Bar Harbor Bankshares Reports Second Quarter Results; Dividend Declared

BAR HARBOR, Maine--(BUSINESS WIRE)--Bar Harbor Bankshares (NYSE American: BHB or the “Company”) reported second quarter 2019 net income of $6.1 million, or $0.39 diluted earnings per share. Net income in the second quarter of 2018 totaled $8.5 million or $0.55 diluted earnings per share. Core earnings (non-GAAP measure) in the second quarter 2019 totaled $6.3 million or $0.41 diluted earnings per share and $8.7 million or $0.56 diluted earnings per share in the same period of 2018.

SECOND QUARTER FINANCIAL HIGHLIGHTS

• 8% annualized growth in total loans, led by 24% in commercial loans
• 14% annualized growth in demand deposits
• 5% growth in non-interest income, compared to second quarter 2018
• 0.62% non-accruing loans to total loans
• 10% annualized growth in book value per share

President and Chief Executive Officer, Curtis C. Simard stated, “Our financial performance in the second quarter was centered on growth in loans, deposits and non-interest income. We grew non-interest bearing demand deposits at a strong double-digit rate as the retail delivery team continues to focus on lasting customer relationships and lower cost non-maturity deposits. Loan growth was led by a surge in the commercial loan pipeline across all regions and specifically in the Portland area as our Loan Production Office is fully-up and running. We are concentrating on more tightly structured opportunities with proven borrowers to ensure that we hold true to our risk management discipline at all points of the economic cycle and regardless of competitive fervor.”

Mr. Simard further stated, “Last week we announced our branch acquisition in central Maine, which will be immediately accretive to earnings and reduce our loan to deposit ratio allowing for future growth through core funding. As we look forward, we are focused on revenue growth through relationship profitability as the Company continues to grow into the infrastructure that has now been put into place. That said, we will be executing on expense efficiencies in the third quarter, which will include relationship and product profitability, organizational opportunities and review of our branch network. This review is a function of our commitment to a balance between growth and earnings as the Company delivers on our long-term goals.”

Mr. Simard concluded, “The path to meeting our objectives includes an emphasis on fee based businesses. Our Wealth Management teams, which include Bar Harbor Trust Services, Charter Trust, and Bar Harbor Financial Services, are critical to this goal and will be further enhanced by Wealth Management business that is included with our recently announced branch acquisition. We are pleased to have hired Jason Edgar as the President of Wealth Management who will lead the teams as one collective business. Jason has strong roots in New England and has been a proven leader in the Wealth Management space for over 20 years. He will be instrumental in further enhancing revenue growth as we explore existing and future prospects, and strive to achieve full potential within this business.”

DIVIDEND DECLARED
The Board of Directors voted to declare a cash dividend of $0.22 per share to shareholders of record at the close of business on August 13, 2019, payable on September 13, 2019. This dividend equates to a 3.3% annualized yield based on the $26.59 closing price of the Company’s common stock at the end of the second quarter of 2019.

FINANCIAL CONDITION
Total assets increased in the second quarter by $58.4 million, or 6% annualized, to $3.7 billion. Loan balances in the second quarter 2019 were up $51.3 million from the first quarter or 8% annualized. Loan growth was led by commercial real estate and commercial and industrial loans, which grew during the second quarter at annualized rates of 29% and 9%, respectively. Our loan to deposit ratio increased to 104% in the second quarter 2019 from 102% in the first quarter 2019 given the robust loan growth.

The second quarter 2019 allowance for loan losses to total loans ratio remains strong at 0.57% with a coverage ratio to non-accruing loans at 91%, up from 84% as of the first quarter. Non-accruing loans decreased $644 thousand in the second quarter 2019 due to favorable settlements of several relationships approximating the carrying values of the loans. The ratio of non-accruing loans to total loans decreased to 0.62% from 0.66% at the end of the first quarter 2019.

The Company’s book value per share was $25.13 at the end of the second quarter 2019 compared to $24.54 the end of the first quarter 2019, representing a 10% annualized growth rate. Tangible book value per share (non-GAAP measure) was $18.23 at the end of the second quarter 2019 compared to $17.63 at the end of the first quarter 2019. In the second quarter, lower long-term rates continued to have a positive impact on the fair value adjustment in the securities portfolio. The fair value adjustment net of tax was a gain of $5.5 million in the second quarter 2019 compared to a loss of $1.8 million in the first quarter 2019.

