BAR HARBOR, ME / ACCESSWIRE / July 21, 2022 / Bar Harbor Bankshares (NYSE:BHB) reported second quarter 2022 net income of $10.5 million or $0.70 per diluted share compared to $9.0 million or $0.60 per diluted share in the same quarter of 2021. Earnings per share in the prior year quarter included a $0.05 benefit from Paycheck Protection Program (PPP) loans offset by $0.03 of non-core items (non-GAAP).

SECOND QUARTER HIGHLIGHTS (ratios compared to the second quarter 2021)

1.14% return on assets, compared to 0.97%
11% annualized loan growth
9% annualized core deposit growth
3.19% net interest margin, compared to 2.74%
59% efficiency ratio, compared to 63%
0.21% non-performing asset ratio to total assets, compared to 0.37%

President and Chief Executive Officer, Curtis C. Simard stated, "Our performance in the second quarter continues to reflect all the hard work everyone is doing across our Company. We increased net income per diluted share by 17%, which improved all of our performance metrics even without any benefit from PPP accretion. We delivered loan growth across all product offerings; Commercial loans, excluding PPP, grew 14% on annualized basis, driven both by existing and new customer growth. This strong loan growth in the first half of the year, along with rising rates, drove meaningful growth in net interest income and expansion in net interest margin. The quarter was also highlighted by solid, positive operating leverage which improved our efficiency ratio."

"Wealth management income remained strong during the quarter. Assets under management decreased 9%, which is manageable compared to the 16% decline in the S&P 500 index for the same period. Net customer cash inflows were strong in the quarter. We completed the consolidation of our wealth platforms under the Bar Harbor Wealth Management brand during the quarter which delivers a simplified, comprehensive offering across our footprint. We've invested in continuous improvements in our financial planning capabilities, reflecting our deep, long-term care for our customers and their families."

"Asset quality continues to remain strong as total nonperforming assets improved by $1.3 million to 0.21% of total assets and net charge-offs were essentially zero during the quarter. As the economic environment continues to evolve, we believe that our disciplined strategy to responsibly grow business lines where we possess specialized sector and underwriting expertise has resulted in almost no losses for the quarter. We remain committed to those relationships with proven operators. This has allowed us to maintain a superior credit risk profile in our commercial banking business."

Mr. Simard further stated, "As we continue to grow profitably, we remain steadfast in our commitment to return capital to our shareholders. Last month, our Board of Directors authorized a stock repurchase plan for up to 5% of our common shares, which represents approximately 751,000 shares. No repurchases were made in the second quarter and we will continue to be opportunistic taking into consideration market conditions, including interest rate volatility and potential loan and risk-weighted asset growth. We grew tangible book value 6% excluding unrealized security losses, which are considered temporary in nature. And as of the June 30, 2022 stock price, our dividend yield is now over 4%. Given our already strong capital ratios and our organic growth rate, we continue to be well-positioned as we look to future growth."

Mr. Simard concluded, "Our customers and communities have noticed our success as we further establish ourselves as the go-to banking institution in Northern New England. With that in mind, I am excited to share that in addition to being named one of America's Best Banks by Newsweek for 2022, we were recently recognized as one of America's Best Banks by Forbes Magazine. This type of recognition from such a renowned publication does not come easily. It is a testament to our teams' hard work every day. Looking forward into the second half of 2022, there are macroeconomic factors that remain uncertain. We believe having a strong balance sheet, robust pipelines, a sound mix of fee-based businesses, and a focus on expense management as we execute against our strategies will provide the foundation for continued success."

DIVIDEND DECLARED

The Board of Directors voted to declare a cash dividend of $0.26 per share to shareholders of record at the close of business on August 16, 2022 payable on September 16, 2022. This dividend equates to a 4.02% annualized yield based on the $25.86 closing price of the Company's common stock at the end of the second quarter of 2022.

FINANCIAL CONDITION

Loans were $2.7 billion at the end of the second quarter. Excluding PPP loans, commercial loans increased $55.8 million from the end of the first quarter 2022 and included over 70 new customer relationships. Total residential loans increased $8.3 million from the end of the first quarter 2022, and included $18.3 million of originations on the balance sheet offset by prepayments and amortization.

