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| 8-K - 8-K - CAMDEN NATIONAL CORP | a8k_investorpresentation03.htm |
Investor Presentation
Gregory Dufour | President & Chief Executive Officer
Deborah Jordan | Chief Operating & Financial Officer
March 8, 2017
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; and changes in consumer spending and savings habits; changes in tax, banking, securities and
insurance laws and regulations; and 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.
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, 2016
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 is the largest
bank headquartered in Northern
New England
• $3.9 billion in assets
• 61 branches (Maine) and 2 loan
offices (New Hampshire and
Massachusetts)
• Market cap over $650 million
• Average daily share volume of
45,000
• Analyst Coverage
• Piper Jaffrey (overweight)
• KBW (outperform)
2
2016 Financial Highlights
• Strong earnings performance
o Net income of $40.1 million
o Return on tangible equity: 14.76%(a)
o Return on assets: 1.04%
• Solid growth
o Total loans $2.6 billion; 4% over 2015
o Total deposits $2.8 billion; 4% over 2015
o Fee income reached $39.6 million for the year
• Execution on SBM acquisition
o Efficiency ratio: 57.53%(a)
o Tangible common equity ratio: 7.71%(a)
3
(a) This is a non-GAAP measure. Refer to the Form 10-K filed on 3/7/17 for the year ended December 31, 2016 for the reconciliation of non-GAAP to
GAAP financial measures.
Why Camden National?
Organic franchise growth, opportunistic acquisitions
4
Credit:
• Strong credit culture and
history
• Disciplined structure and
process
• Low nonperforming assets
Culture:
• Experienced, consistent
leadership
• Strong community-spirit
• Continued branch
optimization
• Simple product sets
Focused:
• Gaining market share
• Adherence to strategic plan
• Opportunistically reviewing
complementary acquisitions
• Solid core funding and sticky
deposit base
Consistent Performance:
• Profitability achieved through
organic growth
• Improved productivity
• Disciplined expense structure
• Diversified revenue stream
Strong Performance to
Northeast Bank Peer Group
Performance Ratios (%) CNC Peer Median Peer Average
ROAA 1.04 0.89 0.90
ROAE 10.48 9.33 9.54
Net Interest Margin (Reported) 3.32 3.11 3.13
Efficiency Ratio (Reported) 57.53 59.04 57.19
Loans / Deposits 91.73 99.81 97.72
Capital Ratios (%)
Total Risk Based Capital 14.04 12.97 13.90
Tangible Equity / Tangible Assets 7.71 8.04 8.14
Leverage 8.83 8.94 8.72
Market Ratios
Current Market Price 44.45$
Price / LTM EPS (x) 17.30 20.76 21.32
Price / TBV (%) 237.15 218.96 231.75
Current Dividend Yield (%) 2.07 2.17 1.91
12/31/2016
5
Source: SNL Financial. 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), 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), Meridian Bancorp, Inc. (EBSB), NBT Bancorp Inc. (NBTB), Tompkins Financial Corporation (TMP), TrustCo
Bank Corp NY (TRST), United Financial Bancorp, Inc. (UBNK), and Washington Trust Bancorp, Inc. (WASH).
Focused on Building Market Share:
Asset Growth History
6
• Successful track record of growing the franchise through combination of
organic growth and acquisitions (42% organic growth over 20 year
horizon).
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
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 million
Through 12/31/16
Organic Growth: $1,399 million
Acquired Growth: $1,955 million
Total Growth CAGR: 10.7%
Focused on Building Market Share:
Market Expansion
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
Focused on Building Market Share:
Deposit Opportunity in Maine
8
Source: SNL Financial. Deposit data as of June 2016.
