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Camden National Corporation Reports Third Quarter 2017 Net Income Increased 4% And Year-To-Date Net Income Increased 9% Over Last Year

CAMDEN, Maine, Oct. 31, 2017 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company"), a $4.0 billion bank holding company headquartered in Camden, Maine, reported net income for the third quarter of 2017 of $11.3 million and diluted earnings per share ("EPS") of $0.72 per share, representing increases over the third quarter of 2016 of 4% and 3%, respectively.

For the nine months ended September 30, 2017, the Company reported net income of $31.6 million and diluted EPS of $2.02 per share, representing increases over the same period last year of 9% and 7%, respectively. For the nine months ended September 30, 2017, the Company reported a return on average assets of 1.07%, a return on average tangible equity (non-GAAP) of 14.40% and an efficiency ratio (non-GAAP) of 56.80%.

"We are extremely pleased to report another quarter with great results," said Gregory A. Dufour, President and Chief Executive Officer of Camden National. "We're seeing the benefits of our investments in people and technology over the past 18 months as Camden National moved up to #2 in deposit market share rankings in the State of Maine, which is the highest of any Maine headquartered bank. We recently enhanced our online treasury management platform, TreasuryLink SM, to expand the depth of our product capabilities for corporate customers. This powerful tool has been instrumental as we onboard several new large deposit relationships, as they now have simple, secure and customizable access to all their banking needs."

Dufour added, "We announced in September two great additions to our senior management team at Camden National — Patricia "Trish" Rose was named Executive Vice President of Retail and Mortgage Banking and Jennifer Mirabile was named Managing Director of Camden National Wealth Management. Both Trish and Jennifer join Camden National with significant backgrounds and experience within their respective industries and we're excited to have them join our team."

During the quarter, Lawrence "Larry" Sterrs was named chair of the Board of Directors of Camden National Corporation and Camden National Bank as the previous chair, Karen Stanley, reached the Company's mandatory retirement age for directors. "Larry is a seasoned business executive with great experience in board governance and strategic planning," said Dufour. "We are also grateful for the superb leadership Karen provided the Company for the past 10 years."

THIRD QUARTER 2017 FINANCIAL HIGHLIGHTS

  • Third quarter 2017 return on average assets was 1.12% and return on average tangible equity (non-GAAP) was 14.85%.
  • Third quarter 2017 efficiency ratio (non-GAAP) was 55.72%.
  • Loan growth was flat during the quarter with year-to-date loan growth of 6%.

FINANCIAL CONDITION

Total assets were $4.0 billion at September 30, 2017, representing an increase of $175.7 million since December 31, 2016. Total loans grew $153.7 million, or 6%, and investment securities increased $18.3 million over the same period last year. On the funding side, total deposits grew $127.9 million, or 5%, while borrowings increased $8.9 million since December 31, 2016.

During the third quarter of 2017, loan balances increased $12.0 million with growth centered in residential mortgages. Year-to-date residential mortgage originations totaled $302.2 million with 51% of the production designated for sale. The Company's focus on low cost deposits has translated into solid growth in average demand and interest checking balance of $41.3 million, or 4%, for the third quarter of 2017 compared to the same period last year.

The Company's asset quality ratios improved in the third quarter of 2017 with the resolution of a large commercial real estate relationship. Non-performing assets decreased $10.8 million in the third quarter of 2017 to $20.1 million at September 30, 2017. Non-performing assets at September 30, 2017 were 0.50% of total assets compared to 0.67% at December 31, 2016. Net charge-offs remained minimal with an annualized net charge-off ratio of 0.07% year-to-date.

Total shareholders' equity at September 30, 2017 increased 6% to $414.4 million since December 31, 2016. The Company's capital position remains in excess of regulatory requirements for "well capitalized" status with a total risk-based capital ratio of 14.09%.

