Camden National Corporation Reports A 2% Increase In Earnings
Over Second Quarter 2014 and Annualized Loan Growth of 12%
CAMDEN, Maine, October 28, 2014/PRNewswire/--Camden National Corporation (NASDAQ: CAC; “Camden National” or the “Company”), a $2.7 billion bank holding company headquartered in Camden, Maine, reported net income for the third quarter of 2014 of $6.5 million and diluted earnings per share ("EPS") of $0.86, representing a 2% increase in earnings and a $0.01 increase in EPS compared to the second quarter of 2014. Camden National's return on equity and return on assets for the third quarter of 2014 was 10.70% and 0.94%, respectively.
Net income and EPS for the nine months ended September 30, 2014 was $18.5 million and $2.46 per share, respectively, reflecting an increase in net income of $123,000 and EPS of $0.07 per share over the nine months ended September 30, 2013. Camden National's return on equity and return on assets for the nine months ended September 30, 2014 was 10.53% and 0.93%, respectively.
“The past few years we have been focused on implementing many strategic initiatives to better align the Company with the needs of its customers and shareholders for today and tomorrow,” said Gregory A. Dufour, president and chief executive officer. “We've been able to successfully execute large scale investments — including the acquisition of 14 branches in 2012, the divestiture of five branches in 2013, and the opening of a commercial loan production office in Manchester, New Hampshire in 2014 — while providing consistent earnings and EPS growth to our shareholders," added Dufour. "Our annualized loan growth of 12% since year-end demonstrates our commitment to growing market share through expansion and hiring seasoned lenders."
Third Quarter 2014 Highlights
• | Earnings Growth — Third quarter net income increased $135,000 compared to the second quarter 2014, while year-to-date net income as of September 30, 2014 compared to adjusted1 net income for the same period in 2013 increased $547,000. |
• | Continued Loan Growth — Loan growth of $29.5 million during the third quarter resulted in year-to-date annualized loan growth of 12%. |
• | Improved Asset Quality — Non-performing assets to total assets of 0.90% reached its lowest level since the first quarter of 2009. |
Balance Sheet
Total assets at September 30, 2014 were $2.7 billion, representing a $138.2 million, or 5%, increase since year-end. The growth in total assets was fueled by loan growth of $145.8 million. Loan growth continues to be centered within the commercial real estate and commercial portfolios, evidenced by total growth in those portfolios of $138.8 million, or 19%, since year-end. The retail portfolio has seen modest growth of $7.0 million, or 1%, since year-end.
Total liabilities at September 30, 2014 were $2.5 billion, representing a $129.3 million, or 6%, increase since year-end. The increase is reflective of the cyclical nature of deposits within the Company's market, as well as the use of brokered deposits and borrowings to fund strong loan growth. Core deposits (demand, interest checking, savings, and money market) increased $56.4 million since year-end, and brokered deposits and borrowings increased $79.6 million and $11.1 million since year-end, respectively.
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1 "Adjusted" excludes the operating results for the five Franklin County branches divested in the fourth quarter of 2013. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures".
Third Quarter 2014 Operating Results
Net interest income for the third quarter of 2014 was $19.4 million, representing a $126,000, or 1%, increase compared to prior quarter. The increase was driven by growth of average interest-earnings assets of $25.8 million. Average loans grew $47.0 million, or 3%, partially offset by a decrease in average investments of $21.2 million as investment cash flows were used to fund loan growth. Net interest margin on a fully-taxable basis decreased 1 basis point to 3.10% as new loans reflect the current interest rate environment.
Non-interest income for the third quarter of 2014 was $5.9 million, representing a $555,000, or 9%, decrease compared to prior quarter. There were no investment gains or derivative income recorded in the third quarter of 2014, compared to a total of $481,000 recorded last quarter.
Non-interest expense for the third quarter of 2014 of $15.2 million decreased $613,000, or 4%, compared to last quarter. The significant factors driving the decrease were a decrease in consulting and professional fees of $314,000 and a decrease in salaries and employee benefits of $223,000, primarily related to a decrease in health care costs of $105,000 due to a refund of premiums from favorable claim experience.
Year-to-Date September 30, 2014 Operating Results
Net income and EPS for the nine months ended September 30, 2014 increased $547,000, or 3%, and $0.13 per share, or 6%, respectively, compared to the adjusted1 net income and adjusted1 EPS for the same period of 2013.
Net interest income for the nine months ended September 30, 2014 of $57.0 million increased $1.2 million, or 2%, compared to adjusted1 net interest income for the same period of 2013. The increase is driven by average loan growth of $124.5 million, or 8%, excluding the five Franklin County branches, and is partially offset by an 11 basis points decrease in net interest margin on a fully-taxable basis, which is reflective of a decreasing yield as new loans and investments reprice at current market interest rates.
Asset quality metrics as of and for the nine months ended September 30, 2014 continue to trend favorably, which has led to a decrease in the provision for credit losses for the nine months ended September 30, 2014 of $312,000 compared to adjusted1 provision for credit losses for the same period of 2013. The following asset quality ratios highlight our current metrics compared to prior periods:
• | Non-performing loans to total loans at September 30, 2014 were 1.35%, representing a decrease of 19 basis points and 57 basis points compared to June 30, 2014 and September 30, 2013, respectively. |
• | Non-performing assets to total assets at September 30, 2014 were 0.90%, representing a decrease of 15 basis points and 34 basis points compared to June 30, 2014 and September 30, 2013, respectively. |
Non-interest income for the nine months ended September 30, 2014 of $18.1 million decreased $497,000, or 3%, compared to adjusted1 non-interest income for the same period of 2013. The significant factors driving the decrease are: (i) a $1.1 million decrease in mortgage banking income due to a reduction in loan sales; (ii) $334,000 less investment gains; partially offset by an increase: in (a) brokerage income of $203,000; (b) derivative income of $196,000; and (c) fiduciary income of $178,000.
