Bar Harbor Bankshares Reports Third Quarter Results; Declares Dividend

Rhea-AI Summary

Bar Harbor Bankshares (BHB) reported a net income of $11.4 million or $0.76 per diluted share for Q3 2022, up from $11.0 million or $0.73 in Q3 2021. The net interest margin improved to 3.47% from 3.02% year-over-year, while loan growth surged by 18%. The efficiency ratio decreased to 58% from 59%, aided by disciplined expense management. A cash dividend of $0.26 per share was declared, yielding 3.92%.

The bank maintained strong asset quality, with a non-performing assets ratio of 0.20%.

Positive

• Net income increased by 4% to $11.4 million compared to Q3 2021.
• Loan growth of 18% and a non-performing assets ratio of 0.20% demonstrate strong asset quality.
• Net interest margin expanded from 3.02% to 3.47%.

Negative

• Non-interest income decreased to $8.8 million from $11.4 million year-over-year.
• Provision for credit losses increased to $1.3 million compared to a recapture of $174 thousand in Q3 2021.

BAR HARBOR, ME / ACCESSWIRE / October 19, 2022 / Bar Harbor Bankshares (NYSE American:BHB) reported third quarter 2022 net income of $11.4 million or $0.76 per diluted share compared to $11.0 million or $0.73 per diluted share in the same quarter of 2021. Earnings per share in the prior year quarter included a $0.14 per diluted share benefit from Paycheck Protection Program (PPP) loans.

THIRD QUARTER HIGHLIGHTS (all comparisons to the third quarter 2021)

• 1.20% return on assets, compared to 1.16%
• 18% annualized loan growth
• 12% annualized core deposit growth
• 3.47% net interest margin, compared to 3.02%
• 58% efficiency ratio, compared to 59%
• 0.20% non-performing assets ratio to total assets, compared to 0.33%

President and Chief Executive Officer, Curtis C. Simard stated, "We are pleased to report our third quarter 2022 results which reflect another strong quarter in loan growth, asset quality, and expansion in net interest margin as well as in all other profitability metrics. We increased net income by 27% over the third quarter of 2021 excluding the benefit from PPP loans. Total revenue was $38.7 million; a 9% increase from the prior quarter driven primarily by both growth in average assets and the expansion in net interest income due to our asset-sensitive position. Return on assets expanded 25 basis points excluding income from PPP loans in 2021. This quarter's earnings reflect strategically designed core run rates based on non-maturity deposits and commercial loan growth. We continue to practice disciplined expense management despite inflationary challenges seen across the US work force today. These combined efforts create positive operating leverage, which in part, drove the efficiency ratio down to 58%, compared to 59% or 63% excluding PPP loan accretion in the third quarter 2021.

"Loan growth was generated across all of our footprint and across all industry sectors and business lines. The economy in Northern New England continues to be resilient despite pressures from the broader economy. While the commercial loan market is active, we continue to be selective in those opportunities with proven operators who similarly are increasingly focused on bank execution. Overall on an annualized basis commercial loans grew by 25% and residential loans grew 9%, as much of the mortgage production during the quarter was shifted to the balance sheet taking advantage of the higher rate environment.

"On the liability side, we are growing core deposits at a strong double digit rate and gaining market share. This has allowed us to increase our deposit funding reliance and diligently manage our funding costs, which also contributed to our expanded margin.

Mr. Simard went on to say, "As always, our asset quality remains a pillar of our foundation as we continue to see negligible net charge-offs this quarter. Non-performing assets to total assets continues to be minimal at 0.20%. At the end of the third quarter, the allowance for credit losses (ACL) was 0.88% of total loans, up from 0.87% at the end of the second 2022 quarter primarily as a result of more conservative economic forecasting and outsized loan growth.

"We've grown our tangible book value per share, excluding the impact of unrealized security losses, at a compound annual growth rate of 8% on strong earnings offset in part by favorable dividend payments to investors. We should also note that while we have not classified any of our portfolio as held to maturity, we do have the ability to hold the investments to maturity and fully expect any unrealized loss positions to be recovered over time. We continue to manage the investment portfolio as a balance sheet tool versus a line of business, and to this point, classifying investments as available for sale preserves our flexibility.

Mr. Simard concluded, "Looking ahead, while the economy remains uncertain, our customer base remains strong, and we continue to be well positioned to support the needs within our communities regardless of the economic environment. We are actively managing the balance sheet, and, as we have proven in the past, we will continue to lend through the uncertainty while managing our market sensitivity position."

