Bar Harbor Bankshares (BHB): A Maine Dish

BHB’s efficiency ratio (operating expenses divided by revenues) is 56%, well below peer averages (in this case, lower is better). It also has exceptional financial strength and profitability. The bank is “well capitalized” under regulatory standards, and it meets the Basel III international regulatory rules that are scheduled to be effective next January 1.
The company has a good record on dividends, with a 3.3% current yield (only 38% of its earnings per share) and dividend increases in each of the past ten years. The dividend growth rate is 7% annually over the past three years and 4.5% over the past five years. With an increase in the first quarter, the current dividend is 8% greater than a year ago.
In sum, Bar Harbor is a well-managed, small bank in the Northeast that offers an attractive dividend yield and prospects for moderate dividend and earnings growth. It is the highest-rated bank out of 20 currently under our research coverage, based on a combination of value, quality, and growth. Despite its superior quality, it sells at a discount to its peers. We think it is an excellent value. Our one-year target price for the stock is $36, which is 35% above its recent price.

Sustainability Profile
Bar Harbor was voted one of 2013’s “Best Places to Work in Maine” by its employees and was the only publicly traded company on the list. Women are one-third of senior management and fill about 20% of board seats. Executive compensation seems to be reasonable for a company this size. Like many small companies, BHB seems to lack a formal sustainability policy.

Bar Harbor Bankshares
Revenues: $56 million
Earnings Per Share (EPS):
2014 est. $2.40
2015 est. $2.48
Projected 3–5 Year Annual Earnings Growth: 5%
Dividend Yield: 3.3%
52-week Low–High: $22.74–$29.35
Risk: Below average