CAMDEN NATIONAL CORPORATION REPORTS A 6% INCREASE IN
SECOND QUARTER 2017 NET INCOME OVER LAST YEAR
CAMDEN, Maine, July 25, 2017/PRNewswire/--Camden National Corporation (NASDAQ: CAC; “Camden National” or the “Company”), a $4.0 billion bank holding company headquartered in Camden, Maine, reported net income for the second quarter of 2017 of $10.2 million and diluted earnings per share ("EPS") of $0.66 per share, each representing an increase over the second quarter of 2016 of 6%.
“We reached another major milestone in the Company's long history this quarter reaching $4.0 billion in total assets," said Gregory A. Dufour, President and Chief Executive Officer of Camden National. "Our positive first half financial results reflect the strength of our growing franchise, highlighted by 6% net income and diluted EPS growth compared to a year ago and 5% loan growth since year end."
For the first half of 2017, the Company's reported net income of $20.3 million and diluted EPS of $1.30 per share, represented an increase over the same period last year of 11% and 10%, respectively. For the first six months of 2017, the Company's return on average assets was 1.04%, return on average tangible equity1 was 14.16% and efficiency ratio1 was 57.36%.
SECOND QUARTER 2017 FINANCIAL HIGHLIGHTS
• | Net income increased $618,000, or 6%, to $10.2 million compared to the second quarter of 2016 and $158,000, or 2%, compared to last quarter. |
• | Diluted EPS increased $0.04 per share, or 6%, to $0.66 per share compared to the second quarter of 2016 and $0.02 per share, or 3%, compared to last quarter. |
• | Return on average assets of 1.03% and return on average equity of 10.17% for the second quarter of 2017. |
• | Loan growth (excluding loans held for sale) for the second quarter of 2017 was 3% (14% annualized). |
• | Tangible book value per share1 at June 30, 2017 increased 3% to $19.75 per share since last quarter. |
FINANCIAL CONDITION
ASSETS AND LOANS
Total assets at June 30, 2017 increased $172.1 million, or 4%, to $4.0 billion since December 31, 2016. Our asset growth for the six months ended June 30, 2017 was driven by loan growth (excluding loans held for sale) of $141.7 million, or 5%, and a $34.7 million, or 4%, increase in our investments portfolio.
Loan growth (excluding loans held for sale) for the first six months of 2017 was centered within commercial real estate, which grew $88.0 million, or 8%. In addition, residential real estate loans grew $29.1 million, or 4%, and commercial loans grew $27.8 million, or 7%, over the same period.
For the three and six months ended June 30, 2017, the Company originated $101.4 million and $180.8 million of residential mortgages, respectively, and sold 54% and 50% of its production.
DEPOSITS AND BORROWINGS
Total deposits at June 30, 2017 increased 4% since year-end to $2.9 billion, while total borrowings increased 7% to $641.7 million over the same period.
Core deposits (demand, interest checking, savings and money market) at June 30, 2017 increased $45.2 million, or 2%, since year-end driven by an increase in demand and interest checking of $17.2 million and $36.0 million, respectively. Brokered deposits at June 30, 2017 increased $79.1 million, or 29%, since year-end to fund loan growth.
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1 | This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures" for further details. |
At June 30, 2017, the Company's loans-to-deposit ratio was 93%, compared to 92% at December 31, 2016 and 94% at June 30, 2016.
Average core deposits for the three and six months ended June 30, 2017 increased 3% and 4%, respectively, compared to the same periods last year.
ASSET QUALITY
Overall, the Company's asset quality continues to be strong, recognizing that at June 30, 2017 non-performing loans and non-performing assets to total assets ratios increased 13 and 9 basis points to 1.12% and 0.77%, respectively, since the first quarter of 2017. At June 30, 2017, loans 30-89 days past due to total loans increased as well since last quarter 6 basis points to 0.32%. The increase in these asset quality metrics was primarily driven by one commercial real estate loan relationship and one residential mortgage loan.
CAPITAL
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 June 30, 2017, the Company’s total risk-based capital ratio and Tier I leverage capital ratio were 13.87% and 8.92%, respectively.
Tangible book value per share1 and the tangible common equity ratio1 continue to trend favorably. Tangible book value per share1 at June 30, 2017 increased 5% since year-end to $19.75 per share, while the tangible common equity ratio1 increased to 7.79% from 7.71% at December 31, 2016.
FINANCIAL OPERATING RESULTS
SECOND QUARTER 2017 COMPARED TO SECOND QUARTER 2016:
Net interest income increased $122,000 to $28.6 million due to higher average interest-earning assets of $174.3 million, which was primarily driven by average loan growth of $133.6 million, or 5%; however, this was partially offset by a decline in net interest margin of 15 basis points to 3.19% for the second quarter of 2017 compared to the second quarter of 2016. The net interest margin decrease was largely attributable to a decrease of $1.3 million of net interest income recognized on loan and deposit fair value mark accretion and collections on previously charged-off acquired loans. The Company's net interest margin excluding the impact of loan and deposit fair value mark accretion and collections on previously charged-off acquired loans was 3.09% for the second quarter of 2017 and 2016.
Non-interest income decreased $664,000 to $9.9 million due to less commercial back-to-back loan swap fee income of $903,000 and less bank-owned life insurance income of $322,000. Non-interest income increased across all other channels, including debit card income, service charges and related fees, fiduciary services and brokerage and insurance commissions, compared to the second quarter of 2016.
