EX-99.1 2 q32018bhbpressrelease.htm EXHIBIT 99.1 Exhibit



  bhblogoa10.jpg

Bar Harbor Bankshares Reports Third Quarter Earnings

BAR HARBOR, MAINE - October 18, 2018 -- Bar Harbor Bankshares (NYSE American: BHB) reported net income for third quarter 2018 of $9.0 million, or 58 cents per share, compared with $8.6 million, or 56 cents per share, in the same quarter of 2017.

THIRD QUARTER FINANCIAL HIGHLIGHTS
14.3% annualized increase in non-maturity deposit accounts
57.9% efficiency ratio (non-GAAP measure)
1.01% return on average assets
9.92% return on average equity
10% annualized growth in tangible book value per share, excluding security adjustments (non-GAAP measure)

President and Chief Executive Officer, Curtis C. Simard stated, “Our third quarter was marked by yet another period of continued focus and execution of our strategies to grow profitability while remaining true to our risk management disciplines including credit. Our GAAP earnings per share this quarter equaled core earnings, which reflect our normalized operations. Tangible book value per share, excluding security adjustments, now exceeds pre-acquisition levels, which were accomplished within two years of the deal closing. We are committed to building long-term shareholder value, as evidenced by continued focus on non-maturity deposits and improvements in our return on assets, return on equity and efficiency ratios.”

“Commercial loans have grown 3% on a year-to-date annualized basis as our teams continue to gain market share within our regions. Commercial loan balances can fluctuate based on timing given some larger deals and a conscious effort to not over extend on terms for the sake of interim periods. We remain true to core banking and cultivating long-term relationships with our customers. Total deposit balances were up 3% on an annualized basis for the quarter including more than a 14% increase in non-maturity deposits. New deposit accounts opened totaled 3,212 for the third quarter and 9,211for the year.”

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Mr. Simard went on to say, “We continue to focus on organic growth within our footprint as we expand further into our markets where we see the greatest opportunity to increase shareholder value. We are on track to open our new branch in Manchester, New Hampshire next month with plans for branches in Bedford, New Hampshire and Belfast, Maine next year. These de novo branches will help provide greater service and convenience to our existing customers and the opportunity to further expand our growing deposit base.”

“As you may have read in our press release earlier this month, we announced a strategic expansion with the development of a commercial loan office in Portland, Maine. This opportunity is about being fully engaged in an important commercial market within the state of Maine. We are already actively calling on the commercial accounts in Portland, and by having a physical presence in this market; we will be best positioned to service those needs. To that end, we also announced Daryl Wentworth and Joe Delano have joined our teams, two very seasoned and accomplished leaders in this market. Daryl and Joe combined have over 50 years of experience in both commercial real estate and commercial and industrial lending; they have been recognized as proven idea generators in the middle market space for New England.”

Mr. Simard concluded, “Over the past few quarters we have further defined a culture that cares about our colleagues, customers and community. These ideals, combined with our existing model of balancing growth and earnings while following a steadfast commitment to risk management and controls have given rise to a catalyst for continued financial performance. The measures we have taken are essential to enhancing profitability and achieving our long-term goals. Together and as one team we are focused on providing first class service to our customers and we look forward to a strong close for the year in the fourth quarter.”

RESULTS OF OPERATIONS
Net income was up 5% to $9.0 million, or 58 cents per share, in the third quarter of 2018 compared to $8.6 million, or 56 cents per share, in the same quarter of 2017. Results in the prior year include a $346 thousand charge, or 1 cent per share reduction, from trailing acquisition and conversion costs.

Interest income totaled $32.2 million, up 7% on a year-over-year basis, and yields on loans and investments expanded eleven basis points in total. Net interest margin in the third quarter 2018 decreased to 2.81% from 3.06% in the prior year due to higher cost of funds driven by short-term interest rate hikes. That decrease included a lower contribution from tax-equivalency adjustments of six basis points over the prior year as a result of the lower federal statutory tax rate. The Company's loan to deposit ratio improved 3%

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over the prior year to 104 at the end of the third quarter. Total deposit growth of 3%, led by 14.3% growth in non-maturity balances, helped to reduce other higher funding cost realized as a result of recent rate increases.

The third quarter provision for loan losses was $643 thousand and exceeded net charge-offs, which follows the positive trend in all quarterly periods presented. Non-interest income increased to $7.1 million or 2.4% from the prior year primarily due to a $685 thousand gain from a partial sale of the Company’s ownership interest in Visa Class B shares. Non-interest expense increased to $17.9 million in the third quarter 2018 from $17.6 million in the same quarter of 2017. The increase is primarily due to higher salary and benefit expense related the build-up of the Company’s talent base with strategic hires. The decrease primarily relates to acquisition, conversion and other expenses, which totaled $70 thousand in 2018 and $346 thousand in 2017. The third quarter effective tax rate decreased to 18.8% in 2018 compared with 29.3% in the same quarter of 2017, reflecting a lower federal statutory tax rate.

