Bar Harbor Bankshares (the “Company”) (NYSE Amex: BHB) the
parent company of Bar Harbor Bank & Trust (the “Bank”), today
announced net income available to common shareholders of $2.8
million for the second quarter of 2011, representing an increase of
$61 thousand, or 2.2%, compared with the second quarter of 2010.
The Company’s diluted earnings per share amounted to $0.72 for the
quarter, compared with $0.71 in the second quarter of 2010,
representing an increase of 1.4%.
The Company’s annualized return on average shareholders’ equity
amounted to 10.26% for the quarter, compared with 10.76% in the
second quarter of 2010. The Company’s annualized return on average
assets amounted to 0.96% for the quarter, compared with 1.01% in
the second quarter of 2010.
For the six months ended June 30, 2011, the Company reported
earnings available to common shareholders of $5.6 million,
representing an increase of $532 thousand, or 10.4%, compared with
the first six months of 2010. Diluted earnings per share amounted
to $1.46, representing an increase of $0.12, or 9.0%, compared with
the first six months of 2010.
The Company’s annualized return on average shareholders’ equity
amounted to 10.69% for the six months ended June 30, 2011, compared
with 11.01% in the first half of 2010. The Company’s annualized
return on average assets amounted to 0.99%, compared with 1.09% in
the first half of 2010.
A large contributing factor underlying the year-to-date
increases in net income available to common shareholders and
diluted earnings per share was the Company’s repurchase of all
shares of its Preferred Stock from the U.S. Department of the
Treasury (the “Treasury”) in the first quarter of 2010. The
Preferred Stock was sold to the Treasury in 2009 as part of the
Emergency Economic Stabilization Act. As a result of the
repurchase, the Company accelerated the accretion of $496 thousand
in preferred stock discount, reducing net income available to
common shareholders and diluted earnings per share by $496 thousand
and $0.13, respectively. Total preferred stock dividends and
accretion of discount amounted to $653 thousand in the first six
months of 2010, compared with none in 2011.
In making the announcement, the Company’s President and Chief
Executive Officer, Joseph M. Murphy commented, “Considering the
continued slow emergence from the national economic recession and
sluggish loan demand at the local level, we are pleased to announce
continued earnings growth while maintaining relatively strong asset
quality. During the first half of 2011 the Company enjoyed a
meaningful expansion of its interest margin and solid earning asset
growth, which in turn increased net interest income by over $1
million, or 7%, compared with the first half of last year. While
most banks have been reporting little or no loan growth, we are
pleased to report continued increases in both our consumer and
commercial loan portfolios. While overall credit quality remained
relatively stable during the first half of 2011, highlighted by net
loan charge-offs of only $65 thousand on a portfolio exceeding $731
million, we did need to increase the allowance for loan losses in
the current quarter by provisioning $600 thousand, which was
largely attributed to one problem relationship.”
In concluding, Mr. Murphy added, “The pace of the national
economic recovery has certainly been disappointing and recent signs
suggest that it may again be faltering. In addition to seriously
depressed real estate markets, companies are laying off employees
at a level not seen in nearly a year, hobbling the job market and
again intensifying the lack of confidence by consumers and business
owners alike. Given all of the economic uncertainties that lie
ahead, we believe any community bank’s future success will be
underpinned by a strongly capitalized balance sheet. In this
regard, we believe that we are well positioned for any future
uncertainties or opportunities, given our strong regulatory capital
ratios and tangible common equity position.”
Balance Sheet
Assets: Total assets ended the second quarter at
$1.15 billion, up $35.3 million, or 3.2%, compared with December
31, 2010. Asset growth was driven by increases in the Bank’s
consumer and commercial loan portfolios, combined with an increase
in investment securities.