The provision for credit losses for the second quarter of 2017 decreased $1.5 million, or 51%, to $1.4 million compared to the same period last year. The net charge-offs to average loans ratio (annualized) for the second quarter of 2017 increased 4 basis points to 0.11% compared to the second quarter of 2016, however this was offset by $2.3 million of incremental provision in the second quarter of 2016 that was required for two loans.
Non-interest expense for the second quarter of 2017 decreased $172,000, or 1%, to $22.2 million compared to the second quarter of 2016. The decrease was driven by the absence of merger-related expenses in the second quarter of
2017 and lower costs across net occupancy, consulting and professional, regulatory assessment, and other real estate
owned and collection costs, partially offset by a 3% increase in compensation expense. The efficiency ratio1 for the second quarter of 2017 was 56.76% compared to 55.97% for the same period last year.
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1 This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures" for further details.
The Company's effective income tax rate for the second quarter of 2017 was 31.6% compared to 30.7% for the second quarter of 2016. The difference in the effective income tax rate was driven by an increase in non-taxable bank-owned life insurance income in the second quarter of 2016 that reduced the effective income tax rate.
SECOND QUARTER 2017 COMPARED TO FIRST QUARTER 2017:
Net income for the second quarter of 2017 increased $158,000 over last quarter.
Total revenues2 for the second quarter of 2017 increased $2.1 million, or 6%, over last quarter. The increase was driven by an increase in non-interest income of $1.3 million, or 15%, and an increase in net interest income of $771,000, or 3%.
• | Non-interest income increased $1.3 million primarily due to an increase of commercial back-to-back loan swap fee income of $423,000 and mortgage banking income of $384,000 driven by greater loan sales and a larger loan pipeline. Non-interest income increased across many other non-interest income channels, including debit card income, service charges and related fees, fiduciary services and brokerage and insurance commissions, compared to last quarter. |
• | Net interest income increased $771,000 primarily due to an increase in average interest-earning assets of $70.3 million, which was primarily driven by average loan growth of $61.2 million, or 2%. Net interest margin for the second quarter of 2017 was 3.19%, compared to 3.18% last quarter. The Company's net interest margin excluding the impact of loan and deposit fair value mark accretion and collection on previously charged-off acquire loans for the first and second quarter of 2017 was 3.09%. Our loan yield increased 8 basis points in the second quarter of 2017 over last quarter, while its cost of funds increased 7 basis points over the same period. |
The provision for credit losses for the second quarter of 2017 increased $822,000 over last quarter primarily due to greater loan growth and an increase in net charge-offs to average loans (annualized) ratio of 0.11% compared to 0.00% last quarter.
Non-interest expense for the second quarter of 2017 increased $730,000, or 3%, compared to last quarter. The increase was driven by an increase in compensation-related costs of 2% and an increase in collection-related costs of $388,000. The efficiency ratio1 for the second quarter of 2017 was 56.76% compared to 58.00% last quarter.
The Company's effective income tax rate for the second quarter of 2017 was 31.6% compared to 30.1% for the first quarter of 2017. The difference in the effective income tax rate was driven by windfall tax benefits recognized in the first quarter of 2017 that reduced the effective income tax rate.
SECOND QUARTER 2017 DIVIDEND
The Board of Directors approved a dividend of $0.23 per share, payable on July 31, 2017, to shareholders of record as of July 17, 2017. This distribution represents an annualized dividend yield of 2.14%, based on the June 30, 2017 closing price of Camden National's common stock at $42.91 per share as reported by NASDAQ.
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1 | This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures" for further details. |
2 | Revenue is defined as the sum of net interest income and non-interest income. |
CONFERENCE CALL
Camden National will host a conference call and webcast at 3:30 p.m. eastern time on July 25, 2017 to discuss our second quarter 2017 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/cac170725.html
A link to the live webcast will be will be available on Camden National's website under "Investor Relations" at www.CamdenNational.com prior to the meeting, and a replay of the webcast will be available on Camden National's website following the conference call. The transcript of the conference call will also be available on Camden National's website approximately two days after the conference call.
ABOUT CAMDEN NATIONAL CORPORATION
Camden National Corporation (NASDAQ:CAC), headquartered in Camden, Maine, is the largest publicly traded bank holding company in Northern New England with $4.0 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. Camden National Bank provides personalized service through a network of 60 banking centers, 76 ATMs, and lending offices in New Hampshire and Massachusetts, all complimented by 24/7 live phone support. Comprehensive wealth management, investment, and financial planning services are delivered by Camden National Wealth Management. To learn more, visit www.CamdenNational.com. Member FDIC.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, projections and other statements, which are subject to numerous risks, assumptions and uncertainties. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, changes in general economic conditions, 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, 2016, 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, and tangible common equity ratios; return on average tangible equity; 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 financial institutions. In addition, these non-GAAP financial measures remove the impact of unusual items that may obscure trends in the Company's underlying performance. These disclosures should not be viewed as a substitute for GAAP operating results, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other financial institutions. Reconciliation to the comparable GAAP financial measure can be found in this document.
ANNUALIZED DATA
Certain returns, yields and performance ratios are presented on an “annualized” basis. This is done for analytical and decision-making purposes to better discern underlying performance trends when compared to full-year or year-over-year amounts.