FINANCIAL CONDITION
Total assets were $3.6 billion at the end of the third quarter 2018, up $20.0 million from the second quarter 2018. Loan balances in the third quarter 2018 were relatively flat with the second quarter with increases in residential products, which were offset by lower commercial loan balances due to higher prepayments and amortization. Asset quality improved during the third quarter with lower non-accrual loans due to activities associated with commercial workouts. Net loan charge-offs continue to be at historic lows and the ratio of credit losses to total loans improved to 0.54% at the end of the third quarter. The Company’s risk-based capital ratio for the third quarter 2018 is expected to be near 14.0% as tangible book value (non-GAAP measure) continued to expand on a quarter-over-quarter basis. Excluding the impact of securities fair value adjustments, earnings grew tangible book value per share (non-GAAP measure) to $17.22 from $16.81 in the second of quarter of 2018.


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BACKGROUND
Bar 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 STATEMENTS
Certain 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.     




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NON-GAAP FINANCIAL MEASURES
This 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 adjusted earnings can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP adjusted 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 adjusted earnings in evaluating operating trends, including components for adjusted 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 adjusted earnings per share based on its measure of adjusted 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 adjusted earnings and adjusted 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.


###

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CONTACTS
Josephine Iannelli; EVP, Chief Financial Officer & Treasurer; (207) 288-3314




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BAR HARBOR BANKSHARES
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED
 
 
 
 
 
At or for the Quarters Ended 
 
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
PER SHARE DATA
 
 
 
 
 
 
 
 
 
 
Net earnings, diluted
 
$
0.58

 
$
0.55

 
$
0.50

 
$
0.43

 
$
0.56

Core earnings, diluted (1) (2)
 
0.58

 
0.56

 
0.52

 
0.58

 
0.57

Total book value
 
23.06

 
22.97

 
22.78

 
22.96

 
22.90

Tangible book value (2)
 
16.11

 
16.00

 
15.78

 
15.94

 
15.84

Market price at period end
 
28.72

 
30.29

 
27.72

 
27.01

 
31.36

Dividends
 
0.20

 
0.20

 
0.19

 
0.19

 
0.19

 
 
 
 
 
 
 
 
 
 
 
PERFORMANCE RATIOS (3)
 
 
 
 
 
 
 
 
 
 
Return on assets
 
1.01
 %
 
0.97
%
 
0.90
 %
 
0.75
%
 
0.99
%
Core return on assets (1) (2)
 
1.01

 
1.00

 
0.93

 
1.02

 
1.01

Return on equity
 
9.92

 
9.65

 
9.01

 
7.35

 
9.67

Core return on equity (1) (2)
 
9.98

 
9.86

 
9.31

 
9.97

 
9.90

Core return on tangible equity (1) (2)
 
14.52

 
14.43

 
13.72

 
14.56

 
14.53

Net interest margin, fully taxable equivalent (FTE) (2) (4)
 
2.81

 
2.91

 
2.97

 
3.04

 
3.06

Net interest margin (FTE), excluding purchased loan accretion (2) (4)
2.71

 
2.80

 
2.85

 
2.93

 
2.93

Efficiency ratio (2)
 
57.88

 
58.83

 
60.44

 
53.02

 
53.53

 
 
 
 
 
 
 
 
 
 
 
GROWTH (Year-to-date, annualized) (2)
 
 
 
 
 
 
 
 
 
 
Total commercial loans
 
2.8
 %
 
5.7
 %
 
2.2
%
 
23.8
%
 
20.5
%
Total loans
 
(0.1
)
 

 
(3.4
)
 
13.1

 
12.2

Total deposits
 
2.2

 
1.9

 
(1.8
)
 
14.4

 
10.6

 
 
 
 
 
 
 
 
 
 
 
FINANCIAL DATA (In millions)
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
3,561

 
$
3,541

 
$
3,511

 
$
3,565

 
$
3,476

Total earning assets (5)
 
3,253

 
3,250

 
3,235

 
3,244

 
3,183

Total investments
 
747

 
749

 
757

 
755

 
756

Total loans
 
2,484

 
2,485

 
2,464

 
2,486

 
2,429

Allowance for loan losses
 
13

 
13

 
13

 
12

 
12

Total goodwill and intangible assets
 
108

 
108

 
108

 
108

 
109

Total deposits
 
2,390

 
2,375

 
2,341

 
2,352

 
2,275

Total shareholders' equity
 
358

 
356

 
352

 
355

 
353

Net income
 
9

 
9

 
8

 
7

 
9

Core income (1) (2)
 
9

 
9

 
8

 
9

 
9

 
 
 
 
 
 
 
 
 
 
