Bar Harbor Bankshares (BHB) Bundle
Understanding Bar Harbor Bankshares (BHB) Revenue Streams
Understanding Bar Harbor Bankshares’ Revenue Streams
The revenue streams of Bar Harbor Bankshares (BHB) are primarily derived from interest income, non-interest income, and various fees associated with financial services. The following sections provide a detailed breakdown of these revenue sources, year-over-year growth, and significant changes impacting overall revenue.
Breakdown of Primary Revenue Sources
- Interest Income: Total interest and dividend income for the nine months ended September 30, 2024, amounted to $141.2 million, an increase of 10.0% compared to $128.4 million in the same period of 2023.
- Non-Interest Income: Non-interest income grew to $27.5 million for the nine months ended September 30, 2024, up from $26.4 million in 2023, reflecting an increase of 4.2%.
-
Key Revenue Segments:
- Wealth management income reached $12.0 million in the nine months ended September 30, 2024, compared to $10.9 million in 2023.
- Mortgage banking income increased to $2.4 million in 2024 from $2.0 million in 2023.
Year-over-Year Revenue Growth Rate
Year-over-year revenue growth has shown positive trends, particularly in interest income, driven by an increase in asset yields. The detailed year-over-year revenue growth rates are summarized in the table below:
| Period | Interest Income ($ Million) | Non-Interest Income ($ Million) | Total Revenue ($ Million) | Growth Rate (%) |
|---|---|---|---|---|
| Q3 2024 | 48.6 | 9.7 | 58.3 | 7.2 |
| Q3 2023 | 45.1 | 8.6 | 53.7 | - |
| 9M 2024 | 141.2 | 27.5 | 168.7 | 4.8 |
| 9M 2023 | 128.4 | 26.4 | 154.8 | - |
Contribution of Different Business Segments to Overall Revenue
As of September 30, 2024, the contributions of various segments to total revenue are as follows:
- Commercial Loans: Contributed approximately 64% of total interest income.
- Wealth Management: Accounted for about 43% of non-interest income.
- Mortgage Banking: Made up 8% of total revenue from non-interest income.
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams have been observed in the following areas:
- The increase in interest income is largely attributed to the repricing of adjustable loans and the growth in fixed-rate loans within the commercial portfolio.
- Non-interest income was bolstered by a 17.2% increase in wealth management income, driven by the growth of managed accounts and improved investment market values.
- Overall, the efficiency ratio increased to 62.09% from 58.37%, indicating a rise in non-interest expenses impacting overall profitability.
A Deep Dive into Bar Harbor Bankshares (BHB) Profitability
Profitability Metrics
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin stood at 82.3%, compared to 83.5% for the same period in 2023. This slight decrease reflects a rise in total interest expenses amidst increased interest income.
Operating Profit Margin: The operating profit margin for the third quarter of 2024 was 25.5%, down from 27.3% in the third quarter of 2023. The decline is attributed to higher operating expenses, particularly in salaries and benefits.
Net Profit Margin: The net profit margin was 24.5% for the third quarter of 2024, compared to 23.1% for the third quarter of 2023. This increase in net margin is due to a one-time tax refund adjustment, which positively impacted net income.
Trends in Profitability Over Time
Net income for the third quarter of 2024 was $12.2 million, compared to $11.1 million in the same quarter of 2023. For the nine months ended September 30, 2024, net income totaled $32.5 million, down from $34.9 million in the previous year. This trend indicates fluctuations in profitability, primarily driven by changes in interest expenses and income.
Comparison of Profitability Ratios with Industry Averages
The company's return on assets (ROA) for the third quarter of 2024 was 1.20%, compared to the industry average of 1.05%. The return on equity (ROE) was 10.68%, slightly below the industry average of 11.00%. These ratios reflect the company's effective asset utilization but also indicate a need for improvement in equity returns.
Analysis of Operational Efficiency
Efficiency Ratio: The efficiency ratio for the third quarter of 2024 was 62.09%, which shows a decline from 58.37% in the same quarter of 2023. An increase in non-interest expenses, particularly in salaries and benefits, contributed to this rise in the efficiency ratio.
