Attached files
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| 8-K - 8-K - CAMDEN NATIONAL CORP | a8k_072914earnings.htm |
| EX-99.2 - EXHIBIT_99.2 - CAMDEN NATIONAL CORP | camdenpresletterpressq21.htm |
Camden National Corporation Reports An Increase In Second Quarter 2014
Earnings Per Share Of 13% Over First Quarter 2014
CAMDEN, Maine, July 29, 2014/PRNewswire/--Camden National Corporation (NASDAQ: CAC; “Camden National” or the “Company”), a $2.7 billion bank holding company headquartered in Camden, Maine, reported net income for the second quarter of 2014 of $6.3 million and diluted earnings per share ("EPS") of $0.85, representing a 10% increase in earnings and a $0.10 increase in EPS compared to the first quarter of 2014. Camden National's return on equity and return on assets for the second quarter of 2014 was 10.92% and 0.95%, respectively, compared to 9.97% and 0.89% last quarter.
“We have implemented several significant strategies over the past several quarters and are pleased to see the positive impact of those investments,” said Gregory A. Dufour, president and chief executive officer. “Our annualized loan growth of 15% for the first half of 2014 and a 13% increase in earnings per share over the first quarter of 2014 reflects our efforts to increase market share and enhance our products to better serve our customers, while balancing the needs of our shareholders through our repurchase and dividend programs.”
Second Quarter 2014 Highlights
• | Earnings Growth — Second quarter 2014 EPS grew 13% or $0.10 per share over prior quarter. |
• | Loan Growth — Year-to-date annualized loan growth of 15%. |
• | Net Interest Margin — Net interest margin increased 3 basis points over prior quarter. |
• | Asset Quality — Year-to-date asset quality metrics trend favorably. |
Balance Sheet
Total assets at June 30, 2014 were $2.7 billion, representing an $87.9 million, or 3%, increase since year-end. The growth in total assets was fueled by loan growth of $116.4 million, representing a 15% annualized growth rate. Loan growth continues to be centered within our commercial real estate and commercial portfolios, evidenced by total growth in those portfolios of $117.7 million since year-end, while our retail portfolio decreased by $1.3 million. The Company saw signs of positive momentum within our home equity and consumer portfolio in the second quarter of 2014 primarily due to recent promotions offered; however, the effects of higher mortgage rates continue to hamper refinance activity.
Total liabilities at June 30, 2014 were $2.5 billion, representing an $81.3 million, or 3%, increase since year-end. The increase is reflective of additional borrowings and brokered deposits totaling $119.8 million necessary to fund strong loan growth. Core deposits (demand, interest checking, savings, and money market) decreased $28.9 million since year-end due to the seasonal outflows of deposits within our market.
Second Quarter 2014 Operating Results Compared to First Quarter 2014
Second quarter 2014 net income was $6.3 million, representing a $600,000, or 10%, increase compared to the first quarter of 2014. EPS for the second quarter 2014 increased $0.10 per share to $0.85 compared to the first quarter of 2014. Strong earnings and EPS growth for the second quarter of 2014 compared to prior quarter is primarily reflective of:
• | An increase in average loan balances of $84.1 million, or 5%, accompanied by an increase in net interest margin on a fully-taxable basis of 3 basis points to 3.11%. Net interest margin increased as our interest-earning assets mix shifted slightly to a higher concentration of loans providing a more favorable yield, while our cost of funds decreased 2 basis points to 0.50%. |
• | An increase in non-interest income of $819,000, or 14%, driven by: (i) an increase in deposit and other service-related fees of $299,000; (ii) $196,000 of derivative income; (iii) an increase in fiduciary income of $165,000; and (iv) additional gains of $119,000 realized upon sale of investment securities. |
• | An increase in non-interest expense of $667,000, or 4%, primarily due to (i) an increase in incentive-related costs of $321,000 due to strong year-to-date financial results exceeding performance metrics and (ii) $106,000 of cost recognized upon issuance of common stock to the Company's directors. |