The allowance for credit losses was $23.8 million for the second quarter, compared to $23.2 million at the end of the first quarter 2022. A steadying economic forecast and disciplined approach to credit quality resulted in an allowance to total loans coverage ratio of 0.87% consistent with the end of the first quarter. The second quarter 2022 charged off loans resulted in a net recovery of $32 thousand compared to $95 thousand in the first quarter. Non-accruing loans for the second quarter 2022 decreased to $7.9 million from $9.2 million at the end of the first quarter. The ratio of accruing past due loans to total loans was 0.12% of total loans at the end of the second quarter from 0.25% at the end of the first quarter.

Total deposits were $3.1 billion at the end of the second quarter 2022 compared to $3.0 billion at the end of the first quarter. Core deposits grew $60.8 million, or 9% on an annualized basis, during the quarter as nearly 840 net new customer accounts were opened. The loan to deposit ratio was 89% compared to 87% at the end of the first quarter 2022, the increase was due to outsized loan growth. Time deposits decreased $30.0 million during the quarter attributable to customers continuing to move funds to transactional accounts upon contractual maturity.

The Company's book value per share was $26.19 at June 30, 2022, compared with $27.11 at the end of the first quarter. Tangible book value per share (non-GAAP measure) was $17.83 at the end of the second quarter 2022, compared to $18.72 at the end of the first quarter. Other comprehensive income included unrealized loss on securities totaling $38.3 million in the second quarter 2022 compared to $20.2 million at the end of the first quarter.

RESULTS OF OPERATIONS

Net income in the second quarter 2022 was $10.5 million, or $0.70 per diluted share, compared to $9.0 million, or $0.60 per diluted share, in the same quarter of 2021. Core earnings (non-GAAP) totaled $10.5 million or $0.70 per diluted share, compared to $9.4 million, or $0.63 per diluted share, in the same quarter of 2021. PPP income was $27 thousand compared to $1.1 million in the second quarter 2021.

Net interest margin was 3.19% compared to 2.74% in the same period of 2021. Acceleration of PPP loan fee amortization due to forgiveness contributed 7 basis points in the second quarter 2021. Interest-bearing cash balances, held mostly at the Federal Reserve Bank, reduced NIM by 5 basis points in the second quarter 2022 and 19 basis points in the second quarter 2021. The yield on earning assets totaled 3.46% compared to 3.26% in the second quarter 2021. Excluding the impact of PPP and excess cash, the yield on earning assets totaled 3.51% and 3.44% for the same periods. The yield on loans was 3.71% in the second quarter 2022, and 3.70% in the second quarter of 2021. Excluding PPP loans the yield on loans was 3.71% in the second quarter of 2022 and 3.64% in the second quarter 2021. Costs of interest-bearing liabilities decreased to 0.36% from 0.66% in the second quarter 2021 due to lower deposit rates and less wholesale borrowings.

The provision for credit losses for the quarter was $534 thousand, compared to a recapture of $765 thousand in the second quarter of 2021. The provision in the second quarter 2022 is attributable to loan growth offset in part by continued improvement in credit quality metrics.

Non-interest income in the second quarter 2022 was $9.0 million, compared to $9.5 million in the same quarter of 2021. Customer service fees were $3.7 million in the second quarter compared to $3.3 million in the same period of 2021. The increase included over 800 net new accounts that were opened during the quarter and a higher volume of customer activity and transactions. Wealth management income was $3.8 million in the second quarter of 2022 and the second quarter of 2021 on strong cash inflows offset by market volatility effects on assets under management. Mortgage banking income was $488 thousand, compared to $1.5 million in the same period of 2021 reflecting higher on balance sheet activity and lower residential loan originations.

Non-interest expense was $21.7 million in the second quarter 2022 and the same quarter of 2021 reflecting consistent and stable costs across most categories. The efficiency ratio in the second quarter 2022 was 59.25%, down from 63.45% in the second quarter 2021. Non-core expenses (non-GAAP) in the second quarter 2022 consisted of a $10 thousand loss on the sale of premises and equipment. In the same quarter of 2021, non-core expenses (non-GAAP) totaled $553 thousand were mostly a one-time reduction in workforce.

BACKGROUND

Bar Harbor Bankshares (NYSE: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 135 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 headings "SECOND QUARTER HIGHLIGHTS" and "RESULTS OF OPERATIONS" 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, 2021 and any subsequently filed Quarterly Reports on Form 10-Q. 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.

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.