Gross Margin Trends: The gross margin has shown a downward trend, decreasing from 83.5% in 2023 to 82.3% in 2024. This decline indicates potential concerns in cost management, particularly in interest expenses.
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Gross Profit Margin | 82.3% | 83.5% | — | — |
| Operating Profit Margin | 25.5% | 27.3% | — | — |
| Net Profit Margin | 24.5% | 23.1% | 32.5M | 34.9M |
| Return on Assets (ROA) | 1.20% | 1.11% | — | — |
| Return on Equity (ROE) | 10.68% | 10.72% | — | — |
| Efficiency Ratio | 62.09% | 58.37% | — | — |
Overall, the analysis of profitability metrics reveals a mixed performance, with some areas of strength offset by challenges in cost management and efficiency ratios compared to industry benchmarks.
Debt vs. Equity: How Bar Harbor Bankshares (BHB) Finances Its Growth
Debt vs. Equity: How Bar Harbor Bankshares Finances Its Growth
As of September 30, 2024, Bar Harbor Bankshares reported total borrowings of $246.8 million, which includes senior borrowings of $186.2 million and subordinated borrowings of $60.6 million. The total liabilities amounted to $3.57 billion.
Overview of Debt Levels
The company's long-term debt consists primarily of FHLB (Federal Home Loan Bank) borrowings, which decreased to $133.8 million as of September 30, 2024, down from $254.3 million at the end of the previous quarter. Short-term borrowings have also seen a reduction, with borrowings under the Federal Reserve’s Bank Term Funding Program decreasing to $45 million.
Debt-to-Equity Ratio
The debt-to-equity ratio is a crucial measure of financial leverage. As of September 30, 2024, Bar Harbor Bankshares had total equity of $459.9 million. Calculating the debt-to-equity ratio:
- Debt-to-Equity Ratio = Total Debt / Total Equity
- Debt-to-Equity Ratio = $246.8 million / $459.9 million = 0.537
This ratio is below the industry average, indicating a conservative approach to leveraging. The industry standard for banks typically ranges from 0.8 to 1.5, suggesting that Bar Harbor Bankshares maintains a lower risk profile.
Recent Debt Issuances and Credit Ratings
Bar Harbor Bankshares has undertaken strategic refinancing activities. The total borrowing costs decreased from 4.57% in the second quarter of 2024 to 4.38% in the third quarter. The company's credit ratings remain strong, reflecting its solid financial performance and low non-performing loans, which stood at 0.23% of total loans.
Balancing Debt Financing and Equity Funding
Bar Harbor Bankshares effectively balances its debt and equity financing by maintaining a robust capital structure. The tangible book value per share increased to $22.02 as of September 30, 2024, up from $20.68. This increase is indicative of the company's focus on equity funding while managing its debt levels prudently.
| Financial Metrics | September 30, 2024 |
|---|---|
| Total Borrowings | $246.8 million |
| Senior Borrowings | $186.2 million |
| Subordinated Borrowings | $60.6 million |
| Total Equity | $459.9 million |
| Debt-to-Equity Ratio | 0.537 |
| Total Assets | $4.0 billion |
| Non-Performing Loans | 0.23% |
| Tangible Book Value per Share | $22.02 |
Assessing Bar Harbor Bankshares (BHB) Liquidity
Assessing Liquidity and Solvency
Liquidity Ratios
The liquidity position of the company can be assessed through its current and quick ratios. As of September 30, 2024, the current ratio stands at 1.12, indicating that the company has $1.12 in current assets for every $1.00 of current liabilities. The quick ratio, a more stringent measure, is 0.92, suggesting that the company has sufficient liquid assets to cover its immediate liabilities.
Working Capital Trends
Working capital, defined as current assets minus current liabilities, has shown a positive trend. As of the third quarter of 2024, working capital is reported at $120 million, an increase from $100 million in the previous quarter. This increase reflects enhanced operational efficiency and better management of current assets and liabilities.
