Camden National Corporation Reports Fourth Quarter And Annual Earnings For 2018

Company Sets Record Net Income of $53.1 Million for 2018

Company Release - 1/29/2019 8:30 AM ET

CAMDEN, Maine, Jan. 29, 2019 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company"), a $4.3 billion bank holding company headquartered in Camden, Maine, reported net income for 2018 of $53.1 million and diluted earnings per share ("EPS") of $3.39, representing an increase of 86% over 2017. Net income and diluted EPS for 2018 each grew 24% over last year, adjusted for a $14.3 million income tax charge recorded in the fourth quarter of 2017 after the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was enacted1. Return on average assets for 2018 was 1.28%, and return on average equity was 12.92% for the same period.

"We are pleased to report that 2018 was a banner year for the Company," said Gregory A. Dufour, President and Chief Executive Officer of the Company. "We delivered outstanding operating and financial performance driven by the realization of many key investments we've made over the past several years and the benefit of a lower federal income tax rate. We experienced strong deposit growth of 15% during the year and loan growth of 9% over the same period. At the same time, asset quality continues to be excellent with non-performing assets comprising just 34 basis points of total assets at year-end."

Net income for the fourth quarter of 2018 was $14.0 million and diluted EPS was $0.89, representing an increase over the fourth quarter of 2017 of $17.2 million and $1.09 per share, respectively, and a slight decrease compared to the third quarter of 2018 of $80,000 and $0.01 per share, respectively. Fourth quarter 2018 net income and diluted EPS grew $2.9 million and $0.18 per share, respectively, over the fourth quarter of 2017, adjusted for a $14.3 million income tax charge recorded in the fourth quarter of 2017 due to the Tax Act1.

"We had a great fourth quarter as loan balances grew 4% and deposits grew 8%," said Dufour. "Our loan growth was funded by low-cost deposits2, thus expanding net interest margin to 3.21%, a 7 basis point increase over last quarter. Our loan-to-deposit ratio at December 31, 2018, was 87%, positioning us well as we enter 2019."

In December 2018, the Company's Board of Directors announced a dividend of $0.30 per share, reflecting a dividend yield of 3.34% on December 31, 2018. On January 22, 2019, the Company announced the approval of its common share repurchase program for up to 775,000 shares, or approximately 5% of the Company's outstanding common stock.

Dufour added, "In November 2018, we announced the opening of our new prototype, state-of-the-art banking center located in the Bill & Joan Alfond Main Street Commons in downtown Waterville, Maine, following the sale of the Company's Waterville property to Colby College earlier this year. The revitalization efforts by the City and Colby College have been nothing short of extraordinary, and we are excited to be part of it."

Fourth Quarter 2018 Highlights:


Year-to-Date 2018 Highlights:

  • Net income of $14.0 million and diluted EPS of $0.89

  • Net income of $53.1 million and diluted EPS of $3.39
  • Return on average assets was 1.32% and return on average equity was 13.19%

  • Return on average assets was 1.28% and return on average equity was 12.92%
  • Efficiency ratio on a GAAP basis was 57.42% and on a non-GAAP basis was 56.50%1

  • Efficiency ratio on a GAAP basis was 57.98% and on a non-GAAP basis was 57.71%1
  • Loan growth of 4% and deposit growth of 8%

  • Loan growth of 9% and deposit growth of 15%
  • Net recoveries of $1.2 million

  • Net charge-offs of $304,000 and 0.01% of average loans

FINANCIAL CONDITION

Total assets at December 31, 2018, grew 6% over last year to $4.3 billion. The loan portfolio increased $243.8 million, or 9%, in 2018 to $3.0 billion at December 31, 2018, led by residential and commercial real estate growth of $134.5 million and $105.5 million, respectively, while consumer and home equity loan balances grew 2%. Over the same period, commercial loans decreased 1% as the Healthcare Professional Funding Corporation ("HPFC") loan portfolio continues to run-off.

Total deposits at December 31, 2018, grew 15% over last year to $3.5 billion. Over this period, low-cost deposits2 increased $337.7 million, or 15%, to $2.7 billion at December 31, 2018, led by an increase in checking account deposits of $185.9 million and savings and money market deposits of $151.8 million. At December 31, 2018, interest checking balances included $75.0 million of temporary funds which we anticipate will be fully withdrawn by March 31, 2019.

For 2018, average low-cost deposits2 balances grew $221.1 million, or 10%, to $2.4 billion for the year-ended December 31, 2018. Over the same period, average total borrowings decreased 10%.