Non-interest expense for the nine months ended September 30, 2014 of $46.1 million decreased $126,000 compared to adjusted1 non-interest expense for the same period of 2013. The decrease was driven by one-time branch acquisition costs of $170,000 in 2013.
Dividends and Capital
The board of directors approved a dividend of $0.27 per share, payable on October 31, 2014, to shareholders of record as of October 17, 2014. This distribution represents an annualized dividend yield of 3.09%, based on the September 30, 2014 closing price of Camden National's common stock at $35.00 per share as reported on NASDAQ.
The Company's total risk-based capital ratio, Tier I risk-based capital ratio, and Tier I leverage capital ratio was 15.14%, 13.90%, and 9.15%, respectively, at September 30, 2014. The Company and its wholly-owned subsidiary, Camden National Bank, continue to exceed the minimum total and Tier I risk-based capital ratios of 10% and 6%, respectively, and the minimum Tier I leverage capital ratio of 5% required by the Federal Reserve for an institution to be considered “well capitalized”.
About Camden National Corporation
Camden National Corporation is the holding company employing more than 480 Maine residents for two financial services companies including Camden National Bank and the wealth management company, Acadia Trust, N.A. Camden National Bank is a full-service community bank with a network of 44 banking offices throughout Maine and a commercial loan office in Manchester, New Hampshire. Acadia Trust offers investment management and fiduciary services with offices in Portland, Bangor and Ellsworth. Located at Camden National Bank, Camden Financial Consultants offers full-service brokerage and insurance services. Learn more at www.CamdenNational.com. Member FDIC.
Forward-Looking Statements
This press release and the documents incorporated by reference herein contain certain statements that may be considered forward-looking statements under the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, projections, and statements, which are subject to numerous risks, assumptions, and uncertainties. Forward-looking statements can be identified by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “plan,” “target,” or “goal,” or future or conditional verbs such as “will,” “may,” “might,” “should,” “would,” “could” and other expressions which predict or indicate future events or trends and which do not relate to historical matters. Forward-looking statements should not be relied on, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of Camden National. These risks, uncertainties and other factors may cause the actual results, performance or achievements of Camden National to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.
Some of the factors that might cause these differences include, but are not limited to, the following: continued weakness in the United States economy in general and the regional and local economies within the New England region and Maine, which could result in a deterioration of credit quality, an increase in the allowance for loan losses, or a reduced demand for the Company's credit or fee-based products and services; changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; competitive pressures, including continued industry consolidation and the increased financial services provided by non-banks; volatility in the securities markets that could adversely affect the value or credit quality of the Company's assets, impairment of goodwill, the availability and terms of funding necessary to meet the Company's liquidity needs, and could lead to impairment in the value of securities in the Company's investment portfolio; changes in information technology that require increased capital spending; changes in consumer spending and savings habits; changes in tax, banking, securities and insurance laws and regulations including laws and regulations; and changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as Financial Accounting Standards Board, and other accounting standard setters. Additional factors that could also cause results to differ materially from those described above can be found in the Company's Annual Report on Form 10-K, as updated by our Quarterly Reports on Form 10-Q and other filings with the SEC. All of these factors should be carefully reviewed, and readers should not place undue reliance on these forward-looking statements.
These forward-looking statements were based on information, plans and estimates at the date of this press release, and Camden National does not promise and assumes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.
Use of Non-GAAP Financial 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 the efficiency ratio, tangible equity to tangible assets ratio, return on average tangible equity ratio, tangible book value per share, tax-equivalent net interest income, and normalized operating results. 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 financial measures, nor are they necessarily comparable to non-GAAP financials measures that may be presented by other financial institutions. Reconciliations to the comparable GAAP financial measure can be found within 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 Nine Months Ended | |||||||||||||||||||
September 30, 2014 | June 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | ||||||||||||||||
Selected Financial and Per Share Data: | ||||||||||||||||||||
Return on average assets | 0.94 | % | 0.95 | % | 0.98 | % | 0.93 | % | 0.95 | % | ||||||||||
Return on average equity | 10.70 | % | 10.92 | % | 11.03 | % | 10.53 | % | 10.52 | % | ||||||||||
Return on average tangible equity (non-GAAP)(1) | 13.82 | % | 14.25 | % | 14.74 | % | 13.71 | % | 14.01 | % | ||||||||||
Tangible equity to tangible assets (non-GAAP)(1) | 7.11 | % | 7.15 | % | 7.07 | % | 7.11 | % | 7.07 | % | ||||||||||
Efficiency ratio (non-GAAP)(1) | 59.18 | % | 61.49 | % | 61.25 | % | 61.01 | % | 61.81 | % | ||||||||||
Yield on average interest-earnings assets | 3.58 | % | 3.60 | % | 3.65 | % | 3.59 | % | 3.75 | % | ||||||||||
Average cost of funds | 0.49 | % | 0.50 | % | 0.54 | % | 0.50 | % | 0.56 | % | ||||||||||
Net interest margin | 3.10 | % | 3.11 | % | 3.13 | % | 3.10 | % | 3.21 | % | ||||||||||
Tier I leverage capital ratio | 9.15 | % | 9.09 | % | 9.24 | % | 9.15 | % | 9.24 | % | ||||||||||
Tier I risk-based capital ratio | 13.90 | % | 14.07 | % | 14.96 | % | 13.90 | % | 14.96 | % | ||||||||||
Total risk-based capital ratio | 15.14 | % | 15.32 | % | 16.21 | % | 15.14 | % | 16.21 | % | ||||||||||
Basic earnings per share | $ | 0.87 | $ | 0.85 | $ | 0.83 | $ | 2.47 | $ | 2.40 | ||||||||||
Diluted earnings per share | $ | 0.86 | $ | 0.85 | $ | 0.83 | $ | 2.46 | $ | 2.39 | ||||||||||
Cash dividends declared per share | $ | 0.27 | $ | 0.27 | $ | 0.27 | $ | 0.81 | $ | 0.81 | ||||||||||
Book value per share | $ | 32.33 | $ | 32.03 | $ | 30.38 | $ | 32.33 | $ | 30.38 | ||||||||||
Tangible book value per share (non-GAAP)(1) | $ | 25.80 | $ | 25.46 | $ | 23.52 | $ | 25.80 | $ | 23.52 | ||||||||||
Weighted average number of common shares outstanding | 7,421,592 | 7,430,709 | 7,643,720 | 7,459,972 | 7,636,352 | |||||||||||||||
Diluted weighted average number of common shares outstanding | 7,439,948 | 7,450,639 | 7,666,305 | 7,479,327 | 7,651,870 | |||||||||||||||
(1) Please see "Reconciliation of non-GAAP to GAAP Financial Measures".
