UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FOR 10-K
Annual Report pursuant to Section 13 or 15(D) of the
Securities Exchange Act of 1934 (fee required).
For the fiscal year ended December 31, 1995. Commission File
No. 0-13666
BAR HARBOR BANKSHARES
State or Other jurisdiction of incorporation or organization:
Maine
IRS Employer Identification Number: 01-0393663
Address: P O Box 400, 82 Main Street, Bar Harbor, ME Zip
Code: 04609
Registrant s telephone number, including area code: 207 288-
3314
Securities registered pursuant to Section 12(g) of the Act:
Title of Class: Common stock, par value $2.00 per share
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(D) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes XX
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (229.405 of this
chapter) is not contained herein, and will not be contained,
to the best of registrant s knowledge, in definite proxy or
information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.
The aggregate market value of the voting stock held by non-
affiliates of the registrant as of January 31, 1996 is:
Common stock, $2.00 par - $47,980,940
The number of shares outstanding of each of the registrant s
classes of common stock, as of January 31, 1996 is:
Common stock, 1,818,237
Documents incorporated by Reference:
(1) Portions of the Annual Report to Stockholders for the year
ended December 31, 1995 are incorporated by reference into
Part II, Items 7 and 8 and Part IV, Item 14 of the Form 10-K.
INDEX
[CAPTION]
# ITEM PAGE
1. Business 3 - 5
2. Properties 6 - 7
3. Pending Legal Proceedings 7
4 Submission of Matters to a Vote
of Security Holders 7
5 Market for Registrant s Common Equity
and Related Stockholders Matters 7
6 Selected Financial Data 8 - 29
7 Management s Discussion and Analysis 30
8 Consolidated Financial Statements and
Supplementary Data 30
9 Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure 30
10 Directors and Executive Officers 30-32
11 Executive Compensation 33-35
12 Security Ownership of Certain Beneficial
Owners and Management 36-37
13 Certain Relationships and Related
Transactions 38
14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K 39-40
PART I
ITEM 1. BUSINESS
Bar Harbor Bankshares, ( the Company ), was incorporated
January 19, 1984. As of December 31, 1995, the Company s
securities consisted of one class of common stock ( the Common
Stock ), par value of $2.00 per share, of which there are
1,713,605 shares outstanding held of record by approximately
974 stockholders.
The accompanying consolidated financial statements include the
accounts of the company and its wholly-owned subsidiary, Bar
Harbor Banking and Trust Company ( the Bank ). All significant
intercompany balances and transactions have been eliminated in
the accompanying financial statements.
The Bank conducts substantially the same business operations
as a typical full service, independent, community commercial
bank. It has ten offices in coastal Maine, including its
principal office located at 82 Main Street, Bar Harbor,
Hancock County and adjacent Washington County. The Hancock
County offices are located at Main Street, Northeast Harbor;
Main Street, Southwest Harbor; Main Street, Blue Hill; Route
#15, Deer Isle; corner of High and Washington Streets,
Ellsworth; and Main Street, Winter Harbor. The Washington
County offices are located at the corner of Route 1 and 1A,
Milbridge; Main Street, Machias; and Washington Street, Lubec.
The Mt. Desert Block Company ( the Block Company ), a wholly
owned subsidiary of the Bank, owns and manages the real estate
upon which all of the Bank s offices are located. The Block
Company also owns a parcel of real estate which is not related
to the Bank s operations and which is leased for commercial
purposes in Lubec; the building next to the Bar Harbor office
which is not currently leased for retail purposes; and land
adjacent to the Blue Hill bank property.
The Bank is a retail bank serving primarily individual
customers, small retail establishments, seasonal lodging,
campgrounds and restaurants. As a coastal bank it serves the
lobstering, fishing and aquaculture industries. It also serves
Maine s wild blueberry industry through its Washington County
offices. The Bank has not made any material changes in its
mode of conducting business during the past five years.
The Bank operates in a highly competitive market. Competition
among banks in Maine has increased in recent years as a result
of aggressive acquisition programs by statewide holding
companies and by completely open interstate banking. This bank
continues to be one of the largest independent commercial
banks in the State of Maine.
In the Bank s immediate service area there are two other
independent commercial banks, one Savings and Loan
Association, three savings bank branch offices and three
commercial banks which are offices owned by holding companies
based outside the state.
The Bank has a broad deposit base and loss of any one
depositor or closely aligned group of depositors would not
have a materially adverse effect on its business.
Approximately 87% of the Bank s deposits are in interest
bearing accounts. The Bank has paid, and anticipates that it
will continue to pay, current competitive rates on
certificates of deposit, IRAs, NOW and money market accounts
and does not anticipate loss of these deposits.
The Bank provides the normal banking services offered by a
commercial bank including checking accounts, NOW accounts, all
forms of savings and time deposit accounts, individual
retirement accounts and KEOGH plans, safe deposit boxes,
collections, travelers checks, night depository services,
direct deposit payroll services, credit cards, personal money
orders, bank-by-mail and club accounts and drive-up facilities
at all offices. The Bank also has arrangements with other
institutions for the provision of certain services which it
does not provide directly, such as computerized payroll
services. In addition, the Bank operates a large Trust
Department, including an office opened in 1991 in Bangor. The
Trust Department handles book assets for clients totaling
$214,000,000 and offers professionally managed investment
accounts.
The Bank has Automated Teller Machines (ATMs) located in each
of its ten branch locations. These ATMS access major networks
for use of the Bank s cards throughout the United States
including the Plus and NYCE systems as well as the major
credit card networks.
In addition to the foregoing, the Bank offers lending services
including consumer credit in the form of installment loans,
stand-by credit, VISA credit card accounts and student loans;
residential mortgage loans; home equity loans; and business
loans to individuals, partnerships and corporations for
capital construction, the purchase of real estate and working
capital. Business loans are provided primarily to
organizations and individuals in the tourist, health care,
blueberry, shipbuilding and fishing and aquaculture industries
as well as to the usual small businesses associated with small
coastal communities. Certain larger loans which would exceed
the Bank s lending limits are written on a participation basis
with correspondent banks, with the Bank retaining only such
portions of those loans as are within its lending limits. The
Bank also provides trust and estate planning services to its
customers. The principal market areas for all of the Bank s
services consist of Hancock and Washington Counties. The
Bank s policy for lending limits is up to 20% of capital and
surplus to any borrower provided that the loans are secured
and approved by the Executive Loan Committee, which includes
members of the Bank s Board of Directors.
As a state chartered bank, the Bank has the Bureau of Banking
of the State of Maine and the Federal Deposit Insurance
Corporation as bank regulatory agencies responsible for its
supervision. In addition, the Company is supervised by the
Federal Reserve Bank.
The Bank is not engaged in any material research activities
relating to the development of new services or the improvement
of existing services except in the normal course of business
activities. As of December 31, 1995 the Bank employed 154
persons in a full or part time basis. The President, Executive
Vice President, Senior Vice President and Vice Presidents in
charge of Human Resources and Trust Department are employed by
the Bank as well as serve as officers of the Company. They are
not compensated by the Company for their services. There are
no employees of the Company.
Since the Bank is located in a summer resort area, a portion
of the Bank s business is seasonal in nature. In addition,
employment in the sardine and blueberry industries of
Washington County is seasonal. As a result of these factors,
the Bank has had an annual deposit swing which has been
declining in the last several years from swings of more than
20% in the late 1980s, to under 5% for both 1994 and 1995. The
drop may be attributable to increasing interest rates and to
safety and soundness issues as customers choose to have their
funds insured by maintaining their deposits in the banking
system. Deposits generally peak in late September with the low
point in February. This deposit swing is predictable and does
not have a materially adverse effect of the Bank. Should the
Bank need additional funds for liquidity needs, it may utilize
short term borrowing lines set up through the Federal Home
Loan Bank of Boston, seek repurchase agreements through a
primary securities dealer or draw on its seasonal line at the
Federal Reserve Bank of Boston. Additionally, sufficient
stability in the Bank s deposit base is maintained in part as
a result of the year round employment of approximately 700
people by the Jackson Laboratory, which is the single largest
employer on Mt. Desert Island.
On July 11, 1995, the Board of Directors declared a five-for-
one stock split to all shareholders of record as of that date
and which took effect on August 7, 1995. All share and per
data share included in this Form 10-K have been restated to
reflect the stock split.
