BAR HARBOR, ME / ACCESSWIRE / January 20, 2022 / Bar Harbor Bankshares (NYSE American:BHB) reported fourth quarter 2021 net income of $9.8 million or $0.65 per diluted share, up from $8.6 million or $0.58 per diluted share in the same quarter of 2020. Core earnings per share (non-GAAP) in the fourth quarter of 2021 was $0.68 compared to $0.62 per share for the same period of 2020.

FOURTH QUARTER HIGHLIGHTS (ratios compared to the fourth quarter 2020)

1.02% return on assets or 1.07% on a core basis (non-GAAP)
13% growth in core pre-tax, pre-provision net revenue, excluding Paycheck Protection Program (PPP) loans
13% annualized commercial loan growth, excluding PPP loans
13% annualized core deposit growth
0.27% non-performing asset ratio to total assets, compared to 0.33%

President and Chief Executive Officer, Curtis C. Simard stated, "Once again our team is proud to deliver strong results, reporting a 10% increase in core earnings per share in the fourth quarter 2021 over the prior year's quarter. Throughout 2021 we maintained an annualized core return on assets of over 1% and a core return on tangible common equity of over 13% in each quarter. This level of performance reflects the progress toward our strategic objectives to reduce funding costs, increase fee-based revenues and grow commercial loans while maintaining exceptional credit quality. We also grew tangible book value per share, which is up 2% from the prior quarter and 6% over the prior year."

"Net interest margin (NIM) on a GAAP basis was 2.79% for the fourth quarter 2021 compared with 3.02% in the same quarter of 2020. Excluding the effects of PPP fee acceleration, excess cash, and one-time items, our normalized NIM increased to 2.99% in 2021 from 2.94% in the fourth quarter of 2020, and is flat with the third quarter of 2021. At year-end 2021, we had about $200 thousand of remaining PPP deferred fees which will be amortized to the margin in 2022 as we have worked closely with our customers to receive PPP loan forgiveness. The stabilization and modest expansion in normalized NIM is due to the continued growth in low-interest bearing deposits in 2021 and several delever and security remix strategies that were executed during the past two years. Our cost of interest-bearing liabilities has steadily dropped to 41 basis points from 77 basis points in the fourth quarter 2020."

"In December 2021, we prepaid $70 million of FHLB borrowings and sold $19 million of securities to offset prepayment penalties, which were replaced with relatively short-lived securities with an average duration of approximately 4 years. The net result of the transactions is expected to add five basis points to NIM and $0.02 to core earnings per share in the first quarter 2022."

Mr. Simard continued, "Looking at yields in 2021, income from loans and securities have both been affected by acceleration of discounts and premiums due to prepayment activity. Specifically, while our yield on commercial real estate loans was 3.40% for the fourth quarter 2021 excluding one-time adjustments, was 3.50% which is consistent with the third quarter 2021. The quarterly contractual rates present a better look at repricing activity and reflect a more linear and flatter curve in the second half of 2021. As we think about 2022, we view this as a positive indicator along with our well-positioned, asset-sensitive balance sheet should the Federal Reserve Bank increase rates."

"On the funding side, core deposits increased 13% during the quarter as new accounts were established from new relationships. Wholesale funding has decreased to 4% of total funding, down from 18% at year-end 2020. Core deposit reliance continues to expand, funding our growth with a much more stabilized cost if rates do go up. At year-end 2021, $114 million of wholesale funding remains, which represent longer durations or have associated hedges."

Mr. Simard further stated, "Wealth management and customer service fees increased 18% from the fourth quarter 2020, given a 13% increase in assets under management and our significant increase in core deposits. Our Wealth Management division continues to deliver a strong performance from both a customer and shareholder perspective. We continue to focus on profitability and fee-based revenue remains a priority. The growth seen during this past year has contributed to the expansion in our key performance metrics, while further enhancing the diversity and strength of our revenue streams. Mortgage banking income in the fourth quarter 2021 benefited from our secondary market loan sales, which also accounts for the decrease in residential loans as we selectively moved production between on-balance sheet and held for sale."

"Growth in commercial real estate loans for the quarter was driven largely by existing customers. These are proven operators and long-time customers of the Bank. Similarly, the growth in commercial and industrial loans of 11%, excluding PPP, came from existing customers and represented a variety of industries. As we look forward, the pipelines remain robust and we see the momentum continuing into the first quarter."

"Credit metrics remained strong and stable in the fourth quarter. The modest increase in provision in the fourth quarter is largely due to stabilizing economic forecasts along with slight increases to qualitative adjustments on certain loan categories, offset by $144 thousand of net recoveries for the quarter. Non-performing loans continue to decline across all categories on a quarterly and year-over-year basis. In the quarter, we also saw a noteworthy reduction of criticized loans, down to 3% from 4% at the end of the third quarter 2021. All of these trends are positive and are expected to continue as we move into 2022 based on our credit disciplines."

Mr. Simard concluded, "As we enter 2022, we continue to actively manage the balance sheet, investing excess liquidity diligently without compromising our credit or interest rate risk appetites. We are excited about this new year and feel we are well positioned regardless of the resulting economic environment."