RESULTS OF OPERATIONS
Net income in the second quarter 2019 was $6.1 million, or $0.39 per share, compared to $8.5 million, or $0.55 per share, in the same quarter of 2018. Interest and dividend income was up 7% to $33.8 million as quarterly yields on earning assets expanded 14 basis points on a year-over-year basis to 4.13%. Net interest margin in the second quarter 2019 decreased to 2.65% from 2.91% in the same period of 2018. The decrease reflects the impact of higher short-term interest rates and the flattening of the yield curve in 2019.

The second quarter 2019 provision for loan losses decreased to $562 thousand from $770 thousand in the same quarter 2018. We continue to have a positive quarterly trend in both recoveries and charged-off loans. The net charged-off loans to average loans ratio is at a zero annualized rate for the second quarter 2019. Asset quality continues to be strong with non-accruing loans to total loans at 0.62% in the second quarter 2019, down from 0.88% in the same quarter of 2018.

Non-interest income in the second quarter 2019 increased 5% to $7.5 million from $7.1 million in the same quarter in 2018. The increase was driven by greater customer service fees on higher transaction volume, an increase in customer derivative income due to commercial loan growth and an increase in bank-owned life insurance income given additional investments.

Non-interest expense increased to $20.9 million in the second quarter 2019 from $18.7 million in the prior year. The increase in salary and employee benefits is due to several strategic hires along with an increase in full-time equivalents to 474 from 451 in 2018. The increase in full-time equivalents is primarily related to new locations that were previously announced. Occupancy and equipment expense is also higher in 2019 compared to 2018 due to the new locations placed in service during the fourth quarter of 2018 and renovations to the Newport, New Hampshire branch in the spring of 2019.

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.bhbt.com.

FORWARD LOOKING STATEMENTS
Certain statements under the heading "SECOND 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, 2018. 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 securities gains/losses, 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.

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

BAR HARBOR BANKSHARES
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED
	At or for the Quarters Ended
	Jun 30, 2019			Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			Jun 30, 2018
PER SHARE DATA
Net earnings, diluted	$	0.39		$	0.47		$	0.49		$	0.58		$	0.55
Core earnings, diluted ^(1) (2)	0.41			0.47			0.59			0.58			0.56
Total book value	25.13			24.54			23.87			23.06			22.97
Tangible book value ^(2)	18.23			17.63			16.94			16.11			16.00
Market price at period end	26.59			25.87			22.43			28.72			30.29
Dividends	0.22			0.20			0.20			0.20			0.20
PERFORMANCE RATIOS ^(3)
Return on assets	0.67		%	0.83		%	0.85		%	1.01		%	0.97		%
Core return on assets ^(1) (2)	0.70			0.83			1.03			1.01			1.00
Return on equity	6.33			7.83			8.31			9.92			9.65
Core return on equity ^(1) (2)	6.57			7.83			10.01			9.98			9.86
Core return on tangible equity ^(1) (2)	9.30			11.19			14.46			14.52			14.43
Net interest margin, fully taxable equivalent (FTE) ^(2) (4)	2.65			2.77			2.78			2.81			2.91
Net interest margin (FTE), excluding purchased loan accretion ^(2) (4)	2.56			2.67			2.70			2.71			2.80
Efficiency ratio ^(2)	68.48			63.94			59.91			57.88			58.83
GROWTH (Year-to-date, annualized) ^(2)
Total commercial loans	10.1		%	(3.3		)%	1.4		%	2.8		%	5.7		%
Total loans	7.1			5.9			0.2			(0.1		)	—
Total deposits	(0.1		)	(2.8		)	5.6			2.2			1.9
FINANCIAL DATA (In millions)
Total assets	$	3,688		$	3,629		$	3,608		$	3,561		$	3,541
Total earning assets^(2) (5)	3,355			3,312			3,263			3,253			3,250
Total investments	784			782			761			747			749
Total loans	2,578			2,527			2,490			2,484			2,485
Allowance for loan losses	15			14			14			13			13
Total goodwill and intangible assets	107			107			108			108			108
Total deposits	2,481			2,466			2,483			2,390			2,375
Total shareholders' equity	391			381			371			358			356
Net income	6			7			8			9			9
Core income ^(1) (2)	6			7			9			9			9
ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (current quarter annualized)/average loans	—		%	0.03		%	0.03		%	0.04		%	0.06		%
Allowance for loan losses/total loans	0.57			0.55			0.56			0.54			0.53
Loans/deposits	104			102			100			104			105
Shareholders' equity to total assets	10.59			10.50			10.27			10.04			10.05
Tangible shareholders' equity to tangible assets	7.92			7.77			7.51			7.24			7.22

