Bar Harbor Bankshares (NYSE MKT: BHB) (the “Company”) the parent
company of Bar Harbor Bank & Trust (the “Bank”), today
announced record net income of $3.9 million for the second quarter
of 2014, representing an increase of $687 thousand, or 21.7%,
compared with the second quarter of 2013. The Company also reported
record diluted earnings per share of $0.65 for the quarter compared
with $0.54 for the second quarter of 2013, representing an increase
of $0.11, or 20.4%. The Company’s annualized return on average
shareholders’ equity amounted to 11.53% for the quarter, up from
9.90% in the second quarter of 2013. The Company’s second quarter
return on average assets amounted to 1.09%, up from 0.96% in the
second quarter of 2013.
For the six months ended June 30, 2014, the Company reported
record net income of $7.6 million, representing an increase of $1.3
million, or 19.7%, compared with the same period in 2013. The
Company also reported record diluted earnings per share of $1.28,
representing an increase of $0.20, or 18.5%, compared with the same
period in 2013. The Company’s annualized return on average
shareholders’ equity amounted to 11.79% for the six months ended
June 30, 2014, up from 10.02% for the same period in 2013. The
Company’s annualized return on average assets amounted to 1.10%, up
from 0.98% for the six months ended June 30, 2013.
In making the announcement, the Company’s President and Chief
Executive Officer, Curtis C. Simard, commented, “Looking back at
the first half of 2014, we are pleased with the Company’s solid
performance and earnings fundamentals, culminating with the
announcement of our best quarterly and year-to-date earnings on
record. Our second quarter results featured a $1.4 million, or
14.6% increase in net interest income compared with the same
quarter last year. We achieved this performance by growing our
average earning assets by almost $97 million, while, unlike most
banks, our net interest margin expanded twenty basis points. Our
second quarter total non-interest income was up 22.4% over the same
quarter last year, led by a $251 thousand, or 29.5%, increase in
trust and financial services fees, including fee income from retail
brokerage activities. Our continued focus on the management of our
operating expenses was also evident, with a year-to-date efficiency
ratio of 54.2%, compared with 55.7% for the first half of last
year.”
Mr. Simard continued, “The credit quality of our loan portfolio
held stable during the first half of this year. Total
non-performing loans declined 11.3% from year-end 2013, while other
delinquent loans and potential problem loans posted a combined
decline of 6.4%. Similarly, our net loan charge-offs were down
11.5%, from the first half of last year.”
In concluding, Mr. Simard added, “There continues to be
aggressive competition for loan and deposit growth. We are
nonetheless staying true to fundamentals and our brand promise. The
result has been continued measured growth, pricing and expense
discipline, and strong performance for our shareholders including
our thirteenth consecutive quarterly cash dividend increase.”
Balance Sheet Highlights
Assets: Led by growth in the loan and securities
portfolios, total assets ended the second quarter at $1.45 billion,
representing an increase of $80.0 million, or 5.7%, compared with
December 31, 2013.
Loans: Total loans ended the quarter at $900.9 million,
representing an increase of $48.1 million, or 5.6%, compared with
December 31, 2013. Consumer loans, which principally consist of
residential real estate mortgages, ended the quarter at $427.9
million, up $46.7 million or 12.2% compared with year-end 2013.
This increase was largely attributed to purchased residential
mortgage loans, as loans originated and closed by the Bank were
largely offset by principal pay-downs from the existing residential
real estate portfolio.
At quarter-end, the Bank’s commercial loan portfolio stood at
$454.7 million, representing a decline of $879 thousand, or 0.2%,
compared with year-end 2013. New commercial loan originations
during the first half of 2014 were more than offset with certain,
sizeable loan payoffs as well as scheduled principal amortization
from the portfolio. Tax exempt loans to local municipalities
increased $2.2 million, or 13.4%, compared with December 31,
2013.
Credit Quality: The overall credit quality of the Bank’s
loan portfolio remained relatively stable during the first six
months of 2014, with non-performing and other delinquent and
potential problem loans posting meaningful declines from year-end
2013. Total non-performing loans ended the second quarter at $7.8
million, compared with $8.8 million at December 31, 2013,
representing a decline of $995 thousand, or 11.3%. Total
non-performing loans expressed as a percentage of total loans ended
the quarter at 0.87%, down from 1.04% at year-end 2013. Similarly,
the allowance for loan losses expressed as a ratio to
non-performing loans ended the quarter at 111.5%, up from 95.9% at
December 31, 2013.
