Bar Harbor Bankshares (NYSE MKT: BHB) (the “Company”), the
parent company of Bar Harbor Bank & Trust (the “Bank”), today
announced record net income of $4.4 million for the first quarter
of 2016, representing an increase of $525 thousand, or 13.5%,
compared with the first quarter of 2015. The Company also reported
record diluted earnings per share of $0.72 for the quarter,
representing an increase of $0.08, or 12.5% compared with the first
quarter of 2015. The Company’s annualized return on average
shareholders’ equity amounted to 11.18% for the quarter, up from
10.57% in the first quarter of 2015. The Company’s first quarter
return on average assets amounted to 1.10%, up from 1.06% in the
first quarter of 2015.
In making the announcement, the Company’s President and Chief
Executive Officer, Curtis C. Simard, commented, “We are pleased to
have carried our 2015 momentum forward into 2016 with the
announcement of our best quarterly earnings on record, following
our recently announced twentieth consecutive quarterly cash
dividend increase.”
“Our first quarter performance was highlighted by a $422
thousand, or 3.7% increase, in tax-equivalent net interest income,
which was driven by earning asset growth of $124.0 million, or
8.7%, compared with the first quarter of 2015. Our non-interest
income was up $986 thousand or 42.1% compared with the first
quarter of 2015, reflecting higher levels of realized securities
gains combined with increases in all other categories of
non-interest income. While appropriately investing in our people,
products, and processes, our continued focus on the overall
management of our operating expenses was also evident, with a first
quarter efficiency ratio of 57.4%.”
Mr. Simard continued, “We are also pleased to report first
quarter commercial loan growth of $22.6 million, or 4.5%, despite
strong competition for quality loans. Credit quality was also a
bright spot for the quarter, with our non-performing loans
declining 10.0% and ending the quarter at 0.63% of our total loan
portfolio. Similarly, we enjoyed low levels of net loan charge-offs
during the quarter, with annualized net charge-offs to average
loans outstanding amounting to only 0.04%.”
In concluding, Mr. Simard added, “Competition remains brisk,
however, our brand remains well received and we continue to focus
on improving our sales culture and the customer experience. We
believe our efforts to balance growth and earnings are evident in
our performance measures and our ability to continue to deliver
value for our shareholders.”
Balance Sheet Highlights
Assets: Led by growth in the loan and securities
portfolios, total assets surpassed $1.6 billion at quarter end, up
$42.4 million, or 2.7%, compared with December 31, 2015.
Loans: Total loans ended the quarter at $1.01 billion,
representing an increase of $16.5 million, or 1.7%, compared with
December 31, 2015. At quarter-end, the Bank’s commercial loan
portfolio stood at $529.4 million, representing an increase of
$22.6 million, or 4.5%, compared with year-end 2015. Consumer
loans, which principally consist of residential real estate
mortgages, ended the quarter at $459.4 million, representing a
decline of $8.5 million or 1.8% compared with year-end 2015. Loans
originated and closed by the Bank during the first quarter were
more than offset by loan re-financings and scheduled principal
amortization from the existing residential real estate
portfolio.
Credit Quality: The overall credit quality of the Bank’s
loan portfolio remained stable during the first quarter. At quarter
end, total non-performing loans stood at $6.3 million, representing
a decline of $699 thousand, or 10.0%, compared with December 31,
2015. Total net loan charge-offs amounted to $90 thousand for the
quarter, compared with net loan recoveries of $14 thousand in the
first quarter of 2015.
For the three months ended March 31, 2016, the Bank recorded a
provision for loan losses of $465 thousand, compared with $495
thousand in the first quarter of 2015. At quarter end, the Bank’s
allowance for loan losses stood at $9.8 million, up from $9.4
million at December 31, 2015. The allowance for loan losses
expressed as a percentage of total loans ended the first quarter at
0.98%, up from 0.95% at year-end 2015.
Securities: Total securities ended the first quarter at
$532.9 million, representing an increase of $28.0 million or 5.5%,
compared with December 31, 2015. Securities purchased during the
quarter 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 at March 31, 2016 were $962.6 million, up $19.8
million, or 2.1%, compared with December 31, 2015. Demand deposits
and NOW accounts experienced a combined seasonal decline of $11.4
million or 4.6%, while savings and money market accounts were up
$27.2 million, or 9.1%. Total time deposits were up $4.0 million,
or 1.0%.
Capital: At March 31, 2016, 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 March 31, 2016, the Company’s Common Equity Tier I, Tier I
Leverage, Tier I Risk-based, and Total Risk-based capital ratios
were 15.58%, 9.20%, 15.58% and 17.16%, respectively.
Shareholder Dividends: The Company paid a regular cash
dividend of 26.5 cents per share of common stock in the first
quarter of 2016, representing an increase of 2.0 cents, or 8.2%,
compared with the first quarter of 2015. In addition, the Company's
Board of Directors recently declared a regular second quarter cash
dividend of 27.0 cents per share of common stock, representing an
increase of 2.0 cents, or 8.0%, compared with the second quarter of
2015. Based on the March 31, 2016 closing price of BHB’s common
stock of $33.22 per share, the dividend yield amounted to
3.25%.