DIVIDEND DECLARED

The Board of Directors voted to declare a cash dividend of $0.26 per share to shareholders of record at the close of business on November 16, 2022 payable on December 16, 2022. This dividend equates to a 3.92% annualized yield based on the $26.52 closing share price of the Company's common stock on September 30, 2022, the last trading day of the third quarter 2022.

FINANCIAL CONDITION

Loans were $2.8 billion at the end of the third quarter. Commercial loans increased $106.4 million from the end of the second quarter 2022 and included 65 new customer relationships. Total residential loans increased $20.0 million from the end of the second quarter 2022, and included $35.1 million of originations on the balance sheet offset by prepayments and amortization.

The allowance for credit losses was $25.0 million for the third quarter, compared to $23.8 million at the end of the second quarter 2022. The increase in the ACL balance is largely due to significant loan growth during the quarter. The third quarter 2022 charged off loans resulted in a net charge-off of $44 thousand compared to a net recovery of $32 thousand in the second quarter. Non-accruing loans for the third quarter 2022 decreased to $7.8 million from $7.9 million at the end of the second quarter. The ratio of accruing past due loans to total loans was 0.10% of total loans at the end of the third quarter from 0.12% at the end of the second quarter.

Total deposits were $3.1 billion at the end of the third quarter 2022 as well as at the end of the second quarter. Core deposits grew $84.8 million, or 12% on an annualized basis. Time deposits decreased $27.7 million during the quarter attributable to customers continuing to move funds to transactional accounts upon contractual maturity. Excess cash and short-term borrowings were used as funding during the third quarter as loan growth outpaced deposit growth. The loan to deposit ratio was 91% compared to 89% at the end of the second quarter 2022.

The Company's book value per share was $25.22 at September 30, 2022, compared with $26.19 at the end of the second quarter. Tangible book value per share (non-GAAP measure) was $16.89 at the end of the third quarter 2022, compared to $17.83 at the end of the second quarter. Other comprehensive income included unrealized loss on securities totaling $58.7 million in the third quarter 2022 compared to $38.3 million at the end of the second quarter.

RESULTS OF OPERATIONS

Net income in the third quarter 2022 was $11.4 million, or $0.76 per diluted share, compared to $11.0 million, or $0.73 per diluted share, in the same quarter of 2021. In the third quarter 2022, there was no PPP income compared to $2.7 million in the third quarter 2021.

Net interest margin was 3.47% compared to 3.02% in the same period of 2021. Acceleration of PPP loan fee amortization due to forgiveness contributed 28 basis points in the third quarter 2021. Interest-bearing cash balances reduced net interest margin by 2 basis points in the third quarter 2022 and 26 basis points the prior year quarter. The yield on loans was 4.04% in the third quarter 2022, and 3.98% in the third quarter of 2021 or 3.62% when excluding interest from PPP loans. Costs of interest-bearing liabilities decreased to 0.48% from 0.50% in the third quarter 2021 primarily due to having a lower percentage of wholesale borrowings to total debt.

The provision for credit losses for the quarter was $1.3 million, compared to a recapture of $174 thousand in the third quarter of 2021. The provision in the current period is mainly attributable to outsized loan growth, while the recapture in the prior year quarter was due to improvement in economic forecasts.

Non-interest income in the third quarter 2022 was $8.8 million, compared to $11.4 million in the same quarter of 2021. Customer service fees grew to $3.8 million from $3.7 million on a higher number of transactional accounts. Wealth management income in the third quarter 2022 was $3.5 million, compared to $3.9 million in the same quarter of 2021 due to market adjustments that reduced assets under management. Mortgage banking income was $315 thousand, compared to $850 thousand in the same period of 2021 reflecting lower originations and higher on balance sheet activity.

Non-interest expense was $23.0 million in the third quarter 2022 and $23.4 million in the same quarter of 2021. Salaries and employee benefits increased by $500 thousand primarily due to annual merit increases in the second quarter 2022 and revaluation long-term incentive accruals to the Company's higher stock price at the end of the third quarter 2022. The efficiency ratio in the third quarter 2022 was 58%, down from 59%, 63% excluding PPP loan income in the third quarter 2021. Non-core expenses (non-GAAP) were $31 thousand compared to $1.9 million in the third quarter of 2021, which mostly consisted of a $1.8 million loss on debt extinguishment.

