Camden National Corporation Reports Second Quarter 2018 Earnings

Q2 2018 vs. Q2 2017 Increase in Net Income of 19% and Diluted Earnings Per Share of 18%

Company Release - 7/31/2018 8:30 AM ET

CAMDEN, Maine, July 31, 2018 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company"), a $4.2 billion bank holding company headquartered in Camden, Maine, reported net income for the second quarter of 2018 of $12.2 million and diluted earnings per share ("EPS") of $0.78 per share, representing increases over the second quarter of 2017 of 19% and 18%, respectively. For the second quarter of 2018, the Company's return on average assets was 1.19%, return on average equity was 12.10% and efficiency ratio1 was 58.39%.

"We reported record high net income of $25.0 million for the first half of 2018 due to strong operating performance, solid asset quality and the benefit of the federal tax reform," said Gregory A. Dufour, President and Chief Executive Officer of Camden National. "Our return on average equity during this period was 12.50%, compared to 10.27% for the same period last year. We continue to deliver on our consistent, long-term strategy to gain market share and build and cultivate long-term relationships with our customers."

Dufour added, "We continue to focus on generating shareholder value. Late last year, we announced a 9% increase in our fourth quarter 2017 dividend, and recently announced a 20% increase in our second quarter 2018 dividend bringing the quarterly dividend to $0.30 per share."

For the six months ended June 30, 2018, the Company reported net income of $25.0 million and diluted EPS of $1.60 per share, representing increases over the same period last year of 23%. For the six months ended June 30, 2018, the Company's return on average assets was 1.24% and efficiency ratio was 58.57%.

"In April, we announced the re-appointment of Robin A. Sawyer, CPA as a member of the Company's Board of Directors," said Dufour. "We are thrilled to have Robin back. Her skill-set and experience within the financial industry and large-company experience complement the strengths of our already distinguished Board of Directors."



1

This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures" for further details.

SECOND QUARTER 2018 FINANCIAL HIGHLIGHTS

  • Net income for the second quarter of 2018 increased $2.0 million, or 19%, over the second quarter of 2017, and decreased $603,000, or 5%, compared to last quarter.
  • Total loans grew $78.4 million in the second quarter of 2018, representing annualized loan growth of 11%.
  • Average low-cost deposits2 for the second quarter of 2018 of $2.3 billion increased 10% over the second quarter of 2017, and 1% over last quarter.
  • Quarterly dividend to shareholders increased $0.05 per share, or 20%, to $0.30 per share, compared to the first quarter of 2018.

FINANCIAL CONDITION

Total assets of $4.2 billion at June 30, 2018 increased 3% since December 31, 2017 driven by loan growth, including loans held for sale, of $89.6 million, or 3%. For the first half of 2018, loan growth was driven by residential mortgages of $49.5 million, or 6%, followed by commercial real estate loan growth of $26.0 million, or 2%, and commercial loan growth, excluding the Healthcare Professional Funding Corporation ("HPFC"), of $13.0 million, or 3%.

The Company sold $93.0 million, or 47%, of its residential mortgage production originated in the first half of 2018, compared to $78.7 million sold, or 50%, over the same period last year.

Total funding at June 30, 2018 was $3.7 billion, representing an increase of 3% since December 31, 2017 led by low-cost deposit growth of $46.7 million, or 2%, and borrowings of $49.9 million, or 8%. Average deposits (excluding brokered deposits) for the six months ended June 30, 2018 were $2.8 billion, representing an increase of $206.2 million, or 8%, over the same period last year, which was driven by average low-cost deposit growth of 9%.

At June 30, 2018, our loan-to-deposit ratio was 94%, compared to 93% at December 31, 2017 and June 30, 2017.

The Company's capital position at June 30, 2018 was well in excess of regulatory requirements, including a total risk-based capital ratio of 14.33% and a Tier I leverage ratio of 9.30%. At June 30, 2018, the Company's tangible common equity ratio1 was 7.59%.

ASSET QUALITY

The Company maintained strong asset quality across its loan portfolio with non-performing loans to total loans of 0.69% at June 30, 2018, compared to 1.12% at June 30, 2017. Asset quality improvement over the past year led to a decrease in the provision for credit losses of $1.5 million for the six months ended June 30, 2018 compared to the same period last year.