• | A decrease of 101,146 dilutive weighted-average shares outstanding as the Company continued to actively repurchase shares of its common stock under the 2013 Repurchase Program. |
Six months ended June 30, 2014 Operating Results Compared to Six Months Ended June 30, 2013
Net income and EPS for the six months ended June 30, 2014 was $12.0 million and $1.60 per share, respectively, reflecting an increase in net income of $38,000 and EPS of $0.04 per share over the six months ended June 30, 2013. Excluded from Camden National's six months ended June 30, 2014 operating results are the five Franklin County branches it divested of in 2013. For the six months ended June 30, 2013, the five Franklin County branches contributed $342,000 to net income, or $0.04 per share. Other significant factors impacting Camden National's year-to-date operating results year-over-year include:
• | A decrease in non-interest expense of $1.2 million. This decrease is largely due to expenses incurred in the first half of 2013 that did not recur in the first half of 2014 – primarily costs associated with (i) the five Franklin County branches totaling $686,000; (ii) a receivable write-down of $348,000; (iii) branch acquisition costs of $232,000; and (iv) $198,000 of costs associated with the conversion of Acadia Trust, N.A.'s core operating system – partially offset by (a) an increase in foreclosure-related expenses of $162,000; and (b) $106,000 of cost recognized upon issuance of common stock to the Company's directors. |
• | A decrease in net interest income of $760,000. This decrease is attributable to two factors: (i) the divestiture of five Franklin County branches, which contributed $813,000 to net interest income in the first half of 2013; and (ii) net interest margin compression of 16 basis points. Average interest-earning assets for the first half of 2014 increased $70.8 million, or 3%, over the same period in 2013. The increase was largely a combination of average loan and investments growth of $53.5 million and $17.1 million, respectively, even after the sale of $46.0 million of loans as part of the Franklin County branch divestiture. Net interest margin on a fully-taxable basis for the six months ended June 30, 2014 was 3.09%. |
• | A decrease in non-interest income of $523,000. The decrease is largely due to a $1.0 million reduction in mortgage banking income due to a reduction in loan sales compared to the same period in 2013 and the divestiture of five Franklin County branches, which contributed $376,000 to non-interest income in the first half of 2013. Partially offsetting the decrease were additional gains of $313,000 realized upon sale of investment securities; an increase in fiduciary and brokerage revenues totaling $231,000; and $196,000 of derivative income. |
Asset Quality
Our asset quality metrics as of and for the six months ended June 30, 2014 continue to trend favorably, which has led to a decrease in provision for credit losses for the six months ended June 30, 2014 of $233,000 compared to the same period last year. The following asset quality ratios highlight our current metrics compared to prior periods:
• | Loans 30-89 days past due to total loans at June 30, 2014 were 0.23%, representing a decrease of 6 basis points and 4 basis points compared to March 31, 2014 and June 30, 2013, respectively. |
• | Year-to-date net-charge offs (annualized) to average loans as of June 30, 2014 were 0.10%, compared to 0.10% and 0.14% for year-to-date March 31, 2014 and June 30, 2013, respectively. |
• | Non-performing loans to total loans at June 30, 2014 were 1.54%, representing a decrease of 14 basis points and 9 basis points compared March 31, 2014 and June 30, 2013, respectively. |
• | Non-performing assets to total assets at June 30, 2014 were 1.05%, representing a decrease of 8 basis points and 4 basis points compared March 31, 2014 and June 30, 2013, respectively. |
Dividends and Capital
The board of directors approved a dividend of $0.27 per share, payable on July 31, 2014, to shareholders of record as of July 17, 2014. This distribution represents an annualized dividend yield of 2.79%, based on the June 30, 2014 closing price of Camden National's common stock at $38.76 per share as reported by NASDAQ.
