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Bar Harbor Bankshares Reports Fourth Quarter Results

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Bar Harbor Bankshares (NYSE American: BHB) reported a strong fourth quarter 2020 with net income reaching $8.6 million, or $0.58 per share, a significant increase from $4.2 million, or $0.27 per share, in the same period of 2019. Core earnings climbed 11% to $9.2 million, or $0.62 per share, compared to $8.8 million in Q4 2019. Key highlights included 11% annualized growth in commercial loans, a 3.02% net interest margin, and a 0.33% ratio of non-performing assets to total assets. Strategic operational adjustments during the pandemic have positioned the bank for continued growth.

Positive
  • Net income rose to $8.6 million, or $0.58 per share, from $4.2 million year-over-year.
  • Core earnings increased 11% year-over-year to $9.2 million, or $0.62 per share.
  • 11% annualized commercial loan growth was recorded, excluding PPP loans.
  • Net interest margin improved to 3.02%, up from 2.94% in Q4 2019.
  • Non-interest income surged to $14.7 million compared to $7.8 million in the previous year.
  • 3,200 new low-cost core deposit accounts were opened, contributing to a growth in core deposits.
Negative
  • Total assets decreased to $3.7 billion from $3.9 billion in the prior quarter.
  • Loans decreased by $122.1 million impacted by $78.3 million in PPP loan forgiveness.
  • Operating expenses increased to $27.8 million from $26.8 million year-over-year.

BAR HARBOR, ME / ACCESSWIRE / January 28, 2021 / Bar Harbor Bankshares (NYSE American:BHB) reported fourth quarter 2020 net income of $8.6 million, or $0.58 per share, compared to $4.2 million, or $0.27 per share, in the same quarter of 2019. Core earnings (non-GAAP) in the fourth quarter 2020 increased to $9.2 million compared to $8.8 million in the fourth quarter of 2019, or increased 11% to $0.62 per share, compared to $0.56 per share, respectively. Non-core expenses (non-GAAP) in the fourth quarter 2020 included swap termination costs and profitability initiative costs while the same quarter of 2019 included acquisition, conversion and balance sheet optimization costs.

FOURTH QUARTER FINANCIAL HIGHLIGHTS

  • 11% annualized commercial loan growth, excluding paycheck protection program (PPP) loans
  • 3,200 new low cost core deposit accounts
  • 3.02% net interest margin
  • 0.92% return on assets; 0.98% core return on assets (non-GAAP)
  • 0.33% non-performing assets to total assets ratio
  • Fee income at 37% of total revenue; 30% of core revenue (non-GAAP)

President and Chief Executive Officer, Curtis C. Simard stated, "While this year has had unique challenges across the regional, national and international stages, we leaned on the culture and infrastructure we have established to support our customers, colleagues, and communities, while not abandoning balanced growth expectations across all business lines. We have proven our commitment to risk management as we safely navigated our operations during the pandemic with established protocols and availability to both customers and prospects alike. This risk management culture extended to increasing remote capabilities while also consistently assessing our credit exposure through quarterly stress testing and steady provisioning throughout the year. We understand our customers and their financial needs because our teams have been in the field helping them navigate the changing landscape. Commercial loans remain a leader of balance sheet growth for the quarter and for the year, guided by stress tested underwriting models we employ.

"Positive trends in credit quality during the year continue to affirm our disciplined approach. By year-end, we had lower levels of non-performing loans, significant improvement in past due and deferred commercial loan accounts and we settled all of our other real estate owned at their carrying values. During the fourth quarter, we expanded stress testing of our commercial loans, including the most watched industries of our footprint specifically hospitality, which demonstrated a better than expected summer tourism season for Northern New England. Results of testing included no significant risk-rating downgrades or changes to reserves. Borrowers with COVID loan modifications continue to demonstrate their repayment capacity and/or have sufficient cash reserves to service their pre-forbearance loans without further government stimulus.

"Fee income continues to be a big part of total revenue for the fourth quarter and for the year 2020. Customer service fees have almost returned to pre-pandemic levels in the second half of the year and are expected to rise on an expanded customer base. Throughout the year we opted to sell our fixed rate residential mortgage production in the secondary market in lieu of taking interest rate and credit risk on our balance sheet. This strategy continues to produce significant fee revenue in the current rate environment. As we look forward, we will continue to take advantage of such opportunities while maintaining a focus on our commercial customer base given the associated loan and derivative fees as well as those generated in treasury and cross-sell to retail and wealth business lines. This demonstrated commitment to risk management enables us to confidently experience growth across Northern New England in the interest of diversification in markets, products, and customer type.

