BAR HARBOR, ME / ACCESSWIRE / October 19, 2022 / Bar Harbor Bankshares (NYSE:BHB) reported third quarter 2022 net income of $11.4 million or $0.76 per diluted share compared to $11.0 million or $0.73 per diluted share in the same quarter of 2021. Earnings per share in the prior year quarter included a $0.14 per diluted share benefit from Paycheck Protection Program (PPP) loans.

THIRD QUARTER HIGHLIGHTS (all comparisons to the third quarter 2021)

1.20% return on assets, compared to 1.16%
18% annualized loan growth
12% annualized core deposit growth
3.47% net interest margin, compared to 3.02%
58% efficiency ratio, compared to 59%
0.20% non-performing assets ratio to total assets, compared to 0.33%

President and Chief Executive Officer, Curtis C. Simard stated, "We are pleased to report our third quarter 2022 results which reflect another strong quarter in loan growth, asset quality, and expansion in net interest margin as well as in all other profitability metrics. We increased net income by 27% over the third quarter of 2021 excluding the benefit from PPP loans. Total revenue was $38.7 million; a 9% increase from the prior quarter driven primarily by both growth in average assets and the expansion in net interest income due to our asset-sensitive position. Return on assets expanded 25 basis points excluding income from PPP loans in 2021. This quarter's earnings reflect strategically designed core run rates based on non-maturity deposits and commercial loan growth. We continue to practice disciplined expense management despite inflationary challenges seen across the US work force today. These combined efforts create positive operating leverage, which in part, drove the efficiency ratio down to 58%, compared to 59% or 63% excluding PPP loan accretion in the third quarter 2021.

"Loan growth was generated across all of our footprint and across all industry sectors and business lines. The economy in Northern New England continues to be resilient despite pressures from the broader economy. While the commercial loan market is active, we continue to be selective in those opportunities with proven operators who similarly are increasingly focused on bank execution. Overall on an annualized basis commercial loans grew by 25% and residential loans grew 9%, as much of the mortgage production during the quarter was shifted to the balance sheet taking advantage of the higher rate environment.

"On the liability side, we are growing core deposits at a strong double digit rate and gaining market share. This has allowed us to increase our deposit funding reliance and diligently manage our funding costs, which also contributed to our expanded margin.

Mr. Simard went on to say, "As always, our asset quality remains a pillar of our foundation as we continue to see negligible net charge-offs this quarter. Non-performing assets to total assets continues to be minimal at 0.20%. At the end of the third quarter, the allowance for credit losses (ACL) was 0.88% of total loans, up from 0.87% at the end of the second 2022 quarter primarily as a result of more conservative economic forecasting and outsized loan growth.

"We've grown our tangible book value per share, excluding the impact of unrealized security losses, at a compound annual growth rate of 8% on strong earnings offset in part by favorable dividend payments to investors. We should also note that while we have not classified any of our portfolio as held to maturity, we do have the ability to hold the investments to maturity and fully expect any unrealized loss positions to be recovered over time. We continue to manage the investment portfolio as a balance sheet tool versus a line of business, and to this point, classifying investments as available for sale preserves our flexibility.

Mr. Simard concluded, "Looking ahead, while the economy remains uncertain, our customer base remains strong, and we continue to be well positioned to support the needs within our communities regardless of the economic environment. We are actively managing the balance sheet, and, as we have proven in the past, we will continue to lend through the uncertainty while managing our market sensitivity position."

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 November 16, 2022 payable on December 16, 2022. This dividend equates to a 3.92% annualized yield based on the $26.52 closing share price of the Company's common stock on September 30, 2022, the last trading day of the third quarter 2022.

FINANCIAL CONDITION

Loans were $2.8 billion at the end of the third quarter. Commercial loans increased $106.4 million from the end of the second quarter 2022 and included 65 new customer relationships. Total residential loans increased $20.0 million from the end of the second quarter 2022, and included $35.1 million of originations on the balance sheet offset by prepayments and amortization.

The allowance for credit losses was $25.0 million for the third quarter, compared to $23.8 million at the end of the second quarter 2022. The increase in the ACL balance is largely due to significant loan growth during the quarter. The third quarter 2022 charged off loans resulted in a net charge-off of $44 thousand compared to a net recovery of $32 thousand in the second quarter. Non-accruing loans for the third quarter 2022 decreased to $7.8 million from $7.9 million at the end of the second quarter. The ratio of accruing past due loans to total loans was 0.10% of total loans at the end of the third quarter from 0.12% at the end of the second quarter.

