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 quarter ended March 31, 1998 Commission File No. 841105-D BAR HARBOR BANKSHARES Maine 01-0393663 (State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) P. O. Box 400 82 Main Street, Bar Harbor, ME 04609- 0400 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (207) 288-3314 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 NO: Indicate the number of shares outstanding of each of the issuer's classes of common stock as of March 31, 1998: Common Stock: 1,821,807 TABLE OF CONTENTS Financial Information Page Item 1. Financial Statements Consolidated Balance Sheets 3 December 31, 1997 and March 31, 1998 Consolidated Statements of Earnings 4 Three months ended March 31, 1997 and 1998 Consolidated Statements of Changes in 5 Stockholders' Equity Three months ended March 31, 1997 and 1998 Consolidated Statement of Cash Flows 6-7 Three months ended March 31, 1997 and 1998 Rate Volume Analysis 8 Three months ended March 31, 1997 and 1998 Notes to Financial Statements 9-11 Item II. Management's Discussion and Analysis of 12- Financial 16 Condition and Results of Operations Signature Page 17 BAR HARBOR BANKSHARES AND SUBSIDIARY CONSOLIDATED STATEMENT OF FINANCIAL CONDITION MARCH 31, 1997 AND 1998 (in thousands, except number of shares and per share data) (Unaudited) March March 31, 31, 1998 1997 ASSETS Cash and Due from Banks $8,787 $7,537 Federal Funds Sold 0 0 Securities Available for Sale 17,343 14,608 Securities Held to Maturity (Market Value 90,093 85,351 $90,830 in 1998 and $86,248 in 1997) Other Securities 6,050 6,012 Loans Held for Sale 620 365 Loans, net of allowance for possible loan losses of $4,749 in 1998 and 211,365 212,396 $4,743 in 1997 Premises and Equipment 7,581 7,658 Other Assets 9,177 8,799 Total Assets $351,016 $342,726 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits Demand Deposits $34,793 $36,838 NOW Accounts 39,996 39,536 Savings Deposits 51,415 53,378 Time Deposits 118,889 122,152 Total Deposits 245,093 251,903 Securities sold under Repurchase Agreements 4,337 4,474 Advances from Federal Home Loan 52,967 39,160 Bank Other Liabilities 5,049 4,727 Total Liabilities 307,445 300,264 Commitments and Contingent Liabilities Capital Stock, par value $2 Authorized 10,000,000 shares Issued 1,821,807 in 1998 and 1,820,583 in 1997 3,644 3,641 Surplus 7,645 7,574 Retained Earnings 33,635 32,562 Net unrealized appreciation on securities (13) 24 available for sale, net of tax Less: Cost of 100,000 shares of Treasury Stock (1,340) (1,340) TOTAL STOCKHOLDERS' EQUITY 43,571 42,461 TOTAL LIIABILITIES AND STOCKHOLDERS' $351,016 $342,726 EQUITY The accompanying notes are an integral part of these consolidated financial statements. BAR HARBOR BANKSHARES AND SUBSIDIARY CONSOLIDATED STATEMENT OF EARNINGS (in thousands, except number of shares and per share data) (UNAUDITED) THREE THREE MONTHS MONTHS ENDING ENDING 3/31/98 3/31/97 Interest & Fees on Loans $5,059 $5,026 Interest and Dividends on Investment Securities: Taxable Interest Income 1,629 1,596 Non-taxable Interest Income 124 180 Dividends 100 96 Federal Funds Sold 15 9 Total Interest Income 6,928 6,907 Interest on Deposits 2,142 2,139 Interest on Borrowings 690 726 Total Interest Expense 2,832 2,865 Net Interest Income 4,096 4,042 Provision for Loan Losses 84 180 Net Interest Income after Provision for Loan Losses 4,012 3,862 Other Income 1,126 1,027 Investment Securities Gains 57 (56) (Losses) Other Expenses: Salaries & Employee Benefits 1,491 1,460 Other 1,307 1,055 Income Before Income Taxes 2,396 2,318 Income Tax Expense 772 744 Net Income 1,624 1,575 PER COMMON SHAE DATA, BASED ON 1,721,807 shares for 1998, AND 1,720,583 shares for 1997 $0.94 $0.92 1,718,237 for 1996 Dividends Per Share $0.32 $0.28 The accompanying notes are an integral part of these consolidated financial statements BAR HARBOR BANKSHARES AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY QUARTERS ENDED MARCH 31, 1997 AND 1998 (in thousands, except number of shares and per share data) (UNAUDITED) ACCUMULATE D OTHER COMPRE- NET CAPITA RETAINE HENSIVE TREASURY STOCKHOLDERS L SUIRPL D INCOME STOCK ' STOCK US EARNING EQUITY S Balance, 12/31/96 $3,636 $7,489 $28,205 ($103) ($1,340) $37,887 Net Earnings 1,575 $1,575 Other comprehensive income, net of tax Unrealized gains/losses on ($161) securities Other Comprehensive (161) ($161) income Comprehensive $1,414 Income Cash dividends declared ($0.28 per share) ($482) ($482) Sale of Stock (2,346 shares) 5 85 $90 Balance, 3/31/97 $3,641 $7,574 $29,298 ($264) ($1,340) $38,908 Balance, 12/31/96 $ 3,641 $ 7,574 $32,652 24 ($1,340) $42,461 Net Earnings 1,624 $1,624 Other comprehensive income, net of tax Unrealized gains/losses on ($37) securities Other comprehensive (37) ($37) income Comprehensive $1,587 Income Cash dividends declared ($0.32 per share) (551) ($551) Sale of Stock (1,224 shares) 2 71 $73 Balance, 3/31/98 $3,644 $7,645 $33,635 ($13) ($1,340) $43,571 The accompanying notes are an integral part of these consolidated financial statements. BAR HARBOR BANKSHARES AND SUBSIDIARY COLSOLIDATED STATEMENT OF CASH FLOWS (in thousands) MARCH MARCH 31, 31, 1998 1997 Cash Flows from Operating Activities: Net Income $1,624 $1,575 Adjustments to reconcile net earnings to net cash provided by operating activities: 225 222 Depreciation Provision for Loss Losses 84 180 Provision for Losses on Other Real Estate 0 0 Owned New Loans Originated for Sale (4,423) (925) Proceeds from Sale of Mortgages Held 4,210 861 for Sale Gain on Sale of Mortgages Originated (31) (30) for Sale Net Amortization of Bond Premium 49 23 (Gain) Loss on sale of premises and equipment 0 0 Net Change in Other Assets (375) (335) Net Change in Other Liabilities 322 530 Net Cash Provided by Operating 1,685 2,101 Activities Cash Flows from Investing Activities: Net decrease (increase) in Federal Funds Sold 0 0 Purchases of Securities Held to Maturity (17,121) (5,054) Proceeds from Maturity and Principal Paydowns 4,830 4,847 of Securities held to maturity Proceeds from Call of Securities Held 7,500 175 to Maturity Purchases of Securities Available for (4,000) (500) Sale Proceeds from Maturity and Principal Paydowns 209 39 of available for sale Proceeds from sale and calls of securities available for sale 1,000 60 Net decrease (increase) in other securities 0 0 Net Loans Made to Customers 915 (2,860) Capital Expenditures (148) (346) Proceeds from sale of other real estate owned 0 0 Proceeds from Sale of Fixed Assets 0 0 Net Cash Used in Investing Activities (6,815) (3,639) Cash Flows from Financing Activities: Net Change in Savings, NOW and Demand (3,547) (7,683) Deposits Net Change in Time Deposits (3,263) 383 Net Change in securities sold under Repurchase Agreements (137) (2,852) Purchase of Advances from FHLB 18,500 3,000 Proceeds from FHLB (9,500) (5,000) Net Change in Short Term Other 4,805 10,642 Borrowed Funds Proceeds from Sale of Capital Stock 73 90 Payment of Dividends (551) (482) Net Cash Provided by Financing 6,380 (1,903) Activities Net Increase (Decrease) in Cash and Cash 1,250 (3,441) Equivalents Cash and Cash Equivalents at Beginning of 7,537 13,298 Year Cash and Cash Equivalents at End of $8,787 $9,857 Quarter Supplemental Disclosures of Cash Flow Information: Cash Paid during the Year for: Interest $2,877 $2,841 Income Taxes, Net of Refunds $50 $279 Non-Cash Transactions:; Transfers from Loans to Real Estate Owned $0 $0 (Other Assets) Transfer of Securities from Held to Maturity to Available for Sale $0 $0 The accompanying notes are an integral part of these consolidated financial statements 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 relationships of the absolute collar amounts of the change in each. YEAR-TO-DATE FIGURES AS OF MARCH 31, 1998 COMPARED TO MARCH 31, 1997 (in thousands, except number of shares per share data) INCREASES (DECREASES) DUE TO: VOLUME RATE NET Loans $104 ($71) $33 Taxable Securities 93 (56) 37 Tax Exempt Securities (70) 15 (55) Federal Funds Sold and Money Market Funds 5 1 6 TOTAL EARNING ASSETS $132 ($111 $21 ) Deposits 15 (12) 3 Borrowings (58) 22 (36) Total Interest Bearing ($43) $10 ($33) Liabilities NET CHANGE IN INTEREST $175 ($121 $54 ) YEAR-TO-DATE FIGURES AS OF MARCH 31, 1997 COMPARED TO MARCH 31, 1996 INCREASES (DECREASES) DUE TO: VOLUME RATE NET Loans $281 ($257 $24 ) Taxable Securities 75 64 138 Tax Exempt Securities (13) (3) (16) Federal Funds Sold and Money