-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gxdx5QftzOurWLWv099GqvPKTiqSVRBYfirzOY4ucmNNeSqhU86GXj/5aVJldyWE GnoFa5JGyLwSZkVzosl+Kg== 0000750686-99-000009.txt : 19990517 0000750686-99-000009.hdr.sgml : 19990517 ACCESSION NUMBER: 0000750686-99-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAMDEN NATIONAL CORP CENTRAL INDEX KEY: 0000750686 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 010413282 STATE OF INCORPORATION: ME FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13227 FILM NUMBER: 99623593 BUSINESS ADDRESS: STREET 1: TWO ELM ST CITY: CAMDEN STATE: ME ZIP: 04843 BUSINESS PHONE: 2072368821 MAIL ADDRESS: STREET 1: 2 ELM ST CITY: CAMDEN STATE: ME ZIP: 04843 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1999 Commission File No. 0-28190 CAMDEN NATIONAL CORPORATION (Exact name of registrant as specified in its charter) MAINE 01-04132282 (State or other jurisdiction (I.R.S. Employer incorporation or organization) Identification No.) 2 ELM STREET, CAMDEN, ME 04843 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (207) 236-8821 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: Outstanding at March 31, 1999: Common stock (no par value) 6,640,414 shares. CAMDEN NATIONAL CORPORATION Form 10-Q for the quarter ended March 31, 1999 TABLE OF CONTENTS OF INFORMATION REQUIRED IN REPORT PART I. ITEM 1. FINANCIAL INFORMATION PAGE Consolidated Statements of Income Three Months Ended March 31, 1999 and 1998 3 Consolidated Statements of Comprehensive Income Three Months Ended March 31, 1999 and 1998 4 Consolidated Statements of Conditions March 31, 1999 and 1998 and December 31, 1998 5 Consolidated Statement of Cash Flows Three Months Ended March 31, 1999 and 1998 6 Notes to Consolidated Financial Statements Three Months Ended March 31, 1999 and 1998 7-8 Analysis of Change in Net Interest Margin Three Months Ended March 31, 1999 and 1998 8 Average Daily Balance Sheets Three Months Ended March 31, 1999 and 1998 9 Analysis of Volume and Rate Changes on Net Interest Income & Expenses March 31, 1999 over March 31, 1998 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10-16 PART II. ITEM 4. Submission Matters to a Vote of Security holders 16 ITEM 6. Exhibits and Reports on Form 8-K 16 SIGNATURES 17 EXHIBITS 18 PART I. ITEM I. FINANCIAL INFORMATION Camden National Corporation and Subsidiaries Consolidated Statement of Income (unaudited) (In Thousands, except number of Three Months Ended March 31 shares and per share data) 1999 1998 Interest Income Interest and fees on loans $ 9,887 $ 8,593 Interest on U.S. Government and agency obligations 2,233 2,576 Interest on state and political subdivisions 101 31 Interest on interest rate swap agreements 0 33 Interest on federal funds sold and other investments 889 241 ------- ------- Total interest income 13,110 11,474 Interest Expense Interest on deposits 4,478 3,679 Interest on other borrowings 1,179 1,539 Interest on interest rate swap agreements 0 32 ------- ------- Total interest expense 5,657 5,250 ------- ------- Net interest income 7,453 6,224 Provision for Loans Losses 435 324 ------- ------- Net interest income after provision for loan losses 7,018 5,900 Other Income Service charges on deposit accounts 536 360 Other service charges and fees 431 396 Other 493 340 ------- ------- Total other income 1,460 1,096 Operating Expenses Salaries and employee benefits 2,375 1,940 Premises and fixed assets 557 465 Other 1,735 1,271 ------- ------- Total operating expenses 4,667 3,676 ------- ------- Income before income taxes 3,811 3,320 Income Taxes 1,207 1,086 ------- ------- Net Income $ 2,604 $ 2,234 ======= ======= Per Share Data Basic Earnings per share $0.39 $0.33 (Net income divided by weighted average shares outstanding) Diluted Earnings per share $0.39 $0.32 Cash dividends per share $0.15 $0.13 Weighted average number of shares outstanding 6,654,288 6,810,630