DIVIDEND DECLARED

The Board of Directors voted to declare a cash dividend of $0.24 per share to shareholders of record at the close of business on February 17, 2022, payable on March 17, 2022. This dividend equates to a 3.32% annualized yield based on the $28.93 closing price of the Company's common stock at the end of the fourth quarter of 2021.

FINANCIAL CONDITION

Total assets were $3.7 billion at the end of the fourth quarter 2021. We executed a balance sheet delever and security remix strategy where $70.0 million of Federal Home Loan Bank advances were prepaid and $19.0 million of securities were sold and then replenished.

Loans were $2.5 billion at the end of the fourth quarter. Excluding PPP loans, commercial loans increased $49.2 million primarily due to five new loans totaling $70.4 million and two new participations totaling $44.3 million. PPP loan balances totaled $6.7 million at year-end 2021 and $53.8 million at the end of 2020. Unearned deferred fees on PPP loans totaled $219 thousand at the end of the quarter and are expected to be mostly recognized in early 2022. COVID loan modifications totaled $566 thousand, down from $4.7 million at the end of the third quarter 2021. Total residential loans decreased $28.7 million from the end of the third quarter 2021, as the Company continued its strategy to sell the majority of residential loan originations in the secondary market.

The allowance for credit losses was $22.7 million for the fourth quarter, compared to $22.4 million at the end of the third quarter 2021. A steadying economic forecast and disciplined approach to credit quality resulted in an allowance to total loans coverage ratio of 0.90% compared to 0.89% at the end of the third quarter 2021. The fourth quarter 2021 charged off loans resulted in a net recovery of $144 thousand, or 0.02% of the total loan portfolio compared to a net charge off of $193 thousand, or 0.03% of total loans in the third quarter 2021. Non-accruing loans for the fourth quarter 2021 decreased to $10.2 million from $12.2 million at the end of the third quarter 2021. The ratio of accruing past due loans to total loans was 0.32% of total loans at the end of the fourth quarter 2021 from 0.12% at the end of the third quarter 2021 and 0.58% at year-end 2020. The increase in 30-day past due accounts for the quarter is attributable to the payment schedules of residential loans and timing due to the quarter ending on a 31 day month.

Total deposits were $3.0 billion at the end of the fourth quarter, an increase of $41.3 million from the third quarter 2021, due to continued core deposit growth. Core deposits grew $85.0 million, or 13% on an annualized basis, during the quarter as over 300 new customer accounts were opened. As a result the loan to deposit ratio was 83% compared to 84% at the end of the third quarter 2021. Time deposits decreased $43.7 million during the quarter primarily due to $15.0 million of brokered certificates of deposit that matured in the fourth quarter. The remaining decrease is attributable to customers continuing to move funds to transactional accounts upon contractual maturity.

The Company's book value per share was $28.27 at December 31, 2021, compared with $27.92 at the end of the third quarter 2021. Tangible book value per share (non-GAAP measure) was $19.86 at the end of the fourth quarter 2021, compared to $19.48 at the end of the third quarter 2021, an annualized growth rate of 8%. Other comprehensive income included unrealized gains on securities totaling $2.0 million in the fourth quarter 2021 compared to $4.4 million at the end of the third quarter 2021.

RESULTS OF OPERATIONS

Net income in the fourth quarter 2021 was $9.8 million, or $0.65 per share, compared to $8.6 million, or $0.58 per share, in the same quarter of 2020. Net income improved on higher fee income and lower operating expenses. PPP loan fees contributed $0.07 to earnings per share in the fourth quarter of 2021 and $0.18 in the same period of 2020. Core earnings (non-GAAP) totaled $10.2 million or $0.68 per share, compared to $9.2 million, or $0.62 per share, in the same quarter of 2020. Non-core items (non-GAAP) reduced net income by $472 thousand in the fourth quarter 2021 and $578 thousand in the same period of 2020.

Net interest margin was 2.79% compared to 3.02% in the same period of 2020. Acceleration of PPP loan fee amortization due to forgiveness contributed 10 basis points to NIM in the fourth quarter 2021 and 23 basis point in the same period of 2020. Interest-bearing cash balances, held mostly at the Federal Reserve Bank, reduced NIM by 27 basis points in the fourth quarter 2021 and 16 basis points in the fourth quarter 2020. The yield on earning assets totaled 3.10% compared to 3.65% in the fourth quarter 2020. Excluding the impact of PPP and excess cash, the yield on earning assets totaled 3.30% and 3.61% for the same periods. The yield on loans was 3.58% in the fourth quarter 2021, 3.98% in the third quarter 2021 and 4.03% in the fourth quarter of 2020. Excluding PPP loans the yield on loans was 3.45% in the fourth quarter of 2021, 3.62% in the third quarter of 2021 and 3.77% in the fourth quarter 2020. Costs of funds decreased to 0.41% from 0.77% in the fourth quarter 2020 due to lower deposit rates and reduced wholesale borrowings.