"During the fourth quarter, core deposits increased $86.4 million and our retail team opened an impressive 3,200 new accounts, raising the total to more than 13,250 for the year as we continue to reduce cost of funds and transition to a true franchise, core-operating institution. Excess liquidity generated in the quarter was used to further delever our balance sheet with an early pay-off of our PPP lending facility and other reductions to wholesale funding. We view that more favorably to absorbing duration or rate risk associated with securities investments or mortgage refinancing."

Mr. Simard continued, "We were prepared to adopt CECL as of the end of 2020, but elected to close our fourth quarter under the same accounting method and control environment as the rest of 2020. We will adopt January 1, 2021 to allow a more comparable quarterly presentation as we report in 2021. Had we adopted CECL at year end 2020, the loan loss reserve as a percentage of total loans would have been 95 basis points compared to 74 basis points reported under the incurred loss model. The 95 basis points may change in the first quarter of 2021 based primarily on any changes in economic forecasts.

Mr. Simard went on to say, "We are well poised to further help our communities with the second round of PPP loans authorized by the new stimulus bill. That process has begun for both first time PPP draws as well as for customers in need of second round PPP loans. For the remaining first round of PPP loans previously provided in 2020, we have $53.8 million that are pending various stages of forgiveness with $1.4 million of deferred fees. We expect the majority of remaining forgiveness to occur by the end of the second quarter 2021.

Mr. Simard further stated, "In the fourth quarter we continued our return of capital programs in the form of stock repurchases and dividend payments. Stock repurchases totaled 31 thousand shares at a cost of $625 thousand during the fourth quarter and 720 thousand shares at a cost of $13.9 million on a year to date basis. An additional 61 thousand shares are available to be repurchased before the end of March 2021. Last week we declared our first quarter dividend of $0.22 per share and we are committed to dividend policies as part of our efficient use of capital supported by expanding earnings."

Mr. Simard concluded, "Looking back on the last four years as we expanded into new areas of Northern New England, we have built amazing teams that quickly adapt to diversity and change with a commitment to a model of balancing growth with earnings across our markets. We are positioned for a solid start to 2021 as we continue to build on consistent, repeatable earnings while expanding our profitability metrics across all business lines."

FINANCIAL CONDITION

Total assets were $3.7 billion at the end of the fourth quarter compared to $3.9 billion in the third quarter of 2020. Loans in the fourth quarter decreased by $122.1 million largely due to $78.3 million in PPP loan forgiveness payments and $70.4 million in residential loan sales offset in part by growth in commercial real estate loans. As of year-end outstanding pandemic deferrals, which primarily consist of interest only forbearance, were $68.6 million or 3% of total loans, with residential loans representing $5.9 million of the total or less than 1% of total residential loans. Commercial real estate loan growth of $38.7 million consisted of over $90.0 million in new loans offset by principal payments during the quarter. Non-maturity deposits increased by $86.4 million in the quarter due to growth in new customer accounts combined with government stimulus programs and an overall decrease in consumer spending given current market conditions. Senior borrowings were reduced by $109.4 million primarily from the payoff of our PPP lending facility with the Federal Reserve Bank totaling $131.1 million offset by a shift from brokered deposits to FHLB borrowings.

We have elected to defer the implementation of the accounting standard known as CECL until January 1, 2021 as allowed by the Consolidated Appropriations Act, 2021. The effect of the CECL adoption to the allowance for loan losses and unfunded commitments is estimated to be a total of $6.8 million, which will flow entirely through equity net of deferred taxes.

The fourth quarter 2020 allowance for loan losses increased by $1.2 million, which includes a $1.4 million provision for loan loss offset by net charge-offs of $185 thousand. The allowance for loan losses to total loans ratio for the fourth quarter expanded to 0.74% from 0.66% in the third quarter 2020 based on an increased allowance for commercial loan growth and decrease in total loans. Non-accruing loans in the fourth quarter 2020 decreased $2.2 million primarily due to $1.6 million in payoffs during the quarter. The successful resolution in non-accruals combined with the sale of other real estate owned contributed to the improvement of the non-performing assets to total assets ratio of 0.33% from 0.42% in the prior quarter. 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. During the fourth quarter we performed stress testing of 54% of our commercial loan portfolio which included the top 50 relationships, all criticized loans greater than $1.0 million, hospitality loans greater than $250 thousand, all loans over $150 thousand with a pandemic modification and any seasonal payment, restaurant, or 2021 maturing term loans that are greater than $500 thousand. Results of the stress testing led to no significant downgrades or changes to reserves.