Selected Financial Data (unaudited) | ||||||||||||||||||||
At or For The Three Months Ended | At or For The Six Months Ended | |||||||||||||||||||
(In thousands, except number of shares and per share data) | June 30, 2017 | March 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||
Financial Condition Data | ||||||||||||||||||||
Investments | $ | 932,338 | $ | 943,061 | $ | 921,989 | $ | 932,338 | $ | 921,989 | ||||||||||
Loans and loans held for sale | 2,747,053 | 2,650,818 | 2,608,228 | 2,747,053 | 2,608,228 | |||||||||||||||
Allowance for loan losses | 24,394 | 23,721 | 23,717 | 24,394 | 23,717 | |||||||||||||||
Total assets | 4,036,367 | 3,938,465 | 3,910,386 | 4,036,367 | 3,910,386 | |||||||||||||||
Deposits | 2,940,866 | 2,937,183 | 2,773,487 | 2,940,866 | 2,773,487 | |||||||||||||||
Borrowings | 641,662 | 556,922 | 690,476 | 641,662 | 690,476 | |||||||||||||||
Shareholders' equity | 406,960 | 397,827 | 384,856 | 406,960 | 384,856 | |||||||||||||||
Operating Data | ||||||||||||||||||||
Net interest income | $ | 28,626 | $ | 27,855 | $ | 28,504 | $ | 56,481 | $ | 56,456 | ||||||||||
Provision for credit losses | 1,401 | 579 | 2,852 | 1,980 | 3,724 | |||||||||||||||
Non-interest income | 9,888 | 8,572 | 10,552 | 18,460 | 18,469 | |||||||||||||||
Non-interest expense | 22,158 | 21,428 | 22,330 | 43,586 | 45,239 | |||||||||||||||
Income before income tax expense | 14,955 | 14,420 | 13,874 | 29,375 | 25,962 | |||||||||||||||
Income tax expense | 4,721 | 4,344 | 4,258 | 9,065 | 7,700 | |||||||||||||||
Net income | $ | 10,234 | $ | 10,076 | $ | 9,616 | $ | 20,310 | $ | 18,262 | ||||||||||
Key Ratios | ||||||||||||||||||||
Return on average assets | 1.03 | % | 1.05 | % | 1.01 | % | 1.04 | % | 0.97 | % | ||||||||||
Return on average equity | 10.17 | % | 10.36 | % | 10.22 | % | 10.27 | % | 9.82 | % | ||||||||||
Net interest margin | 3.19 | % | 3.18 | % | 3.34 | % | 3.19 | % | 3.34 | % | ||||||||||
Non-performing loans to total loans | 1.12 | % | 0.99 | % | 1.10 | % | 1.12 | % | 1.10 | % | ||||||||||
Non-performing assets to total assets | 0.77 | % | 0.68 | % | 0.75 | % | 0.77 | % | 0.75 | % | ||||||||||
Annualized net charge-offs to average loans | 0.11 | % | 0.00 | % | 0.07 | % | 0.05 | % | 0.09 | % | ||||||||||
Tier I leverage capital ratio | 8.92 | % | 8.90 | % | 8.44 | % | 8.92 | % | 8.44 | % | ||||||||||
Total risk-based capital ratio | 13.87 | % | 14.05 | % | 12.94 | % | 13.87 | % | 12.94 | % | ||||||||||
Per Share Data(1) | ||||||||||||||||||||
Basic earnings per share | $ | 0.66 | $ | 0.65 | $ | 0.62 | $ | 1.31 | $ | 1.18 | ||||||||||
Diluted earnings per share | $ | 0.66 | $ | 0.64 | $ | 0.62 | $ | 1.30 | $ | 1.18 | ||||||||||
Cash dividends declared per share | $ | 0.23 | $ | 0.23 | $ | 0.20 | $ | 0.46 | $ | 0.40 | ||||||||||
Book value per share | $ | 26.23 | $ | 25.65 | $ | 24.96 | $ | 26.23 | $ | 24.96 | ||||||||||
Weighted average number of common shares outstanding | 15,512,761 | 15,488,848 | 15,415,308 | 15,500,862 | 15,402,629 | |||||||||||||||
Diluted weighted average number of common shares outstanding | 15,586,571 | 15,568,639 | 15,491,010 | 15,576,711 | 15,472,798 | |||||||||||||||
Non-GAAP Measures(2) | ||||||||||||||||||||
Return on average tangible equity | 13.96 | % | 14.37 | % | 14.50 | % | 14.16 | % | 14.04 | % | ||||||||||
Tangible common equity ratio | 7.79 | % | 7.74 | % | 7.42 | % | 7.79 | % | 7.42 | % | ||||||||||
Efficiency ratio | 56.76 | % | 58.00 | % | 55.97 | % | 57.36 | % | 58.46 | % | ||||||||||
Tangible book value per share(1) | $ | 19.75 | $ | 19.14 | $ | 18.31 | $ | 19.75 | $ | 18.31 | ||||||||||
(1) Second quarter 2016 shares and 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) | June 30, 2017 | December 31, 2016 | June 30, 2016 | |||||||||
ASSETS | ||||||||||||
Cash and due from banks | $ | 93,033 | $ | 87,707 | $ | 96,443 | ||||||
Securities: | ||||||||||||
Available-for-sale securities, at fair value | 810,858 | 779,867 | 799,526 | |||||||||
Held-to-maturity securities, at amortized cost | 94,340 | 94,609 | 93,609 | |||||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost | 27,140 | 23,203 | 28,854 | |||||||||
Total securities | 932,338 | 897,679 | 921,989 | |||||||||
Loans held for sale, at fair value | 10,784 | 14,836 | 22,928 | |||||||||
Loans: | ||||||||||||
Residential real estate | 831,577 | 802,494 | 800,556 | |||||||||