FINANCIAL OPERATING RESULTS (linked quarter)

Net income for the third quarter of 2017 was $11.3 million, representing an increase over the second quarter of 2017 of $1.1 million, or 11%. The increase was driven by an increase in revenues (net interest income and non-interest income) of $945,000, a decrease in provision for credit losses of $584,000 and a decrease in non-interest expense of $333,000. The major changes between the third quarter and second quarter of 2017 include:

  • A 2% increase in net interest income primarily due to an increase in average loan balances of $66.9 million, or 2%, which was driven by strong second quarter 2017 loan growth combined with a stable net interest margin of 3.19% for each quarter.
  • A 4% increase in non-interest income to $10.3 million primarily due to the sale of several small lot investment positions totaling $19.4 million in balances that resulted in gains of $827,000 and an increase in mortgage banking income of $139,000. These were partially offset by a decrease of $646,000 in fee income generated from the back-to-back commercial loan swap program.
  • A 42% decrease in provision for credit losses to $817,000 due to an improvement in asset quality with non-performing loans to total loans declining 40 basis points between quarters as well as the incremental provision necessary in the second quarter due to strong loan volume.
  • A 2% decrease in non-interest expense with a number of expense areas trending lower during the quarter driving the efficiency ratio (non-GAAP) to 55.72%.
  • An increase in the effective income tax rate to 32.6%, compared to 31.6% last quarter. The increase in the effective income tax rate was driven by the Company's change in its estimated annual effective tax rate for calendar year 2017 due to an increase in estimated state income/franchise taxes as its business outside of Maine expands and a lower mix of tax-exempt income as a percentage of pre-tax income.

FINANCIAL OPERATING RESULTS (third quarter 2017 compared to third quarter 2016)

Net income for the third quarter of 2017 increased $436,000, or 4%, over the third quarter of 2016. The increase was driven by a decrease in provision for credit losses of $462,000, a decrease in non-interest expense of $324,000 and an increase in revenues of $86,000. The major changes between the third quarter of 2017 and third quarter of 2016 include:

  • A 36% decrease in provision for credit losses driven by lower net charge-offs and improved asset quality.
  • A 1% decrease in non-interest expense driven by a decline in collection costs of $619,000 as the Company exited a significant sub-servicer relationship on December 31, 2016 and no longer incurs related costs.
  • A $788,000, or 3%, increase in net interest income driven by average loan growth of 6%, partially offset by a decrease in the net interest margin of 5 basis points due to a decline in fair value mark accretion and collections on previously charged-off acquired loans. Excluding this non-core income, the Company's net interest margin for the third quarter of 2017 was 3.11% compared to 3.10% for the third quarter of 2016.
  • A $702,000, or 6%, decrease in non-interest income driven by (i) one-time legal proceeds of $638,000 received in the third quarter of 2016; (ii) a decrease in fee income generated from the back-to-back commercial loan swap program of $426,000; (iii) a decrease in mortgage banking income of $331,000; and (iv) a decrease in income from the exiting of a significant sub-servicer relationship. These were partially offset by gains on investment securities in the third quarter of 2017 and an increase in debit card income.

CONFERENCE CALL

Camden National will host a conference call and webcast at 3:30 p.m. eastern time on October 31, 2017 to discuss its third quarter 2017 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:

http://services.choruscall.com/links/cac171031.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), headquartered in Camden, Maine, is the largest publicly traded bank holding company in Northern New England with $4.0 billion in assets and nearly 650 employees. Camden National Bank, its subsidiary, is a full-service community bank founded in 1875 that offers an array of consumer and business financial products and services, accompanied by the latest in digital banking technology to empower customers to bank the way they want. Camden National Bank provides personalized service through a network of 60 banking centers, 76 ATMs, and lending offices in New Hampshire and Massachusetts, all complemented by 24/7 live phone support. Comprehensive wealth management, investment, and financial planning services are delivered by Camden National Wealth Management. To learn more, visit www.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, 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 in Camden National's Annual Report on Form 10-K for the year ended December 31, 2016, as updated by other filings with the Securities and Exchange Commission ("SEC"). 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 the efficiency, and tangible common equity ratios; return on average tangible equity; tangible book value per share; and tax-equivalent net interest income. Management believes these non-GAAP financial measures help investors in understanding 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.