The Company's book value per share was $27.58 at year end 2020 compared with $27.09 at the end of the third quarter 2020. Tangible book value per share excluding security adjustments (non-GAAP) was $18.38 at the end of the fourth quarter 2020 compared to $17.78 at the end of the third quarter 2020, and $17.98 at the end of the third quarter 2019, prior to the central Maine branch acquisition.

RESULTS OF OPERATIONS

Net income in the fourth quarter 2020 was $8.6 million, or $0.58 per share, compared to $4.2 million, or $0.27 per share, in the same quarter of 2019. The non-GAAP measure of core earnings in the fourth quarter 2020 totaled $9.2 million or $0.62 per share, compared to $8.8 million, or $0.56 per share, in the same quarter of 2019. Net income benefited from an expanded net interest margin and higher non-interest income. Net interest margin in the fourth quarter 2020 increased to 3.02% from 2.94% in the same period of 2019 primarily due to a lower cost of funds and acceleration of PPP loan fee recognition upon forgiveness. Costs of funds decreased to 0.77% compared to 1.42% in the fourth quarter 2019 due to a shift in funding sources to core deposits. Cost of deposits and borrowings also benefited from the Federal Reserve rate cuts in 2020 and other key indexes in response to the pandemic.

Additionally, excess liquidity was used to pay off $520.4 million of wholesale funding since the fourth quarter of 2019 that further reduced interest expense. The yield on earning assets was 3.65% compared to 4.13% in the fourth quarter 2019 reflecting loan originations and repricing of variable rate products in a lower interest rate environment. The fourth quarter core net interest margin was 2.79% compared to 2.94% in the same period of 2019, which included a drag of 16 basis points and one basis point from excess liquidity, respectively.

Non-interest income in the fourth quarter 2020 was $14.7 million compared to $7.8 million in the same quarter in 2019. The increase is primarily due to a $2.1 million increase in mortgage banking income associated with secondary market sales of $70.4 million compared to $26.5 million in the same quarter of 2019. Customer derivative income increased $611 thousand in conjunction with commercial loan growth. We also took advantage of unrealized gains in the securities portfolio in the fourth quarter 2020 by selling certain investments for a net gain of $4.0 million.

Non-interest expense increased to $27.8 million in the fourth quarter 2020 from $26.8 million in the same quarter of 2019. The increase is primarily a result of higher salary and benefit expense due to additional year-end accruals for incentives on improved performance metrics and post-retirement plans on lower discount rates. Operating expenses remained controlled as the efficiency ratio (non-GAAP) improved to 61.98% from 62.56% for the same period a year ago. Non-core expenses (non-GAAP) in the fourth quarter of 2020 primarily consist a $4.0 million loss on termination of a $50.0 million swap on wholesale borrowings and $600 thousand of profitability initiative costs. Non-core expenses in the same quarter of 2019 include a $3.2 million loss on interest rate cap terminations and a $1.1 million loss on extinguishment of debt due to the inflow of liquidity from the 2019 acquisition.

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 130 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.barharbor.bank.

FORWARD LOOKING STATEMENTS

Certain statements under the headings "FOURTH QUARTER FINANCIAL HIGHLIGHTS", "FINANCIAL CONDITION" and "RESULTS OF OPERATIONS" 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, 2019. Because of these and other uncertainties, the Company's actual results, performance or achievements, or industry results, may be materially different from the results indicated by these forward-looking statements. In addition, the Company's past results of operations do not necessarily indicate future results. You should not place undue reliance on any of the forward-looking statements, which speak only as of the dates on which they were made. The Company is not undertaking an obligation to update forward-looking statements, even though its situation may change in the future, except as required under federal securities law. The Company qualifies all of its forward-looking statements by these cautionary statements.

NON-GAAP FINANCIAL 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 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.