Total deposits were $3.1 billion at the end of the third quarter 2022 as well as at the end of the second quarter. Core deposits grew $84.8 million, or 12% on an annualized basis. Time deposits decreased $27.7 million during the quarter attributable to customers continuing to move funds to transactional accounts upon contractual maturity. Excess cash and short-term borrowings were used as funding during the third quarter as loan growth outpaced deposit growth. The loan to deposit ratio was 91% compared to 89% at the end of the second quarter 2022.

The Company's book value per share was $25.22 at September 30, 2022, compared with $26.19 at the end of the second quarter. Tangible book value per share (non-GAAP measure) was $16.89 at the end of the third quarter 2022, compared to $17.83 at the end of the second quarter. Other comprehensive income included unrealized loss on securities totaling $58.7 million in the third quarter 2022 compared to $38.3 million at the end of the second quarter.

RESULTS OF OPERATIONS

Net income in the third quarter 2022 was $11.4 million, or $0.76 per diluted share, compared to $11.0 million, or $0.73 per diluted share, in the same quarter of 2021. In the third quarter 2022, there was no PPP income compared to $2.7 million in the third quarter 2021.

Net interest margin was 3.47% compared to 3.02% in the same period of 2021. Acceleration of PPP loan fee amortization due to forgiveness contributed 28 basis points in the third quarter 2021. Interest-bearing cash balances reduced net interest margin by 2 basis points in the third quarter 2022 and 26 basis points the prior year quarter. The yield on loans was 4.04% in the third quarter 2022, and 3.98% in the third quarter of 2021 or 3.62% when excluding interest from PPP loans. Costs of interest-bearing liabilities decreased to 0.48% from 0.50% in the third quarter 2021 primarily due to having a lower percentage of wholesale borrowings to total debt.

The provision for credit losses for the quarter was $1.3 million, compared to a recapture of $174 thousand in the third quarter of 2021. The provision in the current period is mainly attributable to outsized loan growth, while the recapture in the prior year quarter was due to improvement in economic forecasts.

Non-interest income in the third quarter 2022 was $8.8 million, compared to $11.4 million in the same quarter of 2021. Customer service fees grew to $3.8 million from $3.7 million on a higher number of transactional accounts. Wealth management income in the third quarter 2022 was $3.5 million, compared to $3.9 million in the same quarter of 2021 due to market adjustments that reduced assets under management. Mortgage banking income was $315 thousand, compared to $850 thousand in the same period of 2021 reflecting lower originations and higher on balance sheet activity.

Non-interest expense was $23.0 million in the third quarter 2022 and $23.4 million in the same quarter of 2021. Salaries and employee benefits increased by $500 thousand primarily due to annual merit increases in the second quarter 2022 and revaluation long-term incentive accruals to the Company's higher stock price at the end of the third quarter 2022. The efficiency ratio in the third quarter 2022 was 58%, down from 59%, 63% excluding PPP loan income in the third quarter 2021. Non-core expenses (non-GAAP) were $31 thousand compared to $1.9 million in the third quarter of 2021, which mostly consisted of a $1.8 million loss on debt extinguishment.

