Camden National Corp. CAC

NAS: CAC | ISIN: US1330341082   28/03/2024
33,52 USD (+0,81%)
(+0,81%)   28/03/2024

Camden National Corporation Reports Second Quarter 2022 Financial Results

Camden National Corporation Reports Net Income of $15.0 Million for the Second Quarter of 2022 and 9% Loan Growth for the First Half of 2022

CAMDEN, Maine, July 26, 2022 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company"), a $5.5 billion bank holding company headquartered in Camden, Maine, reported net income of $15.0 million and diluted earnings per share of ("EPS") of $1.02, decreases of 11% and 10%, respectively, compared to the first quarter of 2022. The decrease between periods was driven by higher provision for credit losses of $3.4 million as loans grew 5% and signs of a softening economy continued to take shape. Second quarter 2022 earnings before income tax and provision (non-GAAP) increased 6% over last quarter. The Company's return on average equity was 13.16% and return on average tangible equity (non-GAAP) was 16.83%, compared to 12.96% and 16.01%, respectively, for the first quarter of 2022.

"We are pleased to see an increase in pre-tax, pre-provision earnings in the second quarter over last quarter," said Gregory A. Dufour, President and Chief Executive Officer. "We had another solid quarter of loan growth, seeing positive momentum across all of our loan channels. Loans grew 5% during the second quarter, putting loan growth at 9% for the first half of 2022. These results reflect the hard work and efforts across all of our teams."

Dufour added, "We increased our allowance for credit losses in the second quarter, in part attributable to solid loan growth, but also based on our outlook for the economy. In addition to fortifying our balance sheet through increasing reserve levels, in the second quarter we transferred a portion of our available-for-sale investment portfolio to held-to-maturity to help mitigate the impact of the volatile interest rate environment on reported capital. We continue to closely monitor our markets given the level of volatility throughout the economy, and remain confident as we enter this period with strong asset quality and regulatory capital levels."

In June, the Company announced a cash dividend of $0.40 per share, payable on July 29, 2022, to shareholders of record on July 15, 2022, representing an annualized dividend yield of 3.63%, based on the Company's closing share price of $44.05, as reported by NASDAQ as of June 30, 2022.

Through the first six months of 2022, the Company repurchased 161,556 shares of its common stock at an average price of $45.89 per share.

SECOND QUARTER 2022 HIGHLIGHTS

  • Net income decreased by $1.8 million, or 11%, over the first quarter of 2022, primarily due to the increase in the provision for credit loss expense of $3.4 million. Earnings before income taxes, provision and Small Business Administration Paycheck Protection Program ("SBA PPP") loan income (non-GAAP) increased $2.0 million, or 11%, compared to the first quarter of 2022.
  • Net interest margin decreased 3 basis points to 2.84%, compared to the first quarter of 2022, while adjusted net interest margin (non-GAAP) expanded 1 basis point to 2.85% over the same period.
  • Loans grew $190.0 million, or 5%, during the second quarter of 2022.
  • The Company transferred securities originally designated as available-for-sale ("AFS"), with a market value of $520.3 million and in an unrealized loss position of $72.1 million, to held-to-maturity ("HTM") to help preserve the Company's capital position and limit the impact should interest rates continue to rise.
  • The allowance for credit losses ("ACL") on loans to total loans ratio increased 2 basis points in the second quarter of 2022 to 0.92% of total loans at June 30, 2022 driven by strong loan growth and an elevated risk of a softening economy.
  • Repurchased 148,470 shares of the Company's common stock at a weighted average price $45.83 during the second quarter of 2022.

FINANCIAL CONDITION

As of June 30, 2022, total assets were $5.5 billion, a decrease of $33.9 million, or 1%, since December 31, 2021. Over this period, cash balances decreased $144.2 million and investment balances decreased $170.6 million, or 11%. Cash and investment proceeds were largely used to fund loan growth of $292.8 million, or 9%, during the first half of 2022.

As of June 30, 2022, investments totaled $1.4 billion, or 25% of total assets, compared to $1.5 billion, or 28% of total assets as of December 31, 2021. The decrease in investment balances during the second quarter of 2022 was driven by: (1) the change in market value of the investment portfolio designated as AFS due to the continued increases in interest rates during the quarter and (2) redeployment of normal pay-downs within our investment portfolio to fund loan growth. Throughout the second quarter of 2022, the Federal Open Market Committee continued with its strategy to slow the economy in an effort to curb inflation by increasing the Federal Funds Interest Rate another 125 basis points to a range of 1.50% to 1.75% as of June 30, 2022, compared to a range of 0.00% to 0.25% as of December 31, 2021. The increase in interest rates drove bond prices lower and resulted in an unrealized loss on the Company's AFS investment portfolio of $76.5 million, or 9% of its book value, as of June 30, 2022, compared to an unrealized loss of $1.5 million, which was less than 1% of its book value, as of December 31, 2021. During the second quarter of 2022, the Company transferred AFS securities with a market value of $520.3 million to HTM to protect against further capital dilution should interest rates continue to rise. The unrealized losses on these securities at the time of transfer were $72.1 million.

As of June 30, 2022, the weighted-average life and duration of the AFS investment portfolio was 6.6 years and 5.8 years, respectively, and the weighted-average life and duration of the HTM investment portfolio was 8.1 years and 7.2 years, respectively. As of June 30, 2022, agency-issued mortgage-backed, collateralized mortgage obligations and debt securities comprised 90% of the book value of the investment portfolio.

