Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Bar Harbor Bankshares Reports Second Quarter 2023 Results; Declares Dividend By: ACCESSWIRE July 20, 2023 at 16:15 PM EDT BAR HARBOR, ME / ACCESSWIRE / July 20, 2023 / Bar Harbor Bankshares (NYSE American:BHB) (the "Company") reported second quarter 2023 net income of $10.8 million, or $0.71 per diluted share, compared to $10.5 million, or $0.70 per diluted share, in the same quarter of 2022. SECOND QUARTER 2023 HIGHLIGHTS (all comparisons to the second quarter 2022, unless otherwise noted) $4.0 billion total assets (Company record) 1.10% return on assets; 10.49% return on equity 12% annualized commercial loan growth 3.22% net interest margin ("NIM"), compared to 3.19% 0.17% non-performing assets ratio to total assets, compared to 0.21% $27.12 book value per share, compared to $26.09 in the fourth quarter of 2022 Bar Harbor Bankshares' President and Chief Executive Officer, Curtis C. Simard, stated, "We are very pleased to report our second quarter financial performance as we again delivered strong net interest income generated from robust loan growth and expanding yields on average earning assets while maintaining strong credit quality metrics. As we think about the current pipeline, we continue to be selective based on our ability to negotiate loan pricing, which factors into the appropriate growth levels. And while deposits are at a premium forcing costs to increase as competition tightens in a continued rising rate environment, we have been able to defend our NIM relative to our peers at 3.22%. We did see a demand for and remix into term deposits during the quarter as customers stretch for a higher and longer rate of return. However, our cumulative deposit beta for the current rate cycle is 22% as of June 30, 2023. We believe that our deposit strategy and efforts to individually manage pricing at the relationship level will continue to provide us with a competitive advantage." Mr. Simard continued, "At the end of the second quarter, our allowance for credit losses was $27.4 million. Our reserves to loan ratio increased from 0.90% to 0.91% during the quarter largely driven by a combination of loan growth and general macroeconomic trends. Our quarterly credit trends remained strong as we saw a favorable reduction to nonaccrual loans across all products and improvements in delinquencies." Mr. Simard concluded, "The operating environment for banks has changed yet again in 2023, but our strategy has not. We have built a bank with great people and sound operating principles that is made for shifting environments. As the only community bank headquartered in Northern New England with branches in Maine, New Hampshire and Vermont, we have been operating largely in conservative diversified Northeast markets for more than 135 years, including metropolitan areas, midsized cities and small towns. We serve a stable and diversified customer base with deposits from nearly all banking segments, including consumer, high net worth, small businesses, larger corporate, government agencies and commercial real estate. And here in the first half of 2023, these markets have remained resilient in the face of an uncertain macroeconomic environment. Unemployment rates remained stable within our footprint, continuing to come in below the national average. We believe that the consumer remains financially healthy, and our business customers continue to seek ways to expand and optimize their operations where it makes sense." DIVIDEND DECLARED The Company's Board of Directors voted to declare a cash dividend of $0.28 per share to shareholders of record at the close of business on August 16, 2023 payable on September 15, 2023. This dividend equates to a 4.55% annualized yield based on the $24.64 closing share price of the Company's common stock on June 30, 2023, the last trading day of the second quarter 2023. FINANCIAL CONDITION Total assets grew to $4.0 billion at the end of the second quarter 2023 from $3.9 billion at the end of the first quarter 2023 primarily due to continued loan growth. In the second quarter 2023, loans increased by $63.5 million primarily driven by commercial loans that grew $56.4 million, including $28.0 million from new customers primarily in the Real Estate and Leasing industries. Residential loans were relatively flat due to low production and profitable sales into the secondary market during the second quarter 2023. Consumer loans dropped by $1.7 million from the end of the first quarter 2023 due to run-off of balances associated with the repricing of home equity lines of credit to the higher interest rate environment. Securities available for sale decreased $538.2 million in the second quarter 2023, from $557.0 million in the first quarter 2023 as amortization and prepayments were used to fund loan growth. Throughout the past year, the yields on our securities have risen steadily with the rate environment, but we have curtailed durations to reduce our longer-term rate risk. Unrealized losses on securities totaled $55.3 million at the end of the second quarter 2023 versus $50.6 million at the end of the first quarter 2023 reflecting continued increases in market rates. The allowance for credit losses ("ACL") was $27.4 million at the end of the second quarter of 2023, compared to $26.6 million at the end of the first quarter of 2023. The ratio of allowance for credit losses to total loans increased to 0.91% from 0.90% due largely to loan growth and more conservative macroeconomic forecasting, specifically in national unemployment. Non-accruing loans during the second quarter 2023 decreased to $6.7 million from $7.8 million at the end of the first quarter, which reflects improvements in lending relationships across all product lines. Total deposits were $3.1 billion at the end of the second and first quarter 2023, which gave rise to a slightly higher loan to deposit ratio of 97% compared to 96%, respectively, on higher loan balances. Demand and other non-interest bearing deposits decreased $34.0 million largely driven by non-personal institutional outflows due to seasonality. Savings deposits decreased $40.0 million evenly throughout the second quarter 2023. However, we opened 1,600 non-maturity accounts with new customers with an average balance of $10 thousand during the second quarter 2023. Time deposits increased $231.3 million in the second quarter 2023 primarily due to a shift from non-maturity accounts and a $131.5 million increase in brokered deposits. Our deposit composition at the end of the second quarter 2023 was 46% commercial customers and 54% consumer customers, compared with 47% and 53%, respectively at year-end 2022. The Company's book value per share was $27.12 at June 30, 2023, compared with $26.09 at the end of the fourth quarter 2022. Tangible book value per share (non-GAAP measure) was $18.88 at the end of the second quarter 2023, compared to $17.78 at the end of the fourth quarter 2022, which is an annualized rate of return of approximately 12%. RESULTS OF OPERATIONS Net income in the second quarter 2023 was $10.8 million, or $0.71 per diluted share, versus $10.5 million, or $0.70 per diluted share, in the same quarter of 2022. NIM increased to 3.22% in the second quarter 2023 compared to 3.19% in the same quarter of 2022. The increase was primarily driven by new loans and yield expansion on existing variable rate loans, which were partially offset by a higher cost of funds. The yield on loans expanded to 4.99% at the end of the second quarter 2023, up from 3.71% in the same quarter of 2022. Costs of interest-bearing liabilities increased to 1.99% in the second quarter 2023 from 0.36% in the same quarter 2022 as our costs continue to drift upwards from subsequent interest rate hikes. We also experienced a shift in deposit composition to time deposits as some customers continue to seek higher returns. In the second quarter 2023, we had a heavier reliance on whole-sale borrowings than in the second quarter 2022, which also has a cost that is almost 200 basis points higher than in the prior year quarter. The provision for credit losses in the second quarter of 2023 was $750 thousand, compared to $534 thousand in the same quarter of 2022, primarily driven by loan growth and slightly higher provisioning given current market conditions. Our strong credit performance continues and net charge-offs were near zero. Non-interest income was $9.0 million in the second quarter 2023 and 2022. Customer service fees grew to $3.8 million in the second quarter 2023 from $3.7 million in the same quarter of 2022 on a higher number of transactional accounts. Wealth management income was $3.8 million in the second quarter 2023 and 2022 as higher inflows of cash since 2022 were offset by lower security valuations of assets under management in 2023. Non-interest expense was $23.4 million in the second quarter of 2023 compared to $21.7 million in the same quarter of 2022 principally due to higher salary and benefit expense. Salary and benefit expense increased due to annual salary adjustments that were effective at the end of the first quarter of 2023 and higher post-retirement expense in 2023 as compared to the prior year quarter due to changes in discount rates. BACKGROUND Bar Harbor Bankshares (NYSE American: BHB) is the parent company of its wholly-owned subsidiary, Bar Harbor Bank & Trust. Founded in 1887, Bar Harbor Bank & Trust is a true community bank serving the financial needs of its clients for over 135 years. Bar Harbor Bank & Trust provides full-service community banking with office locations in all three Northern New England states of Maine, New Hampshire and Vermont. For more information, visit www.barharbor.bank FORWARD-LOOKING STATEMENTS All statements, other than statements of historical fact, included in this release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believe," "anticipate," "expect," "may," "will," "assume," "should," "predict," "could," "would," "intend," "targets," "estimates," "projects," "plans," and "potential," and other similar words and expressions of the future, are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking, including statements relating to Company's deposit strategy, monitoring the Company's asset quality, the current economic outlook, our ability to expand and optimize operations, Company management's optimism about the Company's market and financial positions, and the Company's plans, objectives, and intentions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the Company to differ materially from any results, performance, or achievements expressed or implied by such forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (1) deterioration in the financial performance and/or condition of borrowers of Bar Harbor Bank & Trust (the "Bank"), including as a result of the negative impact of inflationary pressures on our customers and their businesses resulting in significant increases in credit losses and provisions for those losses; (2) the possibility that our asset quality could decline or that we experience greater loan losses than anticipated; (3) increased levels of other real estate owned, primarily as a result of foreclosures; (4) the impact of liquidity needs on our results of operations and financial condition; (5) competition from financial institutions and other financial service providers; (6) the effect of interest rate increases on the cost of deposits; (7) unanticipated weakness in loan demand or loan pricing; (8) adverse conditions in the national or local economies including in our markets throughout Northern New England; (9) changes in consumer spending, borrowing and saving habits; (10) the effects of new outbreaks of COVID-19, including actions taken by governmental officials to curb the spread of the virus, and the resulting impact on general economic and financial market conditions and on the Company's and our customers' business, results of operations, asset quality and financial condition; (11) the effects of civil unrest, international hostilities or other geopolitical events, including the war in Ukraine; (12) inflation, interest rate, market, and monetary fluctuations; (13) lack of strategic growth opportunities or our failure to execute on available opportunities; (14) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits; (15) our ability to effectively manage problem credits; (16) our ability to successfully implement efficiency initiatives on time and with the results projected; (17) our ability to successfully develop and market new products and technology; (18) the impact of negative developments in the financial industry and United States and global capital and credit markets; (19) our ability to retain executive officers and key employees and their customer and community relationships; (20) our ability to adapt to technological changes; (21) risks associated with litigation, including reputational and financial risks and the applicability of insurance coverage; (22) our ability to implement new technology effectively; (23) the vulnerability of the Bank's computer and information technology systems and networks, and the systems and networks of third parties with whom the Company or the Bank contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches and interruptions; (24) changes in the reliability of our vendors, internal control systems or information systems; (25) ongoing competition in the labor markets and increased employee turnover; (26) the potential impact of climate change; (27) the impact of pandemics, epidemics or any other health-related crisis; (28) our ability to comply with various governmental and regulatory requirements applicable to financial institutions; (29) changes in state and federal laws, rules, regulations, or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments; (30) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; (31) adverse impacts (including costs, fines, reputational harm, or other negative effects) from current or future litigation, regulatory examinations, or other legal and/or regulatory actions; and (32) general