Bar Harbor Bankshares (NYSE MKT: BHB) (the “Company”), the
parent company of Bar Harbor Bank & Trust (the “Bank”), today
announced net income of $3.9 million for the second quarter of
2015, representing an increase of $16 thousand or 0.4%, compared
with the second quarter of 2014. The Company also reported diluted
earnings per share of $0.64 for the quarter, compared with $0.65
for the second quarter of 2014. The Company’s annualized return on
average shareholders’ equity amounted to 10.31% for the quarter,
compared with 11.53% in the second quarter of 2014. The Company’s
second quarter return on average assets amounted to 1.01%, compared
with 1.09% in the second quarter of 2014.
For the six months ended June 30, 2015, the Company reported
record net income of $7.8 million, representing an increase of $110
thousand, or 1.4%, compared with the same period in 2014. The
Company also reported diluted earnings per share of $1.28,
unchanged compared with the same period in 2014. The Company’s
annualized return on average shareholders’ equity amounted to
10.44% for the six months ended June 30, 2015, compared with 11.79%
for the same period in 2014. The Company’s annualized return on
average assets amounted to 1.04%, compared with 1.10% for the six
months ended June 30, 2014.
In making the announcement, the Company’s President and Chief
Executive Officer, Curtis C. Simard, commented, “The first half of
2015 featured record earnings and strong commercial loan growth,
with that portfolio up over $54 million, or 12%, compared with year
end 2014. Our ability to grow earning assets was instrumental in
offsetting the pressure on our net interest margin, as interest
rates continued to remain near historical lows. With our unwavering
commitment to credit quality, this growth was across industries
with well known and respected borrowers throughout the State.”
Mr. Simard continued, “The credit stability of our loan
portfolio was further evident during the first half of the year,
highlighted by a $3.4 million or 28% decline in non-performing
loans compared with year end 2014. Reflecting our continued focus
on core earnings, we are pleased to deliver a first half efficiency
ratio of 56.0% while continuing to invest in our systems, products,
processes and people.”
In concluding, Mr. Simard added, “There continues to be
aggressive competition for quality loans and core deposits. We are
nonetheless staying true to fundamentals and our brand promise. The
result has been continued measured growth, pricing and expense
discipline, and solid performance for our shareholders including
our recently announced seventeenth 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 $1.56 billion,
representing an increase of $100.7 million, or 6.9%, compared with
December 31, 2014.
Loans: Total loans ended the quarter at $983.2 million,
representing an increase of $64.2 million, or 7.0%, compared with
December 31, 2014. At quarter-end the Bank’s commercial loan
portfolio stood at $510.3 million, representing an increase of
$54.6 million, or 12.0%, compared with year-end 2014. Consumer
loans, which principally consist of residential real estate
mortgages, ended the quarter at $456.7 million, up $10.1 million or
2.3% compared with year-end 2014.
Credit Quality: The overall credit quality of the Bank’s
loan portfolio remained stable during the first six months of 2015,
highlighted by a meaningful decline in non-performing loans from
year-end 2014. Total non-performing loans ended the second quarter
at $8.8 million, compared with $12.3 million at December 31, 2014,
representing a decline of $3.4 million, or 28.1%. Total
non-performing loans expressed as a percentage of total loans ended
the quarter at 0.90%, down from 1.34% at year-end 2014. Similarly,
the allowance for loan losses expressed as a ratio to
non-performing loans ended the quarter at 102.9%, up from 73.0% at
December 31, 2014.
Total net loan charge-offs amounted to $765 thousand during the
first six months of 2015, or annualized net charge-offs to average
loans outstanding of 0.16%, compared with $609 thousand and 0.14%,
respectively, for the same period in 2014. For the three and six
months ended June 30, 2015, the Bank recorded provisions for loan
losses of $400 thousand and $895 thousand, compared with $428
thousand and $885 thousand for the same periods in 2014. At June
30, 2015, the Bank’s allowance for loan losses stood at $9.1
million, representing an increase of $130 thousand, or 1.4%,
compared with year-end 2014.
Securities: Total securities ended the second quarter at
$480.1 million, representing an increase of $9.6 million or 2.0%,
compared with December 31, 2014. Securities purchased during the
first six months of 2015 were comprised of mortgage-backed
securities issued and guaranteed by U.S. Government agencies and
sponsored-enterprises and, to a lesser extent, municipal securities
issued by states and political subdivisions thereof.
