Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-13349 BAR HARBOR BANKSHARES (Exact name of registrant as specified in its charter) Maine 01-0393663 (State or other ju ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the unaudited consolidated financial statements for Q2 2021 and 2020, detailing financial position, performance, and cash flows, along with significant accounting policies [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets detail the company's financial position, showing a slight decrease in total assets and deposits, while shareholders' equity increased Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$3,639,675** | **$3,725,762** | | Net Loans | $2,492,745 | $2,543,803 | | Total Securities | $635,994 | $599,082 | | Goodwill | $119,477 | $119,477 | | **Total Liabilities** | **$3,224,103** | **$3,314,421** | | Total Deposits | $2,822,473 | $2,906,215 | | Total Borrowings | $340,033 | $336,023 | | **Total Shareholders' Equity** | **$415,572** | **$411,341** | [Consolidated Statements of Income](index=8&type=section&id=Consolidated%20Statements%20of%20Income) The income statement shows a year-over-year increase in net income for Q2 and YTD 2021, driven by a negative provision for credit losses and strong non-interest income Key Income Statement Data (in thousands, except EPS) | Metric | Q2 2021 | Q2 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $22,754 | $24,590 | $46,176 | $49,153 | | Provision for Credit Losses | ($765) | $1,354 | ($1,254) | $2,465 | | Non-interest Income | $9,505 | $9,710 | $19,753 | $18,131 | | Non-interest Expense | $21,724 | $22,266 | $44,215 | $44,625 | | **Net Income** | **$9,025** | **$8,481** | **$18,505** | **$16,202** | | **Diluted EPS** | **$0.60** | **$0.55** | **$1.23** | **$1.04** | [Consolidated Statements of Comprehensive Income](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement reconciles net income to total comprehensive income, including unrealized gains and losses, showing an increase for Q2 2021 Comprehensive Income Summary (in thousands) | Metric | Q2 2021 | Q2 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $9,025 | $8,481 | $18,505 | $16,202 | | Total Other Comprehensive Income (Loss) | $4,230 | $2,331 | ($3,322) | $4,610 | | **Total Comprehensive Income** | **$13,255** | **$10,812** | **$15,183** | **$20,812** | [Consolidated Statements of Changes in Shareholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This statement details changes in shareholders' equity, reflecting an increase from year-end 2020 to June 30, 2021, driven by net income, dividends, and other comprehensive income - Total shareholders' equity increased to **$415.6 million** at June 30, 2021, from **$411.3 million** at December 31, 2020[15](index=15&type=chunk)[16](index=16&type=chunk) - The company declared cash dividends of **$0.24 per share** in the second quarter of 2021, an increase from **$0.22 per share** in the prior year[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2021, the company experienced a net decrease in cash and cash equivalents, primarily due to financing activities, partially offset by operating and investing activities Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Category | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $12,922 | $16,116 | | Net Cash from (used in) Investing Activities | $21,318 | ($63,792) | | Net Cash (used in) from Financing Activities | ($86,529) | $61,439 | | **Net Change in Cash** | **($52,289)** | **$13,763** | [Notes to Unaudited Consolidated Interim Financial Statements](index=15&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Interim%20Financial%20Statements) This section provides detailed explanations of accounting policies and financial data, including the impact of CECL adoption and breakdowns of key financial instruments - Effective January 1, 2021, the Company adopted ASU 2016-13 (CECL), which replaced the incurred loss model with a lifetime expected credit loss model[23](index=23&type=chunk)[37](index=37&type=chunk) - The adoption of CECL resulted in a **$5.2 million** increase to the allowance for credit losses on loans and a **$1.6 million** increase to the allowance for unfunded commitments, leading to a cumulative-effect decrease to retained earnings of **$5.2 million**, net of tax[52](index=52&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=87&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides a narrative analysis of the company's financial performance and condition, highlighting strong core earnings, improved credit quality, and effective expense management for Q2 2021 - Q2 2021 net income was **$9.0 million** (**$0.60 per share**), a **9% increase** in EPS compared to Q2 2020[243](index=243&type=chunk) - Key highlights for Q2 2021 include **8% annualized commercial loan growth** (excluding PPP), a **14% annualized increase in core deposits**, and a **13% increase in fee income** compared to Q2 2020[244](index=244&type=chunk) - Net interest margin (NIM) was **2.74%**, impacted by excess cash balances and lower PPP fee acceleration[246](index=246&type=chunk)[265](index=265&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=112&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's exposure to market risk, primarily interest rate risk, managed by ALCO, indicating an asset-sensitive balance sheet - The company's most