Funding: $3.4 billion
Average Funding Cost: 0.49%
Average Deposit Cost: 0.28%
Deposits and Funding
12/31/16
Checking
33%
Saving/Money
Market 28%
CD's 14%
Borrowings
25%
STATE OF MAINE
($ in millions)
Rank Institution Deposits Branches
Market
Share %
1 Toronto-Dominion Bank $3,463 48 12.9
2 KeyCorp 3,353 50 12.5
3 Camden National Corp. 2,793 63 10.4
4 Bangor Bancorp MHC 2,458 56 9.2
5 Bank of America Corp. 1,805 16 6.7
Other Banks 12,919 253 48.2
Total for State of Maine $26,791 486
CUMBERLAND AND YORK COUNTY
($ in millions)
Rank Institution Deposits Branches
Market
Share %
1 KeyCorp $2,519 20 20.3
2 Toronto-Dominion Bank 2,052 25 16.5
3 Bank of America Corp. 1,774 16 14.3
4 Kennebunk Savings Bank 861 13 6.9
5 Peoples United 856 17 6.9
10 Camden National Corp. 382 7 3.1
Other Banks 3,958 85 32.0
Total Cumberland/York County $12,402 183
Focused on Growing and
Diversifying Revenue
• 2016 fee income represented
26% of total revenue (net
interest income plus fee income),
compared to 24% for 2015
9
24%
16%
18%
19%
23%
$0 $2 $4 $6 $8 $10 $12
Other income
Mortgage banking income
Wealth management & brokerage
Debit card income
Service charges
Millions
2016 Fee Income Diversification
Focused on Improving Productivity
and Creating Efficiencies
10
57.45%
62.78%
61.58%
61.13%
57.53%
54%
56%
58%
60%
62%
64%
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2012 2013 2014 2015 2016
M
il
lion
s
Expenses and Efficiency ratio
Operating Expenses Efficiency Ratio
50 44 44 64 61
$33
$34
$35
$36
$37
$38
$39
$40
$41
$42
$43
2012 2013 2014 2015 2016
M
il
lion
s
Deposits per Branch
Deposits per Branch
• Fully realized 37% cost save of upon completion of SBM acquisition
• Consolidated/sold 15 branches over past five years
Balanced 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 loans
• Increase in provision and non-performing
assets in second quarter 2016 related to
two loans and not systemic issue
11
12/31/16
Loans: $2.6 billion
Average Yield: 4.28%
Commercial
15%
Commercial
Real Estate
39%
Residential
Mortgages
32%
Home
Equity/Consumer
14%
2016 2015 2014 2013
Nonperforming assets / total assets 0.67% 0.66% 0.82% 1.18%
Past due loans / total loans 0.24% 0.40% 0.18% 0.40%
Credit loss provision ($ millions) $5.3 $1.9 $2.2 $2.0
Net charge-offs / average loans
(annualized)
0.13% 0.10% 0.16% 0.22%
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
12
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%
3.50%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
0.00%
0.25%
0.50%
0.75%
1.00%
1.25%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
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 '16
Investments & ALM Position
Interest Rate Risk
13
Estimated Changes In
Net Interest Income
Year 1
+200bp (0.9)%
-100bp (1.5)%
Year 2
+200bp 3.6 %
-100bp (7.7)%
(Assumes flat balance sheet, no
change in asset/funding mix and
change of rates over 12 month
period)
Investments: $900 million
Average Yield: 2.44%
Duration: 4.1 years
12/31/16
MBS
51%
Agency CMO
34%
Municipals
11%
Agency/Sub.