The Company's total risk-based capital ratio, Tier I risk-based capital ratio, and Tier I leverage capital ratio was 15.32%, 14.07%, and 9.09%, respectively, at June 30, 2014. Camden National Corporation and its wholly-owned subsidiary, Camden National Bank, continue to exceed the minimum total and Tier I risk-based capital ratios of 10% and 6%, respectively, and the minimum Tier I leverage capital ratio of 5% required by the Federal Reserve for an institution to be considered “well capitalized”.
About Camden National Corporation
Camden National Corporation is the holding company employing more than 480 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 and a commercial loan office in Manchester, New Hampshire. Acadia Trust offers investment management and fiduciary services with offices in Portland, Bangor 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.
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, an increase in the allowance for loan losses, or a reduced demand for the Company's credit or fee-based products and services; 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 and the increased financial services provided by non-banks; 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 could lead to impairment in the value of securities in the Company's investment portfolio; changes in information technology that require increased capital spending; changes in consumer spending and savings habits; changes in tax, banking, securities and insurance laws and regulations including laws and regulations; and changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as 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. 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) | ||||||||||||||||||||
At or For The Three Months Ended | At or For The Six Months Ended | |||||||||||||||||||
June 30, 2014 | March 31, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | ||||||||||||||||
Selected Financial and Per Share Data: | ||||||||||||||||||||
Return on average assets | 0.95 | % | 0.89 | % | 0.98 | % | 0.92 | % | 0.94 | % | ||||||||||
Return on average equity | 10.92 | % | 9.97 | % | 10.71 | % | 10.45 | % | 10.26 | % | ||||||||||
Return on average tangible equity (non-GAAP)(1) | 14.25 | % | 13.05 | % | 14.18 | % | 13.65 | % | 13.65 | % | ||||||||||
Tangible equity to tangible assets (non-GAAP)(1) | 7.15 | % | 7.04 | % | 6.94 | % | 7.15 | % | 6.94 | % | ||||||||||
Efficiency ratio (non-GAAP)(1) | 61.49 | % | 62.69 | % | 60.30 | % | 62.07 | % | 62.08 | % | ||||||||||
Yield on average interest-earnings assets | 3.60 | % | 3.57 | % | 3.77 | % | 3.59 | % | 3.80 | % | ||||||||||
Average cost of funds | 0.50 | % | 0.52 | % | 0.56 | % | 0.51 | % | 0.57 | % | ||||||||||
Net interest margin | 3.11 | % | 3.08 | % | 3.23 | % | 3.09 | % | 3.25 | % | ||||||||||
Tier I leverage capital ratio | 9.09 | % | 9.27 | % | 9.05 | % | 9.09 | % | 9.05 | % | ||||||||||
Tier I risk-based capital ratio | 14.07 | % | 14.64 | % | 14.57 | % | 14.07 | % | 14.57 | % | ||||||||||
Total risk-based capital ratio | 15.32 | % | 15.89 | % | 15.82 | % | 15.32 | % | 15.82 | % | ||||||||||
Basic earnings per share | $ | 0.85 | $ | 0.76 | $ | 0.83 | $ | 1.60 | $ | 1.57 | ||||||||||
Diluted earnings per share | $ | 0.85 | $ | 0.75 | $ | 0.82 | $ | 1.60 | $ | 1.56 | ||||||||||
Cash dividends declared per share | $ | 0.27 | $ | 0.27 | $ | 0.27 | $ | 0.54 | $ | 0.54 | ||||||||||
Book value per share | $ | 32.03 | $ | 30.93 | $ | 30.05 | $ | 32.03 | $ | 30.05 | ||||||||||
Tangible book value per share (non-GAAP)(1) | $ | 25.46 | $ | 24.38 | $ | 23.15 | $ | 25.46 | $ | 23.15 | ||||||||||
Weighted average number of common shares outstanding | 7,430,709 | 7,528,751 | 7,637,433 | 7,479,461 | 7,632,586 | |||||||||||||||
Diluted weighted average number of common shares outstanding | 7,450,639 | 7,551,785 | 7,652,199 | 7,500,318 | 7,646,742 | |||||||||||||||
(1) Please see "Reconciliation of non-GAAP to GAAP Financial Measures".
Consolidated Statements of Condition Data | ||||||||
(In Thousands, Except Number of Shares) | June 30, 2014 (unaudited) | December 31, 2013 | ||||||
ASSETS | ||||||||
Cash and due from banks | $ | 51,465 | $ | 51,355 | ||||
Securities: | ||||||||
Available-for-sale securities, at fair value | 772,467 | 808,477 | ||||||
Held-to-maturity securities, at amortized cost | 9,798 | — | ||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost | 20,379 | 19,724 | ||||||
Total securities | 802,644 | 828,201 | ||||||
Trading account assets | 2,406 | 2,488 | ||||||
Loans | 1,696,765 | 1,580,402 | ||||||
Less: allowance for loan losses | (21,905 | ) | (21,590 | ) | ||||
Net loans | 1,674,860 | 1,558,812 | ||||||
