CAMDEN NATIONAL CORPORATION REPORTS THIRD QUARTER 2023 FINANCIAL RESULTS

Reports Third Quarter 2023 Net Income of $9.8 million and Diluted EPS of $0.67

CAMDEN, Maine, Oct. 31, 2023 /PRNewswire/ — Camden National Corporation (NASDAQ: CAC; “Camden National” or the “Company”), a $5.8 billion bank holding company headquartered in Camden, Maine, reported net income of $9.8 million and diluted earnings per share (“EPS”) of $0.67 for the third quarter of 2023, both decreases of 21%, compared to the second quarter of 2023. The Company’s third quarter operating results include the impact from the sale of $66.7 million of investment securities that resulted in a pre-tax loss of $5.3 million. The Company sold these investments to reposition a portion of its balance sheet in response to the interest rate environment and, in doing so, is expected to improve its future earnings and profitability metrics. The strength of the Company’s capital position enabled it to absorb the loss while maintaining strong capital ratios well in excess of regulatory capital requirements. Excluding the investment loss, the Company’s adjusted net income (non-GAAP) for the third quarter of 2023 was $14.0 million and adjusted EPS (non-GAAP) was $0.96, both an increase of 13% over the second quarter of 2023.

“The continued strength of our capital and operating earnings allowed us to execute an investment restructure strategy that repositions us for the future, while still reporting positive quarterly earnings,” said Gregory A. Dufour, President and Chief Executive Officer. “Although net income decreased 21% compared to the second quarter, on a non-GAAP basis, excluding the $5.3 million pre-tax loss on sale of securities, net income increased 13% over last quarter highlighting the benefits of the strategies we have taken year-to-date as we continue to prioritize deposits, net interest margin optimization and maintaining our strong asset quality.”

For the nine months ended September 30, 2023, the Company reported net income of $34.9 million and diluted EPS of $2.39, decreases of 24% and 23%, respectively, compared to the nine months ended September 30, 2022. The decrease in earnings between periods reflects the sharp rise in interest rates between periods and the impact of a prolonged inverted yield curve, a $5.3 million pre-tax loss on the sale of investment securities recorded in the third quarter of 2023 as part of the Company’s balance sheet repositioning, and the write-off of a $1.8 million Signature Bank corporate bond in the first quarter of 2023. Excluding the impact of the investment loss and corporate bond write-off, adjusted net income (non-GAAP) for the nine months ended September 30, 2023 was $40.6 million and adjusted diluted EPS (non-GAAP) was $2.77, decreases of 12% and 11%, respectively, compared to the same period in 2022.

“Earlier this quarter, we announced further details on my upcoming retirement and planned succession,” said Dufour. “At the end of this year, I will be stepping down as President and CEO of Camden National. The Board of Directors announced the appointment of Simon Griffiths who currently serves as Executive Vice President – Head of Core Banking at Citizens Bank, as my successor. I will remain with Camden National as an advisor for several months following my retirement on December 31, 2023. It has been a privilege serving as the President and CEO of Camden National Corporation for the past 14 years.” Griffiths will join Camden National on or about November 20, 2023, as Executive Vice President and Chief Operating Officer. He will become president and CEO of Camden National, as well as a member of the Board of Directors, effective January 1, 2024.

THIRD QUARTER 2023 HIGHLIGHTS

Net income decreased $2.6 million, or 21%, and diluted EPS decreased $0.18, or 21%, compared to the second quarter, as the Company executed on its strategy to reposition its balance sheet by selling $66.7 million of securities at a pre-tax loss of $5.3 million. The proceeds from the sale were reinvested into investment securities at current market rates and used to pay-down the Company’s borrowings. The Company expects this strategy to improve prospective net interest margin and earnings. Adjusted net income and diluted EPS, excluding the investment loss (non-GAAP), increased $1.6 million, or 13%, and $0.11, or 13%, respectively, over the second quarter of 2023.
Return on average assets was 0.68% and adjusted return on average assets (non-GAAP) was 0.97%, compared to 0.87% and 0.87%, respectively, for the second quarter of 2023.
Return on average equity was 8.25% and adjusted return on average equity (non-GAAP) was 11.80%, compared to 10.66% and 10.66%, respectively, for the second quarter of 2023.
GAAP efficiency ratio was 69.60% and non-GAAP efficiency ratio was 60.63%, compared to 63.42% and 63.07%, respectively, for the second quarter of 2023.
Net interest margin decreased 1 basis point to 2.39%, compared to the second quarter of 2023.
Asset quality remained strong, with non-performing assets totaling 0.11% of total assets and 0.16% of total loans, compared to 0.09% and 0.13%, respectively, at June 30, 2023. Annualized net charge-offs were 0.01%, compared to 0.04% for the second quarter of 2023.
Uninsured and uncollateralized1 deposits at September 30, 2023 and June 30, 2023 were 15% of total deposits at each date, and available liquidity sources were 2.1 times and 2.0 times uninsured and uncollateralized deposits, respectively.

_________________________1 Uncollateralized deposits are customer deposits for which the Company has not pledged any of its assets, including investment securities, or provided any other type of guarantee.

FINANCIAL CONDITION

As of September 30, 2023, total assets were $5.8 billion, an increase of 1% since June 30, 2023, and an increase of 2% since December 31, 2022.

