Camden National Corporation Reports 27% Increase in Earnings for the Second Quarter of 2011

CAMDEN, Maine, July 26, 2011 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National") reported net income of $7.1 million for the second quarter of 2011, an increase of $1.5 million, or 27%, compared to the second quarter of 2010 and an increase of $730,000, or 12%, compared to the first quarter of 2011. Earnings per diluted share were $0.92 for the second quarter of 2011, compared to $0.73 and $0.83 for the second quarter of 2010 and the first quarter of 2011, respectively.

Net income for the six months ended June 30, 2011 was $13.4 million, an increase of 23% compared to $10.9 million for the same period in 2010.  Earnings per diluted share for the six months ended June 30, 2011 and 2010 were $1.75 and $1.42, respectively.

"In light of an uncertain and sluggish economy, I'm pleased to report our focus on community banking fundamentals has resulted in a strong financial performance for the second quarter of 2011," said Gregory A. Dufour, president and chief executive officer of Camden National. "Our return on average assets was 1.22% for the second quarter of 2011, compared to 0.98% for the second quarter of 2010 and our national peer group average of 0.57%, based on the most recent Bank Holding Company Report dated March 31, 2011.  Return on average equity for the second quarter of 2011 and 2010 was 13.29% and 11.36%, respectively, compared to our national peer group average of 6.21% for the first quarter of 2011. We anticipate these financial results will place us in the top level of our national peer group."

Balance Sheet Highlights

Camden National's total assets of $2.3 billion at June 30, 2011 increased $25.0 million compared to December 31, 2010.  Total loans grew to $1.6 billion at June 30, 2011, an increase of $26.7 million, or 2%, for the first six months of 2011. Our loan growth was centered in the commercial loan portfolio, which increased $33.8 million, or 19%, since year end.  Residential real estate loans declined by $6.2 million, or 1%, due to the sale of thirty-year fixed rate mortgages.

Total deposits of $1.5 billion at June 30, 2011 increased $29.7 million compared to December 31, 2010. Since year end, core deposits grew $61.4 million, or 6%, while retail certificate of deposits declined $36.6 million, or 8%.

Asset Quality and the Provision for Credit Losses

"Our loan loss provision for the first half of 2011 decreased $1.9 million from the comparable period in 2010, reflecting continued stabilization of our asset quality," said Dufour. "Despite lower net loan charge-offs, we continue to maintain a cautionary outlook for asset quality as we saw a slight increase in non-performing assets, which is indicative of ongoing weak consumer credit conditions."

Non-performing assets at June 30, 2011 were $26.8 million, up from $25.1 million at March 31, 2011 and $25.9 million at June 30, 2010.  Camden National's non-performing assets compared to total assets increased slightly to 1.15% compared to the same period in 2010, but continued to compare favorably to our national peer group's average of 3.73%, based on the most recent Bank Holding Company Performance Report dated March 31, 2011. When comparing the non-performing asset composition from a year ago, other real estate owned declined $2.2 million, residential real estate non-accrual loans increased $2.0 million and restructured consumer loans increased $2.4 million.

Net loan charge-offs of $1.4 million during the first half of 2011, present a declining trend compared to $1.9 million in the same period a year ago.  These net charge-offs resulted in year-to-date annualized net charge-offs to average loans of 0.18% and 0.25% for those respective periods.

Net Interest Income

Camden National's net interest income of $19.6 million for the second quarter of 2011 increased $1.0 million compared to the first quarter of 2011 and the second quarter of 2010.  The tax equivalent net interest margin increased to 3.64% for the second quarter of 2011, compared to 3.49% and 3.59% for the first quarter of 2011 and second quarter of 2010, respectively. During the second quarter of 2011, Camden National collected approximately $600,000 of loan related non-recurring fees.  

Net interest income for the six months ended June 30, 2011 totaled $38.1 million, an increase of $1.5 million, or 4%, compared to $36.6 million for the same period a year ago.  The increase in net interest income is primarily due to growth in our average earning assets of $90.5 million, partially offset by a slight decline in our net interest margin to 3.57% from 3.59% for the six months ended June 30, 2011 and 2010, respectively.

Non-Interest Income and Non-Interest Expense

Non-interest income of $5.0 million for the second quarter of 2011 increased $581,000, or 13%, compared to the second quarter of 2010. The growth in non-interest income was primarily due to an increase of $267,000 in our loan servicing business, which now services 6,000 Maine Housing loans, and an increase in debit card interchange income of $114,000. On a linked-quarter basis (comparing current quarter results to the previous quarter), second quarter 2011 non-interest income declined $112,000, primarily related to the non-recurring bank-owned life insurance proceeds of $170,000 recorded in the first quarter of 2011.

