Camden National Corporation Reports First Quarter 2021 Financial Results

Company Release - 4/27/2021
Camden National Corporation Reports Record Net Income of $19.7 Million for the First Quarter of 2021

CAMDEN, Maine, April 27, 2021 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company"), a $5.1 billion bank holding company headquartered in Camden, Maine, reported net income of $19.7 million and diluted earnings per share ("EPS") of $1.31 for the first quarter of 2021, increases of 46% and 47% over the first quarter of 2020, respectively. On a linked-quarter basis, the Company's first quarter 2021 net income and diluted EPS increased 8% and 7% over the fourth quarter of 2020, respectively. These strong financial results led to a return on average equity of 15.00% and a return on average tangible equity (non-GAAP) of 18.47% for the first quarter of 2021.

"I'm very pleased with our strong start to the year reporting record quarterly earnings of $19.7 million for the quarter," said Gregory A. Dufour, President and Chief Executive Officer of the Company. "Mortgage banking income for the first quarter doubled that reported for the same period a year ago, while we also recognized $1.9 million of income from Small Business Administration Paycheck Protection Program ('SBA PPP') loans. The actions we took last year in response to the COVID-19 pandemic, which included increasing reserve levels, positioned us well during the early stages of the pandemic, providing flexibility to offer short-term loan deferral arrangements to qualified borrowers and originate SBA PPP loans. As we continue to monitor economic factors closely, our asset quality continues to be favorable, with non-performing assets at 0.20% of total assets and only $2.4 million of loans remaining on short-term deferral arrangement at March 31, 2021. Given the strength of our asset quality and improving market conditions, we released provision of $2.0 million for the quarter. At quarter-end, our loan loss reserves of 1.11% of total loans continued to be well above reserve levels at the onset of the pandemic of 0.84% of total loans at March 31, 2020."

Dufour added, "In addition to great financial results for the first quarter, we were excited to learn Camden National was named to S&P Global's top 50 performing publicly-traded community banks of 2020 with $3 - $10 billion in assets and was named a Raymond James Community Bankers Cup recipient, which recognizes the top 10% of community banks. These are major accomplishments and a testament to our whole team's hard work over the past year."

In March 2021, the Company announced a 9% increase in its quarterly cash dividend to $0.36, payable on April 30, 2021 to shareholders of record on April 15, 2021. The Company's book value per share grew 8% year-over-year to $35.64 at March 31, 2021, and its tangible book value per share (non-GAAP) grew 10% over the same period to $29.12 at March 31, 2021.

FIRST QUARTER 2021 HIGHLIGHTS

  • Net income increased by $6.2 million, or 46%, over the first quarter of 2020 and by $1.5 million, or 8%, over the fourth quarter of 2020.
  • Pre-tax, pre-provision earnings (non-GAAP) increased $4.0 million, or 21%, over the first quarter of 2020 and decreased $420,000, or 2%, from the fourth quarter of 2020.
  • Net interest margin on a fully-taxable equivalent basis ("net interest margin") for the first quarter of 2021 was 2.88%, compared to 3.08% for the first quarter of 2020 and 3.06% for the fourth quarter of 2020.
  • Adjusted net interest margin (non-GAAP), which excludes SBA PPP average loans and related income, and average excess liquidity and related income, for the first quarter of 2021 was 2.91%, compared to 3.09% for the first quarter of 2020 and 2.99% for the fourth quarter of 2020.
  • Loans grew 1% during the first quarter of 2021 to $3.2 billion at March 31, 2021.
  • Non-performing assets were 0.20% of total assets and loans 30-89 days past due were 0.05% of total loans at March 31, 2021.
  • Allowance for loan losses was 1.11% of total loans at March 31, 2021, down from 1.18% at December 31, 2020.
  • Announced an increase in the quarterly cash dividend to shareholders of 9% to $0.36, payable on April 30, 2021 to shareholders of record on April 15, 2021.

FINANCIAL CONDITION

As of March 31, 2021, total assets were $5.1 billion, an increase of $190.5 million, or 4%, since December 31, 2020. Asset growth for the first quarter of 2021 was driven by an increase in cash balances as additional federal stimulus was provided in response to the COVID-19 pandemic, which included another round of SBA PPP loans for qualifying small businesses. Loan growth for the first quarter of $17.2 million, or 1%, was driven by SBA PPP loan growth of $34.3 million and commercial real estate loan growth of $20.9 million, and was partially offset by lower consumer and home equity loan balances of $19.6 million, lower commercial loan balances of $15.3 million and lower residential real estate balances of $3.0 million. Residential real estate originations continued to be strong throughout the first quarter of 2021 as interest rates remained low. For the first quarter of 2021, the Company originated $289.8 million of residential real estate loans, of which 63% was refinancing activity, and 34% of those originated during the quarter were held in its loan portfolio and the remaining were sold to secondary market investors.