Market Funds 4 0 4 TOTAL EARNING ASSETS $347 $197 $150 Deposits (66) (103) (168) Borrowings 212 4 216 Total Interest Bearing $147 ($99) $48 Liabilities NET CHANGE IN INTEREST $200 ($98) $102 NOTES TO FINANCIAL STATEMENTS DATED MARCH 31, 1998 (Tables presented in thousands) 1. Summary of interim financial statement adjustments. The accompanying unaudited statements reflect all adjustments (all of which are normal and recurring in nature) which are, in the opinion of management, necessary to present a fair statement of the results for the interim periods presented. The financial statements should be read in conjunction with the Consolidated Financial Statements and related Notes included in the Bank's 1997 Annual Report. Effect of recent accounting pronouncements: During 1997, the Company adopted SFAS No. 125 and No.127 which relate to the accounting for transfers and servicing of financial assets and extinguishment of certain liabilities. The adoption of these standards did not have a material effect on the financial statements. The Financial Accounting Standards Board (FASB) issued the following statements of financial accounting standards (SFAS) during 1997: SFAS No. 128 Earnings per share SFAS No. 129 Disclosure of information about capital structure SFAS No. 130 Reporting comprehensive income SFAS No. 131 Disclosure about Segments of an enterprise and related information. These four statements do not change the measurement or recognition methods used in the financial statements but rather deal with disclosure and presentation requirements. At December 31, 1997, the Company adopted SFAS No. 128 which specifies the computation and disclosure requirements for earnings per share for entities with publicly held common stock. The Company has no potential common stock and therefore no diluted earnings per share. At December 31, 1997, the Company adopted SFAS No. 129. This statement has no effect on the Company's financial statements as the capital disclosures meet the requirements of SFAS No. 129. At March 31, 1998, the Company adopted SFAS No. 130. Comprehensive income may be reviewed in the Statement of Changes in Stockholders' Equity. At March 31, 1998, the Company adopted SFAS No. 131. This statement has no effect on the Company's financial statements. In February, 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about Pensions and Other Post Retirement Benefits" effective for financial statements for the fiscal year beginning after December 15, 1997. SFAS No. 132, which supersedes the benefit disclosure requirements in FASB Statements No's 87,88 and 106, requires entities to standardize the disclosure requirements for pension and other post retirement benefits to the extent practicable, requires additional information on changes in the benefit obligations and fair value of plan assets that will facilitate financial analysis. The Company expects no material impact from adopting SFAS No. 132. March 31, 1998 2. INVESTMENT SECURITIES CARRYING CARRYING AVAILABLE FOR SALE VALUE VALUE a: U. S. Treasury and other $16,813 $16,777 government agencies b: Marketable equity 550 566 securities Total Securities Available $17,363 $17,343 For Sale HELD TO MATURITY: a: U. S. Treasury and other $75,077 $75,604 government agencies b: States of the U.S. and other political subdivisions 7,647 7,860 c: Corporate bonds 7,369 7,366 Total Securities Held to $90,093 $90,830 Maturity OTHER SECURITIES $6,050 $6,050 TOTAL SECURITIES $113,506 $114,223 The Bank does not hold any securities for a single issuer which exceed 10% of the Bank's stockholders' equity. March December 31, 1998 31, 1997 3. LOANS a: Commercial, agricultural and $35,112 $33,897 other loans b: Real Estate - Construction 8,277 7,925 c: Real Estate - Mortgage 156,055 158,649 d: Installment Loans 16,670 16,668 Total Loans $216,114 $217,139 4. CHANGES IN ALLOWANCE FOR March March POSSIBLE LOAN LOSSES: 31, 31, 1998 1997 Balance, beginning January 1 $4,743 $4,293 Provision charged to income 84 180 Recoveries of amounts 33 26 charged Losses charged to provision 111 133 Balance, ending March 31 $4,749 $4,366 Information regarding March Decembe impaired loans: 31, r 31, 1998 1997 Average investment in $1,887 $2,045 impaired