EX-99.1 2 bhb-20200430xex99d1.htm EX-99.1

Exhibit 99.1

Bar Harbor Bankshares Reports First Quarter Results

BAR HARBOR, MAINE - April 30, 2020 -- Bar Harbor Bankshares (NYSE American: BHB) reported first quarter 2020 net income of $7.7 million or $0.50 per share, a 6% increase in net income over the same quarter of 2019 of $7.3 million or $0.47 per share.

FIRST QUARTER FINANCIAL HIGHLIGHTS (compared to the first quarter of 2019, unless otherwise noted)

●

6% annualized growth in commercial loans

●

10% annualized growth in non-maturity deposits

●

99% loan to deposit ratio, improved from 102%

●

3.06% net interest margin compared to 2.77%

●

37% increase in non-interest income

●

0.38% non-accruing loans to total loans compared to 0.66%

President and Chief Executive Officer, Curtis C. Simard stated, “While our financial performance in the first quarter was strong, our efforts have shifted rather quickly with the COVID 19 developments. Our team has been fully dedicated to supporting our customers, colleagues, friends and families during these difficult times and I am proud of the accomplishments being achieved every day. It’s through adversity that we elevate the strength of our culture and further educate our customers about the strength of our Company’s operating model.”

“Although we are focused on the challenges posed by the health crisis, we remain committed to what has always been a cornerstone of our business operations: Risk management, ranging from underwriting practices to what is now at the forefront, crisis management and business continuity planning. Our ability to navigate during these uncertain times has been tested and proven successful as we continue to proactively work with customers, both large and small, as well as support our dedicated colleagues. From the onset, we’ve maintained open communication with customers and employees alike, as we transitioned to a mostly remote working environment. This transition was very smooth given the readiness of our information technology and operations teams. We modified our branch model to provide for the safety of our customers and colleagues, while balancing a personalized touch to meet the needs of our customers. That includes transitioning to mostly drive-up and walk-up windows along with in person meetings by appointment when necessary. The investments we’ve made in the past few years in online and mobile banking platforms have also been essential with the current environment helping accelerate adoption rates.”

Mr. Simard further stated, “Despite our focus on the current environment, we have not lost sight of our long-term goals. Recognizing the importance of liquidity, we have opportunistically and appropriately utilized many of the various federal programs in an effort to insulate ourselves from potential risk and uncertainty. As you may recall in the fourth quarter of 2019 we refinanced and upsized our subordinated debt, which has further supported capital levels and the balance sheet. The lending teams outperformed this quarter as they kept pace with originations offsetting elevated payoff levels as typically seen with the lower rate environment. The growth in commercial loans offset the decrease in our residential portfolio as we strategically moved most of our production to the secondary market. The teams have also successfully rolled out the Small Business Administration (SBA) Paycheck Protection Program (PPP) in an effort to help our business partners and support our communities. To date we have over 1,500 PPP loans approved by the SBA with a total balance of $127 million. In addition, we also modified close to 500 existing loans, representing $271 million in balances. The loans modified under deferment plans are still accruing interest and all contractual principal and interest is expected to be collected.”

Mr. Simard continued, "Our loan portfolio remains diverse with over 80 different industries and several geographies limiting concentration risk, which is further mitigated by the specific type and strength of the borrowers. These credit relationships are proven successful operators in their industry and have weathered difficult economic times in the past. We continue to carefully review opportunities with these proven borrowers while also stress testing the portfolio regularly.”

"Given the recently passed CARES Act, we have elected to defer the new accounting for the allowance for loan losses known as “CECL” to prioritize resources around our customers and communities. That said, we increased the allowance for credit losses during the quarter

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due to elevated qualitative economic factors at quarter end. Additionally, our liquidity, capital ratios and overall balance sheet position are strong. Our wholesale borrowing reliance is further declining and our ability to access wholesale funding at fair pricing is at an all-time high.”

Mr. Simard concluded, “Moving forward in 2020, we are executing strategies that will benefit our long-term profitability while being mindful of the short-term challenges and operating environment. Lower interest rates and the divergence in FHLB borrowings and brokered deposit spreads has provided us with an opportunity to lock into favorable rates with longer maturities. The benefits of these activities, along with the balance sheet strategies executed last year, are unveiled as we see the net interest margin expand nearly 30 basis points during the quarter. Non-interest income is also up for the quarter as we continue to provide hedging transactions to help meet our customers’ needs. And while trust and investment management fee income is up significantly over prior year, it is also sensitive to market conditions and could vary as market dynamics persist with the pandemic. In summary, our teams are focused on activities that create value for long-term shareholders and the Company continues to build tangible book value at a quarterly annualized rate of close to 10%.”