As of March 31, 2021, total deposits were $4.2 billion, an increase of $206.4 million, or 5%, since December 31, 2020. Deposit growth for the first quarter was driven by core deposit (non-GAAP) growth of $212.8 million, or 6%, which was fueled by another round of government stimulus programs in response to the COVID-19 pandemic. Over the same period, certificates of deposits decreased 3% and total borrowings decreased $1.0 million. During the first quarter of 2021, in light of its liquidity position, the Company terminated a $25.0 million long-term borrowing contract with the Federal Home Loan Bank of Boston ("FHLBB") under which advances had an interest rate of 0.98%, and incurred a one-time prepayment penalty of $514,000. On April 16, 2021, the Company redeemed in full $15.0 million of subordinated notes that had a 5.50% interest rate, at a redemption price equal to the principal amount of the notes plus accrued and unpaid interest.

The Company's loan-to-deposit ratio was 77% at March 31, 2021, compared to 80% at December 31, 2020.

At March 31, 2021, the Company's capital position remained well in excess of regulatory requirements, including a total risk-based capital ratio of 16.00% and a tier 1 leverage ratio of 9.61%. As of March 31, 2021, the Company's $15.0 million of subordinated debt provided 38 basis points of tier 2 capital for its total risk-based capital ratio.

In March 2021, the Company announced a $0.03, or 9%, increase in its quarterly cash dividend to shareholders to $0.36 per share, payable on April 30, 2021 to shareholders of record as of April 15, 2021. As of March 31, 2021, the Company's annualized dividend yield was 3.01% based on Camden National's closing share price of $47.86, as reported by NASDAQ.

In the first quarter of 2021, the Company initiated a new share repurchase program for up to 750,000 shares of its common stock, or approximately 5% of the Company's shares outstanding. This share repurchase program replaces the program that terminated in January 2021, and the new program will terminate upon the earlier of: (1) reaching the authorized share repurchase amount, (2) a vote by the Board of Directors to terminate the program, or (3) one year. The Company did not repurchase any shares during the first quarter of 2021.

ASSET QUALITY AND COVID-19 SHORT TERM LOAN DEFERMENTS

As of March 31, 2021, the Company's asset quality metrics remained very strong, with non-performing assets of 0.20% of total assets and loans 30-89 days past due of 0.05% of total loans. In comparison, at December 31, 2020 and March 31, 2020, non-performing assets were 0.22% and 0.23% of total assets, respectively, and loans 30-89 days past due were 0.10% and 0.24% of total loans, respectively.

In response to the COVID-19 pandemic, the Company offered temporary debt relief to its business and retail customers impacted by COVID-19 in 2020 in accordance with the terms of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and bank regulator guidance. The Company provided short-term debt payment relief to commercial and retail customers for periods up to 180 days, including full and partial principal and/or interest payment relief, and these loans were not individually assessed, designated or accounted for as troubled-debt restructurings. At March 31, 2021, loans operating under a short-term deferral arrangement totaled $2.4 million, compared to $26.5 million at December 31, 2020.

In late December 2020, another stimulus package was signed into law to provide additional COVID-19 relief for businesses and consumers. This stimulus package permits the Company the opportunity to again provide temporary debt relief to borrowers impacted by COVID-19. As of March 31, 2021, the Company had not provided any additional temporary debt relief to borrowers; however, such relief may be made in the future on a case-by-case basis.

ALLOWANCE FOR CREDIT LOSSES ("ACL")

In the fourth quarter of 2020, the Company adopted the current expected credit loss methodology, commonly referred to as "CECL," to account for the ACL on loans and certain off-balance credit exposures, effective as of January 1, 2020. Interim periods prior to the fourth quarter of 2020 continue to be presented under the incurred loss methodology.

At March 31, 2021, the ACL on loans was $35.8 million, or 1.11% of total loans, compared to $37.9 million, or 1.18% of total loans, at December 31, 2020. The decrease in the allowance reflects the Company's strong asset quality and overall improvement in the current and forecasted market conditions over its four-quarter forecast period. There have been no significant changes in the Company's CECL methodology since year-end.