Camden National Corporation and Subsidiaries Consolidated Statements of Comprehensive Income (unaudited) (In Thousands) Three Months Ended March 31 1999 1998 Net income $ 2,604 $ 2,234 Other comprehensive income, net of tax: Change in unrealized gains on securities (31) 5 ------- ------- Comprehensive income $ 2,573 $ 2,239 ======= =======
Camden National Corporation and Subsidiaries Consolidated Statements of Condition (unaudited) (In Thousands, except number March 31, December 31, of shares and per share data) 1999 1999 Assets Cash and due from banks $ 13,374 $ 14,938 Federal funds sold 1,525 0 Securities available for sale 95,641 84,159 Securities held to maturity 80,483 88,570 Other securities 14,085 14,084 Residential mortgages held for sale 27,336 24,637 Loans, less allowance for loan losses of $6,791 and $6,512 at March 31, 1999 and December 31, 1998 420,431 407,798 Bank premises and equipment 9,324 9,530 Other real estate owned 859 905 Interest receivable 4,475 3,820 Other assets 20,669 19,510 -------- -------- Total assets $688,202 $667,951 ======== ======== Liabilities Deposits: Demand $ 57,607 $ 64,303 NOW 26,211 27,955 Money market 84,270 87,532 Savings 84,594 80,908 Certificates of deposit 252,428 247,875 -------- -------- Total deposit 505,110 508,573 Borrowings from Federal Home Loan Bank 86,134 60,265 Other borrowed funds 24,379 29,893 Accrued interest and other liabilities 7,192 5,028 Minority interest in subsidiary 94 90 -------- -------- Total liabilities 622,909 603,849 -------- -------- Stockholders' Equity Common stock, no par value; authorized 10,000,000, issued 7,128,240 shares 2,436 2,436 Surplus 1,142 1,142 Retained earnings 70,387 68,785 Net unrealized appreciation on securities available for sale, net of income tax (155) (129) -------- -------- 73,810 72,234 Less cost of 487,826 and 471,930 shares of treasury stock on March 31, 1999 and December 31, 1998 8,517 8,132 -------- -------- Total stockholders' equity 65,293 64,102 -------- -------- Total liabilities and stockholders' equity $688,202 $667,951 ======== ========
Camden National Corporation and Subsidiaries Consolidated Statements of Cash Flows (unaudited) (In Thousands) Three Months Ended March 31, 1999 1998 Operating Activities Net Income $ 2,604 $ 2,234 Adjustment to reconcile net income to net cash provided by operating activities: Provision for loan losses 435 324 Depreciation and amortization 49 164 (Increase) Decrease in interest receivable (655) 268 Increase in other assets (1,067) (8,145) Increase in other liabilities 2,177 2,738 Cash receipts from sale of residential loans 1,588 167 Origination of mortgage loans held for sale (4,287) (4,869) Loss on disposal of assets 0 0 Other, net 0 1 ------- ------- Net cash provided by operating activities 844 (7,118) ------- ------- Investing Activities Proceeds from maturities of securities held to maturity 8,206 21,514 Proceeds from maturities of securities available for sale 12,561 2,000 Purchase of securities held to maturity 0 0 Purchase of securities available for sale (24,096) 0 Purchase of Federal Home Loan Bank Stock (1) 0 Increase in loans (13,068) (5,763) Net decrease in other real estate 46 129 Purchase of premises and equipment (42) (613) Proceeds from sale of premises and equipment 0 0 Decrease (increase)in minority position 4 1 Net purchase of federal funds (1,525) 1,100 ------- ------- Net cash used by investing activities (17,915) 18,368 ------- ------- Financing Activities Net increase (decrease) in demand deposits, NOW accounts, and savings accounts (8,016) 27,983 Net increase in certificates of deposit 4,553 35,237 Net (decrease)increase in short-term borrowings 20,355 (64,681) Purchase of treasury stock (385) 0 Sale of treasury stock 0 0 Cash Dividends (1,000) (908) ------- ------- Net cash provided by financing activities 15,507 (2,369) ------- ------- Increase in cash and equivalents (1,564) 8,881 Cash and cash equivalents at beginning of year 14,938 13,451 ------- ------- Cash and cash equivalents at end of period $13,374 $22,332 ======= =======
