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| 8-K - 8-K - CAMDEN NATIONAL CORP | a8k_investorpresentation05.htm |
Piper Jaffray
Financial Institutions
Conference
Gregory Dufour | President & Chief Executive Officer
Deborah Jordan | Chief Operating & Financial Officer
May 15 - 17, 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; 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,
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 is the largest
bank headquartered in Northern
New England
• $3.9 billion in assets
• 60 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
1st Quarter 2017
Financial Highlights
• Strong earnings performance
o Net income of $10.1 million
o Return on tangible equity: 14.37%(a)
o Return on assets: 1.05%
o Efficiency ratio: 58.00%(a)
o Tangible common equity ratio: 7.74%(a)
• Solid growth
o Total loans $2.6 billion; annualized growth rate of 8%
o Total deposits $2.9 billion; annualized growth rate of 8%
o Mortgage banking income up 16% over fourth quarter 2016
3
(a) This is a non-GAAP measure. Refer to the Form 10-Q filed on 5/5/17 for the three months ended March 31, 2017 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
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).
Performance Ratios (%) CNC Peer Median Peer Average
ROAA 1.03 0.87 0.87
ROAE 10.22 9.05 9.24
Net Interest Margin (Reported) 3.18 3.14 3.15
Efficiency Ratio (Reported) 58.00 60.70 58.38
Loans / Deposits 90.06 100.06 96.72
Capital Ratios (%)
Total Risk Based Capital 14.05 12.93 13.51
Tangible Equity / Tangible Assets 7.74 8.06 8.06
Leverage 8.90 9.08 8.97
Market Ratios
Current Market Price ($) 44.04
Price / LTM EPS (x) 16.56 19.92 19.64
Price / TBV (%) 230.08 205.56 213.17
Current Dividend Yield (%) 2.09 2.30 2.13
3/31/2017
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
Expansion Strategies
• Introduced MortgageTouch, an online mortgage
application
• Hired two additional commercial lenders in New
Hampshire
• Announced opening of a Portsmouth, New Hampshire
loan production office (site TBD)
• Hired wealth management business developer for the
Southern Maine/New Hampshire markets
• Finalized closing of one branch
8
Focused on Building Market Share:
Deposit Opportunity in Maine
9
Source: SNL Financial. Deposit market share data as of June 2016.
Average Funding: $3.5 billion
Average Funding Cost: 0.53%
Average Deposit Cost: 0.30%
Deposits and Funding
3/31/17
STATE OF MAINE
($ 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
Checking
32%
Saving/Money
Market 28%
CDs 13%
Borrowings
27%
Focused on Growing and
Diversifying Revenue
Q1 2017 fee income represented
24% of total revenue (net interest
income plus fee income), compared
to 22% for Q1 2016
10
14%
18%
20%
21%
27%
$0 $1 $2 $3
Other income
Mortgage banking income
Wealth management & brokerage
Debit card income
Service charges
Millions
Q1 2017 Fee Income Diversification
Focused on Improving Productivity
and Creating Efficiencies
11
• Fully realized 37% cost save of upon completion of SBM acquisition
• Consolidated/sold 16 branches over past five years
50 44 44 64 61 60
$32
$34
$36
$38
$40
$42
$44
2012 2013 2014 2015 2016 Q1 2017
Mill
io
n
s
Deposits per Branch
(1) This is a non-GAAP measure. Refer to the Form 10-Q filed on 5/5/17 for the three months ended March 31, 2017 for the reconciliation of non-GAAP to GAAP financial
measures.
57.45%
62.78%
61.58%
61.13%
57.53%
58.00%
54%
56%
58%
60%
62%
64%
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2012 2013 2014 2015 2016 Q1 2017
Mill
io
n
s
Expenses and Efficiency ratio(1)
Operating Expenses Efficiency Ratio
Balanced Loan Mix &
Strong Credit Culture
12
3/31/17
Average Loans: $2.6 billion
Average Yield: 4.15%
• Internal lending limit of $37 million
• Four Credit Relationships over $25
million
1. Assisted Living
2. Insurance
3. Hospital
4. Business Office
• Commercial Diversification
$349 million Nonresidential Building
Operator
$222 million Hotels and Motels
$155 million Apartment Building
Operators
Commercial
15%
Commercial
Real Estate
41%
Residential
Mortgages
31%
Home
Equity/Consumer
13%
Q1 2017 2016 2015 2014
Nonp rforming assets / tota assets 0.68% 0.67% 0.66% 0.82%
30-89 days past due loans / total loans 0.26% 0.24% 0.40% 0.18%
Provision for loan losses / average loans
(annualized)
0.09% 0.21% 0.10% 0.13%
Net charge-offs / average loans
(annualized)
0.00% 0.13% 0.10% 0.16%
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
13
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%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Q1 '17
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Q1 '17
0.00%
0.25%
0.50%
0.75%
1.00%
1.25%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Q1 '17
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Q1 '17
Investments & ALM Position
Interest Rate Risk
Estimated Changes In Net
Interest Income(1)
Year 1
+200bp (1.3)%
-100bp (1.8)%
Year 2
+200bp 3.0 %
-100bp (8.4)%
Average Investments: $936 million
Average Yield: 2.45%
Duration: 4.2
3/31/17
MBS
54%
Agency CMO
31%
Municipals
11%
Agency/Sub.
