BHB Bar Harbor Bankshares

Table of Contents

​

​

​

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

(Mark one)

For the fiscal year ended: December 31, 2021

OR

For the transition period From          to          

Full title of the plan and the address of the plan, if different from that of the issuer named below:

Bar Harbor Bankshares 401(k) Plan

Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

Bar Harbor Bankshares
82 Main Street

Bar Harbor, Maine 04609

​

​

​

​

Table of Contents

BAR HARBOR BANKSHARES 401(k) PLAN

Financial Statements and Supplemental Schedules

December 31, 2021 and 2020

(With Report of Independent Registered Public Accounting Firm)

​

​

Table of Contents

BAR HARBOR BANKSHARES 401(k) PLAN

Financial Statements and Supplemental Schedules

December 31, 2021 and 2010

Table of Contents

​

*Schedules required by Form 5500 that are not applicable have not been included.

​

​

​

Table of Contents

Table of Contents

See accompanying notes to financial statements.

​

2

Table of Contents

See accompanying notes to financial statements

​

​

3

Table of Contents

BAR HARBOR BANKSHARES 401(k) PLAN

The following description of the Bar Harbor Bankshares (the “Company” or the “Plan Sponsor”) 401(k) Plan (the “Plan”) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.

The Plan is a defined contribution plan covering all employees of the Company who have achieved the age of 20-1/2. Contributions start on the first day of the coinciding month or the next following month once eligibility is achieved. There is no service requirement for eligibility. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Company utilizes a Recapture account for 12b-1 fees. Expenses over and above the balance in the Recapture Account are paid by the Company.

Each year, participants may contribute up to 90% (limited to tax withholding and statutory ceilings) of pretax annual compensation, as defined in the Plan. The Plan also allows after-tax (Roth) deferrals. Participants who have attained age 50 before the end of the Plan year are eligible to make catch-up contributions (limited to statutory ceilings). Participants may also contribute amounts representing distributions from other qualified defined benefit, Individual Retirement Accounts, or defined contribution plans. Participants direct the investment of their contributions into investment options offered by the Plan.

The Plan is a safe harbor plan providing matching contributions under a basic matching contribution formula. During 2021 and 2020, the Company matched 100% up to the first 3% of each participant’s salary deferred and 50% on deferrals from 3% to 5% of each participant’s salary. The Company match is 100% vested immediately and invested in the same manner as the participant has directed for their contributions. Additional profit sharing amounts may be contributed at the option of the Company’s board of directors and, if provided, are vested immediately and invested as directed by the participant. No additional profit sharing contributions were made in 2021 or 2020.

Each participant’s account is credited with the participant’s contribution, allocations of the Company’s match, and profit sharing contributions along with an allocation, based upon a participant’s account balance, of any earnings or losses. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Participants are vested immediately in their personal contributions and the Company’s contributions.

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event

4

Table of Contents

BAR HARBOR BANKSHARES 401(k) PLAN

Notes to Financial Statements

December 31, 2021 and 2020

of Plan termination, participants would remain 100% vested in all funds represented by their account balance.

On termination of employment including disability or retirement, a participant with a balance greater than $5,000 may request payment in a lump sum amount equal to the value of the vested interest in his or her account. Terminated participants with vested balances in their accounts of $1 or more but less than $5,000 have their vested balance rolled over to an Individual Retirement Account unless they make a voluntary election for another form of distribution or rollover. Upon the death of an employee, the named beneficiary may elect to receive a lump sum amount equal to the vested balance in the deceased employee’s account.

Effective January 1, 2020, the Plan was amended to align with Safe Harbor provisions regarding Hardship Withdrawals. Specifically, the Plan: removed the six (6) month Hardship Suspension Rule; removed the requirement to obtain a loan prior to applying for a Hardship Withdrawal; and allowed earnings on Pre-Tax sources to be part of the available balance.

Beginning April 2020, the Plan implemented certain provisions from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which allowed Plan participants to take hardship withdrawals due to adverse financial consequences from COVID-19 up to $100,000.  This provision expired on December 31, 2020.  

Each participant shall direct the investment of his or her own individual account and may select from several mutual funds, common collective trust funds, a stable value fund and Bar Harbor Bankshares common stock. Each participant has the ability to change his or her investment allocation at any time.

Participants may borrow from their accounts up to the lesser of $50,000 or 50% of their account balance. Per the January 1, 2020 amendment participants may carry one loan secured by the balance in their account. Prior to 2020 participants were allowed to carry up to two loans. Loans generally have a fixed rate and are written with an interest rate of 1% over the Prime Rate. Existing loans are presently written at 3.25% to 6.50%. Principal and interest is paid according to amortization schedules through biweekly payroll deductions. Generally, the loan terms may not exceed five years, unless for the purchase of a principal residence, which may permit a longer repayment term.

As a result of the CARES Act, the Plan allowed participants to suspend loan payments due in 2020 until January 1, 2021.

