Bar Harbor Bankshares Reports Fourth Quarter 2023 Results

Press Releases

BAR HARBOR, ME / ACCESSWIRE / January 23, 2024 / Bar Harbor Bankshares (NYSE American:BHB) (the "Company") reported fourth quarter 2023 net income of $9.9 million or $0.65 per diluted share compared to $12.5 million or $0.83 per diluted share in the same quarter of 2022. Core net income (Non-GAAP) in the fourth quarter 2023 was $10.4 million or $0.68 per diluted share compared to $12.5 million or $0.83 per diluted share in the same quarter of 2022. For the full year of 2023, net income was $44.9 million or $2.95 per diluted share compared to $43.6 million and $2.88 per diluted share for 2022.

FOURTH QUARTER 2023 HIGHLIGHTS (all comparisons to the fourth quarter 2022)

• Return on assets of 1.00% compared to 1.30%
• Commercial loan growth of 2% annualized compared to 11%
• Net interest margin of 3.17% compared to 3.76%
• Non-performing loans to total loans ratio of 0.18% compared to 0.23%

Bar Harbor Bankshares’ President and Chief Executive Officer, Curtis C. Simard, stated, "We are pleased to announce our financial results for the fourth quarter. Net interest margin ("NIM") throughout 2023 was marked by earning asset yield expansion across all asset classes and higher funding costs. While NIM pressure remains, we have seen the margin stabilize during the second half of the year. Our deposit beta for this rate cycle is 31%, which is well below many of our peers. As we continue to actively manage our balance sheet towards a more neutral interest rate sensitive position in anticipation of a potentially declining rate environment, we are focused on relationship-based lending funded by core customer deposits, while adhering to our disciplined credit culture. Our credit metrics remain strong, as our net charge-off ratio came in at seven basis points for the quarter. We added another $687 thousand in provision and held our allowance for credit losses to total loans ratio flat at 0.94% to account for broader economic trends. With the start of 2024, we look forward to meeting challenges ahead as we continue to execute on strategic objectives that provide for responsible growth. As previously announced, the Company’s Board reaffirmed our quarterly cash dividend of $0.28 per share of common stock, which is flat to the previous quarter."

FINANCIAL CONDITION (December 31, 2023 compared to September 30, 2023)

Total assets were $4.0 billion at the end of both the fourth and third quarters of 2023, primarily due to relatively flat loan growth and higher security balances as unrealized losses increased on higher market rates during the quarter.

Total loans were $3.0 billion at the end of both the fourth and third quarters 2023. Commercial loans increased $12.0 million during the fourth quarter 2023, comprised of an $8.8 million increase in commercial and industrial, and an increase of $3.2 million in commercial real estate. Despite an uncertain rate environment, the fundamentals remain solid for the industrial, retail, and multifamily sectors driving performance that aligns with our continued strategy to grow our commercial portfolios. Residential loans decreased by $6.9 million compared to the third quarter 2023, primarily due to continued lower demand for prevailing mortgage rates and sales into the secondary market. Consumer loans increased by $1.8 million primarily due to higher home equity fixed and adjustable lines.

Securities available for sale increased to $534.6 million at the end of the fourth quarter 2023, from $509.5 million in the third quarter 2023 principally due to lower unrealized losses on the portfolio. Unrealized losses on securities totaled $62.4 million at the end of the fourth quarter 2023 versus $86.5 million at the end of the third quarter 2023 reflecting continued decreases in market rates. Proceeds received from amortization and prepayments were used to reinvest in the portfolio and pay down borrowings. The book yield from securities was 3.85% at December 31, 2023 and 3.87% at September 30, 2023 which included the impact of the repricing of variable rate securities, acceleration of discounts due to prepayments, and a run-off of lower coupon fixed-rate securities, which was fairly consistent in both periods.

The allowance for credit losses remained relatively flat at $28.1 million at the end of the fourth quarter 2023 compared to $28.0 million at the end of the third quarter 2023. Our allowance for credit losses continues to be driven by a combination of portfolio loan growth, nominal credit movement and general macroeconomic trends that reflect the economic stability of our Northern New England footprint. Non-accruing loans decreased during the fourth quarter 2023 to $5.5 million from $6.8 million in the third quarter 2023. The decline in non-accruing loans was mainly due to the settlement of one commercial loan in the fourth quarter 2023 that was fully reserved in the third quarter 2023.

