Bar Harbor Bankshares (NYSE American: BHB) reported
fourth quarter net income of $7.6 million, a 15% increase from $6.6
million in the same quarter of 2017. Net income for the full year
2018 was $32.9 million, up 27% compared to $26.0 million in
2017.
FOURTH QUARTER FINANCIAL HIGHLIGHTS
- 27% annualized increase in non-maturity
deposit accounts
- 100% loan to deposit ratio
- 7.3% annualized increase in commercial
and industrial loans
- 1.03% core return on assets (non-GAAP
measure)
- 10.01% core return on equity (non-GAAP
measure)
- 0.03% net loan charge-offs/average
loans
President and Chief Executive Officer, Curtis C. Simard stated,
“We finished 2018 with the same drive and commitment we’ve seen all
year as our key performance metrics improved each consecutive
quarter while we focused on profitable organic growth. We delivered
record core earnings per share of 59 cents this quarter and core
return on assets of 1.03%. Core return on equity of 10.01% has
exceeded a financial milestone as of year end. Our credit quality
remains strong with a 0.03% net charge offs to average loans for
the fourth quarter. The retail delivery team was a testament to our
dedicated customer service as non-maturity deposits grew by 27% on
an annualized basis. This growth further demonstrates the
strengthening of both community and customer relationships across
our entire footprint. We continued to build shareholder value in
2018 with an 11% increase in tangible book value per share
excluding security adjustments, which puts us at a record
level.”
Mr. Simard further stated, “Loan growth in the fourth quarter
was driven by our commercial and industrial book, which is no
surprise given our noted pipeline in the third quarter and the
concentrated efforts around this product line. With the expanded
roll out of our Treasury Management platform, we’ve seen growth in
both related loans and deposits. Our new commercial loan office in
Portland, Maine opened in December 2018 and has already contributed
to our 2019 goals. The new commercial loan production office is
also expected to generate more opportunities for fee income,
including but not limited to customer loan derivatives. We’ve
brought in strategic recruits in 2018 to complement our existing
teams which will help drive revenue as we grow market share across
our New England footprint.”
Mr. Simard continued, “2018 was a year marked with active
balance sheet management during a tumultuous interest rate
environment. We executed an investment remix strategy in the fourth
quarter which will be accretive to 2019 while improving our overall
liquidity and interest rate risk position. We continue to
diligently explore various balance sheet strategies to efficiently
use capital and enhance shareholder returns.”
Mr. Simard went on to say, “We are thrilled with the December
opening of our newest branch in Manchester, New Hampshire which has
already attracted market share given its anticipated arrival. We
also look forward to further expanding into Bedford, New Hampshire
and Belfast, Maine during 2019. We view these additional markets as
providing great opportunity to further build on our franchise while
remaining true to the communities we call home.”
Mr. Simard concluded, “We achieved several transformational
goals and projects in 2018 that set an organizational roadmap and a
strong foundation for future growth. As we enter 2019 with normal
seasonal head-winds and an increasing competitive market place, our
teams are eager and ready to execute on our strategies building on
the momentum we saw in 2018.”
RESULTS OF OPERATIONSNet income in the fourth quarter was
$7.6 million, or 49 cents per share, compared to $6.6 million, or
43 cents per share, in the same quarter of 2017. Fourth quarter net
income in 2018 includes $1.5 million of other income related to the
sale of Visa B shares, a loss on security sales of $924 thousand
and a $1.1 million non-recurring charge related to the conversion
from Visa to MasterCard. Net income in the same quarter of 2017
included a $4.0 million revaluation loss on net deferred tax assets
triggered by the Tax Cuts and Jobs Act of 2017. In addition, there
was a net benefit of $2.6 million in 2017, which reflected a gain
on the sale of the Company’s insurance subsidiary offset by other
one-time charges.
Interest income was up 9% to $32.8 million as yields on earning
assets expanded 20 basis points on a year-over-year basis. Net
interest margin in the fourth quarter 2018 decreased to 2.78% from
3.04% in the same period of 2017. The decrease reflects several
short-term interest rate hikes and lower contribution from
purchased loan accretion and tax-equivalency adjustments due to a
lower 2018 federal tax rate. Excluding purchase loan accretion, net
interest margin in the fourth quarter 2018 was 2.70%, which was
consistent with the third quarter 2018. Despite higher short-term
rates, net interest margin stabilized in the fourth quarter and an
investment portfolio remix strategy was executed. Specifically, the
Company sold $30.0 million of lower yielding securities in our
available for sale portfolio and purchased alternative higher
yielding securities with less duration and consistent credit
metrics. While the sale of these securities generated a $924
thousand realized loss, the mark to market on these securities had
already been recognized in other comprehensive income thus
resulting in no impact on tangible book value. The Company's loan
to deposit ratio improved to 100% at the end of the fourth quarter
2018 from 106% in the same period of 2017, which helped to reduce
cost of funds.