(1) Core measurements are non-GAAP financial measures that are adjusted to exclude net non-operating charges primarily related to acquisitions, system conversions and gain or loss on sale of securities 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.

BAR HARBOR BANKSHARES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(in thousands)	Jun 30, 2019			Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			Jun 30, 2018
Assets
Cash and due from banks	$	42,657		$	37,504		$	35,208		$	53,154		$	39,327
Interest-bearing deposits with the Federal Reserve Bank	17,203			16,599			63,546			19,420			22,066
Total cash and cash equivalents	59,860			54,103			98,754			72,574			61,393
Securities available for sale, at fair value	748,560			747,235			725,837			712,658			710,147
Federal Home Loan Bank stock	35,220			35,107			35,659			34,154			38,712
Total securities	783,780			782,342			761,496			746,812			748,859
Commercial real estate	881,479			821,567			826,699			840,018			838,546
Commercial and industrial	416,725			409,937			404,870			385,814			400,293
Residential real estate	1,167,759			1,184,053			1,144,698			1,140,519			1,127,895
Consumer	112,275			111,402			113,960			117,239			118,332
Total loans	2,578,238			2,526,959			2,490,227			2,483,590			2,485,066
Less: Allowance for loan losses	(14,572		)	(13,997		)	(13,866		)	(13,487		)	(13,090		)
Net loans	2,563,666			2,512,962			2,476,361			2,470,103			2,471,976
Premises and equipment, net	50,230			49,661			48,804			47,621			48,038
Other real estate owned	2,351			2,351			2,351			68			129
Goodwill	100,085			100,085			100,085			100,085			100,085
Other intangible assets	7,072			7,266			7,459			7,690			7,921
Cash surrender value of bank-owned life insurance	74,871			74,352			73,810			73,316			58,811
Deferred tax asset, net	5,649			7,632			9,514			11,527			10,309
Other assets	40,071			38,441			29,853			31,196			33,534
Total assets	$	3,687,635		$	3,629,195		$	3,608,487		$	3,560,992		$	3,541,055
Liabilities and shareholders' equity
Demand and other non-interest bearing deposits	$	354,125		$	342,030		$	370,889		$	372,358		$	341,773
NOW deposits	472,576			470,277			484,717			471,326			449,715
Savings deposits	352,657			346,813			358,888			354,908			350,339
Money market deposits	305,506			349,833			335,951			254,142			260,642
Time deposits	996,512			956,818			932,793			937,615			972,252
Total deposits	2,481,376			2,465,771			2,483,238			2,390,349			2,374,721
Senior borrowings	733,084			703,283			680,823			739,224			735,924
Subordinated borrowings	42,943			42,958			42,973			42,988			43,003
Total borrowings	776,027			746,241			723,796			782,212			778,927
Other liabilities	39,670			36,160			30,874			30,746			31,444
Total liabilities	3,297,073			3,248,172			3,237,908			3,203,307			3,185,092
Total shareholders' equity	390,562			381,023			370,579			357,685			355,963
Total liabilities and shareholders' equity	$	3,687,635		$	3,629,195		$	3,608,487		$	3,560,992		$	3,541,055
Net shares outstanding	15,544			15,524			15,523			15,509			15,496

BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED
LOAN ANALYSIS
											June 30, 2019 Annualized Growth %
(in thousands)	Jun 30, 2019		Mar 31, 2019		Dec 31, 2018		Sep 30, 2018		Jun 30, 2018		Quarter End		Year to Date
Commercial real estate	$	881,479	$	821,567	$	826,699	$	840,018	$	838,546	29.2	%	13.3		%
Commercial and industrial	312,029		305,185		309,544		303,984		313,680		9.0		1.6
Total commercial loans	1,193,508		1,126,752		1,136,243		1,144,002		1,152,226		23.7		10.1
Residential real estate	1,167,759		1,184,053		1,144,698		1,140,519		1,127,895		(5.5	)	4.0
Consumer	112,275		111,402		113,960		117,239		118,332		3.1		(3.0		)
Tax exempt	104,696		104,752		95,326		81,830		86,613		(0.2	)	19.7
Total loans	$	2,578,238	$	2,526,959	$	2,490,227	$	2,483,590	$	2,485,066	8.1	%	7.1		%
DEPOSIT ANALYSIS
											June 30, 2019 Annualized Growth %
(in thousands)	Jun 30, 2019		Mar 31, 2019		Dec 31, 2018		Sep 30, 2018		Jun 30, 2018		Quarter End		Year to Date
Demand	$	354,125	$	342,030	$	370,889	$	372,358	$	341,773	14.1	%	(9.0	)%
NOW	472,576		470,277		484,717		471,326		449,715		2.0		(5.0	)
Savings	352,657		346,813		358,888		354,908		350,339		6.7		(3.5	)
Money Market	305,506		349,833		335,951		254,142		260,642		(50.7	)	(18.1	)
Total non-maturity deposits	1,484,864		1,508,953		1,550,445		1,452,734		1,402,469		(6.4	)	(8.5	)
Total time deposits	996,512		956,818		932,793		937,615		972,252		16.6		13.7
Total deposits	$	2,481,376	$	2,465,771	$	2,483,238	$	2,390,349	$	2,374,721	2.5	%	(0.1	)%

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	2019		2018		2019		2018
Interest and dividend income
Loans	$	27,660	$	25,934	$	54,524	$	51,060
Securities and other	6,125		5,784		12,488		11,435
Total interest and dividend income	33,785		31,718		67,012		62,495
Interest expense
Deposits	6,886		4,405		13,193		8,390
Borrowings	5,403		4,321		10,558		7,955
Total interest expense	12,289		8,726		23,751		16,345
Net interest income	21,496		22,992		43,261		46,150
Provision for loan losses	562		770		886		1,565
Net interest income after provision for loan losses	20,934		22,222		42,375		44,585
Non-interest income
Trust and investment management fee income	3,066		3,122		5,823		6,084
Customer service fees	2,618		2,347		4,783		4,571
Bank-owned life insurance income	519		377		1,061		823
Customer derivative income	696		545		725		545
Other income	554		730		1,228		1,336
Total non-interest income	7,453		7,121		13,620		13,359
Non-interest expense
Salaries and employee benefits	11,685		10,375		22,204		21,364
Occupancy and equipment	3,300		2,925		6,686		5,998
Loss on sales of premises and equipment, net	21		—		21		—
Outside services	443		581		854		1,141
Professional services	570		360		1,114		793
Communication	283		304		518		484
Marketing	511		588		806		914
Amortization of intangible assets	207		207		414		414
Acquisition, conversion and other expenses	280		214		280		549
Other expenses	3,606		3,131		6,633		5,880
Total non-interest expense	20,906		18,685		39,530		37,537
Income before income taxes	7,481		10,658		16,465		20,407
Income tax expense	1,364		2,123		3,067		4,060
Net income	$	6,117	$	8,535	$	13,398	$	16,347
Earnings per share:
Basic	$	0.39	$	0.55	$	0.86	$	1.06
Diluted	$	0.39	$	0.55	0.86		1.05
Weighted average shares outstanding:
Basic	15,538		15,482		15,531		15,465
Diluted	15,586		15,571		15,582		15,560

