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CORRESPONDENCE

July 28, 2011

Correspondence filed via EDGAR and overnight delivery

Marc Thomas

Staff Accountant

United States Securities and Exchange Commission

Division of Corporation Finance

100 F. Street, N.E.

Washington, D.C. 20549-4561

    Re:

    Bar Harbor Bankshares

Form 10-K for the Fiscal Year Ended December 31, 2010- Filed March 16, 2011

Form 10-Q for the Quarter Ended March 31, 2011 -Filed May 10, 2011

File No. 1-13349

Dear Mr. Thomas:

On behalf of Bar Harbor Bankshares (the “Company”), this letter is in response to your comment
letter dated June 21, 2011, including responses to subsequent requests communicated during our
phone conversations on July 13 and 14, 2011 (“Telephone Comments”). Set forth below are the
staff’s comments in bold italics followed by the Company’s responses to the staff’s comments:

Form 10-Q for Fiscal Quarter Ended March 31, 2011

Note 4: Securities Available for Sale

    1.

    Please provide us your full detailed securities impairment analysis, as of both December 31,
2010 and March 31, 2011, for the private label mortgage-backed securities. The analysis should
address all available evidence, explains the relative significance of each piece of evidence,
and identifies the primary evidence on which you rely to support a realizable value equal to
or greater than the carrying value of the investment.

Response: Please refer to our preliminary letter to you dated July 5, 2011 in response to this
comment, a copy of which is attached to this letter as Exhibit A.

Telephone Comment: Please provide us with a list of your private-label MBS that were in unrealized
loss positions as of 12/31/10 and 3/31/11.

Response: Please refer to the attached Exhibits B and C for the information requested.

Telephone Comment: Please describe the detailed steps taken following the end of each reporting
period to determine whether any of the Company’s private label MBS are other-than-temporarily
impaired and, if so, the amount of OTTI that should be recorded.

Marc Thomas

Staff Accountant

United States Securities and Exchange Commission

July 28, 2011

Page 2

Response: At March 31, 2011, the Company owned sixty-six private-label mortgage-backed securities
with a total amortized cost of $19.6 million and an estimated fair value of $17.8 million,
amounting to a net unrealized pre-tax loss of $1.9 million, or 9.6%.

Following the end of each reporting period, the Company identifies all private-label MBS with an
unrealized loss position greater than 20% and all securities rated by the major credit rating
agencies as below investment grade. At March 31, 2011, thirty-four such securities were identified.
These securities were then subjected to a detailed OTTI evaluation using the data base information
and future cash flow (i.e. loss modeling) tools provided by Bloomberg.

Management’s best estimate of credit losses (or lack thereof) inherent in the securities is based
on discounted, bond-specific future cash flow projections using assumptions about cash flows
associated with the pools of mortgage loans underlying each security. In estimating those cash
flows the Company takes a variety of factors into consideration including, but not limited to, loan
level credit characteristics, current and historical delinquency and non-performing loan rates,
current levels of subordination and credit support, original and current loan to value ratios,
borrower FICO scores, and the geographical distribution of the underlying collateral. All of the
foregoing information is provided by Bloomberg (e.g. CLP, MTCS, CLC, DES, etc.).

The Company then reviews recent and historical constant default rates (“CDR”), recent and
historical loss severities (“SEV”) and recent and historical conditional pre-payment speeds
(“CPR”). All of the foregoing information is provided by Bloomberg (e.g. SEV, YTR, etc).

Using all of the foregoing information, the Company estimates the most likely future constant
default rates, loss severities and conditional prepayment speeds. These best estimates typically
reflect the most recent performance of the underlying collateral with respect to these three
considerations (using 1, 3, 6, and 12 month experience), as well as the current credit
characteristics of the underlying collateral including delinquencies, and other best estimates of
future collateral performance.

Using the Bloomberg Structure Pay-down software application (SPA), the Company enters its best
estimates for future CDR’s, SEV’s and CPR’s. The application then generates expected future cash
flows using this information, including the existence and percentage of any future credit losses
(i.e. OTTI), as well as the timeframe in which those losses are expected to occur.

Despite some elevated levels of delinquencies, defaults and losses in the underlying residential
mortgage loan collateral, given credit enhancements resulting from the structures of the individual
securities, the Company expects that it will recover the amortized cost basis of its private-label
mortgage-backed securities and had therefore concluded that such securities were not
other-than-temporarily impaired as of March 31, 2011 and December 31, 2010. Nevertheless, given
uncertain market conditions, it is possible that adverse changes in repayment performance and fair
value could occur in future periods that could impact the Company’s then current best estimates.

