Camden National Corporation Reports a 16% Increase in 2015 Core Operating Earnings

04 Feb, 2016, 16:14 ET from Camden National Corporation

CAMDEN, Maine, Feb. 4, 2016 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company"), a $3.7 billion bank holding company headquartered in Camden, Maine, reported a 16% increase in core operating earnings1 for the year ended December 31, 2015 over 2014 to $28.2 million and an 8% increase in core diluted earnings per share ("EPS")1 for 2015 over 2014 to $3.49 per share. Fourth quarter 2015 core operating earnings increased 26% to $7.7 million over fourth quarter 2014, while fourth quarter 2015 core diluted EPS decreased 5% to $0.78 per share compared to fourth quarter 2014, reflecting the issuance of 2.7 million common shares in connection with the acquisition of SBM Financial, Inc. ("SBM"), which was completed on October 16, 2015.

"We are extremely pleased that we reached two significant milestones in 2015 — the completion of the merger with SBM while at the same time achieving record core operating earnings," said Gregory A. Dufour, president and chief executive officer of the Company. "We reached new heights with total assets of $3.7 billion, loans of $2.5 billion and core deposits of $2.0 billion at December 31, 2015. As a combined organization with 64 banking centers and three lending offices, we are looking forward to the future with our franchise's newly expanded footprint in Southern Maine and Massachusetts."

Dufour added, "In under eight months our team worked diligently to integrate the infrastructure of the two banks while always focusing on the customer and shareholder value. We never lost sight of our core business along the way, which speaks to our increase in core operating earnings for 2015 of 16% over 2014. The Company's core return on average equity for the year ended December 31, 2015 was 10.15% and core return on average assets was 0.94%. This performance positions us to meet the long-term financial objectives we set when we announced the merger in March 2015, while also aligning with our five-year strategic plan."

Net income, as presented in accordance with generally accepted accounting principles in the United States ("GAAP"), for the year ended December 31, 2015 and the fourth quarter of 2015 was $21.0 million and $1.7 million, respectively, each representing decreases compared to their respective period of 2014 due to one-time acquisition-related costs recorded in 2015. Diluted EPS for the year ended December 31, 2015 and the fourth quarter of 2015 were $2.60 per share and $0.17 per share, respectively, which reflects the lower GAAP net income and the issuance of 2.7 million shares of Company common stock in October 2015 as consideration for the SBM transaction.

FOURTH QUARTER FINANCIAL HIGHLIGHTS

  • Completed the acquisition of SBM on October 16, 2015 — total assets acquired (including goodwill and core deposit intangible assets generated) were $840.1 million, total loans acquired were $615.2 million, and total deposits acquired were $687.0 million (of which $497.4 million were core deposits)
  • Fourth quarter 2015 core operating earnings increased $1.6 million, or 26%, over fourth quarter 2014
  • Fourth quarter 2015 core diluted EPS decreased $0.04 per share, or 5%, compared to fourth quarter 2014 due to the dilution associated with issuance of 2.7 million shares in the fourth quarter of 2015 combined with the timing of cost savings associated with the SBM acquisition that will be fully achieved in the first quarter of 2016
  • Organic loan growth (excluding SBM acquired loans) for the fourth quarter 2015 was $44.8 million, or 10% annualized
  • Organic deposit growth (excluding SBM acquired deposits) for the fourth quarter 2015 was $32.6 million, or 6% annualized, led by core deposit growth of $75.2 million, or 21% annualized

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

FINANCIAL CONDITION

Total assets at December 31, 2015 reached $3.7 billion compared to $2.8 billion last year. The significant increase over the last year was due to the SBM acquisition with total assets acquired of $840.1 million and organic asset growth during the year of $80.0 million, or 3%. Our loan portfolio grew $102.4 million in 2015 when excluding SBM acquired loans and loans held for sale. Our commercial portfolio at December 31, 2015 totaled $1.3 billion, representing organic loan growth of 11% for the year, while our retail loan portfolio increased modestly by $4.7 million over the same period. The changes within our loan portfolio mix over the past year highlights our focus on business lending and ramp-up of our mortgage banking division. The Company's mortgage sales in 2015 totaled $61.2 million compared to $799,000 for 2014.

Total deposits (excluding brokered deposits) at December 31, 2015 reached $2.5 billion compared to $1.7 billion last year. The significant increase not only reflects the deposits acquired from SBM but, also, strong organic core deposit growth in 2015 of $117.3 million, or 8%. Total borrowings (including brokered deposits) decreased $22.8 million in 2015 compared to December 31, 2014, which includes $15.0 million of subordinated notes issued in the fourth quarter of 2015 associated with the closing of the SBM acquisition.

Our asset quality continues to remain strong with year-to-date net charge-offs to average loans of 0.10% in 2015 compared to 0.16% in 2014 and a 26 basis point decrease in non-performing loans to total loans to 0.93% compared to a year-ago. The annualized net charge-off ratio increased to 0.16% for the fourth quarter 2015 due to the resolution of non-performing loans.

