Business Overview and History

Bar Harbor Bankshares (BHB) is a leading community bank with a rich history and a steadfast commitment to serving the Northern New England region. Headquartered in Bar Harbor, Maine, the company has built a reputation for delivering exceptional financial services and fostering enduring relationships with its customers.

Bar Harbor Bankshares was founded in 1887 as the Bar Harbor Savings Bank, making it one of the oldest community banks in the region. Over the past 138 years, the bank has navigated through various economic cycles, adapting and evolving to meet the changing needs of its customers. In 2024, the company reported total assets of $4.08 billion, a testament to its steady growth and strong market position.

The bank's success is rooted in its focus on community banking, offering a wide range of financial products and services to individuals, businesses, and municipalities across Maine, New Hampshire, and Vermont. From commercial and consumer lending to wealth management and trust services, Bar Harbor Bankshares has established itself as a trusted partner in its local markets.

A significant milestone in the company's history was its conversion from a mutual savings bank to a stock-based bank holding company structure in 1994. This transition allowed the bank to access capital markets and pursue growth opportunities, such as acquisitions and new product lines. In the early 2000s, Bar Harbor Bankshares faced challenges when the local economy in its primary market area was impacted by a downturn in the tourism industry. The company responded by diversifying its loan portfolio and expanding into new geographic markets, such as New Hampshire and Vermont, to reduce its reliance on the seasonal tourism industry.

In recent years, Bar Harbor Bankshares has successfully navigated the changing regulatory landscape in the banking industry by investing in compliance and risk management systems. This has enabled the company to remain compliant with evolving regulations while maintaining its focus on providing high-quality customer service and innovative financial solutions. The bank has also enhanced its digital banking capabilities to remain competitive in the ever-changing financial services industry.

Bar Harbor Bankshares operates as a regional community bank with over 450 dedicated professionals and more than 50 locations across Maine, New Hampshire, and Vermont. The bank offers a variety of financial products and services including lending, deposits, wealth management, and other banking services. The economies in these markets are based on tourism, healthcare, fishing, agriculture, and small businesses.

Financial Performance and Ratios

In the fiscal year 2024, Bar Harbor Bankshares reported net income of $43.54 million, or $2.84 per diluted share. This represents a slight decrease from the previous year's net income of $44.85 million, or $2.95 per diluted share. The company's return on assets (ROA) stood at 1.09% in 2024, compared to 1.14% in 2023, while its return on equity (ROE) was 9.75% in 2024, down from 10.88% in the prior year.

The bank's net interest margin, a key metric in the banking industry, was 3.15% in 2024, down from 3.29% in 2023. This decrease can be attributed to the rising interest rate environment, which has put pressure on the company's net interest income. However, Bar Harbor Bankshares has been proactive in managing its interest rate risk, as evidenced by its asset sensitivity, with a one-year net interest income sensitivity of +2.00% to a 200-basis-point increase in interest rates.

For the fiscal year 2024, Bar Harbor Bankshares reported annual revenue of $150.73 million and annual net income of $43.54 million. In the most recent quarter (Q4 2024), the company recorded revenue of $47.48 million and net income of $11.00 million. Year-over-year revenue growth was 2.2%, while net income grew by 10.1% compared to Q4 2023.

Loan Portfolio and Asset Quality

Bar Harbor Bankshares' loan portfolio has shown steady growth, with total loans increasing by 5.00% on an annualized basis in 2024. The bank's commercial loan portfolio, which accounts for 67.00% of the total loan book, grew by 9.00% annualized during the year, driven by strong demand in the real estate and rental and leasing, finance and insurance, and hospitality industries.

The company's asset quality remains strong, with a non-performing loans to total loans ratio of 0.22% as of December 31, 2024, up slightly from 0.18% at the end of 2023. The allowance for credit losses stood at 0.91% of total loans, down from 0.94% in the prior year, reflecting the bank's proactive risk management practices and the overall improvement in the credit environment.

Deposit and Funding Mix

Bar Harbor Bankshares has a well-diversified deposit base, with a funding mix that includes non-interest-bearing demand deposits, interest-bearing demand deposits, savings accounts, money market accounts, and time deposits. As of December 31, 2024, the bank's total deposits stood at $3.30 billion, up 4.00% on an annualized basis.

The company has also maintained a strong liquidity position, with a loan-to-deposit ratio of 96.00% at the end of 2024. This, coupled with its access to various funding sources, such as the Federal Home Loan Bank and the Federal Reserve Bank, provides Bar Harbor Bankshares with the flexibility to support its loan growth and meet its funding needs.

Wealth Management and Fee Income

Bar Harbor Bankshares' wealth management subsidiary, Bar Harbor Wealth Management (BHWM), has been a significant contributor to the company's non-interest income. As of December 31, 2024, BHWM had $2.80 billion in assets under management, up from $2.50 billion at the end of 2023. This growth, coupled with improved market performance, resulted in a 9.00% year-over-year increase in trust and investment management fee income.