ITEM 2. PROPERTIES
The ten parcels of real estate utilized by the Bank for its
operations are
owned by the Mt. Desert Block Company ( the Block Company ), a
wholly
owned subsidiary of the Bank, and are leased to the Bank.
These properties
are described below:
1. The principal office of the Bank is located at 82 Main
Street, Bar
Harbor, Maine and includes a building housing banking
facilities and
administrative offices and an adjacent 35 car parking lot. The
building
was renovated and expanded in 1987 and 1988. A portion of the
expanded
building was completed in 1990 offering space for operational
personnel.
2. An office is located at Main Street, Northeast Harbor,
Maine. This
property consists of a building constructed in 1974 which is
adequate for
the Bank s current needs at that location.
3. An office is located on Maine Street, Southwest
Harbor, Maine.
This property consists of a building constructed in 1975 which
was added
to and renovated in 1989 to better meet the needs at that
location.
4. An office is located at Church Street, Deer Isle, Maine.
This property
consists of a building constructed in 1974 which was added to
and
renovated in 1994 to better meet the needs at that location.
5. An office is located on Main Street, Blue Hill, Maine.
This property
consists of a building constructed in 1960 which was renovated
in 1989 to
better meet the needs at that location.
6. An office is located at Main Street, Milbridge, Maine.
This property
consists of a building constructed in 1974 to which a
vestibule was added
in 1994 to house an ATM which helps to better meet the needs
at that
location.
7. An office is located at Washington Street, Lubec, Maine.
This branch
consists of a building constructed in 1990 and is adequate for
the Bank s
needs at that location.
8. An office is located at High Street, Ellsworth, Maine.
This branch
consists of a building constructed in 1982 which is adequate
for the
Bank s current needs at that location.
9. An office is located at Main Street, Winter Harbor, Maine.
This branch
consists of a building constructed in 1995 and is adequate for
the Bank s
needs at that location.
10. An office is located on Main Street, Machias, Maine. This
branch was
purchased from Key Bank of Maine in May, 1990, and was
renovated in 1995
to better meet the Bank s needs at that location.
In addition to the foregoing properties, the Block Company
owns the
building adjacent to the Bar Harbor office. This building is
presently
leased to a retail organization.
The Block Company owns real estate located on Washington
Street in Lubec,
Maine which is adjacent to the Lubec branch office of the Bank
and which
is leased to a commercial venture.
A parcel of land adjacent to the Blue Hill branch was
purchased in 1981.
Aggregate annual rentals paid by the Bank during its last
fiscal year for
its operating properties did not exceed 5% of its operating
expenses.
ITEM 3. PENDING LEGAL PROCEEDINGS
During the 1995 bank examination of the Trust Department, the
bank
examiner criticized the Bank s use of a newly established
in-house account
as an investment vehicle for pension plans for which the Bank
acted in a
fiduciary capacity. In the bank examiner s opinion, such
investments
amounted to prohibited transactions under ERISA and the Tax
Code, making
the Bank potentially liable for a penalty amounting to 5% of
the amount
involved,(which is estimated at approximately $190,000). The
Bank s
attorneys are currently in the process of preparing a request
to the
Department of Labor for an exemption from the prohibited
transaction rules
which, if granted, would relieve the Bank from the penalty
liability.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT S COMMON EQUITY AND RELATED
STOCKHOLDER
MATTERS
Bar Harbor Bankshares stock is not listed on any national
exchange and
there is no established trading market for the stock. Since
the Company is
not aware of the price of all trades, the price is established
by
determining what a willing buyer will pay a willing seller.
The stock
prices shown below are based upon quotes received from Paine
Webber, and
represent a range of the high and low bids for each quarter of
1994 and
1995:
1st Quarter 2nd Quarter 3rd
Quarter 4th Quarter
High Low High Low
High Low High Low
1995 17.00 to 16.40 20.00 to 17.00
25.50 to 20.00 28.00 to 25.50
1994 15.20 to 15.20 16.00 to 15.20
16.00 to 16.00 16.40 to 16.00
ITEM 6.
AVERAGE BALANCE SHEETS
[CAPTION]
1995
AVERAGE
YIELD/
BALANCE INTEREST
RATE
ASSETS
Loans $195,178,495 $
19,298,629 9.89%
Taxable Investment Securities 84,364,335
5,877,065 6.97%
Non-Taxable Investment Securities 14,138,613
852,051 6.03%
Fed. Funds Sold & Money Market
Funds 2,097,962
124,242 5.92%
Total Interest-Earning Assets $295,779,405 $
26,151,987 8.84%
Non-Interest Earning Assets:
Total Cash and Due from 7,727,672
Less: Allowance for Losses (4,142,571)
Bank Premises and Equipment 5,720,449
Other Assets 6,027,318
TOTAL ASSETS $311,112,273
LIABILITIES AND STOCKHOLDERS EQUITY
Interest Bearing Demand Deposits $ 37,109,957 $
606,437 1.63%
Savings Deposits 57,521,058
1,408,916 2.45%
Time Deposits 115,118,182
6,412,766 5.57%
Repurchase Agreements and
Short Term Borrowings 38,440,663
2,175,597 5.66%
Long Term Borrowings 580,132
20,677 3.56%
TOTAL INTEREST BEARING LIABILITIES $248,769,992 $
10,624,393 4.27%
Non-Interest Bearing Liabilities:
Non-Interest Bearing Demand
Deposits 30,083,671
Other Liabilities 1,272,847
Stockholders Equity 30,985,763
TOTAL LIABILITIES &
STOCKHOLDERS EQUITY $311,112,273
NET EARNING ASSETS $ 47,009,413
NET INTEREST INCOME/NET INTEREST
SPREAD $
15,527,594 4.57%
NET INTEREST MARGIN
5.25%
1994
AVERAGE
YIELD/
BALANCE INTEREST
RATE
ASSETS
Loans $174,550,402 $
16,006,536 9.17%
Taxable Investment Securities 75,333,849
4,911,599 6.52%
Non-Taxable Investment Securities 14,296,651
828,998 5.80%
Fed. Funds Sold & Money Market
Funds 1,192,601
48,457 4.06%
Total Interest-Earning Assets $265,373,503 $
21,795,590 8.21%
Non-Interest Earning Assets:
Total Cash and Due from 7,664,386
Less: Allowance for Losses (3,720,244)
Bank Premises and Equipment 5,684,033
Other Assets 6,166,864
TOTAL ASSETS $281,168,542
LIABILITIES AND STOCKHOLDERS EQUITY
Interest Bearing Demand Deposits $ 38,591,994 $
633,346 1.64%
Savings Deposits 63,106,980
1,621,651 2.57%
Time Deposits 84,786,001
3,812,734 4.50%
Repurchase Agreements and
Short Term Borrowings 37,686,124
1,608,404 4.27%
Long Term Borrowings 0
0 0%
TOTAL INTEREST BEARING LIABILITIES $224,171,099 $
7,676,135 3.42%
Non-Interest Bearing Liabilities:
Non-Interest Bearing Demand
Deposits 28,559,472
Other Liabilities 1,033,450
Stockholders Equity 27,404,521
TOTAL LIABILITIES &
STOCKHOLDERS EQUITY $281,168,542
NET EARNING ASSETS $ 41,202,404
NET INTEREST INCOME/NET INTEREST
SPREAD $
14,119,455 4.79%
NET INTEREST MARGIN
5.32%
1993
AVERAGE
YIELD/
BALANCE INTEREST
RATE
ASSETS
Loans $153,232,173 $
14,549,586 9.50%
Taxable Investment Securities 64,908,500
4,424,174 6.82%
Non-Taxable Investment Securities 14,954,753
861,642 5.76%
Fed. Funds Sold & Money Market
Funds 582,259
19,987 3.43%
Total Interest-Earning Assets $233,677,685 $
19,855,389 8.50%
Non-Interest Earning Assets:
Total Cash and Due from 6,997,907
Less: Allowance for Losses (3,414,115)
Bank Premises and Equipment 5,700,044
Other Assets 6,811,710
TOTAL ASSETS $249,773,231
LIABILITIES AND STOCKHOLDERS EQUITY
Interest Bearing Demand Deposits $ 36,113,190 $
766,110 2.12%
Savings Deposits 61,670,967
1,835,801 2.98%
Time Deposits 69,621,757
3,042,237 4.37%
Repurchase Agreements and
Short Term Borrowings 16,557,493
556,938 3.36%
Long Term Borrowings 13,846,575
574,564 4.15%
TOTAL INTEREST BEARING LIABILITIES $197,809,982 $
6,775,650 3.43%
Non-Interest Bearing Liabilities:
Non-Interest Bearing Demand
Deposits 25,567,081
Other Liabilities 611,679
Stockholders Equity 25,784,489
TOTAL LIABILITIES &
STOCKHOLDERS EQUITY $249,773,231
NET EARNING ASSETS $ 35,867,703
NET INTEREST INCOME/NET INTEREST
SPREAD $
13,079,739 5.07%
NET INTEREST MARGIN
5.60%
NOTES TO AVERAGE BALANCE SHEET
1. Tax-exempt income is calculated at coupon rate, no
adjusted on a tax
equivalent basis.