The provision for credit losses for the quarter was $126 thousand, compared to of $1.4 million in the fourth quarter of 2020. The provision in the fourth quarter 2021 is attributable to steadying economic forecasts from the third quarter 2021, which overall is down from the provision that was booked under the incurred model in the prior year, considering COVID-19 effects.

Non-interest income in the fourth quarter 2021 was $11.2 million, compared to $14.7 million in the same quarter of 2020. Customer service fees were $3.5 million in the fourth quarter compared to $2.9 million in the same period of 2020. The increase is due to over 300 new accounts that were opened during the quarter and a higher volume of customer activity and transactions. Wealth management income increased 16% over the same quarter of 2020 to $3.8 million with assets under management growing 13% to $2.54 billion compared to $2.25 billion in the same period of 2020. The Company sold securities resulting in an $890 thousand gain as part of the aforementioned remix strategy. Mortgage banking activities were $1.6 million, compared to $2.7 million in the same period of 2020. Additionally, bank-owned life insurance income increased $178 thousand due to mortality proceeds from a death claim.

Non-interest expense was $22.9 million in the fourth quarter 2021 from $27.8 million in the same quarter of 2020. Salaries and benefits expense decreased to $11.8 million compared to $13.3 million in the same quarter of 2020, reflecting full-time equivalents of 423 compared to 531, respectively and favorable discount rates on the Company's supplemental-retirement plans. The efficiency ratio benefited from controlled operating expenses in the fourth quarter and was 60.74% compared to 61.98% in the same period of 2020. Excluding the effects of PPP the efficiency ratio was 62.51% and 63.81% for the same respective periods. Non-core expenses (non-GAAP) in the fourth quarter 2021 totaled $1.5 million and consisted of a $1.1 million prepayment penalty on debt extinguishment and a $515 thousand loss on the sale of premises and equipment as the Company continues to optimize its branch footprint. In the same quarter of 2020 non-core expenses (non-GAAP) totaled $4.7 million and included costs to consolidate our wealth management systems.

The effective tax rate for the quarter was 18%, down from 21% in the fourth quarter 2020. The income tax provision in fourth 2021 includes a true-up of the statutory tax rate as more business was driven from the lower cost state of Maine. Also with the filing of the tax returns in the quarter, $76 thousand of tax reserves were released, which is considered a one-time item.

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
	Dec 31,			Sep 30,			Jun 30,			Mar 31,			Dec 31,
	2021			2021			2021			2021			2020
PER SHARE DATA
Net earnings, diluted	$	0.65		$	0.73		$	0.60		$	0.63		$	0.58
Core earnings, diluted ⁽¹⁾		0.68			0.73			0.63			0.68			0.62
Total book value⁽⁶⁾		28.27			27.92			27.64			27.10			27.29
Tangible book value ^{(1) (6)}		19.86			19.48			19.17			18.61			18.77
Market price at period end		28.93			28.05			28.62			29.42			22.59
Dividends		0.24			0.24			0.24			0.22			0.22

PERFORMANCE RATIOS ⁽²⁾
Return on assets		1.02	%		1.16	%		0.97	%		1.03	%		0.92	%
Core return on assets ⁽¹⁾		1.07			1.16			1.01			1.11			0.98
Pre-tax, pre-provision return on assets		1.26			1.43			1.13			1.22			1.30
Core pre-tax, pre-provision return on assets⁽¹⁾		1.33			1.43			1.18			1.32			1.38
Return on equity⁽⁶⁾		9.16			10.38			8.77			9.45			8.42
Core return on equity ^{(1) (6)}		9.60			10.39			9.14			10.14			8.99
Return on tangible equity⁽⁶⁾		13.30			15.08			12.91			14.01			12.52
Core return on tangible equity ^{(1) (6)}		13.93			15.09			13.45			15.01			13.33
Net interest margin, fully taxable equivalent (FTE) ^{(1) (3)}		2.79			3.02			2.74			2.88			3.02
Core net interest margin^{(1) (4)}		2.69			2.75			2.67			2.78			2.79
Efficiency ratio ⁽¹⁾		60.74			59.18			63.45			61.95			61.98

FINANCIAL DATA (In millions)
Total assets⁽⁶⁾	$	3,709		$	3,738		$	3,639		$	3,730		$	3,724
Total earning assets ⁽⁵⁾		3,380			3,394			3,282			3,381			3,371
Total investments		626			556			636			641			599
Total loans		2,532			2,534			2,516			2,551			2,563
Allowance for credit losses		23			22			23			24			19
Total goodwill and intangible assets		126			126			127			127			127
Total deposits		3,049			3,007			2,822			2,912			2,906
Total shareholders' equity⁽⁶⁾		424			418			414			405			407
Net income		10			11			9			9			9
Core earnings⁽¹⁾		10			11			9			10			9

ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (current quarter annualized)/average loans		-	%		0.03	%		0.01	%		0.03	%		0.03	%
Allowance for credit losses/total loans		0.90			0.89			0.91			0.93			0.74
Loans/deposits		83			84			89			88			88
Shareholders' equity to total assets⁽⁶⁾		11.43			11.19			11.37			10.86			10.93
Tangible shareholders' equity to tangible assets⁽⁶⁾		8.32			8.08			8.17			7.72			7.78

(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.
(6) The first and second quarters of 2021 and the fourth quarter of 2020 have been revised for derivatives that were incorrectly presented as assets instead of liabilities and related equity effects net of tax.