competitive, economic, political, and market conditions, including economic conditions in the local markets where we operate. Additional factors which could affect the forward-looking statements can be found in the Company's annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K filed with the Securities and Exchange Commission (the "SEC") and available on the SEC's website at http://www.sec.gov. The Company believes the forward-looking statements contained herein are reasonable; however, many of such risks, uncertainties, and other factors are beyond the Company's ability to control or predict and undue reliance should not be placed on any forward-looking statements, which are based on current expectations and speak only as of the date that they are made. Therefore, the Company can give no assurance that its future results will be as estimated. The Company does not intend to, and disclaims any obligation to, update or revise any forward-looking statement. NON-GAAP FINANCIAL MEASURES This document contains certain non-GAAP financial measures in addition to results presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. Because non-GAAP financial measures presented in this document are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies. A reconciliation of non-GAAP financial measures to GAAP measures is provided below. In all cases, it should be understood that non-GAAP measures do not depict amounts that accrue directly to the benefit of shareholders. An item which management excludes when computing non-GAAP core earnings can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP core earnings information set forth is not necessarily comparable to non-GAAP information, which may be presented by other companies. Each non-GAAP measure used by the Company in this report as supplemental financial data should be considered in conjunction with the Company's GAAP financial information. The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including gains/losses on securities, premises, equipment and other real estate owned, acquisition costs, restructuring costs, legal settlements, and systems conversion costs. Non-GAAP adjustments are presented net of an adjustment for income tax expense. The Company also calculates core earnings per share based on its measure of core earnings. The Company views these amounts as important to understanding its operating trends, particularly due to the impact of accounting standards related to acquisition activity. Analysts also rely on these measures in estimating and evaluating the Company's performance. Management also believes that the computation of non-GAAP core earnings and core earnings per share may facilitate the comparison of the Company to other companies in the financial services industry. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community. ### CONTACTS Josephine Iannelli; EVP, Chief Financial Officer & Treasurer; (207) 288-3314 TABLE INDEX CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED) A Selected Financial Highlights B Balance Sheets C Loan and Deposit Analysis D Statements of Income E Statements of Income (Five Quarter Trend) F Average Yields and Costs G Average Balances H Asset Quality Analysis I-J Reconciliation of Non-GAAP Financial Measures (Five Quarter Trend) and Supplementary Data BAR HARBOR BANKSHARES SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED At or for the Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, 2023 2023 2022 2022 2022 PER SHARE DATA Net earnings, diluted $ 0.71 $ 0.86 $ 0.83 $ 0.76 $ 0.70 Core earnings, diluted (1) 0.71 0.86 0.83 0.76 0.70 Total book value 27.12 27.00 26.09 25.22 26.19 Tangible book value (1) 18.88 18.74 17.78 16.89 17.83 Market price at period end 24.64 26.45 32.04 26.52 25.86 Dividends 0.28 0.26 0.26 0.26 0.26 PERFORMANCE RATIOS (2) Return on assets 1.10 % 1.36 % 1.30 % 1.20 % 1.14 % Core return on assets (1) 1.09 1.36 1.30 1.20 1.14 Pre-tax, pre-provision return on assets 1.47 1.81 1.72 1.65 1.50 Core pre-tax, pre-provision return on assets (1) 1.46 1.81 1.72 1.65 1.50 Return on equity 10.49 12.96 12.73 11.55 10.58 Core return on equity (1) 10.42 12.94 12.72 11.54 10.59 Return on tangible equity 15.28 18.97 19.03 17.25 15.74 Core return on tangible equity (1) 15.19 18.94 19.02 17.24 15.76 Net interest margin, fully taxable equivalent (1) (3) 3.22 3.54 3.76 3.47 3.19 Efficiency ratio (1) 60.25 54.72 58.19 57.67 59.25 FINANCIAL DATA (In millions) Total assets $ 4,029 $ 3,928 $ 3,910 $ 3,840 $ 3,716 Total earning assets (4) 3,716 3,628 3,601 3,525 3,399 Total investments 556 573 574 566 593 Total loans 3,007 2,944 2,903 2,850 2,727 Allowance for credit losses 27 27 26 25 24 Total goodwill and intangible assets 125 125 125 126 126 Total deposits 3,090 3,054 3,043 3,136 3,079 Total shareholders' equity 411 408 393 380 394 Net income 11 13 13 11 11 Core earnings (1) 11 13 13 11 11 ASSET QUALITY AND CONDITION RATIOS Net charge-offs (recoveries) (5) /average loans - % 0.01 % (0.02 )% 0.01 % - % Allowance for credit losses/total loans 0.91 0.90 0.89 0.88 0.87 Loans/deposits 97 96 95 91 89 Shareholders' equity to total assets 10.20 10.40 10.06 9.89 10.59 Tangible shareholders' equity to tangible assets 7.32 7.45 7.09 6.85 7.46 Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in tables I-J for additional information. All performance ratios are based on average balance sheet amounts, where applicable. Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans. Earning assets includes non-accruing loans and interest-bearing deposits with other banks. Securities are valued at amortized cost. Current quarter annualized. BAR HARBOR BANKSHARES CONSOLIDATED BALANCE SHEETS - UNAUDITED Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 Assets Cash and due from banks $ 46,532 $ 37,769 $ 39,933 $ 50,760 $ 40,834 Interest-earning deposits with other banks 77,253 44,933 52,362 31,305 26,282 Total cash and cash equivalents 123,785 82,702 92,295 82,065 67,116 Securities available for sale 538,178 557,040 559,516 556,752 586,142 Federal Home Loan Bank stock 17,784 15,718 14,893 9,035 6,572 Total securities 555,962 572,758 574,409 565,787 592,714 Loans held for sale 3,669 463 - 982 3,539 Total loans 3,007,480 2,944,005 2,902,690 2,850,364 2,727,274 Less: Allowance for credit losses (27,362 ) (26,607 ) (25,860 ) (25,018 ) (23,756 ) Net loans 2,980,118 2,917,398 2,876,830 2,825,346 2,703,518 Premises and equipment, net 47,412 47,549 47,622 48,010 48,350 Other real estate owned - - - - - Goodwill 119,477 119,477 119,477 119,477 119,477 Other intangible assets 5,335 5,568 5,801 6,034 6,267 Cash surrender value of bank-owned life insurance 78,967 78,436 81,197 80,758 80,262 Deferred tax asset, net 24,181 22,858 24,443 25,288 18,405 Other assets 89,641 81,269 87,729 86,499 76,109 Total assets $ 4,028,547 $ 3,928,478 $ 3,909,803 $ 3,840,246 $ 3,715,757 Liabilities and shareholders' equity Demand and other non-interest bearing deposits $ 602,667 $ 636,710 $ 676,350 $ 700,218 $ 670,268 NOW deposits 911,488 908,483 900,730 918,822 883,239 Savings deposits 588,769 628,798 664,514 669,317 663,676 Money market deposits 351,762 475,577 478,398 513,075 499,456 Time deposits 635,559 404,246 323,439 334,248 361,906 Total deposits 3,090,245 3,053,814 3,043,431 3,135,680 3,078,545 Senior borrowings 398,972 338,244 333,957 188,757 117,347 Subordinated borrowings 60,371 60,330 60,289 60,248 60,206 Total borrowings 459,343 398,574 394,246 249,005 177,553 Other liabilities 68,243 67,680 78,676 75,596 66,062 Total liabilities 3,617,831 3,520,068 3,516,353 3,460,281 3,322,160 Total shareholders' equity 410,716 408,410 393,450 379,965 393,597 Total liabilities and shareholders' equity $ 4,028,547 $ 3,928,478 $ 3,909,803 $ 3,840,246 $ 3,715,757 Net shares outstanding 15,144 15,124 15,083 15,066 15,026 BAR HARBOR BANKSHARES CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED LOAN ANALYSIS Annualized Growth % Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Quarter Year (in thousands) 2023 2023 2022 2022 2022 to Date to Date Commercial real estate $ 1,551,748 $ 1,519,219 $ 1,495,452 $ 1,421,962 $ 1,331,860 9 % 8 % Commercial and industrial 388,430 364,315 352,735 376,624 360,304 26 20 Paycheck Protection Program (PPP) - - - - 170 - - Total commercial loans 1,940,178 1,883,534 1,848,187 1,798,586 1,692,334 12 10 Total commercial loans, excluding PPP 1,940,178 1,883,534 1,848,187 1,798,586 1,692,164 12 10 Residential real estate 907,741 906,059 898,192 896,618 876,644 1 2 Consumer 96,947 98,616 100,855 100,822 100,816 (7 ) (8 ) Tax exempt and other 62,614 55,796 55,456 54,338 57,480 49 26 Total loans $ 3,007,480 $ 2,944,005 $ 2,902,690 $ 2,850,364 $ 2,727,274 9 % 7 % DEPOSIT ANALYSIS Annualized Growth % Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Quarter Year (in thousands) 2023 2023 2022 2022 2022 to Date to Date Demand $ 602,667 $ 636,710 $ 676,350 $ 700,218 $ 670,268 (21 )% (22 )% NOW 911,488 908,483 900,730 918,822 883,239 1 2 Savings 588,769 628,798 664,514 669,317 663,676 (25 ) (23 ) Money market 351,762 475,577 478,398 513,075 499,456 * (53 ) Total non-maturity deposits 2,454,686 2,649,568 2,719,992 2,801,432 2,716,639 (29 ) (20 ) Total time deposits 635,559 404,246 323,439 334,248 361,906 * * Total deposits $ 3,090,245 $ 3,053,814 $ 3,043,431 $ 3,135,680 $ 3,078,545 5 % 3 % *Indicates ratio greater than 100% BAR HARBOR BANKSHARES CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED Three Months Ended Six Months Ended June 30, June 30, (in thousands, except per share data) 2023 2022 2023 2022 Interest and dividend income Loans $ 36,917 $ 24,581 $ 71,477 $ 47,252 Securities and other 5,964 4,207 11,755 8,033 Total interest and dividend income 42,881 28,788 83,232 55,285 Interest expense Deposits 8,590 1,195 13,855 2,384 Borrowings 5,501 1,074 9,681 2,084 Total interest expense 14,091 2,269 23,536 4,468 Net interest income 28,790 26,519 59,696 50,817 Provision for credit losses 750 534 1,548 911 Net interest income after provision for credit losses 28,040 25,985 58,148 49,906 Non-interest income Trust and investment management fee income 3,805 3,829 7,360 7,583 Customer service fees 3,774 3,656 7,451 7,272 Gain on sales of securities, net - - 34 9 Mortgage banking income 378 488 657 1,112 Bank-owned life insurance income 503 504 1,651 1,005 Customer derivative income 83 137 215 155 Other income 437 347 796 1,134 Total non-interest income 8,980 8,961 18,164 18,270 Non-interest expense Salaries and employee benefits 13,223 11,368 25,994 23,515 Occupancy and equipment 4,392 4,373 8,806 8,796 (Gain) loss on sales of premises and equipment, net (86 ) 10 (99 ) (65 ) Outside services 424 410 780 750 Professional services 355 528 781 701 Communication 175 188 337 413 Marketing 476 369 885 632 Amortization of intangible assets 233 233 466 466 Acquisition, conversion and other expenses - - 20 325 Provision for unfunded commitments 45 45 (130 ) 371 Other expenses 4,155 4,176 8,256 7,682 Total non-interest expense 23,392 21,700 46,096 43,586 Income before income taxes 13,628 13,246 30,216 24,590 Income tax expense 2,837 2,743 6,413 4,975 Net income $ 10,791 $ 10,503 $ 23,803 $ 19,615 Earnings per share: Basic $ 0.71 $ 0.70 $ 1.57 $ 1.31 Diluted 0.71 0.70 1.57 1.30 Weighted average shares outstanding: Basic 15,139 15,018 15,125 15,014 Diluted 15,180 15,077 15,186 15,094 BAR HARBOR BANKSHARES CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands, except per share data) 2023 2023 2022 2022 2022 Interest and dividend income Loans $ 36,917 $ 34,560 $ 32,605 $ 27,940 $ 24,581 Securities and other 5,964 5,791 5,551 5,145 4,207 Total interest and dividend income 42,881 40,351 38,156 33,085 28,788 Interest expense Deposits 8,590 5,265 3,159 1,801 1,195 Borrowings 5,501 4,180 2,043 1,374 1,074 Total interest expense 14,091 9,445 5,202 3,175 2,269 Net interest income 28,790 30,906 32,954 29,910 26,519 Provision for credit losses 750 798 687 1,306 534 Net interest income after provision for credit losses 28,040 30,108 32,267 28,604 25,985 Non-interest income Trust and investment management fee income 3,805 3,555 3,442 3,548 3,829 Customer service fees 3,774 3,677 3,683 3,836 3,656 Gain on sales of securities, net - 34 - 44 - Mortgage banking income 378 279 153 315 488 Bank-owned life insurance income 503 1,148 499 496 504 Customer derivative income 83 132 97 58 137 Other income 437 359 354 526 347 Total non-interest income 8,980 9,184 8,228 8,823 8,961 Non-interest expense Salaries and employee benefits 13,223 12,771 12,900 12,242 11,368 Occupancy and equipment 4,392 4,414 4,321 4,458 4,373 (Gain) loss on sales of premises and equipment, net (86 ) (13 ) 75 - 10 Outside services 424 356 435 393 410 Professional services 355 426 490 421 528 Communication 175 162 263 204 188 Marketing 476 409 411 518 369 Amortization of intangible assets 233 233 233 233 233 Acquisition, conversion and other expenses - 20 (90 ) 31 - Provision for unfunded commitments 45 (175 ) 1,413 (26 ) 45 Other expenses 4,155 4,101 4,184 4,558 4,176 Total non-interest expense 23,392 22,704 24,635 23,032 21,700 Income before income taxes 13,628 16,588 15,860 14,395 13,246 Income tax expense 2,837 3,576 3,348 2,965 2,743 Net income $ 10,791 $ 13,012 $ 12,512 $ 11,430 $ 10,503 Earnings per share: Basic $ 0.71 $ 0.86 $ 0.83 $ 0.76 $ 0.70 Diluted 0.71 0.86 0.83 0.76 0.70 Weighted average shares outstanding: Basic 15,139 15,110 15,073 15,058 15,018 Diluted 15,180 15,190 15,147 15,113 15,077 BAR HARBOR BANKSHARES AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent (Non-GAAP) - Annualized) - UNAUDITED Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, 2023 2023 2022 2022 2022 Earning assets Interest-earning deposits with other banks 5.59 % 4.28 % 4.00 % 2.13 % 0.80 % Securities available for sale and FHLB stock 3.71 3.66 3.40 3.12 2.69 Loans: Commercial real estate 5.21 5.08 4.81 4.26 3.82 Commercial and industrial 6.42 5.89 5.43 4.46 3.67 Paycheck protection program - - - - 13.99 Residential real estate 3.76 3.71 3.63 3.45 3.55 Consumer 6.67 6.37 5.79 4.55 3.82 Total loans 4.99 4.82 4.56 4.04 3.71 Total earning assets 4.77 % 4.61 % 4.35 % 3.84 % 3.46 % Funding liabilities