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What changed in BAR HARBOR BANKSHARES's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BAR HARBOR BANKSHARES's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+234 added−199 removedSource: 10-K (2024-03-11) vs 10-K (2023-03-14)

Top changes in BAR HARBOR BANKSHARES's 2023 10-K

234 paragraphs added · 199 removed · 170 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

66 edited+13 added−7 removed111 unchanged
Biggest changeThe following table presents the amortized cost and fair value of securities available for sale for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ ​ Amortized ​ ​ ​ ​ Amortized ​ ​ ​ (in thousands) Cost Fair Value Cost Fair Value US Government-sponsored enterprises ​ $ 249,838 ​ $ 215,027 ​ $ 237,283 ​ $ 236,117 US Government agency ​ 93,010 ​ 82,266 ​ 79,143 ​ 79,637 Private label ​ 64,056 ​ 60,154 ​ 64,691 ​ 64,695 Obligations of states and political subdivisions thereof ​ 121,939 ​ 107,737 ​ 140,585 ​ 141,776 Corporate bonds ​ 102,505 ​ 94,332 ​ 93,994 ​ 96,051 Total ​ $ 631,348 ​ $ 559,516 ​ $ 615,696 ​ $ 618,276 ​ 11 Table of Contents The following table presents the amortized cost and weighted average yields of securities available for sale at by maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Within ​ Over 1 Year ​ Over 5 Years ​ Over ​ ​ ​ (in thousands, except ratios) 1 Year to 5 Years ​ to 10 years ​ 10 Years ​ Total US Government-sponsored enterprises ​ $ 24 ​ $ 1,759 ​ $ 9,954 ​ $ 238,101 ​ $ 249,838 ​ US Government agency ​ ​ 1 ​ ​ 188 ​ ​ 1,223 ​ ​ 91,598 ​ ​ 93,010 ​ Private label ​ — — ​ ​ 27,209 ​ ​ 36,847 ​ ​ 64,056 ​ Obligations of states and political subdivisions thereof ​ 195 530 ​ ​ 3,894 ​ ​ 117,320 ​ ​ 121,939 ​ Corporate bonds ​ — 37,755 ​ ​ 59,750 ​ ​ 5,000 ​ ​ 102,505 ​ Total ​ $ 220 ​ $ 40,232 ​ $ 102,030 ​ $ 488,866 ​ $ 631,348 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Yield ​ ​ 5.39 % ​ 5.54 % ​ 3.93 % ​ 2.17 % ​ 2.66 % ​ DERIVATIVE FINANCIAL INSTRUMENTS Interest swap derivatives are utilized to minimize fluctuations in earnings and cash flows caused by interest rate volatility either in the form of interest rate swaps on wholesale funding and variable rate loans designated as cash flow hedges or partial interest rate hedges on securities accounted for as fair value hedges.
Biggest changeThe following table presents the amortized cost and fair value of securities available for sale for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ ​ Amortized ​ ​ ​ ​ Amortized ​ ​ ​ (in thousands) Cost Fair Value Cost Fair Value Debt Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Obligations of US Government-sponsored enterprises ​ $ 2,021 ​ $ 1,992 ​ $ 2,692 ​ $ 2,660 Mortgage-backed securities and collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ US Government-sponsored enterprises ​ ​ 223,602 ​ ​ 193,282 ​ ​ 249,838 ​ ​ 215,027 US Government agency ​ 85,005 ​ 74,213 ​ 90,318 ​ 79,606 Private label ​ 60,888 ​ 59,051 ​ 64,056 ​ 60,154 Obligations of states and political subdivisions thereof ​ 119,857 ​ 110,168 ​ 121,939 ​ 107,737 Corporate bonds ​ 105,552 ​ 95,868 ​ 102,505 ​ 94,332 Total ​ $ 596,925 ​ $ 534,574 ​ $ 631,348 ​ $ 559,516 ​ The following table presents the amortized cost and weighted average yields of securities available for sale at by maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ Within ​ Over 1 Year ​ Over 5 Years ​ Over ​ ​ ​ (in thousands, except ratios) 1 Year to 5 Years ​ to 10 years ​ 10 Years ​ Total Debt Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Obligations of US Government-sponsored enterprises ​ $ — ​ $ 83 ​ $ 513 ​ $ 1,425 ​ $ 2,021 ​ Mortgage-backed securities and collateralized mortgage obligations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ US Government-sponsored enterprises ​ ​ 634 ​ ​ 3,447 ​ ​ 17,225 ​ ​ 202,296 ​ ​ 223,602 ​ US Government agency ​ ​ 6 ​ ​ 240 ​ ​ 3,272 ​ ​ 81,487 ​ ​ 85,005 ​ Private label ​ — — ​ ​ 27,234 ​ ​ 33,654 ​ ​ 60,888 ​ Obligations of states and political subdivisions thereof ​ — 450 ​ ​ 2,127 ​ ​ 117,280 ​ ​ 119,857 ​ Corporate bonds ​ 3,038 49,939 ​ ​ 47,569 ​ ​ 5,006 ​ ​ 105,552 ​ Total ​ $ 3,678 ​ $ 54,159 ​ $ 97,940 ​ $ 441,148 ​ $ 596,925 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Yield ​ ​ 5.51 % ​ 5.67 % ​ 5.28 % ​ 2.68 % ​ 3.40 % ​ DERIVATIVE FINANCIAL INSTRUMENTS Interest swap derivatives are utilized to minimize fluctuations in earnings and cash flows caused by interest rate volatility either in the form of interest rate swaps on wholesale funding and variable rate loans designated as cash flow hedges or 11 Table of Contents partial interest rate hedges on securities accounted for as fair value hedges.
The Lake Sunapee market is a popular year-round recreation and resort area that includes both Lake Sunapee and Mount Sunapee and includes the towns of Claremont, New London, and Newport. Vermont We have 10 full-service branches in operation in Vermont. The branches are primarily located in central Vermont within the counties of Rutland, Windsor and Orange.
The Lake Sunapee market is a popular year-round recreation and resort area that includes both Lake Sunapee and Mount Sunapee and includes the towns of Claremont, New London, and Newport. Vermont We have 10 full-service branches in operation in Vermont. The branches are primarily located in central Vermont within Rutland, Windsor, and Orange counties.
Under this policy, the holding company is expected to commit resources to support its bank subsidiary, including at times when the holding company may not be in a financial position to provide it. As discussed below, the Company could be required to guarantee the capital plan of the Bank if it becomes undercapitalized for purposes of banking regulations.
Under this policy, the bank holding company is expected to commit resources to support its bank subsidiary, including at times when the bank holding company may not be in a financial position to provide it. As discussed below, the Company could be required to guarantee the capital plan of the Bank if it becomes undercapitalized for purposes of banking regulations.
Anti-tying Restrictions Bank holding companies and their affiliates are prohibited from tying the provision of services, such as extensions of credit, to other services offered by a holding company or its affiliates.
Anti-tying Restrictions Bank holding companies and their affiliates are prohibited from tying the provision of services, such as extensions of credit, to other services offered by a bank holding company or its affiliates.
BUSINESS FORWARD-LOOKING STATEMENTS CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS ​ Certain statements contained in this Annual Report on Form 10-K (the “Form 10-K” or “Annual Report”) that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
FORWARD-LOOKING STATEMENTS CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS ​ Certain statements contained in this Annual Report on Form 10-K (the “Form 10-K” or “Annual Report”) that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Popular vacation destinations in this region include Woodstock, Brandon, and Ludlow. 5 Table of Contents SUBSIDIARY ACTIVITIES Bar Harbor Bankshares is a legal entity separate and distinct from its first-tier bank subsidiary, Bar Harbor Bank & Trust, and its second-tier subsidiaries, Bar Harbor Wealth Management and Cottage Street Corporation.
Popular vacation destinations in this region include Woodstock, Brandon, and Ludlow. 5 Table of Contents SUBSIDIARY ACTIVITIES Bar Harbor Bankshares is a legal entity separate and distinct from its first-tier bank subsidiary, Bar Harbor Bank & Trust, and its second-tier subsidiaries, Bar Harbor Wealth Management (“BHWM”) and Cottage Street Corporation.
Failure to comply with these sanctions could have serious legal and reputational consequences. Guidance on Sound Compensation Policies The Dodd-Frank Act requires publicly traded companies to give shareholders a non-binding vote on executive compensation at least every three years (the so-called “say-on-pay vote”) and on so-called “golden parachute” payments in connection with approvals of mergers and acquisitions.
Failure to comply with these sanctions could have serious legal and reputational consequences. Guidance on Sound Compensation Policies The Dodd-Frank Act requires publicly traded companies to give shareholders a non-binding vote on named executive officer compensation at least every three years (the so-called “say-on-pay vote”) and on so-called “golden parachute” payments in connection with approvals of mergers and acquisitions.
For information regarding the regulatory capital ratios of the Bank and the Company as of December 31, 2021 and December 31, 2022, respectively, see the discussion under the section captioned Capital Resources included in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report and Note 12 – Shareholders’ Equity and Earnings Per Common Share of the Consolidated Financial Statements.
For information regarding the regulatory capital ratios of the Bank and the Company as of December 31, 2023 and December 31, 2022, respectively, see the discussion under the section captioned Capital Resources included in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report and Note 12 – Shareholders’ Equity and Earnings Per Common Share of the Consolidated Financial Statements.
The CFPB and the Federal Trade Commission (“FTC”) have extensive rulemaking authority under the FACT Act, and the Company and the Bank are subject to the rules that have been promulgated under the FACT Act, including rules requiring financial institutions with covered accounts (e.g. consumer bank accounts and loans) to develop, implement, and administer an identity theft protection program, as well as rules regarding limitations on affiliate marketing and implementation of programs to identify, detect and mitigate certain identity theft red flags.
The CFPB and the Federal Trade Commission (“FTC”) have extensive rulemaking authority under the FACT Act, and the 20 Table of Contents Company and the Bank are subject to the rules that have been promulgated under the FACT Act, including rules requiring financial institutions with covered accounts (e.g. consumer bank accounts and loans) to develop, implement, and administer an identity theft protection program, as well as rules regarding limitations on affiliate marketing and implementation of programs to identify, detect and mitigate certain identity theft red flags.
As a Maine-chartered financial institution, the Bank is subject to supervision, regular examination, and regulation by the Maine Bureau of Financial Institutions ("BFI") and the Federal Deposit Insurance Corporation ("FDIC") as its primary federal regulator and as its deposit insurer. The Bank’s deposits are insured by the FDIC in accordance with applicable federal laws and regulations.
As a Maine-chartered financial institution, the Bank is subject to supervision, regular examination, and regulation by the Maine Bureau of Financial Institutions ("BFI") and the FDIC as its primary federal regulator and as its deposit insurer. The Bank’s deposits are insured by the FDIC in accordance with applicable federal laws and regulations.
As of December 31, 2022, BHWM had an appropriate liquidation reserve, minimum capital in excess of statutory requirements, and all funds were held in accordance with prudent investor standards of NH RSA 564-B:9-902 and as required by NH RSA 383-C:5-502.
As of December 31, 2023, BHWM had an appropriate liquidation reserve, minimum capital in excess of statutory requirements, and all funds were held in accordance with prudent investor standards of NH RSA 564-B:9-902 and as required by NH RSA 383-C:5-502.
Infinex was formed by a group of member banks, and is one of the largest providers of third-party investment and insurance services to banks and their customers in New England. Through Infinex, the expertise, capabilities, and experience of a well-established third-party broker-dealer is obtained in a cost effective manner.
Osaic was formed by a group of member banks, and is one of the largest providers of third-party investment and insurance services to banks and their customers in New England. Through Osaic, the expertise, capabilities, and experience of a well-established third-party broker-dealer is obtained in a cost effective manner.
AVAILABLE INFORMATION Annual, quarterly, and current reports, proxy statements and other information are required to be filed with the Securities and Exchange Commission, or SEC. The SEC maintains a website at www.sec.gov that contains reports, proxy statements, and information statements, and other information regarding issuers that file electronically with the SEC.
AVAILABLE INFORMATION Annual, quarterly, and current reports, proxy statements and other information are required to be filed with the Securities and Exchange Commission (“SEC”). The SEC maintains a website at www.sec.gov that contains reports, proxy statements, and information statements, and other information regarding issuers that file electronically with the SEC.
In addition, the Fair Credit Reporting Act (“FCRA”), as amended by the Fair and Accurate 20 Table of Contents Credit Transactions Act of 2003 (the "FACT Act”), includes many provisions affecting the Company, Bank, and/or their affiliates, including provisions concerning obtaining consumer reports, furnishing information to consumer reporting agencies, maintaining a program to prevent identity theft, sharing of certain information among affiliated companies, and other provisions.
In addition, the Fair Credit Reporting Act (“FCRA”), as amended by the Fair and Accurate Credit Transactions Act of 2003 (the "FACT Act”), includes many provisions affecting the Company, Bank, and/or their affiliates, including provisions concerning obtaining consumer reports, furnishing information to consumer reporting agencies, maintaining a program to prevent identity theft, sharing of certain information among affiliated companies, and other provisions.
In addition to these efforts, we have provided charitable donations to more than 450 community organizations across the Northern New England states of Maine, New Hampshire, and Vermont. ​ REGULATION AND SUPERVISION As a bank holding company, the Company is regulated under the federal Bank Holding Company Act (“BHC Act”) and is subject to examination and supervision by the Federal Reserve Board.
In addition to these efforts, we have 14 Table of Contents provided charitable donations to more than 450 community organizations across the Northern New England states of Maine, New Hampshire, and Vermont. ​ REGULATION AND SUPERVISION As a bank holding company, the Company is regulated under the federal Bank Holding Company Act (“BHC Act”) and is subject to examination and supervision by the Federal Reserve Board.
However, if these processes fail to result in a performing loan, foreclosure or other proceedings will be initiated no later than the 120th day of a delinquency, as necessary, to minimize any potential loss. Management reports on delinquent loans and non-performing assets to the Company’s Board of Directors monthly.
However, if these processes fail to result in a performing loan, foreclosure or other proceedings will be initiated no later than the 120th day of a delinquency, as necessary, to minimize any potential loss. Management reports on delinquent loans and non-performing assets to the Company’s Board of Directors monthly through the Board Risk Committee.
Customer deposit fees are also earned from a variety of deposit accounts with various fee schedules and terms, which are designed 12 Table of Contents to meet the customer’s financial needs. Other depositor-related fee services provided to customers include ATMs, remote deposit capture, ACH origination, wire transfers, internet bill pay, and other cash management services.
Customer deposit fees are also earned from a variety of deposit accounts with various fee schedules and terms, which are designed to meet the customer’s financial needs. Other depositor-related fee services provided to customers include ATMs, remote deposit capture, ACH origination, wire transfers, internet bill pay, and other cash management services.
Our corporate goal is to be one of the top performing banks in New England, and our business model is centered on the following: ​ ● Employee and customer experience is the foundation of superior performance, which leads to significant financial benefit to shareholders ● Geography, heritage, and performance are key while remaining true to a community-focused culture ● Commitment to risk management while balancing growth and earnings ● Service and sales driven culture with a focus on core business growth ● Fee income is fundamental to our profitability through trust and treasury management services, customer derivatives, and secondary market mortgage sales ● Investment in processes, products, technology, training, leadership, and infrastructure ● Expansion of our brand and business to deepen market presence ● Opportunity and growth for existing employees while adding catalyst recruits across all levels ​ 4 Table of Contents Shown below is a profile and geographical footprint of the Bank as of December 31, 2022: We serve affluent and growing markets in Maine, New Hampshire, and Vermont with more than 50 thousand, 48 thousand, and 24 thousand customers, respectively in those states.
Our corporate goal is to be one of the most consistently high performing community banks in New England, and our business model is centered on the following: ​ ● Employee and customer experience is the foundation of superior performance, which leads to significant financial benefit to shareholders ● Geography, heritage, and performance are key while remaining true to a community-focused culture ● Commitment to risk management while balancing growth and earnings ● Service and sales driven culture with a focus on core business growth ● Fee income is fundamental to our profitability through trust and treasury management services, customer derivatives, and secondary market mortgage sales ● Investment in processes, products, technology, training, leadership, and infrastructure ● Expansion of our brand and business to deepen market presence ● Opportunity and growth for existing employees while adding catalyst recruits across all levels ​ 4 Table of Contents Shown below is a profile and geographical footprint of the Bank as of December 31, 2023: We serve affluent and growing markets in Maine, New Hampshire, and Vermont with more than 49 thousand, 48 thousand, and 24 thousand customers, respectively in those states.
The Federal Reserve Board has allowed by regulation some exceptions based on activities closely related to banking including: (i) making or servicing loans; (ii) performing certain data processing services; (iii) providing discount brokerage services; (iv) acting as fiduciary, investment or financial advisor; and (v) acquiring a savings and loan association whose direct and indirect activities are limited to those permitted for bank holding companies.
The Federal Reserve Board has allowed by regulation some exceptions based on activities closely related to banking including: (i) making or servicing loans; (ii) performing certain data processing services; (iii) providing discount brokerage services; (iv) acting as fiduciary, 15 Table of Contents investment or financial advisor; and (v) acquiring a savings and loan association whose direct and indirect activities are limited to those permitted for bank holding companies.
TRUST MANAGEMENT SERVICES The Bank has one wholly-owned subsidiary that provides a comprehensive array of fiduciary services including trust and estate administration, wealth advisory services, and investment management services to individuals, businesses, not-for-profit organizations, and municipalities. As a New Hampshire-chartered trust company, Bar Harbor Wealth Management is subject to New Hampshire laws applicable to trust companies and fiduciaries.
TRUST MANAGEMENT SERVICES The Bank has one wholly-owned subsidiary, BHWM, that provides a comprehensive array of fiduciary services including trust and estate administration, wealth advisory services, and investment management services to individuals, businesses, not-for-profit organizations, and municipalities. As a New Hampshire-chartered trust company, BHWM is subject to New Hampshire laws applicable to trust companies and fiduciaries.
Generally, Sections 23A and 23B: (1) limit the extent to which an insured depository or its subsidiaries may engage in covered transactions (a) with an affiliate (as defined in such sections) to an amount equal to 10% of such institution’s capital and surplus, and (b) with all affiliates, in the aggregate to an amount equal to 20% of such capital and surplus; and (2) require all transactions with an affiliate, whether or not covered transactions, to be on terms substantially the same, or at least as favorable to the institution or subsidiary, as the terms provided or that would be provided to a non-affiliate.
Generally, Sections 23A and 23B: (i) limit the extent to which an insured depository or its subsidiaries may engage in covered transactions (a) with an affiliate (as defined in such sections) to an amount equal to 10% of such institution’s capital and surplus, and (b) with all affiliates, in the aggregate to an amount equal to 20% of such capital and surplus; and (ii) require all transactions with an affiliate, whether or not covered transactions, to be on terms substantially the same, or at least as favorable to the institution or subsidiary, as the terms provided or that would be provided to a non-affiliate.
For purposes of Section 38 of the FDI Act, for an insured depository institution to be classified as well-capitalized, it must have a: 18 Table of Contents (i) total risk-based capital ratio of at least 10%, (ii) Tier 1 risk-based capital ratio of at least 8%, (iii) CET1 risk-based capital ratio of at least 6.5%, and (iv) leverage ratio of at least 5%.
For purposes of Section 38 of the FDI Act, for an insured depository institution to be classified as well-capitalized, it must have a: (i) total risk-based capital ratio of at least 10%, (ii) Tier 1 risk-based capital ratio of at least 8%, (iii) CET1 risk-based capital ratio of at least 6.5%, and (iv) leverage ratio of at least 5%.
For more than 135 years, the Bank has contributed to the economic health and vitality of the communities we serve, and we are proud that our employees are involved in the communities in which we live and work. Each year, Bank employees volunteer countless hours of their time on community projects and serve on nonprofit boards.
For more than 137 years, the Bank has contributed to the economic health and vitality of the communities we serve. We are proud that our employees are involved in the communities in which we live and work. Each year, colleagues volunteer countless hours of their time on community projects and serve on nonprofit boards.
Maine law requires the approval of the BFI for any dividend that would reduce a bank’s capital below prescribed limits. 16 Table of Contents ​ Source of Strength In accordance with Federal Reserve Board policy, the Company is expected to act as a source of financial and managerial strength to the Bank.
Maine law requires the approval of the BFI for any dividend that would reduce a bank’s capital below prescribed limits. ​ Source of Strength In accordance with Federal Reserve Board policy, the Company is expected to act as a source of financial and managerial strength to the Bank.
These portfolios include the categories commercial real estate, commercial and industrial, residential real estate and other consumer loans. Loan interest rates and other key loan terms are affected principally by our lending policy, asset/liability strategy, loan demand, competition, and the supply of money available for lending purposes.
These portfolios include the categories commercial real estate, commercial and industrial, residential real estate and other consumer loans. Loan interest rates and 6 Table of Contents other key loan terms are affected principally by our lending policy, asset/liability strategy, loan demand, competition, and the supply of money available for lending purposes.
Opportunities are provided for employees to take on challenging and intriguing work to advance their career goals and transition into new roles as the banking industry evolves.
Opportunities are provided for colleagues to take on challenging and intriguing work to advance their career goals and transition into new roles as the banking industry evolves.
Below is a summary of certain provisions of the BHC Act and 15 Table of Contents certain other laws and regulations applicable to the Company. These laws or regulations may be amended or changed by Congress or through other governmental or legal processes, which could have a material effect on the results of the Company.
Below is a summary of certain provisions of the BHC Act and certain other laws and regulations applicable to the Company. These laws or regulations may be amended or changed by Congress or through other governmental or legal processes, which could have a material effect on the results of the Company.
In order to be classified as “well-capitalized” under the relevant regulatory framework, the Company must, on a consolidated basis, have a: (i) total risk-based capital ratio of at least 10%, and (ii) Tier 1 risk-based capital ratio of at least 6%.
In order to be classified as “well-capitalized” under the relevant regulatory framework, the Company must, on a consolidated basis, have a: (i) total risk-based capital ratio of at least 10%, and 18 Table of Contents (ii) Tier 1 risk-based capital ratio of at least 6%.
