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| 8-K - 8-K - CAMDEN NATIONAL CORP | a8kearningrelease12814.htm |
Camden National Corporation Reports 2013 Earnings of $22.8 Million and $2.97 per Share
CAMDEN, Maine, January 28, 2014/PRNewswire/--Camden National Corporation (NASDAQ: CAC; “Camden National” or the “Company”), a $2.6 billion bank holding company headquartered in Camden, Maine, reported earnings for the year ended December 31, 2013 of $22.8 million, or $2.97 per share, compared to $23.4 million, or $3.05 per share, for 2012. The Company's return on average assets was 0.88% and return on average shareholders' equity was 9.74% for the year ended December 31, 2013.
"The fourth quarter marked another major milestone for Camden National," said Gregory A. Dufour, president and chief executive officer of Camden National Corporation. "October was the one year anniversary of Camden National's acquisition of 14 branches from Bank of America. The acquisition provided the Company with an instant increase in presence and customer-base within some of Maine's major markets with over 25,000 new customers and $287 million in low cost deposits. Also, in October of this year, Camden National divested its five Franklin County branches, resulting in the sale of $46.0 million in loans and $80.4 million in deposits, and a pre-tax gain on the sale of $2.7 million. Although these transactions impact short-term earnings, our strategic decision-making is focused on driving long-term shareholder value by repositioning our organization for the future."
The Company reported earnings of $4.4 million and $0.58 per share for the fourth quarter of 2013 compared to $6.4 million and $0.83 per share for the third quarter of 2013. The Company's return on average assets was 0.68% and return on average shareholders' equity was 7.46% for the fourth quarter of 2013.
Balance Sheet
The Company's total assets increased $39.1 million, or 2%, during the year to $2.6 billion at December 31, 2013. The growth in total assets was primarily driven by an increase in loan and investment balances. The Company's total loans grew $62.6 million, representing organic loan growth of 4% for the year, after adjusting for the impact of the Franklin County branch divestiture (the "branch divestiture") in the fourth quarter of 2013. This loan growth was centered in the commercial real estate portfolio and home equity portfolio which increased $42.2 million and $25.6 million, respectively. The Company's consumer loan portfolio saw a modest increase of $2.3 million during the year, while the commercial portfolio decreased by $4.8 million.
The Company's mortgage loan volume was impacted by the rise in interest rates during 2013 as Treasury rates crept up approximately 100 basis points through the course of the year, and, as a result, the refinance pipeline slowed considerably by year-end. The residential portfolio declined $2.7 million for the year after loan sales of $33.3 million.
At December 31, 2013, total deposits were $1.8 billion, reflecting the sale of $80.4 million of deposits as part of the branch divestiture. Core deposits (demand, interest checking, savings, and money market) represented 76% of the deposit mix compared to 73% a year ago. Our core deposits grew $19.3 million during 2013, while certificates of deposit balances declined $52.7 million, after adjusting for the impact of the branch divestiture.
2013 Year-To-Date Operating Results Compared to 2012
The Company reported earnings of $22.8 million and $2.97 per share for the year ended December 31, 2013. This represents an earnings decrease of $645,000 and $0.08 per share compared to 2012. The primary factors impacting current year results as compared to prior year are:
Net Interest Income:
Net interest income of $75.5 million increased $1.7 million, or 2%, in 2013. For the year, the Company achieved average growth on interest-earnings assets of 7%; however, our yield on interest-earning assets declined 41 basis points as loans and investment portfolios continued to reprice to current market levels. The Company has been able to partially offset the declining yield with a 26 basis points decrease in cost of funds during the year to 0.55%. Average deposits for the year grew $230.5 million, or 15%, largely due to the low cost deposits acquired in the fourth quarter of 2012. The Company's average cost of funds on deposits decreased 17 basis points during the year to 0.32%. The Company's net interest margin on a fully-taxable basis decreased 16 basis points during the year to 3.20%.
Provision for Credit Losses:
The Company's provision for credit losses for the year ended December 31, 2013 was $2.0 million, which is a decrease of $1.8 million, or 47%, compared to 2012. The decrease highlights the continued improvement in our asset quality metrics for the year ended December 31, 2013. At December 31, 2013, our ratio of loans 30 - 89 days past due to total loans decreased 13 basis points to 0.38%, and our annual net charge-offs to average loans decreased 2 basis points to 0.22%. While non-performing assets have increased as of December 31, 2013 compared to the prior year, it's primarily the result of one large relationship being placed on non-accrual status in the third quarter of 2013.
Non-Interest Income:
Non-interest income for the year was $27.8 million, representing an increase of $4.4 million, or 19%, compared to 2012. The increase is primarily attributable to income on deposit service-related fees generated from the new customer accounts associated with the 14 branches acquired during the fourth quarter of 2012. In the fourth quarter of 2013, the Company recognized a gain of $2.7 million on the branch divestiture. This gain was partially offset by $1.7 million of gains recorded on the sale of securities in 2012.
Non-Interest Expense:
Non-interest expense for the year increased $7.3 million, or 12%, to $66.3 million compared to the prior year. The increase is largely due to the full year impact of operating costs associated with the acquisition of 14 branches, including approximately 75 additional employees and over 25,000 new customer accounts, in the fourth quarter of 2012. In the fourth quarter of 2013, the Company performed its annual goodwill impairment assessment in accordance with the applicable accounting guidance and determined that the fair value of the trust and investment services business line was less than its carrying value and, accordingly, recorded a goodwill write-down of $2.8 million. The increase in costs for 2013 was partially offset by non-recurring costs in 2012, including the incremental acquisition and divestiture costs of $2.0 million and prepayment fees on borrowings of $2.0 million.