Loans

Loans at September 30, 2023, totaled $4.1 billion, a 1% decrease since June 30, 2023, and an increase of 1% since December 31, 2022.

Loan balances contracted in the third quarter of 2023 as the Company’s retail loan portfolio grew less than 1%, while the commercial loan portfolio decreased 2% due to a few large loan payoffs and the Company’s strategy to prioritize net interest margin over loan growth.
Residential real estate loans grew 3% and commercial real estate loans grew 2% through September 30, 2023, compared to December 31, 2022.
The Company sold 45% of residential mortgages it originated through the nine months ended September 30, 2023, compared to 21% for the same period in 2022.
At September 30, 2023, the committed retail and commercial loan portfolio pipelines totaled $49.5 million and $29.5 million, respectively. As of September 30, 2023, 39% of the committed residential real estate loan portfolio was designated for sale.

Investments

Investments totaled $1.2 billion as of September 30, 2023, a decrease of 4% since June 30, 2023, and a decrease of 8% since December 31, 2022. Investment balances represented 20% of the Company’s assets as of September 30, 2023, compared to 21% at June 30, 2023 and 22% at December 31, 2022.

The Company repositioned its balance sheet during the third quarter of 2023 to enhance future net interest margin and earnings by selling $66.7 million of investments with a weighted-average yield of 2.31% at a pre-tax loss of $5.3 million. The Company reinvested $30.0 million of the proceeds into investments yielding 6.06% and the remaining proceeds were used to pay-down the Company’s borrowings. The estimated earn-back period on tangible book value dilution from the loss on sale of investments is less than three years.
As of September 30, 2023, the Company’s debt securities designated as available-for-sale (“AFS”) and held-to-maturity (“HTM”) were, collectively, in a net unrealized loss position of $182.4 million, increasing from a net unrealized loss position of $138.7 million and $141.5 million as of June 30, 2023 and December 31, 2022, respectively. As of September 30, 2023, 89% of the investment portfolio was made up of agency-backed bonds, 8% was municipal bonds and 3% was corporate bonds. The Company actively monitors its investment portfolio for credit risk, and, as of September 30, 2023, there were no credit concerns identified within the portfolio.
As of September 30, 2023, the weighted-average life and duration of the Company’s debt securities was 7.5 years and 5.7 years, respectively, compared to 7.8 years and 5.8 years at December 31, 2022.

Deposits

As of September 30, 2023, deposits totaled $4.7 billion, a decrease of less than 1% since June 30, 2023, and a decrease of 3% since December 31, 2022. 

Deposits decreased $15.3 million in the third quarter of 2023 led by a decrease in brokered CDs of $90.4 million, or 40%, and lower checking and savings account balances of $66.6 million, or 2%. These decreases were partially offset by certificate of deposit (“CD”) and money market account growth of $102.8 million, or 23%, and $38.8 million, or 5%, driven by various promotions and campaigns, as well as continued deposit mix shift from lower interest-bearing accounts (checking and savings accounts) to higher interest-bearing deposit accounts (CDs and money market accounts).
Deposit balances decreased $148.5 million for the first nine months of 2023 driven by lower balances within checking and savings of $413.7 million, or 11%, and brokered deposits of $47.4 million, or 26%. These decreases were partially offset by CD and money market account growth of $251.7 million, or 84%, and $60.9 million, or 9%, respectively.
The loan-to-deposit ratio was 87% as of September 30, 2023 compared to 87% at June 30, 2023 and 83% at December 31, 2022.

Borrowings

As of September 30, 2023, borrowings totaled $514.5 million, an increase $22.0 million, or 4%, since June 30, 2023, and $205.0 million, or 66%, since December 31, 2022.

As of September 30, 2023, the Company’s borrowings consisted of: (1) $210.1 million of customer repurchase agreements, (2) $135.0 million from the Bank Term Funding Program (“BTFP”) at a fixed rate of 4.70% scheduled to mature in May 2024, which the Company may exercise its right to prepay at any time without penalty, (3) $125.0 million of short-term Federal Home Loan Bank of Boston borrowings that support interest rate swap derivatives, and (4) $44.3 million of junior subordinated debentures.

Derivatives

The Company executed $450.0 million of balance sheet derivatives during the nine months ended September 30, 2023, to provide protection for rising short-term interest rates. The balance sheet derivatives contributed $3.1 million of pre-tax income during the nine months ended September 30, 2023, including $1.4 million for the third quarter of 2023.

Capital

As of September 30, 2023, the Company’s regulatory capital ratios were each well in excess of regulatory capital requirements. The Company’s common equity ratio was 8.02%, and its tangible common equity ratio (non-GAAP) was 6.47%, compared to 8.14% and 6.58%, respectively, at June 30, 2023, and 7.96% and 6.37%, respectively, at December 31, 2022.

The Company announced a cash dividend of $0.42 per share, representing an annualized dividend yield of 5.95%, based on the Company’s closing share price of $28.22, as reported by NASDAQ on September 29, 2023 (the last business day of the third quarter of 2023), payable on October 31, 2023, to shareholders of record on October 13, 2023.

