BAR HARBOR BANKSHARES (Form: 8-K, Received: 04/18/2019 16:59:58)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): April 18, 2019

BAR HARBOR BANKSHARES

(Exact Name of Registrant as Specified in its Charter)



Maine	001-13349	01-0393663
(State or Other Jurisdiction) of Incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)



PO Box 400		04609-0400
82 Main Street		(Zip Code)
Bar Harbor, Maine
(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (207) 288-3314

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):



¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


Item 2.02	Results of Operations and Financial Condition

On April 18, 2019 , Bar Harbor Bankshares (the “Company”), issued a press release announcing its financial results for the quarter ended March 31, 2019 . The full text of this press release is furnished as Exhibit 99.1 and incorporated herein by reference.

The information contained herein, including the exhibit furnished herewith, is intended to be furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as expressly set forth by specific reference in such filing.


Item 8.01	Other Events

On April 18, 2019, as part of the press release furnished hereto as Exhibit 99.1, Bar Harbor Bankshares announced that the Company’s Board of Directors declared a quarterly cash dividend of $0.22 per share to shareholders of record at the close of business on May 14, 2019 and payable on June 14, 2019.


Item 9.01	Financial Statements and Exhibits


(a)	Financial Statements of Businesses Acquired. Not applicable.


(b)	Pro Forma Financial Information. Not applicable.


(c)	Shell Company Transactions. Not applicable.


(d)	Exhibits.



Exhibit No.		Description

99.1		Press Release dated April 18, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.



			Bar Harbor Bankshares

DATE:	April 18, 2019	By:	/s/ Curtis C. Simard
			Curtis C. Simard
			President and CEO

Bar Harbor Bankshares Reports First Quarter Results; Increases Dividend 10%

BAR HARBOR, MAINE - April 18, 2019 -- Bar Harbor Bankshares (NYSE American: BHB or the “Company”) reported first quarter 2019 net income of $7.3 million or $0.47 diluted earnings per share. Earnings in the same quarter of 2018 totaled $7.8 million or $0.50 diluted earnings per share.

FIRST QUARTER FINANCIAL HIGHLIGHTS

• 6% annualized growth in total loans

• 102% loan to deposit ratio

• 0.66% non-accruing loans to total loans

• 0.03% net charge-offs to average loans

• 11% annualized increase in book value per share

President and Chief Executive Officer, Curtis C. Simard stated, “Earnings for the first quarter were in line with our expectations given the somewhat seasonal nature of our geographic markets and overall economic conditions. The financial performance in the first quarter includes yield expansion, active balance sheet management and continuous execution of our risk centric operating model that balances growth with earnings. Yields from earnings assets increased across the board partially offsetting the rising costs of funds from the December 2018 rate hike. And, we took advantage of the disconnect within funding markets by swapping out short-term borrowings with longer-term fixed interest rates. Our disciplined approach to credit quality and risk mitigation is prevalent as the ratios of non-accruing loans to total loans and net charge-offs to average loans continue to improve on a quarter-over-quarter basis.”

Mr. Simard continued, “Our targeted branch strategy remains on track and we will continue to explore market opportunities within our footprint as it contributes to the Company’s near and long term growth potential. Our Manchester, New Hampshire branch has already started to capture significant market share and we are happy to announce the redesign of our Newport, New Hampshire location, which will create a unique and fulfilling experience for our customers, the community, and our employees. Newport has been an important



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cornerstone to our mortgage banking operations and is home to our consolidated call center.

Mr. Simard further stated, “With our strong capital position and consistent organic growth in equity, we are excited to announce an increase in our quarterly cash dividend by 10%. The new dividend yield along with continuous double digit growth in book value per share and the previously announced 5% share buyback program is continued proof of our commitment to building shareholder value.”

Mr. Simard concluded, “As we look to the rest of 2019, we are focused on our customers and sales culture that is being driven at every level of leadership. It’s a sales culture with an eye towards repeatable performance and thoughtful solutions to the challenges our customers and prospects face. We have a team who greatly believes in itself and this Company, which ultimately drives shareholder value.”