2. At December 31, 1995, loans on non-accrual status totaled
$3,359,857.
These loans are included in the loan category on the preceding
Average
Balance Sheet. If interest had been accrued on such loans,
interest income
on loans would have been $416,342 higher in 1995.
3. Interest on loans includes loan fees pursuant to FASB91
in the
following amounts:
1995 1994 1993
$103,788 $176,032 $209,309
4. The Bank s net interest margin remains above the national
average,
but has remained at higher than average levels for a
number of years.
The Bank is a community bank which focuses its efforts on
customer
relationships and good service while remaining
competitive in the
demand for loans both in the commercial and consumer
sectors. The
spread and margin for the Bank have been decreasing
gradually over
the past three years, as competition for the same
customers within
the Bank s market area continues to grow. The average
rate on earning
assets increased by 63 basis points in 1995 when compared
to 1994;
however, the average rate on interest bearing liabilities
increased
by 85 basis points. The Bank continues to seek quality
loans,
broadening its customer base as the spread tightens. The
effect of
rates and volumes is exemplified further in the Rate
Volume Analysis
found on page 12 of this report.
RATE VOLUME ANALYSIS
The following table represents a summary of the changes in
interest earned
and interest paid as a result of changes in rates and changes
in volumes.
For each category of earning assets and interest-bearing
liabilities,
information is provided with respect to changes attributable
to change in
rate (change in rate multiplied by old volume) and change in
volume
(change in volume multiplied by old rate). The change in
interest due to
both volume and rate has been allocated to volume and rate
changes in
proportion to the relationship of the absolute dollar amounts
of the
change in each.
YEAR ENDED DECEMBER 31, 1995
COMPARED TO DECEMBER 31, 1994
INCREASES (DECREASES) DUE TO:
VOLUME RATE
NET
Loans $1,980,684 $1,311,410
$3,292,093
Taxable Investment Securities 604,581 360,885
965,466
Non-Taxable Investment
Securities (9,243) 32,296
23,053
Federal Funds Sold and
Money Market Funds 47,287 28,498
75,785
TOTAL INTEREST EARNING ASSETS $2,623,309 $1,733,088
$4,356,397
Deposits $ 728,282 $1,632,106
$2,360,388
Repurchase Agreements and
Short Term Borrowings 41,548 525,645
567,193
Long Term Borrowings 20,677 0
20,677
TOTAL INTEREST BEARING
LIABILITIES $ 790,507 $2,157,751
$2,948,258
NET CHANGE IN INTEREST $1,832,802 ($424,663)
$1,408,139
YEAR ENDED DECEMBER 31,
1994
COMPARED TO DECEMBER 31,
1993
INCREASE (DECREASE) DUE TO:
VOLUME RATE
NET
Loans $1,968,588 $ (511,638)
$1,456,950
Taxable Investment Securities 700,128 (212,704)
487,424
Non-Taxable Investment
Securities (38,130) 5,486
(32,644)
Federal Funds Sold and
Money Market Funds 18,090 10,381
28,471
TOTAL INTEREST EARNING ASSETS $2,648,676 ($708,475)
$1,940,201
Deposits $ 647,825 ($224,243)
$ 423,582
Repurchase Agreements and
Short Term Borrowings 895,563 155,903
1,051,466
Long Term Borrowings (574,564) 0
(574,564)
TOTAL INTEREST BEARING
LIABILITIES $ 968,824 $ (68,340)
$ 900,484
NET CHANGE IN INTEREST $1,679,852 ($640,135)
$1,039,717
INTEREST RATE SENSITIVITY ANALYSIS
AS OF DECEMBER 31, 1995
Amounts in Thousands
The following table sets forth the amounts of interest-earning
assets and
interest-bearing liabilities outstanding at December 31, 1995
which are
anticipated by the Bank, based upon certain assumptions, to
reprice or
mature in each of the future time periods shown.
ONE TO GREATER
ONE TO
GREATER
TOTAL TO FIVE
THAN FIVE
ONE YEAR YEARS
YEARS TOTAL
Loans
Fixed Rate $ 16,258 $ 24,312
$ 18,187 $ 58,757
Variable Rate 117,550 23,207
2,252 143,009
Investments 31,667 52,066
18,362 102,095
Federal Funds Sold 3,800 0
0 3,800
Interest Rate Swap 5,000 5,000
0 10,000
TOTAL EARNING ASSETS $ 174,275 $104,585
$ 38,801 $317,661
Deposits $138,452 $ 17,283
$ 95,736 $251,471
Repurchase Agreements 5,791 0
0 5,791
Borrowings 16,011 16,689
0 32,700
Interest Rate Swap 10,000 0
0 10,000
TOTAL SOURCES $170,254 $ 33,972
$ 95,736 $299,962
Net Gap Position $ 4,021 $ 70,613
$(56,935) $ 17,699
Cumulative Gap 4,021 74,634
17,699 17,699
Rate Sensitive Assets/
Rate Sensitive Liabilities 102.36% 307.86%
40.53% 105.90%
Except as stated below, the amounts of assets and liabilities
shown which
reprice or mature during a particular period were determined
in accordance
with the earlier of term to repricing or the contractual terms
of the
asset or liability. The Bank has assumed that 3% of its
savings is more
rate sensitive and will react to rate changes, and has
therefore
categorized it in the one-year time horizon. The remainder is
stable and
is listed in the greater than five year category. NOW
accounts, other than
seasonal fluctuations approximating $4,000,000, are stable and
are listed
in the greater than five year category. Money market accounts
are assumed
to reprice in three months or less. Certificates of deposit
are assumed to
reprice at the date of contractual maturity. Fixed rate
mortgages,
totaling $35,000,000 are amortized using a 6% rate, which
approximates the
Bank s prior experience.
SUMMARY OF INVESTMENT PORTFOLIO
The information presented below is to facilitate the analysis
and
comparison of sources of income and exposure to risks.
1995 1994 1993
U.S. Treasury Securities $ 1,000,470 $ 3,007,997
$ 5,016,933
Obligations of Other U.S.
Government Agencies 13,278,651 13,322,895
6,312,146
Mortgage Backed Securities:
U.S. Government Agencies 42,764,250 46,739,125
38,501,320
Other 8,210,646 4,086,750 2,752,525
Obligations of State and
Political Subdivision 13,240,946 14,401,790
14,408,384
Other Bonds 3,714,099 3,521,514 5,047,385
SECURITIES HELD TO MATURITY $ 82,209,062 $ 85,080,071
$72,038,693
Obligations of Other U.S.
Government Agencies 8,029,922
Mortgage Backed Securities--
U.S. Government Agencies 5,578,826
Other Bonds 500,000
Marketable Equity Securities 5,446,301 5,933,801
6,484,697
Other Investments 330,506 305,086
214,266
SECURITIES AVAILABLE FOR SALE $ 19,885,555 $ 6,238,887
$6,698,963
MATURITY SCHEDULE FOR INVESTMENTS HELD TO MATURITY
AT DECEMBER, 1995
Greater than Greater than Greater
One Year One
Year to Five Years to than
or Less Five
Years Ten Years Ten Years
U.S. Treasury Securities $1,000,470 $
0 $ 0 $ 0
Average Yield 8.00
Obligations of other U.S.
