EX-99.1 2 ex991earningsreleaseq219.htm EXHIBIT 99.1 Exhibit
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CONTACT:                                
Michael Archer
Senior Vice President
Corporate Controller
Camden National Corporation
(800) 860-8821
marcher@CamdenNational.com

FOR IMMEDIATE RELEASE


CAMDEN NATIONAL CORPORATION REPORTS AN 8% INCREASE
IN SECOND QUARTER 2019 EARNINGS

Second Quarter 2019 Net Income of $13.2 Million and Diluted Earnings Per Share of $0.85

CAMDEN, Maine, July 30, 2019/PRNewswire/--Camden National Corporation (NASDAQ: CAC; “Camden National” or the “Company”), a $4.4 billion bank holding company headquartered in Camden, Maine, reported net income for the second quarter of 2019 of $13.2 million, an increase of 8% over the second quarter of 2018, and diluted earnings per share ("EPS") of $0.85, an increase of 9% over the same period. For the second quarter of 2019, the Company's return on average assets was 1.21% and return on average equity was 11.63%.

"We continue to deliver very strong financial performance, highlighted by 10% growth in net income and diluted EPS for the first half of 2019 over the same period last year," said Gregory A. Dufour, President and Chief Executive Officer of the Company. "Over the past 12 months, loans grew 8% and core deposits1 increased 14%, while our net interest margin for the first half of 2019 expanded 4 basis points to 3.14%, compared to the first six months last year."

For the second quarter of 2019, Camden National declared a $0.30 dividend per share, representing an annualized dividend yield of 2.62% as of June 28, 2019 (the last business day of the second quarter).

During the first half of 2019, the Company repurchased 166,778 shares of its common stock at a weighted-average price per share of $42.62.

SECOND QUARTER 2019 FINANCIAL HIGHLIGHTS

•
Net income increased 8% over the second quarter of 2018 and diluted EPS increased 9% over the same period, while net income and diluted EPS both decreased 7% compared to the previous quarter
•
Average loans grew 9% over the second quarter of 2018 and 1% over the previous quarter
•
Average deposits grew 15% over the second quarter of 2018 and 3% over the previous quarter
•
Net interest margin on a fully-taxable basis of 3.11% increased 1 basis point over the second quarter of 2018 and decreased 7 basis points compared to the previous quarter
•
Repurchased 111,221 shares of Camden National common stock in the second quarter of 2019 at a weighted-average price per share of $43.18


FINANCIAL CONDITION

Total assets increased 3% since December 31, 2018 to $4.4 billion at June 30, 2019, which includes loan growth of $74.1 million, or 2%, during the first half of 2019.

•
The residential real estate loan portfolio grew $42.9 million, or 4%, with 57% of mortgage originations held in the portfolio, and the commercial loan portfolio grew $41.3 million, or 10%, over this same period.

•
The commercial real estate loan portfolio decreased 1% during the first half of 2019, despite very strong commercial real estate loan production, due to elevated loan prepayments. Consumer and home equity loans decreased less than 1% over this same period.

Total deposits increased 4% since December 31, 2018 to $3.6 billion at June 30, 2019. Strong deposit growth in the first half of 2019 drove a 9% decrease in total borrowings and improved the Company's loan-to-deposit ratio to 86% at June 30, 2019, compared to 87% at December 31, 2018.
•
In the first half of 2019, core deposits grew 1% and certificates of deposits ("CDs") grew 23%. In the second quarter of 2019, one large depositor shifted $70.0 million of funding from interest checking to CDs. Adjusted for this shift of funding between deposit accounts, core deposits grew 4% and CDs grew 8% over the first half of 2019.

The Company's capital position at June 30, 2019 was well in excess of regulatory requirements, including a total risk-based capital ratio of 14.12% and a Tier I leverage ratio of 9.51%. At June 30, 2019, the Company's common equity ratio was 10.52% and tangible common equity ratio2 was 8.49%.

ASSET QUALITY

At June 30, 2019, the Company's strong asset quality trend continued from prior periods.
•
At June 30, 2019, the allowance for loan losses was 0.84% of total loans, compared to 0.83% at March 31, 2019 and June 30, 2018.
•
Non-performing assets to total assets at June 30, 2019, was 0.34%, compared to 0.33% at March 31, 2019 and 0.48% at June 30, 2018.
•
Loans past due 30-89 days to total loans at June 30, 2019, were 0.27%, compared to 0.26% at March 31, 2019 and 0.20% at June 30, 2018.
•
Annualized net charge-offs to average loans for the three and six months ended June 30, 2019 were 0.03%, compared to 0.04% and 0.07% for three and six months ended June 30, 2018.

OPERATING RESULTS (Second Quarter 2019 vs. Second Quarter 2018)

Net income for the second quarter of 2019 was $13.2 million, representing an increase of $987,000, or 8%, over the second quarter of 2018. The increase was driven by revenue3 growth of $2.6 million, or 7%, net of an increase in non-interest expense of $1.1 million, or 5%.