FINANCIAL CONDITION

Total assets were $3.7 billion and remained relatively flat with the fourth quarter of 2019. In anticipation of customer demand given their potential liquidity needs, cash increased $28.7 million as additional reserves were established. Securities declined $36.9 million as the Company continued to de-lever and remix the investment portfolio during the first of quarter. Loan balances in the first quarter 2020 were $2.6 billion, flat with the fourth quarter 2019. Total commercial loans grew at an annualized rate of 6% led by commercial real estate with an annualized growth rate of 8%. Residential real estate loans were relatively flat with the fourth quarter as most production was funneled through the secondary market platform. Payoff activity was experienced across all products lines as borrowers refinanced given the lower rate environment. The product mix of total commercial loans remains diversified among several hundred industries and over many geographic regions.

As of March 31, 2020, the loan portfolio consists of the following (in millions):

In the first quarter 2020, the Company elected to defer implementation of CECL as allowed under the CARES Act in an effort to prioritize resources around the various debt and government relief programs. As result, the Company continues to operate its incurred loss model, which has been adjusted to reflect current economic conditions increasing the allowance for loan loss. That increase has been offset by an improvement in other credit quality factors including several specifically reserved loans that were settled at approximate book value. The allowance for loan losses to total loans ratio for the first quarter remains at 0.58% with a coverage ratio to non-accruing loans at 152%, up from 133% as of year-end. Past due accounts between 30 to 89 days as a percentage of total loans was 0.84% for the first quarter compared to 0.74% at year-end 2019. The majority of the customers in that range have a history of making payments on a cycle that is about 30 days overdue and is not likely an indication of deteriorated credit quality.

The Company’s liquidity position remains strong. At March 31, 2020, same day available liquidity totaled approximately $1.2 billion, including cash, borrowing capacity at the Federal Home Loan Bank of Boston (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 March 31, 2020, the Company had unused borrowing capacity at the FHLB of $539 million, unused borrowing capacity at the Federal Reserve of $27 million and unused lines of credit totaling $51 million. The Company utilized the Federal Reserve's Paycheck Protection Program Liquidity Facility to provide liquidity to fund PPP loans.

The Company's book value per share was $25.90 at the end of the first quarter 2020 compared to $25.48 at year-end 2019. Tangible book value per share (non-GAAP measure) was $17.70 at the end of the first quarter 2020 compared to $17.30 at year-end 2019; an annualized growth rate of 9%. The low interest rate environment continues to have a positive impact on the fair value of the Company’s securities portfolio. Other comprehensive income included unrealized gains on securities totaling $9.6 million in the first quarter 2020 compared to $5.6 million at year-end 2019.

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RESULTS OF OPERATIONS

Net income in the first quarter 2020 was $7.7 million, or $0.50 per share, compared to $7.3 million, or $0.47 per share, in the same quarter of 2019. Net interest margin in the first quarter 2020 increased to 3.06% from 2.77% in the same period of 2019. The increase is primarily driven by lower borrowing levels as the average balance decreased to $557 million in the first quarter 2020 from $762 million in prior year due to deleveraging strategies executed in late 2019 and a lower cost of funds. The balance sheet strategies executed during the second half of last year along with the rate cuts experienced in the first quarter reduced borrowing rates to 2.10% from 2.74% and interest-bearing deposits rates to 1.08% from 1.25% in the first quarter 2019. The Company continues to optimize its funding sources to take advantage of this lower rate environment through a mixture of various debt and derivative instruments. Yields from earning assets declined to 4.14% from 4.19% in the first quarter 2019 reflecting loan originations and repricing of variable rate products in a lower interest rate environment. The loan to deposit ratio was 99% in the first quarter 2020 as the Company maintained its fourth quarter 2019 deposit levels, which is due to strong customer relationships within its branch model.

The first quarter 2020 provision for loan losses increased to $1.1 million from $324 thousand in the same quarter 2019. As noted above, the Company is maintaining its incurred loss model for calculating the allowance for loan losses. The year-over-year increase in the provision for loan losses is due to qualitative adjustments made to reflect a downward economic trend in the first quarter 2020. Those downward adjustments were offset in part by improvements in other credit quality factors such as charge-off history and underwriting practices. While the impact of the health crisis is uncertain, we believe the existing allowance for loan losses is sufficient to absorb inherent losses based on our disciplined credit approach, experienced losses and methodology, and current review of the portfolio.

Non-interest income in the first quarter 2020 increased 37% to $8.4 million from $6.2 million in the same quarter in 2019. Trust income was $3.4 million in the first quarter 2020, up 22% from the same quarter of 2019 on higher assets under management within an expanded footprint given the branch acquisition which closed in October 2019. Customer service fees also increased significantly to $3.1 million compared to $2.2 million from the same quarter of 2019r due to transaction growth on a higher customer base. Customer loan derivative income also contributed to non-interest income in the first quarter 2020 as demand for these products remains strong within the commercial loan pipeline.

