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| 8-K - 8-K - CAMDEN NATIONAL CORP | a8k_07302013earnings.htm |
| EX-99.2 - EXHIBIT 99.2 - CAMDEN NATIONAL CORP | camdenshareholderletterq.htm |
Camden National Corporation Reports Second Quarter 2013 Results
CAMDEN, Maine, July 30, 2013/PRNewswire/--Camden National Corporation (NASDAQ: CAC; “Camden National” or the “Company”), a $2.6 billion bank holding company headquartered in Camden, Maine, reported net income for the second quarter of 2013 of $6.3 million and diluted earnings per share of $0.82. The net income results of the second quarter of 2013 represent an increase of $669,000, or 12%, compared to the first three months of 2013. For the second quarter of 2013, the Company achieved a return on assets of 0.98%, a return on tangible equity of 13.78% and an efficiency ratio of 60.30%.
“Our second quarter 2013 results reflect revenue growth of $122,000 and lower operating costs of $852,000 compared to the prior quarter as we start to see growth and efficiencies through our new markets,” said Gregory A. Dufour, president and chief executive officer of Camden National Corporation. “Total loans (excluding loans held for sale) have increased $38.7 million since year end, representing an annualized growth rate of 5%.”
Balance Sheet
Total assets were $2.6 billion at June 30, 2013, representing a $37.0 million increase since year end. The growth in total assets was primarily due to an increase in loans (excluding loans held for sale), which grew by $38.7 million. Our loan growth continues to be led by the home equity and commercial real estate portfolios, which experienced increased balances of $23.5 million and $16.8 million, respectively. The growth in the home equity portfolio continues to be fueled by our ten-year fixed rate home equity promotion. The residential real estate portfolio, which decreased $2.8 million, was reduced through the sale of $19.8 million in 30-year fixed-rate production to manage our interest rate risk profile.
Total deposits of $1.9 billion decreased $35.4 million since year end as retail certificates of deposit decreased $25.3 million and core deposits (demand, checking, savings, and money market) decreased $16.4 million due to the seasonal outflow of deposits.
Second Quarter Operating Results
Our net interest income of $19.3 million for the second quarter of 2013 increased $82,000 compared to the previous quarter. The increase reflects growth in average loan balances of $21.9 million partially offset by a 4 basis point decline in the net interest margin on a fully-taxable basis to 3.23% for the second quarter of 2013. We continue to experience a decline in the net interest margin due to the low interest rate environment as the yield on average earning assets declined 5 basis points and our overall funding costs declined 2 basis points for the quarter.
Non-interest income for the second quarter of 2013 of $6.4 million increased $40,000 compared to the first quarter of 2013. The significant changes in non-interest income include:
• | Deposit-related and other service fees increased $155,000. |
• | Net gains on sale of securities and other-than-temporary impairment declined $138,000 as there were no security sales during the second quarter. |
Non-interest expense for the second quarter of 2013 of $15.6 million decreased $852,000, or 5%, compared to the first quarter of 2013. The significant changes in non-interest expense include:
• | Collection costs decreased $910,000 due to a recovery on servicing related claims combined with lower levels of foreclosures and OREO expenses. |
• | Salaries and benefits decreased $400,000 primarily due to lower incentive compensation based on the Company's year-to-date 2013 financial performance compared to performance goals established by the Board of Directors and increased capitalization of loan origination salary costs. |
• | Furniture, equipment and data processing costs increased $327,000 primarily due to the conversion of the core operating systems for Acadia Trust, N.A. and costs associated with the upgrade of the Company's ATM fleet. |
Asset Quality
“Our overall credit quality continues to improve and reflects the stabilization of our economy and the hard work of our employees who ensure that we properly underwrite loans and are repaid by borrowers,” said Dufour.
Our asset quality metrics for the second quarter of 2013 compare favorably to that of the previous quarter. Non-performing loans to total loans decreased to 1.63% from 1.72% and past due loans to total loans decreased to 0.27% from 0.39%. Annualized net charge-offs to average loans for the first six months of 2013 totaled 0.14% and the allowance for credit losses to total loans at June 30, 2013 was 1.45%.
Dividends and Capital
The board of directors approved a dividend of $0.27 per share, payable on July 31, 2013, to shareholders of record as of July 15, 2013. This distribution resulted in an annualized dividend yield of 3.04%, based on the June 28, 2013, closing price of Camden National's common stock at $35.47 per share as reported by NASDAQ.
Camden National's total risk-based capital ratio was 15.82% at June 30, 2013, compared to 15.56% at December 31, 2012. Camden National Corporation and its wholly-owned subsidiary, Camden National Bank, exceeded the minimum total risk-based, Tier 1, and Tier 1 leverage ratios of 10.0%, 6.0%, and 5.0%, respectively, required by the Federal Reserve for an institution to be considered “well capitalized.”