As of June 30, 2022, loans totaled $3.7 billion, or 68% of total assets, an increase of 9% since December 31, 2021. Over this period, residential mortgage loan balances grew $210.8 million, or 16%, commercial loan balances grew $57.5 million, or 16%, commercial real estate loan balances grew $37.5 million, or 3%, and consumer and home equity loan balances grew $20.4 million or 9%.

Through the second quarter of 2022, the Company continued to hold the majority of its residential mortgage production within its loan portfolio. For the three and six months ended June 30, 2022, the Company held in portfolio 80% and 79% of its funded production, respectively. The Company anticipates the majority of its residential mortgage production will be held within its loan portfolio for the remainder of the year.

As of June 30, 2022, deposits totaled $4.5 billion, a decrease of $81.8 million, or 2%, since year end. The decrease over this period was driven by a decrease in brokered deposits of $125.1 million as the Company used alternative borrowing sources to manage its funding costs. Core deposits (non-GAAP) totaled $4.1 billion as of June 30, 2022, an increase of $56.5 million, or 1%, since year end, driven by checking account growth of $45.3 million, or 2%.

The Company's loan-to-deposit ratio was 82% at June 30, 2022, compared to 77% at March 31, 2022 and 74% at December 31, 2021.

The Company's deposit beta, which is calculated using core deposits and certificates of deposits, was 8.9% for the first half of 2022 and its overall funding beta was 10.6% over the same period.

As of June 30, 2022, total borrowings were $415.8 million, an increase of $159.9 million, or 62%, since year end. The increase is the result of the shift in alternative funding over this period from brokered deposits to more cost-effective overnight borrowings, as well as the need for additional funding to support strong loan growth during the first half of 2022.

As of June 30, 2022, the Company's regulatory capital ratios were each well in excess of regulatory capital requirements. Despite the Company's regulatory capital ratios remaining strong, a decrease in the market value of the AFS investment portfolio due to the increase in interest rates during the first half of 2022 caused decreases across the common equity ratio, tangible common equity ratio (non-GAAP), book value per share and tangible book value per share (non-GAAP) over this period. During the second quarter of 2022, the Company transferred certain securities from AFS to HTM to help preserve capital should interest rates continue to rise, and in doing so, $56.6 million of unrealized losses, net of tax, were isolated within capital and will amortize over the remaining life of the securities. The Company's non-regulatory capital ratios and book value as of the dates indicated were as follows:

  • As of June 30, 2022, the Company's common equity ratio was 8.17% and its tangible common equity ratio (non-GAAP) was 6.51%, compared to 8.90% and 7.25% as of March 31, 2022, respectively, and 9.84% and 8.22% as of December 31, 2021, respectively.
  • As of June 30, 2022, the Company's book value per share was $30.52 and its tangible book value per share (non-GAAP) was $23.92, compared to $32.72 and $26.16 as of March 31, 2022, respectively, and $36.72 and $30.15 as of December 31, 2021, respectively.

Under the 2022 share repurchase program, the Company repurchased 161,556 shares of its outstanding common stock through the first six months of 2022, which included the repurchase of 148,470 shares at an average price of $45.83 per share in the second quarter of 2022.

ASSET QUALITY

As of June 30, 2022, the Company's asset quality metrics remained very strong with non-performing assets of 0.11% of total assets and loans 30-89 days past due of 0.06% of total loans. In comparison, at March 31, 2022 and December 31, 2021, non-performing assets were 0.12% and 0.13%, respectively, of total assets, and loans 30-89 days past due for both March 31, 2022 and December 31, 2021 were 0.04% of total loans.

ALLOWANCE FOR CREDIT LOSSES ("ACL")

At June 30, 2022, the ACL on loans was $34.2 million, or 0.92% of total loans, compared to $31.8 million, or 0.90% of total loans, as of March 31, 2022, and $33.3 million, or 0.97% of total loans, as of December 31, 2021. The increase in the ACL on loans of $2.5 million for the second quarter of 2022 was driven by: (1) a softening overall economy and increasing likelihood of a forecasted recession, and (2) 5% loan growth during this period, that offset (3) the release of $2.4 million of additional reserves provided for certain commercial real estate loans in response to COVID-19 modifications due to the heightened credit risk. The Company had established certain metrics that needed to be met prior to the release of these additional reserves, and during the second quarter of 2022, the second tranche of these loans met all required metrics and the associated additional reserves were released. As of June 30, 2022, there were $746,000 of additional reserves provided for certain commercial loans within the Company's ACL on loans that are subject to release upon certain metrics being met.

Overall, the global and national markets continue to be volatile and carry a high degree of uncertainty. These factors are currently forecasted using external data in the ACL model and subject our ACL estimate under CECL to a higher risk of fluctuation between periods based on actual and changes to forecasted macroeconomic factors.

FINANCIAL OPERATING RESULTS (Q2 2022 vs. Q1 2022)

Net income for the second quarter of 2022 was $15.0 million, a decrease of $1.8 million, or 11%, compared to the first quarter of 2022. The decrease between quarters was driven by higher provision for credit losses and lower SBA PPP loan income between quarters. Excluding income taxes, provision for credit losses and SBA PPP loan income, earnings for the second quarter of 2022 were $21.0 million (non-GAAP), an increase of $2.0 million, or 11%, compared to last quarter.

Net Interest Income and Net Interest Margin.  Net interest income for the second quarter of 2022 was $36.5 million, an increase of $169,000 over the first quarter of 2022.