loans Interest income recognized on impaired loans including interest income $131 $165 recognized on cash basis Interest income recognized on impaired loans on cash $131 $165 basis Balance of impaired loans $1,887 $2,670 Less portion for which no allowance for loan losses is 0 0 allowed Portion of impaired loan balance for which an $1,887 $2,670 allowance for credit losses is allocated Portion of allowance for loan losses allocated to the $110 $104 impaired loan balance 5. CHANGES IN ALLOWANCE FOR OTHER REAL ESTATE: 3/31/98 3/31/9 3/31/96 7 Balance, beginning January $17 $23 $26 1 Provision charged to 0 0 (2) income Losses charged to 0 0 0 provision Balance, ending March 31 $17 $23 $24 6. The aggregate dollar amount of loans made to directors, executive officers or principal holders of equity securities as of March 31, 1998 and December 31, 1997 respectively were: Aggregate amount, beginning 1/1 $3,952 $3,807 New loans 692 1,693 Repayments 76 1,548 Aggregate amount, ending $4,568 3/31/98 Aggregate amount, ending $3,952 12/31/97 7. OTHER ASSETS March 31, December 1998 31, 1997 a: Interest earned but not paid on: Loans $1,785 $1,437 Investments 906 1,041 b: Other Real Estate Owned 185 59 8. INCOME TAXES: Components of income tax expense for the period ended March 31, 1998 are as follows: Current Federal $914 State 25 Deferred (167) $772 Actual tax expense differs from the expected tax expense computed by applying the applicable federal corporate income tax rate of 34% is as follows for the three months March 31, 1998: Computed tax expense $793 Tax exempt interest (45) Other 24 $772 At March 31, 1998, items giving rise to the deferred income tax assets and liabilities, using a tax rate of 34%, are as follows: ASSET LIABILITY Allowance for possible losses on loans and real estate owned $1,452 Deferred and accrued employee 970 benefits Deferred mortgage servicing 64 rights Deferred loan origination fees 296 Securities losses not currently 15 deductible Core deposit intangibles 57 Depreciation 0 65 Other 9 $2,799 $129 No valuation allowance is deemed necessary for the deferred tax asset. 9. INCOME TAX EXPENSE March 31, March 31, 1998 1997 Federal Income Tax $747 $718 State Income Tax 25 26 MANAGEMENT'S DISCUSSION AND ANALYSIS The following is the review of the results of operations for March 31, 1998, as compared to March 31, 1997, showing earnings with a 3% increase, and changes in the balance sheet of $6 million over last year. Total loans remained constant over the past twelve months, with the balance within the portfolio between consumer and commercial loans also remaining constant. The investment portfolio grew by $5.5 million or 5% over the past year. Purchase in the investment portfolio totaled in excess of $48.7 million; however, maturities and principal paydowns from the Bank's mortgage backed securities portfolios were $42.6 million for the same period. Purchases were made of US government-sponsored debentures or mortgage backed pools. Many of the debentures are callable securities and some have supported the bank's earnings in lieu of selling fed funds. Unrealized gains and losses gained strength with the reduction of the unrealized loss of $265,000 to $13,000. This shift is indicative of the current economic marketplace. This is also visible in the total market value of the portfolio that is currently $718,000 greater than book value. In the loan area, the Bank continues to experience strong competition from other financial institutions within its marketplace. Within the past twelve months a local bank has opened a branch in the Bank's home office community and strongest market area (Mount Desert Island), and a second local bank has announced the opening of a branch also on Mount Desert Island. Bar Harbor Banking and Trust Company's strength lies in the relationships built with its customers and the ability to offer prompt service in response to their needs. Liquidity is measured by the Bank's ability to meet cash needs at a reasonable cost or minimum loss to the Bank. Liquidity management involves the ability to meet cash flow requirements of its customers, which may come from depositors withdrawing funds or borrowers requiring funds to meet credit