Commercial real estate | 1,138,756 | 1,050,780 | 1,017,777 | |||||||||
Commercial(1) | 421,818 | 394,051 | 407,168 | |||||||||
Consumer and home equity | 344,118 | 347,239 | 359,799 | |||||||||
Total loans | 2,736,269 | 2,594,564 | 2,585,300 | |||||||||
Less: allowance for loan losses | (24,394 | ) | (23,116 | ) | (23,717 | ) | ||||||
Net loans | 2,711,875 | 2,571,448 | 2,561,583 | |||||||||
Goodwill | 94,697 | 94,697 | 94,697 | |||||||||
Other intangible assets | 5,820 | 6,764 | 7,715 | |||||||||
Bank-owned life insurance | 79,266 | 78,119 | 77,352 | |||||||||
Premises and equipment, net | 42,362 | 42,873 | 44,299 | |||||||||
Deferred tax assets | 36,532 | 39,263 | 34,559 | |||||||||
Other assets | 29,660 | 30,844 | 48,821 | |||||||||
Total assets | $ | 4,036,367 | $ | 3,864,230 | $ | 3,910,386 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
Liabilities | ||||||||||||
Deposits: | ||||||||||||
Demand | $ | 424,174 | $ | 406,934 | $ | 381,323 | ||||||
Interest checking | 737,532 | 701,494 | 752,036 | |||||||||
Savings and money market | 971,156 | 979,263 | 940,577 | |||||||||
Certificates of deposit | 456,227 | 468,203 | 493,488 | |||||||||
Brokered deposits | 351,777 | 272,635 | 206,063 | |||||||||
Total deposits | 2,940,866 | 2,828,529 | 2,773,487 | |||||||||
Short-term borrowings | 572,073 | 530,129 | 600,975 | |||||||||
Long-term borrowings | 10,756 | 10,791 | 30,824 | |||||||||
Subordinated debentures | 58,833 | 58,755 | 58,677 | |||||||||
Accrued interest and other liabilities | 46,879 | 44,479 | 61,567 | |||||||||
Total liabilities | 3,629,407 | 3,472,683 | 3,525,530 | |||||||||
Shareholders’ equity | 406,960 | 391,547 | 384,856 | |||||||||
Total liabilities and shareholders’ equity | $ | 4,036,367 | $ | 3,864,230 | $ | 3,910,386 | ||||||
(1) Includes the Healthcare Professional Funding Corporation ("HPFC") loan portfolio.
Consolidated Statements of Income Data (unaudited) | ||||||||||||
For The Three Months Ended | ||||||||||||
(In thousands, except per share data) | June 30, 2017 | March 31, 2017 | June 30, 2016 | |||||||||
Interest Income | ||||||||||||
Interest and fees on loans | $ | 28,423 | $ | 27,062 | $ | 27,706 | ||||||
Interest on U.S. government and sponsored enterprise obligations | 4,355 | 4,256 | 4,016 | |||||||||
Interest on state and political subdivision obligations | 691 | 702 | 711 | |||||||||
Interest on federal funds sold and other investments | 471 | 394 | 342 | |||||||||
Total interest income | 33,940 | 32,414 | 32,775 | |||||||||
Interest Expense | ||||||||||||
Interest on deposits | 2,987 | 2,554 | 2,109 | |||||||||
Interest on borrowings | 1,476 | 1,161 | 1,313 | |||||||||
Interest on subordinated debentures | 851 | 844 | 849 | |||||||||
Total interest expense | 5,314 | 4,559 | 4,271 | |||||||||
Net interest income | 28,626 | 27,855 | 28,504 | |||||||||
Provision for credit losses | 1,401 | 579 | 2,852 | |||||||||
Net interest income after provision for credit losses | 27,225 | 27,276 | 25,652 | |||||||||
Non-Interest Income | ||||||||||||
Debit card income | 1,992 | 1,834 | 1,854 | |||||||||
Service charges on deposit accounts | 1,957 | 1,823 | 1,833 | |||||||||
Mortgage banking income, net | 1,937 | 1,553 | 1,706 | |||||||||
Income from fiduciary services | 1,355 | 1,247 | 1,342 | |||||||||
Bank-owned life insurance | 570 | 577 | 892 | |||||||||
Brokerage and insurance commissions | 548 | 453 | 517 | |||||||||
Other service charges and fees | 501 | 468 | 477 | |||||||||
Net gain on sale of securities | — | — | 4 | |||||||||
Other income | 1,028 | 617 | 1,927 | |||||||||
Total non-interest income | 9,888 | 8,572 | 10,552 | |||||||||
Non-Interest Expense | ||||||||||||
Salaries and employee benefits | 12,376 | 12,147 | 11,999 | |||||||||
Furniture, equipment and data processing | 2,450 | 2,325 | 2,381 | |||||||||
Net occupancy costs | 1,689 | 1,946 | 1,790 | |||||||||
Consulting and professional fees | 853 | 845 | 982 | |||||||||
Debit card expense | 712 | 660 | 718 | |||||||||
Regulatory assessments | 488 | 545 | 774 | |||||||||
Amortization of intangible assets | 472 | 472 | 476 | |||||||||
Other real estate owned and collection (recoveries) costs, net | 344 | (44 | ) | 496 | ||||||||
Merger and acquisition costs | — | — | 177 | |||||||||
Other expenses | 2,774 | 2,532 | 2,537 | |||||||||
Total non-interest expense | 22,158 | 21,428 | 22,330 | |||||||||
Income before income tax expense | 14,955 | 14,420 | 13,874 | |||||||||