For the second quarter of 2018, a $983,000 provision for credit losses was recognized primarily attributable to loan growth of $78.4 million. Annualized net charge-offs to average loans for the second quarter of 2018 were 0.04%, compared to 0.11% for the second quarter of 2017. Loans 30-89 days past due to total loans at June 30, 2018 were 0.20%.



1

This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures" for further details.

2

Low-cost deposits include demand, interest checking, savings and money market.

OPERATING RESULTS (Second Quarter 2018 vs. Second Quarter 2017)

Net income for the second quarter of 2018 was $12.2 million, representing an increase over the second quarter of 2017 of $2.0 million, or 19%. The increase between periods was driven by:

  • A decrease in income tax expense of $1.8 million, or 39%, primarily due to a decrease in the Company's effective income tax rate as the federal corporate income tax rate was reduced under the Tax Cuts and Jobs Act of 2017 ("Tax Act"), which went into effect in 2018.
  • An increase in net interest income of $855,000, or 3%, driven by:
    • Average loan growth of 5% and a shift in funding mix due to strong average low-cost deposit growth of 10% between periods. For the second quarter of 2018, average low-cost deposits were 63% of average total funding, compared to 59% for the second quarter of 2017.
    • Net interest margin on a fully-taxable basis decreased 6 basis points between periods to 3.10% for the second quarter of 2018. The decrease in net interest margin between periods was due to (i) lower fair value mark accretion and recoveries on previously charged-off acquired loans of $283,000, which resulted in a decrease of 3 basis points between periods, and (ii) the change in the federal corporate income tax rate in 2018 accounted for a 3 basis points decrease between periods.
  • A decrease in provision for credit losses of $418,000 resulting from improved overall asset quality between periods.
  • Partially offset by:
    • An increase in non-interest expense of $737,000, or 3%, due to (i) an increase in employee-related costs of $566,000, or 5%, including normal merit increases, an increase in headcount, and other personnel-related expenses; (ii) an increase in professional and consulting fees of $263,000; and (iii) an increase in other expenses of $180,000 driven by recruiting and training costs. Intangible amortization expense decreased $291,000 between periods partially offsetting the aforementioned increases.
    • A decrease in non-interest income of $387,000, or 4%, primarily due to (i) a decrease in fees generated from the back-to-back commercial loan swap program of $483,000 and (ii) a decrease in mortgage banking income of $328,000 primarily driven by a decrease in fair value mark accounting on mortgage banking activities and lower gains on mortgage sales due to a 30 basis points decrease in the average gain rate.

OPERATING RESULTS (Linked Quarter)

Net income for the second quarter of 2018 decreased $603,000, or 5%, and diluted EPS decreased $0.04 per share, or 5%, compared to the previous quarter. The decrease between periods was driven by:

  • An increase in provision for credit losses of $1.5 million driven by 3% loan growth and the resolution of a large commercial real estate loan last quarter that drove a significant allowance for loan loss reversal.
  • An increase in non-interest expense of $591,000, or 3%, due to an increase in professional and consulting fees, collection-related costs and recruiting and training costs. Net occupancy costs decreased between periods as we enter the summer months.
  • Partially offset by an increase in revenues3 of $1.3 million, or 3%.
    • Non-interest income increased $697,000, or 8%, driven by an increase in mortgage banking income of $218,000, debit card income of $197,000 and fiduciary income, including brokerage and wealth management fees, totaling $124,000.
    • Net interest income increased $579,000, or 2%, driven by an increase in average interest-earning assets of $49.2 million led by average loan growth between periods. Net interest margin on a fully-taxable basis remained at 3.10% across periods.

 



3

Revenue is the sum of net interest income and non-interest income.

SECOND QUARTER 2018 DIVIDEND

The Company declared a second quarter 2018 dividend of $0.30 per share, payable on July 31, 2018, to shareholders of record as of July 13, 2018. This distribution represents an annualized dividend yield of 2.63%, based on the June 29, 2018 (last business day) closing price of Camden National's common stock at $45.71 per share as reported by NASDAQ.

CONFERENCE CALL

Camden National will host a conference call and webcast at 1:00 p.m., Eastern time, on Tuesday, July 31, 2018 to discuss its second quarter 2018 financial results and outlook. Participants should dial in to the call 10 - 15 minutes before it begins. Information about the conference call is as follows:

Live dial-in (domestic):

(888) 349-0139

Live dial-in (international):

(412) 542-4154

Live webcast:

http://services.choruscall.com/links/cac180731.html

A link to the live webcast will be available on Camden National's website under "Investor Relations" at www.CamdenNational.com prior to the meeting, and a replay of the webcast will be available on Camden National's website following the conference call. The transcript of the conference call will also be available on Camden National's website approximately two days after the conference call.

