Bar Harbor Bankshares Reports Fourth Quarter Results; Declares Dividend
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Bar Harbor Bankshares Reports Fourth Quarter Results; Declares Dividend

Thursday, January 20, 2022 4:10 PM
Bar Harbor Bank and Trust
Topic:
Earnings

BAR HARBOR, ME / ACCESSWIRE / January 20, 2022 / Bar Harbor Bankshares (NYSE American:BHB) reported fourth quarter 2021 net income of $9.8 million or $0.65 per diluted share, up from $8.6 million or $0.58 per diluted share in the same quarter of 2020. Core earnings per share (non-GAAP) in the fourth quarter of 2021 was $0.68 compared to $0.62 per share for the same period of 2020.

FOURTH QUARTER HIGHLIGHTS (ratios compared to the fourth quarter 2020)

  • 1.02% return on assets or 1.07% on a core basis (non-GAAP)
  • 13% growth in core pre-tax, pre-provision net revenue, excluding Paycheck Protection Program (PPP) loans
  • 13% annualized commercial loan growth, excluding PPP loans
  • 13% annualized core deposit growth
  • 0.27% non-performing asset ratio to total assets, compared to 0.33%

President and Chief Executive Officer, Curtis C. Simard stated, "Once again our team is proud to deliver strong results, reporting a 10% increase in core earnings per share in the fourth quarter 2021 over the prior year's quarter. Throughout 2021 we maintained an annualized core return on assets of over 1% and a core return on tangible common equity of over 13% in each quarter. This level of performance reflects the progress toward our strategic objectives to reduce funding costs, increase fee-based revenues and grow commercial loans while maintaining exceptional credit quality. We also grew tangible book value per share, which is up 2% from the prior quarter and 6% over the prior year."

"Net interest margin (NIM) on a GAAP basis was 2.79% for the fourth quarter 2021 compared with 3.02% in the same quarter of 2020. Excluding the effects of PPP fee acceleration, excess cash, and one-time items, our normalized NIM increased to 2.99% in 2021 from 2.94% in the fourth quarter of 2020, and is flat with the third quarter of 2021. At year-end 2021, we had about $200 thousand of remaining PPP deferred fees which will be amortized to the margin in 2022 as we have worked closely with our customers to receive PPP loan forgiveness. The stabilization and modest expansion in normalized NIM is due to the continued growth in low-interest bearing deposits in 2021 and several delever and security remix strategies that were executed during the past two years. Our cost of interest-bearing liabilities has steadily dropped to 41 basis points from 77 basis points in the fourth quarter 2020."

"In December 2021, we prepaid $70 million of FHLB borrowings and sold $19 million of securities to offset prepayment penalties, which were replaced with relatively short-lived securities with an average duration of approximately 4 years. The net result of the transactions is expected to add five basis points to NIM and $0.02 to core earnings per share in the first quarter 2022."

Mr. Simard continued, "Looking at yields in 2021, income from loans and securities have both been affected by acceleration of discounts and premiums due to prepayment activity. Specifically, while our yield on commercial real estate loans was 3.40% for the fourth quarter 2021 excluding one-time adjustments, was 3.50% which is consistent with the third quarter 2021. The quarterly contractual rates present a better look at repricing activity and reflect a more linear and flatter curve in the second half of 2021. As we think about 2022, we view this as a positive indicator along with our well-positioned, asset-sensitive balance sheet should the Federal Reserve Bank increase rates."

"On the funding side, core deposits increased 13% during the quarter as new accounts were established from new relationships. Wholesale funding has decreased to 4% of total funding, down from 18% at year-end 2020. Core deposit reliance continues to expand, funding our growth with a much more stabilized cost if rates do go up. At year-end 2021, $114 million of wholesale funding remains, which represent longer durations or have associated hedges."

Mr. Simard further stated, "Wealth management and customer service fees increased 18% from the fourth quarter 2020, given a 13% increase in assets under management and our significant increase in core deposits. Our Wealth Management division continues to deliver a strong performance from both a customer and shareholder perspective. We continue to focus on profitability and fee-based revenue remains a priority. The growth seen during this past year has contributed to the expansion in our key performance metrics, while further enhancing the diversity and strength of our revenue streams. Mortgage banking income in the fourth quarter 2021 benefited from our secondary market loan sales, which also accounts for the decrease in residential loans as we selectively moved production between on-balance sheet and held for sale."

"Growth in commercial real estate loans for the quarter was driven largely by existing customers. These are proven operators and long-time customers of the Bank. Similarly, the growth in commercial and industrial loans of 11%, excluding PPP, came from existing customers and represented a variety of industries. As we look forward, the pipelines remain robust and we see the momentum continuing into the first quarter."