 
ASSET QUALITY AND CONDITION RATIOS
 
 
 
 
 
 
 
 
 
 
Net charge-offs (current quarter annualized)/average loans
 
0.04
%
 
0.06
%
 
0.07
%
 
0.04
%
 
0.03
%
Allowance for loan losses/total loans
 
0.54

 
0.53

 
0.51

 
0.50

 
0.49

Loans/deposits
 
104

 
105

 
105

 
106

 
107

Shareholders' equity to total assets
 
10.04

 
10.05

 
10.03

 
9.95

 
10.17

Tangible shareholders' equity to tangible assets
 
7.24

 
7.22

 
7.17

 
7.12

 
7.26


A



_____________________________________
(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.



B



BAR HARBOR BANKSHARES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
Assets
 
 
 
 
 
 

 
 
 
 

Cash and due from banks
 
$
53,154

 
$
39,327

 
$
35,088

 
$
34,262

 
$
31,223

Interest-bearing deposits with the Federal Reserve Bank
 
19,420

 
22,066

 
12,725

 
56,423

 
17,501

Total cash and cash equivalents
 
72,574

 
61,393

 
47,813

 
90,685

 
48,724

Securities available for sale, at fair value
 
712,658

 
710,147

 
718,559

 
717,242

 
718,459

Federal Home Loan Bank stock
 
34,154

 
38,712

 
38,105

 
38,105

 
37,107

Total securities
 
746,812

 
748,859

 
756,664

 
755,347

 
755,566

Commercial real estate
 
840,018

 
838,546

 
824,721

 
826,746

 
793,572

Commercial and industrial
 
385,814

 
400,293

 
387,205

 
379,423

 
357,072

Residential real estate
 
1,140,519

 
1,127,895

 
1,132,977

 
1,155,682

 
1,152,628

Consumer
 
117,239

 
118,332

 
119,516

 
123,762

 
125,590

Total loans
 
2,483,590

 
2,485,066

 
2,464,419

 
2,485,613

 
2,428,862

Less: Allowance for loan losses
 
(13,487
)
 
(13,090
)
 
(12,679
)
 
(12,325
)
 
(11,950
)
Net loans
 
2,470,103

 
2,471,976

 
2,451,740

 
2,473,288

 
2,416,912

 
 
 
 
 
 
 
 
 
 
 
Premises and equipment, net
 
47,621

 
48,038

 
48,464

 
47,708

 
48,309

Other real estate owned
 
68

 
129

 
216

 
122

 
122

Goodwill 
 
100,085

 
100,085

 
100,085

 
100,085

 
100,255

Other intangible assets
 
7,690

 
7,921

 
8,152

 
8,383

 
8,811

Cash surrender value of bank-owned life insurance
 
73,316

 
58,811

 
58,433

 
57,997

 
57,613

Deferred tax asset, net
 
11,527

 
10,309

 
9,627

 
7,180

 
13,052

Other assets
 
31,196

 
33,534

 
29,793

 
24,389

 
26,368

Total assets 
 
$
3,560,992

 
$
3,541,055

 
$
3,510,987

 
$
3,565,184

 
$
3,475,732

 
 
 
 
 
 
 
 
 
 
 
Liabilities and shareholders' equity
 
 
 
 
 
 

 
 
 
 

Demand and other non-interest bearing deposits
 
$
372,358

 
$
341,773

 
$
342,192

 
$
349,055

 
$
357,398

NOW deposits
 
471,326

 
449,715

 
448,992

 
466,610

 
442,085

Savings deposits
 
354,908

 
350,339

 
361,591

 
364,799

 
373,118

Money market deposits
 
254,142

 
260,642

 
303,777

 
305,275

 
300,398

Time deposits
 
937,615

 
972,252

 
884,848

 
866,346

 
802,110

Total deposits
 
2,390,349

 
2,374,721

 
2,341,400

 
2,352,085

 
2,275,109

 
 
 
 
 
 
 
 
 
 
 
Senior borrowings
 
739,224

 
735,924

 
742,198

 
786,688

 
775,582

Subordinated borrowings
 
42,988

 
43,003

 
43,018

 
43,033

 
43,048

Total borrowings
 
782,212

 
778,927

 
785,216

 
829,721

 
818,630

 
 
 
 
 
 
 
 
 
 
 
Other liabilities 
 
30,746

 
31,444

 
32,214

 
28,737

 
28,534

Total liabilities
 
3,203,307

 
3,185,092

 
3,158,830

 
3,210,543

 
3,122,273

 
 
 
 
 
 
 
 
 
 
 
Total common shareholders' equity
 
357,685

 
355,963

 
352,157

 
354,641

 
353,459

Total liabilities and shareholders' equity
 
$
3,560,992

 
$
3,541,055

 
$
3,510,987

 
$
3,565,184

 
$
3,475,732

 
 