The Company and its wholly-owned subsidiary Camden National Bank continue to maintain risk-based capital ratios in excess of the regulatory levels required for an institution to be considered "well capitalized". At December 31, 2015, the Company's total risk-based capital ratio, Tier I risk-based capital ratio, common equity Tier I risk-based capital ratio, and Tier I leverage capital ratio was 12.98%, 11.58%, 10.42%, and 8.74%, respectively.

As part of the SBM acquisition, the Company acquired Healthcare Professional Funding Corporation ("HPFC"), which provides lending services to dentists, veterinarians, and optometrists across the United States. After an extensive analysis it was determined that at this time the capital and operational resources required to allow HPFC to reach its full potential did not align with our need to focus on ensuring we meet the profitability targets of the merger. Operations at HPFC will be discontinued during the first quarter of 2016. The Company will continue to earn revenues from HPFC's loan portfolio as it naturally runs off over the next five to ten years.

FINANCIAL OPERATING RESULTS

Core operating earnings for the fourth quarter of 2015 were $7.7 million compared to $6.1 million for the fourth quarter of 2014 and $7.0 million last quarter. Core diluted EPS for the fourth quarter of 2015 was $0.78 per share compared to $0.82 per share for the fourth quarter of 2014 and $0.93 per share last quarter. The dilution of core diluted EPS in the fourth quarter of 2015 reflects the issuance of 2.7 million shares to SBM shareholders as part of the acquisition.

Generally, revenues and expenses for the fourth quarter of 2015 increased compared to prior quarters due to the acquisition of SBM in the fourth quarter of 2015. Total revenues (including net interest income and non-interest income) for the fourth quarter of 2015 increased 37% over the fourth quarter of 2014 and 31% over the prior quarter, while total non-interest expenses (excluding acquisition-related costs) for the fourth quarter of 2015 increased 39% over the fourth quarter of 2014 and 42% over the prior quarter.

The Company's exposure to rising interest rate risk reduced significantly as of December 31, 2015 due to the level of floating rate loans acquired as part of the SBM acquisition, the reduction in borrowings resulting from the increase in our core deposit base (both organically and due to the SBM acquisition), and our continued use of back-to- back loan swaps.

Net interest income for the fourth quarter of 2015 increased 37% to $26.4 million over the fourth quarter of 2014 and 32% over the prior quarter. Net interest margin for the fourth quarter of 2015 was 3.30%, which represents an increase over fourth quarter 2014 and prior quarter of 24 basis points and 22 basis points, respectively. The net interest margin lift was driven by an increase in the loan yields and the benefit of loan accretion income of $531,000 generated from the discount on SBM's acquired loan portfolio and a $180,000 reduction of interest expense on certificates of deposit due to the amortization of the fair value mark on the acquired SBM time deposits. Excluding the impact of loan accretion income and the interest expense reduction on certificates of deposit, the Company's fourth quarter 2015 net interest margin was 3.21%.

The provision for credit losses was $957,000 for the fourth quarter of 2015, representing an increase of $412,000 and $678,000 over the fourth quarter of 2014 and prior quarter, respectively. The increase reflects the timing of auction activity in the fourth quarter of 2015 on Camden National Bank's legacy non-performing loans.

Non-interest income for the fourth quarter of 2015 totaled $8.5 million, representing an increase of 36% and 29% over the fourth quarter of 2014 and prior quarter, respectively. Non-interest income growth was driven by increases in mortgage banking income, loan swap fees and additional service charges and fees from the acquired SBM deposit customers.

Core operating expenses (excluding one-time acquisition-related costs) for the fourth quarter of 2015 totaled $22.7 million, representing increases over the fourth quarter of 2014 and prior quarter of $6.4 million and $6.7 million, respectively. The increases reflect the incremental operating expenses associated with 55,000 new customers, 24 additional banking and loan centers and 168 new employees associated with the SBM transaction. The core operating expense to total average assets ratio was 0.64% for the fourth quarter of 2015 compared to 0.60% and 0.56% for the fourth quarter of 2014 and prior quarter, respectively.

FOURTH QUARTER DIVIDEND

The board of directors approved a dividend of $0.30 per share, payable on January 29, 2016, to shareholders of record as of January 15, 2016. This distribution represents an annualized dividend yield of 2.72%, based on the December 31, 2015 closing price of Camden National's common stock at $44.09 per share as reported by NASDAQ.