"Credit metrics remained strong and stable in the fourth quarter. The modest increase in provision in the fourth quarter is largely due to stabilizing economic forecasts along with slight increases to qualitative adjustments on certain loan categories, offset by $144 thousand of net recoveries for the quarter. Non-performing loans continue to decline across all categories on a quarterly and year-over-year basis. In the quarter, we also saw a noteworthy reduction of criticized loans, down to 3% from 4% at the end of the third quarter 2021. All of these trends are positive and are expected to continue as we move into 2022 based on our credit disciplines."

Mr. Simard concluded, "As we enter 2022, we continue to actively manage the balance sheet, investing excess liquidity diligently without compromising our credit or interest rate risk appetites. We are excited about this new year and feel we are well positioned regardless of the resulting economic environment."

DIVIDEND DECLARED

The Board of Directors voted to declare a cash dividend of $0.24 per share to shareholders of record at the close of business on February 17, 2022, payable on March 17, 2022. This dividend equates to a 3.32% annualized yield based on the $28.93 closing price of the Company's common stock at the end of the fourth quarter of 2021.

FINANCIAL CONDITION

Total assets were $3.7 billion at the end of the fourth quarter 2021. We executed a balance sheet delever and security remix strategy where $70.0 million of Federal Home Loan Bank advances were prepaid and $19.0 million of securities were sold and then replenished.

Loans were $2.5 billion at the end of the fourth quarter. Excluding PPP loans, commercial loans increased $49.2 million primarily due to five new loans totaling $70.4 million and two new participations totaling $44.3 million. PPP loan balances totaled $6.7 million at year-end 2021 and $53.8 million at the end of 2020. Unearned deferred fees on PPP loans totaled $219 thousand at the end of the quarter and are expected to be mostly recognized in early 2022. COVID loan modifications totaled $566 thousand, down from $4.7 million at the end of the third quarter 2021. Total residential loans decreased $28.7 million from the end of the third quarter 2021, as the Company continued its strategy to sell the majority of residential loan originations in the secondary market.

The allowance for credit losses was $22.7 million for the fourth quarter, compared to $22.4 million at the end of the third quarter 2021. A steadying economic forecast and disciplined approach to credit quality resulted in an allowance to total loans coverage ratio of 0.90% compared to 0.89% at the end of the third quarter 2021. The fourth quarter 2021 charged off loans resulted in a net recovery of $144 thousand, or 0.02% of the total loan portfolio compared to a net charge off of $193 thousand, or 0.03% of total loans in the third quarter 2021. Non-accruing loans for the fourth quarter 2021 decreased to $10.2 million from $12.2 million at the end of the third quarter 2021. The ratio of accruing past due loans to total loans was 0.32% of total loans at the end of the fourth quarter 2021 from 0.12% at the end of the third quarter 2021 and 0.58% at year-end 2020. The increase in 30-day past due accounts for the quarter is attributable to the payment schedules of residential loans and timing due to the quarter ending on a 31 day month.

Total deposits were $3.0 billion at the end of the fourth quarter, an increase of $41.3 million from the third quarter 2021, due to continued core deposit growth. Core deposits grew $85.0 million, or 13% on an annualized basis, during the quarter as over 300 new customer accounts were opened. As a result the loan to deposit ratio was 83% compared to 84% at the end of the third quarter 2021. Time deposits decreased $43.7 million during the quarter primarily due to $15.0 million of brokered certificates of deposit that matured in the fourth quarter. The remaining decrease is attributable to customers continuing to move funds to transactional accounts upon contractual maturity.

The Company's book value per share was $28.27 at December 31, 2021, compared with $27.92 at the end of the third quarter 2021. Tangible book value per share (non-GAAP measure) was $19.86 at the end of the fourth quarter 2021, compared to $19.48 at the end of the third quarter 2021, an annualized growth rate of 8%. Other comprehensive income included unrealized gains on securities totaling $2.0 million in the fourth quarter 2021 compared to $4.4 million at the end of the third quarter 2021.

RESULTS OF OPERATIONS

Net income in the fourth quarter 2021 was $9.8 million, or $0.65 per share, compared to $8.6 million, or $0.58 per share, in the same quarter of 2020. Net income improved on higher fee income and lower operating expenses. PPP loan fees contributed $0.07 to earnings per share in the fourth quarter of 2021 and $0.18 in the same period of 2020. Core earnings (non-GAAP) totaled $10.2 million or $0.68 per share, compared to $9.2 million, or $0.62 per share, in the same quarter of 2020. Non-core items (non-GAAP) reduced net income by $472 thousand in the fourth quarter 2021 and $578 thousand in the same period of 2020.