These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: ​ ● deterioration in the financial performance and/or condition of borrowers of the Bank, including as a result of the negative impact of inflationary pressures on our customers and their businesses resulting in significant increases in credit losses and provisions for those losses; ● the possibility that our asset quality could decline or that we experience greater loan losses than anticipated; ● increased levels of other real estate owned, primarily as a result of foreclosures; ● the impact of liquidity needs on our results of operations and financial condition; ● competition from financial institutions and other financial service providers; ● the effect of interest rate increases on the cost of deposits; ● unanticipated weakness in loan demand or loan pricing; ● adverse conditions in the national or local economies including in our markets throughout Northern New England; ● changes in consumer spending, borrowing and saving habits; ● the effects of new outbreaks of COVID-19, including actions taken by governmental officials to curb the spread of the virus, and the resulting impact on general economic and financial market conditions and on the Company’s and our customers' business, results of operations, asset quality and financial condition; ● the effects of civil unrest, international hostilities or other geopolitical events, including the war in Ukraine; ● inflation, interest rate, market, and monetary fluctuations; ● lack of strategic growth opportunities or our failure to execute on available opportunities; ● the ability to grow and retain low-cost core deposits and retain large, uninsured deposits; ● our ability to effectively manage problem credits; ● our ability to successfully implement efficiency initiatives on time and with the results projected; ● our ability to successfully develop and market new products and technology; ● the impact of negative developments in the financial industry and United States and global capital and credit markets; ● our ability to retain executive officers and key employees and their customer and community relationships ; ● our ability to adapt to technological changes; ● risks associated with litigation, including reputational and financial risks and the applicability of insurance coverage; ● our ability to implement new technology effectively; ● the vulnerability of the Bank’s computer and information technology systems and networks, and the systems and networks of third parties with whom the Company or the Bank contract, to unauthorized access, computer viruses, 3 Table of Contents phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches and interruptions; ● changes in the reliability of our vendors, internal control systems or information systems; ● ongoing competition in the labor markets and increased employee turnover; ● the potential impact of climate change; ● the impact of pandemics, epidemics or any other health-related crisis; ● our ability to comply with various governmental and regulatory requirements applicable to financial institutions; ● changes in state and federal laws, rules, regulations, or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments; ● the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”); ● adverse impacts (including costs, fines, reputational harm, or other negative effects) from current or future litigation, regulatory examinations, or other legal and/or regulatory actions; and ● general competitive, economic, political, and market conditions, including economic conditions in the local markets where we operate. ​ Other factors not identified above, including those described under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Most of these factors are difficult to anticipate and are generally beyond our control.
These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: ​ ● deterioration in the financial performance and/or condition of borrowers of the Bank, including as a result of the negative impact of inflationary pressures on our customers and their businesses resulting in significant increases in credit losses and provisions for those losses; ● the possibility that our asset quality could decline or that we experience greater loan losses than anticipated; ● increased levels of other real estate owned, primarily as a result of foreclosures; ● the impact of liquidity needs on our results of operations and financial condition; ● competition from financial institutions and other financial service providers; ● the effect of interest rate increases on the cost of deposits; ● unanticipated weakness in loan demand or loan pricing; ● adverse conditions in the national or local economies including in our markets throughout Northern New England; ● changes in consumer spending, borrowing and saving habits; ● the emergence and effects related to a future pandemic, epidemic or outbreak of an infectious disease, including actions taken by governmental officials to curb the spread of such an infectious disease, and the resulting impact on general economic and financial market conditions and on the Company’s and our customers' business, results of operations, asset quality and financial condition; ● the effects of civil unrest, international hostilities or other geopolitical events, including the war in Ukraine and ongoing hostilities in the Middle East ; ● inflation, interest rate, market, and monetary fluctuations; ● lack of strategic growth opportunities or our failure to execute on available opportunities; ● the ability to grow and retain low-cost core deposits and retain large, uninsured deposits; ● our ability to effectively manage problem credits; ● our ability to successfully implement efficiency initiatives on time and with the results projected; ● our ability to successfully develop and market new products and technology; ● the impact of negative developments in the financial industry and United States and global capital and credit markets; ● our ability to retain executive officers and key employees and their customer and community relationships ; ● our ability to adapt to technological changes and to implement new technology effectively; ● the vulnerability of the Bank’s computer and information technology systems and networks, and the systems and networks of third parties with whom the Company or the Bank contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches and interruptions; 3 Table of Contents ● changes in the reliability of our vendors, internal control systems or information systems; ● ongoing competition in the labor markets and increased employee turnover; ● the potential impact of climate change; ● our ability to comply with various governmental and regulatory requirements applicable to financial institutions; ● changes in state and federal laws, rules, regulations, or policies applicable to banks or bank holding companies, including regulatory or legislative developments; ● the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”); ● adverse impacts (including costs, fines, reputational harm, or other negative effects) from and risks associated with current or future litigation, regulatory examinations, or other legal and/or regulatory actions; and ● general competitive, economic, political, and market conditions, including economic conditions in the local markets where we operate. ​ Other factors not identified above, including those described in the Annual Report under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Most of these factors are difficult to anticipate and are generally beyond our control.
The term “covered transaction” includes the making of loans, purchase of assets, issuance of a guarantee and other similar types of transactions. State Law Restrictions As a Maine corporation, the Company is subject to certain limitations and restrictions under applicable Maine corporate law.
The term “covered transaction” includes the making of loans, purchase of assets, issuance of a guarantee and other similar types of transactions. 17 Table of Contents State Law Restrictions As a Maine corporation, the Company is subject to certain limitations and restrictions under applicable Maine corporate law.
Having recently celebrated the 135th anniversary of the Bank’s founding, we remain focused on helping our customers achieve their goals as the key to the Bank’s success. With over 500 dedicated professionals and more than 50 locations, we are committed to servicing and building enduring relationships by providing a higher standard of banking.
Having recently celebrated the 137th anniversary of the Bank’s founding, we remain focused on helping our customers achieve their goals as the key to the Bank’s success. With over 450 dedicated professionals and more than 50 locations, we are committed to servicing and building enduring relationships by providing a higher standard of banking.
The BHC Act provides that, in the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a bank subsidiary will be assumed by the bankruptcy trustee and entitled to priority of payment.
The BHC Act provides that, in the event of 16 Table of Contents a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a bank subsidiary will be assumed by the bankruptcy trustee and entitled to priority of payment.
Transactions with Affiliates The holding company and the Bank are considered “affiliates” of each other under the Federal Reserve Act, and transactions between a bank and its affiliates are subject to certain restrictions, under Sections 23A and 23B of the Federal 17 Table of Contents Reserve Act and the Federal Reserve Board’s implementing Regulation W.
Transactions with Affiliates The holding company and the Bank are considered “affiliates” of each other under the Federal Reserve Act, and transactions between a bank and its affiliates are subject to certain restrictions, under Sections 23A and 23B of the Federal Reserve Act and the Federal Reserve Board’s implementing Regulation W.
Neither the Dodd-Frank Act nor the individual consumer financial protection laws prevent states from adopting stricter consumer protection standards. Brokered Deposit Restrictions Under the FDIC Improvement Act, banks may be restricted in their ability to accept brokered deposits, depending on their classification.
Neither the Dodd-Frank Act nor the individual consumer financial protection laws prevent states from adopting stricter consumer protection standards. 19 Table of Contents Brokered Deposit Restrictions Under the FDIC Improvement Act, banks may be restricted in their ability to accept brokered deposits, depending on their classification.
The federal banking agencies and the SEC most recently proposed such regulations in 2016, but the regulations have not yet been finalized. If the regulations are adopted in the form initially proposed, they will restrict the manner in which executive compensation is structured.
The 21 Table of Contents federal banking agencies and the SEC most recently proposed such regulations in 2016, but the regulations have not yet been finalized. If the regulations are adopted in the form initially proposed, they will restrict the manner in which executive compensation is structured.
These markets are home to many attractions, including Killington Mountain, Okemo Resort, and the city of Rutland.
These markets are home to many attractions, including Killington Mountain and the city of Rutland.
In addition, the Dodd-Frank Act requires publicly traded 21 Table of Contents companies to give shareholders a non-binding vote, at least once every six years, on how frequently to hold the “say on pay” vote.
In addition, the Dodd-Frank Act requires publicly traded companies to give shareholders a non-binding vote, at least once every six years, on how frequently to hold the “say on pay” vote.
Outside of trust services, they also provide 401(k) plan services, financial, estate and charitable planning, investment management, family office, municipal and tax services. The employees include credentialed investment professionals with extensive experience. At December 31, 2022 and 2021, trust management services had total assets under management of $2.3 billion and $2.5 billion, respectively.
Outside of trust services, they also provide 401(k) plan services, financial, estate and charitable planning, investment management, family office, municipal and tax services. The 13 Table of Contents employees include credentialed investment professionals with extensive experience. At December 31, 2023 and 2022, trust management services had total assets under management (“AUM”) of $2.5 billion and $2.3 billion, respectively.
The Federal Reserve Board requires the Company to file various reports and also may conduct an examination of the Company. The Company is also under the jurisdiction of the Securities and Exchange Commission ("SEC") and is subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Exchange Act.
The Federal Reserve Board requires the Company to file various reports and also may conduct an examination of the Company. The Company is also under the jurisdiction of the SEC and is subject to the disclosure and regulatory requirements of the Securities Act and the Exchange Act.
Abusive acts or practices are defined as those that materially interfere with a consumer’s ability to understand a term or condition of a consumer financial product or service or take unreasonable advantage of a consumer’s: (i) lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service, (ii) inability of the consumer to 19 Table of Contents protect its interests in selecting or using a consumer financial product or service, or (iii) reasonable reliance on a covered entity to act in the consumer’s interests.
Abusive acts or practices are defined as those that (i) materially interfere with a consumer’s ability to understand a term or condition of a consumer financial product or service; or (ii) take unreasonable advantage of: (a) a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service; (b) the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or (c) the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.
The following table presents the scheduled maturities of time deposits greater than $250 thousand at December 31, 2022: ​ ​ ​ ​ ​ ​ (in thousands, except ratios) ​ Amount Three months or less ​ $ 13,584 Over 3 months through 6 months ​ 7,626 Over 6 months through 12 months ​ 19,121 Over 12 months ​ 7,190 Total ​ $ 47,521 ​ BORROWING ACTIVITIES Borrowings may be utilized as an alternative source of funds which can be invested at a positive interest rate spread when additional capacity to fund loan demand is desired or when asset/liability management goals are met to diversify funding sources and enhance interest rate risk management. ​ Borrowings historically have included advances from the Federal Home Loan Bank of Boston ("FHLB"), securities sold under repurchase agreements, and a correspondent bank unsecured line of credit.
The following table presents the scheduled maturities of time deposits greater than $250 thousand at December 31, 2023: ​ ​ ​ ​ ​ ​ (in thousands, except ratios) ​ Amount Three months or less ​ $ 33,583 Over 3 months through 6 months ​ 31,522 Over 6 months through 12 months ​ 85,198 Over 12 months ​ 4,122 Total ​ $ 154,425 ​ BORROWING ACTIVITIES Borrowings may be utilized as an alternative source of funds which can be invested at a positive interest rate spread when additional capacity to fund loan demand is desired or when asset/liability management goals are met to diversify funding sources and enhance interest rate risk management. ​ Borrowings historically have included advances from the Federal Home Loan Bank of Boston ("FHLB"), securities sold under repurchase agreements, and a correspondent bank unsecured line of credit.
To offset this risk, an offsetting forward sale commitments may be entered into with national financial institutions to purchase the loans selected for sale under a best efforts or mandatory delivery contract accounted for as an economic hedge. ​ Floating-rate fundings are certain hedging transactions and certain products, such as floating-rate loans and mortgages, determine the applicable interest rate or payment amount by reference to a benchmark rate, such as the secured interbank overnight financing rate (“SOFR”), London Interbank Offered Rate (“LIBOR”), or to an index, basket or other financial metric.
To offset this risk, an offsetting forward sale commitment may be entered into with national financial institutions to purchase the loans selected for sale under a best efforts or mandatory delivery contract accounted for as an economic hedge. ​ Floating-rate fundings are certain hedging transactions and certain products, such as floating-rate loans and mortgages, determine the applicable interest rate or payment amount by reference to a benchmark rate, such as the secured interbank overnight financing rate (“SOFR”), or to an index, basket or other financial metric. ​ DEPOSIT ACTIVITIES A variety of deposit products to consumers, businesses and institutional customers with a wide range of interest rates and terms are offered.
As of December 31, 2022, BHWM’s total capital was $13.8 million and it had liquidation reserves of $503 thousand held in a money market account. BHWM also had operating reserves of $10.8 million held primarily at the Bank.
As of December 31, 2023, BHWM’s total capital was $16.8 million and it had liquidation reserves of $504 thousand held in a money market account. BHWM also had operating reserves of $15.7 million held primarily at the Bank.
All employment decisions are based on talent and potential for growth. Our ability to attract and retain diverse, top-tier talent while sustaining and deepening the current employees’ relationship is critical to maintaining a best-in-class customer and employee experience. The opportunity for personal and professional development is a critically important focus of ours and one that helps us retain top talent.
Our ability to attract and retain diverse, top-tier talent while sustaining and deepening the current relationships is critical to maintaining a best-in-class customer and colleague experience. The opportunity for personal and professional development is a critically important focus of ours and one that helps us retain top talent.
Loans that do not share risk characteristics are evaluated on an individual basis, generally comprised of larger non-accruing commercial loans and troubled debt restructurings (“TDRs”).
Loans that do not share risk characteristics are evaluated on an individual basis, generally larger non-accruing commercial loans.
HUMAN CAPITAL We are very fortunate to have a diverse, committed team throughout Maine, New Hampshire, and Vermont who are capable, determined and empowered to drive our company forward. As of December 31, 2022, we had 486 full time equivalent employee positions. None of our colleagues are represented by unions.
HUMAN CAPITAL We are very fortunate to have a diverse, committed team throughout Maine, New Hampshire, and Vermont who are capable, determined and empowered to drive our company forward. As of December 31, 2023, we had 462 full time equivalent employees. None of our colleagues are represented by unions. All employment decisions are based on talent and potential for growth.
The allowance for credit losses is discussed further in Note 1 – Summary of Significant Accounting Policies of the Consolidated Financial Statements. ​ 9 Table of Contents The following table presents an analysis of the allowance for credit losses for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands, except ratios) 2022 2021 Balance at beginning of year ​ $ 22,718 ​ $ 19,082 ​ Impact of CECL adoption ​ ​ — ​ ​ 5,228 ​ Charged-off loans: ​ ​ ​ Commercial construction ​ — ​ — ​ Commercial real estate owner occupied ​ — ​ (403) ​ Commercial real estate non-owner occupied ​ — ​ — ​ Tax exempt ​ ​ — ​ ​ — ​ Commercial and industrial ​ ​ (8) ​ ​ (59) ​ Residential real estate ​ ​ (84) ​ ​ (77) ​ Home equity ​ ​ (7) ​ ​ (154) ​ Consumer other ​ (267) ​ (205) ​ Total charged-off loans ​ (366) ​ (898) ​ Recoveries on charged-off loans: ​ ​ ​ Commercial construction ​ — ​ 18 ​ Commercial real estate owner occupied ​ 120 ​ 290 ​ Commercial real estate non-owner occupied ​ — ​ 4 ​ Tax exempt ​ ​ — ​ ​ — ​ Commercial and industrial ​ ​ 341 ​ ​ 77 ​ Residential real estate ​ ​ 106 ​ ​ 159 ​ Home equity ​ ​ 25 ​ ​ 51 ​ Consumer other ​ 12 ​ 9 ​ Total recoveries on charged-off loans ​ 604 ​ 608 ​ Net recoveries (charge-offs) ​ 238 ​ (290) ​ Provision for credit losses ​ 2,904 ​ (1,302) ​ Balance at end of year ​ $ 25,860 ​ $ 22,718 ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratios: ​ ​ ​ Net (recoveries) charge-offs/average loans ​ (0.01) % 0.01 % Recoveries/charged-off loans ​ 165 ​ 68 ​ Allowance for credit losses/total loans ​ 0.89 ​ 0.90 ​ Allowance for credit losses/non-accruing loans ​ 395 ​ 223 ​ ​ ​ 10 Table of Contents The following table presents year-end data for the approximate allocation of the allowance for credit losses by loan categories at the dates indicated.
The ACL is discussed further in Note 1 – Summary of Significant Accounting Policies of the Consolidated Financial Statements. ​ 9 Table of Contents The following table presents an analysis of the ACL for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands, except ratios) 2023 2022 Balance at beginning of year ​ $ 25,860 ​ $ 22,718 ​ Charged-off loans: ​ ​ ​ Commercial construction ​ — ​ — ​ Commercial real estate owner occupied ​ — ​ — ​ Commercial real estate non-owner occupied ​ — ​ — ​ Tax exempt ​ ​ — ​ ​ — ​ Commercial and industrial ​ ​ (664) ​ ​ (8) ​ Residential real estate ​ ​ (8) ​ ​ (84) ​ Home equity ​ ​ (12) ​ ​ (7) ​ Consumer other ​ (289) ​ (267) ​ Total charged-off loans ​ (973) ​ (366) ​ Recoveries on charged-off loans: ​ ​ ​ Commercial construction ​ — ​ — ​ Commercial real estate owner occupied ​ 142 ​ 120 ​ Commercial real estate non-owner occupied ​ — ​ — ​ Tax exempt ​ ​ — ​ ​ — ​ Commercial and industrial ​ ​ 149 ​ ​ 341 ​ Residential real estate ​ ​ 31 ​ ​ 106 ​ Home equity ​ ​ 6 ​ ​ 25 ​ Consumer other ​ 19 ​ 12 ​ Total recoveries on charged-off loans ​ 347 ​ 604 ​ Net (charge-offs) recoveries ​ (626) ​ 238 ​ Provision for credit losses ​ 2,908 ​ 2,904 ​ Balance at end of year ​ $ 28,142 ​ $ 25,860 ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratios: ​ ​ ​ Net charge-offs (recoveries)/average loans ​ 0.02 % (0.01) % Recoveries/charged-off loans ​ 36 ​ 165 ​ Allowance for credit losses/total loans ​ 0.94 ​ 0.89 ​ Allowance for credit losses/non-accruing loans ​ 509 ​ 395 ​ ​ The following table presents year-end data for the approximate allocation of the ACL by loan categories at the dates indicated.
Loan collections are managed by a combination of the related business units and the managed assets group, which focuses on larger, riskier collections. ​ ​ 8 Table of Contents The following table presents the problem assets for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands, except ratios) 2022 2021 Non-accruing loans: ​ ​ ​ Commercial construction ​ $ — ​ $ — ​ Commercial real estate owner occupied ​ 439 ​ 783 ​ Commercial real estate non-owner occupied ​ 550 ​ 622 ​ Tax exempt ​ ​ — ​ ​ — ​ Commercial and industrial ​ 207 ​ 677 ​ Residential real estate ​ ​ 4,385 ​ ​ 6,835 ​ Home equity ​ ​ 963 ​ ​ 1,269 ​ Consumer other ​ 5 ​ 5 ​ Total loans ​ ​ 6,549 ​ ​ 10,191 ​ Other real estate owned ​ — ​ — ​ Total non-performing assets ​ $ 6,549 ​ $ 10,191 ​ ​ ​ ​ ​ ​ ​ ​ ​ Accruing loans 90+ days past due ​ $ 216 ​ $ 134 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total non-performing loans/total loans ​ 0.23 % 0.40 % Total non-performing assets/total assets ​ 0.17 ​ 0.27 ​ ​ ​ Allowance for Credit Losses Our loan portfolio is regularly reviewed by management to evaluate the adequacy of the allowance for credit losses (“ACL”).
Loan collections are managed by a combination of the related business units and the managed assets group. ​ ​ 8 Table of Contents The following table presents the problem assets for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands, except ratios) 2023 2022 Non-accruing loans: ​ ​ ​ Commercial construction ​ $ — ​ $ — ​ Commercial real estate owner occupied ​ 103 ​ 439 ​ Commercial real estate non-owner occupied ​ 340 ​ 550 ​ Tax exempt ​ ​ — ​ ​ — ​ Commercial and industrial ​ 363 ​ 207 ​ Residential real estate ​ ​ 3,908 ​ ​ 4,385 ​ Home equity ​ ​ 809 ​ ​ 963 ​ Consumer other ​ 5 ​ 5 ​ Total loans ​ ​ 5,528 ​ ​ 6,549 ​ Other real estate owned ​ — ​ — ​ Total non-performing assets ​ $ 5,528 ​ $ 6,549 ​ ​ ​ ​ ​ ​ ​ ​ ​ Total non-performing loans/total loans ​ 0.18 % 0.23 % Total non-performing assets/total assets ​ 0.14 ​ 0.17 ​ ​ ​ Allowance for Credit Losses Our loan portfolio is regularly reviewed by management to evaluate the adequacy of the allowance for credit losses (“ACL”).
The allocation of the allowance to each category is not indicative of future losses and does not restrict the use of any of the allowance to absorb losses in any category. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ ​ ​ ​ ​ % Allocated to ​ ​ ​ ​ % Allocated to (in thousands, except ratios) Amount Total Loans Amount Total Loans Commercial construction $ 2,579 0.09 % $ 2,111 0.08 % Commercial real estate owner occupied ​ 2,189 0.08 ​ 2,751 0.11 ​ Commercial real estate non-owner occupied ​ ​ 9,341 0.32 ​ 5,650 0.23 ​ Tax exempt ​ ​ 93 ​ — ​ ​ 86 ​ 0.01 ​ Commercial and industrial ​ ​ 3,493 ​ 0.12 ​ ​ 5,369 ​ 0.21 ​ Residential real estate ​ ​ 7,274 ​ 0.25 ​ ​ 5,862 ​ 0.23 ​ Home equity ​ ​ 811 ​ 0.03 ​ ​ 814 ​ 0.03 ​ Consumer other ​ ​ 80 ​ — ​ ​ 75 ​ — ​ Total ​ $ 25,860 ​ 0.89 % $ 22,718 ​ 0.90 % ​ INVESTMENT SECURITIES ACTIVITIES The objective of the investment portfolio is to provide liquidity when loan demand is high, and to absorb excess funds when demand is low.