needs. Without adequate liquidity management, the Bank would not be able to meet the needs of the individuals and communities it serves. The Bank utilizes a Basic Surplus/Deficit model to measure its liquidity over a 30-day and a 90-day time horizon. The relationship between liquid assets and short-term liabilities that are vulnerable to non- replacement within a 30-day period are examined. The Bank's Policy is to maintain its liquidity position at a minimum of 5% of total assets. The Bank has maintained liquidity in its balance sheet in excess of 15% for the past twelve months. Liquidity as measured by the Basic Surplus/Deficit model was 19.2% as of March 31, 1998 for the 30-day horizon and 19.8% for the 90-day horizon. How changes in the balance sheet have affected the Bank may be viewed through the earnings statement for the periods ending March 31, 1997 and 1998. With a relatively flat change in the balance sheet from year to year, earnings grew by $50,000. In comparison, the Bank experienced a 6% growth in the balance sheet in 1997 when compared to 1996, with earnings increasing by $52,000. Rates, volumes and the mix of earning assets and interest bearing liabilities affect interest income. For the first three months of 1998, net interest income increased by $54,000 and was a factor of the growth in the balance sheet coming from investments, with yields earning less than loans, and savings realized in funding costs. Interest earned on loans increased by more than $100,000 but was reduced by $70,000 due to decreases in interest rates charged on portions of the loan portfolio. Overall, the loan portfolio yield dropped by 23 basis points. Interest on investments increased due to volumes and partially due to a shift from tax exempt income to taxable income as maturing tax exempt securities are being replaced by taxable securities. The entire portfolio is earning 6.8% and only 8 basis points less than it was a year ago. Interest bearing liabilities decreased by less than one-half of 1%, but the cost of those liabilities decreased by more than 1%. For the past several years, the Bank has maintained its cost of deposits by not increasing its interest rates on savings, NOW and money market accounts. The overall cost of liabilities went down by 17 basis points between March 31, 1998 and March 31, 1997. For the first three months of 1997, net interest income increased by $100,000 and was attributable to the following. The loan portfolio yielded the Bank interest income of $280,000 more than in 1996 through increases in volumes, but experienced offsetting decreases in interest income totaling $257,000 due to decreases in rates, leaving the growth in loan interest income virtually flat over that twelve month period. Yields on loans decreased by 21 basis points from March 1996 to March of 1997. Although the investment portfolio did not grow between the years ended March 31, 1996 and 1997, the portfolio changed as securities matured or were called. Total investment income grew by $126,000, with increases in both rates and volumes on those securities that are taxable ($142,000) and decreasing in both rates and volumes on tax exempt securities owned by the bank ($16,000). The yield on the entire securities portfolio went up just slightly (6 basis point) between March 31, 1996 and March 31, 1997 At March 31, 1997, the Bank's cost of deposits had decreased by $168,000, $65,000 due to reductions in volumes of certificates of deposit and $102,000 due to reductions in rates. The cost of borrowings increased by $216,000, which is comprised of $212,000 due to increased volumes and only $4,000 increase, attributed to rate increases. The cost of purchased funds increased by 8.5 basis points between March 31, 1996 and 1997. The Bank's position with regard to interest rate sensitivity consists of the matching of its assets and liabilities for repricing within a year. There is some exposure to rising rates out beyond a year with the Bank having almost $21 million invested in callable securities with final maturities of ten years or less that potentially would not be called. The gap analysis in today's interest rate environment shows the Bank with approximately $28 million more liabilities