Total net loan charge-offs amounted to $609 thousand during the
first half of 2014, or annualized net charge-offs to average loans
outstanding of 0.14%, down from $688 thousand and 0.17%,
respectively, compared with the first half of 2013. For the three
and six months ended June 30, 2014, the Bank recorded provisions
for loan losses of $428 thousand and $885 thousand, representing
increases of $23 thousand and $127 thousand, compared with the same
periods in 2013. At quarter end, the Bank’s allowance for loan
losses stood at $8.8 million, representing an increase of $276
thousand, or 3.3%, compared with year-end 2013.
Securities: Total securities ended the second quarter at
$477.8 million, representing an increase of $27.6 million or 6.1%,
compared with December 31, 2013. Securities purchased during the
first half of 2014 were comprised 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 through late 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 second quarter at $837.0 million,
representing an increase of $1.3 million, or 0.2%, compared with
December 31, 2013. Demand deposits and NOW accounts experienced a
combined seasonal decline of $15.0 million, or 7.2%, compared with
year end 2013. This decline was more than offset with a $16.3
million, or 2.6%, increase in savings and money market accounts and
time deposits compared with December 31, 2013.
Capital: At June 30, 2014, the Company and the Bank
continued to exceed applicable 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, 2014, the Company’s
Tier I Leverage, Tier I Risk-based, and Total Risk-based capital
ratios were 9.14%, 15.20% and 16.83%, respectively.
Three-for-Two Stock Split: As previously
announced, the Company’s Board of Directors declared a
three-for-two split of its common stock, payable as a large stock
dividend, which was paid on May 19, 2014 to all stockholders of
record at the close of business on May 5, 2014. Prior to the
three-for-two stock split as a large stock dividend, the Company
had approximately 3,944,290 shares of common stock outstanding.
After the stock split, the number of shares of Company common stock
outstanding increased to approximately 5,916,435. All previously
reported share and per share data included in public filings
subsequent to the payment date have been restated to reflect the
retroactive effect of this three-for-two stock split.
Shareholder Dividends: The Company paid a regular cash
dividend of 22.3 cents per share of common stock in the second
quarter of 2014, representing a post-stock split adjusted increase
of 0.7 cents, or 3.3%, compared with the prior quarter and a
post-stock split adjusted increase of 1.7 cents or 8.1% compared
with the second quarter of 2013.
The Company's Board of Directors recently declared a regular
cash dividend of 23.0 cents per share of common stock for the third
quarter of 2014, representing a post-stock adjusted increase of 2.0
cents, or 9.5%, compared with the third quarter of 2013. This
represented the thirteenth consecutive quarter where the Company
increased its quarterly cash dividend to shareholders. Based on the
June 30, 2014 price of The Company’s common stock of $27.88 per
share, the dividend yield amounted to 3.30%.
Results of Operations
Net Interest Income: For the three months ended June 30,
2014, net interest income on a tax-equivalent basis totaled $11.3
million, up $311 thousand or 2.8% on a linked-quarter basis and
representing an increase of $1.4 million, or 14.6%, compared with
the second quarter of 2013. The increase in net interest income was
principally attributed to average earning asset growth of $96.9
million or 7.6%, combined with a twenty basis point improvement in
the net interest margin to 3.32%. The increase in the net interest
margin was principally attributed to a twenty-four basis point
decline in the weighted average cost of interest bearing
liabilities, while the weighted average earning asset yields
declined one basis point. Earning asset yields were favorably
impacted by a fifty-two basis point increase in securities yields,
as higher long-term interest rates and slowing refinance activity
over this past year caused the amortization of mortgage-backed
security purchase premiums to slow.
For the six months ended June 30, 2014, net interest income on a
tax-equivalent basis totaled $22.4 million, representing an
increase of $2.8 million, or 14.2%, compared with the first half of
2013. The increase in net interest income was principally
attributed to average earning asset growth of $94.6 million, or
7.5%, combined with a nineteen basis point improvement in the net
interest margin to 3.33%. The increase in the net interest margin
was principally attributed to a twenty-six basis point decline in
the weighted average cost of interest bearing liabilities, while
the weighted average earning asset yields declined four basis
points. Earning asset yields were favorably impacted by a forty-one
basis point increase in securities yields, reflecting slowing
amortization of mortgage-backed security purchase premiums.
