Camden National Corporation Reports Fourth Quarter And Year End 2020 Financial Results

CAMDEN, Maine, Jan. 26, 2021 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company"), a $4.9 billion bank holding company headquartered in Camden, Maine, reported net income of $18.3 million and diluted earnings per share ("EPS") of $1.22 for the fourth quarter of 2020, an increase of 20% and 23% over the fourth quarter of 2019, respectively.

Net income for the year ended 2020 was $59.5 million, an increase of 4% over the year ended 2019. Over the same period, diluted EPS increased 7% to $3.95 for the year ended 2020. Strong earnings translated into a return on average assets of 1.23%, a return on average equity of 11.81%, and a return on average tangible equity (non-GAAP) of 14.79% for the year ended 2020.

"We have a lot to be proud about at Camden National this year," said Gregory A. Dufour, President and Chief Executive Officer of the Company. "2020 was a year unlike any other with so many personal and professional challenges, as the COVID-19 health crisis disrupted the lives of the people and businesses across all communities we serve. Despite these challenges, we were able to support our employees, as well as provide outstanding service to our customers and communities in their time of need through various offerings, including our Employee Assistance Program, SBA Paycheck Protection Program, short-term loan deferrals, and continued generous donations to our communities."

"Our annual financial results speak to the dedication, hard work and resiliency of our employees across all areas of our company. One great example that highlights the effort and teamwork across the organization is from our residential mortgage team. The team worked tirelessly this past year to support our customers as interest rates hit a historical low, and we were able reach a new record of $1 billion in mortgage originations this past year." Dufour added, "While our methods for conducting business may have changed this year in response to COVID-19, our focus on and ability to deliver an excellent customer experience didn't. Recently, we were named a Customer Experience Leader by a leading independent research firm, Greenwich Associates, for U.S. Retail Banking and U.S. Commercial Small Business."

The Company ended 2020 with excellent asset quality, including non-performing assets of 0.22% of total assets and short-term loan modifications of 0.8% of total loans.

Q4 2020 FINANCIAL HIGHLIGHTS

  • Fourth quarter 2020 net income and diluted EPS increased 20% and 23% over the fourth quarter of 2019, respectively, and 9% and 10% over the third quarter of 2020, respectively.
  • Fourth quarter 2020 pre-tax, pre-provision earnings (non-GAAP) increased 19% over the fourth quarter of 2019 and 5% over the third quarter of 2020.
  • Fourth quarter 2020 return on average assets was 1.45%, return on average equity was 13.94%, and return on average tangible equity (non-GAAP) was 17.27%.
  • Fourth quarter 2020 net interest margin was 3.06%, compared to 3.12% for the fourth quarter of 2019 and 3.00% for the third quarter of 2020.
  • In the fourth quarter of 2020, the Company adopted the new accounting standard for credit loss provisions, commonly referred to as "CECL" (Current Expected Credit Losses), effective as of January 1, 2020. Under CECL, the allowance for loan losses was 1.18% of total loans at December 31, 2020.
  • At December 31, 2020, loans operating under a short-term deferral arrangement due to COVID-19 were negligible at 0.8% of total loans, compared to 5.5% at September 30, 2020.
  • Non-performing assets were 0.22% of total assets at December 31, 2020, and annualized net (recoveries) / charge-offs were (0.02)% and 0.02% of average loans for the fourth quarter and year ended 2020, respectively.
  • Repurchased 9,408 shares of Camden National common stock in the fourth quarter of 2020 and 274,354 shares for the year ended 2020.

FINANCIAL CONDITION

As of December 31, 2020, total assets were $4.9 billion, an 11% increase over last year. Asset growth during 2020 was driven by an increase in investment balances of $195.6 million, or 21%, loan balances of $124.8 million, or 4%, and cash balances of $70.1 million, or 93%. The increase in cash and investment balances during the year was primarily driven by elevated deposits resulting from government stimulus in response to COVID-19, and loan balances increased primarily due to PPP loans. Commercial and commercial real estate loan originations slowed during the year in response to COVID-19, while residential mortgage loan originations soared and reached a new record during the year of $1.0 billion, an increase of 79% over 2019. The increase was largely driven by refinancing activities as interest rates hit record lows in response to economic uncertainty related to COVID-19. For the fourth quarter and year ended 2020, the Company sold 59% and 61% of its residential mortgage originations to the secondary market, respectively, compared to 59% for the fourth quarter of 2019, 69% for the third quarter of 2020, and 51% for the year ended 2019.

As of December 31, 2020, deposits totaled $4.0 billion, an increase of 13% during the year. The increase was driven by core deposit (non-GAAP) growth of $539.0 million, or 19%, which was fueled by government stimulus programs in response to COVID-19. Over the same period, certificates of deposits ("CD's") and total borrowings decreased $164.1 million, or 31%, and $91.1 million, or 27%, respectively, given the influx of core deposits.

The Company's total loan-to-deposit ratio at December 31, 2020 was 80%, compared to 87% at December 31, 2019.