Deposits: NOW 0.94 % 0.51 % 0.22 % 0.16 % 0.14 % Savings 0.37 0.30 0.16 0.08 0.08 Money market 2.52 2.14 1.42 0.65 0.19 Time deposits 2.82 1.34 0.69 0.55 0.58 Total interest-bearing deposits 1.45 0.91 0.52 0.30 0.20 Borrowings 4.73 4.25 3.23 2.69 2.41 Total interest-bearing liabilities 1.99 % 1.39 % 0.78 % 0.48 % 0.36 % Net interest spread 2.78 3.22 3.57 3.36 3.10 Net interest margin, fully taxable equivalent (1) 3.22 3.54 3.76 3.47 3.19 Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in tables I-J for additional information. BAR HARBOR BANKSHARES AVERAGE BALANCES - UNAUDITED Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 Assets Interest-earning deposits with other banks (1) $ 21,440 $ 19,819 $ 26,360 $ 59,556 $ 63,317 Securities available for sale and FHLB stock (2) 636,088 643,523 641,787 642,475 637,881 Loans: Commercial real estate 1,536,035 1,505,681 1,447,384 1,351,599 1,296,162 Commercial and industrial 434,384 413,921 403,304 421,963 412,518 Paycheck protection program - - - 94 788 Residential real estate 911,788 902,348 897,637 882,158 863,172 Consumer 97,518 100,124 100,182 101,175 98,588 Total loans (3) 2,979,725 2,922,074 2,848,507 2,756,989 2,671,228 Total earning assets 3,637,253 3,585,416 3,516,654 3,459,020 3,372,426 Cash and due from banks 32,067 31,556 36,891 40,330 35,051 Allowance for credit losses (26,932 ) (25,971 ) (25,497 ) (24,061 ) (23,228 ) Goodwill and other intangible assets 124,926 125,158 125,391 125,626 126,090 Other assets 163,388 168,773 164,749 171,394 178,037 Total assets $ 3,930,702 $ 3,884,932 $ 3,818,188 $ 3,772,309 $ 3,688,376 Liabilities and shareholders' equity Deposits: NOW $ 885,091 $ 883,134 $ 899,388 $ 905,668 $ 893,239 Savings 602,724 646,291 664,016 668,255 657,047 Money market 423,013 481,951 501,564 491,683 457,088 Time deposits 468,188 342,994 334,297 349,787 375,782 Total interest-bearing deposits 2,379,016 2,354,370 2,399,265 2,415,393 2,383,156 Borrowings 466,402 398,837 251,263 202,296 178,519 Total interest-bearing liabilities 2,845,418 2,753,207 2,650,528 2,617,689 2,561,675 Non-interest-bearing demand deposits 608,180 651,885 703,471 690,134 661,412 Other liabilities 64,346 72,693 74,276 71,934 67,069 Total liabilities 3,517,944 3,477,785 3,428,275 3,379,757 3,290,156 Total shareholders' equity 412,758 407,147 389,913 392,552 398,220 Total liabilities and shareholders' equity $ 3,930,702 $ 3,884,932 $ 3,818,188 $ 3,772,309 $ 3,688,376 Total average interest-bearing deposits with other banks is net of Federal Reserve daily cash letter. Average balances for securities available-for-sale are based on amortized cost. Total average loans include non-accruing loans and loans held for sale. BAR HARBOR BANKSHARES ASSET QUALITY ANALYSIS - UNAUDITED At or for the Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 NON-PERFORMING ASSETS Non-accruing loans: Commercial real estate $ 909 $ 1,163 $ 1,222 $ 1,587 $ 1,483 Commercial installment 1,814 1,917 264 348 632 Residential real estate 3,415 3,830 4,151 4,858 4,882 Consumer installment 565 886 911 981 881 Total non-accruing loans 6,703 7,796 6,548 7,774 7,878 Other real estate owned - - - - - Total non-performing assets $ 6,703 $ 7,796 $ 6,548 $ 7,774 $ 7,878 Total non-accruing loans/total loans 0.22 % 0.26 % 0.23 % 0.27 % 0.29 % Total non-performing assets/total assets 0.17 0.20 0.17 0.20 0.21 PROVISION AND ALLOWANCE FOR CREDIT LOSSES Balance at beginning of period $ 26,607 $ 25,860 $ 25,018 $ 23,756 $ 23,190 Charged-off loans (199 ) (68 ) (136 ) (85 ) (62 ) Recoveries on charged-off loans 204 17 291 41 94 Net loans recovered (charged-off) 5 (51 ) 155 (44 ) 32 Provision for credit losses 750 798 687 1,306 534 Balance at end of period $ 27,362 $ 26,607 $ 25,860 $ 25,018 $ 23,756 Allowance for credit losses/total loans 0.91 % 0.90 % 0.89 % 0.88 % 0.87 % Allowance for credit losses/non-accruing loans 408 341 395 322 300 NET LOAN RECOVERIES (CHARGE-OFFS) Commercial real estate $ (72 ) $ 3 $ - $ 7 $ 59 Commercial installment 139 2 285 12 12 Residential real estate 3 4 (56 ) (5 ) 6 Consumer installment (65 ) (60 ) (74 ) (58 ) (45 ) Total, net $ 5 $ (51 ) $ 155 $ (44 ) $ 32 Net (recoveries) charge-offs (QTD annualized)/average loans - % 0.01 % (0.02 )% 0.01 % - % Net (recoveries) charge-offs (YTD annualized)/average loans - 0.01 (0.01 ) - (0.01 ) DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS 30-89 Days delinquent 0.09 % 0.26 % 0.08 % 0.09 % 0.09 % 90+ Days delinquent and still accruing 0.02 - 0.01 0.01 0.03 Total accruing delinquent loans 0.11 0.26 0.09 0.10 0.12 Non-accruing loans 0.22 0.26 0.23 0.27 0.29 Total delinquent and non-accruing loans 0.33 % 0.52 % 0.32 % 0.37 % 0.41 % BAR HARBOR BANKSHARES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED At or for the Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 Net income $ 10,791 $ 13,012 $ 12,512 $ 11,430 $ 10,503 Non-core items: Gain on sale of securities, net - (34 ) - (44 ) - (Gain) loss on sale of premises and equipment, net (86 ) (13 ) 75 - 10 Acquisition, conversion and other expenses - 20 (90 ) 31 - Income tax expense (1) 20 6 4 3 (2 ) Total non-core items (66 ) (21 ) (11 ) (10 ) 8 Core earnings (2) (A) $ 10,725 $ 12,991 $ 12,501 $ 11,420 $ 10,511 Net interest income (B) $ 28,790 $ 30,906 $ 32,954 $ 29,910 $ 26,519 Non-interest income 8,980 9,184 8,228 8,823 8,961 Total revenue 37,770 40,090 41,182 38,733 35,480 Gain on sale of securities, net - (34 ) - (44 ) - Total core revenue (2) (C) $ 37,770 $ 40,056 $ 41,182 $ 38,689 $ 35,480 Total non-interest expense 23,392 22,704 24,635 23,032 21,700 Non-core expenses: Gain (loss) on sale of premises and equipment, net 86 13 (75 ) - (10 ) Acquisition, conversion and other expenses - (20 ) 90 (31 ) - Total non-core expenses 86 (7 ) 15 (31 ) (10 ) Core non-interest expense (2) (D) $ 23,478 $ 22,697 $ 24,650 $ 23,001 $ 21,690 Total revenue 37,770 40,090 41,182 38,733 35,480 Total non-interest expense 23,392 22,704 24,635 23,032 21,700 Pre-tax, pre-provision net revenue $ 14,378 $ 17,386 $ 16,547 $ 15,701 $ 13,780 Core revenue (2) 37,770 40,056 41,182 38,689 35,480 Core non-interest expense (2) 23,478 22,697 24,650 23,001 21,690 Core pre-tax, pre-provision net revenue (2) (U) $ 14,292 $ 17,359 $ 16,532 $ 15,688 $ 13,790 (in millions) Average earning assets (E) $ 3,637 $ 3,585 $ 3,517 $ 3,459 $ 3,372 Average paycheck protection program (PPP) loans (R) - - - - 1 Average earning assets, excluding PPP loans (S) 3,637 3,585 3,517 3,459 3,371 Average assets (F) 3,931 3,885 3,818 3,772 3,688 Average shareholders' equity (G) 413 407 390 393 398 Average tangible shareholders' equity (2) (3) (H) 288 282 265 267 272 Tangible shareholders' equity, period-end (2) (3) (I) 286 283 268 254 268 Tangible assets, period-end (2) (3) (J) 3,904 3,803 3,785 3,715 3,587 BAR HARBOR BANKSHARES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED At or for the Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 Common shares outstanding, period-end (K) 15,144 15,124 15,083 15,066 15,026 Average diluted shares outstanding (L) 15,180 15,190 15,147 15,113 15,077 Core earnings per share, diluted (2) (A/L) $ 0.71 $ 0.86 $ 0.83 $ 0.76 $ 0.70 Tangible book value per share, period-end (2) (I/K) 18.88 18.74 17.78 16.89 17.83 Securities adjustment, net of tax (1) (4) (M) (55,307 ) (50,646 ) (55,246 ) (58,715 ) (38,304 ) Tangible book value per share, excluding securities adjustment (2) (4) (I+M)/K 22.53 22.08 21.44 20.79 20.38 Tangible shareholders' equity/total tangible assets (2) (I/J) 7.32 7.45 7.09 6.85 7.47 Performance ratios (5) GAAP return on assets 1.10 % 1.36 % 1.30 % 1.20 % 1.14 % Core return on assets (2) (A/F) 1.09 1.36 1.30 1.20 1.14 Pre-tax, pre-provision return on assets 1.47 1.81 1.72 1.65 1.50 Core pre-tax, pre-provision return on assets (2) (U/F) 1.46 1.81 1.72 1.65 1.50 GAAP return on equity 10.49 12.96 12.73 11.55 10.58 Core return on equity (2) (A/G) 10.42 12.94 12.72 11.54 10.59 Return on tangible equity 15.28 18.97 19.03 17.25 15.74 Core return on tangible equity (1) (2) (A+Q)/H 15.19 18.94 19.02 17.24 15.76 Efficiency ratio (2) (6) (D-O-Q)/(C+N) 60.25 54.72 58.19 57.67 59.25 Net interest margin, fully taxable equivalent (2) (B+P)/E 3.22 3.54 3.76 3.47 3.19 Supplementary data (in thousands) Taxable equivalent adjustment for efficiency ratio (N) $ 539 $ 727 $ 520 $ 533 $ 491 Franchise taxes included in non-interest expense (O) 163 148 149 149 144 Tax equivalent adjustment for net interest margin (P) 382 368 365 379 334 Intangible amortization (Q) 233 233 233 233 233 Interest and fees on PPP loans (T) - - - - 27 Assumes a marginal tax rate of 23.80% in the first and second quarter of 2023, 23.53% in the fourth quarter of 2022 and 23.41% for the previous quarters. Non-GAAP financial measure. Tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Tangible assets is computed by taking total assets less the intangible assets at period-end. Securities adjustment, net of tax represents the total unrealized loss on available-for-sale securities recorded on the Company's consolidated balance sheets within total common shareholders' equity. All performance ratios are based on average balance sheet amounts, where applicable. Efficiency ratio is computed by dividing core non-interest expense net of franchise taxes and intangible amortization divided by core revenue on a fully taxable equivalent basis. 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Bar Harbor Bankshares Reports Second Quarter 2023 Results; Declares Dividend By: ACCESSWIRE July 20, 2023 at 16:15 PM EDT BAR HARBOR, ME / ACCESSWIRE / July 20, 2023 / Bar Harbor Bankshares (NYSE American:BHB) (the "Company") reported second quarter 2023 net income of $10.8 million, or $0.71 per diluted share, compared to $10.5 million, or $0.70 per diluted share, in the same quarter of 2022. SECOND QUARTER 2023 HIGHLIGHTS (all comparisons to the second quarter 2022, unless otherwise noted) $4.0 billion total assets (Company record) 1.10% return on assets; 10.49% return on equity 12% annualized commercial loan growth 3.22% net interest margin ("NIM"), compared to 3.19% 0.17% non-performing assets ratio to total assets, compared to 0.21% $27.12 book value per share, compared to $26.09 in the fourth quarter of 2022 Bar Harbor Bankshares' President and Chief Executive Officer, Curtis C. Simard, stated, "We are very pleased to report our second quarter financial performance as we again delivered strong net interest income generated from robust loan growth and expanding yields on average earning assets while maintaining strong credit quality metrics. As we think about the current pipeline, we continue to be selective based on our ability to negotiate loan pricing, which factors into the appropriate growth levels. And while deposits are at a premium forcing costs to increase as competition tightens in a continued rising rate environment, we have been able to defend our NIM relative to our peers at 3.22%. We did see a demand for and remix into term deposits during the quarter as customers stretch for a higher and longer rate of return. However, our cumulative deposit beta for the current rate cycle is 22% as of June 30, 2023. We believe that our deposit strategy and efforts to individually manage pricing at the relationship level will continue to provide us with a competitive advantage." Mr. Simard continued, "At the end of the second quarter, our allowance for credit losses was $27.4 million. Our reserves to loan ratio increased from 0.90% to 0.91% during the quarter largely driven by a combination of loan growth and general macroeconomic trends. Our quarterly credit trends remained strong as we saw a favorable reduction to nonaccrual loans across all products and improvements in delinquencies." Mr. Simard concluded, "The operating environment for banks has changed yet again in 2023, but our strategy has not. We have built a bank with great people and sound operating principles that is made for shifting environments. As the only community bank headquartered in Northern New England with branches in Maine, New Hampshire and Vermont, we have been operating largely in conservative diversified Northeast markets for more than 135 years, including metropolitan areas, midsized cities and small towns. We serve a stable and diversified customer base with deposits from nearly all banking segments, including consumer, high net worth, small businesses, larger corporate, government agencies and commercial real estate. And here in the first half of 2023, these markets have remained resilient in the face of an uncertain macroeconomic environment. Unemployment rates remained stable within our footprint, continuing to come in below the national average. We believe that the consumer remains financially healthy, and our business customers continue to seek ways to expand and optimize their operations where it makes sense." DIVIDEND DECLARED The Company's Board of Directors voted to declare a cash dividend of $0.28 per share to shareholders of record at the close of business on August 16, 2023 payable on September 15, 2023. This dividend equates to a 4.55% annualized yield based on the $24.64 closing share price of the Company's common stock on June 30, 2023, the last trading day of the second quarter 2023. FINANCIAL CONDITION Total assets grew to $4.0 billion at the end of the second quarter 2023 from $3.9 billion at the end of the first quarter 2023 primarily due to continued loan growth. In the second quarter 2023, loans increased by $63.5 million primarily driven by commercial loans that grew $56.4 million, including $28.0 million from new customers primarily in the Real Estate and Leasing industries. Residential loans were relatively flat due to low production and profitable sales into the secondary market during the second quarter 2023. Consumer loans dropped by $1.7 million from the end of the first quarter 2023 due to run-off of balances associated with the repricing of home equity lines of credit to the higher interest rate environment. Securities available for sale decreased $538.2 million in the second quarter 2023, from $557.0 million in the first quarter 2023 as amortization and