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 $890.1 million,
representing an increase of $32.1 million, or 3.7%, compared with
December 31, 2014. The Bank’s transaction accounts experienced a
combined seasonal decline of $20.9 million, or 4.4%, compared with
year end 2014. This decline was more than offset with a $53.0
million increase in time deposits obtained from the national
market, which were also utilized to help fund year-to-date earning
asset growth.
Capital: At June 30, 2015, 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 Common
Equity Tier I, Tier I leverage, Tier I Risk-based, and Total
Risk-based ratios of at least 6.5%, 5%, 8% and 10%, respectively.
At June 30, 2015, the Company’s Common Equity Tier I, Tier I
Leverage, Tier I Risk-based, and Total Risk-based capital ratios
were 14.84%, 9.17%, 14.84% and 16.34%, respectively.
Shareholder Dividends: The Company paid a regular cash
dividend of 25.0 cents per share of common stock in the second
quarter of 2015, representing an increase of 2.7 cents, or 12.0%,
compared with the second quarter of 2014.
The Company's Board of Directors recently declared a regular
cash dividend of 25.5 cents per share of common stock for the third
quarter of 2015, representing an increase of 2.5 cents, or 10.9%,
compared with the third quarter of 2014. Based on the June 30, 2015
price of the Company’s common stock of $35.43 per share, the
dividend yield amounted to 2.88%.
Results of Operations
Net Interest Income: For the three months ended June 30,
2015, net interest income on a tax-equivalent basis totaled $11.3
million, essentially unchanged compared with the second quarter of
2014. While average earning assets increased $88.5 million, the
impact of this growth on net interest income was entirely offset by
a twenty basis point decline in the net interest margin compared
with the second quarter of 2014. The decline in the net interest
margin was attributed to a twenty-two basis point decline in the
weighted average earning asset yield, while the weighted average
cost of interest bearing liabilities declined only two basis
points.
For the six months ended June 30, 2015, net interest income on a
tax-equivalent basis totaled $22.8 million, representing an
increase of $411 thousand, or 1.8%, compared with the same period
in 2014. The increase was principally attributed to average earning
asset growth of $85.4 million, or 6.3%, as the net interest margin
declined fourteen basis points to 3.19% compared with the first
half of 2014. The decline in the net interest margin was attributed
to a sixteen basis point decline in the weighted average earning
asset yield, partially offset by a three basis point decline in the
weighted average cost of interest bearing liabilities. Earning
asset yields continued to be impacted by still-historically low
interest rates as well as competitive pricing pressures for quality
loans.
Non-interest Income: For the three and six months ended
June 30, 2015, total non-interest income amounted to $2.5 million
and $4.8 million, representing increases of $210 thousand and $436
thousand, or 9.2% and 9.9%, respectively, compared with the same
periods in 2014. The increases in non-interest income were
principally attributed to realized securities gains, which for the
three and six months ended June 30, 2015 increased $237 thousand
and $459 thousand, respectively, compared with the same periods in
2014. Other operating income increased $85 thousand and $122
thousand compared with the three and six months ended June 30,
2014, reflecting the Bank’s purchase of Bank Owned Life Insurance
in the first quarter of this year. The foregoing increases were
partially offset by revenue declines in trust and other financial
services, which for the three and six months ended June 30, 2015
were down $117 thousand and $144 thousand, respectively, compared
with the same periods in 2014. These declines largely reflected
lower levels of retail brokerage activity compared with the same
periods in 2014.
Non-interest Expense: For the three months ended June 30,
2015, total non-interest expense amounted to $7.6 million,
representing an increase of $240 thousand, or 3.3%, compared with
the second quarter of 2014. The increase in non-interest expense
was attributed to a wide variety of expense categories including
professional services, marketing, equipment, occupancy, FDIC
insurance assessments and shareholder related expenses.
For the six months ended June 30, 2015, total non-interest
expense amounted to $14.9 million, representing an increase of $727
thousand, or 5.1%. The increase in non-interest was largely
attributed to increases in salaries and employee benefits, which
were up $422 thousand, or 5.1%, compared with the same period in
2014. 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, as well as increases in
staffing levels and strategic changes in staffing mix.