Net interest income for the second quarter of 2019 was $31.6 million, an increase of $2.1 million, or 7%, over the same period last year.

•
Average loans for the second quarter of 2019 grew $252.2 million, or 9%, and average core deposits grew $359.6 million, or 16%, over the second quarter of 2018.
•
Net interest margin on a fully-taxable basis increased 1 basis point to 3.11% for the second quarter of 2019 compared to the second quarter of 2018.



Non-interest income increased $536,000, or 6%, to $10.0 million for the second quarter of 2019 over the second quarter of 2018. Most fee income categories increased between categories, including debit card income, services charges on deposit accounts, mortgage banking income, income from fiduciary services and customer loan swap fees.

Non-interest expense increased 5% to $24.0 million for the second quarter of 2019 over the second quarter of 2018.
•
Compensation-related costs increased 6%, data processing costs increased 7% and other real estate and collection costs increased $158,000 between periods.
•
The Company's efficiency ratio calculated in accordance with generally accepted accounting principles ("GAAP") for the second quarter of 2019 was 57.58%, compared to 58.73% for the second quarter of 2018. The Company's non-GAAP efficiency ratio2 for the second quarter of 2019 was 57.27%, compared to 58.39% for the same period last year.

The provision for credit losses for the second quarter of 2019 was $1.2 million, or 15 basis points of average loans on an annualized basis, an increase of $190,000 over the second quarter of 2018.

OPERATING RESULTS (Linked Quarter)

Net income for the second quarter of 2019 decreased $1.1 million, or 7%, compared to the first quarter of 2019. The decrease in net income between periods was primarily driven by the increase in non-interest expense of $1.2 million, or 5%.
•
Other real estate and collection costs increased $716,000 between periods driven by one matter that resulted in additional expense of $360,000 in the second quarter of 2019 and the favorable resolution of a matter in the first quarter of 2019 that led to a $378,000 reimbursement of costs.
•
Compensation-related costs increased 4% between periods primarily driven by a full quarter of merit increases that are granted annually in the first quarter.

The provision for credit losses for the second quarter of 2019 increased $429,000 over the last quarter, primarily due to loan growth during the second quarter of 2019 of $57.9 million.

Net interest income for the second quarter of 2019 decreased $322,000, or 1%, compared to last quarter. Average loan and deposit growth for the second quarter of 2019 of 1% and 3%, respectively, over last quarter was offset by an increase in funding costs of 6 basis points and a lower asset yield of 2 basis points over the same period. Net interest margin on a fully-taxable equivalent basis between periods decreased 7 basis points to 3.11% for the second quarter of 2019.

Non-interest income for the second quarter of 2019 increased $648,000, or 7%, over the last quarter. Most fee income categories increased over last quarter, reflective of the seasonality within our markets.



CONFERENCE CALL

Camden National will host a conference call and webcast at 3:00 p.m., Eastern Time, on Tuesday, July 30, 2019 to discuss its second quarter 2019 financial results and outlook. Participants should dial in to the call 10 - 15 minutes before it begins. Information about the conference call is as follows:

Live dial-in (domestic):         (888) 349-0139
Live dial-in (international):    (412) 542-4154
Live webcast:            https://services.choruscall.com/links/cac190730.html

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

ABOUT CAMDEN NATIONAL CORPORATION

Camden National Corporation (NASDAQ:CAC), headquartered in Camden, Maine, is the largest publicly traded bank holding company in Northern New England with $4.4 billion in assets and nearly 650 employees. Camden National Bank, its subsidiary, is a full-service community bank founded in 1875 that offers an array of consumer and business financial products and services, accompanied by the latest in digital banking technology to empower customers to bank the way they want. The Bank provides personalized service through a network of 60 banking centers, 71 ATMs, and lending offices in New Hampshire and Massachusetts, all complemented by 24/7 live phone support. Camden National Bank has received nine "Lender at Work for Maine" Awards from the Finance Authority of Maine and Greenwich Associates named the bank a Customer Experience Leader in U.S. Retail Banking. 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, as amended, including certain plans, expectations, goals, projections and other statements, which are subject to numerous risks, assumptions and uncertainties. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures; changes in the interest rate environment; changes in general economic conditions; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; legislative and regulatory changes that adversely affect the business in which Camden National is engaged; changes in the securities markets and other risks and uncertainties disclosed from time to time in in Camden National’s Annual Report on Form 10-K for the year ended December 31, 2018, as updated by other filings with the Securities and Exchange Commission ("SEC"). Camden National does not have any obligation to update forward-looking statements.

USE OF NON-GAAP MEASURES

In addition to evaluating the Company's results of operations in accordance with generally accepted accounting principles in the United States ("GAAP"), management supplements this evaluation with certain non-GAAP financial measures, such as return on average tangible equity; the efficiency and tangible common equity ratios; and tangible book value per share. Management utilizes these non-GAAP financial measures for purposes of measuring our performance against our peer group and other financial institutions and analyzing our internal performance. We also believe these non-GAAP financial measures help investors better understand the Company's operating performance and trends and allow for better performance comparisons to other financial institutions. In addition, these non-GAAP financial measures remove the impact of unusual items that may obscure trends in the Company's


underlying performance. These disclosures should not be viewed as a substitute for GAAP operating results, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other financial institutions. Reconciliation to the comparable GAAP financial measure can be found in this document.