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 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, including statements relating to the current economic outlook, potential risks to the economy, future interest rates, our ability to grow in the future, and management's optimism about the Company's market and financial positions. 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 about the Company's future financial and operating results and the Company's 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 condition of borrowers of Bar Harbor Bank & Trust, including as a result of the negative impact of inflationary pressures on our customers and their businesses resulting in significant increases in loan losses and provisions for those losses, (2) deterioration in the financial condition of borrowers of Bar Harbor Bank & Trust, including as a result of the negative impact of inflationary pressures on our customers and their businesses resulting in significant increases in loan losses and provisions for those losses, (3) the possibility that our asset quality could decline or that we experience greater loan losses than anticipated, (4) increased levels of other real estate, primarily as a result of foreclosures, (5) the impact of liquidity needs on our results of operations and financial condition, (6) competition from financial institutions and other financial service providers, (7) the effect of interest rate increases on the cost of deposits, (8) unanticipated weakness in loan demand or loan pricing, (9) adverse conditions in the national or local economies including in Bar Harbor Bankshares' markets throughout Northern New England, (10) the effects of new outbreaks of COVID-19, including actions taken by governmental officials to curb the spread of the virus, and the resulting impact on general economic and financial market conditions and on Bar Harbor Bankshares' and its customers' business, results of operations, asset quality and financial condition, (11) the efficacy of vaccines against the COVID-19 virus, including new variants, (12) lack of strategic growth opportunities or our failure to execute on available opportunities, (13) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, (14) our ability to effectively manage problem credits, (15) our ability to successfully implement efficiency initiatives on time and with the results projected, (16) our ability to successfully develop and market new products and technology, (17) the impact of negative developments in the financial industry and United States and global capital and credit markets, (18) our ability to retain the services of key personnel, (19) our ability to adapt to technological changes, (20) risks associated with litigation, including reputational and financial risks and the applicability of insurance coverage, (21) the vulnerability of the Bar Harbor Bank & Trust's computer and information technology systems and networks, and the systems and networks of third parties with whom the Company or the Bar Harbor Bank & Trust contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches and interruptions, (22) changes in state and federal laws, rules, regulations, or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments, (23) 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 (24) 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. 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	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
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
		2022				2022				2022				2021				2021
PER SHARE DATA
Net earnings, diluted		$	0.76			$	0.70			$	0.60			$	0.65			$	0.73
Core earnings, diluted (1)			0.76				0.70				0.62				0.68				0.73
Total book value			25.22				26.19				27.11				28.27				27.92
Tangible book value (1)			16.89				17.83				18.72				19.86				19.48
Market price at period end			26.52				25.86				28.62				28.93				28.05
Dividends			0.26				0.26				0.24				0.24				0.24
PERFORMANCE RATIOS (2)
Return on assets			1.20	%			1.14	%			1.00	%			1.02	%			1.16	%
Core return on assets (1)			1.20				1.14				1.02				1.07				1.16
Pre-tax, pre-provision return on assets			1.65				1.50				1.28				1.26				1.43
Core pre-tax, pre-provision return on assets (1)			1.65				1.50				1.31				1.33				1.43
Return on equity			11.55				10.58				8.89				9.16				10.38
Core return on equity (1)			11.54				10.59				9.07				9.60				10.39
Return on tangible equity			17.25				15.74				13.01				13.30				15.08
Core return on tangible equity (1)			17.24				15.76				13.27				13.93				15.09
Net interest margin, fully taxable equivalent (FTE) (1) (3)			3.47				3.19				2.95				2.79				3.02
Core net interest margin (1) (4)			3.47				3.19				2.93				2.69				2.75
Efficiency ratio (1)			57.67				59.25				62.40				60.74				59.18
FINANCIAL DATA (In millions)
Total assets		$	3,840			$	3,716			$	3,692			$	3,709			$	3,738
Total earning assets (5)			3,525				3,399				3,367				3,380				3,394
Total investments			566				593				611				626				556
Total loans			2,850				2,727				2,655				2,532				2,534
Allowance for credit losses			25				24				23				23				22
Total goodwill and intangible assets			126				126				126				126				126
Total deposits			3,136				3,079				3,048				3,049				3,007
Total shareholders' equity			380				394				407				424				418
Net income			11				11				9				10				11
Core earnings (1)			11				11				9				10				11
ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (recoveries)(6)/average loans			0.01	%			-	%			(0.01	)%			(0.02	)%			0.03	%
Allowance for credit losses/total loans			0.88				0.87				0.87				0.90				0.89
Loans/deposits			91				89				87				83				84
Shareholders' equity to total assets			9.89				10.59				11.02				11.43				11.19
Tangible shareholders' equity to tangible assets			6.85				7.46				7.88				8.32				8.08

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. 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. Current quarter annualized.