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

All statements, other than statements of historical fact, included in this release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements relating to the current economic outlook, potential risks to the economy, future interest rates, our ability to grow in the future, and management's optimism about the Company's market and financial positions. The words "believe," "anticipate," "expect," "may," "will," "assume," "should," "predict," "could," "would," "intend," "targets," "estimates," "projects," "plans," and "potential," and other similar words and expressions of the future, are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking, including statements about the Company's future financial and operating results and the Company's plans, objectives, and intentions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the Company to differ materially from any results, performance, or achievements expressed or implied by such forward-looking statements. 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: (1) deterioration in the financial condition of borrowers of Bar Harbor Bank & Trust, including as a result of the negative impact of inflationary pressures on our customers and their businesses resulting in significant increases in loan losses and provisions for those losses, (2) deterioration in the financial condition of borrowers of Bar Harbor Bank & Trust, including as a result of the negative impact of inflationary pressures on our customers and their businesses resulting in significant increases in loan losses and provisions for those losses, (3) the possibility that our asset quality could decline or that we experience greater loan losses than anticipated, (4) increased levels of other real estate, primarily as a result of foreclosures, (5) the impact of liquidity needs on our results of operations and financial condition, (6) competition from financial institutions and other financial service providers, (7) the effect of interest rate increases on the cost of deposits, (8) unanticipated weakness in loan demand or loan pricing, (9) adverse conditions in the national or local economies including in Bar Harbor Bankshares' markets throughout Northern New England, (10) 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 Bar Harbor Bankshares' and its customers' business, results of operations, asset quality and financial condition, (11) the efficacy of vaccines against the COVID-19 virus, including new variants, (12) lack of strategic growth opportunities or our failure to execute on available opportunities, (13) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, (14) our ability to effectively manage problem credits, (15) our ability to successfully implement efficiency initiatives on time and with the results projected, (16) our ability to successfully develop and market new products and technology, (17) the impact of negative developments in the financial industry and United States and global capital and credit markets, (18) our ability to retain the services of key personnel, (19) our ability to adapt to technological changes, (20) risks associated with litigation, including reputational and financial risks and the applicability of insurance coverage, (21) the vulnerability of the Bar Harbor Bank & Trust's computer and information technology systems and networks, and the systems and networks of third parties with whom the Company or the Bar Harbor Bank & Trust contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches and interruptions, (22) changes in state and federal laws, rules, regulations, or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments, (23) 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 (24) general competitive, economic, political, and market conditions, including economic conditions in the local markets where we operate. Additional factors which could affect the forward-looking statements can be found in the Company's annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K filed with the Securities and Exchange Commission (the "SEC") and available on the SEC's website at http://www.sec.gov. The Company believes the forward-looking statements contained herein are reasonable; however, many of such risks, uncertainties, and other factors are beyond the Company's ability to control or predict and undue reliance should not be placed on any forward-looking statements, which are based on current expectations and speak only as of the date that they are made. Therefore, the Company can give no assurance that its future results will be as estimated. The Company does not intend to, and disclaims any obligation to, update or revise any forward-looking statement.

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)


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
	Sep 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,
	2022			2022			2022			2021			2021
PER SHARE DATA
Net earnings, diluted	$	0.76		$	0.70		$	0.60		$	0.65		$	0.73
Core earnings, diluted ⁽¹⁾		0.76			0.70			0.62			0.68			0.73
Total book value		25.22			26.19			27.11			28.27			27.92
Tangible book value ⁽¹⁾		16.89			17.83			18.72			19.86			19.48
Market price at period end		26.52			25.86			28.62			28.93			28.05
Dividends		0.26			0.26			0.24			0.24			0.24

PERFORMANCE RATIOS ⁽²⁾
Return on assets		1.20	%		1.14	%		1.00	%		1.02	%		1.16	%
Core return on assets ⁽¹⁾		1.20			1.14			1.02			1.07			1.16
Pre-tax, pre-provision return on assets		1.65			1.50			1.28			1.26			1.43
Core pre-tax, pre-provision return on assets⁽¹⁾		1.65			1.50			1.31			1.33			1.43
Return on equity		11.55			10.58			8.89			9.16			10.38
Core return on equity ⁽¹⁾		11.54			10.59			9.07			9.60			10.39
Return on tangible equity		17.25			15.74			13.01			13.30			15.08
Core return on tangible equity ⁽¹⁾		17.24			15.76			13.27			13.93			15.09
Net interest margin, fully taxable equivalent (FTE) ^{(1) (3)}		3.47			3.19			2.95			2.79			3.02
Core net interest margin^{(1) (4)}		3.47			3.19			2.93			2.69			2.75
Efficiency ratio ⁽¹⁾		57.67			59.25			62.40			60.74			59.18

FINANCIAL DATA (In millions)
Total assets	$	3,840		$	3,716		$	3,692		$	3,709		$	3,738
Total earning assets ⁽⁵⁾		3,525			3,399			3,367			3,380			3,394
Total investments		566			593			611			626			556
Total loans		2,850			2,727			2,655			2,532			2,534
Allowance for credit losses		25			24			23			23			22
Total goodwill and intangible assets		126			126			126			126			126
Total deposits		3,136			3,079			3,048			3,049			3,007
Total shareholders' equity		380			394			407			424			418
Net income		11			11			9			10			11
Core earnings⁽¹⁾		11			11			9			10			11

ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (recoveries)⁽⁶⁾/average loans		0.01	%		-	%		(0.01	)%		(0.02	)%		0.03	%
Allowance for credit losses/total loans		0.88			0.87			0.87			0.90			0.89
Loans/deposits		91			89			87			83			84
Shareholders' equity to total assets		9.89			10.59			11.02			11.43			11.19
Tangible shareholders' equity to tangible assets		6.85			7.46			7.88			8.32			8.08

