Bar Harbor Bankshares doubles Q4 year-over-year net income
Courtesy / Bar Harbor Bank & Trust
Bar Harbor Bank & Trust, which recently opened an office in Bedford, N.H., doubled its earnings in the fourth quarter.
Bar Harbor Bankshares (NYSE American: BHB) reported fourth-quarter 2020 net income of $8.6 million, or 58 cents per share, compared to $4.2 million, or 27 cents per share, in the same quarter of 2019.
The bank’s president and CEO, Curtis Simard, attributed growth in part to increased deposits and fee income, as well as new accounts and improvement in past due and deferred commercial loan accounts.
“While this year has had unique challenges across the regional, national and international stages, we leaned on the culture and infrastructure we have established to support our customers, colleagues and communities, while not abandoning balanced growth expectations across all business lines,” Simard said in a news release.
Risk management
The bank’s risk management practices included assessing its credit exposure through quarterly stress testing and steady provisioning through the year, he said.
Commercial loans led the balance sheet growth for the quarter and for the year.
“By year-end, we had lower levels of non-performing loans, significant improvement in past due and deferred commercial loan accounts and we settled all of our other real estate owned at their carrying values,” Simard added. “During the fourth quarter, we expanded stress testing of our commercial loans, including the most watched industries of our footprint specifically hospitality, which demonstrated a better than expected summer tourism season for northern New England.”
Results of testing included no significant risk-rating downgrades or changes to reserves. “Borrowers with COVID loan modifications continue to demonstrate their repayment capacity and/or have sufficient cash reserves to service their pre-forbearance loans without further government stimulus,” he said.
Fee income
Fee income was a big part of total revenue for the fourth quarter and for the year 2020.
“Customer service fees have almost returned to pre-pandemic levels in the second half of the year and are expected to rise on an expanded customer base,” Simard said.
Throughout the year, the bank opted to sell its fixed-rate residential mortgage production in the secondary market instead of taking interest rate and credit risk on our balance sheet. The strategy continues to produce significant fee revenue in the current rate environment.
“As we look forward, we will continue to take advantage of such opportunities while maintaining a focus on our commercial customer base given the associated loan and derivative fees as well as those generated in treasury and cross-sell to retail and wealth business lines,” Simard said.
During Q4, core deposits increased $86.4 million and the bank’s retail team opened 3,200 new accounts, raising the total to more than 13,250 for the year.
PPP lending
“Excess liquidity generated in the quarter was used to further deliver our balance sheet with an early pay-off of our PPP lending facility and other reductions to wholesale funding,” Simard said.
He continued, “We are well poised to further help our communities with the second round of PPP loans authorized by the new stimulus bill. That process has begun for both first-time PPP draws as well as for customers in need of second-round PPP loans. For the remaining first round of PPP loans previously provided in 2020, we have $53.8 million that are pending various stages of forgiveness with $1.4 million of deferred fees.”
The bank expects the majority of remaining forgiveness to occur by the end of Q2 2021.
Looking forward, he said, “We are positioned for a solid start to 2021 as we continue to build on consistent, repeatable earnings while expanding our profitability metrics across all business lines.”
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