Bar Harbor Bankshares (NYSE MKT: BHB) (the “Company”) the parent
company of Bar Harbor Bank & Trust (the “Bank”), today
announced record net income of $14.6 million for the year ended
December 31, 2014, representing an increase of $1.4 million, or
10.8%, compared with 2013. The Company also reported record diluted
earnings per share of $2.45 for 2014, representing an increase of
$0.23, or 10.4%, compared with 2013. The Company’s return on
average equity amounted to 10.69%, up from 10.52% in 2013. The
Company’s return on average assets amounted to 1.03%, up from 0.98%
in 2013.
The Company also reported net income of $3.1 million for the
quarter ended December 31, 2014, or diluted earnings per share of
$0.52, compared with $3.3 million or diluted earnings per share of
$0.55 in the fourth quarter of 2013, representing declines of $162
thousand and $0.03, or 5.0% and 5.5%, respectively. Included in
fourth quarter earnings were net realized losses on the sale of
securities amounting to $263 thousand, reflecting the Bank’s
efforts to lower the duration of the portfolio and its overall
interest rate risk profile.
“Our 2014 performance continued a long-standing trend of
delivering both growth and solid financial returns,” said Company
President and Chief Executive Officer, Curtis C. Simard. “We are
delighted to report our ninth consecutive year of record earnings
following our recently announced fifteenth consecutive quarterly
cash dividend increase.”
Mr. Simard continued, “Despite the challenges presented by the
protracted low interest rate environment and a still-struggling
economy, our 2014 performance featured a $4.9 million, or 11.9%,
increase in net interest income. This achievement was driven by an
eighteen basis point improvement in our net interest margin
combined with average earning asset growth of $76 million. Led by
revenue from our Trust and other financial services division, we
also enjoyed higher levels of fee income compared with last year.
Reflecting our continued focus on core earnings, we are pleased to
deliver a 2014 efficiency ratio of 54.7% while continuing to invest
in our products, process, and people.”
In concluding, Mr. Simard added, “We believe our commitment to
pursuing a strategy of achieving long-term sustainable growth,
profitability, and shareholder value without sacrificing our
soundness is again evident from our financial results and overall
performance. As we have said, this is at the very heart of our
model. We continue to seek out opportunities to expand our business
and deliver the promise of successful community banking to our
customers, prospects, employees, and shareholders alike.”
Balance Sheet
Assets: Total assets ended the year at $1.46
billion, up $85.4 million, or 6.2%, compared with December 31,
2013. The increase in total assets was led by loan growth and, to a
lesser extent, an increase in the Bank’s securities portfolio.
Loans: Total loans ended the year at $919.0 million, up
$66.2 million, or 7.8%, compared with December 31, 2013. Consumer
loans, which principally consist of residential real estate
mortgages, ended the year at $446.6 million, up $65.4 million or
17.2% compared with December 31, 2013. This increase was
principally 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 year end, the Bank’s commercial loan portfolio stood at
$455.7 million, unchanged, compared with December 31, 2013. New
commercial loan originations 2014 were largely offset with certain,
sizeable loan payoffs as well as scheduled principal amortization
from the portfolio.
Credit Quality: Total non-performing loans ended the year
at $12.3 million, representing an increase of $3.4 million compared
with December 31, 2013. One residential real estate mortgage loan,
which was placed in non-accrual status in the fourth quarter,
represented 73.5% of this increase. Despite the increase in
non-performing loans, the Bank does not believe it is reflective of
credit deterioration in the loan portfolio as a whole.
Total net loan charge-offs amounted to $1.3 million in 2014, or
net charge-offs to average loans outstanding of 0.15%, up from $1.0
million and 0.12%, respectively, compared with 2013. The Bank
recorded a provision for loan losses of $1.8 million in 2014,
representing an increase of $415 thousand compared with 2013. The
increase in the provision largely reflected elevated levels of loan
loss experience and, to a lesser extent, increases in
non-performing and other potential problem loans.
At December 31, 2014, the Bank’s allowance for loan losses stood
at $9.0 million, representing an increase of $494 thousand or 5.8%
compared with year end 2013. The allowance for loan losses
expressed as a percentage of total loans ended the year at 0.98%,
compared with 0.99% at year end 2013.