Fourth Quarter 2013 Operating Results Compared to Third Quarter 2013
The Company reported earnings of $4.4 million and $0.58 per share for the fourth quarter of 2013. This represents a decrease in earnings of $1.9 million, or $0.25 per share, compared to the third quarter of 2013. The primary factors impacting fourth quarter results are:
Net Interest Income:
Net interest income of $18.4 million decreased $357,000, or 2%, during the quarter. The decrease is primarily driven by the branch divestiture, which decreased net interest income by approximately $350,000 in the fourth quarter. In addition, net interest margin decreased 4 basis points to 3.09% in the fourth quarter of 2013.
Release of Reserves for Credit Losses:
The Company's release of reserves for credit losses for the fourth quarter of 2013 was $6,000, which is a decrease of $671,000, or 101%, from the provision for credit losses in the third quarter of 2013. The decrease highlights the Company's continued positive trends within asset quality:
• | Non-performing loans to total loans decreased 12 basis points; |
• | Non-performing assets to total assets decreased 6 basis points; and |
• | Quarterly net charge-offs to average loans (annualized) decreased 6 basis points. |
Non-Interest Income:
Non-interest income for the quarter was $8.6 million, representing an increase of $2.1 million, or 33%, compared to prior quarter. The increase is primarily representative of a pre-tax gain of $2.7 million recorded on the branch divestiture, partially offset by a reduction in gains recorded on the sale of investments that occurred during the third quarter of 2013 totaling $647,000.
Non-Interest Expense:
Non-interest expense for the quarter increased $3.8 million, or 25%, to $19.0 million compared to prior quarter. The increase was primarily driven by the $2.8 million goodwill write-down in the fourth quarter and an increase of $318,000 in other real estate owned and collection costs as a number of properties went to auction during the fourth quarter.
Dividends and Capital
In 2013, the Company declared dividend payments of $1.08 per share. This is an increase of $0.08 per share, or 8%, compared to 2012 and represents an annual dividend yield of 2.58%, based on the December 31, 2013 closing price of Camden National's common stock at $41.84 per share as reported by NASDAQ.
In September 2013, the board of directors approved a common stock repurchase program (the "Repurchase Program") of up to 250,000 shares of the Company's outstanding common stock. During the fourth quarter, the Company repurchased 68,145 shares under the Repurchase Program at a weighted-average price of $40.78 per share. The Company has 181,855 shares remaining under the Repurchase Program at December 31, 2013.
Camden National's total risk-based capital ratio, Tier 1 risk-based capital ratio, and Tier 1 leverage capital ratio were 16.45%, 15.20%, and 9.43%, respectively, at December 31, 2013. Camden National Corporation and its wholly-owned subsidiary, Camden National Bank, continue to exceed the minimum total and Tier 1 risk-based capital ratios of 10% and 6%, respectively, and the Tier 1 leverage capital ratio of 5% required by the Federal Reserve for an institution to be considered “well capitalized.”
Annual Meeting
Camden National Corporation has scheduled its annual meeting of shareholders for Tuesday, April 29, 2014, at 3:00 p.m. local time, at Point Lookout Resort and Conference Center, 67 Atlantic Highway, Lincolnville, Maine 04849. The date for determining the Company's shareholders of record for the annual meeting is March 3, 2014.
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 44 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 generally accepted accounting principles in the United States ("GAAP"), management supplements this evaluation with certain non-GAAP financial measures, such as the efficiency and tangible 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. A reconciliation to the comparable GAAP financial measure can be found in this document.
Annualized Data
Certain returns, yields, and performance ratios, are presented on an “annualized” basis. This is done for analytical and decision-making purposes to better discern underlying performance trends when compared to full year or year-over-year amounts.