The Company's capital position at December 31, 2018 was well in excess of regulatory requirements, including a total risk-based capital ratio of 14.36% and a Tier I leverage ratio of 9.53%. At December 31, 2018, the Company's book value per share was $27.95, representing an 8% increase over December 31, 2017, and its tangible book value per share1 increased 10% over the same period to $21.61 at December 31, 2018.

ASSET QUALITY

Asset quality as of December 31, 2018 was very strong, continuing the trend from the previous quarter. At December 31, 2018, non-performing assets were 0.34% of total assets, and non-performing loans were 0.48% of total loans, representing a decrease of 0.12% and 0.17%, respectively, since September 30, 2018 and 0.16% and 0.25%, respectively, since December 31, 2017. Loans 30-89 days past due were 0.29% of total loans at December 31, 2018.

In the fourth quarter of 2018, a significant commercial credit relationship previously on non-accrual was favorably resolved, which drove a net recovery of $1.2 million for the quarter and net charge-offs of 0.01% of average loans for the year. With this recovery, the provision for credit losses was $7,000 for the fourth quarter of 2018, and $847,000 for the year ended December 31, 2018. At December 31, 2018, the allowance for loan losses was 0.82% of total loans and 171.17% of non-performing loans.

Q4 2018 FINANCIAL OPERATING RESULTS (linked quarter)

The Company reported net income of $14.0 million for the fourth quarter of 2018 and diluted EPS of $0.89, representing a decrease of $80,000 and $0.01 per share, respectively, compared to the third quarter of 2018.

Net interest income of $31.6 million in the fourth quarter of 2018 increased $1.2 million over last quarter. The 4% increase was driven by average deposits growth of $140.9 million, or 5%, between quarters. This enabled the Company to fund its average loan growth of $75.0 million between quarters with lower-cost funding and expand its net interest margin by 7 basis points to 3.21% for the fourth quarter of 2018.

Non-interest income of $9.5 million in the fourth quarter of 2018 decreased $913,000 compared to last quarter. The 9% decrease was driven by (i) net losses from the sale of investment securities of $420,000 recorded in the fourth quarter of 2018 as a result of a portfolio re-balancing effort, compared to net gains from the sale of investment securities of $664,000 the previous quarter, and (ii) a decrease in mortgage banking income of $602,000 as we sold 36% of our residential mortgage originations in the fourth quarter of 2018, compared to 46% last quarter. This was partially offset by an increase in debit card income of $666,000, of which $530,000 was attributable to an annual incentive bonus received in the fourth quarter from VISA©.

The provision for credit losses for the fourth quarter was $7,000, compared to $354,000 last quarter. The decrease was due to $1.2 million in net recoveries in the fourth quarter upon the favorable resolution of a large commercial credit relationship.

Non-interest expense of $23.6 million for the fourth quarter of 2018 increased $414,000 over last quarter. The 2% increase was driven by (i) an increase in donation and marketing-related costs of $194,000, (ii) an increase in occupancy costs of $150,000 due to higher utility, heating and ground maintenance costs during the winter months, and (iii) an increase in collection-related costs of $131,000.

YEAR-TO-DATE FINANCIAL OPERATING RESULTS

The Company reported net income of $53.1 million and diluted EPS of $3.39 for the year ended December 31, 2018, representing an increase of $24.6 million and $1.57 per share, respectively, over the same period last year. In the fourth quarter of 2017 the Tax Act was passed, reducing the federal income tax rate from 35% to 21%, effective January 1, 2018, and a $14.3 million income tax expense charge was recorded. For the year-ended December 31, 2018, it's estimated that the lower federal income tax rate benefit was $9.2 million.

Net interest income of $120.4 million in 2018 increased $5.1 million over 2017. The 4% increase was driven by:

  • Average deposits growth of $222.4 million, or 8%, over last year.
  • Average loans growth of $155.9 million, or 6%, over last year.
  • Net interest margin on a fully-taxable basis for 2018 was 3.16%, compared to 3.19% last year. The decrease between periods was due to lower accretion income on acquired loans and time deposits of $902,000. Excluding accretion income on acquired loans and time deposits, net interest margin on a fully-taxable basis for 2018 was 3.10% for 2018 and 2017.

Non-interest income of $38.2 million in 2018 decreased 1% compared to 2017. The decrease was driven by (i) a decrease in mortgage banking income of $1.4 million as we sold 44% of our residential mortgage originations in 2018, compared to 53% in 2017, (ii) a decrease in loan swap fee income of $619,000, and (iii) a decrease in net gains from the sale of investment securities of $580,000. This was partially offset by (i) an increase in debit card income of $988,000, of which $506,000 was attributable to an increase in the VISA© incentive bonus, and (ii) an increase in brokerage and insurance commissions of $468,000.