The fourth quarter provision for loan losses is the lowest the
Company has experienced in two years, down to $572 thousand from a
high of $795 thousand in the first quarter of 2018. We continue to
report positive quarterly trends in both recoveries and charged-off
loans.
Non-interest income in the fourth quarter increased 14% to $7.5
million from $6.5 million in the prior year. The sale of the
Company’s remaining ownership interest in Visa Class B shares
contributed $1.5 million in the fourth quarter along with $315
thousand in customer loan derivative fee income.
Non-interest expense increased to $20.1 million in the fourth
quarter from $17.9 million in the third quarter 2018 and $14.3
million in the fourth quarter 2017. Salary and benefit expense
decreased quarter-over-quarter due to the revaluation of
post-retirement liabilities at lower year end discount rates.
Acquisition, conversion and other expenses totaled $1.1 million in
the fourth quarter of 2018 compared to a net benefit of $2.6
million recorded in same quarter of 2017. The charges in 2018
relates to various operating system conversion rebates previously
disclosed. Other non-interest expense increased to $5.1 million
from $3.0 million in the third quarter 2018 and fourth quarter
2017. The increase is due to various one-time charges related to
upgrades around the Company’s automated teller machines and
associated write-offs.
The effective tax rate decreased to 15.8% in the fourth quarter
2018 compared with 18.8% in third quarter 2018 due to higher
non-recurring pretax charges as described above. The 56% effective
tax rate in the fourth quarter 2017 reflected the $4.0 million
charge due to revaluation of net deferred tax assets.
FINANCIAL CONDITIONTotal assets were $3.6 billion at the
end of the fourth quarter 2018, up $47.0 million from the third
quarter 2018 and $43.3 million from year end 2017. Loan balances in
the fourth quarter 2018 were $2.5 billion increasing $6.6 million
from the third quarter and $4.6 million from 2017. Commercial and
industrial loans grew at a rate of 5.4% for the year and 7.3% in
the fourth quarter. This growth aligns with our strategy and focus
on variable rate yields and the previously announced Treasury
Management roll out.
Non-accrual loans in the fourth quarter 2018 decreased $3.5
million primarily due to a $2.3 million commercial relationship
that was taken into other real estate owned. The full carrying
value of the asset is expected to be recovered upon sale. In the
fourth quarter there was an uptick in 30-day past due accounts,
principally due to how payment schedules and calendar dates fell at
the end of the quarter. This effect can also be seen in the fourth
quarter of 2017. Net loan charge-offs continue to be at historic
lows and the ratio of the allowance for loan losses to total loans
increased to 0.56% in the fourth quarter.
The Company’s risk-based capital ratio strengthened in the
fourth quarter 2018 as tangible book value (non-GAAP measure)
continued to expand on a quarter-over-quarter basis. Tangible book
value per share was $16.94 at the end of the fourth quarter 2018
compared to $16.11 at the end of third quarter. Lower long-term
rates had a positive impact on the fair value adjustment to the
Company’s securities portfolio recorded in accumulated other
comprehensive income. Excluding the impact of security fair value
adjustments, tangible book value per share (non-GAAP measure) was
$17.50 at the end of the fourth quarter 2018, up from $17.22 in the
third of quarter of 2018 on strong earnings per share.
BACKGROUNDBar Harbor Bankshares (NYSE American: BHB) is
the parent company of its wholly-owned subsidiary, Bar Harbor Bank
& Trust. Founded in 1887, Bar Harbor Bank & Trust is a true
community bank serving the financial needs of its clients for over
125 years. Bar Harbor provides full-service community banking with
office locations in all three Northern New England states of Maine,
New Hampshire and Vermont. For more information, visit www.bhbt.com.
FORWARD LOOKING STATEMENTSCertain statements contained in
this document that are not historical facts may constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended ("Securities Act"), and Section
21E of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), and are intended to be covered by the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. When used
in this earnings release the words "may," "will," "should,"
"could," "would," "plan," "potential," "estimate," "project,"
"believe," "intend," "anticipate," "expect," "target" and similar
expressions are intended to identify forward-looking statements,
but these terms are not the exclusive means of identifying
forward-looking statements. These forward-looking statements are
subject to significant risks, assumptions and uncertainties,
including among other things, changes in general economic and
business conditions, increased competitive pressures, changes in
the interest rate environment, legislative and regulatory change,
changes in the financial markets, and other risks and uncertainties
disclosed from time to time in documents that the Company files
with the Securities and Exchange Commission, including but not
limited to those discussed in the section titled "Risk Factors" in
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2017. Because of these and other uncertainties, the
Company’s actual results, performance or achievements, or industry
results, may be materially different from the results indicated by
these forward-looking statements. In addition, the Company’s past
results of operations do not necessarily indicate future results.