Income tax expense | 4,721 | 4,344 | 4,258 | |||||||||
Net Income | $ | 10,234 | $ | 10,076 | $ | 9,616 | ||||||
Per Share Data | ||||||||||||
Basic earnings per share | $ | 0.66 | $ | 0.65 | $ | 0.62 | ||||||
Diluted earnings per share | $ | 0.66 | $ | 0.64 | $ | 0.62 | ||||||
Consolidated Statements of Income Data (unaudited) | ||||||||
For The Six Months Ended June 30, | ||||||||
(In thousands, except per share data) | 2017 | 2016 | ||||||
Interest Income | ||||||||
Interest and fees on loans | $ | 55,485 | $ | 54,722 | ||||
Interest on U.S. government and sponsored enterprise obligations | 8,611 | 8,006 | ||||||
Interest on state and political subdivision obligations | 1,393 | 1,425 | ||||||
Interest on federal funds sold and other investments | 865 | 603 | ||||||
Total interest income | 66,354 | 64,756 | ||||||
Interest Expense | ||||||||
Interest on deposits | 5,541 | 4,151 | ||||||
Interest on borrowings | 2,637 | 2,449 | ||||||
Interest on junior subordinated debentures | 1,695 | 1,700 | ||||||
Total interest expense | 9,873 | 8,300 | ||||||
Net interest income | 56,481 | 56,456 | ||||||
Provision for credit losses | 1,980 | 3,724 | ||||||
Net interest income after provision for credit losses | 54,501 | 52,732 | ||||||
Non-Interest Income | ||||||||
Debit card income | 3,826 | 3,756 | ||||||
Service charges on deposit accounts | 3,780 | 3,557 | ||||||
Mortgage banking income, net | 3,490 | 2,514 | ||||||
Income from fiduciary services | 2,602 | 2,511 | ||||||
Bank-owned life insurance | 1,147 | 1,314 | ||||||
Brokerage and insurance commissions | 1,001 | 975 | ||||||
Other service charges and fees | 969 | 903 | ||||||
Net gain on sale of securities | — | 4 | ||||||
Other income | 1,645 | 2,935 | ||||||
Total non-interest income | 18,460 | 18,469 | ||||||
Non-Interest Expense | ||||||||
Salaries and employee benefits | 24,523 | 23,590 | ||||||
Furniture, equipment and data processing | 4,775 | 4,808 | ||||||
Net occupancy costs | 3,635 | 3,667 | ||||||
Consulting and professional fees | 1,698 | 1,867 | ||||||
Debit card expense | 1,372 | 1,438 | ||||||
Regulatory assessments | 1,033 | 1,495 | ||||||
Amortization of intangible assets | 944 | 952 | ||||||
Other real estate owned and collection costs | 300 | 1,152 | ||||||
Merger and acquisition costs | — | 821 | ||||||
Other expenses | 5,306 | 5,449 | ||||||
Total non-interest expense | 43,586 | 45,239 | ||||||
Income before income tax expense | 29,375 | 25,962 | ||||||
Income tax expense | 9,065 | 7,700 | ||||||
Net Income | $ | 20,310 | $ | 18,262 | ||||
Per Share Data | ||||||||
Basic earnings per share | $ | 1.31 | $ | 1.18 | ||||
Diluted earnings per share | $ | 1.30 | $ | 1.18 | ||||
Quarterly Average Balance and Yield/Rate Analysis (unaudited) | |||||||||||||||||||||
For The Three Months Ended | |||||||||||||||||||||
Average Balance | Yield/Rate | ||||||||||||||||||||
(In thousands) | June 30, 2017 | March 31, 2017 | June 30, 2016 | June 30, 2017 | March 31, 2017 | June 30, 2016 | |||||||||||||||
Assets | |||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Securities - taxable | $ | 843,370 | $ | 833,162 | $ | 801,752 | 2.29 | % | 2.23 | % | 2.17 | % | |||||||||
Securities - nontaxable(1) | 101,807 | 102,928 | 102,712 | 4.17 | % | 4.20 | % | 4.26 | % | ||||||||||||
Loans(2)(3): | |||||||||||||||||||||
Residential real estate | 826,353 | 814,626 | 823,908 | 4.12 | % | 4.10 | % | 4.26 | % | ||||||||||||
Commercial real estate | 1,114,508 | 1,076,788 | 983,965 | 4.05 | % | 3.93 | % | 4.12 | % | ||||||||||||
Commercial(1) | 334,761 | 319,556 | 294,795 | 4.23 | % | 4.09 | % | 4.18 | % | ||||||||||||
Municipal(1) | 18,268 | 16,071 | 17,847 | 3.42 | % | 3.39 | % | 3.04 | % | ||||||||||||
Consumer and home equity | 341,544 | 342,775 | 362,735 | 4.36 | % | 4.33 | % | 4.17 | % | ||||||||||||
HPFC | 53,843 | 58,252 | 72,417 | 8.78 | % | 8.34 | % | 9.97 | % | ||||||||||||
Total loans | 2,689,277 | 2,628,068 | 2,555,667 | 4.23 | % | 4.15 | % | 4.34 | % | ||||||||||||
Total interest-earning assets | 3,634,454 | 3,564,158 | 3,460,131 | 3.77 | % | 3.70 | % | 3.83 | % | ||||||||||||
Other assets | 344,945 | 339,684 | 366,668 | ||||||||||||||||||
Total assets | $ | 3,979,399 | $ | 3,903,842 | $ | 3,826,799 | |||||||||||||||
Liabilities & Shareholders' Equity | |||||||||||||||||||||
Deposits: | |||||||||||||||||||||