BAR HARBOR BANKSHARES
CONSOLIDATED BALANCE SHEETS - UNAUDITED


	Dec 31,			Sep 30,			Jun 30,			Mar 31,			Dec 31,
(in thousands)	2021			2021			2021			2021			2020
Assets
Cash and due from banks	$	33,508		$	39,081		$	41,440		$	39,039		$	27,566
Interest-bearing deposits with other banks		216,881			302,118			132,278			184,473			198,441
Total cash and cash equivalents		250,389			341,199			173,718			223,512			226,007

Securities available for sale		618,276			545,327			621,849			626,403			585,046
Federal Home Loan Bank stock		7,384			10,192			14,145			14,826			14,036
Total securities		625,660			555,519			635,994			641,229			599,082

Loans held for sale		5,523			7,505			7,942			10,148			23,988

Total loans		2,531,910			2,534,154			2,515,560			2,551,064			2,562,885
Less: Allowance for credit losses		(22,718	)		(22,448	)		(22,815	)		(23,653	)		(19,082	)
Net loans		2,509,192			2,511,706			2,492,745			2,527,411			2,543,803

Premises and equipment, net		49,382			50,070			51,119			52,253			52,458
Other real estate owned		-			-			-			-			-
Goodwill		119,477			119,477			119,477			119,477			119,477
Other intangible assets		6,733			6,966			7,198			7,431			7,670
Cash surrender value of bank-owned life insurance		79,020			79,380			78,886			78,388			77,870
Deferred tax asset, net⁽¹⁾		5,547			5,811			4,902			5,761			3,047
Other assets⁽¹⁾		58,310			60,712			67,064			64,479			70,873
Total assets⁽¹⁾	$	3,709,233		$	3,738,345		$	3,639,045		$	3,730,089		$	3,724,275

Liabilities and shareholders' equity
Demand and other non-interest bearing deposits	$	664,420		$	664,395		$	599,598		$	586,487		$	544,636
NOW deposits		940,631			888,021			802,681			761,817			738,849
Savings deposits		628,670			605,977			578,361			560,095			521,638
Money market deposits		389,291			379,651			371,075			365,507			402,731
Time deposits		425,532			469,221			470,758			638,436			698,361
Total deposits		3,048,544			3,007,265			2,822,473			2,912,342			2,906,215

Senior borrowings		118,400			190,267			279,991			292,210			276,062
Subordinated borrowings		60,124			60,083			60,042			60,003			59,961
Total borrowings		178,524			250,350			340,033			352,213			336,023

Other liabilities⁽¹⁾		58,018			62,295			62,779			60,354			74,972
Total liabilities⁽¹⁾		3,285,086			3,319,910			3,225,285			3,324,909			3,317,210

Total shareholders' equity⁽¹⁾		424,147			418,435			413,760			405,180			407,065
Total liabilities and shareholders' equity⁽¹⁾	$	3,709,233		$	3,738,345		$	3,639,045		$	3,730,089		$	3,724,275

Net shares outstanding		15,001			14,987			14,972			14,950			14,916

(1) The first and second quarters of 2021 and the fourth quarter of 2020 have been revised for derivatives that were incorrectly presented as assets instead of liabilities and related equity effects net of tax.

BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED

LOAN ANALYSIS

											Annualized
											Growth %
	Dec 31,		Sep 30,		Jun 30,		Mar 31,		Dec 31,		Quarter			Year to
(in thousands)	2021		2021		2021		2021		2020		End			Date
Commercial real estate	$	1,210,580	$	1,170,372	$	1,135,857	$	1,118,669	$	1,084,381		14	%		12	%
Commercial and industrial		340,129		331,091		327,729		317,500		323,864		11			5
Paycheck Protection Program (PPP)		6,669		24,227		65,918		77,878		53,774		*			(88	)
Total commercial loans		1,557,378		1,525,690		1,529,504		1,514,047		1,462,019		8			7
Total commercial loans, excluding PPP		1,550,709		1,501,463		1,463,586		1,436,169		1,408,245		13			10

Residential real estate		821,004		849,692		822,774		868,084		923,891		(14	)		(11	)
Consumer		98,949		100,933		103,589		106,835		113,544		(8	)		(13	)
Tax exempt and other		54,579		57,839		59,693		62,098		63,431		(23	)		(14	)
Total loans	$	2,531,910	$	2,534,154	$	2,515,560	$	2,551,064	$	2,562,885		-	%		(1	)%

DEPOSIT ANALYSIS

											Annualized
											Growth %
	Dec 31,		Sep 30,		Jun 30,		Mar 31,		Dec 31,		Quarter			Year to
(in thousands)	2021		2021		2021		2021		2020		End			Date
Demand	$	664,420	$	664,395	$	599,598	$	586,487	$	544,636		-	%		22	%
NOW		940,631		888,021		802,681		761,817		738,849		24			27
Savings		628,670		605,977		578,361		560,095		521,638		15			21
Money market		389,291		379,651		371,075		365,507		402,731		10			(3	)
Total non-maturity deposits		2,623,012		2,538,044		2,351,715		2,273,906		2,207,854		13			19
Total time deposits		425,532		469,221		470,758		638,436		698,361		(37	)		(39	)
Total deposits	$	3,048,544	$	3,007,265	$	2,822,473	$	2,912,342	$	2,906,215		5	%		5	%

*Indicates ratios of 100% or greater.

BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED


	Three Months Ended						Year Ended
	December 31,						December 31,
(in thousands, except per share data)	2021			2020			2021			2020
Interest and dividend income
Loans	$	22,746		$	26,687		$	95,236		$	107,085
Securities and other		3,776			4,013			15,568			19,019
Total interest and dividend income		26,522			30,700			110,804			126,104
Interest expense
Deposits		1,434			3,606			8,543			18,043
Borrowings		1,273			1,732			6,688			8,881
Total interest expense		2,707			5,338			15,231			26,924
Net interest income		23,815			25,362			95,573			99,180
Provision for credit losses		126			1,360			(1,302	)		5,625
Net interest income after provision for credit losses		23,689			24,002			96,875			93,555
Non-interest income
Trust and investment management fee income		3,844			3,318			15,179			13,378
Customer service fees		3,470			2,890			13,212			11,327
Gain on sales of securities, net		890			3,959			2,870			5,445
Mortgage banking income		1,563			2,654			6,536			6,884
Bank-owned life insurance income		669			482			2,179			2,007
Customer derivative income		173			1,086			1,010			2,503
Other income		549			334			1,275			1,412
Total non-interest income		11,158			14,723			42,261			42,956
Non-interest expense
Salaries and employee benefits		11,842			13,318			47,117			48,920
Occupancy and equipment		4,105			4,192			16,356			16,751
Loss (gain) on sales of premises and equipment, net		515			(122	)		378			(32	)
Outside services		431			571			1,943			1,985
Professional services		556			572			1,756			2,060
Communication		205			194			912			892
Marketing		378			415			1,541			1,385
Amortization of intangible assets		233			256			940			1,024
Loss on debt extinguishment		1,083			-			2,851			1,351
Acquisition, conversion and other expenses		(92	)		4,849			1,667			5,801
Other expenses		3,665			3,571			15,047			14,723
Total non-interest expense		22,921			27,816			90,508			94,860
Income before income taxes		11,926			10,909			48,628			41,651
Income tax expense		2,160			2,269			9,329			8,407
Net income	$	9,766		$	8,640		$	39,299		$	33,244

Earnings per share:
Basic	$	0.65		$	0.58		$	2.63		$	2.18
Diluted		0.65			0.58			2.61			2.18

Weighted average shares outstanding:
Basic		14,993			14,909			14,961			15,246
Diluted		15,075			14,952			15,045			15,272

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


	Dec 31,			Sep 30,			Jun 30,			Mar 31,			Dec 31,
(in thousands, except per share data)	2021			2021			2021			2021			2020
Interest and dividend income
Loans	$	22,746		$	25,094		$	23,191		$	24,205		$	26,687
Securities and other		3,776			3,821			3,992			3,979			4,013
Total interest and dividend income		26,522			28,915			27,183			28,184			30,700
Interest expense
Deposits		1,434			1,555			2,603			2,951			3,606
Borrowings		1,273			1,778			1,826			1,811			1,732
Total interest expense		2,707			3,333			4,429			4,762			5,338
Net interest income		23,815			25,582			22,754			23,422			25,362
Provision for credit losses		126			(174	)		(765	)		(489	)		1,360
Net interest income after provision for credit losses		23,689			25,756			23,519			23,911			24,002
Non-interest income
Trust and investment management fee income		3,844			3,868			3,801			3,666			3,318
Customer service fees		3,470			3,515			3,257			2,970			2,890
Gain on sales of securities, net		890			1,930			50			-			3,959
Mortgage banking income		1,563			850			1,553			2,570			2,654
Bank-owned life insurance income		669			494			498			518			482
Customer derivative income		173			341			86			410			1,086
Other income		549			352			260			114			334
Total non-interest income		11,158			11,350			9,505			10,248			14,723
Non-interest expense
Salaries and employee benefits		11,842			11,743			11,356			12,176			13,318
Occupancy and equipment		4,105			4,029			3,894			4,328			4,192
Loss (gain) on sales of premises and equipment, net		515			(146	)		1			8			(122	)
Outside services		431			547			533			432			571
Professional services		556			491			151			558			572
Communication		205			188			198			321			194
Marketing		378			339			534			290			415
Amortization of intangible assets		233			233			233			241			256
Loss on debt extinguishment		1,083			1,768			-			-			-
Acquisition, conversion and other expenses		(92	)		318			552			889			4,849
Other expenses		3,665			3,862			4,272			3,248			3,571
Total non-interest expense		22,921			23,372			21,724			22,491			27,816
Income before income taxes		11,926			13,734			11,300			11,668			10,909
Income tax expense		2,160			2,706			2,275			2,188			2,269
Net income	$	9,766		$	11,028		$	9,025		$	9,480		$	8,640