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,
2017


June 30,
2017


September 30,
2016


September 30,
2017


September 30,
2016

Financial Condition Data











Investments


$

916,018



$

932,338



$

906,286



$

916,018



$

906,286


Loans and loans held for sale


2,761,287



2,747,053



2,616,653



2,761,287



2,616,653


Allowance for loan losses


24,413



24,394



23,290



24,413



23,290


Total assets


4,039,943



4,036,367



3,903,966



4,039,943



3,903,966


Deposits


2,956,413



2,940,866



2,889,225



2,956,413



2,889,225


Borrowings


608,607



641,662



559,273



608,607



559,273


Shareholders' equity


414,366



406,960



393,181



414,366



393,181


Operating Data











Net interest income


$

29,160



$

28,626



$

28,372



$

85,641



$

84,828


Provision for credit losses


817



1,401



1,279



2,797



5,003


Non-interest income


10,299



9,888



11,001



28,759



29,470


Non-interest expense


21,825



22,158



22,149



65,411



67,388


Income before income tax expense


16,817



14,955



15,945



46,192



41,907


Income tax expense


5,478



4,721



5,042



14,543



12,742


Net income


$

11,339



$

10,234



$

10,903



$

31,649



$

29,165


Key Ratios











Return on average assets


1.12

%


1.03

%


1.11

%


1.07

%


1.02

%

Return on average equity


10.93

%


10.17

%


11.18

%


10.49

%


10.29

%

Net interest margin


3.19

%


3.19

%


3.24

%


3.19

%


3.31

%

Non-performing loans to total loans


0.72

%


1.12

%


0.98

%


0.72

%


0.98

%

Non-performing assets to total assets


0.50

%


0.77

%


0.67

%


0.50

%


0.67

%

Annualized net charge-offs to average loans


0.11

%


0.11

%


0.26

%


0.07

%


0.15

%

Tier I leverage capital ratio


9.01

%


8.92

%


8.48

%


9.01

%


8.48

%

Total risk-based capital ratio


14.09

%


13.87

%


13.60

%


14.09

%


13.60

%

Per Share Data











Basic earnings per share


$

0.72



$

0.66



$

0.70



$

2.03



$

1.88


Diluted earnings per share


$

0.72



$

0.66



$

0.70



$

2.02



$

1.88


Cash dividends declared per share


$

0.23



$

0.23



$

0.20



$

0.69



$

0.60


Book value per share


$

26.71



$

26.23



$

25.47



$

26.71



$

25.47


Weighted average number of common shares outstanding


15,515,189



15,512,761



15,425,452



15,505,698



15,410,310


Diluted weighted average number of common shares outstanding


15,589,008



15,586,571



15,507,561



15,580,072



15,483,320


Non-GAAP Measures(1)











Return on average tangible equity


14.85

%


13.96

%


15.61

%


14.40

%


14.59

%

Tangible common equity ratio


7.98

%


7.79

%


7.66

%


7.98

%


7.66

%

Efficiency ratio


55.72

%


56.76

%


55.39

%


56.80

%


57.40

%

Tangible book value per share


$

20.26



$

19.75



$

18.87



$

20.26



$

18.87




(1)

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

Consolidated Statements of Condition Data (unaudited)




(In thousands, except number of shares)


September 30,
2017


December 31,
2016


September 30,

2016

ASSETS







Cash and due from banks


$

89,435



$

87,707



$

99,458


Investments:







Available-for-sale securities, at fair value


797,251



779,867



788,880


Held-to-maturity securities, at amortized cost


94,207



94,609



94,205


Federal Home Loan Bank and Federal Reserve Bank stock, at cost


24,560



23,203



23,201


Total investments


916,018



897,679



906,286


Loans held for sale, at fair value


12,997



14,836



24,644


Loans:







Residential real estate


852,851



802,494



797,036


Commercial real estate


1,131,883



1,050,780



1,054,307


Commercial(1)


417,105



394,051



390,155


Consumer and home equity


346,451



347,239



350,511


Total loans


2,748,290



2,594,564



2,592,009


Less: allowance for loan losses


(24,413)



(23,116)



(23,290)


Net loans


2,723,877



2,571,448



2,568,719


Goodwill


94,697



94,697



94,697


Other intangible assets


5,347



6,764



7,240


Bank-owned life insurance


86,869



78,119



77,937


Premises and equipment, net


42,422



42,873



43,934


Deferred tax assets


36,344



39,263



34,632


Other assets


31,937



30,844



46,419


Total assets


$

4,039,943



$

3,864,230



$

3,903,966


LIABILITIES AND SHAREHOLDERS' EQUITY







Liabilities







Deposits:







Demand


$

476,386



$

406,934



$

427,349


Interest checking


758,568



701,494



763,710


Savings and money market


976,246



979,263



979,085


Certificates of deposit


498,965



468,203



489,856


Brokered deposits


246,248



272,635



229,225


Total deposits


2,956,413



2,828,529



2,889,225


Short-term borrowings


538,997



530,129



489,749


Long-term borrowings


10,738



10,791



10,808


Subordinated debentures


58,872



58,755



58,716


Accrued interest and other liabilities


60,557



44,479



62,287


Total liabilities


3,625,577



3,472,683



3,510,785


Shareholders' equity


414,366



391,547



393,181


Total liabilities and shareholders' equity


$

4,039,943



$

3,864,230



$

3,903,966




(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)


September 30,
2017


June 30,

2017


September 30,

2016

Interest Income







Interest and fees on loans


$

29,350



$

28,423



$

27,395


Interest on U.S. government and sponsored enterprise obligations


4,177



4,355



4,049


Interest on state and political subdivision obligations


686



691



702


Interest on federal funds sold and other investments


497



471



448


Total interest income


34,710



33,940



32,594


Interest Expense







Interest on deposits


3,027



2,987



2,204


Interest on borrowings


1,665



1,476



1,161


Interest on subordinated debentures


858



851



857


Total interest expense


5,550



5,314



4,222


Net interest income


29,160



28,626



28,372


Provision for credit losses


817



1,401



1,279


Net interest income after provision for credit losses


28,343



27,225



27,093


Non-Interest Income







Debit card income


2,061



1,992



1,894


Service charges on deposit accounts


1,852



1,957



1,799


Mortgage banking income, net


2,076



1,937



2,407


Income from fiduciary services


1,229



1,355



1,225


Bank-owned life insurance


603



570



585


Brokerage and insurance commissions


600



548



594


Other service charges and fees


589



501



591


Net gain on sale of securities


827






Other income


462



1,028



1,906


Total non-interest income


10,299



9,888



11,001


Non-Interest Expense







Salaries and employee benefits


12,359



12,376



12,044


Furniture, equipment and data processing


2,429



2,450



2,349


Net occupancy costs


1,599



1,689



1,685


Consulting and professional fees


714



853



742


Debit card expense


662



712



669


Regulatory assessments


574



488



667


Amortization of intangible assets


473



472



475


Other real estate owned and collection costs, net


258



344



877


Merger and acquisition costs






45


Other expenses


2,757



2,774



2,596


Total non-interest expense


21,825



22,158



22,149


Income before income tax expense


16,817



14,955



15,945


Income tax expense


5,478



4,721



5,042


Net Income


$

11,339



$

10,234



$

10,903


Per Share Data







Basic earnings per share


$

0.72



$

0.66



$

0.70


Diluted earnings per share


$

0.72



$

0.66



$

0.70


Consolidated Statements of Income Data (unaudited)