Demand | $ | 392,789 | $ | 391,671 | $ | 355,184 | — | % | — | % | — | % | |||||||||
Interest checking | 732,096 | 716,940 | 729,907 | 0.18 | % | 0.15 | % | 0.13 | % | ||||||||||||
Savings | 489,408 | 489,041 | 448,594 | 0.06 | % | 0.06 | % | 0.06 | % | ||||||||||||
Money market | 477,734 | 483,914 | 490,815 | 0.49 | % | 0.45 | % | 0.44 | % | ||||||||||||
Certificates of deposit(3) | 456,933 | 463,786 | 483,823 | 0.92 | % | 0.88 | % | 0.78 | % | ||||||||||||
Total deposits | 2,548,960 | 2,545,352 | 2,508,323 | 0.32 | % | 0.30 | % | 0.28 | % | ||||||||||||
Borrowings: | |||||||||||||||||||||
Brokered deposits | 349,762 | 308,594 | 207,371 | 1.08 | % | 0.87 | % | 0.67 | % | ||||||||||||
Subordinated debentures | 58,814 | 58,775 | 58,658 | 5.80 | % | 5.83 | % | 5.82 | % | ||||||||||||
Other borrowings | 577,450 | 552,508 | 622,185 | 1.02 | % | 0.85 | % | 0.85 | % | ||||||||||||
Total borrowings | 986,026 | 919,877 | 888,214 | 1.33 | % | 1.18 | % | 1.14 | % | ||||||||||||
Total funding liabilities | 3,534,986 | 3,465,229 | 3,396,537 | 0.60 | % | 0.53 | % | 0.51 | % | ||||||||||||
Other liabilities | 40,790 | 44,337 | 51,853 | ||||||||||||||||||
Shareholders' equity | 403,623 | 394,276 | 378,409 | ||||||||||||||||||
Total liabilities & Shareholders' Equity | $ | 3,979,399 | $ | 3,903,842 | $ | 3,826,799 | |||||||||||||||
Net interest rate spread (fully-taxable equivalent) | 3.17 | % | 3.17 | % | 3.32 | % | |||||||||||||||
Net interest margin (fully-taxable equivalent) | 3.19 | % | 3.18 | % | 3.34 | % | |||||||||||||||
Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection of previously charged-off acquired loans(3) | 3.09 | % | 3.09 | % | 3.09 | % | |||||||||||||||
(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) | Excludes the impact of the fair value mark accretion on loans and CDs generated in purchase accounting and collection of previously charged-off acquired loans for the three months ended June 30, 2017, March 31, 2017 and June 30, 2016 totaling $861,000, $804,000 and $2.1 million, respectively. |
Year-To-Date Average Balance and Yield/Rate Analysis (unaudited) | ||||||||||||||
For The Six Months Ended | ||||||||||||||
Average Balance | Yield/Rate | |||||||||||||
(In thousands) | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||
Assets | ||||||||||||||
Interest-earning assets: | ||||||||||||||
Securities - taxable | $ | 838,294 | $ | 791,638 | 2.26 | % | 2.17 | % | ||||||
Securities - nontaxable(1) | 102,364 | 102,385 | 4.19 | % | 4.28 | % | ||||||||
Loans(2)(3): | ||||||||||||||
Residential real estate | 820,522 | 826,002 | 4.11 | % | 4.18 | % | ||||||||
Commercial real estate | 1,095,425 | 966,418 | 3.99 | % | 4.15 | % | ||||||||
Commercial(1) | 327,527 | 282,004 | 4.16 | % | 4.39 | % | ||||||||
Municipal(1) | 17,176 | 15,636 | 3.41 | % | 3.27 | % | ||||||||
Consumer and home equity | 342,156 | 364,088 | 4.34 | % | 4.17 | % | ||||||||
HPFC | 56,035 | 74,424 | 8.55 | % | 9.03 | % | ||||||||
Total loans | 2,658,841 | 2,528,572 | 4.19 | % | 4.33 | % | ||||||||
Total interest-earning assets | 3,599,499 | 3,422,595 | 3.74 | % | 3.83 | % | ||||||||
Other assets | 342,330 | 362,027 | ||||||||||||
Total assets | $ | 3,941,829 | $ | 3,784,622 | ||||||||||
Liabilities & Shareholders' Equity | ||||||||||||||
Deposits: | ||||||||||||||
Demand | $ | 392,233 | $ | 350,179 | — | % | — | % | ||||||
Interest checking | 724,560 | 723,424 | 0.17 | % | 0.11 | % | ||||||||
Savings | 489,226 | 449,584 | 0.06 | % | 0.06 | % | ||||||||
Money market | 480,807 | 484,003 | 0.47 | % | 0.42 | % | ||||||||
Certificates of deposit(3) | 460,340 | 496,023 | 0.90 | % | 0.76 | % | ||||||||
Total deposits | 2,547,166 | 2,503,213 | 0.31 | % | 0.27 | % | ||||||||
Borrowings: | ||||||||||||||
Brokered deposits | 329,292 | 204,767 | 0.98 | % | 0.74 | % | ||||||||
Junior subordinated debentures | 58,795 | 58,719 | 5.81 | % | 5.82 | % | ||||||||
Other borrowings | 565,048 | 592,206 | 0.94 | % | 0.83 | % | ||||||||
Total borrowings | 953,135 | 855,692 | 1.26 | % | 1.15 | % | ||||||||
Total funding liabilities | 3,500,301 | 3,358,905 | 0.57 | % | 0.50 | % | ||||||||
Other liabilities | 42,552 | 51,784 | ||||||||||||
Shareholders' equity | 398,976 | 373,933 | ||||||||||||
Total liabilities & shareholders' equity | $ | 3,941,829 | $ | 3,784,622 | ||||||||||
Net interest rate spread (fully-taxable equivalent) | 3.17 | % | 3.33 | % | ||||||||||