CONTACTS

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

TABLE

INDEX

CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED)

A

Selected Financial Highlights

B

Footnotes to Selected Financial Highlights

C

Balance Sheets

D

Loan and Deposit Analysis

E

Statements of Income

F

Statements of Income (Five Quarter Trend)

G

Average Yields and Costs

H

Average Balances

I

Asset Quality Analysis

J

Reconciliation of Non-GAAP Financial Measures (Five Quarter Trend) and Supplementary Data

BAR HARBOR BANKSHARES
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED

 At or for the Quarters Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2020 2020 2020 2020 2019
PER SHARE DATA
Net earnings, diluted
 $0.58 $0.56 $0.55 $0.50 $0.27
Core earnings, diluted (1) (2)
 0.62 0.61 0.56 0.50 0.56
Total book value
 27.58 27.09 26.56 25.90 25.48
Tangible book value (2)
 19.05 18.56 18.18 17.70 17.30
Market price at period end
 22.59 20.55 22.39 17.28 25.39
Dividends
 0.22 0.22 0.22 0.22 0.22
PERFORMANCE RATIOS (3)
Return on assets
 0.92% 0.88% 0.90% 0.85% 0.46%
Core return on assets (1) (2)
 0.98 0.96 0.91 0.86 0.96
Return on equity
 8.39 8.22 8.40 7.64 4.21
Core return on equity (1) (2)
 8.95 8.98 8.52 7.71 8.81
Core return on tangible equity (1) (2)
 13.27 13.36 12.72 11.54 12.66
Net interest margin, fully taxable equivalent (FTE) (2) (4)
 3.02 2.90 2.93 3.04 2.94
Net interest margin (FTE), excluding purchased loan accretion (2) (4)
 2.98 2.84 2.82 2.98 2.86
Core net interest margin (1) (5)
 2.79 2.89 2.92 3.04 2.94
Efficiency ratio (2)
 61.98 59.47 60.67 64.82 62.56
ORGANIC GROWTH (Year-to-date, annualized) (2) (6)
Total commercial loans
 17% 27% 33% 6% 6%
Total loans
 (3) 3 5 (2) 2
Total deposits
 8 12 (0) (7) (2)
FINANCIAL DATA (In millions)
Total assets
 $3,726 $3,860 $3,780 $3,677 $3,669
Total earning assets (7)
 3,360 3,496 3,414 3,313 3,349
Total investments
 599 619 662 646 684
Total loans
 2,563 2,685 2,706 2,623 2,635
Allowance for loan losses
 19 18 17 15 15
Total goodwill and intangible assets
 127 127 128 128 127
Total deposits
 2,906 2,935 2,695 2,651 2,696
Total shareholders' equity
 411 404 404 404 396
Net income
 9 8 8 8 4
Core earnings (1) (2)
 9 9 9 8 9
ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (current quarter annualized)/average loans
 0.03% 0.06% 0.02% 0.18% 0.08%
Allowance for loan losses/total loans
 0.74 0.67 0.61 0.58 0.58
Loans/deposits
 88 91 100 99 98
Shareholders' equity to total assets
 11.04 10.48 10.69 10.98 10.80
Tangible shareholders' equity to tangible assets
 7.90 7.42 7.57 7.77 7.60
  1. Core measurements are non-GAAP financial measures adjusted to exclude net non-operating charges primarily related to acquisitions, restructurings, system conversions, loss on debt extinguishment and gain or loss on sale of securities, other real estate owned and premises and equipment. 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 based on average balance sheet amounts, where applicable.
  4. Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans.
  5. Core net interest margin excludes Paycheck Protection Program loans.
  6. Assets acquired from eight branches purchased from People's United Bank, National Association as of October 25, 2019, were excluded from the December 31, 2019 calculation.
  7. Earning assets includes non-accruing loans and interest-bearing deposits with other banks. Securities are valued at amortized cost.