Notes/Other
1%
FRB/FHLB Stock
3%
Shareholder Value
Long-Term Metrics
14
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
$7.87
$18.74
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
34% 32%
0%
10%
20%
30%
40%
50%
60%
'01 '02 '03 '04 '05
(a)
'06 '07 '08 '09 '10 '11
(a)
'12 '13 '14 '15
(b)
'16
2
77
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
'01 '02 '03 '04 '05 '06
(c)
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Shareholder Value
15 Year Total Return
15
Source: SNL Financial
• Stock price appreciation of 256.55%
• Average dividend yield of 2.83%
461%
198%
165%
-100%
0%
100%
200%
300%
400%
500%
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Investment Summary
Proven Management Team
• Delivered on previous acquisition commitments
• Diverse experience from community and large bank perspectives
Strong Market Share and Brand Recognition
• 140 year operating history
• 3rd overall deposit market share in Maine
• #2 mortgage originator in Maine, with 6.2% of all mortgage
originations in the state
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% of total assets
• Efficiency ratio, ROAA and ROAE superior to peers
14
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 51 20+ 2008
Joanne Campbell EVP Risk Management 54 30+ 1996
Edmund Hayden EVP Chief Credit Officer 61 30+ 2015
Tim Nightingale EVP Senior Loan Officer 59 30+ 2000
June Parent EVP Retail Banking 53 25+ 1995
Renee Smyth SVP Chief Marketing Officer 46 15+ 2015
Edward Walbridge SVP Human Resources 56 15+ 2016
Mary Beth Haut Director of Wealth Management 53 30+ 2016
Financial Highlights
19
12/31/16
vs.
12/31/15
Change
(in million’s) 12/31/16 12/31/15 12/31/14
Loans $2,595 $2,490 4% $1,773
Investment Securities 898 856 5% 804
Total Assets 3,864 3,709 4% 2,790
Deposits 2,829 2,726 4% 1,932
Borrowings 600 572 5% 577
Shareholders’ Equity 392 363 8% 245
Tier 1 Leverage Ratio 8.83% 8.74% - 9.26%
Balance Sheet
Net Income and Key Ratios
Financial Highlights
20
2016 2015 2014
Net Income (in millions) $40.1 $21.0 $24.6
Diluted Earnings per Share(a) $2.57 $1.73 $2.19
Return on Tangible Equity(b) 14.76% 9.91% 13.46%
Return on Assets 1.04% 0.70% 0.92%
Efficiency Ratio(b) 57.53% 61.13% 61.58%
Net Interest Margin (Fully-Taxable
Equivalent)
3.32% 3.19% 3.11%
(a) Per share data adjusted to reflect the three-for-two stock split effective September 30, 2016.
(b) This is a non-GAAP measure. Refer to the Form 10-K filed on 3/7/17 for the year ended December 31, 2016 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
0.00%
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 '16
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '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 '16
40.00%
45.00%
50.00%
55.00%
60.00%
65.00%
70.00%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Mortgage Banking Activity
• The SBM Financial acquisition positions CAC as the #2
Mortgage Originator in Maine
22
(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 3,915 1 9.2% 3,469 1 8.5%
Camden National Bank (1) 2,632 2 6.2% 3,039 2 7.4%
Residential Mortgage Services Inc. 2,447 3 5.8% 2,330 3 5.7%
TD Bank, N.A. 1,764 4 4.2% 2,255 4 4.2%
Quicken Loans 1,642 5 3.9% 1,726 7 3.4%
Kennebec Savings Bank 1,502 6 3.5% 1,689 6 3.6%
Key Bank 1,466 7 3.5% 1,395 5 4.1%
First, N.A. 1,445 8 3.4% 1,465 8 3.0%
Machias Savings Bank 1,226 9 2.9% 1,207 10 2.7%
Norway Savings Bank 1,173 10 2.8% 1,110 9 2.7%
Bank of America 986 11 2.3% 1,090 11 2.4%
Gorham Savings Bank 815 12 1.9% 748 12 1.8%
Merrimack Mortgage Co. Inc. 802 13 1.9% 536 22 1.3%
Bath Savings Institution 800 14 1.9% 784 16 1.7%
Wells Fargo Bank 780 15 1.8% 962 13 1.8%
Total for All Lenders 42,478 - 100.0% 40,840 - 100.0%
Year Ended December 31, 2016 Year Ended December 31, 2015
Market Overview
Maine
• Projected 7.45% growth in
household income for 2016 to 2021
• Unemployment rate of 3.8% as of
December 2016
• Hospitality and tourism generate
more than $2 billion in household
income annually
New Hampshire
• Projected 9.90% growth in
household income for 2016 to 2021
• Unemployment rate of 2.6% as of
December 2016
• State GDP grew 2.5% to $73.9
billion in 2015
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
23
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