Consolidated Statements of Condition Data | ||||||||||||
(In Thousands, Except Number of Shares) | September 30, 2014 (unaudited) | December 31, 2013 | September 30, 2013 (unaudited) | |||||||||
ASSETS | ||||||||||||
Cash and due from banks | $ | 59,450 | $ | 51,355 | $ | 57,086 | ||||||
Securities: | ||||||||||||
Available-for-sale securities, at fair value | 771,806 | 808,477 | 783,243 | |||||||||
Held-to-maturity securities, at amortized cost | 11,490 | — | — | |||||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost | 20,379 | 19,724 | 19,724 | |||||||||
Total securities | 803,675 | 828,201 | 802,967 | |||||||||
Trading account assets | 2,418 | 2,488 | 2,309 | |||||||||
Loans held for sale | — | — | 1,313 | |||||||||
Loans | 1,726,227 | 1,580,402 | 1,589,946 | |||||||||
Less: allowance for loan losses | (21,585 | ) | (21,590 | ) | (22,661 | ) | ||||||
Net loans | 1,704,642 | 1,558,812 | 1,567,285 | |||||||||
Bank-owned life insurance | 57,338 | 46,363 | 46,039 | |||||||||
Goodwill and other intangible assets | 48,458 | 49,319 | 52,436 | |||||||||
Premises and equipment, net | 24,370 | 25,727 | 26,751 | |||||||||
Deferred tax assets | 14,987 | 16,047 | 16,035 | |||||||||
Interest receivable | 6,162 | 5,808 | 5,678 | |||||||||
Other real estate owned | 1,566 | 2,195 | 1,802 | |||||||||
Other assets | 18,923 | 17,514 | 17,554 | |||||||||
Total assets | $ | 2,741,989 | $ | 2,603,829 | $ | 2,597,255 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
Liabilities | ||||||||||||
Deposits: | ||||||||||||
Demand | $ | 281,811 | $ | 241,866 | $ | 280,970 | ||||||
Interest checking | 484,259 | 453,909 | 525,109 | |||||||||
Savings and money market | 661,803 | 675,679 | 684,635 | |||||||||
Certificates of deposit | 321,704 | 343,034 | 379,281 | |||||||||
Brokered deposits | 178,966 | 99,336 | 103,369 | |||||||||
Total deposits | 1,928,543 | 1,813,824 | 1,973,364 | |||||||||
Federal Home Loan Bank advances | 56,058 | 56,112 | 56,130 | |||||||||
Other borrowed funds | 441,171 | 430,058 | 247,326 | |||||||||
Junior subordinated debentures | 43,998 | 43,922 | 43,896 | |||||||||
Accrued interest and other liabilities | 32,307 | 28,817 | 44,257 | |||||||||
Total liabilities | 2,502,077 | 2,372,733 | 2,364,973 | |||||||||
Shareholders’ Equity | ||||||||||||
Common stock, no par value; authorized 20,000,000 shares, issued and outstanding 7,421,595, 7,579,913 and 7,646,664 shares as of September 30, 2014, December 31, 2013, and September 30, 2013, respectively | 41,238 | 47,783 | 50,265 | |||||||||
Retained earnings | 208,125 | 195,660 | 193,304 | |||||||||
Accumulated other comprehensive loss: | ||||||||||||
Net unrealized losses on available-for-sale securities, net of tax | (3,151 | ) | (7,964 | ) | (5,073 | ) | ||||||
Net unrealized losses on derivative instruments, net of tax | (4,530 | ) | (2,542 | ) | (3,614 | ) | ||||||
Net unrecognized losses on postretirement plans, net of tax | (1,770 | ) | (1,841 | ) | (2,600 | ) | ||||||
Total accumulated other comprehensive loss | (9,451 | ) | (12,347 | ) | (11,287 | ) | ||||||
Total shareholders’ equity | 239,912 | 231,096 | 232,282 | |||||||||
Total liabilities and shareholders’ equity | $ | 2,741,989 | $ | 2,603,829 | $ | 2,597,255 | ||||||
Consolidated Statements of Income Data (unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
(In Thousands, Except Number of Shares and Per Share Data) | September 30, 2014 | June 30, 2014 | September 30, 2013 | |||||||||
Interest Income | ||||||||||||
Interest and fees on loans | $ | 18,112 | $ | 17,757 | $ | 17,470 | ||||||
Interest on U.S. government and sponsored enterprise obligations | 3,896 | 4,124 | 4,091 | |||||||||
Interest on state and political subdivision obligations | 319 | 314 | 292 | |||||||||
Interest on federal funds sold and other investments | 95 | 94 | 38 | |||||||||
Total interest income | 22,422 | 22,289 | 21,891 | |||||||||
Interest Expense | ||||||||||||
Interest on deposits | 1,562 | 1,565 | 1,780 | |||||||||
Interest on borrowings | 848 | 845 | 767 | |||||||||
Interest on junior subordinated debentures | 638 | 631 | 637 | |||||||||
Total interest expense | 3,048 | 3,041 | 3,184 | |||||||||
Net interest income | 19,374 | 19,248 | 18,707 | |||||||||
Provision for credit losses | 539 | 643 | 665 | |||||||||
Net interest income after provision for credit losses | 18,835 | 18,605 | 18,042 | |||||||||
Non-Interest Income | ||||||||||||
Service charges on deposit accounts | 1,600 | 1,620 | 1,750 | |||||||||
Other service charges and fees | 1,646 | 1,543 | 1,568 | |||||||||