The Company repurchased 65,692 shares of its common stock at an average price of $30.41 per share during the nine months ended September 30, 2023.

ASSET QUALITY

The Company’s credit quality within its loan portfolio remained very strong throughout the third quarter of 2023. Loans 30-89 days past due and non-performing loans each increased during the third quarter of 2023 due to two residential loans. The Company continues to actively monitor its loan portfolio, particularly its commercial real estate loan portfolio, for signs of credit stress.

Loans 30-89 days past due were 0.09% of total loans at September 30, 2023, 0.05% at June 30, 2023, and 0.06% of total loans at December 31, 2022.
Non-performing loans were 0.16% of total loans at September 30, 2023, compared to 0.13% at each of June 30, 2023 and December 31, 2022.
Annualized net charge-offs to average loans was 0.01% for the third quarter of 2023, compared to 0.04% for the second quarter of 2023 and 0.03% for the fourth quarter of 2022.

FINANCIAL OPERATING RESULTS (Q3 2023 vs. Q2 2023)

Net income for the third quarter of 2023 was $9.8 million, a decrease of $2.6 million, or 21%, compared to the second quarter of 2023. Adjusted net income (non-GAAP) increased $1.6 million, or 13%, and adjusted diluted EPS (non-GAAP) increased $0.11, or 13%, compared to the previous quarter.

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2023 was $32.6 million, a decrease of $106,000, compared to the second quarter of 2023. The decrease was driven by a 1 basis point decrease in net interest margin between periods to 2.39% for the third quarter of 2023.

(Credit) Provision for Credit Losses

Negative provision expense (i.e., credit for credit losses) of $574,000 was recorded for the third quarter of 2023, reflecting the Company’s continued favorable asset quality and a decrease in loans during the quarter, primarily driven by the commercial loan portfolio.

We continue to believe the risk of a potential macroeconomic slow-down in future periods exists. At September 30, 2023, the allowance for credit losses (“ACL”) on loans was 0.90% of total loans, consistent with June 30, 2023. At September 30, 2023, the ACL was 5.5 times total non-performing loans, compared to 7.1 times at June 30, 2023.

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

($ in thousands)

Q3 2023

Q2 2023

Increase /

(Decrease)

(Credit) provision for credit losses – loans

$                       (456)

$                        305

$                       (761)

Credit for credit losses – off-balance sheet
   credit exposures

(118)

(202)

84

(Credit) provision for credit losses

$                       (574)

$                        103

$                       (677)

Non-Interest Income

Non-interest income for the third quarter of 2023 was $5.1 million, a decrease of $5.0 million, or 50%, over the second quarter of 2023. The decrease was driven by the sale of investments as part of the repositioning of the Company’s balance sheet during the third quarter of 2023, which generated a $5.3 million pre-tax loss.

Non-Interest Expense

Non-interest expense for the third quarter of 2023 was $26.2 million, a decrease of $936,000, or 3%, compared to the second quarter of 2023. The Company’s GAAP efficiency ratio and non-GAAP efficiency ratio for the third quarter of 2023 was 69.60% and 60.63%, respectively, compared to 63.42% and 63.07% for the second quarter of 2023. For the third quarter of 2023, the Company’s overhead ratio, which compares annualized non-interest expense for the quarter to average assets, was 1.83%, compared to 1.90% for the second quarter of 2023.

Salaries and employee benefits costs decreased 4% on a linked quarter basis, primarily due to lower incentive-related accruals based on year-to-date financial performance.
Consulting and other professional fees decreased by $478,000 on a linked quarter basis, primarily due to the timing of the annual equity award grant to the Company’s independent directors in the second quarter of each year.

Q3 2023 CONFERENCE CALL

Camden National will host a conference call and webcast at 3:00 p.m., Eastern Time, on Tuesday, October 31, 2023 to discuss its third quarter 2023 financial results and outlook. Participants should dial into the call 10 – 15 minutes before it begins. Information about the conference call is as follows:

A link to the live webcast will be available on Camden National’s website under “About — Investor Relations” at 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 $5.8 billion in assets and was proudly listed as one of the Best Places to Work in Maine for the past three years. Founded in 1875, Camden National Bank is a full-service community bank dedicated to customers at every stage of their financial journey. With 24/7 live phone support, 57 banking centers, and additional lending offices in New Hampshire and Massachusetts, Camden National Bank offers the latest in digital banking, complemented by award-winning, personalized service. To learn more, visit CamdenNational.bank. Member FDIC. Equal Housing Lender.

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; turmoil and volatility in the financial services industry, including failures or rumors of failures of other depository institutions, including Camden National, which could affect Camden National’s ability to attract and retain depositors, and could affect the ability of financial services providers, including the Company, to borrow or raise capital; actions taken by governmental agencies to stabilize the financial system and the effectiveness of such actions; changes to regulatory capital requirements in response to recent developments affecting the banking sector; 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, 2022, 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, conflict in the Middle East 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: adjusted net income; adjusted diluted earnings per share; adjusted return on average assets; adjusted return on average equity; pre-tax pre-provision income; adjusted pre-tax pre-provision income; return on average tangible equity and adjusted return on average tangible equity; the efficiency and tangible common equity ratios; tangible book value per share; core deposits and average core deposits. 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 measures 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. Reconciliations to the comparable GAAP financial measures 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 is presented for illustrative purposes only.