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all disclosures required by generally accepted accounting principles for complete presentation of financial statements. In the opinion of management, the consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the consolidated statements of condition of Camden National Corporation, as of March 31, 1999, and December 31, 1998, the consolidated statements of income for the three months ended March 31, 1999 and March 31, 1998, the consolidated statements of comprehensive income for the three months ended March 31, 1999 and March 31, 1998 and the consolidated statements of cash flows for the three months ended March 31, 1999, and March 31, 1998. All significant intercompany transactions and balances are eliminated in consolidation. The income reported for 1999 period is not necessarily indicative of the results that may be expected for the full year. NOTE 2 - Earnings Per Share Earnings Per Share. Basic earnings per share date is computed based on the weighted average number of common shares outstanding during each year. Potential common stock is considered in the calculation of weighted average shares outstanding for diluted earnings per share. The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended March 31, 1999 1998 Net income, as reported 2,604 2,234 Weighted average shares 6,654,288 6,810,630 Effect of dilutive securities: Employee stock options 83,007 155,388 Dilutive potential common shares Adjusted weighted average shares and assumed conversion 6,737,464 6,966,018 Basic earnings per share $0.39 $0.33 Diluted earnings per share 0.39 0.32 NOTE 3 - Excess of Cost Over Fair Value of Assets Acquired During 1998 the Company's two bank subsidiaries acquired seven branch locations. The excess of cost over fair value of net assets acquired in these branch acquisitions is amortized to expense using the straight- line method over ten years. The acquisition was accounted for under the purchase method of accounting for business combinations. The following is a summary of the transaction: Loans acquired 18,541 Fixed assets 546 Core deposit intangibles 7,466 Other assets 1,202 Deposits assumed 87,332 Other Liabilities 112 Net Cash received 59,689 ANALYSIS OF CHANGE IN NET INTEREST MARGIN Three Months Ending Three Months Ending March 31, 1999 March 31, 1998 ------------------- ------------------- Dollars in thousands Amount Average Amount Average of Yield/ of Yield/ interest Rate interest Rate -------- ------- -------- ------- Interest-earning assets: Securities - taxable $ 3,098 7.05% $ 2,810 6.78% Securities - nontaxable 153 6.47% 47 6.95% Federal funds sold 24 8.14% 11 5.57% Loans 9,674* 8.68% 8,734* 9.59% ------- ------ ------- ------ Total earning assets 12,949 8.19% 11,602 8.70% Interest-bearing liabilities: NOW accounts 155 1.03% 129 1.21% Savings accounts 573 2.79% 543 3.31% Money Market accounts 465 3.50% 289 3.69% Certificates of deposit 3,199 5.23% 2,718 5.52% Short-term borrowings 1,181 4.79% 1,539 5.45% Broker Certificates of deposit 85 5.66% 0 0.00% ------- ------ ------- ------ Total interest-bearing liabilities 5,658 4.16% 5,218 4.64% Net interest income (fully-taxable equivalent) 7,291 6,384 Less: fully-taxable equivalent adjustment (154) (73) ------- ------- $ 7,137 $ 6,311 ======= ======= Net Interest Rate Spread (fully-taxable equivalent) 4.04% 4.06% Net Interest Margin (fully-taxable equivalent) 4.61% 4.79% *Includes net swap income figures (in thousands) - March 1999 $0 and March 1998 $1. Notes: Nonaccrual loans are included in total loans. Tax exempt interest was calculated using a rate of 34% for fully-taxable equivalent.