Income from fiduciary services | 1,212 | 1,349 | 1,149 | |||||||||
Brokerage and insurance commissions | 441 | 459 | 354 | |||||||||
Bank-owned life insurance | 377 | 292 | 334 | |||||||||
Net gain on sale of securities | — | 285 | 647 | |||||||||
Mortgage banking income, net | 55 | 70 | 93 | |||||||||
Other income | 618 | 886 | 580 | |||||||||
Total non-interest income | 5,949 | 6,504 | 6,475 | |||||||||
Non-Interest Expense | ||||||||||||
Salaries and employee benefits | 8,078 | 8,301 | 8,115 | |||||||||
Furniture, equipment and data processing | 1,704 | 1,743 | 1,668 | |||||||||
Net occupancy costs | 1,175 | 1,270 | 1,242 | |||||||||
Consulting and professional fees | 468 | 782 | 504 | |||||||||
Other real estate owned and collection costs | 637 | 515 | 489 | |||||||||
Regulatory assessments | 511 | 485 | 496 | |||||||||
Amortization of intangible assets | 287 | 287 | 289 | |||||||||
Branch acquisition and divestiture costs | — | — | 47 | |||||||||
Other expenses | 2,319 | 2,409 | 2,349 | |||||||||
Total non-interest expense | 15,179 | 15,792 | 15,199 | |||||||||
Income before income taxes | 9,605 | 9,317 | 9,318 | |||||||||
Income Taxes | 3,154 | 3,001 | 2,952 | |||||||||
Net Income | $ | 6,451 | $ | 6,316 | $ | 6,366 | ||||||
Per Share Data | ||||||||||||
Basic earnings per share | $ | 0.87 | $ | 0.85 | $ | 0.83 | ||||||
Diluted earnings per share | $ | 0.86 | $ | 0.85 | $ | 0.83 | ||||||
Consolidated Statements of Income Data (unaudited) | ||||||||
Nine Months Ended September 30, | ||||||||
(In Thousands, Except Number of Shares and Per Share Data) | 2014 | 2013 | ||||||
Interest Income | ||||||||
Interest and fees on loans | $ | 52,649 | $ | 53,324 | ||||
Interest on U.S. government and sponsored enterprise obligations | 12,250 | 12,441 | ||||||
Interest on state and political subdivision obligations | 927 | 889 | ||||||
Interest on federal funds sold and other investments | 278 | 144 | ||||||
Total interest income | 66,104 | 66,798 | ||||||
Interest Expense | ||||||||
Interest on deposits | 4,678 | 5,427 | ||||||
Interest on borrowings | 2,500 | 2,352 | ||||||
Interest on junior subordinated debentures | 1,894 | 1,894 | ||||||
Total interest expense | 9,072 | 9,673 | ||||||
Net interest income | 57,032 | 57,125 | ||||||
Provision for credit losses | 1,675 | 2,034 | ||||||
Net interest income after provision for credit losses | 55,357 | 55,091 | ||||||
Non-Interest Income | ||||||||
Service charges on deposit accounts | 4,689 | 5,189 | ||||||
Other service charges and fees | 4,584 | 4,510 | ||||||
Income from fiduciary services | 3,745 | 3,567 | ||||||
Brokerage and insurance commissions | 1,378 | 1,175 | ||||||
Bank-owned life insurance | 975 | 986 | ||||||
Net gain on sale of securities | 451 | 785 | ||||||
Mortgage banking income, net | 197 | 1,251 | ||||||
Other income | 2,119 | 1,724 | ||||||
Total non-interest income | 18,138 | 19,187 | ||||||
Non-Interest Expense | ||||||||
Salaries and employee benefits | 24,359 | 24,437 | ||||||
Furniture, equipment and data processing | 5,236 | 5,203 | ||||||
Net occupancy costs | 3,825 | 4,201 | ||||||
Consulting and professional fees | 1,768 | 1,636 | ||||||
Other real estate owned and collection costs | 1,665 | 1,355 | ||||||
Regulatory assessments | 1,477 | 1,495 | ||||||
Amortization of intangible assets | 861 | 863 | ||||||
Branch acquisition and divestiture costs | — | 279 | ||||||
Other expenses | 6,905 | 7,878 | ||||||
Total non-interest expense | 46,096 | 47,347 | ||||||
Income before income taxes | 27,399 | 26,931 | ||||||
Income Taxes | 8,917 | 8,572 | ||||||
Net Income | $ | 18,482 | $ | 18,359 | ||||
Per Share Data | ||||||||
Basic earnings per share | $ | 2.47 | $ | 2.40 | ||||
Diluted earnings per share | $ | 2.46 | $ | 2.39 | ||||
Quarterly Average Balance, Interest and Yield/Rate Analysis (unaudited) | ||||||||||||||||||||||
At or for the Three Months Ended | At or for the Three Months Ended | |||||||||||||||||||||
September 30, 2014 | September 30, 2013 | |||||||||||||||||||||
(In Thousands) | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Securities - taxable | $ | 755,114 | $ | 3,986 | 2.11 | % | $ | 765,635 | $ | 4,126 | 2.16 | % | ||||||||||
Securities - nontaxable(1) | 38,884 | 491 | 5.05 | % | 30,481 | 450 | 5.91 | % | ||||||||||||||
Trading account assets | 2,406 | 5 | 0.79 | % | 2,291 | 2 | 0.43 | % | ||||||||||||||
Loans(2): | ||||||||||||||||||||||
Residential real estate | 570,737 | 6,030 | 4.23 | % | 568,099 | 6,043 | 4.25 | % | ||||||||||||||