BAR HARBOR BANKSHARES
CONSOLIDATED BALANCE SHEETS - UNAUDITED

		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
(in thousands)		2022				2022				2022				2021				2021
Assets
Cash and due from banks		$	50,760			$	40,834			$	38,656			$	33,508			$	39,081
Interest-earning deposits with other banks			31,305				26,282				72,393				216,881				302,118
Total cash and cash equivalents			82,065				67,116				111,049				250,389				341,199
Securities available for sale			556,752				586,142				603,910				618,276				545,327
Federal Home Loan Bank stock			9,035				6,572				7,384				7,384				10,192
Total securities			565,787				592,714				611,294				625,660				555,519
Loans held for sale			982				3,539				2,843				5,523				7,505
Total loans			2,850,364				2,727,274				2,654,562				2,531,910				2,534,154
Less: Allowance for credit losses			(25,018	)			(23,756	)			(23,190	)			(22,718	)			(22,448	)
Net loans			2,825,346				2,703,518				2,631,372				2,509,192				2,511,706
Premises and equipment, net			48,010				48,350				48,891				49,382				50,070
Other real estate owned			-				-				-				-				-
Goodwill			119,477				119,477				119,477				119,477				119,477
Other intangible assets			6,034				6,267				6,500				6,733				6,966
Cash surrender value of bank-owned life insurance			80,758				80,262				79,861				79,020				79,380
Deferred tax asset, net			25,288				18,405				12,614				5,547				5,811
Other assets			86,499				76,109				68,169				58,310				60,712
Total assets		$	3,840,246			$	3,715,757			$	3,692,070			$	3,709,233			$	3,738,345
Liabilities and shareholders' equity
Demand and other non-interest bearing deposits		$	700,218			$	670,268			$	653,471			$	664,420			$	664,395
NOW deposits			918,822				883,239				918,768				940,631				888,021
Savings deposits			669,317				663,676				658,834				628,670				605,977
Money market deposits			513,075				499,456				424,750				389,291				379,651
Time deposits			334,248				361,906				391,940				425,532				469,221
Total deposits			3,135,680				3,078,545				3,047,763				3,048,544				3,007,265
Senior borrowings			188,757				117,347				118,538				118,400				190,267
Subordinated borrowings			60,248				60,206				60,165				60,124				60,083
Total borrowings			249,005				177,553				178,703				178,524				250,350
Other liabilities			75,596				66,062				58,605				58,018				62,295
Total liabilities			3,460,281				3,322,160				3,285,071				3,285,086				3,319,910
Total shareholders' equity			379,965				393,597				406,999				424,147				418,435
Total liabilities and shareholders' equity		$	3,840,246			$	3,715,757			$	3,692,070			$	3,709,233			$	3,738,345
Net shares outstanding			15,066				15,026				15,013				15,001				14,987

BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED

LOAN ANALYSIS

																						Annualized
																						Growth %
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,				Quarter				Year
(in thousands)		2022				2022				2022				2021				2021				to Date				to Date
Commercial real estate		$	1,421,962			$	1,331,860			$	1,289,968			$	1,210,580			$	1,170,372				27	%			23	%
Commercial and industrial			376,624				360,304				346,394				340,129				331,091				18				14
Paycheck Protection Program (PPP)			-				170				1,126				6,669				24,227				*				*
Total commercial loans			1,798,586				1,692,334				1,637,488				1,557,378				1,525,690				25				21
Total commercial loans, excluding PPP			1,798,586				1,692,164				1,636,362				1,550,709				1,501,463				25				21
Residential real estate			896,618				876,644				868,382				821,004				849,692				9				12
Consumer			100,822				100,816				96,876				98,949				100,933				-				3
Tax exempt and other			54,338				57,480				51,816				54,579				57,839				(22	)			(1	)
Total loans		$	2,850,364			$	2,727,274			$	2,654,562			$	2,531,910			$	2,534,154				18	%			17	%

DEPOSIT ANALYSIS

																						Annualized
																						Growth %
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,				Quarter				Year
(in thousands)		2022				2022				2022				2021				2021				to Date				to Date
Demand		$	700,218			$	670,268			$	653,471			$	664,420			$	664,395				18	%			7	%
NOW			918,822				883,239				918,768				940,631				888,021				16				(3	)
Savings			669,317				663,676				658,834				628,670				605,977				3				9
Money market			513,075				499,456				424,750				389,291				379,651				11				42
Total non-maturity deposits			2,801,432				2,716,639				2,655,823				2,623,012				2,538,044				12				9
Total time deposits			334,248				361,906				391,940				425,532				469,221				(31	)			(29	)
Total deposits		$	3,135,680			$	3,078,545			$	3,047,763			$	3,048,544			$	3,007,265				7	%			4	%

*Indicates ratios of 100% or greater.

