CAMDEN NATIONAL CORPORATION REPORTS 2016 NET INCOME
OF $40.1 MILLION AND EARNINGS PER SHARE OF $2.57
CAMDEN, Maine, January 31, 2017/PRNewswire/--Camden National Corporation (NASDAQ: CAC; “Camden National” or the “Company”), a $3.9 billion bank holding company headquartered in Camden, Maine, reported net income for the fourth quarter of 2016 of $10.9 million and diluted earnings per share ("EPS")1 of $0.70 per share, which was consistent with the previous quarter's performance.
For the year ended December 31, 2016, the Company reported net income of $40.1 million and diluted EPS of $2.57, representing a 91% increase in net income and a 49% increase in diluted EPS over last year. The Company's return on average assets and return on average equity for the year ended December 31, 2016 was 1.04% and 10.47%, respectively.
“We had strong financial results in 2016, which was our first full year after our merger with The Bank of Maine. We are extremely pleased with our many accomplishments and growth throughout the year,” said Gregory A. Dufour, President and Chief Executive Officer of the Company. "We successfully executed our integration strategy to achieve the synergies and cost savings we had committed to by delivering on an efficiency ratio2 of 57.53%, and increasing tangible book value2 by 11% over last year."
Dufour added, "In addition to our strong financial performance in 2016, we also took steps to provide our shareholders with additional returns, through a 15% increase in our fourth quarter dividend, and increasing our stock liquidity through completion of a three-for-two stock split during the third quarter."
The Company reported adjusted net income2 for the fourth quarter of 2016 of $10.9 million and adjusted diluted EPS2 of $0.70 per share, representing increases over the same period last year of 42% and 35%, respectively. For the year ended December 31, 2016, the Company reported adjusted net income2 of $40.6 million and adjusted diluted EPS2 of $2.61, representing increases over last year of 44% and 12%, respectively.
FOURTH QUARTER 2016 HIGHLIGHTS
• | Net income of $10.9 million and diluted EPS of $0.70 per share |
• | Return on average assets of 1.12%, return on average equity of 11.01%, and an efficiency ratio2 of 57.89% |
• | Dividend increase of $0.03 per share, or 15%, over last quarter |
• | Completed merger of Camden National's wholly-owned subsidiary, Acadia Trust, N.A., into Camden National Bank creating Camden National Wealth Management, a division of Camden National Bank |
YEAR-END DECEMBER 31, 2016 HIGHLIGHTS
• | Net income of $40.1 million and diluted EPS of $2.57 per share |
• | Return on average assets of 1.04%, return on average equity of 10.47% and an efficiency ratio2 of 57.53% |
• | Loan growth of 4% driven by growth of 11% within our commercial loan portfolio |
• | Residential mortgage production of approximately $370.0 million, of which approximately 65% was sold to the secondary market |
• | Core deposits growth (demand, interest checking, saving and money market) of 4% |
• | Tangible book value accretion of 11% in 2016 |
• | Completion of a three-for-two stock split |
___________________________________________________________________________________
1 All share and per share data has been adjusted for all periods presented to reflect the three-for-two stock split on September 30, 2016.
2 This is a non-GAAP measure. Please refer to the "Reconciliation of non-GAAP to GAAP Financial Measures" for further details.
FINANCIAL CONDITION
Total assets at December 31, 2016 were $3.9 billion, compared to $3.7 billion last year. Total asset growth of 4% over last year was driven by loan growth (excluding loans held for sale) of $104.4 million, or 4%, and, secondarily, by growth of our investment portfolio of $41.7 million, or 5%. At both December 31, 2016 and 2015, our ratio of loans to total assets was 67% and investments to total assets was 23%.
Total loans at December 31, 2016 (excluding loans held for sale) were $2.6 billion, compared to $2.5 billion last year. Our 2016 loan growth, excluding the Healthcare Professional Funding Corporation ("HPFC") loan portfolio, was 5%. The HPFC loan portfolio was acquired as part of the acquisition of SBM Financial, Inc. ("SBM"), the parent company of The Bank of Maine, and shortly thereafter HPFC's operations were discontinued in the first quarter of 2016. Our 2016 loan growth was centered in commercial real estate loans and commercial loans with growth of 13% and 12%, respectively, driving commercial real estate loans to $1.1 billion and commercial loans to $333.6 million at December 31, 2016. Our retail portfolio at December 31, 2016 decreased 3% since last year to $1.1 billion. The decrease in our retail portfolio in 2016 was the result of our home equity portfolio declining by 5% and residential mortgages decreasing 2%. We focused our attention on residential mortgage production that translated into originations of approximately $370.0 million in 2016, of which we sold approximately 65%.
Total deposits at December 31, 2016 grew 4% over last year to $2.8 billion. Core deposits (demand, interest checking, saving and money market) increased 4% over last year to $2.1 billion. The decrease in certificate of deposit balances of 9% since last year was supplemented by an increase in brokered deposits of $73.5 million. Total borrowings increased 5% over last year to $600.0 million at December 31, 2016.
Our asset quality continues to remain strong with non-performing assets to total assets of 0.67% and non-performing loans to total loans of 0.97%, representing slight increases over last year of 1 basis point and 4 basis points, respectively. Our ratio of loans 30-89 days past due to total loans at December 31, 2016 was 0.24%, compared to 0.40% last year.
The Company and its wholly-owned subsidiary Camden National Bank, continue to maintain risk-based capital ratios in excess of the regulatory levels required for an institution to be considered “well capitalized.” At December 31, 2016, the Company’s total risk-based capital ratio, Tier I risk-based capital ratio, common equity Tier I risk-based capital ratio, and Tier I leverage capital ratio were 14.04%, 12.59%, 11.27%, and 8.83%, respectively.
FINANCIAL OPERATING RESULTS
FOURTH QUARTER 2016 COMPARED TO THIRD QUARTER 2016:
Net income for the third and fourth quarter of 2016 was $10.9 million, and diluted EPS for each period was $0.70 per share.
Total revenues3 for the fourth quarter of 2016 of $38.4 million decreased 2% compared to the third quarter of 2016. The decrease in total revenues was driven by an 8% decrease in non-interest income and a less than 1% decrease in net interest income as detailed below.