Goodwill and other intangible assets | 48,745 | 49,319 | ||||||
Bank-owned life insurance | 46,961 | 46,363 | ||||||
Premises and equipment, net | 24,696 | 25,727 | ||||||
Deferred tax assets | 13,261 | 16,047 | ||||||
Interest receivable | 5,953 | 5,808 | ||||||
Other real estate owned | 2,217 | 2,195 | ||||||
Other assets | 18,498 | 17,514 | ||||||
Total assets | $ | 2,691,706 | $ | 2,603,829 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Deposits: | ||||||||
Demand | $ | 242,422 | $ | 241,866 | ||||
Interest checking | 440,443 | 453,909 | ||||||
Savings and money market | 659,718 | 675,679 | ||||||
Certificates of deposit | 330,575 | 343,034 | ||||||
Brokered deposits | 184,304 | 99,336 | ||||||
Total deposits | 1,857,462 | 1,813,824 | ||||||
Federal Home Loan Bank advances | 56,076 | 56,112 | ||||||
Other borrowed funds | 464,851 | 430,058 | ||||||
Junior subordinated debentures | 43,973 | 43,922 | ||||||
Accrued interest and other liabilities | 31,624 | 28,817 | ||||||
Total liabilities | 2,453,986 | 2,372,733 | ||||||
Shareholders’ Equity | ||||||||
Common stock, no par value; authorized 20,000,000 shares, issued and outstanding 7,421,445 and 7,579,913 shares on June 30, 2014 and December 31, 2013, respectively | 41,211 | 47,783 | ||||||
Retained earnings | 203,683 | 195,660 | ||||||
Accumulated other comprehensive loss: | ||||||||
Net unrealized losses on available-for-sale securities, net of tax | (943 | ) | (7,964 | ) | ||||
Net unrealized losses on derivative instruments, net of tax | (4,437 | ) | (2,542 | ) | ||||
Net unrecognized losses on postretirement plans, net of tax | (1,794 | ) | (1,841 | ) | ||||
Total accumulated other comprehensive loss | (7,174 | ) | (12,347 | ) | ||||
Total shareholders’ equity | 237,720 | 231,096 | ||||||
Total liabilities and shareholders’ equity | $ | 2,691,706 | $ | 2,603,829 | ||||
Consolidated Statements of Income Data (unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
(In Thousands, Except Number of Shares and Per Share Data) | June 30, 2014 | March 31, 2014 | June 30, 2013 | |||||||||
Interest Income | ||||||||||||
Interest and fees on loans | $ | 17,757 | $ | 16,780 | $ | 18,059 | ||||||
Interest on U.S. government and sponsored enterprise obligations | 4,124 | 4,230 | 4,074 | |||||||||
Interest on state and political subdivision obligations | 314 | 294 | 292 | |||||||||
Interest on federal funds sold and other investments | 94 | 89 | 56 | |||||||||
Total interest income | 22,289 | 21,393 | 22,481 | |||||||||
Interest Expense | ||||||||||||
Interest on deposits | 1,565 | 1,551 | 1,828 | |||||||||
Interest on borrowings | 845 | 807 | 767 | |||||||||
Interest on junior subordinated debentures | 631 | 625 | 636 | |||||||||
Total interest expense | 3,041 | 2,983 | 3,231 | |||||||||
Net interest income | 19,248 | 18,410 | 19,250 | |||||||||
Provision for credit losses | 643 | 493 | 695 | |||||||||
Net interest income after provision for credit losses | 18,605 | 17,917 | 18,555 | |||||||||
Non-Interest Income | ||||||||||||
Service charges on deposit accounts | 1,620 | 1,469 | 1,755 | |||||||||
Other service charges and fees | 1,543 | 1,395 | 1,513 | |||||||||
Income from fiduciary services | 1,349 | 1,184 | 1,275 | |||||||||
Brokerage and insurance commissions | 459 | 478 | 409 | |||||||||
Bank-owned life insurance | 292 | 306 | 314 | |||||||||
Net gain on sale of securities | 285 | 166 | — | |||||||||
Mortgage banking income, net | 70 | 72 | 584 | |||||||||
Other income | 886 | 615 | 526 | |||||||||
Total non-interest income | 6,504 | 5,685 | 6,376 | |||||||||
Non-Interest Expense | ||||||||||||
Salaries and employee benefits | 8,301 | 7,980 | 7,961 | |||||||||
Furniture, equipment and data processing | 1,743 | 1,789 | 1,931 | |||||||||
Net occupancy costs | 1,270 | 1,380 | 1,407 | |||||||||
Consulting and professional fees | 782 | 518 | 585 | |||||||||
Other real estate owned and collection costs (recoveries) | 515 | 513 | (22 | ) | ||||||||
Regulatory assessments | 485 | 481 | 500 | |||||||||
Amortization of intangible assets | 287 | 287 | 287 | |||||||||
Branch acquisition costs | — | — | 71 | |||||||||
Other expenses | 2,409 | 2,177 | 2,928 | |||||||||
Total non-interest expense | 15,792 | 15,125 | 15,648 | |||||||||
Income before income taxes | 9,317 | 8,477 | 9,283 | |||||||||
Income Taxes | 3,001 | 2,762 | 2,952 | |||||||||
Net Income | $ | 6,316 | $ | 5,715 | $ | 6,331 | ||||||
Per Share Data | ||||||||||||