Earnings per share:
Basic	$	0.65		$	0.74		$	0.60		$	0.63		$	0.58
Diluted		0.65			0.73			0.60			0.63			0.58

Weighted average shares outstanding:
Basic		14,993			14,983			14,965			14,934			14,909
Diluted		15,075			15,051			15,042			15,007			14,952

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


	Quarters Ended
	Dec 31,			Sep 30,			Jun 30,			Mar 31,			Dec 31,
	2021			2021			2021			2021			2020
Earning assets
Interest-bearing deposits with other banks⁽¹⁾		0.16	%		0.15	%		0.09	%		0.09	%		0.11	%
Securities available for sale and FHLB stock		2.66			2.59			2.66			2.79			2.97
Loans:
Commercial real estate		3.40			3.53			3.54			3.68			3.74
Commercial and industrial		3.23			3.79			3.60			3.86			3.92
Paycheck protection program		26.25			23.28			5.56			8.12			11.56
Residential real estate		3.61			3.64			3.80			3.76			3.74
Consumer		3.49			3.78			3.44			3.56			3.65
Total loans		3.58			3.98			3.70			3.85			4.03
Total earning assets		3.10	%		3.41	%		3.26	%		3.46	%		3.65	%

Funding liabilities
Deposits:
NOW		0.14	%		0.13	%		0.12	%		0.14	%		0.15	%
Savings		0.08			0.08			0.10			0.13			0.13
Money market		0.12			0.12			0.12			0.14			0.14
Time deposits		0.77			0.88			1.37			1.44			1.64
Total interest-bearing deposits		0.24			0.27			0.45			0.51			0.61
Borrowings		2.17			2.11			2.12			2.16			1.83
Total interest-bearing liabilities		0.41	%		0.50	%		0.66	%		0.72	%		0.77	%

Net interest spread		2.69			2.91			2.60			2.74			2.88
Net interest margin⁽¹⁾		2.79			3.02			2.74			2.88			3.02
Core net interest margin ⁽²⁾		2.69			2.75			2.67			2.78			2.79

(1) Income from interest-bearing deposits with other banks has been separated from securities and restated for prior periods to conform to the current period presentation.
(2) Core net interest margin excludes Paycheck Protection Program loans.

BAR HARBOR BANKSHARES
AVERAGE BALANCES - UNAUDITED


	Quarters Ended
	Dec 31,			Sep 30,			Jun 30,			Mar 31,			Dec 31,
(in thousands)	2021			2021			2021			2021			2020
Assets
Interest-bearing deposits with other banks⁽¹⁾	$	325,260		$	284,429		$	228,825		$	176,728		$	176,747
Securities available for sale and FHLB stock ⁽²⁾		578,323			610,381			635,978			613,459			563,118
Loans:
Commercial real estate		1,189,803			1,153,813			1,122,831			1,099,937			1,059,574
Commercial and industrial		386,156			391,191			378,634			377,176			386,201
Paycheck protection program		14,824			45,835			76,701			65,149			91,109
Residential real estate		844,872			824,686			850,119			916,633			995,173
Consumer		100,723			101,545			104,851			109,802			115,876
Total loans ⁽³⁾		2,536,378			2,517,070			2,533,136			2,568,697			2,647,933
Total earning assets		3,439,961			3,411,880			3,397,939			3,358,884			3,387,798
Cash and due from banks		37,818			38,750			21,414			23,221			22,473
Allowance for credit losses		(22,525	)		(22,607	)		(23,419	)		(24,822	)		(18,690	)
Goodwill and other intangible assets		126,324			126,556			126,789			127,024			127,264
Other assets⁽⁴⁾		200,097			209,509			223,362			232,475			237,414
Total assets⁽⁴⁾	$	3,781,675		$	3,764,088		$	3,746,085		$	3,716,782		$	3,756,259

Liabilities and shareholders' equity
Deposits:
NOW	$	913,326		$	860,206		$	781,836		$	749,100		$	713,464
Savings		620,599			591,440			568,193			541,203			516,266
Money market		395,341			381,755			368,826			378,743			399,543
Time deposits		450,559			471,934			619,454			675,422			734,523
Total interest-bearing deposits		2,379,825			2,305,335			2,338,309			2,344,468			2,363,796
Borrowings		232,492			334,097			345,896			340,209			376,437
Total interest-bearing liabilities		2,612,317			2,639,432			2,684,205			2,684,677			2,740,233
Non-interest-bearing demand deposits		684,895			641,769			591,982			550,657			535,402
Other liabilities⁽⁴⁾		61,480			61,436			57,227			74,778			72,534
Total liabilities⁽⁴⁾		3,358,692			3,342,637			3,333,414			3,310,112			3,348,169
Total shareholders' equity⁽⁴⁾		422,983			421,451			412,671			406,670			408,090
Total liabilities and shareholders' equity⁽⁴⁾	$	3,781,675		$	3,764,088		$	3,746,085		$	3,716,782		$	3,756,259

(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.
(4) The first and second quarters of 2021 and the fourth quarter of 2020 have been revised for derivatives that were incorrectly presented as assets instead of liabilities and related equity effects net of tax.