ABOUT CAMDEN NATIONAL CORPORATION

Camden National Corporation (NASDAQ:CAC), headquartered in Camden, Maine, is the largest publicly traded bank holding company in Northern New England with $4.2 billion in assets and nearly 650 employees. Camden National Bank, its subsidiary, is a full-service community bank founded in 1875 that offers an array of consumer and business financial products and services, accompanied by the latest in digital banking technology to empower customers to bank the way they want. The Bank provides personalized service through a network of 60 banking centers, 71 ATMs, and lending offices in New Hampshire and Massachusetts, all complemented by 24/7 live phone support. 2017 marks the 8th time Camden National Bank has received the "Lender at Work for Maine" Award from the Finance Authority of Maine. Comprehensive wealth management, investment, and financial planning services are delivered by Camden National Wealth Management. To learn more, visit www.CamdenNational.com. Member FDIC.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, projections and other statements, which are subject to numerous risks, assumptions and uncertainties. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures; changes in the interest rate environment; changes in general economic conditions; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; legislative and regulatory changes that adversely affect the business in which Camden National is engaged; changes in the securities markets and other risks and uncertainties disclosed from time to time in in Camden National's Annual Report on Form 10-K for the year ended December 31, 2017, as updated by other filings with the Securities and Exchange Commission ("SEC"). Camden National does not have any obligation to update forward-looking statements.

USE OF NON-GAAP MEASURES

In addition to evaluating the Company's results of operations in accordance with generally accepted accounting principles in the United States ("GAAP"), management supplements this evaluation with certain non-GAAP financial measures, such as return on average tangible equity; the efficiency and tangible common equity ratios; and tangible book value per share. Management utilizes these non-GAAP financial measures for purposes of measuring our performance against our peer group and other financial institutions and analyzing our internal performance. We also believe these non-GAAP financial measures help investors better understand the Company's operating performance and trends and allow for better performance comparisons to other financial institutions. In addition, these non-GAAP financial measures remove the impact of unusual items that may obscure trends in the Company's underlying performance. These disclosures should not be viewed as a substitute for GAAP operating results, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other financial institutions. Reconciliation to the comparable GAAP financial measure can be found in this document.

ANNUALIZED DATA

Certain returns, yields and performance ratios are presented on an "annualized" basis. This is done for analytical and decision-making purposes to better discern underlying performance trends when compared to full-year or year-over-year amounts.

Selected Financial Data

(unaudited)




At or For The

Three Months Ended


At or For The
Six Months Ended

(In thousands, except number of shares and per share data)


June 30, 
2018


March 31, 
2018


June 30, 
2017


June 30, 
2018


June 30, 
2017

Financial Condition Data











Investments


$

918,404


$

913,653


$

932,338


$

918,404


$

932,338

Loans and loans held for sale


2,880,185


2,798,696


2,747,053


2,880,185


2,747,053

Allowance for loan losses


23,668


22,990


24,394


23,668


24,394

Total assets


4,193,782


4,113,185


4,036,367


4,193,782


4,036,367

Deposits


3,056,119


3,025,580


2,940,866


3,056,119


2,940,866

Borrowings


661,393


622,347


641,662


661,393


641,662

Shareholders' equity


409,939


404,055


406,960


409,939


406,960

Operating Data











Net interest income


$

29,481


$

28,902


$

28,626


$

58,383


$

56,481

Provision (credit) for credit losses


983


(497)