significant market risk is interest rate risk, which is managed by the Asset and Liability Committee (ALCO)[284](index=284&type=chunk)[285](index=285&type=chunk) Interest Rate Sensitivity Analysis (vs. Base Case) | Scenario | Impact on Net Interest Income (Year 1) | Impact on Net Interest Income (Year 2) | | :--- | :--- | :--- | | +200 bps | +8.5% | +14.4% | | -100 bps | -2.1% | -11.4% | [Item 4. Controls and Procedures](index=115&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes in internal control over financial reporting - The company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of June 30, 2021[300](index=300&type=chunk) - No changes in internal control over financial reporting occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control[301](index=301&type=chunk) [PART II. OTHER INFORMATION](index=116&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=116&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation, which management believes will not materially affect the consolidated financial statements - The Company reports no material legal proceedings that would significantly impact its financial condition[302](index=302&type=chunk) [Item 1A. Risk Factors](index=116&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the 2020 Annual Report on Form 10-K were reported - No material changes to the risk factors from the 2020 Form 10-K were reported[303](index=303&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=117&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board approved a plan to repurchase up to 747,000 shares of common stock, with no repurchases made during Q2 2021 - A stock repurchase plan for up to **747,000 shares** was approved in April 2021, but no shares were repurchased during the second quarter[304](index=304&type=chunk) [Item 5. Other Information](index=117&type=section&id=Item%205.%20Other%20Information) The company executed a separation agreement with its former Executive Vice President, Chief Operating Officer & Chief Risk Officer upon his retirement - A separation agreement was executed with the retiring COO & Chief Risk Officer, which included a separation payment of **$250,000** and continued vesting of existing equity awards[305](index=305&type=chunk) [Item 6. Exhibits](index=118&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and a former executive's separation agreement - Exhibits filed with the report include CEO/CFO certifications and the separation agreement for Richard B. Maltz[307](index=307&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-13349 BAR HARBOR BANKSHARES (Exact name of registrant as specified in its charter) Maine 01-0393663 (State or other jurisd ...

Loan Portfolio and Credit Quality - As of December 31, 2020, the Bank's loan portfolio consisted of approximately 60% commercial real estate, commercial and industrial, and construction loans, indicating a high concentration in commercial loans [120]. - Greater than anticipated credit losses in the loan portfolios could materially adversely affect the Company's operating results, as the allowance for loan losses may not be adequate [125]. - The Company adopted the CECL accounting standard on January 1, 2021, which requires recognizing an allowance for credit losses that may adversely affect financial condition and results of operations [126]. - The COVID-19 pandemic has created extensive disruptions that could adversely impact the Company's credit quality, collateral values, and overall financial performance [127]. - The qualitative reserve for loans collectively evaluated involves significant judgment, considering factors such as lending policies, business conditions, and loan portfolio quality [299]. - The allowance for loan losses is maintained at a level deemed appropriate for the risk inherent in the loan portfolio, with provisions charged to operating expense [354]. - The Company evaluates the allowance for loan losses regularly, with emphasis on non-performing loans [356]. - Non-performing loans are generally placed on non-accrual status when reaching 90 days past due [345]. - The company reported a loan loss reserve of 95 basis points under the expected credit loss model, compared to 74 basis points under the incurred loss model [392]. Financial Performance and Results - Net income for 2020 was $33,244 thousand, up from $22,620 thousand in 2019, indicating a significant increase of approximately 47% [315]. - Earnings per share (EPS) increased to $2.18 in 2020 from $1.46 in 2019, reflecting a growth of about 49.32% [315]. - Total non-interest income rose to $42,956 thousand in 2020, compared to $29,069 thousand in 2019, an increase of approximately 47.5% [315]. - The company reported a net cash provided by operating activities of $38,173,000 for 2020, compared to $36,403,000 in 2019, indicating a growth of 4.9% [322]. - Total comprehensive income for 2020 was $40,349 thousand, compared to $38,333 thousand in 2019, indicating an increase of about 5.26% [316]. - The company experienced a net change in cash and cash equivalents of $169,097,000 in 2020, a significant improvement from a decrease of $41,844,000 in 2019 [323]. Capital and Liquidity - The Company is currently well-capitalized and not restricted from accepting brokered deposits, which is crucial for its funding strategy [103]. - The Company must maintain sufficient liquidity through various