About Camden National Corporation
Camden National Corporation, recognized by Forbes as one of “America's Most Trustworthy Companies” in 2012 and 2013*, is the holding company employing more than 500 Maine residents for two financial services companies including Camden National Bank and the wealth management company, Acadia Trust, N.A. Camden National Bank is a full-service community bank with a network of 49 banking offices throughout Maine. Acadia Trust offers investment management and fiduciary services with offices in Portland and Ellsworth. Located at Camden National Bank, Camden Financial Consultants offers full-service brokerage and insurance services. Learn more at www.CamdenNational.com. Member FDIC. *From Forbes.com March 18, 2013. © 2013 Forbes.com LLC. All rights reserved. Used by permission and protected by the Copyright Laws of the United States."
Forward-Looking Statements
This press release and the documents incorporated by reference herein contain certain statements that may be considered forward-looking statements under the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, projections, and statements, which are subject to numerous risks, assumptions, and uncertainties. Forward-looking statements can be identified by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “plan,” “target,” or “goal,” or future or conditional verbs such as “will,” “may”, “might”, “should,” “would”, “could” and other expressions which predict or indicate future events or trends and which do not relate to historical matters. Forward-looking statements should not be relied on, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of Camden National. These risks, uncertainties and other factors may cause the actual results, performance or achievements of Camden National to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.
Some of the factors that might cause these differences include, but are not limited to, the following: continued weakness in the United States economy in general and the regional and local economies within the New England region and Maine, which could result in a deterioration of credit quality, a change in the allowance for loan losses, or a reduced demand for the Company's credit or fee-based products and services; adverse changes in the local real estate market could result in a deterioration of credit quality and an increase in the allowance for loan loss, as most of the Company's loans are concentrated in Maine, and a substantial portion of these loans have real estate as collateral; changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve
System; inflation, interest rate, market and monetary fluctuations; competitive pressures, including continued industry consolidation, the increased financial services provided by non-banks and banking reform; continued volatility in the securities markets that could adversely affect the value or credit quality of the Company's assets, impairment of goodwill, the availability and terms of funding necessary to meet the Company's liquidity needs, and the Company's ability to originate loans and could lead to impairment in the value of securities in the Company's investment portfolios; changes in information technology that require increased capital spending; changes in consumer spending and savings habits; new laws and regulations regarding the financial services industry; changes in laws and regulations including laws and regulations concerning taxes, banking, securities and insurance; and changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters. Additional factors that could also cause results to differ materially from those described above can be found in the Company's Annual Report on Form 10-K, as updated by our Quarterly Reports on Form 10-Q and other filings with the SEC. All of these factors should be carefully reviewed, and readers should not place undue reliance on these forward-looking statements.
These forward-looking statements were based on information, plans and estimates at the date of this press release, and Camden National does not promise and assumes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.
Use of Non-GAAP Financial Measures