The company's focus on fee-based services, including customer service fees, mortgage banking income, and customer derivative income, has also helped diversify its revenue streams and mitigate the impact of the low-interest-rate environment.

Acquisition and Growth Strategies

In 2025, Bar Harbor Bankshares announced the acquisition of Guaranty Bancorp, Inc., a community bank based in Woodsville, New Hampshire. This strategic move will expand the company's presence in the Upper Valley region of New Hampshire, complementing its existing footprint in the state.

The acquisition is expected to be approximately 30% accretive to Bar Harbor Bankshares' earnings per share, excluding the impact of one-time transaction costs. The combined entity will have over $4.5 billion in assets, strengthening the company's position as a leading community bank in Northern New England.

Risks and Challenges

Like any financial institution, Bar Harbor Bankshares faces a variety of risks, including interest rate risk, credit risk, and operational risk. The company's exposure to the hospitality industry, which accounts for 19.00% of its total loan portfolio, could present a challenge if economic conditions in its core markets were to deteriorate.

Additionally, the company's reliance on its wealth management operations for a significant portion of its non-interest income means that it is susceptible to volatility in the financial markets, which could impact the value of its assets under management and the corresponding fee income.

Financials

Bar Harbor Bankshares' financial performance has remained relatively stable, with slight decreases in net income and key profitability ratios compared to the previous year. The company's net income of $43.54 million in 2024 reflects its ability to generate consistent earnings despite challenges in the interest rate environment. The slight decline in ROA and ROE indicates some pressure on profitability, but these metrics remain at respectable levels for a community bank.

The banking industry in the Northeast region has seen modest loan and deposit growth in recent years, with a CAGR of 3-5% for loans and deposits. Bar Harbor Bankshares has outperformed the industry average, growing loans and deposits at 5% and 4% annualized, respectively, in 2024.

Liquidity

The bank's liquidity position remains strong, as evidenced by its loan-to-deposit ratio of 96.00% at the end of 2024. This ratio indicates that Bar Harbor Bankshares has a balanced approach to lending and deposit-taking, maintaining sufficient liquidity to meet its obligations and fund future growth. The company's access to various funding sources, including the Federal Home Loan Bank and the Federal Reserve Bank, further enhances its liquidity profile and provides additional flexibility in managing its balance sheet.

As of December 31, 2024, Bar Harbor Bankshares reported cash and cash equivalents of $72.16 million. The bank also has an unused secured line of credit with the Federal Reserve Bank of Boston of $105.60 million. The company's debt-to-equity ratio stood at 0.63, while its current ratio was 0.93 and quick ratio was 0.92, indicating a solid liquidity position.

Product Segments

Bar Harbor Bankshares operates through three main product segments: Commercial Lending, Residential Lending, and Wealth Management.

The Commercial Lending segment, which includes commercial real estate, commercial construction, commercial and industrial, and tax-exempt lending, accounted for 67% of the total loan portfolio as of December 31, 2024. Commercial real estate loans, both owner-occupied and non-owner-occupied, were the largest component at $1.66 billion, or 53% of total loans. Commercial construction loans stood at $131.6 million (4% of the portfolio), while commercial and industrial loans amounted to $319.8 million (10% of the total). Tax-exempt and other loans made up the remaining 2% of the commercial lending segment.

The Residential Lending segment, comprising one-to-four family residential mortgages and home equity loans and lines of credit, accounted for 31% of the total loan portfolio. Residential real estate loans were $888.3 million (28% of total loans), while home equity products amounted to $94.1 million (3% of the portfolio).

The Wealth Management segment, operated through Bar Harbor Wealth Management, provides trust, investment management, and other financial advisory services. As of December 31, 2024, this segment had $2.8 billion in assets under management. Trust and investment management fee income reached $15.7 million in 2024, a 10% increase year-over-year.

Geographic Markets

Bar Harbor Bankshares primarily operates in Maine, New Hampshire, and Vermont. The bank serves over 49,000 customers in Maine, 48,000 in New Hampshire, and 24,000 in Vermont. These markets are characterized by diverse economies based on tourism, healthcare, fishing, agriculture, and small businesses.

Conclusion

Bar Harbor Bankshares has demonstrated its ability to navigate through various economic conditions, delivering consistent financial performance and maintaining a strong market position in its core regions. The company's focus on community banking, fee-based services, and strategic acquisitions has positioned it well for future growth and success.

As the banking industry continues to evolve, Bar Harbor Bankshares' commitment to building lasting relationships with its customers, investing in technology, and prudent risk management will be crucial in ensuring its long-term viability and delivering value to its shareholders.