AVERAGE DAILY BALANCE SHEETS Three Months Ended March 31, Dollars in thousands 1999 1998 ---- ---- Interest-earning assets: Securities - taxable $175,742 $165,749 Securities - nontaxable 9,467 2,705 Federal funds sold 1,180 790 Loans 445,966 364,306 -------- -------- Total earning assets 632,355 533,550 Cash and due from banks 15,032 14,038 Other assets 35,427 25,644 Less allowance for loan losses (6,674) (5,640) -------- -------- Total assets $676,140 $567,592 ======== ======== Interest-bearing liabilities: NOW accounts $ 59,987 $ 42,712 Savings accounts 82,148 65,627 Money market accounts 53,151 31,348 Certificates of deposits 244,792 196,888 Short-term borrowings 98,559 112,956 Broker certificates 6,004 131 -------- -------- Total interest-bearing liabilities 544,641 449,662 Demand deposits 61,820 48,738 Other liabilities 4,982 5,971 Shareholders' equity 64,697 63,221 -------- -------- Total liabilities and stockholders' equity $676,140 $567,592 ======== ========
ANALYSIS OF VOLUME AND RATE CHANGES ON NET INTEREST INCOME AND EXPENSES March 1999 Over March 1998 --------------------------------- Change Change Due to Due to Total In thousands Volume Rate Change ------- ------- ------- Interest-earning assets: Securities--taxable $ 169 $ 119 $ 288 Securities--nontaxable 117 (11) 106 Federal funds sold 5 8 13 Loans 1,958 (1,017) 941 ------- ------- ------- Total interest income $ 2,249 $ (901) $ 1,348 Interest-bearing liabilities: NOW accounts $ 52 $ (26) $ 26 Savings accounts 137 (107) 30 Money market accounts 201 (25) 176 Certificates of deposit 659 (178) 481 Short-term borrowings (196) (162) (358) Broker certificates 85 0 85 ------- ------- ------- Total interest expense $ 938 $ (498) $ 440 ------- ------- ------- Net interest income $ 1,311 $ (403) $ 908 (fully taxable equivalent) ======= ======= =======
ITEM II. MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATION FINANCIAL CONDITION During the first three months of 1999, consolidated assets increased by $20.3 million to $688.2 million. This increase was the result of an increase in the loan portfolio of $15.6 million or 3.6% and an increase in the investment portfolio of $3.4 million or 1.8%. The increase in loans can be attributed to strong loan demand during the first quarter. Although the investment portfolio experienced a modest increase, the Company did not want to aggressively purchase securities during a time of relatively low interest rates. The liquidity needs of the Company's financial institution subsidiaries require the availability of cash to meet the withdrawal demands of depositors and the credit commitments to borrowers. Deposits still represent the Company's primary source of funds. Since December 31, 1998, deposits have decreased by $3.5 million or 0.7%. The major reason for this decrease was the seasonal decline in the Company's transaction accounts (demand deposits and NOW accounts). Both of the Company's banking subsidiaries continue to experience extreme competition by competitors for deposits. Therefore, other funding sources continue to be pursued and utilized. Borrowings provide liquidity in the form of federal funds purchased, securities sold under agreements to repurchase, treasury tax and loan accounts, and borrowings from the Federal Home Loan Bank. Total borrowings have increased by $20.4 million or 22.6% since December 31,1998. The majority of the borrowings were from the Federal Home Loan Bank of Boston. FHLB advances remain the largest nondeposit-related interest-bearing funding source for the Company. These borrowings are secured by qualified residential real estate loans, certain investment securities and certain other assets available to be pledged. The Company views borrowed funds as a reasonably priced alternative funding source that should be utilized. Borrowings have continued to be a viable source of funding. In determining the adequacy of the loan loss allowance, management relies primarily on its review of the loan portfolio both to ascertain if there are any probable losses to be written off, and to assess the loan portfolio in the aggregate. Nonperforming loans are examined on an individual basis to determine estimated probable loss. In addition, management considers current and projected loan mix and loan volumes, historical net loan loss experience for each loan category, and current and anticipated economic conditions affecting each loan category. No assurance can be given, however, that adverse economic conditions or other circumstances will not result in increased losses in the portfolio. The Company continues to monitor and modify its allowance for loan losses as conditions dictate. During the first three months of 1999, $435,000 was added to the reserve for loan losses, resulting in an allowance of $6.8 million, or 1.49%, of total