 
 
 
 
 
 
 
 
 
Net shares outstanding
 
15,509

 
15,496

 
15,459

 
15,443

 
15,432



C



BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED
 
LOAN ANALYSIS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annualized Growth %
(in thousands)
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Quarter End
 
Year to Date
Commercial real estate
 
$
840,018

 
$
838,546

 
$
824,721

 
$
826,746

 
$
793,572

 
0.7
 %
 
2.1
 %
Commercial and industrial
 
303,984

 
313,680

 
301,811

 
293,707

 
270,759

 
(12.4
)
 
4.7

Total commercial loans 
 
1,144,002

 
1,152,226

 
1,126,532

 
1,120,453

 
1,064,331

 
(2.9
)
 
2.8

Residential real estate
 
1,140,519

 
1,127,895

 
1,132,977

 
1,155,682

 
1,152,628

 
4.5

 
(1.8
)
Consumer
 
117,239

 
118,332

 
119,516

 
123,762

 
125,590

 
(3.7
)
 
(7.0
)
Tax exempt and other
 
81,830

 
86,613

 
85,394

 
85,716

 
86,313

 
(22.1
)
 
(6.0
)
Total loans
 
$
2,483,590

 
$
2,485,066

 
$
2,464,419

 
$
2,485,613

 
$
2,428,862

 
(0.2
)%
 
(0.1
)%

DEPOSIT ANALYSIS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annualized Growth %
(in thousands)
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
 
Quarter End
 
Year to Date
Demand
 
$
372,358

 
$
341,773

 
$
342,192

 
$
349,055

 
$
357,398

 
35.8
 %
 
8.9
 %
NOW
 
471,326

 
449,715

 
448,992

 
466,610

 
442,085

 
19.2

 
1.3

Savings
 
354,908

 
350,339

 
361,591

 
364,799

 
373,118

 
5.2

 
(3.6
)
Money Market
 
254,142

 
260,642

 
303,777

 
305,275

 
300,398

 
(10.0
)
 
(22.3
)
Total non-maturity deposits
 
1,452,734

 
1,402,469

 
1,456,552

 
1,485,739

 
1,472,999

 
14.3

 
(3.0
)
Total time deposits
 
937,615

 
972,252

 
884,848

 
866,346

 
802,110

 
(14.3
)
 
11.0

Total deposits
 
$
2,390,349

 
$
2,374,721

 
$
2,341,400

 
$
2,352,085

 
$
2,275,109

 
2.6
 %
 
2.2
 %



D



BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands, except per share data)
 
2018
 
2017
 
2018
 
2017
Interest and dividend income    
 
 

 
 

 
 
 
 
Loans
 
$
26,212

 
$
24,661

 
$
77,272

 
$
70,081

Securities and other    
 
5,972

 
5,402

 
17,407

 
15,832

Total interest and dividend income    
 
32,184

 
30,063

 
94,679

 
85,913

Interest expense
 
 
 
 
 
 
 
 
Deposits
 
5,478

 
3,177

 
13,868

 
7,926

Borrowings
 
4,237

 
3,408

 
12,192

 
9,327

Total interest expense    
 
9,715

 
6,585

 
26,060

 
17,253

Net interest income
 
22,469

 
23,478

 
68,619

 
68,660

Provision for loan losses   
 
643

 
660

 
2,208

 
2,191

Net interest income after provision for loan losses
 
21,826

 
22,818

 
66,411

 
66,469

Non-interest income
 
 
 
 
 
 
 
 
Trust and investment management fee income
 
2,952

 
3,040

 
9,036

 
9,228

Insurance brokerage service income
 

 
329

 

 
1,020

Customer service fees
 
2,490

 
2,638

 
7,061

 
6,402

Gain on sales of securities, net
 

 
19

 

 
19

Bank-owned life insurance income
 
505

 
380

 
1,328

 
1,165

Other income
 
1,179

 
554

 
3,060

 
1,631

Total non-interest income      
 
7,126

 
6,960

 
20,485

 
19,465

Non-interest expense
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
10,331

 
9,617

 
31,695

 
30,065

Occupancy and equipment
 
3,366

 
2,700

 
9,364

 
8,195

Loss on sales of premises and equipment, net
 

 
(1
)
 

 
94

Outside services
 
456

 
907

 
1,597

 
2,220

Professional services
 
223

 
428

 
1,016

 
1,357

Communication
 
217

 
382

 
701

 
1,040

Amortization of intangible assets
 
207

 
212

 
621

 
603

Acquisition, conversion and other expenses
 
70

 
346

 
619

 
5,917

Other expenses
 
3,036

 
2,995

 
9,830

 
8,972

Total non-interest expense     
 
17,906

 
17,586

 
55,443

 
58,463

 
 
 
 
 
 
 
 