###

CONTACTS

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


TABLE
INDEX	CONSOLIDATED FINANCIAL SCHEDULES (UNAUDITED)

	SELECTEDFINANCIALHIGHLIGHTSUNAUDITED_350
A	Selected Financial Highlights
B	Balance Sheets
C	Loan and Deposit Analysis
D	Statements of Income
E	Statements of Income (Five Quarter Trend)
F	Average Yields and Costs
G	Average Balances
H	Asset Quality Analysis
I-J	Reconciliation of Non-GAAP Financial Measures (Five Quarter Trend) and Supplementary Data

BAR HARBOR BANKSHARES
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED

	At or for the Quarters Ended
	Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,
	2022			2022			2021			2021			2021
PER SHARE DATA
Net earnings, diluted	$	0.70		$	0.60		$	0.65		$	0.73		$	0.60
Core earnings, diluted ⁽¹⁾		0.70			0.62			0.68			0.73			0.63
Total book value		26.19			27.11			28.27			27.92			27.64
Tangible book value ⁽¹⁾		17.83			18.72			19.86			19.48			19.17
Market price at period end		25.86			28.62			28.93			28.05			28.62
Dividends		0.26			0.24			0.24			0.24			0.24

PERFORMANCE RATIOS ⁽²⁾
Return on assets		1.14	%		1.00	%		1.02	%		1.16	%		0.97	%
Core return on assets ⁽¹⁾		1.14			1.02			1.07			1.16			1.01
Pre-tax, pre-provision return on assets		1.50			1.28			1.26			1.43			1.13
Core pre-tax, pre-provision return on assets⁽¹⁾		1.50			1.31			1.33			1.43			1.18
Return on equity		10.58			8.89			9.16			10.38			8.77
Core return on equity ⁽¹⁾		10.59			9.07			9.60			10.39			9.14
Return on tangible equity		15.74			13.01			13.30			15.08			12.91
Core return on tangible equity ⁽¹⁾		15.76			13.27			13.93			15.09			13.45
Net interest margin, fully taxable equivalent (FTE) ^{(1) (3)}		3.19			2.95			2.79			3.02			2.74
Core net interest margin^{(1) (4)}		3.19			2.93			2.69			2.75			2.67
Efficiency ratio ⁽¹⁾		59.25			62.40			60.74			59.18			63.45

FINANCIAL DATA (In millions)
Total assets	$	3,712		$	3,692		$	3,709		$	3,738		$	3,639
Total earning assets ⁽⁵⁾		3,399			3,367			3,380			3,394			3,282
Total investments		593			611			626			556			636
Total loans		2,727			2,655			2,532			2,534			2,516
Allowance for credit losses		24			23			23			22			23
Total goodwill and intangible assets		126			126			126			126			127
Total deposits		3,079			3,048			3,049			3,007			2,822
Total shareholders' equity		394			407			424			418			414
Net income		11			9			10			11			9
Core earnings⁽¹⁾		11			9			10			11			9

ASSET QUALITY AND CONDITION RATIOS
Net (recoveries) charge-offs (current quarter annualized)/average loans		(0.01	)%		(0.01	)%		-	%		0.03	%		0.01	%
Allowance for credit losses/total loans		0.87			0.87			0.90			0.89			0.91
Loans/deposits		89			87			83			84			89
Shareholders' equity to total assets		10.60			11.02			11.43			11.19			11.37
Tangible shareholders' equity to tangible assets		7.47			7.88			8.32			8.08			8.17

(1) Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in table I-J for additional information.
(2) All performance ratios are based on average balance sheet amounts, where applicable.
(3) Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans.
(4) Core net interest margin excludes Paycheck Protection Program loans.
(5) Earning assets includes non-accruing loans and interest-bearing deposits with other banks. Securities are valued at amortized cost.

BAR HARBOR BANKSHARES
CONSOLIDATED BALANCE SHEETS - UNAUDITED

	Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,
(in thousands)	2022			2022			2021			2021			2021
Assets
Cash and due from banks	$	40,834		$	38,656		$	33,508		$	39,081		$	41,440
Interest-earning deposits with other banks		26,282			72,393			216,881			302,118			132,278
Total cash and cash equivalents		67,116			111,049			250,389			341,199			173,718

Securities available for sale		586,142			603,910			618,276			545,327			621,849
Federal Home Loan Bank stock		6,572			7,384			7,384			10,192			14,145
Total securities		592,714			611,294			625,660			555,519			635,994

Loans held for sale		3,539			2,843			5,523			7,505			7,942

Total loans		2,727,274			2,654,562			2,531,910			2,534,154			2,515,560
Less: Allowance for credit losses		(23,756	)		(23,190	)		(22,718	)		(22,448	)		(22,815	)
Net loans		2,703,518			2,631,372			2,509,192			2,511,706			2,492,745