loans outstanding. This addition to the allowance was made as a result of loan growth and not a reduction in loan quality. Management believes that this allowance is appropriate given the current economic conditions in the Company's service area and the overall condition of the loan portfolio. Under Federal Reserve Board(FRB) guidelines, bank holding companies such as the Company are required to maintain capital based on "risk-adjusted" assets. These guidelines apply to the Company on a consolidated basis. Under the current guidelines, banking organizations must maintain a risk-based capital ratio of eight percent, of which at least four percent must be in the form of core capital. The Company's risk based capital ratios for Tier 1 and Tier 2 ratios at March 31, 1999, of 12.3% and 13.5% respectively, exceed regulatory guidelines. The Company's ratios at December 31, 1998 were 12.8% and 14.0%. The principal cash requirement of the Company is the payment of dividends on common stock when declared. The Company is primarily dependent upon the payment of cash dividends by Camden National Bank to service its commitments. During the first three months of 1999 Camden National Bank paid dividends to the Company in The amount of $1.4 million. The Company paid dividends to shareholders in the amount of $1.0 million. The remaining amount of $.4 million was used for treasury stock transactions by the Company. RESULTS OF OPERATIONS Net income for the three months ended March 31, 1999 was $2,604,000, an increase of $370,000 or 1.7% above 1998's first three month's net income of $2,234,000. The major contributing factor was the increase in loans, which resulted in an increase in net interest income. NET INTEREST INCOME Net interest income, on a fully taxable equivalent basis, for the three months ended March 31, 1999 was $7.3 million, a 14.2% or $0.9 million increase over the net interest income for the first three months of 1998 of $6.4 million. Interest income on loans increased by $0.9 million. This increase was due to the increase in loan volume, despite a decrease in yields from 9.59% during the first three months of 1998 to 8.68% during the first three months of 1999. The Company experienced a slight increase in interest income on investments during the first three months of 1999 compared to the same period in 1998 due to both increased volume and yield. The Company's net interest expense on deposits and borrowings increased during the first three months of 1999 compared to the same period in 1998. This increase was the result of borrowed funds being used to support loan growth. The Analysis of Change in Net Interest Margin, the Average Daily Balance Sheets, and the Analysis of Volume and Rate Changes on Net Interest Income and Expenses are provided on pages 8-10 of this report to enable the reader to understand the components of the Company's interest income and expenses. The first table provides an analysis of changes in net interest margin on earnings assets; interest income earned and interest expense paid and average rates earned and paid; and the net interest margin on earning assets for the three months ended March 31, 1999 and 1998. The second of these tables presents average assets liabilities and stockholders' equity for the three months ended March 31, 1999 and 1998. The third table presents an analysis of volume and rate change on net interest income and expense from March 31, 1998 to March 31, 1999. The Company utilizes off-balance sheet instruments such as interest rate swap agreements that have an effect on net interest income. There was no effect on net interest income in the first three months of 1999 compare to a slight increase of $1,000 in the first three months of 1998. NONINTEREST INCOME There was a $364,000 or 33.2% increase in total noninterest income in the first three months of 1999 compared to the first three months of 1998. Service charges on deposit accounts increased $176,000 or 48.9% for the first three months of 1999 compared to 1998. This increase was the result of increased deposits balances. The increase in deposit balance was inflated due to the acquisition of seven branches by the Company in 1998. Three branches were acquired in March 1998 and three in October 1998. Other service charges and fees increased by $35,000 or 8.8% in the first three months of 1999 compared to 1998. The largest contributing factor to this increase was the fee income generated by merchant assessments. Other income increased by $153,000 in the first three months of 1999 compared to 1998. The major reason for this increase in other income was a $125,000 gain on the sale of securities. NONINTEREST EXPENSE There was a $991,000 or 21.2% increase in total noninterest expenses in the first three months of 1999 compared to the first three months