Attached files
| file | filename |
|---|---|
| 8-K - 8-K - CAMDEN NATIONAL CORP | a8k_investorpresentation08.htm |
2016 KBW Financial
Institution Conference
Gregory Dufour | President & Chief Executive Officer
Deborah Jordan | Chief Operating & Financial Officer
August 3, 2016
0
Forward Looking Statements
1
This presentation contains certain statements that may be considered forward-looking statements under the Private Securities Litigation
Reform Act of 1995 and other federal securities laws, including certain plans, exceptions, 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,” “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 Corporation (the “Company”). These risks, uncertainties and
other factors may cause the actual results, performance or achievements of the Company to be materially different from the anticipated
future results, performance or achievements expressed or implied by the forward-looking statements.
The following factors, among others, could cause the Company’s financial performance to differ materially from the Company’s goals,
plans, objectives, intentions, expectations and other forward-looking statements: 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; changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as
well as the Financial Accounting Standards Board ("FASB"), and other accounting standard setters; and the ability of the Company to
achieve cost savings as a result of the merger or in achieving such cost savings within the projected timeframe.
You should carefully review all of these factors, and be aware that there may be other factors that could cause differences, including the
risk factors listed in the Company’s filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2015,
as updated by the Company's quarterly reports on Form 10-Q and other filings with the Securities and Exchange Commission. You should
carefully review the risk factors described therein and should not place undue reliance on our forward-looking statements.
These forward-looking statements were based on information, plans and estimates at the date of this report, and we undertake no
obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future
events or other changes, except to the extent required by applicable law or regulation.
Camden National Corporation
Camden National Corporation,
headquartered in Maine, is a full-
service community bank focused on
delivering long-term shareholder
value through banking, brokerage
and wealth management services in
Maine, New Hampshire and select
markets of New England.
2
Camden National Corporation
Headquarters Camden, ME
Employees Over 650
Ticker CAC (NASDAQ)
Current Price $46.54
52 Week Range $37.23 to $47.49
Avg. Daily Volume 35,595
Assets $3.9 billion
Loans $2.6 billion
Deposits $2.8 billion
Market Cap $448 million
Analyst Coverage Piper Jaffrey (overweight)
KBW (outperform)
3
Market data as of August 1, 2016
Balance sheet data as of June 30, 2016
Focused Priorities
Following a strategic plan with three major initiatives:
4
• Organic growth continues to be our #1 priority.
• Growth through acquisitions
• 2015: Acquired The Bank of Maine (SBM Financial) and $687
million of deposits:
o Expanded market opportunity by 202,605 households
• 2012: Acquired 14 Bank of America branches and $287 million of
deposits
• Growth through talent
• Continue to invest in our team and internal training
• Added 21 new lenders since 2013 (increased lenders by 64%)
• Deepen credit bench
Build Market Share
1
Focused Priorities
Maintain discipline around expense control
5
• Focus on improving Efficiency Ratio
• SBM cost savings of $11 million in 2016
• Branch Consolidation
• 3 locations (completed by 12/31/16)
• 4 locations (2015)
• 2 locations (2013)
• Divested 5 rural branches (2013)
• IT/Support: Invest in innovation and leverage scale
• Outsourced core processing system (Jack Henry)
• Expanded digital technology platform
• Levered mortgage loan platform and AML/BSA system.
Create Efficiencies
2
Focused Priorities
Strategically positioned for future growth
6
• Geographic
• Southern Maine
• Southern New Hampshire
• Massachusetts
• Products & Services
• Mortgage Banking
• Treasury Management
• Business Banking
• Technology
• Q2
• Apple Pay
Expand Business Banking Services
3
Strategic Plan for Growth
The Bank of Maine (SBM
Financial)
• October 2015 – simultaneous
close and conversion
• Deposits: $687 million
• Loans: $615 million
• Expansion into high growth
Southern Maine market
• Widens mortgage banking
reach to Massachusetts
• Positions bank as the largest
community bank in Northern
New England
7
Core Market
Acquired
Market
Growth Target
Financial Highlights – Q2 2016
• Strong earnings performance
o Return on tangible equity: 14.50%
o Return on assets: 1.01%
• Solid growth
o Total loans $2.6 billion; 16% annualized growth rate
o Total deposits $2.8 billion; 15% annualized growth rate
o Fee income reached $10.6 million for the quarter
• Execution on SBM acquisition
o Efficiency ratio: 56.53%
o Tangible common equity ratio: 7.42%
8
Loan Mix & Strong Credit Culture
• Community-based, relationship focused
lenders with local decision making
• Larger institutional experience (TD Bank,
Citizens) to compliment an already
strong credit focus
• Significant small-business lending driven
by unmatched market expertise
• Credit quality ratios remain strong
• Disciplined risk management culture
• Conservative limits and prudent growth in
CRE
• Proactive internal and external loan review
process anticipating problematic loan
• Increase in provision and non-performing
assets in second quarter 2016 related to
two loans and not systemic issue
9
6/30/16
Loans: $2.6 billion
Average Yield: 4.33% 6/30/2016 2015 2014 2013
Nonperforming assets / total assets 0.75% 0.66% 0.82% 1.18%
Past due loans / total loans 0.27% 0.40% 0.18% 0.40%
Loan loss provision ($ millions) $3.7 $1.9 $2.2 $2.1
Net charge-offs / average loans
(annualized)
0.09% 0.10% 0.16% 0.22%
Commercial
16%
Commercial
Real Estate
39%
Residential
Mortgages
32%
Home
Equity/Consumer
14%
Deposit Mix & Market Share
10
Source: SNL Financial. Deposit data as of June 2015.