At December 31, 2020, the Company's capital position remained well in excess of regulatory requirements, including a total risk-based capital ratio of 15.40% and a tier 1 leverage ratio of 9.13%.

In December 2020, the Company announced a cash dividend to shareholders of $0.33 per share, payable on January 29, 2021, to shareholders of record as of January 15, 2021. As of December 31, 2020, the Company's annualized dividend yield was 3.69% based on Camden National's closing share price of $35.78, as reported by NASDAQ.

For the year ended 2020, the Company repurchased 274,354 shares of its common stock. The Company continues to monitor and evaluate its use of capital, particularly during these volatile and uncertain times.

ASSET QUALITY AND COVID-19 SHORT TERM LOAN DEFERMENTS

As of December 31, 2020, the Company's asset quality metrics remained very strong with non-performing assets of 0.22% of total assets and loans 30-89 days past due of 0.10% of total loans. In comparison, at September 30, 2020 and December 31, 2019, non-performing assets were 0.22% and 0.25% of total assets, respectively, and loans 30-89 days past due were 0.18% and 0.17% of total loans, respectively.

In March 2020, the Company began offering temporary debt relief to business and retail customers impacted by COVID-19. 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 December 31, 2020, loans operating under a short-term deferral arrangement totaled $26.5 million, or 0.8% of total loans, in comparison to 5.5% of total loans at September 30, 2020.

In late December 2020, another stimulus package was signed into law to provide additional COVID-19 relief for business and consumers. This stimulus package allows the Company the opportunity to again provide temporary debt relief to those impacted by COVID-19. At this time, the Company believes that any additional temporary debt relief would be made on a case-by-case basis.

CECL ADOPTION

In the fourth quarter of 2020, the Company adopted the CECL methodology for accounting for provision for loan losses and certain off-balance credit exposures, effective as of January 1, 2020. Upon the adoption of CECL, the Company recorded a net cumulative-effect adjustment that decreased retained earnings by $2.8 million. This adjustment was the net result of: (1) a $233,000 increase in the allowance for loan losses, (2) a $3.3 million increase in other liabilities related to the allowance for off-balance sheet credit exposures, and (3) a $769,000 increase in deferred tax assets. Interim period financial statements for 2020 were not restated for CECL adoption, but rather continue to be reported under the incurred loss methodology.

The adoption of CECL did not result in the recording of an allowance for credit losses on the Company's held-to-maturity debt securities.

FINANCIAL OPERATING RESULTS (Q4 2020 vs. Q3 2020)

Net income for the fourth quarter of 2020 was $18.3 million, an increase of $1.5 million, or 9%, over the third quarter of 2020. Diluted EPS for the fourth quarter of 2020 was $1.22, an increase of $0.11, or 10%, over the previous quarter.

Net Interest Income.  Net interest income for the fourth quarter of 2020 was $35.5 million, an increase of $980,000, or 3%, over the third quarter of 2020. The increase was driven by PPP loan income earned during the fourth quarter of $3.7 million, an increase of $1.3 million over the prior quarter.

Net interest margin for the fourth quarter of 2020 was 3.06%, an increase of 6 basis points over the third quarter of 2020. The increase between periods was driven by higher PPP loan contribution of 14 basis points and a decrease in costs of funds of 5 basis points, partially offset by an increase in excess liquidity of 4 basis points and a decrease in interest-earning asset yields given the low interest rate environment.

Our net interest margin, excluding PPP loans and excess liquidity (non-GAAP), for the fourth quarter of 2020 was 2.99%, compared to 3.03% for the third quarter of 2020.

Provision for Credit Losses.  The provision for credit losses for the fourth quarter of 2020 was reported using the CECL loss methodology, whereas the third quarter 2020 provision for credit losses was reported using the incurred loss methodology.

The change in provision for credit losses between periods is highlighted in the table below:



CECL


Incurred


Change

($ in thousands)


Q4 2020


Q3 2020


Increase / (Decrease)

Provision for credit losses - loans


$

1,043



$

1,000



$

43


Credit for credit losses - off-balance sheet credit
  exposures


(785)



(13)



(772)


Provision for credit losses


$

258



$

987



$

(729)


Non-Interest Income.  Non-interest income for the fourth quarter of 2020 was $14.3 million, an increase of $1.6 million, or 13%, over the third quarter of 2020. The increase between periods was driven by an increase in mortgage banking income of $934,000 and recognition of our annual debit card income bonus of $555,000 in the fourth quarter of 2020.

Non-Interest Expense.  Non-interest expense for the fourth quarter of 2020 was $26.7 million, an increase of $1.5 million, or 6%, compared to the third quarter of 2020. Compensation-related expenses increased $2.5 million between periods primarily due to incentive compensation due to strong Company performance for the year ended 2020. This was partially offset by a decrease in other expenses of $1.2 million between periods as the Company accrued $1.2 million for a legal matter settlement in the third quarter of 2020. The Company's efficiency ratio calculated in accordance with generally accepted accounting principles in the United States ("GAAP") was 53.61% for the fourth quarter of 2020 and 53.30% for the fourth quarter of 2020 on a non-GAAP basis.