Government Agencies 3,500,000
5,779,530 3,999,121 0
Average Yield 7.02
6.96 7.16
Mortgage-backed Securities:
U.S. Government Agencies 0
8,221,329 4,506,265 30,036,656
Average Yield
7.59 7.11 7.18
Mortgage-Backed Securities:
Other 0
0 2,721,210 5,489,436
Average Yield
5.29 7.33
Obligations of State and
Political Subdivisions 750,637
9,564,305 982,004 1,944,000
Average Yield 6.69
6.06 6.97 7.15
Other Bonds 1,199,081
2,515,018 0 0
Average Yield 8.06
6.96
TOTAL $ 6,450,188
$26,080,182 $12,208,600 $37,470,092
MATURITY SCHEDULE FOR INVESTMENTS
AVAILABLE FOR SALE AT DECEMBER 31, 1995
Greater than Greater than Greater
One Year One
Year to Five Years to than
or Less Five
Years Ten Years Ten Years
Obligations of Other U. S.
Government Agencies $ 0 $
0 $ 7,996,732 $ 0
Average Yield
6.99
Mortgage Backed Securities --
U.S.Government Agencies 0
0 0 $ 5,631,356
Average Yield
7.42
Other Bonds 500,000
0 0 0
Average Yield 6.00
$ 500,000
0 $ 7,996,732 $5,631,356
The maturity schedule for securities available for sale
excludes
marketable equity securities totaling $5,421,086 and other
investments of
$240,483.
Yield on tax exempt bonds were not computed on a tax
equivalent basis
The bank does not hold any securities for a single issuer
where the
aggregate book value of the securities exceed 10% of the Bank
s
stockholders equity.
The maturities for the mortgage-backed securities are shown at
the stated
maturity. If the Bank presented mortgage-backed securities by
average
expected life, the breakdown would be:
Greater than Greater than Greater
One Year One
Year to Five Years to than
or Less Five
Years Ten Years Ten Years
Mortgage-backed Securities Held
To Maturity $ 0
$38,973,809 $12,001,087 $ 0
Mortgage-backed Securities Available
For Sale 3,759,192
1,872,164 0 0
In 1987, the Bank purchased adjustable rate preferred (ARPS)
securities
totaling $1,319,000. As the economy entered into its
recessionary cycle in
the late 1980s, these ARPS, which were issued by other banks,
were
impacted by concerns of investors in the banking industry. The
Bank
elected to recognize a permanent write down on the ARPS
totaling $387,000
beginning in 1990.
The ARPS portfolio began increasing in market value during
1991 as banks
showed stronger earnings. Since this upward market trend
continued in
1992, the Bank elected to sell its holdings of ARPS and by
year end had a
remaining balance of $463,000 in ARPS with minimum loss to the
Bank. The
remaining ARPS were sold in early 1993.
Changes in the market value of the investment portfolio follow
national
interest rate fluctuations. As national interest rates
dropped, the value
of the portfolio has increased. The Bank does not hold any IOs
or POs, nor
does it hold any securities whose market value could change to
a greater
degree than traditional debt. The Bank does hold one 10-year
government
agency backed step up which has a fixed rate of interest for
the first
three years and which then increases incrementally each year
until
maturity. This debenture is callable one year from issuance
date.
SUMMARY OF LOAN
PORTFOLIO
1995
1994 1993
Real estate Loans:
Construction & Development $ 8,072,230
$ 4,594,803 $ 4,606,935
Mortgage 135,068,891
124,620,343 107,948,202
Loans to finance agricultural
production and other loans
to farmers 10,377,194
9,369,651 8,217,183
Commercial and industrial loans 29,806,328
31,791,148 27,533,900
Loans to individuals for
household, family and other
personal expenditures 17,640,397
15,301,322 14,621,364
All other loans 6,790
21,635 269,371
Real Estate Under Foreclosure 793,887
294,904 328,703
TOTAL LOANS $201,765,717
$185,993,806 $163,525,658
Less: Allowance for
possible loan loss 4,047,883
3,891,835 3,369,387
NET LOANS $197,717,834
$182,101,971 $160,156,271
1992
1991
Real estate Loans:
Construction & Development $ 5,642,294
$ 7,991,596
Mortgage 94,906,632
85,984,259
Loans to finance agricultural
production and other loans
to farmers 7,174,262
6,361,583
Commercial and industrial loans 25,621,342
24,630,818
Loans to individuals for
household, family and other
personal expenditures 12,248,539
12,467,348
All other loans 182,397
187,489
Real Estate Under Foreclosure 434,384
373,577
TOTAL LOANS $146,209,850
$137,996,670
Less: Allowance for
possible loan loss 3,205,868
2,120,728
NET LOANS $143,003,982
$135,875,942
PAST DUE LOANS
(Amounts in
Thousands)
The figures below represent loans past due 30 days or more
(% is percentage of loans outstanding for a specific
category of loans).
1995 %
1994 % 1993 %
Construction & Development 214 2.7
77 1.7 0 0.0
Real Estate 3,009 2.2
1,713 1.4 2,177 2.0
Commercial, Industrial
and other 517 1.3
559 1.4 615 1.7
Loans to individuals 434 2.5
324 2.1 238 1.6
Loans past due 90 days or
more and still accruing* 849 .4
892 .5 513 .3
Non-Accruing Loans 3,360 1.7
3,139 1.7 2,645 1.6
1992 %
1991 %
Construction & Development 377 6.7
953 11.9
Real Estate 4,889 5.2
6,147 7.1
Commercial, Industrial
and other 1,524 5.9
1,559 5.0
Loans to individuals 296 2.4
507 4.1
Loans past due 90 days or
more and still accruing* 593 .4
1,306 .9
Non-Accruing Loans 3,683 2.5
3,177 2.3
<FN>
<F1> *The percentage for loans past due 90 days or more and
still
accruing and non-accruing loans relate to total loans
outstanding.
Each loan in these categories is also included in its past due
loan category.
Loans which were non-performing as of December 31, 1994 and
for
which the real estate was acquired by the Bank in 1995 totaled
$181,000.
MATURITY SCHEDULE - LOAN
PORTFOLIO
As of December 31,
1995
After one
One Year
Year through After five
or Less
five years years
Commercial, Financial
and Agricultural $21,775,978
$ 8,256,809 $10,150,735
Real estate Construction
and Land Development $ 8,072,230
The Bank makes construction loans on the basis of: a)
permanent financing
from another financial institution, or b)approval at the time
of
origination for permanent financing by our own Bank. In
addition, a number
of large commercial real estate loans are written and priced
on the basis
of fixed rates with a three to five year balloon payment. It
is generally
the intent of the Bank to renegotiate the rate and term of the
loan at the
balloon maturity. Lines of credit are renewed annually. There
are consumer
construction loans that will either be sold to the secondary
market upon
completion of construction or rolled into permanent portfolio
residential
mortgage loans on the Bank s books.
The total amount of commercial, financial and agricultural,
construction,
and land development loans with adjustable interest rates and
maturities
of greater than one year is $10,676,789 and with fixed
interest rates and
maturities of greater than one year is $7,730,755.
RISK ELEMENTS
1995 1994
1993 1992 1991
Loans accounted for on a non-
accrual basis $3,359,857
$3,139,465 $2,644,678 $3,683,185 $3,176,949
Accruing loans contractually past
due 90-days or more $ 849,127 $
891,986 $ 512,784 $ 593,237 $1,306,150
It is the policy of management to review past due loans on a
monthly
basis. Those loans 90 days or more past due which are not well
secured or
in the process of collection are designated as non-accruing.
This includes
government guaranteed loans unless the guaranteed portion has
been sold.
If interest had been accruing on such loans, interest income
on loans
would have been $416,342 higher in 1995. Interest collected on
these loans
totaled $184,983 in 1995 and was included in net income.
Non-accrual
loans represent 1.7% of average loans for 1995 and 1994.
Management is not aware of any potential problems loans which
are not
included in the above table.
The Bank makes single-family residential loans, commercial
real estate
loans, commercial loans, and a variety of consumer loans. The
Bank s
lending activities are conducted in north coastal Maine.
Because of the
Bank s proximity to Acadia National Park, a large part of the
economic
activity in the area is generated from the hospitality
business associated
with tourism. At December 31, 1995, approximately $25,500,000
of loans
were mde to companies in the hospitality industry. Of this
total
indebtedness, 1.8% were 30 days or more delinquent as of
December 31,
1995. Loans to real estate investors and developers totaled
$14,100,000 in
1995. In the fishing industry, loans decreased from
$10,000,000 in 1994 to
$7,500,000 in 1995. This decrease was attributable to the
paydown of
several aquaculture loans and a lesser need at year end for
Bank support
for the lobster pounding industry.
