Camden National Corporation Reports Third Quarter 2020 Financial Results

Company Release - 10/27/2020
Third Quarter 2020 Net Income Increased 16% over Third Quarter 2019

CAMDEN, Maine, Oct. 27, 2020 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company"), a $5.2 billion bank holding company headquartered in Camden, Maine, reported net income for the third quarter of 2020 of $16.8 million, an increase of $2.3 million, or 16%, compared to the third quarter of 2019. Diluted earnings per share ("EPS") for the third quarter of 2020 was $1.11, an increase of $0.17, or 18%, over the third quarter of 2019.

"This quarter's results demonstrate that our core business is solid and resilient. Our strong earnings for the quarter reflect the collective efforts and tireless work across our Company as we continue to focus on our customers' needs while maintaining our strategic focus," said Gregory A. Dufour, President and Chief Executive Officer of the Company. "Although the last six months have presented unprecedented economic conditions, we took the necessary actions early to preserve the strength of our balance sheet by increasing loan loss reserves over $11 million year-to-date. At the end of the third quarter, our allowance for losses was 1.11% of total loans and 1.19% of total loans when excluding SBA PPP loans1 originated this year, up from 0.81% at the beginning of the year."

Dufour added, "At September 30, 2020, COVID-19-related short-term loan deferrals were 5.5% of total loans, which included nearly $68 million of consumer loans that we automatically deferred for another 90 days after the initial 90-day deferral period matured. This is a significant decrease from June 30, 2020, where our total short-term loan deferrals were 16.4% of total loans at June 30, 2020. Through September 30, 2020, our asset quality continues to be very strong, highlighted by non-performing loans totaling 0.34% and past due loans of 0.18% of total loans at quarter-end, as well as annualized net charge-offs year-to-date of 0.04% of average loans."

______________________________

1 This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures" for further details.

THIRD QUARTER 2020 HIGHLIGHTS

  • Net income increased by $2.3 million, or 16%, over the third quarter of 2019 and by $5.8 million, or 53%, over the second quarter of 2020.
  • Pre-tax, pre-provision earnings1 increased $3.0 million, or 16%, over the third quarter of 2019 and decreased $1.1 million, or 5%, from the second quarter of 2020.
  • Net interest margin on a fully-taxable equivalent basis ("net interest margin") for the third quarter of 2020 was 3.00%, compared to 3.09% for the third quarter of 2019 and 3.11% for the second quarter of 2020.
  • 5.5% of total loans were operating under a short-term deferral due to COVID-19 at September 30, 2020, compared to 16.4% at June 30, 2020.
  • Allowance for loan losses was 1.11% of total loans at September 30, 2020, up from 1.07% at June 30, 2020 and 0.81% at December 31, 2019.
  • Non-performing assets were 0.22% of total assets as of September 30, 2020, and annualized net charge-offs were 0.01% and 0.04% of average loans for the three and nine months ended September 30, 2020, respectively.
  • Capital remains a source of strength, highlighted by regulatory capital ratios well in excess of requirements, including a Total risk-based capital ratio of 15.15% and Tier 1 leverage ratio of 8.96% at September 30, 2020.

FINANCIAL CONDITION

Assets.   Total assets increased 16% since December 31, 2019, to $5.2 billion at September 30, 2020. Asset growth for the nine months ended September 30, 2020, was driven by increases in cash, investments and loans.

Cash and Investments.  Deposit growth for the nine months ended September 30, 2020, of $686.3 million, or 19%, led to elevated cash and investment balances. Federal stimulus provided to businesses and consumers in response to the COVID-19 pandemic has driven deposit growth and resulted in excess liquidity. At September 30, 2020, cash and investment balances totaled $346.4 million and $1.1 billion, respectively, compared to $75.6 million and $933.1 million at December 31, 2019. At September 30, 2020, the Company's investments designated as available-for-sale ("AFS") were in an unrealized gain position of $28.7 million, net of tax, compared to $3.3 million, net of tax, at December 31, 2019.

Loans.  At September 30, 2020, the Company's loan portfolio totaled $3.3 billion, compared to $3.1 billion at December 31, 2019. Loan growth for the nine months ended September 30, 2020, was $179.8 million, or 6%, led by (1) Small Business Administration Paycheck Protection Program ("SBA PPP") loans, which had outstanding loan balances of $223.8 million at September 30, 2020, and (2) commercial real estate loan growth of $90.3 million, or 7%, over this period.

Since the commencement of the SBA PPP in early April 2020, the Company has proudly originated 3,034 loans totaling $244.8 million through September 30, 2020, to businesses across our markets that are in need of support due to the COVID-19 pandemic.

For the nine months ended September 30, 2020, consumer and home equity loans decreased 12% to $297.6 million at September 30, 2020, while residential mortgage loans decreased 2% over the same period to $1.0 billion at September 30, 2020.

For the nine months ended September 30, 2020, the Company originated $727.9 million of residential mortgages and sold 62% of its production to the secondary market. In comparison, for the same period last year, the Company originated $387.8 million and sold 48% of its production. Residential mortgage refinance activity was 59% of originations for the nine months ended September 30, 2020, compared to 31% for the same period last year.

The increase in residential mortgage originations and refinance activity between periods was driven by historically low interest rates for the nine months ended September 30, 2020, highlighted by an average 10-year U.S. Treasury rate of 0.90% over this period.