The allocation of the allowance to each category is not indicative of future losses and does not restrict the use of any of the allowance to absorb losses in any category. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ % Allocated to ​ ​ ​ ​ % Allocated to (in thousands, except ratios) Amount Total Loans Amount Total Loans Commercial construction $ 4,261 0.14 % $ 2,579 0.09 % Commercial real estate owner occupied ​ 2,863 0.10 ​ 2,189 0.08 ​ Commercial real estate non-owner occupied ​ ​ 9,443 0.31 ​ 9,341 0.32 ​ Tax exempt ​ ​ 119 ​ — ​ ​ 93 ​ — ​ Commercial and industrial ​ ​ 3,259 ​ 0.11 ​ ​ 3,493 ​ 0.12 ​ Residential real estate ​ ​ 7,352 ​ 0.25 ​ ​ 7,274 ​ 0.25 ​ Home equity ​ ​ 767 ​ 0.03 ​ ​ 811 ​ 0.03 ​ Consumer other ​ ​ 78 ​ — ​ ​ 80 ​ — ​ Total ​ $ 28,142 ​ 0.94 % $ 25,860 ​ 0.89 % ​ 10 Table of Contents INVESTMENT SECURITIES ACTIVITIES The objective of the investment portfolio is to provide liquidity when loan demand is high, and to absorb excess funds when demand is low.
We are committed to supporting, developing, and encouraging employees to engage with their communities. ​ We invest in our employees and continuously encourage them to build the skills they need to become an even more valuable team member.
We are keenly aware of our ability to be a positive impact in the communities we serve, as such we are committed to supporting, developing, and encouraging colleague engagement with their communities. ​ We invest in our employees and continuously encourage them to build the skills they need to become an even more valuable team member.
Further information about the composition of the loan portfolio is contained in Note 3 – Loans and Allowance for Credit Losses of the Consolidated Financial Statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 (in thousands, except ​ % of ​ ​ % of percentages) ​ Amount ​ Total ​ Amount ​ Total Commercial construction $ 117,577 4 % ​ $ 56,263 2 % Commercial real estate owner occupied ​ 244,814 8 ​ ​ 257,122 12 ​ Commercial real estate non-owner occupied ​ ​ 1,146,674 ​ 40 ​ ​ ​ 887,092 ​ 35 ​ Tax exempt ​ ​ 42,879 ​ 2 ​ ​ ​ 41,280 ​ 2 ​ Commercial and industrial ​ ​ 297,112 ​ 10 ​ ​ ​ 307,112 ​ 12 ​ Residential real estate ​ 954,968 33 ​ ​ 888,263 34 ​ Home equity ​ ​ 90,865 ​ 3 ​ ​ ​ 86,657 ​ 3 ​ Consumer other ​ 7,801 — ​ ​ 8,121 — ​ Total loans ​ $ 2,902,690 100 % ​ $ 2,531,910 100 % ​ Commercial Loan Exposure and Industries All commercial loans are assigned Standard Industrial Classification codes, North American Industry Classification System codes, and state and county codes.
Further information about the composition of the loan portfolio is contained in Note 3 – Loans and Allowance for Credit Losses of the Consolidated Financial Statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 (in thousands, except ​ % of ​ ​ % of percentages) ​ Amount ​ Total ​ Amount ​ Total Commercial construction $ 154,048 5 % ​ $ 117,577 4 % Commercial real estate owner occupied ​ 310,015 10 ​ ​ 244,814 8 ​ Commercial real estate non-owner occupied ​ ​ 1,144,566 ​ 38 ​ ​ ​ 1,146,674 ​ 40 ​ Tax exempt ​ ​ 43,688 ​ 2 ​ ​ ​ 42,879 ​ 2 ​ Commercial and industrial ​ ​ 310,883 ​ 10 ​ ​ ​ 297,112 ​ 10 ​ Residential real estate ​ 940,334 32 ​ ​ 954,968 33 ​ Home equity ​ ​ 87,683 ​ 3 ​ ​ ​ 90,865 ​ 3 ​ Consumer other ​ 7,832 — ​ ​ 7,801 — ​ Total loans ​ $ 2,999,049 100 % ​ $ 2,902,690 100 % ​ Commercial Loan Exposure and Industries All commercial loans are assigned Standard Industrial Classification codes, North American Industry Classification System codes, and state and county codes.
Deposits are solicited primarily in the market area, excluding brokered deposits. Competitive pricing policies, marketing and customer service to attract and retain deposits are relied upon.
Deposits consist of interest-bearing and non-interest-bearing demand accounts, savings accounts, money market deposit accounts, and certificates of deposit. Deposits are solicited primarily in the market area, excluding brokered deposits. Competitive pricing policies, marketing and customer service to attract and retain deposits are relied upon.
We also contribute to employee-owned health savings accounts and have a robust wellness program to encourage employees to stay fit physically and mentally. The retirement savings programs include a 401(k) plan with a generous Company match that vests immediately, along with an Employee Stock Purchase Plan that allows employees to be owners of the Company at a reduced price.
The retirement savings programs include a 401(k) plan with a generous company match that vests immediately, along with an Employee Stock Purchase Plan (ESPP) that allows colleagues to be owners of the company at a reduced price.
The following table presents the average balances and weighted average rates for deposits for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 (in thousands, except ratios) Average Balance Percent of Total Weighted Average Rate Average Balance Percent of Total Weighted Average Rate ​ Demand ​ $ 679,081 22 % — % $ 668,379 22 % — % NOW ​ 907,123 30 0.16 ​ 949,485 31 0.11 ​ Savings ​ 657,591 21 0.10 ​ 629,152 20 0.09 ​ Money market ​ 466,426 15 0.63 ​ 390,150 13 0.12 ​ Time deposits ​ 366,404 12 0.61 ​ 424,899 14 1.51 ​ Total ​ $ 3,076,625 100 % 0.24 % $ 3,062,065 100 % 0.65 % ​ Estimated uninsured non-maturity deposits were $328.5 million as of December 31, 2022 and $352.9 million as of December 31, 2021.
The following table presents the average balances and weighted average rates for deposits for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 (in thousands, except ratios) Average Balance Percent of Total Weighted Average Rate Average Balance Percent of Total Weighted Average Rate ​ Demand ​ $ 618,685 20 % — % $ 679,081 22 % — % NOW ​ 900,035 30 0.98 ​ 907,123 30 0.16 ​ Savings ​ 594,959 20 0.39 ​ 657,591 21 0.10 ​ Money market ​ 406,759 13 2.48 ​ 466,426 15 0.63 ​ Time deposits ​ 532,981 17 3.19 ​ 366,404 12 0.61 ​ Total ​ $ 3,053,419 100 % 1.25 % $ 3,076,625 100 % 0.24 % ​ 12 Table of Contents Estimated uninsured non-maturity deposits were $525.3 million as of December 31, 2023 and $617.7 million as of December 31, 2022.
Bar Harbor Wealth Management, a New Hampshire chartered non-depository trust company and an indirect subsidiary of the Bank (“BHWM”), is subject to supervision, regular examination, and regulation by the New Hampshire Banking Department.
The prior approval of the FDIC is required, and the prior approval of the BFI may be required, for the Bank to establish or relocate a branch office. BHWM, a New Hampshire chartered non-depository trust company and an indirect subsidiary of the Bank, is subject to supervision, regular examination, and regulation by the New Hampshire Banking Department.
Estimated uninsured time deposits were $13.8 million and $24.6 million as of December 31, 2022 and 2021, respectively.
Estimated uninsured time deposits were $60.0 million and $27.9 million as of December 31, 2023 and 2022, respectively.
The plan encourages employees to think and make decisions like shareholders while mitigating risk-taking behavior. ​ 14 Table of Contents Providing good work-life balance choices results in our employees’ making more meaningful contributions in the workplace. We have a Paid Time Off policy to support employees’ time management and paid volunteer time to support this.
ESPP provides a benefit to our colleagues while also encouraging them to think and make decisions like shareholders. ​ Providing work-life balance choices results in our colleagues’ making more meaningful contributions in the workplace. We have a generous paid time off program as well as paid volunteer time to support this.
Loans originated are held for investment except for certain residential mortgages that are underwritten with the intention to be sold in the secondary mortgage market. 6 Table of Contents Loan Portfolio Analysis The following table sets forth the year-end composition of the loan portfolio in dollar amounts and as a percentage of the portfolio for the years indicated.
Loan Portfolio Analysis The following table sets forth the year-end composition of the loan portfolio in dollar amounts and as a percentage of the portfolio for the years indicated.
The following table summarizes the major industries of the commercial loan portfolio as of December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 (in thousands, except percentages) Loans Total Exposure ​ % of Total Portfolio ​ Loans ​ Total Exposure ​ % of Total Portfolio Real Estate and Rental and Leasing ​ $ 946,591 ​ $ 1,212,986 ​ 51 % ​ $ 707,444 ​ $ 815,070 ​ 46 % Accommodation and Food Services ​ 334,053 ​ ​ 347,023 ​ 18 ​ ​ ​ 281,122 ​ ​ 294,971 ​ 18 ​ Health Care and Social Assistance ​ 105,634 ​ ​ 145,361 ​ 6 ​ ​ ​ 99,128 ​ ​ 138,008 ​ 6 ​ Retail Trade ​ 61,265 ​ ​ 79,401 ​ 3 ​ ​ ​ 58,647 ​ ​ 79,109 ​ 4 ​ Agriculture, Forestry, Fishing and Hunting ​ ​ 60,815 ​ ​ 68,040 ​ 3 ​ ​ ​ 52,957 ​ ​ 61,157 ​ 3 ​ Wholesale Trade ​ ​ 55,546 ​ ​ 83,696 ​ 3 ​ ​ ​ 24,179 ​ ​ 38,098 ​ 2 ​ Educational Services ​ ​ 49,162 ​ ​ 61,526 ​ 3 ​ ​ ​ 52,921 ​ ​ 65,524 ​ 3 ​ Manufacturing ​ ​ 44,672 ​ ​ 66,083 ​ 2 ​ ​ ​ 50,752 ​ ​ 70,742 ​ 3 ​ Public Administration ​ ​ 33,769 ​ ​ 39,357 ​ 2 ​ ​ ​ 32,576 ​ ​ 35,189 ​ 2 ​ Finance and Insurance ​ ​ 33,148 ​ ​ 52,551 ​ 2 ​ ​ ​ 54,462 ​ ​ 83,153 ​ 4 ​ Construction ​ ​ 29,448 ​ ​ 49,450 ​ 2 ​ ​ ​ 32,451 ​ ​ 58,394 ​ 2 ​ Arts, Entertainment, and Recreation ​ ​ 29,300 ​ ​ 31,898 ​ 2 ​ ​ ​ 34,122 ​ ​ 36,854 ​ 2 ​ Transportation and Warehousing ​ ​ 14,087 ​ ​ 16,051 ​ 1 ​ ​ ​ 14,569 ​ ​ 17,656 ​ 1 ​ All other ​ ​ 51,566 ​ ​ 81,045 ​ 2 ​ ​ ​ 53,539 ​ ​ 73,417 ​ 4 ​ Total commercial loans ​ $ 1,849,056 ​ $ 2,334,468 ​ 100 % ​ $ 1,548,869 ​ $ 1,867,342 ​ 100 % ​ 7 Table of Contents Maturity and Sensitivity of the Loan Portfolio The following table shows contractual maturities of selected loan categories at December 31, 2022.
The following table summarizes the major industries of the commercial loan portfolio as of December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 (in thousands, except percentages) Loans Total Exposure ​ % of Total Portfolio ​ Loans ​ Total Exposure ​ % of Total Commerical Portfolio Real Estate and Rental and Leasing ​ $ 1,018,035 ​ $ 1,196,273 ​ 52 % ​ $ 946,591 ​ $ 1,212,986 ​ 51 % Accommodation and Food Services ​ 334,838 ​ ​ 347,588 ​ 17 ​ ​ ​ 334,053 ​ ​ 347,023 ​ 18 ​ Health Care and Social Assistance ​ 99,601 ​ ​ 109,771 ​ 5 ​ ​ ​ 105,634 ​ ​ 145,361 ​ 6 ​ Retail Trade ​ 78,036 ​ ​ 94,074 ​ 4 ​ ​ ​ 61,265 ​ ​ 79,401 ​ 3 ​ Agriculture, Forestry, Fishing and Hunting ​ ​ 55,214 ​ ​ 63,052 ​ 3 ​ ​ ​ 60,815 ​ ​ 68,040 ​ 3 ​ Wholesale Trade ​ ​ 63,088 ​ ​ 110,703 ​ 3 ​ ​ ​ 55,546 ​ ​ 83,696 ​ 3 ​ Educational Services ​ ​ 51,512 ​ ​ 63,731 ​ 3 ​ ​ ​ 49,162 ​ ​ 61,526 ​ 3 ​ Finance and Insurance ​ ​ 59,753 ​ ​ 103,444 ​ 3 ​ ​ ​ 33,148 ​ ​ 52,551 ​ 2 ​ Manufacturing ​ ​ 44,277 ​ ​ 67,221 ​ 2 ​ ​ ​ 44,672 ​ ​ 66,083 ​ 2 ​ Arts, Entertainment, and Recreation ​ ​ 30,914 ​ ​ 33,441 ​ 2 ​ ​ ​ 29,300 ​ ​ 31,898 ​ 2 ​ Construction ​ ​ 23,086 ​ ​ 44,518 ​ 1 ​ ​ ​ 29,448 ​ ​ 49,450 ​ 2 ​ Public Administration ​ ​ 35,995 ​ ​ 40,669 ​ — ​ ​ ​ 33,769 ​ ​ 39,357 ​ 2 ​ Transportation and Warehousing ​ ​ 14,424 ​ ​ 22,139 ​ — ​ ​ ​ 14,087 ​ ​ 16,051 ​ 1 ​ All other ​ ​ 54,427 ​ ​ 79,691 ​ 5 ​ ​ ​ 51,566 ​ ​ 81,045 ​ 2 ​ Total commercial loans ​ $ 1,963,200 ​ $ 2,376,315 ​ 100 % ​ $ 1,849,056 ​ $ 2,334,468 ​ 100 % 7 Table of Contents Within our non-owner-occupied commercial real estate portfolio (considered “Commercial construction” and “Commercial Real Estate Non-Owner Occupied” above), the top 10 loans represent approximately 13.9% of total commercial outstanding.
These products are not deposits, are not insured by the FDIC or any other government agency, are not guaranteed by the Bank or any affiliate, and may be subject to investment risk, including possible loss of principal. 13 Table of Contents The Bank is a branch office of Infinex Investments, Inc., (“Infinex”) a full-service third-party broker-dealer, conducting business under the assumed business name “Bar Harbor Financial Services.” Infinex is an independent registered broker-dealer and is not affiliated with the Company or its subsidiaries.
Bar Harbor Financial Services is a branch office of Osaic Institutions, Inc., (“Osaic”) a full-service third-party broker-dealer, conducting business under the assumed business name “Bar Harbor Financial Services.” Osaic is an independent registered broker-dealer and is not affiliated with the Company or its subsidiaries.
The amount of long-term fixed-rate lending and adjustable-rate loan products is monitored according to the Bank’s interest rate management policy.
The amount of long-term fixed-rate lending and adjustable-rate lending is monitored according to the Bank’s interest rate management policy. Loans originated are held for investment except for certain residential mortgages that are underwritten with the intention to be sold in the secondary mortgage market.
Compensation programs align with our Pay for Performance philosophy and guarantees that every employee knows their contribution to the success of the organization. We participate in several market studies, including peers in the banking industry, to ensure competitive pay, benefits, and programs are offered to validate that we are an employer of choice.
We participate in several market studies, including peers in the banking industry, to ensure competitive pay, benefits, and programs. Annual merit increases align with market data and performance to ensure fair and equitable practices are adhered to. Incentive programs are a meaningful component of colleague compensation and are tied to both company and individual performance.
As part of the commitment to equal employment opportunities, we seek to ensure affirmative action provides equality of opportunity in all aspects of employment. ​ Serving the needs of all of the members of our communities also remains an important part of our commitment and strategy.
Our commitment to racial and social equity is ingrained in our guiding principles and allows us to work together to foster an inclusive and equitable work environment. ​ Serving the needs of all of the members of our communities also remains an important part of our commitment and strategy.
The flexibility of these various FWAs allows employees to manage their work-life needs while continuing to deliver stellar results in the workplace. ​ We value a diverse workforce to ensure different perspectives and ideas are considered and are a part of operations.
In addition, we offer Flexible Work Arrangements, which offers options such as fully remote, partially remote, condensed workweeks, and flexible hours. The flexibility of these various arrangements allows colleagues to manage their work-life needs while continuing to deliver stellar results in the workplace. ​ Embracing unique perspectives and supporting inclusivity and diversity are at the core of who we are.
It also offers a line of life insurance, annuity, and retirement products, as well as financial planning services.
It also offers a line of life insurance, annuity, and retirement products, as well as financial planning services. These products are not deposits, are not insured by the Federal Deposit Insurance Corporation (“FDIC”) or any other government agency, are not guaranteed by the Bank or any affiliate, and may be subject to investment risk, including possible loss of principal.
When recognized employees receive points, they can then choose to redeem them for rewards that matter most to them including gift cards, logo items, and concert tickets. ​ Our commitment to an employee’s health and well-being is evidenced through comprehensive benefit packages, including medical, dental, vision, life and disability offerings, and several other voluntary programs.
To complement these programs, colleagues are also able to provide and receive recognition through our online portal, Bar Harbor Connect. When recognized colleagues receive points that they can then redeem for rewards of their choice such as gift cards, logo items, and concert tickets. ​ Beyond compensation, our total rewards program underscores our commitment to colleague’s health and well-being.
Removed
The contractual maturities do not reflect premiums, discounts, deferred costs, or prepayments. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Within ​ 1 to 5 ​ 5 to 15 ​ After ​ ​ ​ ​ ​ ​ (in thousands, except percentages) ​ ​ 1 year Years Years ​ 15 Years Total ​ % of Total Contractual Maturity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial construction $ 4,327 ​ $ 57,690 ​ $ 55,527 ​ $ 33 ​ $ 117,577 ​ 4 % Commercial real estate owner occupied ​ 10,311 ​ 29,260 ​ 191,355 ​ 13,888 ​ 244,814 ​ 8 ​ Commercial real estate non-owner occupied ​ ​ 17,050 ​ 488,200 ​ 623,187 ​ 18,237 ​ 1,146,674 ​ 40 ​ Tax exempt ​ ​ 2,322 ​ 6,765 ​ 23,263 ​ 10,529 ​ 42,879 ​ 2 ​ Commercial and industrial ​ ​ 50,918 ​ ​ 144,850 ​ ​ 52,042 ​ ​ 49,302 ​ ​ 297,112 ​ 10 ​ Residential real estate ​ ​ 3,183 ​ ​ 27,602 ​ ​ 169,119 ​ ​ 755,064 ​ ​ 954,968 ​ 33 ​ Home equity ​ ​ 3,874 ​ ​ 8,644 ​ ​ 9,967 ​ ​ 68,380 ​ ​ 90,865 ​ 3 ​ Consumer other ​ ​ 1,954 ​ ​ 5,199 ​ ​ 443 ​ ​ 205 ​ ​ 7,801 ​ — ​ Total loans ​ $ 93,939 ​ $ 768,210 ​ $ 1,124,903 ​ $ 915,638 ​ $ 2,902,690 ​ 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Repricing Date ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed-rate ​ ​ 19,775 ​ ​ 441,034 ​ ​ 576,017 ​ ​ 632,987 ​ ​ 1,669,813 ​ 58 ​ Floating or adjustable rate ​ ​ 837,945 ​ ​ 264,503 ​ ​ 130,429 ​ ​ — ​ ​ 1,232,877 ​ 42 ​ Total loans ​ $ 857,720 ​ $ 705,537 ​ $ 706,446 ​ $ 632,987 ​ $ 2,902,690 ​ 100 % ​ Problem Assets There is a preference to work with borrowers to resolve problems rather than proceeding to foreclosure.
Added
Our Code of Ethics for Senior Financial Officers, Code of Conduct and Business Ethics, Securities and Insider Trading Policy and the charters of our Board of Directors’ audit committee, governance committee, and compensation and human resources committee are also available on our website (www.barharbor.bank) and in print free of charge to any shareholder who requests them.
Removed
We continue to transition loans with LIBOR based interest rates to other benchmark rates due to recent national, international, and other regulatory rate reform guidance.
Added
Requests should be sent by mail to our corporate secretary at our executive office. We intend to disclose on our website any amendments or waivers to our Code of Ethics for Senior Financial Officers or Code of Conduct and Business Ethics that are required to be disclosed pursuant to Item 5.05 of Form 8-K.
Removed
The transition of those variable rate loans is expected to be complete by June 30, 2023. ​ DEPOSIT ACTIVITIES A variety of deposit products to consumers, businesses and institutional customers with a wide range of interest rates and terms are offered. Deposits consist of interest-bearing and non-interest-bearing demand accounts, savings accounts, money market deposit accounts, and certificates of deposit.
Added
The average loan size in the CRE segment is approximately $2.0 million. Delinquencies within the segment were nominal at less than 0.01% as a percentage of the total segment as of December 31, 2023. Maximum loan-to-value ratios at origination are governed by established policy and regulatory guidelines.
Removed
Developing programs aligned with employee skills and capabilities is critical to our organization’s success and creates robust development opportunities supported by leaders at every level. ​ Attracting, retaining, and rewarding high-performing talent is key to our success. Our total rewards program is designed to recognize and reward top talent and keep employees engaged effectively.
Added
The weighted average loan-to-value ratio for the top 10 loans within the non-owner occupied segment was 61.54% as of December 31, 2023. The top 10 office loans represent approximately 9% of the total commercial real estate segment exposure inclusive of unfunded commitments and 10% of the outstanding balances.
Removed
Annual merit increases align with market data and performance to ensure fair and equitable practices are adhered to. To complement these programs, employees are also able to provide and receive recognition through our online portal, Bar Harbor Connect.
Added
The weighted average loan-to-value for the top ten loans within the office segment is 60.37%.
Removed
In 2022, we continued to offer Flexible Work Arrangements (“FWA”), which includes programs as fully remote, partially remote, condensed workweeks, and flexible hours.
Added
Our total commercial portfolio has a pass rating of 93%, included in the commercial portfolio are office loans of $245.8 million which have a pass rating of 86%. ​ Maturity and Sensitivity of the Loan Portfolio The following table shows contractual maturities of selected loan categories at December 31, 2023.