Loans: Total loans ended the quarter at $731.3 million,
up $3.6 million on a linked-quarter basis and representing an
increase of $30.6 million, or 4.4%, compared with December 31,
2010. Consumer loans were up $20.7 million, which was principally
attributed to the purchase of a Maine-based, seasoned portfolio of
prime consumer loans in the first quarter of 2011. The Bank’s
commercial loan portfolio continued its growth trend during the
first half of 2011, posting an increase of $10.5 million or 2.6%
compared with December 31, 2010.
Credit Quality: Total non-performing loans ended the
quarter at $13.5 million, down from $13.7 million at December 31,
2010. One commercial real estate development loan to a local,
non-profit housing authority in support of an affordable housing
project accounted for $5.1 million, or 37.7% of total
non-performing loans.
The Bank enjoyed low loan loss experience during the first half
of 2011, with net loan charge-offs amounting to $65 thousand, or
0.02% of average loans. For the three and six months ended June 30,
2011, the Bank recorded provisions for loan losses of $600 thousand
and $1.1 million, compared with $550 thousand and $1.1 million for
the same periods in 2010. The provision recorded in the second
quarter was largely attributed to an increase in the loss allowance
for the aforementioned non-performing loan to a local, non-profit
housing authority. At June 30, 2011, the allowance for loan losses
(the “allowance”) stood at $9.5 million, up from $8.5 million at
December 31, 2010. The increase in the allowance was largely
reflective of loan growth during the first half of 2011, combined
with continued elevated levels of non-performing and potential
problem loans.
Securities: Total securities ended the second quarter at
$366.6 million, up $8.7 million, or 2.4%, compared with December
31, 2010. Securities purchased during the first six months of 2011
consisted of mortgage-backed securities issued and guaranteed by
U.S. Government agencies and sponsored-enterprises. Company
management has been cautious about leveraging the portfolio to
generate additional earnings in consideration of historically low
market yields and the corresponding interest rate risk should
interest rates begin to rise.
Deposits: 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 and NOW accounts.
Total deposits ended the second quarter at $729.1 million, up
$20.8 million, or 2.9%, compared with December 31, 2010. Time
deposits were up $45.7 million, offset by a combined seasonal
decline of $24.9 million in demand, now and money market accounts.
The increase in time deposits was attributed to brokered deposits
obtained from the national market, which were principally utilized
to replace seasonal deposit outflows while largely funding asset
growth of $35.3 million.
Capital: At June 30, 2011, the Company and the Bank
continued to exceed regulatory requirements for “well-capitalized”
financial institutions. 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 June 30, 2011, the Company’s Tier I Leverage, Tier I Risk-based,
and Total Risk-based capital ratios were 9.05%, 13.61% and 15.52%,
respectively.
At June 30, 2011, the Company’s tangible common equity ratio
stood at 9.37%, up from 9.01% at December 31, 2010.
Shareholder Dividends: The Company paid a regular cash
dividend of $0.27 per share of common stock in the second quarter
of 2011, unchanged from the prior quarter, but representing an
increase of $0.01 or 3.8% compared with the second quarter of 2010.
As previously announced, the Company’s Board of Directors recently
declared a third quarter 2011 regular cash dividend of $0.275 per
share of common stock, up $0.005 or 1.9% from the prior quarter and
representing an increase of $0.015 or 5.8% compared with the third
quarter of 2010. Based on the June 30, 2011 price of BHB’s common
stock, the annualized dividend yield amounted to 3.90%.
Results of Operations
Net Interest Income: For the three months ended June 30,
2011, net interest income on a tax-equivalent basis amounted to
$9.0 million, up $286 thousand or 3.3% on a linked-quarter basis
and representing an increase of $788 thousand or 9.6% compared with
the second quarter of 2010. This increase was principally
attributed to average earning asset growth of $80.5 million or
7.8%, and to a lesser extent, an improved net interest margin. The
net interest margin amounted to 3.23% in the second quarter, an
expansion of two basis points on a linked-quarter basis, and six
basis points higher than the second quarter of 2010. This
improvement was principally attributed to the cost of interest
bearing liabilities, which declined ten basis points more than the
yield on average earning assets compared with the second quarter of
2010.