FINANCIAL OPERATING RESULTS (Q1 2021 vs. Q1 2020)

Net income for the first quarter of 2021 was $19.7 million, an increase of $6.2 million, or 46%, over the first quarter of 2020. Diluted EPS for the first quarter of 2021 was $1.31, an increase of $0.42, or 47%, over the first quarter of 2020.

Net Interest Income and Net Interest Margin.  Net interest income for the first quarter of 2021 was $32.4 million, an increase of 2% over the first quarter of 2020. Interest expense decreased $5.4 million, or 64%, between periods, while interest income decreased $4.8 million, or 12%. The decrease in interest expense and interest income was primarily driven by the change in the interest rate environment between periods in response to the COVID-19 pandemic. The decrease in interest income was partially offset by $1.9 million of income generated from SBA PPP loans in the first quarter of 2021 that were not yet offered in the first quarter of 2020.

Net interest margin for the first quarter of 2021 was 2.88%, a decrease of 20 basis points compared to the first quarter of 2020. Adjusted net interest margin, which excludes SBA PPP loans and excess liquidity (non-GAAP), for the first quarter of 2021 was 2.91%, compared to 3.09% for the first quarter of 2020.

Provision for Credit Losses.  The provision for credit losses for the first quarter of 2021 was reported using the CECL methodology, whereas the provision for credit losses for the first quarter of 2020 was reported using the incurred loss methodology.

The change in provision for credit losses between periods is highlighted in the table below:



CECL


Incurred


Change

($ in thousands)


Q1 2021


Q1 2020


Increase /

(Decrease)

(Credit) provision for credit losses - loans


$

(1,854)



$

1,772



$

(3,626)


(Credit) provision for credit losses - off-balance sheet credit exposures


(102)



3



(105)


(Credit) provision for credit losses


$

(1,956)



$

1,775



$

(3,731)


Non-Interest Income.  Non-interest income for the first quarter of 2021 was $15.2 million, an increase of $3.8 million, or 33%, over the first quarter of 2020. The increase between periods was driven by: (1) an increase in mortgage banking income of $3.6 million driven by an increase in mortgage sales as mortgage rates decreased and housing demand increased within our markets as a result of the COVID-19 pandemic, (2) an increase in debit card income of $595,000, or 28%, as customer spending increased in large part due to federal stimulus as a result of the COVID-19 pandemic, and (3) an increase in brokerage and insurance commissions of $296,000, net of a decrease in service charges on deposit accounts of $473,000, primarily due to lower overdraft fees as businesses and consumers benefited from federal stimulus in the first quarter of 2021.

Non-Interest Expense.  Non-interest expense for the first quarter of 2021 was $24.9 million, an increase of $338,000, or 1%, compared to the first quarter of 2020. The modest increase in non-interest expense between periods was driven by: (1) a one-time prepayment penalty of $514,000 upon the termination of a long-term borrowing  and (2) an increase in regulatory assessment costs of $341,000 as the Company received an assessment credit in the first quarter of 2020. This increase was partially offset by (1) a decrease in other real estate owned ("OREO") and collection costs of $292,000 driven by collection of previously incurred costs and a gain upon sale of an OREO property and (2) a decrease in marketing-, hiring- and travel-related costs of $573,000.

FINANCIAL OPERATING RESULTS (Q1 2021 vs. Q4 2020)

Net income for the first quarter of 2021 increased $1.5 million, or 8%, over the fourth quarter of 2020. Diluted EPS over this same period increased $0.09, or 7%.

Net Interest Income and Net Interest Margin.  Net interest income for the first quarter of 2021 decreased $3.1 million, or 9%, compared to the fourth quarter of 2020. Interest income decreased $3.8 million, or 10%, between periods, while interest expense decreased $657,000, or 18%. The decrease in interest income was driven by: (1) compressed yields on interest-earning assets, (2) lower SBA PPP income of $1.8 million and (3) a decrease in average interest-earning assets of 2%. The decrease in interest expense was driven by a 4 basis point decrease in cost of funds and a decrease in average funding liabilities of 2% between periods.

Net interest margin for the first quarter of 2021 decreased 18 basis points compared to the fourth quarter of 2020. Adjusted net interest margin, which excludes SBA PPP loans and excess liquidity (non-GAAP), for the first quarter of 2021 was 2.91%, compared to 2.99% for the fourth quarter of 2020.