Commercial real estate | 614,128 | 6,982 | 4.45 | % | 522,932 | 6,256 | 4.68 | % | ||||||||||||||
Commercial(3) | 229,079 | 2,257 | 3.85 | % | 171,350 | 1,870 | 4.27 | % | ||||||||||||||
Municipal(1) | 17,812 | 138 | 3.08 | % | 12,850 | 132 | 4.08 | % | ||||||||||||||
Consumer | 290,760 | 2,858 | 3.90 | % | 322,912 | 3,215 | 3.95 | % | ||||||||||||||
Total loans | 1,722,516 | 18,265 | 4.19 | % | 1,598,143 | 17,516 | 4.33 | % | ||||||||||||||
Total interest-earning assets | 2,518,920 | 22,747 | 3.58 | % | 2,396,550 | 22,094 | 3.65 | % | ||||||||||||||
Cash and due from banks | 47,893 | 44,307 | ||||||||||||||||||||
Other assets | 169,233 | 168,792 | ||||||||||||||||||||
Less: allowance for loan losses | (21,829 | ) | (23,041 | ) | ||||||||||||||||||
Total assets | $ | 2,714,217 | $ | 2,586,608 | ||||||||||||||||||
Liabilities & Shareholders' Equity | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Demand | $ | 268,291 | $ | — | — | $ | 257,987 | $ | — | — | ||||||||||||
Interest checking | 456,072 | 79 | 0.07 | % | 486,834 | 86 | 0.07 | % | ||||||||||||||
Savings | 250,900 | 36 | 0.06 | % | 243,583 | 35 | 0.06 | % | ||||||||||||||
Money market | 406,084 | 295 | 0.29 | % | 438,831 | 326 | 0.29 | % | ||||||||||||||
Certificates of deposit | 325,144 | 759 | 0.93 | % | 386,052 | 982 | 1.01 | % | ||||||||||||||
Total deposits | 1,706,491 | 1,169 | 0.27 | % | 1,813,287 | 1,429 | 0.31 | % | ||||||||||||||
Borrowings: | ||||||||||||||||||||||
Brokered deposits | 188,420 | 393 | 0.83 | % | 105,625 | 351 | 1.32 | % | ||||||||||||||
Junior subordinated debentures | 43,986 | 638 | 5.75 | % | 43,884 | 637 | 5.76 | % | ||||||||||||||
Other borrowings | 506,268 | 848 | 0.66 | % | 367,240 | 767 | 0.83 | % | ||||||||||||||
Total borrowings | 738,674 | 1,879 | 1.01 | % | 516,749 | 1,755 | 1.35 | % | ||||||||||||||
Total funding liabilities | 2,445,165 | 3,048 | 0.49 | % | 2,330,036 | 3,184 | 0.54 | % | ||||||||||||||
Other liabilities | 29,890 | 27,663 | ||||||||||||||||||||
Shareholders' equity | 239,162 | 228,909 | ||||||||||||||||||||
Total liabilities & shareholders' equity | $ | 2,714,217 | $ | 2,586,608 | ||||||||||||||||||
Net interest income (fully-taxable equivalent) | 19,699 | 18,910 | ||||||||||||||||||||
Less: fully-taxable equivalent adjustment | (325 | ) | (203 | ) | ||||||||||||||||||
Net interest income | $ | 19,374 | $ | 18,707 | ||||||||||||||||||
Net interest rate spread (fully-taxable equivalent) | 3.09 | % | 3.11 | % | ||||||||||||||||||
Net interest margin (fully-taxable equivalent) | 3.10 | % | 3.13 | % | ||||||||||||||||||
(1) Reported on tax-equivalent basis calculated using a tax rate of 35.0%. | ||||||||||||||||||||||
(2) Non-accrual loans and loans held for sale are included in total average loans. | ||||||||||||||||||||||
(3) For the three months ended September 30, 2014, $24.8 million of loans reported on tax-equivalent basis calculated using a tax rate of 35.0%. | ||||||||||||||||||||||
Year-to-date Average Balance, Interest and Yield/Rate Analysis (unaudited) | ||||||||||||||||||||||
At or for the Nine Months Ended | At or for the Nine Months Ended | |||||||||||||||||||||
September 30, 2014 | September 30, 2013 | |||||||||||||||||||||
(In Thousands) | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Securities - taxable | $ | 775,440 | $ | 12,516 | 2.15 | % | $ | 770,166 | $ | 12,571 | 2.18 | % | ||||||||||
Securities - nontaxable(1) | 36,349 | 1,426 | 5.23 | % | 30,983 | 1,367 | 5.88 | % | ||||||||||||||
Trading account assets | 2,400 | 12 | 0.66 | % | 2,258 | 14 | 0.83 | % | ||||||||||||||
Loans(2): | ||||||||||||||||||||||
Residential real estate | 568,347 | 18,011 | 4.23 | % | 572,032 | 19,214 | 4.48 | % | ||||||||||||||
Commercial real estate | 586,514 | 20,080 | 4.51 | % | 512,686 | 18,558 | 4.77 | % | ||||||||||||||
Commercial(3) | 204,811 | 6,093 | 3.92 | % | 175,572 | 5,805 | 4.36 | % | ||||||||||||||
Municipal(1) | 14,504 | 379 | 3.49 | % | 12,464 | 400 | 4.29 | % | ||||||||||||||
Consumer | 289,468 | 8,423 | 3.89 | % | 313,489 | 9,487 | 4.05 | % | ||||||||||||||
Total loans | 1,663,644 | 52,986 | 4.23 | % | 1,586,243 | 53,464 | 4.47 | % | ||||||||||||||
Total interest-earning assets | 2,477,833 | 66,940 | 3.59 | % | 2,389,650 | 67,416 | 3.75 | % | ||||||||||||||
Cash and due from banks | 43,942 | 44,268 | ||||||||||||||||||||
Other assets | 166,869 | 167,284 | ||||||||||||||||||||
Less: allowance for loan losses | (21,776 | ) | (23,233 | ) | ||||||||||||||||||
Total assets | $ | 2,666,868 | $ | 2,577,969 | ||||||||||||||||||