Non-interest expense was $22.4 million in the first quarter 2020 compared to $18.6 million in the same quarter of 2019. The increase is primarily due to higher salary and benefit and occupancy and equipment costs to support the Company’s expanded branch model and wealth management business.

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BACKGROUND

Bar Harbor Bankshares (NYSE American: BHB) is the parent company of its wholly-owned subsidiary, Bar Harbor Bank & Trust. Founded in 1887, Bar Harbor Bank & Trust is a true community bank serving the financial needs of its clients for over 130 years. Bar Harbor provides full-service community banking with office locations in all three Northern New England states of Maine, New Hampshire and Vermont. For more information, visit www.barharbor.bank.

FORWARD LOOKING STATEMENTS

Certain statements under the heading "FIRST QUARTER FINANCIAL HIGHLIGHTS" contained in this document 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. When used in this earnings release the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions are intended to identify forward-looking statements, but these terms are not the exclusive means of identifying forward-looking statements. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including among other things, changes in general economic and business conditions, increased competitive pressures, changes in the interest rate environment, legislative and regulatory change, changes in the financial markets, and other risks and uncertainties disclosed from time to time in documents that the Company files with the Securities and Exchange Commission, including but not limited to those discussed in the section titled "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Because of these and other uncertainties, the Company’s actual results, performance or achievements, or industry results, may be materially different from the results indicated by these forward-looking statements. In addition, the Company’s past results of operations do not necessarily indicate future results. You should not place undue reliance on any of the forward-looking statements, which speak only as of the dates on which they were made. The Company is not undertaking an obligation to update forward-looking statements, even though its situation may change in the future, except as required under federal securities law. The Company qualifies all of its forward-looking statements by these cautionary statements.

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NON-GAAP FINANCIAL MEASURES

This document contains certain non-GAAP financial measures in addition to results presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. 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. A reconciliation of non-GAAP financial measures to GAAP measures is provided below. 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 core earnings can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP core earnings information set forth is not necessarily comparable to non- GAAP information which may be presented by other companies. Each non-GAAP measure used by the Company in this report as supplemental financial data should be considered in conjunction with the Company's GAAP financial information.

The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including gains/losses on securities, premises, equipment and other real estate owned, acquisition costs, restructuring costs, legal settlements, and systems conversion costs. Non-GAAP adjustments are presented net of an adjustment for income tax expense.

The Company also calculates core earnings per share based on its measure of core earnings. The Company views these amounts as important to understanding its operating trends, particularly due to the impact of accounting standards related to acquisition activity. Analysts also rely on these measures in estimating and evaluating the Company's performance. Management also believes that the computation of non-GAAP core earnings and core earnings per share may facilitate the comparison of the Company to other companies in the financial services industry. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.

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CONTACTS

Josephine Iannelli; EVP, Chief Financial Officer & Treasurer; (207) 288-3314


TABLE
INDEX	CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED)

A	Selected Financial Highlights
B	Footnotes to Selected Financial Highlights
C	Balance Sheets
D	Loan and Deposit Analysis
E	Statements of Income
F	Statements of Income (Five Quarter Trend)
G	Average Yields and Costs
H	Average Balances
I	Asset Quality Analysis
J	Reconciliation of Non-GAAP Financial Measures (Five Quarter Trend) and Supplementary Data

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BAR HARBOR BANKSHARES

SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED


	At or for the Quarters Ended
	Mar 31,			Dec 31,			Sep 30,			Jun 30,			Mar 31,
	2020			2019			2019			2019			2019
PER SHARE DATA
Net earnings, diluted	$	0.50		$	0.27		$	0.32		$	0.39		$	0.47
Core earnings, diluted ^{(1) (2)}		0.50			0.56			0.47			0.41			0.47
Total book value		25.90			25.48			25.37			25.13			24.54
Tangible book value ⁽²⁾		17.70			17.30			18.49			18.23			17.63
Market price at period end		17.28			25.39			24.93			26.59			25.87
Dividends		0.22			0.22			0.22			0.22			0.20

PERFORMANCE RATIOS ⁽³⁾
Return on assets		0.85	%		0.46	%		0.55	%		0.67	%		0.83	%
Core return on assets ^{(1) (2)}		0.86			0.96			0.80			0.70			0.83
Return on equity		7.64			4.21			5.04			6.33			7.83
Core return on equity ^{(1) (2)}		7.71			8.81			7.36			6.57			7.83
Core return on tangible equity ^{(1) (2)}		11.54			12.66			10.31			9.30			11.19
Net interest margin, fully taxable equivalent (FTE) ^{(2) (4)}		3.06			2.95			2.75			2.65			2.77
Net interest margin (FTE), excluding purchased loan accretion ^{(2) (4)}		2.99			2.88			2.65			2.56			2.67
Efficiency ratio ⁽²⁾		64.82			62.56			65.02			68.48			63.94