CONFERENCE CALL

Camden National will host a conference call and webcast at 11:00 a.m. eastern time on February 5, 2016 to discuss our fourth quarter and year-to-date 2015 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/cac160205

A link to the live webcast will be will be available on Camden National's website under "Investors" at www.CamdenNational.com prior to the meeting. 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 headquartered in Camden, Maine, and listed on the NASDAQ® Global Select Market (NASDAQ®) under the symbol CAC, is the holding company employing more than 650 employees for Camden National Bank and the wealth management company, Acadia Trust, N.A. Camden National Bank is a full-service community bank with a network of 64 banking centers and 85 ATMs throughout Maine and lending offices in Massachusetts and New Hampshire. Located at Camden National Bank, Camden Financial Consultants offers full-service brokerage and insurance services. Acadia Trust, N.A. offers investment management and fiduciary services through offices in Portland, Bangor, and Ellsworth, Maine. To learn more, visit www.CamdenNational.com.

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 difficulties in achieving cost savings in connection with the recent acquisition of SBM or in achieving such cost savings within the expected time frame, increased competitive pressures, changes in the interest rate environment, changes in general economic conditions, 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, 2014, 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 GAAP, management supplements this evaluation with certain non-GAAP financial measures, such as the efficiency, tangible equity to tangible assets, and core return ratios; core operating earnings; core diluted EPS; 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 banks. 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 or the Form 8-K related to this document, all of which can be found on Camden National's website at www.CamdenNational.com.

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 Year Ended

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

December 31,  2015

September 30,  2015

December 31,  2014

December 31,  2015

December 31,  2014

Investments

$

855,995

$

820,052

$

803,633

$

855,995

$

803,633

Loans and loans held for sale

2,501,164

1,831,033

1,772,610

2,501,164

1,772,610

Allowance for loan losses

21,166

21,132

21,116

21,166

21,116

Total assets

3,709,871

2,871,798

2,789,853

3,709,871

2,789,853

Deposits

2,727,836

2,008,177

1,932,097

2,727,836

1,932,097

Borrowings

572,889

563,905

577,002

572,889

577,002

Shareholders' equity

363,190

259,403

245,109

363,190

245,109

Operating Data

Net interest income

$

26,371

$

20,012

$

19,236

$

86,452

$

76,257

Provision for credit losses

957

279

545

1,936

2,220

Non-interest income

8,464

6,561

6,221

27,482

24,370

Non-interest expense

31,470

16,711

16,301

81,139

62,397

Income before income taxes

2,408

9,583

8,611

30,859

36,010

Income tax expense

716

3,127

2,523

9,907

11,440

Net income

$

1,692

$

6,456

$

6,088

$

20,952

$

24,570

Core operating earnings(1)

$

7,662

$

6,951

$

6,088

$

28,186

$

24,277

Key Ratios

Return on average assets

0.19

%

0.90

%

0.88

%

0.70

%

0.92

%

Core return on average assets(1)

0.86

%

0.97

%

0.88

%

0.94

%

0.90

%

Return on average equity

1.91

%

9.99

%

9.92

%

7.54

%

10.37

%

Core return on average equity(1)

8.64

%

10.76

%

9.92

%

10.15

%

10.25

%

Core return on average tangible equity(1)

11.96

%

13.56

%

12.75

%

13.20

%

13.30

%

Tangible equity to tangible assets(1)

7.18

%

7.51

%

7.18

%

7.18

%

7.18

%

Efficiency ratio(1)

64.16

%

58.94

%

63.24

%

61.13

%

61.58

%

Yield on average interest-earning assets

3.74

%

3.54

%

3.54

%

3.65

%

3.60

%

Average cost of funds

0.46

%

0.47

%

0.49

%

0.47

%

0.50

%

Net interest margin

3.30

%

3.08

%

3.06

%

3.19

%

3.11

%

Non-performing loans to total loans

0.93

%

0.83

%

1.19

%

0.93

%

1.19

%

Non-performing assets to total assets

0.66

%

0.54

%

0.82

%

0.66

%

0.82

%

Annualized charge-offs to average loans

0.16

%

0.08

%

0.23

%

0.10

%

0.16

%

Tier I leverage capital ratio(2)

8.74

%

9.41

%

9.26

%

8.74

%

9.26

%

Common equity tier I risk-based capital ratio(2)

10.42

%

11.44

%

10.42

%

Tier I risk-based capital ratio(2)

11.58

%

13.67

%

13.97

%

11.58

%

13.97

%

Total risk-based capital ratio(2)

12.98

%

14.76

%

15.16

%

12.98

%

15.16

%

Per Share Data

Basic earnings per share

$

0.17

$

0.86

$

0.82

$

2.60

$

3.29

Diluted earnings per share

$

0.17

$

0.86

$

0.82

$

2.60

$

3.28

Core diluted earnings per share(1)

$

0.78

$

0.93

$

0.82

$

3.49

$

3.24

Cash dividends declared per share

$

0.30

$

0.30

$

0.30

$

1.20

$

1.11

Book value per share

$

35.54

$

34.80

$

33.01

$

35.54

$

33.01

Tangible book value per share(1)

$

25.33

$

28.45

$

26.52

$

25.33

$

26.52

Weighted average number of common shares outstanding

9,734,020

7,453,222

7,424,319

8,020,851

7,450,980

Diluted weighted average number of common shares outstanding

9,789,179

7,477,039

7,447,550

8,049,708

7,470,593

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

(2) Beginning March 31, 2015, reported regulatory capital ratios reflect Basel III regulatory capital rule and framework.