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

BAR HARBOR BANKSHARES
CONSOLIDATED BALANCE SHEETS - UNAUDITED

	Sep 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,
(in thousands)	2022			2022			2022			2021			2021
Assets
Cash and due from banks	$	50,760		$	40,834		$	38,656		$	33,508		$	39,081
Interest-earning deposits with other banks		31,305			26,282			72,393			216,881			302,118
Total cash and cash equivalents		82,065			67,116			111,049			250,389			341,199

Securities available for sale		556,752			586,142			603,910			618,276			545,327
Federal Home Loan Bank stock		9,035			6,572			7,384			7,384			10,192
Total securities		565,787			592,714			611,294			625,660			555,519

Loans held for sale		982			3,539			2,843			5,523			7,505

Total loans		2,850,364			2,727,274			2,654,562			2,531,910			2,534,154
Less: Allowance for credit losses		(25,018	)		(23,756	)		(23,190	)		(22,718	)		(22,448	)
Net loans		2,825,346			2,703,518			2,631,372			2,509,192			2,511,706

Premises and equipment, net		48,010			48,350			48,891			49,382			50,070
Other real estate owned		-			-			-			-			-
Goodwill		119,477			119,477			119,477			119,477			119,477
Other intangible assets		6,034			6,267			6,500			6,733			6,966
Cash surrender value of bank-owned life insurance		80,758			80,262			79,861			79,020			79,380
Deferred tax asset, net		25,288			18,405			12,614			5,547			5,811
Other assets		86,499			76,109			68,169			58,310			60,712
Total assets	$	3,840,246		$	3,715,757		$	3,692,070		$	3,709,233		$	3,738,345

Liabilities and shareholders' equity
Demand and other non-interest bearing deposits	$	700,218		$	670,268		$	653,471		$	664,420		$	664,395
NOW deposits		918,822			883,239			918,768			940,631			888,021
Savings deposits		669,317			663,676			658,834			628,670			605,977
Money market deposits		513,075			499,456			424,750			389,291			379,651
Time deposits		334,248			361,906			391,940			425,532			469,221
Total deposits		3,135,680			3,078,545			3,047,763			3,048,544			3,007,265

Senior borrowings		188,757			117,347			118,538			118,400			190,267
Subordinated borrowings		60,248			60,206			60,165			60,124			60,083
Total borrowings		249,005			177,553			178,703			178,524			250,350

Other liabilities		75,596			66,062			58,605			58,018			62,295
Total liabilities		3,460,281			3,322,160			3,285,071			3,285,086			3,319,910

Total shareholders' equity		379,965			393,597			406,999			424,147			418,435
Total liabilities and shareholders' equity	$	3,840,246		$	3,715,757		$	3,692,070		$	3,709,233		$	3,738,345

Net shares outstanding		15,066			15,026			15,013			15,001			14,987

BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED

LOAN ANALYSIS

											Annualized
											Growth %
	Sep 30,		Jun 30,		Mar 31,		Dec 31,		Sep 30,		Quarter			Year
(in thousands)	2022		2022		2022		2021		2021		to Date			to Date
Commercial real estate	$	1,421,962	$	1,331,860	$	1,289,968	$	1,210,580	$	1,170,372		27	%		23	%
Commercial and industrial		376,624		360,304		346,394		340,129		331,091		18			14
Paycheck Protection Program (PPP)		-		170		1,126		6,669		24,227		*			*
Total commercial loans		1,798,586		1,692,334		1,637,488		1,557,378		1,525,690		25			21
Total commercial loans, excluding PPP		1,798,586		1,692,164		1,636,362		1,550,709		1,501,463		25			21

Residential real estate		896,618		876,644		868,382		821,004		849,692		9			12
Consumer		100,822		100,816		96,876		98,949		100,933		-			3
Tax exempt and other		54,338		57,480		51,816		54,579		57,839		(22	)		(1	)
Total loans	$	2,850,364	$	2,727,274	$	2,654,562	$	2,531,910	$	2,534,154		18	%		17	%

DEPOSIT ANALYSIS

											Annualized
											Growth %
	Sep 30,		Jun 30,		Mar 31,		Dec 31,		Sep 30,		Quarter			Year
(in thousands)	2022		2022		2022		2021		2021		to Date			to Date
Demand	$	700,218	$	670,268	$	653,471	$	664,420	$	664,395		18	%		7	%
NOW		918,822		883,239		918,768		940,631		888,021		16			(3	)
Savings		669,317		663,676		658,834		628,670		605,977		3			9
Money market		513,075		499,456		424,750		389,291		379,651		11			42
Total non-maturity deposits		2,801,432		2,716,639		2,655,823		2,623,012		2,538,044		12			9
Total time deposits		334,248		361,906		391,940		425,532		469,221		(31	)		(29	)
Total deposits	$	3,135,680	$	3,078,545	$	3,047,763	$	3,048,544	$	3,007,265		7	%		4	%

*Indicates ratios of 100% or greater.