  • Interest income for the second quarter of 2022 of $40.0 million was $1.2 million, or 3%, higher than the first quarter of 2022 driven by the increase in average loan balances of $148.2 million, or 4%. The yield on average interest-earning assets for the second quarter was 3.11%, an increase of 4 basis points over the first quarter of 2022. Adjusting for SBA PPP loans and excess liquidity, the yield on average-interest earning assets for the second quarter was 3.12% (non-GAAP), an increase of 8 basis points compared to the first quarter of 2022. This increase was offset by a decrease in SBA PPP income of $868,000 as SBA PPP loan forgiveness accelerated during the first quarter of 2022 and, as a result, SBA PPP loans decreased $3.8 million during the quarter. The increase in yield between quarters reflects the increase in interest rates through the first six months of 2022 and the shift in asset mix as cash and investment balances are deployed to fund higher yielding loan growth.
  • Interest expense for the second quarter of 2022 of $3.5 million was $1.0 million, or 40%, higher than the first quarter of 2022 driven by higher funding costs as interest rates have risen during the first six months of 2022. Cost of deposits for the second quarter of 2022 were 0.21%, an increase of 6 basis points over last quarter, primarily the result of interest checking costs increasing 13 basis points between periods to 0.32% as indexed deposits reprice higher. Total borrowing costs also increased during this period, increasing 12 basis points between quarters to 0.97% for the second quarter of 2022.

Net interest margin for the second quarter of 2022 was 2.84%, a decrease of 3 basis points compared to the first quarter of 2022. Adjusted net interest margin, which excludes SBA PPP loans and excess liquidity (non-GAAP), for the second quarter of 2022 was 2.85%, an increase of 1 basis point compared to the first quarter of 2022.

Provision for Credit Losses.  The change in provision for credit losses between periods is highlighted in the table below:

($ in thousands)


Q2 2022


Q1 2022


Increase /

(Decrease)

Provision (credit) for credit losses - loans


$                      2,511


$                    (1,236)


$                      3,747

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


(166)


161


(327)

Provision (credit) for credit losses


$                      2,345


$                    (1,075)


$                      3,420

For the second quarter of 2022, a $2.5 million provision for credit losses was recorded as: (1) our forecasted economic outlook reflects new available information and the risk of a slowing economy becomes more likely, and (2) we experienced strong loan growth during the quarter of 5%. The impact of the updated economic forecast and strong loan growth was partially offset by the release of $2.4 million of additional reserves that were established on certain loans in response to COVID-19 modifications due to their heightened credit risk.

For the first quarter of 2022, a negative provision for credit losses on loans of $1.2 million was recorded as the Company released $1.9 million of additional reserves that were established on certain loans in response to COVID-19 modifications, which more than offset the provision expense that would have otherwise been required on 3% loan growth during the quarter.

Non-Interest Income.  Non-interest income for the second quarter of 2022 was $11.1 million, an increase of $1.3 million, or 13%, over the first quarter of 2022 led by mortgage banking income, debit card income and brokerage and insurance commissions. The increase in mortgage banking income was driven by the change in fair value on the Company's mortgage banking products. Overall, margins on sold loans compressed during the second quarter of 2022 but a slight increase in sold volume was largely able to offset the impact.

Non-Interest Expense.  Non-interest expense for the second quarter of 2022 was $26.6 million, an increase of $347,000, or 1%, over the first quarter of 2022 led by: (1) higher consulting and professional fees costs due to timing of annual director equity award grants in the second quarter and (2) higher marketing and employee travel-related costs, partially offset by (3) lower occupancy costs due to normal seasonal fluctuations for heating, utilities and ground maintenance costs during the winter months.

The Company's GAAP efficiency ratio and non-GAAP efficiency ratio for the second quarter of 2022 was 55.70% and 55.42%, respectively, compared to 56.74% and 56.47% for the first quarter of 2022, respectively.

SUMMARY OF FINANCIAL OPERATING RESULTS (Q2 2022 vs. Q2 2021)

Net income for the second quarter of 2022 decreased $3.1 million, or 17%, to $15.0 million compared to the second quarter of 2021. Earnings before income taxes, provision and SBA PPP income (non-GAAP) for the second quarter of 2022 were $21.0 million, an increase of $3.4 million, or 19%, over the second quarter of 2021.

Net interest income increased $3.0 million, or 9%, between periods led by higher average loan balances of $352.5 million, or 11%. Net interest margin increased 1 basis point between periods to 2.84% for the second quarter of 2022, while adjusted net interest margin (non-GAAP) decreased 4 basis points between the same periods.

Provision for credit losses increased $5.7 million between periods led by the change in the forecasted economic outlook between periods, as well as 13% loan growth over this 12-month period.

Non-interest income decreased $179,000, or 2%, between periods led by lower mortgage banking income of $1.1 million, but partially offset by higher service charge fees and brokerage and insurance commissions. The decrease in mortgage banking activity reflects the change in the markets between periods, highlighted by the change in interest rates. During the second quarter of 2022, the Company sold 20% of its residential mortgage loan production, compared to 40% for the same period last year. In addition, the Company's residential mortgage production volumes through the first six months of 2022 have slowed commensurate with the overall industry.

Non-interest expense increased $966,000, or 4%, between periods led by higher consulting and professional fees and data processing-related costs.

Q2 2022 CONFERENCE CALL

Camden National will host a conference call and webcast at 3:00 p.m., Eastern Time, on Tuesday, July 26, 2022 to discuss its second quarter 2022 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): 

(844) 200-6205

Live dial-in (international):

(929) 526-1599

Participant access code: 

278030

Live webcast:

https://events.q4inc.com/attendee/980349533

A link to the live webcast will be available on Camden National's website under "Investor Relations" at www.CamdenNational.bank prior to the meeting, and a replay of the webcast will be available on Camden National's website following the conference call. The transcript of the conference call will also be available on Camden National's website approximately two days after the conference call.