ANNUALIZED DATA

Certain returns, yields and performance ratios are presented on an “annualized” basis. This is done for analytical and decision-making purposes to better discern underlying performance trends when compared to full-year or year-over-year amounts. Annualized data may not be indicative of any four-quarter period, and are presented for illustrative purposes only.






































_____________________________________________________________________________________________
1
Core deposits include non-interest checking, interest checking, savings and money market deposits.
2 This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures" for further details.
3
Revenue is the sum of net interest income and non-interest income.



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,
2019
 
March 31,
2019
 
June 30,
2018
 
June 30,
2019
 
June 30,
2018
Financial Condition Data
 
 
 
 
 
 
 
 
 
 
Investments
 
$
933,100

 
$
936,859

 
$
916,977

 
$
933,100

 
$
916,977

Loans and loans held for sale
 
3,113,437

 
3,051,237

 
2,880,185

 
3,113,437

 
2,880,185

Allowance for loan losses
 
26,163

 
25,201

 
23,668

 
26,163

 
23,668

Total assets
 
4,447,038

 
4,421,189

 
4,192,662

 
4,447,038

 
4,192,662

Deposits
 
3,591,610

 
3,578,197

 
3,056,119

 
3,591,610

 
3,056,119

Borrowings
 
310,638

 
325,159

 
661,393

 
310,638

 
661,393

Shareholders' equity
 
467,759

 
453,718

 
408,819

 
467,759

 
408,819

Operating Data
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
31,573

 
$
31,895

 
$
29,481

 
$
63,468

 
$
58,383

Provision for credit losses
 
1,173

 
744

 
983

 
1,917

 
486

Non-interest income
 
10,037

 
9,389

 
9,501

 
19,426

 
18,305

Non-interest expense
 
23,958

 
22,783

 
22,895

 
46,741

 
45,199

Income before income tax expense
 
16,479

 
17,757

 
15,104

 
34,236

 
31,003

Income tax expense
 
3,275

 
3,484

 
2,887

 
6,759

 
5,966

Net income
 
$
13,204

 
$
14,273

 
$
12,217

 
$
27,477

 
$
25,037

Key Ratios
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
1.21
%
 
1.33
%
 
1.19
%
 
1.27
%
 
1.24
%
Return on average equity
 
11.63
%
 
13.13
%
 
12.10
%
 
12.36
%
 
12.50
%
GAAP efficiency ratio
 
57.58
%
 
55.19
%
 
58.73
%
 
56.39
%
 
58.94
%
Common equity ratio
 
10.52
%
 
10.26
%
 
9.75
%
 
10.52
%
 
9.75
%
Net interest margin (fully-taxable equivalent)
 
3.11
%
 
3.18
%
 
3.10
%
 
3.14
%
 
3.10
%
Non-performing assets to total assets
 
0.34
%
 
0.33
%
 
0.48
%
 
0.34
%
 
0.48
%
Tier I leverage capital ratio
 
9.51
%
 
9.47
%
 
9.30
%
 
9.51
%
 
9.30
%
Total risk-based capital ratio
 
14.12
%
 
14.46
%
 
14.33
%
 
14.12
%
 
14.33
%
Per Share Data
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
0.85

 
$
0.91

 
$
0.78

 
$
1.76

 
$
1.60

Diluted earnings per share
 
$
0.85

 
$
0.91

 
$
0.78

 
$
1.76

 
$
1.60

Cash dividends declared per share
 
$
0.30

 
$
0.30

 
$
0.30

 
$
0.60

 
$
0.55

Book value per share
 
$
30.26

 
$
29.16

 
$
26.25

 
$
30.26

 
$
26.25

Non-GAAP Measures(1)
 
 
 
 
 
 
 
 
 
 
Return on average tangible equity
 
15.00
%
 
17.08
%
 
16.23
%
 
16.01
%
 
16.78
%
Efficiency ratio
 
57.27
%
 
54.86
%
 
58.39
%
 
56.07
%
 
58.57
%
Tangible common equity ratio
 
8.49
%
 
8.21
%
 
7.56
%
 
8.49
%
 
7.56
%
Tangible book value per share
 
$
23.88

 
$
22.81

 
$
19.87

 
$
23.88

 
$
19.87

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




Consolidated Statements of Condition Data
(unaudited)
 
 
 
(In thousands, except number of shares)
 
June 30,
2019
 
December 31,
2018
 
June 30,
2018
ASSETS
 
 

 
 

 
 

Cash and due from banks
 
$
48,153

 
$
52,240

 
$
49,542

Interest-bearing deposits in other banks (including restricted cash)
 