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands, except per share data)	2022		2021			2022			2021
Interest and dividend income
Loans	$	27,940	$	25,094		$	75,192		$	72,490
Securities and other		5,145		3,821			13,178			11,792
Total interest and dividend income		33,085		28,915			88,370			84,282
Interest expense
Deposits		1,801		1,555			4,185			7,109
Borrowings		1,374		1,778			3,458			5,415
Total interest expense		3,175		3,333			7,643			12,524
Net interest income		29,910		25,582			80,727			71,758
Provision for credit losses		1,306		(174	)		2,217			(1,428	)
Net interest income after provision for credit losses		28,604		25,756			78,510			73,186
Non-interest income
Trust and investment management fee income		3,548		3,868			11,131			11,335
Customer service fees		3,836		3,515			11,108			9,742
Gain on sales of securities, net		44		1,930			53			1,980
Mortgage banking income		315		850			1,427			4,973
Bank-owned life insurance income		496		494			1,501			1,510
Customer derivative income		58		341			213			837
Other income		526		352			1,660			726
Total non-interest income		8,823		11,350			27,093			31,103
Non-interest expense
Salaries and employee benefits		12,242		11,743			35,757			35,275
Occupancy and equipment		4,458		4,029			13,254			12,251
Loss (gain) on sales of premises and equipment, net		-		(146	)		(65	)		(137	)
Outside services		393		547			1,143			1,512
Professional services		421		491			1,122			1,200
Communication		204		188			617			707
Marketing		518		339			1,150			1,163
Amortization of intangible assets		233		233			699			707
Loss on debt extinguishment		-		1,768			-			1,768
Acquisition, conversion and other expenses		31		318			356			1,759
Other expenses		4,532		3,862			12,585			11,382
Total non-interest expense		23,032		23,372			66,618			67,587
Income before income taxes		14,395		13,734			38,985			36,702
Income tax expense		2,965		2,706			7,940			7,169
Net income	$	11,430	$	11,028		$	31,045		$	29,533

Earnings per share:
Basic	$	0.76	$	0.74		$	2.07		$	1.97
Diluted		0.76		0.73			2.06			1.96

Weighted average shares outstanding:
Basic		15,058		14,983			15,029			14,961
Diluted		15,113		15,051			15,100			15,035

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

	Sep 30,		Jun 30,		Mar 31,			Dec 31,			Sep 30,
(in thousands, except per share data)	2022		2022		2022			2021			2021
Interest and dividend income
Loans	$	27,940	$	24,581	$	22,671		$	22,746		$	25,094
Securities and other		5,145		4,207		3,826			3,776			3,821
Total interest and dividend income		33,085		28,788		26,497			26,522			28,915
Interest expense
Deposits		1,801		1,195		1,189			1,434			1,555
Borrowings		1,374		1,074		1,010			1,273			1,778
Total interest expense		3,175		2,269		2,199			2,707			3,333
Net interest income		29,910		26,519		24,298			23,815			25,582
Provision for credit losses		1,306		534		377			126			(174	)
Net interest income after provision for credit losses		28,604		25,985		23,921			23,689			25,756
Non-interest income
Trust and investment management fee income		3,548		3,829		3,754			3,844			3,868
Customer service fees		3,836		3,656		3,616			3,470			3,515
Gain on sales of securities, net		44		-		9			890			1,930
Mortgage banking income		315		488		624			1,563			850
Bank-owned life insurance income		496		504		501			669			494
Customer derivative income		58		137		18			173			341
Other income		526		347		787			549			352
Total non-interest income		8,823		8,961		9,309			11,158			11,350
Non-interest expense
Salaries and employee benefits		12,242		11,368		12,147			11,842			11,743
Occupancy and equipment		4,458		4,373		4,423			4,105			4,029
Loss (gain) on sales of premises and equipment, net		-		10		(75	)		515			(146	)
Outside services		393		410		340			431			547
Professional services		421		528		173			556			491
Communication		204		188		225			205			188
Marketing		518		369		263			378			339
Amortization of intangible assets		233		233		233			233			233
Loss on debt extinguishment		-		-		-			1,083			1,768
Acquisition, conversion and other expenses		31		-		325			(92	)		318
Other expenses		4,532		4,221		3,832			3,665			3,862
Total non-interest expense		23,032		21,700		21,886			22,921			23,372
Income before income taxes		14,395		13,246		11,344			11,926			13,734
Income tax expense		2,965		2,743		2,232			2,160			2,706
Net income	$	11,430	$	10,503	$	9,112		$	9,766		$	11,028