 
Income before income taxes
 
11,046

 
12,192

 
31,453

 
27,471

Income tax expense
 
2,076

 
3,575

 
6,136

 
8,085

Net income
 
$
8,970

 
$
8,617

 
$
25,317

 
$
19,386

 
 
 
 
 
 
 
 
 
Earnings per share:
 
 

 
 

 
 

 
 

Basic 
 
$
0.58

 
$
0.56

 
$
1.64

 
$
1.27

Diluted
 
$
0.58

 
$
0.56

 
1.63

 
1.27

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 

 
 

 
 
 
 
Basic
 
15,503

 
15,420

 
15,478

 
15,098

Diluted
 
15,580

 
15,511

 
15,564

 
15,204


E



BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED
 
 
 
 
 
 
 
 
 
 
 
(in thousands, except per share data)
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
Interest and dividend income    
 
 

 
 

 
 

 
 

 
 

Loans
 
$
26,212

 
$
25,934

 
$
25,126

 
$
24,895

 
$
24,661

Securities and other    
 
5,972

 
5,784

 
5,651

 
5,261

 
5,402

Total interest and dividend income    
 
32,184

 
31,718

 
30,777

 
30,156

 
30,063

Interest expense
 
 

 
 
 
 
 
 
 
 
Deposits
 
5,478

 
4,405

 
3,985

 
3,381

 
3,177

Borrowings
 
4,237

 
4,321

 
3,634

 
3,279

 
3,408

Total interest expense    
 
9,715

 
8,726

 
7,619

 
6,660

 
6,585

Net interest income
 
22,469

 
22,992

 
23,158

 
23,496

 
23,478

Provision for loan losses   
 
643

 
770

 
795

 
597

 
660

Net interest income after provision for loan losses
 
21,826

 
22,222

 
22,363

 
22,899

 
22,818

Non-interest income
 
 

 
 
 
 
 
 
 
 
Trust and investment management fee income
 
2,952

 
3,122

 
2,962

 
3,042

 
3,040

Insurance brokerage service income
 

 

 

 
77

 
329

Customer service fees
 
2,490

 
2,347

 
2,224

 
2,495

 
2,638

Gain on sales of securities, net
 

 

 

 

 
19

Bank-owned life insurance income
 
505

 
377

 
446

 
374

 
380

Other income
 
1,179

 
1,275

 
606

 
530

 
554

Total non-interest income      
 
7,126

 
7,121

 
6,238

 
6,518

 
6,960

Non-interest expense
 
 

 
 
 
 
 
 
 
 
Salaries and employee benefits
 
10,331

 
10,375

 
10,989

 
9,524

 
9,617

Occupancy and equipment
 
3,366

 
2,925

 
3,073

 
2,866

 
2,700

Gain on sales of premises and equipment, net
 

 

 

 

 
(1
)
Outside services
 
456

 
581

 
560

 
780

 
907

Professional services
 
223

 
360

 
433

 
298

 
428

Communication
 
217

 
304

 
180

 
249

 
382

Amortization of intangible assets
 
207

 
207

 
207

 
209

 
212

Acquisition, conversion, and other expenses
 
70

 
214

 
335

 
(2,615
)
 
346

Other expenses
 
3,036

 
3,719

 
3,075

 
2,952

 
2,995

Total non-interest expense     
 
17,906

 
18,685

 
18,852

 
14,263

 
17,586

 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
11,046

 
10,658

 
9,749

 
15,154

 
12,192

Income tax expense
 
2,076

 
2,123

 
1,937

 
8,545

 
3,575

Net income
 
$
8,970

 
$
8,535

 
$
7,812

 
$
6,609

 
$
8,617

 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 

 
 

 
 

 
 

 
 

Basic 
 
$
0.58

 
$
0.55

 
$
0.51

 
$
0.43

 
$
0.56

Diluted
 
$
0.58

 
$
0.55

 
$
0.50

 
$
0.43

 
$
0.56

 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 

 
 

 
 

Basic
 
15,503

 
15,482

 
15,448

 
15,437

 
15,420

Diluted
 
15,580

 
15,571

 
15,553

 
15,537

 
15,511



F



BAR HARBOR BANKSHARES
AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters Ended
 
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
Earning assets
 
 

 
 

 
 

 
 

 
 

Commercial real estate
 
4.57
%
 
4.48
%
 
4.41
%
 
4.30
%
 
4.28
%
Commercial and industrial
 
4.59

 
4.69

 
4.41

 
4.77

 
4.84

Residential
 
3.83

 
3.88

 
3.87

 
3.78

 
3.79

Consumer
 
4.85

 
4.65

 
4.47

 
4.17

 
4.34

Total loans
 
4.25

 
4.25

 
4.16

 
4.12

 
4.13

Securities and other
 
3.21

 
3.18

 
3.16

 
3.06

 
3.13

Total earning assets
 
4.00
%
 
3.99
%
 
3.92
%
 
3.87
%
 
3.89
%
 
 
 