38,083

 
14,759

 
67,604

Total cash, cash equivalents and restricted cash
 
86,236

 
66,999

 
117,146

Investments:
 
 

 
 

 
 

Available-for-sale securities, at fair value (book value of $915,099, $933,399 and $920,302, respectively)
 
920,083

 
910,692

 
889,325

Held-to-maturity securities, at amortized cost (fair value of $1,335, $1,291 and $1,276, respectively)
 
1,304

 
1,307

 
1,310

Other investments
 
11,713

 
14,679

 
26,342

Total investments
 
933,100

 
926,678

 
916,977

Loans held for sale, at fair value (book value of $13,088, $4,314 and $12,587, respectively)
 
13,113

 
4,403

 
12,656

Loans:
 
 
 
 
 
 
Commercial real estate
 
1,260,639

 
1,269,533

 
1,190,052

Residential real estate
 
1,035,792

 
992,866

 
907,910

Commercial(1)
 
456,692

 
415,436

 
426,390

Consumer and home equity
 
347,201

 
348,387

 
343,177

Total loans
 
3,100,324

 
3,026,222

 
2,867,529

      Less: allowance for loan losses
 
(26,163
)
 
(24,712
)
 
(23,668
)
       Net loans
 
3,074,161

 
3,001,510

 
2,843,861

Goodwill
 
94,697

 
94,697

 
94,697

Other intangible assets
 
3,877

 
4,230

 
4,592

Bank-owned life insurance
 
91,116

 
89,919

 
88,706

Premises and equipment, net
 
41,402

 
42,495

 
41,017

Deferred tax assets
 
16,836

 
23,053

 
25,813

Other assets
 
92,500

 
43,451

 
47,197

Total assets
 
$
4,447,038

 
$
4,297,435

 
$
4,192,662

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 

 
 

 
 
Liabilities
 
 

 
 

 
 
Deposits:
 
 

 
 

 
 
Non-interest checking
 
$
505,355

 
$
496,729

 
$
496,368

Interest checking
 
1,111,424

 
1,023,373

 
879,668

Savings and money market
 
1,074,094

 
1,137,356

 
990,408

Certificates of deposit
 
547,786

 
443,912

 
472,215

Brokered deposits
 
352,951

 
363,104

 
217,460

Total deposits
 
3,591,610

 
3,464,474

 
3,056,119

Short-term borrowings
 
241,647

 
270,868

 
591,648

Long-term borrowings
 
10,000

 
11,580

 
10,756

Subordinated debentures
 
58,991

 
59,067

 
58,989

Accrued interest and other liabilities
 
77,031

 
55,621

 
66,331

Total liabilities
 
3,979,279

 
3,861,610

 
3,783,843

Shareholders’ equity
 
467,759

 
435,825

 
408,819

Total liabilities and shareholders’ equity
 
$
4,447,038

 
$
4,297,435

 
$
4,192,662

(1) Includes the HPFC loan portfolio.




Consolidated Statements of Income Data
(unaudited)
 
 
For The
Three Months Ended
(In thousands, except per share data)
 
June 30,
2019
 
March 31,
2019
 
June 30,
2018
Interest Income
 
 

 
 

 
 

Interest and fees on loans
 
$
36,092

 
$
35,721

 
$
31,367

Taxable interest on investments
 
4,941

 
4,994

 
4,386

Nontaxable interest on investments
 
624

 
644

 
658

Dividend income
 
174

 
230

 
343

Other interest income
 
606

 
420

 
335

Total interest income
 
42,437

 
42,009

 
37,089

Interest Expense
 
 

 
 

 
 

Interest on deposits
 
9,156

 
8,423

 
4,459

Interest on borrowings
 
885

 
974

 
2,298

Interest on subordinated debentures
 
823

 
717

 
851

Total interest expense
 
10,864

 
10,114

 
7,608

Net interest income
 
31,573

 
31,895

 
29,481

Provision for credit losses
 
1,173

 
744

 
983

Net interest income after provision for credit losses
 
30,400

 
31,151

 
28,498

Non-Interest Income
 
 

 
 

 
 

Debit card income
 
2,281

 
2,010

 
2,126

Service charges on deposit accounts
 
2,209

 
2,023

 
2,069

Mortgage banking income, net
 
1,742

 
1,252

 
1,609

Income from fiduciary services
 
1,545

 
1,392

 
1,407

Brokerage and insurance commissions
 
732

 
585

 
685

Bank-owned life insurance
 
603

 
594

 
609

Customer loan swap fees
 
285

 
525

 
180

Net gain on sale of securities
 
27

 
—

 
31

Other income
 
613

 
1,008

 
785

Total non-interest income
 
10,037

 
9,389

 
9,501

Non-Interest Expense
 
 

 
 

 
 