Deposits and Borrowings.  Deposits increased 19% since December 31, 2019, to $4.2 billion at September 30, 2020. The increase in deposits was driven by federal stimulus to businesses and consumers in response to the COVID-19 pandemic, as well as a shift in consumer habits in response to the COVID-19 pandemic, highlighted by the national personal savings rate nearly doubling to 14.1% in August 2020 compared to December 2019. For the nine months ended September 30, 2020, checking account balances grew $514.3 million, or 30%, savings and money market balances grew $187.7 million, or 17%, and brokered deposits grew $100.6 million, or 53%. Over this same period, certificates of deposit ("CDs") decreased $116.3 million, or 22%.

The Company's loan-to-deposit ratio was 78% at September 30, 2020, compared to 87% at December 31, 2019.

Total borrowings decreased 13% since December 31, 2019 to $294.4 million at September 30, 2020. At September 30, 2020, short-term borrowings of $210.1 million are entirely made up of repurchase agreements.

Shareholders' Equity.  At September 30, 2020, the Company's capital position remained well in excess of regulatory requirements, including a Total risk-based capital ratio of 15.15% and a Tier 1 leverage ratio of 8.96%. Additionally, at September 30, 2020, the Company's common equity ratio was 10.04% and tangible common equity ratio1 was 8.30%.

In September 2020, the Company announced a cash dividend to shareholders of $0.33 per share, consistent with that issued for the second quarter of 2020. The cash dividend is payable on October 30, 2020, to shareholders of record as of October 15, 2020. As of September 30, 2020, the Company's annualized dividend yield was 4.37% based on Camden National's closing share price of $30.23, as reported by NASDAQ.

The Company temporarily suspended its share repurchase program during the first quarter of 2020 in response to the COVID-19 pandemic. In September 2020, the Company lifted its suspension and repurchased 47,915 shares. For the nine months ended September 30, 2020, the Company has repurchased 264,946 shares of its common stock. The Company will continue to evaluate its use of the share repurchase program as the impact and our response to the COVID-19 pandemic develops.

ASSET QUALITY

As of September 30, 2020, the Company's asset quality metrics continue to be stable and consistent with past quarters.

  • Non-performing assets were 0.22% of total assets at September 30, 2020, compared to 0.23% and 0.25% at June 30, 2020 and December 31, 2019, respectively.
  • Past due loans were 0.18% of total loans at September 30, 2020, compared to 0.19% and 0.17% at June 30, 2020 and December 31, 2019, respectively.
  • Net charge-offs (annualized) for the third quarter of 2020 were 0.01% of average loans, compared to 0.05% for the second quarter of 2020 and 0.16% for the third quarter of 2019.

COVID-19 Short-Term Deferment Program.  In March 2020, the Company began offering temporary debt relief to business and retail customers impacted by the COVID-19 pandemic. All loan modifications made by the Company complied with the terms of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") or bank regulator guidance, and, thus, were not individually assessed, designated or accounted for as troubled-debt restructurings.

Short-term debt payment relief was provided to commercial and retail customers for periods up to 180 days, including full and partial principal and/or interest payment relief. At September 30, 2020, loans operating under a short-term deferral arrangement totaled $181.2 million, or 5.5% of total loans at September 30, 2020, of which $67.7 million were retail loans that were provided an automatic 90-day deferment extension upon maturity of the initial 90-day deferment period. In comparison, at June 30, 2020, loan operating under a short-term deferral arrangement totaled $546.7 million, or 16.4% of total loans.

Allowance for Credit Losses and Provision Expense.  The provision for credit losses for the three and nine months ended September 30, 2020 was $987,000 and $12.2 million, respectively, compared to $730,000 and $2.6 million for the three and nine months ended September 30, 2019. At September 30, 2020, the Company's allowance for loan losses was $36.4 million, or 1.11% of total loans (1.19% of total loans, excluding SBA PPP loans1), and 3.3 times non-performing loans, compared to $25.2 million, or 0.81% of total loans and 2.3 times non-performing loans, at December 31, 2019. Although asset quality at September 30, 2020 remains strong and COVID-19 deferments have steadily decreased, there continues to be an elevated credit risk throughout the industry given current market conditions, as well as the level of economic, political, and medical uncertainty that remains.

CECL.  In the first quarter of 2020, the Company chose to delay its implementation of the current expected credit losses model, commonly referred to as "CECL," in accordance with the provisions of the CARES Act. As such, the reported allowance for credit losses and related provision expense for the three and nine months ended September 30, 2020 was accounted for under the incurred loss model. In accordance with the CARES Act, the Company will effectively adopt CECL on December 31, 2020, retroactively effective as of January 1, 2020.

While the Company has not yet adopted CECL, it estimates that as of September 30, 2020, the allowance for credit losses under CECL, which is comprised of allowance for loan losses and unfunded commitments, would have been $39.0 million to $43.0 million, or 1.19% to 1.31% of total loans, at September 30, 2020.

FINANCIAL OPERATING RESULTS (Q3 2020 vs. Q3 2019)

Net income for the third quarter of 2020 was $16.8 million, an increase of $2.3 million, or 16%, over the third quarter of 2019. Diluted EPS for the third quarter of 2020 was $1.11, an increase of $0.17, or 18%, over the same period last year.