Total deposits and the loan to deposit ratio remained at $3.1 billion and 95%, respectively as of December 31, 2023. The $48.7 million decrease in demand deposits in the fourth quarter 2023 was mainly driven by seasonality, tax payment timing, and migration to brokerage accounts and higher yielding certificates of deposit ("CDs"). Negotiable order of withdrawal ("NOW") and money market deposits increased by $25.9 million primarily due to higher business, Insured Cash Sweep, or ICS, reciprocal and trust accounts. Time deposits increased by $41.8 million primarily due to the migration of existing customers into higher yielding CDs. Brokered CDs increased by $17.7 million, and senior borrowings were paid down $36.0 million in the fourth quarter 2023.

The Company’s book value per share was $28.48 as of December 31, 2023 compared to $26.67 as of September 30, 2023. Unrealized losses on securities, net of taxes, reduced book value per share by $3.14 and $4.39 at the end of those respective periods. Tangible book value per share (non-GAAP measure) was $20.28 at the end of the fourth quarter 2023, compared to $18.45 at the end of the third quarter 2023.

RESULTS OF OPERATIONS (December 31, 2023 to December 31, 2022 quarterly comparison)

Net interest margin was 3.17% compared to 3.76% in the fourth quarter 2022. The decrease was primarily driven by a higher cost of funds. The yield on loans expanded to 5.24% in the fourth quarter 2023, up from 4.56% in the same quarter of 2022. Costs of interest-bearing liabilities increased to 2.37% from 0.78% in the fourth quarter 2022 showing full realization of several 2023 rate hikes. We continue to experience a shift in deposit composition from non-maturity deposits to CDs, and we had a heavier reliance on wholesale borrowings in the fourth quarter 2023 as compared with the same quarter of 2022.

Non-interest income was $8.9 million in the fourth quarter 2023 compared to $8.2 million in the same quarter 2022. Customer service fees grew 3% to $3.8 million during the fourth quarter 2023 from $3.7 million in the same quarter of 2022 on a higher number of transactional accounts. Wealth management income was $3.4 million in both periods. Assets under management increased $143 million to $2.5 billion from $2.3 billion in the fourth quarter 2022 primarily due to higher security valuations in the fourth quarter 2023. Mortgage banking income was $515 thousand in the fourth quarter 2023, compared to $153 thousand in the fourth quarter 2022 primarily due to higher sales in the secondary market.

The provision for credit losses was $687 thousand in both the fourth quarters of 2023 and 2022 and was largely a function of loan growth, limited credit movement and macro trends.

Non-interest expense was $24.4 million in the fourth quarter 2023 compared to $24.6 million in the fourth quarter 2022. Salary and benefit expense increased $611 thousand from the comparative quarter on higher stock compensation and post-retirement expense due to changes in the Company’s stock price and discount rates, respectively, in the fourth quarter 2023. Non-core expenses associated with the opening of a new service totaled $544 thousand in the fourth quarter 2023, which raised our efficiency ratio by 1.47%. A steady commercial loan pipeline during 2023 kept the provision for unfunded commitment expense at zero compared to a volume increase that drove the $1.4 million of expense in the fourth quarter of 2022.

The effective tax rate was 21% in the fourth quarter of 2023 and 2022. Non-recurring items for return to provision adjustments associated with tax credit investments increased the effective rate by 0.55% in the fourth quarter 2023 and 0.86% in the same quarter of 2022.

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 135 years. Bar Harbor Bank & Trust 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.barharbor.bank.