Salaries and employee benefits
 
13,461

 
12,978

 
12,728

Furniture, equipment and data processing
 
2,723

 
2,680

 
2,549

Net occupancy costs
 
1,639

 
1,914

 
1,625

Consulting and professional fees
 
974

 
813

 
1,116

Debit card expense
 
883

 
823

 
776

Regulatory assessments
 
437

 
472

 
501

Amortization of intangible assets
 
176

 
176

 
181

Other real estate owned and collection costs (recoveries), net
 
409

 
(307
)
 
251

Other expenses
 
3,256

 
3,234

 
3,168

Total non-interest expense
 
23,958

 
22,783

 
22,895

Income before income tax expense
 
16,479

 
17,757

 
15,104

Income tax expense
 
3,275

 
3,484

 
2,887

Net Income
 
$
13,204

 
$
14,273

 
$
12,217

Per Share Data
 
 

 
 

 
 

Basic earnings per share
 
$
0.85

 
$
0.91

 
$
0.78

Diluted earnings per share
 
$
0.85

 
$
0.91

 
$
0.78






Consolidated Statements of Income Data
(unaudited)
 
 
For The
Six Months Ended
June 30,
(In thousands, except per share data)
 
2019
 
2018
Interest Income
 
 

 
 

Interest and fees on loans
 
$
71,813

 
$
61,201

Taxable interest on investments
 
9,935

 
8,611

Nontaxable interest on investments
 
1,268

 
1,330

Dividend income
 
404

 
629

Other interest income
 
1,026

 
596

Total interest income
 
84,446

 
72,367

Interest Expense
 
 
 
 
Interest on deposits
 
17,579

 
8,208

Interest on borrowings
 
1,859

 
4,078

Interest on subordinated debentures
 
1,540

 
1,698

Total interest expense
 
20,978

 
13,984

Net interest income
 
63,468

 
58,383

Provision for credit losses
 
1,917

 
486

Net interest income after provision for credit losses
 
61,551

 
57,897

Non-Interest Income
 
 
 
 
Debit card income
 
4,291

 
4,055

Service charges on deposit accounts
 
4,232

 
4,036

Mortgage banking income, net
 
2,994

 
3,000

Income from fiduciary services
 
2,937

 
2,690

Brokerage and insurance commissions
 
1,317

 
1,335

Bank-owned life insurance
 
1,197

 
1,217

Customer loan swap fees
 
810

 
267

Net gain on sale of securities
 
27

 
31

Other income
 
1,621

 
1,674

Total non-interest income
 
19,426

 
18,305

Non-Interest Expense
 
 
 
 
Salaries and employee benefits
 
26,439

 
25,290

Furniture, equipment and data processing
 
5,403

 
5,135

Net occupancy costs
 
3,553

 
3,498

Consulting and professional fees
 
1,787

 
1,920

Debit card expense
 
1,706

 
1,506

Regulatory assessments
 
909

 
1,000

Amortization of intangible assets
 
352

 
362

Other real estate owned and collection costs, net
 
102

 
326

Other expenses
 
6,490

 
6,162

Total non-interest expense
 
46,741

 
45,199

Income before income tax expense
 
34,236

 
31,003

Income tax expense
 
6,759

 
5,966

Net Income
 
$
27,477

 
$
25,037

Per Share Data
 
 

 
 

Basic earnings per share
 
$
1.76

 
$
1.60

Diluted earnings per share
 
$
1.76

 
$
1.60




Quarterly Average Balance and Yield/Rate Analysis
(unaudited)
 
 
Average Balance
 
Yield/Rate
 
 
For The Three Months Ended
 
For The Three Months Ended
(In thousands)
 
June 30,
2019
 
March 31,
2019
 
June 30,
2018
 
June 30,
2019
 
March 31,
2019
 
June 30,
2018
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits in other banks and other interest-earning assets
 
$
59,901

 
$
29,985

 
$
58,500

 
2.34
%
 
2.63
%
 
1.57
%
Investments - taxable
 
839,714

 
851,516

 
834,675

 
2.56
%
 
2.56
%
 
2.32
%
Investments - nontaxable(1)
 
90,087

 
94,710

 
98,015

 
3.51
%
 
3.44
%
 
3.40
%
Loans(2):
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
1,255,172

 
1,281,501

 
1,180,421

 
4.68
%
 
4.73
%
 
4.35
%
Residential real estate
 
1,032,215

 
1,008,285

 
884,977

 
4.34
%
 
4.30
%
 
4.20
%
Commercial(1)
 
389,166

 
369,832

 
351,711

 
4.72
%
 
4.70
%
 
4.42
%
Consumer and home equity
 
347,141

 
347,052

 
340,782

 
5.47
%
 
5.46
%
 
5.01
%
HPFC
 
29,472

 
32,171

 
41,182

 
7.83
%
 
7.91
%
 
7.80
%
Municipal(1)
 
20,117

 
15,333

 
21,993

 
3.56
%
 
3.60
%
 
3.13
%
     Total loans 
 
3,073,283

 
3,054,174

 
2,821,066

 
4.68
%
 
4.70
%
 
4.43
%
Total interest-earning assets
 
4,062,985

 
4,030,385

 
3,812,256

 
4.18
%
 
4.20
%
 
3.90
%
Other assets
 
315,604

 
308,064

 
294,752

 
 