Net Interest Income.  Net interest income for the third quarter of 2020 was $34.5 million, an increase of $2.6 million, or 8%, over the third quarter of 2019 due to an increase in average interest-earning assets of 11%, partially offset by a compressed net interest margin of 9 basis points between periods to 3.00% for the third quarter of 2020.

Average interest-earning assets for the third quarter of 2020 were $4.6 billion, an increase of $465.8 million over the third quarter of 2019. Average loans grew 7% between periods to $3.3 billion for the third quarter of 2020, primarily driven by average SBA PPP loans of $221.7 million for the third quarter of 2020, while average cash and investment balances grew 25% to $1.2 billion for the third quarter of 2020.

Net interest margin for the third quarter of 2020 was 3.00%, a decrease of 9 basis points from the third quarter of 2019. The decrease in net interest margin was driven by the current low interest rate environment and change in the mix of interest-earning assets driving down the yield on interest-earning assets by 74 basis points between periods to 3.37% for the third quarter of 2020, whereas the cost of funds decreased 70 basis points between periods to 0.38% for the third quarter of 2020.

Provision for Credit Losses.  The provision for credit losses for the third quarter of 2020 was $987,000, an increase of $257,000 compared to the third quarter of 2019.

Non-Interest Income.  Non-interest income for the third quarter of 2020 was $12.7 million, an increase of $2.0 million, or 18%, over the third quarter of 2019. The increase was primarily driven by an increase in mortgage banking income between periods of $2.0 million as the Company's sold loan production grew by 110% between periods. This increase was partially offset by a decrease in service charges on deposit accounts between periods of $364,000, or 18%. Service charges on deposit accounts primarily decreased between periods due to lower overdraft fees because of elevated deposits across our customers.

Non-Interest Expense.  Non-interest expense for the third quarter of 2020 was $25.2 million, an increase of $1.5 million, or 6%, compared to the third quarter of 2019. In the third quarter of 2020, the Company accrued $1.2 million within other expenses for a legal settlement to avoid the burden and expense of litigation. The Company's efficiency ratio calculated in accordance with generally accepted accounting principles in the United States ("GAAP") was 53.46% for the third quarter of 2020 and 50.60%1 for the third quarter of 2020 on a non-GAAP basis.

FINANCIAL OPERATING RESULTS (Q3 2020 vs. Q2 2020)

Net income for the third quarter 2020 increased $5.8 million, or 53%, and diluted EPS increased $0.38, or 52%, over the second quarter 2020. The increase between quarters was driven by a decrease in provision expense of $8.4 million.

Net Interest Income.  Net interest income for the third quarter 2020 decreased $58,000, compared to the second quarter 2020. The decrease between periods was driven by net interest margin compression of 11 basis points as average cash balances increased $47.8 million, or 28%, to $216.0 million for the third quarter of 2020.

Provision for Credit Losses.  Provision for credit losses for the third quarter 2020 decreased $8.4 million, compared to the second quarter 2020. In the second quarter 2020, higher provisions were provided for as reserve levels increased due to the economic environment created by the COVID-19 pandemic, and the Company worked through its COVID-19 loan modifications.

Non-Interest Income.  Non-interest income for the third quarter 2020 increased $636,000, or 5%, over the second quarter 2020. The increase between periods was primarily attributable to an increase in service charges on deposit accounts of $269,000 and debit card income of $236,000.

Non-Interest Expense.  Non-interest expense for the third quarter 2020 increased $1.7 million, or 7%, over the second quarter 2020. Included in the third quarter 2020, the Company accrued $1.2 million for a legal settlement to avoid the burden and expense of litigation. This was presented within other expenses on the consolidated statements of income.

CONFERENCE CALL

Camden National will host a conference call and webcast at 3:00 p.m., Eastern Time, on Tuesday, October 27, 2020 to discuss its third quarter 2020 financial results and outlook. Participants should dial in to the call 10 - 15 minutes before it begins. Information about the conference call is as follows:

Live dial-in (domestic):

(888) 349-0139

Live dial-in (international):

(412) 542-4154

Live webcast:

https://services.choruscall.com/links/cac201027.html

A link to the live webcast will be available on Camden National's website under "Investor Relations" at www.CamdenNational.com prior to the meeting, and a replay of the webcast will be available on Camden National's website following the conference call. The transcript of the conference call will also be available on Camden National's website approximately two days after the conference call.

ABOUT CAMDEN NATIONAL CORPORATION

Camden National Corporation (NASDAQ:CAC) is the largest publicly traded bank holding company in Northern New England with $5.2 billion in assets and approximately 650 employees. Camden National Bank, its subsidiary, is a full-service community bank founded in 1875 in Camden, Maine. Dedicated to customers at every stage of their financial journey, the bank offers the latest in digital banking, complemented by personalized service with 58 banking centers, 24/7 live phone support, 68 ATMs, and additional lending offices in New Hampshire and Massachusetts. For the past two years, Camden National Bank was named "Customer Experience Leader in U.S. Retail Banking" by Greenwich Associates, and in 2019, it was the only New England based organization included in Sandler O'Neill's "Bank and Thrift Sm-All Star" list of high-performing financial institutions. The Finance Authority of Maine has awarded Camden National Bank as "Lender at Work for Maine" for ten years. Comprehensive wealth management, investment and financial planning services are delivered by Camden National Wealth Management. To learn more, visit CamdenNational.com. Member FDIC.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including certain plans, expectations, goals, projections and other statements, which are subject to numerous risks, assumptions and uncertainties. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures; changes in the interest rate environment; changes in general economic conditions; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; legislative and regulatory changes that adversely affect the business in which Camden National is engaged; changes in the securities markets and other risks and uncertainties disclosed from time to time in Camden National's Annual Report on Form 10-K for the year ended December 31, 2019, as updated by other filings with the Securities and Exchange Commission ("SEC"). Further, statements about the potential effects of the COVID-19 pandemic on our business, results of operations and financial condition may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, action taken by government authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, service providers and on economies and markets more generally. Camden National does not have any obligation to update forward-looking statements.