Liabilities & Shareholders' Equity | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Demand | $ | 241,255 | $ | — | — | $ | 234,844 | $ | — | — | ||||||||||||
Interest checking | 461,040 | 237 | 0.07 | % | 480,495 | 244 | 0.07 | % | ||||||||||||||
Savings | 246,822 | 104 | 0.06 | % | 236,712 | 99 | 0.06 | % | ||||||||||||||
Money market | 417,069 | 915 | 0.29 | % | 446,852 | 1,037 | 0.31 | % | ||||||||||||||
Certificates of deposit | 331,966 | 2,336 | 0.94 | % | 400,211 | 2,981 | 1.00 | % | ||||||||||||||
Total deposits | 1,698,152 | 3,592 | 0.28 | % | 1,799,114 | 4,361 | 0.32 | % | ||||||||||||||
Borrowings: | ||||||||||||||||||||||
Brokered deposits | 145,798 | 1,086 | 1.00 | % | 118,210 | 1,066 | 1.21 | % | ||||||||||||||
Junior subordinated debentures | 43,961 | 1,894 | 5.76 | % | 43,858 | 1,894 | 5.77 | % | ||||||||||||||
Other borrowings | 515,383 | 2,500 | 0.65 | % | 351,387 | 2,352 | 0.89 | % | ||||||||||||||
Total borrowings | 705,142 | 5,480 | 1.04 | % | 513,455 | 5,312 | 1.38 | % | ||||||||||||||
Total funding liabilities | 2,403,294 | 9,072 | 0.50 | % | 2,312,569 | 9,673 | 0.56 | % | ||||||||||||||
Other liabilities | 29,000 | 32,002 | ||||||||||||||||||||
Shareholders' equity | 234,574 | 233,398 | ||||||||||||||||||||
Total liabilities & shareholders' equity | $ | 2,666,868 | $ | 2,577,969 | ||||||||||||||||||
Net interest income (fully-taxable equivalent) | 57,868 | 57,743 | ||||||||||||||||||||
Less: fully-taxable equivalent adjustment | (836 | ) | (618 | ) | ||||||||||||||||||
Net interest income | $ | 57,032 | $ | 57,125 | ||||||||||||||||||
Net interest rate spread (fully-taxable equivalent) | 3.09 | % | 3.19 | % | ||||||||||||||||||
Net interest margin (fully-taxable equivalent) | 3.10 | % | 3.21 | % | ||||||||||||||||||
(1) Reported on tax-equivalent basis calculated using a tax rate of 35.0%. | ||||||||||||||||||||||
(2) Non-accrual loans and loans held for sale are included in total average loans. | ||||||||||||||||||||||
(3) For the nine months ended September 30, 2014, $24.8 million of loans reported on tax-equivalent basis calculated using a tax rate of 35.0%. | ||||||||||||||||||||||
Asset Quality Data (unaudited) | ||||||||||||||||||||
(In Thousands) | At or For The Nine Months Ended September 30, 2014 | At or For The Six Months Ended June 30, 2014 | At or For The Three Months Ended March 31, 2014 | At or For The Twelve Months Ended December 31, 2013 | At or For The Nine Months Ended September 30, 2013 | |||||||||||||||
Non-accrual loans: | ||||||||||||||||||||
Residential real estate | $ | 7,098 | $ | 7,887 | $ | 9,125 | $ | 10,520 | $ | 10,224 | ||||||||||
Commercial real estate | 5,707 | 6,282 | 8,278 | 7,799 | 9,847 | |||||||||||||||
Commercial | 3,051 | 3,840 | 1,935 | 2,146 | 2,994 | |||||||||||||||
Consumer | 2,169 | 2,575 | 2,457 | 2,012 | 2,018 | |||||||||||||||
Total non-accrual loans | 18,025 | 20,584 | 21,795 | 22,477 | 25,083 | |||||||||||||||
Loans 90 days past due and accruing | — | 109 | 50 | 455 | 24 | |||||||||||||||
Renegotiated loans not included above | 5,198 | 5,379 | 5,413 | 5,468 | 5,379 | |||||||||||||||
Total non-performing loans | 23,223 | 26,072 | 27,258 | 28,400 | 30,486 | |||||||||||||||
Other real estate owned: | ||||||||||||||||||||
Residential real estate | 554 | 912 | 1,035 | 1,044 | 1,126 | |||||||||||||||
Commercial real estate | 1,012 | 1,305 | 1,677 | 1,151 | 676 | |||||||||||||||
Total other real estate owned | 1,566 | 2,217 | 2,712 | 2,195 | 1,802 | |||||||||||||||
Total non-performing assets | $ | 24,789 | $ | 28,289 | $ | 29,970 | $ | 30,595 | $ | 32,288 | ||||||||||
Loans 30-89 days past due: | ||||||||||||||||||||
Residential real estate | $ | 880 | $ | 1,800 | $ | 1,349 | $ | 1,551 | $ | 1,419 | ||||||||||
Commercial real estate | 1,675 | 1,151 | 1,716 | 2,595 | 833 | |||||||||||||||
Commercial | 2,027 | 466 | 1,007 | 313 | 529 | |||||||||||||||
Consumer | 2,015 | 569 | 632 | 1,571 | 1,207 | |||||||||||||||
Total loans 30-89 days past due | $ | 6,597 | $ | 3,986 | $ | 4,704 | $ | 6,030 | $ | 3,988 | ||||||||||
Allowance for loan losses at the beginning of the period | $ | 21,590 | $ | 21,590 | $ | 21,590 | $ | 23,044 | $ | 23,044 | ||||||||||
Provision for loan losses | 1,675 | 1,141 | 492 | 2,052 | 2,051 | |||||||||||||||
Charge-offs: | ||||||||||||||||||||
Residential real estate | 370 | 361 | 183 | 1,059 | 687 | |||||||||||||||
Commercial real estate | 276 | 176 | 171 | 952 | 762 | |||||||||||||||
Commercial | 1,201 | 526 | 219 | 1,426 | 823 | |||||||||||||||