FINANCIAL OPERATING RESULTS (Q4 2020 vs. Q4 2019)

Net income for the fourth quarter 2020 increased $3.0 million, or 20%, over the fourth quarter of 2019. Diluted EPS increased $0.23, or 23%, over the same period.

Net Interest Income.  Net interest income for the fourth quarter of 2020 increased $3.2 million, or 10%, over the fourth quarter 2019. The increase was led by PPP loan income of $3.7 million in the fourth quarter of 2020.

Net interest margin for the fourth quarter of 2020 decreased 6 basis points compared to the fourth quarter of 2019. Net interest margin compression between periods was driven by the change in the interest rate environment and the build of cash balances both pressuring our yield on interest-earning assets. Our yield on interest-earning assets for the fourth quarter of 2020 was 3.38%, which included a 19 basis point contribution from PPP loans and a 15 basis point drag from excess liquidity, compared to 4.02%, which included a 1 basis point drag from excess liquidity, for the fourth quarter of 2019. Over this same period, our cost of funds decreased 61 basis points to 0.33% for the fourth quarter of 2020.

Our net interest margin, excluding PPP loans and excess liquidity (non-GAAP), for the fourth quarter of 2020 was 2.99%, compared to 3.13% for the fourth quarter of 2019.

Provision for Credit Losses.  The provision for credit losses for the fourth quarter of 2020 was reported using the CECL loss methodology, whereas the fourth quarter 2019 provision for credit losses was reported using the incurred loss methodology.

The change in provision for credit losses between periods is highlighted in the table below:



CECL


Incurred


Change

($ in thousands)


Q4 2020


Q4 2019


Increase / (Decrease)

Provision for credit losses - loans


$

1,043



$

204



$

839


(Credit) provision for credit losses - off-balance
  sheet credit exposures


(785)



10



(795)


Provision for credit losses


$

258



$

214



$

44


Non-Interest Income.  Non-interest income for the fourth quarter 2020 increased $2.4 million, or 20%, over the fourth quarter of 2019. The increase between periods was led by an increase in mortgage banking income of $3.4 million driven by an increase in residential mortgage sales of 64%, and was partially offset by a one-time unrealized gain of $866,000 recognized in the fourth quarter of 2019, lower service charge income of $449,000 and lower customer loan swap fees of $247,000.

Non-Interest Expense.  Non-interest expense for the fourth quarter of 2020 increased $1.9 million, or 8%, over the fourth quarter of 2019. The net increase was driven by: (1) an increase in compensation-related expenses of $1.8 million driven by normal merit increases and higher incentive accruals based on performance, (2) an increase in furniture, equipment, and data processing costs of $410,000 driven by new systems and technologies, (3) an increase in regulatory assessment costs of $309,000 as the assessment credits received in 2019 were fully utilized prior to the fourth quarter of 2020, and (4) lower employment and travel-related costs of $432,000 driven by changes due to COVID-19.

CONFERENCE CALL

Camden National will host a conference call and webcast at 3:00 p.m., Eastern Time, on Tuesday, January 26, 2021 to discuss its fourth quarter and fiscal year 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/cac210126.html

A link to the live webcast will be available on Camden National's website under "Investor Relations" at 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 approximately $4.9 billion in assets and approximately 610 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 three years, Camden National Bank was named a Customer Experience (CX) Leader by a leading independent research firm, Greenwich Associates. In 2020, it received awards in two CX categories: U.S. Retail Banking and U.S. Commercial Small Business. The Finance Authority of Maine has awarded Camden National Bank as "Lender at Work for Maine" for eleven 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 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; adjusted yield on interest-earning assets and adjusted net interest margin (fully-taxable equivalent); 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

Year Ended

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


December 31,

2020


September 30,

2020


December 31,

2019


December 31,

2020


December 31,

2019

Financial Condition Data











Investments


$

1,128,651



$

1,121,712



$

933,069



$

1,128,651



$

933,069


Loans and loans held for sale


3,261,379



3,312,777



3,106,877



3,261,379



3,106,877


Allowance for loan losses


37,865



36,414



25,171



37,865



25,171


Total assets


4,898,745



5,153,793



4,429,521



4,898,745



4,429,521


Deposits


4,005,244



4,224,044



3,537,743



4,005,244



3,537,743


Borrowings


246,770



294,361



337,889



246,770



337,889


Shareholders' equity


529,314



517,522



473,415



529,314



473,415


Operating Data











Net interest income


$

35,461



$

34,481



$

32,239



$

136,307



$

127,630


Provision for credit losses


258



987



214



12,418



2,861


Non-interest income


14,331



12,696



11,948



50,490



42,113


Non-interest expense


26,692



25,221



24,814



99,983



95,303


Income before income tax expense


22,842



20,969



19,159



74,396



71,579


Income tax expense


4,564



4,194



3,921



14,910



14,376


Net income


$

18,278



$

16,775



$

15,238



$

59,486



$

57,203


Key Ratios











Return on average assets


1.45

%


1.34

%


1.35

%


1.23

%


1.30

%

Return on average equity


13.94

%


13.01

%


12.77

%


11.81

%


12.44

%

GAAP efficiency ratio


53.61

%


53.46

%


56.16

%


53.52

%


56.15

%

Net interest margin (fully-taxable equivalent)


