Bar Harbor Bankshares (the “Company”) (NYSE Amex: BHB) the
parent company of Bar Harbor Bank & Trust (the “Bank”), today
announced financial results for the three months ended March 31,
2012. The Company reported record net income of $3.2 million,
representing an increase of $294 thousand, or 10.2%, compared with
the first quarter of 2011. Diluted earnings per share amounted to
$0.81 for the quarter compared with $0.74 in the first quarter of
2011, representing an increase of $0.07, or 9.5%.
The Company’s annualized return on average shareholders’ equity
amounted to 10.51% for the quarter, compared with 11.14% in the
first quarter of 2011. The Company’s first quarter return on
average assets amounted to 1.07%, up from 1.03% in the first
quarter of 2011.
In making the announcement, the Company’s President and Chief
Executive Officer, Joseph M. Murphy commented, “We are encouraged
to have started the year with record quarterly earnings, continued
loan growth, improving credit quality and an expanding net interest
margin.”
Mr. Murphy continued his remarks by saying, “During the first
quarter we enjoyed a seven basis point expansion of our net
interest margin while growing total assets by $57 million. This in
turn increased our linked-quarterly net interest income by $290
thousand, or 3.3%. While many banks throughout our region have been
reporting little or no loan growth, we are pleased to report
sustained growth in both our commercial and consumer loan
portfolios. Paramount to our continued success is credit quality,
the metrics for which improved during the quarter, with
non-performing and other potential problem loans posting meaningful
declines compared with year-end 2011. Despite an ever-increasing
regulatory focus, our first quarter efficiency ratio came in at an
enviable 53.4%, demonstrating our relentless focus on the
management of the Company’s operating expenses.”
In concluding, Mr. Murphy added, “Given our Company’s earnings
momentum and strong financial condition, we are looking forward to
another successful year at Bar Harbor Bankshares. In this regard,
we are pleased that we have been able to reward our shareholders
with increasing and highly competitive returns on their BHB stock.
In 2011, we increased our quarterly cash dividend three times, and
we continued this positive trend in the first and second quarters
of 2012.”
Balance Sheet Highlights
Assets: Total assets ended the first quarter at
$1.22 billion, up $57.2 million, or 4.9%, compared with December
31, 2011. 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 $763.8 million,
up $34.8 million, or 4.8%, compared with December 31, 2011.
Consumer loans, which principally consist of residential real
estate mortgages, were up $25.6 million or 8.1%, reflecting the
purchase of a $23.5 million, New England based portfolio of
residential mortgage loans during the quarter. The Bank’s
commercial loan portfolio continued its growth trend during the
quarter, posting an increase of $7.8 million or 1.9%. Tax exempt
loans to local municipalities were also up for the quarter, posting
an increase of $1.5 million, or 15.3%, compared with year end
2011.
Credit Quality: Total non-performing loans ended the
quarter at $11.4 million, representing a decline of $1.5 million,
or 11.8%, compared with December 31, 2011. One commercial real
estate development loan to a local, non-profit housing authority in
support of an affordable housing project accounted for $2.8
million, or 24.2%, of the Bank’s total non-performing loans.
Total net loan charge-offs amounted to $315 thousand in the
first quarter, or annualized net charge-offs to average loans
outstanding of 0.17%. The Bank recorded a first quarter provision
for loan losses of $415 thousand, compared with $500 thousand in
the first quarter of 2011, representing a decline of $85 thousand,
or 17.0%.
The Bank maintains an allowance for loan losses (the
“allowance”) which is available to absorb probable losses on loans.
At March 31, 2012, the allowance stood at $8.3 million, up $100
thousand or 1.2% compared with December 31, 2011. The increase in
the allowance was principally attributed to loan growth during the
quarter, as the Bank’s non-performing and potential problem loans
posted meaningful declines.