 
 
 
 
Total assets
 
$
4,378,589

 
$
4,338,449

 
$
4,107,008

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities & Shareholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest checking
 
$
485,724

 
$
490,382

 
$
464,164

 
—
%
 
—
%
 
—
%
Interest checking
 
1,110,567

 
1,085,301

 
839,510

 
1.01
%
 
0.98
%
 
0.47
%
Savings
 
476,104

 
485,646

 
483,192

 
0.09
%
 
0.08
%
 
0.06
%
Money market
 
581,638

 
582,685

 
507,545

 
1.28
%
 
1.21
%
 
0.82
%
Certificates of deposit
 
516,972

 
443,107

 
472,637

 
1.60
%
 
1.34
%
 
1.06
%
Total deposits
 
3,171,005

 
3,087,121

 
2,767,048

 
0.86
%
 
0.78
%
 
0.48
%
Borrowings:
 
 
 
 
 
 
 
 
 
 
 
 
Brokered deposits
 
370,448

 
405,837

 
239,105

 
2.53
%
 
2.50
%
 
1.89
%
Customer repurchase agreements
 
246,935

 
238,499

 
247,789

 
1.30
%
 
1.24
%
 
1.03
%
Subordinated debentures
 
58,985

 
59,007

 
58,970

 
5.60
%
 
4.93
%
 
5.79
%
Other borrowings
 
15,940

 
44,711

 
330,096

 
2.17
%
 
2.22
%
 
2.02
%
Total borrowings
 
692,308

 
748,054

 
875,960

 
2.34
%
 
2.27
%
 
1.96
%
Total funding liabilities
 
3,863,313

 
3,835,175

 
3,643,008

 
1.13
%
 
1.07
%
 
0.84
%
Other liabilities
 
59,747

 
62,247

 
59,126

 
 
 
 
 
 
Shareholders' equity
 
455,529

 
441,027

 
404,874

 
 
 
 
 
 
Total liabilities & shareholders' equity
 
$
4,378,589

 
$
4,338,449

 
$
4,107,008

 
 
 
 
 
 
Net interest rate spread (fully-taxable equivalent)
 
3.05
%
 
3.13
%
 
3.06
%
Net interest margin (fully-taxable equivalent)
 
3.11
%
 
3.18
%
 
3.10
%
Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection of previously charged-off acquired loans(3)
 
3.07
%
 
3.14
%
 
3.04
%
(1) 
Reported on a tax-equivalent basis calculated using the federal corporate income tax rate of 21%, 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 certificates of deposit generated in purchase accounting and collection of previously charged-off acquired loans for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018 totaling $439,000, $390,000 and $578,000, respectively.






Year-to-Date Average Balance and Yield/Rate Analysis
(unaudited)
 
 
Average Balance
 
Yield/Rate
 
 
For The Six Months Ended
 
For The Six Months Ended
(In thousands)
 
June 30,
2019
 
June 30,
2018
 
June 30,
2019
 
June 30,
2018
Assets
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
Interest-bearing deposits in other banks and other interest-earning assets
 
$
48,301

 
$
55,254

 
2.27
%
 
1.50
%
Investments - taxable
 
845,583

 
830,624

 
2.56
%
 
2.27
%
Investments - nontaxable(1)
 
92,386

 
98,783

 
3.48
%
 
3.41
%
Loans(2):
 
 
 
 
 
 
 
 
Commercial real estate
 
1,268,264

 
1,176,034

 
4.71
%
 
4.28
%
Residential real estate
 
1,020,316

 
872,947

 
4.32
%
 
4.16
%
Commercial(1)
 
379,552

 
350,842

 
4.71
%
 
4.35
%
Consumer and home equity
 
347,097

 
340,929

 
5.46
%
 
4.88
%
HPFC
 
30,814

 
42,462

 
7.87
%
 
7.89
%
Municipal(1)
 
17,738

 
19,648

 
3.58
%
 
3.22
%
     Total loans 
 
3,063,781

 
2,802,862

 
4.69
%
 
4.37
%
Total interest-earning assets
 
4,050,051

 
3,787,523

 
4.19
%
 
3.84
%
Other assets
 
308,579

 
293,807

 
 
 
 
Total assets
 
$
4,358,630

 
$
4,081,330

 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities & Shareholders' Equity
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
Non-interest checking
 
$
488,040

 
$
458,428

 
—
%
 
—
%
Interest checking
 
1,098,003

 
836,477

 
0.99
%
 
0.42
%
Savings
 
480,849

 
488,397

 
0.08
%
 
0.06
%
Money market
 
582,158

 
497,670

 
1.25
%
 
0.74
%
Certificates of deposit
 
480,244

 
472,426

 
1.48
%
 
1.03
%
Total deposits
 
3,129,294

 
2,753,398

 
0.82
%
 
0.45
%
Borrowings:
 
 
 