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(in thousands, except per share data)		2022				2021				2022				2021
Interest and dividend income
Loans		$	27,940			$	25,094			$	75,192			$	72,490
Securities and other			5,145				3,821				13,178				11,792
Total interest and dividend income			33,085				28,915				88,370				84,282
Interest expense
Deposits			1,801				1,555				4,185				7,109
Borrowings			1,374				1,778				3,458				5,415
Total interest expense			3,175				3,333				7,643				12,524
Net interest income			29,910				25,582				80,727				71,758
Provision for credit losses			1,306				(174	)			2,217				(1,428	)
Net interest income after provision for credit losses			28,604				25,756				78,510				73,186
Non-interest income
Trust and investment management fee income			3,548				3,868				11,131				11,335
Customer service fees			3,836				3,515				11,108				9,742
Gain on sales of securities, net			44				1,930				53				1,980
Mortgage banking income			315				850				1,427				4,973
Bank-owned life insurance income			496				494				1,501				1,510
Customer derivative income			58				341				213				837
Other income			526				352				1,660				726
Total non-interest income			8,823				11,350				27,093				31,103
Non-interest expense
Salaries and employee benefits			12,242				11,743				35,757				35,275
Occupancy and equipment			4,458				4,029				13,254				12,251
Loss (gain) on sales of premises and equipment, net			-				(146	)			(65	)			(137	)
Outside services			393				547				1,143				1,512
Professional services			421				491				1,122				1,200
Communication			204				188				617				707
Marketing			518				339				1,150				1,163
Amortization of intangible assets			233				233				699				707
Loss on debt extinguishment			-				1,768				-				1,768
Acquisition, conversion and other expenses			31				318				356				1,759
Other expenses			4,532				3,862				12,585				11,382
Total non-interest expense			23,032				23,372				66,618				67,587
Income before income taxes			14,395				13,734				38,985				36,702
Income tax expense			2,965				2,706				7,940				7,169
Net income		$	11,430			$	11,028			$	31,045			$	29,533
Earnings per share:
Basic		$	0.76			$	0.74			$	2.07			$	1.97
Diluted			0.76				0.73				2.06				1.96
Weighted average shares outstanding:
Basic			15,058				14,983				15,029				14,961
Diluted			15,113				15,051				15,100				15,035

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

		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
(in thousands, except per share data)		2022				2022				2022				2021				2021
Interest and dividend income
Loans		$	27,940			$	24,581			$	22,671			$	22,746			$	25,094
Securities and other			5,145				4,207				3,826				3,776				3,821
Total interest and dividend income			33,085				28,788				26,497				26,522				28,915
Interest expense
Deposits			1,801				1,195				1,189				1,434				1,555
Borrowings			1,374				1,074				1,010				1,273				1,778
Total interest expense			3,175				2,269				2,199				2,707				3,333
Net interest income			29,910				26,519				24,298				23,815				25,582
Provision for credit losses			1,306				534				377				126				(174	)
Net interest income after provision for credit losses			28,604				25,985				23,921				23,689				25,756
Non-interest income
Trust and investment management fee income			3,548				3,829				3,754				3,844				3,868
Customer service fees			3,836				3,656				3,616				3,470				3,515
Gain on sales of securities, net			44				-				9				890				1,930
Mortgage banking income			315				488				624				1,563				850
Bank-owned life insurance income			496				504				501				669				494
Customer derivative income			58				137				18				173				341
Other income			526				347				787				549				352
Total non-interest income			8,823				8,961				9,309				11,158				11,350
Non-interest expense
Salaries and employee benefits			12,242				11,368				12,147				11,842				11,743
Occupancy and equipment			4,458				4,373				4,423				4,105				4,029
Loss (gain) on sales of premises and equipment, net			-				10				(75	)			515				(146	)
Outside services			393				410				340				431				547
Professional services			421				528				173				556				491
Communication			204				188				225				205				188
Marketing			518				369				263				378				339
Amortization of intangible assets			233				233				233				233				233
Loss on debt extinguishment			-				-				-				1,083				1,768
Acquisition, conversion and other expenses			31				-				325				(92	)			318
Other expenses			4,532				4,221				3,832				3,665				3,862
Total non-interest expense			23,032				21,700				21,886				22,921				23,372
Income before income taxes			14,395				13,246				11,344				11,926				13,734
Income tax expense			2,965				2,743				2,232				2,160				2,706
Net income		$	11,430			$	10,503			$	9,112			$	9,766			$	11,028
Earnings per share:
Basic		$	0.76			$	0.70			$	0.61			$	0.65			$	0.74
Diluted			0.76				0.70				0.60				0.65				0.73
Weighted average shares outstanding:
Basic			15,058				15,018				15,011				14,993				14,983
Diluted			15,113				15,077				15,102				15,075				15,051