Non-interest income of $10.1 million for the six months ended June 30, 2011 increased $1.1 million, or 13%, compared to the same period in 2010, with over half of the increase driven by the growth in loan servicing income.  

Non-interest expense of $13.3 million for the second quarter of 2011 increased $415,000, or 3%, compared to the second quarter of 2010, primarily due to increases in salaries and employee benefits of $816,000 and consulting fees of $318,000, partially offset by declines in write-downs of other real estate owned of $772,000.  Salaries and employee benefits reflect an increase in employees' incentive compensation of $425,000, based on our second quarter 2011 financial performance.  During the second quarter, we engaged an outside consultant to facilitate an in-depth review of business processes, which resulted in a $318,000 increase in consulting and professional fees. On a linked-quarter basis, second quarter 2011 non-interest expense declined slightly as we benefited from lower FDIC deposit assessments and lower occupancy costs related to snow removal which was partially offset by increases in salaries and employee benefits and consulting fees.

Non-interest expense of $26.6 million for the six months ended June 30, 2011 increased $778,000 compared to the same period in 2010.  This 3% increase relates to increases in salaries and employee benefit costs and consulting fees, partially offset by a decline in write-downs of other real estate owned.

Camden National's efficiency ratio improved to 53.39% in the second quarter of 2011 from 55.27% and 54.76% for the first quarter of 2011 and the second quarter of 2010, respectively.  Camden National's efficiency ratio was 54.31% and 55.41% for the six months ended June 30, 2011 and 2010, respectively.

Dividends and Capital

The board of directors approved a dividend of $0.25 per share, payable on July 29, 2011, to shareholders of record on July 15, 2011.  This resulted in an annualized dividend yield of 3.05%, based on the June 30, 2011 closing price of Camden National's common stock of $32.81 per share as reported on NASDAQ.

Camden National's total risk-based capital ratio increased to 15.45% at June 30, 2011, compared to 13.99% at June 30, 2010, and 15.05% at December 31, 2010, as capital levels increased from retained earnings. The Company and Camden National Bank exceeded the minimum total risk-based, tier 1 and tier 1 leverage ratios of 10.0%, 6.0%, and 5.0%, respectively, required by the Federal Reserve for an institution to be considered "well capitalized."

About Camden National Corporation

Camden National Corporation, headquartered in Camden, Maine, and ranked 12th in US Banker's list of top-performing mid-tier banks in 2010, is the holding company employing more than 400 Maine residents for two financial services companies including 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 38 banking offices throughout Maine. Acadia Trust offers investment management and fiduciary services with offices in Portland, Bangor and Ellsworth. Located at Camden National Bank, Camden Financial Consultants, formerly known as Acadia Financial Consultants, offers full-service brokerage and insurance services.

Forward-Looking Statements

This press release and the documents incorporated by reference herein contain certain statements that may be considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "will," "should," and other expressions which predict or indicate future events or trends and which do not relate to historical matters. Forward-looking statements should not be relied on, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of Camden National. These risks, uncertainties and other factors may cause the actual results, performance or achievements of Camden National to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.

Some of the factors that might cause these differences include the following: general, national, regional or local economic conditions which are less favorable than anticipated; changes in loan default and charge-off rates; declines in the equity and financial markets; reductions in deposit levels; declines in mortgage loan refinancing, equity loan and line of credit activity; changes in the domestic interest rate environment and inflation; changes in the carrying value of investment securities and other assets; further actions by the U.S. government and Treasury Department, including actions similar to the Federal Home Loan Mortgage Corporation conservatorship, which could have a negative impact on Camden National's investment portfolio and earnings; misalignment of Camden National's interest-bearing assets and liabilities; increases in loan repayment rates affecting interest income and the value of mortgage servicing rights; changing business, banking, or regulatory conditions or policies, or new legislation affecting the financial services industry, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act, that could lead to changes in the competitive balance among financial institutions, restrictions on bank activities, changes in costs (including deposit insurance premiums), increased regulatory scrutiny, declines in consumer confidence in depository institutions, or changes in the secondary market for bank loan and other products; and changes in accounting rules, Federal and State laws, Internal Revenue Service regulations, and other regulations and policies governing financial holding companies and their subsidiaries which may impact our ability to take appropriate action to protect our financial interests in certain loan situations. Other factors could also cause these differences. For more information about these factors please see our Annual Report on Form 10-K, as updated by our Quarterly Reports on Form 10-Q and other filings on file with the SEC. All of these factors should be carefully reviewed, and readers should not place undue reliance on these forward-looking statements.

These forward-looking statements were based on information, plans and estimates at the date of this press release, and Camden National does not promise to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.