3.06

%


3.00

%


3.12

%


3.09

%


3.15

%

Non-performing assets to total assets


0.22

%


0.22

%


0.25

%


0.22

%


0.25

%

Common equity ratio


10.81

%


10.04

%


10.69

%


10.81

%


10.69

%

Tier 1 leverage capital ratio


9.13

%


8.96

%


9.55

%


9.13

%


9.55

%

Common equity tier 1 risk-based capital ratio


12.45

%


12.21

%


11.80

%


12.45

%


11.80

%

Tier 1 risk-based capital ratio


13.78

%


13.55

%


13.16

%


13.78

%


13.16

%

Total risk-based capital ratio


15.40

%


15.15

%


14.44

%


15.40

%


14.44

%

Per Share Data











Basic earnings per share


$

1.22



$

1.12



$

1.00



$

3.96



$

3.70


Diluted earnings per share


$

1.22



$

1.11



$

0.99



$

3.95



$

3.69


Cash dividends declared per share


$

0.33



$

0.33



$

0.33



$

1.32



$

1.23


Book value per share


$

35.50



$

34.69



$

31.26



$

35.50



$

31.26


Non-GAAP Measures(1)











Return on average tangible equity


17.27

%


16.21

%


16.26

%


14.79

%


15.99

%

Efficiency ratio


53.30

%


50.60

%


55.64

%


52.56

%


55.77

%

Pre-tax, pre-provision earnings


$

23,100



$

21,956



$

19,373



$

86,814



$

74,440


Allowance for loan losses to total loans, excluding SBA PPP
   loans


1.23

%


1.19

%


0.81

%


1.23

%


0.81

%

Tangible common equity ratio


8.99

%


8.30

%


8.66

%


8.99

%


8.66

%

Tangible book value per share


$

28.96



$

28.14



$

24.77



$

28.96



$

24.77



(1)

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

 

Consolidated Statements of Condition Data

(unaudited)


(In thousands)


December 31,

2020


September 30,

2020


December 31,

2019

ASSETS







Cash and due from banks


$

49,524



$

42,119



$

39,586


Interest-bearing deposits in other banks (including restricted cash)


96,250



304,270



36,050


Total cash, cash equivalents and restricted cash


145,774



346,389



75,636


Investments:







Available-for-sale securities, at fair value (book value of $1,078,474, $1,070,479 and $913,978,
  respectively)


1,115,813



1,107,069



918,118


Held-to-maturity securities, at amortized cost (fair value of $1,411, $1,403 and $1,359, respectively)


1,297



1,298



1,302


Other investments


11,541



13,345



13,649


Total investments


1,128,651



1,121,712



933,069


Loans held for sale, at fair value (book value of $40,499, $37,301 and $11,915, respectively)


41,557



37,935



11,854


Loans:







Commercial real estate


1,369,470



1,333,733



1,243,397


Commercial(1)


381,494



375,548



442,701


SBA PPP


135,095



223,838




Residential real estate


1,054,798



1,044,103



1,070,374


Consumer and home equity


278,965



297,620



338,551


Total loans


3,219,822



3,274,842



3,095,023


      Less: allowance for loan losses(2)


(37,865)



(36,414)



(25,171)


       Net loans


3,181,957



3,238,428



3,069,852


Goodwill


94,697



94,697



94,697


Core deposit intangible assets


2,843



3,014



3,525


Bank-owned life insurance


94,877



94,262



92,344


Premises and equipment, net


39,884



40,517



41,836


Deferred tax assets


11,956



11,195



16,823


Other assets


156,549



165,644



89,885


Total assets


$

4,898,745



$

5,153,793



$

4,429,521


LIABILITIES AND SHAREHOLDERS' EQUITY







Liabilities







Deposits:







Non-interest checking


$

792,550



$

800,582



$

552,590


Interest checking


1,288,575



1,419,544



1,153,203


Savings and money market


1,282,886



1,306,868



1,119,193


Certificates of deposit


357,666



405,434



521,752


Brokered deposits


283,567



291,616



191,005


 Total deposits


4,005,244



4,224,044



3,537,743


Short-term borrowings


162,439



210,055



268,809


Long-term borrowings


25,000



25,000



10,000


Subordinated debentures


59,331



59,306



59,080


Accrued interest and other liabilities(2)


117,417



117,866



80,474


Total liabilities


4,369,431



4,636,271



3,956,106


Shareholders' equity


529,314



517,522



473,415


Total liabilities and shareholders' equity


$

4,898,745



$

5,153,793



$

4,429,521



(1)

Includes the Healthcare Professional Funding Corporation ("HPFC") loan portfolio.

(2)

At December 31, 2020, the reported balance has been accounted for under the CECL model. Periods reported prior to December 31, 2020, have been accounted for under the incurred loss model.