You should not place undue reliance on any of the forward-looking
statements, which speak only as of the dates on which they were
made. The Company is not undertaking an obligation to update
forward-looking statements, even though its situation may change in
the future, except as required under federal securities law. The
Company qualifies all of its forward-looking statements by these
cautionary statements.
NON-GAAP FINANCIAL MEASURESThis document contains certain
non-GAAP financial measures in addition to results presented in
accordance with accounting principles generally accepted in the
United States of America ("GAAP"). These non-GAAP measures are
intended to provide the reader with additional supplemental
perspectives on operating results, performance trends, and
financial condition. Non-GAAP financial measures are not a
substitute for GAAP measures; they should be read and used in
conjunction with the Company's GAAP financial information. A
reconciliation of non-GAAP financial measures to GAAP measures is
provided below. In all cases, it should be understood that non-GAAP
measures do not depict amounts that accrue directly to the benefit
of shareholders. An item which management excludes when computing
non-GAAP core earnings can be of substantial importance to the
Company's results for any particular quarter or year. The Company's
non-GAAP core earnings information set forth is not necessarily
comparable to non- GAAP information which may be presented by other
companies. Each non-GAAP measure used by the Company in this report
as supplemental financial data should be considered in conjunction
with the Company's GAAP financial information.
The Company utilizes the non-GAAP measure of core earnings in
evaluating operating trends, including components for core revenue
and expense. These measures exclude amounts which the Company views
as unrelated to its normalized operations, including securities
gains/losses, acquisition costs, restructuring costs, legal
settlements, and systems conversion costs. Non-GAAP adjustments are
presented net of an adjustment for income tax expense.
The Company also calculates core earnings per share based on its
measure of core earnings. The Company views these amounts as
important to understanding its operating trends, particularly due
to the impact of accounting standards related to acquisition
activity. Analysts also rely on these measures in estimating and
evaluating the Company's performance. Management also believes that
the computation of non-GAAP core earnings and core earnings per
share may facilitate the comparison of the Company to other
companies in the financial services industry. The Company also
adjusts certain equity related measures to exclude intangible
assets due to the importance of these measures to the investment
community.
TABLE
INDEX
CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED)
A
Selected Financial Highlights
B Footnotes to
Selected Financial Highlights
C Balance Sheets
D Loan and Deposit Analysis
E Statements
of Income
F Statements of Income (Five Quarter Trend)
G Average Yields and Costs
H Average
Balances
I Asset Quality Analysis
J
Reconciliation of Non-GAAP Financial Measures (Five Quarter Trend)
and Supplementary Data
BAR HARBOR BANKSHARES
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED At or
for the Quarters Ended Dec 31, 2018
Sep 30,2018 Jun 30,2018
Mar 31,2018 Dec 31, 2017 PER
SHARE DATA Net earnings, diluted $ 0.49 $ 0.58 $ 0.55 $ 0.50 $
0.43 Core earnings, diluted (1) (2) 0.59 0.58 0.56 0.52 0.58 Total
book value 23.87 23.06 22.97 22.78 22.96 Tangible book value (2)
16.94 16.11 16.00 15.78 15.94 Market price at period end 22.43
28.72 30.29 27.72 27.01 Dividends 0.20 0.20 0.20 0.19 0.19
PERFORMANCE RATIOS (3) Return on assets 0.85 % 1.01 % 0.97 %
0.90 % 0.75 % Core return on assets (1) (2) 1.03 1.01 1.00 0.93
1.02 Return on equity 8.31 9.92 9.65 9.01 7.35 Core return on
equity (1) (2) 10.01 9.98 9.86 9.31 9.97 Core return on tangible
equity (1) (2) 14.46 14.52 14.43 13.72 14.56 Net interest margin,
fully taxable equivalent (FTE) (2) (4) 2.78 2.81 2.91 2.97 3.04 Net
interest margin (FTE), excluding purchased loan accretion (2) (4)
2.70 2.71 2.80 2.85 2.93 Efficiency ratio (2) 59.91 57.88 58.83
60.44 53.02
GROWTH (Year-to-date, annualized) (2)
Total commercial loans 1.4 % 2.8 % 5.7 % 2.2 % 23.8 % Total loans
0.2 (0.1 ) — (3.4 ) 13.1 Total deposits 5.6 2.2 1.9 (1.8 ) 14.4
FINANCIAL DATA (In millions) Total assets $ 3,608 $
3,561 $ 3,541 $ 3,511 $ 3,565 Total earning assets (5) 3,263 3,253
3,250 3,235 3,244 Total investments 761 747 749 757 755 Total loans
2,490 2,484 2,485 2,464 2,486 Allowance for loan losses 14 13 13 13
12 Total goodwill and intangible assets 108 108 108 108 108 Total
deposits 2,483 2,390 2,375 2,341 2,352 Total shareholders' equity
371 358 356 352 355 Net income 8 9 9 8 7 Core income (1) (2) 9 9 9
8 9
ASSET QUALITY AND CONDITION RATIOS Net
charge-offs (current quarter annualized)/average loans 0.03 % 0.04
% 0.06 % 0.07 % 0.04 % Allowance for loan losses/total loans 0.56
0.54 0.53 0.51 0.50 Loans/deposits 100 104 105 105 106
Shareholders' equity to total assets 10.27 10.04 10.05 10.03 9.95
Tangible shareholders' equity to tangible assets 7.51
7.24 7.22 7.17
7.12
____________________________________
(1) Core measurements are non-GAAP financial measures that are
adjusted to exclude net non-operating charges primarily related to
acquisitions, system conversions and gain on sale of securities.