Selected Financial Data (unaudited) | ||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
December 31, 2013 | December 31, 2012 | September 30, 2013 | December 31, 2013 | December 31, 2012 | ||||||||||||||||
Selected Financial and Per Share Data: | ||||||||||||||||||||
Return on average assets | 0.68 | % | 0.66 | % | 0.98 | % | 0.88 | % | 0.98 | % | ||||||||||
Return on average shareholders' equity | 7.46 | % | 7.07 | % | 11.03 | % | 9.74 | % | 10.31 | % | ||||||||||
Return on average tangible shareholders' equity (non-GAAP) (1) | 16.12 | % | 9.33 | % | 14.74 | % | 14.55 | % | 13.19 | % | ||||||||||
Tangible equity to tangible assets (non-GAAP) (1) | 7.12 | % | 7.19 | % | 7.07 | % | 7.12 | % | 7.19 | % | ||||||||||
Efficiency ratio (non-GAAP) (1) | 65.79 | % | 65.29 | % | 61.25 | % | 62.78 | % | 57.45 | % | ||||||||||
Yield on average interest-earnings assets | 3.61 | % | 3.88 | % | 3.65 | % | 3.73 | % | 4.14 | % | ||||||||||
Average cost of funds | 0.53 | % | 0.71 | % | 0.54 | % | 0.55 | % | 0.81 | % | ||||||||||
Net interest margin | 3.09 | % | 3.20 | % | 3.13 | % | 3.20 | % | 3.36 | % | ||||||||||
Tier 1 leverage capital ratio | 9.43 | % | 8.94 | % | 9.24 | % | 9.43 | % | 8.94 | % | ||||||||||
Tier 1 risk-based capital ratio | 15.20 | % | 14.31 | % | 14.96 | % | 15.20 | % | 14.31 | % | ||||||||||
Total risk-based capital ratio | 16.45 | % | 15.56 | % | 16.21 | % | 16.45 | % | 15.56 | % | ||||||||||
Basic earnings per share | $ | 0.58 | $ | 0.55 | $ | 0.83 | $ | 2.98 | $ | 3.06 | ||||||||||
Diluted earnings per share | $ | 0.58 | $ | 0.55 | $ | 0.83 | $ | 2.97 | $ | 3.05 | ||||||||||
Cash dividends declared per share | $ | 0.27 | $ | 0.25 | $ | 0.27 | $ | 1.08 | $ | 1.00 | ||||||||||
Book value per share | $ | 30.49 | $ | 30.67 | $ | 30.38 | $ | 30.49 | $ | 30.67 | ||||||||||
Tangible book value per share (non-GAAP) (1) | $ | 23.98 | $ | 23.68 | $ | 23.52 | $ | 23.98 | $ | 23.68 | ||||||||||
Weighted average number of common shares outstanding | 7,628,871 | 7,620,753 | 7,643,720 | 7,634,455 | 7,646,861 | |||||||||||||||
Diluted weighted average number of common shares outstanding | 7,664,795 | 7,638,609 | 7,666,305 | 7,653,270 | 7,661,273 | |||||||||||||||
(1) Please see "Reconciliation of non-GAAP to GAAP Financial Measures".
Statement of Condition Data | ||||||||
(In Thousands, Except Number of Shares) | December 31, 2013 (unaudited) | December 31, 2012 | ||||||
ASSETS | ||||||||
Cash and due from banks | $ | 51,355 | $ | 58,290 | ||||
Securities | ||||||||
Securities available-for-sale, at fair value | 808,477 | 781,050 | ||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost | 19,724 | 21,034 | ||||||
Total securities | 828,201 | 802,084 | ||||||
Trading account assets | 2,488 | 2,300 | ||||||
Loans | 1,580,402 | 1,563,866 | ||||||
Less allowance for loan losses | (21,590 | ) | (23,044 | ) | ||||
Net loans | 1,558,812 | 1,540,822 | ||||||
Goodwill and other intangible assets | 49,319 | 53,299 | ||||||
Bank-owned life insurance | 46,363 | 45,053 | ||||||
Premises and equipment, net | 25,727 | 28,059 | ||||||
Deferred tax asset | 16,047 | 7,663 | ||||||
Interest receivable | 5,808 | 6,215 | ||||||
Other real estate owned | 2,195 | 1,313 | ||||||
Other assets | 17,514 | 19,659 | ||||||
Total assets | $ | 2,603,829 | $ | 2,564,757 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Deposits | ||||||||
Demand | $ | 243,269 | $ | 240,749 | ||||
Interest checking, savings and money market | 1,128,185 | 1,169,148 | ||||||
Retail certificates of deposit | 343,034 | 418,442 | ||||||
Brokered deposits | 99,336 | 101,130 | ||||||
Total deposits | 1,813,824 | 1,929,469 | ||||||
Federal Home Loan Bank advances | 286,112 | 56,404 | ||||||
Other borrowed funds | 200,058 | 259,940 | ||||||
Junior subordinated debentures | 43,922 | 43,819 | ||||||
Accrued interest and other liabilities | 28,817 | 41,310 | ||||||
Total liabilities | 2,372,733 | 2,330,942 | ||||||
Shareholders’ Equity | ||||||||
Common stock, no par value; authorized 20,000,000 shares, issued and outstanding 7,579,913 and 7,622,750 shares on December 31, 2013 and 2012, respectively | 47,783 | 49,667 | ||||||
Retained earnings | 195,660 | 181,151 | ||||||
Accumulated other comprehensive income (loss) | ||||||||
Net unrealized (losses) gains on securities available-for-sale, net of tax | (7,964 | ) | 12,943 | |||||
Net unrealized losses on derivative instruments, at fair value, net of tax | (2,542 | ) | (7,205 | ) | ||||