of 1998. Salaries and employee benefits cost increased by $435,000 or 22.4% in the first three months of 1999 compared to 1998. This increase was the result of normal annual increases, additions to staff (including the staff at the seven branches acquired in 1998) and higher pension benefit costs. Other operating expenses increased by $556,000 or 32.0%. The major contributing factor for this increase the costs related to the seven new branch locations added in 1998. The Company experienced increases in premises and fix assets, credit card expenses, data processing, and amortization of deposit premium and various other general operating expenses. The amortization of deposit premium of $193,000 was recorded in 1999, which was the result of the new branches acquired in 1998. YEAR 2000 The Year 2000 issue refers to the fact that many computers were originally programmed using two digits rather than four digits when referring to the applicable year. When the year 2000 occurs, these systems will read the year as 1900 rather than 2000. Unless software and hardware systems are corrected to be Year 2000 compliant, computers could generate miscalculations and create operational problems. Year 2000 compliant means having computer systems that accurately process date and time data from, into, and between the twentieth and twenty-first centuries. Furthermore, Year 2000 compliant information technology, when used in combination with other information technology, will accurately process date and time data if the other information technology properly exchanges date and time data with it. To assist in identifying any and all exposures that the Company may have and to help make all the appropriate changes necessary to allow for a smooth transition into the new millennium the Company engaged Vitex Inc. to assist in development of a Year 2000 Plan. The Company's Executive Operations and Technology Committee manages the Year 2000 project with the assistance of Vitex Inc. The Committee developed a Year 2000 Plan to address the Company's exposure to potential problems arising from the Year 2000. The plan is based on the Federal Financial Institution Examination Council ("FFIEC") Guidelines. The Company has been working since June 1997 to identify, test, and if necessary, upgrade key systems such as checking, savings, general ledger, wire transfer, consumer and commercial loans, and other core computer systems. These are the Company's "mission critical" systems. Currently, 100% of the company's "mission critical" systems are ready for the Year 2000. In addition, all other systems were tested in our own environment. Independent validation of the testing results of "mission critical" systems has been completed. The Company also operates in a highly interconnected local and wide area network environment. The Company's entire network has been renovated to Year 2000 ready versions of both hardware and software. In addition, a thorough inventory of the company's facilities, elevators and security systems for potential Year 2000 issues was completed in September 1998. All software used by the company is provided by outside vendors, which are selected based on the quality of their products and their proven ability to deliver to the Company and its customers. The Company is actively monitoring its approximate 50 software and hardware suppliers for Year 2000 compliance. The progress of these vendors is tracked as they deliver Year 2000 compliant upgrades to their applications. The Company strives to strengthen customer awareness of the Year 2000 issue in various forms. An internal awareness training program is ongoing with employees. This will enable our staff to effectively answer customers' concerns. Statement stuffers have been mailed with monthly statements to customers of the Company's bank subsidiaries to assure them of the Company's readiness to serve them in the new millennium. The Company has sponsored several seminars for the community on the Year 2000 issues. The Company has requested compliance statements from over 150 companies upon which the Company relies. Some examples of these companies are utility providers, insurance companies, investment firms, other banks, and human resource service providers. If providers fail to demonstrate adequate Year 2000 compliance progress, the Company has et deadlines for implementation of contingency plans. An essential component of preparing for the Year 2000 problem and beyond is developing a Contingency Plan if any or all of the Company's systems fail or cannot be made Year 2000 ready. The Company is developing Year 2000 contingency plans for all of its mission critical products and services. These plans are designed to mitigate the risks associated with (1) the failure to successfully complete renovation, validation, or