FORWARD-LOOKING STATEMENTS

All statements, other than statements of historical fact, included in this release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believe," "anticipate," "expect," "may," "will," "assume," "should," "predict," "could," "would," "intend," "targets," "estimates," "projects," "plans," and "potential," and other similar words and expressions of the future, are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking, including statements relating to Company’s balance sheet management, our credit trends, our overall credit performance, and the Company’s strategic plans, objectives, and intentions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the Company to differ materially from any results, performance, or achievements expressed or implied by such forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (1) deterioration in the financial performance and/or condition of borrowers of Bar Harbor Bank & Trust (the "Bank"), including as a result of the negative impact of inflationary pressures on our customers and their businesses resulting in significant increases in credit losses and provisions for those losses; (2) the possibility that our asset quality could decline or that we experience greater loan losses than anticipated; (3) increased levels of other real estate owned, primarily as a result of foreclosures; (4) the impact of liquidity needs on our results of operations and financial condition; (5) competition from financial institutions and other financial service providers; (6) the effect of interest rate increases on the cost of deposits; (7) unanticipated weakness in loan demand or loan pricing; (8) adverse conditions in the national or local economies including in our markets throughout Northern New England; (9) changes in consumer spending, borrowing and saving habits; (10) the emergence and effects related to a future pandemic, epidemic or outbreak of an infectious disease, including actions taken by governmental officials to curb the spread of such an infectious disease, and the resulting impact on general economic and financial market conditions and on the Company’s and our customers’ business, results of operations, asset quality and financial condition; (11) the effects of civil unrest, international hostilities or other geopolitical events, including the war in Ukraine and recent hostilities in the Middle East; (12) inflation, interest rate, market, and monetary fluctuations; (13) lack of strategic growth opportunities or our failure to execute on available opportunities; (14) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits; (15) our ability to effectively manage problem credits; (16) our ability to successfully implement efficiency initiatives on time and with the results projected; (17) our ability to successfully develop and market new products and technology; (18) the impact of negative developments in the financial industry and United States and global capital and credit markets; (19) our ability to retain executive officers and key employees and their customer and community relationships; (20) our ability to adapt to technological changes; (21) risks associated with litigation, including reputational and financial risks and the applicability of insurance coverage; (22) our ability to implement new technology effectively; (23) the vulnerability of the Bank’s computer and information technology systems and networks, and the systems and networks of third parties with whom the Company or the Bank contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches and interruptions; (24) changes in the reliability of our vendors, internal control systems or information systems; (25) ongoing competition in the labor markets and increased employee turnover; (26) the potential impact of climate change; (27) the impact of pandemics, epidemics or any other health-related crisis; (28) our ability to comply with various governmental and regulatory requirements applicable to financial institutions; (29) changes in state and federal laws, rules, regulations, or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments; (30) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; (31) adverse impacts (including costs, fines, reputational harm, or other negative effects) from current or future litigation, regulatory examinations, or other legal and/or regulatory actions; and (32) general competitive, economic, political, and market conditions, including economic conditions in the local markets where we operate. Additional factors which could affect the forward-looking statements can be found in the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K filed with the Securities and Exchange Commission (the "SEC") and available on the SEC’s website at http://www.sec.gov. The Company believes the forward-looking statements contained herein are reasonable; however, many of such risks, uncertainties, and other factors are beyond the Company’s ability to control or predict and undue reliance should not be placed on any forward-looking statements, which are based on current expectations and speak only as of the date that they are made. Therefore, the Company can give no assurance that its future results will be as estimated. The Company does not intend to, and disclaims any obligation to, update or revise any forward-looking statement.

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. Because non-GAAP financial measures presented in this document are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies. 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 gains/losses on securities, premises, equipment and other real estate owned, 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.

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CONTACTS

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

TABLE
INDEX CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED)
A Selected Financial Highlights
B Balance Sheets
C Loan and Deposit Analysis
D Statements of Income
E Statements of Income (Five Quarter Trend)
F Average Yields and Costs
G Average Balances
H Asset Quality Analysis
I -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, Sep 30, Jun 30, Mar 31, Dec 31,
2023 2023 2023 2023 2022
PER SHARE DATA
Net earnings, diluted
$ 0.65 $ 0.73 $ 0.71 $ 0.86 $ 0.83
Core earnings, diluted (1)
0.68 0.73 0.71 0.86 0.83
Total book value
28.48 26.67 27.12 27.00 26.09
Tangible book value (1)
20.28 18.45 18.88 18.74 17.78
Market price at period end
29.36 23.63 24.64 26.45 32.04
Dividends
0.28 0.28 0.28 0.26 0.26
PERFORMANCE RATIOS (2)
Return on assets
1.00 % 1.11 % 1.10 % 1.36 % 1.30 %
Core return on assets (1)
1.04 1.11 1.09 1.36 1.30
Pre-tax, pre-provision return on assets
1.34 1.49 1.47 1.81 1.72
Core pre-tax, pre-provision return on assets (1)
1.39 1.49 1.46 1.81 1.72
Return on equity
9.43 10.72 10.49 12.96 12.73
Core return on equity (1)
9.82 10.72 10.42 12.94 12.72
Return on tangible equity
13.65 15.65 15.28 18.97 19.03
Core return on tangible equity (1)
14.21 15.65 15.19 18.94 19.02
Net interest margin, fully taxable equivalent (1) (3)
3.17 3.18 3.22 3.54 3.76
Efficiency ratio (1)
61.38 58.59 60.25 54.72 58.19
FINANCIAL DATA (In millions)
Total assets
$ 3,971 $ 3,984 $ 4,029 $ 3,928 $ 3,910
Total earning assets (4)
3,664 3,687 3,716 3,628 3,601
Total investments
547 524 556 573 574
Total loans
2,999 2,993 3,007 2,944 2,903
Allowance for credit losses
28 28 27 27 26
Total goodwill and intangible assets
124 125 125 125 125
Total deposits
3,141 3,140 3,090 3,054 3,043
Total shareholders’ equity
432 404 411 408 393
Net income
10 11 11 13 13
Core earnings (1)
10 11 11 13 13
ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (recoveries) (5) /average loans
0.07 % % % 0.01 % (0.02 )%
Allowance for credit losses/total loans
0.94 0.94 0.91 0.90 0.89
Loans/deposits
95 95 97 96 95
Shareholders’ equity to total assets
10.88 10.15 10.20 10.40 10.06
Tangible shareholders’ equity to tangible assets
8.00 7.25 7.32 7.45 7.09
  1. Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in tables I-J for additional information.
  2. All performance ratios are based on average balance sheet amounts, where applicable.
  3. Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans.
  4. Earning assets includes non-accruing loans and interest-bearing deposits with other banks. Securities are valued at amortized cost.
  5. Current quarter annualized.