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED
(in thousands, except per share data)	Jun 30, 2019		Mar 31, 2019		Dec 31, 2018			Sep 30, 2018		Jun 30, 2018
Interest and dividend income
Loans	$	27,660	$	26,864	$	26,743		$	26,212	$	25,934
Securities and other	6,125		6,363		6,029			5,972		5,784
Total interest and dividend income	33,785		33,227		32,772			32,184		31,718
Interest expense
Deposits	6,886		6,307		5,653			5,478		4,405
Borrowings	5,403		5,155		4,855			4,237		4,321
Total interest expense	12,289		11,462		10,508			9,715		8,726
Net interest income	21,496		21,765		22,264			22,469		22,992
Provision for loan losses	562		324		572			643		770
Net interest income after provision for loan losses	20,934		21,441		21,692			21,826		22,222
Non-interest income
Trust and investment management fee income	3,066		2,757		2,949			2,952		3,122
Customer service fees	2,618		2,165		2,477			2,490		2,347
Loss on sales of securities, net	—		—		(924		)	—		—
Bank-owned life insurance income	519		542		493			505		377
Customer derivative income	696		29		315			—		545
Other income	554		674		2,140			1,179		730
Total non-interest income	7,453		6,167		7,450			7,126		7,121
Non-interest expense
Salaries and employee benefits	11,685		10,519		9,269			10,331		10,375
Occupancy and equipment	3,300		3,386		3,022			3,366		2,925
Loss on sales of premises and equipment, net	21		—		—			—		—
Outside services	443		411		811			456		581
Professional services	570		544		458			223		360
Communication	283		235		103			217		304
Marketing	511		295		536			293		588
Amortization of intangible assets	207		207		207			207		207
Acquisition, conversion, and other expenses	280		—		1,109			70		214
Other expenses	3,606		3,027		4,581			2,743		3,131
Total non-interest expense	20,906		18,624		20,096			17,906		18,685
Income before income taxes	7,481		8,984		9,046			11,046		10,658
Income tax expense	1,364		1,703		1,426			2,076		2,123
Net income	$	6,117	$	7,281	$	7,620		$	8,970	$	8,535
Earnings per share:
Basic	$	0.39	$	0.47	$	0.49		$	0.58	$	0.55
Diluted	$	0.39	$	0.47	$	0.49		$	0.58	$	0.55
Weighted average shares outstanding:
Basic	15,538		15,523		15,516			15,503		15,482
Diluted	15,586		15,587		15,574			15,580		15,571

BAR HARBOR BANKSHARES
AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED
	Quarters Ended
	Jun 30, 2019		Mar 31, 2019		Dec 31, 2018		Sep 30, 2018		Jun 30, 2018
Earning assets
Commercial real estate	4.74	%	4.78	%	4.71	%	4.57	%	4.48	%
Commercial and industrial	4.75		4.79		4.61		4.59		4.69
Residential	3.93		3.94		3.83		3.83		3.88
Consumer	5.21		5.25		5.07		4.85		4.65
Total loans	4.39		4.42		4.31		4.25		4.25
Securities and other	3.29		3.47		3.28		3.21		3.18
Total earning assets	4.13	%	4.19	%	4.07	%	4.00	%	3.99	%
Funding liabilities
NOW	0.49	%	0.51	%	0.50	%	0.43	%	0.37	%
Savings	0.21		0.19		0.18		0.17		0.17
Money market	1.44		1.38		0.93		0.76		0.79
Time deposits	2.11		2.00		1.85		1.78		1.51
Total interest bearing deposits	1.32		1.25		1.12		1.06		0.90
Borrowings	2.74		2.74		2.53		2.26		2.07
Total interest-bearing liabilities	1.71	%	1.66	%	1.50	%	1.38	%	1.25	%
Net interest spread	2.42		2.53		2.57		2.62		2.74
Net interest margin	2.65		2.77		2.78		2.81		2.91