ORGANIC GROWTH (Year-to-date, annualized) ^{(2) (6)}
Total commercial loans		6.4	%		6.0	%		10.5	%		10.1	%		(3.3)	%
Total loans		(0.9)			2.0			4.7			7.1			5.9
Total deposits		(6.7)			(1.8)			0.6			(0.1)			(2.8)

FINANCIAL DATA (In millions)
Total assets	$	3,677		$	3,669		$	3,612		$	3,688		$	3,629
Total earning assets ⁽⁵⁾		3,269			3,336			3,270			3,355			3,312
Total investments		646			684			703			784			782
Total loans		2,635			2,641			2,577			2,578			2,527
Allowance for loan losses		15			15			15			15			14
Total goodwill and intangible assets		128			127			107			107			107
Total deposits		2,651			2,696			2,494			2,481			2,466
Total shareholders' equity		404			396			394			391			381
Net income		8			4			5			6			7
Core earnings ^{(1) (2)}		8			9			7			6			7

ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (current quarter annualized)/average loans		0.18	%		0.08	%		0.02	%		—	%		0.03	%
Allowance for loan losses/total loans		0.58			0.58			0.60			0.57			0.55
Loans/deposits		99			98			103			104			102
Shareholders' equity to total assets		10.98			10.80			10.92			10.59			10.50
Tangible shareholders' equity to tangible assets		7.77			7.60			8.20			7.92			7.77

(1)

Core measurements are non-GAAP financial measures adjusted to exclude net non-operating charges primarily related to acquisitions, restructurings, system conversions, loss on debt extinguishment and gain or loss on sale of securities, other real estate owned and premises and equipment. Refer to the Reconciliation of Non-GAAP Financial Measures in table J for additional information.

(2)	Non-GAAP financial measure.

(3)	All performance ratios are based on average balance sheet amounts, where applicable.

(4)	Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans.

(5)	Earning assets includes non-accruing loans and securities are valued at amortized cost.

(6)	Assets acquired from eight branches purchased from People's United Bank, National Association as of October 25, 2019, were excluded from calculation.

BAR HARBOR BANKSHARES

CONSOLIDATED BALANCE SHEETS - UNAUDITED


	Mar 31,		Dec 31,		Sep 30,		Jun 30,		Mar 31,
(in thousands)	2020		2019		2019		2019		2019
Assets
Cash and due from banks	$	68,481	$	37,261	$	50,032	$	42,657	$	37,504
Interest-bearing deposits with the Federal Reserve Bank		17,174		19,649		21,561		17,203		16,599
Total cash and cash equivalents		85,655		56,910		71,593		59,860		54,103

Securities available for sale, at fair value		626,341		663,230		675,675		748,560		747,235
Federal Home Loan Bank stock		19,897		20,679		27,469		35,220		35,107
Total securities		646,238		683,909		703,144		783,780		782,342

Commercial real estate		948,178		930,661		923,773		881,479		821,567
Commercial and industrial		426,357		423,291		402,706		416,725		409,937
Residential real estate		1,132,328		1,151,857		1,143,452		1,167,759		1,184,053
Consumer		128,120		135,283		107,375		112,275		111,402
Total loans		2,634,983		2,641,092		2,577,306		2,578,238		2,526,959
Less: Allowance for loan losses		(15,297)		(15,353)		(15,353)		(14,572)		(13,997)
Net loans		2,619,686		2,625,739		2,561,953		2,563,666		2,512,962

Premises and equipment, net		49,978		51,205		47,644		50,230		49,661
Other real estate owned		2,205		2,236		2,455		2,351		2,351
Goodwill		119,477		118,649		100,085		100,085		100,085
Other intangible assets		8,398		8,641		6,879		7,072		7,266
Cash surrender value of bank-owned life insurance		76,400		75,863		75,368		74,871		74,352
Deferred tax asset, net		3,166		3,865		4,988		5,649		7,632
Other assets		66,139		42,111		38,365		40,071		38,441
Total assets	$	3,677,342	$	3,669,128	$	3,612,474	$	3,687,635	$	3,629,195

Liabilities and shareholders' equity
Demand and other non-interest bearing deposits	$	400,410	$	414,534	$	380,707	$	354,125	$	342,030
NOW deposits		578,320		575,809		490,315		472,576		470,277
Savings deposits		423,345		388,683		360,570		352,657		346,813
Money market deposits		404,385		384,090		359,328		305,506		349,833
Time deposits		844,097		932,635		902,665		996,512		956,818
Total deposits		2,650,557		2,695,751		2,493,585		2,481,376		2,465,771