ABOUT CAMDEN NATIONAL CORPORATION

Camden National Corporation (NASDAQ:CAC) is the largest publicly traded bank holding company in Northern New England with $5.5 billion in assets and approximately 620 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, 66 ATMs, and additional lending offices in New Hampshire and Massachusetts. For the past four years, Camden National Bank was named a Customer Experience (CX) Leader by Coalition Greenwich, a division of CRISIL. In 2021, it received awards in two CX categories: U.S. Retail Banking and U.S. Commercial Small Business Banking. The Finance Authority of Maine has awarded Camden National Bank as "Lender at Work for Maine" for eleven years, and the bank was included in the 2021 list of Best Places to Work in Maine. Comprehensive wealth management, investment and financial planning services are delivered by Camden National Wealth Management. To learn more, visit www.CamdenNational.bank. 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; inflation; ongoing competition in labor markets and employee turnover; deterioration in the value of Camden National's investment securities; changes in consumer spending and savings habits; changes in the interest rate environment; changes in general economic conditions; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; legislative and regulatory changes that adversely affect the business in which Camden National is engaged; changes in the securities markets and other risks and uncertainties disclosed from time to time in Camden National's Annual Report on Form 10-K for the year ended December 31, 2021, as updated by other filings with the Securities and Exchange Commission ("SEC"). Further, statements regarding the potential effects of the war in Ukraine, the COVID-19 pandemic and other notable and global current events on the Company's business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possible 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 the Company's control. 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 generally accepted accounting principles in the United States ("GAAP"), management supplements this evaluation with certain non-GAAP financial measures, such as earnings before income taxes and provision and earnings before income taxes, provision and SBA PPP loan income; 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 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

Six Months Ended

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


June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Financial Condition Data











Investments


$   1,352,882


$    1,437,410


$    1,415,695


$    1,352,882


$    1,415,695

Loans and loans held for sale


$   3,727,567


$    3,540,923


$    3,301,056


$    3,727,567


$    3,301,056

Allowance for credit losses on loans


$        34,244


$         31,770


$         32,060


$         34,244


$         32,060

Total assets


$   5,466,496


$    5,420,415


$    5,152,069


$    5,466,496


$    5,152,069

Deposits


$   4,527,061


$    4,576,664


$    4,294,114


$    4,527,061


$    4,294,114

Borrowings


$      415,833


$       281,999


$       214,744


$       415,833


$       214,744

Shareholders' equity


$      446,381


$       482,446


$       545,548


$       446,381


$       545,548

Operating Data











Net interest income


$        36,534


$         36,365


$         33,529


$         72,899


$         65,893

Provision (credit) for credit losses


2,345


(1,075)


(3,403)


1,270


(5,359)

Non-interest income


11,141


9,825


11,320


20,966


26,535

Non-interest expense


26,556


26,209


25,590


52,765


50,489

Income before income tax expense


18,774


21,056


22,662


39,830


47,298

Income tax expense


3,748


4,261


4,519


8,009


9,415

Net income


$        15,026


$         16,795


$         18,143


$         31,821


$         37,883

Key Ratios











Return on average assets


1.11 %


1.26 %


1.42 %


1.18 %


1.52 %

Return on average equity


13.16 %


12.96 %


13.50 %


13.06 %


14.24 %

GAAP efficiency ratio


55.70 %


56.74 %


57.06 %


56.21 %


54.63 %

Net interest margin (fully-taxable equivalent)


2.84 %


2.87 %


2.83 %


2.85 %


2.85 %

Non-performing assets to total assets


0.11 %


0.12 %


0.17 %


0.11 %


0.17 %

Common equity ratio


8.17 %


8.90 %


10.59 %


8.17 %


10.59 %

Tier 1 leverage capital ratio


9.25 %


9.30 %


9.48 %


9.25 %


9.48 %

Common equity tier 1 risk-based capital ratio


12.04 %


12.38 %


12.94 %


12.04 %


12.94 %

Total risk-based capital ratio


14.15 %


14.51 %


15.26 %


14.15 %


15.26 %

Per Share Data











Basic earnings per share


$            1.02


$             1.14


$             1.21


$             2.16


$             2.53

Diluted earnings per share


$            1.02


$             1.13


$             1.21


$             2.15


$             2.52

Cash dividends declared per share


$            0.40


$             0.40


$             0.36


$             0.80


$             0.72

Book value per share


$          30.52


$           32.72


$           36.49


$           30.52


$           36.49

Non-GAAP Measures(1)











Earnings before income taxes and provision for credit
   losses


$        21,119


$         19,981


$         19,259


$         41,100


$         41,939

Earnings before income taxes, provision for credit losses
   and SBA PPP loan income


$        20,954


$         18,948


$         17,599


$         39,902


$         38,403

Tangible book value per share


$          23.92


$           26.16


$           29.99


$           23.92


$           29.99

Tangible common equity ratio


6.51 %


7.25 %


8.87 %


6.51 %


8.87 %

Return on average tangible equity


16.83 %


16.01 %


16.60 %


16.38 %


17.52 %

Efficiency ratio


55.42 %


56.47 %


56.72 %


55.94 %


53.76 %

Adjusted net interest margin (fully-taxable equivalent)


2.85 %


2.84 %


2.89 %


2.85 %


2.90 %

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

 

Consolidated Statements of Condition Data

(unaudited)