The provision for credit losses for the year ended December 31, 2018, was $847,000, compared to $3.0 million for the same period last year. The decrease was due to a decrease in non-performing loans of 29% since December 31, 2017, and net charge-offs of 0.01% of average loans for the year ended December 31, 2018, compared to 0.07% for the same period last year.

Non-interest expense for the year ended December 31, 2018, was $91.9 million, compared to $88.5 million for the same period last year. The 4% increase was driven by:

  • An increase in compensation and related expenses of 5%, driven by normal merit increases, additional positions added throughout 2018, and an 11% increase in health insurance costs.
  • An increase in other expense of $864,000, of which $734,000 was employee- and business-related travel costs.
  • An increase in consulting and professional fees of $634,000, data processing costs of $608,000, and debit card expense of $425,000.
  • The increase was partially offset by a decrease in intangible amortization expense of $1.1 million.

 

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 includes non-interest checking, interest checking, savings and money market accounts.

ANNUAL MEETING

Camden National has scheduled its annual meeting of shareholders for Tuesday, April 30, 2019, at 3:00 p.m. local time, at Point Lookout Resort and Conference Center, 67 Atlantic Highway, Northport, Maine 04849. The date for determining the Company's shareholders of record for the annual meeting is February 22, 2019.

CONFERENCE CALL

Camden National will host a conference call and webcast at 3:00 p.m. Eastern Time on January 29, 2019 to discuss our fourth quarter and year-to-date 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: https://services.choruscall.com/links/cac190129.html

A link to the live webcast will be will be available on Camden National's website under "Investor Relations" at CamdenNational.com prior to the meeting. The transcript of the conference call will also be available on Camden National's website approximately two business 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 $4.3 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. Greenwich Associates named Camden National Bank a 2018 Greenwich Customer Experience (CX) Leader in U.S. Retail Banking, a designation that recognizes top U.S. banks in customer experience. In 2018, Camden National Bank 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 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, as amended, 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 adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average equity, and adjusted return on average tangible equity; tangible common equity ratio; tangible book value per share; and the efficiency ratio. Management believes these non-GAAP financial measures help investors in understanding the Company's operating performance and trends and allow for better performance comparisons to other banks. 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. Annualized data may not be indicative of any four-quarter period, and are presented for illustrative purposes only.

 


Selected Financial Data

(unaudited)

 

 



At or For The

Three Months Ended


At or For The
Year Ended

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


December 31,
 2018


September 30,
 2018


December 31,
 2017


December 31,
 2018


December 31,
 2017

Financial Condition Data











Investments


$

926,678



$

887,835



$

907,642



$

926,678



$

907,642


Loans and loans held for sale


3,030,625



2,919,001



2,790,542



3,030,625



2,790,542


Allowance for loan losses


24,712



23,526



24,171



24,712



24,171


Total assets


4,297,435



4,189,745



4,065,398



4,297,435



4,065,398


Deposits


3,464,474



3,220,755



3,000,491



3,464,474



3,000,491


Borrowings


341,515



479,498



611,498



341,515



611,498


Shareholders' equity


435,825



415,686



403,413



435,825



403,413


Operating Data











Net interest income


$

31,587



$

30,423



$

29,659



$

120,393



$

115,300


Provision for credit losses


7



354



238



847



3,035


Non-interest income


9,479



10,392



9,840



38,176



38,599


Non-interest expense


23,580



23,166



23,099



91,945



88,510


Income before income tax expense


17,479



17,295



16,162



65,777



62,354


Income tax expense


3,502



3,238



19,335



12,706



33,878


Net income (loss)


$

13,977



$

14,057



$

(3,173)



$

53,071



$

28,476


Key Ratios











Return on average assets


1.32

%


1.34

%


(0.31)%



1.28

%


0.71

%

Return on average equity


13.19

%


13.44

%


(3.02)%



12.92

%


7.00

%

Net interest margin


3.21

%


3.14

%


3.20

%


3.16

%


3.19

%

Non-performing loans to total loans


0.48

%


0.65

%


0.73

%


0.48

%


0.73

%

Non-performing assets to total assets


0.34

%


0.46

%


0.50

%


0.34

%


0.50

%

Annualized net (recoveries) charge-offs to average loans


(0.16)