prepayments were used to fund loan growth. Throughout the past year, the yields on our securities have risen steadily with the rate environment, but we have curtailed durations to reduce our longer-term rate risk. Unrealized losses on securities totaled $55.3 million at the end of the second quarter 2023 versus $50.6 million at the end of the first quarter 2023 reflecting continued increases in market rates. The allowance for credit losses ("ACL") was $27.4 million at the end of the second quarter of 2023, compared to $26.6 million at the end of the first quarter of 2023. The ratio of allowance for credit losses to total loans increased to 0.91% from 0.90% due largely to loan growth and more conservative macroeconomic forecasting, specifically in national unemployment. Non-accruing loans during the second quarter 2023 decreased to $6.7 million from $7.8 million at the end of the first quarter, which reflects improvements in lending relationships across all product lines. Total deposits were $3.1 billion at the end of the second and first quarter 2023, which gave rise to a slightly higher loan to deposit ratio of 97% compared to 96%, respectively, on higher loan balances. Demand and other non-interest bearing deposits decreased $34.0 million largely driven by non-personal institutional outflows due to seasonality. Savings deposits decreased $40.0 million evenly throughout the second quarter 2023. However, we opened 1,600 non-maturity accounts with new customers with an average balance of $10 thousand during the second quarter 2023. Time deposits increased $231.3 million in the second quarter 2023 primarily due to a shift from non-maturity accounts and a $131.5 million increase in brokered deposits. Our deposit composition at the end of the second quarter 2023 was 46% commercial customers and 54% consumer customers, compared with 47% and 53%, respectively at year-end 2022. The Company's book value per share was $27.12 at June 30, 2023, compared with $26.09 at the end of the fourth quarter 2022. Tangible book value per share (non-GAAP measure) was $18.88 at the end of the second quarter 2023, compared to $17.78 at the end of the fourth quarter 2022, which is an annualized rate of return of approximately 12%. RESULTS OF OPERATIONS Net income in the second quarter 2023 was $10.8 million, or $0.71 per diluted share, versus $10.5 million, or $0.70 per diluted share, in the same quarter of 2022. NIM increased to 3.22% in the second quarter 2023 compared to 3.19% in the same quarter of 2022. The increase was primarily driven by new loans and yield expansion on existing variable rate loans, which were partially offset by a higher cost of funds. The yield on loans expanded to 4.99% at the end of the second quarter 2023, up from 3.71% in the same quarter of 2022. Costs of interest-bearing liabilities increased to 1.99% in the second quarter 2023 from 0.36% in the same quarter 2022 as our costs continue to drift upwards from subsequent interest rate hikes. We also experienced a shift in deposit composition to time deposits as some customers continue to seek higher returns. In the second quarter 2023, we had a heavier reliance on whole-sale borrowings than in the second quarter 2022, which also has a cost that is almost 200 basis points higher than in the prior year quarter. The provision for credit losses in the second quarter of 2023 was $750 thousand, compared to $534 thousand in the same quarter of 2022, primarily driven by loan growth and slightly higher provisioning given current market conditions. Our strong credit performance continues and net charge-offs were near zero. Non-interest income was $9.0 million in the second quarter 2023 and 2022. Customer service fees grew to $3.8 million in the second quarter 2023 from $3.7 million in the same quarter of 2022 on a higher number of transactional accounts. Wealth management income was $3.8 million in the second quarter 2023 and 2022 as higher inflows of cash since 2022 were offset by lower security valuations of assets under management in 2023. Non-interest expense was $23.4 million in the second quarter of 2023 compared to $21.7 million in the same quarter of 2022 principally due to higher salary and benefit expense. Salary and benefit expense increased due to annual salary adjustments that were effective at the end of the first quarter of 2023 and higher post-retirement expense in 2023 as compared to the prior year quarter due to changes in discount rates. BACKGROUND Bar Harbor Bankshares (NYSE American: BHB) is the parent company of its wholly-owned subsidiary, Bar Harbor Bank & Trust. Founded in 1887, Bar Harbor Bank & Trust is a true community bank serving the financial needs of its clients for over 135 years. Bar Harbor Bank & Trust provides full-service community banking with office locations in all three Northern New England states of Maine, New Hampshire and Vermont. For more information, visit www.barharbor.bank FORWARD-LOOKING STATEMENTS All statements, other than statements of historical fact, included in this release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believe," "anticipate," "expect," "may," "will," "assume," "should," "predict," "could," "would," "intend," "targets," "estimates," "projects," "plans," and "potential," and other similar words and expressions of the future, are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking, including statements relating to Company's deposit strategy, monitoring the Company's asset quality, the current economic outlook, our ability to expand and optimize operations, Company management's optimism about the Company's market and financial positions, and the Company's plans, objectives, and intentions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the Company to differ materially from any results, performance, or achievements expressed or implied by such forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (1) deterioration in the financial performance and/or condition of borrowers of Bar Harbor Bank & Trust (the "Bank"), including as a result of the negative impact of inflationary pressures on our customers and their businesses resulting in significant increases in credit losses and provisions for those losses; (2) the possibility that our asset quality could decline or that we experience greater loan losses than anticipated; (3) increased levels of other real estate owned, primarily as a result of foreclosures; (4) the impact of liquidity needs on our results of operations and financial condition; (5) competition from financial institutions and other financial service providers; (6) the effect of interest rate increases on the cost of deposits; (7) unanticipated weakness in loan demand or loan pricing; (8) adverse conditions in the national or local economies including in our markets throughout Northern New England; (9) changes in consumer spending, borrowing and saving habits; (10) the effects of new outbreaks of COVID-19, including actions taken by governmental officials to curb the spread of the virus, and the resulting impact on general economic and financial market conditions and on the Company's and our customers' business, results of operations, asset quality and financial condition; (11) the effects of civil unrest, international hostilities or other geopolitical events, including the war in Ukraine; (12) inflation, interest rate, market, and monetary fluctuations; (13) lack of strategic growth opportunities or our failure to execute on available opportunities; (14) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits; (15) our ability to effectively manage problem credits; (16) our ability to successfully implement efficiency initiatives on time and with the results projected; (17) our ability to successfully develop and market new products and technology; (18) the impact of negative developments in the financial industry and United States and global capital and credit markets; (19) our ability to retain executive officers and key employees and their customer and community relationships; (20) our ability to adapt to technological changes; (21) risks associated with litigation, including reputational and financial risks and the applicability of insurance coverage; (22) our ability to implement new technology effectively; (23) the vulnerability of the Bank's computer and information technology systems and networks, and the systems and networks of third parties with whom the Company or the Bank contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches and interruptions; (24) changes in the reliability of our vendors, internal control systems or information systems; (25) ongoing competition in the labor markets and increased employee turnover; (26) the potential impact of climate change; (27) the impact of pandemics, epidemics or any other health-related crisis; (28) our ability to comply with various governmental and regulatory requirements applicable to financial institutions; (29) changes in state and federal laws, rules, regulations, or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments; (30) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; (31) adverse impacts (including costs, fines, reputational harm, or other negative effects) from current or future litigation, regulatory examinations, or other legal and/or regulatory actions; and (32) general competitive, economic, political, and market conditions, including economic conditions in the local markets where we operate. Additional factors which could affect the forward-looking statements can be found in the Company's annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K filed with the Securities and Exchange Commission (the "SEC") and available on the SEC's website at http://www.sec.gov. The Company believes the forward-looking statements contained herein are reasonable; however, many of such risks, uncertainties, and other factors are beyond the Company's ability to control or predict and undue reliance should not be placed on any forward-looking statements, which are based on current expectations and speak only as of the date that they are made. Therefore, the Company can give no assurance that its future results will be as estimated. The Company does not intend to, and disclaims any obligation to, update or revise any forward-looking statement. NON-GAAP FINANCIAL MEASURES This document contains certain non-GAAP financial measures in addition to results presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. Because non-GAAP financial measures presented in this document are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies. A reconciliation of non-GAAP financial measures to GAAP measures is provided below. In all cases, it should be understood that non-GAAP measures do not depict amounts that accrue directly to the benefit of shareholders. An item which management excludes when computing non-GAAP core earnings can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP core earnings information set forth is not necessarily comparable to non-GAAP information, which may be presented by other companies. Each non-GAAP measure used by the Company in this report as supplemental financial data should be considered in conjunction with the Company's GAAP financial information. The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including gains/losses on securities, premises, equipment and other real estate owned, acquisition costs, restructuring costs, legal settlements, and systems conversion costs. Non-GAAP adjustments are presented net of an adjustment for income tax expense. The Company also calculates core earnings per share based on its measure of core earnings. The Company views these amounts as important to understanding its operating trends, particularly due to the impact of accounting standards related to acquisition activity. Analysts also rely on these measures in estimating and evaluating the Company's performance. Management also believes that the computation of non-GAAP core earnings and core earnings per share may facilitate the comparison of the Company to other companies in the financial services industry. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community. ### CONTACTS Josephine Iannelli; EVP, Chief Financial Officer & Treasurer; (207) 288-3314 TABLE INDEX CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED) A Selected Financial Highlights B Balance Sheets C Loan and Deposit Analysis D Statements of Income E Statements of Income (Five Quarter Trend) F Average Yields and Costs G Average Balances H Asset Quality Analysis I-J Reconciliation of Non-GAAP Financial Measures (Five Quarter Trend) and Supplementary Data BAR HARBOR BANKSHARES SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED At or for the Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, 2023 2023 2022 2022 2022 PER SHARE DATA Net earnings, diluted $ 0.71 $ 0.86 $ 0.83 $ 0.76 $ 0.70 Core earnings, diluted (1) 0.71 0.86 0.83 0.76 0.70 Total book value 27.12 27.00 26.09 25.22 26.19 Tangible book value (1) 18.88 18.74 17.78 16.89 17.83 Market price at period end 24.64 26.45 32.04 26.52 25.86 Dividends 0.28 0.26 0.26 0.26 0.26 PERFORMANCE RATIOS (2) Return on assets 1.10 % 1.36 % 1.30 % 1.20 % 1.14 % Core return on assets (1) 1.09 1.36 1.30 1.20 1.14 Pre-tax, pre-provision return on assets 1.47 1.81 1.72 1.65 1.50 Core pre-tax, pre-provision return on assets (1) 1.46 1.81 1.72 1.65 1.50 Return on equity 10.49 12.96 12.73 11.55 10.58 Core return on equity (1) 10.42 12.94 12.72 11.54 10.59 Return on tangible equity 15.28 18.97 19.03 17.25 15.74 Core return on tangible equity (1) 15.19 18.94 19.02 17.24 15.76 Net interest margin, fully taxable equivalent (1) (3) 3.22 3.54 3.76 3.47 3.19 Efficiency ratio (1) 60.25 54.72 58.19 57.67 59.25 FINANCIAL DATA (In millions) Total assets $ 4,029 $ 3,928 $ 3,910 $ 3,840 $ 3,716 Total earning assets (4) 3,716 3,628 3,601 3,525 3,399 Total investments 556 573 574 566 593 Total loans 3,007 2,944 2,903 2,850 2,727 Allowance for credit losses 27 27 26 25 24 Total goodwill and intangible assets 125 125 125 126 126 Total deposits 3,090 3,054 3,043 3,136 3,079 Total shareholders' equity 411 408 393 380 394 Net income 11 13 13 11 11 Core earnings (1) 11 13 13 11 11 ASSET QUALITY AND CONDITION RATIOS Net charge-offs (recoveries) (5) /average loans - % 0.01 % (0.02 )% 0.01 % - % Allowance for credit losses/total loans 0.91 0.90 0.89 0.88 0.87 Loans/deposits 97 96 95 91 89 Shareholders' equity to total assets 10.20 10.40 10.06 9.89 10.59 Tangible shareholders' equity to tangible assets 7.32 7.45 7.09 6.85 7.46 Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in tables I-J for additional information. All performance ratios are based on average balance sheet amounts, where applicable. Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans. Earning assets includes non-accruing loans and interest-bearing deposits with other banks. Securities are valued at amortized cost. Current quarter annualized. BAR HARBOR BANKSHARES CONSOLIDATED BALANCE SHEETS - UNAUDITED Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 Assets Cash and due from banks $ 46,532 $ 37,769 $ 39,933 $ 50,760 $ 40,834 Interest-earning deposits with other banks 77,253 44,933 52,362 31,305 26,282 Total cash and cash equivalents 123,785 82,702 92,295 82,065 67,116 Securities available for sale 538,178 557,040 559,516 556,752 586,142 Federal Home Loan Bank stock 17,784 15,718 14,893 9,035 6,572 Total securities 555,962 572,758 574,409 565,787 592,714 Loans held for sale 3,669 463 - 982 3,539 Total loans 3,007,480 2,944,005 2,902,690 2,850,364 2,727,274 Less: Allowance for credit losses (27,362 ) (26,607 ) (25,860 ) (25,018 ) (23,756 ) Net loans 2,980,118 2,917,398 2,876,830 2,825,346 2,703,518 Premises and equipment, net 47,412 47,549 47,622 48,010 48,350 Other real estate owned - - - - - Goodwill 119,477 119,477 119,477 119,477 119,477 Other intangible assets 5,335 5,568 5,801 6,034 6,267 Cash surrender value of bank-owned life insurance 78,967 78,436 81,197 80,758 80,262 Deferred tax asset, net 24,181 22,858 24,443 25,288 18,405 Other assets 89,641 81,269 87,729 86,499 76,109 Total assets $ 4,028,547 $ 3,928,478 $ 3,909,803 $ 3,840,246 $ 3,715,757 Liabilities and shareholders' equity Demand and other non-interest bearing deposits $ 602,667 $ 636,710 $ 676,350 $ 700,218 $ 670,268 NOW deposits 911,488 908,483 900,730 918,822 883,239 Savings deposits 588,769 628,798 664,514 669,317 663,676 Money market deposits 351,762 475,577 478,398 513,075 499,456 Time deposits 635,559 404,246 323,439 334,248 361,906 Total deposits 3,090,245 3,053,814 3,043,431 3,135,680 3,078,545 Senior borrowings 398,972 338,244 333,957 188,757 117,347 Subordinated borrowings 60,371 60,330 60,289 60,248 60,206 Total borrowings 459,343 398,574 394,246 249,005 177,553 Other liabilities 68,243 67,680 78,676 75,596 66,062 Total liabilities 3,617,831 3,520,068 3,516,353 3,460,281 3,322,160 Total shareholders' equity 410,716 408,410 393,450 379,965 393,597 Total liabilities and shareholders' equity $ 4,028,547 $ 3,928,478 $ 3,909,803 $ 3,840,246 $ 3,715,757 Net shares outstanding 15,144 15,124 15,083 15,066 15,026 BAR HARBOR BANKSHARES CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED LOAN ANALYSIS Annualized Growth % Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Quarter Year (in thousands) 2023 2023 2022 2022 2022 to Date to Date Commercial real estate $ 1,551,748 $ 1,519,219 $ 1,495,452 $ 1,421,962 $ 1,331,860 9 % 8 % Commercial and industrial 388,430 364,315 352,735 376,624 360,304 26 20 Paycheck Protection Program (PPP) - - - - 170 - - Total commercial loans 1,940,178 1,883,534 1,848,187 1,798,586 1,692,334 12 10 Total commercial loans, excluding PPP 1,940,178 1,883,534 1,848,187 1,798,586 1,692,164 12 10 Residential real estate 907,741 906,059 898,192 896,618 876,644 1 2 Consumer 96,947 98,616 100,855 100,822 100,816 (7 ) (8 ) Tax exempt and other 62,614 55,796 55,456 54,338 57,480 49 26 Total loans $ 3,007,480 $ 2,944,005 $ 2,902,690 $ 2,850,364 $ 2,727,274 9 % 7 % DEPOSIT ANALYSIS Annualized Growth % Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Quarter Year (in thousands) 2023 2023 2022 2022 2022 to Date to Date Demand $ 602,667 $ 636,710 $ 676,350 $ 700,218 $ 670,268 (21 )% (22 )% NOW 911,488 908,483 900,730 918,822 883,239 1 2 Savings 588,769 628,798 664,514 669,317 663,676 (25 ) (23 ) Money market 351,762 475,577 478,398 513,075 499,456 * (53 ) Total non-maturity deposits 2,454,686 2,649,568 2,719,992 2,801,432 2,716,639 (29 ) (20 ) Total time deposits 635,559 404,246 323,439 334,248 361,906 * * Total deposits $ 3,090,245 $ 3,053,814 $ 3,043,431 $ 3,135,680 $ 3,078,545 5 % 3 % *Indicates ratio greater than 100% BAR HARBOR BANKSHARES CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED Three Months Ended Six Months Ended June 30, June 30, (in thousands, except per share data) 2023 2022 2023 2022 Interest and dividend income Loans $ 36,917 $ 24,581 $ 71,477 $ 47,252 Securities and other 5,964 4,207 11,755 8,033 Total interest and dividend income 42,881 28,788 83,232 55,285 Interest expense Deposits 8,590 1,195 13,855 2,384 Borrowings 5,501 1,074 9,681 2,084 Total interest expense 14,091 2,269 23,536 4,468 Net interest income 28,790 26,519 59,696 50,817 Provision for credit losses 750 534 1,548 911 Net interest income after provision for credit losses 28,040 25,985 58,148 49,906 Non-interest income Trust and investment management fee income 3,805 3,829 7,360 7,583 Customer service fees 3,774 3,656 7,451 7,272 Gain on sales of securities, net - - 34 9 Mortgage banking income 378 488 657 1,112 Bank-owned life insurance income 503 504 1,651 1,005 Customer derivative income 83 137 215 155 Other income 437 347 796 1,134 Total non-interest income 8,980 8,961 18,164 18,270 Non-interest expense Salaries and employee benefits 13,223 11,368 25,994 23,515 Occupancy and equipment 4,392 4,373 8,806 8,796 (Gain) loss on sales of premises and equipment, net (86 ) 10 (99 ) (65 ) Outside services 424 410 780 750 Professional services 355 528 781 701 Communication 175 188 337 413 Marketing 476 369 885 632 Amortization of intangible assets 233 233 466 466 Acquisition, conversion and other expenses - - 20 325 Provision for unfunded commitments 45 45 (130 ) 371 Other expenses 4,155 4,176 8,256 7,682 Total non-interest expense 23,392 21,700 46,096 43,586 Income before income taxes 13,628 13,246 30,216 24,590 Income tax expense 2,837 2,743 6,413 4,975 Net income $ 10,791 $ 10,503 $ 23,803 $ 19,615 Earnings per share: Basic $ 0.71 $ 0.70 $ 1.57 $ 1.31 Diluted 0.71 0.70 1.57 1.30 Weighted average shares outstanding: Basic 15,139 15,018 15,125 15,014 Diluted 15,180 15,077 15,186 15,094 BAR HARBOR BANKSHARES CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands, except per share data) 2023 2023 2022 2022 2022 Interest and dividend income Loans $ 36,917 $ 34,560 $ 32,605 $ 27,940 $ 24,581 Securities and other 5,964 5,791 5,551 5,145 4,207 Total interest and dividend income 42,881 40,351 38,156 33,085 28,788 Interest expense Deposits 8,590 5,265 3,159 1,801 1,195 Borrowings 5,501 4,180 2,043 1,374 1,074 Total interest expense 14,091 9,445 5,202 3,175 2,269 Net interest income 28,790 30,906 32,954 29,910 26,519 Provision for credit losses 750 798 687 1,306 534 Net interest income after provision for credit losses 28,040 30,108 32,267 28,604 25,985 Non-interest income Trust and investment management fee income 3,805 3,555 3,442 3,548 3,829 Customer service fees 3,774 3,677 3,683 3,836 3,656 Gain on sales of securities, net - 34 - 44 - Mortgage banking income 378 279 153 315 488 Bank-owned life insurance income 503 1,148 499 496 504 Customer derivative income 83 132 97 58 137 Other income 437 359 354 526 347 Total non-interest income 8,980 9,184 8,228 8,823 8,961 Non-interest expense Salaries and employee benefits 13,223 12,771 12,900 12,242 11,368 Occupancy and equipment 4,392 4,414 4,321 4,458 4,373 (Gain) loss on sales of premises and equipment, net (86 ) (13 ) 75 - 10 Outside services 424 356 435 393 410 Professional services 355 426 490 421 528 Communication 175 162 263 204 188 Marketing 476 409 411 518 369 Amortization of intangible assets 233 233 233 233 233 Acquisition, conversion and other expenses - 20 (90 ) 31 - Provision for unfunded commitments 45 (175 ) 1,413 (26 ) 45 Other expenses 4,155 4,101 4,184 4,558 4,176 Total non-interest expense 23,392 22,704 24,635 23,032 21,700 Income before income taxes 13,628 16,588 15,860 14,395 13,246 Income tax expense 2,837 3,576 3,348 2,965 2,743 Net income $ 10,791 $ 13,012 $ 12,512 $ 11,430 $ 10,503 Earnings per share: Basic $ 0.71 $ 0.86 $ 0.83 $ 0.76 $ 0.70 Diluted 0.71 0.86 0.83 0.76 0.70 Weighted average shares outstanding: Basic 15,139 15,110 15,073 15,058 15,018 Diluted 15,180 15,190 15,147 15,113 15,077 BAR HARBOR BANKSHARES AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent (Non-GAAP) - Annualized) - UNAUDITED Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, 2023 2023 2022 2022 2022 Earning assets Interest-earning deposits with other banks 5.59 % 4.28 % 4.00 % 2.13 % 0.80 % Securities available for sale and FHLB stock 3.71 3.66 3.40 3.12 2.69 Loans: Commercial real estate 5.21 5.08 4.81 4.26 3.82 Commercial and industrial 6.42 5.89 5.43 4.46 3.67 Paycheck protection program - - - - 13.99 Residential real estate 3.76 3.71 3.63 3.45 3.55 Consumer 6.67 6.37 5.79 4.55 3.82 Total loans 4.99 4.82 4.56 4.04 3.71 Total earning assets 4.77 % 4.61 % 4.35 % 3.84 % 3.46 % Funding liabilities Deposits: NOW 0.94 % 0.51 % 0.22 % 0.16 % 0.14 % Savings 0.37 0.30 0.16 0.08 0.08 Money market 2.52 2.14 1.42 0.65 0.19 Time deposits 2.82 1.34 0.69 0.55 0.58 Total interest-bearing deposits 1.45 0.91 0.52 0.30 0.20 Borrowings 4.73 4.25 3.23 2.69 2.41 Total interest-bearing liabilities 1.99 % 1.39 % 0.78 % 0.48 % 0.36 % Net interest spread 2.78 3.22 3.57 3.36 3.10 Net interest margin, fully taxable equivalent (1) 3.22 3.54 3.76 3.47 3.19 Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in tables I-J for additional information. BAR HARBOR BANKSHARES AVERAGE BALANCES - UNAUDITED Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 Assets Interest-earning deposits with other banks (1) $ 21,440 $ 19,819 $ 26,360 $ 59,556 $ 63,317 Securities available for sale and FHLB stock (2) 636,088 643,523 641,787 642,475 637,881 Loans: Commercial real estate 1,536,035 1,505,681 1,447,384 1,351,599 1,296,162 Commercial and industrial 434,384 413,921 403,304 421,963 412,518 Paycheck protection program - - - 94 788 Residential real estate 911,788 902,348 897,637 882,158 863,172 Consumer 97,518 100,124 100,182 101,175 98,588 Total loans (3) 2,979,725 2,922,074 2,848,507 2,756,989 2,671,228 Total earning assets 3,637,253 3,585,416 3,516,654 3,459,020 3,372,426 Cash and due from banks 32,067 31,556 36,891 40,330 35,051 Allowance for credit losses (26,932 ) (25,971 ) (25,497 ) (24,061 ) (23,228 ) Goodwill and other intangible assets 124,926 125,158 125,391 125,626 126,090 Other assets 163,388 168,773 164,749 171,394 178,037 Total assets $ 3,930,702 $ 3,884,932 $ 3,818,188 $ 3,772,309 $ 3,688,376 Liabilities and shareholders' equity Deposits: NOW $ 885,091 $ 883,134 $ 899,388 $ 905,668 $ 893,239 Savings 602,724 646,291 664,016 668,255 657,047 Money market 423,013 481,951 501,564 491,683 457,088 Time deposits 468,188 342,994 334,297 349,787 375,782 Total interest-bearing deposits 2,379,016 2,354,370 2,399,265 2,415,393 2,383,156 Borrowings 466,402 398,837 251,263 202,296 178,519 Total interest-bearing liabilities 2,845,418 2,753,207 2,650,528 2,617,689 2,561,675 Non-interest-bearing demand deposits 608,180 651,885 703,471 690,134 661,412 Other liabilities 64,346 72,693 74,276 71,934 67,069 Total liabilities 3,517,944 3,477,785 3,428,275 3,379,757 3,290,156 Total shareholders' equity 412,758 407,147 389,913 392,552 398,220 Total liabilities and shareholders' equity $ 3,930,702 $ 3,884,932 $ 3,818,188 $ 3,772,309 $ 3,688,376 Total average interest-bearing deposits with other banks is net of Federal Reserve daily cash letter. Average balances for securities available-for-sale are based on amortized cost. Total average loans include non-accruing loans and loans held for sale. BAR HARBOR BANKSHARES ASSET QUALITY ANALYSIS - UNAUDITED At or for the Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 NON-PERFORMING ASSETS Non-accruing loans: Commercial real estate $ 909 $ 1,163 $ 1,222 $ 1,587 $ 1,483 Commercial installment 1,814 1,917 264 348 632 Residential real estate 3,415 3,830 4,151 4,858 4,882 Consumer installment 565 886 911 981 881 Total non-accruing loans 6,703 7,796 6,548 7,774 7,878 Other real estate owned - - - - - Total non-performing assets $ 6,703 $ 7,796 $ 6,548 $ 7,774 $ 7,878 Total non-accruing loans/total loans 0.22 % 0.26 % 0.23 % 0.27 % 0.29 % Total non-performing assets/total assets 0.17 0.20 0.17 0.20 0.21 PROVISION AND ALLOWANCE FOR CREDIT LOSSES Balance at beginning of period $ 26,607 $ 25,860 $ 25,018 $ 23,756 $ 23,190 Charged-off loans (199 ) (68 ) (136 ) (85 ) (62 ) Recoveries on charged-off loans 204 17 291 41 94 Net loans recovered (charged-off) 5 (51 ) 155 (44 ) 32 Provision for credit losses 750 798 687 1,306 534 Balance at end of period $ 27,362 $ 26,607 $ 25,860 $ 25,018 $ 23,756 Allowance for credit losses/total loans 0.91 % 0.90 % 0.89 % 0.88 % 0.87 % Allowance for credit losses/non-accruing loans 408 341 395 322 300 NET LOAN RECOVERIES (CHARGE-OFFS) Commercial real estate $ (72 ) $ 3 $ - $ 7 $ 59 Commercial installment 139 2 285 12 12 Residential real estate 3 4 (56 ) (5 ) 6 Consumer installment (65 ) (60 ) (74 ) (58 ) (45 ) Total, net $ 5 $ (51 ) $ 155 $ (44 ) $ 32 Net (recoveries) charge-offs (QTD annualized)/average loans - % 0.01 % (0.02 )% 0.01 % - % Net (recoveries) charge-offs (YTD annualized)/average loans - 0.01 (0.01 ) - (0.01 ) DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS 30-89 Days delinquent 0.09 % 0.26 % 0.08 % 0.09 % 0.09 % 90+ Days delinquent and still accruing 0.02 - 0.01 0.01 0.03 Total accruing delinquent loans 0.11 0.26 0.09 0.10 0.12 Non-accruing loans 0.22 0.26 0.23 0.27 0.29 Total delinquent and non-accruing loans 0.33 % 0.52 % 0.32 % 0.37 % 0.41 % BAR HARBOR BANKSHARES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED At or for the Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 