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.
All share and per share amounts have been adjusted to reflect
the effect of the 3-for-2 stock split (dividend) during May
2014.
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 Bankshares Selected
Financial Information (dollars in thousands except per share
data) (unaudited) Period End 2nd
Quarter Average Balance Sheet Data 6/30/2015
12/31/2014 2015 2014
Total assets $ 1,560,009 $ 1,459,320 $ 1,533,041 $ 1,420,133 Total
securities 480,138 470,525 481,947 478,804 Total loans 983,244
919,024 953,800 872,400 Allowance for loan losses 9,099 8,969 9,416
8,831 Total deposits 890,116 858,049 876,487 866,128 Total
borrowings 514,164 447,020 499,293 413,339 Shareholders' equity
148,656 146,287 150,654 134,197
Three Months Ended
Six Months Ended Results Of Operations
6/30/2015 6/30/2014 6/30/2015 6/30/2014
Interest and dividend income $ 13,472 $ 13,351 $ 27,005 $
26,392 Interest expense 2,586 2,487 5,121 4,969 Net interest income
10,886 10,864 21,884 21,423 Provision for loan losses 400 428 895
885
Net interest income after provision for
loan losses
10,486 10,436 20,989 20,538 Non-interest income 2,503 2,293
4,845 4,409 Non-interest expense 7,601
7,361 14,934 14,207
Income before income taxes 5,388 5,368 10,900 10,740 Income taxes
1,515 1,511 3,146
3,096 Net income $ 3,873
$ 3,857 $ 7,754 $ 7,644
At or for the Three At or for the Six Months
Ended Months Ended Share and Per Common Share
Data June 30, June 30, 2015 2014
2015 2014 Period-end shares outstanding
5,984,956 5,928,043 5,984,956 5,928,043 Basic average shares
outstanding 5,973,758 5,921,025 5,963,704 5,916,387 Diluted average
shares outstanding 6,064,413 5,960,842 6,050,122 5,956,501
Basic earnings per share $ 0.65 $ 0.65 $ 1.30 $ 1.29 Diluted
earnings per share $ 0.64 $ 0.65 $ 1.28 $ 1.28 Cash
dividends $ 0.2500 $ 0.2230 $ 0.4950 $ 0.4400 Book value $ 24.84 $
23.28 $ 24.84 $ 23.28 Tangible book value $ 23.93 $ 22.35 $ 23.93 $
22.35
Selected Financial Ratios Return on
Average Assets 1.01 % 1.09 % 1.04 % 1.10 % Return on Average Equity
10.31 % 11.53 % 10.44 % 11.79 % Tax-equivalent Net Interest Margin
3.12 % 3.32 % 3.19 % 3.33 % Efficiency Ratio (1) 56.8 % 55.1 % 56.0
% 54.2 %
At or for the Six At or for
the Months Ended Year Ended June 30,
December 31, 2015 2014 2014
Asset Quality Net charge-offs (recoveries) to average
loans 0.16 % 0.14 % 0.15 % Allowance for loan losses to total loans
0.93 % 0.97 % 0.98 % Allowance for loan losses to non-performing
loans 102.9 % 111.5 % 73.0 % Non-performing loans to total loans
0.90 % 0.87 % 1.34 % Non-performing assets to total assets 0.59 %
0.66 % 0.88 %
Capital Ratios Common equity
tier 1 capital 14.84 % n/a n/a Tier 1 leverage capital 9.17 % 9.14
% 9.30 % Tier 1 risk-based capital 14.84 % 15.20 % 15.60 % Total
risk-based capital 16.34 % 16.83 % 17.24 % Tangible equity to total
assets 9.18 % 9.12 % 9.65 % Tangible common equity (2) 9.21 % 9.15
% 9.68 %
All share and per share amounts have been
adjusted to reflect the effect of the 3-for-2 stock split
(dividend) during May 2014.
(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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version on businesswire.com: http://www.businesswire.com/news/home/20150729006714/en/
Bar Harbor BanksharesGerald Shencavitz,
207-288-3314EVP and Chief Financial Officer
Bar Harbor Bankshares (AMEX:BHB)
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