Bar Harbor Bankshares — Q1 2024 Form 10-Q Summary
Business context and reporting period
Bar Harbor Bankshares is a Maine-based bank holding company operating principally through Bar Harbor Bank & Trust, serving businesses and consumers primarily across Northern New England. This unaudited filing covers the three months ended March 31, 2024; balance-sheet comparisons are with December 31, 2023.
Financial results and position
| Metric | Q1 2024 | Comparison |
|---|---|---|
| Net interest income | $28.1 million | $30.9 million in Q1 2023 |
| Net interest margin, fully taxable equivalent | 3.14% | 3.54% in Q1 2023 |
| Net income / diluted EPS | $10.1 million / $0.66 | $13.0 million / $0.86 in Q1 2023 |
| Non-interest income / expense | $8.6 million / $23.7 million | $9.2 million / $22.7 million in Q1 2023 |
| Return on assets / equity | 1.03% / 9.32% | 1.36% / 12.96% in Q1 2023 |
| Efficiency ratio | 62.91% | 54.72% in Q1 2023 |
| Operating cash flow | $8.5 million | $17.4 million in Q1 2023 |
Total revenue (net interest income plus non-interest income) was $36.6 million, down from $40.1 million. Interest and dividend income rose 13.4% to $45.8 million, but interest expense increased to $17.8 million from $9.4 million, largely reflecting deposit pricing. The provision for credit losses was $289,000, versus $798,000.
At March 31, total assets were $3.96 billion, loans $3.01 billion, deposits $3.13 billion, and shareholders’ equity $435.7 million. Total borrowings were $329.9 million, including $269.2 million of short-term borrowings and $60.8 million of long-term borrowings. Cash and cash equivalents were $76.2 million. Net cash declined $18.6 million during the quarter.
Loans increased $12.6 million from year-end, with commercial loan growth partly offset by lower residential and tax-exempt balances. Deposits decreased $14.1 million; non-maturity balances shifted toward time deposits, which increased $76.9 million. Brokered time deposits rose to $275.0 million from $219.6 million.
The allowance for credit losses was $28.4 million, or 0.94% of loans. Net charge-offs were $76,000. Non-accrual loans were $6.9 million (0.23% of loans), up from $5.5 million at year-end but below the prior-year ratio. Total past-due loans were $6.5 million. Commercial real estate loans were $1.57 billion, a significant concentration within the $3.01 billion loan portfolio.
Regulatory capital remained above minimums: consolidated total capital ratio was 14.36%, and the Bank’s was 14.10%; both were classified as well-capitalized. Available-for-sale securities had $70.5 million of gross unrealized losses and $5.5 million of gross unrealized gains at quarter-end; management reported no allowance for credit losses on those securities and said it did not intend or expect to be required to sell them before recovery.
Material changes versus the comparable period
- Net income fell 22% and diluted EPS declined from $0.86 to $0.66, principally because the increase in funding costs exceeded growth in asset yields.
- Loan yield rose to 5.31% from 4.82%, while the cost of interest-bearing liabilities rose to 2.48% from 1.39%. Deposit interest expense increased $9.3 million; borrowing expense decreased $944,000.
- Non-interest expense increased $984,000, driven by salaries and benefits, marketing, and other expenses. The efficiency ratio worsened as net interest income declined.
- Non-interest income decreased $598,000. Q1 2023 included elevated bank-owned life insurance income, including $622,000 associated with one-time death benefits, and customer derivative income not recorded in Q1 2024.
- Other comprehensive loss was $2.7 million, versus $5.2 million of other comprehensive income in Q1 2023, primarily reflecting securities and hedging valuation changes.
Outlook, commentary, risks, and unusual items
The filing provides no specific earnings or financial guidance. Management described liquidity, capital, and asset quality as strong and considered liquidity adequate for current and future needs. Same-day liquidity was approximately $1.1 billion, including cash, unused FHLB and Federal Reserve capacity, and credit lines. The Federal Reserve Bank Term Funding Program stopped making new loans effective March 11, 2024; the Company had $65 million outstanding at a fixed 4.76% rate, maturing January 16, 2025.
Interest-rate modeling showed the balance sheet was asset-sensitive over one- and two-year horizons. A modeled 100-basis-point rate increase was associated with net interest income increases of 1.9% over 1–12 months and 3.4% over 13–24 months; a 100-basis-point decrease was associated with declines of 2.7% and 4.8%, respectively. Management cautioned that these scenarios are not forecasts and depend on assumptions about rates, deposits, prepayments, and customer behavior.
Key disclosed risks include deposit cost and retention, reliance on brokered deposits and wholesale funding, liquidity needs, interest-rate movements, loan demand, borrower performance, commercial real estate exposure, competition, economic conditions, and cybersecurity and regulatory risks. Management reported no material change in risk factors from the 2023 Form 10-K. Routine litigation was described as not expected to have a material adverse effect, though outcomes and related costs remain uncertain.
The Board approved an April 18, 2024 plan to repurchase up to 5% of outstanding common shares (approximately 761,000 shares) over 12 months; none were repurchased during Q1. The Company declared dividends of $0.28 per share for the quarter and said it expects to continue quarterly dividends subject to Board discretion.
Most important facts for investors to verify
- Whether deposit pricing and the shift from non-maturity deposits to higher-cost time and brokered deposits continue to pressure net interest margin.
- How the $275.0 million brokered-deposit balance, seasonal deposit patterns, and the January 2025 maturity of the $65 million BTFP borrowing affect liquidity and funding costs.
- Whether non-accrual loans, delinquencies, and credit losses rise, particularly in the commercial real estate portfolio; compare subsequent credit disclosures with the $6.9 million non-accrual balance.
- Whether unrealized securities losses and interest-rate changes affect capital, liquidity, book value, or the ability to hold securities to recovery.
- Whether loan growth, expense trends, repurchases, and dividends remain consistent with capital and liquidity priorities; review the full filing for any subsequent developments.