Premises and equipment, net		48,350			48,891			49,382			50,070			51,119
Other real estate owned		-			-			-			-			-
Goodwill		119,477			119,477			119,477			119,477			119,477
Other intangible assets		6,267			6,500			6,733			6,966			7,198
Cash surrender value of bank-owned life insurance		80,262			79,861			79,020			79,380			78,886
Deferred tax asset, net		18,405			12,614			5,547			5,811			4,902
Other assets		72,596			68,169			58,310			60,712			67,064
Total assets	$	3,712,244		$	3,692,070		$	3,709,233		$	3,738,345		$	3,639,045

Liabilities and shareholders' equity
Demand and other non-interest bearing deposits	$	670,268		$	653,471		$	664,420		$	664,395		$	599,598
NOW deposits		883,239			918,768			940,631			888,021			802,681
Savings deposits		663,676			658,834			628,670			605,977			578,361
Money market deposits		499,456			424,750			389,291			379,651			371,075
Time deposits		361,906			391,940			425,532			469,221			470,758
Total deposits		3,078,545			3,047,763			3,048,544			3,007,265			2,822,473

Senior borrowings		117,347			118,538			118,400			190,267			279,991
Subordinated borrowings		60,206			60,165			60,124			60,083			60,042
Total borrowings		177,553			178,703			178,524			250,350			340,033

Other liabilities		62,549			58,605			58,018			62,295			62,779
Total liabilities		3,318,647			3,285,071			3,285,086			3,319,910			3,225,285

Total shareholders' equity		393,597			406,999			424,147			418,435			413,760
Total liabilities and shareholders' equity	$	3,712,244		$	3,692,070		$	3,709,233		$	3,738,345		$	3,639,045

Net shares outstanding		15,026			15,013			15,001			14,987			14,972

BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED

LOAN ANALYSIS

											Annualized
											Growth %
(in thousands)	Jun 30, 2022		Mar 31, 2022		Dec 31, 2021		Sep 30, 2021		Jun 30, 2021		Quarter to Date			Year to Date
Commercial real estate	$	1,331,860	$	1,289,968	$	1,210,580	$	1,170,372	$	1,135,857		13	%		20	%
Commercial and industrial		360,304		346,394		340,129		331,091		327,729		16			12
Paycheck Protection Program (PPP)		170		1,126		6,669		24,227		65,918		*			*
Total commercial loans		1,692,334		1,637,488		1,557,378		1,525,690		1,529,504		13			17
Total commercial loans, excluding PPP		1,692,164		1,636,362		1,550,709		1,501,463		1,463,586		14			18

Residential real estate		876,644		868,382		821,004		849,692		822,774		4			14
Consumer		100,816		96,876		98,949		100,933		103,589		16			4
Tax exempt and other		57,480		51,816		54,579		57,839		59,693		44			11
Total loans	$	2,727,274	$	2,654,562	$	2,531,910	$	2,534,154	$	2,515,560		11	%		15	%

DEPOSIT ANALYSIS

											Annualized
											Growth %
(in thousands)	Jun 30, 2022		Mar 31, 2022		Dec 31, 2021		Sep 30, 2021		Jun 30, 2021		Quarter to Date			Year to Date
Demand	$	670,268	$	653,471	$	664,420	$	664,395	$	599,598		10	%		2	%
NOW		883,239		918,768		940,631		888,021		802,681		(15	)		(12	)
Savings		663,676		658,834		628,670		605,977		578,361		3			11
Money market		499,456		424,750		389,291		379,651		371,075		70			57
Total non-maturity deposits		2,716,639		2,655,823		2,623,012		2,538,044		2,351,715		9			7
Total time deposits		361,906		391,940		425,532		469,221		470,758		(31	)		(30	)
Total deposits	$	3,078,545	$	3,047,763	$	3,048,544	$	3,007,265	$	2,822,473		4	%		2	%

*Indicates ratios of 100% or greater.