DIVIDEND INCREASED

On April 16, 2019, the Board of Directors voted to increase the quarterly cash dividend by $0.02, or 10%, to $0.22 per share to shareholders of record at the close of business May 14, 2019, payable on June 14, 2019. The dividend equates to a 3.4% annualized yield based on a $25.87 closing price at the end of the first quarter 2019.

FINANCIAL CONDITION

Total assets were $3.6 billion at the end of the first quarter 2019, up $20.7 million from the fourth quarter and $118.2 million from the first quarter 2018. Loan balances in the first quarter 2019 were $2.5 billion increasing $36.7 million from the fourth quarter or 6% annualized. Loan growth is attributed to our expanded branch model and the momentum of our sales culture.

The first quarter 2019 allowance for loan losses to total loans ratio remains strong at 0.55% with a coverage ratio to non-accruing loans at 84%, up from 76% as of year-end. Non-accruing loans decreased $1.6 million in the first quarter 2019 with improvements across most categories. These improvements decreased the ratio of non-accruing loans to average loans to 0.66% from 0.73% at year-end 2018. This positive trend was also seen in the ratio of past due accounts as a percentage of average loans.



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The Company’s book value per share was $24.54 at the end of the first quarter 2019 compared to $23.87 at year-end 2018, representing an 11% annualized growth rate. Tangible book value per share (non-GAAP measure) was $17.63 at the end of the first quarter 2019 compared to $16.94 at year-end 2018. Lower long-term rates had a positive impact on the fair value adjustment in the securities portfolio. The fair value adjustment was a loss of $1.8 million in the first quarter 2019 compared $8.7 million in the fourth quarter 2018.

RESULTS OF OPERATIONS

Net income in the first quarter 2019 was $7.3 million, or $0.47 per share, compared to $7.8 million, or $0.50 per share, in the same quarter of 2018. Interest income was up 8% to $33.2 million as quarterly yields on earning assets expanded 27 basis points on a year-over-year basis to 4.19%. Net interest margin in the first quarter 2019 decreased to 2.77% from 2.97% in the same period of 2018. The decrease reflects several short-term interest rate hikes in 2018 and the continued flattening of the yield curve into 2019. We remain focused on balance sheet strategies such as the investment portfolio remix seen in the fourth quarter 2018 and current quarter brokered certificate of deposit hedge, which helps to manage interest rate risk. Our loan to deposit ratio increased to 102% in the first quarter 2019 as deposits are traditionally lower in the beginning of the year.

The first quarter 2019 provision for loan losses decreased to $324 thousand from $795 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 remained low at a 0.03% annualized rate for the first quarter 2019. Asset quality continues to improve with non-accruing loans to total loans at 0.66% in the first quarter 2019 compared to 0.83% in the same quarter of 2018.

Non-interest income and non-interest expense remained relatively flat for the first quarter of 2019 compared to first quarter of 2018. The reduction in salary and benefit expenses were offset by increase in occupancy and equipment based on the new locations in Manchester, New Hampshire and Portland, Maine placed in service during the fourth quarter of 2018.



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BACKGROUND

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

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.



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CONTACTS

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



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



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BAR HARBOR BANKSHARES
SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED

	At or for the Quarters Ended
	Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			Jun 30, 2018			Mar 31, 2018
PER SHARE DATA
Net earnings, diluted	$	0.47		$	0.49		$	0.58		$	0.55		$	0.50
Core earnings, diluted ^{(1) (2)}	0.47			0.59			0.58			0.56			0.52
Total book value	24.54			23.87			23.06			22.97			22.78
Tangible book value ⁽²⁾	17.63			16.94			16.11			16.00			15.78
Market price at period end	25.87			22.43			28.72			30.29			27.72
Dividends	0.20			0.20			0.20			0.20			0.19

PERFORMANCE RATIOS ⁽³⁾
Return on assets	0.83		%	0.85		%	1.01		%	0.97		%	0.90		%
Core return on assets ^{(1) (2)}	0.83			1.03			1.01			1.00			0.93
Return on equity	7.83			8.31			9.92			9.65			9.01
Core return on equity ^{(1) (2)}	7.83			10.01			9.98			9.86			9.31
Core return on tangible equity ^{(1) (2)}	11.19			14.46			14.52			14.43			13.72
Net interest margin, fully taxable equivalent (FTE) ^{(2) (4)}	2.77			2.78			2.81			2.91			2.97
Net interest margin (FTE), excluding purchased loan accretion ^{(2) (4)}	2.67			2.70			2.71			2.80			2.85
Efficiency ratio ⁽²⁾	63.94			59.91			57.88			58.83			60.44