For the six months ended June 30, 2011, net interest income on a
tax-equivalent basis amounted to $17.7 million, up $1.0 million or
6.2% compared with the same period in 2010. This increase was
principally attributed to average earning asset growth of $75.2
million or 7.3%, offset in part by a four basis point decline in
the tax-equivalent net-interest margin to 3.22%, compared with the
first half of 2010.
Non-interest Income: For the three months ended June 30,
2011, total non-interest income amounted to $1.5 million, down $310
thousand or 17.3%, compared with the second quarter of 2010. This
decline was principally attributed to a decline in securities gains
net of other-than-temporary impairment (“OTTI”) losses. Total
second quarter securities gains net of OTTI losses amounted to a
net loss of $54 thousand, compared with a net gain of $263 thousand
in the second quarter of 2010, representing a decline of $317
thousand.
For the six months ended June 30, 2011, total non-interest
income amounted to $3.2 million, down $488 thousand or 13.2%,
compared with the first half of 2010. This decline was principally
attributed to a decline in securities gains net of OTTI losses.
Total securities gains net of OTTI losses amounted to $166 thousand
in the first half of 2011, compared with $817 thousand during the
same period in 2010, representing a decline of $651 thousand.
For the six months ended June 30, 2011, trust and other
financial services fees amounted to $1.5 million, up $179 thousand
or 13.4% compared with the first half of 2010. Reflecting
additional new business and some recovery in the equity markets, at
June 30, 2011 assets under management stood at $323.2 million,
representing an increase of $55.2 million or 20.6% compared with
June 30, 2010.
For the six months ended June 30, 2011, credit and debit card
service charges and fees amounted to $579 thousand, up $53 thousand
or 10.1% compared with the first half of 2010. This increase was
principally attributed to continued growth of the Bank’s retail
deposit base, higher levels of merchant credit card processing
volumes, and continued success with a program that offers rewards
for certain debit card transactions.
Non-interest Expense: For the three months ended June 30,
2011, total non-interest expense amounted to $5.8 million, up $370
thousand, or 6.9%, compared with the first quarter of 2010. The
increase in non-interest expense was attributed to a variety of
expense categories, including elevated levels of loan collection
and other real estate owned expenses, and higher occupancy,
equipment and marketing expenses. Salaries and employee benefits
were up $40 thousand or 1.4%, but were inclusive of approximately
$130 thousand in employee health insurance credits, based on
favorable claims experience.
For the six months ended June 30, 2011, total non-interest
expense amounted to $11.3 million, up $700 thousand, or 6.6%,
compared with the first half of 2010. The increase in non-interest
expense was attributed to a variety of expense categories including
higher levels of loan collection and other real estate owned
expenses as well as higher marketing and insurance expenses.
Occupancy, furniture and equipment expenses were up a combined $168
thousand, or 11.4%, which were largely attributed to higher levels
of utilities expense, equipment and software depreciation, and
maintenance contract expenses related to a variety of technology
upgrades and new technology systems and applications. Salaries and
employee benefit expenses were up $205 thousand or 3.5%, but were
inclusive of the previously mentioned health insurance credits. The
increase in salaries and employee benefits was principally
attributed to normal increases in base salaries, as well as changes
in staffing levels and mix.
Efficiency Ratio: The Company’s efficiency ratio, or
non-interest operating expenses divided by the sum of
tax-equivalent net interest income and non-interest income other
than net securities gains and other-than-temporary impairments,
measures the relationship of operating expenses to revenues. For
the three and six months ended June, 2011, the Company’s efficiency
ratios amounted to 54.5% and 54.2%, which compared favorably to
peer and industry averages.