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(in thousands, except per share data)	2022		2021			2022			2021
Interest and dividend income
Loans	$	24,581	$	23,191		$	47,252		$	47,396
Securities and other		4,207		3,992			8,033			7,971
Total interest and dividend income		28,788		27,183			55,285			55,367
Interest expense
Deposits		1,195		2,603			2,384			5,554
Borrowings		1,074		1,826			2,084			3,637
Total interest expense		2,269		4,429			4,468			9,191
Net interest income		26,519		22,754			50,817			46,176
Provision for credit losses		534		(765	)		911			(1,254	)
Net interest income after provision for credit losses		25,985		23,519			49,906			47,430
Non-interest income
Trust and investment management fee income		3,829		3,801			7,583			7,467
Customer service fees		3,656		3,257			7,272			6,227
Gain on sales of securities, net		-		50			9			50
Mortgage banking income		488		1,553			1,112			4,123
Bank-owned life insurance income		504		498			1,005			1,016
Customer derivative income		137		86			155			496
Other income		347		260			1,134			374
Total non-interest income		8,961		9,505			18,270			19,753
Non-interest expense
Salaries and employee benefits		11,368		11,356			23,515			23,532
Occupancy and equipment		4,373		3,894			8,796			8,222
Loss (gain) on sales of premises and equipment, net		10		1			(65	)		9
Outside services		410		533			750			965
Professional services		528		151			701			709
Communication		188		198			413			519
Marketing		369		534			632			824
Amortization of intangible assets		233		233			466			474
Loss on debt extinguishment		-		-			-			-
Acquisition, conversion and other expenses		-		552			325			1,441
Other expenses		4,221		4,272			8,053			7,520
Total non-interest expense		21,700		21,724			43,586			44,215
Income before income taxes		13,246		11,300			24,590			22,968
Income tax expense		2,743		2,275			4,975			4,463
Net income	$	10,503	$	9,025		$	19,615		$	18,505

Earnings per share:
Basic	$	0.70	$	0.60		$	1.31		$	1.24
Diluted		0.70		0.60			1.30			1.23

Weighted average shares outstanding:
Basic		15,018		14,965			15,014			14,950
Diluted		15,077		15,042			15,094			15,026

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED

	Jun 30,		Mar 31,			Dec 31,			Sep 30,			Jun 30,
(in thousands, except per share data)	2022		2022			2021			2021			2021
Interest and dividend income
Loans	$	24,581	$	22,671		$	22,746		$	25,094		$	23,191
Securities and other		4,207		3,826			3,776			3,821			3,992
Total interest and dividend income		28,788		26,497			26,522			28,915			27,183
Interest expense
Deposits		1,195		1,189			1,434			1,555			2,603
Borrowings		1,074		1,010			1,273			1,778			1,826
Total interest expense		2,269		2,199			2,707			3,333			4,429
Net interest income		26,519		24,298			23,815			25,582			22,754
Provision for credit losses		534		377			126			(174	)		(765	)
Net interest income after provision for credit losses		25,985		23,921			23,689			25,756			23,519
Non-interest income
Trust and investment management fee income		3,829		3,754			3,844			3,868			3,801
Customer service fees		3,656		3,616			3,470			3,515			3,257
Gain on sales of securities, net		-		9			890			1,930			50
Mortgage banking income		488		624			1,563			850			1,553
Bank-owned life insurance income		504		501			669			494			498
Customer derivative income		137		18			173			341			86
Other income		347		787			549			352			260
Total non-interest income		8,961		9,309			11,158			11,350			9,505
Non-interest expense
Salaries and employee benefits		11,368		12,147			11,842			11,743			11,356
Occupancy and equipment		4,373		4,423			4,105			4,029			3,894
Loss (gain) on sales of premises and equipment, net		10		(75	)		515			(146	)		1
Outside services		410		340			431			547			533
Professional services		528		173			556			491			151
Communication		188		225			205			188			198
Marketing		369		263			378			339			534
Amortization of intangible assets		233		233			233			233			233
Loss on debt extinguishment		-		-			1,083			1,768			-
Acquisition, conversion and other expenses		-		325			(92	)		318			552
Other expenses		4,221		3,832			3,665			3,862			4,272
Total non-interest expense		21,700		21,886			22,921			23,372			21,724
Income before income taxes		13,246		11,344			11,926			13,734			11,300
Income tax expense		2,743		2,232			2,160			2,706			2,275
Net income	$	10,503	$	9,112		$	9,766		$	11,028		$	9,025

Earnings per share:
Basic	$	0.70	$	0.61		$	0.65		$	0.74		$	0.60
Diluted		0.70		0.60			0.65			0.73			0.60

Weighted average shares outstanding:
Basic		15,018		15,011			14,993			14,983			14,965
Diluted		15,077		15,102			15,075			15,051			15,042