(In thousands)


June 30,
2022


December 31,
2021


June 30,
2021

ASSETS







Cash, cash equivalents and restricted cash


$             76,423


$           220,625


$           103,733

Investments:







Trading securities


3,808


4,428


4,354

Available-for-sale securities, at fair value (amortized cost of $864,600, $1,508,981 and
    $1,381,864, respectively)


788,123


1,507,486


1,399,823

Held-to-maturity securities, at amortized cost (fair value of $537,538, $1,380 and $1,397,
    respectively)


546,520


1,291


1,294

Other investments


14,431


10,280


10,224

Total investments


1,352,882


1,523,485


1,415,695

Loans held for sale, at fair value (book value of $3,380, $5,786 and $14,887, respectively)


3,340


5,815


15,140

Loans:







Commercial real estate


1,532,914


1,495,460


1,423,897

Commercial


421,220


363,695


367,093

SBA PPP


2,509


35,953


126,064

Residential real estate


1,517,239


1,306,447


1,120,917

Consumer and home equity


250,345


229,919


247,945

Total loans


3,724,227


3,431,474


3,285,916

      Less: allowance for credit losses on loans


(34,244)


(33,256)


(32,060)

       Net loans


3,689,983


3,398,218


3,253,856

Goodwill and core deposit intangible assets


96,573


96,885


97,213

Other assets


247,295


255,328


266,432

Total assets


$        5,466,496


$        5,500,356


$        5,152,069

LIABILITIES AND SHAREHOLDERS' EQUITY







Liabilities







Deposits:







Non-interest checking


$        1,228,146


$        1,279,565


$        1,183,403

Interest checking


1,448,408


1,351,736


1,138,273

Savings and money market


1,470,720


1,459,472


1,355,316

Certificates of deposit


296,408


309,648


334,336

Brokered deposits


83,379


208,468


282,786

Total deposits


4,527,061


4,608,889


4,294,114

Short-term borrowings


371,502


211,608


170,413

Subordinated debentures


44,331


44,331


44,331

Accrued interest and other liabilities


77,221


94,234


97,663

Total liabilities


5,020,115


4,959,062


4,606,521

Commitments and Contingencies







Shareholders' equity







Common stock, no par value: authorized 40,000,000 shares, issued and outstanding
    14,625,041, 14,739,956 and 14,951,067 shares on June 30, 2022, December 31, 2021 and
    June 30, 2021, respectively


116,825


123,111


132,278

Retained earnings


444,522


424,412


404,602

Accumulated other comprehensive (loss) income:







Net unrealized (loss) gain on debt securities, net of tax


(116,037)


(1,173)


14,097

Net unrealized gain (loss) on cash flow hedging derivative instruments, net of tax


3,985


(1,779)


(1,826)

Net unrecognized loss on postretirement plans, net of tax


(2,914)


(3,277)


(3,603)

   Total accumulated other comprehensive (loss) income


(114,966)


(6,229)


8,668

   Total shareholders' equity


446,381


541,294


545,548

   Total liabilities and shareholders' equity


$        5,466,496


$        5,500,356


$        5,152,069

 

Consolidated Statements of Income Data

(unaudited)




For The

Three Months Ended


For The

Six Months Ended

(In thousands, except per share data)


June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Interest Income











Interest and fees on loans


$           33,121


$           32,035


$           30,865


$           65,156


$           61,425

Taxable interest on investments


5,850


5,789


4,376


11,639


8,205

Nontaxable interest on investments


770


764


763


1,534


1,491

Dividend income


106


106


102


212


207

Other interest income


183


164


160


347


326

Total interest income


40,030


38,858


36,266


78,888


71,654

Interest Expense











Interest on deposits


2,510


1,833


1,921


4,343


3,984

Interest on borrowings


454


131


176


585


332

Interest on subordinated debentures


532


529


640


1,061


1,445

Total interest expense


3,496


2,493


2,737


5,989


5,761

Net interest income


36,534


36,365


33,529


72,899


65,893

Provision (credit) for credit losses


2,345


(1,075)


(3,403)


1,270


(5,359)

Net interest income after provision (credit) for
    credit losses


34,189


37,440


36,932


71,629


71,252

Non-Interest Income











Debit card income


3,213


2,924


3,112


6,137


5,848

Service charges on deposit accounts


1,931


1,833


1,517


3,764


3,056

Income from fiduciary services


1,681


1,631


1,707


3,312


3,233

Mortgage banking income, net


1,517


1,034


2,598


2,551


9,707

Brokerage and insurance commissions


1,272


994


939


2,266


1,892

Bank-owned life insurance


569


576


591


1,145


1,185

Net loss on sale of securities


(9)




(9)


Other income


967


833


856


1,800


1,614

Total non-interest income


11,141


9,825


11,320


20,966


26,535

Non-Interest Expense











Salaries and employee benefits


15,402


15,506


15,318


30,908


29,840

Furniture, equipment and data processing


3,202


3,132


2,947


6,334


5,974

Net occupancy costs


1,806


2,144


1,805


3,950


3,756

Consulting and professional fees


1,293


1,007


997


2,300


1,860

Debit card expense


1,134


1,066


1,074


2,200


2,060

Regulatory assessments


515


655


487


1,170


990

Amortization of core deposit intangible assets


157


156


164


313


328

Other real estate owned and collection costs (recoveries),
    net


38


(85)


(25)


(47)


(216)