1,401


486


1,980

Non-interest income


9,501


8,804


9,888


18,305


18,460

Non-interest expense


22,895


22,304


22,158


45,199


43,586

Income before income tax expense


15,104


15,899


14,955


31,003


29,375

Income tax expense


2,887


3,079


4,721


5,966


9,065

Net income


$

12,217


$

12,820


$

10,234


$

25,037


$

20,310

Key Ratios











Return on average assets


1.19%


1.28%


1.03%


1.24%


1.04%

Return on average equity


12.10%


12.91%


10.17%


12.50%


10.27%

Net interest margin


3.10%


3.10%


3.16%


3.10%


3.15%

Non-performing loans to total loans


0.69%


0.69%


1.12%


0.69%


1.12%

Non-performing assets to total assets


0.48%


0.47%


0.77%


0.48%


0.77%

Annualized net charge-offs to average loans


0.04%


0.10%


0.11%


0.07%


0.05%

Tier I leverage capital ratio


9.30%


9.23%


8.92%


9.30%


8.92%

Total risk-based capital ratio


14.33%


14.32%


13.87%


14.33%


13.87%

Per Share Data











Basic earnings per share


$

0.78


$

0.82


$

0.66


$

1.60


$

1.31

Diluted earnings per share


$

0.78


$

0.82


$

0.66


$

1.60


$

1.30

Cash dividends declared per share


$

0.30


$

0.25


$

0.23


$

0.55


$

0.46

Book value per share


$

26.32


$

25.96


$

26.23


$

26.32


$

26.23

Weighted average number of common shares outstanding


15,572,848


15,541,975


15,512,761


15,557,500


15,500,862

Diluted weighted average number of common shares 
     outstanding


15,629,779


15,603,380


15,586,571


15,615,038


15,576,711

Non-GAAP Measures(1)











Return on average tangible equity


16.23%


17.35%


13.96%


16.78%


14.16%

Efficiency ratio


58.39%


58.76%


56.76%


58.57%


57.36%

Tangible common equity ratio


7.59%


7.59%


7.79%


7.59%


7.79%

Tangible book value per share


$

19.94


$

19.57


$

19.75


$

19.94


$

19.75


(1) Please see "Reconciliation of non-GAAP to GAAP Financial Measures (unaudited)."

 

 

Consolidated Statements of Condition Data

(unaudited)


(In thousands, except number of shares)


June 30, 
2018


December 31, 
2017


June 30, 
2017

ASSETS







Cash and due from banks


$

49,542


$

44,057


$

46,989

Interest-bearing deposits in other banks


67,604


58,914


46,044

Total cash, cash equivalents and restricted cash


117,146


102,971


93,033

Investments:







Available-for-sale securities, at fair value


799,000


789,899


810,858

Held-to-maturity securities, at amortized cost (fair value of $91.6 million, $94.9 million 
and $95.0 million, respectively)


93,062


94,073


94,340

Other investments


26,342


23,670


27,140

Total investments


918,404


907,642


932,338

Loans held for sale, at fair value


12,656


8,103


10,784

Loans:







Residential real estate


907,910


858,369


831,577

Commercial real estate


1,190,052


1,164,023


1,138,756

Commercial(1)


426,390


418,520


421,818

Consumer and home equity


343,177


341,527


344,118

Total loans


2,867,529


2,782,439


2,736,269

      Less: allowance for loan losses


(23,668)


(24,171)


(24,394)

       Net loans


2,843,861


2,758,268


2,711,875

Goodwill


94,697


94,697


94,697

Other intangible assets


4,592


4,955


5,820

Bank-owned life insurance


88,706


87,489


79,266

Premises and equipment, net


41,017


41,891


42,362

Deferred tax assets


25,506


22,776


36,532

Other assets


47,197


36,606


29,660

Total assets


$

4,193,782


$

4,065,398


$

4,036,367

LIABILITIES AND SHAREHOLDERS' EQUITY







Liabilities







Deposits:







Demand


$

496,368


$

478,643


$

424,174

Interest checking


879,668


855,570


737,532

Savings and money market


990,408


985,508


971,156

Certificates of deposit


472,215


475,010


456,227

Brokered deposits


217,460


205,760


351,777

Total deposits


3,056,119


3,000,491


2,940,866

Short-term borrowings


591,648


541,796


572,004

Long-term borrowings


10,756


10,791


10,825

Subordinated debentures


58,989


58,911


58,833

Accrued interest and other liabilities


66,331


49,996


46,879

Total liabilities


3,783,843


3,661,985


3,629,407

Shareholders' equity


409,939


403,413


406,960

Total liabilities and shareholders' equity


$

4,193,782


$

4,065,398


$

4,036,367


(1) Includes the HPFC loan portfolio.