Notes/Other
1%
FRB/FHLB Stock
3%
14
(1) Assumes flat balance sheet, no change in asset/funding mix, and a parallel and pro rata shift in rates over a 12 month period
Shareholder Value
Long-Term Metrics
15
(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
$9.18
$19.14
$0
$4
$8
$12
$16
$20
'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Q1
'17
$3
$77
$0
$20
$40
$60
$80
'02 '03 '04 '05 '06
(c)
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Q1
'17
33%
36%
0%
10%
20%
30%
40%
50%
60%
'02 '03 '04 '05
(a)
'06 '07 '08 '09 '10 '11
(a)
'12 '13 '14 '15
(b)
'16 Q1
'17
Shareholder Value
15 Year Total Return
16
Source: SNL Financial
• Stock price appreciation of 175.47%
• Average dividend yield of 2.81%
331%
209%
153%
-50%
0%
50%
100%
150%
200%
250%
300%
350%
400%
May-02 May-03 May-04 May-05 May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14 May-15 May-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 6.4% 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
17
18
Appendix
Seasoned Management Team
19
Name Position Age
Years of
Banking
Experience
Year joined
Camden
Greg Dufour President and CEO 57 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
20
3/31/17
vs.
3/31/16
Change
(in million’s) 3/31/17 3/31/16
Loans $2,645 $2,493 6%
Investment Securities 943 910 4%
Total Assets 3,938 3,763 5%
Deposits 2,937 2,675 10%
Borrowings 557 659 (15%)
Shareholders’ Equity 398 375 6%
Tier 1 Leverage Ratio 8.90% 8.42% -
Balance Sheet
Net Income and Key Ratios
Financial Highlights
21
3/31/17 3/31/16(a)
Net Income (in millions) $10.1 $8.6
Diluted Earnings per Share $0.64 $0.56
Return on Tangible Equity(b) 14.37% 13.56%
Return on Assets 1.05% 0.93%
Efficiency Ratio(b) 58.00% 61.18%
Net Interest Margin (Fully-Taxable
Equivalent)
3.18% 3.35%
(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-Q filed on 5/5/17 for the three months ended March 31, 2017 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
22
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%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Q1 '17
2.50%
2.75%
3.00%
3.25%
3.50%
3.75%
4.00%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Q1 '17
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Q1 '17
40.00%
45.00%
50.00%
55.00%
60.00%
65.00%
70.00%
75.00%
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 Q1 '17
Mortgage Banking Activity
23
Top 15 Lenders Originations Rank % of Total
Bangor Savings Bank 810 1 9.2%
Camden National Bank 562 2 6.4%
Residential Mortgage Services Inc. 446 3 5.1%
TD Bank, N.A. 418 4 4.8%
Key Bank 413 5 4.7%
Quicken Loans 403 6 4.6%
First, N.A. 305 7 3.5%
Kennebec Savings Bank 277 8 3.1%
Norway Savings Bank 230 9 2.6%
Machias Savings Bank 220 10 2.5%
Bank of America 196 11 2.2%
Kennebunk Savings Bank 167 12 1.9%
Gorham Savings Bank 154 13 1.8%
Bath Savings Institution 149 14 1.7%
Saco & Biddeford Savings Inst. 142 15 1.6%
Total for All Lenders 8,796 100.0%
Three Months Ended March 31, 2017
Source: MRS, Inc.
Data obtained from registry of deeds throughout the state of Maine.
Market Overview
Maine
• Projected 7.45% growth in
household income for 2016 to 2021
• Unemployment rate of 3.0% as of
March 2017
• 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 2.8% as of
March 2017
• State GDP grew 3.0% to $77.9
billion in 2016
(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
24
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