Net interest margin was 2.79% compared to 3.02% in the same period of 2020. Acceleration of PPP loan fee amortization due to forgiveness contributed 10 basis points to NIM in the fourth quarter 2021 and 23 basis point in the same period of 2020. Interest-bearing cash balances, held mostly at the Federal Reserve Bank, reduced NIM by 27 basis points in the fourth quarter 2021 and 16 basis points in the fourth quarter 2020. The yield on earning assets totaled 3.10% compared to 3.65% in the fourth quarter 2020. Excluding the impact of PPP and excess cash, the yield on earning assets totaled 3.30% and 3.61% for the same periods. The yield on loans was 3.58% in the fourth quarter 2021, 3.98% in the third quarter 2021 and 4.03% in the fourth quarter of 2020. Excluding PPP loans the yield on loans was 3.45% in the fourth quarter of 2021, 3.62% in the third quarter of 2021 and 3.77% in the fourth quarter 2020. Costs of funds decreased to 0.41% from 0.77% in the fourth quarter 2020 due to lower deposit rates and reduced wholesale borrowings.

The provision for credit losses for the quarter was $126 thousand, compared to of $1.4 million in the fourth quarter of 2020. The provision in the fourth quarter 2021 is attributable to steadying economic forecasts from the third quarter 2021, which overall is down from the provision that was booked under the incurred model in the prior year, considering COVID-19 effects.

Non-interest income in the fourth quarter 2021 was $11.2 million, compared to $14.7 million in the same quarter of 2020. Customer service fees were $3.5 million in the fourth quarter compared to $2.9 million in the same period of 2020. The increase is due to over 300 new accounts that were opened during the quarter and a higher volume of customer activity and transactions. Wealth management income increased 16% over the same quarter of 2020 to $3.8 million with assets under management growing 13% to $2.54 billion compared to $2.25 billion in the same period of 2020. The Company sold securities resulting in an $890 thousand gain as part of the aforementioned remix strategy. Mortgage banking activities were $1.6 million, compared to $2.7 million in the same period of 2020. Additionally, bank-owned life insurance income increased $178 thousand due to mortality proceeds from a death claim.

Non-interest expense was $22.9 million in the fourth quarter 2021 from $27.8 million in the same quarter of 2020. Salaries and benefits expense decreased to $11.8 million compared to $13.3 million in the same quarter of 2020, reflecting full-time equivalents of 423 compared to 531, respectively and favorable discount rates on the Company's supplemental-retirement plans. The efficiency ratio benefited from controlled operating expenses in the fourth quarter and was 60.74% compared to 61.98% in the same period of 2020. Excluding the effects of PPP the efficiency ratio was 62.51% and 63.81% for the same respective periods. Non-core expenses (non-GAAP) in the fourth quarter 2021 totaled $1.5 million and consisted of a $1.1 million prepayment penalty on debt extinguishment and a $515 thousand loss on the sale of premises and equipment as the Company continues to optimize its branch footprint. In the same quarter of 2020 non-core expenses (non-GAAP) totaled $4.7 million and included costs to consolidate our wealth management systems.

The effective tax rate for the quarter was 18%, down from 21% in the fourth quarter 2020. The income tax provision in fourth 2021 includes a true-up of the statutory tax rate as more business was driven from the lower cost state of Maine. Also with the filing of the tax returns in the quarter, $76 thousand of tax reserves were released, which is considered a one-time item.

CONTACTS

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

TABLE
INDEXCONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED)
ASelected Financial Highlights
BBalance Sheets
CLoan and Deposit Analysis
DStatements of Income
EStatements of Income (Five Quarter Trend)
FAverage Yields and Costs
GAverage Balances
HAsset Quality Analysis
I-JReconciliation 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,
2021 2021 2021 2021 2020
PER SHARE DATA
Net earnings, diluted
$0.65 $0.73 $0.60 $0.63 $0.58
Core earnings, diluted (1)
0.68 0.73 0.63 0.68 0.62
Total book value (6)
28.27 27.92 27.64 27.10 27.29
Tangible book value (1) (6)
19.86 19.48 19.17 18.61 18.77
Market price at period end
28.93 28.05 28.62 29.42 22.59
Dividends
0.24 0.24 0.24 0.22 0.22
PERFORMANCE RATIOS (2)
Return on assets
1.02% 1.16% 0.97% 1.03% 0.92%
Core return on assets (1)
1.07 1.16 1.01 1.11 0.98
Pre-tax, pre-provision return on assets
1.26 1.43 1.13 1.22 1.30
Core pre-tax, pre-provision return on assets (1)
1.33 1.43 1.18 1.32 1.38
Return on equity (6)
9.16 10.38 8.77 9.45 8.42
Core return on equity (1) (6)
9.60 10.39 9.14 10.14 8.99
Return on tangible equity (6)
13.30 15.08 12.91 14.01 12.52
Core return on tangible equity (1) (6)
13.93 15.09 13.45 15.01 13.33
Net interest margin, fully taxable equivalent (FTE) (1) (3)
2.79 3.02 2.74 2.88 3.02
Core net interest margin (1) (4)
2.69 2.75 2.67 2.78 2.79
Efficiency ratio (1)
60.74 59.18 63.45 61.95 61.98
FINANCIAL DATA (In millions)
Total assets (6)
$3,709 $3,738 $3,639 $3,730 $3,724
Total earning assets (5)
3,380 3,394 3,282 3,381 3,371
Total investments
626 556 636 641 599
Total loans
2,532 2,534 2,516 2,551 2,563
Allowance for credit losses
23 22 23 24 19
Total goodwill and intangible assets
126 126 127 127 127
Total deposits
3,049 3,007 2,822 2,912 2,906
Total shareholders' equity (6)
424 418 414 405 407
Net income
10 11 9 9 9
Core earnings (1)
10 11 9 10 9
ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (current quarter annualized)/average loans
-% 0.03% 0.01% 0.03% 0.03%
Allowance for credit losses/total loans
0.90 0.89 0.91 0.93 0.74
Loans/deposits
83 84 89 88 88
Shareholders' equity to total assets (6)
11.43 11.19 11.37 10.86 10.93
Tangible shareholders' equity to tangible assets (6)
8.32 8.08 8.17 7.72 7.78