 
 
 
 
 
Brokered deposits
 
388,045

 
238,988

 
2.51
%
 
1.74
%
Customer repurchase agreements
 
242,740

 
242,452

 
1.27
%
 
0.88
%
Subordinated debentures
 
58,996

 
58,950

 
5.26
%
 
5.81
%
Other borrowings
 
30,237

 
329,124

 
2.21
%
 
1.85
%
Total borrowings
 
720,018

 
869,514

 
2.31
%
 
1.82
%
Total funding liabilities
 
3,849,312

 
3,622,912

 
1.10
%
 
0.78
%
Other liabilities
 
61,000

 
54,662

 
 
 
 
Shareholders' equity
 
448,318

 
403,756

 
 
 
 
Total liabilities & shareholders' equity
 
$
4,358,630

 
$
4,081,330

 
 
 
 
Net interest rate spread (fully-taxable equivalent)
 
3.09
%
 
3.06
%
Net interest margin (fully-taxable equivalent)
 
3.14
%
 
3.10
%
Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection of previously charged-off acquired loans(3)
 
3.10
%
 
3.04
%
(1) 
Reported on a tax-equivalent basis calculated using the federal corporate income tax rate of 21%, 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 certificates of deposit generated in purchase accounting and collection of previously charged-off acquired loans for the six months ended June 30, 2019 and June 30, 2018 totaling $829,000 and $1.1 million, respectively.



Asset Quality Data
(unaudited)
(In thousands)
 
At or For The
Six Months Ended
June 30, 2019
 
At or For The
Three Months Ended
March 31, 2019
 
At or For The
Year Ended
December 31, 2018
 
At or For The
Nine Months Ended
September 30, 2018
 
At or For The
Six Months Ended
June 30, 2018
Non-accrual loans:
 
 
 
 
 
 
 
 
 
 
Residential real estate
 
$
5,566

 
$
5,415

 
$
5,492

 
$
4,720

 
$
5,742

Commercial real estate
 
1,590

 
975

 
1,380

 
5,517

 
5,600

Commercial 
 
785

 
802

 
1,279

 
2,402

 
1,934

Consumer and home equity
 
3,039

 
2,476

 
1,861

 
1,647

 
1,700

HPFC
 
465

 
485

 
518

 
591

 
834

Total non-accrual loans
 
11,445

 
10,153

 
10,530

 
14,877

 
15,810

Loans 90 days past due and accruing
 
14

 
14

 
14

 
14

 
—

   Accruing troubled-debt restructured loans not included above
 
3,511

 
3,771

 
3,893

 
4,039

 
4,000

Total non-performing loans
 
14,970

 
13,938

 
14,437

 
18,930

 
19,810

Other real estate owned
 
130

 
673

 
130

 
185

 
130

Total non-performing assets
 
$
15,100

 
$
14,611

 
$
14,567

 
$
19,115

 
$
19,940

Loans 30-89 days past due:
 
 
 
 
 
 
 
 
 
 
Residential real estate
 
$
2,536

 
$
2,265

 
$
4,833

 
$
3,816

 
$
2,222

Commercial real estate
 
3,378

 
2,947

 
2,130

 
574

 
309

Commercial 
 
1,400

 
1,205

 
169

 
723

 
1,490

Consumer and home equity
 
907

 
1,430

 
1,467

 
902

 
1,258

HPFC
 
171

 
187

 
183

 
1,078

 
455

Total loans 30-89 days past due
 
$
8,392

 
$
8,034

 
$
8,782

 
$
7,093

 
$
5,734

Allowance for loan losses at the beginning of the period
 
$
24,712

 
$
24,712

 
$
24,171

 
$
24,171

 
$
24,171

Provision for loan losses
 
1,925

 
750

 
845

 
845

 
490

Charge-offs:
 
 
 
 
 
 
 
 
 
 
Residential real estate
 
25

 
11

 
173

 
231

 
116

Commercial real estate
 
65

 
65

 
512

 
512

 
512

Commercial 
 
453

 
236

 
736

 
448

 
298

Consumer and home equity
 
64

 
24

 
572

 
451

 
266

HPFC
 
—

 
—

 
255

 
209

 
—

Total charge-offs 
 
607

 
336

 
2,248

 
1,851

 
1,192

Total recoveries 
 
(133
)
 
(75
)
 
(1,944
)
 
(361
)
 
(199
)
Net charge-offs
 
474

 
261

 
304

 
1,490

 
993

Allowance for loan losses at the end of the period
 
$
26,163

 
$
25,201

 
$
24,712

 
$
23,526

 
$
23,668

Components of allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses
 
$
26,163

 
$
25,201

 
$
24,712

 
$
23,526

 
$
23,668

Liability for unfunded credit commitments
 
14

 
16

 
22

 
15

 
16

Allowance for credit losses 
 
$
26,177

 
$
25,217

 
$
24,734

 
$
23,541

 
$
23,684

Ratios:
 
 
 
 
 
 
 
 
 