BAR HARBOR BANKSHARES
CONSOLIDATED BALANCE SHEETS - UNAUDITED

 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(in thousands)
 2020 2020 2020 2020 2019
Assets
Cash and due from banks
 $27,566 $22,722 $24,430 $42,282 $26,485
Interest-bearing deposits with other banks
 198,441 192,935 46,243 43,373 30,425
Total cash and cash equivalents
 226,007 215,657 70,673 85,655 56,910
Securities available for sale
 585,046 604,529 641,574 626,341 663,230
Federal Home Loan Bank stock
 14,036 13,975 20,265 19,897 20,679
Total securities
 599,082 618,504 661,839 646,238 683,909
Loans held for sale
 23,988 23,721 22,979 11,701 6,499
Total loans
 2,562,885 2,684,970 2,706,438 2,623,282 2,634,593
Less: Allowance for loan losses
 (19,082) (17,907) (16,509) (15,297) (15,353)
Net loans
 2,543,803 2,667,063 2,689,929 2,607,985 2,619,240
Premises and equipment, net
 52,458 51,424 50,464 49,978 51,205
Other real estate owned
 - 1,983 2,318 2,205 2,236
Goodwill
 119,477 119,477 119,477 119,477 118,649
Other intangible assets
 7,670 7,913 8,155 8,398 8,641
Cash surrender value of bank-owned life insurance
 77,870 77,388 76,896 76,400 75,863
Deferred tax asset, net
 1,745 2,180 2,451 3,166 3,865
Other assets
 73,662 74,400 75,084 66,139 42,111
Total assets
 $3,725,762 $3,859,710 $3,780,265 $3,677,342 $3,669,128
Liabilities and shareholders' equity
Demand and other non-interest bearing deposits
 $544,636 $515,064 $504,325 $400,410 $414,534
NOW deposits
 738,849 706,048 642,908 578,320 575,809
Savings deposits
 521,638 511,938 466,668 423,345 388,683
Money market deposits
 402,731 388,356 402,835 404,385 384,090
Time deposits
 698,361 813,509 678,126 844,097 932,635
Total deposits
 2,906,215 2,934,915 2,694,862 2,650,557 2,695,751
Senior borrowings
 276,062 385,472 546,863 497,580 471,396
Subordinated borrowings
 59,961 59,920 59,879 59,849 59,920
Total borrowings
 336,023 445,392 606,742 557,429 531,316
Other liabilities
 72,183 74,958 74,487 65,601 45,654
Total liabilities
 3,314,421 3,455,265 3,376,091 3,273,587 3,272,721
Total common shareholders' equity
 411,341 404,445 404,174 403,755 396,407
Total liabilities and shareholders' equity
 $3,725,762 $3,859,710 $3,780,265 $3,677,342 $3,669,128
Net shares outstanding
 14,916 14,929 15,214 15,587 15,558

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)
 2020 2020 2020 2020 2019 End Date
Commercial real estate
 $1,084,381 $1,045,635 $982,070 $948,178 $930,661 15% 17%
Commercial and industrial
 323,864 324,647 340,898 321,605 318,988 (1) 2
Paycheck Protection Program (PPP)
 53,774 131,537 131,626 - - * *
Total commercial loans
 1,462,019 1,501,819 1,454,594 1,269,783 1,249,649 (11) 17
Total commercial loans, excluding PPP
 1,408,245 1,370,282 1,322,968 1,269,783 1,249,649 11 13
Residential real estate
 923,891 997,485 1,060,729 1,120,627 1,145,358 (30) (19)
Consumer
 113,544 119,340 124,197 128,120 135,283 (19) (16)
Tax exempt and other
 63,431 66,326 66,918 104,752 104,303 (17) (39)
Total loans
 $2,562,885 $2,684,970 $2,706,438 $2,623,282 $2,634,593 (18)% (3)%

*Indicates ratios of 100% or greater.

DEPOSIT ANALYSIS

 Annualized
Growth %
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Quarter Year to
(in thousands)
 2020 2020 2020 2020 2019 End Date
Demand
 $544,636 $515,064 $504,325 $400,410 $414,534 23% 31%
NOW
 738,849 706,048 642,908 578,320 575,809 19 28
Savings
 521,638 511,938 466,668 423,345 388,683 8 34
Money market
 402,731 388,356 402,835 404,385 384,090 15 5
Total non-maturity deposits
 2,207,854 2,121,406 2,016,736 1,806,460 1,763,116 16 25
Total time deposits
 698,361 813,509 678,126 844,097 932,635 (57) (25)
Total deposits
 $2,906,215 $2,934,915 $2,694,862 $2,650,557 $2,695,751 (4)% 8%