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

		Quarters Ended
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
		2022				2022				2022				2021				2021
Earning assets
Interest-earning deposits with other banks			2.13	%			0.80	%			0.16	%			0.16	%			0.15	%
Securities available for sale and FHLB stock			3.12				2.69				2.55				2.66				2.59
Loans:
Commercial real estate			4.26				3.82				3.50				3.40				3.53
Commercial and industrial			4.46				3.67				3.46				3.23				3.79
Paycheck protection program			-				13.99				26.49				26.25				23.28
Residential real estate			3.45				3.55				3.55				3.61				3.64
Consumer			4.55				3.82				3.51				3.49				3.78
Total loans			4.04				3.71				3.54				3.58				3.98
Total earning assets			3.84	%			3.46	%			3.21	%			3.10	%			3.41	%
Funding liabilities
Deposits:
NOW			0.16	%			0.14	%			0.14	%			0.14	%			0.13	%
Savings			0.08				0.08				0.09				0.08				0.08
Money market			0.65				0.19				0.12				0.12				0.12
Time deposits			0.55				0.58				0.62				0.77				0.88
Total interest-bearing deposits			0.30				0.20				0.20				0.24				0.27
Borrowings			2.69				2.41				2.29				2.17				2.11
Total interest-bearing liabilities			0.48	%			0.36	%			0.35	%			0.41	%			0.50	%
Net interest spread			3.36				3.10				2.86				2.69				2.91
Net interest margin			3.47				3.19				2.95				2.79				3.02
Core net interest margin (1)			3.47				3.19				2.93				2.69				2.75

1. Core net interest margin (Non-GAAP) excludes Paycheck Protection Program loans.

BAR HARBOR BANKSHARES
AVERAGE BALANCES - UNAUDITED

		Quarters Ended
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
(in thousands)		2022				2022				2022				2021				2021
Assets
Interest-earning deposits with other banks (1)		$	59,556			$	63,317			$	140,383			$	325,260			$	284,429
Securities available for sale and FHLB stock (2)			642,475				637,881				629,811				578,323				610,381
Loans:
Commercial real estate			1,351,599				1,296,162				1,264,798				1,189,803				1,153,813
Commercial and industrial			421,963				412,518				393,759				386,156				391,191
Paycheck protection program			94				788				2,999				14,824				45,835
Residential real estate			882,158				863,172				856,252				844,872				824,686
Consumer			101,175				98,588				97,594				100,723				101,545
Total loans (3)			2,756,989				2,671,228				2,615,402				2,536,378				2,517,070
Total earning assets			3,459,020				3,372,426				3,385,596				3,439,961				3,411,880
Cash and due from banks			40,330				35,051				32,742				37,818				38,750
Allowance for credit losses			(24,061	)			(23,228	)			(23,256	)			(22,525	)			(22,607	)
Goodwill and other intangible assets			125,626				126,090				126,090				126,324				126,556
Other assets			171,394				178,037				190,846				200,097				209,509
Total assets		$	3,772,309			$	3,688,376			$	3,712,018			$	3,781,675			$	3,764,088
Liabilities and shareholders' equity
Deposits:
NOW		$	905,668			$	893,239			$	930,556			$	913,326			$	860,206
Savings			668,255				657,047				640,672				620,599				591,440
Money market			491,683				457,088				414,130				395,341				381,755
Time deposits			349,787				375,782				406,730				450,559				471,934
Total interest-bearing deposits			2,415,393				2,383,156				2,392,088				2,379,825				2,305,335
Borrowings			202,296				178,519				178,958				232,492				334,097
Total interest-bearing liabilities			2,617,689				2,561,675				2,571,046				2,612,317				2,639,432
Non-interest-bearing demand deposits			690,134				661,412				660,717				684,895				641,769
Other liabilities			71,934				67,069				64,619				61,480				61,436
Total liabilities			3,379,757				3,290,156				3,296,382				3,358,692				3,342,637
Total shareholders' equity			392,552				398,220				415,636				422,983				421,451
Total liabilities and shareholders' equity		$	3,772,309			$	3,688,376			$	3,712,018			$	3,781,675			$	3,764,088