Consumer | 371 | 146 | 76 | 837 | 598 | |||||||||||||||
Total charge-offs | 2,218 | 1,209 | 649 | 4,274 | 2,870 | |||||||||||||||
Total recoveries | 538 | 383 | 237 | 768 | 436 | |||||||||||||||
Net charge-offs | 1,680 | 826 | 412 | 3,506 | 2,434 | |||||||||||||||
Allowance for loan losses at the end of the period | $ | 21,585 | $ | 21,905 | $ | 21,670 | $ | 21,590 | $ | 22,661 | ||||||||||
Components of allowance for credit losses: | ||||||||||||||||||||
Allowance for loan losses | $ | 21,585 | $ | 21,905 | $ | 21,670 | $ | 21,590 | $ | 22,661 | ||||||||||
Liability for unfunded credit commitments | 21 | 16 | 22 | 21 | 28 | |||||||||||||||
Balance of allowance for credit losses | $ | 21,606 | $ | 21,921 | $ | 21,692 | $ | 21,611 | $ | 22,689 | ||||||||||
Ratios: | ||||||||||||||||||||
Non-performing loans to total loans | 1.35 | % | 1.54 | % | 1.68 | % | 1.80 | % | 1.92 | % | ||||||||||
Non-performing assets to total assets | 0.90 | % | 1.05 | % | 1.13 | % | 1.18 | % | 1.24 | % | ||||||||||
Allowance for credit losses to total loans | 1.25 | % | 1.29 | % | 1.34 | % | 1.37 | % | 1.43 | % | ||||||||||
Net charge-offs to average loans (annualized): | ||||||||||||||||||||
Quarter-to-date | 0.20 | % | 0.10 | % | 0.10 | % | 0.27 | % | 0.33 | % | ||||||||||
Year-to-date | 0.13 | % | 0.10 | % | 0.10 | % | 0.22 | % | 0.20 | % | ||||||||||
Allowance for credit losses to non-performing loans | 93.04 | % | 84.08 | % | 79.58 | % | 76.09 | % | 74.42 | % | ||||||||||
Loans 30-89 days past due to total loans | 0.38 | % | 0.23 | % | 0.29 | % | 0.38 | % | 0.25 | % | ||||||||||
Reconciliation of non-GAAP to GAAP Financial Measures
Camden National presents its efficiency ratio using non-GAAP information. The GAAP-based efficiency ratio is non-interest expense divided by net interest income plus non-interest income from the consolidated statements of income. The non-GAAP efficiency ratio excludes branch acquisition and divestiture costs from non-interest expense, excludes net gain on sale of securities from non-interest income, and adds the tax-equivalent adjustment (assumed 35.0% tax rate) to net interest income. The following table provides a reconciliation between the GAAP and non-GAAP efficiency ratio:
Three Months Ended | Nine Months Ended | |||||||||||||||||||
(In Thousands) | September 30, 2014 | June 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |||||||||||||||
Non-interest expense, as presented | $ | 15,179 | $ | 15,792 | $ | 15,199 | $ | 46,096 | $ | 47,347 | ||||||||||
Less: branch acquisition and divestiture costs | — | — | 47 | — | 279 | |||||||||||||||
Adjusted non-interest expense | $ | 15,179 | $ | 15,792 | $ | 15,152 | $ | 46,096 | $ | 47,068 | ||||||||||
Net interest income, as presented | $ | 19,374 | $ | 19,248 | $ | 18,707 | $ | 57,032 | $ | 57,125 | ||||||||||
Add: effect of tax-exempt income | 325 | 214 | 203 | 836 | 618 | |||||||||||||||
Non-interest income, as presented | 5,949 | 6,504 | 6,475 | 18,138 | 19,187 | |||||||||||||||
Less: net gain on sale of securities | — | 285 | 647 | 451 | 785 | |||||||||||||||
Adjusted net interest income plus non-interest income | $ | 25,648 | $ | 25,681 | $ | 24,738 | $ | 75,555 | $ | 76,145 | ||||||||||
Non-GAAP efficiency ratio | 59.18 | % | 61.49 | % | 61.25 | % | 61.01 | % | 61.81 | % | ||||||||||
GAAP efficiency ratio | 59.94 | % | 61.32 | % | 60.36 | % | 61.32 | % | 62.04 | % | ||||||||||
The following table provides a reconciliation between tax-equivalent net interest income to GAAP net interest income using a 35.0% tax rate:
Three Months Ended | Nine Months Ended | |||||||||||||||||||
(In Thousands) | September 30, 2014 | June 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |||||||||||||||
Net interest income, as presented | $ | 19,374 | $ | 19,248 | $ | 18,707 | $ | 57,032 | $ | 57,125 | ||||||||||
Add: effect of tax-exempt income | 325 | 214 | 203 | 836 | 618 | |||||||||||||||
Net interest income, tax equivalent | $ | 19,699 | $ | 19,462 | $ | 18,910 | $ | 57,868 | $ | 57,743 | ||||||||||
Return on average tangible equity is the ratio of (i) net income, adjusted for tax-effected amortization of intangible assets to (ii) average equity, adjusted for goodwill and other intangible assets. The following table reconciles the return on average tangible equity to GAAP return on average equity:
Three Months Ended | Nine Months Ended | |||||||||||||||||||
(In Thousands) | September 30, 2014 | June 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |||||||||||||||