• | The decrease in non-interest income of $850,000 was primarily due to lower mortgage banking income of $1.1 million, which was driven by a decrease in our interest rate locked residential mortgage loan pipeline of $18.1 million compared to September 30, 2016, partially offset by one-time proceeds received of $577,000 upon liquidation of a mortgage insurance exchange in the fourth quarter of 2016. |
___________________________________________________________________________________________
3 Revenue is defined as the sum of net interest income and non-interest income.
• | The decrease in net interest income of $128,000 was driven by a decrease in average interest-earning assets of 1% compared to the third quarter of 2016. Average investment and loan balances for the fourth quarter of 2016 decreased $18.9 million and $13.5 million, respectively, compared to last quarter, partially offset by a 2 basis points increase in net interest margin to 3.26%. |
Non-interest expense for the fourth quarter of 2016 increased $359,000, or 2%, to $22.5 million over last quarter. Our efficiency ratio2 for the fourth quarter of 2016 was 57.89%, compared to 55.39% last quarter. The net increase in non-interest expense was driven by:
• | An increase in salary and benefits costs of $394,000, or 3%, primarily due to an increase in incentive compensation based on 2016 financial performance; and |
• | An increase in other real estate owned and collection costs of $222,000 was related to higher sub-servicing costs, as one major relationship terminated on December 31, 2016, and the write-down of other real estate owned properties based on current appraisals. |
• | Partially offsetting the increases were lower consulting and professional fees of $117,000 and lower debit card expense of $192,000. |
The provision for credit losses was $255,000 for the fourth quarter of 2016, representing a decrease of $1.0 million compared to last quarter. The decrease was due to lower net charge-offs during the fourth quarter of $432,000 compared to $1.7 million in the third quarter of 2016, translating to an annualized net charge-offs ratio for the fourth quarter of 0.07%. Additionally, in the fourth quarter one large loan was upgraded from criticized to a pass rating, reducing the required allowance for loan loss by $201,000.
Our effective tax rate for the fourth quarter of 2016 of 30.3% was 1.3% lower than last quarter resulting in lower income tax expense of $210,000 compared to last quarter. The decrease in our effective tax rate for the quarter was driven by tax benefits generated upon exercise of stock options and vesting of restricted shares. Excluding these tax benefits, the Company's net income for the fourth quarter of 2016 was $10.7 million and its diluted EPS was $0.68 per share.
YEAR ENDED DECEMBER 31, 2016 COMPARED TO YEAR ENDED DECEMBER 31, 2015:
Net income for the year ended December 31, 2016 was $40.1 million compared to $21.0 million reported last year, representing an increase of $19.1 million, or 91%. Diluted EPS for the year ended December 31, 2016 was $2.57 per share compared to $1.73 per share reported last year, representing an increase of $0.84 per share, or 49%.
Our return on average assets, average equity and average tangible equity2 for the year ended December 31, 2016 was 1.04%, 10.47% and 14.76%, respectively, compared to 0.70%, 7.54% and 9.91% last year. Our efficiency ratio2 for the year ended December 31, 2016 was 57.53% compared to 61.13% last year.
The improvement in our financial performance and related key metrics for the year ended December 31, 2016 compared to last year highlights the benefits of the acquisition of SBM completed in the fourth quarter of 2015. Through the successful integration and execution of our acquisition strategy we were able to achieve the synergies and cost savings anticipated.
FOURTH QUARTER 2016 DIVIDEND
The Company increased its fourth quarter 2016 dividend by $0.03 per share, or 15%, to $0.23 per share, payable on January 31, 2017, to shareholders of record as of January 17, 2017. This distribution represents an annualized dividend yield of 2.07%, based on the December 30, 2016 (last business day) closing price of Camden National's common stock at $44.45 per share as reported by NASDAQ.
_____________________________________________________________________________________________
2 This is a non-GAAP measure. Please refer to the "Reconciliation of non-GAAP to GAAP Financial Measures" for further details.
ANNUAL MEETING
Camden National has scheduled its annual meeting of shareholders for Tuesday, April 25, 2017, at 3:00 p.m. local time, at Point Lookout Resort and Conference Center, 67 Atlantic Highway, Lincolnville, Maine 04849. The date for determining the Company's shareholders of record for the annual meeting is March 3, 2017.
CONFERENCE CALL
Camden National will host a conference call and webcast at 3:30 p.m. eastern time on January 31, 2017 to discuss our fourth quarter and year-to-date 2016 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/cac170131.html
A link to the live webcast will be will be available on Camden National's website under "Investors" at www.CamdenNational.com prior to the meeting. 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) is the holding company of Camden National Bank. Headquartered in Camden, Maine, the Company had approximately $3.9 billion in assets as of December 31, 2016 and is the largest publicly traded bank holding company in Northern New England. Camden National Bank, a leading financial services company offering financial products for consumers, businesses and wealth management clients, is a full-service community bank that employs over 625 people, features a network of 61 banking centers and 84 ATMs in Maine. Camden National Bank offers state-of-the-art online and mobile banking resources as well as comprehensive wealth management, and investment, insurance and financial planning services through Camden National Wealth Management and Camden Financial Consultants. To learn more, visit www.CamdenNational.com.
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, 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 Camden National’s Annual Report on Form 10-K for the year ended December 31, 2015, 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 the efficiency, tangible common equity, return on average tangible equity and adjusted return ratios; adjusted net income; adjusted diluted EPS; adjusted net interest margin; tangible book value per share; and tax-equivalent net interest income. 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.