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
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
(in thousands)		2022				2022				2022				2021				2021
NON-PERFORMING ASSETS
Non-accruing loans:
Commercial real estate		$	1,587			$	1,483			$	1,633			$	2,890			$	3,646
Commercial installment			348				632				905				1,056				1,163
Residential real estate			4,858				4,882				5,612				5,192				6,311
Consumer installment			981				881				1,063				1,053				1,087
Total non-accruing loans			7,774				7,878				9,213				10,191				12,207
Other real estate owned			-				-				-				-				-
Total non-performing assets		$	7,774			$	7,878			$	9,213			$	10,191			$	12,207
Total non-accruing loans/total loans			0.27	%			0.29	%			0.35	%			0.40	%			0.48	%
Total non-performing assets/total assets			0.20				0.21				0.25				0.27				0.33
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
Balance at beginning of period		$	23,756			$	23,190			$	22,718			$	22,448			$	22,815
Charged-off loans			(85	)			(62	)			(83	)			(154	)			(286	)
Recoveries on charged-off loans			41				94				178				298				93
Net loans charged-off			(44	)			32				95				144				(193	)
Provision for credit losses			1,306				534				377				126				(174	)
Balance at end of period		$	25,018			$	23,756			$	23,190			$	22,718			$	22,448
Allowance for credit losses/total loans			0.88	%			0.87	%			0.87	%			0.90	%			0.89	%
Allowance for credit losses/non-accruing loans			322				300				252				223				184
NET LOAN (CHARGE-OFFS) RECOVERIES
Commercial real estate		$	7			$	59			$	54			$	216			$	(69	)
Commercial installment			12				12				25				53				(24	)
Residential real estate			(5	)			6				76				8				13
Consumer installment			(58	)			(45	)			(60	)			(133	)			(113	)
Total, net		$	(44	)		$	32			$	95			$	144			$	(193	)
Net charge-offs (recoveries) (QTD annualized)/average loans			0.01	%			-	%			(0.01	)%			(0.02	)%			0.03	%
Net charge-offs (recoveries) (YTD annualized)/average loans			-				(0.01	)			(0.01	)			0.01				0.02
DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS
30-89 Days delinquent			0.09	%			0.09	%			0.22	%			0.31	%			0.09	%
90+ Days delinquent and still accruing			0.01				0.03				0.03				0.01				0.02
Total accruing delinquent loans			0.10				0.12				0.25				0.32				0.12
Non-accruing loans			0.27				0.29				0.35				0.40				0.48
Total delinquent and non-accruing loans			0.37	%			0.41	%			0.60	%			0.72	%			0.60	%

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

					At or for the Quarters Ended
					Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
(in thousands)					2022				2022				2022				2021				2021
Net income$					$	11,430			$	10,503			$	9,112			$	9,766			$	11,028
Non-core items:
Gain on sale of securities, net						(44	)			-				(9	)			(890	)			(1,930	)
Loss (gain) on sale of premises and equipment, net						-				10				(75	)			515				(146	)
Loss on debt extinguishment						-				-				-				1,083				1,768
Acquisition, conversion and other expenses						31				-				325				(92	)			318
Income tax expense (1)						3				(2	)			(56	)			(144	)			(2	)
Total non-core items						(10	)			8				185				472				8
Core earnings (2)		(A)			$	11,420			$	10,511			$	9,297			$	10,238			$	11,036
Net interest income		(B)			$	29,910			$	26,519			$	24,298			$	23,815			$	25,582
Non-interest income						8,823				8,961				9,309				11,158				11,350
Total revenue						38,733				35,480				33,607				34,973				36,932
Gain on sale of securities, net						(44	)			-				(9	)			(890	)			(1,930	)
Total core revenue (2)		(C)			$	38,689			$	35,480			$	33,598			$	34,083			$	35,002
Total non-interest expense						23,032				21,700				21,886				22,921				23,372
Non-core expenses:
(Loss) gain on sale of premises and equipment, net						-				(10	)			75				(515	)			146
Loss on debt extinguishment						-				-				-				(1,083	)			(1,768	)
Acquisition, conversion and other expenses						(31	)			-				(325	)			92				(318	)
Total non-core expenses						(31	)			(10	)			(250	)			(1,506	)			(1,940	)
Core non-interest expense (2)		(D)			$	23,001			$	21,690			$	21,636			$	21,415			$	21,432
Total revenue						38,733				35,480				33,607				34,973				36,932
Total non-interest expense						23,032				21,700				21,886				22,921				23,372
Pre-tax, pre-provision net revenue					$	15,701			$	13,780			$	11,721			$	12,052			$	13,560
Core revenue(2)						38,689				35,480				33,598				34,083				35,002
Core non-interest expense(2)						23,001				21,690				21,636				21,415				21,432
Core pre-tax, pre-provision net revenue(2)		(U)			$	15,688			$	13,790			$	11,962			$	12,668			$	13,570
(in millions)
Average earning assets		(E)			$	3,459			$	3,372			$	3,386			$	3,440			$	3,412
Average paycheck protection program (PPP) loans		(R)				-				1				3				15				46
Average earning assets, excluding PPP loans		(S)				3,459				3,371				3,383				3,425				3,366
Average assets		(F)				3,772				3,688				3,712				3,782				3,764
Average shareholders' equity		(G)				393				398				416				423				421
Average tangible shareholders' equity (2) (3)		(H)				267				272				290				297				295
Tangible shareholders' equity, period-end (2) (3)		(I)				254				268				281				298				292
Tangible assets, period-end (2) (3)		(J)				3,715				3,587				3,566				3,583				3,612