 

 

Consolidated Statement of Condition Data (unaudited)

(In thousands, except number of shares)

December 31,  2015

December 31,  2014

ASSETS

Cash and due from banks

$

79,488

$

60,813

Securities:

Available-for-sale securities, at fair value

750,338

763,063

Held-to-maturity securities, at amortized cost

84,144

20,179

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

21,513

20,391

Total securities

855,995

803,633

Loans held for sale

10,958

Loans

2,490,206

1,772,610

Less: allowance for loan losses

(21,166)

(21,116)

Net loans

2,469,040

1,751,494

Goodwill and other intangible assets

104,324

48,171

Bank-owned life insurance

59,917

57,800

Premises and equipment, net

45,959

23,886

Deferred tax assets

39,716

14,434

Interest receivable

7,985

6,017

Other real estate owned

1,304

1,587

Other assets

35,185

22,018

Total assets

$

3,709,871

$

2,789,853

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Deposits:

Demand

$

359,130

$

263,013

Interest checking

740,084

480,521

Savings and money market

912,668

653,708

Certificates of deposit

516,867

317,123

Brokered deposits

199,087

217,732

Total deposits

2,727,836

1,932,097

Federal Home Loan Bank advances

55,000

56,039

Other borrowed funds

458,763

476,939

Subordinated debentures

59,126

44,024

Accrued interest and other liabilities

45,956

35,645

Total liabilities

3,346,681

2,544,744

Shareholders' Equity

Common stock, no par value: authorized 20,000,000 shares, issued and outstanding 10,220,478 and 7,426,222 on December 31, 2015 and 2014, respectively

153,083

41,555

Retained earnings

222,329

211,979

Accumulated other comprehensive loss:

Net unrealized losses on securities available-for-sale, net of tax

(3,801)

(319)

Net unrealized losses on derivative instruments, net of tax

(6,374)

(5,943)

Net unrecognized losses on postretirement plans, net of tax

(2,047)

(2,163)

Total accumulated other comprehensive loss

(12,222)

(8,425)

Total shareholders' equity

363,190

245,109

Total liabilities and shareholders' equity

$

3,709,871

$

2,789,853

 

 

Consolidated Statements of Income Data (unaudited)

Three Months Ended

 December 31,

(In thousands, except per share data)

2015

2014

Interest Income

Interest and fees on loans

$

25,144

$

18,005

Interest on U.S. government and sponsored enterprise obligations

3,904

3,868

Interest on state and political subdivision obligations

704

329

Interest on federal funds sold and other investments

231

90

Total interest income

29,983

22,292

Interest Expense

Interest on deposits

1,881

1,589

Interest on borrowings

901

829

Interest on subordinated debentures

830

638

Total interest expense

3,612

3,056

Net interest income

26,371

19,236

Provision for credit losses

957

545

Net interest income after provision for credit losses

25,414

18,691

Non-Interest Income

Service charges on deposit accounts

1,789

1,540

Other service charges and fees

2,074

1,552

Income from fiduciary services

1,193

1,244

Mortgage banking income, net

1,056

85

Brokerage and insurance commissions

337

388

Bank-owned life insurance

413

462

Other income

1,602

950

Total non-interest income

8,464

6,221

Non-Interest Expenses

Salaries and employee benefits

11,670

8,310

Furniture, equipment and data processing

2,527

2,080

Net occupancy

1,790

1,230

Consulting and professional fees

891

600

Other real estate owned and collection costs

937

624

Regulatory assessments

650

505

Amortization of intangible assets

444

287

Merger and acquisition costs

8,786

Other expenses

3,775

2,665

Total non-interest expenses

31,470

16,301

Income before income taxes

2,408

8,611

Income Taxes

716

2,523

Net income

$

1,692

$

6,088

Per Share Data

Basic earnings per share

$

0.17

$

0.82

Diluted earnings per share

$

0.17

$

0.82

 

 

Consolidated Statements of Income Data (unaudited)

Year Ended

 December 31,

(In thousands, except per share data)