Earnings per share:
Basic	$	0.76	$	0.70	$	0.61		$	0.65		$	0.74
Diluted		0.76		0.70		0.60			0.65			0.73

Weighted average shares outstanding:
Basic		15,058		15,018		15,011			14,993			14,983
Diluted		15,113		15,077		15,102			15,075			15,051

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

	Quarters Ended
	Sep 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,
	2022			2022			2022			2021			2021
Earning assets
Interest-earning deposits with other banks		2.13	%		0.80	%		0.16	%		0.16	%		0.15	%
Securities available for sale and FHLB stock		3.12			2.69			2.55			2.66			2.59
Loans:
Commercial real estate		4.26			3.82			3.50			3.40			3.53
Commercial and industrial		4.46			3.67			3.46			3.23			3.79
Paycheck protection program		-			13.99			26.49			26.25			23.28
Residential real estate		3.45			3.55			3.55			3.61			3.64
Consumer		4.55			3.82			3.51			3.49			3.78
Total loans		4.04			3.71			3.54			3.58			3.98
Total earning assets		3.84	%		3.46	%		3.21	%		3.10	%		3.41	%

Funding liabilities
Deposits:
NOW		0.16	%		0.14	%		0.14	%		0.14	%		0.13	%
Savings		0.08			0.08			0.09			0.08			0.08
Money market		0.65			0.19			0.12			0.12			0.12
Time deposits		0.55			0.58			0.62			0.77			0.88
Total interest-bearing deposits		0.30			0.20			0.20			0.24			0.27
Borrowings		2.69			2.41			2.29			2.17			2.11
Total interest-bearing liabilities		0.48	%		0.36	%		0.35	%		0.41	%		0.50	%

Net interest spread		3.36			3.10			2.86			2.69			2.91
Net interest margin		3.47			3.19			2.95			2.79			3.02
Core net interest margin ⁽¹⁾		3.47			3.19			2.93			2.69			2.75

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

BAR HARBOR BANKSHARES
AVERAGE BALANCES - UNAUDITED

	Quarters Ended
	Sep 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,
(in thousands)	2022			2022			2022			2021			2021
Assets
Interest-earning deposits with other banks⁽¹⁾	$	59,556		$	63,317		$	140,383		$	325,260		$	284,429
Securities available for sale and FHLB stock ⁽²⁾		642,475			637,881			629,811			578,323			610,381
Loans:
Commercial real estate		1,351,599			1,296,162			1,264,798			1,189,803			1,153,813
Commercial and industrial		421,963			412,518			393,759			386,156			391,191
Paycheck protection program		94			788			2,999			14,824			45,835
Residential real estate		882,158			863,172			856,252			844,872			824,686
Consumer		101,175			98,588			97,594			100,723			101,545
Total loans ⁽³⁾		2,756,989			2,671,228			2,615,402			2,536,378			2,517,070
Total earning assets		3,459,020			3,372,426			3,385,596			3,439,961			3,411,880
Cash and due from banks		40,330			35,051			32,742			37,818			38,750
Allowance for credit losses		(24,061	)		(23,228	)		(23,256	)		(22,525	)		(22,607	)
Goodwill and other intangible assets		125,626			126,090			126,090			126,324			126,556
Other assets		171,394			178,037			190,846			200,097			209,509
Total assets	$	3,772,309		$	3,688,376		$	3,712,018		$	3,781,675		$	3,764,088

Liabilities and shareholders' equity
Deposits:
NOW	$	905,668		$	893,239		$	930,556		$	913,326		$	860,206
Savings		668,255			657,047			640,672			620,599			591,440
Money market		491,683			457,088			414,130			395,341			381,755
Time deposits		349,787			375,782			406,730			450,559			471,934
Total interest-bearing deposits		2,415,393			2,383,156			2,392,088			2,379,825			2,305,335
Borrowings		202,296			178,519			178,958			232,492			334,097
Total interest-bearing liabilities		2,617,689			2,561,675			2,571,046			2,612,317			2,639,432
Non-interest-bearing demand deposits		690,134			661,412			660,717			684,895			641,769
Other liabilities		71,934			67,069			64,619			61,480			61,436
Total liabilities		3,379,757			3,290,156			3,296,382			3,358,692			3,342,637
Total shareholders' equity		392,552			398,220			415,636			422,983			421,451
Total liabilities and shareholders' equity	$	3,772,309		$	3,688,376		$	3,712,018		$	3,781,675		$	3,764,088