BAR HARBOR BANKSHARES
ASSET QUALITY ANALYSIS - UNAUDITED


	At or for the Quarters Ended
	Dec 31,			Sep 30,			Jun 30,			Mar 31,			Dec 31,
(in thousands)	2021			2021			2021			2021			2020
NON-PERFORMING ASSETS
Non-accruing loans:
Commercial real estate	$	2,890		$	3,646		$	4,367		$	4,664		$	4,251
Commercial installment		1,056			1,163			1,370			1,534			1,466
Residential real estate		5,192			6,311			6,788			6,753			5,729
Consumer installment		1,053			1,087			1,054			1,118			742
Total non-accruing loans		10,191			12,207			13,579			14,069			12,188
Other real estate owned		-			-			-			-			-
Total non-performing assets	$	10,191		$	12,207		$	13,579		$	14,069		$	12,188

Total non-accruing loans/total loans		0.40	%		0.48	%		0.54	%		0.55	%		0.48	%
Total non-performing assets/total assets		0.27			0.33			0.37			0.38			0.33

PROVISION AND ALLOWANCE FOR CREDIT LOSSES
Balance at beginning of period	$	22,448		$	22,815		$	23,653		$	19,082		$	17,907
Impact of CECL adoption		-			-			-			5,228			-
Charged-off loans		(154	)		(286	)		(239	)		(216	)		(297	)
Recoveries on charged-off loans		298			93			166			48			112
Net loans charged-off		144			(193	)		(73	)		(168	)		(185	)
Provision for credit losses		126			(174	)		(765	)		(489	)		1,360
Balance at end of period	$	22,718		$	22,448		$	22,815		$	23,653		$	19,082

Allowance for credit losses/total loans		0.90	%		0.89	%		0.91	%		0.93	%		0.74	%
Allowance for credit losses/non-accruing loans		223			184			168			168			157

NET LOAN CHARGE-OFFS
Commercial real estate	$	216		$	(69	)	$	(105	)	$	(131	)	$	63
Commercial installment		53			(24	)		(7	)		1			(228	)
Residential real estate		8			13			88			(28	)		(21	)
Consumer installment		(133	)		(113	)		(49	)		(10	)		1
Total, net	$	144		$	(193	)	$	(73	)	$	(168	)	$	(185	)

Net charge-offs (QTD annualized)/average loans		(0.02	)%		0.03	%		0.01	%		0.03	%		0.03	%
Net charge-offs (YTD annualized)/average loans		0.01			0.02			0.02			0.03			0.07

DELINQUENT AND NON-ACCRUING LOANS/ TOTAL LOANS
30-89 Days delinquent		0.31	%		0.09	%		0.13	%		0.43	%		0.58	%
90+ Days delinquent and still accruing		0.01			0.02			0.02			0.01			-
Total accruing delinquent loans		0.32			0.12			0.15			0.44			0.58
Non-accruing loans		0.40			0.48			0.54			0.55			0.48
Total delinquent and non-accruing loans		0.72	%		0.60	%		0.69	%		0.99	%		1.06	%

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


		At or for the Quarters Ended
		Dec 31,			Sep 30,			Jun 30,			Mar 31,			Dec 31,
(in thousands)		2021			2021			2021			2021			2020
Net income		$	9,766		$	11,028		$	9,025		$	9,480		$	8,640
Non-core items:
(Gain) on sale of securities, net			(890	)		(1,930	)		(50	)		-			(3,959	)
Loss (gain) on sale of premises and equipment, net			515			(146	)		1			8			(122	)
(Gain) loss on other real estate owned			-			-			-			-			(11	)
Loss on debt extinguishment			1,083			1,768			-			-			-
Acquisition, conversion and other expenses			(92	)		318			552			889			4,849
Income tax expense ⁽¹⁾			(144	)		(2	)		(119	)		(213	)		(179	)
Total non-core items			472			8			384			684			578
Core earnings ⁽²⁾	(A)	$	10,238		$	11,036		$	9,409		$	10,164		$	9,218

Net interest income	(B)	$	23,815		$	25,582		$	22,754		$	23,422		$	25,362
Non-interest income			11,158			11,350			9,505			10,248			14,723
Total Revenue			34,973			36,932			32,259			33,670			40,085
(Gain) on sale of securities, net			(890	)		(1,930	)		(50	)		-			(3,959	)
Total core revenue ⁽²⁾	(C)	$	34,083		$	35,002		$	32,209		$	33,670		$	36,126