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, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||||
Financial Condition Data | ||||||||||||||||||||
Investments | $ | 897,679 | $ | 906,286 | $ | 855,995 | $ | 897,679 | $ | 855,995 | ||||||||||
Loans and loans held for sale | 2,609,400 | 2,616,653 | 2,501,164 | 2,609,400 | 2,501,164 | |||||||||||||||
Allowance for loan losses | (23,116 | ) | (23,290 | ) | (21,166 | ) | (23,116 | ) | (21,166 | ) | ||||||||||
Total assets | 3,864,230 | 3,903,966 | 3,709,344 | 3,864,230 | 3,709,344 | |||||||||||||||
Deposits | 2,828,529 | 2,889,225 | 2,726,379 | 2,828,529 | 2,726,379 | |||||||||||||||
Borrowings | 599,675 | 559,273 | 572,362 | 599,675 | 572,362 | |||||||||||||||
Shareholders' equity | 391,547 | 393,181 | 363,190 | 391,547 | 363,190 | |||||||||||||||
Operating Data | ||||||||||||||||||||
Net interest income | $ | 28,244 | $ | 28,372 | $ | 26,371 | $ | 113,072 | $ | 86,452 | ||||||||||
Provision for credit losses | 255 | 1,279 | 957 | 5,258 | 1,936 | |||||||||||||||
Non-interest income | 10,151 | 11,001 | 8,464 | 39,621 | 27,482 | |||||||||||||||
Non-interest expense | 22,508 | 22,149 | 31,470 | 89,896 | 81,139 | |||||||||||||||
Income before income tax expense | 15,632 | 15,945 | 2,408 | 57,539 | 30,859 | |||||||||||||||
Income tax expense | 4,730 | 5,042 | 716 | 17,472 | 9,907 | |||||||||||||||
Net income | $ | 10,902 | $ | 10,903 | $ | 1,692 | $ | 40,067 | $ | 20,952 | ||||||||||
Key Ratios | ||||||||||||||||||||
Return on average assets | 1.12 | % | 1.11 | % | 0.19 | % | 1.04 | % | 0.70 | % | ||||||||||
Return on average equity | 11.01 | % | 11.18 | % | 1.91 | % | 10.47 | % | 7.54 | % | ||||||||||
Yield on average interest-earning assets | 3.72 | % | 3.72 | % | 3.74 | % | 3.80 | % | 3.65 | % | ||||||||||
Average cost of funds | 0.47 | % | 0.49 | % | 0.46 | % | 0.49 | % | 0.47 | % | ||||||||||
Net interest margin | 3.26 | % | 3.24 | % | 3.30 | % | 3.32 | % | 3.19 | % | ||||||||||
Non-performing loans to total loans | 0.97 | % | 0.98 | % | 0.93 | % | 0.97 | % | 0.93 | % | ||||||||||
Non-performing assets to total assets | 0.67 | % | 0.67 | % | 0.66 | % | 0.67 | % | 0.66 | % | ||||||||||
Annualized charge-offs to average loans | 0.07 | % | 0.26 | % | 0.16 | % | 0.13 | % | 0.10 | % | ||||||||||
Tier I leverage capital ratio | 8.83 | % | 8.48 | % | 8.74 | % | 8.83 | % | 8.74 | % | ||||||||||
Common equity Tier I risk-based capital ratio | 11.27 | % | 10.86 | % | 10.42 | % | 11.27 | % | 10.42 | % | ||||||||||
Tier I risk-based capital ratio | 12.59 | % | 12.16 | % | 11.58 | % | 12.59 | % | 11.58 | % | ||||||||||
Total risk-based capital ratio | 14.04 | % | 13.60 | % | 12.98 | % | 14.04 | % | 12.98 | % | ||||||||||
Per Share Data (1) | ||||||||||||||||||||
Basic earnings per share | $ | 0.70 | $ | 0.70 | $ | 0.11 | $ | 2.59 | $ | 1.73 | ||||||||||
Diluted earnings per share | $ | 0.70 | $ | 0.70 | $ | 0.11 | $ | 2.57 | $ | 1.73 | ||||||||||
Cash dividends declared per share | $ | 0.23 | $ | 0.20 | $ | 0.20 | $ | 0.83 | $ | 0.80 | ||||||||||
Book value per share | $ | 25.30 | $ | 25.47 | $ | 23.69 | $ | 25.30 | $ | 23.69 | ||||||||||
Weighted average number of common shares outstanding | 15,457,498 | 15,425,452 | 14,601,030 | 15,422,160 | 12,031,294 | |||||||||||||||
Diluted weighted average number of common shares outstanding | 15,569,346 | 15,507,561 | 14,683,769 | 15,504,239 | 12,074,579 | |||||||||||||||
Non-GAAP Measures(2) | ||||||||||||||||||||
Adjusted net income | $ | 10,872 | $ | 10,933 | $ | 7,662 | $ | 40,597 | $ | 28,186 | ||||||||||
Adjusted return on average tangible equity | 15.22 | % | 15.65 | % | 11.96 | % | 14.95 | % | 13.20 | % | ||||||||||
Return on average tangible equity | 15.26 | % | 15.61 | % | 2.98 | % | 14.76 | % | 9.91 | % | ||||||||||
Tangible common equity ratio | 7.71 | % | 7.66 | % | 7.18 | % | 7.71 | % | 7.18 | % | ||||||||||
Efficiency ratio | 57.89 | % | 55.39 | % | 64.16 | % | 57.53 | % | 61.13 | % | ||||||||||
Adjusted diluted earnings per share(1) | $ | 0.70 | $ | 0.70 | $ | 0.52 | $ | 2.61 | $ | 2.33 | ||||||||||
Tangible book value per share(1) | $ | 18.74 | $ | 18.87 | $ | 16.89 | $ | 18.74 | $ | 16.89 | ||||||||||
(1) Per share data adjusted for three-for-two stock split effective September 30, 2016.
(2) Please see "Reconciliation of non-GAAP to GAAP Financial Measures."