STATE OF MAINE
($ in millions)
Rank Instituition Deposits Branches
Market
Share %
1 Toronto-Dominion Bank $3,309 49 13.3
2 KeyCorp 2,891 51 11.6
3 Camden + SBM 2,668 64 10.7
4 Bangor Bancorp MHC 2,265 60 9.1
5 Bank of America Corp. 1,651 17 6.6
Other Banks 12,101 256 48.6
Total for State of Maine $24,885 497
CUMBERLAND AND YORK COUNTY
($ in millions)
Rank Instituition Deposits Branches
Market
Share %
1 KeyCorp $2,077 20 18.7
2 Toronto-Dominion Bank 1,933 25 17.3
3 Bank of America Corp. 1,622 16 14.5
4 Kennebunk Savings Bank 790 13 7.1
5 PeoplesUnited 766 17 6.9
12 Camden + SBM 299 8 2.7
Other Banks 3,652 85 32.8
Total Cumberland/York County $11,138 184
Funding: $3.5 billion
Average Funding Cost: 0.50%
Average Deposit Cost: 0.27%
Checking
32%
Saving/Money
Market 28%
CD's 15%
Borrowings
25%
Investments & ALM Position
Interest Rate Risk
11
Estimated Changes In
Net Interest Income
Year 1
+200bp (2.0)%
-100bp (1.3)%
Year 2
+200bp 1.3 %
-100bp (7.8)%
(Assumes flat balance sheet, no
change in asset/funding mix and
change of rates over 12 month
period)
MBS
52%
Agency CMO
33%
Municipals
11%
Agency/Sub. Notes
1%
FRB/FHLB Stock
3%
Investments: $922 million
Average Yield: 2.41%
Duration: 3.8 years
Long-Term Shareholder Value
12
a) 2005 and 2011, special dividend of $0.50 per share.
b) The increase in 2015 due to reduction in net income related to merger and acquisition costs of $7.2 million, after tax.
c) 2006 issuance of trust preferred and share buyback.
Dividends as % of Net Income
Cumulative Stock Repurchases
($ in millions)
TBV Per Share
$10.34
$27.47
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Q2
'16
$0
$77
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
'00 '01 '02 '03 '04 '05 '06
(c)
'07 '08 '09 '10 '11 '12 '13 '14 '15 Q2
'16
37.17%
34.11%
0%
10%
20%
30%
40%
50%
60%
'00 '01 '02 '03 '04 '05
(a)
'06 '07 '08 '09 '10 '11
(a)
'12 '13 '14 '15
(b)
Q2
'16
Total Return
13
Source: SNL Financial
Strong 15 year return
• Stock price appreciation of 135.35%
• Average dividend yield of 2.87%
-100%
-50%
0%
50%
100%
150%
200%
250%
300%
Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16
271%
141%
110%
Peer Analysis
14
Camden National Corporation’s peer group consists of the following: Arrow Financial Corporation (AROW), Bar Harbor Bankshares (BHB), Berkshire Hills Bancorp, Inc. (BHLB),
Boston Private Financial Holdings, Inc. (BPFH), Brookline Bancorp, Inc. (BRKL), Century Bancorp, Inc. (CNBKA), Chemung Financial Corporation (CHMG), Community Bank System,
Inc. (CBU), Enterprise Bancorp, Inc. (EBTC), Financial Institutions, Inc. (FISI), First Bancorp, Inc. (FNLC), First Connecticut Bancorp, Inc. (FBNK), Hingham Institution for Savings
(HIFS), Independent Bank Corp. (INDB), Merchants Bancshares, Inc. (MBVT), NBT Bancorp Inc. (NBTB), Sterling Bancorp (STL), Tompkins Financial Corporation (TMP), TrustCo
Bank Corp NY (TRST), United Financial Bancorp, Inc. (UBNK), and Washington Trust Bancorp, Inc. (WASH).
