Bar Harbor Bankshares (the �Company�) (AMEX:BHB) the parent company
of Bar Harbor Bank & Trust (the �Bank�), today announced net
income of $2.0 million for the quarter ended March 31, 2008 or
fully diluted earnings per share of $0.64, compared with $1.4
million or fully diluted earnings per share of $0.44 for the first
quarter of 2007, representing increases of $577 thousand and $0.20,
or 42% and 45%, respectively. The increase in first quarter
earnings compared with the first quarter of 2007 was attributed to
variety of factors including: a $1.0 million or 19.1% increase in
net interest income; a $1.3 million increase in net securities
gains (losses); and a $313 thousand gain representing the proceeds
from shares redeemed in connection with the Visa Inc. initial
public offering. Partially offsetting the foregoing increases was a
$512 thousand increase in the provision for loan losses. In
addition, in the first quarter of 2007 the Company recorded an $832
thousand reduction in non-interest expense related to the Company�s
settlement of its limited postretirement benefit program. In making
the announcement, President and Chief Executive Officer, Joseph M.
Murphy commented, �The first quarter story at BHB reflects a
significant lift in net interest income, driven by a meaningful
improvement in our net interest margin and healthy growth in
earning assets. Of equal importance, our asset quality measures
remained strong during the quarter. While our provision for loan
losses was higher than historical norms, this was principally in
response to strong loan growth, declining real estate values and
other environmental factors, as opposed to an increase in problem
loans.� In concluding, Mr. Murphy added, �Economic conditions
nationally and in our own marketplace continue to soften and, like
most financial institutions, our future success will largely depend
upon sustaining the strong asset quality levels we have enjoyed
over the past several years. During the past six months, the
banking industry in general has been plagued with serious issues of
liquidity, capital adequacy, the sub prime mortgage fallout,
declining collateral values and impaired securities. As a local
community bank, we are largely but not totally insulated from these
issues. Despite these variables, we believe our Company is in sound
condition and is off to a very strong start as we navigate our way
through what is widely viewed as one of the more turbulent years in
the history of banking.� Financial Condition Assets: Total assets
ended the first quarter at $911 million, representing increases of
$21 million and $84 million, or 2% and 10%, compared with December
31 and March 31, 2007, respectively. Loans: Total loans ended the
first quarter at $607 million, representing increases of $27
million and $55 million, or 5% and 10%, compared with December 31
and March 31, 2007, respectively. Business lending activity
continued at a healthy pace during the first quarter, leading the
overall growth in the loan portfolio. Credit Quality: The Bank�s
non-performing loans ended the first quarter at $2.3 million, or
0.38% of total loans, compared with $2.1 million or, 0.36%, at
December 31, 2007. One problem loan accounted for $864 thousand of
non-performing loans at quarter end and $1,144 at December 31,
2007. Net charge-offs amounted to $300 thousand during the quarter,
or annualized net charge-offs to average loans outstanding of
0.20%. The aforementioned problem loan was accountable for $280
thousand of first quarter net charge-offs, essentially all of which
was provided for in the December 31, 2007 allowance for loan
losses. The real estate securing this loan was sold during the
second quarter of 2008 and no further charge-off was sustained. The
Bank�s provision for loan losses amounted to $512 thousand in the
first quarter of 2008 compared with no provision in the first
quarter of last year. The increase in the provision principally
reflects growth in the loan portfolio, declining real estate values
and other environmental factors. Securities: Total securities ended
the first quarter at $257 million, representing a decrease of $8
million or 3% and an increase of $29 million or 13%, compared with
December 31 and March 31, 2007, respectively. The decline in the
securities portfolio during the first quarter was principally
attributed to called securities, paydowns on mortgage-backed
securities and sales of securities, the cash flows from which were
not fully reinvested, largely due to prevailing market conditions
and strong first quarter loan growth. Deposits: Total deposits
ended the first quarter at $558 million, representing increases of
$19 million and $52 million, or 4% and 10%, compared with December
31 and March 31, 2007, respectively. Total deposits included
brokered certificates of deposit, which declined $5 million and $21
million compared with December 31 and March 31, 2007, respectively.
At March 31, 2008, total retail deposits stood at $460 million,
representing increases of $25 million and $73 million, or 6% and
19%, compared with December 31 and March 31, 2007, respectively.
Historically, the banking business in the Bank�s market area has
been seasonal, with lower deposits in winter and spring, and higher
deposits in summer and autumn. Consequently, during the first
quarter of 2008, demand deposits and NOW accounts declined $17
million and $3 million compared with December 31, 2007,
respectively. Comparing March 31, 2008 with the same date last
year, all categories of retail deposits were showing increases, led
by time deposits and savings and money market accounts. Borrowings:
Total borrowings ended the first quarter at $281 million,
representing increases of $3 million and $29 million, or 1% and
12%, compared with December 31, and March 31 2007, respectively.
The additional borrowings were utilized to help support the Bank�s
earning asset growth. Capital: The Company continued to exceed
regulatory requirements for well-capitalized institutions, ending
the first quarter of 2008 with a Tier I Capital Ratio of 6.90%.