Net income, as presented | $ | 6,451 | $ | 6,316 | $ | 6,366 | $ | 18,482 | $ | 18,359 | ||||||||||
Add: tax-effected amortization of intangible assets | 187 | 187 | 188 | 560 | 561 | |||||||||||||||
Net income, adjusted | $ | 6,638 | $ | 6,503 | $ | 6,554 | $ | 19,042 | $ | 18,920 | ||||||||||
Average equity | $ | 239,162 | $ | 231,949 | $ | 228,909 | $ | 234,574 | $ | 233,398 | ||||||||||
Less: average goodwill and other intangible assets | 48,596 | 48,880 | 52,572 | 48,879 | 52,861 | |||||||||||||||
Average tangible equity | $ | 190,566 | $ | 183,069 | $ | 176,337 | $ | 185,695 | $ | 180,537 | ||||||||||
Return on average tangible equity | 13.82 | % | 14.25 | % | 14.74 | % | 13.71 | % | 14.01 | % | ||||||||||
Return on average equity | 10.70 | % | 10.92 | % | 11.03 | % | 10.53 | % | 10.52 | % | ||||||||||
The following table provides a reconciliation between tangible book value per share and GAAP book value per share:
(In Thousands, Except Number of Shares and Per Share Data) | September 30, 2014 | December 31, 2013 | September 30, 2013 | |||||||||
Shareholders' equity, as presented | $ | 239,912 | $ | 231,096 | $ | 232,282 | ||||||
Less: goodwill and other intangible assets | 48,458 | 49,319 | 52,436 | |||||||||
Tangible equity | $ | 191,454 | $ | 181,777 | $ | 179,846 | ||||||
Shares outstanding at period end | 7,421,595 | 7,579,913 | 7,646,664 | |||||||||
Tangible book value per share | $ | 25.80 | $ | 23.98 | $ | 23.52 | ||||||
Book value per share | $ | 32.33 | $ | 30.49 | $ | 30.38 | ||||||
The following table provides a reconciliation between tangible equity to tangible assets and GAAP equity to assets:
(In Thousands) | September 30, 2014 | December 31, 2013 | September 30, 2013 | |||||||||
Shareholders' equity, as presented | $ | 239,912 | $ | 231,096 | $ | 232,282 | ||||||
Less: goodwill and other intangibles | 48,458 | 49,319 | 52,436 | |||||||||
Tangible equity | $ | 191,454 | $ | 181,777 | $ | 179,846 | ||||||
Total assets | $ | 2,741,989 | $ | 2,603,829 | $ | 2,597,255 | ||||||
Less: goodwill and other intangibles | 48,458 | 49,319 | 52,436 | |||||||||
Tangible assets | $ | 2,693,531 | $ | 2,554,510 | $ | 2,544,819 | ||||||
Tangible equity to tangible assets | 7.11 | % | 7.12 | % | 7.07 | % | ||||||
Equity to assets | 8.75 | % | 8.88 | % | 8.94 | % | ||||||
In the fourth quarter of 2013, the Company divested its five Franklin County branches and, as a result, these branches are not included within the Company's financial results for the three or nine months ended September 30, 2014. The following table reconciles the Company's three and nine months ended September 30, 2013 GAAP (as reported) operating results to the Company's normalized three and nine months ended September 30, 2013 operating results (excluding the divested branches operating results). The Company utilizes such analysis when comparing its three and nine months ended September 30, 2014 operating results to the same period in 2013 as it believes it provides a more meaningful representation of current year performance.
For The Three Months Ended | ||||||||||||
September 30, 2013 | ||||||||||||
(In Thousands, Except Per Share Data) | GAAP, as reported | Franklin County Operating Results | Normalized Operating Results, as adjusted | |||||||||
Net interest income | $ | 18,707 | $ | 421 | $ | 18,286 | ||||||
Provision for credit losses | 665 | 14 | 651 | |||||||||
Non-interest income | 6,475 | 176 | 6,299 | |||||||||
Non-interest expense | 15,199 | 349 | 14,850 | |||||||||
Income before income taxes | 9,318 | 234 | 9,084 | |||||||||
Income taxes | 2,952 | 82 | 2,870 | |||||||||
Net income | $ | 6,366 | $ | 152 | $ | 6,214 | ||||||
Diluted EPS | $ | 0.83 | $ | 0.02 | $ | 0.81 | ||||||
For The Nine Months Ended | ||||||||||||
September 30, 2013 | ||||||||||||
(In Thousands, Except Per Share Data) | GAAP, as reported | Franklin County Operating Results | Normalized Operating Results, as adjusted | |||||||||
Net interest income | $ | 57,125 | $ | 1,273 | $ | 55,852 | ||||||
Provision for credit losses | 2,034 | 47 | 1,987 | |||||||||
Non-interest income | 19,187 | 552 | 18,635 | |||||||||
Non-interest expense | 47,347 | 1,125 | 46,222 | |||||||||
Income before income taxes | 26,931 | 653 | 26,278 | |||||||||
Income taxes | 8,572 | 229 | 8,343 | |||||||||
Net income | $ | 18,359 | $ | 424 | $ | 17,935 | ||||||
Diluted EPS | $ | 2.39 | $ | 0.06 | $ | 2.33 | ||||||
CONTACT: Michael R. Archer, Vice President, Corporate Controller, Camden National Corporation, 207.230.2058, marcher@camdennational.com
