Page 1

BAR HARBOR BANKSHARES Bar Harbor Bankshares Reports Second Quarter Results ; Declares Dividend BAR HARBOR , MAINE – July 21 , 2021 - Bar Harbor Bankshares ( NYSE American : BHB ) reported second quarter 2021 net income of $ 9.0 million or $ 0.60 per share from $ 8.5 million or $ 0.55 per share in the same quarter of 2020 , an increase of 9 % in earnings per share . Core earnings ( non - GAAP ) were $ 9.4 million , or $ 0.63 per share , compared to $ 8.6 million , or $ 0.56 per share for the same periods . Non - core items ( non - GAAP ) reduced net income in the second quarter 2021 by $ 384 thousand , or $ 0.02 per share . SECOND QUARTER FINANCIAL HIGHLIGHTS ( compared to the second quarter 2020 , unless otherwise noted ) 0.97 % return on assets ; 1.01 % core return on assets ( non - GAAP ) • 9 % growth in earnings per share , 13 % growth in core earnings ( non - GAAP ) • • • 14 % annualized increase in core deposits • 8 % annualized total commercial loan growth , excluding PPP loans 13 % increase in fee income Exceptional credit quality President and Chief Executive Officer , Curtis C. Simard stated , " We had another quarter of double - digit core earnings growth and core return on assets of over 1.00 % . Profitability increased on higher fee income driven from growth in core deposits and assets under management ( AUM ) . Customer service income returned to pre - pandemic levels suggesting a potentially meaningful recovery in regional activity , augmented by a lift from our previously announced fee strategies implemented at the start of this year . The 8 % annualized growth in commercial loans during the quarter , excluding PPP , reflects our commitment to meeting the needs of our existing customers and developing new relationships as we navigate past PPP activities . Our Wealth Management business continues to be a significant contributor to total non - interest income while our Retail and Commercial loan teams continue to generate new core deposit accounts , especially in DDA categories . More than 1,000 new banking relationships were created in the second quarter , highlighting both existing customer retention efforts and new customer initiatives . With the increase in mortgage rates late in the first quarter , we chose to opportunistically add balances to the balance sheet which helped stem the attrition . However , a focus on IRR management remains top of mind . " Mr. Simard continued , “ We continued to organically grow our capital levels expanding tangible equity to tangible assets ( non - GAAP ) to 8.23 % , while maintaining exceptional credit quality . All credit metrics remain strong and further improved in the quarter , primarily marked by lower past dues , minimal net charge - offs and improved coverage ratios . Overall , we continue to see favorable migration in risk ratings across most loan categories . Loan modification concessions made during the pandemic have essentially all resumed normal repayment schedules as of the end of the quarter . " Mr. Simard stated , “ As we think about net interest margin ( NIM ) quarter over quarter , the second quarter had substantially less PPP fee acceleration and was further impacted by the excess cash on hand . Of note , $ 105 million of wholesale deposits matured on the last day of the quarter which will benefit our cost of funds going forward . We are starting to see a leveling off of NIM , excluding non - recurring items , as reliance on wholesale borrowings continues to be reduced and DDA growth continues . Given our overall asset sensitive balance sheet position and a more core - funded profile , we are well positioned for when rates start to move back up . Excluding the effects of one - time items , our second quarter NIM was 2.95 % compared with the same adjusted metric of 2.86 % in the first quarter 2021. " Mr. Simard commented , “ In the first quarter , we announced the initiation of a comprehensive review of our non - interest expenses which included an annual reduction to salary and benefits of more than $ 3.0 million , along with additional cost savings associated with vendor contracts and process efficiencies . While some savings have been immediately realized in our second quarter run - rates , others will be phased in depending on contract timelines . As we continue to resume business - as - usual activities , we are also rolling out cost containment initiatives to absorb any potential increases associated with pandemic - delayed expenses . Lastly , we evaluate profitability at each branch within our footprint , at least annually , taking into consideration the unique geography of Northern New England and our customer needs . " BHB - Bar Harbor Bankshares Page 1 www.barharbor.bank