(1) Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in table 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) Core net interest margin excludes Paycheck Protection Program loans.
(5) Earning assets includes non-accruing loans and interest-bearing deposits with other banks. Securities are valued at amortized cost.
(6) The first and second quarters of 2021 and the fourth quarter of 2020 have been revised for derivatives that were incorrectly presented as assets instead of liabilities and related equity effects net of tax.

BAR HARBOR BANKSHARES
CONSOLIDATED BALANCE SHEETS - UNAUDITED


Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(in thousands)
2021 2021 2021 2021 2020
Assets
Cash and due from banks
$33,508 $39,081 $41,440 $39,039 $27,566
Interest-bearing deposits with other banks
216,881 302,118 132,278 184,473 198,441
Total cash and cash equivalents
250,389 341,199 173,718 223,512 226,007
Securities available for sale
618,276 545,327 621,849 626,403 585,046
Federal Home Loan Bank stock
7,384 10,192 14,145 14,826 14,036
Total securities
625,660 555,519 635,994 641,229 599,082
Loans held for sale
5,523 7,505 7,942 10,148 23,988
Total loans
2,531,910 2,534,154 2,515,560 2,551,064 2,562,885
Less: Allowance for credit losses
(22,718) (22,448) (22,815) (23,653) (19,082)
Net loans
2,509,192 2,511,706 2,492,745 2,527,411 2,543,803
Premises and equipment, net
49,382 50,070 51,119 52,253 52,458
Other real estate owned
- - - - -
Goodwill
119,477 119,477 119,477 119,477 119,477
Other intangible assets
6,733 6,966 7,198 7,431 7,670
Cash surrender value of bank-owned life insurance
79,020 79,380 78,886 78,388 77,870
Deferred tax asset, net (1)
5,547 5,811 4,902 5,761 3,047
Other assets (1)
58,310 60,712 67,064 64,479 70,873
Total assets (1)
$3,709,233 $3,738,345 $3,639,045 $3,730,089 $3,724,275
Liabilities and shareholders' equity
Demand and other non-interest bearing deposits
$664,420 $664,395 $599,598 $586,487 $544,636
NOW deposits
940,631 888,021 802,681 761,817 738,849
Savings deposits
628,670 605,977 578,361 560,095 521,638
Money market deposits
389,291 379,651 371,075 365,507 402,731
Time deposits
425,532 469,221 470,758 638,436 698,361
Total deposits
3,048,544 3,007,265 2,822,473 2,912,342 2,906,215
Senior borrowings
118,400 190,267 279,991 292,210 276,062
Subordinated borrowings
60,124 60,083 60,042 60,003 59,961
Total borrowings
178,524 250,350 340,033 352,213 336,023
Other liabilities (1)
58,018 62,295 62,779 60,354 74,972
Total liabilities (1)
3,285,086 3,319,910 3,225,285 3,324,909 3,317,210
Total shareholders' equity (1)
424,147 418,435 413,760 405,180 407,065
Total liabilities and shareholders' equity (1)
$3,709,233 $3,738,345 $3,639,045 $3,730,089 $3,724,275
Net shares outstanding
15,001 14,987 14,972 14,950 14,916

(1) The first and second quarters of 2021 and the fourth quarter of 2020 have been revised for derivatives that were incorrectly presented as assets instead of liabilities and related equity effects net of tax.

BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED

LOAN ANALYSIS

Annualized
Growth %

Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Quarter Year to
(in thousands)
2021 2021 2021 2021 2020 End Date
Commercial real estate
$1,210,580 $1,170,372 $1,135,857 $1,118,669 $1,084,381 14% 12%
Commercial and industrial
340,129 331,091 327,729 317,500 323,864 11 5
Paycheck Protection Program (PPP)
6,669 24,227 65,918 77,878 53,774 * (88)
Total commercial loans
1,557,378 1,525,690 1,529,504 1,514,047 1,462,019 8 7
Total commercial loans, excluding PPP
1,550,709 1,501,463 1,463,586 1,436,169 1,408,245 13 10
Residential real estate
821,004 849,692 822,774 868,084 923,891 (14) (11)
Consumer
98,949 100,933 103,589 106,835 113,544 (8) (13)
Tax exempt and other
54,579 57,839 59,693 62,098 63,431 (23) (14)
Total loans
$2,531,910 $2,534,154 $2,515,560 $2,551,064 $2,562,885 -% (1)%

DEPOSIT ANALYSIS

Annualized
Growth %

Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Quarter Year to
(in thousands)
2021 2021 2021 2021 2020 End Date
Demand
$664,420 $664,395 $599,598 $586,487 $544,636 -% 22%
NOW
940,631 888,021 802,681 761,817 738,849 24 27
Savings
628,670 605,977 578,361 560,095 521,638 15 21
Money market
389,291 379,651 371,075 365,507 402,731 10 (3)
Total non-maturity deposits
2,623,012 2,538,044 2,351,715 2,273,906 2,207,854 13 19
Total time deposits
425,532 469,221 470,758 638,436 698,361 (37) (39)
Total deposits
$3,048,544 $3,007,265 $2,822,473 $2,912,342 $2,906,215 5% 5%

*Indicates ratios of 100% or greater.

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED


Three Months Ended Year Ended

December 31, December 31,
(in thousands, except per share data)
2021 2020 2021 2020
Interest and dividend income




Loans
$22,746 $26,687 $95,236 $107,085
Securities and other
3,776 4,013 15,568 19,019
Total interest and dividend income
26,522 30,700 110,804 126,104
Interest expense
Deposits
1,434 3,606 8,543 18,043
Borrowings
1,273 1,732 6,688 8,881
Total interest expense
2,707 5,338 15,231 26,924
Net interest income
23,815 25,362 95,573 99,180
Provision for credit losses
126 1,360 (1,302) 5,625
Net interest income after provision for credit losses
23,689 24,002 96,875 93,555
Non-interest income
Trust and investment management fee income
3,844 3,318 15,179 13,378
Customer service fees
3,470 2,890 13,212 11,327
Gain on sales of securities, net
890 3,959 2,870 5,445
Mortgage banking income
1,563 2,654 6,536 6,884
Bank-owned life insurance income
669 482 2,179 2,007
Customer derivative income
173 1,086 1,010 2,503
Other income
549 334 1,275 1,412
Total non-interest income
11,158 14,723 42,261 42,956
Non-interest expense
Salaries and employee benefits
11,842 13,318 47,117 48,920
Occupancy and equipment
4,105 4,192 16,356 16,751
Loss (gain) on sales of premises and equipment, net
515 (122) 378 (32)
Outside services
431 571 1,943 1,985
Professional services
556 572 1,756 2,060
Communication
205 194 912 892
Marketing
378 415 1,541 1,385
Amortization of intangible assets
233 256 940 1,024
Loss on debt extinguishment
1,083 - 2,851 1,351
Acquisition, conversion and other expenses
(92) 4,849 1,667 5,801
Other expenses
3,665 3,571 15,047 14,723
Total non-interest expense
22,921 27,816 90,508 94,860
Income before income taxes
11,926 10,909 48,628 41,651
Income tax expense
2,160 2,269 9,329 8,407
Net income
$9,766 $8,640 $39,299 $33,244
Earnings per share:
Basic
$0.65 $0.58 $2.63 $2.18
Diluted
0.65 0.58 2.61 2.18
Weighted average shares outstanding:
Basic
14,993 14,909 14,961 15,246
Diluted
15,075 14,952 15,045 15,272