Securities: Total securities ended the first quarter at
$396.7 million, up $14.8 million, or 3.9%, compared with December
31, 2011. Securities purchased during the quarter principally
consisted of mortgage-backed securities issued and guaranteed by
U.S. Government agencies and sponsored-enterprises.
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 these seasonal swings have varied from year to
year and have generally impacted the Bank’s transactional deposit
accounts.
Total deposits ended the first quarter at $724.4 million, up
$1.5 million, or 0.2%, compared with December 31, 2011. NOW
accounts and savings and money market accounts experienced a
combined seasonal decline of $12.6 million, or 4.1%. This decline
was offset by a $12.8 million, or 3.6%, increase in time deposits.
Unlike historical experience, at March 31, 2012 demand deposits
were up $1.4 million or 2.2%, compared with year end 2011.
Borrowings: Total borrowings ended the first quarter at
$373.6 million, up $53.3 million, or 16.6%, compared with December
31, 2011. The increase in borrowings was utilized to fund first
quarter earning asset growth.
Capital: At March 31, 2012, 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 March 31, 2012, the Company’s Tier I Leverage, Tier I
Risk-based, and Total Risk-based capital ratios were 9.26%, 14.21%
and 15.94%, respectively.
Shareholder Dividends: The Company paid a regular cash
dividend of $0.285 per share of common stock in the first quarter
of 2012, up $0.005 from the prior quarter and representing an
increase of $0.015 or 5.6% compared with the first quarter of 2011.
As previously announced, the Company’s Board of Directors recently
declared a second quarter 2012 regular cash dividend of $0.29 per
share of common stock, representing an increase of $0.02 or 7.4%
compared with the second quarter of 2011. Based on the March 31,
2012 price of BHB’s common stock of $33.24, the annualized dividend
yield amounted to 3.49%.
Results of Operations
Net Interest Income: For the three months ended March 31,
2012, net interest income on a tax-equivalent basis totaled $9.4
million, up $289 thousand or 3.2% on a linked-quarter basis and
representing an increase of $661 thousand or 7.6% compared with the
first quarter of 2011. The net interest margin amounted to 3.30% in
the first quarter, representing an expansion of seven basis points
on a linked-quarter basis. The improved net interest margin was
attributed to a fifteen basis point decline in the cost of interest
bearing liabilities during the quarter, whereas earning asset
yields declined only five basis points.
The increase in first quarter net interest income compared with
the first quarter of 2011 was attributed to average earning asset
growth of $42.2 million combined with a nine basis point
improvement in the net interest margin. The improvement in the net
interest margin was attributed to a thirty-nine basis point decline
in the cost of interest bearing liabilities, which more than offset
a twenty-five basis point decline in earning asset yields.
Non-interest Income: For the three months ended March 31,
2012, total non-interest income amounted to $1.7 million, down $32
thousand or 1.8%, compared with the first quarter of 2011.
Income generated from trust and other financial services fees
amounted to $779 thousand in the first quarter, unchanged compared
with the first quarter of 2011. Reflecting additional new business
and continued recovery in the equity markets, at March 31, 2012
assets under management stood at $350.7 million, up $16.8 million
from year end 2011 and representing an increase of $29.3 million or
9.1% compared with March 31, 2011.
Income generated from service charges on deposit accounts
amounted to $250 thousand in the first quarter, compared with $289
thousand in the first quarter of 2011, representing a decline of
$39 thousand, or 13.5%. The decline in service charges on deposit
accounts was principally attributed to declines in deposit account
overdraft fees, reflecting reduced overdraft activity and the
impact of new regulations that limit the ability of a bank to offer
overdraft protection to customers without their specific consent
and to derive fees from overdraft protection programs in
general.
Income generated from credit and debit card service charges and
fees amounted to $316 thousand in the first quarter, up $28
thousand or 9.7% compared with the first quarter of 2011. 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.
Total first quarter net securities gains, inclusive of
other-than-temporary impairment losses (“OTTI”), amounted to $223
thousand, compared with $220 thousand in the first quarter of 2011.