implementation of our Year 2000 readiness plan; or (2) the failure to any of our systems at critical dates. The Company has dedicated staff for this critical aspect of preparation for the Year 2000. The Company's Contingency Plan includes the development of a Crisis Management Team to handle any unforeseen problems. Although the Company does not expect there to be any problems, it will outline procedures to handle any if there is a mission critical system failure. A general contingency plan is being developed for non-mission critical systems. All contingency plans will be completed by June 30, 1999. The intent of these plans is to describe how the Company will resume normal business operations if systems do not perform as planned and required before or after the turn of the century. The basic priorities for restoring service will be based on the essential application processing required to provide the company's financial services to its customers. The Company is conducting business impact analyses for each mission critical area to identify potential disruption and the effect such disruption could have on business operations should a service provider or software vendor be unable to operate in a Year 2000 compliant environment. The Company is analyzing strategies and identifying resources that will be required to restore systems and or business operations. As part of the emergency plan for each individual mission critical item, the Company will include a recovery program that identifies participants, processes, and equipment that might be needed for the company to function at an adequate level. The program ensure that all participants are aware of their roles, adequately trained, and able to do whatever is necessary to restore operations. The Company will monitor cash levels during 1999 in order to determine usage trends. The company plans to increase its currency and coin levels starting in the fall of 1999 in anticipation of higher liquidity levels required to meet cash needs during the transition to the year 2000. In addition, The Company will confirm its available lines of credit with correspondent banks, the Federal Home Loan Bank, and the Federal Reserve Bank to insure available liquidity in meeting unanticipated cash demands. The estimated cost to address all of the Year 2000 issues is $450,000. This includes approximately $200,000 to upgrade software and hardware systems, $100,000 for testing of systems, $100,000 for consulting fees, and $50,000 for existing personnel costs to effectively implement the Year 2000 Plan. IMPACT OF INFLATION AND CHANGING PRICES The Consolidated Financial Statements and related Notes thereto presented elsewhere herein have been prepared in accordance with generally accepted accounting principles which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. Unlike many industrial companies, substantially all of the assets and virtually all of the liabilities of the Company are monetary in nature. As a result, interest rates have a more significant impact on the Company's performance than the general level of inflation. Over short periods of time, interest rates may not necessarily move in the same direction or in the same magnitude as inflation. RECENT ACCOUNTING PRONOUNCEMENTS During 1998, the Company adopted SFAS No. 130, No. 131 and No. 132. The adoption of SFAS No. 130 "Reporting Comprehensive Income," required that certain items be reported under a new category of income, "Other Comprehensive Income." Unrealized gains and losses on securities available for sale is the only item included in other comprehensive income. SFAS No. 131 and No. 132 relate to disclosures about segments and employee benefits, respectively. The financial statements, where applicable, include the required additional disclosures for SFAS No. 130, No. 131 and No. 132. SFAS No. 133, "Accounting For Derivative Instruments and Hedging activities," and SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained After the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise," are effective for fiscal years beginning after June 15, 1999, and the first fiscal quarter beginning July 1, 1999, respectively. Management has not determined the impact of SFAS No. 133 and No. 134 on the financial statements. OTHER MATTERS SHARE REPURCHASE PLAN. Camden National Corporation (CNC) will seek to repurchase up to $6,000,000 worth of its outstanding shares during the succeeding twelve months following the adoption of this plan. The Board of Directors approved funding of this plan on October 13, 1998. The repurchase will be effected as follows: 1. All of CNC's bids and repurchases of its stock during a given day shall be effected through a single broker or dealer, except that CNC may repurchase shares from others provided that the same have not been solicited by or on behalf of CNC. For this purpose, CNC shall utilize the services of any registered broker or dealer. 