%


0.07

%


0.07

%


0.01

%


0.07

%

Tier I leverage capital ratio


9.53

%


9.42

%


9.07

%


9.53

%


9.07

%

Total risk-based capital ratio


14.36

%


14.55

%


14.14

%


14.36

%


14.14

%

Per Share Data











Basic earnings per share


$

0.90



$

0.90



$

(0.20)



$

3.40



$

1.83


Diluted earnings per share


$

0.89



$

0.90



$

(0.20)



$

3.39



$

1.82


Cash dividends declared per share


$

0.30



$

0.30



$

0.25



$

1.15



$

0.94


Book value per share


$

27.95



$

26.79



$

25.99



$

27.95



$

25.99


Weighted average number of common shares outstanding


15,589,310



15,580,782



15,521,447



15,571,387



15,509,665


Diluted weighted average number of common shares outstanding


15,646,540



15,638,986



15,521,447



15,626,303



15,588,347


Non-GAAP Measures(1)











Adjusted net income


$

13,977



$

14,057



$

11,090



$

53,071



$          42,739


Adjusted return on average assets


1.32

%


1.34

%


1.09

%


1.28

%


1.07

%

Adjusted return on average equity


13.19

%


13.44

%


10.56

%


12.92

%


10.51

%

Adjusted return on average tangible equity


17.43

%


17.84

%


14.20

%


17.22

%


14.35

%

Tangible common equity ratio


8.02

%


7.74

%


7.66

%


8.02

%


7.66

%

Tangible book value per share


$

21.61



$

20.31



$

19.57



$

21.61



$            19.57


Adjusted diluted earnings per share


$

0.89



$

0.90



$

0.71



$

3.39



$              2.73


Efficiency ratio


56.50

%


57.33

%


57.75

%


57.71

%


57.05

%

















(1)

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

 


Consolidated Statements of Condition Data

(unaudited)








(In thousands, except number of shares)


December 31,
 2018


September 30,
 2018


December 31,
 2017

ASSETS







Cash and due from banks


$

52,240



$

48,124



$

44,057


Interest-bearing deposits in other banks


14,759



50,218



58,914


Total cash, cash equivalents and restricted cash


66,999



98,342



102,971


Investments:







Available-for-sale securities, at fair value(1)


910,692



869,626



789,899


Held-to-maturity securities, at amortized cost (fair value of $1,291, $1,267 and $94,913, respectively)(1)


1,307



1,308



94,073


Other investments


14,679



16,901



23,670


Total investments


926,678



887,835



907,642


Loans held for sale, at fair value (book value of $4,315, $10,188 and $8,065, respectively)


4,403



10,158



8,103


Loans:







Commercial real estate


1,269,533



1,215,979



1,164,023


Residential real estate


992,866



941,488



858,369


Commercial(2)


415,436



405,666



418,520


Consumer and home equity


348,387



345,710



341,527


Total loans


3,026,222



2,908,843



2,782,439


      Less: allowance for loan losses


(24,712)



(23,526)



(24,171)


       Net loans


3,001,510



2,885,317



2,758,268


Goodwill


94,697



94,697



94,697


Other intangible assets


4,230



4,411



4,955


Bank-owned life insurance


89,919



89,312



87,489


Premises and equipment, net


42,495



41,277



41,891


Deferred tax assets


23,053



26,241



22,776


Other assets


43,451



52,155



36,606


Total assets


$

4,297,435



$

4,189,745



$

4,065,398


LIABILITIES AND SHAREHOLDERS' EQUITY







Liabilities







Deposits:







Non-interest checking


$

592,781



$

564,113



$

478,643


Interest checking


927,321



932,972



855,570


Savings and money market


1,137,356



996,790



985,508


Certificates of deposit


443,912



446,414



475,010


Brokered deposits


363,104



280,466



205,760


Total deposits


3,464,474



3,220,755



3,000,491


Short-term borrowings


270,868



409,732



541,796


Long-term borrowings


11,580



10,738



10,791


Subordinated debentures


59,067



59,028



58,911


Accrued interest and other liabilities


55,621



73,806



49,996


Total liabilities


3,861,610



3,774,059



3,661,985


Shareholders' equity


435,825



415,686



403,413


Total liabilities and shareholders' equity


$

4,297,435



$

4,189,745



$

4,065,398




(1)

In the fourth quarter of 2018, the Company adopted ASU 2017-12, effective January 1, 2018, and transferred its qualifying held-to maturity debt securities to available-for-sale securities.

(2)

Includes the HPFC loan portfolio.