Securities: Total securities ended the year at $470.5
million, up $20.4 million, or 4.5%, compared with December 31,
2013. Securities purchased during 2014 consisted of mortgage-backed
securities issued by U.S. Government agencies and
sponsored-enterprises and, to a lesser extent, municipal securities
issued by states and political subdivisions thereof.
Deposits: Total deposits ended the year at $858.0
million, up $22.4 million, or 2.7%, compared with December 31,
2013. Demand, NOW and money market accounts combined were up $39.9
million or 9.1%, while time deposits declined $17.5 million, or
4.4%. The decline in time deposits was attributed to lower levels
of brokered deposits compared with year end 2013.
Capital: At December 31, 2014, 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 December 31, 2014, the Company’s Tier I Leverage, Tier I
Risk-based, and Total Risk-based capital ratios were 9.30%, 15.60%
and 17.24%, 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: During 2014 the Company paid
regular cash dividends on its common stock in the aggregate amount
of $5.36 million, compared with $4.92 million in 2013. The
Company’s 2014 dividend payout ratio amounted to 36.7%, compared
with 37.3% in 2013. The total regular cash dividends paid in 2014
amounted to $0.905 per share of common stock, compared with $0.833
per share in 2013, representing an increase of 0.072 cents per
share, or 8.6%.
The Company’s Board of Directors recently declared a first
quarter 2015 regular cash dividend of 24.5 cents per share of
common stock, representing an increase of 2.83 cents or 13.1%
compared with the first quarter of 2014. Based on the year-end 2014
price of BHB’s common stock of $32.00 per share, the dividend yield
amounted to 3.06%.
Results of Operations
Net Interest Income: For the year ended December 31,
2014, net interest income on a tax-equivalent basis amounted to
$45.7 million, representing an increase of $4.9 million, or 11.9%,
compared with 2013. The increase in net interest income was
principally attributed to average earning asset growth of $75.7
million or 5.8%, combined with an eighteen basis point improvement
in the net interest margin to 3.33%. The increase in the net
interest margin was principally attributed to a twenty basis point
decline in the weighted average cost of interest bearing
liabilities to 0.82%, as the weighted average earning asset yield
of 4.05% was unchanged compared with 2013. While the weighted
average loan yield declined fifteen basis points in 2014, this
decline was offset by a twenty-eight basis point increase in
securities yields, as higher long-term interest rates and slowing
mortgage refinance activity over this past year caused the
amortization of mortgage-backed security purchase premiums to
slow.
For the quarter ended December 31, 2014, net interest income on
a tax-equivalent basis amounted to $11.5 million, representing an
increase of $656 thousand, or 6.1%, compared with the fourth
quarter of 2013. The Bank’s fourth quarter tax-equivalent
net-interest margin amounted to 3.28%, up from 3.21% in the fourth
quarter of 2013. The increase in net interest income was
principally attributed to average earning asset growth of $52.9
million combined with a seven basis point improvement in the net
interest margin to 3.28%. The increase in the net interest margin
was principally attributed to an eleven basis point decline in the
weighted average cost of interest bearing liabilities to 0.82%, as
the weighted average earning asset yields declined three basis
points to 4.00%.
Non-interest Income: For the year ended December 31,
2014, total non-interest income amounted to $7.8 million,
representing an increase of $192 thousand, or 2.5%. The increase in
non-interest income was principally attributed to a $342 thousand,
or 9.4% increase in trust and other financial services fees
compared with 2013. This increase was principally attributed to
increases in the value of assets under management and higher levels
of fee income from retail brokerage activities. Partially
offsetting the foregoing increase was a $97 thousand or 7.8%
decline in service charges on deposits, reflecting lower levels of
customer overdraft activity. Total realized securities gains, net
of other-than-temporary impairment losses, amounted to $403 in
2014, representing a decline of $24 thousand, or 5.6%, compared
with 2013.
Non-interest Expense: For the year ended December 31,
2014, total non-interest expense amounted to $29.2 million, up $2.4
million, or 8.8%, compared with 2013. The increase in non-interest
expense was largely attributed to a $1.6 million, or 10.6%,
increase in salaries and employee benefits. The increase in
salaries and employee benefits was attributed to a variety of
factors including normal increases in base salaries, higher levels
of employee incentive compensation, higher levels of employee
health insurance, lower levels of deferred loan origination costs,
as well as increases in staffing levels and strategic changes in
staffing mix. Total other operating expenses amounted to $6.9
million in 2014, up $358 thousand, or 5.4%, compared with 2013.