Refer to the Reconciliation of Non-GAAP Financial Measures in table
J for additional information.(2) Non-GAAP financial measure.(3) All
performance ratios are annualized and are based on average balance
sheet amounts, where applicable.(4) Fully taxable equivalent
considers the impact of tax-advantaged investment securities and
loans.(5) Earning assets includes non-accruing loans and securities
are valued at amortized cost.
BAR HARBOR BANKSHARES CONSOLIDATED BALANCE SHEETS
- UNAUDITED (in
thousands) Dec 31, 2018 Sep 30, 2018 Jun 30,
2018 Mar 31, 2018 Dec 31, 2017 Assets Cash
and due from banks $ 35,208 $ 53,154 $ 39,327 $ 35,088 $ 34,262
Interest-bearing deposits with the Federal Reserve Bank 63,546
19,420 22,066 12,725 56,423
Total cash and cash equivalents 98,754 72,574 61,393 47,813 90,685
Securities available for sale, at fair value 725,837 712,658
710,147 718,559 717,242 Federal Home Loan Bank stock 35,659
34,154 38,712 38,105 38,105 Total
securities 761,496 746,812 748,859 756,664 755,347 Commercial real
estate 826,699 840,018 838,546 824,721 826,746 Commercial and
industrial 404,870 385,814 400,293 387,205 379,423 Residential real
estate 1,144,698 1,140,519 1,127,895 1,132,977 1,155,682 Consumer
113,960 117,239 118,332 119,516 123,762
Total loans 2,490,227 2,483,590 2,485,066 2,464,419
2,485,613 Less: Allowance for loan losses (13,866 ) (13,487 )
(13,090 ) (12,679 ) (12,325 ) Net loans 2,476,361 2,470,103
2,471,976 2,451,740 2,473,288 Premises and equipment, net
48,804 47,621 48,038 48,464 47,708 Other real estate owned 2,351 68
129 216 122 Goodwill 100,085 100,085 100,085 100,085 100,085 Other
intangible assets 7,459 7,690 7,921 8,152 8,383 Cash surrender
value of bank-owned life insurance 73,810 73,316 58,811 58,433
57,997 Deferred tax asset, net 9,514 11,527 10,309 9,627 7,180
Other assets 29,853 31,196 33,534 29,793
24,389 Total assets $ 3,608,487 $ 3,560,992
$ 3,541,055 $ 3,510,987 $ 3,565,184
Liabilities and shareholders' equity Demand and other
non-interest bearing deposits $ 370,889 $ 372,358 $ 341,773 $
342,192 $ 349,055 NOW deposits 484,717 471,326 449,715 448,992
466,610 Savings deposits 358,888 354,908 350,339 361,591 364,799
Money market deposits 335,951 254,142 260,642 303,777 305,275 Time
deposits 932,793 937,615 972,252 884,848
866,346 Total deposits 2,483,238 2,390,349 2,374,721
2,341,400 2,352,085 Senior borrowings 680,823 739,224
735,924 742,198 786,688 Subordinated borrowings 42,973
42,988 43,003 43,018 43,033 Total
borrowings 723,796 782,212 778,927 785,216 829,721 Other
liabilities 30,874 30,746 31,444 32,214
28,737 Total liabilities 3,237,908 3,203,307 3,185,092
3,158,830 3,210,543 Total common shareholders' equity
370,579 357,685 355,963 352,157 354,641
Total liabilities and shareholders' equity $ 3,608,487
$ 3,560,992 $ 3,541,055 $ 3,510,987 $
3,565,184
Net shares outstanding 15,523
15,509 15,496 15,459
15,443
BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED
LOAN
ANALYSIS
Annualized Growth
% (in thousands) Dec 31, 2018 Sep
30,2018 Jun 30,2018 Mar
31,2018 Dec 31, 2017 Quarter End
Year to Date Commercial real estate $ 826,699 $
840,018 $ 838,546 $ 824,721 $ 826,746 (6.3 )% — % Commercial and
industrial 309,544 303,984 313,680 301,811
293,707 7.3 5.4 Total commercial loans
1,136,243 1,144,002 1,152,226 1,126,532 1,120,453 (2.7 ) 1.4
Residential real estate 1,144,698 1,140,519 1,127,895 1,132,977
1,155,682 1.5 (1.0 ) Consumer 113,960 117,239 118,332 119,516
123,762 (11.2 ) (7.9 ) Tax exempt and other 95,326 81,830
86,613 85,394 85,716 66.0 11.2
Total loans $ 2,490,227 $ 2,483,590
$ 2,485,066 $ 2,464,419 $
2,485,613 1.1 % 0.2 %
DEPOSIT
ANALYSIS
Annualized Growth
% (in thousands) Dec 31, 2018 Sep