In addition to evaluating the Company's results of operations in accordance with GAAP, management supplements this evaluation with certain non-GAAP financial measures, such as the efficiency and tangible equity ratios, tangible book value per share, and tax-equivalent net interest income. Management believes these non-GAAP financial measures help investors in understanding the Company's operating performance and trends and allow for better performance comparisons to other banks. In addition, these non-GAAP financial measures remove the impact of unusual items that may obscure trends in the Company's underlying performance. These disclosures should not be viewed as a substitute for GAAP operating results, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other financial institutions. The reconciliation to the comparable GAAP financial measure can be found in this document or the Form 8-K related to this document, all of which can be found on Camden National's website at www.camdennational.com.
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) | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 30, 2013 | March 31, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | ||||||||||||||||
Selected Financial and Per Share Data: | ||||||||||||||||||||
Return on average assets | 0.98 | % | 0.90 | % | 1.10 | % | 0.94 | % | 1.12 | % | ||||||||||
Return on average equity | 10.71 | % | 9.81 | % | 11.48 | % | 10.26 | % | 11.74 | % | ||||||||||
Return on average tangible equity | 13.78 | % | 12.69 | % | 14.33 | % | 13.24 | % | 14.71 | % | ||||||||||
Tangible equity to tangible assets (non-GAAP) | 6.94 | % | 7.19 | % | 7.69 | % | 6.94 | % | 7.69 | % | ||||||||||
Efficiency ratio | 60.30 | % | 63.88 | % | 56.10 | % | 62.08 | % | 55.26 | % | ||||||||||
Net interest margin | 3.23 | % | 3.27 | % | 3.40 | % | 3.25 | % | 3.44 | % | ||||||||||
Tier 1 leverage capital ratio | 9.05 | % | 8.95 | % | 9.64 | % | 9.05 | % | 9.64 | % | ||||||||||
Tier 1 risk-based capital ratio | 14.57 | % | 14.34 | % | 14.97 | % | 14.57 | % | 14.97 | % | ||||||||||
Total risk-based capital ratio | 15.82 | % | 15.60 | % | 16.22 | % | 15.82 | % | 16.22 | % | ||||||||||
Basic earnings per share | $ | 0.83 | $ | 0.74 | $ | 0.84 | $ | 1.57 | $ | 1.69 | ||||||||||
Diluted earnings per share | $ | 0.82 | $ | 0.74 | $ | 0.83 | $ | 1.56 | $ | 1.69 | ||||||||||
Cash dividends declared per share | $ | 0.27 | $ | 0.27 | $ | 0.25 | $ | 0.54 | $ | 0.50 | ||||||||||
Book value per share | $ | 30.05 | $ | 30.85 | $ | 29.67 | $ | 30.05 | $ | 29.67 | ||||||||||
Tangible book value per share (non-GAAP) | $ | 23.15 | $ | 23.91 | $ | 23.82 | $ | 23.15 | $ | 23.82 | ||||||||||
Weighted average number of common shares outstanding | 7,637,433 | 7,627,691 | 7,675,819 | 7,632,586 | 7,673,927 | |||||||||||||||
Diluted weighted average number of common shares outstanding | 7,652,199 | 7,643,267 | 7,687,620 | 7,646,742 | 7,686,747 | |||||||||||||||
Statement of Condition Data (unaudited) | ||||||||||||
(In thousands, except number of shares) | June 30, 2013 | December 31, 2012 | June 30, 2012 | |||||||||
ASSETS | ||||||||||||
Cash and due from banks | $ | 44,896 | $ | 58,290 | $ | 40,478 | ||||||
Securities | ||||||||||||
Securities available-for-sale, at fair value | 789,369 | 781,050 | 677,262 | |||||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost | 19,724 | 21,034 | 21,034 | |||||||||
Total securities | 809,093 | 802,084 | 698,296 | |||||||||
Trading account assets | 2,281 | 2,300 | 2,184 | |||||||||
Loans held for sale | 2,826 | — | — | |||||||||
Loans | 1,602,559 | 1,563,866 | 1,536,464 | |||||||||
Less allowance for loan losses | (23,321 | ) | (23,044 | ) | (23,262 | ) | ||||||
Net loans | 1,579,238 | 1,540,822 | 1,513,202 | |||||||||
Goodwill and other intangible assets | 52,725 | 53,299 | 44,629 | |||||||||
Bank-owned life insurance | 45,705 | 45,053 | 44,352 | |||||||||
Premises and equipment, net | 26,890 | 28,059 | 23,913 | |||||||||
Deferred tax asset | 13,962 | 7,663 | 8,531 | |||||||||
Interest receivable | 6,506 | 6,215 | 6,530 | |||||||||
Other real estate owned | 2,155 | 1,313 | 1,697 | |||||||||
Other assets | 15,501 | 19,659 | 20,045 | |||||||||
Total assets | $ | 2,601,778 | $ | 2,564,757 | $ | 2,403,857 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
Liabilities | ||||||||||||
Deposits | ||||||||||||
Demand | $ | 232,535 | $ | 240,749 | $ | 271,648 | ||||||
Interest checking, savings and money market | 1,160,933 | 1,169,148 | 858,617 | |||||||||
Retail certificates of deposit | 393,158 | 418,442 | 372,982 | |||||||||
Brokered deposits | 107,461 | 101,130 | 98,614 | |||||||||
Total deposits | 1,894,087 | 1,929,469 | 1,601,861 | |||||||||