Senior borrowings		497,580		471,396		641,819		733,084		703,283
Subordinated borrowings		59,849		59,920		42,928		42,943		42,958
Total borrowings		557,429		531,316		684,747		776,027		746,241

Other liabilities		65,601		45,654		39,683		39,670		36,160
Total liabilities		3,273,587		3,272,721		3,218,015		3,297,073		3,248,172

Total common shareholders' equity		403,755		396,407		394,459		390,562		381,023
Total liabilities and shareholders' equity	$	3,677,342	$	3,669,128	$	3,612,474	$	3,687,635	$	3,629,195

Net shares outstanding		15,587		15,558		15,549		15,544		15,524

BAR HARBOR BANKSHARES

CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED

LOAN ANALYSIS


											Annualized
											Growth %
	Mar 31,		Dec 31,		Sep 30,		Jun 30,		Mar 31,		Quarter
(in thousands)	2020		2019		2019		2019		2019		End
Commercial real estate	$	948,178	$	930,661	$	923,773	$	881,479	$	821,567	7.5	%
Commercial and industrial		321,605		318,988		301,590		312,029		305,185	3.3
Total commercial loans		1,269,783		1,249,649		1,225,363		1,193,508		1,126,752	6.4
Residential real estate		1,132,328		1,151,857		1,143,452		1,167,759		1,184,053	(6.8)
Consumer		128,120		135,283		107,375		112,275		111,402	(21.2)
Tax exempt and other		104,752		104,303		101,116		104,696		104,752	1.7
Total loans	$	2,634,983	$	2,641,092	$	2,577,306	$	2,578,238	$	2,526,959	(0.9)	%

DEPOSIT ANALYSIS


											Annualized
											Growth %
	Mar 31,		Dec 31,		Sep 30,		Jun 30,		Mar 31,		Quarter
(in thousands)	2020		2019		2019		2019		2019		End
Demand	$	400,410	$	414,534	$	380,707	$	354,125	$	342,030	(13.6)	%
NOW		578,320		575,809		490,315		472,576		470,277	1.7
Savings		423,345		388,683		360,570		352,657		346,813	35.7
Money market		404,385		384,090		359,328		305,506		349,833	21.1
Total non-maturity deposits		1,806,460		1,763,116		1,590,920		1,484,864		1,508,953	9.8
Total time deposits		844,097		932,635		902,665		996,512		956,818	(38.0)
Total deposits	$	2,650,557	$	2,695,751	$	2,493,585	$	2,481,376	$	2,465,771	(6.7)	%

BAR HARBOR BANKSHARES

CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED


	Three Months Ended
	March 31,
(in thousands, except per share data)	2020		2019
Interest and dividend income
Loans	$	27,987	$	26,864
Securities and other		5,507		6,363
Total interest and dividend income		33,494		33,227
Interest expense
Deposits		6,020		6,307
Borrowings		2,911		5,155
Total interest expense		8,931		11,462
Net interest income		24,563		21,765
Provision for loan losses		1,111		324
Net interest income after provision for loan losses		23,452		21,441
Non-interest income
Trust and investment management fee income		3,369		2,757
Customer service fees		3,112		2,165
Gain (loss) on sales of securities, net		135		—
Bank-owned life insurance income		537		542
Customer derivative income		588		29
Other income		680		674
Total non-interest income		8,421		6,167
Non-interest expense
Salaries and employee benefits		11,884		10,519
Occupancy and equipment		4,420		3,386
Loss on sales of premises and equipment, net		92		—
Outside services		534		411
Professional services		672		544
Communication		289		235
Marketing		388		295
Amortization of intangible assets		256		207
Acquisition, conversion and other expenses		103		—
Other expenses		3,721		3,027
Total non-interest expense		22,359		18,624
Income before income taxes		9,514		8,984
Income tax expense		1,793		1,703
Net income	$	7,721	$	7,281

Earnings per share:
Basic	$	0.50	$	0.47
Diluted		0.50		0.47

Weighted average shares outstanding:
Basic		15,558		15,523
Diluted		15,593		15,587