 
 
 
 
 
 
 
 
Funding liabilities
 
 

 
 

 
 

 
 

 
 

NOW
 
0.43
%
 
0.37
%
 
0.34
%
 
0.31
%
 
0.32
%
Savings
 
0.17

 
0.17

 
0.18

 
0.19

 
0.18

Money market
 
0.76

 
0.79

 
0.68

 
0.58

 
0.52

Time deposits
 
1.78

 
1.51

 
1.39

 
1.19

 
1.13

Total interest bearing deposits
 
1.06

 
0.90

 
0.82

 
0.70

 
0.66

Borrowings
 
2.26

 
2.07

 
1.80

 
1.62

 
1.66

Total interest-bearing liabilities
 
1.38
%
 
1.25
%
 
1.11
%
 
0.97
%
 
0.96
%
 
 
 
 
 
 
 
 
 
 
 
Net interest spread
 
2.62

 
2.74

 
2.81

 
2.90

 
2.93

Net interest margin
 
2.81

 
2.91

 
2.97

 
3.04

 
3.06




G



BAR HARBOR BANKSHARES
AVERAGE BALANCES - UNAUDITED
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarters Ended
(in thousands)
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
Assets
 
 

 
 

 
 

 
 

 
 

Commercial real estate
 
$
837,058

 
$
824,356

 
$
819,531

 
$
783,730

 
$
764,770

Commercial and industrial
 
388,831

 
396,471

 
380,029

 
362,881

 
353,194

Residential
 
1,120,336

 
1,126,714

 
1,147,010

 
1,161,865

 
1,158,069

Consumer
 
117,735

 
119,570

 
121,467

 
125,109

 
126,138

Total loans (1)
 
2,463,960

 
2,467,111

 
2,468,037

 
2,433,585

 
2,402,171

Securities and other (2)
 
773,562

 
767,886

 
765,328

 
753,282

 
754,450

Total earning assets
 
3,237,522

 
3,234,997

 
3,233,365

 
3,186,867

 
3,156,621

Cash and due from banks
 
63,272

 
50,869

 
53,151

 
65,145

 
49,169

Allowance for loan losses
 
(13,463
)
 
(13,107
)
 
(12,589
)
 
(12,202
)
 
(11,786
)
Goodwill and other intangible assets
 
107,887

 
108,118

 
108,349

 
108,769

 
109,147

Other assets
 
137,466

 
131,522

 
129,525

 
144,359

 
149,394

Total assets
 
$
3,532,684

 
$
3,512,399

 
$
3,511,801

 
$
3,492,938

 
$
3,452,545

 
 
 
 
 
 
 
 
 
 
 
Liabilities and shareholders' equity
 
 

 
 

 
 

 
 

 
 

NOW
 
$
461,875

 
$
441,645

 
$
447,026

 
$
449,669

 
$
447,459

Savings
 
356,834

 
351,712

 
362,508

 
368,714

 
368,443

Money market
 
259,738

 
288,169

 
305,105

 
308,071

 
292,110

Time deposits
 
964,108

 
872,149

 
857,796

 
799,348

 
793,489

Total interest bearing deposits
 
2,042,555

 
1,953,675

 
1,972,435

 
1,925,802

 
1,901,501

Borrowings
 
744,632

 
836,295

 
819,576

 
803,469

 
812,938

Total interest-bearing liabilities
 
2,787,187

 
2,789,970

 
2,792,011

 
2,729,271

 
2,714,439

Non-interest-bearing demand deposits
 
357,856

 
339,374

 
339,349

 
376,066

 
354,470

Other liabilities
 
28,943

 
28,386

 
29,000

 
30,971

 
30,079

Total liabilities
 
3,173,986

 
3,157,730

 
3,160,360

 
3,136,308

 
3,098,988

 
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity
 
358,698

 
354,669

 
351,441

 
356,630

 
353,557

 
 
 
 
 
 
 
 
 
 
 
Total liabilities and shareholders' equity
 
$
3,532,684

 
$
3,512,399

 
$
3,511,801

 
$
3,492,938

 
$
3,452,545

_____________________________________
(1)
Total loans include non-accruing loans.
(2)
Average balances for securities available-for-sale are based on amortized cost.