Provision for Credit Losses.  The change in provision for credit losses between periods is highlighted in the table below:



CECL


CECL


Change

($ in thousands)


Q1 2021


Q4 2020


Increase /

(Decrease)

(Credit) provision for credit losses - loans


$

(1,854)



$

1,043



$

(2,897)


Credit for credit losses - off-balance sheet credit exposures


(102)



(785)



683


(Credit) provision for credit losses


$

(1,956)



$

258



$

(2,214)


Non-Interest Income.  Non-interest income for the first quarter of 2021 increased $884,000, or 6%, over the fourth quarter of 2020. The increase between periods was driven by an increase in mortgage banking income of $1.5 million, partially offset by decreases in: (1) debit card income of $525,000 as the Company recognized its annual debit card income bonus of $555,000 in the fourth quarter of 2020, and (2) service charges on deposit accounts of $203,000, primarily due to lower overdraft fees as businesses and consumers benefited from federal stimulus in the first quarter of 2021.

Non-Interest Expense.  Non-interest expense for the first quarter of 2021 decreased $1.8 million, or 7%, compared to the fourth quarter of 2020. The decrease in non-interest expense between periods was driven by: (1) a decrease in compensation and related costs of $1.7 million that was primarily due to an increase in performance-based incentive accruals in the fourth quarter of 2020, and (2) a decrease in OREO and collection costs of $303,000, driven by collection of previously incurred costs and a gain upon sale of an OREO property. This decrease was partially offset by a one-time prepayment penalty of $514,000 upon the termination of the Company's $25.0 million long-term FHLBB borrowing contract.

2021 ANNUAL MEETING OF SHAREHOLDERS

Camden National has scheduled its annual meeting of shareholders for Tuesday, April 27, 2021, at 3:00 p.m. Eastern time. Due to the ongoing concerns regarding the public health impact of COVID-19, the Company will hold its annual meeting both in person and virtually via live audio webcast. Shareholders will be permitted to attend the annual meeting in person at Camden National's Hanley Center, Fox Ridge Office Park, 245 Commercial Street, Rockport, Maine 04856, only to the extent consistent with, or permitted by, applicable law and directives of public health authorities. We strongly urge shareholders to attend the annual meeting virtually by visiting www.virtualshareholdermeeting.com/CAC2021.

Camden National's proxy materials for its annual meeting of shareholders and additional information can be found at www.cacannualmeeting.com.

Q1 2021 CONFERENCE CALL

Camden National will host a conference call and webcast at 1:00 p.m., Eastern Time, on Tuesday, April 27, 2021 to discuss its first quarter 2021 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/cac210427.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 $5.1 billion in assets and approximately 600 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 three years, Camden National Bank was named a Customer Experience (CX) Leader by leading independent research firm, Greenwich Associates. In 2020, it received awards in two CX categories: U.S. Retail Banking and U.S. Commercial Small Business. The Finance Authority of Maine has awarded Camden National Bank as "Lender at Work for Maine" for eleven years, and Camden National Corporation received a 2020 Raymond James Community Bankers Cup award, placing it in the top 10% of community banks. 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, 2020, 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 generally accepted accounting principles in the United States ("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; adjusted yield on interest-earning assets and adjusted net interest margin (fully-taxable equivalent). 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

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


March 31,
2021


December 31,
2020


March 31,
2020

Financial Condition Data







Investments


$

1,131,178



1,132,812



$

979,674


Loans and loans held for sale


3,259,275



3,261,379



3,185,492


Allowance for credit losses on loans


35,775



37,865



26,521


Total assets


5,089,279



4,898,745



4,594,539


Deposits


4,211,630



4,005,244



3,563,705


Borrowings


245,739



246,770



420,877


Shareholders' equity


532,120



529,314



492,680


Operating Data







Net interest income


$

32,364



$

35,461



$

31,826


(Credit) provision for credit losses


(1,956)



258



1,775


Non-interest income


15,215



14,331



11,403


Non-interest expense


24,899



26,692



24,561


Income before income tax expense


24,636



22,842



16,893


Income tax expense


4,896



4,564



3,400


Net income


$

19,740



$

18,278



$

13,493


Key Ratios







Return on average assets


1.62

%


1.45

%


1.21

%

Return on average equity


15.00

%


13.94

%


11.30

%

GAAP efficiency ratio


52.33

%


53.61

%


56.82

%

Net interest margin (fully-taxable equivalent)