 

Consolidated Statements of Income Data

(unaudited)




For The

Three Months Ended


For the

Year Ended

(In thousands, except per share data)


December 31,

2020


September 30,

2020


December 31,

2019


December 31,

2020


December 31,

2019

Interest Income











Interest and fees on loans


$

33,810



$

33,025



$

35,379



$

134,000



$

143,399


Taxable interest on investments


4,158



4,480



4,780



18,399



19,509


Nontaxable interest on investments


815



823



758



3,253



2,701


Dividend income


157



163



160



655



722


Other interest income


202



176



475



893



2,187


Total interest income


39,142



38,667



41,552



157,200



168,518


Interest Expense











Interest on deposits


2,591



2,899



7,459



15,544



34,001


Interest on borrowings


246



394



961



1,837



3,621


Interest on subordinated debentures


844



893



893



3,512



3,266


Total interest expense


3,681



4,186



9,313



20,893



40,888


Net interest income


35,461



34,481



32,239



136,307



127,630


Provision for credit losses(1)


258



987



214



12,418



2,861


Net interest income after provision for credit losses


35,203



33,494



32,025



123,889



124,769


Non-Interest Income











Mortgage banking income, net


5,598



4,664



2,175



18,487



7,837


Debit card income


3,261



2,627



2,978



10,420



9,701


Service charges on deposit accounts


1,742



1,606



2,191



6,697



8,393


Income from fiduciary services


1,506



1,504



1,520



6,115



5,901


Brokerage and insurance commissions


798



755



683



2,832



2,625


Bank-owned life insurance


615



615



615



2,533



2,425


Customer loan swap fees




51



247



222



1,166


Net loss on sale of securities






(133)





(105)


Other income


811



874



1,672



3,184



4,170


Total non-interest income


14,331



12,696



11,948



50,490



42,113


Non-Interest Expense











Salaries and employee benefits


16,245



13,739



14,446



57,938



54,489


Furniture, equipment and data processing


3,180



3,076



2,770



11,756



10,881


Net occupancy costs


1,800



1,785



1,784



7,585



7,047


Consulting and professional fees


956



913



1,027



3,833



3,706


Debit card expense


969



972



947



3,753



3,613


Regulatory assessments


479



510



170



1,450



1,261


Amortization of core deposit intangible assets


171



170



176



682



705


Other real estate owned and collection costs, net


112



71



127



382



480


Other expenses


2,780



3,985



3,367



12,604



13,121


Total non-interest expense


26,692



25,221



24,814



99,983



95,303


Income before income tax expense


22,842



20,969



19,159



74,396



71,579


Income Tax Expense


4,564



4,194



3,921



14,910



14,376


Net Income


$

18,278



$

16,775



$

15,238



$

59,486



$

57,203


Per Share Data











Basic earnings per share


$

1.22



$

1.12



$

1.00



$

3.96



$

3.70


Diluted earnings per share


$

1.22



$

1.11



$

0.99



$

3.95



$

3.69



(1)

Reported balances for the three and 12 months ended December 31, 2020, have been accounted for under the CECL model. Reported balances for the three months ended September 30, 2020 and December 31, 2019, and 12 months ended December 31, 2019, have been accounted for under the incurred loss method.

 

Quarterly Average Balance and Yield/Rate Analysis

(unaudited)




Average Balance


Yield/Rate



For the Three Months Ended


For the Three Months Ended

(In thousands)


December 31,

2020


September 30,

2020


December 31,

2019


December 31,

2020


September 30,

2020


December 31,

2019

Assets













Interest-earning assets:













Interest-bearing deposits in other banks and
other interest-earning assets


$

267,083



$

216,027



$

79,578



0.09

%


0.09

%


1.74

%

Investments - taxable


945,866



906,374



804,587



1.88

%


2.11

%


2.52

%

Investments - nontaxable(1)


121,354



122,204



112,730



3.40

%


3.41

%


3.40

%

Loans(2):













  Commercial real estate


1,348,269



1,315,958



1,249,961



3.65

%


3.74

%


4.40

%

  Commercial(1)


331,707



372,416



403,601



3.89

%


3.73

%


4.41

%

  SBA PPP


186,416



221,672





7.74

%


4.16

%


%

  Municipal(1)


20,645



19,072



18,469



3.46

%


3.52

%


3.66

%

  HPFC


13,947



16,104



22,516



6.98

%


8.09

%


7.56

%

  Residential real estate


1,093,367



1,083,052



1,078,485



3.96

%


4.00

%


4.38

%

  Consumer and home equity


287,665



305,194



345,487



4.25

%


4.31

%


5.11

%

Total loans 


3,282,016



3,333,468



3,118,519



4.07

%


3.92

%


4.49

%

Total interest-earning assets


4,616,319



4,578,073



4,115,414



3.38

%


3.37

%


4.02

%

Other assets


405,976



417,956



349,786








Total assets


$

5,022,295



$

4,996,029



$

4,465,200





















Liabilities & Shareholders' Equity













Deposits:













Non-interest checking


$

800,391



$

741,757



$

558,677



%


%


%

Interest checking


1,371,910



1,339,389



1,165,610



0.23

%


0.26

%


0.79

%

Savings


589,856



557,718



471,777



0.04

%


0.06

%


0.08

%

Money market


700,949



737,782



642,174



0.33

%


0.35

%


1.16

%

Certificates of deposit


373,364



417,788



533,416



0.89

%


1.07

%


1.66

%

 Total deposits


3,836,470



3,794,434



3,371,654



0.23

%


0.29

%


0.77

%

Borrowings:













Brokered deposits


286,038



242,390



187,125



0.46

%


0.26

%


2.02

%

Customer repurchase agreements


183,337



194,937



247,780



0.40

%


0.42

%


1.20

%

Subordinated debentures


59,327



59,269



59,037



5.66

%


6.00

%


6.01

%

Other borrowings


25,000



73,370



44,816



1.00

%


1.02

%


1.88

%

 Total borrowings


553,702



569,966



538,758



1.02

%


1.01

%


2.07

%

Total funding liabilities


4,390,172



4,364,400



3,910,412



0.33

%


0.38

%


0.94

%

Other liabilities


110,452



118,727



81,261








Shareholders' equity


521,671



512,902



473,527








Total liabilities & shareholders' equity


$

5,022,295



$

4,996,029



$

4,465,200








Net interest rate spread (fully-taxable equivalent)


3.05

%


2.99

%


3.08

%

Net interest margin (fully-taxable equivalent)


3.06

%


3.00

%


3.12

%

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


3.03

%


2.96

%


3.09

%


(1)

Reported on 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 December 31, 2020, September 30, 2020, and December 31, 2019, totaling $339,000, $453,000 and $326,000, respectively.

  

Year-to-Date Average Balance and Yield/Rate Analysis

(unaudited)




Average Balance


Yield/Rate



For the Year Ended


For the Year Ended

(In thousands)


December 31,

2020


December 31,

2019


December 31,

2020


December 31,

2019

Assets









Interest-earning assets:









Interest-bearing deposits in other banks and other interest-earning assets


$

179,718



$

67,288



0.19

%


2.13

%

Investments - taxable


874,823



825,674



2.24

%


2.54

%

Investments - nontaxable(1)


121,302



99,024



3.39

%


3.45

%

Loans(2):









  Commercial real estate


1,310,160



1,260,412



3.92

%


4.66

%

  Commercial(1)


381,087



390,689



3.97

%


4.68

%

  SBA PPP


146,918





5.28

%


%

  Municipal(1)


19,073



19,181



3.56

%


3.59

%

  HPFC


17,000



27,502



8.23

%


8.05

%

  Residential real estate


1,085,064



1,045,668



4.05

%


4.33

%

  Consumer and home equity


312,076



346,769



4.48

%


5.35

%

 Total loans 


3,271,378



3,090,221



4.11

%


4.65

%

Total interest-earning assets


4,447,221



4,082,207



3.56

%


4.15

%

Other assets


398,224



328,301






Total assets


$

4,845,445



$

4,410,508















Liabilities & Shareholders' Equity









Deposits:









Non-interest checking


$

684,539



$

519,078



%


%

Interest checking


1,289,501



1,123,268



0.35

%


0.93

%

Savings


536,014



476,860



0.06

%


0.08

%

Money market


701,640



607,383



0.50

%


1.24

%

Certificates of deposit


454,750



506,971



1.27

%


1.57

%

 Total deposits


3,666,444



3,233,560



0.38

%


0.81

%

Borrowings:









Brokered deposits


242,951



316,475



0.60

%


2.42

%

Customer repurchase agreements


205,890



241,899



0.64

%


1.25

%

Subordinated debentures


59,228



59,007



5.93

%


5.54

%

Other borrowings


58,601



29,132



0.89

%


2.05

%

 Total borrowings


566,670



646,513



1.20

%


2.25

%

Total funding liabilities


4,233,114



3,880,073



0.49

%


1.05

%

Other liabilities


108,707



70,570






Shareholders' equity


503,624



459,865






Total liabilities & shareholders' equity


$

4,845,445



$

4,410,508






Net interest rate spread (fully-taxable equivalent)


3.07

%


3.10

%

Net interest margin (fully-taxable equivalent)


3.09

%


3.15

%

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


3.06

%


3.11

%


(1)

Reported on 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 years ended December 31, 2020 and 2019, totaling $1.5 million and $1.6 million, respectively.