Removed
The prior approval of the FDIC is required, and the prior approval of the BFI may be required, for the Bank to establish or relocate a branch office.
Added
The contractual maturities do not reflect premiums, discounts, deferred costs, or prepayments. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Within ​ 1 to 5 ​ 5 to 15 ​ After ​ ​ ​ ​ ​ ​ (in thousands, except percentages) ​ ​ 1 year Years Years ​ 15 Years Total ​ % of Total Contractual Maturity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial construction $ 6,850 ​ $ 72,019 ​ $ 71,924 ​ $ 3,255 ​ $ 154,048 ​ 5 % Commercial real estate owner occupied ​ 8,979 ​ 79,518 ​ 204,259 ​ 17,259 ​ 310,015 ​ 10 ​ Commercial real estate non-owner occupied ​ ​ 73,288 ​ 473,200 ​ 584,110 ​ 13,968 ​ 1,144,566 ​ 38 ​ Tax exempt ​ ​ 5,663 ​ 6,575 ​ 22,523 ​ 8,927 ​ 43,688 ​ 2 ​ Commercial and industrial ​ ​ 69,179 ​ ​ 116,484 ​ ​ 79,481 ​ ​ 45,739 ​ ​ 310,883 ​ 10 ​ Residential real estate ​ ​ 1,294 ​ ​ 33,448 ​ ​ 144,362 ​ ​ 761,230 ​ ​ 940,334 ​ 32 ​ Home equity ​ ​ 2,512 ​ ​ 5,438 ​ ​ 11,050 ​ ​ 68,683 ​ ​ 87,683 ​ 3 ​ Consumer other ​ ​ 1,791 ​ ​ 5,446 ​ ​ 430 ​ ​ 165 ​ ​ 7,832 ​ — ​ Total loans ​ $ 169,556 ​ $ 792,128 ​ $ 1,118,139 ​ $ 919,226 ​ $ 2,999,049 ​ 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Repricing Date ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed-rate ​ ​ 99,517 ​ ​ 359,198 ​ ​ 579,268 ​ ​ 637,546 ​ ​ 1,675,529 ​ 56 ​ Floating or adjustable rate ​ ​ 70,039 ​ ​ 432,930 ​ ​ 538,871 ​ ​ 281,680 ​ ​ 1,323,520 ​ 44 ​ Total loans ​ $ 169,556 ​ $ 792,128 ​ $ 1,118,139 ​ $ 919,226 ​ $ 2,999,049 ​ 100 % ​ Problem Assets There is a preference to work with borrowers to resolve problems rather than proceeding to foreclosure.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

45 edited+30 added−4 removed89 unchanged
Biggest changeOur ability to manage liquidity will be severely constrained if unable to maintain access to funding or if adequate financing is not available to accommodate future growth at acceptable costs. In addition, if we need to rely heavily on more expensive funding sources to support future growth, revenues may not increase proportionately to cover costs.
Biggest changeThese sources include FHLB and the Federal Reserve Bank (“FRB”) advances, proceeds from the sale of securities and loans and liquidity resources at the holding company. Our ability to manage liquidity will be severely constrained if unable to maintain access to funding or if adequate financing is not available to accommodate future growth at acceptable costs.
Funding costs may increase if deposits are lost and are forced to replace them with more expensive sources of funding, if customers shift their deposits into higher cost products or if we need to raise interest rates to avoid losing deposits. Higher funding costs reduce our net interest income, net interest margin, and net income.
Funding costs may increase if deposits are lost and we are forced to replace them with more expensive sources of funding, if customers shift their deposits into higher cost products or if we need to raise interest rates to avoid losing deposits. Higher funding costs reduce our net interest income, net interest margin, and net income.
Moreover, while commercial real estate values have stabilized as demand has returned to pre-pandemic levels in several markets; the post-pandemic outlook for commercial real estate demand remains dependent on the broader economic environment and, specifically, how major subsectors respond to a rising interest rate environment, the reduction of office utilization due to the impact of hybrid working patterns, greater flexibility for work location, and higher prices for commodities, goods and services.
Moreover, while certain commercial real estate values have stabilized as demand has returned to pre-pandemic levels in several markets; the post-pandemic outlook for commercial real estate demand remains dependent on the broader economic environment and, specifically, how major subsectors respond to a rising interest rate environment, the reduction of office utilization due to the impact of hybrid working patterns, greater flexibility for work location, and higher prices for commodities, goods and services.
A decline in economic conditions, such as recession, economic downturn, and/or inflationary conditions, changes in domestic and foreign economic conditions, volatility in financial markets, and general trends in business and finance, all of which are beyond our control, could adversely impact the market value of wealth management assets under management, which are primarily marketable securities, and the fee revenues derived from the management of these assets. ​ Strategic and External Risks ​ Changes and instability in economic conditions, geopolitical matters and financial markets, including a contraction of economic activity, could adversely impact our business, results of operations and financial condition.
A decline in economic conditions, such as recession, economic downturn, and/or inflationary conditions, changes in domestic and foreign economic conditions, volatility in financial markets, and general trends in business and finance, all of which are beyond our control, could adversely impact the market value of wealth management AUM, which are primarily marketable securities, and the fee revenues derived from the management of these assets. ​ Strategic and External Risks ​ Changes and instability in economic conditions, geopolitical matters and financial markets, including a contraction of economic activity, could adversely impact our business, results of operations and financial condition.
If this were to happen, the value of our securities could decline significantly, and you could lose all or part of your investment. ​ Credit Risks ​ Deterioration in local economies or real estate market may adversely affect our financial performance, as our borrowers’ ability to repay loans and the value of the collateral securing the loans may decline.
If this were to happen, the value of our securities could decline significantly, and you could lose all or part of your investment. ​ Credit Risks ​ Deterioration in local economies or real estate markets may adversely affect our financial performance, as our borrowers’ ability to repay loans and the value of the collateral securing the loans may decline.
As of December 31, 2022, approximately 64% of our loan portfolio consisted of commercial real estate, commercial and industrial and construction loans. Commercial loan portfolio concentration generally exposes lenders to greater risk of delinquency and loss than residential real estate loans because repayment of the loans often depends on the successful operation and income streams from the property.
As of December 31, 2023, approximately 64% of our loan portfolio consisted of commercial real estate, commercial and industrial and construction loans. Commercial loan portfolio concentration generally exposes lenders to greater risk of delinquency and loss than residential real estate loans because repayment of the loans often depends on the successful operation and income streams from the property.
While to date we have not experienced a significant compromise, significant data loss or material financial losses related to cybersecurity attacks, our systems and those of our customers and third-party service providers, are under constant threat and may experience a significant event in the future.
While to date we believe that we have not experienced a significant compromise, significant data loss or material financial losses related to cybersecurity attacks, our systems and those of our customers and third-party service providers, are under constant threat and may experience a significant event in the future.
We may be adversely affected by the soundness of other financial institutions. Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Bank and non-bank financial services companies are interrelated as a result of trading, clearing, counterparty and other relationships.
Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Bank and non-bank financial services companies are interrelated as a result of trading, clearing, counterparty and other relationships.
If we were to sell any of these securities before their value recovers, including as 26 Table of Contents a result of asset liability management strategies or in response to liquidity needs, we would be required to recognize these losses and the recognition of those losses could materially and adversely affect our results of operations, capital and financial. ​ Impairment of investment securities or goodwill could result in a negative impact on our results of operations.
If we were to sell any of these securities before their value recovers, including as a result of asset liability management strategies or in response to liquidity needs, we would be required to recognize these losses and the recognition of those losses could materially and adversely affect our results of operations, capital and financial. ​ Impairment of investment securities or goodwill could result in a negative impact on our results of operations.
We may experience operational challenges as we implement these new technology enhancements or products, which could impair our ability to realize the anticipated benefits from such new technology or require us to incur significant costs to remedy any such challenges in a timely manner. 25 Table of Contents Many of our larger competitors have substantially greater resources to invest in technological improvements.
We may experience operational challenges as we implement these new technology enhancements or products, which could impair our ability to realize the anticipated benefits from such new technology or require us to incur significant costs to remedy any such challenges in a timely manner. Many of our larger competitors have substantially greater resources to invest in technological improvements.
Although forecasts have varied, many economists are projecting that U.S. economic growth will slow and inflation will remain elevated in the coming quarters, potentially resulting in a contraction of U.S. gross domestic output in 2023.
Although forecasts have varied, many economists are projecting that U.S. economic growth will slow and inflation will remain elevated in the coming quarters, potentially resulting in a contraction of U.S. gross domestic output in 2024.
Changes in interest rates can negatively affect the performance of most of our investment securities. Interest rate volatility can reduce unrealized gains or increase unrealized losses in our portfolio, as was the case in 2022 with the rising rate environment.
Changes in interest rates can negatively affect the performance of most of our investment securities. Interest rate volatility can reduce unrealized gains or increase unrealized losses in our portfolio, as was the case in 2023 with the rising rate environment.
A downturn in the local economies may adversely affect collateral values, sources of funds, and demand for products, all of which could have a negative impact on results of operations, financial condition and business expansion. 22 Table of Contents High concentrations of commercial loans may increase exposure to credit loss upon borrower default.
A downturn in the local economies may adversely affect collateral values, sources of funds, and demand for products, all of which could have a negative impact on results of operations, financial condition and business expansion. High concentrations of commercial loans may increase exposure to credit loss upon borrower default.
Greater than anticipated credit losses in the loan portfolios may adversely affect our earnings. Credit losses are inherent in the business of making loans and could have a material adverse effect on operating results. We make various assumptions and judgments about the collectability of the loan portfolio and provide an allowance for credit losses based on a number of factors.
Greater than anticipated credit losses in the loan portfolios may adversely affect our earnings. Credit losses are inherent in the business of making loans and could have a material adverse effect on operating results. We make various assumptions and judgments about the collectability of the loan portfolio and provide an ACL based on a number of factors.
Any such downturn, especially domestically and in the regions in which we operate, may adversely affect our asset quality, deposit levels, loan demand and results of operations. ​ 27 Table of Contents As a result of the economic and geopolitical factors discussed above, financial institutions also face heightened credit risk, among other forms of risk.
Any such downturn, especially domestically and in the regions in which we operate, may adversely affect our asset quality, deposit levels, loan demand and results of operations. ​ As a result of the economic and geopolitical factors discussed above, financial institutions also face heightened credit risk, among other forms of risk.
The allowance for credit losses is evaluated on a periodic basis using current information, including the quality of the loan portfolio, economic conditions, and value of the underlying collateral and the level of non-accrual loans. Although we believe the allowance for credit losses is appropriate to absorb probable losses in the loan portfolio, this allowance may not be adequate.
The ACL is evaluated on a periodic basis using current information, including the quality of the loan portfolio, economic conditions, and value of the underlying collateral and the level of non-accrual loans. Although we believe the ACL is appropriate to absorb probable losses in the loan portfolio, this allowance may not be adequate.
As our loan portfolio contains a significant number of large commercial loans, the deterioration of one or a few of these loans could cause a significant increase in non-performing loans, provision for loan losses, and/or an increase in loan charge-offs, all of which could adversely affect our financial condition and results of operations.
As our loan portfolio contains a significant number of large commercial loans, the deterioration of one or a few of these loans could cause a significant increase in 22 Table of Contents non-performing loans, provision for loan losses, and/or an increase in loan charge-offs, all of which could adversely affect our financial condition and results of operations.
Further, work-from-home and other modified business practices may introduce additional operational risks, including cybersecurity and execution risks, which may result in inefficiencies or delays, and may affect our ability to, or the manner in which we, conduct our business activities. ​ Legal, Regulatory and Compliance Risks ​ 29 Table of Contents We are subject to extensive government regulation and supervision, which may interfere with the ability to conduct business and may negatively impact our financial results.
Further, work-from-home and other modified business practices may introduce additional operational risks, including cybersecurity and execution risks, which may result in inefficiencies or delays, and may affect our ability to, or the manner in which we, conduct our business activities. ​ Legal, Regulatory and Compliance Risks ​ We are subject to extensive government regulation and supervision, which may interfere with the ability to conduct business and may negatively impact our financial results.
To the extent that our activities or the activities of its customers or third-party service providers involve the storage and transmission of confidential information, security breaches and malicious software could expose us to claims, regulatory scrutiny, litigation and other possible liabilities.
To the extent that our activities or the activities of its customers or third-party service providers involve 25 Table of Contents the storage and transmission of confidential information, security breaches and malicious software could expose us to claims, regulatory scrutiny, litigation and other possible liabilities.
Any 30 Table of Contents failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations, and financial condition. ​ We may be unable to attract and retain key personnel.
Any failure or circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations, and financial condition. ​ We may be unable to attract and retain key personnel.
Throughout 2022 the Federal Open Market Committee (“FOMC”) raised the target range for the Federal funds rate on seven separate occasions and-citing factors including the hardships caused by the ongoing Russia-Ukraine conflict, continued global supply chain disruptions and imbalances, and increased inflationary pressure-the FOMC has indicated that ongoing increases may be appropriate. ​ The tightening of the FRB's monetary policies, including repeated and aggressive increases in the target range for the Federal funds rate as well as the conclusion of the FRB's tapering of asset purchases, together with ongoing economic and geopolitical instability, increases the risk of an economic recession.
Throughout 2023 the Federal Open Market Committee (“FOMC”) raised the target range for the Federal funds rate on four separate occasions and-citing factors including the hardships caused by the ongoing Russia-Ukraine conflict, an economic slowdown in China, continued global supply chain disruptions and imbalances, and increased inflationary pressure-the FOMC has indicated that ongoing increases may be appropriate. ​ The tightening of the FRB's monetary policies, including repeated and aggressive increases in the target range for the Federal funds rate as well as the conclusion of the FRB's tapering of asset purchases, together with ongoing economic and geopolitical instability, increases the risk of an economic recession.
In response to recent increased congressional and regulatory scrutiny, and in anticipation of enhanced supervision and enforcement of overdraft protection practices in the future, certain banking organizations have begun to modify their overdraft protection programs, including by discontinuing the imposition of overdraft transaction fees.
In response to recent increased congressional and regulatory scrutiny, and 31 Table of Contents in anticipation of enhanced supervision and enforcement of overdraft protection practices in the future, certain banking organizations have begun to modify their overdraft protection programs, including by discontinuing the imposition of overdraft transaction fees.
Instability and uncertainty in the commercial and residential real estate markets, headwinds for lease rates and landlord cash flows, as well as in the broader commercial and retail credit markets, could have a material adverse effect on our financial condition and results of operations. ​ Monetary policy and economic environment could impact our financial performance.
Instability and uncertainty in the commercial and residential real estate markets, including headwinds for mortgage rates, lease rates and landlord cash flows, as well as in the broader commercial and retail credit markets, could have a material adverse effect on our financial condition and results of operations. ​ 28 Table of Contents Monetary policy and economic environment could impact our financial performance.
A significant decline in fees and commissions or trading losses suffered in the investment portfolio could adversely affect our income and potentially require the contribution of additional capital to support our operations. Strong competition within our markets may significantly impact profitability. We compete with an ever-increasing array of financial service providers.
A significant decline in fees and commissions or trading losses suffered in the investment portfolio could adversely affect our income and potentially require the contribution of additional capital to support our operations. Strong competition within our markets may significantly impact profitability. We compete with an ever-increasing array of financial service providers. See the section entitled “Competition” in Part I.
During 2022, our annual impairment test conducted in October, using discounted cash flows and market based approaches, indicated that the estimated fair value of our sole reporting unit “Bar Harbor Bank & Trust” exceeded the carrying value.
During 2023, our annual impairment test conducted in October, using discounted 27 Table of Contents cash flows and market-based approaches, indicated that the estimated fair value of our sole reporting unit “Bar Harbor Bank & Trust” exceeded the carrying value.
The unexpected loss of key personnel could have an adverse impact on our business because of their skills, knowledge of the markets in which the we operate, years of industry experience and the difficulty of promptly finding qualified replacement personnel. ​ ​
The unexpected loss of key personnel could have an adverse impact on our business because of their skills, knowledge of the markets in which we operate, years of industry experience and the difficulty of promptly finding qualified replacement personnel. ​ ​ ITEM 1B. UNRESOLVED STAFF COMMENTS. None. ​ ​
These losses or defaults could have an adverse effect on our business, financial condition and results of operations. Changes in the federal, state or local tax laws may negatively impact our financial performance and we are subject to examinations and challenges by tax authorities. We are subject to federal and applicable state tax laws and regulations.
Future events of this nature could have an adverse effect on our business, financial condition and results of operations. Changes in the federal, state or local tax laws may negatively impact our financial performance and we are subject to examinations and challenges by tax authorities. We are subject to federal and applicable state tax laws and regulations.
While we have comprehensive policies and procedures in place to mitigate risk in all phases of vendor management from selection to performance monitoring, the failure of a vendor to perform in accordance with contractual agreements could be disruptive to our business, which could have a material adverse effect on our financial condition and results of operations.
While we have comprehensive policies and procedures in place to mitigate risk in all phases of vendor management from selection to performance monitoring, the failure of a vendor to perform in accordance with contractual agreements could be disruptive to our business, which could have a material adverse effect on our financial condition and results of operations. 26 Table of Contents We may be adversely affected by the soundness of other financial institutions.
In addition, from time to time we may restructure portions of our investment securities portfolio as part of our asset liability management strategies or in response to liquidity needs, and we may incur losses, which may be material, in connection with any such restructuring.
Fluctuations in interest rates can materially affect both the returns on and market value of our investment securities. ​ In addition, from time to time we may restructure portions of our investment securities portfolio as part of our asset liability management strategies or in response to liquidity needs, and we may incur losses, which may be material, in connection with any such restructuring.
Revenues derived from transaction fees associated with overdraft protection programs offered to our customers represent a significant portion of its noninterest income.
Fee revenues from overdraft protection programs constitute a significant portion of our noninterest income and may be subject to increased supervisory scrutiny. Revenues derived from transaction fees associated with overdraft protection programs offered to our customers represent a significant portion of its noninterest income.
The occurrence of any of these risks could result in a diminished ability to operate (e.g., by requiring us to expend significant resources to correct the defect), as well as potential liability to customers, reputational damage, and regulatory intervention. 24 Table of Contents Disruptions to our information systems and security breaches may adversely affect our business and reputation.
The occurrence of any of these risks could result in a diminished ability to operate (e.g., by requiring us to expend significant resources to correct the defect), as well as potential liability to customers, reputational damage, and regulatory intervention.
Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a material adverse effect on our business, financial condition and results of operations.
Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have a material adverse effect on our business, financial condition and results of operations. While we have policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur.
Interest rates are highly sensitive to many factors including monetary policies, domestic and international economic, social and political conditions and issues, including trade disputes, global health pandemics, and other factors beyond our control. Fluctuations in interest rates can materially affect both the returns on and market value of our investment securities.
Interest rates are highly sensitive to many factors including monetary policies, domestic and international economic, social and political conditions and issues, including trade disputes, global health pandemics, and other factors beyond our control.
These agencies could limit purchases of conforming loans due to capital constraints, changes in conforming loan criteria or other factors. Proposals to reform mortgage finance could affect the role of these agencies and the market for conforming loans.
These agencies could limit purchases of conforming loans due to capital constraints, changes in conforming loan criteria or other factors.
The Company’s subsidiaries are subject to laws that authorize regulatory bodies to block or reduce the flow of funds from those subsidiaries to the Company based on assertion that certain payments from subsidiaries are considered an unsafe or unsound practice. ​ Prepayments of loans may negatively impact our business as customers may prepay the principal amount of their outstanding loans at any time.
The Company’s subsidiaries are subject to laws that authorize regulatory bodies to block or reduce the flow of funds from those subsidiaries to the Company based on assertion that certain payments from subsidiaries are considered an unsafe or unsound practice, which could impede our access to funds that we may need to make payments on our obligations or dividend payments, if and when declared from time to time by our board of directors in its sole discretion out of funds legally available for that purpose. ​ Prepayments of loans may negatively impact our business as customers may prepay the principal amount of their outstanding loans at any time.
Operational Risks ​ We are subject to a variety of operational risks, including reputational risk, and the risk of fraud or theft by employees or outsiders, which may adversely affect our business and results of operations.
Proposals to reform mortgage finance could affect the role of these agencies and the market for conforming loans. 24 Table of Contents Operational Risks ​ We are subject to a variety of operational risks, including reputational risk, and the risk of fraud or theft by employees or outsiders, which may adversely affect our business and results of operations.
Market changes may adversely affect demand for our services and impact revenue, costs, and earnings. Channels for servicing our customers are evolving rapidly, with less reliance on traditional branch facilities, increased use of e-commerce channels, and demand for universal bankers and other relationship managers who can service multiple product lines.
Channels for servicing our customers are evolving rapidly, with less reliance on traditional branch facilities, increased use of e-commerce channels, and demand for universal bankers and other relationship managers who can service multiple product lines. We have an ongoing process for evaluating the profitability of its branch system and other office and operational facilities.
Success of these activities depends on our ability to continue to maintain and develop an infrastructure appropriate to support and integrate such growth.
We may grow organically both by geographic expansion and through business line expansion, as well as through acquisitions. Success of these activities depends on our ability to continue to maintain and develop an infrastructure appropriate to support and integrate such growth.
In particular, interest rates are highly sensitive to many factors that are beyond our control, including global, domestic and local economic conditions and the policies of various governmental and regulatory agencies and, specifically, the Federal Reserve Bank (“FRB”).
Any contraction of economic activity, including an economic recession, may adversely affect our asset quality, deposit levels and loan demand and, therefore, our earnings. In particular, interest rates are highly sensitive to many factors that are beyond our control, including global, domestic and local economic conditions and the policies of various governmental and regulatory agencies and, specifically, the FRB.
To manage liquidity, we use a number of funding sources in addition to core deposit growth, loan repayments and maturities of loans and securities. These sources include FHLB and FRB advances, proceeds from the sale of securities and loans and liquidity resources at the holding company.
We must maintain sufficient funds to respond to the needs of customers. To manage liquidity, we use a number of funding sources in addition to core deposit growth, loan repayments and maturities of loans and securities.