Consolidated Statements of Condition Data (unaudited) | ||||||||
(In thousands, except number of shares) | December 31, 2016 | December 31, 2015 | ||||||
ASSETS | ||||||||
Cash and due from banks | $ | 87,707 | $ | 79,488 | ||||
Securities: | ||||||||
Available-for-sale securities, at fair value | 779,867 | 750,338 | ||||||
Held-to-maturity securities, at amortized cost | 94,609 | 84,144 | ||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost | 23,203 | 21,513 | ||||||
Total securities | 897,679 | 855,995 | ||||||
Loans held for sale, at fair value | 14,836 | 10,958 | ||||||
Loans | 2,594,564 | 2,490,206 | ||||||
Less: allowance for loan losses | (23,116 | ) | (21,166 | ) | ||||
Net loans | 2,571,448 | 2,469,040 | ||||||
Goodwill | 94,697 | 95,657 | ||||||
Other intangible assets | 6,764 | 8,667 | ||||||
Bank-owned life insurance | 78,119 | 59,917 | ||||||
Premises and equipment, net | 42,873 | 45,959 | ||||||
Deferred tax assets | 39,263 | 39,716 | ||||||
Interest receivable | 8,654 | 7,985 | ||||||
Other real estate owned | 922 | 1,304 | ||||||
Other assets | 21,268 | 34,658 | ||||||
Total assets | $ | 3,864,230 | $ | 3,709,344 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Deposits: | ||||||||
Demand | $ | 406,934 | $ | 357,673 | ||||
Interest checking | 701,494 | 740,084 | ||||||
Savings and money market | 979,263 | 912,668 | ||||||
Certificates of deposit | 468,203 | 516,867 | ||||||
Brokered deposits | 272,635 | 199,087 | ||||||
Total deposits | 2,828,529 | 2,726,379 | ||||||
Short-term borrowings | 530,129 | 477,852 | ||||||
Long-term borrowings | 10,791 | 35,911 | ||||||
Subordinated debentures | 58,755 | 58,599 | ||||||
Accrued interest and other liabilities | 44,479 | 47,413 | ||||||
Total liabilities | 3,472,683 | 3,346,154 | ||||||
Commitments and Contingencies | ||||||||
Shareholders’ Equity | ||||||||
Common stock, no par value: authorized 20,000,000 shares, issued and outstanding 15,476,379 and 15,330,717 on December 31, 2016 and 2015, respectively | 156,041 | 153,083 | ||||||
Retained earnings | 249,415 | 222,329 | ||||||
Accumulated other comprehensive loss: | ||||||||
Net unrealized losses on available-for-sale securities, net of tax | (6,085 | ) | (3,801 | ) | ||||
Net unrealized losses on cash flow hedging derivative instruments, net of tax | (5,694 | ) | (6,374 | ) | ||||
Net unrecognized losses on postretirement plans, net of tax | (2,130 | ) | (2,047 | ) | ||||
Total accumulated other comprehensive loss | (13,909 | ) | (12,222 | ) | ||||
Total shareholders’ equity | 391,547 | 363,190 | ||||||
Total liabilities and shareholders’ equity | $ | 3,864,230 | $ | 3,709,344 | ||||
Consolidated Statements of Income Data (unaudited) | ||||||||||||
For The Three Months Ended | ||||||||||||
(In thousands, except per share data) | December 31, 2016 | September 30, 2016 | December 31, 2015 | |||||||||
Interest Income | ||||||||||||
Interest and fees on loans | $ | 27,107 | $ | 27,395 | $ | 25,144 | ||||||
Interest on U.S. government and sponsored enterprise obligations | 4,027 | 4,049 | 3,904 | |||||||||
Interest on state and political subdivision obligations | 709 | 702 | 704 | |||||||||
Interest on federal funds sold and other investments | 433 | 448 | 231 | |||||||||
Total interest income | 32,276 | 32,594 | 29,983 | |||||||||
Interest Expense | ||||||||||||
Interest on deposits | 2,278 | 2,204 | 1,881 | |||||||||
Interest on borrowings | 896 | 1,161 | 901 | |||||||||
Interest on subordinated debentures | 858 | 857 | 830 | |||||||||
Total interest expense | 4,032 | 4,222 | 3,612 | |||||||||
Net interest income | 28,244 | 28,372 | 26,371 | |||||||||
Provision for credit losses | 255 | 1,279 | 957 | |||||||||
Net interest income after provision for credit losses | 27,989 | 27,093 | 25,414 | |||||||||
Non-Interest Income | ||||||||||||
Debit card income | 1,928 | 1,894 | 1,625 | |||||||||
Service charges on deposit accounts | 1,854 | 1,799 | 1,789 | |||||||||
Mortgage banking income, net | 1,337 | 2,407 | 1,056 | |||||||||
Income from fiduciary services | 1,224 | 1,225 | 1,193 | |||||||||
Bank-owned life insurance | 695 | 585 | 413 | |||||||||
Brokerage and insurance commissions | 505 | 594 | 337 | |||||||||
Other service charges and fees | 468 | 591 | 449 | |||||||||
Net gain on sale of securities | 47 | — | — | |||||||||
Other income | 2,093 | 1,906 | 1,602 | |||||||||
Total non-interest income | 10,151 | 11,001 | 8,464 | |||||||||
Non-Interest Expense | ||||||||||||
Salaries and employee benefits | 12,438 | 12,044 | 11,670 | |||||||||
Furniture, equipment and data processing | 2,400 | 2,349 | 2,527 | |||||||||
Net occupancy costs | 1,736 | 1,685 | 1,790 | |||||||||
Consulting and professional fees | 625 | 742 | 891 | |||||||||
Other real estate owned and collection costs | 1,099 | 877 | 937 | |||||||||
Regulatory assessments | 615 | 667 | 650 | |||||||||
Debit card expense | 477 | 669 | 637 | |||||||||
Amortization of intangible assets | 476 | 475 | 444 | |||||||||
Merger and acquisition costs | — | 45 | 8,786 | |||||||||
Other expenses | 2,642 | 2,596 | 3,138 | |||||||||
Total non-interest expense | 22,508 | 22,149 | 31,470 | |||||||||
Income before income tax expense | 15,632 | 15,945 | 2,408 | |||||||||
Income tax expense | 4,730 | 5,042 | 716 | |||||||||
Net income | $ | 10,902 | $ | 10,903 | $ | 1,692 | ||||||
Per Share Data | ||||||||||||