 

Asset Quality Data

(unaudited)


(In thousands)


At or For The

Year Ended

December 31, 2020


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

Non-accrual loans:











Residential real estate


$

3,531



$

4,017



$

4,664



$

3,499



$

4,096


Commercial real estate


518



565



432



646



1,122


Commercial(1)


1,607



1,114



1,091



1,070



784


Consumer and home equity


1,996



2,503



2,371



2,102



2,154


Total non-accrual loans


7,652



8,199



8,558



7,317



8,156


   Accruing troubled-debt restructured loans not
      included above


2,818



2,952



2,874



3,008



2,993


Total non-performing loans


10,470



11,151



11,432



10,325



11,149


Other real estate owned


236





118



94



94


Total non-performing assets


$

10,706



$

11,151



$

11,550



$

10,419



$

11,243


Loans 30-89 days past due:











Residential real estate


$

2,297



$

1,784



$

4,016



$

1,781



$

2,227


Commercial real estate


50



2,056



1,625



2,641



1,582


Commercial(1)


430



1,638



223



1,725



791


Consumer and home equity


440



434



388



1,379



750


Total loans 30-89 days past due


$

3,217



$

5,912



$

6,252



$

7,526



$

5,350


Allowance for loan losses at the beginning of the
  period


$

25,171



$

25,171



$

25,171



$

25,171



$

24,712


Impact of adopting CECL


233










Provision for loan losses


13,215



12,172



11,172



1,772



2,862


Charge-offs:











Residential real estate


121



121



96



96



462


Commercial real estate


103



104



71



50



300


Commercial(1)


1,130



857



673



253



1,238


Consumer and home equity


484



199



134



91



713


Total charge-offs 


1,838



1,281



974



490



2,713


Total recoveries 


(1,084)



(352)



(170)



(68)



(310)


Net charge-offs


754



929



804



422



2,403


Allowance for loan losses at the end of the period


37,865



36,414



35,539



26,521



25,171


Allowance for off-balance sheet credit
   exposures(2)(3)


2,568



9



22



24



21


Allowance for credit losses 


$

40,433



$

36,423



$

35,561



$

26,545



$

25,192


Ratios:











Non-performing loans to total loans


0.33

%


0.34

%


0.34

%


0.33

%


0.36

%

Non-performing assets to total assets


0.22

%


0.22

%


0.23

%


0.23

%


0.25

%

Allowance for loan losses to total loans


1.18

%


1.11

%


1.07

%


0.84

%


0.81

%

Allowance for loan losses to total loans, excluding 
   SBA PPP loans(4)


1.23

%


1.19

%


1.14

%


0.84

%


0.81

%

Net (recoveries) charge-offs to average loans (annualized)











Quarter-to-date


(0.02)

%


0.01

%


0.05

%


0.05

%


0.09

%

Year-to-date


0.02

%


0.04

%


0.05

%


0.05

%


0.08

%

Allowance for loan losses to non-performing loans


361.65

%


326.55

%


310.87

%


256.86

%


225.77

%

Loans 30-89 days past due to total loans


0.10

%


0.18

%


0.19

%


0.24

%


0.17

%


(1)

Includes the HPFC loan portfolio.

(2)

Period ended December 31, 2020, includes a $3.3 million increase upon adoption of CECL. Prior periods were not restated for CECL.

(3)

Presented within accrued interest and other liabilities on the consolidated statements of condition.

(4)

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
Year Ended

(In thousands)


December 31,
 2020


September 30,
2020


December 31,
2019


December 31,
2020


December 31,
2019

Net income, as presented


$

18,278



$

16,775



$

15,238



$

59,486



$

57,203


Add: amortization of core deposit
  intangible assets, net of tax(1)


135



134



139



539



557


Net income, adjusted for amortization of
  core deposit intangible assets


$

18,413



$

16,909



$

15,377



$

60,025



$

57,760


Average equity, as presented


$

521,671



$

512,902



$

473,527



$

503,624



$

459,865


Less: average goodwill and core deposit
  intangible assets


(97,622)



(97,794)



(98,307)



(97,880)



(98,570)


Average tangible equity


$

424,049



$

415,108



$

375,220



$

405,744



$

361,295


Return on average equity


13.94

%


13.01

%


12.77

%


11.81

%


12.44

%

Return on average tangible equity


17.27

%


16.21

%


16.26

%


14.79

%


15.99

%

















 (1)   Assumed a 21% tax rate.

















Efficiency Ratio:



For the
Three Months Ended


For the
Year Ended

(In thousands)


December 31,
2020


September 30,
2020


December 31,
2019


December 31,
2020


December 31,
2019

Non-interest expense, as presented


$

26,692



$

25,221



$

24,814



$

99,983



$

95,303


Less: legal settlement




(1,200)





(1,200)




Adjusted non-interest expense


$

26,692



$

24,021



$

24,814



$

98,783



$

95,303


Net interest income, as presented


$

35,461



$

34,481



$

32,239



$

136,307



$

127,630


Add: effect of tax-exempt income(1)


290



292



277



1,155



1,029


Non-interest income, as presented


14,331



12,696



11,948



50,490



42,113


Add: net loss on sale of securities






133





105


Adjusted net interest income plus non-
   interest income


$

50,082



$

47,469



$

44,597



$

187,952



$

170,877


GAAP efficiency ratio


53.61

%


53.46

%


56.16

%


53.52

%


56.15

%

Non-GAAP efficiency ratio


53.30

%


50.60

%


55.64

%


52.56

%


55.77

%

















 (1)   Assumed a 21% tax rate.



