Net unrecognized losses on postretirement plans, net of tax | (1,841 | ) | (2,741 | ) | ||||
Total accumulated other comprehensive income (loss) | (12,347 | ) | 2,997 | |||||
Total shareholders’ equity | 231,096 | 233,815 | ||||||
Total liabilities and shareholders’ equity | $ | 2,603,829 | $ | 2,564,757 | ||||
Statement of Income Data (unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
(In Thousands, Except Number of Shares and Per Share Data) | December 31, 2013 | December 31, 2012 | September 30, 2013 | |||||||||
Interest Income | ||||||||||||
Interest and fees on loans | $ | 16,938 | $ | 18,072 | $ | 17,470 | ||||||
Interest on U.S. government and sponsored enterprise obligations | 4,146 | 4,065 | 4,091 | |||||||||
Interest on state and political subdivision obligations | 281 | 321 | 292 | |||||||||
Interest on federal funds sold and other investments | 54 | 91 | 38 | |||||||||
Total interest income | 21,419 | 22,549 | 21,891 | |||||||||
Interest Expense | ||||||||||||
Interest on deposits | 1,646 | 2,147 | 1,780 | |||||||||
Interest on borrowings | 785 | 1,199 | 767 | |||||||||
Interest on junior subordinated debentures | 638 | 642 | 637 | |||||||||
Total interest expense | 3,069 | 3,988 | 3,184 | |||||||||
Net interest income | 18,350 | 18,561 | 18,707 | |||||||||
Provision for (release of) credit losses | (6 | ) | 1,108 | 665 | ||||||||
Net interest income after provision for credit losses | 18,356 | 17,453 | 18,042 | |||||||||
Non-Interest Income | ||||||||||||
Service charges on deposit accounts | 1,551 | 1,700 | 1,750 | |||||||||
Other service charges and fees | 1,461 | 1,257 | 1,568 | |||||||||
Income from fiduciary services | 1,184 | 1,155 | 1,149 | |||||||||
Brokerage and insurance commissions | 522 | 382 | 354 | |||||||||
Mortgage banking income, net | 155 | 112 | 93 | |||||||||
Bank-owned life insurance | 324 | 348 | 334 | |||||||||
Gain on branch divestiture | 2,742 | — | — | |||||||||
Net gain on sale of securities and other-than-temporary impairment of securities | — | 1,439 | 647 | |||||||||
Other income | 675 | 999 | 580 | |||||||||
Total non-interest income | 8,614 | 7,392 | 6,475 | |||||||||
Non-Interest Expenses | ||||||||||||
Salaries and employee benefits | 8,172 | 8,539 | 8,115 | |||||||||
Furniture, equipment and data processing | 1,848 | 1,524 | 1,668 | |||||||||
Net occupancy | 1,248 | 1,304 | 1,242 | |||||||||
Other real estate owned and collection costs | 807 | 590 | 489 | |||||||||
Consulting and professional fees | 701 | 467 | 504 | |||||||||
Regulatory assessments | 503 | 476 | 496 | |||||||||
Amortization of intangible assets | 287 | 224 | 289 | |||||||||
Goodwill impairment | 2,830 | — | — | |||||||||
Branch acquisition and divestiture costs | 95 | 1,620 | 47 | |||||||||
Prepayment fees on borrowings | — | 1,302 | — | |||||||||
Other expenses | 2,495 | 2,717 | 2,349 | |||||||||
Total non-interest expenses | 18,986 | 18,763 | 15,199 | |||||||||
Income before income taxes | 7,984 | 6,082 | 9,318 | |||||||||
Income Taxes | 3,560 | 1,904 | 2,952 | |||||||||
Net Income | $ | 4,424 | $ | 4,178 | $ | 6,366 | ||||||
Per Share Data | ||||||||||||
Basic earnings per share | $ | 0.58 | $ | 0.55 | $ | 0.83 | ||||||
Diluted earnings per share | $ | 0.58 | $ | 0.55 | $ | 0.83 | ||||||
Statement of Income Data - continued | ||||||||
Twelve Months Ended December 31, | ||||||||
(In Thousands, Except Number of Shares and Per Share Data) | 2013 (unaudited) | 2012 | ||||||
Interest Income | ||||||||
Interest and fees on loans | $ | 70,262 | $ | 72,859 | ||||
Interest on U.S. government and sponsored enterprise obligations | 16,587 | 16,452 | ||||||
Interest on state and political subdivision obligations | 1,170 | 1,385 | ||||||
Interest on federal funds sold and other investments | 198 | 251 | ||||||
Total interest income | 88,217 | 90,947 | ||||||
Interest Expense | ||||||||
Interest on deposits | 7,073 | 9,293 | ||||||
Interest on borrowings | 3,137 | 5,363 | ||||||
Interest on junior subordinated debentures | 2,532 | 2,546 | ||||||
Total interest expense | 12,742 | 17,202 | ||||||
Net interest income | 75,475 | 73,745 | ||||||
Provision for credit losses | 2,028 | 3,816 | ||||||
Net interest income after provision for credit losses | 73,447 | 69,929 | ||||||
Non-Interest Income | ||||||||
Service charges on deposit accounts | 6,740 | 5,557 | ||||||
Other service charges and fees | 5,971 | 4,061 | ||||||