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

 Three Months Ended Year Ended
December 31, December 31,
(in thousands, except per share data)
 2020 2019 2020 2019
Interest and dividend income
Loans
 $26,687 $28,361 $107,085 $111,042
Securities and other
 4,013 5,756 19,019 24,349
Total interest and dividend income
 30,700 34,117 126,104 135,391
Interest expense
Deposits
 3,606 6,698 18,043 27,034
Borrowings
 1,732 3,315 8,881 18,547
Total interest expense
 5,338 10,013 26,924 45,581
Net interest income
 25,362 24,104 99,180 89,810
Provision for loan losses
 1,360 538 5,625 2,317
Net interest income after provision for loan losses
 24,002 23,566 93,555 87,493
Non-interest income
Trust and investment management fee income
 3,318 3,227 13,378 12,063
Customer service fees
 2,890 2,791 11,327 10,127
Gain on sales of securities, net
 3,959 80 5,445 237
Mortgage banking income
 2,654 532 6,884 1,626
Bank-owned life insurance income
 482 495 2,007 2,053
Customer derivative income
 1,086 475 2,503 2,028
Other income
 334 206 1,412 935
Total non-interest income
 14,723 7,806 42,956 29,069
Non-interest expense
Salaries and employee benefits
 13,318 11,432 48,920 45,000
Occupancy and equipment
 4,192 4,113 16,751 14,214
(Gain) loss on sales of premises and equipment, net
 (122) (3) (32) 18
Outside services
 571 540 1,985 1,818
Professional services
 572 370 2,060 2,191
Communication
 194 114 892 821
Marketing
 415 453 1,385 1,872
Amortization of intangible assets
 256 240 1,024 861
Loss on debt extinguishment
 - 1,096 1,351 1,096
Acquisition, conversion and other expenses
 4,849 4,998 5,801 8,317
Other expenses
 3,571 3,450 14,723 13,525
Total non-interest expense
 27,816 26,803 94,860 89,733
Income before income taxes
 10,909 4,569 41,651 26,829
Income tax expense
 2,269 362 8,407 4,209
Net income
 $8,640 $4,207 $33,244 $22,620
Earnings per share:
Basic
 $0.58 $0.27 $2.18 $1.46
Diluted
 0.58 0.27 2.18 1.45
Weighted average shares outstanding:
Basic
 14,909 15,554 15,246 15,541
Diluted
 14,952 15,602 15,272 15,587

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)
 2020 2020 2020 2020 2019
Interest and dividend income
Loans
 $26,687 $25,918 $26,493 $27,987 $28,361
Securities and other
 4,013 4,557 4,942 5,507 5,756
Total interest and dividend income
 30,700 30,475 31,435 33,494 34,117
Interest expense
Deposits
 3,606 3,869 4,548 6,020 6,698
Borrowings
 1,732 1,941 2,297 2,911 3,315
Total interest expense
 5,338 5,810 6,845 8,931 10,013
Net interest income
 25,362 24,665 24,590 24,563 24,104
Provision for loan losses
 1,360 1,800 1,354 1,111 538
Net interest income after provision for loan losses
 24,002 22,865 23,236 23,452 23,566
Non-interest income
Trust and investment management fee income
 3,318 3,532 3,159 3,369 3,227
Customer service fees
 2,890 2,886 2,439 3,112 2,791
Gain on sales of securities, net
 3,959 - 1,351 135 80
Mortgage banking income
 2,654 2,649 1,124 457 532
Bank-owned life insurance income
 482 492 496 537 495
Customer derivative income
 1,086 316 513 588 475
Other income
 334 227 628 223 206
Total non-interest income
 14,723 10,102 9,710 8,421 7,806
Non-interest expense
Salaries and employee benefits
 13,318 11,809 11,909 11,884 11,432
Occupancy and equipment
 4,192 4,279 3,860 4,420 4,113
(Gain) loss on sales of premises and equipment, net
 (122) - (2) 92 (3)
Outside services
 571 438 442 534 540
Professional services
 572 479 337 672 370
Communication
 194 215 194 289 114
Marketing
 415 300 282 388 453
Amortization of intangible assets
 256 256 256 256 240
Loss on debt extinguishment
 - - 1,351 - 1,096
Acquisition, conversion and other expenses
 4,849 691 158 103 4,998
Other expenses
 3,571 3,952 3,479 3,721 3,450
Total non-interest expense
 27,816 22,419 22,266 22,359 26,803
Income before income taxes
 10,909 10,548 10,680 9,514 4,569
Income tax expense
 2,269 2,146 2,199 1,793 362
Net income
 $8,640 $8,402 $8,481 $7,721 $4,207
Earnings per share:
Basic
 $0.58 $0.56 $0.55 $0.50 $0.27
Diluted
 0.58 0.56 0.55 0.50 0.27
Weighted average shares outstanding:
Basic
 14,909 15,079 15,424 15,558 15,554
Diluted
 14,952 15,103 15,441 15,593 15,602