Federal Home Loan Bank advances | 186,147 | 56,404 | 251,613 | |||||||||
Other borrowed funds | 218,318 | 259,940 | 232,432 | |||||||||
Junior subordinated debentures | 43,870 | 43,819 | 43,768 | |||||||||
Accrued interest and other liabilities | 29,736 | 41,310 | 48,095 | |||||||||
Total liabilities | 2,372,158 | 2,330,942 | 2,177,769 | |||||||||
Shareholders’ Equity | ||||||||||||
Common stock, no par value; authorized 20,000,000 shares, issued and outstanding 7,640,712, 7,619,009 and 7,622,750 shares on June 30, 2013 and 2012 and December 31, 2012, respectively. | 49,909 | 49,667 | 49,273 | |||||||||
Retained earnings | 189,007 | 181,151 | 174,500 | |||||||||
Accumulated other comprehensive income (loss) | ||||||||||||
Net unrealized (losses) gains on securities available-for-sale, net of tax | (2,590 | ) | 12,943 | 12,082 | ||||||||
Net unrealized losses on derivative instruments, at fair value, net of tax | (4,059 | ) | (7,205 | ) | (8,018 | ) | ||||||
Net unrecognized losses on postretirement plans, net of tax | (2,647 | ) | (2,741 | ) | (1,749 | ) | ||||||
Total accumulated other comprehensive income (loss) | (9,296 | ) | 2,997 | 2,315 | ||||||||
Total shareholders’ equity | 229,620 | 233,815 | 226,088 | |||||||||
Total liabilities and shareholders’ equity | $ | 2,601,778 | $ | 2,564,757 | $ | 2,403,857 | ||||||
Statement of Income Data (unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
(In thousands, except number of shares and per share data) | June 30, 2013 | March 31, 2013 | June 30, 2012 | |||||||||
Interest Income | ||||||||||||
Interest and fees on loans | $ | 18,059 | $ | 17,795 | $ | 18,268 | ||||||
Interest on U.S. government and sponsored enterprise obligations | 4,074 | 4,276 | 4,118 | |||||||||
Interest on state and political subdivision obligations | 292 | 305 | 355 | |||||||||
Interest on federal funds sold and other investments | 56 | 50 | 56 | |||||||||
Total interest income | 22,481 | 22,426 | 22,797 | |||||||||
Interest Expense | ||||||||||||
Interest on deposits | 1,828 | 1,819 | 2,390 | |||||||||
Interest on borrowings | 767 | 818 | 1,409 | |||||||||
Interest on junior subordinated debentures | 636 | 621 | 632 | |||||||||
Total interest expense | 3,231 | 3,258 | 4,431 | |||||||||
Net interest income | 19,250 | 19,168 | 18,366 | |||||||||
Provision for credit losses | 695 | 674 | 835 | |||||||||
Net interest income after provision for credit losses | 18,555 | 18,494 | 17,531 | |||||||||
Non-Interest Income | ||||||||||||
Service charges on deposit accounts | 1,755 | 1,684 | 1,315 | |||||||||
Other service charges and fees | 1,513 | 1,429 | 956 | |||||||||
Income from fiduciary services | 1,275 | 1,143 | 1,289 | |||||||||
Mortgage banking income, net | 584 | 574 | 132 | |||||||||
Brokerage and insurance commissions | 409 | 412 | 410 | |||||||||
Bank-owned life insurance | 314 | 338 | 342 | |||||||||
Net gain on sale of securities and other-than-temporary impairment of securities | — | 138 | 751 | |||||||||
Other income | 526 | 618 | 559 | |||||||||
Total non-interest income | 6,376 | 6,336 | 5,754 | |||||||||
Non-Interest Expenses | ||||||||||||
Salaries and employee benefits | 7,961 | 8,361 | 6,972 | |||||||||
Furniture, equipment and data processing | 1,931 | 1,604 | 1,295 | |||||||||
Net occupancy | 1,407 | 1,552 | 1,020 | |||||||||
Other real estate owned and collection costs (recoveries), net | (22 | ) | 888 | 497 | ||||||||
Consulting and professional fees | 585 | 547 | 608 | |||||||||
Regulatory assessments | 500 | 499 | 432 | |||||||||
Amortization of intangible assets | 287 | 288 | 145 | |||||||||
Branch acquisition/divestiture costs | 71 | 161 | — | |||||||||
Other expenses | 2,928 | 2,600 | 3,010 | |||||||||
Total non-interest expenses | 15,648 | 16,500 | 13,979 | |||||||||
Income before income taxes | 9,283 | 8,330 | 9,306 | |||||||||
Income Taxes | 2,952 | 2,668 | 2,894 | |||||||||
Net Income | $ | 6,331 | $ | 5,662 | $ | 6,412 | ||||||
Per Share Data | ||||||||||||
Basic earnings per share | $ | 0.83 | $ | 0.74 | $ | 0.84 | ||||||
Diluted earnings per share | $ | 0.82 | $ | 0.74 | $ | 0.83 | ||||||
Statement of Income Data (unaudited) - continued | |||||||||
Six Months Ended June 30, | |||||||||
(In thousands, except number of shares and per share data) | 2013 | 2012 | |||||||
Interest Income | |||||||||
Interest and fees on loans | $ | 35,854 | $ | 36,703 | |||||