Selected Financial Data

(unaudited)

At or For The

Three Months Ended

At or For The

Nine Months Ended

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

September 30,
2023

June 30,
2023

September 30,
2022

September 30,
2023

September 30,
2022

Financial Condition Data

Investments

$   1,157,618

$    1,211,679

$    1,276,762

$    1,157,618

$    1,276,762

Loans

4,058,413

4,100,131

3,860,680

4,058,413

3,860,680

Allowance for credit losses on loans

36,407

36,983

36,542

36,407

36,542

Total assets

5,779,675

5,743,931

5,551,724

5,779,675

5,551,724

Deposits

4,678,406

4,693,745

4,568,604

4,678,406

4,568,604

Borrowings

514,471

492,513

465,432

514,471

465,432

Shareholders’ equity

463,298

467,376

431,007

463,298

431,007

Operating and Per Share Data

Net income

$          9,787

$         12,389

$         14,267

$         34,903

$         46,088

Adjusted net income (non-GAAP)(1)

14,002

12,389

14,267

40,570

46,095

Diluted earnings per share

0.67

0.85

0.97

2.39

3.12

Adjusted diluted earnings per share (non-GAAP)(1)

0.96

0.85

0.97

2.77

3.12

Cash dividends declared per share

0.42

0.42

0.40

1.26

1.20

Book value per share

31.82

32.11

29.59

31.82

29.59

Tangible book value per share (non-GAAP)(1)

25.24

25.52

22.97

25.24

22.97

Profitability Ratios

Return on average assets

0.68 %

0.87 %

1.03 %

0.82 %

1.13 %

Adjusted return on average assets (non-GAAP)(1)

0.97 %

0.87 %

1.03 %

0.95 %

1.13 %

Return on average equity

8.25 %

10.66 %

12.50 %

10.00 %

12.88 %

Adjusted return on average equity (non-GAAP)(1)

11.80 %

10.66 %

12.50 %

11.63 %

12.88 %

Return on average tangible equity (non-GAAP)(1)

10.48 %

13.55 %

16.02 %

12.72 %

16.27 %

Adjusted return on average tangible equity (non-

   GAAP)(1)

14.94 %

13.55 %

16.02 %

14.77 %

16.27 %

GAAP efficiency ratio

69.60 %

63.42 %

56.71 %

63.82 %

56.38 %

Efficiency ratio (non-GAAP)(1)

60.63 %

63.07 %

56.43 %

60.87 %

56.10 %

Net interest margin (fully-taxable equivalent)

2.39 %

2.40 %

2.88 %

2.44 %

2.86 %

Asset Quality Ratios

ACL on loans to total loans

0.90 %

0.90 %

0.95 %

0.90 %

0.95 %

Non-performing assets to total assets

0.11 %

0.09 %

0.09 %

0.11 %

0.09 %

Annualized net charge-offs to average loans

0.01 %

0.04 %

0.02 %

0.03 %

0.02 %

Capital Ratios

Common equity ratio

8.02 %

8.14 %

7.76 %

8.02 %

7.76 %

Tangible common equity ratio (non-GAAP)(1)

6.47 %

6.58 %

6.13 %

6.47 %

6.13 %

Tier 1 leverage capital ratio

9.35 %

9.29 %

9.24 %

9.35 %

9.24 %

Common equity tier 1 risk-based capital ratio

12.16 %

11.92 %

11.72 %

12.16 %

11.72 %

Total risk-based capital ratio

14.19 %

13.95 %

13.81 %

14.19 %

13.81 %

(1)

This is a non-GAAP measure, please see “Reconciliation of non-GAAP to GAAP Financial Measures (unaudited).”

Consolidated Statements of Condition Data

(unaudited)

(In thousands)

September 30,
2023

December 31,
2022

September 30,
2022

ASSETS

Cash, cash equivalents and restricted cash

$           211,514

$             75,427

$             82,012

Investments:

Trading securities

4,195

3,990

3,727

Available-for-sale securities, at fair value (amortized cost of $705,019, $796,960, and
   $833,888 respectively)

589,003

695,875

723,618

Held-to-maturity securities, at amortized cost (fair value of $483,547, $506,193 and
   $491,759 respectively)

549,961

546,583

534,309

Other investments

14,459

12,713

15,108

Total investments

1,157,618

1,259,161

1,276,762

Loans held for sale, at fair value (book value of $11,299, $5,259, and $4,863 respectively)

11,187

5,197

4,629

Loans:

Commercial real estate

1,653,288

1,624,937

1,562,887

Commercial

400,031

430,131

424,010

Residential real estate

1,752,401

1,700,266

1,619,409

Consumer and home equity

252,693

255,019

254,374

Total loans

4,058,413

4,010,353

3,860,680

      Less: allowance for credit losses on loans

(36,407)

(36,922)

(36,542)

       Net loans

4,022,006

3,973,431

3,824,138

Goodwill and core deposit intangible assets

95,816

96,260

96,416

Other assets

281,534

262,374

267,767

Total assets

$        5,779,675

$        5,671,850

$        5,551,724

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities

Deposits:

Non-interest checking

$        1,023,239

$        1,141,753

$        1,245,137

Interest checking

1,579,991

1,763,850

1,460,571

Savings and money market

1,389,180

1,439,622

1,493,518

Certificates of deposit

552,111

300,451

279,603

Brokered deposits

133,885

181,253

89,775

Total deposits

4,678,406

4,826,929

4,568,604

Short-term borrowings

470,140

265,176

421,101

Junior subordinated debentures

44,331

44,331

44,331

Accrued interest and other liabilities

123,500

84,136

86,681

Total liabilities

5,316,377

5,220,572

5,120,717

Commitments and Contingencies

Shareholders’ equity

Common stock, no par value: authorized 40,000,000 shares, issued and outstanding
   14,558,137, 14,567,325 and 14,563,828 shares on September 30, 2023, December 31,
   2022 and September 30, 2022, respectively

114,842

115,069

114,536

Retained earnings

478,664

462,164

452,927

Accumulated other comprehensive loss:

Net unrealized loss on debt securities, net of tax

(139,228)

(131,539)

(140,268)

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

9,343

5,891

6,545

Net unrecognized loss on postretirement plans, net of tax

(323)

(307)

(2,733)

Total accumulated other comprehensive loss

(130,208)

(125,955)

(136,456)

Total shareholders’ equity

463,298

451,278

431,007

Total liabilities and shareholders’ equity

$        5,779,675

$        5,671,850

$        5,551,724

Consolidated Statements of Income Data

(unaudited)

For The

Three Months Ended

For The

Nine Months Ended

(In thousands, except per share data)

September 30,
2023

June 30,
2023

September 30,
2022

September 30,
2023

September 30,
2022

Interest Income

Interest and fees on loans

$           50,115

$           48,645

$           37,568

$         144,092

$         102,724

Taxable interest on investments

5,814

5,852

5,756

17,629

17,395

Nontaxable interest on investments

748

762

790

2,273

2,324

Dividend income

302

267

137

788

349

Other interest income

690

529

330

1,667

677

Total interest income

57,669

56,055

44,581

166,449

123,469

Interest Expense

Interest on deposits

20,969

19,245

5,442

56,046

9,785

Interest on borrowings

3,577

3,587

787

9,249

1,372

Interest on junior subordinated debentures

539

533

539

1,600

1,600

Total interest expense

25,085

23,365

6,768

66,895

12,757

Net interest income

32,584

32,690

37,813

99,554

110,712

(Credit) provision for credit losses

(574)

103

2,764

1,531

4,034

Net interest income after provision for credit losses

33,158

32,587

35,049

98,023

106,678

Non-Interest Income

Debit card income

3,130

3,079

3,234

9,147

9,371

Service charges on deposit accounts

2,040

1,935

1,941

5,737

5,705

Income from fiduciary services

1,641

1,775

1,535

5,016

4,847

Brokerage and insurance commissions

1,217

1,152

1,003

3,462

3,269

Mortgage banking income, net

583

590

635

1,889

3,186

Bank-owned life insurance

644

613

374

1,849

1,519

Net loss on sale of securities

(5,335)

(5,335)

(9)

Other income

1,152

966

1,232

3,283

3,032

Total non-interest income

5,072

10,110

9,954

25,048

30,920

Non-Interest Expense

Salaries and employee benefits

14,744

15,288

15,849

44,605

46,757

Furniture, equipment and data processing

3,382

3,179

3,305

9,772

9,639

Net occupancy costs

1,804

1,852

1,765

5,735

5,715

Debit card expense

1,318

1,262

1,210

3,781

3,410

Consulting and professional fees

897

1,375

814

3,327

3,114

Regulatory assessments

861

868

575

2,574

1,745

Amortization of core deposit intangible assets

148

148

156

444

469

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

(34)

4

56

(25)

9

Other expenses

3,087

3,167

3,361

9,302

8,998

Total non-interest expense

26,207

27,143

27,091

79,515

79,856

Income before income tax expense

12,023

15,554

17,912

43,556

57,742

Income Tax Expense

2,236

3,165

3,645

8,653

11,654

Net Income

$             9,787

$           12,389

$           14,267

$           34,903

$           46,088

Per Share Data

Basic earnings per share

$               0.67

$               0.85

$               0.97

$               2.39

$               3.13

Diluted earnings per share

0.67

0.85

0.97

2.39

3.12

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)

September 30,
2023

June 30,
2023

September 30,
2022

September 30,
2023

June 30,
2023

September 30,
2022

Assets

Interest-earning assets:

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

$            48,401

$            27,008

$            30,063

4.04 %

4.90 %

2.24 %

Investments – taxable

1,177,367

1,212,942

1,288,172

2.14 %

2.08 %

1.88 %

Investments – nontaxable(1)

102,872

105,210

109,661

3.68 %

3.67 %

3.65 %

Loans(2):

Commercial real estate

1,658,125

1,670,299

1,546,638

4.84 %

4.75 %

4.04 %

Commercial(1)

391,052

405,485

402,152

6.08 %

5.83 %

4.26 %

SBA PPP

439

512

1,254

2.40 %

4.27 %

15.67 %

Municipal(1)