Cash Flow Statements Overview
The cash flow statements provide insight into the company's liquidity through its operating, investing, and financing cash flows:
| Cash Flow Type | Q3 2024 (in thousands) | Q3 2023 (in thousands) |
|---|---|---|
| Operating Cash Flow | $39,113 | $31,093 |
| Investing Cash Flow | ($74,386) | ($58,389) |
| Financing Cash Flow | $21,651 | $57,817 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company holds $81.2 million in cash and cash equivalents, down from $94.8 million at year-end 2023. Additionally, the company has unused borrowing capacity of $475.1 million at the Federal Home Loan Bank and $87.0 million at the Federal Reserve, providing a cushion for liquidity needs. The overall liquidity position is considered strong, with a liquidity policy aiming for at least 8% of total assets, which is currently met.
Conclusion
Overall, the liquidity and solvency metrics indicate a robust financial position, with sufficient cash flow from operations and manageable levels of current liabilities.
Is Bar Harbor Bankshares (BHB) Overvalued or Undervalued?
Valuation Analysis
Determining whether a company is overvalued or undervalued often involves analyzing key financial ratios, stock price trends, and dividend metrics. For Bar Harbor Bankshares, we will look into the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The P/E ratio for Bar Harbor Bankshares as of September 30, 2024, is calculated using the diluted earnings per share (EPS) of $0.80 and the stock price of approximately $29.30, resulting in a P/E ratio of:
P/E Ratio = Stock Price / EPS = $29.30 / $0.80 = 36.63
Price-to-Book (P/B) Ratio
As of September 30, 2024, the book value per share is $30.12. The current stock price is $29.30, leading to a P/B ratio of:
P/B Ratio = Stock Price / Book Value per Share = $29.30 / $30.12 = 0.97
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To determine the EV/EBITDA ratio, we need to calculate the enterprise value (EV) and EBITDA. The total debt as of September 30, 2024, is approximately $246.8 million, with total equity of $459.9 million. The EBITDA for the trailing 12 months (estimated) is around $80 million.
EV = Market Capitalization + Total Debt - Cash
Assuming cash and cash equivalents of $81.2 million:
Market Capitalization = Stock Price Shares Outstanding = $29.30 15.27 million = $448.51 million
EV = $448.51 million + $246.8 million - $81.2 million = $614.11 million
EV/EBITDA = EV / EBITDA = $614.11 million / $80 million = 7.68
Stock Price Trends
Over the last 12 months, the stock price of Bar Harbor Bankshares has shown the following trends:
- 12 months ago: $24.00
- 6 months ago: $27.50
- Current price: $29.30
This represents a 22.92% increase over the year.
Dividend Yield and Payout Ratios
The company declared dividends of $0.30 per share in the third quarter of 2024. With a current stock price of $29.30, the dividend yield is:
Dividend Yield = Annual Dividends / Stock Price = ($0.30 4) / $29.30 = 4.08%
The payout ratio based on the EPS of $0.80 is:
Payout Ratio = Dividends per Share / EPS = $1.20 / $0.80 = 1.50 or 150%
Analyst Consensus on Stock Valuation
Analyst consensus on the stock valuation of Bar Harbor Bankshares is as follows:
- Buy: 3 analysts
- Hold: 2 analysts
- Sell: 0 analysts
| Metric | Value |
|---|---|
| P/E Ratio | 36.63 |
| P/B Ratio | 0.97 |
| EV/EBITDA Ratio | 7.68 |
| Current Stock Price | $29.30 |
| Dividend Yield | 4.08% |
| Payout Ratio | 150% |
| 12-Month Stock Price Change | 22.92% |
| Analyst Consensus (Buy/Hold/Sell) | 3/2/0 |
Key Risks Facing Bar Harbor Bankshares (BHB)
Key Risks Facing Bar Harbor Bankshares
Internal Risks:
- Operational risk due to increased non-interest expenses, which rose to $24.8 million in the third quarter of 2024 compared to $22.8 million in the same quarter of 2023.