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)
2021 2021 2021 2021 2020
Interest and dividend income
Loans
$22,746 $25,094 $23,191 $24,205 $26,687
Securities and other
3,776 3,821 3,992 3,979 4,013
Total interest and dividend income
26,522 28,915 27,183 28,184 30,700
Interest expense
Deposits
1,434 1,555 2,603 2,951 3,606
Borrowings
1,273 1,778 1,826 1,811 1,732
Total interest expense
2,707 3,333 4,429 4,762 5,338
Net interest income
23,815 25,582 22,754 23,422 25,362
Provision for credit losses
126 (174) (765) (489) 1,360
Net interest income after provision for credit losses
23,689 25,756 23,519 23,911 24,002
Non-interest income
Trust and investment management fee income
3,844 3,868 3,801 3,666 3,318
Customer service fees
3,470 3,515 3,257 2,970 2,890
Gain on sales of securities, net
890 1,930 50 - 3,959
Mortgage banking income
1,563 850 1,553 2,570 2,654
Bank-owned life insurance income
669 494 498 518 482
Customer derivative income
173 341 86 410 1,086
Other income
549 352 260 114 334
Total non-interest income
11,158 11,350 9,505 10,248 14,723
Non-interest expense
Salaries and employee benefits
11,842 11,743 11,356 12,176 13,318
Occupancy and equipment
4,105 4,029 3,894 4,328 4,192
Loss (gain) on sales of premises and equipment, net
515 (146) 1 8 (122)
Outside services
431 547 533 432 571
Professional services
556 491 151 558 572
Communication
205 188 198 321 194
Marketing
378 339 534 290 415
Amortization of intangible assets
233 233 233 241 256
Loss on debt extinguishment
1,083 1,768 - - -
Acquisition, conversion and other expenses
(92) 318 552 889 4,849
Other expenses
3,665 3,862 4,272 3,248 3,571
Total non-interest expense
22,921 23,372 21,724 22,491 27,816
Income before income taxes
11,926 13,734 11,300 11,668 10,909
Income tax expense
2,160 2,706 2,275 2,188 2,269
Net income
$9,766 $11,028 $9,025 $9,480 $8,640
Earnings per share:
Basic
$0.65 $0.74 $0.60 $0.63 $0.58
Diluted
0.65 0.73 0.60 0.63 0.58
Weighted average shares outstanding:
Basic
14,993 14,983 14,965 14,934 14,909
Diluted
15,075 15,051 15,042 15,007 14,952

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


Quarters Ended

Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,

2021 2021 2021 2021 2020
Earning assets
Interest-bearing deposits with other banks (1)
0.16% 0.15% 0.09% 0.09% 0.11%
Securities available for sale and FHLB stock
2.66 2.59 2.66 2.79 2.97
Loans:
Commercial real estate
3.40 3.53 3.54 3.68 3.74
Commercial and industrial
3.23 3.79 3.60 3.86 3.92
Paycheck protection program
26.25 23.28 5.56 8.12 11.56
Residential real estate
3.61 3.64 3.80 3.76 3.74
Consumer
3.49 3.78 3.44 3.56 3.65
Total loans
3.58 3.98 3.70 3.85 4.03
Total earning assets
3.10% 3.41% 3.26% 3.46% 3.65%

Funding liabilities
Deposits:
NOW
0.14% 0.13% 0.12% 0.14% 0.15%
Savings
0.08 0.08 0.10 0.13 0.13
Money market
0.12 0.12 0.12 0.14 0.14
Time deposits
0.77 0.88 1.37 1.44 1.64
Total interest-bearing deposits
0.24 0.27 0.45 0.51 0.61
Borrowings
2.17 2.11 2.12 2.16 1.83
Total interest-bearing liabilities
0.41% 0.50% 0.66% 0.72% 0.77%
Net interest spread
2.69 2.91 2.60 2.74 2.88
Net interest margin (1)
2.79 3.02 2.74 2.88 3.02
Core net interest margin (2)
2.69 2.75 2.67 2.78 2.79

(1) Income from interest-bearing deposits with other banks has been separated from securities and restated for prior periods to conform to the current period presentation.
(2) Core net interest margin excludes Paycheck Protection Program loans.

BAR HARBOR BANKSHARES
AVERAGE BALANCES - UNAUDITED


Quarters Ended

Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(in thousands)
2021 2021 2021 2021 2020
Assets





