Camden National Corporation Reports a 2% increase in Third Quarter 2013 Net Income

CAMDEN, Maine, Oct. 29, 2013 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company"), a $2.6 billion bank holding company headquartered in Camden, Maine, reported net income for the third quarter of 2013 of $6.4 million and diluted earnings per share of $0.83. The net income results of the third quarter of 2013 represent an increase of $111,000, or 2%, compared to the third quarter of 2012. For the third quarter of 2013, the Company achieved a return on average assets of 0.98% and a return on average tangible equity of 14.32%.

"Our net income for the first nine months of 2013 was $18.4 million or $2.39 per diluted share as compared to net income of $19.3 million or $2.50 per diluted share for the same period a year ago. This performance reflects the strength of our organization to make a strategic investment in acquiring fourteen branches last year and still report solid earnings and returns. We expect the financial performance of these branches to improve over time as we convert the cash from the acquired low cost core deposits into loans. In these markets, with additional lenders and our expanded presence, we have closed over $75 million in loans in less than one year," said Gregory A. Dufour, president and chief executive officer of Camden National Corporation. Dufour added, "The divestiture of five Franklin County branches on October 4, 2013 had a minimal impact on the Company's third quarter results."

Balance Sheet

Total assets at September 30, 2013 were $2.6 billion, representing a $32.5 million increase, or 1%, since December 31, 2012. The growth in total assets was primarily driven by an increase in loans (excluding loans held for sale) of $26.1 million. Our loan growth is centered in the consumer and commercial real estate portfolios, which experienced increases of $29.9 million and $16.4 million, respectively. The growth in the consumer portfolio was led by our promotions on home equity lines and a short-term fixed-rate home equity product. Since year end we experienced declines in our residential real estate and commercial portfolios of $7.8 million and $12.6 million, respectively. The residential real estate portfolio decreased primarily due to the sale of $28.2 million in 30-year fixed-rate production to manage our interest rate risk profile.

Total deposits at September 30, 2013 of $2.0 billion increased $43.9 million, or 2%, since December 31, 2012. The increase is primarily driven by an increase in core deposits (demand, interest checking, savings, and money market) of $80.8 million, offset by a decrease in retail certificates of deposit of $39.2 million. The increase in core deposits was the result of normal business with customers and large deposits received from our municipal relationships in the third quarter of 2013.

Third Quarter Operating Results

Our net interest income of $18.7 million for the third quarter of 2013 increased $260,000, or 1%, compared to the third quarter of 2012. The increase reflects growth in our average loan balance of $61.4 million, partially offset by a 17 basis point decline in the net interest margin on a fully-taxable basis to 3.13% for the third quarter of 2013. We continue to experience a decline in the net interest margin due to the low interest rate environment as the yield on average interest-earning assets declined 40 basis points from the third quarter of 2012 to 3.65%. However, the decline in earning asset yields has been partially offset by a decline in our overall cost of funds. The average cost of funds for the third quarter of 2013 was 0.54%, which is a decrease of 24 basis points compared to the third quarter of 2012.

Non-interest income for the third quarter of 2013 of $6.5 million increased $1.4 million, or 29%, compared to the third quarter of 2012. The significant changes in non-interest income include:

• Deposit-related and other service fees increased $929,000 due to new customer accounts from the branch acquisition in the fourth quarter of 2012.
• A net gain from the sale of available-for-sale securities of $647,000 in the third quarter of 2013, which is an increase of $460,000 from the third quarter of 2012.

Non-interest expense for the third quarter of 2013 of $15.2 million increased $1.8 million, or 14%, compared to the third quarter of 2012. The increase reflects the incremental costs associated with the addition of new branch locations in the fourth quarter of 2012. These costs include salaries and benefits for new employees and general operating costs, including facility-related costs. The increase in non-interest expense for the third quarter of 2013 was partially offset by a decrease in one-time transaction-related costs of $349,000 as compared to the third quarter of 2012.

Asset Quality

Our asset quality metrics for the period ended September 30, 2013 remained relatively stable as compared to the period ended June 30, 2013. The ratios of allowance for credit losses and loans past due to total loans each decreased 2 basis points to 1.43% and 0.25%, respectively. Annualized three and nine months ended net charge-offs to average loans for September 30, 2013 were 0.33% and 0.20%, respectively. Non-performing assets to total assets at September 30, 2013 of 1.24% increased 15 basis points from prior quarter as one large relationship was placed on non-accrual status. Our ratio of non-performing assets to total assets continues to compare favorably to our national peer group's average of 2.29% as disclosed in the most recent June 30, 2013 Bank Holding Company Performance Report.