Net income $ 10,791 $ 13,012 $ 12,512 $ 11,430 $ 10,503 Non-core items: Gain on sale of securities, net - (34 ) - (44 ) - (Gain) loss on sale of premises and equipment, net (86 ) (13 ) 75 - 10 Acquisition, conversion and other expenses - 20 (90 ) 31 - Income tax expense (1) 20 6 4 3 (2 ) Total non-core items (66 ) (21 ) (11 ) (10 ) 8 Core earnings (2) (A) $ 10,725 $ 12,991 $ 12,501 $ 11,420 $ 10,511 Net interest income (B) $ 28,790 $ 30,906 $ 32,954 $ 29,910 $ 26,519 Non-interest income 8,980 9,184 8,228 8,823 8,961 Total revenue 37,770 40,090 41,182 38,733 35,480 Gain on sale of securities, net - (34 ) - (44 ) - Total core revenue (2) (C) $ 37,770 $ 40,056 $ 41,182 $ 38,689 $ 35,480 Total non-interest expense 23,392 22,704 24,635 23,032 21,700 Non-core expenses: Gain (loss) on sale of premises and equipment, net 86 13 (75 ) - (10 ) Acquisition, conversion and other expenses - (20 ) 90 (31 ) - Total non-core expenses 86 (7 ) 15 (31 ) (10 ) Core non-interest expense (2) (D) $ 23,478 $ 22,697 $ 24,650 $ 23,001 $ 21,690 Total revenue 37,770 40,090 41,182 38,733 35,480 Total non-interest expense 23,392 22,704 24,635 23,032 21,700 Pre-tax, pre-provision net revenue $ 14,378 $ 17,386 $ 16,547 $ 15,701 $ 13,780 Core revenue (2) 37,770 40,056 41,182 38,689 35,480 Core non-interest expense (2) 23,478 22,697 24,650 23,001 21,690 Core pre-tax, pre-provision net revenue (2) (U) $ 14,292 $ 17,359 $ 16,532 $ 15,688 $ 13,790 (in millions) Average earning assets (E) $ 3,637 $ 3,585 $ 3,517 $ 3,459 $ 3,372 Average paycheck protection program (PPP) loans (R) - - - - 1 Average earning assets, excluding PPP loans (S) 3,637 3,585 3,517 3,459 3,371 Average assets (F) 3,931 3,885 3,818 3,772 3,688 Average shareholders' equity (G) 413 407 390 393 398 Average tangible shareholders' equity (2) (3) (H) 288 282 265 267 272 Tangible shareholders' equity, period-end (2) (3) (I) 286 283 268 254 268 Tangible assets, period-end (2) (3) (J) 3,904 3,803 3,785 3,715 3,587 BAR HARBOR BANKSHARES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED At or for the Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 Common shares outstanding, period-end (K) 15,144 15,124 15,083 15,066 15,026 Average diluted shares outstanding (L) 15,180 15,190 15,147 15,113 15,077 Core earnings per share, diluted (2) (A/L) $ 0.71 $ 0.86 $ 0.83 $ 0.76 $ 0.70 Tangible book value per share, period-end (2) (I/K) 18.88 18.74 17.78 16.89 17.83 Securities adjustment, net of tax (1) (4) (M) (55,307 ) (50,646 ) (55,246 ) (58,715 ) (38,304 ) Tangible book value per share, excluding securities adjustment (2) (4) (I+M)/K 22.53 22.08 21.44 20.79 20.38 Tangible shareholders' equity/total tangible assets (2) (I/J) 7.32 7.45 7.09 6.85 7.47 Performance ratios (5) GAAP return on assets 1.10 % 1.36 % 1.30 % 1.20 % 1.14 % Core return on assets (2) (A/F) 1.09 1.36 1.30 1.20 1.14 Pre-tax, pre-provision return on assets 1.47 1.81 1.72 1.65 1.50 Core pre-tax, pre-provision return on assets (2) (U/F) 1.46 1.81 1.72 1.65 1.50 GAAP return on equity 10.49 12.96 12.73 11.55 10.58 Core return on equity (2) (A/G) 10.42 12.94 12.72 11.54 10.59 Return on tangible equity 15.28 18.97 19.03 17.25 15.74 Core return on tangible equity (1) (2) (A+Q)/H 15.19 18.94 19.02 17.24 15.76 Efficiency ratio (2) (6) (D-O-Q)/(C+N) 60.25 54.72 58.19 57.67 59.25 Net interest margin, fully taxable equivalent (2) (B+P)/E 3.22 3.54 3.76 3.47 3.19 Supplementary data (in thousands) Taxable equivalent adjustment for efficiency ratio (N) $ 539 $ 727 $ 520 $ 533 $ 491 Franchise taxes included in non-interest expense (O) 163 148 149 149 144 Tax equivalent adjustment for net interest margin (P) 382 368 365 379 334 Intangible amortization (Q) 233 233 233 233 233 Interest and fees on PPP loans (T) - - - - 27 Assumes a marginal tax rate of 23.80% in the first and second quarter of 2023, 23.53% in the fourth quarter of 2022 and 23.41% for the previous quarters. Non-GAAP financial measure. Tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Tangible assets is computed by taking total assets less the intangible assets at period-end. Securities adjustment, net of tax represents the total unrealized loss on available-for-sale securities recorded on the Company's consolidated balance sheets within total common shareholders' equity. All performance ratios are based on average balance sheet amounts, where applicable. Efficiency ratio is computed by dividing core non-interest expense net of franchise taxes and intangible amortization divided by core revenue on a fully taxable equivalent basis. SOURCE: Bar Harbor Bank and Trust View source version on accesswire.com: https://www.accesswire.com/769380/Bar-Harbor-Bankshares-Reports-Second-Quarter-2023-Results-Declares-Dividend
BAR HARBOR, ME / ACCESSWIRE / July 20, 2023 / Bar Harbor Bankshares (NYSE American:BHB) (the "Company") reported second quarter 2023 net income of $10.8 million, or $0.71 per diluted share, compared to $10.5 million, or $0.70 per diluted share, in the same quarter of 2022. SECOND QUARTER 2023 HIGHLIGHTS (all comparisons to the second quarter 2022, unless otherwise noted) $4.0 billion total assets (Company record) 1.10% return on assets; 10.49% return on equity 12% annualized commercial loan growth 3.22% net interest margin ("NIM"), compared to 3.19% 0.17% non-performing assets ratio to total assets, compared to 0.21% $27.12 book value per share, compared to $26.09 in the fourth quarter of 2022 Bar Harbor Bankshares' President and Chief Executive Officer, Curtis C. Simard, stated, "We are very pleased to report our second quarter financial performance as we again delivered strong net interest income generated from robust loan growth and expanding yields on average earning assets while maintaining strong credit quality metrics. As we think about the current pipeline, we continue to be selective based on our ability to negotiate loan pricing, which factors into the appropriate growth levels. And while deposits are at a premium forcing costs to increase as competition tightens in a continued rising rate environment, we have been able to defend our NIM relative to our peers at 3.22%. We did see a demand for and remix into term deposits during the quarter as customers stretch for a higher and longer rate of return. However, our cumulative deposit beta for the current rate cycle is 22% as of June 30, 2023. We believe that our deposit strategy and efforts to individually manage pricing at the relationship level will continue to provide us with a competitive advantage." Mr. Simard continued, "At the end of the second quarter, our allowance for credit losses was $27.4 million. Our reserves to loan ratio increased from 0.90% to 0.91% during the quarter largely driven by a combination of loan growth and general macroeconomic trends. Our quarterly credit trends remained strong as we saw a favorable reduction to nonaccrual loans across all products and improvements in delinquencies." Mr. Simard concluded, "The operating environment for banks has changed yet again in 2023, but our strategy has not. We have built a bank with great people and sound operating principles that is made for shifting environments. As the only community bank headquartered in Northern New England with branches in Maine, New Hampshire and Vermont, we have been operating largely in conservative diversified Northeast markets for more than 135 years, including metropolitan areas, midsized cities and small towns. We serve a stable and diversified customer base with deposits from nearly all banking segments, including consumer, high net worth, small businesses, larger corporate, government agencies and commercial real estate. And here in the first half of 2023, these markets have remained resilient in the face of an uncertain macroeconomic environment. Unemployment rates remained stable within our footprint, continuing to come in below the national average. We believe that the consumer remains financially healthy, and our business customers continue to seek ways to expand and optimize their operations where it makes sense." DIVIDEND DECLARED The Company's Board of Directors voted to declare a cash dividend of $0.28 per share to shareholders of record at the close of business on August 16, 2023 payable on September 15, 2023. This dividend equates to a 4.55% annualized yield based on the $24.64 closing share price of the Company's common stock on June 30, 2023, the last trading day of the second quarter 2023. FINANCIAL CONDITION Total assets grew to $4.0 billion at the end of the second quarter 2023 from $3.9 billion at the end of the first quarter 2023 primarily due to continued loan growth. In the second quarter 2023, loans increased by $63.5 million primarily driven by commercial loans that grew $56.4 million, including $28.0 million from new customers primarily in the Real Estate and Leasing industries. Residential loans were relatively flat due to low production and profitable sales into the secondary market during the second quarter 2023. Consumer loans dropped by $1.7 million from the end of the first quarter 2023 due to run-off of balances associated with the repricing of home equity lines of credit to the higher interest rate environment. Securities available for sale decreased $538.2 million in the second quarter 2023, from $557.0 million in the first quarter 2023 as amortization and prepayments were used to fund loan growth. Throughout the past year, the yields on our securities have risen steadily with the rate environment, but we have curtailed durations to reduce our longer-term rate risk. Unrealized losses on securities totaled $55.3 million at the end of the second quarter 2023 versus $50.6 million at the end of the first quarter 2023 reflecting continued increases in market rates. The allowance for credit losses ("ACL") was $27.4 million at the end of the second quarter of 2023, compared to $26.6 million at the end of the first quarter of 2023. The ratio of allowance for credit losses to total loans increased to 0.91% from 0.90% due largely to loan growth and more conservative macroeconomic forecasting, specifically in national unemployment. Non-accruing loans during the second quarter 2023 decreased to $6.7 million from $7.8 million at the end of the first quarter, which reflects improvements in lending relationships across all product lines. Total deposits were $3.1 billion at the end of the second and first quarter 2023, which gave rise to a slightly higher loan to deposit ratio of 97% compared to 96%, respectively, on higher loan balances. Demand and other non-interest bearing deposits decreased $34.0 million largely driven by non-personal institutional outflows due to seasonality. Savings deposits decreased $40.0 million evenly throughout the second quarter 2023. However, we opened 1,600 non-maturity accounts with new customers with an average balance of $10 thousand during the second quarter 2023. Time deposits increased $231.3 million in the second quarter 2023 primarily due to a shift from non-maturity accounts and a $131.5 million increase in brokered deposits. Our deposit composition at the end of the second quarter 2023 was 46% commercial customers and 54% consumer customers, compared with 47% and 53%, respectively at year-end 2022. The Company's book value per share was $27.12 at June 30, 2023, compared with $26.09 at the end of the fourth quarter 2022. Tangible book value per share (non-GAAP measure) was $18.88 at the end of the second quarter 2023, compared to $17.78 at the end of the fourth quarter 2022, which is an annualized rate of return of approximately 12%. RESULTS OF OPERATIONS Net income in the second quarter 2023 was $10.8 million, or $0.71 per diluted share, versus $10.5 million, or $0.70 per diluted share, in the same quarter of 2022. NIM increased to 3.22% in the second quarter 2023 compared to 3.19% in the same quarter of 2022. The increase was primarily driven by new loans and yield expansion on existing variable rate loans, which were partially offset by a higher cost of funds. The yield on loans expanded to 4.99% at the end of the second quarter 2023, up from 3.71% in the same quarter of 2022. Costs of interest-bearing liabilities increased to 1.99% in the second quarter 2023 from 0.36% in the same quarter 2022 as our costs continue to drift upwards from subsequent interest rate hikes. We also experienced a shift in deposit composition to time deposits as some customers continue to seek higher returns. In the second quarter 2023, we had a heavier reliance on whole-sale borrowings than in the second quarter 2022, which also has a cost that is almost 200 basis points higher than in the prior year quarter. The provision for credit losses in the second quarter of 2023 was $750 thousand, compared to $534 thousand in the same quarter of 2022, primarily driven by loan growth and slightly higher provisioning given current market conditions. Our strong credit performance continues and net charge-offs were near zero. Non-interest income was $9.0 million in the second quarter 2023 and 2022. Customer service fees grew to $3.8 million in the second quarter 2023 from $3.7 million in the same quarter of 2022 on a higher number of transactional accounts. Wealth management income was $3.8 million in the second quarter 2023 and 2022 as higher inflows of cash since 2022 were offset by lower security valuations of assets under management in 2023. Non-interest expense was $23.4 million in the second quarter of 2023 compared to $21.7 million in the same quarter of 2022 principally due to higher salary and benefit expense. Salary and benefit expense increased due to annual salary adjustments that were effective at the end of the first quarter of 2023 and higher post-retirement expense in 2023 as compared to the prior year quarter due to changes in discount rates. BACKGROUND Bar Harbor Bankshares (NYSE American: BHB) is the parent company of its wholly-owned subsidiary, Bar Harbor Bank & Trust. Founded in 1887, Bar Harbor Bank & Trust is a true community bank serving the financial needs of its clients for over 135 years. Bar Harbor Bank & Trust provides full-service community