Bar Harbor Bankshares (the �Company�) (NYSE Amex: BHB) the
parent company of Bar Harbor Bank & Trust (the �Bank�), today
announced net income of $2.6 million for the quarter ended March
31, 2009, compared with $2.0 million for the first quarter of 2008,
representing an increase of $673 thousand, or 34.5%. The Company�s
fully diluted earnings per share, after preferred stock dividends
and accretion of preferred stock discount, amounted to $0.82 for
the first quarter of 2009, compared with $0.64 for the first
quarter of 2008, representing an increase of $0.18, or 28.1%. First
quarter net income available to common shareholders amounted to
$2.4 million, representing an increase of $451 thousand, or 23.1%
compared with the first quarter of 2008.
The Company�s annualized return on average shareholders� equity
amounted to 12.98% in the first quarter of 2009, compared with
11.66% for the same quarter in 2008.
In making the announcement, the Company�s President and Chief
Executive Officer, Joseph M. Murphy commented, �Despite the
deepening economic recession and well publicized problems being
suffered by a large segment of the banking and financial services
industry, Bar Harbor Bankshares is off to a remarkably vigorous
start in 2009. We are delighted to report very strong earnings and
earnings per share, solid earning asset growth, and a healthy
financial condition.�
Mr. Murphy continued his remarks by saying, �In the first
quarter of 2009 the Bank enjoyed a significant expansion of its net
interest margin and a significant increase in net interest income,
which was the primary contributor to the Company�s outstanding
earnings performance. Considering the weakening economy, slackening
commercial loan demand and unrelenting competition for high quality
loans, we are also pleased to report first quarter loan portfolio
growth of $14.7 million. Among the many issues the banking industry
is experiencing, as a whole, is a serious deterioration in both
commercial and consumer loan credit quality. We are pleased to
report that, as of quarter-end, the Bank�s non-performing loans
remained at low levels and were essentially unchanged compared with
year end 2008. Our disciplined approach to underwriting loans
continues to serve us well during the current economic downturn, as
we have historically not sacrificed credit quality for higher loan
yields and higher levels of earning asset growth.�
In concluding, Mr. Murphy added, �Economic conditions nationally
and locally are expected to deteriorate further as the impact of
the current recession continues to unfold. In light of the
Company�s strong balance sheet, liquidity position, earnings
fundamentals and capitalization, we are confident the Company is
well prepared for the uncertainties that lie ahead for the banking
industry, which are likely to characterize the road to economic
recovery that we believe lies ahead.�
Financial Condition
Assets: The Company�s total assets surpassed the
$1 billion mark during the first quarter. At March 31, 2009 total
assets stood at $1.06 billion, representing an increase of $89.9
million, or 9.2%, compared with December 31, 2008.
Loans: Total loans ended the first quarter at $648.3
million, representing an increase of $14.7 million, or 2.3%,
compared with December 31, 2008. First quarter loan growth was led
by commercial loans and tax-exempt loans to local municipalities.
Residential mortgage loan origination activity increased
significantly during the quarter, principally reflecting the
declines in residential mortgage loan interest rates and borrower
refinancing activity.
Credit Quality: The Bank�s non-performing loans ended the
quarter at relatively low levels and were well below the Bank�s
peer group average. At March 31, 2009, total non-performing loans
amounted to $4.4 million or 0.68% of total loans, compared with
$4.4 million, or 0.70% at December 31, 2008.
The Bank�s loan loss experience improved during the first
quarter of 2009 compared with the same quarter in 2008. Total net
loan charge-offs amounted to $205 thousand, or net charge-offs to
average loans outstanding of 0.13%, compared with $300 thousand, or
net charge-offs to average loans outstanding of 0.20%, in the first
quarter of 2008.
For the quarter ended March 31, 2009, the Bank recorded a
provision for loan losses (the �provision�) of $665 thousand,
representing an increase of $153 thousand or 29.9% compared with
the first quarter of 2008. The increase in the provision was
largely attributed to growth in the loan portfolio and
deteriorating economic conditions, including declining real estate
values in most of the markets served by the Bank.
The Bank maintains an allowance for loan losses (the
�allowance�) which is available to absorb probable losses on loans.
The allowance is maintained at a level that, in management�s
judgment, is appropriate for the amount of risk inherent in the
current loan portfolio and adequate to provide for estimated
probable losses. At March 31, 2009, the allowance stood at $5.9
million, representing an increase of $460 thousand or 8.4% compared
with December 31, 2008. At March 31, 2009, the allowance expressed
as a percentage of total loans stood at 91 basis points, up from 86
basis points at December 31, 2008.
Securities: Total securities ended the first quarter at
$367.6 million, representing an increase of $77.1 million, or
26.5%, compared with December 31, 2008. Securities purchased during
the quarter included mortgage-backed securities issued by U.S.
Government agencies and sponsored enterprises, as well as
obligations of state and political subdivisions thereof.