2015

2014

Interest Income

Interest and fees on loans

$

81,221

$

70,654

Interest on U.S. government and sponsored enterprise obligations

15,091

16,118

Interest on state and political subdivision obligations

2,208

1,256

Interest on federal funds sold and other investments

624

357

Total interest income

99,144

88,385

Interest Expense

Interest on deposits

6,511

6,267

Interest on borrowings

3,457

3,329

Interest on subordinated debentures

2,724

2,532

Total interest expense

12,692

12,128

Net interest income

86,452

76,257

Provision for credit losses

1,936

2,220

Net interest income after provision for credit losses

84,516

74,037

Non-Interest Income

Service charges on deposit accounts

6,423

6,229

Other service charges and fees

6,850

6,136

Income from fiduciary services

4,918

4,989

Mortgage banking income, net

2,031

282

Brokerage and insurance commissions

1,699

1,766

Bank-owned life insurance

1,680

1,437

Net gain on sale of securities

4

451

Other income

3,877

3,080

Total non-interest income

27,482

24,370

Non-Interest Expenses

Salaries and employee benefits

37,220

32,669

Furniture, equipment and data processing

8,057

7,316

Net occupancy

5,695

5,055

Consulting and professional fees

2,625

2,368

Other real estate owned and collection costs

2,491

2,289

Regulatory assessments

2,184

1,982

Amortization of intangible assets

1,306

1,148

Merger and acquisition costs

10,415

Other expenses

11,146

9,570

Total non-interest expenses

81,139

62,397

Income before income taxes

30,859

36,010

Income Taxes

9,907

11,440

Net income

$

20,952

$

24,570

Per Share Data

Basic earnings per share

$

2.60

$

3.29

Diluted earnings per share

$

2.60

$

3.28

 

 

Quarterly Average Balance, Interest and Yield/Rate Analysis (unaudited)

At or For The Three Months Ended

December 31, 2015

December 31, 2014

(In thousands)

Average Balance

Interest

Yield/Rate

Average Balance

Interest

Yield/Rate

Assets

Interest-earning assets:

Securities - taxable

$

748,341

$

4,135

2.21

%

$

754,660

$

3,959

2.10

%

Securities - nontaxable(1)

99,281

1,084

4.37

%

40,913

506

4.94

%

Loans(2)(3):

Residential real estate

787,441

8,418

4.28

%

581,225

6,025

4.15

%

Commercial real estate

873,620

9,540

4.27

%

617,105

6,894

4.37

%

Commercial(1)

347,310

3,707

4.18

%

232,231

2,252

3.79

%

Municipal(1)

13,866

122

3.49

%

11,687

107

3.65

%

Consumer

359,851

3,500

3.86

%

291,435

2,869

3.91

%

Total loans

2,382,088

25,287

4.19

%

1,733,683

18,147

4.14

%

Total interest-earning assets

3,229,710

30,506

3.74

%

2,529,256

22,612

3.54

%

Cash and due from banks

72,588

45,270

Other assets

264,503

176,942

Less: allowance for loan losses

(21,216)

(21,440)

Total assets

$

3,545,585

$

2,730,028

Liabilities & Shareholders' Equity

Deposits:

Demand

$

355,421

$

$

282,333

$

Interest checking

691,191

136

0.08

%

479,685

88

0.07

%

Savings

406,723

61

0.06

%

260,020

38

0.06

%

Money market

441,431

388

0.35

%

403,749

291

0.29

%

Certificates of deposit(3)

489,329

952

0.77

%

319,752

780

0.97

%

Total deposits

2,384,095

1,537

0.26

%

1,745,539

1,197

0.27

%

Borrowings:

Brokered deposits

203,046

344

0.67

%

191,292

392

0.81

%

Subordinated debentures

57,973

830

5.68

%

44,012

638

5.75

%

Other borrowings

503,606

901

0.71

%

473,409

829

0.69

%

Total borrowings

764,625

2,075

1.08

%

708,713

1,859

1.04

%

Total funding liabilities

3,148,720

3,612

0.46

%

2,454,252

3,056

0.49

%

Other liabilities

45,223

32,178

Shareholders' equity

351,642

243,598

Total liabilities & shareholders' equity

$

3,545,585

$

2,730,028

Net interest income (fully-taxable equivalent)

26,894

19,556

Less: fully-taxable equivalent adjustment

(523)

(320)

Net interest income

$

26,371

$

19,236

Net interest rate spread (fully-taxable equivalent)

3.28

%

3.05

%

Net interest margin (fully-taxable equivalent)(3)

3.30

%

3.06

%

(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)  The accounting for the SBM acquisition required loans and time deposits to be recorded at fair value. The fair value marks on the loans and time deposits acquired accrete and amortize into net interest income over time. For the fourth quarter of 2015, the loan accretion income and interest expense reduction on time deposits related to the SBM acquisition totaled $531,000 and $180,000, respectively. Excluding these items, net interest margin for the fourth quarter of 2015 was 3.21%.