30,2018 Jun 30,2018 Mar
31,2018 Dec 31, 2017 Quarter End
Year to Date Demand $ 370,889 $ 372,358 $ 341,773 $
342,192 $ 349,055 (1.6 )% 6.3 % NOW 484,717 471,326 449,715 448,992
466,610 11.4 3.9 Savings 358,888 354,908 350,339 361,591 364,799
4.5 (1.6 ) Money market 335,951 254,142 260,642
303,777 305,275 128.8 10.0 Total
non-maturity deposits 1,550,445 1,452,734 1,402,469 1,456,552
1,485,739 26.9 4.4 Total time deposits 932,793 937,615
972,252 884,848 866,346 (2.1 ) 7.7
Total deposits $ 2,483,238 $ 2,390,349
$ 2,374,721 $ 2,341,400 $
2,352,085 15.5 % 5.6 %
BAR HARBOR
BANKSHARES CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Three Months Ended December 31,
Twelve Months Ended December 31, (in thousands, except
per share data) 2018 2017 2018 2017
Interest and dividend income Loans $ 26,743 $ 24,895 $
104,015 $ 94,976 Securities and other 6,029 5,261
23,436 21,093 Total interest and dividend income 32,772
30,156 127,451 116,069
Interest expense Deposits 5,653 3,381
19,521 11,307 Borrowings 4,855 3,279 17,047
12,607 Total interest expense 10,508 6,660 36,568
23,914
Net interest income 22,264 23,496 90,883
92,155 Provision for loan losses 572 597 2,780
2,788 Net interest income after provision for loan losses 21,692
22,899 88,103 89,367
Non-interest
income Trust and investment management fee income 2,949 3,042
11,985 12,270 Insurance brokerage service income — 77 — 1,097
Customer service fees 2,477 2,495 9,538 8,484 Loss on sales of
securities, net (924 ) — (924 ) 19 Bank-owned life insurance income
493 374 1,821 1,539 Other income 2,455 530 5,515
2,573 Total non-interest income 7,450 6,518
27,935 25,982
Non-interest expense Salaries and
employee benefits 9,269 9,524 40,964 39,589 Occupancy and equipment
3,022 2,866 12,386 11,061 Loss on sales of premises and equipment,
net — — — 94 Outside services 811 780 2,408 3,000 Professional
services 458 298 1,474 1,655 Communication 103 249 804 1,289
Amortization of intangible assets 207 209 828 812 Acquisition,
conversion and other expenses 1,109 (2,615 ) 1,728 3,302 Other
expenses 5,117 2,952 14,947 11,924 Total
non-interest expense 20,096 14,263 75,539
72,726 Income before income taxes 9,046 15,154 40,499 42,623
Income tax expense 1,426 8,545 7,562 16,630
Net income $ 7,620 $ 6,609
$ 32,937 $ 25,993
Earnings per
share: Basic $ 0.49 $ 0.43 $ 2.13 $ 1.71 Diluted 0.49 0.43 2.12
1.70
Weighted average shares outstanding: Basic
15,516 15,437 15,488 15,184 Diluted 15,574
15,537 15,564 15,290
BAR
HARBOR BANKSHARES CONSOLIDATED STATEMENTS OF INCOME (5
Quarter Trend) - UNAUDITED
(in thousands, except per share data) Dec 31,
2018 Sep 30,2018 Jun 30,2018
Mar 31,2018 Dec 31, 2017 Interest
and dividend income Loans $ 26,743 $ 26,212 $ 25,934 $ 25,126 $
24,895 Securities and other 6,029 5,972 5,784
5,651 5,261 Total interest and dividend income 32,772
32,184 31,718 30,777 30,156
Interest expense Deposits 5,653
5,478 4,405 3,985 3,381 Borrowings 4,855 4,237 4,321
3,634 3,279 Total interest expense 10,508
9,715 8,726 7,619 6,660
Net
interest income 22,264 22,469 22,992 23,158 23,496 Provision
for loan losses 572 643 770 795 597
Net interest income after provision for loan losses 21,692
21,826 22,222 22,363 22,899
Non-interest income Trust and investment management fee
income 2,949 2,952 3,122 2,962 3,042 Insurance brokerage service
income — — — — 77 Customer service fees 2,477 2,490 2,347 2,224
2,495 Loss on sales of securities, net (924 ) — — — — Bank-owned
life insurance income 493 505 377 446 374 Other income 2,455
1,179 1,275 606 530 Total non-interest
income 7,450 7,126 7,121 6,238 6,518
Non-interest expense Salaries and employee benefits
9,269 10,331 10,375 10,989 9,524 Occupancy and equipment 3,022