Cash Dividends: The Company paid cash dividends of 25 cents per
share of common stock in the first quarter of 2008, representing an
increase of 1.5 cents, or 6.4%, compared with the same quarter in
2007. Tangible Book Value: At March 31, 2008, the Company�s
tangible book value per share of common stock outstanding amounted
to $21.08, representing an increase of $1.63 or 8%, compared with
the same date last year. Results of Operations Net Interest Income:
For the quarter ended March 31, 2008, net interest income on a
fully tax equivalent basis amounted to $6.5 million, representing
an increase of $1.1 million, or 19.5%, compared with the same
quarter in 2007. The increase in net interest income was
principally attributed to a 24 basis point improvement in the fully
tax equivalent net interest margin, combined with average earning
asset growth of $71 million, or 9%. Since September of 2007, the
Federal Reserve has lowered short-term interest rates 300 basis
points. These actions favorably impacted the Bank�s net interest
margin and net interest income, reflecting its liability sensitive
balance sheet. Non-interest Income: For the quarter ended March 31
2008, total non-interest income amounted to $2.0 million,
representing an increase of $1.7 million, or 442%, compared with
the same quarter in 2007. The increase in non-interest income was
principally attributed to a $1.3 million increase in net securities
gains. In the first quarter of 2007 the Bank restructured a portion
of its securities portfolio, recording net securities losses of
$920 thousand, whereas in the first quarter of 2008 the Bank
recorded securities gains of $377 thousand. Also included in first
quarter 2008 non-interest income was a $313 thousand gain
representing the proceeds from shares redeemed in connection with
the Visa, Inc. initial public offering. Non-interest Expense: For
the quarter ended March 31, 2008, total non-interest expense
amounted to $5.0 million, representing an increase of $1.2 million,
or 31.4%, compared with the same quarter in 2007. The increase in
non-interest expense was principally attributed to the settlement
of the Company�s limited postretirement program in the first
quarter of 2007, the financial impact of which reduced that
quarter�s non-interest expense by $832 thousand. The increase in
first quarter non-interest expense was also attributed to higher
levels of salaries and employee benefit expenses, which were up
$312 thousand or 13.3% compared with the first quarter of 2007. The
increase in salaries and employee benefits was attributed to a
variety of factors including strategic additions to staff, normal
increases in base salaries, and higher levels of incentive
compensation. Bar Harbor Bankshares is the parent company of its
wholly owned subsidiary, Bar Harbor Bank & Trust. Bar Harbor
Bank & Trust, founded in 1887, provides full service community
banking with twelve branch office locations serving down east and
mid coast Maine. This earnings release contains certain
forward-looking statements with respect to the financial condition,
results of operations and business of Bar Harbor Bankshares (the
�Company�) for which the Company claims the protection of the safe
harbor provided by the Private Securities Litigation Reform Act of
1995. You can identify these forward-looking statements by the use
of words like �strategy,� �expects,� �plans,� �believes,� �will,�
�estimates,� �intends,� �projects,� �goals,� �targets,� and other
words of similar meaning. You can also identify them by the fact
that they do not relate strictly to historical or current facts.
Forward-looking statements include, but are not limited to, those
made in connection with estimates with respect to the future
results of operation, financial condition, and the business of the
Company which are subject to change based on the impact of various
factors that could cause actual results to differ materially from
those projected or suggested due to certain risks and
uncertainties. These risks and uncertainties include, but are not
limited to, changes in general economic conditions, interest rates,
deposit flows, loan demand, internal controls, legislation or
regulation and accounting principles, policies or guidelines, as
well as other economic, competitive, governmental, regulatory and
accounting and technological factors affecting the Company�s
operations. The Company assumes no obligation to update any
forward-looking statements as a result of new information or future
events or development. Bar Harbor Bankshares Selected Financial
Information (dollars in thousands except share data) (unaudited) �
Period End 1st Quarter Average Balance Sheet Data 03/31/2008 �
03/31/2007 2008 � 2007 � Total assets $ 910,894 $ 827,266 $ 898,261
$ 828,033 Total securities 256,698 227,473 258,231 226,538 Total
loans 607,165 552,643 589,807 554,027 Allowance for loan losses
4,955 4,499 4,826 4,556 Total deposits 558,419 506,832 547,721
499,574 Borrowings 281,457 252,352 278,639 261,568 Shareholders'
equity 65,827 62,552 67,339 61,832 � Three Months Ended Results Of
Operations 03/31/2008 03/31/2007 � Interest and dividend income $
13,430 $ 12,360 Interest expense 7,138 7,078 Net interest income
6,292 5,282 Provision for loan losses 512 --- Net interest income
after provision for loan losses 5,780 5,282 � Non-interest income
1,672 1,298 Net securities gains (losses) 377 (920) Non-interest
expense 4,988 3,797 Income before income taxes 2,841 1,863 Income
taxes 889 488 � Net income $ 1,952 $ 1,375 � Earnings per share:
Basic $ 0.65 $ 0.45 Diluted $ 0.64 $ 0.44 � Cash dividends per
share $ 0.250 $ 0.235 � Return on Average Equity 11.66% 9.02%
Return on Average Assets 0.87% 0.67% � As of March 31: 2008 2007
Tier 1 Leverage Capital Ratio 6.90% 7.26% Book value per share $
22.19 $ 20.54 Tangible book value per share $ 21.08 $ 19.45 Shares
outstanding 2,966,977 3,044,670
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