Income from fiduciary services | 4,751 | 5,038 | ||||||
Brokerage and insurance commissions | 1,697 | 1,491 | ||||||
Mortgage banking income, net | 1,406 | 588 | ||||||
Bank-owned life insurance | 1,310 | 1,382 | ||||||
Gain on branch divestiture | 2,742 | — | ||||||
Net gain on sale of securities and other-than-temporary impairment of securities | 785 | 2,498 | ||||||
Other income | 2,399 | 2,797 | ||||||
Total non-interest income | 27,801 | 23,412 | ||||||
Non-Interest Expenses | ||||||||
Salaries and employee benefits | 32,609 | 29,689 | ||||||
Furniture, equipment and data processing | 7,051 | 5,079 | ||||||
Net occupancy | 5,449 | 4,365 | ||||||
Other real estate owned and collection costs | 2,162 | 2,284 | ||||||
Consulting and professional fees | 2,337 | 1,818 | ||||||
Regulatory assessments | 1,997 | 1,793 | ||||||
Amortization of intangible assets | 1,150 | 657 | ||||||
Goodwill impairment | 2,830 | — | ||||||
Branch acquisition and divestiture costs | 374 | 2,324 | ||||||
Prepayment fees on borrowings | — | 2,030 | ||||||
Other expenses | 10,374 | 8,992 | ||||||
Total non-interest expenses | 66,333 | 59,031 | ||||||
Income before income taxes | 34,915 | 34,310 | ||||||
Income Taxes | 12,132 | 10,882 | ||||||
Net Income | $ | 22,783 | $ | 23,428 | ||||
Per Share Data | ||||||||
Basic earnings per share | $ | 2.98 | $ | 3.06 | ||||
Diluted earnings per share | $ | 2.97 | $ | 3.05 | ||||
Quarterly Average Balance, Interest and Yield/Rate Analysis (unaudited) | ||||||||||||||||||||||
At or for the Three Months Ended | At or for the Three Months Ended | |||||||||||||||||||||
December 31, 2013 | December 31, 2012 | |||||||||||||||||||||
(In Thousands) | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Securities - taxable | $ | 777,821 | $ | 4,181 | 2.15 | % | $ | 716,862 | $ | 4,118 | 2.30 | % | ||||||||||
Securities - nontaxable (1) | 29,748 | 432 | 5.81 | % | 34,354 | 493 | 5.75 | % | ||||||||||||||
Trading account assets | 2,406 | 20 | 3.27 | % | 2,271 | 25 | 4.38 | % | ||||||||||||||
Federal funds sold | — | — | 22,283 | 14 | 0.25 | % | ||||||||||||||||
Loans: (2) | ||||||||||||||||||||||
Residential real estate | 569,095 | 5,994 | 4.21 | % | 570,525 | 6,516 | 4.57 | % | ||||||||||||||
Commercial real estate | 523,855 | 6,206 | 4.64 | % | 502,421 | 6,309 | 4.91 | % | ||||||||||||||
Commercial | 169,067 | 1,786 | 4.13 | % | 173,101 | 1,976 | 4.47 | % | ||||||||||||||
Municipal (1) | 9,828 | 108 | 4.37 | % | 14,314 | 160 | 4.45 | % | ||||||||||||||
Consumer | 293,041 | 2,881 | 3.90 | % | 292,089 | 3,167 | 4.31 | % | ||||||||||||||
Total loans | 1,564,886 | 16,975 | 4.29 | % | 1,552,450 | 18,128 | 4.62 | % | ||||||||||||||
Total interest-earning assets | 2,374,861 | 21,608 | 3.61 | % | 2,328,220 | 22,778 | 3.88 | % | ||||||||||||||
Cash and due from banks | 42,725 | 55,394 | ||||||||||||||||||||
Other assets | 168,361 | 158,404 | ||||||||||||||||||||
Less: allowance for loan losses | (22,181 | ) | (22,763 | ) | ||||||||||||||||||
Total assets | $ | 2,563,766 | $ | 2,519,255 | ||||||||||||||||||
Liabilities & Shareholders' Equity | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Non-interest bearing demand deposits | $ | 266,342 | — | — | $ | 232,966 | — | — | ||||||||||||||
Interest checking accounts | 459,427 | 81 | 0.07 | % | 445,847 | 85 | 0.08 | % | ||||||||||||||
Savings accounts | 238,290 | 34 | 0.06 | % | 216,657 | 42 | 0.08 | % | ||||||||||||||
Money market accounts | 431,205 | 310 | 0.28 | % | 454,754 | 452 | 0.40 | % | ||||||||||||||
Certificates of deposit | 351,035 | 873 | 0.99 | % | 404,874 | 1,212 | 1.19 | % | ||||||||||||||
Total deposits | 1,746,299 | 1,298 | 0.29 | % | 1,755,098 | 1,791 | 0.41 | % | ||||||||||||||
Borrowings: | ||||||||||||||||||||||
Brokered deposits | 119,055 | 348 | 1.16 | % | 99,518 | 356 | 1.42 | % | ||||||||||||||
Junior subordinated debentures | 43,909 | 638 | 5.76 | % | 43,807 | 642 | 5.83 | % | ||||||||||||||
Other borrowings | 389,319 | 785 | 0.80 | % | 341,933 | 1,199 | 1.40 | % | ||||||||||||||
Total borrowings | 552,283 | 1,771 | 1.27 | % | 485,258 | 2,197 | 1.80 | % | ||||||||||||||
Total funding liabilities | 2,298,582 | 3,069 | 0.53 | % | 2,240,356 | 3,988 | 0.71 | % | ||||||||||||||
Other liabilities | 29,842 | 43,879 | ||||||||||||||||||||
Shareholders' equity | 235,342 | 235,020 | ||||||||||||||||||||
Total liabilities & shareholders' equity | $ | 2,563,766 | $ | 2,519,255 | ||||||||||||||||||