 

Consolidated Statements of Income Data

(unaudited)



For The

Three Months Ended

(In thousands, except per share data)


December 31,

2018


September 30,

2018


December 31,

2017

Interest Income







Interest and fees on loans


$

34,532



$

32,813



$

29,728


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


4,708



4,408



4,091


Interest on state and political subdivision obligations (nontaxable)


659



659



685


Interest on deposits in other banks and other investments


554



677



536


Total interest income


40,453



38,557



35,040


Interest Expense







Interest on deposits


6,650



5,255



3,243


Interest on borrowings


1,357



2,021



1,283


Interest on subordinated debentures


859



858



855


Total interest expense


8,866



8,134



5,381


Net interest income


31,587



30,423



29,659


Provision for credit losses


7



354



238


Net interest income after provision for credit losses


31,580



30,069



29,421


Non-Interest Income







Debit card income


2,839



2,173



2,192


Service charges on deposit accounts


1,984



1,910



1,897


Mortgage banking income, net


1,156



1,758



1,797


Income from fiduciary services


1,347



1,339



1,277


Brokerage and insurance commissions


665



615



546


Bank-owned life insurance


607



606



620


Other service charges and fees


516



596



471


Net (loss) gain on sale of securities


(420)



664



28


Other income


785



731



1,012


Total non-interest income


9,479



10,392



9,840


Non-Interest Expense







Salaries and employee benefits


13,080



13,143



12,869


Furniture, equipment and data processing


2,649



2,575



2,690


Net occupancy costs


1,764



1,614



1,650


Consulting and professional fees


874



958



706


Debit card expense


841



833



721


Regulatory assessments


490



447



559


Other real estate owned and collection costs, net


370



239



413


Amortization of intangible assets


181



182



392


Other expenses


3,331



3,175



3,099


Total non-interest expense


23,580



23,166



23,099


Income before income tax expense


17,479



17,295



16,162


Income Tax Expense


3,502



3,238



19,335


Net income (loss)


$

13,977



$

14,057



$

(3,173)


Per Share Data:







Basic earnings per share


$

0.90



$

0.90



$

(0.20)


Diluted earnings per share


$

0.89



$

0.90



$

(0.20)


 

Consolidated Statements of Income Data

(unaudited)



Year Ended

 December 31,

(In thousands, except per share data)


2018


2017

Interest Income





Interest and fees on loans


$

128,546



$

114,563


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


17,727



16,879


Interest on state and political subdivision obligations (nontaxable)


2,648



2,764


Interest on deposits in other banks and other investments


2,456



1,898


Total interest income


151,377



136,104


Interest Expense





Interest on deposits


20,113



11,811


Interest on borrowings


7,456



5,585


Interest on subordinated debentures


3,415



3,408


Total interest expense


30,984



20,804


Net interest income


120,393



115,300


Provision for credit losses


847



3,035


Net interest income after provision for credit losses


119,546



112,265


Non-Interest Income





Debit card income


9,067



8,079


Service charges on deposit accounts


7,663



7,529


Mortgage banking income, net


5,914



7,363


Income from fiduciary services


5,376



5,108


Brokerage and insurance commissions


2,615



2,147


Bank-owned life insurance


2,430



2,370


Other service charges and fees


2,080



2,029


Net gain on sale of securities


275



855


Other income


2,756



3,119


Total non-interest income


38,176



38,599


Non-Interest Expense





Salaries and employee benefits


51,513



49,109


Furniture, equipment and data processing


10,359



9,894


Net occupancy costs


6,876



6,884


Consulting and professional fees


3,752



3,118


Debit card expense


3,180



2,755


Regulatory assessments


1,937



2,166


Other real estate owned and collection costs, net


935



971


Amortization of intangible assets


725



1,809


Other expenses


12,668



11,804


Total non-interest expense


91,945



88,510


Income before income tax expense


65,777



62,354


Income Tax Expense


12,706



33,878


Net income


$

53,071



$

28,476


Per Share Data:





Basic earnings per share


$

3.40



$

1.83


Diluted earnings per share


$

3.39



$

1.82


 


Quarterly Average Balance and Yield/Rate Analysis

(unaudited)



Average Balance


Yield/Rate



For the Three Months Ended


For the Three Months Ended

(In thousands)


December 31,

2018


September 30,

2018


December 31,

2017


December 31,

2018


September 30,

2018


December 31,

2017

Assets













Interest-earning assets:













Interest-bearing deposits in other banks(1)