GROWTH (Year-to-date, annualized) ⁽²⁾
Total commercial loans	(3.3		)%	1.4		%	2.8		%	5.7		%	2.2		%
Total loans	5.9			0.2			(0.1		)	—			(3.4		)
Total deposits	(2.8		)	5.6			2.2			1.9			(1.8		)

FINANCIAL DATA (In millions)
Total assets	$	3,629		$	3,608		$	3,561		$	3,541		$	3,511
Total earning assets ^{(2) (5)}	3,312			3,263			3,253			3,250			3,235
Total investments	782			761			747			749			757
Total loans	2,527			2,490			2,484			2,485			2,464
Allowance for loan losses	14			14			13			13			13
Total goodwill and intangible assets	107			108			108			108			108
Total deposits	2,466			2,483			2,390			2,375			2,341
Total shareholders' equity	381			371			358			356			352
Net income	7			8			9			9			8
Core income ^{(1) (2)}	7			9			9			9			8

ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (current quarter annualized)/average loans	0.03		%	0.03		%	0.04		%	0.06		%	0.07		%
Allowance for loan losses/total loans	0.55			0.56			0.54			0.53			0.51
Loans/deposits	102			100			104			105			105
Shareholders' equity to total assets	10.50			10.27			10.04			10.05			10.03
Tangible shareholders' equity to tangible assets	7.77			7.51			7.24			7.22			7.17

_____________________________________

(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 on sale of securities. 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 annualized and 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)	Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			Jun 30, 2018			Mar 31, 2018
Assets
Cash and due from banks	$	37,504		$	35,208		$	53,154		$	39,327		$	35,088
Interest-bearing deposits with the Federal Reserve Bank	16,599			63,546			19,420			22,066			12,725
Total cash and cash equivalents	54,103			98,754			72,574			61,393			47,813
Securities available for sale, at fair value	747,235			725,837			712,658			710,147			718,559
Federal Home Loan Bank stock	35,107			35,659			34,154			38,712			38,105
Total securities	782,342			761,496			746,812			748,859			756,664
Commercial real estate	821,567			826,699			840,018			838,546			824,721
Commercial and industrial	409,937			404,870			385,814			400,293			387,205
Residential real estate	1,184,053			1,144,698			1,140,519			1,127,895			1,132,977
Consumer	111,402			113,960			117,239			118,332			119,516
Total loans	2,526,959			2,490,227			2,483,590			2,485,066			2,464,419
Less: Allowance for loan losses	(13,997		)	(13,866		)	(13,487		)	(13,090		)	(12,679		)
Net loans	2,512,962			2,476,361			2,470,103			2,471,976			2,451,740

Premises and equipment, net	49,661			48,804			47,621			48,038			48,464
Other real estate owned	2,351			2,351			68			129			216
Goodwill	100,085			100,085			100,085			100,085			100,085
Other intangible assets	7,266			7,459			7,690			7,921			8,152
Cash surrender value of bank-owned life insurance	74,352			73,810			73,316			58,811			58,433
Deferred tax asset, net	7,632			9,514			11,527			10,309			9,627
Other assets	38,441			29,853			31,196			33,534			29,793
Total assets	$	3,629,195		$	3,608,487		$	3,560,992		$	3,541,055		$	3,510,987

Liabilities and shareholders' equity
Demand and other non-interest bearing deposits	$	342,030		$	370,889		$	372,358		$	341,773		$	342,192
NOW deposits	470,277			484,717			471,326			449,715			448,992
Savings deposits	346,813			358,888			354,908			350,339			361,591
Money market deposits	349,833			335,951			254,142			260,642			303,777
Time deposits	956,818			932,793			937,615			972,252			884,848
Total deposits	2,465,771			2,483,238			2,390,349			2,374,721			2,341,400