3,366 2,925 3,073 2,866 Loss on sales of premises and equipment,
net — — — — — Outside services 811 456 581 560 780 Professional
services 458 223 360 433 298 Communication 103 217 304 180 249
Amortization of intangible assets 207 207 207 207 209 Acquisition,
conversion and other expenses 1,109 70 214 335 (2,615 ) Other
expenses 5,117 3,036 3,719 3,075 2,952
Total non-interest expense 20,096 17,906
18,685 18,852 14,263 Income before
income taxes 9,046 11,046 10,658 9,749 15,154 Income tax expense
1,426 2,076 2,123 1,937 8,545
Net income $ 7,620 $ 8,970
$ 8,535 $ 7,812 $ 6,609
Earnings per share: Basic $ 0.49 $ 0.58 $ 0.55 $ 0.51
$ 0.43 Diluted 0.49 0.58 0.55 0.50 0.43
Weighted average
shares outstanding: Basic 15,516 15,503 15,482 15,448 15,437
Diluted 15,574 15,580 15,571
15,553 15,537
BAR
HARBOR BANKSHARES AVERAGE YIELDS AND COSTS (Fully Taxable
Equivalent - Annualized) - UNAUDITED
Quarters Ended Dec 31,
2018 Sep 30,2018 Jun 30,2018
Mar 31,2018 Dec 31, 2017 Earning
assets Commercial real estate 4.71 % 4.57 % 4.48 % 4.41 % 4.30
% Commercial and industrial 4.61 4.59 4.69 4.41 4.77 Residential
3.83 3.83 3.88 3.87 3.78 Consumer 5.07 4.85 4.65
4.47 4.17 Total loans 4.31 4.25 4.25 4.16 4.12
Securities and other 3.28 3.21 3.18 3.16
3.06 Total earning assets 4.07 % 4.00 % 3.99 % 3.92 %
3.87 %
Funding liabilities NOW 0.50 % 0.43 % 0.37 %
0.34 % 0.31 % Savings 0.18 0.17 0.17 0.18 0.19 Money market 0.93
0.76 0.79 0.68 0.58 Time deposits 1.85 1.78 1.51
1.39 1.19 Total interest bearing deposits 1.12
1.06 0.90 0.82 0.70 Borrowings 2.53 2.26 2.07
1.80 1.62 Total interest-bearing liabilities 1.50 %
1.38 % 1.25 % 1.11 % 0.97 %
Net interest spread 2.57
2.62 2.74 2.81 2.90 Net interest margin 2.78
2.81 2.91 2.97 3.04
BAR HARBOR BANKSHARES AVERAGE BALANCES -
UNAUDITED Quarters
Ended (in thousands) Dec 31, 2018 Sep
30,2018 Jun 30,2018 Mar
31,2018 Dec 31, 2017 Assets
Commercial real estate $ 836,813 $ 837,058 $ 824,356 $ 819,531 $
783,730 Commercial and industrial 393,396 388,831 396,471 380,029
362,881 Residential 1,137,493 1,120,336 1,126,714 1,147,010
1,161,865 Consumer 114,960 117,735 119,570
121,467 125,109 Total loans (1) 2,482,662 2,463,960
2,467,111 2,468,037 2,433,585 Securities and other (2) 762,901
773,562 767,886 765,328 753,282
Total earning assets 3,245,563 3,237,522 3,234,997 3,233,365
3,186,867 Cash and due from banks 68,904 63,272 50,869 53,151
65,145 Allowance for loan losses (13,922 ) (13,463 ) (13,107 )
(12,589 ) (12,202 ) Goodwill and other intangible assets 107,657
107,887 108,118 108,349 108,769 Other assets 138,074 137,466
131,522 129,525 144,359 Total assets $
3,546,276 $ 3,532,684 $ 3,512,399 $ 3,511,801
$ 3,492,938
Liabilities and shareholders'
equity NOW $ 475,449 $ 461,875 $ 441,645 $ 447,026 $ 449,669
Savings 346,905 356,834 351,712 362,508 368,714 Money market
272,612 259,738 288,169 305,105 308,071 Time deposits 914,674
964,108 872,149 857,796 799,348
Total interest bearing deposits 2,009,640 2,042,555 1,953,675
1,972,435 1,925,802 Borrowings 761,781 744,632
836,295 819,576 803,469 Total interest-bearing
liabilities 2,771,421 2,787,187 2,789,970 2,792,011 2,729,271
Non-interest-bearing demand deposits 384,636 357,856 339,374
339,349 376,066 Other liabilities 26,569 28,943
28,386 29,000 30,971 Total liabilities
3,182,626 3,173,986 3,157,730 3,160,360 3,136,308 Total
shareholders' equity 363,650 358,698 354,669 351,441 356,630
Total liabilities and
shareholders' equity $ 3,546,276 $ 3,532,684
$ 3,512,399 $ 3,511,801 $
3,492,938
_____________________________________
(1) Total loans include non-accruing loans.(2) Average balances
for securities available-for-sale are based on amortized cost.