2.88

%


3.06

%


3.08

%

Non-performing assets to total assets


0.20

%


0.22

%


0.23

%

Common equity ratio


10.46

%


10.81

%


10.72

%

Tier 1 leverage capital ratio


9.61

%


9.13

%


9.53

%

Total risk-based capital ratio


16.00

%


15.40

%


13.81

%

Per Share Data







Basic earnings per share


$

1.32



$

1.22



$

0.89


Diluted earnings per share


$

1.31



$

1.22



$

0.89


Cash dividends declared per share


$

0.36



$

0.33



$

0.33


Book value per share


$

35.64



$

35.50



$

32.95


Non-GAAP Measures(1)







Return on average tangible equity


18.47

%


17.27

%


14.35

%

Efficiency ratio


50.96

%


53.30

%


56.45

%

Adjusted net interest margin (fully-taxable equivalent)


2.91

%


2.99

%


3.09

%

Pre-tax, pre-provision earnings


$

22,680



$

23,100



$

18,668


Tangible common equity ratio


8.71

%


8.99

%


8.78

%

Tangible book value per share


$

29.12



$

28.96



$

26.39




(1)

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

 

Consolidated Statements of Condition Data
(unaudited)


(In thousands)


March 31,
2021


December 31,
2020


March 31,
2020

ASSETS







Cash, cash equivalents and restricted cash


$

368,247



$

145,774



$

54,209


Investments:







Trading securities


4,123



4,161



3,187


Available-for-sale securities, at fair value (book value of $1,100,514, $1,078,474 and
$931,876, respectively)


1,115,548



1,115,813



960,131


Held-to-maturity securities, at amortized cost (fair value of $1,396, $1,411 and $1,358,
respectively)


1,295



1,297



1,300


Other investments


10,212



11,541



15,056


Total investments


1,131,178



1,132,812



979,674


Loans held for sale, at fair value (book value of $22,243, $40,499 and $28,356,
respectively)


22,229



41,557



27,730


Loans:







Commercial real estate


1,390,327



1,369,470



1,299,860


Commercial(1)


366,159



381,494



463,087


SBA PPP


169,407



135,095




Residential real estate


1,051,765



1,054,798



1,064,212


Consumer and home equity


259,388



278,965



330,603


Total loans


3,237,046



3,219,822



3,157,762


      Less: allowance for credit losses on loans


(35,775)



(37,865)



(26,521)


       Net loans


3,201,271



3,181,957



3,131,241


Goodwill and core deposit intangible assets


97,377



97,540



98,052


Other assets


268,977



299,105



303,633


Total assets


$

5,089,279



$

4,898,745



$

4,594,539


LIABILITIES AND SHAREHOLDERS' EQUITY







Liabilities







Deposits:







Non-interest checking


$

860,024



$

792,550



$

536,243


Interest checking


1,349,528



1,288,575



1,147,653


Savings and money market


1,367,274



1,282,886



1,146,038


Certificates of deposit


346,046



357,666



545,013


Brokered deposits


288,758



283,567



188,758


Total deposits


4,211,630



4,005,244



3,563,705


Short-term borrowings


186,408



162,439



326,722


Long-term borrowings




25,000



35,000


Subordinated debentures


59,331



59,331



59,155


Accrued interest and other liabilities


99,790



117,417



117,277


Total liabilities


4,557,159



4,369,431



4,101,859


Shareholders' equity


532,120



529,314



492,680


Total liabilities and shareholders' equity


$

5,089,279



$

4,898,745



$

4,594,539




(1)

 Includes the Healthcare Professional Funding Corporation ("HPFC") loan portfolio.

 

Consolidated Statements of Income Data
(unaudited)




For The

Three Months Ended

(In thousands, except per share data)


March 31,
2021


December 31,

2020


March 31,
2020

Interest Income







Interest and fees on loans


$

30,560



$

33,810



$

34,045


Taxable interest on investments


3,829



4,158



4,878


Nontaxable interest on investments


728



815



787


Dividend income


105



157



168


Other interest income


166



202



335


Total interest income


35,388



39,142



40,213


Interest Expense







Interest on deposits


2,063



2,591



6,662


Interest on borrowings


156



246



838


Interest on subordinated debentures


805



844



887


Total interest expense


3,024



3,681



8,387


Net interest income


32,364



35,461



31,826


(Credit) provision for credit losses(1)