BAR HARBOR BANKSHARES
CONSOLIDATED BALANCE SHEETS – UNAUDITED

Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(in thousands)
2023 2023 2023 2023 2022
Assets
Cash and due from banks
$ 42,221 $ 41,210 $ 46,532 $ 37,769 $ 39,933
Interest-earning deposits with other banks
52,621 81,606 77,253 44,933 52,362
Total cash and cash equivalents
94,842 122,816 123,785 82,702 92,295
Securities available for sale
534,574 509,453 538,178 557,040 559,516
Federal Home Loan Bank stock
12,788 14,834 17,784 15,718 14,893
Total securities
547,362 524,287 555,962 572,758 574,409
Loans held for sale
2,189 2,016 3,669 463
Total loans
2,999,049 2,992,791 3,007,480 2,944,005 2,902,690
Less: Allowance for credit losses
(28,142 ) (28,011 ) (27,362 ) (26,607 ) (25,860 )
Net loans
2,970,907 2,964,780 2,980,118 2,917,398 2,876,830
Premises and equipment, net
48,287 47,790 47,412 47,549 47,622
Other real estate owned
Goodwill
119,477 119,477 119,477 119,477 119,477
Other intangible assets
4,869 5,102 5,335 5,568 5,801
Cash surrender value of bank-owned life insurance
80,037 79,469 78,967 78,436 81,197
Deferred tax asset, net
22,979 28,328 24,181 22,858 24,443
Other assets
79,936 89,876 89,641 81,269 87,729
Total assets
$ 3,970,885 $ 3,983,941 $ 4,028,547 $ 3,928,478 $ 3,909,803
Liabilities and shareholders’ equity
Demand and other non-interest bearing deposits
$ 569,714 $ 618,421 $ 602,667 $ 636,710 $ 676,350
NOW deposits
946,978 929,481 911,488 908,483 900,730
Savings deposits
553,963 572,271 588,769 628,798 664,514
Money market deposits
370,242 361,839 351,762 475,577 478,398
Time deposits
700,260 658,482 635,559 404,246 323,439
Total deposits
3,141,157 3,140,494 3,090,245 3,053,814 3,043,431
Senior borrowings
271,044 307,070 398,972 338,244 333,957
Subordinated borrowings
60,461 60,422 60,371 60,330 60,289
Total borrowings
331,505 367,492 459,343 398,574 394,246
Other liabilities
66,164 71,747 68,243 67,680 78,676
Total liabilities
3,538,826 3,579,733 3,617,831 3,520,068 3,516,353
Total shareholders’ equity
432,059 404,208 410,716 408,410 393,450
Total liabilities and shareholders’ equity
$ 3,970,885 $ 3,983,941 $ 4,028,547 $ 3,928,478 $ 3,909,803
Net shares outstanding
15,172 15,156 15,144 15,124 15,083

BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS – UNAUDITED
LOAN ANALYSIS

Annualized
Growth %
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Quarter Year
(in thousands)
2023 2023 2023 2023 2022 to Date to Date
Commercial real estate
$ 1,552,061 $ 1,548,835 $ 1,551,748 $ 1,519,219 $ 1,495,452 1 % 4 %
Commercial and industrial
400,169 391,347 388,430 364,315 352,735 9 13
Total commercial loans
1,952,230 1,940,182 1,940,178 1,883,534 1,848,187 2 6
Residential real estate
889,904 896,757 907,741 906,059 898,192 (3 ) (1 )
Consumer
97,001 95,160 96,947 98,616 100,855 8 (4 )
Tax exempt and other
59,914 60,692 62,614 55,796 55,456 (5 ) 8
Total loans
$ 2,999,049 $ 2,992,791 $ 3,007,480 $ 2,944,005 $ 2,902,690 1 % 3 %