than assets that would be repricable within twelve months. If rates were to drop by 200 basis points, simulations based on a static balance sheet indicate that the Bank's net interest income could rise by approximately $193,000 during the first year of the drop, while increasing its income in the second year by $135,000. If rates were to rise by 200 basis points, the Bank could experience a drop in interest income in the first year by $77,000, and drop additional interest earnings in the second year by $400,000. The Bank has maintained its reserve for possible loan losses at better than 2% of total loans outstanding for a number of years, with a ratio of 2.2% as of March 31, 1998. The Bank reviews its allocation to the reserve on a monthly basis and funds the reserve as deemed necessary. This review includes a provision for specific credits, provisions due to historic loan losses by loan types and reserves reflecting industry concentrations, credit concentrations, current economic conditions and underwriting standards. In 1995, the Bank added a provision for impaired loans in accordance with FASB 114/118. Reference is made to the notes included in this filing that outlines the impaired loan figures. Losses in the loan portfolio are estimated at $500,000 for 1998, with first quarter 1998 charge offs totaling $110,000 compared to $133,000 during the first quarter of 1997. The amounts represented below are the total dollars past due for the first three months of each year listed. Category 1998 1997 1996 90-day past due and still $1,102,919 $1,302,437 $1,247,941 accruing Non-accruing $3,438,992 $3,207,492 $3,289,461 $4,541,911 $4,509,929 $4,537,402 Gross loans $216,113,8 $214,687,01 $201,502,68 53 6 2 Percentage of gross loans 2.10% 2.10% 2.25% With earnings as of March 31, 1998 $50,000 ahead of March 31, 1997, the following is a review of non-interest income and non-interest expense. As stated earlier, the Bank has maintained a reserve for possible loan losses in excess of 2% when compared to total loans for a number of years. With loan growth and net charged off loans slowing down, the Bank is able to reduce the amount it provides for the reserve. As of March 31, 1998, the provision for possible loan losses is $96,000 less than a year before. Other income is almost $100,000 ahead of last year's first quarter income and includes the Trust Department income, which is $52,000 ahead of last year's income. No other major category in other income can be singled out for substantial growth from year to year. Other non-interest expense is $252,000 more as of March 31, 1998 when compared to the same period for 1997. The introduction of the bank's call center, interactive voice response system and several loan promotions have created media opportunities for the bank. Additionally, the bank is involved in several projects as of March 31, 1998, including the review of banking software. Another expense in 1998, which was not found in 1997, includes the development of the bank's Year 2000 assessment and action plan. The due diligence process will be in place by June 30, 1998 as recommended by the FDIC. The assessment of customers' preparedness and the resulting impact on the institution should be substantially completed by September 30, 1998. Testing of parts of the bank's hardware and software has already begun. In reviewing non-interest income and non- interest expense for the period between March 31, 1996 and 1997, there are no categories showing significant changes with dollars exceeding $60,000 and more than 4% for any major category. The Bank's capital to asset ratio is 12.4% and the Bank far exceeds the required risk based capital ratio of 8% with its Tier 1 ratio of 20.3% and total capital ratio of 21.5% or additional capital of $28.7 million. These ratios compare favorably to March 31, 1997 when the capital to average asset ratio was 11.6%, Tier 1 and total capital ratios compared to risk weighted assets were 18.3% and 19.5% respectively. Pursuant to the requirements 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 Date: May 15, 1998 Sheldon F. Goldthwait, Jr. Chief Executive Officer Date: May 15, 1998 Virginia M. Vendrell Treasurer and Chief Financial Officer