 
Non-performing loans to total loans
 
0.48
%
 
0.46
%
 
0.48
 %
 
0.65
%
 
0.69
%
Non-performing assets to total assets
 
0.34
%
 
0.33
%
 
0.34
 %
 
0.46
%
 
0.48
%
Allowance for loan losses to total loans
 
0.84
%
 
0.83
%
 
0.82
 %
 
0.81
%
 
0.83
%
Net charge-offs (recoveries) to average loans (annualized):
 
 
 
 
 
 
 
 
 
 
Quarter-to-date
 
0.03
%
 
0.03
%
 
(0.16
)%
 
0.07
%
 
0.04
%
Year-to-date
 
0.03
%
 
0.03
%
 
0.01
 %
 
0.07
%
 
0.07
%
Allowance for loan losses to non-performing loans
 
174.77
%
 
180.81
%
 
171.17
 %
 
124.28
%
 
119.48
%
Loans 30-89 days past due to total loans
 
0.27
%
 
0.26
%
 
0.29
 %
 
0.24
%
 
0.20
%





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

Return on Average Tangible Equity:
 
 
 
 
 
 
For the
Three Months Ended
 
For the
Six Months Ended
(In thousands)
 
June 30,
2019
 
March 31,
2019
 
June 30,
2018
 
June 30,
 2019
 
June 30,
 2018
Net income, as presented
 
$
13,204

 
$
14,273

 
$
12,217

 
$
27,477

 
$
25,037

Add: amortization of intangible assets, net of tax(1)
 
139

 
139

 
143

 
278

 
286

Net income, adjusted for amortization of intangible assets
 
$
13,343

 
$
14,412

 
$
12,360

 
$
27,755

 
$
25,323

Average equity, as presented
 
$
455,529

 
$
441,027

 
$
404,874

 
$
448,318

 
$
403,756

Less: average goodwill and other intangible assets
 
(98,660
)
 
(98,838
)
 
(99,377
)
 
(98,749
)
 
(99,472
)
Average tangible equity
 
$
356,869

 
$
342,189

 
$
305,497

 
$
349,569

 
$
304,284

Return on average tangible equity
 
15.00
%
 
17.08
%
 
16.23
%
 
16.01
%
 
16.78
%
Return on average equity
 
11.63
%
 
13.13
%
 
12.10
%
 
12.36
%
 
12.50
%
(1) Assumed a 21% tax rate.




Efficiency Ratio:
 
 
 
 
 
 
 
 
 
 
 
 
For the
Three Months Ended
 
For the
Six Months Ended
(In thousands)
 
June 30,
2019
 
March 31,
2019
 
June 30,
2018
 
June 30,
2019
 
June 30,
2018
Non-interest expense, as presented
 
$
23,958

 
$
22,783

 
$
22,895

 
$
46,741

 
$
45,199

Net interest income, as presented
 
$
31,573

 
$
31,895

 
$
29,481

 
$
63,468

 
$
58,383

Add: effect of tax-exempt income(1)
 
248

 
244

 
257

 
491

 
511

Non-interest income, as presented
 
10,037

 
9,389

 
9,501

 
19,426

 
18,305

Less: net gain on sale of securities
 
(27
)
 
—

 
(31
)
 
(27
)
 
(31
)
Adjusted net interest income plus non-interest income
 
$
41,831

 
$
41,528

 
$
39,208

 
$
83,358

 
$
77,168

GAAP efficiency ratio
 
57.58
%
 
55.19
%
 
58.73
%
 
56.39
%
 
58.94
%
Non-GAAP efficiency ratio
 
57.27
%
 
54.86
%
 
58.39
%
 
56.07
%
 
58.57
%
(1) Assumed a 21% tax rate.





Tangible Book Value Per Share and Tangible Common Equity Ratio:
 
 
June 30,
2019
 
March 31,
2019
 
June 30,
2018
(In thousands, except number of shares and per share data)
 
Tangible Book Value Per Share:
 
 
 
 
 
 
Shareholders' equity, as presented
 
$
467,759

 
$
453,718

 
$
408,819

Less: goodwill and other intangible assets
 
(98,574
)
 
(98,751
)
 
(99,289
)
Tangible shareholders' equity
 
$
369,185

 
$
354,967

 
$
309,530

Shares outstanding at period end
 
15,457,480

 
15,560,565

 
15,576,249

Book value per share
 
$
30.26

 
$
29.16

 
$
26.25

Tangible book value per share
 
$
23.88

 
$
22.81

 
$
19.87

Tangible Common Equity Ratio:
Total assets
 
$
4,447,038

 
$
4,421,189

 
$
4,192,662

Less: goodwill and other intangibles
 
(98,574
)
 
(98,751
)
 
(99,289
)
Tangible assets
 
$
4,348,464

 
$
4,322,438

 
$
4,093,373

Common equity ratio
 
10.52
%
 
10.26
%
 
9.75
%
Tangible common equity ratio
 
8.49
%
 
8.21
%
 
7.56
%