Basic earnings per share | $ | 0.70 | $ | 0.70 | $ | 0.11 | ||||||
Diluted earnings per share | $ | 0.70 | $ | 0.70 | $ | 0.11 | ||||||
Consolidated Statements of Income Data (unaudited) | ||||||||
Year Ended December 31, | ||||||||
(In thousands, except per share data) | 2016 | 2015 | ||||||
Interest Income | ||||||||
Interest and fees on loans | $ | 109,224 | $ | 81,221 | ||||
Interest on U.S. government and sponsored enterprise obligations | 16,082 | 15,091 | ||||||
Interest on state and political subdivision obligations | 2,836 | 2,208 | ||||||
Interest on federal funds sold and other investments | 1,484 | 624 | ||||||
Total interest income | 129,626 | 99,144 | ||||||
Interest Expense | ||||||||
Interest on deposits | 8,633 | 6,511 | ||||||
Interest on borrowings | 4,506 | 3,457 | ||||||
Interest on subordinated debentures | 3,415 | 2,724 | ||||||
Total interest expense | 16,554 | 12,692 | ||||||
Net interest income | 113,072 | 86,452 | ||||||
Provision for credit losses | 5,258 | 1,936 | ||||||
Net interest income after provision for credit losses | 107,814 | 84,516 | ||||||
Non-Interest Income | ||||||||
Debit card income | 7,578 | 5,277 | ||||||
Service charges on deposit accounts | 7,210 | 6,423 | ||||||
Mortgage banking income, net | 6,258 | 2,031 | ||||||
Income from fiduciary services | 4,960 | 4,918 | ||||||
Bank-owned life insurance | 2,594 | 1,680 | ||||||
Brokerage and insurance commissions | 2,074 | 1,699 | ||||||
Other service charges and fees | 1,962 | 1,573 | ||||||
Net gain on sale of securities | 51 | 4 | ||||||
Other income | 6,934 | 3,877 | ||||||
Total non-interest income | 39,621 | 27,482 | ||||||
Non-Interest Expense | ||||||||
Salaries and employee benefits | 48,072 | 37,220 | ||||||
Furniture, equipment and data processing | 9,557 | 8,057 | ||||||
Net occupancy costs | 7,088 | 5,695 | ||||||
Consulting and professional fees | 3,234 | 2,625 | ||||||
Other real estate owned and collection costs | 3,128 | 2,491 | ||||||
Regulatory assessments | 2,777 | 2,184 | ||||||
Debit card expense | 2,584 | 1,936 | ||||||
Amortization of intangible assets | 1,903 | 1,306 | ||||||
Merger and acquisition costs | 866 | 10,415 | ||||||
Other expenses | 10,687 | 9,210 | ||||||
Total non-interest expense | 89,896 | 81,139 | ||||||
Income before income tax expense | 57,539 | 30,859 | ||||||
Income tax expense | 17,472 | 9,907 | ||||||
Net income | $ | 40,067 | $ | 20,952 | ||||
Per Share Data | ||||||||
Basic earnings per share | $ | 2.59 | $ | 1.73 | ||||
Diluted earnings per share | $ | 2.57 | $ | 1.73 | ||||
Quarterly Average Balance, Interest and Yield/Rate Analysis (unaudited) | ||||||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||||||
December 31, 2016 | December 31, 2015 | |||||||||||||||||||||
(In thousands) | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Securities - taxable | $ | 791,565 | $ | 4,460 | 2.25 | % | $ | 748,341 | $ | 4,135 | 2.21 | % | ||||||||||
Securities - nontaxable(1) | 103,904 | 1,090 | 4.20 | % | 99,281 | 1,084 | 4.37 | % | ||||||||||||||
Loans(2): | ||||||||||||||||||||||
Residential real estate | 813,846 | 8,451 | 4.15 | % | 787,441 | 8,418 | 4.28 | % | ||||||||||||||
Commercial real estate | 1,051,346 | 10,538 | 3.92 | % | 873,620 | 9,540 | 4.27 | % | ||||||||||||||
Commercial(1) | 299,425 | 3,032 | 3.96 | % | 279,399 | 2,526 | 3.54 | % | ||||||||||||||
Municipal(1) | 20,971 | 153 | 2.90 | % | 13,866 | 122 | 3.49 | % | ||||||||||||||
Consumer | 349,202 | 3,712 | 4.23 | % | 359,851 | 3,500 | 3.86 | % | ||||||||||||||
HPFC | 63,662 | 1,373 | 8.44 | % | 67,911 | 1,181 | 6.90 | % | ||||||||||||||
Total loans | 2,598,452 | 27,259 | 4.14 | % | 2,382,088 | 25,287 | 4.19 | % | ||||||||||||||
Total interest-earning assets | 3,493,921 | 32,809 | 3.72 | % | 3,229,710 | 30,506 | 3.74 | % | ||||||||||||||
Cash and due from banks | 87,532 | 72,588 | ||||||||||||||||||||
Other assets | 304,114 | 264,503 | ||||||||||||||||||||
Less: allowance for loan losses | (23,323 | ) | (21,216 | ) | ||||||||||||||||||
Total assets | $ | 3,862,244 | $ | 3,545,585 | ||||||||||||||||||
Liabilities & Shareholders' Equity | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Demand | $ | 428,057 | $ | — | — | % | $ | 355,421 | $ | — | — | % | ||||||||||
Interest checking | 728,563 | 272 | 0.15 | % | 691,191 | 136 | 0.08 | % | ||||||||||||||
Savings | 481,630 | 74 | 0.06 | % | 406,723 | 61 | 0.06 | % | ||||||||||||||
Money market | 503,688 | 521 | 0.41 | % | 441,431 | 388 | 0.35 | % | ||||||||||||||
Certificates of deposit | 477,569 | 958 | 0.80 | % | 489,329 | 952 | 0.77 | % | ||||||||||||||
Total deposits | 2,619,507 | 1,825 | 0.28 | % | 2,384,095 | 1,537 | 0.26 | % | ||||||||||||||
Borrowings: | ||||||||||||||||||||||
Brokered deposits | 276,347 | 453 | 0.65 | % | 203,046 | 344 | 0.67 | % | ||||||||||||||
Subordinated debentures | 58,736 | 858 | 5.81 | % | 57,973 | 830 | 5.68 | % | ||||||||||||||
Other borrowings | 460,708 | 896 | 0.77 | % | 503,606 | 901 | 0.71 | % | ||||||||||||||
Total borrowings | 795,791 | 2,207 | 1.10 | % | 764,625 | 2,075 | 1.08 | % | ||||||||||||||
Total funding liabilities | 3,415,298 | 4,032 | 0.47 | % | 3,148,720 | 3,612 | 0.46 | % | ||||||||||||||
Other liabilities | 52,942 | 45,223 | ||||||||||||||||||||
Shareholders' equity | 394,004 | 351,642 | ||||||||||||||||||||