BAR HARBOR BANKSHARES
AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent (Non-GAAP) - Annualized) - UNAUDITED

	Quarters Ended
	Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,
	2022			2022			2021			2021			2021
Earning assets
Interest-earning deposits with other banks		0.80	%		0.16	%		0.16	%		0.15	%		0.09	%
Securities available for sale and FHLB stock		2.69			2.55			2.66			2.59			2.66
Loans:
Commercial real estate		3.82			3.50			3.40			3.53			3.54
Commercial and industrial		3.67			3.46			3.23			3.79			3.60
Paycheck protection program		13.99			26.49			26.25			23.28			5.56
Residential real estate		3.55			3.55			3.61			3.64			3.80
Consumer		3.82			3.51			3.49			3.78			3.44
Total loans		3.71			3.54			3.58			3.98			3.70
Total earning assets		3.46	%		3.21	%		3.10	%		3.41	%		3.26	%

Funding liabilities
Deposits:
NOW		0.14	%		0.14	%		0.14	%		0.13	%		0.12	%
Savings		0.08			0.09			0.08			0.08			0.10
Money market		0.19			0.12			0.12			0.12			0.12
Time deposits		0.58			0.62			0.77			0.88			1.37
Total interest-bearing deposits		0.20			0.20			0.24			0.27			0.45
Borrowings		2.41			2.29			2.17			2.11			2.12
Total interest-bearing liabilities		0.36	%		0.35	%		0.41	%		0.50	%		0.66	%

Net interest spread		3.10			2.86			2.69			2.91			2.60
Net interest margin		3.19			2.95			2.79			3.02			2.74
Core net interest margin ⁽¹⁾		3.19			2.93			2.69			2.75			2.67

(1) Core net interest margin (Non-GAAP) excludes Paycheck Protection Program loans.

BAR HARBOR BANKSHARES
AVERAGE BALANCES - UNAUDITED

	Quarters Ended
	Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,
(in thousands)	2022			2022			2021			2021			2021
Assets
Interest-earning deposits with other banks⁽¹⁾	$	63,317		$	140,383		$	325,260		$	284,429		$	228,825
Securities available for sale and FHLB stock ⁽²⁾		637,881			629,811			578,323			610,381			635,978
Loans:
Commercial real estate		1,296,162			1,264,798			1,189,803			1,153,813			1,122,831
Commercial and industrial		412,518			393,759			386,156			391,191			378,634
Paycheck protection program		788			2,999			14,824			45,835			76,701
Residential real estate		863,172			856,252			844,872			824,686			850,119
Consumer		98,588			97,594			100,723			101,545			104,851
Total loans ⁽³⁾		2,671,228			2,615,402			2,536,378			2,517,070			2,533,136
Total earning assets		3,372,426			3,385,596			3,439,961			3,411,880			3,397,939
Cash and due from banks		35,051			32,742			37,818			38,750			21,414
Allowance for credit losses		(23,228	)		(23,256	)		(22,525	)		(22,607	)		(23,419	)
Goodwill and other intangible assets		126,090			126,090			126,324			126,556			126,789
Other assets		174,880			190,846			200,097			209,509			223,362
Total assets	$	3,685,219		$	3,712,018		$	3,781,675		$	3,764,088		$	3,746,085

Liabilities and shareholders' equity
Deposits:
NOW	$	893,239		$	930,556		$	913,326		$	860,206		$	781,836
Savings		657,047			640,672			620,599			591,440			568,193
Money market		457,088			414,130			395,341			381,755			368,826
Time deposits		375,782			406,730			450,559			471,934			619,454
Total interest-bearing deposits		2,383,156			2,392,088			2,379,825			2,305,335			2,338,309
Borrowings		178,519			178,958			232,492			334,097			345,896
Total interest-bearing liabilities		2,561,675			2,571,046			2,612,317			2,639,432			2,684,205
Non-interest-bearing demand deposits		661,412			660,717			684,895			641,769			591,982
Other liabilities		63,912			64,619			61,480			61,436			57,227
Total liabilities		3,286,999			3,296,382			3,358,692			3,342,637			3,333,414
Total shareholders' equity		398,220			415,636			422,983			421,451			412,671
Total liabilities and shareholders' equity	$	3,685,219		$	3,712,018		$	3,781,675		$	3,764,088		$	3,746,085

(1) Total average interest-bearing deposits with other banks is net of Federal Reserve daily cash letter.
(2) Average balances for securities available-for-sale are based on amortized cost.
(3) Total average loans include non-accruing loans and loans held for sale.