 

 

Year-to-Date Average Balance, Interest and Yield/Rate Analysis (unaudited)

At or For The Year Ended

December 31, 2015

December 31, 2014

(In thousands)

Average Balance

Interest

Yield/Rate

Average Balance

Interest

Yield/Rate

Assets

Interest-earning assets:

Securities - taxable

$

739,168

$

15,715

2.13

%

$

770,202

$

16,474

2.14

%

Securities - nontaxable(1)

76,779

3,397

4.42

%

37,499

1,932

5.15

%

Loans(2)(3):

Residential real estate

636,516

26,505

4.16

%

571,593

24,036

4.21

%

Commercial real estate

716,112

31,859

4.45

%

594,224

26,976

4.54

%

Commercial(1)

271,631

10,907

4.02

%

211,722

8,346

3.94

%

Municipal(1)

13,698

471

3.44

%

13,794

486

3.52

%

Consumer

310,664

12,053

3.88

%

289,964

11,292

3.89

%

Total loans

1,948,621

81,795

4.20

%

1,681,297

71,136

4.23

%

Total interest-earning assets

2,764,568

100,907

3.65

%

2,488,998

89,542

3.60

%

Cash and due from banks

55,256

44,276

Other assets

200,857

171,204

Less: allowance for loan losses

(21,281)

(21,691)

Total assets

$

2,999,400

$

2,682,787

Liabilities & Shareholders' Equity

Deposits:

Demand

$

292,776

$

$

251,609

$

Interest checking

543,330

427

0.08

%

465,740

325

0.07

%

Savings

306,536

180

0.06

%

250,148

142

0.06

%

Money market

394,367

1,283

0.33

%

413,712

1,206

0.29

%

Certificates of deposit(3)

357,972

3,126

0.87

%

328,887

3,116

0.95

%

Total deposits

1,894,981

5,016

0.26

%

1,710,096

4,789

0.28

%

Borrowings:

Brokered deposits

229,079

1,495

0.65

%

157,265

1,478

0.94

%

Subordinated debentures

47,569

2,724

5.73

%

43,973

2,532

5.76

%

Other borrowings

511,632

3,457

0.68

%

504,803

3,329

0.66

%

Total borrowings

788,280

7,676

0.97

%

706,041

7,339

1.04

%

Total funding liabilities

2,683,261

12,692

0.47

%

2,416,137

12,128

0.50

%

Other liabilities

38,423

29,801

Shareholders' equity

277,716

236,849

Total liabilities & shareholders' equity

$

2,999,400

$

2,682,787

Net interest income (fully-taxable equivalent)

88,215

77,414

Less: fully-taxable equivalent adjustment

(1,763)

(1,157)

Net interest income

$

86,452

$

76,257

Net interest rate spread (fully-taxable equivalent)

3.18

%

3.10

%

Net interest margin (fully-taxable equivalent)(3)

3.19

%

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)  The accounting for the SBM acquisition required loans and time deposits to be recorded at fair value. The fair value marks on the loans and time deposits acquired accrete and amortize into net interest income over time. For the year ended December 31, 2015, the loan accretion income and interest expense reduction on time deposits related to the SBM acquisition totaled $531,000 and $180,000, respectively. Additionally, in the second quarter of 2015 one loan paid-off that was on non-accrual status and resulted in income of $734,000. Excluding these items, net interest margin for the year ended ended December 31, 2015 was 3.14%.

 

 

Loan and Deposit Organic Growth Data (unaudited)

(A)

(B)

(C)

(D) = (A) - (B) - (C)

(In thousands)

December 31,

2015

September 30,

2015

SBM

Acquisition

Three Months Ended

December 31, 2015

Organic Growth

(Annualized)

Loans:

Residential

$

820,704

$

583,076

$

234,619

$

3,009

2

%

Commercial real estate

927,951

690,935

193,883

43,133

25

%

Commercial

374,964

258,105

113,190

3,669

6

%

Home equity

348,634

281,492

71,005

(3,863)

(5)

%

Consumer

17,953

16,535

2,526

(1,108)

(27)

%

Total loans

$

2,490,206

$

1,830,143

$

615,223

$

44,840

10

%

Deposits:

Demand

$

359,130

$

308,576

$

30,139

$

20,415

26

%

Interest checking

740,084

480,065

247,834

12,185

10

%

Savings and money market

912,668

650,701

219,385

42,582

26

%

Certificates of deposit

516,867

339,937

189,659

(12,729)

(15)

%

Brokered deposits

199,087

228,898

(29,811)

(52)

%

Total deposits

$

2,727,836

$

2,008,177

$

687,017

$

32,642

6

%

(A)

(B)

(C)

(D) = (A) - (B) - (C)

(In thousands)

December 31,

2015

December 31,

2014

SBM

Acquisition

Year Ended

December 31, 2015

Organic Growth

Loans:

Residential

$

820,704

$

585,468

$

234,619

$

617

%

Commercial real estate

927,951

640,661

193,883

93,407

15

%

Commercial

374,964

257,515

113,190

4,259

2

%

Home equity

348,634

271,709

71,005

5,920

2

%

Consumer

17,953

17,257

2,526

(1,830)

(11)

%

Total loans

$

2,490,206

$

1,772,610

$

615,223

$

102,373

6

%

Deposits:

Demand

$

359,130

$

263,013

$

30,139

$

65,978

25

%

Interest checking

740,084

480,521

247,834

11,729

2

%

Savings and money market

912,668

653,708

219,385

39,575

6

%

Certificates of deposit

516,867

317,123

189,659

10,085

3

%

Brokered deposits

199,087

217,732

(18,645)

(9)

%

Total deposits

$

2,727,836

$

1,932,097

$

687,017

$

108,722

6

%

 

 

Asset Quality Data (unaudited)

(In thousands)

At or For The

Year Ended

December 31, 2015

At or For The

Nine Months Ended

September 30, 2015

At or For The

Six Months Ended

June 30, 2015

At or For The

Three Months Ended

March 31, 2015

At or For The Year Ended December 31, 2014

Non-accrual loans(1):

Residential real estate

$

7,253

$

4,149

$

4,498

$

5,630

$

6,056

Commercial real estate

4,529

3,384

2,813

4,083

7,043

Commercial

4,489

1,383

1,425

1,442

1,529

Consumer

2,051

1,243

1,957

1,942

2,011

Total non-accrual loans

18,322

10,159

10,693

13,097

16,639

Loans 90 days past due and accruing

Renegotiated loans not included above

4,861

5,013

5,313

4,433

4,539

Total non-performing loans

23,183

15,172

16,006

17,530

21,178

Other real estate owned(2):

Residential real estate

407

204

300

533

575

Commercial real estate

897

351

848

1,012

Total other real estate owned

1,304

204

651

1,381

1,587

Total non-performing assets

$

24,487

$

15,376

$

16,657

$

18,911

$

22,765

Loans 30-89 days past due:

Residential real estate

$

3,590

$

1,153

$

1,287

$

798

$

1,303

Commercial real estate

4,295

1,281

586

959

381

Commercial

802

497

718

144

656

Consumer

1,255

315

897

707

891

Total loans 30-89 days past due

$

9,942

$

3,246

$

3,488

$

2,608

$

3,231

Allowance for loan losses at the beginning of the period

$

21,116

$

21,116

$

21,116

$

21,116

$

21,590

Provision for loan losses

1,938

972

691

440

2,224

Charge-offs:

Residential real estate

801

468

292

113

785

Commercial real estate

481

174

103

55

361

Commercial

655

387

243

159

1,544

Consumer

679

481

260

97

754

Total charge-offs

2,616

1,510

898

424

3,444

Total recoveries

728

554

285

133

746

Net charge-offs

1,888

956

613

291

2,698

Allowance for loan losses at the end of the period

$

21,166

$

21,132

$

21,194

$

21,265

$

21,116

Components of allowance for credit losses:

Allowance for loan losses

$

21,166

$

21,132

$

21,194

$

21,265

$

21,116

Liability for unfunded credit commitments

22

24

26

23

17

Allowance for credit losses

$

21,188

$

21,156

$

21,220

$

21,288

$

21,133

Ratios:

Non-performing loans to total loans

0.93

%

0.83

%

0.89

%

0.98

%

1.19

%

Non-performing assets to total assets

0.66

%

0.54

%

0.59

%

0.67

%

0.82

%

Allowance for loan losses to total loans

0.85

%

1.15

%

1.17

%

1.19

%

1.19

%

Net charge-offs to average loans (annualized)

Quarter-to-date

0.16

%

0.08

%

0.07

%

0.07

%

0.23

%

Year-to-date

0.10

%

0.07

%

0.07

%

0.07

%

0.16

%

Allowance for loan losses to non-performing loans

91.30

%

139.27

%

132.41

%

121.30

%

99.70

%

Loans 30-89 days past due to total loans

0.40

%

0.18

%

0.19

%

0.15

%

0.18

%

(1) As part of the SBM acquisition, the Company acquired $10.6 million of loans designated as non-accrual.

(2) As part of the SBM acquisition, the Company acquired properties designated as real estate owned totaling $729,000. In conjunction with the SBM acquisition, the Company consolidated certain branch locations and two of these branches were designated as real estate owned totaling $401,000.

 

 

Reconciliation of non-GAAP to GAAP Financial Measures

Efficiency Ratio:

Three Months Ended

Year Ended

(In thousands)

December 31,  2015

September 30,  2015

December 31,  2014

December 31,  2015

December 31,  2014

Non-interest expense, as presented

$

31,470

$

16,711

$

16,301

$

81,139

$

62,397

Less: merger and acquisition costs

8,786

766

10,415

Adjusted non-interest expense

$

22,684

$

15,945

$

16,301

$

70,724

$

62,397

Net interest income, as presented

$

26,371

$

20,012

$

19,236

$

86,452

$

76,257

Add: effect of tax-exempt income(1)

523

483

320

1,763

1,157

Non-interest income, as presented

8,464

6,561

6,221

27,482

24,370

Less: net gain on sale of securities

4

4

451

Adjusted net interest income plus non-interest income

$

35,358

$

27,052

$

25,777

$

115,693

$

101,333

Non-GAAP efficiency ratio

64.16

%

58.94

%

63.24

%

61.13

%

61.58

%

GAAP efficiency ratio

90.34

%

62.89

%

64.03

%

71.22

%

62.01

%

(1) Assumed a 35.0% tax rate.