From the standpoint of large loans to single borrowers, loans
of $700,000
or more to one borrower decreased as a percentage of capital
from 95% in
1994 to 90% in 1995. As most loans granted by the Bank are
collateralized
by real estate, the ability of the Bank s borrowers to repay
is dependent
on the level of economic activity and the level of real estate
values in
the Bank s market area. Because of the increasing health of
the tourist
industry and other industries in its market area, the Bank has
benefited
from the economic well-being of its customers.
SUMMARY OF LOAN LOSSES
Delinquencies are reviewed on a monthly and quarterly basis by
senior
management as well as the Board of Directors. Information
reviewed is used
in determining if and when loans represent potential losses to
the Bank. A
determination of a potential loss could result in a charge to
the
provision for loan losses, with an increase to the reserve for
possible
loans so that risks in the portfolio can be identified on a
timely basis
and an appropriate reserve can be maintained.
Historically, the amount allocated for the allowance for
possible loan
losses has been based on management s evaluation of the loan
portfolio.
Considerations used in this evaluation included past and
anticipated loan
loss experience, the character and size of the loan portfolio,
the value
of collateral, general economic conditions, and maintenance of
the
allowance at a level adequate to absorb anticipated losses.
With net
charge offs remaining under one-half of one percent of average
loans
outstanding for 1990, the above method and review was
adequate.
Since 1991, the Bank has utilized the methodology for the
review of the
allowance for loan losses to be in accordance with the
approach suggested
by bank regulators through FDIC Fil-34-91, dated June 28,
1992. The
reserve includes specific reserves based on the review of
specific
credits, pool reserves based on historical charge offs by loan
types and
supplementary reserves reflecting concerns and loan
concentrations by
industry, by customer and by general economic conditions. The
allocation
has changed based on concentration of loans in the fishing and
tourist
related industries.
In 1992, the Bank continued to concentrate on resolving loan
problems,
focusing on the reduction of non-earning assets and resolution
of troubled
debt situations. With continued softness in the economy, the
Bank
aggressively charged off problem loans, and, at the same time
provided
more reserves for possible loan losses in the future. Building
on the
prior year s program of measuring adequacy, the Bank continued
to build
reserves to ensure that future earnings were not hurt by
unforseen
problems in the loan area.
The Bank experienced its greatest percentage of charge offs
when compared
to average loans outstanding in 1991 when the ratio was .74%.
This ratio
reached a low point in 1994 with charge offs representing only
.25% of
average loans. The percentage of charge offs to average loans
in 1995
totals .41%. During the past five years, the majority of
charge offs have
been commercial loans secured by real estate. In 1992,
increases in charge
offs were attributable to an account where faulty
documentation resulted
in loss of collateral. The Bank real estate charge offs in
1994 represent
charge down of loan balances on troubled loans based on
updated fair value
appraisals, or highest third party bids at auction.
In 1994 there were two writedowns of REO charged directly to
earnings. A
property in Northeast Harbor was sold at a loss of $74,000
after paying
all expenses, and property on Main Street in Ellsworth was
written down by
$100,000 to more closely reflect a liquidation. In 1994, the
same property
in Ellsworth was written down by additional $23,500. This
property was
sold in 1995 for $120,000. Additionally in 1994, three
residential
properties owned by the Bank were written down by a total of
$58,000 to
more closely reflect their market values.
Approximately 28% of the chargeoffs in 1995 represented loans
secured by
real estate, and 39% represented commercial credits. The
increase in
commercial loan chargeoffs in 1995 included a chargedown of a
large
commercial loan. Recoveries offset losses totaling $97,000,
$141,000 and
$264,900 for the years ended 1995, 1994 and 1993,
respectively.
Softness in the economy in the early 1990s, reduction of
collateral value,
and, in some cases, poor management by the owners of the
business have
caused the major losses in the commercial area.
Based on past experience and management s assessment of the
present loan
portfolio, it is expected that loan charge offs for 1996 will
not exceed
$840,000.
Commercial $ 75,000
Real estate mortgages 640,000
Installments to individuals 125,000
A breakdown of the allowance for possible loan losses is as
follows:
1995
1994
Percent of
Percent of
Loans in
each loans in each
Category
to Category to
Amount Total
Loans Amount Total Loans
Real Estate Mortgages $ 915,168 71.34%
$ 1,665,363 69.63%
Installments to individuals 503,777 8.74%
404,942 8.23%
Commercial, financial
And agricultural 277,775 19.92%
1,220,253 22.13%
Other 965,391 0.00%
80,337 0.01%
Unallocated 1,385,772 0.00%
520,940 0.00%
TOTAL $ 4,047,883 100.00%
$ 3,891,835 100.00%
SUMMARY OF LOAN LOSS
EXPERIENCE
(In thousands)
% = Percentage of Loans Outstanding for a Specific Category
of Loans
ALLOWANCE FOR LOAN LOSSES 1995 % 1994 %
1993 % 1992 % 1990 %
Balance at beginning of period $3,892 $3,369
$3,206 $2,121 $1,303
Charge offs:
Commercial, Financial,
Agricultural, Others 377 .94 122 .30
386 1.07 302 .92 597 1.38
Real Estate Mortgages 256 .18 267 .21
505 .45 633 .63 237 .28
Installments to individuals 268 1.52 189 1.23
290 1.98 188 1.53 266 2.63
Total Charge Offs 901 578
1,181 1,123 1,090
Recoveries:
Commercial, Financial,
Agricultural, Others 20 .05 47 .11
101 .28 55 .17 35 .08
Real Estate Mortgages 20 .01 54 .04
118 .10 49 .05 6 .01
Installments to individuals 57 .32 40 .26
45 .31 39 .32 37 .37
Total Recoveries 97 141
264 143 78
Net Charge Offs 804 437
917 980 1,012
Provision Charge to Operations 960 960
1,080 2,065 1,830
Balance at End of Period $4,048 $3,892
$3,369 $3,206 $2,121
Average loans outstanding
during period $195,178 $174,550
$153,232 $146,257 $137,608
Net Charge Offs to Average
Loans Outstanding during
Period .41 .25
.60 .67 .74
SUMMARY OF DEPOSIT PORTFOLIO
1995 1994
1993
Demand Deposit Accounts $ 32,394,610 $ 30,124,536 $
27,845,786
NOW Accounts 38,300,119 37,951,497
38,135,964
Money Market Deposit Accounts 21,400,643 27,733,548
32,128,978
Savings 32,259,883 34,247,891
33,443,983
Time Deposits Less than
$100,000 113,110,959 87,509,593
66,203,969
Certificates of Deposit
$100,000 or more 14,005,187 7,977,495
5,764,437
TOTAL DEPOSITS $251,471,401 $225,544,560
$203,523,117
MATURITY SCHEDULE FOR TIME DEPOSITS
$100,000 OR MORE
Over Three Over Six
Three Months Months Through Months Through
Over
or Less Six Months Twelve Months
Twelve Months
$ 2,156,492 $ 3,336,507 $ 5,927,611 $
2,584,577
RETURN ON EQUITY AND ASSETS
1995 1994
1993
Return on Average Assets 1.89 1.75
1.00
Return on Average Equity 18.97 17.93
9.72
Dividend Payout Ratio 25.07 25.75
42.24
Average Equity Capital to
Average Assets Ratio 9.96 9.75
10.32
As of January 1, 1996, there were approximately 974 holders of
record of
Bar Harbor Bankshares common stock.
Dividends have been paid semi-annually during 1994 and 1995,
as follows:
June December
1995 $ 0.36 $ 0.50
1994 $ 0.30 $ 0.44
In 1996 the Company will pay dividends on a quarterly basis.
SHORT TERM BORROWINGS
Average Weighted
Weighted
Maximum Amount Average
Balance Average
Outstanding Outstanding Interest
at end Interest
During During Rate During
of Period Rate
Period Period Period
1995
FHLB Advances $26,700,000 5.85%
$29,000,000 $17,058,082 5.84%
Wholesale Repurchase Agreements $ 0 0.00%
$18,250,000 $ 4,337,852 6.16%
1994
FHLB Advances $25,000,000 5.54%
$50,000,000 $28,904,110 4.28%
Wholesale Repurchase Agreements $ 0 0.00%
$11,000,000 $ 4,809,890 4.22%
1993
FHLB Advances $16,000,000 3.83%
$19,000,000 $ 9,025,479 3.43%
Wholesale Repurchase Agreements $ 2,000,000 3.45%
$13,120,000 $ 5,032,493 3.37%
The terms for short-term FHLB advances taken in 1995 ranged
from 5 days to
200 days and averaged 49 days. The terms for wholesale
repurchase
agreements taken in 1995 ranged from 4 days to 90 days and
averaged 24
days.
