INDEX
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| PART I. · FINANCIAL INFORMATION · |
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| Item 1. · Consolidated Financial Statements (unaudited) · |
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| | Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 | 5 | |
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| | Consolidated Statements of Income for the Three Months Ended March 31, 2024 and 2023 | 6 | |
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| | Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023 | 7 | |
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| | Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2024 and 2023 | 8 | |
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| | Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 | 9 | |
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| | Condensed Notes to Unaudited Consolidated Interim Financial Statements | | |
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| | | Note 1 | Basis of Presentation | 10 |
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| | | Note 2 | Securities Available for Sale | 12 |
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| | | Note 3 | Loans and Allowance for Credit Losses | 16 |
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| | | Note 4 | Borrowed Funds | 25 |
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| | | Note 5 | Deposits | 27 |
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| | | Note 6 | Capital Ratios and Shareholders' Equity | 28 |
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| | | Note 7 | Earnings per Share | 31 |
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| | | Note 8 | Derivative Financial Instruments and Hedging Activities | 32 |
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| | | Note 9 | Fair Value Measurements | 39 |
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| | | Note 10 | Revenue from Contracts with Customers | 45 |
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 47 | |
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| | | Selected Financial Data | 53 | |
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| | | Consolidated Loan and Deposit Analysis | 54 | |
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| | | Average Balances and Average Yields/Rates | 55 | |
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| | | Reconciliation of Non-GAAP Financial Measures | 56 | |
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| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 58 | |
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| Item 4. | Controls and Procedures | 60 | |
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| PART II. | OTHER INFORMATION | | |
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| Item 1. | Legal Proceedings | 60 | |
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| Item 1A. | Risk Factors | 60 | |
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 61 | |
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| Item 5. | Other Information | 61 | |
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| Item 6. | Exhibits | 62 | |
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| Signatures | | 63 | |
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Bar Harbor Bankshares conducts business operations principally through Bar Harbor Bank & Trust, which may be referred to as the “Bank” and which is a subsidiary of Bar Harbor Bankshares. Unless the context requires otherwise, references in this report to “the Company” "our Company, "our," "us," and similar terms refer to Bar Harbor Bankshares and its subsidiaries, including the Bank, collectively.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-Q (this “Form 10-Q”) that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this Form 10-Q the words “believe,” “anticipate,” “expect,” “may,” “will,” “assume,” “should,” “predict,” “could,” “would,” “intend,” “targets,” “estimates,” “projects,” “plans,” and “potential,” and other similar words and expressions of the future, are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking, including statements about the Company’s future financial and operating results and the Company’s plans, objectives, and intentions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the Company to differ materially from any results, performance, or achievements expressed or implied by such forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to:
| ● | deterioration in the financial performance and/or condition of borrowers of the Bank, including as a result of the negative impact of inflationary pressures on our customers and their businesses resulting in significant increases in credit losses and provisions for those losses; |
| ● | the possibility that our asset quality could decline or that we experience greater loan losses than anticipated; |
| ● | increased levels of other real estate owned, primarily as a result of foreclosures; |
| ● | the impact of liquidity needs on our results of operations and financial condition; |
| ● | competition from financial institutions and other financial service providers; |
| ● | the effect of interest rate increases on the cost of deposits; |
| ● | unanticipated weakness in loan demand or loan pricing; |
| ● | adverse conditions in the national or local economies including in our markets throughout Northern New England; |
| ● | changes in consumer spending, borrowing and saving habits; |
| ● | the emergence and effects related to a future pandemic, epidemic or outbreak of an infectious disease, including actions taken by governmental officials to curb the spread of such an infectious disease, and the resulting impact on general economic and financial market conditions and on the Company’s and our customers' business, results of operations, asset quality and financial condition; |
| ● | the effects of civil unrest, international hostilities or other geopolitical events, including the war in Ukraine and recent hostilities in the Middle East; |
| ● | lack of strategic growth opportunities or our failure to execute on available opportunities; |
| ● | the ability to grow and retain low-cost core deposits and retain large, uninsured deposits; |
| ● | our ability to effectively manage problem credits; |
| ● | our ability to successfully implement efficiency initiatives on time and with the results projected; |
| ● | our ability to successfully develop and market new products and implement technology effectively; |
| ● | the impact of negative developments in the financial industry and United States and global capital and credit markets; |
| ● | our ability to retain executive officers and key employees and their customer and community relationships; |
| ● | our ability to adapt to technological changes; |
| ● | risks associated with litigation, including reputational and financial risks and the applicability of insurance coverage; |
| ● | the vulnerability of the Bank’s computer and information technology systems and networks, and the systems and networks of third parties with whom the Company or the Bank contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches and interruptions; |
| ● | changes in the reliability of our vendors, internal control systems or information systems; |
| ● | ongoing competition in the labor markets and increased employee turnover; |
| ● | the potential impact of climate change; |
| ● | our ability to comply with various governmental and regulatory requirements applicable to financial institutions; |
| ● | changes in state and federal laws, rules, regulations, or policies applicable to banks or bank or financial holding companies, including regulatory or legislative developments; |
| ● | the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve”); |
| ● | adverse impacts (including costs, fines, reputational harm, financial risks and the applicability of insurance coverage or other negative effects) from current or future litigation, regulatory examinations, or other legal and/or regulatory actions; and |
| ● | general competitive, economic, political, and market conditions, including economic conditions in the local markets where we operate. |
Other factors not identified above, including those described under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Form 10-K”), our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website at http://www.sec.gov, may also cause actual results to differ materially from those described in our forward-looking statements. Most of these factors are difficult to anticipate and are generally beyond our control. Given these uncertainties, you are cautioned not to place undue reliance on such forward-looking statements, andyou should consider these factors in connection with considering any forward-looking statements that may be made by us. We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.