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

 Quarters Ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2020 2020 2020 2020 2019
Earning assets
Interest-bearing deposits with other banks (1)
 0.11% 0.09% 0.08% 1.16% 1.96%
Securities available for sale and FHLB stock (1)
 2.97 3.04 3.26 3.50 3.45
Loans:
Commercial real estate
 3.74 3.81 4.11 4.46 4.69
Commercial and industrial
 3.92 4.39 4.13 4.89 4.58
Paycheck protection program
 11.56 3.18 3.34 - -
Residential
 3.74 3.71 3.81 3.84 3.89
Consumer
 3.65 3.42 3.81 5.20 4.84
Total loans
 4.03 3.81 3.94 4.30 4.33
Total earning assets
 3.65% 3.57% 3.73% 4.12% 4.13%
Funding liabilities
Deposits:
NOW
 0.15% 0.14% 0.14% 0.40% 0.44%
Savings
 0.13 0.13 0.15 0.25 0.20
Money market
 0.14 0.16 0.40 1.01 1.17
Time deposits
 1.64 1.69 1.94 1.92 2.06
Total interest-bearing deposits
 0.61 0.66 0.81 1.08 1.19
Borrowings
 1.83 1.60 1.51 2.10 2.30
Total interest-bearing liabilities
 0.77% 0.82% 0.96% 1.28% 1.42%
Net interest spread
 2.88 2.75 2.77 2.84 2.71
Net interest margin (1)
 3.02 2.90 2.93 3.04 2.94
Core net interest margin (2)
 2.79 2.89 2.92 3.04 2.94
  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)
 2020 2020 2020 2020 2019
Assets
Interest-bearing deposits with other banks (1)
 $176,747 $92,066 $71,067 $16,933 $14,554
Securities available for sale and FHLB stock (2)
 563,118 627,162 648,185 661,848 683,939
Loans:
Commercial real estate
 1,059,574 1,012,194 952,264 945,851 928,445
Commercial and industrial
 386,201 399,734 417,620 423,393 412,595
Paycheck protection program
 91,109 131,605 104,740 - -
Residential real estate
 995,173 1,060,084 1,117,608 1,141,908 1,156,215
Consumer
 115,876 121,248 126,413 130,471 127,425
Total loans (3)
 2,647,933 2,724,865 2,718,645 2,641,623 2,624,680
Total earning assets
 3,387,798 3,444,093 3,437,897 3,320,404 3,323,173
Cash and due from banks
 22,473 36,521 43,165 40,818 53,088
Allowance for loan losses
 (18,690) (17,028) (15,678) (15,242) (15,657)
Goodwill and other intangible assets
 127,264 127,508 127,751 128,014 114,537
Other assets
 237,424 223,316 213,986 187,765 179,512
Total assets
 $3,756,269 $3,814,410 $3,807,121 $3,661,759 $3,654,653
Liabilities and shareholders' equity
Deposits:
NOW
 $713,464 $677,706 $611,860 $570,127 $551,335
Savings
 516,266 488,508 450,621 410,931 378,997
Money market
 399,543 396,351 411,232 373,650 379,361
Time deposits
 734,523 777,424 776,042 892,654 918,528
Total interest-bearing deposits
 2,363,796 2,339,989 2,249,755 2,247,362 2,228,221
Borrowings
 376,437 481,687 612,538 556,824 571,936
Total interest-bearing liabilities
 2,740,233 2,821,676 2,862,293 2,804,186 2,800,157
Non-interest-bearing demand deposits
 535,402 507,844 472,688 406,951 418,324
Other liabilities
 71,119 78,072 66,302 44,343 40,136
Total liabilities
 3,346,754 3,407,592 3,401,283 3,255,480 3,258,617
Total shareholders' equity
 409,515 406,818 405,838 406,279 396,036
Total liabilities and shareholders' equity
 $3,756,269 $3,814,410 $3,807,121 $3,661,759 $3,654,653
  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)
 2020 2020 2020 2020 2019
NON-PERFORMING ASSETS
Non-accruing loans:
Commercial real estate
 $4,251 $4,714 $3,981 $2,227 $3,489
Commercial installment
 1,466 1,820 1,790 1,996 1,836
Residential real estate
 5,729 7,154 7,194 5,089 5,335
Consumer installment
 742 720 1,023 744 890
Total non-accruing loans
 12,188 14,408 13,988 10,056 11,550
Other real estate owned
 - 1,983 2,318 2,205 2,236
Total non-performing assets
 $12,188 $16,391 $16,306 $12,261 $13,786
Total non-accruing loans/total loans
 0.48% 0.54% 0.52% 0.38% 0.44%
Total non-performing assets/total assets
 0.33 0.42 0.43 0.33 0.38
PROVISION AND ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period
 $17,907 $16,509 $15,297 $15,353 $15,353
Charged-off loans
 (297) (439) (220) (1,211) (603)
Recoveries on charged-off loans
 112 37 78 44 65
Net loans charged-off
 (185) (402) (142) (1,167) (538)
Provision for loan losses
 1,360 1,800 1,354 1,111 538
Balance at end of period
 $19,082 $17,907 $16,509 $15,297 $15,353
Allowance for loan losses/total loans
 0.74% 0.66% 0.60% 0.58% 0.58%
Allowance for loan losses/non-accruing loans
 157 124 118 152 133
NET LOAN CHARGE-OFFS
Commercial real estate
 $63 $(252) $71 $(846) $(92)
Commercial installment
 (228) (10) (155) (170) (331)
Residential real estate
 (21) 1 (20) (1) (16)
Consumer installment
 1 (141) (38) (150) (99)
Total, net
 $(185) $(402) $(142) $(1,167) $(538)
Net charge-offs (QTD annualized)/average loans
 0.03% 0.06% 0.02% 0.18% 0.08%
Net charge-offs (YTD annualized)/average loans
 0.07 0.08 0.10 0.18 0.03
DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS
30-89 Days delinquent
 0.58% 0.16% 0.28% 0.84% 0.74%
90+ Days delinquent and still accruing
 - 0.08 0.04 0.08 0.01
Total accruing delinquent loans
 0.58 0.24 0.32 0.92 0.75
Non-accruing loans
 0.48 0.53 0.51 0.38 0.44
Total delinquent and non-accruing loans
 1.06% 0.77% 0.83% 1.30% 1.19%