- Credit risk remains a concern, with the allowance for credit losses at $29.0 million as of September 30, 2024, compared to $28.1 million at the end of 2023.
External Risks:
- Market conditions affecting net interest income, which decreased to $28.96 million in Q3 2024 from $29.19 million in Q3 2023.
- Regulatory changes impacting capital ratios, with total capital to risk-weighted assets at 14.37% as of September 30, 2024, above the required 8.00%.
Operational, Financial, or Strategic Risks
The provision for credit losses was $228 thousand in Q3 2024, down from $673 thousand in Q3 2023, indicating improved credit quality but still highlighting potential operational risks.
Net charge-offs to total loans remained nominal at $221 thousand for the nine months ended September 30, 2024. Non-accruing loans to total loans was 0.23%, indicating stable asset quality.
Mitigation Strategies
The company has increased its focus on managing operational costs, with non-interest expenses driven by salary and benefits rising 10.5% year-over-year. The efficiency ratio was 62.09%, reflecting higher non-interest expenses.
Additionally, the company is adjusting its loan portfolio to mitigate risks, with total loans growing 2.8% to $3.1 billion.
| Risk Factor | Current Status | Previous Status |
|---|---|---|
| Non-Interest Expenses | $24.8 million (Q3 2024) | $22.8 million (Q3 2023) |
| Allowance for Credit Losses | $29.0 million (Q3 2024) | $28.1 million (End of 2023) |
| Net Interest Income | $28.96 million (Q3 2024) | $29.19 million (Q3 2023) |
| Total Capital to Risk-Weighted Assets | 14.37% (Q3 2024) | 8.00% (Minimum Requirement) |
| Net Charge-Offs | $221 thousand (Nine months ended Sept 2024) | $70 thousand (Nine months ended Sept 2023) |
Future Growth Prospects for Bar Harbor Bankshares (BHB)
Future Growth Prospects for Bar Harbor Bankshares
Bar Harbor Bankshares (BHB) presents several growth opportunities driven by strategic initiatives, market expansions, and competitive advantages.
Key Growth Drivers
- Product Innovations: The bank has focused on enhancing its wealth management services, which saw a growth of 17.2% in income, reaching $4.1 million in Q3 2024 compared to $3.5 million in Q3 2023.
- Market Expansions: Total loans increased by $17.6 million or 2% on an annualized basis in Q3 2024, with commercial real estate loans growing by 10%.
- Acquisitions: The bank continues to look for strategic acquisitions to expand its market presence and product offerings.
Future Revenue Growth Projections
Future revenue growth is projected to be robust, with total interest and dividend income increasing by 10.0% to $141.2 million in the nine months ended September 30, 2024, compared to $128.4 million in the prior year.
Earnings Estimates
For the nine months ended September 30, 2024, net income was $32.5 million, or $2.14 per diluted share, compared to $34.9 million, or $2.31 per diluted share in the same period of 2023.
Strategic Initiatives
- Partnerships: The bank has formed partnerships to enhance service delivery and product offerings, particularly in the wealth management sector.
- Technology Investments: Investments in technology to improve customer experience and operational efficiency are ongoing.
Competitive Advantages
Bar Harbor Bankshares maintains several competitive advantages, including:
- Strong Capital Ratios: As of September 30, 2024, the total capital to risk-weighted assets ratio was 14.37%, well above the required 8.00%.
- Robust Liquidity Position: Available same-day liquidity totaled approximately $1.1 billion, providing flexibility to meet customer needs.
Financial Performance Summary
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Income | $12.2 million | $11.1 million | +9.9% |
| EPS | $0.80 | $0.73 | +9.6% |
| Total Loans | $3.1 billion | $2.99 billion | +2% |
| Wealth Management Income | $4.1 million | $3.5 million | +17.2% |
| Return on Assets | 1.20% | 1.11% | +8.1% |
| Return on Equity | 10.68% | 10.72% | -0.4% |
Bar Harbor Bankshares (BHB) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Bar Harbor Bankshares (BHB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Bar Harbor Bankshares (BHB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Bar Harbor Bankshares (BHB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.