The terms for short-term FHLB advances taken in 1994 ranged
from 14 days
to 257 days and averaged 82 days. The terms for wholesale
repurchase
agreements taken in 1994 ranged from four days to 90 days and
averaged 25
days.
The terms for short-term FHLB advances taken in 1993 ranged
from 17 days
to 260 days and averaged 82 days. The terms for wholesale
repurchase
agreements taken in 1993 ranged from 6 days to 140 days and
averaged 31
days.
The following data represents selected year end financial
information for
the past five years. All information is unaudited.
(In thousands, except per share data)
BALANCE SHEET TOTALS 1995 1994 1993 1992
1991
Total Assets $326,609 $296,687 $257,347 $247,149
$216,275
Net Loans 197,718 182,102 160,156 143,004
135,876
Total Deposits 251,471 225,545 203,523 195,723
181,484
Total Equity 33,243 28,761 24,987 23,558
21,985
Average Assets 311,112 281,169 249,773 231,114
209,189
Average Equity 30,986 27,405 25,784 23,563
21,049
STATEMENT OF EARNINGS TOTALS
Interest Income $ 26,152 $ 21,795 $ 19,855 $ 20,283
$ 20,193
Interest Expense 10,624 7,676 6,775 7,997
10,092
Net Interest Income 15,528 14,119 13,080 12,286
10,101
Provision for Loan
Losses 960 960 1,080 2,065
1,830
Net Interest Income
After provision for
Loan Losses 14,568 13,159 12,000 10,221
8,271
Non-interest income
(Includes net security
gains {losses]) 4,398 4,012 4,153 3,576
3,029
Non-interest expense 10,471 10,161 10,957 9,169
7,787
Applicable income
Taxes 2,616 2,096 1,632 1,254
735
Net income before Cumulative Effect of
Accounting Change 5,879 4,914 3,564 3,374
2,778
Cumulative Effect of
Accounting Change 0 0 (1,058) 0
0
Net Income $ 5,879 $ 4,914 $ 2,506 $ 3,374
$ 2,778
PER SHARE DATA:
(Restated for five-for-one stock split in 1995)
Income Before Cumulative Effect of
Accounting Change $ 3.43 $ 2.87 $ 2.09 $ 1.87
$ 1.54
Cumulative Effect of Change in
Accounting for Postretirement
Benefits, Net of Income
Tax Benefit $ 0.00 $ 0.00 ($ 0.62) $ 0.00
$ 0.00
Net Income $ 3.43 $ 2.87 $ 1.47 $ 1.87
$ 1.54
Dividends $ 0.86 $ 0.74 $ 0.62 $ 0.42
$ 0.37
Weighted average number of
Common shares outstanding,
In thousands 1,713 1,710 1,707 1,806
1,804
Return on total average
Assets/Net Income 1.89% 1.75% 1.00% 1.46%
1.33%
SUPPLEMENTARY FINANCIAL DATA BY QUARTERS
(In thousands except per share data)
1995 1st Quarter 2nd Quarter 3rd Quarter
4th Quarter
Interest Income $ 5,992 $ 6,518 $ 6,902
$ 6,740
Interest Expense 2,370 2,660 2,767
2,827
Net Interest Income 3,622 3,858 4,135
3,913
Provision for Losses 240 240 240
240
Security Gains
(Losses) 0 0 0
0
Income Before Income Taxes
And Cumulative effect of
Accounting Change 1,884 2,150 2,706
1,755
Income Taxes 576 650 859
531
Net Income 1,308 1,500 1,846
1,225
Earnings Per Share $ 0.76 $ 0.88 $ 1.08
$ 0.71
1994
Interest Income $ 4,968 $ 5,296 $ 5,706
$ 5,825
Interest Expense 1,680 1,879 1,975
2,142
Net Interest Income 3,228 3,417 3,731
3,683
Provision for Losses 240 240 240
240
Security Gains
(Losses) 15 8 0
(388)
Income Before Income
Taxes 1,703 1,624 2,479
1,204
Income Taxes 515 496 678
407
Net Income 1,188 1,128 1,801
797
Earnings per share $ 0.70 $0.66 $ 1.05
$ 0.47
ITEM 7. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND
RESULTS OF OPERATIONS
The information contained in the section captioned Management
s
Discussion and Analysis of Financial Condition and Results of
Operations
in the Company s Annual Report is incorporated herein by
reference.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
The financial statements required are contained on pages 10
through 25 of
the Company s Annual Report for the year ended December 31,
1995 and are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND
FINANCIAL DISCLOSURES
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The following statements pertain to all individuals listed
below:
1. There are no arrangements or understandings between any
director or
officer listed below and any other person pursuant to which
such director
or officer was selected as an officer or director.
2. There is no family relationship among any of the directors
and
officers listed below.
3. None of the directors and officers listed below have been
involved in
any bankruptcy, criminal, or other proceeding set forth or
described in
sub-section (f) of Item 401 of Regulation S-K as promulgated
by the
Securities and Exchange Commission.
4. Each of the directors listed below has been elected to a
three year
term, except where the mandatory retirement age of 75 years
precluded an
election of a shorter term, with one third of the Board of
Directors, as
nearly as may be, standing for election each year. Each
director of the
Company also serves as a director of the Bank, and references
below to the
year in which an individual was first elected refer to the
year in which
s/he was first elected a director of the Bank.
[1] Robert H. Avery. Director, Age 67. Mr. Avery is retired.
He first was
elected as a Director on November 2, 1965. He was elected as
President and
Chief Executive Officer of the Bank in 1971 and retired as of
June 30,
1986. He currently serves as Director and Treasurer of the Bar
Harbor
Water Company.
[2] Frederick F. Brown, Director, Age 69. Mr. Brown s
principal occupation
during the past five years has been as proprietor and owner of
F. T. Brown
Company, which owns and operates a hardware store in Northeast
Harbor and
as one-third owner of Island Plumbing & Heating in Northeast
Harbor. He
also serves as President of Northeast Harbor Water Company.
Mr. Brown
first was elected as a director on October 2, 1979.
[3] Thomas A. Colwell, Director. Age 51. Mr. Colwell s
principal
occupation during the past five years has been as owner of
Colwell
Brothers, Inc. He also serves as a member of the Board of
Directors of the
Maine Lobster Pound Association. Mr. Colwell was first elected
as a
director on October 1, 1991.
[4] Bernard K. Cough, Director, Age 68. Mr. Cough s principal
occupation
during the past five years has been owner/operator of several
motels,
including the Atlantic Oakes Motel, Atlantic Eyrie Lodge,
Inc., Brookside
Motel, Bay View, Inc., and Ocean Gate, Inc. Mr. Cough is also
Treasurer of
Cough Bros., Inc. And President of Downeast Inns, Inc. Mr.
Cough was first
elected as a director on October 1, 1985.
[5] Peter Dodge, Director, Age 52. Mr. Dodge is President of
the Peter
Dodge Agency (a Maine corporation) d/b/a the Merle B. Grindle
Insurance
Agency in Blue Hill, Maine. He is also Director and Treasurer
of Coastal
Holdings, Inc., Trustee of George Stevens Academy, and
Director, Bagaduce
Music Lending Library. He was first elected as a director on
October 6,
1987.
[6] Lawrence L. Dorr, Director, Age 74. Mr Dorr is retired.
Prior to his
retirement, Mr. Dorr was the principal stockholder and
administrator of
Oceanview Nursing Home, Inc. Of Lubec. Mr. Dorr first was
elected as a
director on October 2, 1973.
[7] Dwight L. Eaton, Senior Vice President and Trust Officer,
Age 60. Mr.
Eaton s principal occupation during the past five years has
been as Senior
Vice President and Trust Officer of Bar Harbor Banking and
Trust Company.
He serves as Chairman and Director of the Acadia Corporation.
Mr. Eaton
first was elected as a Director on October 4, 1988.