Our efforts to take these risks into account in making lending and other decisions may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior. ​ Pandemics, severe weather, natural disasters, acts of war or terrorism, and other external events could significantly impact our business and the business of our customers.
Our efforts to take these risks into account in making lending and other decisions may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior. ​ Factors associated with global climate change, including evolving and increasing regulations, increasing global concern and stakeholder scrutiny about climate change and extreme weather conditions could adversely affect our business, reputation, results of operations and financial position.
To compete, we focus on quality customer service, making decisions at the local level, maintaining long-term customer relationships, building customer loyalty, and providing products and services designed to address the specific needs of customers. Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect growth and profitability.
Item 1, “Business” of this Annual Report for additional competitor information. Competition from nationwide banks, as well as local institutions, continues to mount in our markets. To compete, we focus on quality customer service, making decisions at the local level, maintaining long-term customer relationships, building customer loyalty, and providing products and services designed to address the specific needs of customers.
Conversely, if interest rates increase, loans and investment securities may be subject to extension risk, which could negatively impact our net interest margin as well. Wholesale funding sources may prove insufficient to replace deposits, support operations and future growth. We must maintain sufficient funds to respond to the needs of customers.
Conversely, if interest rates increase, loans and investment securities may be subject to extension risk, which could negatively impact our net interest margin as well. We are required to maintain sufficient capital and adequate liquidity. As a banking organization, our capital and liquidity are subject to regulation and supervision by banking regulators.
In this case, our operating margins and profitability would be adversely affected. 23 Table of Contents Loss of deposits or a change in deposit mix could increase our cost of funding. Deposits are a low cost and stable source of funding. We compete with banks and other financial institutions for deposits.
Deposits are a low cost and stable source of funding. We compete with banks and other financial institutions for deposits.
We have an ongoing process for evaluating the profitability of its branch system and other office and operational facilities. The identification of unprofitable operations and facilities can lead to restructuring charges and introduce the risk of disruptions to revenues and customer relationships.
The identification of unprofitable operations and facilities can lead to restructuring charges and introduce the risk of disruptions to revenues and customer relationships. We compete with larger financial institutions who are rapidly evolving their service channels and escalating the costs of evolving the service process.
Removed
Any contraction of economic activity, including an economic recession, may adversely affect our asset quality, deposit levels and loan demand and, therefore, our earnings.
Added
We are required to maintain minimum levels of capital. The proportion of the Bank’s deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk as it relates to maintaining such levels of capital as uninsured depositors historically have been more likely to withdraw their deposits.
Removed
See the section entitled “Competition” of Item 1 of this Annual Report for additional competitor information. Competition from nationwide banks, as well as local institutions, continues to mount in our markets.
Added
In addition, our banking regulators could require us to maintain more and higher quality capital than previously expected. Our banking regulators could also require us to hold higher levels of short-term investments, thereby limiting our ability to invest in longer-term or less liquid assets at higher yields.
Removed
We compete with larger financial institutions who are rapidly evolving their service channels and escalating the costs of evolving the service process. 28 Table of Contents Expansion, growth, and acquisitions could negatively impact earnings if not successful. We may grow organically both by geographic expansion and through business line expansion, as well as through acquisitions.
Added
The need to maintain capital and liquidity could result in our being required to take steps to increase our regulatory capital and may dilute shareholder value or limit our ability to pay dividends or otherwise return capital to our investors through stock repurchases.
Removed
While we have policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur. ​ Fee revenues from overdraft protection programs constitute a significant portion of our noninterest income and may be subject to increased supervisory scrutiny.
Added
In addition, if we fail to maintain appropriate levels of capital or liquidity, we could become subject to formal or informal enforcement actions that may impose restrictions on our business, including limiting our lending activities or our ability to expand, requiring us to raise additional capital (which may be dilutive to shareholders) or requiring regulatory approval to pay dividends or otherwise return capital to shareholders.
Added
See Item 1. “Business—Regulation and Supervision—Capital Adequacy and Prompt Corrective Action” for additional information on capital requirements applicable to us and the Bank. 23 Table of Contents The Company’s earnings may not grow if we are unable to successfully attract core deposits and lending opportunities and execute opportunities to generate fee-based income.
Added
The Company has experienced growth, and our future business strategy is to continue to expand. Historically, the growth of our loans and deposits has been the principal factor in our increase in net-interest income. In the event that we are unable to execute our business strategy of continued growth in loans and deposits, our earnings could be adversely impacted.
Added
The Company’s ability to continue to grow depends, in part, upon our ability to expand our market share, to successfully attract core deposits and identify loan and investment opportunities, as well as opportunities to generate fee-based income.
Added
Our ability to manage growth successfully will also depend on whether we can continue to efficiently fund asset growth and maintain asset quality and cost controls, as well as on factors beyond our control, such as economic conditions and interest-rate trends. Wholesale funding sources may prove insufficient to replace deposits, support operations and future growth.
Added
In addition, if we need to rely heavily on more expensive funding sources to support future growth, revenues may not increase proportionately to cover costs. In this case, our operating margins and profitability would be adversely affected. Loss of deposits or a change in deposit mix could increase our cost of funding.
Added
In addition, we are dependent on our reputation within our market area, as a trusted and responsible financial company, for all aspects of our relationships with customers, employees, vendors, third-party service providers and others with whom we conduct business or potential future business, particularly because our business is primarily concentrated in Northern New England.
Added
Our actual or perceived failure, including, to (i) identify and address potential conflicts of interest, ethical issues, money-laundering, or privacy issues; (ii) meet legal and regulatory requirements applicable to the Bank and to the Company; (iii) maintain the privacy of customer and accompanying personal information; (iv) maintain adequate record keeping; (v) engage in proper sales and trading practices; and (vi) identify the legal, reputational, credit, liquidity and market risks inherent in our products; or any action of one of our employees that results in actual or perceived misconduct or error, among other things, could give rise to reputational risk that could cause harm to the Bank and our business prospects.
Added
If we fail to address any of these issues in an appropriate manner, we could be subject to additional legal risks, which, in turn, could increase the size and number of litigation claims and damages asserted or subject us to enforcement actions, fines and penalties and cause us to incur related costs and expenses.
Added
Because we primarily serve individuals and businesses located in Northern New England, any negative impact resulting from reputational harm, including any impact on our ability to attract and retain customers and employees, likely would be greater than if our business were more geographically diverse. Disruptions to our information systems and security breaches may adversely affect our business and reputation.
Added
Further, when volatility, market events or similar issues affect a subset of financial institutions, or when there are news reports or high-profile incidents relating to trends, concerns, and other issues in the banking industry, the ramifications can affect the sector as a whole, regardless of the effect, or lack thereof, on any specific institution.
Added
Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect growth and profitability. Market changes may adversely affect demand for our services and impact revenue, costs, and earnings.
Added
Our business is concentrated in and largely dependent upon the continued growth and welfare of the general geographic markets in which we operate. Our operations are concentrated in Northern New England (and in particular, Maine, New Hampshire and Vermont).
Added
As a result, the Company's financial condition, results of operations and cash flows are significantly impacted by changes in the economic conditions in those areas.
Added
Therefore, the Company’s financial performance generally, and in particular, the ability of borrowers to pay interest on and repay the principal of outstanding loans and the value of collateral securing these loans, is highly dependent upon the business environment in the markets where the Company operates.
Added
The Company's success depends to a significant extent upon the business activity, population, income levels, deposits and real estate activity in these markets.
Added
Although the Company's clients’ business and financial interests may extend well beyond these markets, adverse economic conditions that affect these markets could disproportionately reduce the Company's growth rate, affect the ability of the Company's clients to repay their loans to the Company, affect the value of collateral underlying loans and generally affect the Company's financial condition and results of operations.
Added
Because of the Company's geographic concentration, we are less able than other regional or national financial institutions to diversify our credit risks across multiple markets. For additional information on the Company's market area, see Part I, Item 1, "Business" of this Annual Report. 29 Table of Contents Expansion, growth, and acquisitions could negatively impact earnings if not successful.
Added
There has been an increased focus from regulators and stakeholders on environmental, social, and governance (“ESG”) matters.
Added
Our failure or perceived failure to achieve our ESG goals, maintain ESG practices, or comply with emerging ESG regulations that meet evolving regulatory or stakeholder expectations could adversely affect public perception of our business, employee morale or patient or stakeholder support, expend corporate resources, result in substantial costs and expenses, result in legal or regulatory proceedings against the Company and negatively impact our financial condition and results of operations.
Added
Damage to our reputation may reduce demand for our services and thus have an adverse effect on our future financial performance, as well as require additional resources to rebuild our reputation. ​ Global climate change also presents both immediate and long-term physical risks (such as extreme weather conditions) and risks associated with the transition to a low-carbon economy (such as regulatory or technology changes).
Added
These changes could result in, for example, closures of our banking offices and other facilities, and supply chain disruptions, as well as increased costs of products, commodities and energy (including utilities), and disruptions in our information systems, which in turn could negatively impact our business and results of operations.
Added
In addition, certain of our operations 30 Table of Contents and facilities are located in regions that may be disproportionately impacted by the physical risks of climate change (including hurricanes and flooding), and we face the risk of losses incurred as a result of physical damage to our facilities and business interruptions caused by such events.
Added
We maintain property insurance coverage to address the impact of physical damage to our facilities and for business interruption losses. However, such insurance coverage may be insufficient to cover all losses and we may experience a material, adverse effect on our results of operations that is not recoverable through our insurance policies.
Added
Additionally, if we experience a significant increase in climate-related events that result in material losses we may be unable to obtain similar levels of property insurance coverage in the future or at rates that are significantly higher than our current rates.
Added
Changes in consumer preferences and additional legislation and regulatory requirements, including those associated with the transition to a low-carbon economy, may increase costs associated with compliance, the operation of our facilities and supplies.
Added
Regulations limiting greenhouse gas emissions and energy inputs may also increase in coming years, which may adversely impact us through increased compliance costs for us and our suppliers and vendors. ​ Pandemics, severe weather, natural disasters, acts of war or terrorism, and other external events could significantly impact our business and the business of our customers.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed4 unchanged
Biggest changeIn addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially adversely affect our reputation, even if resolved in our favor. ​ ​ ​ 31 Table of Contents PART II
Biggest changeIn addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially adversely affect our reputation, even if resolved in our favor. ​ ​ Item 4. Mine Safety Disclosures. Not applicable. ​ ​ ​ 34 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−0 removed4 unchanged
Biggest changeThe graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2017 to December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Bar Harbor Bankshares ​ 100.00 ​ 85.40 ​ 100.07 ​ 92.81 ​ 122.85 ​ 140.95 NYSE American Composite Index 100.00 88.23 100.34 95.60 141.85 174.66 S&P U.S.
Biggest changeThe graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2018 to December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/18 12/31/19 12/30/20 12/31/21 12/31/22 12/31/23 Bar Harbor Bankshares ​ 100.00 ​ 117.15 ​ 108.68 ​ 143.81 ​ 165.04 ​ 157.69 NYSE American Composite Index 100.00 113.72 108.34 160.76 197.94 224.59 S&P U.S.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The common stock of the Company is traded on the NYSE American, under the trading symbol “BHB”.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The common stock of the Company is traded on the NYSE American, under the trading symbol “BHB”.
Cash dividends declared and paid totaled $0.26 per share in the second, third and fourth quarters of 2022 and $0.24 per share in the first quarter of 2022. We currently expect that comparable cash dividends will continue to be paid in the future.
Cash dividends declared and paid totaled $0.28 per share in the second, third and fourth quarters of 2023 and $0.26 per share in the first quarter of 2023. We currently expect that comparable cash dividends will continue to be paid in the future.
Recent Sale of Unregistered Securities and Use of Proceeds from Registered Securities No unregistered equity securities were sold by the Company during the year ended December 31, 2022. On June 23, 2022, the Board approved a 12-month plan to repurchase up to 5% of the Company’s outstanding shares of common stock, representing 751,000 shares.
Recent Sale of Unregistered Securities and Use of Proceeds from Registered Securities No unregistered equity securities were sold by the Company during the year ended December 31, 2023. On May 22, 2023, the Board approved a 12-month plan to repurchase up to 5% of the Company’s outstanding shares of common stock, representing 756,000 shares.
No shares were repurchased by the Company in the fourth quarter of 2022 and the maximum number of shares that may yet be purchased under the plan is 751,000 shares. ​ ​ ​ 32 Table of Contents Common Stock Performance Graph The following graph illustrates the estimated yearly change in value of the cumulative total shareholder return on our common stock for each of the last five years.
No shares were repurchased by the Company during the year ended December 31, 2023 and the maximum number of shares that may yet be purchased under the plan is 756,000 shares. ​ ​ ​ 35 Table of Contents Common Stock Performance Graph The following graph illustrates the estimated yearly change in value of the cumulative total shareholder return on our common stock for each of the last five years.
As of March 10, 2023, there were 15,124,451 shares of Bar Harbor Bankshares common stock, par value $2.00 per share, outstanding and approximately 1,428 shareholders of record, as obtained through the Company’s transfer agent.
As of March 7, 2024, there were 15,185,021 shares of Bar Harbor Bankshares common stock, par value $2.00 per share, outstanding and approximately 1,375 shareholders of record, as obtained through the Company’s transfer agent.
SmallCap Banks Index 100.00 83.44 104.69 95.08 132.36 116.69 ​ ​ ​ 33 Table of Contents ITEM 6. [Reserved]
SmallCap Banks Index 100.00 125.46 113.94 158.62 139.85 140.55 ​ ​ ​ 36 Table of Contents ITEM 6. [RESERVED] Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

47 edited+20 added−18 removed23 unchanged
Biggest changeThe following reconciliation table provides a more detailed analysis of these, and reconciliation for, each of non-GAAP financial measures. ​ 40 Table of Contents RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ​ The following table summarizes the reconciliation of non-GAAP items for the time periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For The Years Ended December 31, (in thousands) Calculations ​ 2022 ​ 2021 ​ 2020 Net income $ 43,557 ​ $ 39,299 ​ $ 33,244 Non-recurring items: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain on sale of securities, net (53) ​ (2,870) ​ (5,445) Gain on sale of premises and equipment, net 10 ​ 378 ​ (32) Gain on other real estate owned — ​ — ​ 355 Loss on debt extinguishment ​ ​ ​ — ​ ​ 2,851 ​ ​ 1,351 Acquisition, conversion and other expenses 266 ​ 1,667 ​ 5,801 Income tax expense (1) (51) ​ (479) ​ (481) Total non-recurring items ​ ​ ​ 172 ​ ​ 1,547 ​ ​ 1,549 Total adjusted income (2) (A) $ 43,729 ​ $ 40,846 ​ $ 34,793 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income (B) $ 113,681 ​ $ 95,573 ​ $ 99,180 Plus: Non-interest income 35,321 ​ 42,261 ​ 42,956 Total Revenue 149,002 ​ 137,834 ​ 142,136 Gain on sale of securities, net (53) ​ (2,870) ​ (5,445) Total adjusted revenue (2) (C) $ 148,949 ​ $ 134,964 ​ $ 136,691 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total non-interest expense $ 91,253 ​ $ 90,508 ​ $ 94,860 Non-recurring expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain on sale of premises and equipment, net (10) ​ (378) ​ 32 Gain on other real estate owned — ​ — ​ (355) Loss on debt extinguishment ​ ​ ​ — ​ ​ (2,851) ​ ​ (1,351) Acquisition, conversion and other expenses (266) ​ (1,667) ​ (5,801) Total non-recurring expenses ​ ​ ​ (276) ​ ​ (4,896) ​ ​ (7,475) Adjusted non-interest expense (2) (D) $ 90,977 ​ $ 85,612 ​ $ 87,385 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ​ ​ ​ 149,002 ​ ​ 137,834 ​ ​ 142,136 Total non-interest expense ​ ​ ​ 91,253 ​ ​ 90,508 ​ ​ 94,860 Pre-tax, pre-provision net revenue ​ ​ $ 57,749 ​ $ 47,326 ​ $ 47,276 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted revenue (2) ​ ​ ​ 148,949 ​ ​ 134,964 ​ ​ 136,691 Adjusted non-interest expense (2) ​ ​ ​ 90,977 ​ ​ 85,612 ​ ​ 87,385 Adjusted pre-tax, pre-provision net revenue (2) ​ ​ $ 57,972 ​ $ 49,352 ​ $ 49,306 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in millions) ​ ​ Average earning assets (E) $ 3,425 ​ $ 3,373 ​ $ 3,397 Average paycheck protection program (PPP) loans ​ (R) ​ 1 ​ ​ 51 ​ ​ 109 Average interest-bearing deposits with other banks ​ (U) ​ 72 ​ ​ 219 ​ ​ 89 Average earning assets, excluding PPP loans ​ (S) ​ 3,424 ​ ​ 3,103 ​ ​ 3,199 Average assets (F) 3,747 ​ 3,718 ​ 3,758 Average shareholders' equity (G) 399 ​ 414 ​ 401 Average tangible shareholders' equity (2)(3) (H) 273 ​ 288 ​ 273 Tangible shareholders' equity, period-end (2)(3) (I) 268 ​ 298 ​ 284 Tangible assets, period-end (2)(3) (J) 3,784 ​ 3,583 ​ 3,598 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 41 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For The Years Ended December 31, ​ ​ ​ Calculations ​ 2022 ​ 2021 ​ 2020 ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Common shares outstanding, period-end (K) ​ 15,083 ​ 15,001 ​ ​ 14,916 ​ Average diluted shares outstanding (L) ​ 15,112 ​ 15,045 ​ ​ 15,272 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted earnings per share, diluted (2) (A/L) $ 2.89 ​ $ 2.72 ​ $ 2.28 ​ Tangible book value per share, period-end (2) (I/K) ​ 17.78 ​ 19.86 ​ ​ 18.77 ​ Securities adjustment, net of tax (1)(4) (M) ​ (55,246) ​ 1,985 ​ ​ 10,023 ​ Tangible book value per share, excluding securities adjustment (2)(4) (I+M)/K ​ 21.44 ​ 19.73 ​ ​ 18.09 ​ Total tangible shareholders' equity/total tangible assets (2) (I/J) ​ 7.09 ​ 8.32 ​ ​ 7.78 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance ratios (5) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on assets ​ ​ 1.16 % ​ 1.06 % ​ 0.88 % Adjusted return on assets (2) ​ (A/F) ​ 1.17 ​ ​ 1.10 ​ ​ 0.93 ​ Pre-tax, pre-provision return on assets ​ ​ ​ 1.54 ​ ​ 1.27 ​ ​ 1.26 ​ Adjusted pre-tax, pre-provision return on assets (2) ​ (U/F) ​ 1.49 ​ ​ 1.33 ​ ​ 1.31 ​ Return on equity ​ ​ 10.91 ​ ​ 9.50 ​ ​ 8.29 ​ Adjusted return on equity (2) ​ (A/G) ​ 10.96 ​ ​ 9.87 ​ ​ 8.68 ​ Return on tangible equity ​ ​ ​ 16.20 ​ ​ 13.92 ​ ​ 12.45 ​ Adjusted return on tangible equity (1)(2) ​ (A+Q)/H ​ 16.26 ​ ​ 14.46 ​ ​ 13.02 ​ Efficiency ratio (1)(2)(6) ​ (D-O-Q)/(C+N) ​ 59.26 ​ ​ 61.29 ​ ​ 61.71 ​ Net interest margin ​ (B+P)/E ​ 3.36 ​ ​ 2.88 ​ ​ 2.97 ​ Adjusted net interest margin (2) ​ (B+P-T)/S ​ 3.35 ​ ​ 2.93 ​ ​ 2.76 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplementary data (in thousands) ​ ​ ​ ​ ​ ​ ​ Taxable equivalent adjustment for efficiency ratio ​ (N) $ 2,020 ​ $ 2,330 ​ $ 2,477 ​ Franchise taxes included in non-interest expense ​ (O) ​ 583 ​ ​ 528 ​ ​ 477 ​ Tax equivalent adjustment for net interest margin ​ (P) ​ 1,398 ​ ​ 1,653 ​ ​ 1,853 ​ Intangible amortization ​ (Q) ​ 932 ​ ​ 940 ​ ​ 1,024 ​ Interest and fees on PPP loans ​ (T) ​ 223 ​ ​ 6,039 ​ ​ 4,569 ​ Interest and fees on interest-earning deposits with other banks ​ (V) ​ 769 ​ ​ 333 ​ ​ 131 ​ (1) 2022 assumes a marginal tax rate of 23.53% for the fourth quarter and 23.41% for the first three quarters. 2021 assumes a marginal tax rate of 23.41% for the fourth quarter and 23.71% for the first three quarters. 2020 assumes a marginal tax rate of 23.71% for the fourth quarter and 23.87% for the first three quarters.