Basic earnings per share | $ | 0.85 | $ | 0.76 | $ | 0.83 | ||||||
Diluted earnings per share | $ | 0.85 | $ | 0.75 | $ | 0.82 | ||||||
Consolidated Statements of Income Data (unaudited) | ||||||||
Six Months Ended June 30, | ||||||||
(In Thousands, Except Number of Shares and Per Share Data) | 2014 | 2013 | ||||||
Interest Income | ||||||||
Interest and fees on loans | $ | 34,537 | $ | 35,854 | ||||
Interest on U.S. government and sponsored enterprise obligations | 8,354 | 8,350 | ||||||
Interest on state and political subdivision obligations | 608 | 597 | ||||||
Interest on federal funds sold and other investments | 183 | 106 | ||||||
Total interest income | 43,682 | 44,907 | ||||||
Interest Expense | ||||||||
Interest on deposits | 3,116 | 3,647 | ||||||
Interest on borrowings | 1,652 | 1,585 | ||||||
Interest on junior subordinated debentures | 1,256 | 1,257 | ||||||
Total interest expense | 6,024 | 6,489 | ||||||
Net interest income | 37,658 | 38,418 | ||||||
Provision for credit losses | 1,136 | 1,369 | ||||||
Net interest income after provision for credit losses | 36,522 | 37,049 | ||||||
Non-Interest Income | ||||||||
Service charges on deposit accounts | 3,089 | 3,439 | ||||||
Other service charges and fees | 2,938 | 2,942 | ||||||
Income from fiduciary services | 2,533 | 2,418 | ||||||
Brokerage and insurance commissions | 937 | 821 | ||||||
Bank-owned life insurance | 598 | 652 | ||||||
Net gain on sale of securities | 451 | 138 | ||||||
Mortgage banking income, net | 142 | 1,158 | ||||||
Other income | 1,501 | 1,144 | ||||||
Total non-interest income | 12,189 | 12,712 | ||||||
Non-Interest Expense | ||||||||
Salaries and employee benefits | 16,281 | 16,322 | ||||||
Furniture, equipment and data processing | 3,532 | 3,535 | ||||||
Net occupancy costs | 2,650 | 2,959 | ||||||
Consulting and professional fees | 1,300 | 1,132 | ||||||
Other real estate owned and collection costs | 1,028 | 866 | ||||||
Regulatory assessments | 966 | 999 | ||||||
Amortization of intangible assets | 574 | 574 | ||||||
Branch acquisition costs | — | 232 | ||||||
Other expenses | 4,586 | 5,529 | ||||||
Total non-interest expense | 30,917 | 32,148 | ||||||
Income before income taxes | 17,794 | 17,613 | ||||||
Income Taxes | 5,763 | 5,620 | ||||||
Net Income | $ | 12,031 | $ | 11,993 | ||||
Per Share Data | ||||||||
Basic earnings per share | $ | 1.60 | $ | 1.57 | ||||
Diluted earnings per share | $ | 1.60 | $ | 1.56 | ||||
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, 2014 | June 30, 2013 | |||||||||||||||||||||
(In Thousands) | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Securities - taxable | $ | 777,935 | $ | 4,212 | 2.17 | % | $ | 774,916 | $ | 4,130 | 2.13 | % | ||||||||||
Securities - nontaxable(1) | 37,386 | 484 | 5.17 | % | 30,800 | 449 | 5.83 | % | ||||||||||||||
Trading account assets | 2,309 | 5 | 0.95 | % | 2,245 | — | — | % | ||||||||||||||
Loans(2): | ||||||||||||||||||||||
Residential real estate | 566,070 | 6,017 | 4.25 | % | 572,920 | 6,596 | 4.61 | % | ||||||||||||||
Commercial real estate | 591,276 | 6,816 | 4.56 | % | 511,115 | 6,227 | 4.82 | % | ||||||||||||||
Commercial | 214,559 | 2,045 | 3.77 | % | 178,887 | 1,964 | 4.34 | % | ||||||||||||||
Municipal(1) | 14,724 | 127 | 3.45 | % | 12,949 | 136 | 4.21 | % | ||||||||||||||
Consumer | 288,897 | 2,797 | 3.88 | % | 315,197 | 3,184 | 4.05 | % | ||||||||||||||
Total loans | 1,675,526 | 17,802 | 4.23 | % | 1,591,068 | 18,107 | 4.53 | % | ||||||||||||||
Total interest-earning assets | 2,493,156 | 22,503 | 3.60 | % | 2,399,029 | 22,686 | 3.77 | % | ||||||||||||||
Cash and due from banks | 42,360 | 43,758 | ||||||||||||||||||||
Other assets | 165,574 | 166,333 | ||||||||||||||||||||
Less: allowance for loan losses | (21,892 | ) | (23,395 | ) | ||||||||||||||||||
Total assets | $ | 2,679,198 | $ | 2,585,725 | ||||||||||||||||||
Liabilities & Shareholders' Equity | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Demand | $ | 227,599 | $ | — | — | $ | 224,351 | $ | — | — | ||||||||||||
Interest checking | 465,565 | 80 | 0.07 | % | 475,621 | 90 | 0.08 | % | ||||||||||||||
Savings | 245,034 | 35 | 0.06 | % | 236,277 | 33 | 0.06 | % | ||||||||||||||
Money market | 423,687 | 315 | 0.30 | % | 445,585 | 337 | 0.30 | % | ||||||||||||||
Certificates of deposit | 332,686 | 774 | 0.93 | % | 399,864 | 1,013 | 1.02 | % | ||||||||||||||
Total deposits | 1,694,571 | 1,204 | 0.28 | % | 1,781,698 | 1,473 | 0.33 | % | ||||||||||||||