USE OF NON-GAAP MEASURES

In addition to evaluating the Company's results of operations in accordance with GAAP, management supplements this evaluation with certain non-GAAP financial measures, such as pre-tax, pre-provision earnings; return on average tangible equity; the efficiency and tangible common equity ratios; tangible book value per share; core deposits and average core deposits; and allowance for loan losses to total loans, excluding SBA PPP loans. Management utilizes these non-GAAP financial measures for purposes of measuring our performance against our peer group and other financial institutions and analyzing our internal performance. We also believe these non-GAAP financial measure help investors better understand the Company's operating performance and trends and allow for better performance comparisons to other financial institutions. 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.

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. Annualized data may not be indicative of any four-quarter period, and are presented for illustrative purposes only.

 

Selected Financial Data

(unaudited)




At or For The
Three Months Ended


At or For The
Nine Months Ended

(In thousands, except number of shares and per share data)


September 30,
2020


June 30,
2020


September 30,
2019


September 30,
2020


September 30,
2019

Financial Condition Data











Investments


$

1,121,712



$

1,064,089



$

926,444



$

1,121,712



$

926,444


Loans and loans held for sale


3,312,777



3,362,631



3,127,083



3,312,777



3,127,083


Allowance for loan losses


36,414



35,539



25,688



36,414



25,688


Total assets


5,153,793



4,959,016



4,520,315



5,153,793



4,520,315


Deposits


4,224,044



3,996,358



3,617,963



4,224,044



3,617,963


Borrowings


294,361



330,229



342,459



294,361



342,459


Shareholders' equity


517,522



506,467



471,672



517,522



471,672


Operating Data











Net interest income


$

34,481



$

34,539



$

31,923



$

100,846



$

95,391


Provision for credit losses


987



9,398



730



12,160



2,647


Non-interest income


12,696



12,060



10,739



36,159



30,165


Non-interest expense


25,221



23,509



23,748



73,291



70,489


Income before income tax expense


20,969



13,692



18,184



51,554



52,420


Income tax expense


4,194



2,752



3,696



10,346



10,455


Net income


$

16,775



$

10,940



$

14,488



$

41,208



$

41,965


Key Ratios











Return on average assets


1.34

%


0.90

%


1.29

%


1.15

%


1.28

%

Return on average equity


13.01

%


8.81

%


12.26

%


11.06

%


12.32

%

GAAP efficiency ratio


53.46

%


50.45

%


55.67

%


53.50

%


56.14

%

Net interest margin (fully-taxable equivalent)


3.00

%


3.11

%


3.09

%


3.06

%


3.13

%

Non-performing assets to total assets


0.22

%


0.23

%


0.30

%


0.22

%


0.30

%

Common equity ratio


10.04

%


10.21

%


10.43

%


10.04

%


10.43

%

Tier 1 leverage capital ratio


8.96

%


8.95

%


9.39

%


8.96

%


9.39

%

Common equity tier 1 risk-based capital ratio


12.21

%


11.69

%


11.36

%


12.21

%


11.36

%

Tier 1 risk-based capital ratio


13.55

%


13.01

%


12.70

%


13.55

%


12.70

%

Total risk-based capital ratio


15.15

%


14.56

%


13.97

%


15.15

%


13.97

%

Per Share Data











Basic earnings per share


$

1.12



$

0.73



$

0.94



$

2.74



$

2.70


Diluted earnings per share


$

1.11



$

0.73



$

0.94



$

2.73



$

2.70


Cash dividends declared per share


$

0.33



$

0.33



$

0.30



$

0.99



$

0.90


Book value per share


$

34.69



$

33.85



$

30.98



$

34.69



$

30.98


Non-GAAP Measures(1)











Return on average tangible equity


16.21

%


11.09

%


15.67

%


13.91

%


15.89

%

Efficiency ratio


50.60

%


50.13

%


55.32

%


52.29

%


55.82

%

Pre-tax, pre-provision earnings


$

21,956



$

23,090



$

18,914



$

63,714



$

55,067


Allowance for loan losses to total loans, excluding
   SBA PPP loans


1.19

%


1.14

%


0.83

%


1.19

%


0.83

%

Tangible common equity ratio


8.30

%


8.41

%


8.44

%


8.30

%


8.44

%

Tangible book value per share


$

28.14



$

27.31



$

24.52



$

28.14



$

24.52



(1) Please see "Reconciliation of non-GAAP to GAAP Financial Measures (unaudited)."