H



BAR HARBOR BANKSHARES
ASSET QUALITY ANALYSIS - UNAUDITED
 
 
 
 
 
 
 
 
 
 
 
 
 
At or for the Quarters Ended
(in thousands)
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
NON-PERFORMING ASSETS
 
 

 
 

 
 

 
 

 
 

Non-accruing loans:
 
 

 
 

 
 

 
 

 
 

Commercial real estate
 
$
8,348

 
$
8,883

 
$
8,422

 
$
8,343

 
$
2,467

Commercial installment
 
2,303

 
2,411

 
2,304

 
1,209

 
236

Residential real estate
 
10,396

 
9,945

 
8,548

 
4,266

 
3,619

Consumer installment
 
727

 
707

 
1,065

 
500

 
496

Total non-accruing loans
 
21,774

 
21,946

 
20,339

 
14,318

 
6,818

Other real estate owned
 
68

 
129

 
216

 
122

 
122

Total non-performing assets
 
$
21,842

 
$
22,075

 
$
20,555

 
$
14,440

 
$
6,940

 
 
 
 
 
 
 
 
 
 
 
Total non-accruing loans/total loans
 
0.88
%
 
0.88
%
 
0.83
%
 
0.58
%
 
0.28
%
Total non-performing assets/total assets
 
0.61

 
0.62

 
0.59

 
0.41

 
0.20

 
 
 
 
 
 
 
 
 
 
 
PROVISION AND ALLOWANCE FOR LOAN LOSSES
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
 
$
13,090

 
$
12,679

 
$
12,325

 
$
11,950

 
$
11,442

Charged-off loans
 
(298
)
 
(517
)
 
(461
)
 
(277
)
 
(297
)
Recoveries on charged-off loans
 
52

 
158

 
20

 
55

 
145

Net loans charged-off
 
(246
)
 
(359
)
 
(441
)
 
(222
)
 
(152
)
Provision for loan losses
 
643

 
770

 
795

 
597

 
660

Balance at end of period
 
$
13,487

 
$
13,090

 
$
12,679

 
$
12,325

 
$
11,950

 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses/total loans
 
0.54
%
 
0.53
%
 
0.51
%
 
0.50
%
 
0.49
%
Allowance for loan losses/non-accruing loans
 
62

 
60

 
62

 
86

 
175

 
 
 
 
 
 
 
 
 
 
 
NET LOAN CHARGE-OFFS
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
$
(27
)
 
$
(92
)
 
$
(91
)
 
$
(92
)
 
$
(16
)
Commercial installment
 
(53
)
 
(54
)
 
(140
)
 
1

 
6

Residential real estate
 
(123
)
 
(64
)
 
1

 

 
(79
)
Consumer installment
 
(43
)
 
(149
)
 
(211
)
 
(131
)
 
(63
)
Total, net
 
$
(246
)
 
$
(359
)
 
$
(441
)
 
$
(222
)
 
$
(152
)
 
 
 
 
 
 
 
 
 
 
 
Net charge-offs (QTD annualized)/average loans
 
0.04
%
 
0.06
%
 
0.07
%
 
0.04
%
 
0.03
%
Net charge-offs (YTD annualized)/average loans
 
0.06

 
0.06

 
0.07

 
0.04

 
0.04

 
 
 
 
 
 
 
 
 
 
 
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS
 
 
 
 
 
 
 
 
 
 
30-89 Days delinquent
 
0.17
%
 
0.14
%
 
0.24
%
 
0.37
%
 
0.35
%
90+ Days delinquent and still accruing
 

 

 

 
0.02

 
0.01

Total accruing delinquent loans
 
0.17

 
0.14

 
0.24

 
0.39

 
0.36

Non-accruing loans
 
0.88

 
0.88

 
0.83

 
0.58

 
0.28

Total delinquent and non-accruing loans
 
1.05
%
 
1.02
%
 
1.07
%
 
0.97
%
 
0.64
%


I



BAR HARBOR BANKSHARES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED
 
 
 
At or for the Quarters Ended
(in thousands)
 
 
Sep 30,
2018
 
Jun 30,
2018
 
Mar 31,
2018
 
Dec 31,
2017
 
Sep 30,
2017
Net income
 
 
$
8,970

 
$
8,535

 
$
7,812

 
$
6,609

 
$
8,617

Adj: Security Gains
 
 

 

 

 

 
(19
)
Adj: Gain on sale of fixed assets, net
 
 

 

 

 

 
(1
)
Adj: Loss on other real estate owned
 
 
(8
)
 
23

 

 

 

Adj: Acquisition, conversion and other expenses
 
 
70

 
214

 
335

 
(2,615
)
 
346

Adj: Income taxes (1)
 
 
(12
)
 
(57
)
 
(81
)
 
982

 
(122
)
Adj: Tax reform charge
 
 

 

 

 
3,988

 

Total core income (2)
(A)
 
$
9,020

 
$
8,715

 
$
8,066

 
$
8,964

 
$
8,821

 
 
 
 
 
 
 
 
 
 
 
 
Net-interest income
(B)
 
$
22,469

 
$
22,992

 
$
23,158

 
$
23,496

 
$
23,478

Plus: Non-interest income
 
 
7,126

 
7,121

 
6,238

 
6,518

 
6,960

Total Revenue
 
 
29,595

 
30,113

 
29,396

 
30,014

 
30,438

Adj: Net security gains
 
 