DEPOSIT ANALYSIS

Annualized
Growth %
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Quarter Year
(in thousands)
2023 2023 2023 2023 2022 to Date to Date
Demand
$ 569,714 $ 618,421 $ 602,667 $ 636,710 $ 676,350 (32 )% (16 )%
NOW
946,978 929,481 911,488 908,483 900,730 8 5
Savings
553,963 572,271 588,769 628,798 664,514 (13 ) (17 )
Money market
370,242 361,839 351,762 475,577 478,398 9 (23 )
Total non-maturity deposits
2,440,897 2,482,012 2,454,686 2,649,568 2,719,992 (7 ) (10 )
Total time deposits
700,260 658,482 635,559 404,246 323,439 25 *
Total deposits
$ 3,141,157 $ 3,140,494 $ 3,090,245 $ 3,053,814 $ 3,043,431 % 3 %

*Indicates ratio greater than 100%

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED

Three Months Ended Year Ended
December 31, December 31,
(in thousands, except per share data)
2023 2022 2023 2022
Interest and dividend income
Loans
$ 39,531 $ 32,605 $ 149,420 $ 107,797
Securities and other
6,284 5,551 24,762 18,729
Total interest and dividend income
45,815 38,156 174,182 126,526
Interest expense
Deposits
12,962 3,159 38,232 7,344
Borrowings
4,060 2,043 18,275 5,501
Total interest expense
17,022 5,202 56,507 12,845
Net interest income
28,793 32,954 117,675 113,681
Provision for credit losses
687 687 2,908 2,904
Net interest income after provision for credit losses
28,106 32,267 114,767 110,777
Non-interest income
Trust and investment management fee income
3,401 3,442 14,283 14,573
Customer service fees
3,791 3,683 15,168 14,791
Gain on sales of securities, net
34 53
Mortgage banking income
515 153 1,587 1,580
Bank-owned life insurance income
533 499 2,699 2,000
Customer derivative income
151 97 409 310
Other income
459 354 1,649 2,014
Total non-interest income
8,850 8,228 35,829 35,321
Non-interest expense
Salaries and employee benefits
13,511 12,900 52,516 48,657
Occupancy and equipment
4,309 4,321 17,584 17,575
Loss on sales of premises and equipment, net
281 75 182 10
Outside services
515 435 1,671 1,578
Professional services
369 490 1,586 1,612
Communication
190 263 697 880
Marketing
485 411 1,696 1,561
Amortization of intangible assets
233 233 932 932
Acquisition, conversion and other expenses
263 (90 ) 283 266
Provision for unfunded commitments
1,413 (85 ) 1,758
Other expenses
4,211 4,184 16,417 16,424
Total non-interest expense
24,367 24,635 93,479 91,253
Income before income taxes
12,589 15,860 57,117 54,845
Income tax expense
2,644 3,348 12,265 11,288
Net income
$ 9,945 $ 12,512 $ 44,852 $ 43,557
Earnings per share:
Basic
$ 0.66 $ 0.83 $ 2.96 $ 2.90
Diluted
0.65 0.83 2.95 2.88
Weighted average shares outstanding:
Basic
15,164 15,073 15,142 15,040
Diluted
15,221 15,147 15,195 15,112

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) – UNAUDITED

Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(in thousands, except per share data)
2023 2023 2023 2023 2022
Interest and dividend income
Loans
$ 39,531 $ 38,412 $ 36,917 $ 34,560 $ 32,605
Securities and other
6,284 6,723 5,964 5,791 5,551
Total interest and dividend income
45,815 45,135 42,881 40,351 38,156
Interest expense
Deposits
12,962 11,415 8,590 5,265 3,159
Borrowings
4,060 4,534 5,501 4,180 2,043
Total interest expense
17,022 15,949 14,091 9,445 5,202
Net interest income
28,793 29,186 28,790 30,906 32,954
Provision for credit losses
687 673 750 798 687
Net interest income after provision for credit losses
28,106 28,513 28,040 30,108 32,267
Non-interest income
Trust and investment management fee income
3,401 3,522 3,805 3,555 3,442
Customer service fees
3,791 3,926 3,774 3,677 3,683
Gain on sales of securities, net
34
Mortgage banking income
515 415 378 279 153
Bank-owned life insurance income
533 515 503 1,148 499
Customer derivative income
151 43 83 132 97
Other income
459 394 437 359 354
Total non-interest income
8,850 8,815 8,980 9,184 8,228
Non-interest expense
Salaries and employee benefits
13,511 13,011 13,223 12,771 12,900
Occupancy and equipment
4,309 4,469 4,392 4,414 4,321
Loss (gain) on sales of premises and equipment, net
281 (86 ) (13 ) 75
Outside services
515 376 424 356 435
Professional services
369 436 355 426 490
Communication
190 170 175 162 263
Marketing
485 326 476 409 411
Amortization of intangible assets
233 233 233 233 233
Acquisition, conversion and other expenses
263 20 (90 )
Provision for unfunded commitments
45 45 (175 ) 1,413
Other expenses
4,211 3,950 4,155 4,101 4,184
Total non-interest expense
24,367 23,016 23,392 22,704 24,635
Income before income taxes
12,589 14,312 13,628 16,588 15,860
Income tax expense
2,644 3,208 2,837 3,576 3,348
Net income
$ 9,945 $ 11,104 $ 10,791 $ 13,012 $ 12,512
Earnings per share:
Basic
$ 0.66 $ 0.73 $ 0.71 $ 0.86 $ 0.83
Diluted
0.65 0.73 0.71 0.86 0.83
Weighted average shares outstanding:
Basic
15,164 15,155 15,139 15,110 15,073
Diluted
15,221 15,196 15,180 15,190 15,147