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rates and market risks. Due to the level of risk associated with investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.

5

Table of Contents

BAR HARBOR BANKSHARES 401(k) PLAN

Notes to Financial Statements

December 31, 2021 and 2020

​

The Plan’s financial statements have been prepared on an accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).

Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 3 for discussion of fair value measurements.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex- dividend date. Net appreciation (depreciation) includes the Plan’s gains and losses on investments bought and sold as well as held during the year.

Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded on the accrual basis. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2021 or 2020. If a participant ceases to make loan repayments and the plan administrator deems the participant loan to be in default, the participant loan balance is reduced and a benefit payment is recorded.

Benefits are recorded when paid.

The preparation of financial statements, in conformity with U.S. GAAP; requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.

Effective February 1, 2022 the Plan changed its trustee from Reliance Trust Company to Vanguard Fiduciary Trust Company and its recordkeeper from Sentinel Benefits to Vanguard Fiduciary Trust Company.

​

The Plan has evaluated subsequent events through June 27, 2022, the date the financial statements were available to be issued.

​

6

Table of Contents

BAR HARBOR BANKSHARES 401(k) PLAN

Notes to Financial Statements

December 31, 2021 and 2020

U.S. GAAP establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active market that the Plan has the ability to access.

Level 2: Inputs to the valuation methodology include:

If the asset or liability has a specified (Contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Stable Value Fund and Common Trust Funds: The Morley Stable Value Fund and Common Trust Funds are valued at the Net Asset Value (“NAV”) of shares held by the Plan based on the fair value of their underlying assets reported in the fund’s audited financial statements.

Mutual Funds: Mutual funds are valued at quoted market prices, representing the net asset value of shares held by the Plan, and is classified as Level 1, as they are actively traded and no valuation adjustments have been applied.

Money Market Funds: Money Market funds are valued at quoted market prices, which represent the NAV of shares held at year-end.

Common Stock: The Bar Harbor Bankshares (BHB) common stock is valued at quoted market prices and is classified as Level 1, as they are actively traded and no valuation adjustments have been applied.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the

7

Table of Contents

fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There were no changes in valuation methodology during the year ended December 31, 2021 or 2020.

​

​

​

There were no transfers between levels during 2021 or 2020.

​

8

Table of Contents

BAR HARBOR BANKSHARES 401(k) PLAN

Notes to Financial Statements

December 31, 2021 and 2020

The following tables set forth additional disclosures of Plan’s investments whose fair value is estimated using NAV per share (or its equivalent) as of December 31, 2021 and 2020.

For the years ended December 31, 2021 and 2020, the Common Trust Funds require a redemption notice period of 5 days if the redemption request is greater than $1,000,000.

​

The Plan is based on a prototype plan. The Internal Revenue Service (“IRS”) informed the Plan Sponsor, in an opinion letter dated November 30, 2020, that the form of the Plan is acceptable under the requirements of the Internal Revenue Code (“IRC”). An employer may rely on a favorable opinion letter issued to a prototype sponsor as evidenced that the Plan is qualified under Code Section 401 (a) as provided in Revenue Procedure 2011-49. Although the Plan has been amended since receiving the determination letter, the plan administrator believes that the current plan is designed and being operated in compliance with applicable requirements of the IRC so that the plan is qualified and the related trust is tax exempt.  

U.S. GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The plan administrator has analyzed the tax positions taken by the Plan, and has

9

Table of Contents

BAR HARBOR BANKSHARES 401(k) PLAN

Notes to Financial Statements

December 31, 2021 and 2020

concluded that as of December 31, 2021 and 2020, there were no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2018.

Shares of common stock issued by the Company represent certain Plan investments (See Note 3). The Plan held 193,096 and 259,844 shares of BHB’s common stock as of December 31, 2021 and 2020, respectively, with fair values of $5,586,279 and $5,876,713, respectively. During the year ended December 31, 2021, the Plan had purchases of $518,666, sales of $1,325,443 and incurred a net depreciation in fair value of investments of $516,343 on its common stock investment. During the year ended December 31, 2020, the Plan had purchases of $548,387, sales of $449,865 and incurred a net depreciation in fair value of investments of $650,325 on its common stock investment.  Dividend income earned during the years ended December 31, 2021 and 2020 was $192,177 and $226,920, respectively. The decision to invest in Company stock is voluntary on the part of the participants. These transactions are party-in-interest transactions. Senior officers are prohibited from purchasing, selling, or reallocating their positions in the Company’s common stock during times of established blackouts or while in possession of insider information. Effective December 1, 2010, Reliance Trust Company became Trustee and investments (including Bar Harbor Bankshares) were held by Fidelity Investments. Participant loan distributions and repayments are also considered party-in-interest transactions.

​

​

​

10

Table of Contents

See accompanying report of independent registered public accounting firm.

​

11

Table of Contents

Table of Contents