Total liabilities & shareholders' equity | $ | 3,862,244 | $ | 3,545,585 | ||||||||||||||||||
Net interest income (fully-taxable equivalent) | 28,777 | 26,894 | ||||||||||||||||||||
Less: fully-taxable equivalent adjustment | (533 | ) | (523 | ) | ||||||||||||||||||
Net interest income | $ | 28,244 | $ | 26,371 | ||||||||||||||||||
Net interest rate spread (fully-taxable equivalent) | 3.25 | % | 3.28 | % | ||||||||||||||||||
Net interest margin (fully-taxable equivalent) | 3.26 | % | 3.30 | % | ||||||||||||||||||
(1) Reported on tax-equivalent basis calculated using a tax rate of 35%, including certain commercial loans. | ||||||||||||||||||||||
(2) Non-accrual loans and loans held for sale are included in total average loans. | ||||||||||||||||||||||
Year-to-Date Average Balance, Interest and Yield/Rate Analysis (unaudited) | ||||||||||||||||||||||
For the Year Ended | ||||||||||||||||||||||
December 31, 2016 | December 31, 2015 | |||||||||||||||||||||
(In thousands) | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Securities - taxable | $ | 796,423 | $ | 17,566 | 2.21 | % | $ | 739,168 | $ | 15,715 | 2.13 | % | ||||||||||
Securities - nontaxable(1) | 103,086 | 4,363 | 4.23 | % | 76,779 | 3,397 | 4.42 | % | ||||||||||||||
Loans(2): | ||||||||||||||||||||||
Residential real estate | 822,690 | 34,366 | 4.18 | % | 636,516 | 26,505 | 4.16 | % | ||||||||||||||
Commercial real estate(3) | 1,004,169 | 41,228 | 4.11 | % | 716,112 | 31,859 | 4.45 | % | ||||||||||||||
Commercial(1) | 292,709 | 12,350 | 4.22 | % | 254,514 | 9,726 | 3.82 | % | ||||||||||||||
Municipal(1) | 19,238 | 572 | 2.97 | % | 13,698 | 471 | 3.44 | % | ||||||||||||||
Consumer | 358,098 | 15,111 | 4.22 | % | 310,664 | 12,053 | 3.88 | % | ||||||||||||||
HPFC | 70,188 | 6,191 | 8.82 | % | 17,117 | 1,181 | 6.90 | % | ||||||||||||||
Total loans | 2,567,092 | 109,818 | 4.28 | % | 1,948,621 | 81,795 | 4.20 | % | ||||||||||||||
Total interest-earning assets | 3,466,601 | 131,747 | 3.80 | % | 2,764,568 | 100,907 | 3.65 | % | ||||||||||||||
Cash and due from banks | 87,319 | 55,256 | ||||||||||||||||||||
Other assets | 305,440 | 200,857 | ||||||||||||||||||||
Less: allowance for loan losses | (22,663 | ) | (21,281 | ) | ||||||||||||||||||
Total assets | $ | 3,836,697 | $ | 2,999,400 | ||||||||||||||||||
Liabilities & Shareholders' Equity | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Demand | $ | 386,189 | $ | — | — | % | $ | 292,776 | $ | — | — | % | ||||||||||
Interest checking | 724,222 | 921 | 0.13 | % | 543,330 | 427 | 0.08 | % | ||||||||||||||
Savings | 461,794 | 278 | 0.06 | % | 306,536 | 180 | 0.06 | % | ||||||||||||||
Money market | 490,155 | 2,053 | 0.42 | % | 394,367 | 1,283 | 0.33 | % | ||||||||||||||
Certificates of deposit | 489,040 | 3,793 | 0.78 | % | 357,972 | 3,126 | 0.87 | % | ||||||||||||||
Total deposits | 2,551,400 | 7,045 | 0.28 | % | 1,894,981 | 5,016 | 0.26 | % | ||||||||||||||
Borrowings: | ||||||||||||||||||||||
Brokered deposits | 231,610 | 1,588 | 0.69 | % | 229,079 | 1,495 | 0.65 | % | ||||||||||||||
Subordinated debentures | 58,718 | 3,415 | 5.82 | % | 47,569 | 2,724 | 5.73 | % | ||||||||||||||
Other borrowings | 557,684 | 4,506 | 0.81 | % | 511,632 | 3,457 | 0.68 | % | ||||||||||||||
Total borrowings | 848,012 | 9,509 | 1.12 | % | 788,280 | 7,676 | 0.97 | % | ||||||||||||||
Total funding liabilities | 3,399,412 | 16,554 | 0.49 | % | 2,683,261 | 12,692 | 0.47 | % | ||||||||||||||
Other liabilities | 54,778 | 38,423 | ||||||||||||||||||||
Shareholders' equity | 382,507 | 277,716 | ||||||||||||||||||||
Total liabilities & shareholders' equity | $ | 3,836,697 | $ | 2,999,400 | ||||||||||||||||||
Net interest income (fully-taxable equivalent) | 115,193 | 88,215 | ||||||||||||||||||||
Less: fully-taxable equivalent adjustment | (2,121 | ) | (1,763 | ) | ||||||||||||||||||
Net interest income | $ | 113,072 | $ | 86,452 | ||||||||||||||||||
Net interest rate spread (fully-taxable equivalent) | 3.31 | % | 3.18 | % | ||||||||||||||||||
Net interest margin (fully-taxable equivalent) | 3.32 | % | 3.19 | % | ||||||||||||||||||
(1) Reported on tax-equivalent basis calculated using a tax rate of 35%, including certain commercial loans. | ||||||||||||||||||||||
(2) Non-accrual loans and loans held for sale are included in total average loans. | ||||||||||||||||||||||
(3) Includes $734,000 of income recognized in the second quarter of 2015 upon payoff of one loan that was on non-accrual status. | ||||||||||||||||||||||
Asset Quality Data (unaudited) | ||||||||||||||||||||
(In thousands) | At or For The Year Ended December 31, 2016 | At or For The Nine Months Ended September 30, 2016 | At or For The Six Months Ended June 30, 2016 | At or For The Three Months Ended March 31, 2016 | At or For The Year Ended December 31, 2015 | |||||||||||||||
Non-accrual loans: | ||||||||||||||||||||
Residential real estate | $ | 3,945 | $ | 3,986 | $ | 4,697 | $ | 6,275 | $ | 7,253 | ||||||||||
Commercial real estate | 12,849 | 12,917 | 13,752 | 3,044 | 4,529 | |||||||||||||||
Commercial | 2,088 | 2,259 | 3,539 | 4,128 | 4,489 | |||||||||||||||
Consumer | 1,624 | 1,650 | 1,615 | 1,572 | 2,051 | |||||||||||||||
HPFC | 207 | 216 | 110 | 357 | — | |||||||||||||||
Total non-accrual loans | 20,713 | 21,028 | 23,713 | 15,376 | 18,322 | |||||||||||||||
Loans 90 days past due and accruing | — | — | 112 | — | — | |||||||||||||||