First quarter 2012 net securities gains were comprised of net
realized gains on the sale of securities amounting to $567
thousand, largely offset by OTTI losses of $344 thousand on certain
available-for-sale, private label, residential mortgage-backed
securities.
Non-interest Expense: For the three months ended March
31, 2012, total non-interest expense amounted to $5.8 million, up
$273 thousand, or 4.9%, compared with the first quarter of
2011.
Total salaries and employee benefits expense amounted to $3.2
million in the first quarter, up $74 thousand or 2.4%, compared
with the first quarter of 2011. 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.
Total FDIC insurance assessments amounted to $185 thousand in
the first quarter, down $79 thousand or 29.9%, compared with the
first quarter of 2011. This decline was attributed to a new
assessment formula that became effective on April 1, 2011, whereby
deposit insurance premiums are principally based on asset size
rather than insurable deposits.
Total other operating expenses amounted to $1.5 million in the
first quarter, up $291 thousand or 23.4%, compared with the first
quarter of 2011. This increase was principally attributed to higher
levels of loan collection and other real estate owned expenses, as
well as fees for professional services.
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 quarter ended March 31, 2011, the Company’s efficiency ratio
amounted to 53.4%, 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 1st Quarter Average Balance Sheet Data
3/31/2012 12/31/2011 2012 2011
Total assets $ 1,224,671 $ 1,167,466 $ 1,192,338 $ 1,134,591 Total
securities 396,690 381,880 382,380 383,067 Total loans 763,840
729,003 743,710 700,987 Allowance for loan losses 8,321 8,221 8,367
8,851 Total deposits 724,439 722,890 724,619 717,814 Total
Borrowings 373,603 320,283 340,616 307,239 Shareholders' equity
120,878 118,250 121,007 104,451
Three Months Ended
Results Of Operations 3/31/2012 3/31/2011
Interest and dividend income $ 12,587 $ 12,678 Interest
expense 3,570 4,344 Net interest income 9,017 8,334 Provision for
loan losses 415 500
Net interest income
after provision for loan losses
8,602 7,834 Non-interest income 1,700 1,732 Non-interest
expense 5,808 5,535
Income before income taxes 4,494 4,031 Income taxes 1,331
1,162 Net income $ 3,163
$ 2,869
Share and Per Common
Share Data Period-end shares outstanding 3,882,375
3,841,590 Basic average shares outstanding 3,880,052 3,829,469
Diluted average shares outstanding 3,891,708 3,859,727 Basic
earnings per share $ 0.82 $ 0.75 Diluted earnings per share $ 0.81
$ 0.74 Cash dividends $ 0.285 $ 0.270 Book value $ 31.14 $
27.32 Tangible book value $ 30.32 $ 26.50
Selected
Financial Ratios Return on Average Assets 1.07 % 1.03 %
Return on Average Equity 10.51 % 11.14 % Tax-equivalent Net
Interest Margin 3.30 % 3.21 % Efficiency Ratio (1) 53.4 % 54.0 %
At or for the
Three Months Ended
March 31,
At or for the Year Ended
December 31,
2012 2011 2011 Asset
Quality Net charge-offs (recoveries) to average loans
0.17 % -0.05 % 0.37 % Allowance for loan losses to total loans 1.09
% 1.25 % 1.13 % Allowance for loan losses to non-performing loans
73 % 67 % 64 % Non-performing loans to total loans 1.49 % 1.87 %
1.77 % Non-performing assets to total assets 1.26 % 1.24 % 1.45 %
Capital Ratios Tier 1 leverage capital 9.26 %
9.03 % 9.32 % Tier 1 risk-based capital 14.21 % 13.39 % 14.29 %
Total risk-based capital 15.94 % 15.25 % 16.06 % Tangible equity to
total assets 9.61 % 8.76 % 9.86 % Tangible common equity (2) 9.64 %
8.78 % 9.89 %
(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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