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)
 2020 2020 2020 2020 2019
Net income
 $ 8,640 $ 8,402 $ 8,481 $ 7,721 $ 4,207
(Gain) on sale of securities, net
 (3,959) - (1,351) (135) (80)
(Gain) loss on sale of premises and equipment, net
 (122) - (2) 92 (3)
(Gain) loss on other real estate owned
 (11) 335 - 31 20
Loss on debt extinguishment
 - - 1,351 - 1,096
Acquisition, conversion and other expenses
 4,849 691 158 103 4,998
Income tax expense (1)
 (179) (245) (37) (22) (1,440)
Core earnings (2)
(A)
 $ 9,218 $ 9,183 $ 8,600 $ 7,790 $ 8,798
Net interest income
(B)
 $ 25,362 $ 24,665 $ 24,590 $ 24,563 $ 24,104
Non-interest income
 14,723 10,102 9,710 8,421 7,806
Total Revenue
 40,085 34,767 34,300 32,984 31,910
(Gain) on sale of securities, net
 (3,959) - (1,351) (135) (80)
Total core revenue (2)
(C)
 $ 36,126 $ 34,767 $ 32,949 $ 32,849 $ 31,830
Total non-interest expense
 27,816 22,419 22,266 22,359 26,803
Gain (loss) on sale of premises and equipment, net
 122 - 2 (92) 3
Gain (loss) on other real estate owned
 11 (335) - (31) (20)
Loss on debt extinguishment
 - - (1,351) - (1,096)
Acquisition, conversion and other expenses
 (4,849) (691) (158) (103) (4,998)
Core non-interest expense (2)
(D)
 $ 23,100 $ 21,393 $ 20,759 $ 22,133 $ 20,692
(in millions)
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FAQ

What were Bar Harbor Bankshares' net income figures for Q4 2020?

Bar Harbor Bankshares reported a net income of $8.6 million for Q4 2020.

How did Bar Harbor Bankshares' core earnings change in Q4 2020?

Core earnings increased by 11% to $9.2 million, or $0.62 per share, in Q4 2020.

What was the net interest margin for Bar Harbor Bankshares in Q4 2020?

The net interest margin for Q4 2020 was 3.02%, up from 2.94% in Q4 2019.

How many new accounts did Bar Harbor Bankshares open in Q4 2020?

Bar Harbor Bankshares opened 3,200 new low-cost core deposit accounts in Q4 2020.

What was the impact of PPP loan forgiveness on Bar Harbor Bankshares' loans?

PPP loan forgiveness led to a $122.1 million decrease in loans in Q4 2020.

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