(1,956)



258



1,775


Net interest income after (credit) provision for credit losses


34,320



35,203



30,051


Non-Interest Income







Mortgage banking income, net


7,109



5,598



3,534


Debit card income


2,736



3,261



2,141


Service charges on deposit accounts


1,539



1,742



2,012


Income from fiduciary services


1,526



1,506



1,502


Brokerage and insurance commissions


953



798



657


Bank-owned life insurance


594



615



689


Customer loan swap fees






114


Other income


758



811



754


Total non-interest income


15,215



14,331



11,403


Non-Interest Expense







Salaries and employee benefits


14,522



16,245



14,327


Furniture, equipment and data processing


3,027



3,180



2,790


Net occupancy costs


1,951



1,800



2,003


Debit card expense


986



969



934


Consulting and professional fees


863



956



783


Regulatory assessments


503



479



162


Amortization of core deposit intangible assets


164



171



170


Other real estate owned and collection (recoveries) costs, net


(191)



112



101


Other expenses


3,074



2,780



3,291


Total non-interest expense


24,899



26,692



24,561


Income before income tax expense


24,636



22,842



16,893


Income Tax Expense


4,896



4,564



3,400


Net Income


$

19,740



$

18,278



$

13,493


Per Share Data







Basic earnings per share


$

1.32



$

1.22



$

0.89


Diluted earnings per share


$

1.31



$

1.22



$

0.89




(1)

Reported balances for the three months ended March 31, 2021 and December 31, 2020 have been accounted for under the CECL model. Reported balances for the three months ended March 31, 2020 have been accounted for under the incurred loss method.


 

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)


March 31,
2021


December 31,

2020


March 31,

2020


March 31,
2021


December 31,

2020


March 31,

2020

Assets













Interest-earning assets:













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


$

210,844



$

267,083



$

66,180



0.09

%


0.09

%


1.24

%

Investments - taxable


946,456



945,866



809,041



1.71

%


1.88

%


2.56

%

Investments - nontaxable(1)


118,469



121,354



117,537



3.11

%


3.40

%


3.39

%

Loans(2):













Commercial real estate


1,382,795



1,348,269



1,273,538



3.58

%


3.65

%


4.24

%

Commercial(1)


333,458



331,707



416,527



3.74

%


3.89

%


4.21

%

SBA PPP


154,900



186,416





4.85

%


7.74

%


%

Municipal(1)


24,133



20,645



16,990



3.33

%


3.46

%


3.67

%

HPFC


12,549



13,947



20,336



7.18

%


6.98

%


7.83

%

Residential real estate


1,083,101



1,093,367



1,078,836



3.72

%


3.96

%


4.19

%

Consumer and home equity


268,711



287,665



334,771



4.17

%


4.25

%


5.03

%

     Total loans 


3,259,647



3,282,016



3,140,998



3.76

%


4.07

%


4.32

%

Total interest-earning assets


4,535,416



4,616,319



4,133,756



3.15

%


3.38

%


3.90

%

Other assets


401,973



405,976



354,436








Total assets


$

4,937,389



$

5,022,295



$

4,488,192





















Liabilities & Shareholders' Equity













Deposits:













Non-interest checking


$

817,631



$

800,391



$

529,501



%


%


%

Interest checking


1,289,511



1,371,910



1,146,783



0.19

%


0.23

%


0.70

%

Savings


626,591



589,856



476,849



0.04

%


0.04

%


0.07

%

Money market


685,026



700,949



650,383



0.31

%


0.33

%


0.98

%

Certificates of deposit


351,555



373,364



552,079



0.63

%


0.89

%


1.61

%

Total deposits


3,770,314



3,836,470



3,355,595



0.19

%


0.23

%


0.70

%

Borrowings:













Brokered deposits


284,620



286,038



208,084



0.45

%


0.46

%


1.54

%

Customer repurchase agreements


165,721



183,337



236,351



0.29

%


0.40

%


1.08

%

Subordinated debentures


59,331



59,327



59,119



5.50

%


5.66

%


6.04

%

Other borrowings


14,444



25,000



59,257



0.99

%


1.00

%


1.39

%

Total borrowings


524,116



553,702



562,811



0.99

%


1.02

%


1.80

%

Total funding liabilities


4,294,430



4,390,172



3,918,406



0.29

%


0.33

%


0.86

%

Other liabilities


109,314



110,452



89,612








Shareholders' equity


533,645



521,671



480,174








Total liabilities & shareholders' equity


$

4,937,389



$

5,022,295



$

4,488,192








Net interest rate spread (fully-taxable equivalent)


2.86

%


3.05

%


3.04

%

Net interest margin (fully-taxable equivalent)


2.88

%


3.06

%


3.08

%

Adjusted net interest margin (fully-taxable equivalent) (non-GAAP)


2.91

%


2.99

%


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.