For The

Nine Months Ended
September 30,

(In thousands, except per share data)


2017


2016

Interest Income





Interest and fees on loans


$

84,835



$

82,117


Interest on U.S. government and sponsored enterprise obligations


12,788



12,055


Interest on state and political subdivision obligations


2,079



2,127


Interest on federal funds sold and other investments


1,362



1,051


Total interest income


101,064



97,350


Interest Expense





Interest on deposits


8,568



6,355


Interest on borrowings


4,302



3,610


Interest on junior subordinated debentures


2,553



2,557


Total interest expense


15,423



12,522


Net interest income


85,641



84,828


Provision for credit losses


2,797



5,003


Net interest income after provision for credit losses


82,844



79,825


Non-Interest Income





Debit card income


5,887



5,650


Service charges on deposit accounts


5,632



5,356


Mortgage banking income, net


5,566



4,921


Income from fiduciary services


3,831



3,736


Bank-owned life insurance


1,750



1,899


Brokerage and insurance commissions


1,601



1,569


Other service charges and fees


1,558



1,494


Net gain on sale of securities


827



4


Other income


2,107



4,841


Total non-interest income


28,759



29,470


Non-Interest Expense





Salaries and employee benefits


36,882



35,634


Furniture, equipment and data processing


7,204



7,157


Net occupancy costs


5,234



5,352


Consulting and professional fees


2,412



2,609


Debit card expense


2,034



2,107


Regulatory assessments


1,607



2,162


Amortization of intangible assets


1,417



1,427


Other real estate owned and collection costs


558



2,029


Merger and acquisition costs




866


Other expenses


8,063



8,045


Total non-interest expense


65,411



67,388


Income before income tax expense


46,192



41,907


Income tax expense


14,543



12,742


Net Income


$

31,649



$

29,165


Per Share Data





Basic earnings per share


$

2.03



$

1.88


Diluted earnings per share


$

2.02



$

1.88


Quarterly Average Balance and Yield/Rate Analysis (unaudited)




For The Three Months Ended



Average Balance


Yield/Rate

(In thousands)


September 30, 2017


June 30,

2017


September 30, 2016


September 30, 2017


June 30,

2017


September 30, 2016

Assets













Interest-earning assets:













Securities - taxable


$

819,778



$

843,370



$

810,747



2.28

%


2.29

%


2.22

%

Securities - nontaxable(1)


101,507



101,807



103,657



4.16

%


4.17

%


4.17

%

Loans(2)(3):













Residential real estate


851,828



826,353



824,985



4.09

%


4.12

%


4.20

%

Commercial real estate


1,136,851



1,114,508



1,031,674



4.07

%


4.05

%


3.94

%

Commercial(1)


347,469



334,761



307,184



4.18

%


4.23

%


3.89

%

Municipal(1)


24,847



18,268



24,628



3.24

%


3.42

%


2.66

%

Consumer and home equity


345,533



341,544



355,144



4.58

%


4.36

%


4.32

%

HPFC


49,619



53,843



68,334



8.38

%


8.78

%


8.13

%

Total loans


2,756,147



2,689,277



2,611,949



4.23

%


4.23

%


4.17

%

Total interest-earning assets


3,677,432



3,634,454



3,526,353



3.79

%


3.77

%


3.72

%

Other assets


352,711



344,945



387,833








Total assets


$

4,030,143



$

3,979,399



$

3,914,186





















Liabilities & Shareholders' Equity













Deposits:













Demand


$

450,350



$

392,789



$

415,558



%


%


%

Interest checking


727,959



732,096



721,459



0.19

%


0.18

%


0.14

%

Savings


493,447



489,408



466,113



0.07

%


0.06

%


0.06

%

Money market


469,458



477,734



488,793



0.53

%


0.49

%


0.43

%

Certificates of deposit(3)