BAR HARBOR BANKSHARES

CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED


	Mar 31,		Dec 31,		Sep 30,		Jun 30,		Mar 31,
(in thousands, except per share data)	2020		2019		2019		2019		2019
Interest and dividend income
Loans	$	27,987	$	28,361	$	28,157	$	27,660	$	26,864
Securities and other		5,507		5,756		6,105		6,125		6,363
Total interest and dividend income		33,494		34,117		34,262		33,785		33,227
Interest expense
Deposits		6,020		6,698		7,143		6,886		6,307
Borrowings		2,911		3,315		4,674		5,403		5,155
Total interest expense		8,931		10,013		11,817		12,289		11,462
Net interest income		24,563		24,104		22,445		21,496		21,765
Provision for loan losses		1,111		538		893		562		324
Net interest income after provision for loan losses		23,452		23,566		21,552		20,934		21,441
Non-interest income
Trust and investment management fee income		3,369		3,227		3,013		3,066		2,757
Customer service fees		3,112		2,791		2,553		2,618		2,165
Gain on sales of securities, net		135		80		157		—		—
Bank-owned life insurance income		537		495		497		519		542
Customer derivative income		588		475		828		696		29
Other income		680		738		595		554		674
Total non-interest income		8,421		7,806		7,643		7,453		6,167
Non-interest expense
Salaries and employee benefits		11,884		11,432		11,364		11,685		10,519
Occupancy and equipment		4,420		4,113		3,415		3,300		3,386
Loss (gain) on sales of premises and equipment, net		92		(3)		—		21		—
Outside services		534		540		424		443		411
Professional services		672		370		707		570		544
Communication		289		114		189		283		235
Marketing		388		453		613		511		295
Amortization of intangible assets		256		240		207		207		207
Loss on debt extinguishment		—		1,096		—		—		—
Acquisition, conversion and other expenses		103		4,998		3,039		280		—
Other expenses		3,721		3,450		3,442		3,606		3,027
Total non-interest expense		22,359		26,803		23,400		20,906		18,624
Income before income taxes		9,514		4,569		5,795		7,481		8,984
Income tax expense		1,793		362		780		1,364		1,703
Net income	$	7,721	$	4,207	$	5,015	$	6,117	$	7,281

Earnings per share:
Basic	$	0.50	$	0.27	$	0.32	$	0.39	$	0.47
Diluted		0.50		0.27		0.32		0.39		0.47

Weighted average shares outstanding:
Basic		15,558		15,554		15,547		15,538		15,523
Diluted		15,593		15,602		15,581		15,586		15,587

BAR HARBOR BANKSHARES

AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED


	Quarters Ended
	Mar 31,		Dec 31,		Sep 30,		Jun 30,		Mar 31,
	2020		2019		2019		2019		2019
Earning assets
Commercial real estate	4.46	%	4.69	%	4.74	%	4.74	%	4.78	%
Commercial and industrial	4.89		4.58		4.78		4.75		4.79
Residential	3.84		3.89		3.88		3.93		3.94
Consumer	5.20		4.84		5.13		5.21		5.25
Total loans	4.30		4.33		4.38		4.39		4.42
Securities and other	3.53		3.49		3.44		3.29		3.47
Total earning assets	4.14	%	4.15	%	4.17	%	4.13	%	4.19	%

Funding liabilities
NOW	0.40	%	0.44	%	0.51	%	0.49	%	0.51	%
Savings	0.25		0.20		0.21		0.21		0.19
Money market	1.01		1.17		1.37		1.44		1.38
Time deposits	1.92		2.06		2.16		2.11		2.00
Total interest-bearing deposits	1.08		1.19		1.33		1.32		1.25
Borrowings	2.10		2.30		2.62		2.74		2.74
Total interest-bearing liabilities	1.28	%	1.42	%	1.65	%	1.71	%	1.66	%

Net interest spread	2.86		2.73		2.52		2.42		2.53
Net interest margin	3.06		2.95		2.75		2.65		2.77

BAR HARBOR BANKSHARES

AVERAGE BALANCES - UNAUDITED


	Quarters Ended
	Mar 31,		Dec 31,		Sep 30,		Jun 30,		Mar 31,
(in thousands)	2020		2019		2019		2019		2019
Assets
Commercial real estate	$	945,851	$	928,445	$	900,568	$	846,921	$	825,596
Commercial and industrial		423,393		412,595		410,453		416,000		405,107
Residential real estate		1,141,908		1,156,215		1,154,552		1,176,583		1,143,862
Consumer		130,471		127,425		109,562		111,641		113,060
Total loans ⁽¹⁾		2,641,623		2,624,680		2,575,135		2,551,145		2,487,625
Securities and other ⁽²⁾		661,848		683,939		732,925		779,072		777,458
Total earning assets		3,303,471		3,308,619		3,308,060		3,330,217		3,265,083
Cash and due from banks		57,751		67,642		62,999		52,728		50,298
Allowance for loan losses		(15,242)		(15,657)		(14,965)		(14,459)		(14,119)
Goodwill and other intangible assets		128,014		114,537		107,058		107,252		107,446
Other assets		187,765		179,512		178,804		170,340		152,332
Total assets	$	3,661,759	$	3,654,653	$	3,641,956	$	3,646,078	$	3,561,040