BAR HARBOR BANKSHARES
ASSET QUALITY ANALYSIS - UNAUDITED

	At or for the Quarters Ended
	Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,
(in thousands)	2022			2022			2021			2021			2021
NON-PERFORMING ASSETS
Non-accruing loans:
Commercial real estate	$	1,483		$	1,633		$	2,890		$	3,646		$	4,367
Commercial installment		632			905			1,056			1,163			1,370
Residential real estate		4,882			5,612			5,192			6,311			6,788
Consumer installment		881			1,063			1,053			1,087			1,054
Total non-accruing loans		7,878			9,213			10,191			12,207			13,579
Other real estate owned		-			-			-			-			-
Total non-performing assets	$	7,878		$	9,213		$	10,191		$	12,207		$	13,579

Total non-accruing loans/total loans		0.29	%		0.35	%		0.40	%		0.48	%		0.54	%
Total non-performing assets/total assets		0.21			0.25			0.27			0.33			0.37

PROVISION AND ALLOWANCE FOR CREDIT LOSSES
Balance at beginning of period	$	23,190		$	22,718		$	22,448		$	22,815		$	23,653
Charged-off loans		(62	)		(83	)		(154	)		(286	)		(239	)
Recoveries on charged-off loans		94			178			298			93			166
Net loans charged-off		32			95			144			(193	)		(73	)
Provision for credit losses		534			377			126			(174	)		(765	)
Balance at end of period	$	23,756		$	23,190		$	22,718		$	22,448		$	22,815

Allowance for credit losses/total loans		0.87	%		0.87	%		0.90	%		0.89	%		0.91	%
Allowance for credit losses/non-accruing loans		300			252			223			184			168

NET LOAN (CHARGE-OFFS) RECOVERIES
Commercial real estate	$	59		$	54		$	216		$	(69	)	$	(105	)
Commercial installment		12			25			53			(24	)		(7	)
Residential real estate		6			76			8			13			88
Consumer installment		(45	)		(60	)		(133	)		(113	)		(49	)
Total, net	$	32		$	95		$	144		$	(193	)	$	(73	)

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

DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS
30-89 Days delinquent		0.09	%		0.22	%		0.31	%		0.09	%		0.13	%
90+ Days delinquent and still accruing		0.03			0.03			0.01			0.02			0.02
Total accruing delinquent loans		0.12			0.25			0.32			0.12			0.15
Non-accruing loans		0.29			0.35			0.40			0.48			0.54
Total delinquent and non-accruing loans		0.41	%		0.60	%		0.72	%		0.60	%		0.69	%

BAR HARBOR BANKSHARES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED

		At or for the Quarters Ended
		Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,
(in thousands)		2022			2022			2021			2021			2021
Net income		$	10,503		$	9,112		$	9,766		$	11,028		$	9,025
Non-core items:
Gain on sale of securities, net			-			(9	)		(890	)		(1,930	)		(50	)
Loss (gain) on sale of premises and equipment, net			10			(75	)		515			(146	)		1
Loss on debt extinguishment			-			-			1,083			1,768			-
Acquisition, conversion and other expenses			-			325			(92	)		318			552
Income tax expense ⁽¹⁾			(2	)		(56	)		(144	)		(2	)		(119	)
Total non-core items			8			185			472			8			384
Core earnings ⁽²⁾	(A)	$	10,511		$	9,297		$	10,238		$	11,036		$	9,409

Net interest income	(B)	$	26,519		$	24,298		$	23,815		$	25,582		$	22,754
Non-interest income			8,961			9,309			11,158			11,350			9,505
Total Revenue			35,480			33,607			34,973			36,932			32,259
Gain on sale of securities, net			-			(9	)		(890	)		(1,930	)		(50	)
Total core revenue ⁽²⁾	(C)	$	35,480		$	33,598		$	34,083		$	35,002		$	32,209

Total non-interest expense			21,700			21,886			22,921			23,372			21,724
Non-core expenses:
(Loss) gain on sale of premises and equipment, net			(10	)		75			(515	)		146			(1	)
Loss on debt extinguishment			-			-			(1,083	)		(1,768	)		-
Acquisition, conversion and other expenses			-			(325	)		92			(318	)		(552	)
Total non-core expenses			(10	)		(250	)		(1,506	)		(1,940	)		(553	)
Core non-interest expense ⁽²⁾	(D)	$	21,690		$	21,636		$	21,415		$	21,432		$	21,171