Marc Thomas

Staff Accountant

United States Securities and Exchange Commission

July 28, 2011

Page 3

Telephone Comment: For the five securities listed below that had no OTTI recorded in the first
quarter of 2011, please address the reasons why no OTTI was taken and the steps used to make that
determination.

Response: Please note that the steps taken to determine the existence of OTTI for the five
securities in question were the same as those outlined in our response to the previous comment.

The primary reasons why no OTTI was taken on the five subject securities are summarized below:

GSR 2004-9 3A2

Book Value — $568,512

Par Value — $609,605

These are variable rate 30 year mortgages with a current borrower rate of 3.16%. The security is
rated Aa3 (Moody’s) and AAA (Fitch). These loans were originated in July 2004 (pre-bubble) and had
an LTV ratio of 59.75%. The current LTV increased to 63.22%, suggesting the borrowers still have
plenty of equity in their homes. Since 2004, 87% of this pool has paid down, with cumulative credit
losses of only 0.49% that were covered with the credit support built into the structure. The
original credit support was 4.15%, but has since increased to 11.91%. The collateral has been
showing four delinquent loans over 90 days dating back to early 2010. There have been no new 30 or
60 day delinquencies since July 2010.

We modeled future cash flows using a CDR of 1.5%, based on the strength of the collateral,
including recent and historical performance. We used a CPR of 6%, which is relatively slow but
consistent with historical and recent performance. For loss severity we used 40% based on
historical experience and in consideration of the current LTV’s of 63.22%. These inputs resulted in
a credit loss of $12,670, with the first loss occurring in 2031 and extending out to 2034. No OTTI
was taken on this security given that book value was less than the par value by $41,093.

We alternatively modeled this security using a CDR of 1, a CPR of 4, and a SEV of 60. There was no
OTTI using these alternative inputs.

CWL 2002-S2 A5

Book Value — $685,513

Par Value — $685,557

This is a pool of fixed rate, closed-end home equity loans that were originated in 2002. The
highest collateral concentration is in Texas at 37%, and only 5% in California. Since origination,
87% of the pool has been paid down. The security is rated AAA by both Moody’s and S&P. The original
LTV’s were 17.39% and the current LTV’s are 10.68%, indicating the borrowers have sufficient equity
in their homes. This security has had no historical losses, which appears reflective of the
borrower equity positions. The collateral has been consistently performing well with loans
delinquent 60+ at 0.66%, and 30 day delinquencies at 0.30%. The original credit support was 6.75%,
but has since climbed to 13.5%.

Marc Thomas

Staff Accountant

United States Securities and Exchange Commission

July 28, 2011

Page 4

The payment speeds on this pool have been running steady at about 15. The CDR’s have been averaging
about 2.5%, but without any losses being incurred, presumably because of strong equity positions.
Because of the strength of the underlying collateral, we heavily stress tested future cash flows
using a CPR of only 6, a CDR of 5, and a SEV of 60. These inputs resulted in no future credit
losses.

CSMC 2007-7 3A2

Current book value: $677,148

Current Par Value: $699,236

This is a small pool of fifty-four, 15 year mortgages with 53 months of seasoning and equity build.
Borrowers with 15 year mortgages are typically more financially stable than 30 year borrowers.
Consistent with this assumption, the original LTV’s on this pool were 50.52%, but have since
climbed to 69.55%. Since these loans were originated, there have been no losses. The collateral has
been performing well with the last new delinquency dating back to May 2010. Currently, there are
only two delinquent loans in the pool, both of which are over 90 days. All other loans are current.
The original credit support on this pool was 5.38%, but has since declined to 3.17%.

We modeled expected future cash flows using a CPR of 12 which essentially mirrored the previous 12
month average. Having little historical loss severity data (one loan at 29.32% in November 2010) we
used an SEV of 43, which gave some consideration to the apparent strong equity positions. With
respect to CDR, we determined that based on the small pool of steadily performing loans, it was
appropriate to use a vector. Specifically, we modeled a CDR of 5 for one month (in consideration of
the two delinquent loans), and then used a 1.1 CDR until maturity. These inputs resulted in a
future credit loss of $21,657, with the first loss occurring in October 2017 and continuing through
July 2022.

No OTTI was taken on this security given that book value was less than the par value by $22,088.