 

 

Consolidated Statements of Condition Data

(unaudited)


(In thousands)


September 30,
2020


December 31,
2019


September 30,
2019

ASSETS







Cash and due from banks


$

42,119



$

39,586



$

63,620


Interest-bearing deposits in other banks (including restricted cash)


304,270



36,050



73,912


Total cash, cash equivalents and restricted cash


346,389



75,636



137,532


Investments:







Available-for-sale securities, at fair value (book value of $1,070,479, $913,978 and $903,988, respectively)


1,107,069



918,118



913,523


Held-to-maturity securities, at amortized cost (fair value of $1,403, $1,359 and $1,352, respectively)


1,298



1,302



1,303


Other investments


13,345



13,649



11,618


Total investments


1,121,712



933,069



926,444


Loans held for sale, at fair value (book value of $37,301, $11,915 and $16,630, respectively)


37,935



11,854



16,449


Loans:







Commercial real estate


1,333,733



1,243,397



1,255,519


Commercial(1)


375,548



442,701



445,466


SBA PPP


223,838






Residential real estate


1,044,103



1,070,374



1,061,898


Consumer and home equity


297,620



338,551



347,751


Total loans


3,274,842



3,095,023



3,110,634


      Less: allowance for loan losses


(36,414)



(25,171)



(25,688)


       Net loans


3,238,428



3,069,852



3,084,946


Goodwill


94,697



94,697



94,697


Core deposit intangible assets


3,014



3,525



3,701


Bank-owned life insurance


94,262



92,344



91,729


Premises and equipment, net


40,517



41,836



40,930


Deferred tax assets


11,195



16,823



15,656


Other assets


165,644



89,885



108,231


Total assets


$

5,153,793



$

4,429,521



$

4,520,315


LIABILITIES AND SHAREHOLDERS' EQUITY







Liabilities







Deposits:







Non-interest checking


$

800,582



$

552,590



$

573,621


Interest checking


1,419,544



1,153,203



1,147,627


Savings and money market


1,306,868



1,119,193



1,105,290


Certificates of deposit


405,434



521,752



541,199


Brokered deposits


291,616



191,005



250,226


Total deposits


4,224,044



3,537,743



3,617,963


Short-term borrowings


210,055



268,809



273,454


Long-term borrowings


25,000



10,000



10,000


Subordinated debentures


59,306



59,080



59,005


Accrued interest and other liabilities


117,866



80,474



88,221


Total liabilities


4,636,271



3,956,106



4,048,643


Shareholders' equity


517,522



473,415



471,672


Total liabilities and shareholders' equity


$

5,153,793



$

4,429,521



$

4,520,315



(1) Includes the HPFC loan portfolio.


 

 

Consolidated Statements of Income Data

(unaudited)




For The
Three Months Ended


For The
Nine Months Ended

(In thousands, except per share data)


September 30,
2020


June 30,
2020


September 30,
2019


September 30,
2020


September 30,
2019

Interest Income











Interest and fees on loans


$

33,025



$

33,120



$

36,207



$

100,190



$

108,020


Taxable interest on investments


4,480



4,883



4,794



14,241



14,729


Nontaxable interest on investments


823



828



675



2,438



1,943


Dividend income


163



167



158



498



562


Other interest income


176



180



686



691



1,712


Total interest income


38,667



39,178



42,520



118,058



126,966


Interest Expense











Interest on deposits


2,899



3,392



8,963



12,953



26,542


Interest on borrowings


394



359



801



1,591



2,660


Interest on subordinated debentures


893



888



833



2,668



2,373


Total interest expense


4,186



4,639



10,597



17,212



31,575


Net interest income


34,481



34,539



31,923



100,846



95,391


Provision for credit losses


987



9,398



730



12,160



2,647


Net interest income after provision for credit losses


33,494



25,141



31,193



88,686



92,744


Non-Interest Income











Mortgage banking income, net


4,664



4,691



2,668



12,889



5,662


Debit card income


2,627



2,391



2,432



7,159



6,723


Service charges on deposit accounts


1,606



1,337



1,970



4,955



6,202


Income from fiduciary services


1,504



1,603



1,444



4,609



4,381


Brokerage and insurance commissions


755



622



625



2,034



1,942


Bank-owned life insurance


615



614



613



1,918



1,810


Customer loan swap fees


51



57



109



222



919


Net gain on sale of securities






1





28


Other income


874



745



877



2,373



2,498


Total non-interest income


12,696



12,060



10,739



36,159



30,165


Non-Interest Expense











Salaries and employee benefits


13,739



13,627



13,604



41,693



40,043


Furniture, equipment and data processing


3,076



2,710



2,708



8,576



8,111


Net occupancy costs


1,785



1,997



1,710



5,785



5,263


Consulting and professional fees


913



1,181



892



2,877



2,679


Debit card expense


972



878



960



2,784



2,666


Regulatory assessments


510



299



182



971



1,091


Amortization of core deposit intangible assets


170



171



177



511



529


Other real estate owned and collection costs, net


71



98



251



270



353


Other expenses


3,985



2,548



3,264



9,824



9,754


Total non-interest expense


25,221



23,509



23,748



73,291



70,489


Income before income tax expense


20,969



13,692



18,184



51,554



52,420


Income Tax Expense


4,194



2,752



3,696



10,346



10,455


Net Income


$

16,775



$

10,940



$

14,488



$

41,208



$

41,965


Per Share Data











Basic earnings per share


$

1.12



$

0.73



$

0.94



$

2.74



$

2.70


Diluted earnings per share


$

1.11



$

0.73



$

0.94



$

2.73



$

2.70


 

 

Quarterly Average Balance and Yield/Rate Analysis

(unaudited)




Average Balance


Yield/Rate



For The Three Months Ended


For The Three Months Ended

(Dollars in thousands)