BAR HARBOR BANKSHARES ASSET QUALITY ANALYSIS -
UNAUDITED At or for the
Quarters Ended (in thousands) Dec 31, 2018
Sep 30,2018 Jun 30,2018 Mar
31,2018 Dec 31, 2017 NON-PERFORMING
ASSETS Non-accruing loans: Commercial real estate $ 8,156 $
8,348 $ 8,883 $ 8,422 $ 8,343 Commercial installment 2,331 2,303
2,411 2,304 1,209 Residential real estate 7,211 10,396 9,945 8,548
4,266 Consumer installment 537 727 707 1,065
500 Total non-accruing loans 18,235 21,774 21,946
20,339 14,318 Other real estate owned 2,351 68 129
216 122 Total non-performing assets $ 20,586
$ 21,842 $ 22,075 $ 20,555 $ 14,440
Total non-accruing loans/total loans 0.73 % 0.88 %
0.88 % 0.83 % 0.58 % Total non-performing assets/total assets 0.57
0.61 0.62 0.59 0.41
PROVISION AND ALLOWANCE FOR LOAN
LOSSES Balance at beginning of period $ 13,487 $ 13,090 $
12,679 $ 12,325 $ 11,950 Charged-off loans (631 ) (298 ) (517 )
(461 ) (277 ) Recoveries on charged-off loans 438 52
158 20 55 Net loans charged-off (193 ) (246 )
(359 ) (441 ) (222 ) Provision for loan losses 572 643
770 795 597 Balance at end of period $
13,866 $ 13,487 $ 13,090 $ 12,679 $
12,325 Allowance for loan losses/total loans 0.56 %
0.54 % 0.53 % 0.51 % 0.50 % Allowance for loan losses/non-accruing
loans 76 62 60 62 86
NET LOAN CHARGE-OFFS Commercial
real estate $ (25 ) $ (27 ) $ (92 ) $ (91 ) $ (92 ) Commercial
installment 53 (53 ) (54 ) (140 ) 1 Residential real estate (31 )
(123 ) (64 ) 1 — Consumer installment (190 ) (43 ) (149 ) (211 )
(131 ) Total, net $ (193 ) $ (246 ) $ (359 ) $ (441 ) $ (222 )
Net charge-offs (QTD annualized)/average loans 0.03 % 0.04 %
0.06 % 0.07 % 0.04 % Net charge-offs (YTD annualized)/average loans
0.05 0.06 0.06 0.07 0.04
DELINQUENT AND NON-ACCRUING
LOANS/TOTAL LOANS 30-89 Days delinquent 0.38 % 0.17 % 0.14 %
0.24 % 0.37 % 90+ Days delinquent and still accruing 0.01 —
— — 0.02 Total accruing delinquent
loans 0.39 0.17 0.14 0.24 0.39 Non-accruing loans 0.73 0.88
0.88 0.83 0.58 Total delinquent and
non-accruing loans 1.12 % 1.05 % 1.02 %
1.07 % 0.97 %
BAR HARBOR BANKSHARES RECONCILIATION
OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA -
UNAUDITED At or for the Quarters Ended (in
thousands) Dec 31,2018 Sep
30,2018 Jun 30,2018 Mar
31,2018 Dec 31, 2017 Net income $
7,620 $ 8,970 $ 8,535 $ 7,812 $ 6,609 Adj: Loss on sale of
securities, net 924 — — — — Adj: Loss (gain) on other real estate
owned 5 (8 ) 23 — — Adj: Acquisition, conversion and other expenses
1,109 70 214 335 (2,615 ) Adj: Income taxes (1) (485 ) (12 ) (57 )
(81 ) 982 Adj: Tax reform charge — — —
— 3,988 Total core income (2) (A) $ 9,173 $
9,020 $ 8,715 $ 8,066 $ 8,964
Net interest income (B) $ 22,264 $ 22,469 $ 22,992 $ 23,158 $
23,496 Plus: Non-interest income 7,450 7,126
7,121 6,238 6,518 Total Revenue(2) 29,714
29,595 30,113 29,396 30,014 Adj: Loss on sale of securities, net
924 — — — — Total core
revenue (2) (C) $ 30,638 $ 29,595 $ 30,113 $
29,396 $ 30,014 Total non-interest expense
20,096 17,906 18,685 18,852 14,263 Less: (Loss) gain on other real
estate owned (5 ) 8 (23 ) — — Less: Acquisition, conversion and
other expenses (1,109 ) (70 ) (214 ) (335 ) 2,615
Core non-interest expense (2) (D) $ 18,982 $ 17,844 $