[8] Ruth S. Foster, Director, Age 66. Mrs. Foster s principal
occupation
is the President and principal stockholder of Ruth Foster s, a
children s
clothing store in Ellsworth, Maine. Mrs. Foster first was
elected as a
director on October 7, 1986.
[9] Robert L. Gilfillan, Chairman of the Board of Directors,
Age 68. Mr.
Gilfillan s principal occupation during the past five years
has been as
the owner and President of the West End Drug Company in Bar
Harbor. Mr.
Gilfillan first was elected as a director on November 5, 1957.
[10] Sheldon F. Goldthwait, Jr., President and Chief Executive
Officer,
Age 57. He was appointed President and Chief Executive Officer
of Bar
Harbor Banking and Trust Company January 1, 1995. Prior to
that he served
as Executive Vice President of Bar Harbor Banking and Trust
Company. He
serves as Treasurer and Director of the Acadia Corporation.
Mr. Goldthwait
first was elected as a director on October 4, 1988.
[11] James C. MacLeod, Director, Age 71. Mr. MacLeod is
retired. Mr.
MacLeod served as Vice President of the Bank until his
retirement in
December of 1987. He was appointed as a Vice president of the
Bank in 1972
and was first elected as a director of the Bank on November 7,
1961.
[12] John P. McCurdy, Director, Age 64. Prior to his
retirement in 1991.
Mr. McCurdy s principal occupation was the owner and operator
of McCurdy
Fish Company of Lubec, a processor of smoked herring. Mr.
McCurdy first
was elected as a director on October 2, 1979.
[13] Jarvis W. Newman, Director, Age 60. Mr. Newman is the
owner of Newman
Marine, a boat brokerage in Southwest Harbor. Mr. Newman first
was elected
as a Director on October 5, 1971.
[14] Robert M. Phillips, Director, Age 54. Mr. Phillips is
Vice President
and Chief Operating Officer of Jasper Wyman and Son (blueberry
processors), Milbridge, Maine. He was first elected as a
director on
October 5, 1993.
[15] John P. Reeves. Director, Age 61. Mr. Reeves is retired.
He was
elected as President and Chief Executive Officer of Bar Harbor
Banking and
Trust Company in 1986 and retired in 1994. He first was
elected as a
director on October 6, 1970.
[16] Abner L. Sargent, Director, Age 71. Mr. Sargent is former
owner and
designated broker of High Street Real Estate and Vice
President and
Treasurer of Sargent s Mobile Homes, Inc., of Ellsworth. He
first was
elected as a director on October 6, 1981.
[17] Lynda Z. Tyson, Director, Age 40. Mrs. Tyson is Chief
Operating
Officer and Marketing Director of Tyson & Partners, Inc., a
marketing
communications consulting firm in Bar Harbor. Mrs. Tyson was
first elected
as a director on October 5, 1993.
ITEM 11. EXECUTIVE COMPENSATION
Officers of the Company do not, as such, receive compensation.
The
following table sets forth cash compensation received during
the Bank s
last fiscal year by the executive officers for whom such
compensation
exceeded $100,000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Other
Name and
Annual
Principal Salary
Incentive Compensation
Position Year ($)
($) ($)
John P. Reeves 1993 $ 127,500
$ 14,385 $ 0
Retired President and 1994 135,000
17,629 0
Chief Executive Officer 1995 ---
4,922 ---
Sheldon F. Goldthwait, Jr. 1993 $ 88,000
$ 9,923 N/a
Pesident and 1994 $ 92,000
$ 12,084 $ 0
Chief Executive Officer 1995 $ 130,000
$ 23,108 0
Dwight L. Eaton 1993 $ 88,000
$ 9,923 N/a
Senior Vice President 1994 $ 92,000
$ 12,084 $ 0
and Trust officer 1995 $ 94,000
$ 17,637 0
LONG TERM COMPENSATION
AWARDS
PAYOUT
Restricted
Stock
LTIP
Awards
Options/ Payouts
Year ($)
SARs (#) ($)
John P. Reeves 1993 $ 0
0 $ 0
1994 0
0 0
1995 0
0 0
Sheldon F. Goldthwait, Jr. 1993 0
0 0
1994 $ 0
0 $ 0
1995 0
0 0
Dwight L. Eaton 1993 0
0 0
1994 $ 0
0 $ 0
1995 0
0 0
ALL OTHER COMPENSATION ($)
John P. Reeves 1993 $ 3,152
1994 $ 4,984
1995 $ 0
Sheldon F. Goldthwait, Jr. 1993 $ 2,226
1994 $ 2,384
1995 $ 3,522
Dwight L. Eaton 1993 $ 2,793
1994 $ 2,937
1995 $ 3,439
The Bank has an incentive plan in which all employees who
were on the
payroll as of January 1st of a calendar year and who worked
through
December 31st are eligible. The computation is based on
earnings per share
growing by 10% each year with 1992 being the base year. Once
the 10%
growth is attained, a pool is created in which all eligible
employees
receive the same percentage of their salary in the form of an
incentive
payment.
COMPENSATION OF DIRECTORS
Each of the directors of the Company is a director of the Bank
and as such
receives a fee of $250.00 for each meeting attended. The fee
paid for the
Annual Meeting is $500.00 per member of the Board of
Directors. Meetings
of the Board of Directors of the Bank are held monthly. No
directors fees
are paid to the directors of the Company as such. Those
directors of the
Bank who are also officers do not receive directors fees.
EMPLOYEE BENEFIT PLANS
Effective August 31, 1993, the Board of Directors ratified the
termination
of the Company s noncontributory defined benefit pension plan,
which
covered all eligible employees.
At December 31, 1994, the plan s projected benefit obligation
was
essentially equivalent to the plan s net assets available for
benefits of
approximately $2,150,000, and such assets were invested in
U.S. Government
obligations and cash equivalents. The settlement of the vested
benefit
obligation by the purchase of nonparticipating annuity
contracts for, or
the lump sum payments to, each covered employee was completed
in 1994,
upon receipt of certain regulatory approvals. The Company
recognized no
curtailment gain or loss in 1993 as a result of the plan
termination and
no gain or loss was recognized when the plan s benefit
obligation was
settled in 1994.
Prior to the plan termination, pension benefits were based on
years of
service, and the Company s policy was to fund, at a minimum,
the amount
required under the Employee Retirement Income Security Act of
1974. Net
pension income of $51,000 in 1993 has been included in
operating results.
The weighted average discount rate and increase in salary
levels used in
determining the projected benefit obligation were 8% in 1993.
The expected
long-term rate of return on assets was 9%.
The Bank offers a 401(k) plan to all employees who have
completed one year
of service and who have attained the age of 21. Employees may
elect to
defer from 1% to 15% of their salaries subject to a maximum
amount
determined by a formula annually, which amount was $9,240 in
1994 and
1995. In 1995, the bank matched employee contributions to the
401(k) plan
to the extend of 25% of the first 6% of salary for a total of
contribution
by the bank of $46,637. The bank match for 1994 and 1993 was
$42,590 and
$37,195, respectively. On December 31, 1995, the Company
contributed to
each participating employee an additional 3% of the employee s
salary,
which represented a non-contributory plan replacing the Bank s
contribution to the former defined benefit plan. The total
contribution
made for the non-contributory plan was $122,486. This
non-contributory
plan was established in 1994 with a contribution made by the
Bank
totalling $113,432. Any future contributions by the bank will
be
determined annually by the vote of the Board of Directors.
In 1995 and 1994, the Bank provided a restricted stock
purchase plan
through which each employee having one year of service may
purchase up to
100 shares of Bar Harbor Bankshares stock at the current fair
market price
as of a date determined by the Board of Directors. These
shares may be
purchased through a direct purchase or through the employees
401(k)
accounts.
At December 31, 1995, employees exercised their right to
purchase 4,632
shares at $28.00 per share, with the actual purchase
transpiring in
January of 1996. At December 31, 1994, employees exercised
their right to
purchase 3,770 shares at $16.40 per share, with the actual
purchase
transpiring in January of 1995.
The Bank provides certain of its officers with individual
memberships in
local civic organizations and clubs. The aggregate value of
these benefits
with respect to any individual officer did not exceed $5,000
during the
Bank s last fiscal year.