 

 

Consolidated Statements of Income Data

(unaudited)




For The
Three Months Ended

(In thousands, except per share data)


June 30, 
2018


March 31,
2018


June 30,
2017

Interest Income







Interest and fees on loans


$

31,367


$

29,834


$

28,423

Interest on U.S. government and sponsored enterprise obligations (taxable)


4,386


4,225


4,355

Interest on state and political subdivision obligations (nontaxable)


658


672


691

Interest on deposits in other banks and other investments


678


547


471

Total interest income


37,089


35,278


33,940

Interest Expense







Interest on deposits


4,459


3,749


2,987

Interest on borrowings


2,298


1,780


1,476

Interest on subordinated debentures


851


847


851

Total interest expense


7,608


6,376


5,314

Net interest income


29,481


28,902


28,626

Provision (credit) for credit losses


983


(497)


1,401

Net interest income after provision (credit) for credit losses


28,498


29,399


27,225

Non-Interest Income







Debit card income


2,126


1,929


1,992

Service charges on deposit accounts


1,933


1,836


1,957

Mortgage banking income, net


1,609


1,391


1,937

Income from fiduciary services


1,407


1,283


1,355

Brokerage and insurance commissions


685


650


548

Bank-owned life insurance


609


608


570

Other service charges and fees


506


462


501

Net gain on sale of securities


31



Other income


595


645


1,028

Total non-interest income


9,501


8,804


9,888

Non-Interest Expense







Salaries and employee benefits


12,728


12,562


12,162

Furniture, equipment and data processing


2,549


2,586


2,450

Net occupancy costs


1,625


1,873


1,689

Consulting and professional fees


1,116


804


853

Debit card expense


776


730


712

Regulatory assessments


501


499


488

Amortization of intangible assets


181


181


472

Other real estate owned and collection costs, net


251


75


344

Other expenses


3,168


2,994


2,988

Total non-interest expense


22,895


22,304


22,158

Income before income tax expense


15,104


15,899


14,955

Income tax expense


2,887


3,079


4,721

Net Income


$

12,217


$

12,820


$

10,234

Per Share Data







Basic earnings per share


$

0.78


$

0.82


$

0.66

Diluted earnings per share


$

0.78


$

0.82


$

0.66

 

 

Consolidated Statements of Income Data

(unaudited)



For The
Six Months Ended
June 30,

(In thousands, except per share data)


2018


2017

Interest Income





Interest and fees on loans


$

61,201


$

55,485

Interest on U.S. government and sponsored enterprise obligations (taxable)


8,611


8,611

Interest on state and political subdivision obligations (nontaxable)


1,330


1,393

Interest on federal funds sold and other investments


1,225


865

Total interest income


72,367


66,354

Interest Expense





Interest on deposits


8,208


5,541

Interest on borrowings


4,078


2,637

Interest on subordinated debentures


1,698


1,695

Total interest expense


13,984


9,873

Net interest income


58,383


56,481

Provision for credit losses


486


1,980

Net interest income after provision for credit losses


57,897


54,501

Non-Interest Income





Debit card income


4,055


3,826

Service charges on deposit accounts


3,769


3,780

Mortgage banking income, net


3,000


3,490

Income from fiduciary services


2,690


2,602

Brokerage and insurance commissions


1,335


1,001

Bank-owned life insurance


1,217


1,147

Other service charges and fees


968


969

Net gain on sale of securities


31


Other income


1,240


1,645

Total non-interest income


18,305


18,460

Non-Interest Expense





Salaries and employee benefits


25,290


24,095

Furniture, equipment and data processing


5,135


4,775

Net occupancy costs


3,498


3,635

Consulting and professional fees


1,920


1,698

Debit card expense


1,506


1,372

Regulatory assessments


1,000


1,033

Amortization of intangible assets


362


944

Other real estate owned and collection costs


326


300

Other expenses


6,162


5,734

Total non-interest expense


45,199


43,586

Income before income tax expense


31,003


29,375

Income tax expense


5,966


9,065

Net Income


$

25,037


$

20,310

Per Share Data





Basic earnings per share


$

1.60


$

1.31

Diluted earnings per share


$

1.60


$

1.30

 

 

Quarterly Average Balance and Yield/Rate Analysis

(unaudited)



For The Three Months Ended



Average Balance


Yield/Rate

(In thousands)


June 30, 
2018


March 31,
2018


June 30,
2017


June 30, 
2018


March 31,
2018


June 30,
2017

Assets













Interest-earning assets:













Interest-bearing deposits in other banks(1)