BAR HARBOR BANKSHARES
AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent (Non-GAAP) – Annualized) – UNAUDITED

Quarters Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2023 2023 2023 2023 2022
Earning assets
Interest-earning deposits with other banks
6.42 % 5.02 % 5.59 % 4.28 % 4.00 %
Securities available for sale and FHLB stock
3.85 3.87 3.71 3.66 3.40
Loans:
Commercial real estate
5.46 5.34 5.21 5.08 4.81
Commercial and industrial
6.66 6.56 6.42 5.89 5.43
Residential real estate
3.94 3.84 3.76 3.71 3.63
Consumer
7.14 6.88 6.67 6.37 5.79
Total loans
5.24 5.11 4.99 4.82 4.56
Total earning assets
5.02 % 4.90 % 4.77 % 4.61 % 4.35 %
Funding liabilities
Deposits:
NOW
1.33 % 1.11 % 0.94 % 0.51 % 0.22 %
Savings
0.48 0.42 0.37 0.30 0.16
Money market
2.80 2.55 2.52 2.14 1.42
Time deposits
3.93 3.65 2.82 1.34 0.69
Total interest-bearing deposits
2.05 1.81 1.45 0.91 0.52
Borrowings
4.64 4.59 4.73 4.25 3.23
Total interest-bearing liabilities
2.37 % 2.19 % 1.99 % 1.39 % 0.78 %
Net interest spread
2.65 2.71 2.78 3.22 3.57
Net interest margin, fully taxable equivalent (1)
3.17 3.18 3.22 3.54 3.76
  1. Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in tables I-J for additional information.

BAR HARBOR BANKSHARES
AVERAGE BALANCES – UNAUDITED

Quarters Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(in thousands)
2023 2023 2023 2023 2022
Assets
Interest-earning deposits with other banks (1)
$ 36,794 $ 70,499 $ 21,440 $ 19,819 $ 26,360
Securities available for sale and FHLB stock (2)
608,793 620,851 636,088 643,523 641,787
Loans:
Commercial real estate
1,554,961 1,550,188 1,536,035 1,505,681 1,447,384
Commercial and industrial
457,642 439,915 434,384 413,921 403,304
Residential real estate
898,147 909,296 911,788 902,348 897,637
Consumer
95,193 96,362 97,518 100,124 100,182
Total loans (3)
3,005,943 2,995,761 2,979,725 2,922,074 2,848,507
Total earning assets
3,651,530 3,687,111 3,637,253 3,585,416 3,516,654
Cash and due from banks
34,741 36,713 32,067 31,556 36,891
Allowance for credit losses
(28,057 ) (27,473 ) (26,932 ) (25,971 ) (25,497 )
Goodwill and other intangible assets
124,459 124,926 124,926 125,158 125,391
Other assets
157,159 162,801 163,388 168,773 164,749
Total assets
$ 3,939,832 $ 3,984,078 $ 3,930,702 $ 3,884,932 $ 3,818,188
Liabilities and shareholders’ equity
Deposits:
NOW
$ 916,314 $ 915,072 $ 885,091 $ 883,134 $ 899,388
Savings
552,932 579,090 602,724 646,291 664,016
Money market
365,142 358,742 423,013 481,951 501,564
Time deposits
670,628 645,285 468,188 342,994 334,297
Total interest-bearing deposits
2,505,016 2,498,189 2,379,016 2,354,370 2,399,265
Borrowings
347,459 391,976 466,402 398,837 251,263
Total interest-bearing liabilities
2,852,475 2,890,165 2,845,418 2,753,207 2,650,528
Non-interest-bearing demand deposits
604,638 610,644 608,180 651,885 703,471
Other liabilities
64,092 72,409 64,346 72,693 74,276
Total liabilities
3,521,205 3,573,218 3,517,944 3,477,785 3,428,275
Total shareholders’ equity
418,627 410,860 412,758 407,147 389,913
Total liabilities and shareholders’ equity
$ 3,939,832 $ 3,984,078 $ 3,930,702 $ 3,884,932 $ 3,818,188
  1. Total average interest-bearing deposits with other banks is net of Federal Reserve daily cash letter.
  2. Average balances for securities available-for-sale are based on amortized cost.
  3. Total average loans include non-accruing loans and loans held for sale.