Borrowings: | ||||||||||||||||||||||
Brokered deposits | 144,792 | 361 | 1.00 | % | 123,151 | 355 | 1.16 | % | ||||||||||||||
Junior subordinated debentures | 43,960 | 631 | 5.76 | % | 43,858 | 636 | 5.82 | % | ||||||||||||||
Other borrowings | 535,834 | 845 | 0.63 | % | 368,183 | 767 | 0.84 | % | ||||||||||||||
Total borrowings | 724,586 | 1,837 | 1.02 | % | 535,192 | 1,758 | 1.32 | % | ||||||||||||||
Total funding liabilities | 2,419,157 | 3,041 | 0.50 | % | 2,316,890 | 3,231 | 0.56 | % | ||||||||||||||
Other liabilities | 28,092 | 31,669 | ||||||||||||||||||||
Shareholders' equity | 231,949 | 237,166 | ||||||||||||||||||||
Total liabilities & shareholders' equity | $ | 2,679,198 | $ | 2,585,725 | ||||||||||||||||||
Net interest income (fully-taxable equivalent) | 19,462 | 19,455 | ||||||||||||||||||||
Less: fully-taxable equivalent adjustment | (214 | ) | (205 | ) | ||||||||||||||||||
Net interest income | $ | 19,248 | $ | 19,250 | ||||||||||||||||||
Net interest rate spread (fully-taxable equivalent) | 3.10 | % | 3.21 | % | ||||||||||||||||||
Net interest margin (fully-taxable equivalent) | 3.11 | % | 3.23 | % | ||||||||||||||||||
(1) Reported on tax-equivalent basis calculated using a tax rate of 35.0%. | ||||||||||||||||||||||
(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, 2014 | June 30, 2013 | |||||||||||||||||||||
(In Thousands) | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Securities - taxable | $ | 785,772 | $ | 8,530 | 2.17 | % | $ | 772,469 | $ | 8,445 | 2.19 | % | ||||||||||
Securities - nontaxable(1) | 35,060 | 935 | 5.33 | % | 31,238 | 919 | 5.88 | % | ||||||||||||||
Trading account assets | 2,397 | 7 | 0.59 | % | 2,241 | 12 | 1.05 | % | ||||||||||||||
Loans(2): | ||||||||||||||||||||||
Residential real estate | 567,132 | 11,981 | 4.23 | % | 574,031 | 13,171 | 4.59 | % | ||||||||||||||
Commercial real estate | 572,478 | 13,098 | 4.55 | % | 507,478 | 12,301 | 4.82 | % | ||||||||||||||
Commercial | 192,475 | 3,736 | 3.86 | % | 177,718 | 3,935 | 4.40 | % | ||||||||||||||
Municipal(1) | 12,822 | 240 | 3.78 | % | 12,267 | 267 | 4.39 | % | ||||||||||||||
Consumer | 288,812 | 5,566 | 3.89 | % | 308,700 | 6,272 | 4.10 | % | ||||||||||||||
Total loans | 1,633,719 | 34,621 | 4.23 | % | 1,580,194 | 35,946 | 4.55 | % | ||||||||||||||
Total interest-earning assets | 2,456,948 | 44,093 | 3.59 | % | 2,386,142 | 45,322 | 3.80 | % | ||||||||||||||
Cash and due from banks | 41,933 | 44,249 | ||||||||||||||||||||
Other assets | 165,668 | 166,517 | ||||||||||||||||||||
Less: allowance for loan losses | (21,749 | ) | (23,331 | ) | ||||||||||||||||||
Total assets | $ | 2,642,800 | $ | 2,573,577 | ||||||||||||||||||
Liabilities & Shareholders' Equity | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Demand | $ | 227,513 | $ | — | — | $ | 223,081 | $ | — | — | ||||||||||||
Interest checking | 463,566 | 158 | 0.07 | % | 477,274 | 157 | 0.07 | % | ||||||||||||||
Savings | 244,749 | 68 | 0.06 | % | 233,219 | 65 | 0.06 | % | ||||||||||||||
Money market | 422,652 | 621 | 0.30 | % | 450,929 | 710 | 0.32 | % | ||||||||||||||
Certificates of deposit | 335,433 | 1,576 | 0.95 | % | 407,407 | 2,000 | 0.99 | % | ||||||||||||||
Total deposits | 1,693,913 | 2,423 | 0.29 | % | 1,791,910 | 2,932 | 0.33 | % | ||||||||||||||
Borrowings: | ||||||||||||||||||||||
Brokered deposits | 124,134 | 693 | 1.13 | % | 124,607 | 715 | 1.16 | % | ||||||||||||||
Junior subordinated debentures | 43,948 | 1,256 | 5.76 | % | 43,845 | 1,257 | 5.78 | % | ||||||||||||||
Other borrowings | 520,016 | 1,652 | 0.64 | % | 343,328 | 1,585 | 0.93 | % | ||||||||||||||
Total borrowings | 688,098 | 3,601 | 1.06 | % | 511,780 | 3,557 | 1.40 | % | ||||||||||||||
Total funding liabilities | 2,382,011 | 6,024 | 0.51 | % | 2,303,690 | 6,489 | 0.57 | % | ||||||||||||||
Other liabilities | 28,546 | 34,208 | ||||||||||||||||||||
Shareholders' equity | 232,243 | 235,679 | ||||||||||||||||||||
Total liabilities & shareholders' equity | $ | 2,642,800 | $ | 2,573,577 | ||||||||||||||||||
Net interest income (fully-taxable equivalent) | 38,069 | 38,833 | ||||||||||||||||||||
Less: fully-taxable equivalent adjustment | (411 | ) | (415 | ) | ||||||||||||||||||
Net interest income | $ | 37,658 | $ | 38,418 | ||||||||||||||||||
Net interest rate spread (fully-taxable equivalent) | 3.08 | % | 3.23 | % | ||||||||||||||||||
Net interest margin (fully-taxable equivalent) | 3.09 | % | 3.25 | % | ||||||||||||||||||
