Bar Harbor Bankshares(BHB) - 2020 Q2 - Quarterly Report

Accounting Standards and Financial Reporting - The Company adopted ASU 2017-04 effective January 1, 2020, which did not have a material impact on its financial statements, with no impairments to goodwill recognized in Q2 2020 [29]. - The Company has adopted ASU 2018-13 as of January 1, 2020, which did not materially affect disclosures [29]. Credit Losses and Allowances - The Company estimates that the allowance for credit losses would have increased by $5.0 to $10.0 million as of January 1, 2020, under the CECL model [31]. - The estimated credit losses remained stable at $1,697 for both the three and six months ended June 30, 2020, and 2019 [38]. - The company did not record any other-than-temporary impairment (OTTI) losses for the three and six months ended June 30, 2020, and 2019 [37]. - The allowance for loan losses at the end of June 30, 2020, was $15.978 million, with a provision for loan losses of $1.012 million during the three months ended June 30, 2020 [95]. - The Company’s provision for loan losses increased slightly by $243 thousand, reflecting higher economic qualitative factors [228]. Securities and Investments - Total securities available for sale as of June 30, 2020, amounted to $641.574 million, with an amortized cost of $625.313 million [33]. - The fair value of US Government-sponsored enterprises was $267.444 million, with an amortized cost of $258.169 million and gross unrealized gains of $9.701 million [33]. - The fair value of corporate bonds was $96.821 million, with an amortized cost of $98.248 million and gross unrealized losses of $2.568 million [33]. - The total gross unrealized gains for securities available for sale as of June 30, 2020, were $20.242 million, while gross unrealized losses were $3.981 million [33]. - The net unrealized gain on available-for-sale (AFS) securities was $14.9 million as of June 30, 2020, compared to $7.3 million as of December 31, 2019 [134]. - The net unrealized gain on AFS securities for the three months ended June 30, 2020, was $9,560,000, compared to $7,391,000 for the same period in 2019, reflecting an increase of approximately 29% [137]. Loans and Loan Performance - Total loans as of June 30, 2020, amounted to $2,729.4 million, an increase from $2,641.1 million as of December 31, 2019, representing a growth of approximately 3.3% [46]. - The total commercial loans reached $1,521.5 million, up from $1,353.9 million, indicating a year-over-year increase of about 12.3% [46]. - Residential mortgages totaled $1,083.7 million, compared to $1,151.9 million in the previous period, reflecting a decrease of approximately 5.9% [46]. - The company reported a total of 4,090 past due loans in residential real estate, with 1,950 loans being 90 days or more past due [48]. - Total impaired loans increased to $6,061,000, representing a 26% rise compared to $12,727,000 in the previous year [71]. - The total balance of loans evaluated for impairment was $2,019,602 million, with $783,045 million in commercial real estate [55]. Financial Performance and Ratios - Net income for the three months ended June 30, 2020, was $8,481,000, compared to $6,117,000 for the same period in 2019, representing an increase of 38.7% [141]. - Earnings per share (EPS) for the second quarter of 2020 was $0.55, up from $0.39 in Q2 2019, reflecting a growth of 41% [141]. - Return on assets improved to 0.90% for the three months ended June 30, 2020, compared to 0.67% in the same period of 2019 [212]. - The efficiency ratio improved to 60.67% for the three months ended June 30, 2020, down from 68.48% a year earlier, indicating better cost management [212]. - The market capitalization of the company was reported at $341 million as of June 30, 2020 [210]. Deposits and Borrowings - Total deposits amounted to $2.69 billion, showing a year-over-year increase of 7% [214]. - Total short-term borrowings decreased to $228,015 thousand as of June 30, 2020, from $348,118 thousand as of December 31, 2019, with a weighted average rate of 0.75% [119]. - Total long-term borrowings increased to $378,727 thousand as of June 30, 2020, from $183,198 thousand as of December 31, 2019, with a weighted average rate of 2.58% [119]. Derivatives and Hedging - The company reported a total notional amount of $750,909,000 in derivative instruments as of June 30, 2020, with a fair value liability of $(3,677,000) [146]. - The Company paid total premiums of $4.6 million for interest rate cap agreements to limit exposure to rising interest rates, ensuring maximum interest expense of 3.00% on borrowings [154]. - The Company entered into interest rate swaps with a total notional amount of $125 million, paying fixed rates of 2.46%, 1.53%, and 0.58% to hedge against rising interest rates [155]. Revenue and Income Sources - Trust management fees for the three months ended June 30, 2020, were $2,892,000, a slight increase from $2,794,000 in the same period of 2019 [194]. - Total revenue from major products and service lines for the six months ended June 30, 2020, was $12,079,000, up from $10,606,000 in 2019, indicating a year-over-year growth of approximately 13.9% [194]. - Non-interest income increased by 12%, excluding $1.4 million in security gains [227]. Asset Management and Valuation - Total assets increased to $3.78 billion as of June 30, 2020, up from $3.69 billion a year earlier, representing a growth of approximately 2.5% [212]. - The total fair value of non-recurring assets was $16,939,000 as of June 30, 2020, compared to $17,926,000 as of December 31, 2019, indicating a decrease of $(1,838,000) [177]. - Cash and cash equivalents amounted to $70,673,000, with a fair value of $70,763,000 as of June 30, 2020 [188].