 

 

Tax-Equivalent Net Interest Income:

Three Months Ended

Year Ended

(In thousands)

December 31,  2015

September 30,  2015

December 31,  2014

December 31,  2015

December 31,  2014

Net interest income, as presented

$

26,371

$

20,012

$

19,236

$

86,452

$

76,257

Add: effect of tax-exempt income(1)

523

483

320

1,763

1,157

Net interest income, tax equivalent

$

26,894

$

20,495

$

19,556

$

88,215

$

77,414

(1) Assumed a 35.0% tax rate.

 

 

Tangible Book Value Per Share and Tangible Equity To Tangible Assets:

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

December 31,  2015

September 30,  2015

December 31,  2014

Tangible Book Value Per Share:

Shareholders' equity, as presented

$

363,190

$

259,403

$

245,109

Less: goodwill and other intangible assets

104,324

47,309

48,171

Tangible equity

$

258,866

$

212,094

$

196,938

Shares outstanding at period end

10,220,478

7,454,045

7,426,222

Tangible book value per share

$

25.33

$

28.45

$

26.52

Book value per share

$

35.54

$

34.80

$

33.01

Tangible Equity to Tangible Assets:

Total assets

$

3,709,871

$

2,871,798

$

2,789,853

Less: goodwill and other intangibles

104,324

47,309

48,171

Tangible assets

$

3,605,547

$

2,824,489

$

2,741,682

Tangible equity to tangible assets

7.18

%

7.51

%

7.18

%

Shareholders' equity to total assets

9.79

%

9.03

%

8.79

%

 

 

Core Operating Earnings, Core Diluted EPS, Core Return on Average Assets, and Core Return on Average Equity:

Three Months Ended

Year Ended

(In thousands, except per share data)

December 31,  2015

September 30,  2015

December 31,  2014

December 31,  2015

December 31,  2014

Core Operating Earnings:

Net income, as presented

$

1,692

$

6,456

$

6,088

$

20,952

$

24,570

Merger and acquisition costs, net of tax(1)

5,970

498

7,237

Gains on sale of securities, net of tax(2)

(3)

(3)

(293)

Core operating earnings

$

7,662

$

6,951

$

6,088

$

28,186

$

24,277

Core Diluted EPS:

Diluted EPS, as presented

$

0.17

$

0.86

$

0.82

$

2.60

$

3.28

Non-core transactions impact

0.61

0.07

0.89

(0.04)

Core diluted EPS

$

0.78

$

0.93

$

0.82

$

3.49

$

3.24

Core Return on Average Assets:

Return on average assets, as presented

0.19

%

0.90

%

0.88

%

0.70

%

0.92

%

Non-core transactions impact

0.67

%

0.07

%

0.24

%

(0.02)

%

Core return on average assets

0.86

%

0.97

%

0.88

%

0.94

%

0.90

%

Core Return on Average Equity:

Return on average equity, as presented

1.91

%

9.99

%

9.92

%

7.54

%

10.37

%

Non-core transactions impact

6.73

%

0.77

%

2.61

%

(0.12)

%

Core return on average equity

8.64

%

10.76

%

9.92

%

10.15

%

10.25

%

(1) Assumed 35.0% tax rate for deductible expenses.

(2) Assumed 35.0% tax rate.

 

 

Core Return on Average Tangible Equity:

Three Months Ended

Year Ended

(In thousands)

December 31,  2015

September 30,  2015

December 31,  2014

December 31,  2015

December 31,  2014

Net income, as presented

$

1,692

$

6,456

$

6,088

$

20,952

$

24,570

Amortization of intangible assets, net of tax(1)

289

187

187

849

746

Merger and acquisition costs, net of tax(2)

5,970

498

7,237

Gains on sale of securities, net of tax(1)

(3)

(3)

(293)

Core tangible operating earnings

$

7,951

$

7,138

$

6,275

$

29,035

$

25,023

Average equity

$

351,642

$

256,326

$

243,598

$

277,716

$

236,849

Less: average goodwill and other intangible assets

87,814

47,446

48,306

57,833

48,735

Average tangible equity

$

263,828

$

208,880

$

195,292

$

219,883

$

188,114

Core return on average tangible equity

11.96

%

13.56

%

12.75

%

13.20

%

13.30

%

Return on average equity

1.91

%

9.99

%

9.92

%

7.54

%

10.37

%

(1) Assumed 35.0% tax rate.

(2) Assumed 35.0% tax rate for deductible expenses.

 

 

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SOURCE Camden National Corporation



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