(1) Reported on tax-equivalent basis calculated using a tax rate of 35.0%. | ||||||||||||||||||||||
(2) Non-accrual loans and loans held for sale are included in total average loans. | ||||||||||||||||||||||
Asset Quality Data (unaudited) | ||||||||||||||||||||
(In Thousands) | At or For The Six Months Ended June 30, 2014 | At or For The Three Months Ended March 31, 2014 | At or For The Twelve Months Ended December 31, 2013 | At or For The Nine Months Ended September 30, 2013 | At or For The Six Months Ended June 30, 2013 | |||||||||||||||
Non-accrual loans: | ||||||||||||||||||||
Residential real estate | $ | 7,887 | $ | 9,125 | $ | 10,520 | $ | 10,224 | $ | 8,624 | ||||||||||
Commercial real estate | 6,282 | 8,278 | 7,799 | 9,847 | 6,634 | |||||||||||||||
Commercial | 3,840 | 1,935 | 2,146 | 2,994 | 3,233 | |||||||||||||||
Consumer | 2,575 | 2,457 | 2,012 | 2,018 | 1,945 | |||||||||||||||
Total non-accrual loans | 20,584 | 21,795 | 22,477 | 25,083 | 20,436 | |||||||||||||||
Loans 90 days past due and accruing | 109 | 50 | 455 | 24 | — | |||||||||||||||
Renegotiated loans not included above | 5,379 | 5,413 | 5,468 | 5,379 | 5,701 | |||||||||||||||
Total non-performing loans | 26,072 | 27,258 | 28,400 | 30,486 | 26,137 | |||||||||||||||
Other real estate owned: | ||||||||||||||||||||
Residential real estate | 912 | 1,035 | 1,044 | 1,126 | 1,038 | |||||||||||||||
Commercial real estate | 1,305 | 1,677 | 1,151 | 676 | 1,117 | |||||||||||||||
Total other real estate owned | 2,217 | 2,712 | 2,195 | 1,802 | 2,155 | |||||||||||||||
Total non-performing assets | $ | 28,289 | $ | 29,970 | $ | 30,595 | $ | 32,288 | $ | 28,292 | ||||||||||
Loans 30-89 days past due: | ||||||||||||||||||||
Residential real estate | $ | 1,800 | $ | 1,349 | $ | 1,551 | $ | 1,419 | $ | 1,827 | ||||||||||
Commercial real estate | 1,151 | 1,716 | 2,595 | 833 | 1,591 | |||||||||||||||
Commercial | 466 | 1,007 | 313 | 529 | 202 | |||||||||||||||
Consumer | 569 | 632 | 1,571 | 1,207 | 716 | |||||||||||||||
Total loans 30-89 days past due | $ | 3,986 | $ | 4,704 | $ | 6,030 | $ | 3,988 | $ | 4,336 | ||||||||||
Allowance for loan losses at the beginning of the period | $ | 21,590 | $ | 21,590 | $ | 23,044 | $ | 23,044 | $ | 23,044 | ||||||||||
Provision for loan losses | 1,141 | 492 | 2,052 | 2,051 | 1,384 | |||||||||||||||
Charge-offs: | ||||||||||||||||||||
Residential real estate | 361 | 183 | 1,059 | 687 | 347 | |||||||||||||||
Commercial real estate | 176 | 171 | 952 | 762 | 171 | |||||||||||||||
Commercial | 526 | 219 | 1,426 | 823 | 444 | |||||||||||||||
Consumer | 146 | 76 | 837 | 598 | 470 | |||||||||||||||
Total charge-offs | 1,209 | 649 | 4,274 | 2,870 | 1,432 | |||||||||||||||
Total recoveries | 383 | 237 | 768 | 436 | 325 | |||||||||||||||
Net charge-offs | 826 | 412 | 3,506 | 2,434 | 1,107 | |||||||||||||||
Allowance for loan losses at the end of the period | $ | 21,905 | $ | 21,670 | $ | 21,590 | $ | 22,661 | $ | 23,321 | ||||||||||
Components of allowance for credit losses: | ||||||||||||||||||||
Allowance for loan losses | $ | 21,905 | $ | 21,670 | $ | 21,590 | $ | 22,661 | $ | 23,321 | ||||||||||
Liability for unfunded credit commitments | 16 | 22 | 21 | 28 | 30 | |||||||||||||||
Balance of allowance for credit losses | $ | 21,921 | $ | 21,692 | $ | 21,611 | $ | 22,689 | $ | 23,351 | ||||||||||
Ratios: | ||||||||||||||||||||
Non-performing loans to total loans | 1.54 | % | 1.68 | % | 1.80 | % | 1.92 | % | 1.63 | % | ||||||||||
Non-performing assets to total assets | 1.05 | % | 1.13 | % | 1.18 | % | 1.24 | % | 1.09 | % | ||||||||||
Allowance for credit losses to total loans | 1.29 | % | 1.34 | % | 1.37 | % | 1.43 | % | 1.45 | % | ||||||||||
Net charge-offs to average loans (annualized): | ||||||||||||||||||||
Quarter-to-date | 0.10 | % | 0.10 | % | 0.27 | % | 0.33 | % | 0.20 | % | ||||||||||
Year-to-date | 0.10 | % | 0.10 | % | 0.22 | % | 0.20 | % | 0.14 | % | ||||||||||
Allowance for credit losses to non-performing loans | 84.08 | % | 79.58 | % | 76.09 | % | 74.42 | % | 89.34 | % | ||||||||||
Loans 30-89 days past due to total loans | 0.23 | % | 0.29 | % | 0.38 | % | 0.25 | % | 0.27 | % | ||||||||||
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 expense 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 expense, excludes net gain on sale of securities from non-interest income, and adds the tax-equivalent adjustment (assumed 35.0% tax rate) 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, 2014 | March 31, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||||||||