18,888

17,484

22,574

4.41 %

3.98 %

3.01 %

Residential real estate

1,762,860

1,748,443

1,571,449

4.18 %

4.06 %

3.49 %

Consumer and home equity

252,357

253,308

252,145

7.74 %

7.53 %

5.21 %

     Total loans 

4,083,721

4,095,531

3,796,212

4.85 %

4.73 %

3.91 %

Total interest-earning assets

5,412,361

5,440,691

5,224,108

4.23 %

4.12 %

3.40 %

Other assets

304,439

271,822

292,973

Total assets

$       5,716,800

$        5,712,513

$        5,517,081

Liabilities & Shareholders’ Equity

Deposits:

Non-interest checking

$       1,019,450

$          999,809

$        1,243,174

— %

— %

— %

Interest checking

1,584,314

1,638,677

1,502,436

2.42 %

2.28 %

0.85 %

Savings

661,126

685,282

774,725

0.14 %

0.10 %

0.04 %

Money market

721,423

692,330

720,641

2.85 %

2.47 %

0.84 %

Certificates of deposit

497,301

410,272

290,043

3.05 %

2.55 %

0.45 %

Total deposits

4,483,614

4,426,370

4,531,019

1.67 %

1.48 %

0.45 %

Borrowings:

Brokered deposits

161,623

237,083

80,701

5.07 %

4.89 %

1.40 %

Customer repurchase agreements

193,297

192,428

228,495

1.69 %

1.47 %

0.57 %

Junior subordinated debentures

44,331

44,331

44,331

4.83 %

4.83 %

4.83 %

Other borrowings

263,705

272,737

108,084

4.14 %

4.23 %

1.68 %

Total borrowings

662,956

746,579

461,611

3.70 %

3.77 %

1.38 %

Total funding liabilities

5,146,570

5,172,949

4,992,630

1.93 %

1.81 %

0.54 %

Other liabilities

99,480

73,366

71,636

Shareholders’ equity

470,750

466,198

452,815

Total liabilities & shareholders’ equity

$       5,716,800

$        5,712,513

$        5,517,081

Net interest rate spread (fully-taxable equivalent)

2.30 %

2.31 %

2.86 %

Net interest margin (fully-taxable equivalent)

2.39 %

2.40 %

2.88 %

(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 Nine Months Ended

For The Nine Months Ended

(Dollars in thousands)

September 30,

2023

September 30,

2022

September 30,

2023

September 30,

2022

Assets

Interest-earning assets:

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

$            30,002

$            60,105

4.78 %

0.57 %

Investments – taxable

1,209,000

1,354,339

2.09 %

1.79 %

Investments – nontaxable(1)

104,518

112,526

3.67 %

3.49 %

Loans(2):

Commercial real estate

1,658,188

1,512,285

4.73 %

3.81 %

Commercial(1)

401,817

391,540

5.80 %

3.82 %

SBA PPP

514

9,138

3.08 %

18.01 %

Municipal(1)

17,467

18,837

4.01 %

3.17 %

Residential real estate

1,742,340

1,459,659

4.01 %

3.46 %

Consumer and home equity

253,137

240,041

7.46 %

4.60 %

     Total loans 

4,073,463

3,631,500

4.69 %

3.75 %

Total interest-earning assets

5,416,983

5,158,470

4.09 %

3.19 %

Other assets

288,783

291,821

Total assets

$        5,705,766

$        5,450,291

Liabilities & Shareholders’ Equity

Deposits:

Non-interest checking

$        1,031,700

$        1,214,263

— %

— %

Interest checking

1,637,231

1,448,146

2.23 %

0.46 %

Savings

693,468

759,053

0.10 %

0.04 %

Money market

704,360

712,729

2.51 %

0.52 %

Certificates of deposit

409,909

297,646

2.54 %

0.44 %

Total deposits

4,476,668

4,431,837

1.46 %

0.27 %

Borrowings:

Brokered deposits

206,206

133,928

4.64 %

0.74 %

Customer repurchase agreements

189,532

220,026

1.42 %

0.41 %

Junior subordinated debentures

44,331

44,331

4.83 %

4.83 %

Other borrowings

237,546

65,595

4.07 %

1.41 %

Total borrowings

677,615

463,880

3.55 %

1.07 %

Total funding liabilities

5,154,283

4,895,717

1.74 %

0.35 %

Other liabilities

84,920

76,154

Shareholders’ equity

466,563

478,420

Total liabilities & shareholders’ equity

$        5,705,766

$        5,450,291

Net interest rate spread (fully-taxable equivalent)

2.35 %

2.84 %

Net interest margin (fully-taxable equivalent)

2.44 %

2.86 %

(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

Nine Months Ended

September 30, 2023

At or For The

Six Months Ended

June 30, 2023

At or For The

Three Months Ended

March 31, 2023

At or For The

Year Ended

December 31, 2022

At or For The

Nine Months Ended

September 30, 2022

Non-accrual loans:

Residential real estate

$               2,775

$               1,781

$               1,713

$               1,733

$               1,562

Commercial real estate

92

56

56

57

73

Commercial

1,083

729

748

715

541

Consumer and home equity

674

482

441

486

589

Total non-accrual loans

4,624

3,048

2,958

2,991

2,765

Accruing troubled-debt restructured loans not
   included above

1,997

2,140

2,154

2,114

2,285

Total non-performing loans

6,621

5,188

5,112

5,105

5,050

Other real estate owned

Total non-performing assets

$               6,621

$               5,188

$               5,112

$               5,105

$               5,050

Loans 30-89 days past due:

Residential real estate

$                  751

$               1,192

$                  313

$               1,038

$               2,326

Commercial real estate

188

112

111

323

195

Commercial

2,260

294

1,030

802

1,344

Consumer and home equity

603

653

684

391

843

Total loans 30-89 days past due

$               3,802

$               2,251

$               2,138

$               2,554

$               4,708

ACL on loans at the beginning of the period

$              36,922

$              36,922

$              36,922

$              33,256

$              33,256

Provision for loan losses

288

744

439

4,430

3,788

Charge-offs:

Residential real estate

18

18

18

66

65

Commercial real estate

58

Commercial

1,101

846

312

1,042

744

Consumer and home equity

63

31

4

134

130

Total charge-offs 

1,240

895

334

1,242

939

Total recoveries 

(437)

(212)

(107)

(478)

(437)

Net charge-offs

803

683

227

764

502

ACL on loans at the end of the period

$              36,407

$              36,983

$              37,134

$              36,922

$              36,542

Components of ACL:

ACL on loans

$              36,407

$              36,983

$              37,134

$              36,922

$              36,542

ACL on off-balance sheet credit exposures(1)

2,670

2,788

2,990

3,265

3,441

ACL, end of period

$              39,077

$              39,771

$              40,124

$              40,187

$              39,983

Ratios:

Non-performing loans to total loans

0.16 %

0.13 %

0.13 %

0.13 %

0.13 %

Non-performing assets to total assets

0.11 %

0.09 %

0.09 %

0.09 %

0.09 %

ACL on loans to total loans

0.90 %

0.90 %

0.91 %

0.92 %

0.95 %

Net charge-offs to average loans (annualized):

Quarter-to-date

0.01 %

0.04 %

0.02 %

0.03 %

0.02 %

Year-to-date

0.03 %

0.03 %

0.02 %

0.02 %

0.02 %

ACL on loans to non-performing loans

549.87 %

712.86 %

726.41 %

723.25 %

723.60 %

Loans 30-89 days past due to total loans

0.09 %

0.05 %

0.05 %

0.06 %

0.12 %

(1)

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

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

Adjusted Net Income; Adjusted Diluted Earnings per Share; Adjusted Return on Average Assets; and Adjusted Return on Average Equity:

For the

Three Months Ended

For the

Nine Months Ended

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

September 30,
2023

June 30,
2023

September 30,
2022

September 30,
2023

September 30,
2022

Adjusted Net Income:

Net income, as presented

$          9,787

$        12,389

$        14,267

$        34,903

$        46,088

Adjustment for net loss on sale of securities

5,335

5,335

9

Adjustment for Signature Bank bond write-off

1,838

Tax impact of above adjustments(1)

(1,120)

(1,506)

(2)

Adjusted net income

$        14,002

$        12,389

$        14,267

$        40,570

$        46,095

Adjusted Diluted Earnings per Share:

Diluted earnings per share, as presented

$             0.67

$             0.85

$             0.97

$             2.39

$             3.12

Adjustment for net loss on sale of securities

0.37

0.37

Adjustment for Signature Bank bond write-off

0.13

Tax impact of above adjustments(1)

(0.08)

(0.12)

Adjusted diluted earnings per share

$             0.96

$             0.85

$             0.97

$             2.77

$             3.12

Adjusted Return on Average Assets:

Return on average assets, as presented

0.68 %

0.87 %

1.03 %

0.82 %

1.13 %

Adjustment for net loss on sale of securities

0.37 %

0.13 %

Adjustment for Signature Bank bond write-off

0.04 %

Tax impact of above adjustments(1)

(0.08) %

(0.04) %

Adjusted return on average assets

0.97 %

0.87 %

1.03 %

0.95 %

1.13 %

Adjusted Return on Average Equity:

Return on average equity, as presented

8.25 %

10.66 %

12.50 %

10.00 %

12.88 %

Adjustment for net loss on sale of securities

4.50 %

1.53 %

Adjustment for Signature Bank bond write-off

0.53 %

Tax impact of above adjustments(1)

(0.95) %

(0.43) %

Adjusted return on average equity

11.80 %

10.66 %

12.50 %

11.63 %

12.88 %

(1)

Assumed a 21% tax rate.

Pre-Tax Pre-Provision Income and Adjusted Pre-Tax Pre-Provision Income:

For the

Three Months Ended

For the

Nine Months Ended

(In thousands)

September 30,
2023

June 30,
2023

September 30,
2022

September 30,

2023

September 30,

2022

Net income, as presented

$              9,787

$            12,389

$            14,267

$            34,903

$            46,088

Adjustment for (credit) provision for credit
   losses

(574)

103

2,764

1,531

4,034

Adjustment for income tax expense

2,236

3,165

3,645

8,653

11,654

Pre-tax pre-provision income

11,449

15,657

20,676

45,087

61,776

Adjustment for net loss on sale of securities

5,335

5,335

9

Adjustment for SBA PPP loan income

(3)

(6)

(50)

(12)

(1,248)