$

58,500


$

52,510


$

37,337


1.57%


1.40%


1.01%

Securities - taxable


834,675


826,529


843,370


2.32%


2.22%


2.24%

Securities - nontaxable(2)


98,015


99,560


101,807


3.40%


3.42%


4.17%

Loans(3)(4):













Residential real estate


884,977


860,783


826,353


4.20%


4.12%


4.12%

Commercial real estate


1,180,421


1,171,598


1,114,508


4.35%


4.20%


4.05%

Commercial(2)


351,711


349,963


334,761


4.42%


4.27%


4.23%

Municipal(2)


21,993


17,277


18,268


3.13%


3.33%


3.42%

Consumer and home equity


340,782


341,078


341,544


5.01%


4.76%


4.36%

HPFC


41,182


43,757


53,843


7.80%


7.99%


8.78%

     Total loans


2,821,066


2,784,456


2,689,277


4.43%


4.30%


4.23%

Total interest-earning assets(1)


3,812,256


3,763,055


3,671,791


3.90%


3.78%


3.74%

Other assets


294,752


292,312


307,608







Total assets


$

4,107,008


$

4,055,367


$

3,979,399




















Liabilities & Shareholders' Equity













Deposits:













Demand


$

464,164


$

452,629


$

392,789


—%


—%


—%

Interest checking


839,510


833,410


732,096


0.47%


0.38%


0.18%

Savings


483,192


493,660


489,408


0.06%


0.06%


0.06%

Money market


507,545


487,685


477,734


0.82%


0.66%


0.49%

Certificates of deposit(4)


472,637


472,213


456,933


1.06%


1.00%


0.92%

Total deposits


2,767,048


2,739,597


2,548,960


0.48%


0.42%


0.32%

Borrowings:













Brokered deposits


239,105


238,870


349,762


1.89%


1.59%


1.08%

Customer repurchase agreements


247,789


237,056


232,295


1.03%


0.72%


0.49%

Subordinated debentures


58,970


58,930


58,814


5.79%


5.83%


5.80%

Other borrowings


330,096


328,141


345,155


2.02%


1.68%


1.38%

Total borrowings


875,960


862,997


986,026


1.96%


1.68%


1.33%

Total funding liabilities


3,643,008


3,602,594


3,534,986


0.84%


0.72%


0.60%

Other liabilities


59,126


50,147


40,790







Shareholders' equity


404,874


402,626


403,623







Total liabilities & shareholders' equity


$

4,107,008


$

4,055,367


$

3,979,399







Net interest rate spread (fully-taxable equivalent)(1)








3.06%


3.06%


3.14%

Net interest margin (fully-taxable equivalent)(1)


3.10%


3.10%


3.16%

Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection
of previously charged-off acquired loans(1)(4)


3.04%


3.04%


3.06%



(1)

Balances for the three months ended June 30, 2017 were revised to include average interest-bearing deposits in other banks in total average interest-earning assets. Previously, average interest-bearing deposits in other banks was presented in other assets.

(2)

Reported on a tax-equivalent basis using the corporate federal income tax rate in effect for the period, including certain commercial loans.

(3)

Non-accrual loans and loans held for sale are included in total average loans.

(4)

Excludes the impact of the fair value mark accretion on loans and certificates of deposit generated in purchase accounting and collection of previously charged-off acquired loans for the three months ended June 30, 2018, March 31, 2018 and June 30, 2017 totaling $578,000, $558,000 and $861,000, respectively.

 

 

Year-to-Date Average Balance and Yield/Rate Analysis

(unaudited)



For The Six Months Ended



Average Balance


Yield/Rate

(In thousands)


June 30,

2018


June 30,

2017


June 30,

2018


June 30,

2017

Assets









Interest-earning assets:









Interest-bearing deposits in other banks(1)


$

55,254


$

35,911


1.50%


0.86%

Securities - taxable


830,624


838,294


2.27%


2.22%

Securities - nontaxable(2)


98,783


102,364


3.41%


4.19%

Loans(3)(4):









Residential real estate


872,947


820,522


4.16%


4.11%

Commercial real estate


1,176,034


1,095,425


4.28%


3.99%

Commercial(2)


350,842


327,527


4.35%


4.16%

Municipal(2)


19,648


17,176


3.22%


3.41%

Consumer and home equity


340,929


342,156


4.88%


4.34%

HPFC


42,462


56,035


7.89%


8.55%

     Total loans


2,802,862


2,658,841


4.37%


4.19%

Total interest-earning assets(1)