Interest-bearing deposits with other banks (1)
$325,260 $284,429 $228,825 $176,728 $176,747
Securities available for sale and FHLB stock (2)
578,323 610,381 635,978 613,459 563,118
Loans:
Commercial real estate
1,189,803 1,153,813 1,122,831 1,099,937 1,059,574
Commercial and industrial
386,156 391,191 378,634 377,176 386,201
Paycheck protection program
14,824 45,835 76,701 65,149 91,109
Residential real estate
844,872 824,686 850,119 916,633 995,173
Consumer
100,723 101,545 104,851 109,802 115,876
Total loans (3)
2,536,378 2,517,070 2,533,136 2,568,697 2,647,933
Total earning assets
3,439,961 3,411,880 3,397,939 3,358,884 3,387,798
Cash and due from banks
37,818 38,750 21,414 23,221 22,473
Allowance for credit losses
(22,525) (22,607) (23,419) (24,822) (18,690)
Goodwill and other intangible assets
126,324 126,556 126,789 127,024 127,264
Other assets (4)
200,097 209,509 223,362 232,475 237,414
Total assets (4)
$3,781,675 $3,764,088 $3,746,085 $3,716,782 $3,756,259
Liabilities and shareholders' equity
Deposits:
NOW
$913,326 $860,206 $781,836 $749,100 $713,464
Savings
620,599 591,440 568,193 541,203 516,266
Money market
395,341 381,755 368,826 378,743 399,543
Time deposits
450,559 471,934 619,454 675,422 734,523
Total interest-bearing deposits
2,379,825 2,305,335 2,338,309 2,344,468 2,363,796
Borrowings
232,492 334,097 345,896 340,209 376,437
Total interest-bearing liabilities
2,612,317 2,639,432 2,684,205 2,684,677 2,740,233
Non-interest-bearing demand deposits
684,895 641,769 591,982 550,657 535,402
Other liabilities (4)
61,480 61,436 57,227 74,778 72,534
Total liabilities (4)
3,358,692 3,342,637 3,333,414 3,310,112 3,348,169
Total shareholders' equity (4)
422,983 421,451 412,671 406,670 408,090
Total liabilities and shareholders' equity (4)
$3,781,675 $3,764,088 $3,746,085 $3,716,782 $3,756,259

(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.
(4) The first and second quarters of 2021 and the fourth quarter of 2020 have been revised for derivatives that were incorrectly presented as assets instead of liabilities and related equity effects net of tax.

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)
2021 2021 2021 2021 2020
NON-PERFORMING ASSETS
Non-accruing loans:
Commercial real estate
$2,890 $3,646 $4,367 $4,664 $4,251
Commercial installment
1,056 1,163 1,370 1,534 1,466
Residential real estate
5,192 6,311 6,788 6,753 5,729
Consumer installment
1,053 1,087 1,054 1,118 742
Total non-accruing loans
10,191 12,207 13,579 14,069 12,188
Other real estate owned
- - - - -
Total non-performing assets
$10,191 $12,207 $13,579 $14,069 $12,188

Total non-accruing loans/total loans
0.40% 0.48% 0.54% 0.55% 0.48%
Total non-performing assets/total assets
0.27 0.33 0.37 0.38 0.33
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
Balance at beginning of period
$22,448 $22,815 $23,653 $19,082 $17,907
Impact of CECL adoption
- - - 5,228 -
Charged-off loans
(154) (286) (239) (216) (297)
Recoveries on charged-off loans
298 93 166 48 112
Net loans charged-off
144 (193) (73) (168) (185)
Provision for credit losses
126 (174) (765) (489) 1,360
Balance at end of period
$22,718 $22,448 $22,815 $23,653 $19,082
Allowance for credit losses/total loans
0.90% 0.89% 0.91% 0.93% 0.74%
Allowance for credit losses/non-accruing loans
223 184 168 168 157
NET LOAN CHARGE-OFFS
Commercial real estate
$216 $(69) $(105) $(131) $63
Commercial installment
53 (24) (7) 1 (228)
Residential real estate
8 13 88 (28) (21)
Consumer installment
(133) (113) (49) (10) 1
Total, net
$144 $(193) $(73) $(168) $(185)
Net charge-offs (QTD annualized)/average loans
(0.02)% 0.03% 0.01% 0.03% 0.03%
Net charge-offs (YTD annualized)/average loans
0.01 0.02 0.02 0.03 0.07
DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS
30-89 Days delinquent
0.31% 0.09% 0.13% 0.43% 0.58%
90+ Days delinquent and still accruing
0.01 0.02 0.02 0.01 -
Total accruing delinquent loans
0.32 0.12 0.15 0.44 0.58
Non-accruing loans
0.40 0.48 0.54 0.55 0.48
Total delinquent and non-accruing loans
0.72% 0.60% 0.69% 0.99% 1.06%

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)

2021 2021 2021 2021 2020
Net income
$9,766 $11,028 $9,025 $9,480 $8,640
Non-core items:
(Gain) on sale of securities, net
(890) (1,930) (50) - (3,959)
Loss (gain) on sale of premises and equipment, net

515 (146) 1 8 (122)
(Gain) loss on other real estate owned

- - - - (11)
Loss on debt extinguishment
1,083 1,768 - - -
Acquisition, conversion and other expenses

(92) 318 552 889 4,849
Income tax expense (1)
(144) (2) (119) (213) (179)
Total non-core items
472 8 384 684 578
Core earnings (2)
(A)
$10,238 $11,036 $9,409 $10,164 $9,218
Net interest income
(B)
$23,815 $25,582 $22,754 $23,422 $25,362
Non-interest income
11,158 11,350 9,505 10,248 14,723
Total Revenue
34,973 36,932 32,259 33,670 40,085
(Gain) on sale of securities, net
(890) (1,930) (50) - (3,959)
Total core revenue (2)
(C)
$34,083 $35,002 $32,209 $33,670 $36,126
Total non-interest expense
22,921 23,372 21,724 22,491 27,816
Non-core expenses:
(Loss) gain on sale of premises and equipment, net