funding sources, including FHLB and FRB advances, to support operations and future growth [148]. - Increased reliance on more expensive funding sources could adversely affect operating margins and profitability if revenues do not increase proportionately [149]. - The Company is subject to numerous federal and state consumer protection laws, which require disclosures and provide consumer rights, potentially leading to significant liabilities if violated [100]. Regulatory and Compliance Risks - The Company is subject to extensive government regulation, which may interfere with business operations and negatively impact financial results [156]. - The Company operates under the Dodd-Frank Act, which mandates a non-binding vote on executive compensation at least every three years [113]. - The Company is required to maintain policies to detect and prevent money laundering and terrorist financing under the USA PATRIOT Act, with serious consequences for non-compliance [111]. Market and Economic Conditions - A downturn in local economies may adversely affect collateral values and demand for products, impacting the Company's financial performance [119]. - Strong competition from both nationwide and local financial service providers may significantly impact the Company's profitability and growth [133]. - The secondary mortgage market conditions, influenced by interest rates and investor demand, may reduce the Company's loan production volumes and operating results [122]. - Societal responses to climate change may lead to cost increases and asset value reductions, impacting the Company's business and its customers [145]. Interest Rate and Funding Risks - Interest rate volatility poses a risk to profitability, as net interest income is sensitive to changes in interest rates and could adversely affect earnings [154]. - The Bank's interest rate risk management is overseen by the Asset and Liability Committee, which evaluates balance sheet structure and implements strategies to manage interest rate exposure [277]. - As of December 31, 2020, the Bank's interest rate sensitivity modeling indicated that the balance sheet was asset sensitive over the one- and two-year horizons [286]. - Management anticipates that if short-term interest rates increase by 200 basis points, net interest income will improve over both the one and two-year horizons [288]. Asset and Securities Management - Total assets increased to $3,725,762 thousand as of December 31, 2020, compared to $3,669,128 thousand in 2019, reflecting a growth of approximately 1.53% [311]. - Total deposits rose to $2,906,215 thousand in 2020, up from $2,695,751 thousand in 2019, representing an increase of approximately 7.81% [311]. - The total fair value of securities available for sale as of December 31, 2020, was $113,258,000, compared to $194,433,000 in 2019, indicating a decrease of 41.8% [397]. - The total securities pledged for deposits as of December 31, 2020, was $169,974,000, with an estimated fair value of $183,894,000, compared to $470,188,000 and $473,989,000 in 2019 [398]. - The Company recognizes revenue in accordance with ASC 606, reflecting the transfer of promised goods or services to customers [387]. Growth and Strategic Initiatives - Expansion through geographic and business line growth, as well as acquisitions, carries risks that could negatively impact the Company's financial condition if not successful [128]. - Continuous technological change in the financial services industry necessitates the Company to effectively use technology to meet customer demands and operational efficiencies [129]. - The company operates primarily in Maine, New Hampshire, and Vermont, focusing on commercial and residential lending activities [408].

Accounting Standards and Financial Reporting - The Company adopted ASU 2017-04 effective January 1, 2020, with no material impact on financial statements, and recognized no impairments to goodwill in Q3 2020 [29]. - The Company adopted ASU 2018-13 on January 1, 2020, which did not have a material impact on disclosures [29]. - The Company is required to adopt ASU 2018-14 by January 1, 2021, which is not expected to have a material impact on consolidated financial statements [31]. - The Company has not yet adopted ASU 2020-04, which provides temporary expedients for the transition from LIBOR to alternative reference rates, and is currently evaluating its contracts and hedging relationships [32]. Securities and Investments - Total securities available for sale amounted to $589.3 million with gross unrealized gains of $18.1 million and gross unrealized losses of $2.9 million as of September 30, 2020 [33]. - The fair value of US Government-sponsored enterprises securities was $235.2 million, with an amortized cost of $226.9 million, reflecting gross unrealized gains of $8.7 million and losses of $441, as of September 30, 2020 [33]. - The fair value of corporate bonds was $99.8 million, with an amortized cost of $99.8 million, reflecting gross unrealized gains of $1.7 million and losses of $1.7 million as of September 30, 2020 [33]. - The amortized cost of mortgage-backed securities was $339.6 million, with a fair value of $350.6 million as of September 30, 2020 [34]. - The total fair value of securities available for sale as of September 30, 2020, was $112,256,000, with gross unrealized losses totaling $2,852,000 [36]. - The company expects to recover its amortized cost basis on all securities in its available-for-sale portfolio [38]. Loan Portfolio and Credit Quality - Total loans as of September 30, 2020, amounted to $2,056.8 million, an increase from $1,835.2 million in the previous year [46]. - The loan portfolio includes segments such as commercial real estate, commercial and industrial, residential real estate, and consumer loans [45]. - Total commercial loans reached $1,293.5 million, with a significant portion being commercial real estate loans at $852.4 million [46]. - Past due loans over 90 days amounted to $3,239 thousand, with total past due loans at $5,082 thousand as of September 30, 2020 [48]. - The allowance for loan losses at the end of the period was $17.375 million, with specific reserves for loans individually evaluated totaling $632 thousand and collectively evaluated loans totaling $16.743 million [96]. - The provision for loan losses for the three months ended September 30, 2020, was $3.906 million, while charged-off loans totaled $1.699 million [96]. - The company has shown a consistent increase in total loans, reflecting growth in both commercial and residential sectors [46]. - The total balance of acquired loans was $651,845 million, with $193,237 million in commercial real estate [59]. Financial Performance - The net income for the three months ended September 30, 2020, was $8,402 thousand, an increase of 67.5% from $5,015 thousand in the same period of 2019 [140]. - The earnings per share (EPS) for the three months ended September 30, 2020, was $0.56, compared to $0.32 for the same period in 2019, representing a growth of 75.0% [140]. - The adjusted return on equity for the three months ended September 30, 2020, was 8.98%, up from 7.36% in the same period last year [211]. - The efficiency ratio improved to 59.47% for the three months ended September 30, 2020, compared to 65.02% in the prior year [211]. - Non-interest income increased by 32% compared to the same quarter last year [227]. Capital and Regulatory Compliance - The Company’s total capital to risk-weighted assets ratio was 13.32% as of September 30, 2020, above the regulatory minimum of 10.50% [132]. - Common equity tier 1 capital to risk-weighted assets was 10.29% as of September 30, 2020, exceeding the regulatory minimum of 7.00% [132]. - The Company met the conditions to be classified as "well-capitalized" under the relevant regulatory framework as of September 30, 2020 [133]. Derivatives and Hedging - The company employs derivative instruments to manage interest rate volatility, aiming to minimize fluctuations in earnings and cash flows [142]. - As of September 30, 2020, the total notional amount of cash flow hedges was $125,000 thousand, with a liability fair value of $(6,835) thousand [145]. - The total notional amount of economic hedges was $633,009 thousand, with a liability fair value of $(87) thousand [145]. - The company recognized a loss of $(5,231) thousand in other comprehensive income for cash flow hedges related to interest rate swaps on wholesale funding [149]. Customer Deposits and Borrowings - Total deposits grew by 12% year-to-date, amounting to $2.93 billion as of September 30, 2020 [213]. - Total time deposits decreased from $932.6 million on December 31, 2019, to $813.5 million on September 30, 2020, representing a decline of approximately 12.8% [129]. - Demand deposits increased by 32% year-to-date, totaling $515.06 million as of September 30, 2020 [213]. Trust Management and Revenue - Trust management fees increased to $3,256,000 for the three months ended September 30, 2020, compared to $2,737,000 in the same period of 2019, representing a growth of 19% [193]. - Total revenue from major products and service lines reached $6,418,000 for the three months ended September 30, 2020, compared to $5,566,000 in the same period of 2019, an increase of 15% [193]. Market and Asset Valuation - The Company reported total assets of $3.9 billion as of September 30, 2020 [209]. - The fair value of available-for-sale securities as of September 30, 2020, included $321,969 thousand in US Government-sponsored enterprises and $99,661 thousand in US Government agency securities [167]. - The total fair value of financial assets as of September 30, 2020, was $2,690,784,000, with net loans valued at $2,672,882,000 [187].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-13349 BAR HARBOR BANKSHARES (Exact name of registrant as specified in its charter) Maine 01-0393663 (State or other jurisdi ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-13349 BAR HARBOR BANKSHARES (Exact name of registrant as specified in its charter) Maine 01-0393663 (State or other jurisd ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-13349 BAR HARBOR BANKSHARES (Exact name of registrant as specified in its charter) Maine 01-0393663 (State or other jurisdiction ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2019 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-13349 BAR HARBOR BANKSHARES (Exact name of registrant as specified in its charter) Maine 01-0393663 (State or other ju ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2019 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-13349 BAR HARBOR BANKSHARES (Exact name of registrant as specified in its charter) Maine 01-0393663 (State or other jurisdi ...