Liabilities and shareholders' equity
NOW	$	570,127	$	551,335	$	487,506	$	459,572	$	468,392
Savings		410,931		378,997		359,242		352,733		346,707
Money market		373,650		379,361		338,013		338,095		335,882
Time deposits		892,654		918,528		947,949		935,616		894,160
Total interest bearing deposits		2,247,362		2,228,221		2,132,710		2,086,016		2,045,141
Borrowings		556,824		571,936		708,222		789,953		761,885
Total interest-bearing liabilities		2,804,186		2,800,157		2,840,932		2,875,969		2,807,026
Non-interest-bearing demand deposits		406,951		418,324		368,100		349,322		351,362
Other liabilities		44,343		40,136		37,975		33,107		25,520
Total liabilities		3,255,480		3,258,617		3,247,007		3,258,398		3,183,908

Total shareholders' equity		406,279		396,036		394,949		387,680		377,132

Total liabilities and shareholders' equity	$	3,661,759	$	3,654,653	$	3,641,956	$	3,646,078	$	3,561,040

(1)	Total loans include non-accruing loans.

(2)	Average balances for securities available-for-sale are based on amortized cost.

BAR HARBOR BANKSHARES

ASSET QUALITY ANALYSIS - UNAUDITED


	At or for the Quarters Ended
	Mar 31,			Dec 31,			Sep 30,			Jun 30,			Mar 31,
(in thousands)	2020			2019			2019			2019			2019
NON-PERFORMING ASSETS
Non-accruing loans:
Commercial real estate	$	2,227		$	3,489		$	8,519		$	7,048		$	7,516
Commercial installment		1,996			1,836			2,077			2,081			2,192
Residential real estate		5,089			5,335			5,340			5,965			6,326
Consumer installment		744			890			743			861			565
Total non-accruing loans		10,056			11,550			16,679			15,955			16,599
Other real estate owned		2,205			2,236			2,455			2,351			2,351
Total non-performing assets	$	12,261		$	13,786		$	19,134		$	18,306		$	18,950

Total non-accruing loans/total loans		0.38	%		0.44	%		0.65	%		0.62	%		0.66	%
Total non-performing assets/total assets		0.33			0.38			0.53			0.50			0.52

PROVISION AND ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	15,353		$	15,353		$	14,572		$	13,997		$	13,866
Charged-off loans		(1,211)			(603)			(215)			(104)			(231)
Recoveries on charged-off loans		44			65			103			117			38
Net loans charged-off		(1,167)			(538)			(112)			13			(193)
Provision for loan losses		1,111			538			893			562			324
Balance at end of period	$	15,297		$	15,353		$	15,353		$	14,572		$	13,997

Allowance for loan losses/total loans		0.58	%		0.58	%		0.60	%		0.57	%		0.55	%
Allowance for loan losses/non-accruing loans		152			133			92			91			84

NET LOAN CHARGE-OFFS
Commercial real estate	$	(846)		$	(92)		$	1		$	114		$	(41)
Commercial installment		(170)			(331)			62			(12)			(15)
Residential real estate		(1)			(16)			(124)			(65)			(86)
Consumer installment		(150)			(99)			(51)			(24)			(51)
Total, net	$	(1,167)		$	(538)		$	(112)		$	13		$	(193)

Net charge-offs (QTD annualized)/average loans		0.18	%		0.08	%		0.02	%		0.03	%		0.03	%
Net charge-offs (YTD annualized)/average loans		0.18			0.03			0.02			0.01			0.03

DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS
30-89 Days delinquent		0.84	%		0.74	%		0.18	%		0.29	%		0.21	%
90+ Days delinquent and still accruing		0.08			0.01			0.03			—			—
Total accruing delinquent loans		0.92			0.75			0.21			0.29			0.21
Non-accruing loans		0.38			0.44			0.65			0.62			0.66
Total delinquent and non-accruing loans		1.30	%		1.19	%		0.86	%		0.91	%		0.87	%

BAR HARBOR BANKSHARES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED


		At or for the Quarters Ended
		Mar 31,		Dec 31,		Sep 30,		Jun 30,		Mar 31,
(in thousands)		2020		2019		2019		2019		2019
Net income		$	7,721	$	4,207	$	5,015	$	6,117	$	7,281
Plus (less):
Gain on sale of securities, net			(135)		(80)		(157)		—		—
Loss (gain) on sale of premises and equipment, net			92		(3)		—		21		—
Loss on other real estate owned			31		20		146		—		—
Loss on debt extinguishment			—		1,096		—		—		—
Acquisition, restructuring and other expenses			103		4,998		3,039		280		—
Income tax expense ⁽¹⁾			(22)		(1,440)		(720)		(72)		—
Total core earnings ⁽²⁾	(A)	$	7,790	$	8,798	$	7,323	$	6,346	$	7,281