Results of Operations
Net Interest Income: For the three months ended March 31,
2016, net interest income on a tax-equivalent basis amounted to
$11.9 million, representing an increase of $422 thousand, or 3.7%,
compared with the first quarter of 2015. The increase in net
interest income was principally attributed to average earning asset
growth of $124.0 million or 8.7%, as the tax-equivalent net
interest margin declined eighteen basis points to 3.09%. The
decline in the net interest margin was attributed to a sixteen
basis point decline in the weighted average earning asset yield to
3.83%, combined with a one basis point increase in the weighted
average cost of interest bearing liabilities to 0.83%. 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 months ended March 31,
2016, total non-interest income amounted to $3.3 million,
representing an increase of $986 thousand or 42.1% compared with
the first quarter of 2015. The increase in non-interest income was
principally attributed to an $817 thousand increase in realized
security gains, largely reflecting the Bank’s strategy of lowering
the duration of the securities portfolio and its overall interest
rate risk profile, while simultaneously generating earnings. All
other categories of non-interest income posted moderate increases
compared with the first quarter of 2015.
Non-interest Expense: For the three months ended March
31, 2016, total non-interest expense amounted to $8.0 million,
representing an increase of $664 thousand, or 9.1%, compared with
the first quarter of 2015. The increase in non-interest expense was
principally attributed to a $665 thousand or 15.3% increase in
salaries and employee benefits compared with the first quarter of
2015. The increase in salaries and employee benefits was attributed
to a variety of factors including normal increases in base salaries
and higher levels of employee health insurance, higher levels of
employee incentive and equity compensation, 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.
Bar Harbor Bankshares Selected Financial
Information (dollars in thousands except per share data)
(unaudited) Period End
1st Quarter Average Balance Sheet
Data 3/31/2016 12/31/2015
2016 2015 Total assets $
1,622,493 $ 1,580,055 $ 1,617,529 $ 1,486,805 Total securities
532,919 504,969 509,311 464,419 Total loans 1,006,562 990,070
1,011,934 933,708 Allowance for loan losses 9,814 9,439 9,774 9,169
Total deposits 962,575 942,787 962,698 856,338 Total borrowings
492,253 474,791 488,993 474,286 Shareholders' equity 160,594
154,152 158,521 148,970
Three Months Ended Results
Of Operations 3/31/2016 3/31/2015 Interest
and dividend income $ 14,164 $ 13,533 Interest expense 2,828 2,535
Net interest income 11,336 10,998 Provision for loan losses 465 495
Net interest income after provision for loan losses 10,871 10,503
Non-interest income 3,328 2,342 Non-interest expense
7,997 7,333 Income before
income taxes 6,202 5,512 Income taxes 1,796
1,631 Net income $ 4,406
$ 3,881
At or for the Three
MonthsEnded
Share and Per Common Share Data March 31, 2016
2015 Period-end shares outstanding 6,011,008
5,959,377 Basic average shares outstanding 6,009,198 5,953,538
Diluted average shares outstanding 6,081,024 6,033,257 Basic
earnings per share $ 0.73 $ 0.65 Diluted earnings per share $ 0.72
$ 0.64 Cash dividends $ 0.265 $ 0.245 Book value $ 26.72 $
25.19 Tangible book value $ 25.82 $ 24.27
Selected
Financial Ratios Return on Average Assets 1.10 % 1.06 %
Return on Average Equity 11.18 % 10.57 % Tax-equivalent Net
Interest Margin 3.09 % 3.27 % Efficiency Ratio (1) 57.4 % 55.3 %
At or for the ThreeMonths
Ended
At or for theYear Ended
March 31, December 31, 2016
2015 2015 Asset Quality Net
charge-offs (recoveries) to average loans 0.04% (0.01%) 0.14%
Allowance for loan losses to total loans 0.98% 1.01% 0.95%
Allowance for loan losses to non-performing loans 155.6% 77.1%
134.7% Non-performing loans to total loans 0.63% 1.31% 0.71%
Non-performing assets to total assets 0.40% 0.84% 0.46%
Capital Ratios Common equity tier 1 capital 15.58%
14.98% 15.55% Tier 1 leverage capital 9.20% 9.26% 9.37% Tier 1
risk-based capital 15.58% 14.98% 15.55% Total risk-based capital
17.16% 16.57% 17.12% Tangible equity to total assets 9.57% 9.59%
9.41% Tangible common equity (2) 9.60% 9.62% 9.45%
(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.
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20160428006795/en/
Bar Harbor BanksharesGerald Shencavitz,
207-288-3314EVP and Chief Financial Officer
Bar Harbor Bankshares (AMEX:BHB)
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