Non-interest Income: For the three months ended June 30,
2014, total non-interest income amounted to $2.3 million,
representing an increase of $419 thousand, or 22.4%, compared with
the second quarter of 2013. The increase in non-interest income was
led by a $251 thousand, or 29.5%, increase in trust and other
financial services fees. Realized security gains also contributed
to this increase, and were up $94 thousand, or 36.7%, compared with
the second quarter of 2013.
For the six months ended June 30, 2014, total non-interest
income amounted to $4.4 million, representing an increase of $585
thousand, or 15.3%, compared with the first half of 2013. The
increase in non-interest income was led by a $317 thousand, or
18.0%, increase in trust and other financial services fees.
Realized security gains also contributed to this increase, and were
up $226 thousand, or 43.4%, compared with the first half of
2013.
Non-interest Expense: For the three and six months ended
June 30, 2014, total non-interest expense amounted to $7.4 million
and $14.2 million, representing increases of $766 thousand and $1.3
million, or 11.6% and 10.1%, compared with the same periods in
2013, respectively. The increases in non-interest expense were
largely attributed to increases in salaries and employee benefits,
which were up $587 thousand and $896 thousand, or 15.9% and 12.3%,
compared with the same periods in 2013, respectively. The increases
in salaries and employee benefits were attributed to a variety of
factors including normal increases in base salaries, higher levels
of employee incentive compensation, higher levels of employee
health insurance, as well as increases in staffing levels and
strategic changes in staffing mix.
The increases in non-interest expense for the three and six
months ended June 30, 2014 were also attributed to higher levels of
other operating expenses, which were up $37 thousand and $189
thousand, or 2.2% and 6.1%, respectively, compared with the same
periods in 2013. These increases largely reflected higher levels of
loan collection and other real estate owned expenses.
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 fifteen branch office locations serving downeast, midcoast and
central Maine.
Safe Harbor Statement: 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 6/30/2014 12/31/2013
2014 2013 Total assets $ 1,452,856 $
1,373,893 $ 1,420,133 $ 1,325,713 Total securities 477,804 450,170
478,804 421,921 Total loans 900,936 852,857 872,400 833,696
Allowance for loan losses 8,751 8,475 8,831 8,166 Total deposits
836,971 835,651 866,128 840,052 Total Borrowings 470,967 409,445
413,339 352,944 Shareholders' equity 138,015 121,379 134,197
128,372
Three Months Ended Six Months Ended
Results Of Operations 6/30/2014 6/30/2013
6/30/2014 6/30/2013 Interest and dividend
income $ 13,351 $ 12,474 $ 26,392 $ 24,839 Interest expense 2,487
2,991 4,969 6,067 Net interest income 10,864 9,483 21,423 18,772
Provision for loan losses 428 405 885 758 Net interest income after
provision for loan losses 10,436 9,078 20,538 18,014
Non-interest income 2,293 1,874 4,409 3,824 Non-interest expense
7,361 6,595 14,207
12,902 Income before income taxes 5,368 4,357 10,740 8,936
Income taxes 1,511 1,187 3,096
2,550 Net income $ 3,857 $ 3,170
$ 7,644 $ 6,386
Share and Per
Common Share Data Period-end shares outstanding
5,928,040 5,896,705 5,928,040 5,896,705 Basic average shares
outstanding 5,921,025 5,894,388 5,916,387 5,890,006 Diluted average
shares outstanding 5,960,842 5,922,124 5,956,501 5,917,897
Basic earnings per share $ 0.65 $ 0.54 $ 1.29 $ 1.08 Diluted
earnings per share $ 0.65 $ 0.54 $ 1.28 $ 1.08 Cash
dividends $ 0.223 $ 0.207 $ 0.440 $ 0.410 Book value $ 23.28 $
20.43 $ 23.28 $ 20.43 Tangible book value $ 22.35 $ 19.47 $ 22.35 $
19.47
Selected Financial Ratios Return on
Average Assets 1.09 % 0.96 % 1.10 % 0.98 % Return on Average Equity
11.53 % 9.90 % 11.79 % 10.02 % Tax-equivalent Net Interest Margin
3.32 % 3.12 % 3.33 % 3.14 % Efficiency Ratio (1) 55.1 % 56.3 % 54.2
% 55.7 %
At or for the
Six Months Ended
At or for the Year Ended
June 30, December 31, 2014 2013
2013 Asset Quality Net charge-offs to average
loans 0.14 % 0.17 % 0.12 % Allowance for loan losses to total loans
0.97 % 0.96 % 0.99 % Allowance for loan losses to non-performing
loans 111.5 % 96.4 % 95.9 % Non-performing loans to total loans
0.87 % 0.99 % 1.04 % Non-performing assets to total assets 0.66 %
0.80 % 0.76 %
Capital Ratios Tier 1 leverage
capital 9.14 % 9.02 % 9.01 % Tier 1 risk-based capital 15.20 %
14.48 % 14.97 % Total risk-based capital 16.83 % 16.10 % 16.62 %