Other expenses


3,009


2,628


2,823


5,637


5,897

Total non-interest expense


26,556


26,209


25,590


52,765


50,489

Income before income tax expense


18,774


21,056


22,662


39,830


47,298

Income Tax Expense


3,748


4,261


4,519


8,009


9,415

Net Income


$           15,026


$           16,795


$           18,143


$           31,821


$           37,883

Per Share Data











Basic earnings per share


$               1.02


$               1.14


$               1.21


$               2.16


$               2.53

Diluted earnings per share


$               1.02


$               1.13


$               1.21


$               2.15


$               2.52

 

Quarterly Average Balance and Yield/Rate Analysis

(unaudited)




Average Balance


Yield/Rate



For The Three Months Ended


For The Three Months Ended

(Dollars in thousands)


June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


March 31,
2022


June 30,
2021

Assets













Interest-earning assets:













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


$            51,018


$          100,002


$          235,676


0.43 %


0.13 %


0.09 %

Investments - taxable


1,366,612


1,409,567


1,129,682


1.78 %


1.71 %


1.62 %

Investments - nontaxable(1)


112,954


115,021


114,811


3.45 %


3.36 %


3.36 %

Loans(2):













  Commercial real estate


1,500,284


1,489,304


1,407,374


3.73 %


3.64 %


3.60 %

  Commercial(1)


399,240


372,910


329,875


3.64 %


3.54 %


3.98 %

  SBA PPP


4,696


21,687


158,258


13.88 %


19.05 %


4.15 %

  Municipal(1)


18,633


15,221


26,137


3.13 %


3.46 %


3.26 %

  Residential real estate


1,457,639


1,347,427


1,093,502


3.42 %


3.46 %


3.77 %

  Consumer and home equity


240,967


226,731


253,825


4.26 %


4.26 %


4.17 %

     Total loans 


3,621,459


3,473,280


3,268,971


3.64 %


3.70 %


3.76 %

Total interest-earning assets


5,152,043


5,097,870


4,749,140


3.11 %


3.07 %


3.06 %

Other assets


259,592


323,233


381,677







Total assets


$       5,411,635


$        5,421,103


$        5,130,817




















Liabilities & Shareholders' Equity













Deposits:













Non-interest checking


$       1,199,678


$        1,199,456


$          970,446


— %


— %


— %

Interest checking


1,426,335


1,414,704


1,311,400


0.32 %


0.19 %


0.18 %

Savings


751,274


750,899


659,892


0.04 %


0.04 %


0.04 %

Money market


707,176


710,256


703,780


0.42 %


0.30 %


0.29 %

Certificates of deposit


298,335


304,720


338,595


0.44 %


0.45 %


0.53 %

  Total deposits


4,382,798


4,380,035


3,984,113


0.21 %


0.15 %


0.16 %

Borrowings:













Brokered deposits


145,735


176,399


284,194


0.59 %


0.55 %


0.44 %

Customer repurchase agreements


223,212


208,147


184,663


0.40 %


0.25 %


0.38 %

Subordinated debentures


44,331


44,331


46,639


4.81 %


4.84 %


5.50 %

Other borrowings


85,917


1,613



1.07 %


0.39 %


— %

  Total borrowings


499,195


430,490


515,496


0.97 %


0.85 %


0.88 %

Total funding liabilities


4,881,993


4,810,525


4,499,609


0.29 %


0.21 %


0.24 %

Other liabilities


71,838


85,140


92,261







Shareholders' equity


457,804


525,438


538,947







Total liabilities & shareholders' equity


$       5,411,635


$        5,421,103


$        5,130,817







Net interest rate spread (fully-taxable equivalent)


2.82 %


2.86 %


2.82 %

Net interest margin (fully-taxable equivalent)


2.84 %


2.87 %


2.83 %

Adjusted net interest margin (fully-taxable equivalent) (non-GAAP)


2.85 %


2.84 %


2.89 %

(1)  Reported on a tax-equivalent basis calculated using the federal corporate income tax rate of 21%, including certain commercial loans.

(2)  Non-accrual loans and loans held for sale are included in total average loans.

 

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

(unaudited)




Average Balance


Yield/Rate



For The Six Months Ended


For The Six Months Ended

(Dollars in thousands)


June 30,

2022


June 30,

2021


June 30,

2022


June 30,

2021

Assets









Interest-earning assets:









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


$            75,375


$          223,329


0.23 %


0.09 %

Investments - taxable


1,387,971


1,038,575


1.74 %


1.66 %

Investments - nontaxable(1)


113,982


116,630


3.41 %


3.24 %

Loans(2):









  Commercial real estate


1,494,824


1,395,152


3.69 %


3.59 %

  Commercial(1)


386,147


337,897


3.59 %


3.92 %

  SBA PPP


13,145


156,588


18.12 %


4.49 %

  Municipal(1)


16,937


25,141


3.28 %


3.29 %

  Residential real estate


1,402,838


1,088,330


3.44 %


3.75 %

  Consumer and home equity


233,888


261,227


4.26 %


4.17 %

     Total loans 


3,547,779


3,264,335


3.67 %


3.76 %

Total interest-earning assets


5,125,107


4,642,869


3.09 %


3.10 %

Other assets


291,236


391,768





Total assets


$        5,416,343


$        5,034,637














Liabilities & Shareholders' Equity









Deposits:









Non-interest checking


$        1,199,567


$          894,460


— %


— %

Interest checking


1,420,552


1,300,516


0.26 %


0.19 %

Savings


751,087


643,333


0.04 %


0.04 %

Money market


708,708


694,455


0.36 %


0.30 %

Certificates of deposit


301,510


345,039


0.44 %


0.58 %

  Total deposits


4,381,424


3,877,803


0.18 %


0.17 %

Borrowings:









Brokered deposits


160,982


284,406


0.57 %


0.44 %

Customer repurchase agreements


215,721


175,245


0.33 %


0.34 %

Subordinated debentures


44,331


52,950


4.83 %


5.50 %

Other borrowings


43,998


7,182


1.06 %


0.99 %

  Total borrowings


465,032


519,783


0.91 %


0.93 %

Total funding liabilities


4,846,456


4,397,586


0.25 %


0.26 %

Other liabilities


78,453


100,740





Shareholders' equity


491,434


536,311





Total liabilities & shareholders' equity


$        5,416,343


$        5,034,637





Net interest rate spread (fully-taxable equivalent)


2.84 %


2.84 %

Net interest margin (fully-taxable equivalent)


2.85 %


2.85 %

Adjusted net interest margin (fully-taxable equivalent) (non-GAAP)


2.85 %


2.90 %

(1)  Reported on a tax-equivalent basis calculated using the federal corporate income tax rate of 21%, including certain commercial loans.

(2)  Non-accrual loans and loans held for sale are included in total average loans.

 

Asset Quality Data

(unaudited)


(In thousands)


At or For The

Six Months Ended

June 30, 2022


At or For The

Three Months
Ended

March 31, 2022


At or For The

Year Ended

December 31, 2021


At or For The

Nine Months Ended

September 30, 2021


At or For The

Six Months Ended

June 30, 2021

Non-accrual loans:











Residential real estate


$               1,831


$               2,052


$               2,107


$               2,576


$               2,725

Commercial real estate


182


183


184


207


222

Commercial


723


1,045


829


860


1,511

Consumer and home equity


769


1,172


1,207


1,429


1,424

Total non-accrual loans


3,505


4,452


4,327


5,072


5,882

Accruing troubled-debt restructured loans not
    included above


2,316


2,303


2,392


2,564


2,519

Total non-performing loans


5,821


6,755


6,719


7,636


8,401

Other real estate owned




165


165


165

Total non-performing assets


$               5,821


$               6,755


$               6,884


$               7,801


$               8,566

Loans 30-89 days past due:











Residential real estate


$                  918


$                  575


$                  400


$               1,195


$                  303

Commercial real estate


258


91


47



99

Commercial


422


169


552


557


183

Consumer and home equity


577


466


509


386


214

Total loans 30-89 days past due


$               2,175


$               1,301


$               1,508


$               2,138


$                  799

ACL on loans at the beginning of the period


$              33,256


$              33,256


$              37,865


$              37,865


$              37,865

Provision (credit) for loan losses


1,275


(1,236)


(3,817)


(5,037)


(5,306)

Charge-offs:











Residential real estate


16



92


92


88

Commercial real estate






Commercial


561


245


799


503


406

Consumer and home equity


84


67


273


233


213

Total charge-offs 


661


312


1,164


828


707

Total recoveries 


(374)


(62)


(372)


(272)


(208)

Net charge-offs


287


250


792


556


499

ACL on loans at the end of the period


$              34,244


$              31,770


$              33,256


$              32,272


$              32,060

Components of ACL:











ACL on loans


$              34,244


$              31,770


$              33,256


$              32,272


$              32,060

ACL on off-balance sheet credit exposures(1)


3,190


3,356


3,195


3,185


2,515

ACL, end of period


$              37,434


$              35,126


$              36,451


$              35,457


$              34,575

Ratios:











Non-performing loans to total loans


0.16 %


0.19 %


0.20 %


0.23 %


0.26 %

Non-performing assets to total assets


0.11 %


0.12 %


0.13 %


0.14 %


0.17 %

ACL on loans to total loans


0.92 %


0.90 %


0.97 %


0.97 %


0.98 %

Net charge-offs to average loans (annualized):











Quarter-to-date


0.00 %


0.03 %


0.03 %


0.01 %


0.03 %

Year-to-date


0.02 %


0.03 %


0.02 %


0.02 %


0.03 %

ACL on loans to non-performing loans


588.28 %


470.32 %


494.95 %


422.63 %


381.62 %

Loans 30-89 days past due to total loans


0.06 %


0.04 %


0.04 %


0.06 %


0.02 %

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

 

Reconciliation of non-GAAP to GAAP Financial Measures (unaudited)

 Return on Average Tangible Equity:







For the

Three Months Ended


For the

Six Months Ended

(Dollars in thousands)


June 30,

2022


March 31,

2022


June 30,

2021


June 30,

2022


June 30,

2021

Net income, as presented


$        15,026


$        16,795


$        18,143


$        31,821


$        37,883

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


124


123


130


247


259

Net income, adjusted for amortization of core
   deposit intangible assets


$        15,150


$        16,918


$        18,273


$        32,068


$        38,142

Average equity, as presented


$      457,804


$      525,438


$      538,947


$      491,434


$      536,311

Less: average goodwill and core deposit
   intangible assets


(96,648)


(96,815)


(97,292)


(96,731)


(97,377)

Average tangible equity


$      361,156


$      428,623


$      441,655


$      394,703


$      438,934

Return on average equity


13.16 %


12.96 %


13.50 %


13.06 %


14.24 %

Return on average tangible equity


16.83 %


16.01 %


16.60 %


16.38 %


17.52 %

(1) Assumed a 21% tax rate.


