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BAR HARBOR BANKSHARES Bar Harbor Bankshares Reports First Quarter Results ; Record Core ROA BAR HARBOR , MAINE – April 27 , 2021 - Bar Harbor Bankshares ( NYSE American : BHB ) reported a 26 % increase in earnings for the first quarter 2021 compared to the same quarter of 2020. Net income in the first quarter 2021 was $ 9.5 million , or $ 0.63 per share , compared to $ 7.7 million , or $ 0.50 per share in the same quarter of 2020. For the same periods , core earnings ( non - GAAP ) were $ 10.2 million , or $ 0.68 per share , compared to $ 7.8 million , or $ 0.50 per share . Non - core charges ( non - GAAP ) in the first quarter 2021 included a reduction in workforce charges totaling $ 900 thousand , or $ 0.05 per share . FIRST QUARTER FINANCIAL HIGHLIGHTS ( compared to the first quarter 2020 , unless otherwise noted ) 1.03 % return on assets ; 1.11 % core return on assets ( non - GAAP ) • • 8 % annualized total commercial loan growth , excluding PPP loans • • • 12 % annualized increase in core deposits 5 % increase in pre - tax , pre - provision net revenue ; 13 % excluding non - core charges ( non - GAAP ) 22 % increase in fee income 0.55 % non - accrual to total loan ratio , 0.47 % excluding purchased credit deteriorated ( PCD ) loans ( non - GAAP ) , net charge- offs near zero President and Chief Executive Officer , Curtis C. Simard stated , “ During the first quarter , we increased core earnings 36 % over the prior year , boosting our core return on assets to 1.11 % . Earnings in the quarter were driven by strong 8 % annualized growth in total commercial loans excluding PPP loans , higher wealth management and mortgage banking income , lower core non - interest expenses and a credit provision recapture . In short , a 13 % increase in core pre - tax , pre - provision net revenue reflects continued development across the Company's varying businesses lines . Wealth management income increased 9 % due to a 23 % increase in assets under management ( AUM ) compared to the same quarter of 2020. This increase reflects the strength of our newly consolidated platform as well as improved market conditions . Balancing growth with earnings is a key fundamental of our business model . Mindful of this , we continue to generate significant gains from residential loan sales that are more profitable to the Bank in the short and long term versus recording them on our balance sheet . “ Our management teams did a great job focusing on profitability , reducing most categories of non - interest expense during the first quarter 2021. Also , during the first quarter , we kicked off an intensive review of our non - interest expense leveraging a strategic third- party partner . The goal of the review is to identify normalized expense run - rates that are optimal for our current size and footprint , and establish sustainable run - rates that allow for revenue growth in the future . We recorded non - core charges related to early retirement and reduction in workforce initiatives , as a result of early milestones achieved in our expense review . These non - core charges are expected to decrease salary and benefit expense by more than $ 3.0 million annually starting in the second quarter 2021. The final results of the review and action plans are expected to be completed by the end of the second quarter . Our provision for credit losses was also a benefit to earnings of $ 500 thousand due to improved macroeconomic expectations along with lower specific reserves . Of note , we did not take outsized provisions in prior quarters based on the results of our quarterly stress testing and tightly managed credit discipline . " Mr. Simard continued , “ Our loan to deposit ratio remains strong at 88 % as we continue to enhance liquidity levels through new core deposit account openings totaling 4,300 in the first quarter . Deposit growth has also allowed us to optimize our cost of funds by reducing wholesale funding as a percentage of total debt to 15 % , compared to 29 % for the first quarter 2020. Over the past several quarters excess liquidity was used to fund earning asset growth , specifically in commercial loans . " We adopted CECL effective January 1 , 2021 , which increased our allowance for credit losses ( ACL ) by $ 5.2 million and reserve for unfunded commitments by $ 1.6 million . As a result of the adoption , the coverage ratio of ACL to total loans increased to 0.94 % from 0.76 % in the fourth quarter of 2020 , excluding PPP loans . Additionally , past due accounts within the commercial real estate and residential product lines were significantly down from year - end 2020 and total past due accounts were about half of levels experienced BHB - Bar Harbor Bankshares Page 1 www.barharbor.bank