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. For more
information about these risks and uncertainties and other factors,
please see the Company’s Annual Report on Form 10-K, as updated by
the Company’s Quarterly Reports on Form 10-Q and other filings on
file with the SEC. All of these factors should be carefully
reviewed, and readers should not place undue reliance on these
forward-looking statements. 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 2nd Quarter Average Balance Sheet Data
6/30/2011 12/31/2010 2011 2010
Total assets $ 1,153,210 $ 1,117,933 $ 1,156,570 $ 1,075,535 Total
securities 366,579 357,882 371,029 339,521 Total loans 731,292
700,670 731,449 682,107 Allowance for loan losses 9,535 8,500 9,379
8,377 Total deposits 729,115 708,328 729,812 679,606 Total
Borrowings 307,596 300,014 313,267 289,746 Shareholders' equity
110,930 103,608 108,446 101,099
Three Months Ended
Six Months Ended Results Of Operations
6/30/2011 6/30/2010 6/30/2011 6/30/2010
Interest and dividend income $ 12,916 $ 12,605 $ 25,594 $
25,559 Interest expense 4,292 4,810 8,636 9,706 Net interest income
8,624 7,795 16,958 15,853 Provision for loan losses 600 550 1,100
1,050 Net interest income after provision for loan losses 8,024
7,245 15,858 14,803 Non-interest income 1,485 1,795 3,217
3,705 Non-interest expense 5,762 5,392
11,297 10,597 Income
before income taxes 3,747 3,648 7,778 7,911 Income taxes 974
936 2,136
2,148 Net income $ 2,773 $ 2,712 $ 5,642 $ 5,763
Preferred stock dividends and accretion of discount -
- - 653
Net income available to common shareholders $ 2,773
$ 2,712 $ 5,642 $ 5,110
Share and Per Common Share Data Period-end shares
outstanding 3,862,273 3,776,812 3,862,273 3,776,812 Basic average
shares outstanding 3,852,428 3,776,213 3,841,012 3,776,244 Diluted
average shares outstanding 3,873,381 3,832,597 3,866,550 3,823,439
Basic earnings per share $ 0.72 $ 0.72 $ 1.47 $ 1.36 Diluted
earnings per share $ 0.72 $ 0.71 $ 1.46 $ 1.34 Cash
dividends $ 0.270 $ 0.260 $ 0.540 $ 0.520 Book value $ 28.72 $
27.33 $ 28.72 $ 27.33 Tangible book value $ 27.90 $ 26.49 $ 27.90 $
26.49
Selected Financial Ratios Return on
Average Assets 0.96 % 1.01 % 0.99 % 1.09 % Return on Average Equity
10.26 % 10.76 % 10.69 % 11.01 % Tax-equivalent Net Interest Margin
3.23 % 3.17 % 3.22 % 3.26 % Efficiency Ratio (1) 54.5 % 55.2 % 54.2
% 54.0 %
At or for the Six Months
Ended
At or for theYear Ended
June 30, December 31, 2011 2010
2010 Asset Quality Net charge-offs to average
loans, annualized 0.02 % 0.12 % 0.24 % Allowance for loan losses to
total loans 1.30 % 1.24 % 1.21 % Allowance for loan losses to
non-performing loans 71 % 99 % 62 % Non-performing loans to total
loans 1.85 % 1.25 % 1.95 % Non-performing assets to total assets
1.47 % 0.79 % 1.28 %
Capital Ratios Tier 1
leverage capital 9.05 % 9.01 % 9.01 % Tier 1 risk-based capital
13.61 % 13.33 % 13.57 % Total risk-based capital 15.52 % 15.19 %
15.41 % Tangible equity to total assets 9.35 % 9.23 % 8.99 %
Tangible common equity (2) 9.37 % 9.25 % 9.01 %
(1) Computed by dividing non-interest expense by the sum of tax
equivalent net interest income and non-interest income other than
net securities gains and OTTI.
(2) Computed by dividing the total common shareholders' equity,
less goodwill and other intangible assets, by total assets, less
goodwill and other intangible assets.
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