Efficiency Ratio:













For the

Three Months Ended


For the

Six Months Ended

(Dollars in thousands)


June 30,
2022


March 31,

2022


June 30,

2021


June 30,

2022


June 30,

2021

Non-interest expense, as presented


$        26,556


$        26,209


$        25,590


$        52,765


$        50,489

Less: prepayment penalty on borrowings






(514)

Adjusted non-interest expense


$        26,556


$        26,209


$        25,590


$        52,765


$        49,975

Net interest income, as presented


$        36,534


$        36,365


$        33,529


$        72,899


$        65,893

Add: effect of tax-exempt income(1)


231


226


265


458


536

Non-interest income, as presented


11,141


9,825


11,320


20,966


26,535

Add: net loss on sale of securities


9




9


Adjusted net interest income plus non-interest
   income


$        47,915


$        46,416


$        45,114


$        94,332


$        92,964

GAAP efficiency ratio


55.70 %


56.74 %


57.06 %


56.21 %


54.63 %

Non-GAAP efficiency ratio


55.42 %


56.47 %


56.72 %


55.94 %


53.76 %

(1) Assumed a 21% tax rate.






Earnings before Income Taxes and Provision, and Earnings before Income Taxes, Provision
and SBA PPP Loan Income:







For the

Three Months Ended


For the

Six Months Ended

(In thousands)


June 30,
2022


March 31,

2022


June 30,

2021


June 30,

2022


June 30,

2021

Net income, as presented


$            15,026


$            16,795


$            18,143


$            31,821


$            37,883

Add: provision (credit) for credit losses


2,345


(1,075)


(3,403)


1,270


(5,359)

Add: income tax expense


3,748


4,261


4,519


8,009


9,415

Earnings before income taxes and provision
   for credit losses


21,119


19,981


19,259


41,100


41,939

Less: SBA PPP loan income


(165)


(1,033)


(1,660)


(1,198)


(3,536)

Earnings before income taxes and provision
   (credit) for credit losses and SBA PPP loan
   income


$            20,954


$            18,948


$            17,599


$            39,902


$            38,403



Adjusted Yield on Interest-Earning Assets:



For the

Three Months Ended


For the

Six Months Ended



June 30,
2022


March 31,

2022


June 30,

2021


June 30,

2022


June 30,

2021

Yield on interest-earning assets, as presented


3.11 %


3.07 %


3.06 %


3.09 %


3.10 %

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


0.02 %


0.04 %


0.12 %


0.03 %


0.11 %

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


(0.01) %


(0.07) %


(0.04) %


(0.04) %


(0.05) %

Adjusted yield on interest-earning assets


3.12 %


3.04 %


3.14 %


3.08 %


3.16 %



Adjusted Net Interest Margin (Fully-Taxable Equivalent):



For the

Three Months Ended


For the

Six Months Ended



June 30,
2022


March 31,

2022


June 30,

2021


June 30,

2022


June 30,

2021

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


2.84 %


2.87 %


2.83 %


2.85 %


2.85 %

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


0.02 %


0.04 %


0.11 %


0.03 %


0.10 %

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


(0.01) %


(0.07) %


(0.05) %


(0.03) %


(0.05) %

Adjusted net interest margin (fully-taxable
   equivalent)


2.85 %


2.84 %


2.89 %


2.85 %


2.90 %

 

Tangible Book Value Per Share and Tangible Common Equity Ratio:



June 30,
2022


March 31,

2022


June 30,

2021

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


Tangible Book Value Per Share:







Shareholders' equity, as presented


$      446,381


$      482,446


$      545,548

Less: goodwill and other intangible assets


(96,573)


(96,729)


(97,213)

Tangible shareholders' equity


$      349,808


$      385,717


$      448,335

Shares outstanding at period end


14,625,041


14,746,410


14,951,067

Book value per share


$           30.52


$           32.72


$           36.49

Tangible book value per share


$           23.92


$           26.16


$           29.99

Tangible Common Equity Ratio:

Total assets


$   5,466,496


$   5,420,415


$   5,152,069

Less: goodwill and other intangible assets


(96,573)


(96,729)


(97,213)

Tangible assets


$   5,369,923


$   5,323,686


$   5,054,856

Common equity ratio


8.17 %


8.90 %


10.59 %

Tangible common equity ratio


6.51 %


7.25 %


8.87 %

Core Deposits:

(In thousands)


June 30,
2022


March 31,
2022


June 30,
2021

Total deposits


$       4,527,061


$       4,576,664


$       4,294,114

Less: certificates of deposit


(296,408)


(299,865)


(334,336)

Less: brokered deposits


(83,379)


(161,302)


(282,786)

Core deposits


$       4,147,274


$       4,115,497


$       3,676,992

 

Average Core Deposits:







For the

Three Months Ended


For the

Six Months Ended

(In thousands)


June 30,
2022


March 31,

2022


June 30,

2021


June 30,

2022


June 30,

2021

Total average deposits


$       4,382,798


$       4,380,035


$       3,984,113


$       4,381,424


$       3,877,803

Less: average certificates of deposit


(298,335)


(304,720)


(338,595)


(301,510)


(345,039)

Average core deposits


$       4,084,463


$       4,075,315


$       3,645,518


$       4,079,914


$       3,532,764

 

Total loans, excluding SBA PPP loans:







(In thousands)


June 30,
2022


March 31,

2022


June 30,

2021

Total loans, as presented


$   3,724,227


$   3,534,218


$   3,285,916

Less: SBA PPP loans


(2,509)


(6,311)


(126,064)

Total loans, excluding SBA PPP loans


$   3,721,718


$   3,527,907


$   3,159,852

 

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

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/camden-national-corporation-reports-second-quarter-2022-financial-results-301592805.html

SOURCE Camden National Corporation

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