Interest on U.S. government and sponsored enterprise obligations | 8,350 | 8,234 | |||||||
Interest on state and political subdivision obligations | 597 | 720 | |||||||
Interest on federal funds sold and other investments | 106 | 105 | |||||||
Total interest income | 44,907 | 45,762 | |||||||
Interest Expense | |||||||||
Interest on deposits | 3,647 | 4,928 | |||||||
Interest on borrowings | 1,585 | 2,827 | |||||||
Interest on junior subordinated debentures | 1,257 | 1,270 | |||||||
Total interest expense | 6,489 | 9,025 | |||||||
Net interest income | 38,418 | 36,737 | |||||||
Provision for credit losses | 1,369 | 1,840 | |||||||
Net interest income after provision for credit losses | 37,049 | 34,897 | |||||||
Non-Interest Income | |||||||||
Service charges on deposit accounts | 3,439 | 2,471 | |||||||
Other service charges and fees | 2,942 | 1,801 | |||||||
Income from fiduciary services | 2,418 | 2,728 | |||||||
Mortgage banking income, net | 1,158 | 468 | |||||||
Brokerage and insurance commissions | 821 | 749 | |||||||
Bank-owned life insurance | 652 | 681 | |||||||
Net gain on sale of securities and other-than-temporary impairment of securities | 138 | 872 | |||||||
Other income | 1,144 | 1,212 | |||||||
Total non-interest income | 12,712 | 10,982 | |||||||
Non-Interest Expenses | |||||||||
Salaries and employee benefits | 16,322 | 13,880 | |||||||
Furniture, equipment and data processing | 3,535 | 2,518 | |||||||
Net occupancy | 2,959 | 2,131 | |||||||
Other real estate owned and collection costs | 866 | 1,123 | |||||||
Consulting and professional fees | 1,132 | 1,098 | |||||||
Regulatory assessments | 999 | 867 | |||||||
Amortization of intangible assets | 574 | 289 | |||||||
Branch acquisition/divestiture costs | 232 | — | |||||||
Other expenses | 5,529 | 4,992 | |||||||
Total non-interest expenses | 32,148 | 26,898 | |||||||
Income before income taxes | 17,613 | 18,981 | |||||||
Income Taxes | 5,620 | 5,986 | |||||||
Net Income | $ | 11,993 | $ | 12,995 | |||||
Per Share Data | |||||||||
Basic earnings per share | $ | 1.57 | $ | 1.69 | |||||
Diluted earnings per share | $ | 1.56 | $ | 1.69 | |||||
Quarterly Average Balance, Interest and Yield/rate Analysis (unaudited) | ||||||||||||||||||||||
At or for the Three Months Ended | At or for the Three Months Ended | |||||||||||||||||||||
June 30, 2013 | June 30, 2012 | |||||||||||||||||||||
(In thousands) | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Securities - taxable | $ | 774,916 | $ | 4,130 | 2.13 | % | $ | 608,205 | $ | 4,167 | 2.74 | % | ||||||||||
Securities - nontaxable (1) | 30,800 | 449 | 5.83 | % | 38,246 | 548 | 5.73 | % | ||||||||||||||
Trading account assets | 2,245 | — | — | % | 2,182 | 6 | 1.13 | % | ||||||||||||||
Loans: (1) (2) | ||||||||||||||||||||||
Residential real estate | 572,920 | 6,596 | 4.61 | % | 571,619 | 6,906 | 4.83 | % | ||||||||||||||
Commercial real estate | 511,115 | 6,227 | 4.82 | % | 491,976 | 6,092 | 4.90 | % | ||||||||||||||
Commercial | 178,887 | 1,964 | 4.34 | % | 168,476 | 1,989 | 4.67 | % | ||||||||||||||
Municipal | 12,949 | 136 | 4.21 | % | 14,023 | 175 | 5.03 | % | ||||||||||||||
Consumer | 315,197 | 3,184 | 4.05 | % | 286,594 | 3,167 | 4.44 | % | ||||||||||||||
Total loans | 1,591,068 | 18,107 | 4.53 | % | 1,532,688 | 18,329 | 4.77 | % | ||||||||||||||
Total interest-earning assets | 2,399,029 | 22,686 | 3.77 | % | 2,181,321 | 23,050 | 4.21 | % | ||||||||||||||
Cash and due from banks | 43,758 | 36,332 | ||||||||||||||||||||
Other assets | 166,333 | 153,939 | ||||||||||||||||||||
Less: allowance for loan losses | (23,395 | ) | (23,298 | ) | ||||||||||||||||||
Total assets | $ | 2,585,725 | $ | 2,348,294 | ||||||||||||||||||
Liabilities & Shareholders' Equity | ||||||||||||||||||||||
Retail deposits: | ||||||||||||||||||||||
Non-interest bearing demand deposits | $ | 230,152 | $ | — | — | % | $ | 264,545 | $ | — | — | % | ||||||||||
Interest checking accounts | 469,820 | 90 | 0.08 | % | 289,544 | 81 | 0.11 | % | ||||||||||||||
Savings accounts | 236,277 | 33 | 0.06 | % | 187,551 | 86 | 0.18 | % | ||||||||||||||
Money market accounts | 445,585 | 337 | 0.30 | % | 351,181 | 515 | 0.59 | % | ||||||||||||||
Certificates of deposit | 399,864 | 1,013 | 1.02 | % | 377,458 | 1,257 | 1.34 | % | ||||||||||||||
Total retail deposits | 1,781,698 | 1,473 | 0.33 | % | 1,470,279 | 1,939 | 0.53 | % | ||||||||||||||
Borrowings: | ||||||||||||||||||||||