Net interest margin (fully-taxable equivalent) | 3.19 | % | 3.34 | % | ||||||||||
Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection of previously charged-off acquired loans(3) | 3.09 | % | 3.11 | % | ||||||||||
(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) | Excludes the impact of the fair value mark accretion on loans and CDs generated in purchase accounting and collection of previously charged-off acquired loans for the six months ended June 30, 2017 and 2016 totaling $1.7 million and $3.9 million, respectively. |
Asset Quality Data (unaudited) | ||||||||||||||||||||
(In thousands) | At or For The Six Months Ended June 30, 2017 | At or For The Three Months Ended March 31, 2017 | 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 | |||||||||||||||
Non-accrual loans: | ||||||||||||||||||||
Residential real estate | $ | 4,890 | $ | 4,105 | $ | 3,945 | $ | 3,986 | $ | 4,697 | ||||||||||
Commercial real estate | 16,291 | 12,858 | 12,849 | 12,917 | 13,752 | |||||||||||||||
Commercial | 2,056 | 1,994 | 2,088 | 2,259 | 3,539 | |||||||||||||||
Consumer | 1,371 | 1,552 | 1,624 | 1,650 | 1,615 | |||||||||||||||
HPFC | 1,083 | 1,014 | 207 | 216 | 110 | |||||||||||||||
Total non-accrual loans | 25,691 | 21,523 | 20,713 | 21,028 | 23,713 | |||||||||||||||
Loans 90 days past due and accruing | 76 | — | — | — | 112 | |||||||||||||||
Accruing troubled-debt restructured loans not included above | 4,809 | 4,558 | 4,338 | 4,468 | 4,509 | |||||||||||||||
Total non-performing loans | 30,576 | 26,081 | 25,051 | 25,496 | 28,334 | |||||||||||||||
Other real estate owned: | ||||||||||||||||||||
Residential real estate | — | 14 | 14 | 75 | 80 | |||||||||||||||
Commercial real estate | 341 | 607 | 908 | 736 | 775 | |||||||||||||||
Total other real estate owned | 341 | 621 | 922 | 811 | 855 | |||||||||||||||
Total non-performing assets | $ | 30,917 | $ | 26,702 | $ | 25,973 | $ | 26,307 | $ | 29,189 | ||||||||||
Loans 30-89 days past due: | ||||||||||||||||||||
Residential real estate | $ | 3,020 | $ | 2,379 | $ | 2,470 | $ | 2,228 | $ | 2,159 | ||||||||||
Commercial real estate | 3,442 | 2,531 | 971 | 599 | 2,267 | |||||||||||||||
Commercial | 269 | 168 | 851 | 463 | 630 | |||||||||||||||
Consumer | 1,378 | 1,008 | 1,018 | 552 | 1,090 | |||||||||||||||
HPFC | 639 | 777 | 1,029 | 492 | 876 | |||||||||||||||
Total loans 30-89 days past due | $ | 8,748 | $ | 6,863 | $ | 6,339 | $ | 4,334 | $ | 7,022 | ||||||||||
Allowance for loan losses at the beginning of the period | $ | 23,116 | $ | 23,116 | $ | 21,166 | $ | 21,166 | $ | 21,166 | ||||||||||
Provision for loan losses | 1,984 | 581 | 5,269 | 5,011 | 3,724 | |||||||||||||||
Charge-offs: | ||||||||||||||||||||
Residential real estate | 195 | 5 | 356 | 229 | 229 | |||||||||||||||
Commercial real estate | 12 | 3 | 315 | 273 | 241 | |||||||||||||||
Commercial | 362 | 136 | 2,218 | 1,970 | 429 | |||||||||||||||
Consumer | 454 | 15 | 409 | 289 | 226 | |||||||||||||||
HPFC | — | — | 507 | 507 | 302 | |||||||||||||||
Total charge-offs | 1,023 | 159 | 3,805 | 3,268 | 1,427 | |||||||||||||||
Total recoveries | 317 | 183 | 486 | 381 | 254 | |||||||||||||||
Net charge-offs (recoveries) | 706 | (24 | ) | 3,319 | 2,887 | 1,173 | ||||||||||||||
Allowance for loan losses at the end of the period | $ | 24,394 | $ | 23,721 | $ | 23,116 | $ | 23,290 | $ | 23,717 | ||||||||||
Components of allowance for credit losses: | ||||||||||||||||||||
Allowance for loan losses | $ | 24,394 | $ | 23,721 | $ | 23,116 | $ | 23,290 | $ | 23,717 | ||||||||||
Liability for unfunded credit commitments | 7 | 9 | 11 | 14 | 22 | |||||||||||||||
Allowance for credit losses | $ | 24,401 | $ | 23,730 | $ | 23,127 | $ | 23,304 | $ | 23,739 | ||||||||||
Ratios: | ||||||||||||||||||||
Non-performing loans to total loans | 1.12 | % | 0.99 | % | 0.97 | % | 0.98 | % | 1.10 | % | ||||||||||
Non-performing assets to total assets | 0.77 | % | 0.68 | % | 0.67 | % | 0.67 | % | 0.75 | % | ||||||||||
Allowance for loan losses to total loans | 0.89 | % | 0.90 | % | 0.89 | % | 0.90 | % | 0.92 | % | ||||||||||
Net charge-offs to average loans (annualized): | ||||||||||||||||||||
Quarter-to-date | 0.11 | % | 0.00 | % | 0.07 | % | 0.26 | % | 0.07 | % | ||||||||||
Year-to-date | 0.05 | % | 0.00 | % | 0.13 | % | 0.15 | % | 0.09 | % | ||||||||||
Allowance for loan losses to non-performing loans | 79.78 | % | 90.95 | % | 92.28 | % | 91.35 | % | 85.71 | % | ||||||||||