(515) 146 (1) (8) 122
Gain (loss) on other real estate owned

- - - - 11
Loss on debt extinguishment
(1,083) (1,768) - - -
Acquisition, conversion and other expenses

92 (318) (552) (889) (4,849)
Total non-core expenses
(1,506) (1,940) (553) (897) (4,716)
Core non-interest expense (2)
(D)
$21,415 $21,432 $21,171 $21,594 $23,100
Total revenue
34,973 36,932 32,259 33,670 40,085
Total non-interest expense
22,921 23,372 21,724 22,491 27,816
Pre-tax, pre-provision net revenue
$12,052 $13,560 $10,535 $11,179 $12,269
Core revenue (2)
34,083 35,002 32,209 33,670 36,126
Core non-interest expense (2)
21,415 21,432 21,171 21,594 23,100
Core pre-tax, pre-provision net revenue (2)
(U)
$12,668 $13,570 $11,038 $12,076 $13,026
(in millions)
Average earning assets
(E)
$3,440 $3,412 $3,398 $3,359 $3,388
Average paycheck protection program (PPP) loans
(R)
15 46 77 65 91
Average earning assets, excluding PPP loans
(S)
3,425 3,366 3,321 3,294 3,297
Average assets
(F)
3,764 3,764 3,746 3,717 3,756
Average shareholders' equity (8)
(G)
423 421 413 407 408
Average tangible shareholders' equity (2) (3) (8)
(H)
297 295 286 280 281
Tangible shareholders' equity, period-end (2) (3) (8)
(I)
298 292 287 278 280
Tangible assets, period-end (2) (3) (8)
(J)
3,583 3,612 3,512 3,603 3,597

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)
2021 2021 2021 2021 2020
Common shares outstanding, period-end
(K) 15,001 14,987 14,972 14,950 14,916
Average diluted shares outstanding
(L) 15,075 15,051 15,042 15,007 14,952
Core earnings per share, diluted (2)

(A/L)

$0.68 $0.73 $0.63 $0.68 $0.62
Tangible book value per share, period-end (2) (8)

(I/K)

19.86 19.48 19.17 18.61 18.77
Securities adjustment, net of tax (1) (4)

(M)

1,985 4,398 7,237 4,510 10,023
Tangible book value per share, excluding securities adjustment (2) (4) (8)

(I+M)/K

19.73 19.19 18.69 18.31 18.09
Tangible shareholders' equity/total tangible assets (2) (8)

(I/J)

8.32 8.08 8.17 7.72 7.78
Performance ratios (5)
GAAP return on assets
1.02% 1.16% 0.97% 1.03% 0.92%
Core return on assets (2)

(A/F)

1.07 1.16 1.01 1.11 0.98
Pre-tax, pre-provision return on assets
1.26 1.43 1.13 1.22 1.30
Core pre-tax, pre-provision return on assets (2)

(U/F)

1.33 1.43 1.18 1.32 1.38
GAAP return on equity (8)
9.16 10.38 8.77 9.45 8.42
Core return on equity (2) (8)

(A/G)

9.60 10.39 9.14 10.14 8.99
Return on tangible equity (8)
13.30 15.08 12.91 14.01 12.52
Core return on tangible equity (1) (2) (8)

(A+Q)/H

13.93 15.09 13.45 15.01 13.33
Efficiency ratio (2) (6)

(D-O-Q)/(C+N)

60.74 59.18 63.45 61.95 61.98
Net interest margin

(B+P)/E

2.79 3.02 2.74 2.88 3.02
Core net interest margin (2) (7)

(B+P-T)/S

2.69 2.75 2.67 2.78 2.79
Supplementary data (in thousands)
Taxable equivalent adjustment for efficiency ratio

(N)

$573 $576 $586 $595 $542
Franchise taxes included in non-interest expense

(O)

132 143 128 125 117
Tax equivalent adjustment for net interest margin

(P)

369 421 430 433 396
Intangible amortization

(Q)

233 233 233 241 256
Interest and fees on PPP loans

(T)

981 2,690 1,064 1,304 2,648

(1)Assumes a marginal tax rate of 23.41% for the fourth quarter of 2021 and 23.71% for the first three quarters of 2021 and fourth quarter of 2020.
(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.
(7)Core net interest margin excludes Paycheck Protection Program loans.
(8)The first and second quarters of 2021 and the fourth quarter of 2020 have been revised for derivatives that were incorrectly presented as assets instead of liabilities and related equity effects net of tax.

SOURCE: Bar Harbor Bank and Trust

Topic:
Earnings
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