Source: SNL Financial
6/30/2016 3/31/2016 3/31/2016
Performance Ratios (%) CNC Peer Median Peer Average
Core ROAA 1.01 0.87 0.93
Core ROAE 10.25 9.04 9.37
Net Interest Margin (Reported) 3.34 3.15 3.18
Efficiency Ratio (Reported) 58.77 61.97 60.80
Loans / Deposits 93.21 93.78 94.51
Asset Quality Ratios (%)
NPAs / Loans & OREO 1.11 0.47 0.55
NCOs / Avg. Loans 0.09 0.08 0.08
Reserves / NPAs 81.57 195.52 232.60
Capital Ratios (%)
Total Risk Based Capital 12.94 13.08 13.69
Tangible Equity / Tangible Assets 7.42 8.01 8.06
Leverage 8.44 9.12 8.89
Market Ratios
Price / LTM Core EPS (x) 11.76 14.84 14.79
Price / TBV (%) 152.88 160.50 164.38
Current Dividend Yield (%) 2.86 3.07 2.92
Investment Summary
Experienced Leaders
• 25+ years average banking experience and 12 years with CAC
Strong Market Share and Brand Recognition
• 140 year operating history
• 3rd overall deposit market share in Maine(1)
• #2 mortgage originator in Maine, with 6.3% of all mortgage
originations in the state(2)
Quality Growth
• Consistent long-term growth both organically and through acquisitions
• Expanded presence in higher growth Southern Maine markets and
enhanced scale, density, and deposit costs in existing markets
Strong Fundamental Operating Metrics
• Historically strong credit quality with nonperforming assets
consistently less than 1.5% of total assets
• Efficiency ratio, ROAA and ROAE superior to peers
14
(1) On a combined basis as of 6/30/15.
(2) Year to date as of 6/30/16.
Why Invest in Camden National?
• Diversified business model creates strong franchise
value
• Highly experienced management team with track
record of solid performance
• Geographic footprint expanding into higher growth
markets with proven denovo and acquisition history
• Strong and stable asset quality with disciplined credit
environment
• Largest publicly traded bank in Northern New England
16
17
Appendix
Seasoned Management Team
18
Name Position Age
Years of
Banking
Experience
Year joined
Camden
Greg Dufour President and CEO 56 25+ 2001
Debbie Jordan, CPA COO & CFO 50 20+ 2008
Joanne Campbell EVP Risk Management 54 30+ 1996
Carolyn Crosby SVP Human Resources 50 25+ 1996
Edmund Hayden EVP Chief Credit Officer 60 30+ 2015
Tim Nightingale EVP Senior Loan Officer 58 30+ 2000
June Parent EVP Retail Banking 53 25+ 1995
Renee Smyth SVP Chief Marketing Officer 45 15+ 2015
Mary Beth Haut President/CEO Acadia Trust 52 30+ 2016
Financial Highlights
19
6/30/16 vs.
12/31/15
Change (in million’s) 6/30/16 12/31/15 6/30/15 12/31/14
Loans $2,585 $2,490 4% $1,807 $1,773
Investment Securities 922 856 8% 823 804
Total Assets 3,910 3,709 5% 2,837 2,790
Deposits 2,773 2,726 2% 1,981 1,932
Borrowings 690 572 20% 564 577
Shareholders’ Equity 385 363 6% 255 245
Tier 1 Leverage Ratio 8.44% 8.74% - 9.39% 9.26%
Balance Sheet
Net Income and Key Ratios
Financial Highlights
20
Six Months Ended Year Ended
Core (a) GAAP GAAP GAAP GAAP
6/30/16 6/30/16 6/30/15 2015 2014
Net Income (in millions) $18.8 $18.3 $12.8 $21.0 $24.6
Diluted Earnings per Share $1.81 $1.76 $1.71 $2.60 $3.28
Return on Tangible Equity(b) 14.44% 14.04% 13.08% 9.53% 13.06%
Return on Assets 1.00% 0.97% 0.92% 0.70% 0.92%
Efficiency Ratio(b) 58.77% 58.77% 60.24% 61.13% 61.58%
Net Interest Margin 3.11%(c) 3.34% 3.14% 3.19% 3.11%
(a) Core results are non-GAAP measures. Refer to the Form 8-K filed on 7/26/16 and Form 10-K filed for the year ended December 31, 2015 for the
reconciliation of non-GAAP to GAAP financial measures.
(b) This is a non-GAAP measure. Refer to the Form 8-K filed on 7/26/16 and Form 10-K filed for the year ended December 31, 2015 for the
reconciliation of non-GAAP to GAAP financial measures.
(c) Represents net interest margin excluding certain one-time, non-recurring transactions and the effect of fair value accounting on acquired loans and
CD’s. This is a non-GAAP measure. Refer to the Form 8-K filed on 7/26/16 for the reconciliation of non-GAAP to GAAP financial measures.