 

 

 

 
(19
)
Total core revenue (2)
(C)
 
$
29,595

 
$
30,113

 
$
29,396

 
$
30,014

 
$
30,419

 
 
 
 
 
 
 
 
 
 
 
 
Total non-interest expense
 
 
17,906

 
18,685

 
18,852

 
14,263

 
17,586

Less: Gain on sale of fixed assets, net
 
 

 

 

 

 
1

Less: Loss on other real estate owned
 
 
8

 
(23
)
 

 

 

Less: Acquisition, conversion and other expenses
 
 
(70
)
 
(214
)
 
(335
)
 
2,615

 
(346
)
Core non-interest expense (2)                                    
(D)
 
$
17,844

 
$
18,448

 
$
18,517

 
$
16,878

 
$
17,241

 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 

 
 

 
 

 
 

 
 

Total average earning assets
(E)
 
$
3,238

 
$
3,235

 
$
3,233

 
$
3,187

 
$
3,157

Total average assets                                                
(F)
 
3,533

 
3,512

 
3,512

 
3,493

 
3,453

Total average shareholders' equity                         
(G)
 
359

 
355

 
351

 
357

 
354

Total average tangible shareholders' equity (2) (3)
(H)
 
251

 
247

 
243

 
248

 
244

Total tangible shareholders' equity, period-end (2) (3)
(I)
 
250

 
248

 
244

 
246

 
244

Total tangible assets, period-end (2) (3)
(J)
 
3,453

 
3,433

 
3,403

 
3,457

 
3,367

 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
Total common shares outstanding, period-end
(K)
 
15,509

 
15,496

 
15,459

 
15,443

 
15,432

Average diluted shares outstanding
(L)
 
15,580

 
15,571

 
15,553

 
15,537

 
15,511

 
 
 
 
 
 
 
 
 
 
 
 
Core earnings per share, diluted (2)
(A/L)
 
$
0.58

 
$
0.56

 
$
0.52

 
$
0.58

 
$
0.57

Tangible book value per share, period-end (2)
(I/K)
 
16.11

 
16.00

 
15.78

 
15.94

 
15.84

Securities adjustment, net of tax (1)(4)
(M)
 
(17,152
)
 
(12,594
)
 
(10,237
)
 
1,711

 
(1,155
)
Tangible book value per share, excluding securities adjustment(2)
(I+M)/K
 
17.22

 
16.81

 
16.44

 
15.83

 
15.91

Total tangible shareholders' equity/total tangible assets (2)
(I/J)
 
7.24

 
7.22

 
7.17

 
7.12

 
7.26

 
 
 
 
 
 
 
 
 
 
 
 

J



Performance ratios
 
 
 

 
 

 
 

 
 

 
 

GAAP return on assets
 
 
1.01
%
 
0.97
%
 
0.90
%
 
0.75
%
 
0.99
%
Core return on assets (2)
(A/F)
 
1.01

 
1.00

 
0.93

 
1.02

 
1.01

GAAP return on equity 
 
 
9.92

 
9.65

 
9.01

 
7.35

 
9.67

Core return on equity (2)
(A/G)
 
9.98

 
9.86

 
9.31

 
9.97

 
9.90

Core return on tangible equity (2) (5)
(A/I)
 
14.52

 
14.43

 
13.72

 
14.56

 
14.53

Efficiency ratio (2) (6)
(D-O-Q)/(C+N)
 
57.88

 
58.83

 
60.44

 
53.02

 
53.53

Net interest margin
(B+P)/E
 
2.81

 
2.91

 
2.97

 
3.04

 
3.06

Supplementary data (in thousands)
 
 
 
 
 
 
 
 
 
 
 
Taxable equivalent adjustment for efficiency ratio
(N)
 
$
654

 
$
622

 
$
645

 
$
1,122

 
$
1,107

Franchise taxes included in non-interest expense
(O)
 
129

 
159

 
152

 
161

 
154

Tax equivalent adjustment for net interest margin
(P)
 
493

 
502

 
503

 
897

 
878

Intangible amortization
(Q)
 
207

 
207

 
207

 
209

 
212

_____________________________________
(1)
Assumes a marginal tax rate of 23.78% in third quarter 2018 net of adjustment for first and second quarter 2018, which was recorded at a marginal rate of 24.15%.  A marginal tax rate of 37.57% was used 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)
Adjusted 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 quarter 2018, 24.15% in first and second quarter 2018 and 37.57% in 2017, by tangible equity.    
(6)
Efficiency ratio is computed by dividing total core tangible non-interest expense by the sum of total net interest income on a fully taxable equivalent basis and total core non-interest income.  The Company uses this non-GAAP measure to provide important information about its operating efficiency.




K