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

					At or for the Quarters Ended
					Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
(in thousands)					2022				2022				2022				2021				2021
Common shares outstanding, period-end		(K)				15,066				15,026				15,013				15,001				14,987
Average diluted shares outstanding		(L)				15,113				15,077				15,102				15,075				15,051
Core earnings per share, diluted (2)		(A/L)			$	0.76			$	0.70			$	0.62			$	0.68			$	0.73
Tangible book value per share, period-end (2)		(I/K)				16.89				17.83				18.72				19.86				19.48
Securities adjustment, net of tax (1) (4)		(M)				(58,715	)			(38,304	)			(20,225	)			1,985				4,398
Tangible book value per share, excluding securities adjustment (2) (4)		(I+M)/K				20.79				20.38				20.07				19.73				19.19
Tangible shareholders' equity/total tangible assets (2)		(I/J)				6.85				7.47				7.88				8.32				8.08
Performance ratios (5)
GAAP return on assets						1.20	%			1.14	%			1.00	%			1.02	%			1.16	%
Core return on assets (2)		(A/F)				1.20				1.14				1.02				1.07				1.16
Pre-tax, pre-provision return on assets						1.65				1.50				1.28				1.26				1.43
Core pre-tax, pre-provision return on assets (2)		(U/F)				1.65				1.50				1.31				1.33				1.43
GAAP return on equity						11.55				10.58				8.89				9.16				10.38
Core return on equity (2)		(A/G)				11.54				10.59				9.07				9.60				10.39
Return on tangible equity						17.25				15.74				13.01				13.30				15.08
Core return on tangible equity (1) (2)		(A+Q)/H				17.24				15.76				13.27				13.93				15.09
Efficiency ratio (2) (6)		(D-O-Q)/(C+N)				57.67				59.25				62.40				60.74				59.18
Net interest margin		(B+P)/E				3.47				3.19				2.95				2.79				3.02
Core net interest margin (2) (7)		(B+P-T)/S				3.47				3.19				2.93				2.69				2.75
Supplementary data (in thousands)
Taxable equivalent adjustment for efficiency ratio		(N)			$	533			$	491			$	476			$	573			$	576
Franchise taxes included in non-interest expense		(O)				149				144				141				132				143
Tax equivalent adjustment for net interest margin		(P)				379				334				320				369				421
Intangible amortization		(Q)				233				233				233				233				233
Interest and fees on PPP loans		(T)				-				27				196				981				2,690

1. Assumes a marginal tax rate of 23.41% for the last four quarters and 23.71% for the third quarter of 2021.
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.

SOURCE: Bar Harbor Bank and Trust

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FAQ

What were Bar Harbor Bankshares' earnings results for Q3 2022?

Bar Harbor Bankshares reported a net income of $11.4 million, or $0.76 per diluted share, for Q3 2022.

What is the dividend declared by Bar Harbor Bankshares for Q4 2022?

Bar Harbor Bankshares declared a cash dividend of $0.26 per share, payable on December 16, 2022.

How did loan growth perform in Q3 2022 for Bar Harbor Bankshares?

Loan growth for Bar Harbor Bankshares increased by 18% in Q3 2022 compared to the same quarter in 2021.

What was the non-performing assets ratio at Bar Harbor Bankshares for Q3 2022?

The non-performing assets ratio was 0.20% at the end of Q3 2022.

What is the net interest margin reported by Bar Harbor Bankshares?

The net interest margin improved to 3.47% in Q3 2022.