Loans 30-89 days past due to total loans | 0.32 | % | 0.26 | % | 0.24 | % | 0.17 | % | 0.27 | % | ||||||||||
Reconciliation of non-GAAP to GAAP Financial Measures
Efficiency Ratio: | ||||||||||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||
(In thousands) | June 30, 2017 | March 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||
Non-interest expense, as presented | $ | 22,158 | $ | 21,428 | $ | 22,330 | $ | 43,586 | $ | 45,239 | ||||||||||
Less: merger and acquisition costs | — | — | (177 | ) | — | (821 | ) | |||||||||||||
Adjusted non-interest expense | $ | 22,158 | $ | 21,428 | $ | 22,153 | $ | 43,586 | $ | 44,418 | ||||||||||
Net interest income, as presented | $ | 28,626 | $ | 27,855 | $ | 28,504 | $ | 56,481 | $ | 56,456 | ||||||||||
Add: effect of tax-exempt income(1) | 525 | 520 | 529 | 1,045 | 1,054 | |||||||||||||||
Non-interest income, as presented | 9,888 | 8,572 | 10,552 | 18,460 | 18,469 | |||||||||||||||
Less: net gain on sale of securities | — | — | (4 | ) | — | (4 | ) | |||||||||||||
Adjusted net interest income plus non-interest income | $ | 39,039 | $ | 36,947 | $ | 39,581 | $ | 75,986 | $ | 75,975 | ||||||||||
Non-GAAP efficiency ratio | 56.76 | % | 58.00 | % | 55.97 | % | 57.36 | % | 58.46 | % | ||||||||||
GAAP efficiency ratio | 57.53 | % | 58.82 | % | 57.17 | % | 58.16 | % | 60.38 | % | ||||||||||
(1) Assumed a 35% tax rate.
Tax-Equivalent Net Interest Income: | ||||||||||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||
(In thousands) | June 30, 2017 | March 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||
Net interest income, as presented | $ | 28,626 | $ | 27,855 | $ | 28,504 | $ | 56,481 | $ | 56,456 | ||||||||||
Add: effect of tax-exempt income(1) | 525 | 520 | 529 | 1,045 | 1,054 | |||||||||||||||
Net interest income, tax equivalent | $ | 29,151 | $ | 28,375 | $ | 29,033 | $ | 57,526 | $ | 57,510 | ||||||||||
(1) Assumed a 35% tax rate.
Tangible Book Value Per Share and Tangible Common Equity Ratio: | ||||||||||||
June 30, 2017 | March 31, 2017 | June 30, 2016 | ||||||||||
(In thousands, except number of shares and per share data) | ||||||||||||
Tangible Book Value Per Share: | ||||||||||||
Shareholders' equity, as presented | $ | 406,960 | $ | 397,827 | $ | 384,856 | ||||||
Less: goodwill and other intangible assets | (100,517 | ) | (100,989 | ) | (102,413 | ) | ||||||
Tangible equity | $ | 306,443 | $ | 296,838 | $ | 282,443 | ||||||
Shares outstanding at period end | 15,512,914 | 15,508,025 | 15,421,651 | |||||||||
Tangible book value per share | $ | 19.75 | $ | 19.14 | $ | 18.31 | ||||||
Book value per share | $ | 26.23 | $ | 25.65 | $ | 24.96 | ||||||
Tangible Common Equity Ratio: | ||||||||||||
Total assets | $ | 4,036,367 | $ | 3,938,465 | $ | 3,910,386 | ||||||
Less: goodwill and other intangibles | (100,517 | ) | (100,989 | ) | (102,413 | ) | ||||||
Tangible assets | $ | 3,935,850 | $ | 3,837,476 | $ | 3,807,973 | ||||||
Tangible common equity ratio | 7.79 | % | 7.74 | % | 7.42 | % | ||||||
Shareholders' equity to total assets | 10.08 | % | 10.10 | % | 9.84 | % | ||||||
Return on Average Tangible Equity: | ||||||||||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||
(In thousands) | June 30, 2017 | March 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||
Net income, as presented | $ | 10,234 | $ | 10,076 | $ | 9,616 | $ | 20,310 | $ | 18,262 | ||||||||||
Amortization of intangible assets, net of tax(1) | 307 | 307 | 309 | 614 | 619 | |||||||||||||||
Net income, adjusted for amortization of intangible assets | $ | 10,541 | $ | 10,383 | $ | 9,925 | $ | 20,924 | $ | 18,881 | ||||||||||
Average equity | $ | 403,623 | $ | 394,276 | $ | 378,409 | $ | 398,976 | $ | 373,933 | ||||||||||
Less: average goodwill and other intangible assets | (100,745 | ) | (101,229 | ) | (103,203 | ) | (100,986 | ) | (103,502 | ) | ||||||||||
Average tangible equity | $ | 302,878 | $ | 293,047 | $ | 275,206 | $ | 297,990 | $ | 270,431 | ||||||||||
Return on average tangible equity | 13.96 | % | 14.37 | % | 14.50 | % | 14.16 | % | 14.04 | % | ||||||||||
Return on average equity | 10.17 | % | 10.36 | % | 10.22 | % | 10.27 | % | 9.82 | % | ||||||||||
(1) Assumed a 35% tax rate.
CONTACT: Michael R. Archer, Senior Vice President, Corporate Controller, Camden National Corporation, (800) 860-8821, marcher@camdennational.com