454,013



456,933



486,698



0.83

%


0.92

%


0.79

%

Total deposits


2,595,227



2,548,960



2,578,621



0.31

%


0.32

%


0.28

%

Borrowings:













Brokered deposits


310,207



349,762



239,975



1.30

%


1.08

%


0.63

%

Customer repurchase agreements


222,386



232,295



189,539



0.51

%


0.49

%


0.29

%

Subordinated debentures


58,853



58,814



58,697



5.78

%


5.80

%


5.81

%

Other borrowings


386,643



345,155



396,828



1.42

%


1.38

%


1.02

%

Total borrowings


978,089



986,026



885,039



1.43

%


1.33

%


1.08

%

Total funding liabilities


3,573,316



3,534,986



3,463,660



0.62

%


0.60

%


0.49

%

Other liabilities


45,330



40,790



62,554








Shareholders' equity


411,497



403,623



387,972








Total liabilities & Shareholders' Equity


$

4,030,143



$

3,979,399



$

3,914,186








Net interest rate spread (fully-taxable equivalent)


3.17

%


3.17

%


3.23

%

Net interest margin (fully-taxable equivalent)


3.19

%


3.19

%


3.24

%

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


3.11

%


3.09

%


3.10

%



(1)

Reported on tax-equivalent basis calculated using a tax rate of 35%, 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 CDs generated in purchase accounting and collection of previously charged-off acquired loans
for the three months ended September 30, 2017, June 30, 2017 and September 30, 2016 totaling $804,000, $861,000 and $1.2 million, respectively.

Year-To-Date Average Balance and Yield/Rate Analysis (unaudited)




For The Nine Months Ended



Average Balance


Yield/Rate

(In thousands)


September 30,
2017


September 30,
2016


September 30,
2017


September 30,
2016

Assets









Interest-earning assets:









Securities - taxable


$

832,054



$

798,054



2.27

%


2.19

%

Securities - nontaxable(1)


102,075



102,812



4.18

%


4.24

%

Loans(2)(3):









Residential real estate


831,072



825,660



4.10

%


4.18

%

Commercial real estate


1,109,386



988,329



4.02

%


4.08

%

Commercial(1)


334,247



290,459



4.17

%


4.21

%

Municipal(1)


19,761



18,655



3.34

%


3.00

%

Consumer and home equity


343,294



361,085



4.42

%


4.22

%

HPFC


53,873



72,380



8.50

%


8.75

%

Total loans


2,691,633



2,556,568



4.20

%


4.27

%

Total interest-earning assets


3,625,762



3,457,434



3.76

%


3.79

%

Other assets


345,827



370,692






Total assets


$

3,971,589



$

3,828,126















Liabilities & Shareholders' Equity









Deposits:









Demand


$

411,818



$

372,131



%


%

Interest checking


725,705



722,764



0.18

%


0.12

%

Savings


490,648



455,134



0.06

%


0.06

%

Money market


476,983



485,611



0.49

%


0.42

%

Certificates of deposit(3)


458,208



492,892



0.88

%


0.77

%

Total deposits


2,563,362



2,528,532



0.31

%


0.28

%

Borrowings:









Brokered deposits


322,860



216,589



1.09

%


0.70

%

Customer repurchase agreements


225,426



188,124



0.44

%


0.27

%

Junior subordinated debentures


58,814



58,712



5.80

%


5.82

%

Other borrowings


354,443



402,121



1.34

%


1.07

%

Total borrowings


961,543



865,546



1.32

%


1.13

%

Total funding liabilities


3,524,905



3,394,078



0.58

%


0.49

%

Other liabilities


43,489



55,401






Shareholders' equity


403,195



378,647






Total liabilities & shareholders' equity


$

3,971,589



$

3,828,126






Net interest rate spread (fully-taxable equivalent)


3.18

%


3.30

%

Net interest margin (fully-taxable equivalent)


3.19

%


3.31

%

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


3.10

%


3.11

%



(1)

Reported on tax-equivalent basis calculated using a tax rate of 35%, 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 CDs generated in purchase accounting and collection of
previously charged-off acquired loans for the nine months ended September 30, 2017 and 2016 totaling $2.5 million and
$5.2 million, respectively.