Brokered deposits | 123,151 | 355 | 1.16 | % | 130,665 | 451 | 1.39 | % | ||||||||||||||
Junior subordinated debentures | 43,858 | 636 | 5.82 | % | 43,756 | 632 | 5.80 | % | ||||||||||||||
Other borrowings | 368,183 | 767 | 0.84 | % | 446,173 | 1,409 | 1.27 | % | ||||||||||||||
Total borrowings | 535,192 | 1,758 | 1.32 | % | 620,594 | 2,492 | 1.62 | % | ||||||||||||||
Total funding liabilities | 2,316,890 | 3,231 | 0.56 | % | 2,090,873 | 4,431 | 0.85 | % | ||||||||||||||
Other liabilities | 31,669 | 32,833 | ||||||||||||||||||||
Shareholders' equity | 237,166 | 224,588 | ||||||||||||||||||||
Total liabilities & shareholders' equity | $ | 2,585,725 | $ | 2,348,294 | ||||||||||||||||||
Net interest income (fully-taxable equivalent) | 19,455 | 18,619 | ||||||||||||||||||||
Less: fully-taxable equivalent adjustment | (205 | ) | (253 | ) | ||||||||||||||||||
Net interest income | $ | 19,250 | $ | 18,366 | ||||||||||||||||||
Net interest rate spread (fully-taxable equivalent) | 3.21 | % | 3.36 | % | ||||||||||||||||||
Net interest margin (fully-taxable equivalent) | 3.23 | % | 3.40 | % | ||||||||||||||||||
(1) Reported on tax-equivalent basis calculated using a tax rate of 35%. | ||||||||||||||||||||||
(2) Non-accrual loans and loans held for sale are included in total average loans. | ||||||||||||||||||||||
Year-to Date Average Balance, Interest and Yield/Rate Analysis (unaudited) | ||||||||||||||||||||||
At or for the Six Months Ended | At or for the Six Months Ended | |||||||||||||||||||||
June 30, 2013 | June 30, 2012 | |||||||||||||||||||||
(In thousands) | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Securities - taxable | $ | 772,469 | $ | 8,445 | 2.19 | % | $ | 588,892 | $ | 8,329 | 2.83 | % | ||||||||||
Securities - nontaxable (1) | 31,238 | 919 | 5.88 | % | 38,863 | 1,109 | 5.71 | % | ||||||||||||||
Trading account assets | 2,241 | 12 | 1.05 | % | 2,189 | 10 | 0.88 | % | ||||||||||||||
Loans: (1) (2) | ||||||||||||||||||||||
Residential real estate | 574,031 | 13,171 | 4.59 | % | 576,442 | 14,010 | 4.86 | % | ||||||||||||||
Commercial real estate | 507,478 | 12,301 | 4.82 | % | 483,639 | 12,123 | 4.96 | % | ||||||||||||||
Commercial | 177,718 | 3,935 | 4.40 | % | 168,903 | 4,028 | 4.72 | % | ||||||||||||||
Municipal | 12,267 | 267 | 4.39 | % | 13,540 | 347 | 5.16 | % | ||||||||||||||
Consumer | 308,700 | 6,272 | 4.10 | % | 284,076 | 6,316 | 4.47 | % | ||||||||||||||
Total loans | 1,580,194 | 35,946 | 4.55 | % | 1,526,600 | 36,824 | 4.81 | % | ||||||||||||||
Total interest-earning assets | 2,386,142 | 45,322 | 3.80 | % | 2,156,544 | 46,272 | 4.28 | % | ||||||||||||||
Cash and due from banks | 44,249 | 36,095 | ||||||||||||||||||||
Other assets | 166,517 | 154,375 | ||||||||||||||||||||
Less: allowance for loan losses | (23,331 | ) | (23,189 | ) | ||||||||||||||||||
Total assets | $ | 2,573,577 | $ | 2,323,825 | ||||||||||||||||||
Liabilities & Shareholders' Equity | ||||||||||||||||||||||
Retail deposits: | ||||||||||||||||||||||
Non-interest bearing demand deposits | $ | 227,721 | $ | — | — | % | $ | 259,360 | $ | — | — | % | ||||||||||
Interest checking accounts | 472,634 | 157 | 0.07 | % | 278,144 | 155 | 0.11 | % | ||||||||||||||
Savings accounts | 233,219 | 65 | 0.06 | % | 184,900 | 181 | 0.20 | % | ||||||||||||||
Money market accounts | 450,929 | 710 | 0.32 | % | 353,088 | 1,056 | 0.60 | % | ||||||||||||||
Certificates of deposit | 407,407 | 2,000 | 0.99 | % | 384,630 | 2,598 | 1.36 | % | ||||||||||||||
Total retail deposits | 1,791,910 | 2,932 | 0.33 | % | 1,460,122 | 3,990 | 0.55 | % | ||||||||||||||
Borrowings: | ||||||||||||||||||||||
Brokered deposits | 124,607 | 715 | 1.16 | % | 130,248 | 938 | 1.45 | % | ||||||||||||||
Junior subordinated debentures | 43,845 | 1,257 | 5.78 | % | 43,743 | 1,270 | 5.84 | % | ||||||||||||||
Other borrowings | 343,328 | 1,585 | 0.93 | % | 433,562 | 2,827 | 1.31 | % | ||||||||||||||
Total borrowings | 511,780 | 3,557 | 1.40 | % | 607,553 | 5,035 | 1.67 | % | ||||||||||||||
Total funding liabilities | 2,303,690 | 6,489 | 0.57 | % | 2,067,675 | 9,025 | 0.88 | % | ||||||||||||||
Other liabilities | 34,208 | 33,638 | ||||||||||||||||||||
Shareholders' equity | 235,679 | 222,512 | ||||||||||||||||||||
Total liabilities & shareholders' equity | $ | 2,573,577 | $ | 2,323,825 | ||||||||||||||||||
Net interest income (fully-taxable equivalent) | 38,833 | 37,247 | ||||||||||||||||||||
Less: fully-taxable equivalent adjustment | (415 | ) | (510 | ) | ||||||||||||||||||