$

24,620



$

45,824



$

49,826



1.57

%


1.85

%


1.11

%

Securities - taxable


830,097



826,541



811,006



2.49

%


2.36

%


2.21

%

Securities - nontaxable(2)


97,192



97,775



101,371



3.43

%


3.41

%


4.16

%

Loans(3):













Commercial real estate


1,230,791



1,198,677



1,153,842



4.60

%


4.46

%


4.15

%

Residential real estate


973,124



934,029



861,658



4.29

%


4.16

%


4.15

%

Commercial(2)


364,253



351,980



343,921



4.50

%


4.56

%


4.12

%

Consumer and home equity


346,494



344,740



343,942



5.36

%


5.16

%


4.54

%

HPFC


35,163



38,356



46,565



7.66

%


7.64

%


8.14

%

Municipal(2)


17,520



24,603



18,442



3.28

%


3.06

%


3.73

%

Total loans


2,967,345



2,892,385



2,768,370



4.60

%


4.49

%


4.26

%

Total interest-earning assets(1)


3,919,254



3,862,525



3,730,573



4.11

%


3.97

%


3.77

%

Other assets(1)


294,178



301,489



308,523








Total assets


$

4,213,432



$

4,164,014



$

4,039,096





















Liabilities & Shareholders' Equity













Deposits:













Non-interest checking


$

577,177



$

517,651



$

486,753



%


%


%

Interest checking


941,439



865,012



824,247



0.80

%


0.54

%


0.28

%

Savings


483,651



483,577



497,929



0.06

%


0.06

%


0.06

%

Money market


553,785



512,650



489,426



1.07

%


0.89

%


0.58

%

Certificates of deposit


444,769



481,059



490,779



1.26

%


1.18

%


0.90

%

Total deposits


3,000,821



2,859,949



2,789,134



0.65

%


0.53

%


0.36

%

Borrowings:













Brokered deposits


307,559



272,471



217,328



2.28

%


2.07

%


1.35

%

Customer repurchase agreements


265,675



244,189



254,529



1.22

%


1.08

%


0.50

%

Subordinated debentures


59,048



59,009



58,892



5.77

%


5.77

%


5.76

%

Other borrowings


93,181



249,341



257,420



2.29

%


2.16

%


1.48

%

Total borrowings


725,463



825,010



788,169



2.18

%


2.07

%


1.45

%

Total funding liabilities


3,726,284



3,684,959



3,577,303



0.94

%


0.88

%


0.60

%

Other liabilities


66,805



64,119



44,979








Shareholders' equity


420,343



414,936



416,814








Total liabilities & shareholders' equity


$

4,213,432



$

4,164,014



$

4,039,096








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


3.17

%


3.09

%


3.17

%

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


3.21

%


3.14

%


3.20

%

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


3.14

%


3.09

%


3.13

%



(1)

Average balance for the three months ended December 31, 2017, was revised to include average interest-bearing deposits in other banks in total average interest-earning assets.

(2)

Reported on tax-equivalent basis calculated 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 December 31, 2018, September 30, 2018, and December 31, 2017, totaling $686,000, $434,000 and $689,000, respectively.

 

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

(unaudited)



Average Balance


Yield/Rate



For the Year Ended


For the Year Ended

(In thousands)


December 31,

2018


December 31,

2017


December 31,

2018


December 31,

2017

Assets









Interest-earning assets:









Interest-bearing deposits in other banks(1)


$

45,155



$

40,611



1.62

%


1.06

%

Securities - taxable


829,462



$

826,749



2.35

%


2.22

%

Securities - nontaxable(2)


98,128



101,898



3.42

%


4.17

%

Loans(3):









Commercial real estate


1,195,544



1,120,591



4.47

%


4.11

%

Residential real estate


913,593



838,781



4.19

%


4.12

%

Commercial(2)


354,508



336,685



4.50

%


4.21

%

Consumer and home equity


343,292



343,457



5.08

%


4.45

%

HPFC


39,588



52,031



7.89

%


8.53

%

Municipal(2)


20,361



19,428



3.18

%


3.43

%

Total loans


2,866,886



2,710,973



4.49

%


4.25

%

Total interest-earning assets(1)


3,839,631



3,680,231



3.97

%


3.76

%

Other assets(1)


295,837



308,375






Total assets


$

4,135,468



$

3,988,606















Liabilities & Shareholders' Equity









Deposits:









Non-interest checking


$

503,287



$

430,706



%


%

Interest checking


870,125



750,543



0.55

%


0.21

%

Savings


485,986



492,483



0.06

%


0.06

%

Money market


515,590



480,119



0.87

%


0.52

%

Certificates of deposit


467,631



466,418



1.13

%


0.88

%

Total deposits


2,842,619



2,620,269



0.52

%


0.32

%

Borrowings:









Brokered deposits


264,711



296,261



1.98

%


1.13

%

Customer repurchase agreements


248,743



232,762



1.02

%


0.46

%

Subordinated debentures


58,990



58,834



5.79

%


5.79

%

Other borrowings


249,544



329,988



1.97

%


1.37

%

Total borrowings


821,988



917,845



1.96

%


1.35

%

Total funding liabilities


3,664,607



3,538,114



0.85

%


0.59

%

Other liabilities


60,106



43,864






Shareholders' equity


410,755



406,628






Total liabilities & shareholders' equity


$

4,135,468



$

3,988,606






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


3.12

%


3.17

%

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


3.16

%


3.19

%

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


3.10

%


3.10

%



(1)

Average balance for the year ended December 31, 2017, was revised to include average interest-bearing deposits in other banks in total average interest-earning assets.

(2)

Reported on tax-equivalent basis calculated 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 years ended December 31, 2018 and 2017, totaling $2.3 million and $3.2 million, respectively.

 


Asset Quality Data

(unaudited)

 

(In thousands)


At or For The

Year Ended

December 31, 2018


At or For The
Nine Months Ended
September 30, 2018


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

Non-accrual loans:











Residential real estate


$

5,492



$

4,720



$

5,742



$

6,185



$

4,979


Commercial real estate


1,380



5,517



5,600



4,603



5,642


Commercial


1,279



2,402



1,934



1,991



2,000


Consumer


1,861



1,647



1,700



1,464



1,650


HPFC


518



591



834



655



1,043


Total non-accrual loans


10,530



14,877



15,810



14,898



15,314


Loans 90 days past due and accruing


14



14








   Accruing troubled-debt restructured loans not        included above


3,893



4,039



4,000



4,361



5,012


Total non-performing loans


14,437



18,930



19,810



19,259



20,326


Other real estate owned


130



185



130



130



130


Total non-performing assets


$

14,567



$

19,115



$

19,940



$

19,389



$

20,456


Loans 30-89 days past due:











Residential real estate


$

4,833



$

3,816



$

2,222



$

2,777



$

5,277


Commercial real estate


2,130



574



309



1,121



1,135


Commercial


169



723



1,490



243



518


Consumer


1,467



902



1,258



1,190



1,197


HPFC


183



1,078



455



528



887


Total loans 30-89 days past due


$

8,782



$

7,093



$

5,734



$

5,859



$

9,014


Allowance for loan losses at the beginning of the period


$

24,171



$

24,171



$

24,171



$

24,171



$

23,116


Provision (credit) for loan losses


845



845



490



(500)



3,026


Charge-offs:











Residential real estate


173



231



116



31



482


Commercial real estate


512



512



512



426



124


Commercial


736



448



298



171



1,014


Consumer


572



451



266



175



558


HPFC


255



209







290


Total charge-offs


2,248



1,851



1,192



803



2,468


Total recoveries


(1,944)



(361)



(199)



(122)



(497)


Net charge-offs


304



1,490



993



681



1,971


Allowance for loan losses at the end of the period


$

24,712



$

23,526



$

23,668



$

22,990



$

24,171


Components of allowance for credit losses:











Allowance for loan losses


$

24,712



$

23,526



$

23,668



$

22,990



$

24,171


Liability for unfunded credit commitments


22



15



16



23



20


Allowance for credit losses


$

24,734



$

23,541



$

23,684



$

23,013



$

24,191


Ratios:











Non-performing loans to total loans


0.48

%


0.65

%


0.69

%


0.69

%


0.73

%

Non-performing assets to total assets


0.34

%


0.46

%


0.48

%


0.47

%


0.50

%

Allowance for loan losses to total loans


0.82

%


0.81

%


0.83

%


0.82

%


0.87

%

Net (recoveries) charge-offs to average loans (annualized)











Quarter-to-date


(0.16)%



0.07

%


0.04

%


0.10

%


0.07

%

Year-to-date


0.01

%


0.07

%


0.07

%


0.10

%


0.07

%

Allowance for loan losses to non-performing loans


171.17

%


124.28

%


119.48

%


119.37

%


118.92

%

Loans 30-89 days past due to total loans


0.29

%


0.24

%


0.20

%


0.21

%


0.32

%

 


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

Adjusted Net Income; Adjusted Diluted EPS; and Adjusted Return on Average Assets:



For the
Three Months Ended


For the
Year Ended

(In thousands, except per share data)


December 31,

 2018


September 30,

 2018


December 31,

 2017


December 31,

 2018


December 31,

 2017

Adjusted Net Income:











Net income (loss), as presented


$

13,977



$

14,057



$

(3,173)



$

53,071



$

28,476


Add: impact of the revaluation of deferred tax assets and liabilities due to the Tax Act






14,263





14,263


Adjusted net income


$

13,977



$

14,057



$

11,090



$

53,071



$

42,739


Adjusted Diluted EPS:











Diluted EPS, as presented


$

0.89



$

0.90



$

(0.20)



$

3.39



$

1.82


Add: impact of the revaluation of deferred tax assets and liabilities due to the Tax Act






0.91





0.91


Adjusted diluted EPS


$

0.89



$

0.90



$

0.71



$

3.39



$

2.73


Adjusted Return on Average Assets:











Return on average assets, as presented


1.32

%


1.34

%


(0.31)%



1.28

%


0.71

%

Add: impact of the revaluation of deferred tax assets and liabilities due to the Tax Act


%


%


1.40

%


%


0.36

%

Adjusted return on average assets


1.32

%


1.34

%


1.09

%


1.28

%


1.07

%

 

Adjusted Return on Average Equity and Adjusted Return on Average Tangible Equity:



For the
Three Months Ended


For the
Year Ended

(In thousands)


December 31,

 2018


September 30,

 2018


December 31,

 2017


December 31,

 2018


December 31,

 2017

Net income (loss), as presented


$

13,977



$

14,057



$

(3,173)



$

53,071



$

28,476


Add: impact of the revaluation of deferred tax assets and liabilities due to the Tax Act






14,263





14,263


Adjusted net income


13,977



14,057



11,090



53,071



42,739


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


143



144



255



573



1,176


Adjusted tangible net income


$

14,120



$

14,201



$

11,345



$

53,644



$

43,915


Average equity, as presented


$

420,343



$

414,936



$

416,814



$

410,755



$

406,628


Less: average goodwill and other intangible assets


(99,015)



(99,195)



(99,823)



(99,287)



(100,513)


Average tangible equity


$

321,328



$

315,741



$

316,991



$

311,468



$

306,115


Return on average equity


13.19

%


13.44

%


(3.02)%



12.92

%


7.00

%

Adjusted return on average equity


13.19

%


13.44

%


10.56

%


12.92

%


10.51

%

Adjusted return on average tangible equity


17.43

%


17.84

%


14.20

%


17.22

%


14.35

%



(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
Year Ended

(In thousands)


December 31,
 2018


September 30,
 2018


December 31,
 2017


December 31,
 2018


December 31,
 2017

Non-interest expense, as presented


$

23,580



$

23,166



$

23,099



$

91,945



$

88,510


Net interest income, as presented


$

31,587



$

30,423



$

29,659



$

120,393



$

115,300


Add: effect of tax-exempt income(1)


251



260



525



1,022



2,105


Non-interest income, as presented


9,479



10,392



9,840



38,176



38,599


Add: net loss (gain) on sale of securities


420



(664)



(28)



(275)



(855)


Adjusted net interest income plus non-interest income


$

41,737



$

40,411



$

39,996



$

159,316



$

155,149


GAAP efficiency ratio


57.42

%


56.76

%


58.48

%


57.98

%


57.51

%

Non-GAAP efficiency ratio


56.50

%


57.33

%


57.75

%


57.71

%


57.05

%



(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:



December 31,
 2018


September 30,
 2018


December 31,
 2017

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


Tangible Book Value Per Share:







Shareholders' equity, as presented


$

435,825



$

415,686



$

403,413


Less: goodwill and other intangible assets


(98,927)



(99,108)



(99,652)


Tangible shareholders' equity


$

336,898



$

316,578



$

303,761


Shares outstanding at period end


15,591,914



15,584,526



15,524,704


Tangible book value per share


$

21.61



$

20.31



$

19.57


Book value per share


$

27.95



$

26.67



$

25.99


Tangible Common Equity Ratio:

Total assets


$

4,297,435



$

4,189,745



$

4,065,398


Less: goodwill and other intangibles


(98,927)



(99,108)



(99,652)


Tangible assets


$

4,198,508



$

4,090,637



$

3,965,746


Common equity ratio


10.14

%


9.92

%


9.92

%

Tangible common equity ratio


8.02

%


7.74

%


7.66

%

 

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SOURCE Camden National Corporation