Biggest changeThe following reconciliation table provides a more detailed analysis of these, and reconciliation for, each of non-GAAP financial measures. ​ 43 Table of Contents RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ​ The following table summarizes the reconciliation of non-GAAP items for the time periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) Calculations ​ 2023 ​ 2022 ​ 2021 Net income ​ $ 44,852 ​ $ 43,557 ​ $ 39,299 Non-recurring items: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain on sale of securities, net ​ (34) ​ (53) ​ (2,870) Gain on sale of premises and equipment, net ​ 182 ​ 10 ​ 378 Loss on debt extinguishment ​ ​ ​ ​ — ​ ​ — ​ ​ 2,851 Acquisition, conversion and other expenses ​ 283 ​ 266 ​ 1,667 Income tax expense (1) ​ (104) ​ (51) ​ (479) Total non-recurring items ​ ​ ​ ​ 327 ​ ​ 172 ​ ​ 1,547 Total adjusted income (2) (A) ​ $ 45,179 ​ $ 43,729 ​ $ 40,846 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income (B) ​ $ 117,675 ​ $ 113,681 ​ $ 95,573 Plus: Non-interest income ​ 35,829 ​ 35,321 ​ 42,261 Total Revenue ​ 153,504 ​ 149,002 ​ 137,834 Gain on sale of securities, net ​ (34) ​ (53) ​ (2,870) Total adjusted revenue (2) (C) ​ $ 153,470 ​ $ 148,949 ​ $ 134,964 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total non-interest expense ​ $ 93,479 ​ $ 91,253 ​ $ 90,508 Non-recurring expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain on sale of premises and equipment, net ​ (182) ​ (10) ​ (378) Loss on debt extinguishment ​ ​ ​ ​ — ​ ​ — ​ ​ (2,851) Acquisition, conversion and other expenses ​ (283) ​ (266) ​ (1,667) Total non-recurring expenses ​ ​ ​ ​ (465) ​ ​ (276) ​ ​ (4,896) Adjusted non-interest expense (2) (D) ​ $ 93,014 ​ $ 90,977 ​ $ 85,612 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ​ ​ ​ ​ 153,504 ​ ​ 149,002 ​ ​ 137,834 Total non-interest expense ​ ​ ​ ​ 93,479 ​ ​ 91,253 ​ ​ 90,508 Pre-tax, pre-provision net revenue ​ ​ ​ $ 60,025 ​ $ 57,749 ​ $ 47,326 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted revenue (2) ​ ​ ​ ​ 153,470 ​ ​ 148,949 ​ ​ 134,964 Adjusted non-interest expense (2) ​ ​ ​ ​ 93,014 ​ ​ 90,977 ​ ​ 85,612 Adjusted pre-tax, pre-provision net revenue (2) ​ (U) ​ $ 60,456 ​ $ 57,972 ​ $ 49,352 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in millions) ​ ​ ​ Average earning assets (E) ​ $ 3,623 ​ $ 3,425 ​ $ 3,373 Average paycheck protection program (PPP) loans ​ (R) ​ ​ — ​ ​ 1 ​ ​ 51 Average earning assets, excluding PPP loans ​ (S) ​ ​ 3,623 ​ ​ 3,424 ​ ​ 3,103 Average assets (F) ​ 3,934 ​ 3,747 ​ 3,718 Average shareholders' equity (G) ​ 412 ​ 399 ​ 414 Average tangible shareholders' equity (2)(3) (H) ​ 288 ​ 273 ​ 288 Tangible shareholders' equity, period-end (2)(3) (I) ​ 308 ​ 268 ​ 298 Tangible assets, period-end (2)(3) (J) ​ 3,847 ​ 3,784 ​ 3,583 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 44 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ Calculations ​ 2023 ​ 2022 ​ 2021 ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common shares outstanding, period-end (K) ​ ​ 15,172 ​ 15,083 ​ 15,001 ​ Average diluted shares outstanding (L) ​ ​ 15,195 ​ 15,112 ​ 15,045 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted earnings per share, diluted (2) (A/L) ​ $ 2.95 ​ $ 2.89 ​ $ 2.72 ​ Tangible book value per share, period-end (2) (I/K) ​ ​ 20.28 ​ 17.78 ​ 19.86 ​ Securities adjustment, net of tax (1)(4) (M) ​ ​ (47,649) ​ (55,246) ​ 1,985 ​ Tangible book value per share, excluding securities adjustment (2)(4) (I+M)/K ​ ​ 23.42 ​ 21.44 ​ 19.73 ​ Total tangible shareholders' equity/total tangible assets (2) (I/J) ​ ​ 8.00 ​ 7.09 ​ 8.32 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance ratios (5) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on assets ​ ​ ​ 1.14 % ​ 1.16 % ​ 1.06 % Core return on assets (2) ​ (A/F) ​ ​ 1.15 ​ ​ 1.17 ​ ​ 1.10 ​ Pre-tax, pre-provision return on assets ​ ​ ​ ​ 1.53 ​ ​ 1.54 ​ ​ 1.27 ​ Adjusted pre-tax, pre-provision return on assets (2) ​ (U/F) ​ ​ 1.54 ​ ​ 1.49 ​ ​ 1.33 ​ Return on equity ​ ​ ​ 10.88 ​ ​ 10.91 ​ ​ 9.50 ​ Core return on equity (2) ​ (A/G) ​ ​ 10.96 ​ ​ 10.96 ​ ​ 9.87 ​ Return on tangible equity ​ ​ ​ ​ 15.84 ​ ​ 16.20 ​ ​ 13.92 ​ Adjusted return on tangible equity (1)(2) ​ (A+Q)/H ​ ​ 15.96 ​ ​ 16.26 ​ ​ 14.46 ​ Efficiency ratio (1)(2)(6) ​ (D-O-Q)/(C+N) ​ ​ 58.67 ​ ​ 59.26 ​ ​ 61.29 ​ Net interest margin ​ (B+P)/E ​ ​ 3.29 ​ ​ 3.36 ​ ​ 2.88 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplementary data (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ Taxable equivalent adjustment for efficiency ratio ​ (N) ​ $ 2,392 ​ $ 2,020 ​ $ 2,330 ​ Franchise taxes included in non-interest expense ​ (O) ​ ​ 638 ​ ​ 583 ​ ​ 528 ​ Tax equivalent adjustment for net interest margin ​ (P) ​ ​ 1,550 ​ ​ 1,398 ​ ​ 1,653 ​ Intangible amortization ​ (Q) ​ ​ 932 ​ ​ 932 ​ ​ 940 ​ Interest and fees on PPP loans ​ (T) ​ ​ — ​ ​ 223 ​ ​ 6,039 ​ (1) 2023 assumes a marginal tax rate of 24.01% for the fourth quarter and 23.80% for the first three quarters. 2022 assumes a marginal tax rate of 23.53% for the fourth quarter and 23.41% for the first three quarters. 2021 assumes a marginal tax rate of 23.41% for the fourth quarter and 23.71% for the first three quarters.
It should be read in conjunction with the consolidated financial statements and footnotes and selected financial data presented elsewhere in this Annual Report. Within the tables presented, certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. The detailed financial discussion that follows focuses on 2022 results compared to 2021.
It should be read in conjunction with the consolidated financial statements and footnotes and selected financial data presented elsewhere in this Annual Report. Within the tables presented, certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. The detailed financial discussion that follows focuses on 2023 results compared to 2022.
For a discussion of 2021 results compared to 2020, see the Company's Annual Report on Form 10-K for the year ended December 31, 2021 . ​ GENERAL The Company is a bank holding company headquartered in Maine, providing a broad array of banking and nonbanking products and services to businesses and consumers primarily within our three-state footprint.
For a discussion of 2022 results compared to 2021, see the Company's Annual Report on Form 10-K for the year ended December 31, 2022 . ​ GENERAL The Company is a bank holding company headquartered in Maine, providing a broad array of banking and nonbanking products and services to businesses and consumers primarily within our three-state footprint.
Capital Resources Consistent with our long-term goal of operating a sound and profitable organization, at December 31, 2022, we continue to be a “well-capitalized” financial institution according to applicable regulatory standards. Management believes this to be vital in promoting depositor and investor confidence and providing a solid foundation for future growth.
Capital Resources Consistent with our long-term goal of operating a sound and profitable organization, at December 31, 2023, we continue to be a “well-capitalized” financial institution according to applicable regulatory standards. Management believes this to be vital in promoting depositor and investor confidence and providing a solid foundation for future growth.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES Note 1 – Summary of Significant Accounting Policies to our audited Consolidated Financial Statements for the year ended December 31, 2022 contains a summary of significant accounting policies. Various elements of these accounting policies, by their nature, are subject to estimation techniques, valuation assumptions and other subjective assessments.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES Note 1 – Summary of Significant Accounting Policies to our audited Consolidated Financial Statements for the year ended December 31, 2023 contains a summary of significant accounting policies. Various elements of these accounting policies, by their nature, are subject to estimation techniques, valuation assumptions and other subjective assessments.
However, to consider the impact of a hypothetical stressed forecast, we estimated the allowance using forecast inputs that were severely unfavorable to the expected scenario for each macroeconomic variable. This unfavorable scenario resulted in an allowance that is approximately $8.0 million higher than the allowance using the expected scenario. 46 Table of Contents
However, to consider the impact of a hypothetical stressed forecast, we estimated the allowance using forecast inputs that were severely unfavorable to the expected scenario for each macroeconomic variable. This unfavorable scenario resulted in an allowance that is approximately $8.0 million higher than the allowance using the expected scenario. 49 Table of Contents ​
Examples of such contractual agreements include, but are not limited to: services providing core banking systems, ATM and debit card processing, trust services software, accounting software and the leasing of T-1 telecommunication lines and other technology infrastructure supporting our network.
Examples of such contractual agreements include, but are not limited to: services providing core banking systems, ATM and debit card processing, trust services software, accounting software and the leasing of T-1 telecommunication lines and 48 Table of Contents other technology infrastructure supporting our network.
At December 31, 2022, available same-day liquidity totaled approximately $1.0 billion, including cash, borrowing capacity at FHLB and the Federal Reserve Discount Window and various lines of credit. Additional sources of liquidity include cash flows from operations, wholesale deposits, cash flow from the Company's amortizing securities and loan portfolios.
At December 31, 2023, available same-day liquidity totaled approximately $1.2 billion, including cash, borrowing capacity at FHLB and the Federal Reserve Discount Window and various lines of credit. Additional sources of liquidity include cash flows from operations, wholesale deposits, cash flow from the Company's amortizing securities and loan portfolios.
Total cash dividends paid in 2022 was $1.02 per common share of stock, compared with $0.88 in 2021. ​ The Company and the Bank remained well-capitalized under regulatory guidelines at period end as further described in Note 12 – Shareholders’ Equity and Earnings Per Common Share on the Consolidated Financial Statements. ​ COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 Net Interest Income Net interest income for 2022 was $113.7 million compared with $95.6 million in 2021.
Total cash dividends paid in 2023 was $1.10 per share of common stock, compared with $1.02 per share of common stock in 2022. ​ The Company and the Bank remained well-capitalized under regulatory guidelines at period end as further described in Note 12 – Shareholders’ Equity and Earnings Per Common Share on the Consolidated Financial Statements. ​ COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 Net Interest Income Net interest income for 2023 was $117.7 million compared with $113.7 million in 2022.
The critical accounting policy involves a higher degree of complexity and requires management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions, and estimates could result in material differences in the results of operations or financial condition. Allowance for credit losses on loans (the “allowance”).
The critical accounting policy involves a higher degree of complexity and requires management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions, and estimates could result in material differences in the results of operations or financial condition.
Net unrealized security losses reduced book value per share by $3.87.
Net unrealized security losses reduced book value per share by $3.14.
We have unused borrowing capacity at the FHLB of $275 million, unused borrowing capacity at the Federal Reserve of 45 Table of Contents $90 million and unused lines of credit totaling $51 million, in addition to over $200 million in unencumbered, liquid investment portfolio assets. ​ Purchase Obligations In the normal course of conducting our banking and financial services business, and in connection with providing products and services to our customers, a variety of traditional third-party contracts for support services have been entered into.
We have unused borrowing capacity at the FHLB of $381.4 million, unused borrowing capacity at the Federal Reserve of $126.6 million and unused lines of credit totaling $51.0 million, in addition to over $200 million in unencumbered, liquid investment portfolio assets. ​ Purchase Obligations In the normal course of conducting our banking and financial services business, and in connection with providing products and services to our customers, a variety of traditional third-party contracts for support services have been entered into.
Tangible book value per share excluding net unrealized security losses (non-GAAP) increased 9% on annualized basis on net income offset by dividends to shareholders. ​ ​ 35 Table of Contents ​ SELECTED FINANCIAL DATA ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Years Ended December 31, (in millions, except ratios and share data) 2022 2021 2020 Financial Condition Data: ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 3,910 ​ $ 3,709 ​ $ 3,724 Total earning assets (1) ​ 3,601 ​ 3,377 ​ 3,371 Total investments ​ 574 ​ 626 ​ 599 Total loans ​ 2,903 ​ 2,532 ​ 2,563 Allowance for credit losses ​ 26 ​ 23 ​ 19 Total goodwill and intangible assets ​ 125 ​ 126 ​ 127 Total deposits ​ 3,043 ​ 3,049 ​ 2,906 Total borrowings ​ 394 ​ 179 ​ 336 Total shareholders' equity ​ 393 ​ 424 ​ 407 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Data: ​ ​ ​ Total interest and dividend income ​ $ 127 ​ $ 111 ​ $ 126 Total interest expense ​ 13 ​ 15 ​ 27 Net interest income ​ 114 ​ 96 ​ 99 Non-interest income ​ 35 ​ 42 ​ 43 Net revenue (2) ​ 149 ​ 138 ​ 142 Provision for credit losses ​ 3 ​ (1) ​ 6 Total non-interest expense ​ 91 ​ 91 ​ 95 Income tax expense ​ 11 ​ 9 ​ 8 Net income ​ 44 ​ 39 ​ 33 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratios and Other Data: ​ ​ ​ Per Common Share Data ​ ​ ​ Basic earnings ​ $ 2.90 ​ $ 2.63 ​ $ 2.18 Diluted earnings ​ 2.88 ​ 2.61 ​ 2.18 Total book value (5) ​ 26.09 ​ 28.27 ​ 27.29 Dividends ​ 1.02 ​ 0.94 ​ 0.88 Common stock price: ​ ​ ​ High ​ 33.11 ​ 32.94 ​ 25.55 Low ​ 24.00 ​ 21.26 ​ 13.05 Close ​ 32.04 ​ 28.93 ​ 22.59 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding (in thousands) : ​ ​ ​ Basic ​ 15,040 ​ 14,969 ​ 15,246 Diluted ​ 15,112 ​ 15,045 ​ 15,272 ​ 36 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Years Ended December 31, (in millions, except ratios and share data) 2022 2021 2020 Performance Ratios: (4) ​ ​ ​ ​ ​ ​ ​ Return on assets 1.16 % 1.06 % 0.88 % Return on equity (6) 10.91 9.50 8.29 ​ Interest rate spread 3.24 2.74 2.92 ​ Net interest margin (5) 3.36 2.88 2.97 ​ Dividend payout ratio 35.20 35.81 40.36 ​ ​ ​ ​ ​ ​ ​ ​ ​ Organic Growth Ratios: ​ Total commercial loans 19 % 7 % 17 % Total loans 15 (1) (3) ​ Total deposits (0) 5 8 ​ ​ ​ ​ ​ ​ ​ ​ ​ Asset Quality and Condition Ratios: ​ Non-accruing loans/total loans 0.23 % 0.40 % 0.48 % Net (recoveries) charge-offs/average loans (0.01) 0.01 0.07 ​ Allowance for credit losses/total loans 0.89 0.90 0.74 ​ Loans/deposits 95 83 88 ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital Ratios: ​ Tier 1 capital to average assets - Company 9.21 % 8.66 % 8.12 % Tier 1 capital to risk-weighted assets - Company 11.02 11.90 11.28 ​ Tier 1 capital to average assets - Bank 10.10 9.62 9.02 ​ Tier 1 capital to risk-weighted assets - Bank 12.67 13.22 12.52 ​ Shareholders equity to total assets (5) 10.06 11.43 11.04 ​ (1) Earning assets includes non-accruing loans and interest-bearing deposits with other banks.
Tangible book value per share excluding net unrealized security losses (non-GAAP) increased 9% on an annualized basis on net income offset by dividends to shareholders. ​ 38 Table of Contents ​ SELECTED FINANCIAL DATA ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Years Ended December 31, (in millions, except ratios and share data) 2023 2022 2021 Financial Condition Data: ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 3,971 ​ $ 3,910 ​ $ 3,709 Total earning assets (1) ​ 3,664 ​ 3,601 ​ 3,377 Total investments ​ 547 ​ 574 ​ 626 Total loans ​ 2,999 ​ 2,903 ​ 2,532 Allowance for credit losses ​ 28 ​ 26 ​ 23 Total goodwill and intangible assets ​ 124 ​ 125 ​ 126 Total deposits ​ 3,141 ​ 3,043 ​ 3,049 Total borrowings ​ 332 ​ 394 ​ 179 Total shareholders' equity ​ 432 ​ 393 ​ 424 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Data: ​ ​ ​ Total interest and dividend income ​ $ 174 ​ $ 127 ​ $ 111 Total interest expense ​ 57 ​ 13 ​ 15 Net interest income ​ 118 ​ 114 ​ 96 Non-interest income ​ 36 ​ 35 ​ 42 Net revenue (2) ​ 154 ​ 149 ​ 138 Provision for credit losses ​ 3 ​ 3 ​ (1) Total non-interest expense ​ 93 ​ 91 ​ 91 Income tax expense ​ 12 ​ 11 ​ 9 Net income ​ 45 ​ 44 ​ 39 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratios and Other Data: ​ ​ ​ Per Common Share Data ​ ​ ​ Basic earnings ​ $ 2.96 ​ $ 2.90 ​ $ 2.63 Diluted earnings ​ 2.95 ​ 2.88 ​ 2.61 Total book value (5) ​ 28.48 ​ 26.09 ​ 28.27 Dividends ​ 1.10 ​ 1.02 ​ 0.94 Common stock price: ​ ​ ​ High ​ 32.42 ​ 33.11 ​ 32.94 Low ​ 19.55 ​ 24.00 ​ 21.26 Close ​ 29.36 ​ 32.04 ​ 28.93 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding (in thousands) : ​ ​ ​ Basic ​ 15,142 ​ 15,040 ​ 14,969 Diluted ​ 15,195 ​ 15,112 ​ 15,045 ​ 39 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Years Ended December 31, (in millions, except ratios and share data) 2023 2022 2021 Performance Ratios: (4) ​ ​ ​ ​ ​ ​ ​ Return on assets 1.14 % 1.16 % 1.06 % Return on equity 10.88 10.91 9.50 ​ Interest rate spread 2.86 3.24 2.74 ​ Net interest margin (5) 3.29 3.36 2.88 ​ Dividend payout ratio 36.93 35.20 35.81 ​ ​ ​ ​ ​ ​ ​ ​ ​ Organic Growth Ratios: ​ Total commercial loans 6 % 19 % 7 % Total loans 3 15 (1) ​ Total deposits 3 (0) 5 ​ ​ ​ ​ ​ ​ ​ ​ ​ Asset Quality and Condition Ratios: ​ Non-accruing loans/total loans 0.18 % 0.23 % 0.40 % Net (recoveries) charge-offs/average loans — (0.01) 0.01 ​ Allowance for credit losses/total loans 0.94 0.89 0.90 ​ Loans/deposits 95 95 83 ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital Ratios: ​ Tier 1 capital to average assets - Company 9.70 % 9.21 % 8.66 % Tier 1 capital to risk-weighted assets - Company 11.96 11.02 11.90 ​ Tier 1 capital to average assets - Bank 10.50 10.10 9.62 ​ Tier 1 capital to risk-weighted assets - Bank 12.96 12.67 13.22 ​ Shareholders equity to total assets (5) 10.88 10.06 11.43 ​ (1) Earning assets includes non-accruing loans and interest-bearing deposits with other banks.
At the end of 2022, our securities portfolio had an average life of 9.4 years with an effective duration of 5.0 compared to an average life of 5.3 years with an effective duration of 4.2 years at the end of 2021. The extension of duration during 2022 was driven by the increase in rates.
At the end of 2023, our securities portfolio had an average life of 8.7 years with an effective duration of 4.8 compared to an average life of 9.4 years with an effective duration of 5.0 years at the end of 2022. The extension of duration during 2022 was driven by the increase in rates.
(2) The average balance for securities is based on amortized cost. (3) Fully taxable equivalent considers the impact of tax-advantaged securities and loans. (4) Adjusted net interest margin excludes PPP loans. ​ ​ RATE/VOLUME ANALYSIS ​ The following table presents the effects of rate and volume changes on the fully taxable equivalent net interest income.
(2) The average balance for securities is based on amortized cost. (3) Fully taxable equivalent considers the impact of tax-advantaged securities and loans. 41 Table of Contents RATE/VOLUME ANALYSIS ​ The following table presents the effects of rate and volume changes on the fully taxable equivalent net interest income.
Adjusted net interest margin excludes PPP loans and interest-earning deposits with other banks. ​ 42 Table of Contents COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2022 AND 2021 Cash and cash equivalents Total cash and cash equivalents at December 31, 2022 were $92.3 million, compared to $250.3 million at December 31, 2021.
Adjusted net interest margin excludes PPP loans and interest-earning deposits with other banks. ​ 45 Table of Contents COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2023 AND 2022 Cash and cash equivalents Total cash and cash equivalents at December 31, 2023 were $94.8 million, compared to $92.3 million at December 31, 2022.
The allowance is sensitive to a number of internal factors, such as modifications in the mix and level of loan balances outstanding, portfolio performance and assigned risk ratings.
Allowance for credit losses on loans (the “allowance”) The allowance is sensitive to a number of internal factors, such as modifications in the mix and level of loan balances outstanding, portfolio performance and assigned risk ratings.
Income Tax Expense Income tax expense was $11.3 million for the year ended December 31, 2022, compared with $9.3 million for the year ended December 31, 2021. The effective tax rate increased to 20.6% in 2022 from 19.2% in 2021 due to a higher proportion of revenue from non-exempt sources.
Income Tax Expense Income tax expense was $12.3 million for the year ended December 31, 2023, compared with $11.3 million for the year ended December 31, 2022. The effective tax rate increased to 21.5% in 2023 from 20.6% in 2022 due to a higher proportion of revenue from non-exempt sources.