Total average interest-bearing deposits with other banks is net of Federal Reserve daily cash letter.
Average balances for securities available-for-sale are based on amortized cost.
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
	Sep 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,
(in thousands)	2022			2022			2022			2021			2021
NON-PERFORMING ASSETS
Non-accruing loans:
Commercial real estate	$	1,587		$	1,483		$	1,633		$	2,890		$	3,646
Commercial installment		348			632			905			1,056			1,163
Residential real estate		4,858			4,882			5,612			5,192			6,311
Consumer installment		981			881			1,063			1,053			1,087
Total non-accruing loans		7,774			7,878			9,213			10,191			12,207
Other real estate owned		-			-			-			-			-
Total non-performing assets	$	7,774		$	7,878		$	9,213		$	10,191		$	12,207

Total non-accruing loans/total loans		0.27	%		0.29	%		0.35	%		0.40	%		0.48	%
Total non-performing assets/total assets		0.20			0.21			0.25			0.27			0.33

PROVISION AND ALLOWANCE FOR CREDIT LOSSES
Balance at beginning of period	$	23,756		$	23,190		$	22,718		$	22,448		$	22,815
Charged-off loans		(85	)		(62	)		(83	)		(154	)		(286	)
Recoveries on charged-off loans		41			94			178			298			93
Net loans charged-off		(44	)		32			95			144			(193	)
Provision for credit losses		1,306			534			377			126			(174	)
Balance at end of period	$	25,018		$	23,756		$	23,190		$	22,718		$	22,448

Allowance for credit losses/total loans		0.88	%		0.87	%		0.87	%		0.90	%		0.89	%
Allowance for credit losses/non-accruing loans		322			300			252			223			184

NET LOAN (CHARGE-OFFS) RECOVERIES
Commercial real estate	$	7		$	59		$	54		$	216		$	(69	)
Commercial installment		12			12			25			53			(24	)
Residential real estate		(5	)		6			76			8			13
Consumer installment		(58	)		(45	)		(60	)		(133	)		(113	)
Total, net	$	(44	)	$	32		$	95		$	144		$	(193	)

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

DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS
30-89 Days delinquent		0.09	%		0.09	%		0.22	%		0.31	%		0.09	%
90+ Days delinquent and still accruing		0.01			0.03			0.03			0.01			0.02
Total accruing delinquent loans		0.10			0.12			0.25			0.32			0.12
Non-accruing loans		0.27			0.29			0.35			0.40			0.48
Total delinquent and non-accruing loans		0.37	%		0.41	%		0.60	%		0.72	%		0.60	%

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

		At or for the Quarters Ended
		Sep 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,
(in thousands)		2022			2022			2022			2021			2021
Net income$		$	11,430		$	10,503		$	9,112		$	9,766		$	11,028
Non-core items:
Gain on sale of securities, net			(44	)		-			(9	)		(890	)		(1,930	)
Loss (gain) on sale of premises and equipment, net			-			10			(75	)		515			(146	)
Loss on debt extinguishment			-			-			-			1,083			1,768
Acquisition, conversion and other expenses			31			-			325			(92	)		318
Income tax expense ⁽¹⁾			3			(2	)		(56	)		(144	)		(2	)
Total non-core items			(10	)		8			185			472			8
Core earnings ⁽²⁾	(A)	$	11,420		$	10,511		$	9,297		$	10,238		$	11,036

Net interest income	(B)	$	29,910		$	26,519		$	24,298		$	23,815		$	25,582
Non-interest income			8,823			8,961			9,309			11,158			11,350
Total revenue			38,733			35,480			33,607			34,973			36,932
Gain on sale of securities, net			(44	)		-			(9	)		(890	)		(1,930	)
Total core revenue ⁽²⁾	(C)	$	38,689		$	35,480		$	33,598		$	34,083		$	35,002

Total non-interest expense			23,032			21,700			21,886			22,921			23,372
Non-core expenses:
(Loss) gain on sale of premises and equipment, net			-			(10	)		75			(515	)		146
Loss on debt extinguishment			-			-			-			(1,083	)		(1,768	)
Acquisition, conversion and other expenses			(31	)		-			(325	)		92			(318	)
Total non-core expenses			(31	)		(10	)		(250	)		(1,506	)		(1,940	)
Core non-interest expense ⁽²⁾	(D)	$	23,001		$	21,690		$	21,636		$	21,415		$	21,432