Net interest income (fully-taxable equivalent) | 18,539 | 18,790 | ||||||||||||||||||||
Less: fully-taxable equivalent adjustment | (189 | ) | (229 | ) | ||||||||||||||||||
Net interest income | $ | 18,350 | $ | 18,561 | ||||||||||||||||||
Net interest rate spread (fully-taxable equivalent) | 3.08 | % | 3.17 | % | ||||||||||||||||||
Net interest margin (fully-taxable equivalent) | 3.09 | % | 3.20 | % | ||||||||||||||||||
(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 Twelve Months Ended | At or for the Twelve Months Ended | |||||||||||||||||||||
December 31, 2013 | December 31, 2012 | |||||||||||||||||||||
(In Thousands) | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Securities - taxable | $ | 772,095 | $ | 16,751 | 2.17 | % | $ | 640,779 | $ | 16,646 | 2.60 | % | ||||||||||
Securities - nontaxable (1) | 30,672 | 1,799 | 5.87 | % | 37,163 | 2,130 | 5.73 | % | ||||||||||||||
Trading account assets | 2,295 | 34 | 1.48 | % | 2,214 | 43 | 1.94 | % | ||||||||||||||
Federal funds sold | — | — | — | 5,601 | 14 | 0.25 | % | |||||||||||||||
Loans: (2) | ||||||||||||||||||||||
Residential real estate | 571,291 | 25,209 | 4.41 | % | 573,227 | 27,210 | 4.75 | % | ||||||||||||||
Commercial real estate | 515,501 | 24,764 | 4.80 | % | 491,732 | 24,572 | 5.00 | % | ||||||||||||||
Commercial | 173,933 | 7,591 | 4.36 | % | 169,043 | 7,961 | 4.71 | % | ||||||||||||||
Municipal (1) | 11,799 | 508 | 4.31 | % | 14,473 | 694 | 4.80 | % | ||||||||||||||
Consumer | 308,335 | 12,369 | 4.01 | % | 287,173 | 12,665 | 4.41 | % | ||||||||||||||
Total loans | 1,580,859 | 70,441 | 4.46 | % | 1,535,648 | 73,102 | 4.76 | % | ||||||||||||||
Total interest-earning assets | 2,385,921 | 89,025 | 3.73 | % | 2,221,405 | 91,935 | 4.14 | % | ||||||||||||||
Cash and due from banks | 43,879 | 42,165 | ||||||||||||||||||||
Other assets | 167,557 | 154,970 | ||||||||||||||||||||
Less: allowance for loan losses | (22,968 | ) | (23,050 | ) | ||||||||||||||||||
Total assets | $ | 2,574,389 | $ | 2,395,490 | ||||||||||||||||||
Liabilities & Shareholders' Equity | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Non-interest bearing demand deposits | $ | 246,637 | — | — | $ | 240,369 | — | — | ||||||||||||||
Interest checking accounts | 471,331 | 324 | 0.07 | % | 351,232 | 336 | 0.10 | % | ||||||||||||||
Savings accounts | 237,110 | 133 | 0.06 | % | 195,800 | 285 | 0.15 | % | ||||||||||||||
Money market accounts | 442,908 | 1,346 | 0.30 | % | 382,274 | 2,019 | 0.53 | % | ||||||||||||||
Certificates of deposit | 387,816 | 3,856 | 0.99 | % | 385,666 | 4,998 | 1.30 | % | ||||||||||||||
Total deposits | 1,785,802 | 5,659 | 0.32 | % | 1,555,341 | 7,638 | 0.49 | % | ||||||||||||||
Borrowings: | ||||||||||||||||||||||
Brokered deposits | 118,423 | 1,414 | 1.19 | % | 117,815 | 1,655 | 1.40 | % | ||||||||||||||
Junior subordinated debentures | 43,871 | 2,532 | 5.77 | % | 43,769 | 2,546 | 5.82 | % | ||||||||||||||
Other borrowings | 360,948 | 3,137 | 0.87 | % | 414,566 | 5,363 | 1.29 | % | ||||||||||||||
Total borrowings | 523,242 | 7,083 | 1.35 | % | 576,150 | 9,564 | 1.66 | % | ||||||||||||||
Total funding liabilities | 2,309,044 | 12,742 | 0.55 | % | 2,131,491 | 17,202 | 0.81 | % | ||||||||||||||
Other liabilities | 31,457 | 36,870 | ||||||||||||||||||||
Shareholders' equity | 233,888 | 227,129 | ||||||||||||||||||||
Total liabilities & shareholders' equity | $ | 2,574,389 | $ | 2,395,490 | ||||||||||||||||||
Net interest income (fully-taxable equivalent) | 76,283 | 74,733 | ||||||||||||||||||||
Less: fully-taxable equivalent adjustment | (808 | ) | (988 | ) | ||||||||||||||||||
Net interest income | $ | 75,475 | $ | 73,745 | ||||||||||||||||||
Net interest rate spread (fully-taxable equivalent) | 3.18 | % | 3.33 | % | ||||||||||||||||||
Net interest margin (fully-taxable equivalent) | 3.20 | % | 3.36 | % | ||||||||||||||||||
(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 Twelve Months Ended | At or for Nine Months Ended | At or for Six Months Ended | At or for Three Months Ended | At or for Twelve Months Ended | ||||||||||||||||
(In Thousands) | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | |||||||||||||||
Non-accrual loans: | ||||||||||||||||||||
Residential real estate | $ | 10,520 | $ | 10,224 | $ | 8,624 | $ | 10,311 | $ | 10,584 | ||||||||||
Commercial real estate | 7,799 | 9,847 | 6,634 | 5,782 | 6,719 | |||||||||||||||