Refer to the Reconciliation of Non-GAAP Financial Measures for additional information. ​ 37 Table of Contents AVERAGE BALANCES AND AVERAGE YIELDS/RATES ​ The following table presents average balances and average rates and yields on a fully taxable equivalent basis for the periods included: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 ​ 2021 ​ 2020 ​ ​ ​ Average ​ Interest ​ Yield/ ​ Average ​ Interest ​ Yield/ ​ Average ​ Interest ​ Yield/ (in millions, except ratios) Balance (3) ​ Rate (3) ​ Balance (3) ​ Rate (3) Balance (3) ​ Rate (3) Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-earning deposits with other banks ​ $ 72 ​ ​ 1 ​ 1.07 % ​ $ 219 ​ $ — ​ 0.15 % ​ $ 89 ​ $ — ​ 0.15 % Securities available for sale and FHLB stock (2)(3) ​ ​ 630 ​ ​ 19 ​ 2.99 ​ ​ ​ 621 ​ ​ 16 ​ 2.63 ​ ​ ​ 625 ​ ​ 20 ​ 3.20 ​ Loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate ​ ​ 1,340 ​ ​ 55 ​ 4.13 ​ ​ ​ 1,210 ​ ​ 40 3.34 ​ ​ ​ 993 ​ ​ 40 4.02 ​ Commercial and industrial (3) ​ 410 ​ ​ 17 ​ 4.25 ​ ​ 348 ​ 14 3.98 ​ ​ 379 ​ 21 5.62 ​ Paycheck protection program ​ ​ 1 ​ ​ — ​ 17.27 ​ ​ ​ 51 ​ ​ 6 ​ 11.93 ​ ​ ​ 109 ​ ​ 5 ​ 4.19 ​ Residential ​ 873 ​ ​ 31 ​ 3.55 ​ ​ 825 ​ 32 3.86 ​ ​ 1,078 ​ 41 3.78 ​ Consumer ​ 100 ​ ​ 4 ​ 4.41 ​ ​ 99 ​ 4 3.77 ​ ​ 124 ​ 5 4.03 ​ Total loans (1) ​ 2,724 ​ 107 3.98 ​ ​ 2,533 ​ 96 3.78 ​ ​ 2,683 ​ 112 4.16 ​ Total earning assets ​ 3,426 ​ ​ 127 ​ 3.73 % ​ 3,373 ​ 112 3.33 % ​ 3,397 ​ 132 3.87 % Cash and due from banks ​ ​ 37 ​ ​ ​ ​ ​ ​ ​ ​ 35 ​ ​ ​ ​ ​ ​ 27 ​ ​ ​ ​ ​ ​ Allowance for credit losses ​ ​ (24) ​ ​ ​ ​ ​ ​ ​ ​ (23) ​ ​ ​ ​ ​ ​ (17) ​ ​ ​ ​ ​ ​ Other assets ​ 308 ​ ​ ​ ​ ​ ​ ​ 333 ​ ​ ​ ​ ​ 351 ​ ​ ​ ​ Total assets ​ $ 3,747 ​ ​ ​ ​ ​ $ 3,718 ​ ​ ​ ​ ​ $ 3,758 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ NOW ​ $ 907 ​ ​ 1 ​ 0.16 % ​ $ 949 ​ $ 1 0.11 % ​ $ 643 ​ $ 1 0.20 % Savings ​ 658 ​ ​ 1 ​ 0.10 ​ ​ 629 ​ 1 0.90 ​ ​ 467 ​ 1 0.16 ​ Money market ​ 466 ​ ​ 3 ​ 0.63 ​ ​ 390 ​ 1 0.12 ​ ​ 396 ​ 2 0.42 ​ Time deposits ​ 366 ​ ​ 2 ​ 0.61 ​ ​ 425 ​ 6 1.51 ​ ​ 796 ​ 14 1.80 ​ Total interest bearing deposits ​ 2,397 ​ 7 0.31 ​ ​ 2,393 ​ 9 0.36 ​ ​ 2,302 ​ 18 0.78 ​ Borrowings ​ 203 ​ ​ 6 ​ 2.71 ​ ​ 175 ​ 7 3.82 ​ ​ 507 ​ 9 1.75 ​ Total interest bearing liabilities ​ 2,600 ​ 13 0.49 % ​ 2,568 ​ 16 0.59 % ​ 2,809 ​ 27 0.96 % Non-interest bearing demand deposits ​ 679 ​ ​ ​ 668 ​ ​ ​ 481 ​ ​ Other liabilities ​ 69 ​ ​ ​ 68 ​ ​ ​ 67 ​ ​ Total liabilities ​ 3,348 ​ ​ ​ 3,304 ​ ​ ​ 3,357 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total shareholders' equity ​ 399 ​ ​ ​ 414 ​ ​ ​ 401 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities and shareholders' equity ​ $ 3,747 ​ ​ ​ $ 3,718 ​ ​ ​ $ 3,758 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ ​ $ 114 ​ ​ ​ ​ $ 96 ​ ​ ​ ​ $ 105 ​ ​ Net interest spread ​ ​ ​ ​ ​ ​ ​ 3.24 % ​ ​ ​ ​ ​ ​ ​ 2.74 % ​ ​ ​ ​ ​ ​ ​ 2.91 % Net interest margin ​ ​ 3.36 ​ ​ ​ 2.88 ​ ​ ​ 2.97 ​ Adjusted net interest margin (4) ​ ​ ​ ​ ​ ​ ​ 3.35 ​ ​ ​ ​ ​ ​ ​ ​ 2.76 ​ ​ ​ ​ ​ ​ ​ ​ 2.93 ​ ​ ​ 38 Table of Contents (1) The average balances of loans include non-accrual loans and unamortized deferred fees and costs.
Refer to the Reconciliation of Non-GAAP Financial Measures for additional information. ​ 40 Table of Contents AVERAGE BALANCES AND AVERAGE YIELDS/RATES ​ The following table presents average balances and average rates and yields on a fully taxable equivalent basis for the periods included: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ Average ​ Interest ​ Yield/ ​ Average ​ Interest ​ Yield/ ​ Average ​ Interest ​ Yield/ (in millions, except ratios) Balance (3) ​ Rate (3) ​ Balance (3) ​ Rate (3) Balance (3) ​ Rate (3) Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-earning deposits with other banks ​ $ 37 ​ $ 2 ​ 5.33 % ​ $ 72 ​ ​ 1 ​ 1.07 % ​ $ 219 ​ $ — ​ 0.15 % Securities available for sale and FHLB stock (2)(3) ​ ​ 610 ​ ​ 26 ​ 3.88 ​ ​ ​ 630 ​ ​ 19 ​ 2.99 ​ ​ ​ 621 ​ ​ 16 ​ 2.63 ​ Loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate ​ ​ 1,537 ​ ​ 81 ​ 5.27 ​ ​ ​ 1,340 ​ ​ 55 ​ 4.13 ​ ​ ​ 1,210 ​ ​ 40 3.34 ​ Commercial and industrial (3) ​ 437 ​ ​ 28 ​ 6.39 ​ ​ 410 ​ ​ 17 ​ 4.25 ​ ​ 348 ​ 14 3.98 ​ Paycheck protection program ​ ​ — ​ ​ — ​ — ​ ​ ​ 1 ​ ​ — ​ 17.27 ​ ​ ​ 51 ​ ​ 6 ​ 11.93 ​ Residential ​ 905 ​ ​ 35 ​ 3.82 ​ ​ 873 ​ ​ 31 ​ 3.55 ​ ​ 825 ​ 32 3.86 ​ Consumer ​ 97 ​ ​ 7 ​ 6.75 ​ ​ 100 ​ ​ 4 ​ 4.41 ​ ​ 99 ​ 4 3.77 ​ Total loans (1) ​ 2,976 ​ 151 5.04 ​ ​ 2,724 ​ 107 3.98 ​ ​ 2,533 ​ 96 3.78 ​ Total earning assets ​ 3,623 ​ ​ 179 ​ 4.85 % ​ 3,426 ​ ​ 127 ​ 3.73 % ​ 3,373 ​ 112 3.33 % Cash and due from banks ​ ​ 34 ​ ​ ​ ​ ​ ​ ​ ​ 37 ​ ​ ​ ​ ​ ​ ​ ​ 35 ​ ​ ​ ​ Allowance for credit losses ​ ​ (27) ​ ​ ​ ​ ​ ​ ​ ​ (24) ​ ​ ​ ​ ​ ​ ​ ​ (23) ​ ​ ​ ​ Other assets ​ ​ 304 ​ ​ ​ ​ ​ ​ ​ ​ 308 ​ ​ ​ ​ ​ ​ ​ 333 ​ ​ ​ ​ Total assets ​ $ 3,934 ​ ​ ​ ​ ​ $ 3,747 ​ ​ ​ ​ ​ $ 3,718 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ NOW ​ $ 900 ​ $ 9 ​ 0.98 % ​ $ 907 ​ ​ 1 ​ 0.16 % ​ $ 949 ​ $ 1 0.11 % Savings ​ 595 ​ ​ 2 ​ 0.39 ​ ​ 658 ​ ​ 1 ​ 0.10 ​ ​ 629 ​ 1 0.90 ​ Money market ​ 407 ​ ​ 10 ​ 2.48 ​ ​ 466 ​ ​ 3 ​ 0.63 ​ ​ 390 ​ 1 0.12 ​ Time deposits ​ 533 ​ ​ 17 ​ 3.19 ​ ​ 366 ​ ​ 2 ​ 0.61 ​ ​ 425 ​ 6 1.51 ​ Total interest bearing deposits ​ 2,435 ​ 38 1.57 ​ ​ 2,397 ​ 7 0.31 ​ ​ 2,393 ​ 9 0.36 ​ Borrowings ​ 401 ​ ​ 18 ​ 4.56 ​ ​ 203 ​ ​ 6 ​ 2.71 ​ ​ 175 ​ 7 3.82 ​ Total interest bearing liabilities ​ 2,836 ​ 56 1.99 % ​ 2,600 ​ 13 0.49 % ​ 2,568 ​ 16 0.59 % Non-interest bearing demand deposits ​ 619 ​ ​ ​ 679 ​ ​ ​ 668 ​ ​ Other liabilities ​ 67 ​ ​ ​ 69 ​ ​ ​ 68 ​ ​ Total liabilities ​ 3,522 ​ ​ ​ 3,348 ​ ​ ​ 3,304 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total shareholders' equity ​ 412 ​ ​ ​ 399 ​ ​ ​ 414 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities and shareholders' equity ​ $ 3,934 ​ ​ ​ $ 3,747 ​ ​ ​ $ 3,718 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest spread ​ ​ ​ ​ ​ ​ ​ 2.86 % ​ ​ ​ ​ ​ ​ ​ 3.24 % ​ ​ ​ ​ ​ ​ ​ 2.74 % Net interest margin ​ ​ 3.29 ​ ​ ​ 3.36 ​ ​ ​ 2.88 ​ ​ ​ (1) The average balances of loans include non-accrual loans and unamortized deferred fees and costs.
The Company’s 2022 dividend payout ratio amounted to 35%, compared with 36% in 2021.
The Company’s 2023 dividend payout ratio amounted to 37%, compared with 35% in 2022.
Non-GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non-GAAP financial measures or both. ​ The non-GAAP financial measures that we discuss in this Annual Report should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP.
The non-GAAP financial measures that we discuss in this Annual Report should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP.
The net fair value of all derivatives was an asset of $4.8 million at the end of 2022 compared to a $1.1 million liability at year-end 2021. The increase in net derivative fair values reflects the rise in long-term interest rates.
The net fair value of all derivatives was an asset of $3.2 million at the end of 2023 compared to a $4.8 million asset at year-end 2022. The decrease in net derivative fair values reflects the slowing of rising long-term interest rates.
Net unrealized losses were $71.8 million, or 12% of gross securities, compared with a gain of $2.6 million, or 0.4% of gross securities as fixed rate securities continued to reprice to higher interest rates. All securities are classified as available for sale preserving capital flexibility. ​ ● Total loans grew 15% year-over-year as commercial loans increased 21%.
Net unrealized losses were $62.4 million, or 11% of gross securities, compared with a gain of $71.8 million, or 12% of gross securities. All securities are classified as available for sale preserving capital flexibility. ​ ● Total loans grew 3% year-over-year as commercial loans increased 6%.
Equity included net unrealized losses on securities, derivative and pension revaluations, net of tax, totaling a $58.3 million loss at the end of 2022 compared to a $2.3 million gain at year-end 2021. ​ During 2022 and 2021, the Company declared and distributed regular cash dividends on its common stock in the aggregate amounts of $15.3 million, respectively.
Equity included securities adjustments, net of tax, totaling a $47.6 million loss at the end of 2023 compared to a $55.3 million loss at year-end 2022. ​ During 2023 and 2022, the Company declared and distributed regular cash dividends on its common stock in the aggregate amounts of $16.6 million compared to $15.3 million, respectively.
Interest-earning cash held with other banks totaled $52.4 million at year-end 2022 compared to $216.9 million at year end 2021 carrying a yield of 1.07% in 2022 versus 0.15% in 2021.
Interest-earning cash held with other banks totaled $52.6 million at year-end 2023 compared to $52.4 million at year-end 2022 carrying a yield of 5.33% in 2023 versus 1.07% in 2022. ​ Securities Securities totaled $547.4 million at year-end 2023 and $574.4 million at year-end 2022.
Both ratios include the benefit of higher net income and lower average balances related to unrealized losses on securities as noted below under the “Financial Position” section. ​ ● Net interest income was $113.7 million, an increase of 19%. Net interest margin (NIM) was 3.36%, an increase of 48 basis points from the same period in 2021.
Both ratios include higher borrowing costs and lower unrealized losses on securities as noted below under the “Financial Position” section. ​ ● Net interest income was $117.7 million, an increase of 4%. Net interest margin was 3.29%, a decrease of 7 basis points from the same period in 2022.
The Company's primary sources of revenue, through the Bank, are net interest income (predominantly from loans and investment securities) and noninterest income (principally fees and other revenue from financial services provided to customers or ancillary services tied to loans and deposits). ​ ANNUAL PERFORMANCE SUMMARY Earnings (For year ended December 31, 2022 compared to the same period of 2021) ​ ● Net income was $43.6 million, an increase of 11%, or 25% on a non-GAAP basis when excluding the accretion from Paycheck Protection Program (“PPP”) loan fees.
The Company's primary sources of revenue, through the Bank, are net interest income (predominantly from loans and investment securities) and noninterest income (principally fees and other revenue from financial services provided to customers or ancillary services tied to loans and deposits). ​ ANNUAL PERFORMANCE SUMMARY Earnings (For year ended December 31, 2023 compared to the same period of 2022) ​ ● Net income was $44.9 million compared to $43.6, an increase of 3%, driven primarily due to a benefit to net interest income as our assets repriced to higher rates.
For each category of interest- earning assets and interest-bearing liabilities, information is provided with respect to changes attributable to (1) changes in rate (change in rate multiplied by prior year volume), (2) changes in volume (change in volume multiplied by prior year rate), and (3) changes in volume/rate (change in rate multiplied by change in volume) have been allocated proportionately based on the absolute value of the change due to the rate and the change due to volume. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 Compared with 2021 ​ 2021 Compared with 2020 ​ ​ Increases (Decreases) due to ​ Increases (Decreases) due to (in thousands) Rate Volume Net Rate Volume Net Interest income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-earning deposits with other banks ​ $ 660 ​ $ (224) ​ $ 436 ​ $ 11 ​ $ 191 ​ $ 202 Securities available for sale and FHLB stock ​ ​ 2,274 ​ ​ 233 ​ ​ 2,507 ​ ​ (3,560) ​ ​ (139) ​ ​ (3,699) Loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate ​ ​ 10,614 ​ ​ 4,340 ​ ​ 14,954 ​ ​ (8,244) ​ ​ 8,748 ​ ​ 504 Commercial and industrial ​ 75 ​ 3,448 ​ 3,523 ​ (5,712) ​ (1,752) ​ (7,464) Paycheck protection program ​ ​ 114 ​ ​ (5,891) ​ ​ (5,777) ​ ​ 3,919 ​ ​ (2,450) ​ ​ 1,469 Residential ​ (2,662) ​ 1,836 ​ (826) ​ 647 ​ (9,566) ​ (8,919) Consumer ​ 644 ​ 43 ​ 687 ​ (263) ​ (1,011) ​ (1,274) Total loans ​ 8,785 ​ 3,776 ​ 12,561 ​ (9,653) ​ (6,031) ​ (15,684) Total interest income ​ $ 11,719 ​ $ 3,785 ​ $ 15,504 ​ $ (13,202) ​ $ (5,979) ​ $ (19,181) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense: ​ ​ ​ ​ ​ ​ Deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NOW ​ $ 466 ​ $ (48) ​ $ 418 ​ $ (842) ​ $ 617 ​ $ (225) Savings ​ 101 ​ 25 ​ 126 ​ (452) ​ 262 ​ (190) Money market ​ 2,368 ​ 93 ​ 2,461 ​ (1,148) ​ (23) ​ (1,171) Time deposits ​ (3,318) ​ (886) ​ (4,204) ​ (1,230) ​ (6,685) ​ (7,915) Total deposits ​ (383) ​ (816) ​ (1,199) ​ (3,672) ​ (5,829) ​ (9,501) Borrowings ​ (2,249) ​ 1,062 ​ (1,187) ​ 3,619 ​ (5,812) ​ (2,193) Total interest expense ​ $ (2,632) ​ $ 246 ​ $ (2,386) ​ $ (53) ​ $ (11,641) ​ $ (11,694) Change in net interest income ​ $ 14,351 ​ $ 3,539 ​ $ 17,890 ​ $ (13,149) ​ $ 5,662 ​ $ (7,487) ​ 39 Table of Contents NON-GAAP FINANCIAL MEASURES ​ Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America ("GAAP") and the prevailing practices in the financial services industry.
For each category of interest- earning assets and interest-bearing liabilities, information is provided with respect to changes attributable to (1) changes in rate (change in rate multiplied by prior year volume), (2) changes in volume (change in volume multiplied by prior year rate), and (3) changes in volume/rate (change in rate multiplied by change in volume) have been allocated proportionately based on the absolute value of the change due to the rate and the change due to volume. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 Compared with 2022 ​ 2022 Compared with 2021 ​ ​ Increases (Decreases) due to ​ Increases (Decreases) due to (in thousands) Rate Volume Net Rate Volume Net Interest income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-earning deposits with other banks ​ $ 1,595 ​ $ (369) ​ $ 1,226 ​ $ 660 ​ $ (224) ​ $ 436 Securities available for sale and FHLB stock ​ ​ 5,424 ​ ​ (575) ​ ​ 4,849 ​ ​ 2,274 ​ ​ 233 ​ ​ 2,507 Loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate ​ ​ 17,630 ​ ​ 8,110 ​ ​ 25,740 ​ ​ 10,614 ​ ​ 4,340 ​ ​ 14,954 Commercial and industrial ​ 9,360 ​ 1,168 ​ 10,528 ​ 75 ​ 3,448 ​ 3,523 Paycheck protection program ​ ​ — ​ ​ (223) ​ ​ (223) ​ ​ 114 ​ ​ (5,891) ​ ​ (5,777) Residential ​ 2,376 ​ 1,142 ​ 3,518 ​ (2,662) ​ 1,836 ​ (826) Consumer ​ 2,280 ​ (109) ​ 2,171 ​ 644 ​ 43 ​ 687 Total loans ​ 31,646 ​ 10,088 ​ 41,734 ​ 8,785 ​ 3,776 ​ 12,561 Total interest income ​ $ 38,665 ​ $ 9,144 ​ $ 47,809 ​ $ 11,719 ​ $ 3,785 ​ $ 15,504 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense: ​ ​ ​ ​ ​ ​ Deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NOW ​ $ 7,342 ​ $ (12) ​ $ 7,330 ​ $ 466 ​ $ (48) ​ $ 418 Savings ​ 1,707 ​ (66) ​ 1,641 ​ 101 ​ 25 ​ 126 Money market ​ 7,517 ​ (376) ​ 7,141 ​ 2,368 ​ 93 ​ 2,461 Time deposits ​ 13,761 ​ 1,015 ​ 14,776 ​ (3,318) ​ (886) ​ (4,204) Total deposits ​ 30,327 ​ 561 ​ 30,888 ​ (383) ​ (816) ​ (1,199) Borrowings ​ 7,406 ​ 5,368 ​ 12,774 ​ (2,249) ​ 1,062 ​ (1,187) Total interest expense ​ $ 37,733 ​ $ 5,929 ​ $ 43,662 ​ $ (2,632) ​ $ 246 ​ $ (2,386) Change in net interest income ​ $ 932 ​ $ 3,215 ​ $ 4,147 ​ $ 14,351 ​ $ 3,539 ​ $ 17,890 ​ 42 Table of Contents NON-GAAP FINANCIAL MEASURES ​ Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America ("GAAP") and the prevailing practices in the financial services industry.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS Please refer to the notes on Recently Adopted Accounting Principles and Future Application of Accounting Pronouncements in Note 1 – Summary of Significant Accounting Policies of the Consolidated Financial Statements.
These lower market values may negatively affect the Bank’s liquidity position as it results in a lower value of the Bank’s liquid assets. ​ IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS Please refer to the notes on Recently Adopted Accounting Principles and Future Application of Accounting Pronouncements in Note 1 – Summary of Significant Accounting Policies of the Consolidated Financial Statements.
Unused credit lines grew at the end of 2022 increasing reserves by $1.7 million, which are also recorded in other liabilities. ​ Equity Total equity was $393.5 million at year-end 2022, compared with $424.1 million at year-end 2021. Book value per share was $26.09 as of December 31, 2022 compared with $28.27 at December 31, 2021.
The reserve for unfunded commitments remained flat at the end of 2023 at $3.9 million, which are also recorded in other liabilities. ​ Equity Total equity was $432.1 million at year-end 2023, compared with $393.5 million at year-end 2022. Book value per share was $28.48 as of December 31, 2023 compared with $26.09 at December 31, 2022.
These types of purchase obligations that will come due during 2023 totaled $7.7 million as of December 31, 2022 which is expected to be funded by cash flows generated from our operations.
These types of purchase obligations that will come due during 2024 approximates $9.5 million as of December 31, 2023 which is expected to be funded by cash flows generated from our operations. Impact of Inflation and Changing Prices A banking organization’s assets and liabilities are primarily monetary.
Deferred tax assets, net, increased $18.9 million as of December 31, 2022 compared to 2021 driven by the unrealized loss position in the securities available for sale portfolio. ​ Deposits and Borrowings Total deposits were $3.0 billion at the end of 2022 and 2021.
Deferred tax assets, net, decreased $1.5 million as of December 31, 2023 compared to 2022 driven by the unrealized loss position in the securities available for sale portfolio.
Interest-earning cash balances, held mostly at the Federal Reserve Bank, reduced NIM by 5 basis points in the year and 19 basis points in 2021. The yield on earning assets totaled 3.73% compared to 3.33% in 2021. Excluding the impact of PPP and excess cash, the yield on earning assets totaled 3.79% and 3.42% for the same periods.
The net interest margin was 3.29% in 2023 compared to 3.35% in the prior year. Interest-earning cash balances, held mostly at the Federal Reserve Bank, reduced NIM by 2 basis points in the year and 5 basis points in 2022. The yield on earning assets totaled 4.85% compared to 3.73% in 2022.
The weighted average yield of the securities portfolio was 2.99% as of December 31, 2022 compared to 2.63% at year-end 2021.