Asset Quality Data (unaudited)


(In thousands)


At or For The
Nine Months Ended
September 30, 2017


At or For The
Six Months Ended
June 30, 2017


At or For The
Three Months Ended
March 31, 2017


At or For The
Year Ended
December 31, 2016


At or For The
Nine Months Ended
September 30, 2016

Non-accrual loans:











Residential real estate


$

4,465



$

4,890



$

4,105



$

3,945



$

3,986


Commercial real estate


5,887



16,291



12,858



12,849



12,917


Commercial


1,830



2,056



1,994



2,088



2,259


Consumer


1,626



1,371



1,552



1,624



1,650


HPFC


838



1,083



1,014



207



216


Total non-accrual loans


14,646



25,691



21,523



20,713



21,028


Loans 90 days past due and accruing




76








Accruing troubled-debt restructured loans not included above


5,154



4,809



4,558



4,338



4,468


Total non-performing loans


19,800



30,576



26,081



25,051



25,496


Other real estate owned:











Residential real estate






14



14



75


Commercial real estate


341



341



607



908



736


Total other real estate owned


341



341



621



922



811


Total non-performing assets


$

20,141



$

30,917



$

26,702



$

25,973



$

26,307


Loans 30-89 days past due:











Residential real estate


$

3,169



$

3,020



$

2,379



$

2,470



$

2,228


Commercial real estate


2,297



3,442



2,531



971



599


Commercial


712



269



168



851



463


Consumer


1,256



1,378



1,008



1,018



552


HPFC


938



639



777



1,029



492


Total loans 30-89 days past due


$

8,372



$

8,748



$

6,863



$

6,339



$

4,334


Allowance for loan losses at the beginning of the period


$

23,116



$

23,116



$

23,116



$

21,166



$

21,166


Provision for loan losses


2,786



1,984



581



5,269



5,011


Charge-offs:











Residential real estate


433



195



5



356



229


Commercial real estate


81



12



3



315



273


Commercial


650



281



136



2,218



1,970


Consumer


493



454



15



409



289


HPFC


274



81





507



507


Total charge-offs


1,931



1,023



159



3,805



3,268


Total recoveries


442



317



183



486



381


Net charge-offs (recoveries)


1,489



706



(24)



3,319



2,887


Allowance for loan losses at the end of the period


$

24,413



$

24,394



$

23,721



$

23,116



$

23,290


Components of allowance for credit losses:











Allowance for loan losses


$

24,413



$

24,394



$

23,721



$

23,116



$

23,290


Liability for unfunded credit commitments


22



7



9



11



14


Allowance for credit losses


$

24,435



$

24,401



$

23,730



$

23,127



$

23,304


Ratios:











Non-performing loans to total loans


0.72

%


1.12

%


0.99

%


0.97

%


0.98

%

Non-performing assets to total assets


0.50

%


0.77

%


0.68

%


0.67

%


0.67

%

Allowance for loan losses to total loans


0.89

%


0.89

%


0.90

%


0.89

%


0.90

%

Net charge-offs to average loans (annualized):











Quarter-to-date


0.11

%


0.11

%


%


0.07

%


0.26

%

Year-to-date


0.07

%


0.05

%


%


0.13

%


0.15

%

Allowance for loan losses to non-performing loans


123.30

%


79.78

%


90.95

%


92.28

%


91.35

%

Loans 30-89 days past due to total loans


0.30

%


0.32

%


0.26

%


0.24

%


0.17

%

Reconciliation of non-GAAP to GAAP Financial Measures

















Efficiency Ratio:













For the

Three Months Ended


For the
Nine Months Ended

(In thousands)


September 30,
2017


June 30,
2017


September 30,
2016


September 30,
2017


September 30,
2016

Non-interest expense, as presented


$

21,825



$

22,158



$

22,149



$

65,411



$

67,388


Less: merger and acquisition costs






(45)





(866)


Adjusted non-interest expense


$

21,825



$

22,158



$

22,104



$

65,411



$

66,522


Net interest income, as presented


$

29,160



$

28,626



$

28,372



$

85,641



$

84,828


Add: effect of tax-exempt income(1)


535



525



533



1,580



1,588


Non-interest income, as presented


10,299



9,888



11,001



28,759



29,470


Less: net gain on sale of securities


(827)







(827)



(4)


Adjusted net interest income plus non-interest income


$

39,167



$

39,039



$

39,906



$

115,153



$

115,882


Non-GAAP efficiency ratio


55.72

%


56.76

%


55.39

%


56.80

%


57.40

%

GAAP efficiency ratio


55.31

%


57.53

%


56.25

%


57.18

%


58.96

%

















(1) Assumed a 35% tax rate.






























Tax-Equivalent Net Interest Income:









For the
Three Months Ended


For the
Nine Months Ended

(In thousands)


September 30,
2017


June 30,
2017


September 30,
2016


September 30,
2017


September 30,
2016

Net interest income, as presented


$

29,160



$

28,626



$

28,372



$

85,641



$

84,828


Add: effect of tax-exempt income(1)


535



525



533



1,580



1,588


Net interest income, tax equivalent


$

29,695



$

29,151



$

28,905



$

87,221



$

86,416



(1) Assumed a 35% tax rate.



Tangible Book Value Per Share and Tangible Common Equity Ratio:




September 30,
2017


June 30,

2017


September 30,
2016

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


Tangible Book Value Per Share:







Shareholders' equity, as presented


$

414,366



$

406,960



$

393,181


Less: goodwill and other intangible assets


(100,044)



(100,517)



(101,937)


Tangible equity


$

314,322



$

306,443



$

291,244


Shares outstanding at period end


15,515,577



15,512,914



15,434,856


Tangible book value per share


$

20.26



$

19.75



$

18.87


Book value per share


$

26.71



$

26.23



$

25.47


Tangible Common Equity Ratio:

Total assets


$

4,039,943



$

4,036,367



$

3,903,966


Less: goodwill and other intangibles


(100,044)



(100,517)



(101,937)


Tangible assets


$

3,939,899



$

3,935,850



$

3,802,029


Tangible common equity ratio


7.98

%


7.79

%


7.66

%

Shareholders' equity to total assets


10.26

%


10.08

%


10.07

%











Return on Average Tangible Equity:







For the
Three Months Ended


For the
Nine Months Ended

(In thousands)


September 30,
2017


June 30,
2017


September 30,
2016


September 30,
2017


September 30,
2016

Net income, as presented


$

11,339



$

10,234



$

10,903



$

31,649



$

29,165


Amortization of intangible assets, net of tax(1)


307



307



309



921



928


Net income, adjusted for amortization of intangible assets


$

11,646



$

10,541



$

11,212



$

32,570



$

30,093


Average equity


$

411,497



$

403,623



$

387,972



$

403,195



$

378,647


Less: average goodwill and other intangible assets


(100,273)



(100,745)



(102,168)



(100,746)



(103,054)


Average tangible equity


$

311,224



$

302,878



$

285,804



$

302,449



$

275,593


Return on average tangible equity


14.85

%


13.96

%


15.61

%


14.40

%


14.59

%

Return on average equity


10.93

%


10.17

%


11.18

%


10.49

%


10.29

%

















(1) Assumed a 35% tax rate.
















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SOURCE Camden National Corporation