BAR HARBOR BANKSHARES
ASSET QUALITY ANALYSIS – UNAUDITED

At or for the Quarters Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(in thousands)
2023 2023 2023 2023 2022
NON-PERFORMING ASSETS
Non-accruing loans:
Commercial real estate
$ 610 $ 867 $ 909 $ 1,163 $ 1,222
Commercial and industrial
363 1,595 1,814 1,917 264
Residential real estate
3,742 3,673 3,415 3,830 4,151
Consumer
813 635 565 886 911
Total non-accruing loans
5,528 6,770 6,703 7,796 6,548
Other real estate owned
Total non-performing assets
$ 5,528 $ 6,770 $ 6,703 $ 7,796 $ 6,548
Total non-accruing loans/total loans
0.18 % 0.23 % 0.22 % 0.26 % 0.23 %
Total non-performing assets/total assets
0.14 0.17 0.17 0.20 0.17
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
Balance at beginning of period
$ 28,011 $ 27,362 $ 26,607 $ 25,860 $ 25,018
Charged-off loans
(632 ) (74 ) (199 ) (68 ) (136 )
Recoveries on charged-off loans
76 50 204 17 291
Net loans (charged-off) recovered
(556 ) (24 ) 5 (51 ) 155
Provision for credit losses
687 673 750 798 687
Balance at end of period
$ 28,142 $ 28,011 $ 27,362 $ 26,607 $ 25,860
Allowance for credit losses/total loans
0.94 % 0.94 % 0.91 % 0.90 % 0.89 %
Allowance for credit losses/non-accruing loans
509 414 408 341 395
NET LOAN (CHARGE-OFFS) RECOVERIES
Commercial real estate
$ $ $ (72 ) $ 3 $
Commercial and industrial
(479 ) 34 139 2 285
Residential real estate
3 13 3 4 (56 )
Consumer
(80 ) (71 ) (65 ) (60 ) (74 )
Total, net
$ (556 ) $ (24 ) $ 5 $ (51 ) $ 155
Net (recoveries) charge-offs (QTD annualized)/average loans
0.07 % % % 0.01 % (0.02 )%
Net (recoveries) charge-offs (YTD annualized)/average loans
0.02 0.01 0.01 (0.01 )
DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS
30-89 Days delinquent
0.11 % 0.13 % 0.09 % 0.26 % 0.08 %
90+ Days delinquent and still accruing
0.01 0.03 0.02 0.01
Total accruing delinquent loans
0.12 0.16 0.11 0.26 0.09
Non-accruing loans
0.18 0.23 0.22 0.26 0.23
Total delinquent and non-accruing loans
0.30 % 0.39 % 0.33 % 0.52 % 0.32 %

BAR HARBOR BANKSHARES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA – UNAUDITED