Adjusted pre-tax pre-provision income

$            16,781

$            15,651

$            20,626

$            50,410

$            60,537

Efficiency Ratio:

For the

Three Months Ended

For the

Nine Months Ended

(Dollars in thousands)

September 30,
2023

June 30,
2023

September 30,
2022

September 30,

2023

September 30,

2022

Non-interest expense, as presented

$        26,207

$        27,143

$        27,091

$        79,515

$        79,856

Net interest income, as presented

$        32,584

$        32,690

$        37,813

$        99,554

$      110,712

Adjustment for the effect of tax-exempt

   income(1)

237

235

242

701

700

Non-interest income, as presented

5,072

10,110

9,954

25,048

30,920

Adjustment for net loss on sale of securities

5,335

5,335

9

Adjusted net interest income plus non-

   interest income

$        43,228

$        43,035

$        48,009

$      130,638

$      142,341

GAAP efficiency ratio

69.60 %

63.42 %

56.71 %

63.82 %

56.38 %

Non-GAAP efficiency ratio

60.63 %

63.07 %

56.43 %

60.87 %

56.10 %

(1)

Assumed a 21% tax rate.

Return on Average Tangible Equity and Adjusted Return on Average Tangible Equity:

For the

Three Months Ended

For the

Nine Months Ended

(Dollars in thousands)

September 30,

2023

June 30,

2023

September 30,

2022

September 30,

2023

September 30,

2022

Return on Average Tangible Equity:

Net income, as presented

$           9,787

$        12,389

$        14,267

$        34,903

$        46,088

Adjustment for amortization of core deposit

   intangible assets

148

148

156

444

469

Tax impact of above adjustment(1)

(31)

(31)

(33)

(93)

(98)

Net income, adjusted for amortization of

   core deposit intangible assets

$           9,904

$        12,506

$        14,390

$        35,254

$        46,459

Average equity, as presented

$      470,750

$      466,198

$      452,815

$      466,563

$      478,420

Adjustment for average goodwill and core

   deposit intangible assets

(95,888)

(96,036)

(96,493)

(96,037)

(96,651)

Average tangible equity

$      374,862

$      370,162

$      356,322

$      370,526

$      381,769

Return on average equity

8.25 %

10.66 %

12.50 %

10.00 %

12.88 %

Return on average tangible equity

10.48 %

13.55 %

16.02 %

12.72 %

16.27 %

Adjusted Return on Average Tangible

   Equity:

Adjusted net income (see “Adjusted Net

   Income” table above)

$        14,002

$        12,389

$        14,267

$        40,570

$        46,095

Adjustment for amortization of core deposit

   intangible assets

148

148

156

444

469

Tax impact of above adjustment(1)

(31)

(31)

(33)

(93)

(98)

Adjusted net income, adjusted for

   amortization of core deposit intangible    

   assets

$        14,119

$        12,506

$        14,390

$        40,921

$        46,466

Adjusted return on average tangible equity

14.94 %

13.55 %

16.02 %

14.77 %

16.27 %

(1)

Assumed a 21% tax rate.

Tangible Book Value Per Share and Tangible Common Equity Ratio:

September 30,
2023

June 30,
2023

September 30,
2022

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

Tangible Book Value Per Share:

Shareholders’ equity, as presented

$      463,298

$      467,376

$      431,007

Adjustment for goodwill and core deposit intangible assets

(95,816)

(95,964)

(96,416)

Tangible shareholders’ equity

$      367,482

$      371,412

$      334,591

Shares outstanding at period end

14,558,137

14,554,778

14,563,828

Book value per share

$           31.82

$           32.11

$           29.59

Tangible book value per share

25.24

25.52

22.97

Tangible Common Equity Ratio:

Total assets

$   5,779,675

$   5,743,931

$   5,551,724

Adjustment for goodwill and core deposit intangible assets

(95,816)

(95,964)

(96,416)

Tangible assets

$   5,683,859

$   5,647,967

$   5,455,308

Common equity ratio

8.02 %

8.14 %

7.76 %

Tangible common equity ratio

6.47 %

6.58 %

6.13 %

Core Deposits:

(In thousands)

September 30,
2023

June 30,
2023

September 30,
2022

Total deposits

$       4,678,406

$       4,693,745

$       4,568,604

Adjustment for certificates of deposit

(552,111)

(449,265)

(279,603)

Adjustment for brokered deposits

(133,885)

(224,255)

(89,775)

Core deposits

$       3,992,410

$       4,020,225

$       4,199,226

Average Core Deposits:

For the

Three Months Ended

For the

Nine Months Ended

(In thousands)

September 30,
2023

June 30,
2023

September 30,
2022

September 30,

2023

September 30,

2022

Total average deposits, as presented(1)

$       4,483,614

$       4,426,370

$       4,531,019

$       4,476,668

$       4,431,837

Adjustment for average certificates of

   deposit

(497,301)

(410,272)

(290,043)

(409,909)

(297,646)

Average core deposits

$       3,986,313

$       4,016,098

$       4,240,976

$       4,066,759

$       4,134,191

(1)

Brokered deposits are excluded from total average deposits, as presented on the Average Balance, Interest and Yield/Rate analysis table.

SOURCE Camden National Corporation


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