The Bank has entered into agreements with Messrs: Avery,
Reeves,
Goldthwait, and Eaton whereby those individuals or their
beneficiaries
will receive upon death or retirement an annual supplemental
pension
benefit over a period of 10 years in the amount of $15,000 (in
the case of
Messrs. Avery and Reeves) and in the amount of $10,000 (in the
case of
Messrs. Goldthwait and Eaton). This plan is unfunded and
benefits will be
paid out of Bank earnings. As of January 1, 1987, Mr. Avery
began drawing
his annual installment of $15,000 pursuant to this deferred
compensation
arrangement. Mr. Reeves began drawing his annual installment
of $5,300.04
(reduced for early retirement) as of January 1, 1995.
In 1993, the Company established a non-qualified supplemental
retirement
plan for Messrs. Reeves, Eaton, Goldthwait and MacDonald. The
agreements
provide supplemental retirement benefits payable in
installments over
twenty years upon retirement or death. The Company recognizes
the costs
associated with the agreements over the service lives of the
participating
officers. The cost relative to the supplemental plan was
$98,273,
$368,898, and $181,415 for 1995, 1994, and 1993 respectively.
The
agreements with Messrs. Reeves, Eaton, Goldthwait and
MacDonald are in the
amounts of $49,020, $22,600, $37,400 and $7,700 respectively.
Mr Reeves
began drawing his annual installment of $49,020 as of January
1, 1995.
Officers of the Bank are entitled to participate in certain
group
insurance benefits. In accordance with Bank policy, all such
benefits are
available generally to employees of the Bank.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of December 31, 1995, to the knowledge of the Company,
there are not
any beneficial owners of more than five percent of the Company
s common
stock.
The following table lists, as of December 31, 1995, the number
of shares
of Common Stock and the percentage of the Common Stock
represented
thereby, beneficially owned by each director and nominee for
director, and
by all principal officers and directors of the Company as a
group.
Amount of
Director or Beneficial
Percent of
Nominee Ownership
Class
Robert H. Avery 29,160
1.70
Frederick F. Brown 11,590
*
Thomas A. Colwell 2,475
*
Bernard K. Cough 82,550
4.82
Peter Dodge 1,930
*
Lawrence L. Dorr 8,250
*
Dwight L. Eaton 3,788
*
Ruth S. Foster 1,500
*
Robert L. Gilfillan 39,640
2.31
Sheldon F. Goldthwait, Jr. 10,039
*
James C. MacLeod 20,300
1.18
John P. McCurdy 3,300
*
Jarvis W. Newman 15,050
*
Robert M. Phillips 550
*
John P. Reeves 12,352
*
Abner L. Sargent 3,500
*
Lynda Z. Tyson 600
*
Total Ownership of all directors and
executive officers of Company as a
group (20 persons) 251,306
14.67
<FN>
<F1> * Less than one percent
For purposes of this table, beneficial ownership has been
determined in
accordance with the provisions of Rule 13-d-3 promulgated
under the
Securities Exchange Act of 1934 as amended. Direct beneficial
ownership
includes shares held outright or jointly with others. Indirect
beneficial
ownership includes shares held in the same name of a director
s spouse or
minor children or in trust for the benefit of a director or
member of his
or her family. Indirect beneficial ownership does not include,
in the case
of each director, one seventeenth (2,864 shares) of the 48,680
shares
(2.84%) of the Common Stock held by two trusts which shares,
for purposes
of voting, are allocated equally among the directors of the
bank under the
terms of the respective trust instruments. No director has any
other
beneficial interest in such shares. Ownership figures for
directors and
nominees include directors qualifying shares owned by each
person named.
Management is not aware of any arrangement which could, at a
subsequent
date, result in a change in control of the company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank retains the firm of Tyson & Partners, Inc. to assist
with its
marketing program. Lynda Z. Tyson, who was elected to the
Board of the
Company and the Bank on October 4, 1993, serves as that firm s
Chief
Operating Officer as well as Director of Marketing. Management
believes
that the fees charged by Tyson & Partners, Inc. are at least
as favorable
as any which could have been obtained from persons not
affiliated with the
Bank.
The Bank has had, and expects to have in the future, banking
transactions
in the ordinary course of its business with directors,
officers, principal
stockholders and their associates upon substantially the same
terms,
including interest rates and collateral on the loans, as those
prevailing
at the same time for comparable transactions with others. Such
loans have
not and will not involve more than normal risk of
collectibility or
present other unfavorable features.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) (1) The following financial statements are incorporated by
reference
from Item 8 hereof: [Annual Report to Stockholders included
herein as
Exhibit 13].
PAGE
Independent Auditor s Report
9
Consolidated Statements of Financial Condition
December 31, 1995 and 1994
10
Consolidated Statements of Earnings for the years ended
December 31, 1995, 1994 and 1993
11
Consolidated Statements of changes in the Stockholders
Equity for the years ended
December 31, 1995, 1994 and 1993
12
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993
13
Notes to Consolidated Financial Statements
14 - 25
(a) (2) Financial Data Schedule
See Item 14(d)
(a) (3) Listing of Exhibits -- see Item 14 (c)
(b) Report on Form 8-K not applicable
(c) Exhibits -- EXHIBIT INDEX
EXHIBIT INDEX - 14(c)
NUMBER
1. Underwriting Agreements Not Applicable
2. Plan of Acquisition, reorganization Incorporated by
reference
agreement, liquidation or succession to Form S-14
dated
March 14, 1984
3. Articles of Incorporation and Bylaws Incorporated by
reference
To Form S-14
dated
March 14, 1984
4. Instruments defining the rights of Not Applicable
security holders
5. Opinion re: legality Not Applicable
6. Opinion re: discount on capital shares Not Applicable
7. Opinion re: liquidation preference Not Applicable
8. Opinion re: tax matters Not Applicable
9. Voting Trust Agreements Not Applicable
10. Material Contracts Incorporated by
reference
to Form 10-K
dated
December 31,
1986
11. Statement re: computation of per Not Applicable
share earnings
12. Statement of computation of ratios Not Applicable
13. Annual report to security holders Enclosed
herewith
14. Material foreign patents Not Applicable
15. Letter re: unaudited interim Not Applicable
financial information
16. Letter re: change in certifying Not Applicable
accountant
17. Letter re: director resignations Not Applicable
18. Letter re: change in accounting Not Applicable
principles
19. Report furnished to security holders Not Applicable
20. Other documents or statements to Not Applicable
security holders
21. Subsidiaries of the registrant Incorporated by
reference
to Form 10-K
dated
December 31,
1986
22. Published report regarding matters Not Applicable
submitted to vote of security holders
23. Consents of experts and counsel Not Applicable
24. Power of Attorney Not Applicable
25. Statement of eligibility of Trustee Not Applicable
26. Invitation for competitive bids Not Applicable
27. Information from reports furnished to
State insurance regulatory authorities Not Applicable
(d) Financial Data Schedule Not Applicable
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
BAR HARBOR BANKSHARES
(Registrant)
/S/ Sheldon F.
Goldthwait, Jr.
Sheldon F.
Goldthwait, Jr.
President and Chief
Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this
report has been signed below by the persons on behalf of the
Registrant
and in the capacities and on the dates indicated.
/S/ Sheldon F. Goldthwait, Jr. /S/ Virginia M.
Vendrell
Sheldon F. Goldthwait, Jr. Virginia M. Vendrell
President and Director Chief Financial
Officer
Chief Executive Officer Chief Accounting
Officer
/S/ John P. Reeves /S/ Robert L.
Gilfillan
John P. Reeves, Director Robert L. Gilfillan,
Chairman of
the Board
/S/ Frederick F. Brown /S/ Jarvis W. Newman
Frederick F. Brown, Director Jarvis W. Newman,
Director
/S/ Robert M. Phillips /S/ Peter Dodge
Robert M. Phillips, Director Peter Dodge, Director
/S/ Thomas A. Colwell /S/ Bernard K. Cough
Thomas A. Colwell, Director Bernard K. Cough,
Director
/S/ Lawrence L. Dorr /S/ Ruth S. Foster
Lawrence L. Dorr Ruth S. Foster
/S/ Lynda Z. Tyson /S/ Dwight L. Eaton
Lynda Z. Tyson, Director Dwight L. Eaton,
Director
/S/ John P. McCurdy /S/ Abner L. Sargent
John P. McCurdy, Director Abner L. Sargent,
Director
DATE: March 12, 1996