Camden National Corporation Reports Third Quarter 2020 Financial Results

Rhea-AI Summary

Camden National Corporation (NASDAQ: CAC) reported a net income of $16.8 million for Q3 2020, a 16% increase from Q3 2019. Diluted EPS rose 18% to $1.11. The bank's total assets increased 16% to $5.2 billion, driven by strong deposit growth of 19%. Loan loss reserves increased to $36.4 million, 1.11% of total loans. Notably, COVID-19 short-term loan deferrals reduced to 5.5% from 16.4%. The total risk-based capital ratio stood at a robust 15.15%. Camden National also announced a cash dividend of $0.33 per share, with an annualized yield of 4.37%.

Positive

• Net income increased by 16% year-over-year to $16.8 million.
• Diluted EPS rose 18% to $1.11.
• Total assets grew by 16% to $5.2 billion.
• Deposits increased by 19%, driven by federal stimulus.
• Loan loss reserves increased to 1.11% of total loans.
• Cash dividend announced at $0.33 per share, yielding 4.37%.

Negative

• Net interest margin decreased to 3.00%, down from 3.09% a year ago.
• Annualized net charge-offs for Q3 were 0.01%, signaling potential credit quality issues.
• Provision for credit losses increased to $987,000, up from $730,000 in Q3 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

FAQ

What were the earnings results for Camden National (CAC) in Q3 2020?

Camden National reported net income of $16.8 million and diluted EPS of $1.11, reflecting increases of 16% and 18%, respectively, compared to Q3 2019.

What is Camden National's outlook following the Q3 2020 earnings?

The bank maintains a strong capital position with a total risk-based capital ratio of 15.15%, and a commitment to evaluating its share repurchase program as conditions evolve.

How did Camden National perform in terms of asset quality in Q3 2020?

Camden National's non-performing loans were 0.34%, and COVID-19 loan deferrals dropped to 5.5% of total loans, indicating improved asset quality.

When will Camden National's next dividend be paid?

Camden National announced a cash dividend of $0.33 per share payable on October 30, 2020, to shareholders of record as of October 15, 2020.