banking with office locations in all three Northern New England states of Maine, New Hampshire and Vermont. For more information, visit www.barharbor.bank FORWARD-LOOKING STATEMENTS All statements, other than statements of historical fact, included in this release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believe," "anticipate," "expect," "may," "will," "assume," "should," "predict," "could," "would," "intend," "targets," "estimates," "projects," "plans," and "potential," and other similar words and expressions of the future, are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking, including statements relating to Company's deposit strategy, monitoring the Company's asset quality, the current economic outlook, our ability to expand and optimize operations, Company management's optimism about the Company's market and financial positions, and the Company's plans, objectives, and intentions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the Company to differ materially from any results, performance, or achievements expressed or implied by such forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (1) deterioration in the financial performance and/or condition of borrowers of Bar Harbor Bank & Trust (the "Bank"), including as a result of the negative impact of inflationary pressures on our customers and their businesses resulting in significant increases in credit losses and provisions for those losses; (2) the possibility that our asset quality could decline or that we experience greater loan losses than anticipated; (3) increased levels of other real estate owned, primarily as a result of foreclosures; (4) the impact of liquidity needs on our results of operations and financial condition; (5) competition from financial institutions and other financial service providers; (6) the effect of interest rate increases on the cost of deposits; (7) unanticipated weakness in loan demand or loan pricing; (8) adverse conditions in the national or local economies including in our markets throughout Northern New England; (9) changes in consumer spending, borrowing and saving habits; (10) the effects of new outbreaks of COVID-19, including actions taken by governmental officials to curb the spread of the virus, and the resulting impact on general economic and financial market conditions and on the Company's and our customers' business, results of operations, asset quality and financial condition; (11) the effects of civil unrest, international hostilities or other geopolitical events, including the war in Ukraine; (12) inflation, interest rate, market, and monetary fluctuations; (13) lack of strategic growth opportunities or our failure to execute on available opportunities; (14) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits; (15) our ability to effectively manage problem credits; (16) our ability to successfully implement efficiency initiatives on time and with the results projected; (17) our ability to successfully develop and market new products and technology; (18) the impact of negative developments in the financial industry and United States and global capital and credit markets; (19) our ability to retain executive officers and key employees and their customer and community relationships; (20) our ability to adapt to technological changes; (21) risks associated with litigation, including reputational and financial risks and the applicability of insurance coverage; (22) our ability to implement new technology effectively; (23) the vulnerability of the Bank's computer and information technology systems and networks, and the systems and networks of third parties with whom the Company or the Bank contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches and interruptions; (24) changes in the reliability of our vendors, internal control systems or information systems; (25) ongoing competition in the labor markets and increased employee turnover; (26) the potential impact of climate change; (27) the impact of pandemics, epidemics or any other health-related crisis; (28) our ability to comply with various governmental and regulatory requirements applicable to financial institutions; (29) changes in state and federal laws, rules, regulations, or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments; (30) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; (31) adverse impacts (including costs, fines, reputational harm, or other negative effects) from current or future litigation, regulatory examinations, or other legal and/or regulatory actions; and (32) general competitive, economic, political, and market conditions, including economic conditions in the local markets where we operate. Additional factors which could affect the forward-looking statements can be found in the Company's annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K filed with the Securities and Exchange Commission (the "SEC") and available on the SEC's website at http://www.sec.gov. The Company believes the forward-looking statements contained herein are reasonable; however, many of such risks, uncertainties, and other factors are beyond the Company's ability to control or predict and undue reliance should not be placed on any forward-looking statements, which are based on current expectations and speak only as of the date that they are made. Therefore, the Company can give no assurance that its future results will be as estimated. The Company does not intend to, and disclaims any obligation to, update or revise any forward-looking statement. NON-GAAP FINANCIAL MEASURES This document contains certain non-GAAP financial measures in addition to results presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. Because non-GAAP financial measures presented in this document are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies. A reconciliation of non-GAAP financial measures to GAAP measures is provided below. In all cases, it should be understood that non-GAAP measures do not depict amounts that accrue directly to the benefit of shareholders. An item which management excludes when computing non-GAAP core earnings can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP core earnings information set forth is not necessarily comparable to non-GAAP information, which may be presented by other companies. Each non-GAAP measure used by the Company in this report as supplemental financial data should be considered in conjunction with the Company's GAAP financial information. The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including gains/losses on securities, premises, equipment and other real estate owned, acquisition costs, restructuring costs, legal settlements, and systems conversion costs. Non-GAAP adjustments are presented net of an adjustment for income tax expense. The Company also calculates core earnings per share based on its measure of core earnings. The Company views these amounts as important to understanding its operating trends, particularly due to the impact of accounting standards related to acquisition activity. Analysts also rely on these measures in estimating and evaluating the Company's performance. Management also believes that the computation of non-GAAP core earnings and core earnings per share may facilitate the comparison of the Company to other companies in the financial services industry. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community. ### CONTACTS Josephine Iannelli; EVP, Chief Financial Officer & Treasurer; (207) 288-3314 TABLE INDEX CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED) A Selected Financial Highlights B Balance Sheets C Loan and Deposit Analysis D Statements of Income E Statements of Income (Five Quarter Trend) F Average Yields and Costs G Average Balances H Asset Quality Analysis I-J Reconciliation of Non-GAAP Financial Measures (Five Quarter Trend) and Supplementary Data BAR HARBOR BANKSHARES SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED At or for the Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, 2023 2023 2022 2022 2022 PER SHARE DATA Net earnings, diluted $ 0.71 $ 0.86 $ 0.83 $ 0.76 $ 0.70 Core earnings, diluted (1) 0.71 0.86 0.83 0.76 0.70 Total book value 27.12 27.00 26.09 25.22 26.19 Tangible book value (1) 18.88 18.74 17.78 16.89 17.83 Market price at period end 24.64 26.45 32.04 26.52 25.86 Dividends 0.28 0.26 0.26 0.26 0.26 PERFORMANCE RATIOS (2) Return on assets 1.10 % 1.36 % 1.30 % 1.20 % 1.14 % Core return on assets (1) 1.09 1.36 1.30 1.20 1.14 Pre-tax, pre-provision return on assets 1.47 1.81 1.72 1.65 1.50 Core pre-tax, pre-provision return on assets (1) 1.46 1.81 1.72 1.65 1.50 Return on equity 10.49 12.96 12.73 11.55 10.58 Core return on equity (1) 10.42 12.94 12.72 11.54 10.59 Return on tangible equity 15.28 18.97 19.03 17.25 15.74 Core return on tangible equity (1) 15.19 18.94 19.02 17.24 15.76 Net interest margin, fully taxable equivalent (1) (3) 3.22 3.54 3.76 3.47 3.19 Efficiency ratio (1) 60.25 54.72 58.19 57.67 59.25 FINANCIAL DATA (In millions) Total assets $ 4,029 $ 3,928 $ 3,910 $ 3,840 $ 3,716 Total earning assets (4) 3,716 3,628 3,601 3,525 3,399 Total investments 556 573 574 566 593 Total loans 3,007 2,944 2,903 2,850 2,727 Allowance for credit losses 27 27 26 25 24 Total goodwill and intangible assets 125 125 125 126 126 Total deposits 3,090 3,054 3,043 3,136 3,079 Total shareholders' equity 411 408 393 380 394 Net income 11 13 13 11 11 Core earnings (1) 11 13 13 11 11 ASSET QUALITY AND CONDITION RATIOS Net charge-offs (recoveries) (5) /average loans - % 0.01 % (0.02 )% 0.01 % - % Allowance for credit losses/total loans 0.91 0.90 0.89 0.88 0.87 Loans/deposits 97 96 95 91 89 Shareholders' equity to total assets 10.20 10.40 10.06 9.89 10.59 Tangible shareholders' equity to tangible assets 7.32 7.45 7.09 6.85 7.46 Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in tables I-J for additional information. All performance ratios are based on average balance sheet amounts, where applicable. Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans. Earning assets includes non-accruing loans and interest-bearing deposits with other banks. Securities are valued at amortized cost. Current quarter annualized. BAR HARBOR BANKSHARES CONSOLIDATED BALANCE SHEETS - UNAUDITED Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 Assets Cash and due from banks $ 46,532 $ 37,769 $ 39,933 $ 50,760 $ 40,834 Interest-earning deposits with other banks 77,253 44,933 52,362 31,305 26,282 Total cash and cash equivalents 123,785 82,702 92,295 82,065 67,116 Securities available for sale 538,178 557,040 559,516 556,752 586,142 Federal Home Loan Bank stock 17,784 15,718 14,893 9,035 6,572 Total securities 555,962 572,758 574,409 565,787 592,714 Loans held for sale 3,669 463 - 982 3,539 Total loans 3,007,480 2,944,005 2,902,690 2,850,364 2,727,274 Less: Allowance for credit losses (27,362 ) (26,607 ) (25,860 ) (25,018 ) (23,756 ) Net loans 2,980,118 2,917,398 2,876,830 2,825,346 2,703,518 Premises and equipment, net 47,412 47,549 47,622 48,010 48,350 Other real estate owned - - - - - Goodwill 119,477 119,477 119,477 119,477 119,477 Other intangible assets 5,335 5,568 5,801 6,034 6,267 Cash surrender value of bank-owned life insurance 78,967 78,436 81,197 80,758 80,262 Deferred tax asset, net 24,181 22,858 24,443 25,288 18,405 Other assets 89,641 81,269 87,729 86,499 76,109 Total assets $ 4,028,547 $ 3,928,478 $ 3,909,803 $ 3,840,246 $ 3,715,757 Liabilities and shareholders' equity Demand and other non-interest bearing deposits $ 602,667 $ 636,710 $ 676,350 $ 700,218 $ 670,268 NOW deposits 911,488 908,483 900,730 918,822 883,239 Savings deposits 588,769 628,798 664,514 669,317 663,676 Money market deposits 351,762 475,577 478,398 513,075 499,456 Time deposits 635,559 404,246 323,439 334,248 361,906 Total deposits 3,090,245 3,053,814 3,043,431 3,135,680 3,078,545 Senior borrowings 398,972 338,244 333,957 188,757 117,347 Subordinated borrowings 60,371 60,330 60,289 60,248 60,206 Total borrowings 459,343 398,574 394,246 249,005 177,553 Other liabilities 68,243 67,680 78,676 75,596 66,062 Total liabilities 3,617,831 3,520,068 3,516,353 3,460,281 3,322,160 Total shareholders' equity 410,716 408,410 393,450 379,965 393,597 Total liabilities and shareholders' equity $ 4,028,547 $ 3,928,478 $ 3,909,803 $ 3,840,246 $ 3,715,757 Net shares outstanding 15,144 15,124 15,083 15,066 15,026 BAR HARBOR BANKSHARES CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED LOAN ANALYSIS Annualized Growth % Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Quarter Year (in thousands) 2023 2023 2022 2022 2022 to Date to Date Commercial real estate $ 1,551,748 $ 1,519,219 $ 1,495,452 $ 1,421,962 $ 1,331,860 9 % 8 % Commercial and industrial 388,430 364,315 352,735 376,624 360,304 26 20 Paycheck Protection Program (PPP) - - - - 170 - - Total commercial loans 1,940,178 1,883,534 1,848,187 1,798,586 1,692,334 12 10 Total commercial loans, excluding PPP 1,940,178 1,883,534 1,848,187 1,798,586 1,692,164 12 10 Residential real estate 907,741 906,059 898,192 896,618 876,644 1 2 Consumer 96,947 98,616 100,855 100,822 100,816 (7 ) (8 ) Tax exempt and other 62,614 55,796 55,456 54,338 57,480 49 26 Total loans $ 3,007,480 $ 2,944,005 $ 2,902,690 $ 2,850,364 $ 2,727,274 9 % 7 % DEPOSIT ANALYSIS Annualized Growth % Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Quarter Year (in thousands) 2023 2023 2022 2022 2022 to Date to Date Demand $ 602,667 $ 636,710 $ 676,350 $ 700,218 $ 670,268 (21 )% (22 )% NOW 911,488 908,483 900,730 918,822 883,239 1 2 Savings 588,769 628,798 664,514 669,317 663,676 (25 ) (23 ) Money market 351,762 475,577 478,398 513,075 499,456 * (53 ) Total non-maturity deposits 2,454,686 2,649,568 2,719,992 2,801,432 2,716,639 (29 ) (20 ) Total time deposits 635,559 404,246 323,439 334,248 361,906 * * Total deposits $ 3,090,245 $ 3,053,814 $ 3,043,431 $ 3,135,680 $ 3,078,545 5 % 3 % *Indicates ratio greater than 100% BAR HARBOR BANKSHARES CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED Three Months Ended Six Months Ended June 30, June 30, (in thousands, except per share data) 2023 2022 2023 2022 Interest and dividend income Loans $ 36,917 $ 24,581 $ 71,477 $ 47,252 Securities and other 5,964 4,207 11,755 8,033 Total interest and dividend income 42,881 28,788 83,232 55,285 Interest expense Deposits 8,590 1,195 13,855 2,384 Borrowings 5,501 1,074 9,681 2,084 Total interest expense 14,091 2,269 23,536 4,468 Net interest income 28,790 26,519 59,696 50,817 Provision for credit losses 750 534 1,548 911 Net interest income after provision for credit losses 28,040 25,985 58,148 49,906 Non-interest income Trust and investment management fee income 3,805 3,829 7,360 7,583 Customer service fees 3,774 3,656 7,451 7,272 Gain on sales of securities, net - - 34 9 Mortgage banking income 378 488 657 1,112 Bank-owned life insurance income 503 504 1,651 1,005 Customer derivative income 83 137 215 155 Other income 437 347 796 1,134 Total non-interest income 8,980 8,961 18,164 18,270 Non-interest expense Salaries and employee benefits 13,223 11,368 25,994 23,515 Occupancy and equipment 4,392 4,373 8,806 8,796 (Gain) loss on sales of premises and equipment, net (86 ) 10 (99 ) (65 ) Outside services 424 410 780 750 Professional services 355 528 781 701 Communication 175 188 337 413 Marketing 476 369 885 632 Amortization of intangible assets 233 233 466 466 Acquisition, conversion and other expenses - - 20 325 Provision for unfunded commitments 45 45 (130 ) 371 Other expenses 4,155 4,176 8,256 7,682 Total non-interest expense 23,392 21,700 46,096 43,586 Income before income taxes 13,628 13,246 30,216 24,590 Income tax expense 2,837 2,743 6,413 4,975 Net income $ 10,791 $ 10,503 $ 23,803 $ 19,615 Earnings per share: Basic $ 0.71 $ 0.70 $ 1.57 $ 1.31 Diluted 0.71 0.70 1.57 1.30 Weighted average shares outstanding: Basic 15,139 15,018 15,125 15,014 Diluted 15,180 15,077 15,186 15,094 BAR HARBOR BANKSHARES CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands, except per share data) 2023 2023 2022 2022 2022 Interest and dividend income Loans $ 36,917 $ 34,560 $ 32,605 $ 27,940 $ 24,581 Securities and other 5,964 5,791 5,551 5,145 4,207 Total interest and dividend income 42,881 40,351 38,156 33,085 28,788 Interest expense Deposits 8,590 5,265 3,159 1,801 1,195 Borrowings 5,501 4,180 2,043 1,374 1,074 Total interest expense 14,091 9,445 5,202 3,175 2,269 Net interest income 28,790 30,906 32,954 29,910 26,519 Provision for credit losses 750 798 687 1,306 534 Net interest income after provision for credit losses 28,040 30,108 32,267 28,604 25,985 Non-interest income Trust and investment management fee income 3,805 3,555 3,442 3,548 3,829 Customer service fees 3,774 3,677 3,683 3,836 3,656 Gain on sales of securities, net - 34 - 44 - Mortgage banking income 378 279 153 315 488 Bank-owned life insurance income 503 1,148 499 496 504 Customer derivative income 83 132 97 58 137 Other income 437 359 354 526 347 Total non-interest income 8,980 9,184 8,228 8,823 8,961 Non-interest expense Salaries and employee benefits 13,223 12,771 12,900 12,242 11,368 Occupancy and equipment 4,392 4,414 4,321 4,458 4,373 (Gain) loss on sales of premises and equipment, net (86 ) (13 ) 75 - 10 Outside services 424 356 435 393 410 Professional services 355 426 490 421 528 Communication 175 162 263 204 188 Marketing 476 409 411 518 369 Amortization of intangible assets 233 233 233 233 233 Acquisition, conversion and other expenses - 20 (90 ) 31 - Provision for unfunded commitments 45 (175 ) 1,413 (26 ) 45 Other expenses 4,155 4,101 4,184 4,558 4,176 Total non-interest expense 23,392 22,704 24,635 23,032 21,700 Income before income taxes 13,628 16,588 15,860 14,395 13,246 Income tax expense 2,837 3,576 3,348 2,965 2,743 Net income $ 10,791 $ 13,012 $ 12,512 $ 11,430 $ 10,503 Earnings per share: Basic $ 0.71 $ 0.86 $ 0.83 $ 0.76 $ 0.70 Diluted 0.71 0.86 0.83 0.76 0.70 Weighted average shares outstanding: Basic 15,139 15,110 15,073 15,058 15,018 Diluted 15,180 15,190 15,147 15,113 15,077 BAR HARBOR BANKSHARES AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent (Non-GAAP) - Annualized) - UNAUDITED Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, 2023 2023 2022 2022 2022 Earning assets Interest-earning deposits with other banks 5.59 % 4.28 % 4.00 % 2.13 % 0.80 % Securities available for sale and FHLB stock 3.71 3.66 3.40 3.12 2.69 Loans: Commercial real estate 5.21 5.08 4.81 4.26 3.82 Commercial and industrial 6.42 5.89 5.43 4.46 3.67 Paycheck protection program - - - - 13.99 Residential real estate 3.76 3.71 3.63 3.45 3.55 Consumer 6.67 6.37 5.79 4.55 3.82 Total loans 4.99 4.82 4.56 4.04 3.71 Total earning assets 4.77 % 4.61 % 4.35 % 3.84 % 3.46 % Funding liabilities Deposits: NOW 0.94 % 0.51 % 0.22 % 0.16 % 0.14 % Savings 0.37 0.30 0.16 0.08 0.08 Money market 2.52 2.14 1.42 0.65 0.19 Time deposits 2.82 1.34 0.69 0.55 0.58 Total interest-bearing deposits 1.45 0.91 0.52 0.30 0.20 Borrowings 4.73 4.25 3.23 2.69 2.41 Total interest-bearing liabilities 1.99 % 1.39 % 0.78 % 0.48 % 0.36 % Net interest spread 2.78 3.22 3.57 3.36 3.10 Net interest margin, fully taxable equivalent (1) 3.22 3.54 3.76 3.47 3.19 Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in tables I-J for additional information. BAR HARBOR BANKSHARES AVERAGE BALANCES - UNAUDITED Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 Assets Interest-earning deposits with other banks (1) $ 21,440 $ 19,819 $ 26,360 $ 59,556 $ 63,317 Securities available for sale and FHLB stock (2) 636,088 643,523 641,787 642,475 637,881 Loans: Commercial real estate 1,536,035 1,505,681 1,447,384 1,351,599 1,296,162 Commercial and industrial 434,384 413,921 403,304 421,963 412,518 Paycheck protection program - - - 94 788 Residential real estate 911,788 902,348 897,637 882,158 863,172 Consumer 97,518 100,124 100,182 101,175 98,588 Total loans (3) 2,979,725 2,922,074 2,848,507 2,756,989 2,671,228 Total earning assets 3,637,253 3,585,416 3,516,654 3,459,020 3,372,426 Cash and due from banks 32,067 31,556 36,891 40,330 35,051 Allowance for credit losses (26,932 ) (25,971 ) (25,497 ) (24,061 ) (23,228 ) Goodwill and other intangible assets 124,926 125,158 125,391 125,626 126,090 Other assets 163,388 168,773 164,749 171,394 178,037 Total assets $ 3,930,702 $ 3,884,932 $ 3,818,188 $ 3,772,309 $ 3,688,376 Liabilities and shareholders' equity Deposits: NOW $ 885,091 $ 883,134 $ 899,388 $ 905,668 $ 893,239 Savings 602,724 646,291 664,016 668,255 657,047 Money market 423,013 481,951 501,564 491,683 457,088 Time deposits 468,188 342,994 334,297 349,787 375,782 Total interest-bearing deposits 2,379,016 2,354,370 2,399,265 2,415,393 2,383,156 Borrowings 466,402 398,837 251,263 202,296 178,519 Total interest-bearing liabilities 2,845,418 2,753,207 2,650,528 2,617,689 2,561,675 Non-interest-bearing demand deposits 608,180 651,885 703,471 690,134 661,412 Other liabilities 64,346 72,693 74,276 71,934 67,069 Total liabilities 3,517,944 3,477,785 3,428,275 3,379,757 3,290,156 Total shareholders' equity 412,758 407,147 389,913 392,552 398,220 Total liabilities and shareholders' equity $ 3,930,702 $ 3,884,932 $ 3,818,188 $ 3,772,309 $ 3,688,376 Total average interest-bearing deposits with other banks is net of Federal Reserve daily cash letter. Average balances for securities available-for-sale are based on amortized cost. Total average loans include non-accruing loans and loans held for sale. BAR HARBOR BANKSHARES ASSET QUALITY ANALYSIS - UNAUDITED At or for the Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 NON-PERFORMING ASSETS Non-accruing loans: Commercial real estate $ 909 $ 1,163 $ 1,222 $ 1,587 $ 1,483 Commercial installment 1,814 1,917 264 348 632 Residential real estate 3,415 3,830 4,151 4,858 4,882 Consumer installment 565 886 911 981 881 Total non-accruing loans 6,703 7,796 6,548 7,774 7,878 Other real estate owned - - - - - Total non-performing assets $ 6,703 $ 7,796 $ 6,548 $ 7,774 $ 7,878 Total non-accruing loans/total loans 0.22 % 0.26 % 0.23 % 0.27 % 0.29 % Total non-performing assets/total assets 0.17 0.20 0.17 0.20 0.21 PROVISION AND ALLOWANCE FOR CREDIT LOSSES Balance at beginning of period $ 26,607 $ 25,860 $ 25,018 $ 23,756 $ 23,190 Charged-off loans (199 ) (68 ) (136 ) (85 ) (62 ) Recoveries on charged-off loans 204 17 291 41 94 Net loans recovered (charged-off) 5 (51 ) 155 (44 ) 32 Provision for credit losses 750 798 687 1,306 534 Balance at end of period $ 27,362 $ 26,607 $ 25,860 $ 25,018 $ 23,756 Allowance for credit losses/total loans 0.91 % 0.90 % 0.89 % 0.88 % 0.87 % Allowance for credit losses/non-accruing loans 408 341 395 322 300 NET LOAN RECOVERIES (CHARGE-OFFS) Commercial real estate $ (72 ) $ 3 $ - $ 7 $ 59 Commercial installment 139 2 285 12 12 Residential real estate 3 4 (56 ) (5 ) 6 Consumer installment (65 ) (60 ) (74 ) (58 ) (45 ) Total, net $ 5 $ (51 ) $ 155 $ (44 ) $ 32 Net (recoveries) charge-offs (QTD annualized)/average loans - % 0.01 % (0.02 )% 0.01 % - % Net (recoveries) charge-offs (YTD annualized)/average loans - 0.01 (0.01 ) - (0.01 ) DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS 30-89 Days delinquent 0.09 % 0.26 % 0.08 % 0.09 % 0.09 % 90+ Days delinquent and still accruing 0.02 - 0.01 0.01 0.03 Total accruing delinquent loans 0.11 0.26 0.09 0.10 0.12 Non-accruing loans 0.22 0.26 0.23 0.27 0.29 Total delinquent and non-accruing loans 0.33 % 0.52 % 0.32 % 0.37 % 0.41 % BAR HARBOR BANKSHARES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED At or for the Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 Net income $ 10,791 $ 13,012 $ 12,512 $ 11,430 $ 10,503 Non-core items: Gain on sale of securities, net - (34 ) - (44 ) - (Gain) loss on sale of premises and equipment, net (86 ) (13 ) 75 - 10 Acquisition, conversion and other expenses - 20 (90 ) 31 - Income tax expense (1) 20 6 4 3 (2 ) Total non-core items (66 ) (21 ) (11 ) (10 ) 8 Core earnings (2) (A) $ 10,725 $ 12,991 $ 12,501 $ 11,420 $ 10,511 Net interest income (B) $ 28,790 $ 30,906 $ 32,954 $ 29,910 $ 26,519 Non-interest income 8,980 9,184 8,228 8,823 8,961 Total revenue 37,770 40,090 41,182 38,733 35,480 Gain on sale of securities, net - (34 ) - (44 ) - Total core revenue (2) (C) $ 37,770 $ 40,056 $ 41,182 $ 38,689 $ 35,480 Total non-interest expense 23,392 22,704 24,635 23,032 21,700 Non-core expenses: Gain (loss) on sale of premises and equipment, net 86 13 (75 ) - (10 ) Acquisition, conversion and other expenses - (20 ) 90 (31 ) - Total non-core expenses 86 (7 ) 15 (31 ) (10 ) Core non-interest expense (2) (D) $ 23,478 $ 22,697 $ 24,650 $ 23,001 $ 21,690 Total revenue 37,770 40,090 41,182 38,733 35,480 Total non-interest expense 23,392 22,704 24,635 23,032 21,700 Pre-tax, pre-provision net revenue $ 14,378 $ 17,386 $ 16,547 $ 15,701 $ 13,780 Core revenue (2) 37,770 40,056 41,182 38,689 35,480 Core non-interest expense (2) 23,478 22,697 24,650 23,001 21,690 Core pre-tax, pre-provision net revenue (2) (U) $ 14,292 $ 17,359 $ 16,532 $ 15,688 $ 13,790 (in millions) Average earning assets (E) $ 3,637 $ 3,585 $ 3,517 $ 3,459 $ 3,372 Average paycheck protection program (PPP) loans (R) - - - - 1 Average earning assets, excluding PPP loans (S) 3,637 3,585 3,517 3,459 3,371 Average assets (F) 3,931 3,885 3,818 3,772 3,688 Average shareholders' equity (G) 413 407 390 393 398 Average tangible shareholders' equity (2) (3) (H) 288 282 265 267 272 Tangible shareholders' equity, period-end (2) (3) (I) 286 283 268 254 268 Tangible assets, period-end (2) (3) (J) 3,904 3,803 3,785 3,715 3,587 BAR HARBOR BANKSHARES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED At or for the Quarters Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in thousands) 2023 2023 2022 2022 2022 Common shares outstanding, period-end (K) 15,144 15,124 15,083 15,066 15,026 Average diluted shares outstanding (L) 15,180 15,190 15,147 15,113 15,077 Core earnings per share, diluted (2) (A/L) $ 0.71 $ 0.86 $ 0.83 $ 0.76 $ 0.70 Tangible book value per share, period-end (2) (I/K) 18.88 18.74 17.78 16.89 17.83 Securities adjustment, net of tax (1) (4) (M) (55,307 ) (50,646 ) (55,246 ) (58,715 ) (38,304 ) Tangible book value per share, excluding securities adjustment (2) (4) (I+M)/K 22.53 22.08 21.44 20.79 20.38 Tangible shareholders' equity/total tangible assets (2) (I/J) 7.32 7.45 7.09 6.85 7.47 Performance ratios (5) GAAP return on assets 1.10 % 1.36 % 1.30 % 1.20 % 1.14 % Core return on assets (2) (A/F) 1.09 1.36 1.30 1.20 1.14 Pre-tax, pre-provision return on assets 1.47 1.81 1.72 1.65 1.50 Core pre-tax, pre-provision return on assets (2) (U/F) 1.46 1.81 1.72 1.65 1.50 GAAP return on equity 10.49 12.96 12.73 11.55 10.58 Core return on equity (2) (A/G) 10.42 12.94 12.72 11.54 10.59 Return on tangible equity 15.28 18.97 19.03 17.25 15.74 Core return on tangible equity (1) (2) (A+Q)/H 15.19 18.94 19.02 17.24 15.76 Efficiency ratio (2) (6) (D-O-Q)/(C+N) 60.25 54.72 58.19 57.67 59.25 Net interest margin, fully taxable equivalent (2) (B+P)/E 3.22 3.54 3.76 3.47 3.19 Supplementary data (in thousands) Taxable equivalent adjustment for efficiency ratio (N) $ 539 $ 727 $ 520 $ 533 $ 491 Franchise taxes included in non-interest expense (O) 163 148 149 149 144 Tax equivalent adjustment for net interest margin (P) 382 368 365 379 334 Intangible amortization (Q) 233 233 233 233 233 Interest and fees on PPP loans (T) - - - - 27 Assumes a marginal tax rate of 23.80% in the first and second quarter of 2023, 23.53% in the fourth quarter of 2022 and 23.41% for the previous quarters. Non-GAAP financial measure. Tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Tangible assets is computed by taking total assets less the intangible assets at period-end. Securities adjustment, net of tax represents the total unrealized loss on available-for-sale securities recorded on the Company's consolidated balance sheets within total common shareholders' equity. All performance ratios are based on average balance sheet amounts, where applicable. Efficiency ratio is computed by dividing core non-interest expense net of franchise taxes and intangible amortization divided by core revenue on a fully taxable equivalent basis. SOURCE: Bar Harbor Bank and Trust View source version on accesswire.com: https://www.accesswire.com/769380/Bar-Harbor-Bankshares-Reports-Second-Quarter-2023-Results-Declares-Dividend