Total revenue			35,480			33,607			34,973			36,932			32,259
Total non-interest expense			21,700			21,886			22,921			23,372			21,724
Pre-tax, pre-provision net revenue		$	13,780		$	11,721		$	12,052		$	13,560		$	10,535

Core revenue⁽²⁾			35,480			33,598			34,083			35,002			32,209
Core non-interest expense⁽²⁾			21,690			21,636			21,415			21,432			21,171
Core pre-tax, pre-provision net revenue⁽²⁾	(U)	$	13,790		$	11,962		$	12,668		$	13,570		$	11,038

(in millions)
Average earning assets	(E)	$	3,372		$	3,386		$	3,440		$	3,412		$	3,398
Average paycheck protection program (PPP) loans	(R)		1			3			15			46			77
Average earning assets, excluding PPP loans	(S)		3,371			3,383			3,425			3,366			3,321
Average assets	(F)		3,685			3,712			3,764			3,764			3,746
Average shareholders' equity	(G)		398			416			423			421			413
Average tangible shareholders' equity ^{(2) (3)}	(H)		272			290			297			295			286
Tangible shareholders' equity, period-end ^{(2) (3)}	(I)		268			281			298			292			287
Tangible assets, period-end ^{(2) (3)}	(J)		3,587			3,566			3,583			3,612			3,512

BAR HARBOR BANKSHARES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA - UNAUDITED

		At or for the Quarters Ended
		Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,
(in thousands)		2022			2022			2021			2021			2021
Common shares outstanding, period-end	(K)		15,018			15,013			15,001			14,987			14,972
Average diluted shares outstanding	(L)		15,077			15,102			15,075			15,051			15,042

Core earnings per share, diluted ⁽²⁾	(A/L)	$	0.70		$	0.62		$	0.68		$	0.73		$	0.63
Tangible book value per share, period-end ⁽²⁾	(I/K)		17.83			18.72			19.86			19.48			19.17
Securities adjustment, net of tax ^{(1) (4)}	(M)		(38,304	)		(20,225	)		1,985			4,398			7,237
Tangible book value per share, excluding securities adjustment ^{(2) (4)}	(I+M)/K		20.38			20.07			19.73			19.19			18.69
Tangible shareholders' equity/total tangible assets ⁽²⁾	(I/J)		7.47			7.88			8.32			8.08			8.17

Performance ratios ⁽⁵⁾
GAAP return on assets			1.14	%		1.00	%		1.02	%		1.16	%		0.97	%
Core return on assets ⁽²⁾	(A/F)		1.14			1.02			1.07			1.16			1.01
Pre-tax, pre-provision return on assets			1.50			1.28			1.26			1.43			1.13
Core pre-tax, pre-provision return on assets⁽²⁾	(U/F)		1.50			1.31			1.33			1.43			1.18
GAAP return on equity			10.58			8.89			9.16			10.38			8.77
Core return on equity ⁽²⁾	(A/G)		10.59			9.07			9.60			10.39			9.14
Return on tangible equity			15.74			13.01			13.30			15.08			12.91
Core return on tangible equity ^{(1) (2)}	(A+Q)/H		15.76			13.27			13.93			15.09			13.45
Efficiency ratio ^{(2) (6)}	(D-O-Q)/(C+N)		59.25			62.40			60.74			59.18			63.45
Net interest margin	(B+P)/E		3.19			2.95			2.79			3.02			2.74
Core net interest margin^{(2) (7)}	(B+P-T)/S		3.19			2.93			2.69			2.75			2.67

Supplementary data (in thousands)
Taxable equivalent adjustment for efficiency ratio	(N)	$	491		$	476		$	573		$	576		$	586
Franchise taxes included in non-interest expense	(O)		144			141			132			143			128
Tax equivalent adjustment for net interest margin	(P)		334			320			369			421			430
Intangible amortization	(Q)		233			233			233			233			233
Interest and fees on PPP loans	(T)		27			196			981			2,690			1,064

(1) Assumes a marginal tax rate of 23.41% for the first and second quarter of 2022 and fourth quarter of 2021 and 23.71% for the first three quarters of 2021.
(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) 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.
(7) Core net interest margin excludes Paycheck Protection Program loans.

SOURCE: Bar Harbor Bank and Trust

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Bar Harbor Bankshares Reports Second Quarter Results; Declares Dividend