Commercial | 2,146 | 2,994 | 3,233 | 3,134 | 3,409 | |||||||||||||||
Consumer | 2,012 | 2,018 | 1,945 | 2,341 | 1,771 | |||||||||||||||
Total non-accrual loans | 22,477 | 25,083 | 20,436 | 21,568 | 22,483 | |||||||||||||||
Loans 90 days past due and accruing | 455 | 24 | — | 49 | 611 | |||||||||||||||
Renegotiated loans not included above | 5,468 | 5,379 | 5,701 | 5,491 | 4,674 | |||||||||||||||
Total non-performing loans | 28,400 | 30,486 | 26,137 | 27,108 | 27,768 | |||||||||||||||
Other real estate owned: | ||||||||||||||||||||
Residential real estate | 1,044 | 1,126 | 1,038 | 1,101 | 669 | |||||||||||||||
Commercial real estate | 1,151 | 676 | 1,117 | 812 | 644 | |||||||||||||||
Total other real estate owned | 2,195 | 1,802 | 2,155 | 1,913 | 1,313 | |||||||||||||||
Total non-performing assets | $ | 30,595 | $ | 32,288 | $ | 28,292 | $ | 29,021 | $ | 29,081 | ||||||||||
Loans 30-89 days past due: | ||||||||||||||||||||
Residential real estate | $ | 1,551 | $ | 1,419 | $ | 1,827 | $ | 1,165 | $ | 1,658 | ||||||||||
Commercial real estate | 2,595 | 833 | 1,591 | 3,375 | 2,618 | |||||||||||||||
Commercial | 313 | 529 | 202 | 731 | 1,043 | |||||||||||||||
Consumer | 1,571 | 1,207 | 716 | 962 | 2,721 | |||||||||||||||
Total loans 30-89 days past due | $ | 6,030 | $ | 3,988 | $ | 4,336 | $ | 6,233 | $ | 8,040 | ||||||||||
Allowance for loan losses at the beginning of the period | $ | 23,044 | $ | 23,044 | $ | 23,044 | $ | 23,044 | $ | 23,011 | ||||||||||
Provision for loan losses | 2,052 | 2,051 | 1,384 | 684 | 3,791 | |||||||||||||||
Charge-offs: | ||||||||||||||||||||
Residential real estate | 1,059 | 687 | 347 | 145 | 1,197 | |||||||||||||||
Commercial real estate | 952 | 762 | 171 | 80 | 593 | |||||||||||||||
Commercial | 1,426 | 823 | 444 | 277 | 1,393 | |||||||||||||||
Consumer | 837 | 598 | 470 | 85 | 1,319 | |||||||||||||||
Total charge-offs | 4,274 | 2,870 | 1,432 | 587 | 4,502 | |||||||||||||||
Total recoveries | 768 | 436 | 325 | 228 | 744 | |||||||||||||||
Net charge-offs | 3,506 | 2,434 | 1,107 | 359 | 3,758 | |||||||||||||||
Allowance for loan losses at the end of the period | $ | 21,590 | $ | 22,661 | $ | 23,321 | $ | 23,369 | $ | 23,044 | ||||||||||
Components of allowance for credit losses: | ||||||||||||||||||||
Allowance for loan losses | $ | 21,590 | $ | 22,661 | $ | 23,321 | $ | 23,369 | $ | 23,044 | ||||||||||
Liability for unfunded credit commitments | 21 | 28 | 30 | 35 | 45 | |||||||||||||||
Balance of allowance for credit losses | $ | 21,611 | $ | 22,689 | $ | 23,351 | $ | 23,404 | $ | 23,089 | ||||||||||
Ratios: | ||||||||||||||||||||
Non-performing loans to total loans | 1.80 | % | 1.92 | % | 1.63 | % | 1.72 | % | 1.78 | % | ||||||||||
Non-performing assets to total assets | 1.18 | % | 1.24 | % | 1.09 | % | 1.12 | % | 1.13 | % | ||||||||||
Allowance for credit losses to total loans | 1.37 | % | 1.43 | % | 1.45 | % | 1.48 | % | 1.48 | % | ||||||||||
Net charge-offs to average loans (annualized) | ||||||||||||||||||||
Quarter-to-date | 0.27 | % | 0.33 | % | 0.20 | % | 0.09 | % | 0.24 | % | ||||||||||
Year-to-date | 0.22 | % | 0.20 | % | 0.14 | % | 0.09 | % | 0.24 | % | ||||||||||
Allowance for credit losses to non-performing loans | 76.09 | % | 74.42 | % | 89.34 | % | 86.34 | % | 83.15 | % | ||||||||||
Loans 30-89 days past due to total loans | 0.38 | % | 0.25 | % | 0.27 | % | 0.39 | % | 0.51 | % | ||||||||||
Reconciliation of non-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 and divestiture costs, prepayment fees on borrowings, and goodwill impairment from non-interest expense, excludes net gains on sale of securities and other-than-temporary impairment, and the gain on branch divestiture 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 | Twelve Months Ended | |||||||||||||||||||
(In Thousands) | December 31, 2013 | December 31, 2012 | September 30, 2013 | December 31, 2013 | December 31, 2012 | |||||||||||||||
Non-interest expense, as presented | $ | 18,986 | $ | 18,763 | $ | 15,199 | $ | 66,333 | $ | 59,031 | ||||||||||
Less: branch acquisition and divestiture costs | 95 | 1,620 | 47 | 374 | 2,324 | |||||||||||||||
Less: prepayment fees on borrowings | — | 1,302 | — | — | 2,030 | |||||||||||||||
Less: goodwill impairment | 2,830 | — | — | 2,830 | — | |||||||||||||||
Adjusted non-interest expense | $ | 16,061 | $ | 15,841 | $ | 15,152 | $ | 63,129 | $ | 54,677 | ||||||||||