At or for the Quarters Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(in thousands)
2023 2023 2023 2023 2022
Net income
$ 9,945 $ 11,104 $ 10,791 $ 13,012 $ 12,512
Non-core items:
Gain on sale of securities, net
(34 )
Loss (gain) loss on sale of premises and equipment, net
281 (86 ) (13 ) 75
Acquisition, conversion and other expenses
263 20 (90 )
Income tax expense (1)
(131 ) 20 6 4
Total non-core items
413 (66 ) (21 ) (11 )
Core earnings (2)
(A)
$ 10,358 $ 11,104 $ 10,725 $ 12,991 $ 12,501
Net interest income
(B)
$ 28,793 $ 29,186 $ 28,790 $ 30,906 $ 32,954
Non-interest income
8,850 8,815 8,980 9,184 8,228
Total revenue
37,643 38,001 37,770 40,090 41,182
Gain on sale of securities, net
(34 )
Total core revenue (2)
(C)
$ 37,643 $ 38,001 $ 37,770 $ 40,056 $ 41,182
Total non-interest expense
24,367 23,016 23,392 22,704 24,635
Non-core expenses:
(Loss) gain on sale of premises and equipment, net
(281 ) 86 13 (75 )
Acquisition, conversion and other expenses
(263 ) (20 ) 90
Total non-core expenses
(544 ) 86 (7 ) 15
Core non-interest expense (2)
(D)
$ 23,823 $ 23,016 $ 23,478 $ 22,697 $ 24,650
Total revenue
37,643 38,001 37,770 40,090 41,182
Total non-interest expense
24,367 23,016 23,392 22,704 24,635
Pre-tax, pre-provision net revenue
$ 13,276 $ 14,985 $ 14,378 $ 17,386 $ 16,547
Core revenue (2)
37,643 38,001 37,770 40,056 41,182
Core non-interest expense (2)
23,823 23,016 23,478 22,697 24,650
Core pre-tax, pre-provision net revenue (2)
(U)
$ 13,820 $ 14,985 $ 14,292 $ 17,359 $ 16,532
(in millions)
Average earning assets
(E)
$ 3,652 $ 3,687 $ 3,637 $ 3,585 $ 3,517
Average assets
(F)
3,940 3,984 3,931 3,885 3,818
Average shareholders’ equity
(G)
419 411 413 407 390
Average tangible shareholders’ equity (2) (3)
(H)
294 286 288 282 265
Tangible shareholders’ equity, period-end (2) (3)
(I)
308 280 286 283 268
Tangible assets, period-end (2) (3)
(J)
3,847 3,859 3,904 3,803 3,785

BAR HARBOR BANKSHARES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA – UNAUDITED

At or for the Quarters Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(in thousands)
2023 2023 2023 2023 2022
Common shares outstanding, period-end
(K) 15,172 15,156 15,144 15,124 15,083
Average diluted shares outstanding
(L) 15,221 15,196 15,180 15,190 15,147
Core earnings per share, diluted (2)
(A/L) $ 0.68 $ 0.73 $ 0.71 $ 0.86 $ 0.83
Tangible book value per share, period-end (2)
(I/K) 20.28 18.45 18.88 18.74 17.78
Securities adjustment, net of tax (1) (4)
(M) (47,649 ) (66,530 ) (55,307 ) (50,646 ) (55,246 )
Tangible book value per share, excluding securities adjustment (2) (4)
(I+M)/K 23.42 22.84 22.53 22.08 21.44
Tangible shareholders’ equity/total tangible assets (2)
(I/J) 8.00 7.25 7.32 7.45 7.09
Performance ratios (5)
GAAP return on assets
1.00 % 1.11 % 1.10 % 1.36 % 1.30 %
Core return on assets (2)
(A/F) 1.04 1.11 1.09 1.36 1.30
Pre-tax, pre-provision return on assets
1.34 1.49 1.47 1.81 1.72
Core pre-tax, pre-provision return on assets (2)
(U/F) 1.39 1.49 1.46 1.81 1.72
GAAP return on equity
9.43 10.72 10.49 12.96 12.73
Core return on equity (2)
(A/G) 9.82 10.72 10.42 12.94 12.72
Return on tangible equity
13.65 15.65 15.28 18.97 19.03
Core return on tangible equity (1) (2)
(A+Q)/H 14.21 15.65 15.19 18.94 19.02
Efficiency ratio (2) (6)
(D-O-Q)/(C+N) 61.38 58.59 60.25 54.72 58.19
Net interest margin, fully taxable equivalent (2)
(B+P)/E 3.17 3.18 3.22 3.54 3.76
Supplementary data (in thousands)
Taxable equivalent adjustment for efficiency ratio
(N) $ 561 $ 565 $ 539 $ 727 $ 520
Franchise taxes included in non-interest expense
(O) 141 186 163 148 149
Tax equivalent adjustment for net interest margin
(P) 395 405 382 368 365
Intangible amortization
(Q) 233 233 233 233 233
  1. Assumes a marginal tax rate of 24.01% in the fourth quarter 2023, 23.80% in the first three quarters of 2023 and 23.53% in the fourth quarter 2022.
  2. Non-GAAP financial measure.
  3. Tangible shareholders’ equity is computed by taking total shareholders’ equity less the intangible assets at period-end. 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. All performance ratios are based on average balance sheet amounts, where applicable.
  6. Efficiency ratio is computed by dividing core non-interest expense net of franchise taxes and intangible amortization divided by core revenue on a fully taxable equivalent basis.

SOURCE: Bar Harbor Bank and Trust

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