Net interest income | $ | 38,418 | $ | 36,737 | ||||||||||||||||||
Net interest rate spread (fully-taxable equivalent) | 3.23 | % | 3.40 | % | ||||||||||||||||||
Net interest margin (fully-taxable equivalent) | 3.25 | % | 3.44 | % | ||||||||||||||||||
(1) Reported on tax-equivalent basis calculated using a tax rate of 35%. | ||||||||||||||||||||||
(2) Non-accrual loans and loans held for sale are included in total average loans. | ||||||||||||||||||||||
Asset Quality Data (unaudited) | ||||||||||||||||||||
At or for Six Months Ended | At or for Three Months Ended | At or for Twelve Months Ended | At or for Nine Months Ended | At or for Six Months Ended | ||||||||||||||||
(In thousands) | June 30, 2013 | March 31, 2013 | December 31, 2012 | September 30, 2012 | June 30, 2012 | |||||||||||||||
Non-accrual loans: | ||||||||||||||||||||
Residential real estate | $ | 8,624 | $ | 10,311 | $ | 10,584 | $ | 9,459 | $ | 10,349 | ||||||||||
Commercial real estate | 6,634 | 5,782 | 6,719 | 7,121 | 7,362 | |||||||||||||||
Commercial | 3,233 | 3,134 | 3,409 | 3,765 | 4,687 | |||||||||||||||
Consumer | 1,945 | 2,341 | 1,771 | 1,929 | 1,912 | |||||||||||||||
Total non-accrual loans | 20,436 | 21,568 | 22,483 | 22,274 | 24,310 | |||||||||||||||
Loans 90 days past due and accruing | — | 49 | 611 | 246 | 562 | |||||||||||||||
Renegotiated loans not included above | 5,701 | 5,491 | 4,674 | 3,162 | 3,177 | |||||||||||||||
Total non-performing loans | 26,137 | 27,108 | 27,768 | 25,682 | 28,049 | |||||||||||||||
Other real estate owned: | ||||||||||||||||||||
Residential real estate | 1,038 | 1,101 | 669 | 421 | 1,045 | |||||||||||||||
Commercial real estate | 1,117 | 812 | 644 | 175 | 652 | |||||||||||||||
Total other real estate owned | 2,155 | 1,913 | 1,313 | 596 | 1,697 | |||||||||||||||
Total non-performing assets | $ | 28,292 | $ | 29,021 | $ | 29,081 | $ | 26,278 | $ | 29,746 | ||||||||||
Loans 30-89 days past due: | ||||||||||||||||||||
Residential real estate | $ | 1,827 | $ | 1,165 | $ | 1,658 | $ | 1,256 | $ | 780 | ||||||||||
Commercial real estate | 1,591 | 3,375 | 2,618 | 1,938 | 2,122 | |||||||||||||||
Commercial | 202 | 731 | 1,043 | 1,135 | 762 | |||||||||||||||
Consumer | 716 | 962 | 2,721 | 452 | 310 | |||||||||||||||
Total loans 30-89 days past due | $ | 4,336 | $ | 6,233 | $ | 8,040 | $ | 4,781 | $ | 3,974 | ||||||||||
Allowance for loan losses at the beginning of the period | $ | 23,044 | $ | 23,044 | $ | 23,011 | $ | 23,011 | $ | 23,011 | ||||||||||
Provision for loan losses | 1,384 | 684 | 3,791 | 2,676 | 1,817 | |||||||||||||||
Charge-offs: | ||||||||||||||||||||
Residential real estate | 347 | 145 | 1,197 | 1,024 | 446 | |||||||||||||||
Commercial real estate | 171 | 80 | 593 | 209 | 209 | |||||||||||||||
Commercial | 444 | 277 | 1,393 | 1,146 | 416 | |||||||||||||||
Consumer | 470 | 85 | 1,319 | 987 | 879 | |||||||||||||||
Total charge-offs | 1,432 | 587 | 4,502 | 3,366 | 1,950 | |||||||||||||||
Total recoveries | 325 | 228 | 744 | 530 | 384 | |||||||||||||||
Net charge-offs | 1,107 | 359 | 3,758 | 2,836 | 1,566 | |||||||||||||||
Allowance for loan losses at the end of the period | $ | 23,321 | $ | 23,369 | $ | 23,044 | $ | 22,851 | $ | 23,262 | ||||||||||
Components of allowance for credit losses: | ||||||||||||||||||||
Allowance for loan losses | $ | 23,321 | $ | 23,369 | $ | 23,044 | $ | 22,851 | $ | 23,262 | ||||||||||
Liability for unfunded credit commitments | 30 | 35 | 45 | 51 | 43 | |||||||||||||||
Balance of allowance for credit losses | $ | 23,351 | $ | 23,404 | $ | 23,089 | $ | 22,902 | $ | 23,305 | ||||||||||
Ratios: | ||||||||||||||||||||
Non-performing loans to total loans | 1.63 | % | 1.72 | % | 1.78 | % | 1.67 | % | 1.83 | % | ||||||||||
Non-performing assets to total assets | 1.09 | % | 1.12 | % | 1.13 | % | 1.06 | % | 1.24 | % | ||||||||||
Allowance for credit losses to total loans | 1.45 | % | 1.48 | % | 1.48 | % | 1.49 | % | 1.52 | % | ||||||||||
Net charge-offs to average loans (annualized) | ||||||||||||||||||||
Quarter-to-date | 0.20 | % | 0.09 | % | 0.24 | % | 0.33 | % | 0.15 | % | ||||||||||
Year-to-date | 0.14 | % | 0.09 | % | 0.24 | % | 0.25 | % | 0.21 | % | ||||||||||
Allowance for credit losses to non-performing loans | 89.34 | % | 86.34 | % | 83.15 | % | 89.18 | % | 83.09 | % | ||||||||||
Loans 30-89 days past due to total loans | 0.27 | % | 0.39 | % | 0.51 | % | 0.31 | % | 0.26 | % | ||||||||||