September 30,
2020


June 30,
2020


September 30,
2019


September 30,
2020


June 30,
2020


September 30,
2019

Assets













Interest-earning assets:













Interest-bearing deposits in other banks
   and other interest-earning assets


$

216,027



$

168,221



$

92,352



0.09

%


0.06

%


2.24

%

Investments - taxable


906,374



836,885



807,591



2.11

%


2.49

%


2.53

%

Investments - nontaxable(1)


122,204



124,101



98,378



3.41

%


3.38

%


3.47

%

Loans(2):













   Commercial real estate


1,315,958



1,302,393



1,255,417



3.74

%


3.83

%


4.56

%

   Commercial(1)


372,416



404,545



399,689



3.73

%


3.78

%


4.65

%

   SBA PPP


221,672



178,119





4.16

%


3.79

%


%

   Municipal(1)


19,072



19,567



22,730



3.52

%


3.62

%


3.60

%

   HPFC


16,104



17,659



25,973



8.09

%


9.28

%


8.40

%

   Residential real estate


1,083,052



1,084,931



1,062,728



4.00

%


4.06

%


4.31

%

   Consumer and home equity


305,194



321,019



347,405



4.31

%


4.29

%


5.38

%

        Total loans 


3,333,468



3,328,233



3,113,942



3.92

%


3.97

%


4.60

%

Total interest-earning assets


4,578,073



4,457,440



4,112,263



3.37

%


3.53

%


4.11

%

Other assets


417,956



414,225



345,618








Total assets


$

4,996,029



$

4,871,665



$

4,457,881





















Liabilities & Shareholders' Equity













Deposits:













Non-interest checking


$

741,757



$

664,605



$

540,542



%


%


%

Interest checking


1,339,389



1,298,468



1,130,632



0.26

%


0.28

%


0.96

%

Savings


557,718



518,803



474,096



0.06

%


0.06

%


0.08

%

Money market


737,782



717,056



622,219



0.35

%


0.37

%


1.32

%

Certificates of deposit


417,788



477,068



533,110



1.07

%


1.34

%


1.64

%

   Total deposits


3,794,434



3,676,000



3,300,599



0.29

%


0.35

%


0.85

%

Borrowings:













Brokered deposits


242,390



234,823



305,019



0.26

%


0.28

%


2.42

%

Customer repurchase agreements


194,937



209,302



234,362



0.42

%


0.56

%


1.26

%

Subordinated debentures


59,269



59,194



58,998



6.00

%


6.03

%


5.60

%

Other borrowings


73,370



76,983



11,273



1.02

%


0.35

%


1.96

%

   Total borrowings


569,966



580,302



609,652



1.01

%


0.98

%


2.27

%

Total funding liabilities


4,364,400



4,256,302



3,910,251



0.38

%


0.44

%


1.08

%

Other liabilities


118,727



115,914



78,710








Shareholders' equity


512,902



499,449



468,920








Total liabilities & shareholders' equity


$

4,996,029



$

4,871,665



$

4,457,881








Net interest rate spread (fully-taxable equivalent)


2.99

%


3.09

%


3.03

%

Net interest margin (fully-taxable equivalent)


3.00

%


3.11

%


3.09

%

Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection
   of previously charged-off acquired loans(3)


2.96

%


3.07

%


3.05

%



(1)

Reported on a tax-equivalent basis calculated using the federal corporate income tax rate of 21%, including certain commercial loans.

(2)

Non-accrual loans and loans held for sale are included in total average loans.

(3)

Excludes the impact of the fair value mark accretion on loans and certificates of deposit generated in purchase accounting and collection of previously charged-off acquired loans for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019 totaling $453,000, $403,000 and $409,000, respectively.

 

 

Year-to-Date Average Balance and Yield/Rate Analysis

(unaudited)




Average Balance


Yield/Rate



For The Nine Months Ended


For The Nine Months Ended

(Dollars in thousands)


September 30,
2020


September 30,
2019


September 30,
2020


September 30,
2019

Assets









Interest-earning assets:









Interest-bearing deposits in other banks and other interest-earning assets


$

150,383



$

63,146



0.25

%


2.26

%

Investments - taxable


850,970



832,780



2.37

%


2.55

%

Investments - nontaxable(1)


121,284



94,405



3.39

%


3.47

%

Loans(2):









   Commercial real estate


1,297,364



1,263,934



3.93

%


4.66

%

   Commercial(1)


397,754



386,338



3.91

%


4.69

%

   SBA PPP


133,569





4.00

%


%

   Municipal(1)


18,545



19,421



3.60

%


3.56

%

   HPFC


18,026



29,183



8.38

%


8.03

%

   Residential real estate


1,082,276



1,034,609



4.08

%


4.31

%

   Consumer and home equity


320,273



347,201



4.55

%


5.43

%

        Total loans 


3,267,807



3,080,686



4.06

%


4.66

%

Total interest-earning assets


4,390,444



4,071,017



3.59

%


4.16

%

Other assets


395,621



321,060






Total assets


$

4,786,065



$

4,392,077















Liabilities & Shareholders' Equity









Deposits:









Non-interest checking


$

645,640



$

505,733



%


%

Interest checking


1,261,831



1,108,999



0.40

%


0.98

%

Savings


517,936



478,573



0.06

%


0.08

%

Money market


701,872



595,659



0.55

%


1.27

%

Certificates of deposit


482,076



498,059



1.36

%


1.54

%

   Total deposits


3,609,355



3,187,023



0.44

%


0.83

%

Borrowings:









Brokered deposits


228,483



360,066



0.65

%


2.49

%

Customer repurchase agreements


213,463



239,917



0.71

%


1.27

%

Subordinated debentures


59,195



58,997



6.02

%


5.38

%

Other borrowings


69,883



23,847



0.88

%


2.17

%

   Total borrowings


571,024



682,827



1.26

%


2.30

%

Total funding liabilities


4,180,379



3,869,850



0.55

%


1.09

%

Other liabilities


108,122



66,966






Shareholders' equity


497,564



455,261






Total liabilities & shareholders' equity


$

4,786,065



$

4,392,077






Net interest rate spread (fully-taxable equivalent)


3.04

%


3.07

%

Net interest margin (fully-taxable equivalent)


3.06

%


3.13

%

Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection of previously
   charged-off acquired loans(3)


3.03

%


3.09

%



(1)

Reported on a tax-equivalent basis calculated using the federal corporate income tax rate of 21%, including certain commercial loans.

(2)

Non-accrual loans and loans held for sale are included in total average loans.

(3)

Excludes the impact of the fair value mark accretion on loans and certificates of deposit generated in purchase accounting and collection of previously charged-off acquired loans for the nine months ended September 30, 2020 and September 30, 2019 totaling $1.1 million and $1.2 million, respectively.

 

 

Asset Quality Data

(unaudited)

(In thousands)


At or For The
Nine Months Ended
September 30, 2020


At or For The
Six Months Ended
June 30, 2020


At or For The
Three Months Ended
March 31, 2020


At or For The
Year Ended
December 31, 2019


At or For The
Nine Months Ended
September 30, 2019

Non-accrual loans:











Residential real estate


$

4,017



$

4,664



$

3,499



$

4,096



$

5,152


Commercial real estate


565



432



646



1,122



1,156


Commercial 


605



699



748



420



751


Consumer and home equity


2,503



2,371



2,102



2,154



2,616


HPFC


509



392



322



364



450


Total non-accrual loans


8,199



8,558



7,317



8,156



10,125


   Accruing troubled-debt restructured loans not
      included above


2,952



2,874



3,008



2,993



3,259


Total non-performing loans


11,151



11,432



10,325



11,149



13,384


Other real estate owned




118



94



94



94


Total non-performing assets


$

11,151



$

11,550



$

10,419



$

11,243



$

13,478


Loans 30-89 days past due:











Residential real estate


$

1,784



$

4,016



$

1,781



$

2,227



$

1,447


Commercial real estate


2,056



1,625



2,641



1,582



2,242


Commercial 


1,315



95



1,560



548



1,135


Consumer and home equity


434



388



1,379



750



822


HPFC


323



128



165



243



193


Total loans 30-89 days past due


$

5,912



$

6,252



$

7,526



$

5,350



$

5,839


Allowance for loan losses at the beginning of
   the period


$

25,171



$

25,171



$

25,171



$

24,712



$

24,712


Provision for loan losses


12,172



11,172



1,772



2,862



2,658


Charge-offs:











Residential real estate


121



96



96



462



436


Commercial real estate


104



71



50



300



157


Commercial 


857



673



253



1,167



636


Consumer and home equity


199



134



91



713



670


HPFC








71



11


Total charge-offs 


1,281



974



490



2,713



1,910


Total recoveries 


(352)



(170)



(68)



(310)



(228)


Net charge-offs


929



804



422



2,403



1,682


Allowance for loan losses at the end of the
   period


$

36,414



$

35,539



$

26,521



$

25,171



$

25,688


Components of allowance for credit losses:











Allowance for loan losses


$

36,414



$

35,539



$

26,521



$

25,171



$

25,688


Liability for unfunded credit commitments


9



22



24



21



11


Allowance for credit losses 


$

36,423



$

35,561



$

26,545



$

25,192



$

25,699


Ratios:











Non-performing loans to total loans


0.34

%


0.34

%


0.33

%


0.36

%


0.43

%

Non-performing assets to total assets


0.22

%


0.23

%


0.23

%


0.25

%


0.30

%

Allowance for loan losses to total loans


1.11

%


1.07

%


0.84

%


0.81

%


0.83

%

Allowance for loan losses to total loans, excluding
   SBA PPP loans(1)


1.19

%


1.14

%


0.84

%


0.81

%


0.83

%

Net charge-offs to average loans (annualized):











Quarter-to-date


0.01

%


0.05

%


0.05

%


0.09

%


0.16

%

Year-to-date


0.04

%


0.05

%


0.05

%


0.08

%


0.07

%

Allowance for loan losses to non-performing loans


326.55

%


310.87

%


256.86

%


225.77

%


191.93

%

Loans 30-89 days past due to total loans


0.18

%


0.19

%


0.24

%


0.17

%


0.19

%



(1)

This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures (unaudited)" for further details.