Pre-tax, Pre-provision Earnings:













For the
Three Months Ended


For the
Year Ended

(In thousands)


December 31,
2020


September 30,
2020


December 31,
2019


December 31,
2020


December 31,
2019

Net income, as presented


$

18,278



$

16,775



$

15,238



$

59,486



$

57,203


Add: provision for credit losses


258



987



214



12,418



2,861


Add: income tax expense


4,564



4,194



3,921



14,910



14,376


Pre-tax, pre-provision earnings


$

23,100



$

21,956



$

19,373



$

86,814



$

74,440


 

Adjusted Yield on Interest-Earning Assets:



For the
Three Months Ended


For the
Year Ended



December 31,
2020


September 30,
2020


December 31,
2019


December 31,
2020


December 31,
2019

Yield on interest-earning assets, as presented


3.38

%


3.37

%


4.02

%


3.56

%


4.15

%

Add: effect of excess liquidity on yield 
  on interest-earning assets


0.15

%


0.11

%


0.01

%


0.09

%


0.01

%

Less: effect of SBA PPP loans on yield
  on interest-earning assets


(0.19)

%


(0.04)

%


%


(0.06)

%


%

Adjusted yield on interest-earning assets


3.34

%


3.44

%


4.03

%


3.59

%


4.16

%


Adjusted Net Interest Margin (Fully-Taxable Equivalent):



For the
Three Months Ended


For the
Year Ended



December 31,
2020


September 30,
2020


December 31,
2019


December 31,
2020


December 31,
2019

Net interest margin (fully-taxable
equivalent), as presented


3.06

%


3.00

%


3.12

%


3.09

%


3.15

%

Add: effect of excess liquidity on net
  interest margin (fully-taxable
  equivalent)


0.13

%


0.09

%


0.01

%


0.08

%


0.01

%

Less: effect of SBA PPP loans on net
  interest margin (fully-taxable
  equivalent)


(0.20)

%


(0.06)

%


%


(0.07)

%


%

Adjusted net interest margin (fully-taxable
  equivalent)


2.99

%


3.03

%


3.13

%


3.10

%


3.16

%

 

Allowance for Loan Losses to Total Loans, excluding SBA PPP Loans:







(In thousands)


December 31,
2020


September 30,
2020


December 31,
2019

Allowance for loan losses, as presented


$

37,865



$

36,414



$

25,171


Less: allowance for loan losses on SBA PPP loans


(69)



(115)




Adjusted allowance for loan losses


$

37,796



$

36,299



$

25,171


Total loans, as presented


$

3,219,822



$

3,274,842



$

3,095,023


Less: SBA PPP loans


(135,095)



(223,838)




Adjusted total loans


$

3,084,727



$

3,051,004



$

3,095,023


Allowance for loan losses to total loans


1.18

%


1.11

%


0.81

%

Allowance for loan losses to total loans, excluding SBA PPP loans


1.23

%


1.19

%


0.81

%


Tangible Book Value Per Share and Tangible Common Equity Ratio:



December 31,
2020


September 30,
2020


December 31,
2019

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


Tangible Book Value Per Share:







Shareholders' equity, as presented


$

529,314



$

517,522



$

473,415


Less: goodwill and core deposit intangible assets


(97,540)



(97,711)



(98,222)


Tangible shareholders' equity


$

431,774



$

419,811



$

375,193


Shares outstanding at period end


14,909,097



14,917,344



15,144,719


Book value per share


$

35.50



$

34.69



$

31.26


Tangible book value per share


$

28.96



$

28.14



$

24.77



Tangible Common Equity Ratio:

Total assets


$

4,898,745



$

5,153,793



$

4,429,521


Less: goodwill and core deposit intangible assets


(97,540)



(97,711)



(98,222)


Tangible assets


$

4,801,205



$

5,056,082



$

4,331,299


Common equity ratio


10.81

%


10.04

%


10.69

%

Tangible common equity ratio


8.99

%


8.30

%


8.66

%


Core Deposits:

(In thousands)


December 31,
2020


September 30,
2020


December 31,
2019

Total deposits


$

4,005,244



$

4,224,044



$

3,537,743


Less: certificates of deposit


(357,666)



(405,434)



(521,752)


Less: brokered deposits


(283,567)



(291,616)



(191,005)


Core deposits


$

3,364,011



$

3,526,994



$

2,824,986


 

Average Core Deposits:



For the
Three Months Ended


For the
Year Ended

(In thousands)


December 31,
2020


September 30,
2020


December 31,
2019


December 31,
2020


December 31,
2019

Total average deposits


$

3,836,470



$

3,794,434



$

3,371,654



$

3,666,444



$

3,233,560


Less: average certificates of deposit


(373,364)



(417,788)



(533,416)



(454,750)



(506,971)


Average core deposits


$

3,463,106



$

3,376,646



$

2,838,238



$

3,211,694



$

2,726,589


 

www.camdennational.com.  (PRNewsFoto/Camden National Corporation) (PRNewsfoto/Camden National Corporation)

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/camden-national-corporation-reports-fourth-quarter-and-year-end-2020-financial-results-301214897.html

SOURCE Camden National Corporation

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