18,448 $ 18,517 $ 16,878
(in
millions) Total average earning assets (E) $ 3,246 $ 3,238 $
3,235 $ 3,233 $ 3,187 Total average assets (F) 3,546 3,533 3,512
3,512 3,493 Total average shareholders' equity (G) 364 359 355 351
357 Total average tangible shareholders' equity (2) (3) (H) 256 251
247 243 248 Total tangible shareholders' equity, period-end (2)(3)
(I) 263 250 248 244 246 Total tangible assets, period-end (2) (3)
(J) 3,501 3,453 3,433 3,403 3,457
(in thousands)
Total common shares outstanding, period-end (K) 15,523 15,509
15,496 15,459 15,443 Average diluted shares outstanding (L) 15,574
15,580 15,571 15,553 15,537 Core earnings per share, diluted
(A/L) $ 0.59 $ 0.58 $ 0.56 $ 0.52 $ 0.58 Tangible book value per
share, period-end (2) (I/K) 16.94 16.11 16.00 15.78 15.94
Securities adjustment, net of tax(4) (M) (8,663 ) (17,152 ) (12,594
) (10,237 ) 1,711 Tangible book value per share, excluding
securities adjustment(4) (I+M)/K 17.50 17.22 16.81 16.44 15.83
Total tangible shareholders' equity/total tangible assets(2) (I/J)
7.51 7.24 7.22 7.17 7.12
Performance ratios Return on
assets 0.85 % 1.01 % 0.97 % 0.90 % 0.75 % Core return on assets (2)
(A/F) 1.03 1.01 1.00 0.93 1.02 Return on equity 8.31 9.92 9.65 9.01
7.35 Core return on equity (2) (A/G) 10.01 9.98 9.86 9.31 9.97 Core
return on tangible equity (2) (5) (A/H) 14.46 14.52 14.43 13.72
14.56 Efficiency ratio (2)(6) (D-O-Q)/(C+N) 59.91 57.88 58.83 60.44
53.02 Net interest margin(2) (B+P)/E 2.78 2.81 2.91 2.97 3.04
Supplementary data (in thousands) Taxable
equivalent adjustment for efficiency ratio (N) $ 633 $ 654 $ 622 $
645 $ 1,122 Franchise taxes included in non-interest expense (O) 39
129 159 152 161 Tax equivalent adjustment for net interest margin
(P) 488 493 502 503 897 Intangible amortization (Q) 207
207 207 207
209
______________________________________
(1) A marginal tax rate was used of 23.78% in third and fourth
quarter 2018, 24.15% for the first and second quarter of 2018 and
37.57% in 2017.(2) Non-GAAP financial measure.(3) Total tangible
shareholders' equity is computed by taking total shareholders'
equity less the intangible assets at period-end. Total
tangible assets is computed by taking total assets less the
intangible assets at period-end.(4) Securities adjustment, net of
tax represents the total unrealized loss on available-for-sale
securities recorded on the Company's consolidated balance sheets
within total common shareholders' equity.(5) Core return on
tangible equity is computed by dividing the total core income
adjusted for the tax-effected amortization of intangible assets,
assuming a marginal rate of 23.78% in third and fourth quarter
2018, 24.15% in first and second quarter 2018 and 37.57% in 2017,
by average tangible equity.(6) Efficiency ratio is computed by
dividing total adjusted tangible non-interest expense by the sum of
total net interest income on a fully taxable equivalent basis and
total adjusted non-interest income.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190124005837/en/
Josephine Iannelli; EVP, Chief Financial Officer &
Treasurer; (207) 288-3314
Bar Harbor Bankshares (AMEX:BHB)
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