Senior borrowings	703,283			680,823			739,224			735,924			742,198
Subordinated borrowings	42,958			42,973			42,988			43,003			43,018
Total borrowings	746,241			723,796			782,212			778,927			785,216

Other liabilities	36,160			30,874			30,746			31,444			32,214
Total liabilities	3,248,172			3,237,908			3,203,307			3,185,092			3,158,830

Total common shareholders' equity	381,023			370,579			357,685			355,963			352,157
Total liabilities and shareholders' equity	$	3,629,195		$	3,608,487		$	3,560,992		$	3,541,055		$	3,510,987

Net shares outstanding	15,524			15,523			15,509			15,496			15,459



BAR HARBOR BANKSHARES
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED

LOAN ANALYSIS

											Annualized Growth %
(in thousands)	Mar 31, 2019		Dec 31, 2018		Sep 30, 2018		Jun 30, 2018		Mar 31, 2018		Mar 31, 2019
Commercial real estate	$	821,567	$	826,699	$	840,018	$	838,546	$	824,721	(2.5	)%
Commercial and industrial	305,185		309,544		303,984		313,680		301,811		(5.6	)
Total commercial loans	1,126,752		1,136,243		1,144,002		1,152,226		1,126,532		(3.3	)
Residential real estate	1,184,053		1,144,698		1,140,519		1,127,895		1,132,977		13.8
Consumer	111,402		113,960		117,239		118,332		119,516		(9.0	)
Tax exempt and other	104,752		95,326		81,830		86,613		85,394		39.6
Total loans	$	2,526,959	$	2,490,227	$	2,483,590	$	2,485,066	$	2,464,419	5.9	%



DEPOSIT ANALYSIS

											Annualized Growth %
(in thousands)	Mar 31, 2019		Dec 31, 2018		Sep 30, 2018		Jun 30, 2018		Mar 31, 2018		Mar 31, 2019
Demand	$	342,030	$	370,889	$	372,358	$	341,773	$	342,192	(31.1	)%
NOW	470,277		484,717		471,326		449,715		448,992		(11.9	)
Savings	346,813		358,888		354,908		350,339		361,591		(13.5	)
Money Market	349,833		335,951		254,142		260,642		303,777		16.5
Total non-maturity deposits	1,508,953		1,550,445		1,452,734		1,402,469		1,456,552		(10.7	)
Total time deposits	956,818		932,793		937,615		972,252		884,848		10.3
Total deposits	$	2,465,771	$	2,483,238	$	2,390,349	$	2,374,721	$	2,341,400	(2.8	)%



BAR HARBOR BANKSHARES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

	Three Months Ended March 31,
(in thousands, except per share data)	2019		2018
Interest and dividend income
Loans	$	26,864	$	25,126
Securities and other	6,363		5,651
Total interest and dividend income	33,227		30,777
Interest expense
Deposits	6,307		3,985
Borrowings	5,155		3,634
Total interest expense	11,462		7,619
Net interest income	21,765		23,158
Provision for loan losses	324		795
Net interest income after provision for loan losses	21,441		22,363
Non-interest income
Trust and investment management fee income	2,757		2,962
Customer service fees	2,165		2,224
Bank-owned life insurance income	542		446
Other income	703		606
Total non-interest income	6,167		6,238
Non-interest expense
Salaries and employee benefits	10,519		10,989
Occupancy and equipment	3,386		3,073
Outside services	411		560
Professional services	544		433
Communication	235		180
Amortization of intangible assets	207		207
Acquisition, conversion and other expenses	—		335
Other expenses	3,322		3,075
Total non-interest expense	18,624		18,852

Income before income taxes	8,984		9,749
Income tax expense	1,703		1,937
Net income	$	7,281	$	7,812