Non-interest expense, as presented | $ | 15,792 | $ | 15,125 | $ | 15,648 | $ | 30,917 | $ | 32,148 | ||||||||||
Less: branch acquisition costs | — | — | 71 | — | 232 | |||||||||||||||
Adjusted non-interest expense | $ | 15,792 | $ | 15,125 | $ | 15,577 | $ | 30,917 | $ | 31,916 | ||||||||||
Net interest income, as presented | $ | 19,248 | $ | 18,410 | $ | 19,250 | $ | 37,658 | $ | 38,418 | ||||||||||
Add: effect of tax-exempt income | 214 | 198 | 205 | 411 | 415 | |||||||||||||||
Non-interest income, as presented | 6,504 | 5,685 | 6,376 | 12,189 | 12,712 | |||||||||||||||
Less: net gain on sale of securities | 285 | 166 | — | 451 | 138 | |||||||||||||||
Adjusted net interest income plus non-interest income | $ | 25,681 | $ | 24,127 | $ | 25,831 | $ | 49,807 | $ | 51,407 | ||||||||||
Non-GAAP efficiency ratio | 61.49 | % | 62.69 | % | 60.30 | % | 62.07 | % | 62.08 | % | ||||||||||
GAAP efficiency ratio | 61.32 | % | 62.77 | % | 61.06 | % | 62.02 | % | 62.88 | % | ||||||||||
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, 2014 | March 31, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||||||||
Net interest income, as presented | $ | 19,248 | $ | 18,410 | $ | 19,250 | $ | 37,658 | $ | 38,418 | ||||||||||
Add: effect of tax-exempt income | 214 | 198 | 205 | 411 | 415 | |||||||||||||||
Net interest income, tax equivalent | $ | 19,462 | $ | 18,608 | $ | 19,455 | $ | 38,069 | $ | 38,833 | ||||||||||
Return on average tangible equity is the ratio of (i) net income, adjusted for tax-effected amortization of intangible assets to (ii) average equity, adjusted for goodwill and other intangible assets. The following table reconciles the return on average tangible equity to GAAP return on average equity:
Three Months Ended | Six Months Ended | |||||||||||||||||||
(In Thousands) | June 30, 2014 | March 31, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||||||||
Net income, as presented | $ | 6,316 | $ | 5,715 | $ | 6,331 | $ | 12,031 | $ | 11,993 | ||||||||||
Add: tax-effected amortization of intangible assets | 187 | 187 | 187 | 373 | 373 | |||||||||||||||
Net income, adjusted | $ | 6,503 | $ | 5,902 | $ | 6,518 | $ | 12,404 | $ | 12,366 | ||||||||||
Average equity | $ | 231,949 | $ | 232,539 | $ | 237,166 | $ | 232,243 | $ | 235,679 | ||||||||||
Less: average goodwill and other intangible assets | 48,880 | 49,168 | 52,860 | 49,023 | 53,007 | |||||||||||||||
Average tangible equity | $ | 183,069 | $ | 183,371 | $ | 184,306 | $ | 183,220 | $ | 182,672 | ||||||||||
Return on average tangible equity | 14.25 | % | 13.05 | % | 14.18 | % | 13.65 | % | 13.65 | % | ||||||||||
Return on average equity | 10.92 | % | 9.97 | % | 10.71 | % | 10.45 | % | 10.26 | % | ||||||||||
The following table provides a reconciliation between tangible book value per share and GAAP book value per share:
(In Thousands, Except Number of Shares and Per Share Data) | June 30, 2014 | March 31, 2014 | June 30 2013 | |||||||||
Shareholders' equity, as presented | $ | 237,720 | $ | 231,469 | $ | 229,620 | ||||||
Less: goodwill and other intangible assets | 48,745 | 49,032 | 52,725 | |||||||||
Tangible equity | $ | 188,975 | $ | 182,437 | $ | 176,895 | ||||||
Shares outstanding at period end | 7,421,445 | 7,484,560 | 7,640,712 | |||||||||
Tangible book value per share | $ | 25.46 | $ | 24.38 | $ | 23.15 | ||||||
Book value per share | $ | 32.03 | $ | 30.93 | $ | 30.05 | ||||||
The following table provides a reconciliation between tangible equity to tangible assets and GAAP equity to assets:
(In Thousands) | June 30, 2014 | March 31, 2014 | June 30, 2013 | |||||||||
Shareholders' equity, as presented | $ | 237,720 | $ | 231,469 | $ | 229,620 | ||||||
Less: goodwill and other intangibles | 48,745 | 49,032 | 52,725 | |||||||||
Tangible equity | $ | 188,975 | $ | 182,437 | $ | 176,895 | ||||||
Total assets | $ | 2,691,706 | $ | 2,640,666 | $ | 2,601,778 | ||||||
Less: goodwill and other intangibles | 48,745 | 49,032 | 52,725 | |||||||||
Tangible assets | $ | 2,642,961 | $ | 2,591,634 | $ | 2,549,053 | ||||||
Tangible equity to tangible assets | 7.15 | % | 7.04 | % | 6.94 | % | ||||||
Equity to assets | 8.83 | % | 8.77 | % | 8.83 | % | ||||||
CONTACT: Michael R. Archer, Vice President, Corporate Controller, Camden National Corporation, 207.230.2058, marcher@camdennational.com