Reconciliation of non-Generally Accepted Accounting Principals ("GAAP") to GAAP Financial Measures
Camden National presents its efficiency ratio using non-GAAP information. The GAAP-based efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income. The non-GAAP efficiency ratio excludes branch acquisition costs from non-interest expenses, excludes net gains on sale of securities from non-interest income, and adds the tax-equivalent adjustment to net interest income. The following table provides a reconciliation between the GAAP and non-GAAP efficiency ratio:
Three Months Ended | Six Months Ended | |||||||||||||||||||
(In Thousands) | June 30, 2013 | March 31, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | |||||||||||||||
Non-interest expense, as presented | $ | 15,648 | $ | 16,500 | $ | 13,979 | $ | 32,148 | $ | 26,898 | ||||||||||
Less branch acquisition costs | 71 | 161 | — | 232 | — | |||||||||||||||
Less prepayment fees on borrowings | — | — | 728 | — | 728 | |||||||||||||||
Adjusted non-interest expense | $ | 15,719 | $ | 16,339 | $ | 13,979 | $ | 32,380 | $ | 26,898 | ||||||||||
Net interest income, as presented | $ | 19,250 | $ | 19,168 | $ | 18,366 | $ | 38,418 | $ | 36,737 | ||||||||||
Effect of tax-exempt income | 205 | 210 | 253 | 415 | 510 | |||||||||||||||
Non-interest income, as presented | 6,376 | 6,336 | 5,754 | 12,712 | 10,982 | |||||||||||||||
Less gains on sale of securities, net of other-than-temporary impairments | — | 138 | (751 | ) | (138 | ) | (872 | ) | ||||||||||||
Adjusted net interest income plus non-interest income | $ | 25,831 | $ | 25,576 | $ | 23,622 | $ | 51,407 | $ | 47,357 | ||||||||||
Non-GAAP efficiency ratio | 60.30 | % | 63.88 | % | 56.10 | % | 62.08 | % | 55.26 | % | ||||||||||
GAAP efficiency ratio | 61.06 | % | 64.70 | % | 57.96 | % | 62.88 | % | 56.37 | % | ||||||||||
The following table provides a reconciliation between tax-equivalent net interest income to GAAP net interest income using a 35.0% tax rate.
Three Months Ended | Six Months Ended | |||||||||||||||||||
(In Thousands) | June 30, 2013 | March 31, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | |||||||||||||||
Net interest income, as presented | $ | 19,250 | $ | 19,168 | $ | 18,366 | $ | 38,418 | $ | 36,737 | ||||||||||
Effect of tax-exempt income | 205 | 210 | 253 | 415 | 510 | |||||||||||||||
Net interest income, tax equivalent | $ | 19,455 | $ | 19,378 | $ | 18,619 | $ | 38,833 | $ | 37,247 | ||||||||||
The following table provides a reconciliation between tangible book value per share and book value per share, which has been prepared in accordance with GAAP:
At June 30, | At March 31, | December 31, | At June 30, | |||||||||||||
(In Thousands) | 2013 | 2013 | 2012 | 2012 | ||||||||||||
Shareholders' equity, as presented | $ | 229,620 | $ | 235,575 | $ | 233,815 | $ | 226,088 | ||||||||
Less goodwill and other intangibles | 52,725 | 53,011 | 53,299 | 44,629 | ||||||||||||
Tangible shareholders' equity | $ | 176,895 | $ | 182,564 | $ | 180,516 | $ | 181,459 | ||||||||
Shares outstanding at period end | 7,640,712 | 7,635,957 | 7,622,750 | 7,619,009 | ||||||||||||
Tangible book value per share | $ | 23.15 | $ | 23.91 | $ | 23.68 | $ | 23.82 | ||||||||
Book value per share | $ | 30.05 | $ | 30.85 | $ | 30.67 | $ | 29.67 | ||||||||
The following table provides a reconciliation between tangible equity to tangible assets and equity to assets, which has been prepared in accordance with GAAP:
At June 30, | At March 31, | At December 31, | At June 30, | |||||||||||||
(In Thousands) | 2013 | 2013 | 2012 | 2012 | ||||||||||||
Shareholders' equity, as presented | $ | 229,620 | $ | 235,575 | $ | 233,815 | $ | 226,088 | ||||||||
Less goodwill and other intangibles | 52,725 | 53,011 | 53,299 | 44,629 | ||||||||||||
Tangible shareholders' equity | $ | 176,895 | $ | 182,564 | $ | 180,516 | $ | 181,459 | ||||||||
Total assets | $ | 2,601,778 | $ | 2,590,817 | $ | 2,564,757 | $ | 2,403,857 | ||||||||
Less goodwill and other intangibles | 52,725 | 53,011 | 53,299 | 44,629 | ||||||||||||
Tangible assets | $ | 2,549,053 | $ | 2,537,806 | $ | 2,511,458 | $ | 2,359,228 | ||||||||
Tangible equity to tangible assets | 6.94 | % | 7.19 | % | 7.19 | % | 7.69 | % | ||||||||
Equity to assets | 8.83 | % | 9.09 | % | 9.12 | % | 9.41 | % | ||||||||
CONTACT: Susan M. Westfall, Senior Vice President, Clerk, Camden National Corporation, 207.230.2096, swestfall@camdennational.com