3,787,523


3,635,410


3.84%


3.70%

Other assets


293,807


306,419





Total assets


$

4,081,330


$

3,941,829














Liabilities & Shareholders' Equity









Deposits:









Demand


$

458,428


$

392,233


—%


—%

Interest checking


836,477


724,560


0.42%


0.17%

Savings


488,397


489,226


0.06%


0.06%

Money market


497,670


480,807


0.74%


0.47%

Certificates of deposit(4)


472,426


460,340


1.03%


0.90%

Total deposits


2,753,398


2,547,166


0.45%


0.31%

Borrowings:









Brokered deposits


238,988


329,292


1.74%


0.98%

Customer repurchase agreements


242,452


226,972


0.88%


0.41%

Subordinated debentures


58,950


58,795


5.81%


5.81%

Other borrowings


329,124


338,076


1.85%


1.30%

Total borrowings


869,514


953,135


1.82%


1.26%

Total funding liabilities


3,622,912


3,500,301


0.78%


0.57%

Other liabilities


54,662


42,552





Shareholders' equity


403,756


398,976





Total liabilities & shareholders' equity


$

4,081,330


$

3,941,829





Net interest rate spread (fully-taxable equivalent)(1)


3.06%


3.13%

Net interest margin (fully-taxable equivalent)(1)


3.10%


3.15%

Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection of previously charged-
off acquired loans(1)(4)


3.04%


3.06%



(1)

Balances for the six months ended June 30, 2017 were revised to include average interest-bearing deposits in other banks in total average interest-earning assets. Previously, average interest-bearing deposits in other banks was presented in other assets.

(2)

Reported on a tax-equivalent basis using the corporate federal income tax rate in effect for the period, including certain commercial loans.

(3)

Non-accrual loans and loans held for sale are included in total average loans.

(4)

Excludes the impact of the fair value mark accretion on loans and certificates of deposit generated in purchase accounting and collection of previously charged-off acquired loans for the six months ended June 30, 2018 and 2017 totaling $1.1 million and $1.7 million, respectively.

 

 

Asset Quality Data

(unaudited)


(In thousands)


At or For The
Six Months Ended
June 30, 2018


At or For The
Three Months Ended
March 31, 2018


At or For The
Year Ended
December 31, 2017


At or For The
Nine Months Ended
September 30, 2017


At or For The
Six Months Ended
June 30, 2017

Non-accrual loans:











Residential real estate


$

5,742


$

6,185


$

4,979


$

4,465


$

4,890

Commercial real estate


5,600


4,603


5,642


5,887


16,291

Commercial


1,934


1,991


2,000


1,830


2,056

Consumer


1,700


1,464


1,650


1,626


1,371

HPFC


834


655


1,043


838


1,083

Total non-accrual loans


15,810


14,898


15,314


14,646


25,691

Loans 90 days past due and accruing






76

   Accruing troubled-debt restructured loans not included above


4,000


4,361


5,012


5,154


4,809

Total non-performing loans


19,810


19,259


20,326


19,800


30,576

Other real estate owned


130


130


130


341


341

Total non-performing assets


$

19,940


$

19,389


$

20,456


$

20,141


$

30,917

Loans 30-89 days past due:











Residential real estate


$

2,222


$

2,777


$

5,277


$

3,169


$

3,020

Commercial real estate


309


1,121


1,135


2,297


3,442

Commercial


1,490


243


518


712


269

Consumer


1,258


1,190


1,197


1,256


1,378

HPFC


455


528


887


938


639

Total loans 30-89 days past due


$

5,734


$

5,859


$

9,014


$

8,372


$

8,748

Allowance for loan losses at the beginning of the period


$

24,171


$

24,171


$

23,116


$

23,116


$

23,116

Provision (credit) for loan losses


490


(500)


3,026


2,786


1,984

Charge-offs:











Residential real estate


116


31


482


433


195

Commercial real estate


512


426


124


81


12

Commercial


298


171


1,014


650


281

Consumer


266


175


558


493


454

HPFC




290


274


81

Total charge-offs


1,192


803


2,468


1,931


1,023

Total recoveries


(199)


(122)


(497)


(442)


(317)

Net charge-offs


993


681


1,971


1,489


706

Allowance for loan losses at the end of the 
     period


$

23,668


$

22,990


$

24,171


$

24,413


$

24,394

Components of allowance for credit losses:











Allowance for loan losses


$

23,668


$

22,990


$

24,171


$

24,413


$

24,394

Liability for unfunded credit commitments


16


23


20


22


7

Allowance for credit losses


$

23,684


$

23,013


$

24,191


$

24,435


$

24,401

Ratios:











Non-performing loans to total loans


0.69%


0.69%


0.73%


0.72%


1.12%

Non-performing assets to total assets


0.48%


0.47%


0.50%


0.50%


0.77%

Allowance for loan losses to total loans


0.83%


0.82%


0.87%


0.89%


0.89%

Net charge-offs to average loans (annualized):











Quarter-to-date


0.04%


0.10%


0.07%


0.11%


0.11%

Year-to-date


0.07%


0.10%


0.07%


0.07%


0.05%

Allowance for loan losses to non-performing loans


119.48%


119.37%


118.92%


123.30%


79.78%

Loans 30-89 days past due to total loans


0.20%


0.21%


0.32%


0.30%


0.32%

 

 

Reconciliation of non-GAAP to GAAP Financial Measures (unaudited)


Return on Average Tangible Equity:



For the
Three Months Ended


For the
Six Months Ended

(In thousands)


June 30,

 2018


March 31,

 2018


June 30,

 2017


June 30,

 2018


June 30,

 2017

Net income, as presented


$

12,217


$

12,820


$

10,234


$

25,037


$

20,310

Add: amortization of intangible assets, net of 
     tax(1)


143


143


307


286


614

Net income, adjusted for amortization of 
     intangible assets


$

12,360


$

12,963


$

10,541


$

25,323


$

20,924

Average equity


$

404,874


$

402,626


$

403,623


$

403,756


$

398,976

Less: average goodwill and other intangible 
     assets


(99,377)


(99,568)


(100,745)


(99,472)


(100,986)

Average tangible equity


$

305,497


$

303,058


$

302,878


$

304,284


$

297,990

Return on average tangible equity


16.23%


17.35%


13.96%


16.78%


14.16%

Return on average equity


12.10%


12.91%


10.17%


12.50%


10.27%


(1) Reported on a tax-equivalent basis using the corporate federal income tax rate in effect for the respective period.




Efficiency Ratio:





For the
Three Months Ended


For the
Six Months Ended

(In thousands)


June 30, 
2018


March 31, 
2018


June 30, 
2017


June 30, 
2018


June 30, 
2017

Non-interest expense, as presented


$

22,895


$

22,304


$

22,158


$

45,199


$

43,586

Net interest income, as presented


$

29,481


$

28,902


$

28,626


$

58,383


$

56,481

Add: effect of tax-exempt income(1)


257


254


525


511


1,045

Non-interest income, as presented


9,501


8,804


9,888


18,305


18,460

Less: net gain on sale of securities


(31)




(31)


Adjusted net interest income plus non-
     interest income


$

39,208


$

37,960


$

39,039


$

77,168


$

75,986

Non-GAAP efficiency ratio


58.39%


58.76%


56.76%


58.57%


57.36%

GAAP efficiency ratio


58.73%


59.15%


57.53%


58.94%


58.16%


(1) Reported on a tax-equivalent basis using the corporate federal income tax rate in effect for the respective period.




Tangible Book Value Per Share and Tangible Common Equity Ratio:

(In thousands, except number of shares and per share data)


June 30, 
2018


March 31,
2018


June 30, 
2017

Tangible Book Value Per Share:







Shareholders' equity, as presented


$

409,939


$

404,055


$

406,960

Less: goodwill and other intangible assets


(99,289)


(99,471)


(100,517)

Tangible shareholders' equity


$

310,650


$

304,584


$

306,443

Shares outstanding at period end


15,576,249


15,565,868


15,512,914

Tangible book value per share


$

19.94


$

19.57


$

19.75

Book value per share


$

26.32


$

25.96


$

26.23

Tangible Common Equity Ratio:

Total assets


$

4,193,782


$

4,113,185


$

4,036,367

Less: goodwill and other intangibles


(99,289)


(99,471)


(100,517)

Tangible assets


$

4,094,493


$

4,013,714


$

3,935,850

Tangible common equity ratio


7.59%


7.59%


7.79%

Shareholders' equity to total assets


9.77%


9.82%


10.08%

 

 

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SOURCE Camden National Corporation