BOAMS 2005-J 3A2

Book Value $439,375

Par Value: $456,374

This is a small pool of sixty-one 30 year mortgages with 66 months of seasoning. Since 2005, 55% of
this pool has been paid with cumulative losses of 1.43%. The security is credit rated B (Fitch) and
C (Moody’s). The original credit support for this pool was 3.90%, but has since increased to 4.83%.
The original LTV for these loans was 70.7%, but has since increased to 88.3%. The collateral has
been performing reasonably well, with 90+ day delinquencies holding steady between 7% and 8% (30
day delinquents were 1.69% whereas 60 day delinquents were 1.82%).

Marc Thomas

Staff Accountant

United States Securities and Exchange Commission

July 28, 2011

Page 5

We modeled expected future cash flows using a CPR of 24, compared with the prior six month average
of 26.3 and a current month speed of 28.9. For CDR we used 4.8 until maturity. This was higher than
the 3 month experience (4.56) but consistent with the 6 and 12 month experience (4.77 and 4.97). We
also gave consideration to the low delinquencies in the 30 and 60 day categories. For SEV we used
40% which was consistent with recent and historical experience. These inputs resulted in an
estimated future credit loss of $11,642, with the first loss occurring in August 2018 and the last
loss in August 2020.

No OTTI was taken on this security given that book value was less than the par value by $16,999.

CWHL 2008-3R 1A2

Book Value: $746,874

Par Value: $1,054,905

This is a private placement MBS, which is not rated by the major credit rating agencies, making the
security more illiquid in the marketplace. The collateral consists of 30-year mortgages with 47
months of seasoning. Since origination, 50% of this pool has paid down with no cumulative losses.
While borrower FICO scores were 742 at origination with LTV’s at 70.7%, forty-one percent of the
collateral is in California. The Collateral was currently showing 90+ day delinquencies of 15.6%,
however, 60 day delinquencies were at 0.93% and 30 day delinquencies at 2.25%.

We modeled expected future cash flows using a CPR of 21, which approximated the prior six month
average. We used a CDR of 3.7 to maturity, which was higher than all current and historical
averages, but gave consideration to the delinquency status of the underlying loans. We used a 45
for SEV, which was higher than the 3, 6 and 12 month averages. The foregoing inputs resulted in an
estimated future credit loss of $299,400, with the first loss occurring in August 2010 and the last
loss in May 2016.

No OTTI was taken on this security given that book value was less than the par value by $308,031.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Nonperforming Loans

Marc Thomas

Staff Accountant

United States Securities and Exchange Commission

July 28, 2011

Page 6

2. We note your response to comment one in our letter dated April 6, 2011. In order for us to more
clearly understand the nature, terms, collateral and any specific allowance for loan loss recorded
on this specific loan, please address the following:

Comment: Tell us the original loan terms and indicate whether the terms have ever been modified.

Response: The original loan terms were outlined in item one of our initial response letter dated
April 19, 2011, to your comment letter dated April 6, 2011.

By way of further explanation, a $5 million loan to the Authority closed on August 28, 2007, and
matured on August 28, 2010. That note was extended for one year to August 28, 2011. A separate $1
million loan to the Authority was closed on August 18, 2008, and matured on August 28, 2010. That
note was extended to August 28, 2011. The extensions were requested and granted after the town
declined to provide an anticipated $1 million development grant, and they were intended to give the
Authority time to assess all of its repayment options, to reconsider the best means by which to
sell the remaining houses (i.e., as affordable units, as straight market value homes, or with the
option to do either). Other than these two extensions, no other loan terms have been modified from
the original documentation. Since the date of the second extension, the Authority has liquidated
ownership of another real estate asset, sold several affordability covenants in the subject project
and obtained a survey necessary to sell some additional covenants; however, no additional houses
have sold. The Authority has also determined a selling price and other details necessary to begin
selling affordability covenants in another project (as of the third quarter of this year).

Comment: Provide us with specific information detailing the nature of the loan, sources of
repayment, repayment history (i.e., from housing units and affordability covenants) to date as well
as management’s expectations regarding full repayment of the loan upon maturity in August 2011”

The loans funded the construction costs for a 31 unit affordable housing project conceived and
managed by the local not-for-profit Housing Authority. The original repayment sources included
housing sales and a $1 million bond issuance by the town. That bond issuance was rejected by the
town in 2010 after approval in a prior year. The bank receives 100% of the net proceeds from any
sale and applies the payments to outstanding principal. The bank received $2.1 million in
principal payments in 2008 (from housing unit sales), $836 thousand in 2009 (from housing unit
sales) and $422 thousand in 2010 (from housing unit sales). Interest in each of those years was
$169, $233 and $202 thousand, respectively. To date, f