Earnings per share:
Basic	$	0.47	$	0.51
Diluted	$	0.47	$	0.50

Weighted average shares outstanding:
Basic	15,523		15,448
Diluted	15,587		15,553



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

(in thousands, except per share data)	Mar 31, 2019		Dec 31, 2018			Sep 30, 2018		Jun 30, 2018		Mar 31, 2018
Interest and dividend income
Loans	$	26,864	$	26,743		$	26,212	$	25,934	$	25,126
Securities and other	6,363		6,029			5,972		5,784		5,651
Total interest and dividend income	33,227		32,772			32,184		31,718		30,777
Interest expense
Deposits	6,307		5,653			5,478		4,405		3,985
Borrowings	5,155		4,855			4,237		4,321		3,634
Total interest expense	11,462		10,508			9,715		8,726		7,619
Net interest income	21,765		22,264			22,469		22,992		23,158
Provision for loan losses	324		572			643		770		795
Net interest income after provision for loan losses	21,441		21,692			21,826		22,222		22,363
Non-interest income
Trust and investment management fee income	2,757		2,949			2,952		3,122		2,962
Customer service fees	2,165		2,477			2,490		2,347		2,224
Gain on sales of securities, net	—		(924		)	—		—		—
Bank-owned life insurance income	542		493			505		377		446
Other income	703		2,455			1,179		1,275		606
Total non-interest income	6,167		7,450			7,126		7,121		6,238
Non-interest expense
Salaries and employee benefits	10,519		9,269			10,331		10,375		10,989
Occupancy and equipment	3,386		3,022			3,366		2,925		3,073
Outside services	411		811			456		581		560
Professional services	544		458			223		360		433
Communication	235		103			217		304		180
Amortization of intangible assets	207		207			207		207		207
Acquisition, conversion, and other expenses	—		1,109			70		214		335
Other expenses	3,322		5,117			3,036		3,719		3,075
Total non-interest expense	18,624		20,096			17,906		18,685		18,852

Income before income taxes	8,984		9,046			11,046		10,658		9,749
Income tax expense	1,703		1,426			2,076		2,123		1,937
Net income	$	7,281	$	7,620		$	8,970	$	8,535	$	7,812

Earnings per share:
Basic	$	0.47	$	0.49		$	0.58	$	0.55	$	0.51
Diluted	$	0.47	$	0.49		$	0.58	$	0.55	$	0.50

Weighted average shares outstanding:
Basic	15,523		15,516			15,503		15,482		15,448
Diluted	15,587		15,574			15,580		15,571		15,553



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

	Quarters Ended
	Mar 31, 2019		Dec 31, 2018		Sep 30, 2018		Jun 30, 2018		Mar 31, 2018
Earning assets
Commercial real estate	4.78	%	4.71	%	4.57	%	4.48	%	4.41	%
Commercial and industrial	4.79		4.61		4.59		4.69		4.41
Residential	3.94		3.83		3.83		3.88		3.87
Consumer	5.25		5.07		4.85		4.65		4.47
Total loans	4.42		4.31		4.25		4.25		4.16
Securities and other	3.47		3.28		3.21		3.18		3.16
Total earning assets	4.19	%	4.07	%	4.00	%	3.99	%	3.92	%

Funding liabilities
NOW	0.51	%	0.50	%	0.43	%	0.37	%	0.34	%
Savings	0.19		0.18		0.17		0.17		0.18
Money market	1.38		0.93		0.76		0.79		0.68
Time deposits	2.00		1.85		1.78		1.51		1.39
Total interest bearing deposits	1.25		1.12		1.06		0.90		0.82
Borrowings	2.74		2.53		2.26		2.07		1.80
Total interest-bearing liabilities	1.66	%	1.50	%	1.38	%	1.25	%	1.11	%

Net interest spread	2.53		2.57		2.62		2.74		2.81
Net interest margin	2.77		2.78		2.81		2.91		2.97



BAR HARBOR BANKSHARES
AVERAGE BALANCES - UNAUDITED

	Quarters Ended
(in thousands)	Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			Jun 30, 2018			Mar 31, 2018
Assets
Commercial real estate	$	825,596		$	836,813		$	837,058		$	824,356		$	819,531
Commercial and industrial	405,107			393,396			388,831			396,471			380,029
Residential	1,143,862			1,137,493			1,120,336			1,126,714			1,147,010
Consumer	113,060			114,960			117,735			119,570			121,467
Total loans ⁽¹⁾	2,487,625			2,482,662			2,463,960			2,467,111			2,468,037
Securities and other ⁽²⁾	777,458			762,901			773,562			767,886			765,328
Total earning assets	3,265,083			3,245,563			3,237,522			3,234,997			3,233,365
Cash and due from banks	50,298			68,904			63,272			50,869			53,151
Allowance for loan losses	(14,119		)	(13,922		)	(13,463		)	(13,107		)	(12,589		)
Goodwill and other intangible assets	107,446			107,657			107,887			108,118			108,349
Other assets	152,332			138,074			137,466			131,522			129,525
Total assets	$	3,561,040		$	3,546,276		$	3,532,684		$	3,512,399		$	3,511,801