Net interest income	(B)	$	24,563	$	24,104	$	22,445	$	21,496	$	21,765
Plus: Non-interest income			8,421		7,806		7,643		7,453		6,167
Total Revenue			32,984		31,910		30,088		28,949		27,932
Adj: Gain on sale of securities, net			(135)		(80)		(157)		—		—
Total core revenue ⁽²⁾	(C)	$	32,849	$	31,830	$	29,931	$	28,949	$	27,932

Total non-interest expense			22,359		26,803		23,400		20,906		18,624
Less: (Loss) gain on sale of premises and equipment, net			(92)		3		—		(21)		—
Less: Loss on other real estate owned			(31)		(20)		(146)		—		—
Less: Loss on debt extinguishment			—		(1,096)		—		—		—
Less: Acquisition, conversion and other expenses			(103)		(4,998)		(3,039)		(280)		—
Core non-interest expense ⁽²⁾	(D)	$	22,133	$	20,692	$	20,215	$	20,605	$	18,624

(in millions)
Total average earning assets	(E)	$	3,306	$	3,309	$	3,308	$	3,330	$	3,265
Total average assets	(F)		3,662		3,655		3,642		3,646		3,561
Total average shareholders' equity	(G)		406		396		395		388		377
Total average tangible shareholders' equity ^{(2) (3)}	(H)		278		281		288		280		270
Total tangible shareholders' equity, period-end ^{(2) (3)}	(I)		276		269		287		283		274
Total tangible assets, period-end ^{(2) (3)}	(J)		3,549		3,542		3,506		3,580		3,522

(in thousands)
Total common shares outstanding, period-end	(K)		15,587		15,558		15,549		15,544		15,524
Average diluted shares outstanding	(L)		15,593		15,602		15,581		15,586		15,587

Core earnings per share, diluted ⁽²⁾	(A/L)	$	0.50	$	0.56	$	0.47	$	0.41	$	0.47
Tangible book value per share, period-end ⁽²⁾	(I/K)		17.70		17.30		18.49		18.23		17.63
Securities adjustment, net of tax ^{(1) (4)}	(M)		9,560		5,549		8,002		5,550		(1,842)
Tangible book value per share, excluding securities adjustment ⁽²⁾	(I+M)/K		17.09		16.94		17.98		17.88		17.75
Total tangible shareholders' equity/total tangible assets ⁽²⁾	(I/J)		7.77		7.60		8.20		7.92		7.77

BAR HARBOR BANKSHARES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED


		At or for the Quarters Ended
		Mar 31,			Dec 31,			Sep 30,			Jun 30,			Mar 31,
(in thousands)		2020			2019			2019			2019			2019
Performance ratios ⁽⁵⁾
GAAP return on assets			0.85	%		0.46	%		0.55	%		0.67	%		0.83	%
Core return on assets ⁽²⁾	(A/F)		0.86			0.96			0.80			0.70			0.83
GAAP return on equity			7.64			4.21			5.04			6.33			7.83
Core return on equity ⁽²⁾	(A/G)		7.71			8.81			7.36			6.57			7.83
Core return on tangible equity ^{(2) (6)}	(A+Q)/H		11.54			12.66			10.31			9.30			11.19
Efficiency ratio ^{(2) (7)}	(D-O-Q)/(C+N)		64.82			62.56			65.02			68.48			63.94
Net interest margin	(B+P)/E		3.06			2.95			2.75			2.65			2.77

Supplementary data (in thousands)
Taxable equivalent adjustment for efficiency ratio	(N)	$	719		$	674		$	658		$	676		$	684
Franchise taxes included in non-interest expense	(O)		119			119			119			111			120
Tax equivalent adjustment for net interest margin	(P)		551			516			503			514			515
Intangible amortization	(Q)		256			240			207			207			207

(1)	Assumes a marginal tax rate of 23.87% for the first quarter of 2020 and the fourth quarter of 2019 and 23.78% in the first three quarters of 2019.

(2)	Non-GAAP financial measure.

(3)	Tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Tangible assets is computed by taking total assets less the intangible assets at period-end.

(4)	Securities adjustment, net of tax represents the total unrealized loss on available-for-sale securities recorded on the Company's consolidated balance sheets within total common shareholders' equity.

(5)	All performance ratios are based on average balance sheet amounts, where applicable.

(6)

Adjusted return on tangible equity is computed by taking core earnings divided by shareholders’ equity less the tax-effected amortization of intangible assets, assuming a marginal rate of 23.87% for the first quarter of 2020 and the fourth quarter of 2019, and 23.78% in the first three quarters of 2019.

(7)	Efficiency ratio is computed by dividing core non-interest expense net of franchise taxes and intangible amortization divided by core revenue on a fully taxable equivalent basis.