Deposits: During the first quarter of 2009, the most
significant funding source for the Bank�s earning assets continued
to be retail deposits, gathered through its network of twelve
banking offices throughout downeast and midcoast Maine.
Historically, the banking business in the Bank�s market area has
been seasonal, with lower deposits in the winter and spring and
higher deposits in summer and autumn. The timing and extent of
seasonal swings have varied from year to year, particularly with
respect to demand deposits.
Total deposits ended the first quarter at $615.4 million,
representing an increase of $37.2 million, or 6.4%, compared with
December 31, 2008. Total retail deposits ended the first quarter at
$497.3 million, up $7.6 million or 1.6% compared with December 31,
2008. Retail deposit growth was principally attributed to time
deposits, with demand deposits, NOW accounts and savings and money
market accounts posting a combined seasonal decline of $13.9
million, or 4.8%.
Brokered deposits obtained from the national market ended the
first quarter at $118.1 million, representing an increase of $29.6
million, or 33.5%, compared with December 31, 2008. The increase in
brokered deposits was utilized to support first quarter earning
asset growth and replace the seasonal decline in retail
deposits.
Borrowings: Total borrowings ended the first quarter at
$354.5 million, representing an increase of $30.6 million, or 9.5%,
compared with December 31, 2008. The increase in borrowings was
principally used to fund the growth of the Bank�s securities
portfolio.
Capital: During the first quarter of 2009, the Bank
continued to exceed regulatory requirements for �well-capitalized�
institutions. Company management considers this to be vital in
promoting depositor and investor confidence and providing a solid
foundation for future growth. Under the capital adequacy guidelines
administered by the Bank�s principal regulators, �well-capitalized�
institutions are those with Tier I leverage, Tier I Risk-based, and
Total Risk-based ratios of at least 5%, 6% and 10%, respectively.
At March 31, 2009, the Bank�s Tier I Leverage, Tier I Risk-based,
and Total Bisk-based capital ratios were 8.37%, 12.65% and 14.30%,
compared with 6.65%, 10.03% and 11.69% at December 31, 2008,
respectively.
In January 2009, the Company announced the issuance and sale of
$18.751 million in Fixed Rate Cumulative Perpetual Preferred Stock,
Series A, no par value, to the U.S. Treasury in connection with its
participation in the U.S. Treasury�s Capital Purchase Program
(�CPP�). The CPP is a voluntary program designed by the U.S.
Treasury to provide additional capital to healthy, well-capitalized
banks, to help provide economic stimulus through the creation of
additional lending capacity in local banking markets.
Shareholder Dividends: The Company paid regular cash
dividends of $0.26 per share of common stock in the first quarter
of 2009, representing an increase of $0.01 per share, or 4.0%,
compared with the dividend paid for the same quarter in 2008.
The Company�s Board of Directors recently declared a second
quarter 2009 regular cash dividend of $0.26 per share of common
stock, compared with $0.25 for the same quarter in 2008,
representing an increase of $0.01, or 4.0%.
Results of Operations
Net Interest Income: For the three months ended March 31,
2009, net interest income on a fully tax-equivalent basis amounted
to $8.2 million, up $760 thousand or 10.2% on a linked quarter
basis and representing an increase of $1.7 million, or 26.3%,
compared with the first quarter of 2008.
The increase in first quarter 2009 net interest income compared
with the same quarter in 2008 was principally attributed to an
improved net interest margin, combined with average earning asset
growth of 12.8%. The decline in short-term interest rates over the
past eighteen months favorably impacted the Bank�s net interest
margin, as the cost of interest bearing liabilities declined faster
and to a greater degree than the decline in earning asset
yields.
For the three months ended March 31, 2009, the fully
tax-equivalent net interest margin amounted to 3.42%, up 21 basis
points on a linked quarter basis and representing an improvement of
39 basis points compared with the first quarter of 2008.
Non-interest Income: For the three months ended March 31,
2009, total non-interest income amounted to $1.6 million,
representing a decline of $445 thousand or 21.7%, compared with the
first quarter of 2008. The decline in non-interest income was
largely attributed to a $313 thousand gain recorded in the first
quarter of 2008 representing the proceeds from shares redeemed in
connection with the Visa, Inc. initial public offering.
First quarter 2009 net securities gains amounted to $412
thousand, representing an increase of $35 thousand, or 9.3%,
compared with the first quarter of 2008. The $412 thousand in first
quarter net securities gains were comprised of realized gains on
the sale of securities amounting to $1.4 million, largely offset by
other-than-temporary securities impairment losses of $1.0 million.
During the first quarter of 2009 the Company concluded that
unrealized losses on certain available-for-sale, 1-4 family
non-agency mortgage-backed securities with an amortized cost of
$3.9 million were other-than-temporarily impaired, because the
Company could no longer conclude that it is probable it will
receive 100% of future contractual principal and interest. Because
these securities were being carried at fair value, estimated losses
on these securities, net of tax, were previously recorded in
unrealized losses on securities available-for-sale within
accumulated other comprehensive loss, a component of total
shareholders equity on the Company�s consolidated balance sheet.