This increase largely reflected higher levels of loan collection
and other real estate owned expenses.
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 year ended December 31, 2014, the Company’s efficiency ratio
amounted to 54.7%, compared with 55.6% for 2013. These ratios
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. Founded in 1887, Bar
Harbor Bank & Trust provides full service community banking
with fifteen branch office locations serving downeast, midcoast and
central 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, cyber attacks or
other failures in our technology and privacy protection measures,
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.
Furthermore, there is a risk that the Company may not identify or
be successful in realizing upon new opportunities to expand its
business consistent with its business strategy, which would limit
our growth and may have a negative impact on future results of
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 4th Quarter Average Balance
Sheet Data 12/31/2014 12/31/2013
2014 2013 Total assets $
1,459,320 $ 1,373,893 $ 1,447,725 $ 1,379,442 Total securities
470,525 450,170 465,188 464,953 Total loans 919,024 852,857 901,273
851,640 Allowance for loan losses 8,969 8,475 8,908 8,526 Total
deposits 858,049 835,651 885,894 865,256 Total borrowings 447,020
409,445 409,458 381,972 Shareholders' equity 146,287 121,379
145,205 124,994
Three Months Ended Years Ended
Results Of Operations 12/31/2014 12/31/2013
12/31/2014 12/31/2013 Interest and dividend
income $ 13,520 $ 13,076 $ 53,718 $ 50,749 Interest expense 2,507
2,731 9,905 11,663 Net interest income 11,013 10,345 43,813 39,086
Provision for loan losses 457 490 1,833 1,418 Net interest income
after provision for loan losses 10,556 9,855 41,980 37,668
Non-interest income 1,533 1,817 7,758 7,566 Non-interest expense
7,792 7,123 29,211
26,860 Income before income
taxes 4,297 4,549 20,527 18,374 Income taxes 1,195
1,285 5,914
5,191 Net income $ 3,102
$ 3,264 $ 14,613 $ 13,183
At or for the Three Months Ended At or for the
Years Ended Share and Per Common Share Data December
31, December 31, 2014 2013 2014
2013 Period-end shares outstanding 5,946,325
5,908,612 5,946,325 5,908,612 Basic average shares outstanding
5,941,103 5,907,834 5,926,387 5,898,077 Diluted average shares
outstanding 6,008,790 5,943,063 5,976,264 5,928,440 Basic
earnings per share $ 0.52 $ 0.55 $ 2.47 $ 2.24 Diluted earnings per
share $ 0.52 $ 0.55 $ 2.45 $ 2.22 Cash dividends $ 0.235 $
0.213 $ 0.905 $ 0.833 Book value $ 24.60 $ 20.54 $ 24.60 $ 20.54
Tangible book value $ 23.68 $ 19.60 $ 23.68 $ 19.60
Selected Financial Ratios Return on Average Assets
0.85 % 0.94 % 1.03 % 0.98 % Return on Average Equity 8.48 % 10.36 %
10.69 % 10.52 % Tax-equivalent Net Interest Margin 3.28 % 3.21 %
3.33 % 3.15 % Efficiency Ratio (1) 58.4 % 55.9 % 54.7 % 55.6 %
At or for the Years Ended December
31, 2014 2013 Asset Quality
Net charge-offs to average loans 0.15% 0.12% Allowance for
loan losses to total loans 0.98% 0.99% Allowance for loan losses to
non-performing loans 73.0% 95.9% Non-performing loans to total
loans 1.34% 1.04% Non-performing assets to total assets 0.88% 0.76%
Capital Ratios Tier 1 leverage capital 9.30%
9.01% Tier 1 risk-based capital 15.60% 14.97% Total risk-based
capital 17.24% 16.62% Tangible equity to total assets 9.65% 8.43%
Tangible common equity (2) 9.68% 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. Fourth quarter
and year-to-date non-recurring expenses amounted to $34 and $863,
all of which were associated with the Border Trust transaction.
(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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