Net interest income, as presented | $ | 18,350 | $ | 18,561 | $ | 18,707 | $ | 75,475 | $ | 73,745 | ||||||||||
Effect of tax-exempt income | 189 | 229 | 203 | 808 | 988 | |||||||||||||||
Non-interest income, as presented | 8,614 | 7,392 | 6,475 | 27,801 | 23,412 | |||||||||||||||
Less: gains on sale of securities, net of other-than-temporary impairments | — | 1,439 | 647 | 785 | 2,498 | |||||||||||||||
Less: gain on branch divestiture | 2,742 | — | — | 2,742 | — | |||||||||||||||
Less: gain on sale of branch facility | — | 479 | — | — | 479 | |||||||||||||||
Adjusted net interest income plus non-interest income | $ | 24,411 | $ | 24,264 | $ | 24,738 | $ | 100,557 | $ | 95,168 | ||||||||||
Non-GAAP efficiency ratio | 65.79 | % | 65.29 | % | 61.25 | % | 62.78 | % | 57.45 | % | ||||||||||
GAAP efficiency ratio | 70.41 | % | 72.30 | % | 60.36 | % | 64.23 | % | 60.76 | % | ||||||||||
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 | Twelve Months Ended | |||||||||||||||||||
(In Thousands) | December 31, 2013 | December 31, 2013 | September 30, 2013 | December 31, 2013 | December 31, 2012 | |||||||||||||||
Net interest income, as presented | $ | 18,350 | $ | 18,561 | $ | 18,707 | $ | 75,475 | $ | 73,745 | ||||||||||
Effect of tax-exempt income | 189 | 229 | 203 | 808 | 988 | |||||||||||||||
Net interest income, tax equivalent | $ | 18,539 | $ | 18,790 | $ | 18,910 | $ | 76,283 | $ | 74,733 | ||||||||||
The following table provides a reconciliation between return on average tangible shareholders' equity to GAAP return on average shareholders' equity using a 35.0% tax rate.
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
(In Thousands) | December 31, 2013 | December 31, 2012 | September 30, 2013 | December 31, 2013 | December 31, 2012 | |||||||||||||||
Net income, as presented | $ | 4,424 | $ | 4,178 | $ | 6,366 | $ | 22,873 | $ | 23,428 | ||||||||||
Tax affected amortization of intangible assets | 186 | 146 | 188 | 747 | 427 | |||||||||||||||
Goodwill impairment | 2,830 | — | — | 2,830 | — | |||||||||||||||
Net income, adjusted | $ | 7,440 | $ | 4,324 | $ | 6,554 | $ | 26,450 | $ | 23,855 | ||||||||||
Average shareholders’ equity, as presented | 235,342 | 235,020 | 228,909 | 233,888 | 227,129 | |||||||||||||||
Less: average goodwill and other intangibles | 52,253 | 50,687 | 52,572 | 52,708 | 46,253 | |||||||||||||||
Average tangible shareholders’ equity | $ | 183,089 | $ | 184,333 | $ | 176,337 | $ | 181,180 | $ | 180,876 | ||||||||||
Return on average tangible shareholders' equity | 16.12 | % | 9.33 | % | 14.74 | % | 14.55 | % | 13.19 | % | ||||||||||
Return on average shareholders' equity | 7.46 | % | 7.07 | % | 11.03 | % | 9.74 | % | 10.31 | % | ||||||||||
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 December 31, | At December 31, | At September 30, | ||||||||||
(In Thousands, Except Number of Shares and Per Share Data) | 2013 | 2012 | 2013 | |||||||||
Shareholders' equity, as presented | $ | 231,096 | $ | 233,815 | $ | 232,282 | ||||||
Less: goodwill and other intangible assets | 49,319 | 53,299 | 52,436 | |||||||||
Tangible shareholders' equity | $ | 181,777 | $ | 180,516 | $ | 179,846 | ||||||
Shares outstanding at period end | 7,579,913 | 7,622,750 | 7,646,664 | |||||||||
Tangible book value per share | $ | 23.98 | $ | 23.68 | $ | 23.52 | ||||||
Book value per share | $ | 30.49 | $ | 30.67 | $ | 30.38 | ||||||
The following table provides a reconciliation between tangible shareholders' equity to tangible assets and shareholders' equity to assets, which has been prepared in accordance with GAAP:
At December 31, | At December 31, | At September 30, | ||||||||||
(In Thousands) | 2013 | 2012 | 2013 | |||||||||
Shareholders' equity, as presented | $ | 231,096 | $ | 233,815 | $ | 232,282 | ||||||
Less: goodwill and other intangibles | 49,319 | 53,299 | 52,436 | |||||||||
Tangible shareholders' equity | $ | 181,777 | $ | 180,516 | $ | 179,846 | ||||||
Total assets | $ | 2,603,829 | $ | 2,564,757 | $ | 2,597,255 | ||||||
Less: goodwill and other intangibles | 49,319 | 53,299 | 52,436 | |||||||||
Tangible assets | $ | 2,554,510 | $ | 2,511,458 | $ | 2,544,819 | ||||||
Tangible shareholders' equity to tangible assets | 7.12 | % | 7.19 | % | 7.07 | % | ||||||
Shareholders' equity to assets | 8.88 | % | 9.12 | % | 8.94 | % | ||||||
CONTACT: Michael R. Archer, Vice President, Corporate Controller, Camden National Corporation, 207.230.2058, marcher@camdennational.com