Dividends and Capital

The board of directors approved a dividend of $0.27 per share, payable on October 31, 2013, to shareholders of record as of October 17, 2013. This distribution represents an annualized dividend yield of 2.65%, based on the September 30, 2013 closing price of Camden National's common stock at $40.76 per share as reported by NASDAQ.

On September 24, 2013, the board of directors approved a common stock repurchase program for the repurchase of up to 250,000 shares of the Company's outstanding common stock. The program is expected to continue until the authorized number of shares is repurchased or the board of directors terminate the program.

Camden National's total risk-based capital ratio, Tier 1 risk-based capital ratio, and Tier 1 leverage capital ratio were 16.21%, 14.96%, and 9.24%, respectively, at September 30, 2013. Camden National Corporation and its wholly-owned subsidiary, Camden National Bank, continue to exceed the minimum total and Tier 1 risk-based capital ratios of 10% and 6%, respectively, and the Tier 1 leverage capital ratio of 5% required by the Federal Reserve for an institution to be considered "well capitalized."

About Camden National Corporation

Camden National Corporation, recognized by Forbes as one of "America's Most Trustworthy Companies" in 2012 and 2013*, is the holding company employing more than 500 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 44 banking offices throughout Maine. Acadia Trust offers investment management and fiduciary services with offices in Portland and Ellsworth. Located at Camden National Bank, Camden Financial Consultants offers full-service brokerage and insurance services. Learn more at www.CamdenNational.com. Member FDIC. *From Forbes.com March 18, 2013. © 2013 Forbes.com LLC. All rights reserved. Used by permission and protected by the Copyright Laws of the United States.

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, including certain plans, expectations, goals, projections, and statements, which are subject to numerous risks, assumptions, and uncertainties. Forward-looking statements can be identified by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "plan," "target," or "goal," or future or conditional verbs such as "will," "may," "might," "should," "would," "could" 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, but are not limited to, the following: continued weakness in the United States economy in general and the regional and local economies within the New England region and Maine, which could result in a deterioration of credit quality, a change in the allowance for loan losses, or a reduced demand for the Company's credit or fee-based products and services; adverse changes in the local real estate market could result in a deterioration of credit quality and an increase in the allowance for loan loss, as most of the Company's loans are concentrated in Maine, and a substantial portion of these loans have real estate as collateral; changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; competitive pressures, including continued industry consolidation, the increased financial services provided by non-banks and banking reform; continued volatility in the securities markets that could adversely affect the value or credit quality of the Company's assets, impairment of goodwill, the availability and terms of funding necessary to meet the Company's liquidity needs, and the Company's ability to originate loans and could lead to impairment in the value of securities in the Company's investment portfolios; changes in information technology that require increased capital spending; changes in consumer spending and savings habits; new laws and regulations regarding the financial services industry; changes in laws and regulations including laws and regulations concerning taxes, banking, securities and insurance; and changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters. Additional factors that could also cause results to differ materially from those described above can be found in the Company's Annual Report on Form 10-K, as updated by our Quarterly Reports on Form 10-Q and other filings 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 and assumes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Use of Non-GAAP Financial Measures

In addition to evaluating the Company's results of operations in accordance with generally accepted accounting principles in the United States ("GAAP"), management supplements this evaluation with certain non-GAAP financial measures, such as the efficiency and tangible equity ratios, 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. A 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.

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

Reconciliation of non-GAAP to GAAP Financial Measures

Camden National presents its efficiency ratio using non-GAAP information. The GAAP-based efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income. The non-GAAP efficiency ratio excludes branch acquisition and divestiture costs and prepayment fees on borrowings from non-interest expense, excludes net gains on sale of securities and other-than-temporary impairment from non-interest income, and adds the tax-equivalent adjustment to net interest income. The following table provides a reconciliation between the GAAP and non-GAAP efficiency ratio:

The following table provides a reconciliation between tax-equivalent net interest income to GAAP net interest income using a 35.0% tax rate.

The following table provides a reconciliation between tangible book value per share and book value per share, which has been prepared in accordance with GAAP:

The following table provides a reconciliation between tangible shareholders' equity to tangible assets and shareholders' equity to assets, which has been prepared in accordance with GAAP:

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SOURCE Camden National Corporation