Unrealized gains shifted to loss position in 2022 due to changes in the long-term treasury yield curve. The weighted average yield of the securities portfolio was 3.85% as of December 31, 2023 compared to 2.99% at year-end 2022.
Customer service fees increased 12% to $14.8 million in 2022 due to higher transaction volumes associated with 2,460 net new core accounts that opened during the year. The Company sold securities resulting in gains of $53 thousand in 2022 compared to $2.9 million during 2021.
Customer service fees increased 3% to $15.2 million in 2023 due to higher transaction volumes associated with 1,000 net new core accounts that opened during the year.
Non-accruing loans decreased to $6.5 million, or 0.23% of total loans at the end of 2022 from $10.2 million or 0.40% of total loans at year-end 2021. The ratio of accruing past due loans to total loans improved to 0.09% of total loans from 0.32%. Total delinquent and non-accruing loans as percentage of total improved to 0.32% from 0.72%.
The ratio of accruing past due loans to total loans increased to 0.12% of total loans from 0.09%. Total delinquent and non-accruing loans as percentage of total loans improved to 0.30% from 0.32%.
All securities remain classified as available for sale to provide flexibility in loan funding and management of our cost of funds. ​ Loans Loans increased by $370.8 million from year-end 2021 or 15%. The increase was the net result of the strategy to grow commercial portfolios.
All securities remain classified as available for sale to provide flexibility in loan funding and management of our cost of funds. ​ Loans Loans increased by $96.4 million from year-end 2022 or 3%. The controlled growth was a function of the tight credit markets and the rising interest rate environment in 2023 that limited commercial loan refinancing activity.
Non-Interest Income Non-interest income in 2022 was $35.3 million compared to $42.3 million in 2021. Trust management fees were $14.6 million in 2022 compared to $15.2 in 2021 due to lower market valuation of assets under management (“AUM”).
Trust management fees were $14.3 million in 2023 compared to $14.6 in 2022 due to lower market valuation of assets under management (“AUM”) throughout the year. AUM was $2.5 billion compared to $2.3 billion in 2022, the increase of $143 million primarily due to higher security valuations in the fourth quarter 2023.
The $20.7 million increase primarily reflects a $10.1 million increase in capital commitments on limited partnership investments, a 43 Table of Contents $6.4 million net increase in customer loan swaps, and a $4.2 million variable rate loan hedge increase due to higher interest rates compared to 2021.
The $12.5 million decrease primarily reflects a $10.0 million decrease in capital commitments on limited partnership investments, a $5.2 million net decrease in customer loan swaps, and a $1.5 million variable rate loan hedge decrease offset by $3.5 million increase in brokered CD and a $581 thousand increase in CD interest payable.
There were $11.0 million of purchases and $3.5 million in sales of FHLB stock during the year. Fair value adjustments decreased the security portfolio by $71.8 million in 2022 compared to a $2.8 million unrealized gain in 2021. Unrealized gains shifted to loss position in 2022 due to changes in the long-term treasury yield curve.
During 2023, security purchases totaled $7.5 million and were offset $44.6 million of maturities, calls and pay-downs of amortizing securities. There were $18.4 million of purchases and $20.5 million in sales of FHLB stock during the year. Fair value adjustments decreased the security portfolio by $62.4 million in 2023 compared to a $71.8 million unrealized gain in 2022.
Non-maturity deposits increased $97.0 million in 2022, or 4% due to growth in new accounts with over 2,460 new accounts opened. Time deposits decreased $102.1 million to $323.4 million at year-end 2022 versus $425.5 million in 2021. $178 million of brokered deposits matured in of 2021 and were not replaced due to excess liquidity.
Non-maturity deposits decreased $279.1 million in 2023, or 10% due to consumer’s migration to brokerage accounts and higher yielding Time deposits. 4,638 non-maturity deposit accounts with new customers were opened in 2023. Time deposits increased $376.8 million to $700.3 million at year-end 2023 versus $323.4 million in 2022. Brokered deposits increased $204.5 million.
Net charge-offs continue to be historically low with a net recovery of $238 thousand in 2022 compared to a net charge-off of $209 thousand in 2021. ​ Other Assets Total other assets increased $47.8 million to $366 million at December 31, 2022 from $318 million as of December 31, 2021.
Net charge-offs increased to $626 thousand in 2023 compared to a net recovery of $238 thousand in 2022 primarily driven by the resolution of one non-accruing C&I loan. ​ Other Assets Total other assets decreased $10.6 million to $356 million at December 31, 2023 from $366 million as of December 31, 2022.
The improvement in the ratio showcases our displaced approach to expense management. ​ ​ ​ 34 Table of Contents Financial Position (For year ended December 31, 2022 compared to the same period of 2021) ​ ● Total assets increased $200.6 million to $3.9 billion mainly due to strong loan growth offset in part by unfavorable fair value adjustments on our securities portfolio. ​ ● Cash and cash equivalents decreased to $92.3 million, from $250.4 million principally due to self-funding loan growth in the first half of 2022. ​ ● Securities were $574.4 million, or 15% of total assets, compared to $625.7 million, or 16% of total assets.
Salaries and benefits expense increased $3.9 million to $52.5 million in 2023 due to revaluation of post-retirement plan liabilities, higher stock compensation expense and decrease in deferred loan origination costs. ​ ● Efficiency ratio improved to 58.7% in 2023 from 59.3% in 2022. ​ ​ Financial Position (For year ended December 31, 2023 compared to the same period of 2022) ​ ● Total assets increased $61.1 million to $4.0 billion mainly due to loan growth offset by available for sale security pay-downs. ​ 37 Table of Contents ● Cash and cash equivalents increased to $94.8 million, from $92.3 million primarily due to excess cash available generated from operations. ​ ● Total securities were $547.4 million, or 14% of total assets, compared to $574.4 million, or 15% of total assets.
The increase is primarily due to the repricing of variable rate assets and continued loan growth. ​ ● The provision for credit losses was an expense of $2.9 million mainly due to loan growth compared to a net benefit of $1.3 million reflecting improved economic forecasts. ​ ● Non-interest income was $35.3 million, down from $42.3 million primarily due to a $5.0 million decrease in mortgage banking income and $2.9 million of gains on security sales in 2021 that did not reoccur in 2022. ​ ● Non-interest expense was $91.2 million versus $90.5 million.
The decrease is primarily due to the repricing of variable rate assets and continued loan growth offset by higher borrowing costs and cost of interest-bearing liabilities. ​ ● The provision for credit losses was an expense of $2.9 million in both 2023 and 2022. ​ ● Non-interest income was $35.8 million, compared to $35.3 million primarily due to $699 thousand higher bank-owned life insurance (“ BOLI”) income related to one-time death benefits during the first quarter of 2023. ​ ● Non-interest expense was $93.5 million versus $91.3 million.
Retail time deposits decreased $63.0 million as customers moved funds to transactional accounts upon contractual maturity. Total borrowings increased by $215.6 million at December 31, 2022 primarily due to funding loan growth opportunities. ​ Derivative Financial Instruments and Other Liabilities Other liabilities totaled $78.7 million at the end of 2022 compared to $58.0 million as of December 31, 2021.
Total borrowings decreased $62.7 million to $271 million at December 31, 2023 compared to $334 million as of December 31, 2022 primarily due to excess cash available generated from operations. 46 Table of Contents ​ Derivative Financial Instruments and Other Liabilities Other liabilities totaled $66.2 million at the end of 2023 compared to $78.7 million as of December 31, 2022.
Salaries and benefits expense increased $1.5 million to $48.7 million in 2022 due to a $1.5 million increase in incentive accruals on stronger performance metrics and a $1.5 million decrease in deferred loan origination costs driven by lower residential loan volume.
Salaries and benefits expense increased $3.9 million to $52.5 million in 2023 due to a $2.0 million increase in revaluation of post-retirement plan liabilities driven by rate environment, $711 thousand increase in stock compensation expense due to the revaluation of our 47 Table of Contents long term incentive obligations and a $782 thousand decrease in deferred loan origination costs driven by lower residential loan volume.
Diluted earnings per share included a $0.01 and $0.30 benefit from PPP loans in 2022 and 2021, respectively. ​ ● Return on assets increased to 1.16% from 1.06%. Return on equity was 10.91% compared to 9.50%.
Diluted earnings per share was $2.95, an increase of $0.07 or 2%. ​ ● Return on assets was 1.14% compared to 1.16%. Return on equity was 10.88% compared to 10.91%.
Removed
The increase is primarily due to a benefit to net interest income as our assets repriced to higher rates and efficiency measures on non-interest expense. ​ ● Diluted earnings per share was $2.88, an increase of $0.27 or 11%.
Added
The increase was the net result of the strategy to grow commercial construction and commercial real estate owner-occupied segments. ​ ● The ratio of the allowance for credit losses to total loans was 0.94%, increasing from 0.89%, reflecting more refined economic forecasting, especially in the national unemployment figures, increase in specific reserves, and loan portfolio growth.
Removed
Prior year included a $2.9 million loss on extinguishment of debt. ​ ● Efficiency ratio improved to 59% from 61%, excluding the impact of PPP loans it improved 59% from 64%.
Added
Net charge-offs increased to $590 thousand in 2023 compared to a net recovery of $238 thousand in 2022 primarily driven by one non-accrual commercial and industrial (“C&I loan”). ​ ● Deposit balances increased 3% year-over-year due to consumer’s migration to brokerage accounts and higher yielding time deposits and an increase in brokered deposits. ​ ● Borrowings decreased to $331.5 million from $394.3 million primarily due to excess cash available generated from operations. ​ ● Total book value per share was $28.48 compared to $26.09.
Removed
Loan growth was generated across all of our footprint while adhering to selective criteria and only experienced operators. We believe that the economy in Northern New England continues to be strong despite pressures from the broader economy. ​ ● The ratio of the allowance for credit losses to total loans was 0.89%, decreasing from 0.90%, which reflects solid credit quality.
Added
Non-GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non-GAAP financial measures or both. ​ These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition.
Removed
Net charge-offs continue to be insignificant and each credit metric improved during the year. ​ ● While deposit balances were consistent with 2021, we did see a decline during the fourth quarter of 2022 primarily in institutional accounts with low activity, which tend to be most rate sensitive.
Added
Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information.
Removed
We continue to work with each customer on rates rather than make sweeping movements, which allows us to focus on expanding those relationships as we review individual requests. ​ ● Borrowings increased to $394.2 million from $178.5 million as short-term funding was used to grow loans in the second half of 2022. ​ ● Total book value per share was $26.09 compared to $28.27.
Added
Because non-GAAP financial measures presented in this Annual Report are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies. A reconciliation of non-GAAP financial measures to GAAP measures is provided herein.
Removed
The decrease in cash reflects loan growth on relatively flat deposit balances on a year-over-year basis. ​ Securities Securities totaled $574.4 million at year-end 2022 and $625.7 million at year-end 2021. During 2022, security purchases totaled $109.0 million and were offset by $7.1 million of sales and $73.7 million of maturities, calls and pay-downs of amortizing securities.
Added
In all cases, it should be understood that non-GAAP measures do not depict amounts that accrue directly to the benefit of shareholders. An item which management excludes when computing non-GAAP financial measures can be of substantial importance to the Company’s results for any particular quarter or year.
Removed
Total commercial loans were $1.8 billion growing 19% in 2022 and 10% in 2021 when excluding PPP loans, which was driven mostly from new relationships in commercial real estate fixed-rate products. Total residential loans increased 3% or $25.5 million from year-end 2021, as we placed more originations on the balance sheet instead of selling into the secondary market.
Added
Each non-GAAP measure used by the Company in this Annual Report as supplemental financial data should be considered in conjunction with the Company's GAAP financial information. The Company utilizes these non-GAAP financial measures for purposes of measuring our performance against our peer group and other financial institutions and analyzing our internal performance.
Removed
Residential loan origination volume in 2022 is significantly down as compared to the respective period of 2021 on lower refinancing activity due to increasing market rates. ​ Allowance for Credit Losses The ACL was $25.9 million at the end of 2022 compared to $22.7 million at year-end 2021. The increase is primarily due to the loan portfolio growth.
Added
We also believe these non-GAAP financial measures help investors better understand the Company’s operating performance and trends and allow for better performance comparisons to other banks. In addition, these non-GAAP financial measures remove the impact of unusual items that may obscure trends in the Company’s underlying performance.
Removed
The increase is primarily attributed to a $10.1 million increase in partnership investments, and a $16.2 million increase in the asset position of the derivative and hedging instruments.
Added
Total commercial loans were $2.0 billion, growing 6% in 2023 and 19% in 2022 which was driven mostly from new relationships primarily to commercial borrowers. Total residential loans decreased 2% or $14.6 million from year-end 2022, due to lower demand for prevailing mortgage rates and strategy to sell production to the secondary market.
Removed
The net interest margin was 3.36% in 2022 compared to 2.88% in the prior year. The 2022 adjusted net interest margin (non-GAAP measure), which excludes PPP loans was 3.35% versus 2.93% in 2021. Acceleration of PPP loan fee amortization due to forgiveness contributed 1 basis point to NIM in 2022 and 14 basis points in the same period of 2021.
Added
Home Equity lines decreased 4% or $3.2 million from year-end 2022 due to the run-off of balances associated with the repricing of home equity lines of credit. ​ Allowance for Credit Losses The ACL was $28.1 million at the end of 2023 compared to $25.9 million at year-end 2022.
Removed
The yield on loans was 3.98% in 2022 and 3.78% in 2021. Excluding PPP loans the yield on loans was 3.97% in 2022, and 3.62% in 2021.
Added
The increase was primarily due to more refined economic forecasting, especially in the national unemployment figures and in commercial real estate prices, and loan portfolio growth. Non-accruing loans decreased $1 million to $5.5 million, or 0.18% of total loans at the end of 2023 from $6.5 million or 0.23% of total loans at year-end 2022.
Removed
Costs of interest-bearing liabilities decreased to 0.52% from 0.59% in 2021 due to decreased core deposit levels offset by increased deposit rates. ​ Provision for Credit Losses The provision in 2022 was a $2.9 million expense versus a recapture of $1.3 million in 2021. The expense is primarily attributed to the 15% loan growth in 2022.
Added
The decrease is primarily attributed to a $5.1 million decrease in the asset position customer loan swaps and $2.2 million decrease in interest rate swaps on wholesale funding. Other intangible assets decreased $932 thousand from 2022 driven by amortization.
Removed
Overall credit quality remains strong and credit quality metrics improved with decreases in non-accruing and past due loans. The benefit in 2021 is primarily due to a partial recapture of the Day 1 CECL allowance that was established January 1, 2021 given steady improvements in most macroeconomic drivers to the ACL during that year.
Added
Cash surrender value of Bank Owned Life insurance decreased $1.2 million due to settlement of one-time death benefits that occurred in the first quarter of 2023. ​ Deposits and Borrowings Total deposits increased $97.8 million to $3.1 billion at the end of 2023 compared to $3.0 billion at the end of 2022.
Removed
While assets under management were $2.3 billion compared to $2.5 billion in 2021, we added more than $132 million of new account balances. We believe that we have a strong wealth management group and are well positioned to realize an organic lift as market valuations return.
Added
Retail time deposits increased $172.4 million as customers moved funds from non-maturity deposits into higher yielding alternatives. Our deposit composition at year-end 2023 and 2022 was 47% commercial customers and 53% consumer customers.
Removed
Mortgage banking income decreased to $1.6 million from $6.5 million in 2021 primarily driven by the rate environment and lower loan sales. ​ Non-Interest Expense Non-interest expense was $91.3 million in 2022 compared to $90.5 million in 2021.
Added
The yield on loans was 5.04% in 2023 and 3.98% in 2022. Costs of interest-bearing liabilities increased in 2023 to 1.99% from 0.49% in 2022 due to increased deposit rates.
Removed
Those additional costs in 2022 were offset in part by a $767 thousand benefit from the revaluation of post-retirement plan 44 Table of Contents liabilities as discount rates increased throughout the year, and $539 thousand in savings from employee insurance and other benefit plans.
Added
Interest expense on borrowings increased $12.8 million in 2023 compared to 2022 driven by a 79 basis point increase in the weighted average rate of borrowings to 3.24% from 2.45%, respectively, reflecting higher interest rates and increased average borrowings. ​ Provision for Credit Losses The provision for credit losses in both 2023 and 2022 was a $2.9 million expense.
Removed
The provision for credit losses on unfunded commitments increased $1.6 million due to higher commercial construction unused lines of credit. Other expenses increased $1.7 million in 2022 due to a $352 thousand one-time charitable contribution and a $1.4 million increase in various operating expenses including travel, software and statement processing and postage.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeChanges in net interest income based upon these simulations are measured against the flat interest rate scenario. ​ As of December 31, 2022, interest rate sensitivity modeling results indicate that the balance sheet was asset sensitive over the one- and two-year horizons. ​ The following table presents the changes in sensitivities on net interest income for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in Interest Rates-Basis Points (Rate Ramp) ​ 1 - 12 Months ​ 13 - 24 Months (in thousands, except ratios) ​ $ Change ​ % Change ​ $ Change ​ % Change At December 31, 2022 ​ ​ ​ -200 ​ $ (6,183) ​ (4.3) % $ (19,692) ​ (12.8) % -100 ​ ​ (2,261) ​ (1.6) ​ ​ (7,954) ​ (5.2) ​ +100 ​ ​ 1,704 ​ 1.2 ​ ​ 5,583 ​ 3.6 ​ +200 ​ 3,253 ​ 2.3 ​ ​ 10,627 ​ 6.9 ​ At December 31, 2021 ​ ​ ​ ​ -100 ​ (1,939) (2.0) ​ ​ (5,945) (6.4) ​ +100 ​ ​ 4,545 ​ 4.8 ​ ​ 11,492 ​ 12.4 ​ +200 ​ 9,413 9.9 ​ 22,220 23.9 ​ ​ Assuming short-term and long-term interest rates decline 100 to 200 basis points from current levels (i.e., a parallel yield curve shift) and the Bank’s balance sheet structure and size remain at current levels, management believes net interest income will deteriorate over the one year horizon while deteriorating further from that level over the two-year horizon. ​ Assuming the Bank’s balance sheet structure and size remain at current levels and the Federal Reserve increases short-term interest rates by 100 to 200 basis points with the balance of the yield curve shifting in parallel with these increases, management believes net interest income will improve over both the one and two-year horizons. ​ As compared to December 31, 2021, sensitivity to rate movements has decreased as the bank has incrementally shifted to a less asset sensitive position. ​ The preceding sensitivity analysis does not represent a forecast and should not be relied upon as being indicative of expected operating results.
Biggest changeChanges in net interest income based upon these simulations are measured against the flat interest rate scenario. ​ As of December 31, 2023, interest rate sensitivity modeling results indicate that the balance sheet was asset sensitive over the one- and two-year horizons. ​ The following table presents the changes in sensitivities on net interest income for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in Interest Rates-Basis Points (Rate Ramp) ​ 1 - 12 Months ​ ​ 13 - 24 Months (in thousands, except ratios) ​ $ Change ​ % Change ​ ​ $ Change ​ % Change At December 31, 2023 ​ ​ ​ ​ -200 ​ $ (6,229) ​ (5.0) % ​ $ (12,776) ​ (9.7) % -100 ​ ​ (3,310) ​ (2.7) ​ ​ ​ (6,468) ​ (4.9) ​ +100 ​ ​ 2,421 ​ 2.0 ​ ​ ​ 4,818 ​ 3.7 ​ +200 ​ 4,938 ​ (4.0) ​ ​ ​ 9,143 ​ 6.9 ​ At December 31, 2022 ​ ​ ​ ​ ​ ​ -200 ​ $ (6,183) ​ (4.3) % ​ $ (19,692) ​ (12.8) % -100 ​ (2,261) (1.6) ​ ​ ​ (7,954) (5.2) ​ +100 ​ ​ 1,704 ​ 1.2 ​ ​ ​ 5,583 ​ 3.6 ​ +200 ​ 3,253 2.3 ​ ​ 10,627 6.9 ​ ​ Assuming short-term and long-term interest rates decline 100 to 200 basis points from current levels (i.e., a parallel yield curve shift) and the Bank’s balance sheet structure and size remain at current levels, management believes net interest income will deteriorate over the one year horizon while deteriorating further from that level over the two-year horizon. ​ Assuming the Bank’s balance sheet structure and size remain at current levels and the Federal Reserve increases short-term interest rates by 100 to 200 basis points with the balance of the yield curve shifting in parallel with these increases, management believes net interest income will improve over both the one and two-year horizons. ​ As compared to December 31, 2022, sensitivity to rate movements has decreased as the bank has incrementally shifted to a less asset sensitive position. ​ The preceding sensitivity analysis does not represent a forecast and should not be relied upon as being indicative of expected operating results.
The sensitivity analysis also does not reflect additional actions that the Bank’s senior executive team and Board of Directors might take in responding to or anticipating changes in interest rates, and the anticipated impact on the Bank’s net interest income. ​ 48 Table of Contents
The sensitivity analysis also does not reflect additional actions that the Bank’s senior executive team and Board of Directors might take in responding to or anticipating changes in interest rates, and the anticipated impact on the Bank’s net interest income. ​ 51 Table of Contents
Interest income and interest expense are then simulated under several hypothetical interest rate conditions. ​ The simulation models a parallel and pro rata shift in rates over a 12-month period. Using this approach, we are able to produce simulation results that illustrate the effect that both a gradual “rate ramp” and a “rate shock” have on earnings expectations.
Using this approach, we are able to produce simulation results that illustrate the effect that both a gradual “rate ramp” and a “rate shock” have on earnings expectations. Our net interest income sensitivity analysis reflects changes to net interest income assuming no balance sheet growth and a parallel shift in interest rates.
Our net interest income sensitivity analysis reflects changes to net interest income assuming no balance sheet 47 Table of Contents growth and a parallel shift in interest rates. All rate changes were “ramped” over the first 12-month period and then maintained at those levels over the remainder of the simulation horizon.
All rate changes were “ramped” over the first 12-month period and then maintained at those levels over the remainder of the simulation horizon.
Added
Interest income and interest expense are then simulated under several hypothetical interest rate conditions. ​ 50 Table of Contents The simulation models a parallel and pro rata shift in rates over a 12-month period.

Other BHB 10-K year-over-year comparisons