 


Asset Quality Data

(unaudited)

(In thousands)


At or For The

Three Months Ended

March 31, 2021


At or For The

Year Ended

December 31, 2020


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

Non-accrual loans:











Residential real estate


$

3,637



$

3,531



$

4,017



$

4,664



$

3,499


Commercial real estate


309



518



565



432



646


Commercial(1)


1,737



1,607



1,114



1,091



1,070


Consumer and home equity


1,897



1,996



2,503



2,371



2,102


Total non-accrual loans


7,580



7,652



8,199



8,558



7,317


Accruing troubled-debt restructured loans not included above


2,579



2,818



2,952



2,874



3,008


Total non-performing loans


10,159



10,470



11,151



11,432



10,325


Other real estate owned


204



236





118



94


Total non-performing assets


$

10,363



$

10,706



$

11,151



$

11,550



$

10,419


Loans 30-89 days past due:











Residential real estate


$

772



$

2,297



$

1,784



$

4,016



$

1,781


Commercial real estate


177



50



2,056



1,625



2,641


Commercial(1)


425



430



1,638



223



1,725


Consumer and home equity


264



440



434



388



1,379


Total loans 30-89 days past due


$

1,638



$

3,217



$

5,912



$

6,252



$

7,526


ACL on loans at the beginning of the period


$

37,865



$

25,171



$

25,171



$

25,171



$

25,171


Impact of CECL adoption




233








(Credit) provision for loan losses


(1,854)



13,215



12,172



11,172



1,772


Charge-offs:











Residential real estate


53



121



121



96



96


Commercial real estate




103



104



71



50


Commercial(1)


147



1,130



857



673



253


Consumer and home equity


87



484



199



134



91


Total charge-offs 


287



1,838



1,281



974



490


Total recoveries 


(51)



(1,084)



(352)



(170)



(68)


Net charge-offs


236



754



929



804



422


ACL on loans at the end of the period


$

35,775



$

37,865



$

36,414



$

35,539



$

26,521


Components of ACL:











ACL on loans


$

35,775



$

37,865



$

36,414



$

35,539



$

26,521


ACL on off-balance sheet credit exposures(2)(3)


2,466



2,568



9



22



24


ACL, end of period


$

38,241



$

40,433



$

36,423



$

35,561



$

26,545


Ratios:











Non-performing loans to total loans


0.31

%


0.33

%


0.34

%


0.34

%


0.33

%

Non-performing assets to total assets


0.20

%


0.22

%


0.22

%


0.23

%


0.23

%

ACL on loans to total loans


1.11

%


1.18

%


1.11

%


1.07

%


0.84

%

Net charge-offs (recoveries) to average loans (annualized):











Quarter-to-date


0.03

%


(0.02)

%


0.01

%


0.05

%


0.05

%

Year-to-date


0.03

%


0.02

%


0.04

%


0.05

%


0.05

%

ACL on loans to non-performing loans


352.15

%


361.65

%


326.55

%


310.87

%


256.86

%

Loans 30-89 days past due to total loans


0.05

%


0.10

%


0.18

%


0.19

%


0.24

%



(1)

Includes the HPFC loan portfolio.

(2)

Period ended December 31, 2020, includes a $3.3 million increase upon adoption of CECL. Prior periods were not restated for CECL.

(3)

Presented within accrued interest and other liabilities on the consolidated statements of condition.

 

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


Return on Average Tangible Equity:



For the

Three Months Ended

(Dollars in thousands)


March 31,

2021


December 31,

2020


March 31,

2020

Net income, as presented


$

19,740



$

18,278



$

13,493


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


130



135



134


Net income, adjusted for amortization of core deposit intangible assets


$

19,870



$

18,413



$

13,627


Average equity, as presented


$

533,645



$

521,671



$

480,174


Less: average goodwill and core deposit intangible assets


(97,463)



(97,622)



(98,143)


Average tangible equity


$

436,182



$

424,049



$

382,031


Return on average equity


15.00

%


13.94

%


11.30

%

Return on average tangible equity


18.47

%


17.27

%


14.35

%


(1)   Assumed a 21% tax rate.