Liabilities and shareholders' equity
NOW	$	468,392		$	475,449		$	461,875		$	441,645		$	447,026
Savings	346,707			346,905			356,834			351,712			362,508
Money market	335,882			272,612			259,738			288,169			305,105
Time deposits	894,160			914,674			964,108			872,149			857,796
Total interest bearing deposits	2,045,141			2,009,640			2,042,555			1,953,675			1,972,435
Borrowings	761,885			761,781			744,632			836,295			819,576
Total interest-bearing liabilities	2,807,026			2,771,421			2,787,187			2,789,970			2,792,011
Non-interest-bearing demand deposits	351,362			384,636			357,856			339,374			339,349
Other liabilities	25,520			26,569			28,943			28,386			29,000
Total liabilities	3,183,908			3,182,626			3,173,986			3,157,730			3,160,360

Total shareholders' equity	377,132			363,650			358,698			354,669			351,441

Total liabilities and shareholders' equity	$	3,561,040		$	3,546,276		$	3,532,684		$	3,512,399		$	3,511,801

_____________________________________


(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)	Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			Jun 30, 2018			Mar 31, 2018
NON-PERFORMING ASSETS
Non-accruing loans:
Commercial real estate	$	7,516		$	8,156		$	8,348		$	8,883		$	8,422
Commercial installment	2,192			2,331			2,303			2,411			2,304
Residential real estate	6,326			7,211			10,396			9,945			8,548
Consumer installment	565			537			727			707			1,065
Total non-accruing loans	16,599			18,235			21,774			21,946			20,339
Other real estate owned	2,351			2,351			68			129			216
Total non-performing assets	$	18,950		$	20,586		$	21,842		$	22,075		$	20,555

Total non-accruing loans/total loans	0.66		%	0.73		%	0.88		%	0.88		%	0.83		%
Total non-performing assets/total assets	0.52			0.57			0.61			0.62			0.59

PROVISION AND ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	13,866		$	13,487		$	13,090		$	12,679		$	12,325
Charged-off loans	(231		)	(631		)	(298		)	(517		)	(461		)
Recoveries on charged-off loans	38			438			52			158			20
Net loans charged-off	(193		)	(193		)	(246		)	(359		)	(441		)
Provision for loan losses	324			572			643			770			795
Balance at end of period	$	13,997		$	13,866		$	13,487		$	13,090		$	12,679

Allowance for loan losses/total loans	0.55		%	0.56		%	0.54		%	0.53		%	0.51		%
Allowance for loan losses/non-accruing loans	84			76			62			60			62

NET LOAN CHARGE-OFFS
Commercial real estate	$	(41	)	$	(25	)	$	(27	)	$	(92	)	$	(91	)
Commercial installment	(15		)	53			(53		)	(54		)	(140		)
Residential real estate	(86		)	(31		)	(123		)	(64		)	1
Consumer installment	(51		)	(190		)	(43		)	(149		)	(211		)
Total, net	$	(193	)	$	(193	)	$	(246	)	$	(359	)	$	(441	)

Net charge-offs (QTD annualized)/average loans	0.03		%	0.03		%	0.04		%	0.06		%	0.07		%
Net charge-offs (YTD annualized)/average loans	0.03			0.05			0.06			0.06			0.07

DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS
30-89 Days delinquent	0.21		%	0.38		%	0.17		%	0.14		%	0.24		%
90+ Days delinquent and still accruing	—			0.01			—			—			—
Total accruing delinquent loans	0.21			0.39			0.17			0.14			0.24
Non-accruing loans	0.66			0.73			0.88			0.88			0.83
Total delinquent and non-accruing loans	0.87		%	1.12		%	1.05		%	1.02		%	1.07		%