Total non-interest expense			22,921			23,372			21,724			22,491			27,816
Non-core expenses:
(Loss) gain on sale of premises and equipment, net			(515	)		146			(1	)		(8	)		122
Gain (loss) on other real estate owned			-			-			-			-			11
Loss on debt extinguishment			(1,083	)		(1,768	)		-			-			-
Acquisition, conversion and other expenses			92			(318	)		(552	)		(889	)		(4,849	)
Total non-core expenses			(1,506	)		(1,940	)		(553	)		(897	)		(4,716	)
Core non-interest expense ⁽²⁾	(D)	$	21,415		$	21,432		$	21,171		$	21,594		$	23,100

Total revenue			34,973			36,932			32,259			33,670			40,085
Total non-interest expense			22,921			23,372			21,724			22,491			27,816
Pre-tax, pre-provision net revenue		$	12,052		$	13,560		$	10,535		$	11,179		$	12,269

Core revenue⁽²⁾			34,083			35,002			32,209			33,670			36,126
Core non-interest expense⁽²⁾			21,415			21,432			21,171			21,594			23,100
Core pre-tax, pre-provision net revenue⁽²⁾	(U)	$	12,668		$	13,570		$	11,038		$	12,076		$	13,026

(in millions)
Average earning assets	(E)	$	3,440		$	3,412		$	3,398		$	3,359		$	3,388
Average paycheck protection program (PPP) loans	(R)		15			46			77			65			91
Average earning assets, excluding PPP loans	(S)		3,425			3,366			3,321			3,294			3,297
Average assets	(F)		3,764			3,764			3,746			3,717			3,756
Average shareholders' equity⁽⁸⁾	(G)		423			421			413			407			408
Average tangible shareholders' equity ^{(2) (3) (8)}	(H)		297			295			286			280			281
Tangible shareholders' equity, period-end ^{(2) (3) (8)}	(I)		298			292			287			278			280
Tangible assets, period-end ^{(2) (3) (8)}	(J)		3,583			3,612			3,512			3,603			3,597

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


		At or for the Quarters Ended
		Dec 31,			Sep 30,			Jun 30,			Mar 31,			Dec 31,
(in thousands)		2021			2021			2021			2021			2020
Common shares outstanding, period-end	(K)		15,001			14,987			14,972			14,950			14,916
Average diluted shares outstanding	(L)		15,075			15,051			15,042			15,007			14,952
Core earnings per share, diluted ⁽²⁾	(A/L)	$	0.68		$	0.73		$	0.63		$	0.68		$	0.62
Tangible book value per share, period-end ^{(2) (8)}	(I/K)		19.86			19.48			19.17			18.61			18.77
Securities adjustment, net of tax ^{(1) (4)}	(M)		1,985			4,398			7,237			4,510			10,023
Tangible book value per share, excluding securities adjustment ^{(2) (4) (8)}	(I+M)/K		19.73			19.19			18.69			18.31			18.09
Tangible shareholders' equity/total tangible assets ^{(2) (8)}	(I/J)		8.32			8.08			8.17			7.72			7.78

Performance ratios ⁽⁵⁾
GAAP return on assets			1.02	%		1.16	%		0.97	%		1.03	%		0.92	%
Core return on assets ⁽²⁾	(A/F)		1.07			1.16			1.01			1.11			0.98
Pre-tax, pre-provision return on assets			1.26			1.43			1.13			1.22			1.30
Core pre-tax, pre-provision return on assets⁽²⁾	(U/F)		1.33			1.43			1.18			1.32			1.38
GAAP return on equity⁽⁸⁾			9.16			10.38			8.77			9.45			8.42
Core return on equity ^{(2) (8)}	(A/G)		9.60			10.39			9.14			10.14			8.99
Return on tangible equity⁽⁸⁾			13.30			15.08			12.91			14.01			12.52
Core return on tangible equity ^{(1) (2) (8)}	(A+Q)/H		13.93			15.09			13.45			15.01			13.33
Efficiency ratio ^{(2) (6)}	(D-O-Q)/(C+N)		60.74			59.18			63.45			61.95			61.98
Net interest margin	(B+P)/E		2.79			3.02			2.74			2.88			3.02
Core net interest margin^{(2) (7)}	(B+P-T)/S		2.69			2.75			2.67			2.78			2.79

Supplementary data (in thousands)
Taxable equivalent adjustment for efficiency ratio	(N)	$	573		$	576		$	586		$	595		$	542
Franchise taxes included in non-interest expense	(O)		132			143			128			125			117
Tax equivalent adjustment for net interest margin	(P)		369			421			430			433			396
Intangible amortization	(Q)		233			233			233			241			256
Interest and fees on PPP loans	(T)		981			2,690			1,064			1,304			2,648

(1)Assumes a marginal tax rate of 23.41% for the fourth quarter of 2021 and 23.71% for the first three quarters of 2021 and fourth quarter of 2020.
(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.
(8)The first and second quarters of 2021 and the fourth quarter of 2020 have been revised for derivatives that were incorrectly presented as assets instead of liabilities and related equity effects net of tax.

SOURCE: Bar Harbor Bank and Trust

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