Accruing troubled-debt restructured loans not included above | 4,338 | 4,468 | 4,509 | 4,594 | 4,861 | |||||||||||||||
Total non-performing loans | 25,051 | 25,496 | 28,334 | 19,970 | 23,183 | |||||||||||||||
Other real estate owned: | ||||||||||||||||||||
Residential real estate | 14 | 75 | 80 | 273 | 407 | |||||||||||||||
Commercial real estate | 908 | 736 | 775 | 955 | 897 | |||||||||||||||
Total other real estate owned | 922 | 811 | 855 | 1,228 | 1,304 | |||||||||||||||
Total non-performing assets | $ | 25,973 | $ | 26,307 | $ | 29,189 | $ | 21,198 | $ | 24,487 | ||||||||||
Loans 30-89 days past due: | ||||||||||||||||||||
Residential real estate | $ | 2,470 | $ | 2,228 | $ | 2,159 | $ | 1,109 | $ | 3,590 | ||||||||||
Commercial real estate | 971 | 599 | 2,267 | 4,201 | 4,295 | |||||||||||||||
Commercial | 851 | 463 | 630 | 667 | 637 | |||||||||||||||
Consumer | 1,018 | 552 | 1,090 | 808 | 1,255 | |||||||||||||||
HPFC | 1,029 | 492 | 876 | 624 | 165 | |||||||||||||||
Total loans 30-89 days past due | $ | 6,339 | $ | 4,334 | $ | 7,022 | $ | 7,409 | $ | 9,942 | ||||||||||
Allowance for loan losses at the beginning of the period | $ | 21,166 | $ | 21,166 | $ | 21,166 | $ | 21,166 | $ | 21,116 | ||||||||||
Provision for loan losses | 5,269 | 5,011 | 3,724 | 870 | 1,938 | |||||||||||||||
Charge-offs: | ||||||||||||||||||||
Residential real estate | 356 | 229 | 229 | 210 | 801 | |||||||||||||||
Commercial real estate | 315 | 273 | 241 | 222 | 481 | |||||||||||||||
Commercial | 2,218 | 1,970 | 429 | 226 | 655 | |||||||||||||||
Consumer | 409 | 289 | 226 | 143 | 679 | |||||||||||||||
HPFC | 507 | 507 | 302 | — | — | |||||||||||||||
Total charge-offs | 3,805 | 3,268 | 1,427 | 801 | 2,616 | |||||||||||||||
Total recoveries | 486 | 381 | 254 | 104 | 728 | |||||||||||||||
Net charge-offs | 3,319 | 2,887 | 1,173 | 697 | 1,888 | |||||||||||||||
Allowance for loan losses at the end of the period | $ | 23,116 | $ | 23,290 | $ | 23,717 | $ | 21,339 | $ | 21,166 | ||||||||||
Components of allowance for credit losses: | ||||||||||||||||||||
Allowance for loan losses | $ | 23,116 | $ | 23,290 | $ | 23,717 | $ | 21,339 | $ | 21,166 | ||||||||||
Liability for unfunded credit commitments | 11 | 14 | 22 | 24 | 22 | |||||||||||||||
Allowance for credit losses | $ | 23,127 | $ | 23,304 | $ | 23,739 | $ | 21,363 | $ | 21,188 | ||||||||||
Ratios: | ||||||||||||||||||||
Non-performing loans to total loans | 0.97 | % | 0.98 | % | 1.10 | % | 0.80 | % | 0.93 | % | ||||||||||
Non-performing assets to total assets | 0.67 | % | 0.67 | % | 0.75 | % | 0.56 | % | 0.66 | % | ||||||||||
Allowance for loan losses to total loans | 0.89 | % | 0.90 | % | 0.92 | % | 0.86 | % | 0.85 | % | ||||||||||
Net charge-offs to average loans (annualized) | ||||||||||||||||||||
Quarter-to-date | 0.07 | % | 0.26 | % | 0.07 | % | 0.11 | % | 0.16 | % | ||||||||||
Year-to-date | 0.13 | % | 0.15 | % | 0.09 | % | 0.11 | % | 0.10 | % | ||||||||||
Allowance for loan losses to non-performing loans | 92.28 | % | 91.35 | % | 85.71 | % | 106.86 | % | 91.30 | % | ||||||||||
Loans 30-89 days past due to total loans | 0.24 | % | 0.17 | % | 0.27 | % | 0.30 | % | 0.40 | % | ||||||||||
Reconciliation of non-GAAP to GAAP Financial Measures
Efficiency Ratio: | ||||||||||||||||||||
For the Three Months Ended | For the Year Ended | |||||||||||||||||||
(In thousands) | December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||||
Non-interest expense, as presented | $ | 22,508 | $ | 22,149 | $ | 31,470 | $ | 89,896 | $ | 81,139 | ||||||||||
Less: merger and acquisition costs | — | (45 | ) | (8,786 | ) | (866 | ) | (10,415 | ) | |||||||||||
Adjusted non-interest expense | $ | 22,508 | $ | 22,104 | $ | 22,684 | $ | 89,030 | $ | 70,724 | ||||||||||
Net interest income, as presented | $ | 28,244 | $ | 28,372 | $ | 26,371 | $ | 113,072 | $ | 86,452 | ||||||||||
Add: effect of tax-exempt income(1) | 533 | 533 | 523 | 2,121 | 1,763 | |||||||||||||||
Non-interest income, as presented | 10,151 | 11,001 | 8,464 | 39,621 | 27,482 | |||||||||||||||
Less: net gain on sale of securities | (47 | ) | — | — | (51 | ) | (4 | ) | ||||||||||||
Adjusted net interest income plus non-interest income | $ | 38,881 | $ | 39,906 | $ | 35,358 | $ | 154,763 | $ | 115,693 | ||||||||||
Non-GAAP efficiency ratio(2) | 57.89 | % | 55.39 | % | 64.16 | % | 57.53 | % | 61.13 | % | ||||||||||
GAAP efficiency ratio | 58.62 | % | 56.25 | % | 90.34 | % | 58.87 | % | 71.22 | % | ||||||||||
(1) Assumed a 35% tax rate. | ||||||||||||||||||||
(2) For the three months and nine months ended September 30, 2016 non-GAAP efficiency ratio has been adjusted from what was previously reported to remove the adjustments to non-interest expense for bank-owned life insurance death benefits and legal settlement proceeds. The Company had previously reported a non-GAAP efficiency ratio for the three and nine months ended of 56.29% and 57.92%, respectively, and as revised was 55.39% and 57.40%. | ||||||||||||||||||||
Tax-Equivalent Net Interest Income:
For the Three Months Ended | For the Year Ended | |||||||||||||||||||
(In thousands) | December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||||
Net interest income, as presented | $ | 28,244 | $ | 28,372 | $ | 26,371 | $ | 113,072 | $ | 86,452 | ||||||||||
Add: effect of tax-exempt income(1) | 533 | 533 | 523 | 2,121 | 1,763 | |||||||||||||||