BAR HARBOR BANKSHARES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED
		At or for the Quarters Ended
(in thousands)		Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			Jun 30, 2018			Mar 31, 2018
Net income		$	7,281		$	7,620		$	8,970		$	8,535		$	7,812
Plus (less):
Loss on sale of securities, net		—			924			—			—			—
Loss (gain) on other real estate owned		—			5			(8		)	23			—
Acquisition, conversion and other expenses		—			1,109			70			214			335
Income tax (expense) ⁽¹⁾		—			(485		)	(12		)	(57		)	(81		)
Total core income ⁽²⁾	(A)	$	7,281		$	9,173		$	9,020		$	8,715		$	8,066

Net-interest income	(B)	$	21,765		$	22,264		$	22,469		$	22,992		$	23,158
Plus: Non-interest income		6,167			7,450			7,126			7,121			6,238
Total Revenue		27,932			29,714			29,595			30,113			29,396
Plus: Loss on sale of securities, net		—			924			—			—			—
Total core revenue ⁽²⁾	(C)	$	27,932		$	30,638		$	29,595		$	30,113		$	29,396

Total non-interest expense		18,624			20,096			17,906			18,685			18,852
Less: Loss on other real estate owned		—			(5		)	8			(23		)	—
Less: Acquisition, conversion and other expenses		—			(1,109		)	(70		)	(214		)	(335		)
Core non-interest expense ⁽²⁾	(D)	$	18,624		$	18,982		$	17,844		$	18,448		$	18,517

(in millions)
Total average earning assets	(E)	$	3,265		$	3,246		$	3,238		$	3,235		$	3,233
Total average assets	(F)	3,561			3,546			3,533			3,512			3,512
Total average shareholders' equity	(G)	377			364			359			355			351
Total average tangible shareholders' equity ^{(2) (3)}	(H)	270			256			251			247			243
Total tangible shareholders' equity, period-end ^{(2) (3)}	(I)	274			263			250			248			244
Total tangible assets, period-end ^{(2) (3)}	(J)	3,522			3,501			3,453			3,433			3,403

(in thousands)
Total common shares outstanding, period-end	(K)	15,524			15,523			15,509			15,496			15,459
Average diluted shares outstanding	(L)	15,587			15,574			15,580			15,571			15,553

Core earnings per share, diluted ⁽²⁾	(A/L)	$	0.47		$	0.59		$	0.58		$	0.56		$	0.52
Tangible book value per share, period-end ⁽²⁾	(I/K)	17.63			16.94			16.11			16.00			15.78
Securities adjustment, net of tax ^{(1) (4)}	(M)	(1,842		)	(8,663		)	(17,152		)	(12,594		)	(10,237		)
Tangible book value per share, excluding securities adjustment ⁽²⁾	(I+M)/K	17.75			17.50			17.22			16.81			16.44
Total tangible shareholders' equity/total tangible assets ⁽²⁾	(I/J)	7.77			7.51			7.24			7.22			7.17



BAR HARBOR BANKSHARES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED
		At or for the Quarters Ended
(in thousands)		Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			Jun 30, 2018			Mar 31, 2018
Performance ratios
GAAP return on assets		0.83		%	0.85		%	1.01		%	0.97		%	0.90		%
Core return on assets ⁽²⁾	(A/F)	0.83			1.03			1.01			1.00			0.93
GAAP return on equity		7.83			8.31			9.92			9.65			9.01
Core return on equity ⁽²⁾	(A/G)	7.83			10.01			9.98			9.86			9.31
Core return on tangible equity ^{(2) (5)}	(A+Q)/H	11.19			14.46			14.52			14.43			13.72
Efficiency ratio ^{(2) (6)}	(D-O-Q)/(C+N)	63.94			59.91			57.88			58.83			60.44
Net interest margin	(B+P)/E	2.77			2.78			2.81			2.91			2.97
Supplementary data (in thousands)
Taxable equivalent adjustment for efficiency ratio	(N)	$	684		$	633		$	654		$	622		$	645
Franchise taxes included in non-interest expense	(O)	120			39			129			159			152
Tax equivalent adjustment for net interest margin	(P)	515			488			493			502			503
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.