2. All of CNC's repurchases of its stock shall be at a price which is not higher than the lowest current independent offer quotation determined on the basis of reasonable inquiry. Management shall exercise its best judgement whether to purchase stock at the then lowest current independent offer quotation; 3. Daily volume of CNC repurchases must be in an amount that (a) when added to the amounts of all of CNC's other repurchases through a broker or dealer on that day, except "block purchases," (i.e., 2,000 or more shares repurchased from a single seller) does not exceed one "round lot" (i.e., 100 shares) or (b) when added to the amounts of all of CNC's other repurchases through a broker or dealer during that day and the preceding five business days, except "block purchases" does not exceed one twentieth of one percent (1/20 of 1%) of the outstanding shares of CNC stock, exclusive of shares known to be owned beneficially by affiliates, (i.e., approximately 1,000 shares); 4. If at any time while this plan is in effect trading in CNC's shares of stock are reported through a consolidated system, compliance for rule 10b-18 of the Exchange Act Rules shall be complied with; 5. A press release was issued describing this plan. The Camden National Bank expressed, to the Comptroller of the Currency, in a letter dated September 3, 1998, its desire to change its capital structure by reducing its common stock or surplus in an amount not to exceed $6,000,000 to accommodate the above described "Share Repurchase Plan." This will reduce the Company's excess capital position and should improve shareholder return on equity. In a letter dated September 25, 1998 from the Comptroller of the Currency's office approval was granted with the understanding that the reduction in capital will be accomplished through a reduction in Camden National Bank's surplus account and a corresponding distribution to Camden National Corporation, the bank's sole shareholder. Item 4. Submission Matters to a vote of Security holders. Item 6. Exhibits and Reports on Form 8-K. (a). Exhibits (3.i.) The Articles of Incorporation of Camden National Corporation, are incorporated herein by reference. (3.ii.) The Bylaws of Camden National Corporation, as amended to date, Exhibit 3.ii. to the Company's Registration Statement on Form S-4 filed with the Commission on September 25, 1995, file number 33-97340, are incorporated herein by reference. (10.1) Lease Agreement for the facility occupied by the Thomaston Branch of Camden National Bank, filed with Form 10-K, December 31, 1995, and is incorporated herein by reference. (10.2) Lease Agreement for the facility occupied by the Camden Square Branch of Camden National Bank, filed with Form 10-K, December 31, 1995, and is incorporated herein by reference. (10.3) Lease Agreement for the facility occupied by the Hampden Branch of United Bank, filed with Form 10-K, December 31, 1995, and is incorporated herein by reference. (10.4) Camden National Corporation 1993 Stock Option Plan, filed with Form 10-K, December 31, 1995, and is incorporated herein by reference. (10.5) UnitedCorp Stock Option Plan, filed with Form 10-K, December 31, 1995, and is incorporated herein by reference. (10.6) Lease Agreement for the facility occupied by the Damariscotta Branch of Camden National Bank, betweek Keybank National Associa- tion (Lessor) and Camden National Bank (Lessee). (10.7) Lease Agreement for the facility occupied by the Milo Branch of United Bank, between Bangor Savings Bank (Lessor) and United Bank (Lessee). (27) Financial Data Schedule. (b) Reports on Form 8-K. None filed. SIGNATURES Pursuant to the requirements of the Securities Acto of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAMDEN NATIONAL CORPORATION (Registrant) Robert W. Daigle (signature) 05/14/99 - ------------------------------------- -------- Robert W. Daigle Date President and Chief Executive Officer Susan M. Westfall (signature) 05/14/99 - ------------------------------------- -------- Susan M. Westfall Date Treasurer and Chief Financial Officer EX-27 2
9 3-MOS YEAR DEC-31-1999 DEC-31-1998 MAR-31-1999 DEC-31-1998 13,374 14,938 447,503 444,270 1,525 0 0 0 95,641 98,243 80,483 88,570 83,443 91,579 454,558 438,947 6,791 6,512 688,202 667,951 505,110 508,573 110,513 90,158 7,286 5,118 0 0 0 0 0 0 2,436 2,436 62,857 61,666 688,202 667,951 9,887 37,845 2,334 10,937 889 33 13,110 48,815 4,478 17,017 5,657 20,750 7,453 28,065 435 1,376 124 0 4,667 17,073 3,811 14,114 3,811 14,114 0 0 0 0 2,604 9,645 0.39 1.43 0.39 1.41 8.19 8.88 3,402 1,710 316 612 0 0 3,718 2,322 6,512 5,640 188 770 32 266 6,791 6,512 6,301 5,927 0 0 490 585
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