Net interest income, tax equivalent | $ | 28,777 | $ | 28,905 | $ | 26,894 | $ | 115,193 | $ | 88,215 | ||||||||||
(1) Assumed a 35.0% tax rate. | ||||||||||||||||||||
Tangible Book Value Per Share and Tangible Common Equity Ratio: | ||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | ||||||||||
(In thousands, except number of shares and per share data) | ||||||||||||
Tangible Book Value Per Share: | ||||||||||||
Shareholders' equity, as presented | $ | 391,547 | $ | 393,181 | $ | 363,190 | ||||||
Less: goodwill and other intangible assets | (101,461 | ) | (101,937 | ) | (104,324 | ) | ||||||
Tangible equity | $ | 290,086 | $ | 291,244 | $ | 258,866 | ||||||
Shares outstanding at period end | 15,476,379 | 15,434,856 | 15,330,717 | |||||||||
Tangible book value per share | $ | 18.74 | $ | 18.87 | $ | 16.89 | ||||||
Book value per share | $ | 25.30 | $ | 25.47 | $ | 23.69 | ||||||
Tangible Common Equity Ratio: | ||||||||||||
Total assets | $ | 3,864,230 | $ | 3,903,966 | $ | 3,709,344 | ||||||
Less: goodwill and other intangibles | (101,461 | ) | (101,937 | ) | (104,324 | ) | ||||||
Tangible assets | $ | 3,762,769 | $ | 3,802,029 | $ | 3,605,020 | ||||||
Tangible common equity ratio | 7.71 | % | 7.66 | % | 7.18 | % | ||||||
Shareholders' equity to total assets | 10.13 | % | 10.07 | % | 9.79 | % | ||||||
Adjusted Net Income and Adjusted Diluted EPS: | ||||||||||||||||||||
For the Three Months Ended | For the Year Ended | |||||||||||||||||||
(In thousands, except per share data) | December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||||
Adjusted Net Income: | ||||||||||||||||||||
Net income, as presented | $ | 10,902 | $ | 10,903 | $ | 1,692 | $ | 40,067 | $ | 20,952 | ||||||||||
Merger and acquisition costs, net of tax(1) | — | 30 | 5,970 | 563 | 7,237 | |||||||||||||||
Net gain on sale of securities, net of tax(1) | (30 | ) | — | — | (33 | ) | (3 | ) | ||||||||||||
Adjusted net income | $ | 10,872 | $ | 10,933 | $ | 7,662 | $ | 40,597 | $ | 28,186 | ||||||||||
Adjusted Diluted EPS: | ||||||||||||||||||||
Diluted EPS, as presented | $ | 0.70 | $ | 0.70 | $ | 0.11 | $ | 2.57 | $ | 1.73 | ||||||||||
Adjusted net income impact | — | — | 0.41 | 0.04 | 0.60 | |||||||||||||||
Adjusted diluted EPS | $ | 0.70 | $ | 0.70 | $ | 0.52 | $ | 2.61 | $ | 2.33 | ||||||||||
(1) Assumed a 35% tax rate for deductible expenses. | ||||||||||||||||||||
Adjusted Return on Average Tangible Equity and Adjusted Return on Average Tangible Equity: | ||||||||||||||||||||
For the Three Months Ended | For the Year Ended | |||||||||||||||||||
(In thousands) | December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||||
Net income, as presented | $ | 10,902 | $ | 10,903 | $ | 1,692 | $ | 40,067 | $ | 20,952 | ||||||||||
Amortization of intangible assets, net of tax(1) | 309 | 309 | 289 | 1,237 | 849 | |||||||||||||||
Net income, adjusted for amortization of intangible assets | 11,211 | 11,212 | 1,981 | 41,304 | 21,801 | |||||||||||||||
Merger and acquisition costs, net of tax(2) | — | 30 | 5,970 | 563 | 7,237 | |||||||||||||||
Net gain on sale of securities, net of tax(1) | (30 | ) | — | — | (33 | ) | (3 | ) | ||||||||||||
Adjusted tangible net income | $ | 11,181 | $ | 11,242 | $ | 7,951 | $ | 41,834 | $ | 29,035 | ||||||||||
Average equity | $ | 394,004 | $ | 387,972 | $ | 351,642 | $ | 382,507 | $ | 277,716 | ||||||||||
Less: average goodwill and other intangible assets | (101,689 | ) | (102,168 | ) | (87,814 | ) | (102,711 | ) | (57,833 | ) | ||||||||||
Average tangible equity | $ | 292,315 | $ | 285,804 | $ | 263,828 | $ | 279,796 | $ | 219,883 | ||||||||||
Adjusted return on average tangible equity | 15.22 | % | 15.65 | % | 11.96 | % | 14.95 | % | 13.20 | % | ||||||||||
Return on average tangible equity | 15.26 | % | 15.61 | % | 2.98 | % | 14.76 | % | 9.91 | % | ||||||||||
Return on average equity | 11.01 | % | 11.18 | % | 1.91 | % | 10.47 | % | 7.54 | % | ||||||||||
(1) Assumed a 35% tax rate. | ||||||||||||||||||||
(2) Assumed a 35% tax rate for tax deductible expenses. | ||||||||||||||||||||
Adjusted Net Interest Margin | ||||||||||||||||||||
For the Three Months Ended | For the Year Ended | |||||||||||||||||||
(In thousands) | December 31, 2016 | September 30, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||||
Net interest income, tax equivalent, as presented | $ | 28,777 | $ | 28,905 | $ | 26,894 | $ | 115,193 | $ | 88,215 | ||||||||||
Less: fair value mark accretion from purchase accounting | (912 | ) | (1,030 | ) | (737 | ) | (5,082 | ) | (812 | ) | ||||||||||
Less: collection of previously charged-off acquired loans | (94 | ) | (208 | ) | (52 | ) | (1,078 | ) | (52 | ) | ||||||||||
Adjusted net interest income, tax equivalent | $ | 27,771 | $ | 27,667 | $ | 26,105 | $ | 109,033 | $ | 87,351 | ||||||||||
Average total interest-earnings assets | $ | 3,493,921 | $ | 3,526,353 | $ | 3,229,710 | $ | 3,466,601 | $ | 2,764,568 | ||||||||||
Net interest margin (fully-taxable equivalent)(1) | 3.26 | % | 3.24 | % | 3.30 | % | 3.32 | % | 3.19 | % | ||||||||||
Adjusted net interest margin (fully-taxable equivalent)(1) | 3.14 | % | 3.10 | % | 3.22 | % | 3.15 | % | 3.16 | % | ||||||||||
(1) Annualized. | ||||||||||||||||||||
CONTACT: Michael R. Archer, Senior Vice President, Corporate Controller, Camden National Corporation, (800) 860-8821, marcher@camdennational.com