Total revenue			38,733			35,480			33,607			34,973			36,932
Total non-interest expense			23,032			21,700			21,886			22,921			23,372
Pre-tax, pre-provision net revenue		$	15,701		$	13,780		$	11,721		$	12,052		$	13,560

Core revenue⁽²⁾			38,689			35,480			33,598			34,083			35,002
Core non-interest expense⁽²⁾			23,001			21,690			21,636			21,415			21,432
Core pre-tax, pre-provision net revenue⁽²⁾	(U)	$	15,688		$	13,790		$	11,962		$	12,668		$	13,570

(in millions)
Average earning assets	(E)	$	3,459		$	3,372		$	3,386		$	3,440		$	3,412
Average paycheck protection program (PPP) loans	(R)		-			1			3			15			46
Average earning assets, excluding PPP loans	(S)		3,459			3,371			3,383			3,425			3,366
Average assets	(F)		3,772			3,688			3,712			3,782			3,764
Average shareholders' equity	(G)		393			398			416			423			421
Average tangible shareholders' equity ^{(2) (3)}	(H)		267			272			290			297			295
Tangible shareholders' equity, period-end ^{(2) (3)}	(I)		254			268			281			298			292
Tangible assets, period-end ^{(2) (3)}	(J)		3,715			3,587			3,566			3,583			3,612

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

		At or for the Quarters Ended
		Sep 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,
(in thousands)		2022			2022			2022			2021			2021
Common shares outstanding, period-end	(K)		15,066			15,026			15,013			15,001			14,987
Average diluted shares outstanding	(L)		15,113			15,077			15,102			15,075			15,051

Core earnings per share, diluted ⁽²⁾	(A/L)	$	0.76		$	0.70		$	0.62		$	0.68		$	0.73
Tangible book value per share, period-end ⁽²⁾	(I/K)		16.89			17.83			18.72			19.86			19.48
Securities adjustment, net of tax ^{(1) (4)}	(M)		(58,715	)		(38,304	)		(20,225	)		1,985			4,398
Tangible book value per share, excluding securities adjustment ^{(2) (4)}	(I+M)/K		20.79			20.38			20.07			19.73			19.19
Tangible shareholders' equity/total tangible assets ⁽²⁾	(I/J)		6.85			7.47			7.88			8.32			8.08

Performance ratios ⁽⁵⁾
GAAP return on assets			1.20	%		1.14	%		1.00	%		1.02	%		1.16	%
Core return on assets ⁽²⁾	(A/F)		1.20			1.14			1.02			1.07			1.16
Pre-tax, pre-provision return on assets			1.65			1.50			1.28			1.26			1.43
Core pre-tax, pre-provision return on assets⁽²⁾	(U/F)		1.65			1.50			1.31			1.33			1.43
GAAP return on equity			11.55			10.58			8.89			9.16			10.38
Core return on equity ⁽²⁾	(A/G)		11.54			10.59			9.07			9.60			10.39
Return on tangible equity			17.25			15.74			13.01			13.30			15.08
Core return on tangible equity ^{(1) (2)}	(A+Q)/H		17.24			15.76			13.27			13.93			15.09
Efficiency ratio ^{(2) (6)}	(D-O-Q)/(C+N)		57.67			59.25			62.40			60.74			59.18
Net interest margin	(B+P)/E		3.47			3.19			2.95			2.79			3.02
Core net interest margin^{(2) (7)}	(B+P-T)/S		3.47			3.19			2.93			2.69			2.75

Supplementary data (in thousands)
Taxable equivalent adjustment for efficiency ratio	(N)	$	533		$	491		$	476		$	573		$	576
Franchise taxes included in non-interest expense	(O)		149			144			141			132			143
Tax equivalent adjustment for net interest margin	(P)		379			334			320			369			421
Intangible amortization	(Q)		233			233			233			233			233
Interest and fees on PPP loans	(T)		-			27			196			981			2,690

Assumes a marginal tax rate of 23.41% for the last four quarters and 23.71% for the third quarter of 2021.
Non-GAAP financial measure.
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.
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.
All performance ratios are based on average balance sheet amounts, where applicable.
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.
Core net interest margin excludes Paycheck Protection Program loans.

SOURCE: Bar Harbor Bank and Trust

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Bar Harbor Bankshares Reports Third Quarter Results; Declares Dividend