On Monday, Keefe, Bruyette & Woods adjusted its stock price target for Bar Harbor Bankshares (NYSE:BHB), increasing it to $29.00 from the previous $28.00. The firm has also reaffirmed its Market Perform rating on the bank's shares. This revision follows Bar Harbor's recent earnings report which aligned with the consensus estimates and exceeded the firm's expectations by $0.02 per share.
The financial institution reported a profitable quarter, marked by higher-than-anticipated fee income and effective expense management. Moreover, Bar Harbor experienced robust credit trends. However, the bank's margin faced slightly more pressure than anticipated.
Notably, the bank's loan growth, which was up 7% on a linked quarter annualized (LQA) basis, surpassed expectations and also outpaced deposit growth, which was up 2% LQA.
The increased borrowing that resulted from the higher loan growth has impacted the bank's overall cost of funds. This has contributed to a 5 basis points quarter-over-quarter decline in the net interest margin (NIM). Despite the competitive pricing environment which is expected to continue exerting modest pressure on the NIM, the outlook for fee income and expenses remains positive, along with continued strong and stable credit trends.
The firm's decision to raise the price target reflects these mixed financial dynamics and the bank's ability to navigate them. The new stock target of $29 suggests that while there are challenges, there are also opportunities for Bar Harbor Bankshares as it moves forward. The Market Perform rating indicates that the firm believes the bank's stock will perform in line with the broader market.
In other recent news, Bar Harbor Bankshares has been under review by Keefe, Bruyette & Woods following its Q1 earnings report. The firm lowered its share price target for the company to $28.00, down from $29.00, while maintaining a Market Perform rating. The adjustment came after Bar Harbor Bankshares reported earnings of $0.66 per share, slightly beating expectations by $0.02, mainly due to lower expenses and provisions offsetting weaker spread income.
Furthermore, the company experienced a modest margin decline of 3 basis points, reflecting a mix shift and ongoing pricing pressures on deposits. Despite slower loan growth at 2% from the previous quarter, its net interest income was impacted by a slightly smaller earning asset base. Keefe, Bruyette & Woods adjusted its 2024 earnings estimate for the company downward by one cent, leaving its 2025 earnings estimate unchanged.
These recent developments come as Bar Harbor Bankshares navigates a mix shift and deposit pricing pressures. Keefe, Bruyette & Woods anticipates that the margin will remain stable, supported by healthy loan growth pipelines, while expenses and fee income are expected to continue trending positively. The new stock price target reflects the firm's revised expectations based on recent financial performance and market conditions.
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