BAR HARBOR BANKSHARES
AVERAGE BALANCES - UNAUDITED
	Quarters Ended
(in thousands)	Jun 30, 2019			Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			Jun 30, 2018
Assets
Commercial real estate	$	846,921		$	825,596		$	836,813		$	837,058		$	824,356
Commercial and industrial	416,000			405,107			393,396			388,831			396,471
Residential	1,176,583			1,143,862			1,137,493			1,120,336			1,126,714
Consumer	111,641			113,060			114,960			117,735			119,570
Total loans ^(1)	2,551,145			2,487,625			2,482,662			2,463,960			2,467,111
Securities and other^(2)	779,072			777,458			762,901			773,562			767,886
Total earning assets	3,330,217			3,265,083			3,245,563			3,237,522			3,234,997
Cash and due from banks	52,728			50,298			68,904			63,272			50,869
Allowance for loan losses	(14,459		)	(14,119		)	(13,922		)	(13,463		)	(13,107		)
Goodwill and other intangible assets	107,252			107,446			107,657			107,887			108,118
Other assets	170,340			152,332			138,074			137,466			131,522
Total assets	$	3,646,078		$	3,561,040		$	3,546,276		$	3,532,684		$	3,512,399
Liabilities and shareholders' equity
NOW	$	459,572		$	468,392		$	475,449		$	461,875		$	441,645
Savings	352,733			346,707			346,905			356,834			351,712
Money market	338,095			335,882			272,612			259,738			288,169
Time deposits	935,616			894,160			914,674			964,108			872,149
Total interest bearing deposits	2,086,016			2,045,141			2,009,640			2,042,555			1,953,675
Borrowings	789,953			761,885			761,781			744,632			836,295
Total interest-bearing liabilities	2,875,969			2,807,026			2,771,421			2,787,187			2,789,970
Non-interest-bearing demand deposits	349,322			351,362			384,636			357,856			339,374
Other liabilities	33,160			25,520			26,569			28,943			28,386
Total liabilities	3,258,451			3,183,908			3,182,626			3,173,986			3,157,730
Total shareholders' equity	387,627			377,132			363,650			358,698			354,669
Total liabilities and shareholders' equity	$	3,646,078		$	3,561,040		$	3,546,276		$	3,532,684		$	3,512,399

(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
(in thousands)	Jun 30, 2019			Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			Jun 30, 2018
NON-PERFORMING ASSETS
Non-accruing loans:
Commercial real estate	$	7,048		$	7,516		$	8,156		$	8,348		$	8,883
Commercial installment	2,081			2,192			2,331			2,303			2,411
Residential real estate	5,965			6,326			7,211			10,396			9,945
Consumer installment	861			565			537			727			707
Total non-accruing loans	15,955			16,599			18,235			21,774			21,946
Other real estate owned	2,351			2,351			2,351			68			129
Total non-performing assets	$	18,306		$	18,950		$	20,586		$	21,842		$	22,075
Total non-accruing loans/total loans	0.62		%	0.66		%	0.73		%	0.88		%	0.88		%
Total non-performing assets/total assets	0.50			0.52			0.57			0.61			0.62
PROVISION AND ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	13,997		$	13,866		$	13,487		$	13,090		$	12,679
Charged-off loans	(104		)	(231		)	(631		)	(298		)	(517		)
Recoveries on charged-off loans	117			38			438			52			158
Net loans charged-off	13			(193		)	(193		)	(246		)	(359		)
Provision for loan losses	562			324			572			643			770
Balance at end of period	$	14,572		$	13,997		$	13,866		$	13,487		$	13,090
Allowance for loan losses/total loans	0.57		%	0.55		%	0.56		%	0.54		%	0.53		%
Allowance for loan losses/non-accruing loans	91			84			76			62			60
NET LOAN CHARGE-OFFS
Commercial real estate	$	114		$	(41	)	$	(25	)	$	(27	)	$	(92	)
Commercial installment	(12		)	(15		)	53			(53		)	(54		)
Residential real estate	(65		)	(86		)	(31		)	(123		)	(64		)
Consumer installment	(24		)	(51		)	(190		)	(43		)	(149		)
Total, net	$	13		$	(193	)	$	(193	)	$	(246	)	$	(359	)
Net charge-offs (QTD annualized)/average loans	—		%	0.03		%	0.03		%	0.04		%	0.06		%
Net charge-offs (YTD annualized)/average loans	0.01			0.03			0.05			0.06			0.06
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS
30-89 Days delinquent	0.29		%	0.21		%	0.38		%	0.17		%	0.14		%
90+ Days delinquent and still accruing	—			—			0.01			—			—
Total accruing delinquent loans	0.29			0.21			0.39			0.17			0.14
Non-accruing loans	0.62			0.66			0.73			0.88			0.88
Total delinquent and non-accruing loans	0.91		%	0.87		%	1.12		%	1.05		%	1.02		%