Company management believes that the ultimate economic losses that
may be realized for these securities may be meaningfully less than
the �mark-to-market� losses that were recorded during the
quarter.
First quarter 2009 credit and debit card service charges and
fees amounted to $176 thousand, representing a decline of $157
thousand, or 47.2%, compared with the first quarter of 2008. This
decline was attributed to the previously reported sale of the
Bank�s merchant processing and Visa credit card portfolios in the
fourth quarter of 2008.
First quarter 2009 trust and other financial services fees
amounted to $572 thousand, representing an increase of $33
thousand, or 6.1%, compared with the first quarter of 2008.
Non-interest Expense: For the three months ended March
31, 2009, total non-interest expense amounted to $5.2 million,
representing an increase of $176 thousand, or 3.5%, compared with
the first quarter of 2008.
Included in first quarter 2009 non interest expense, was the
write-down of certain non-marketable venture capital equity
investment funds considered other-than-temporarily impaired
amounting to $168 thousand, compared with $36 thousand in the first
quarter of 2008. These investment funds, originating as far back as
1994 and in most cases qualifying for Community Reinvestment Act
credit, generally represent socially responsible venture capital
investments in small businesses throughout Maine and New England.
The first quarter 2009 write-down represented 35.3% of their
recorded book carrying value.
The increase in first quarter 2009 non-interest expense was also
attributed to a $128 thousand reduction in the Company�s previously
reported liability related to the Visa Reorganization and the Visa,
Inc. initial public offering recorded in the first quarter of
2008.
First quarter 2009, salaries and employee benefits amounted to
$2.8 million, representing an increase of $99 thousand, or 3.7%,
compared with the first quarter of 2008. The increase in salaries
and employee benefits was principally attributed to normal
increases in base salaries and employee benefits, as well as
changes in staffing levels and mix.
First quarter 2009 credit and debit card expenses amounted to
$101 thousand, representing a decline of $154 thousand, or 60.4%,
compared with the first quarter of 2008. This decline was
attributed to the previously reported sale of the Bank�s merchant
processing and Visa credit card portfolios in the fourth quarter of
2008.
First quarter 2009 furniture and equipment expenses amounted to
$353 thousand, representing a decline of $137 thousand, or 28.0%,
compared with the first quarter of 2008. This decline was
principally attributed to declines in a variety of expense
categories including depreciation expense, maintenance contract
expenses, miscellaneous equipment purchases and repairs, and
personal property taxes.
Income Taxes: For the three months ended March 31, 2009,
total income taxes amounted to $1.1 million, representing an
increase of $201 thousand, or 22.6%, compared with the first
quarter of 2008. The Company�s effective tax rate amounted to 29.3%
in the first quarter of 2009, compared with 31.3% in the first
quarter of 2008.
About Bar Harbor Bankshares
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 downeast and midcoast
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,
as amended. You can identify these forward-looking statements by
the use of words like �strategy,� �anticipates� �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
developments.
Bar Harbor Bankshares
Selected Financial
Information
(dollars in thousands except
per share data)
(unaudited)
� �
Period End 1st Quarter Average Balance Sheet
Data 3/31/2009 �
12/31/08 2009 �
2008 � Total assets $ 1,062,175 $ 972,288 $ 1,004,528 $
898,261 Total securities 367,582 290,502 321,608 258,231 Total
loans 648,323 633,603 638,263 589,807 Allowance for loan losses
5,906 5,446 5,616 4,826 Total deposits 615,427 578,193 570,853
547,721 Borrowings 354,535 323,903 346,685 278,639 Shareholders'
equity 86,520 65,445 82,029 67,339 �
Three Months Ended
Results of Operations 3/31/2009 3/31/2008 �
Interest and dividend income $ 13,364 $ 13,430 Interest expense
5,424 7,138 Net interest income 7,940 6,292 Provision for loan
losses 665 512
Net interest income after
provision for loan losses
7,275 5,780 � Non-interest income 1,604 2,049 Non-interest expense
5,164 4,988 Income before income taxes 3,715 2,841 Income taxes
1,090 889 � Net income $ 2,625 $ 1,952 � Preferred stock dividends
and accretion of discount � 222 � � � - � Net income available to
common shareholders $ 2,403 � � $ 1,952 � �
Per Common Share
Data � Basic Earnings Per Share $ 0.84 $ 0.65 Diluted Earnings
Per Share $ 0.82 $ 0.64 Cash Dividends Per Share $ 0.26 $ 0.25 �
Selected Financial Ratios � Tax-equivalent Net Interest
Margin 3.42 % 3.03 % Return on Average Equity 12.98 % 11.66 %
Return on Average Assets 1.06 % 0.87 %
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