Profitability Trends
Note: Peer Group defined as publicly traded banks and thrifts headquartered in the United States with total assets between $1.5 billion and $7.0 billion, excluding merger targets.
Source: SNL Financial
21
ROAA ROAE
Net Interest Margin Efficiency Ratio
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Q2 '16
2.50%
2.75%
3.00%
3.25%
3.50%
3.75%
4.00%
4.25%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Q2 '16
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Q2 '16
40.00%
45.00%
50.00%
55.00%
60.00%
65.00%
70.00%
75.00%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Q2 '16
Historical Credit Metrics
Note: Peer Group defined as publicly traded banks and thrifts headquartered in the United States with total assets between $1.5 billion and $7.0 billion, excluding merger targets.
Source: SNL Financial
22
NPAs / Assets NCOs / Average Loans
Loan Loss Reserves / Gross Loans Nonaccrual Loans / Loans
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Q2 '16
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Q2 '16
0.00%
0.25%
0.50%
0.75%
1.00%
1.25%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Q2 '16
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Q2 '16
Asset Growth
23
• Successful track record of growing the franchise through combination of
organic growth and acquisitions (40% organic growth over 20 year
horizon).
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
United Corp.
$54 million
Key Bank
4 Branches
$54 million
KSB Bancorp
$179 million Union Bankshares
$565 million
Bank of
America
14 Branches
$287 million
Branch Sale
5 Branches
$46 million
The Bank of Maine
$816 millionThrough 12/31/15
Organic Growth: $1,274 million
Acquired Growth: $1,955 million
Total Growth CAGR: 10.8%
Mortgage Banking Activity
• The SBM Financial acquisition positions CAC as the #2
Mortgage Originator in Maine
24
(a) Camden National’s 2015 loan originations include those originated by SBM Financial, Inc. in 2015 prior to the acquisition that closed on October 16, 2015.
Source: MRS, Inc.
Top 15 Lenders Originations Rank % of Total Originations Rank % of Total
Bangor Savings Bank 1,637 1 8.7% 3,469 1 8.5%
Camden National Bank (1) 1,195 2 6.3% 3,039 2 7.4%
Residential Mortgage Services Inc. 1,064 3 5.6% 2,330 3 5.7%
TD Bank, N.A. 804 4 4.3% 2,255 4 4.2%
Quicken Loans 775 5 4.1% 1,726 7 3.4%
Kennebec Savings Bank 688 6 3.6% 1,689 6 3.6%
First, N.A. 647 7 3.4% 1,465 8 3.0%
Key Bank 580 8 3.1% 1,395 5 4.1%
Machias Savings Bank 568 9 3.0% 1,207 10 2.7%
Norway Savings Bank 526 10 2.8% 1,110 9 2.7%
Bank of America 524 11 2.8% 1,090 11 2.4%
Wells Fargo Bank 365 12 1.9% 962 13 1.8%
Bath Savings Institution 356 13 1.9% 784 16 1.7%
Gorham Savings Bank 350 14 1.9% 748 12 1.8%
Saco & Biddeford Savings Inst. 330 15 1.7% 734 14 1.8%
Total for All Lenders 18,883 - 100.0% 40,840 - 100.0%
Six Months Ended June 30, 2016 Year Ended December 31, 2015
Market Overview
Maine
• Projected 7.57% growth in
household income for 2015 to 2020
• Unemployment rate of 3.7% as of
June 2016
• Hospitality and tourism generate
more than $2 billion in household
income annually
New Hampshire
• Projected 7.57% growth in
household income for 2015 to
2020
• Unemployment rate of 2.8% as of
June 2016
• State GDP grew 2.3% to $71.6
billion in 2014
1) Mass Affluent Households defined as households with Interest Producing Assets between $250,000 and $1,000,000
Sources: SNL Financial, Bureau of Economic Analysis, Nielsen, Maine Office of Tourism, Bureau of Labor Statistics
25
Expanding Footprint to Higher Growth Market
Pre-Merger Southern Maine Southern
Market Segments & Growth Footprint Maine New Hampshire
Total Households 291,602 202,605 453,657
Projected Growth, 2014 to 2019 0.2% 1.9% 1.3%
Mass Affluent Households1 78,216 102,179 259,169
% of Total Households 26.8% 50.4% 57.1%
Number of Businesses 41,767 32,627 65,959
Stable Operating Economy
26
Sources: Bureau of Economic Analysis and Maine State Government
Unemployment Rate
Per Capital Personal Income
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
Maine United States
$30,000
$32,000
$34,000
$36,000
$38,000
$40,000
$42,000
$44,000
$46,000
$48,000
$50,000
Maine United States