BAR HARBOR BANKSHARES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED
		At or for the Quarters Ended
(in thousands)		Jun 30, 2019			Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			Jun 30, 2018
Net income		$	6,117		$	7,281		$	7,620		$	8,970		$	8,535
Plus (less):
Loss on sale of securities, net		—			—			924			—			—
Loss on sale of premises and equipment, net		21			—			—			—			—
Loss (gain) on other real estate owned		—			—			5			(8		)	23
Acquisition, conversion and other expenses		280			—			1,109			70			214
Income tax expense ^(1)		(72		)	—			(485		)	(12		)	(57		)
Total core earnings ^(2)	(A)	$	6,346		$	7,281		$	9,173		$	9,020		$	8,715
Net-interest income	(B)	$	21,496		$	21,765		$	22,264		$	22,469		$	22,992
Plus: Non-interest income		7,453			6,167			7,450			7,126			7,121
Total Revenue		28,949			27,932			29,714			29,595			30,113
Plus: Loss on sale of securities, net		—			—			924			—			—
Total core revenue ^(2)	(C)	$	28,949		$	27,932		$	30,638		$	29,595		$	30,113
Total non-interest expense		20,906			18,624			20,096			17,906			18,685
Less: Loss on sale of premises and equipment, net		(21		)	—			—			—			—
Less: (Loss) gain on other real estate owned		—			—			(5		)	8			(23		)
Less: Acquisition, conversion and other expenses		(280		)	—			(1,109		)	(70		)	(214		)
Core non-interest expense ^(2)	(D)	$	20,605		$	18,624		$	18,982		$	17,844		$	18,448
(in millions)
Total average earning assets	(E)	$	3,330		$	3,265		$	3,246		$	3,238		$	3,235
Total average assets	(F)	3,646			3,561			3,546			3,533			3,512
Total average shareholders' equity	(G)	388			377			364			359			355
Total average tangible shareholders' equity ^(2) (3)	(H)	280			270			256			251			247
Total tangible shareholders' equity, period-end ^(2) (3)	(I)	283			274			263			250			248
Total tangible assets, period-end ^(2) (3)	(J)	3,580			3,522			3,501			3,453			3,433
(in thousands)
Total common shares outstanding, period-end	(K)	15,544			15,524			15,523			15,509			15,496
Weighted average diluted shares outstanding	(L)	15,586			15,587			15,574			15,580			15,571
Core earnings per share, diluted ^(2)	(A/L)	$	0.41		$	0.47		$	0.59		$	0.58		$	0.56
Tangible book value per share, period-end ^(2)	(I/K)	18.23			17.63			16.94			16.11			16.00
Securities adjustment, net of tax ^(1) (4)	(M)	5,550			(1,842		)	(8,663		)	(17,152		)	(12,594		)
Tangible book value per share, excluding securities adjustment ^(2)	(I+M)/K	17.88			17.75			17.50			17.22			16.81
Total tangible shareholders' equity/total tangible assets ^(2)	(I/J)	7.92			7.77			7.51			7.24			7.22
Performance ratios
GAAP return on assets		0.67		%	0.83		%	0.85		%	1.01		%	0.97		%
Core return on assets ^(2)	(A/F)	0.70			0.83			1.03			1.01			1.00
GAAP return on equity		6.33			7.83			8.31			9.92			9.65
Core return on equity ^(2)	(A/G)	6.57			7.83			10.01			9.98			9.86
Core return on tangible equity ^(2) (5)	(A+Q)/H	9.30			11.19			14.46			14.52			14.43
Efficiency ratio ^(2) (6)	(D-O-Q)/(C+N)	68.48			63.94			59.91			57.88			58.83
Net interest margin	(B+P)/E	2.65			2.77			2.78			2.81			2.91
Supplementary data (in thousands)
Taxable equivalent adjustment for efficiency ratio	(N)	$	676		$	684		$	633		$	654		$	622
Franchise taxes included in non-interest expense	(O)	111			120			39			129			159
Tax equivalent adjustment for net interest margin	(P)	514			515			488			493			502
Intangible amortization	(Q)	207			207			207			207			207

(1) Assumes a marginal tax rate of 23.78% in 2019. A marginal tax rate of 24.15% was used in the first and second quarter of 2018 and 23.78% was used in the third and fourth quarter of 2018.

(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) Adjusted return on tangible equity is computed by dividing the total core income adjusted for the tax-effected amortization of intangible assets, assuming a marginal rate of 23.78% in 2019, 24.15% in the first and second quarter of 2018 and 23.78% in the third and fourth quarter of 2018, by tangible equity.

(6) Efficiency ratio is computed by dividing adjusted non-interest expense by the sum of net interest income on a fully taxable equivalent basis and adjusted non-interest income.