Efficiency Ratio:









For the

Three Months Ended

(Dollars in thousands)


March 31,
2021


December 31,

2020


March 31,

2020

Non-interest expense, as presented


$

24,899



$

26,692



$

24,561


Less: prepayment penalty on borrowings


(514)






Adjusted non-interest expense


$

24,385



$

26,692



$

24,561


Net interest income, as presented


$

32,364



$

35,461



$

31,826


Add: effect of tax-exempt income(1)


271



290



280


Non-interest income, as presented


15,215



14,331



11,403


Adjusted net interest income plus non-interest income


$

47,850



$

50,082



$

43,509


GAAP efficiency ratio


52.33

%


53.61

%


56.82

%

Non-GAAP efficiency ratio


50.96

%


53.30

%


56.45

%


(1)   Assumed a 21% tax rate.


Pre-tax, Pre-provision Earnings:









For the

Three Months Ended

(In thousands)


March 31,
2021


December 31,

2020


March 31,

2020

Net income, as presented


$

19,740



$

18,278



$

13,493


Add: (credit) provision for credit losses


(1,956)



258



1,775


Add: income tax expense


4,896



4,564



3,400


Pre-tax, pre-provision earnings


$

22,680



$

23,100



$

18,668




 

Adjusted Yield on Interest-Earning Assets:



For the

Three Months Ended



March 31,
2021


December 31,

2020


March 31,

2020

Yield on interest-earning assets, as presented


3.15

%


3.38

%


3.90

%

Add: effect of excess liquidity on yield on interest-earning assets


0.10

%


0.15

%


%

Less: effect of SBA PPP loans on yield on interest-earning assets


(0.06)

%


(0.19)

%


%

Adjusted yield on interest-earning assets


3.19

%


3.34

%


3.90

%



Adjusted Net Interest Margin (Fully-Taxable Equivalent):



For the

Three Months Ended



March 31,
2021


December 31,

2020


March 31,

2020

Net interest margin (fully-taxable equivalent), as presented


2.88

%


3.06

%


3.08

%

Add: effect of excess liquidity on net interest margin (fully-taxable equivalent)


0.10

%


0.13

%


0.01

%

Less: effect of SBA PPP loans on net interest margin (fully-taxable equivalent)


(0.07)

%


(0.20)

%


%

Adjusted net interest margin (fully-taxable equivalent)


2.91

%


2.99

%


3.09

%




Tangible Book Value Per Share and Tangible Common Equity Ratio:



March 31,

2021


December 31,

2020


March 31,

2020

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


Tangible Book Value Per Share:







Shareholders' equity, as presented


$

532,120



$

529,314



$

492,680


Less: goodwill and other intangible assets


(97,377)



(97,540)



(98,052)


Tangible shareholders' equity


$

434,743



$

431,774



$

394,628


Shares outstanding at period end


14,928,434



14,909,097



14,951,597


Book value per share


$

35.64



$

35.50



$

32.95


Tangible book value per share


$

29.12



$

28.96



$

26.39


Tangible Common Equity Ratio:

Total assets


$

5,089,279



$

4,898,745



$

4,594,539


Less: goodwill and other intangible assets


(97,377)



(97,540)



(98,052)


Tangible assets


$

4,991,902



$

4,801,205



$

4,496,487


Common equity ratio


10.46

%


10.81

%


10.72

%

Tangible common equity ratio


8.71

%


8.99

%


8.78

%





















Core Deposits:

(In thousands)


March 31,

2021


December 31,

 2020


March 31,

2020

Total deposits


$

4,211,630



$

4,005,244



$

3,563,705


Less: certificates of deposit


(346,046)



(357,666)



(545,013)


Less: brokered deposits


(288,758)



(283,567)



(188,758)


Core deposits


$

3,576,826



$

3,364,011



$

2,829,934




Average Core Deposits:



For the

Three Months Ended

(In thousands)


March 31,

2021


December 31,

 2020


March 31,

2020

Total average deposits


$

3,770,314



$

3,836,470



$

3,355,595


Less: average certificates of deposit


(351,555)



(373,364)



(552,079)


Average core deposits


$

3,418,759



$

3,463,106



$

2,803,516


 

 

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SOURCE Camden National Corporation