 

 

Reconciliation of non-GAAP to GAAP Financial Measures (unaudited)


Return on Average Tangible Equity:







For the
Three Months Ended


For the
Nine Months Ended

(Dollars in thousands)


September 30,
2020


June 30,
2020


September 30,
2019


September 30,
 2020


September 30,
 2019

Net income, as presented


$

16,775



$

10,940



$

14,488



$

41,208



$

41,965


Add: amortization of core deposit
   intangible assets, net of tax(1)


134



135



140



404



418


Net income, adjusted for amortization of
   core deposit intangible assets


$

16,909



$

11,075



$

14,628



$

41,612



$

42,383


Average equity, as presented


$

512,902



$

499,449



$

468,920



$

497,564



$

455,261


Less: average goodwill and core deposit
   intangible assets


(97,794)



(97,965)



(98,484)



(97,967)



(98,659)


Average tangible equity


$

415,108



$

401,484



$

370,436



$

399,597



$

356,602


Return on average equity


13.01

%


8.81

%


12.26

%


11.06

%


12.32

%

Return on average tangible equity


16.21

%


11.09

%


15.67

%


13.91

%


15.89

%


(1) Assumed a 21% tax rate.



Efficiency Ratio:













For the
Three Months Ended


For the
Nine Months Ended

(Dollars in thousands)


September 30,
2020


June 30,
2020


September 30,
2019


September 30,
2020


September 30,
2019

Non-interest expense, as presented


$

25,221



$

23,509



$

23,748



$

73,291



$

70,489


Less: legal settlement


(1,200)







(1,200)




Adjusted non-interest expense


$

24,021



$

23,509



$

23,748



$

72,091



$

70,489


Net interest income, as presented


$

34,481



$

34,539



$

31,923



$

100,846



$

95,391


Add: effect of tax-exempt income(1)


292



295



264



865



752


Non-interest income, as presented


12,696



12,060



10,739



36,159



30,165


Less: net gain on sale of securities






(1)





(28)


Adjusted net interest income plus non-
   interest income


$

47,469



$

46,894



$

42,925



$

137,870



$

126,280


GAAP efficiency ratio


53.46

%


50.45

%


55.67

%


53.50

%


56.14

%

Non-GAAP efficiency ratio


50.60

%


50.13

%


55.32

%


52.29

%


55.82

%


(1) Assumed a 21% tax rate.



Pre-tax, Pre-provision Earnings:













For the
Three Months Ended


For the
Nine Months Ended

(In thousands)


September 30,
2020


June 30,
2020


September 30,
2019


September 30,
2020


September 30,
2019

Net income, as presented


$

16,775



$

10,940



$

14,488



$

41,208



$

41,965


Add: provision for credit losses


987



9,398



730



12,160



2,647


Add: income tax expense


4,194



2,752



3,696



10,346



10,455


Pre-tax, pre-provision earnings


$

21,956



$

23,090



$

18,914



$

63,714



$

55,067


 

 

Allowance for loan losses to total loans, excluding SBA PPP loans:







(In thousands)


September 30,
2020


June 30,
2020


September 30,
2019

Allowance for loan losses, as presented


$

36,414



$

35,539



$

25,688


Less: allowance for loan losses on SBA PPP loans


(115)



(113)




Adjusted allowance for loan losses


$

36,299



$

35,426



$

25,688


Total loans, as presented


$

3,274,842



$

3,326,041



$

3,110,634


Less: SBA PPP loans


(223,838)



(218,803)




Adjusted total loans


$

3,051,004



$

3,107,238



$

3,110,634


Allowance for loan losses to total loans


1.11

%


1.07

%


0.83

%

Allowance for loan losses to total loans, excluding SBA PPP loans


1.19

%


1.14

%


0.83

%



Tangible Book Value Per Share and Tangible Common Equity Ratio:



September 30,
2020


June 30,
2020


September 30,
2019

(In thousands, except number of shares, per share data and ratios)


Tangible Book Value Per Share:







Shareholders' equity, as presented


$

517,522



$

506,467



$

471,672


Less: goodwill and other intangible assets


(97,711)



(97,881)



(98,398)


Tangible shareholders' equity


$

419,811



$

408,586



$

373,274


Shares outstanding at period end


14,917,344



14,963,041



15,224,903


Book value per share


$

34.69



$

33.85



$

30.98


Tangible book value per share


$

28.14



$

27.31



$

24.52


Tangible Common Equity Ratio:

Total assets


$

5,153,793



$

4,959,016



$

4,520,315


Less: goodwill and other intangible assets


(97,711)



(97,881)



(98,398)


Tangible assets


$

5,056,082



$

4,861,135



$

4,421,917


Common equity ratio


10.04

%


10.21

%


10.43

%

Tangible common equity ratio


8.30

%


8.41

%


8.44

%



Core Deposits:

(In thousands)


September 30,
2020


June 30,
 2020


September 30,
2019

Total deposits


$

4,224,044



$

3,996,358



$

3,617,963


Less: certificates of deposit


(405,434)



(431,376)



(541,199)


Less: brokered deposits


(291,616)



(224,777)



(250,226)


Core deposits


$

3,526,994



$

3,340,205



$

2,826,538












Average Core Deposits:







For the
Three Months Ended


For the
Nine Months Ended

(In thousands)


September 30,
2020


June 30,
 2020


September 30,
2019


September 30,
2020


September 30,
2019

Total average deposits


$

3,794,434



$

3,676,000



$

3,300,599



$

3,609,355



$

3,187,023


Less: average certificates of deposit


(417,788)



(477,068)



(533,110)



(482,076)



(498,059)


Average core deposits


$

3,376,646



$

3,198,932



$

2,767,489



$

3,127,279



$

2,688,964


 

 

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SOURCE Camden National Corporation