Tangible equity to total assets 9.12 % 8.55 % 8.43 % Tangible
common equity (2) 9.15 % 8.58 % 8.46 %
Use of non-GAAP Financial Measures
Certain information in this press release contains financial
information determined by methods other than in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”). Management uses these “non-GAAP” measures in its
analysis of the Company’s performance and believes these non-GAAP
financial measures provide a greater understanding of ongoing
operations and enhance comparability of results with prior periods
as well as demonstrating the effects of significant gains and
charges in the current period. The Company believes that a
meaningful analysis of its financial performance requires an
understanding of the factors underlying that performance.
Management believes that investors may use these non-GAAP financial
measures to analyze financial performance without the impact of
unusual items that may obscure trends in the Company’s underlying
performance. These disclosures should not be viewed as a substitute
for operating results determined in accordance with GAAP, nor are
they necessarily comparable to non-GAAP performance measures that
may be presented by other companies.
(1) In certain places in this press release
net interest income and the net interest margin is calculated and
discussed on a fully tax-equivalent basis. Specifically included in
interest income was tax-exempt interest income from certain
investment securities and loans. An amount equal to the tax benefit
derived from this tax-exempt income has been added back to the
interest income total, which increased net interest income
accordingly. Management believes the disclosure of tax-equivalent
net interest income information improves the clarity of financial
analysis, and is particularly useful to investors in understanding
and evaluating the changes and trends in the Company’s results of
operations. Other financial institutions commonly present net
interest income on a tax-equivalent basis. This adjustment is
considered helpful in the comparison of one financial institution’s
net interest income to that of another institution, as each will
have a different proportion of tax-exempt interest from its earning
assets. Moreover, net interest income is a component of a second
financial measure commonly used by financial institutions, net
interest margin, which is the ratio of net interest income to
average earning assets. For purposes of this measure as well, other
financial institutions generally use tax-equivalent net interest
income to provide a better basis of comparison from institution to
institution. The Company follows these practices.
(2) The Company presents its efficiency ratio
using non-GAAP information. The GAAP efficiency ratio is computed
by dividing non-interest expense by the sum of tax-equivalent net
interest income and non-interest income. The non-GAAP efficiency
ratio presented in this press release is 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, and other significant non-recurring expenses.
(3) The Company presents certain information
based upon tangible common equity instead of total shareholders’
equity in accordance with GAAP. The difference between these two
measures is the Company’s intangible assets, specifically goodwill
and core deposit intangibles from prior acquisitions. Management,
banking regulators and many stock analysts use the tangible common
equity ratio, the tangible equity to total assets ratio and the
tangible book value per common share in conjunction with more
traditional bank capital ratios to, among other things, compare the
capital adequacy of banking organizations with significant amounts
of goodwill or other intangible assets, typically stemming from the
use of the purchase accounting method in accounting for mergers and
acquisitions. The tangible common equity ratio is computed by
dividing the total common shareholders' equity, less goodwill and
other intangible assets, by total assets, less goodwill and other
intangible assets. The tangible equity to total assets ratio is
computed by dividing total shareholders' equity, less goodwill and
other intangible assets, by total assets at period end. The
tangible book value ratio is computed by dividing total
shareholders’ equity, less goodwill and other intangible assets, by
period end total outstanding shares of common stock.
Bar Harbor BanksharesGerald Shencavitz, 207-288-3314EVP and
Chief Financial Officer
Bar Harbor Bankshares (AMEX:BHB)
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