LSBG Lake Sunapee Bank Group

Notes to Financial Statements

December 31, 2015 and 2014

The following description of the Lake Sunapee Bank Profit Sharing – Stock Ownership Plan (the Plan) provides only general information. Participants should refer to the plan agreement for a more complete description of the Plan’s provisions.

The Plan is a defined contribution plan covering substantially all employees of Lake Sunapee Bank, FSB (the Bank). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

Contributions

Each participant may elect to contribute a minimum of 1% up to a maximum of 100% of compensation, as defined by the Plan. Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans. Contributions in excess of limits established by the Internal Revenue Code (the Code) are returned to the participant as corrective distributions. Participants direct their contributions into various investment options offered by the Plan.

Effective January 1, 2008, the Bank may elect to make a discretionary qualified matching contribution in any plan year. The Bank elected to match 50% of participant deferrals up to 3% of compensation in 2015. For the year ended December 31, 2015, the discretionary match was $365,330.

Also effective January 1, 2008, the Bank elected to make an annual Safe Harbor non-elective contribution to the account of each eligible participant in an amount equal to 3% of the participant’s compensation for the plan year. For the year ended December 31, 2015, the Safe Harbor contribution was $456,742.

Participants are 100% vested in contributions.

Rollover contributions are allowed into the Plan.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and changes therein, and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

- 5 -

LAKE SUNAPEE BANK PROFIT SHARING –

STOCK OWNERSHIP PLAN

Notes to Financial Statements

December 31, 2015 and 2014

Investments

Investments are stated 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 8 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 depreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year.

Participant Loans

Notes receivable from participants are measured at their unpaid principal balances plus any accrued but unpaid interest. Delinquent loans are classified as distributions based upon the terms of the plan document.

Administrative Expenses

Substantially all administrative expenses of the Plan are paid by the Bank.

Benefit Payments

Benefits are recorded when paid.

Subsequent Events

Management has considered transactions or events occurring through the date of issuance of these financial statements.

On May 5, 2016 Lake Sunapee Bank Group (LSBG), parent company of the Bank, and Bar Harbor Bankshares (“Bar Harbor”), the holding company for Bar Harbor Bank & Trust (“Bar Harbor Bank”), entered into an Agreement and Plan of Merger, dated as of May 5, 2016, by and between LSBG and Bar Harbor (the “Merger Agreement”), pursuant to which Bar Harbor will acquire LSBG subject to the terms and conditions set forth therein. Thereafter, pursuant to the terms of the plan of bank merger to be entered into by the Bank and Bar Harbor Bank, Lake Sunapee Bank, FSB will be merged with and into Bar Harbor Bank, with Bar Harbor Bank surviving. Under the terms of the Merger Agreement, each outstanding share of LSBG stock will be converted into the right to receive 0.4970 shares of Bar Harbor common stock. The transaction is expected to close in the fourth quarter of 2016 or first quarter of 2017, subject to customary closing conditions, including receipt of regulatory approvals and the approvals of the shareholders of the Company and Bar Harbor.

- 6 -

LAKE SUNAPEE BANK PROFIT SHARING –

STOCK OWNERSHIP PLAN

Notes to Financial Statements

December 31, 2015 and 2014

In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965). ASU 2015-12 reduces the complexity in employee benefit plan accounting and simplifies financial reporting and disclosure requirements. ASU 2015-12 eliminates the requirements to disclose (1) individual investments that represent 5% or more of net assets available for benefits and (2) the net appreciation or depreciation for investments by general type. The Plan elected to apply ASU 2015-02 for the year ended December 31, 2015, and therefore the financial statements and related notes have been presented accordingly.

In May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820). The ASU eliminates the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The Plan elected to apply the ASU for the year ended December 31, 2015, and therefore the financial statements and related notes have been presented accordingly.

The Plan obtained its latest determination letter dated March 31, 2008, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Code. The Plan has been amended since receiving the determination letter. However, the plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan’s financial statements.

Although it has not expressed any intention to do so, the Bank has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions set forth in ERISA.

LSBG, formerly New Hampshire Thrift Bancshares, Inc., is the holding company of the Bank. The Plan’s Employer Stock Fund investment includes 232,850 shares with a fair value of $3,266,891 and 224,714 shares with a fair value of $3,510,034 of LSBG stock at December 31, 2015 and 2014, respectively.

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain 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.

The fair value measurement accounting literature establishes a framework for measuring fair value that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy consists of three broad

- 7 -

LAKE SUNAPEE BANK PROFIT SHARING –

STOCK OWNERSHIP PLAN

Notes to Financial Statements

December 31, 2015 and 2014

levels: Level 1 inputs consist of unadjusted prices in active markets for identical assets and have the highest priority, and Level 3 inputs have the lowest priority. The Plan uses appropriate techniques based on the available inputs to measure the fair value of its investments. When available, the Plan measures fair value using Level 1 inputs as they generally provide the most reliable evidence of fair value.

The Plan’s investments are reported at fair value in the accompanying statements of net assets available for benefits. The methods used to measure fair value may produce an amount that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Level 1

Mutual funds and the money market fund are valued at the quoted net asset value of shares held by the Plan at year-end.

The fair value of the employer stock fund is based on the value of its underlying assets, which consist of shares of LSBG common stock and a money market fund. In accordance with FASB ASC Topic 820, the investment in the employer stock fund is measured using the net asset value per share (or its equivalent) practical expedient and has not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statements of net assets available for benefits.

The following table sets forth, by level within the fair value hierarchy, the Plan’s assets as of December 31, 2015 and 2014.

- 8 -