CNC Posts a 17.7% Increase in 2008 EPS Results
7/29/2008
CAMDEN, Maine, July 29, 2008: Robert W. Daigle, president and chief executive officer of Camden National Corporation (NASDAQ: CAC; the "Company"), today announced 2008 year-to-date earnings per diluted share of $1.73, a $0.26, or 17.7%, increase over the first six months of 2007, which includes the impact of the Company's acquisition of Union Bankshares Company ("Union"). The second quarter 2008 earnings per diluted share were $0.92, which was $0.17, or 22.7%, over the $0.75 per diluted share for the second quarter of 2007.
Net income for the first six months of 2008 increased 36.8% to $13.3 million, compared to the $9.7 million reported for the six months ended June 30, 2007, and net income for the recently completed second quarter was $7.1 million, an increase of 43.8% over the $4.9 million earned in the same three-month period in 2007. Increases in both periods primarily reflect the impact of the January 3, 2008 addition of Union's $547.4 million asset base.
For the six months ended June 30, 2008, the returns on average equity and average assets were 15.77% and 1.17%, compared to 17.97% and 1.12%, respectively, for the six months ended June 30, 2007. The decline in return on average equity is primarily the result of $38.4 million of goodwill created from the Union acquisition. During the first half of 2008, return on average tangible equity (which excludes goodwill and other intangibles) was 22.21% compared to 18.75% for the same period in 2007.
Daigle commented, "We believe that a successful strategic acquisition and a steady, conservative and disciplined approach in carrying on normal day-to-day activities have produced solid operating results."
Net interest income for the second quarter of 2008 increased 45.1% to $17.9 million, compared to $12.3 million for same period of 2007. This increase in net interest income was primarily attributable to a $463.2 million, or 27.8%, increase in average earning assets resulting from the Union acquisition. In addition, the net interest margin increased 31 basis points to 3.37% for the first half of 2008, compared to the same period in 2007, as a result of the recent rate moves by the Federal Reserve and a positively sloped yield curve.
During the second quarter of 2008, the Company provided $450,000 to the allowance for loan and lease losses ("ALLL") compared to no provision to the ALLL for the same quarter of 2007. The increase in the provision to the ALLL resulted from an increase in non-performing loans as a percentage of total loans to 0.90% at June 30, 2008, compared to 0.56% at June 30, 2007. Additionally, net charge-offs to average loans increased to 0.11% for the six months ended June 30, 2008, compared to 0.09% for the six months ended June 30, 2007. The ALLL was 1.13% of total loans outstanding at June 30, 2008, compared to 1.17% of loans outstanding on the same date in 2007. The ALLL was 125.6% of total non-performing loans at June 30, 2008, compared to 207.2% at June 30, 2007.
With respect to credit quality, Daigle commented, "Despite being proactive in re-tooling our loan origination practices and increasing our vigilance on all matters relating to risk management, we have not been immune from the adverse effects of a weakening economy. These indicators are not where we are accustomed to seeing them, however, I have the utmost confidence in the people and processes we have in place to guide us through these difficult times."
Non-interest income of $4.7 million for the quarter ended June 30, 2008 was up 45.0% from the same quarter a year ago. Resulting primarily from the customer relationships gained in the acquisition of Union, the Company recorded increases in service charges on deposit accounts, income from fiduciary services at Acadia Trust, N.A., and brokerage commission income at Acadia Financial Consultants ("AFC").
Non-interest expense for the second quarter of 2008 was $11.9 million, an increase of $3.4 million, or 40.2%, over the same quarter in the prior year primarily due to the Union acquisition. The Company's efficiency ratio for the six-month period ended June 30, 2008 was 54.80%, compared to 55.00% for the six months ended June 30, 2007.
In comparing the second and first quarters of 2008, which represent the first two quarters following the Union acquisition, the Company highlighted the following results:
• Earnings per diluted share of $0.92 were $0.12, or 15.0%, higher than the $0.80 reported in the first quarter.
• Net income of $7.1 million was $913,000, or 14.8%, greater than the $6.2 million reported in the first quarter.
• Net interest income for the second quarter increased $736,000, or 4.3%, over the first quarter primarily due to a reduction in the cost of funds.
• Non-interest income for the second quarter increased $249,000, or 5.7%, over the first quarter due to increased service charges on deposit accounts and brokerage commission income at AFC.
• Non-interest expenses decreased $348,000 reflecting non-recurring integration-related costs recorded in the first quarter, and the run-off of core deposit intangible amortization related to the 1998 branch acquisition.
• The efficiency ratio improved to 52.83% for the second quarter compared to 56.85% for the first quarter.
• Total assets increased $15.1 million from March 31 to June 30, which included an $8.8 million increase in the loan portfolio and a $2.7 million increase in the investment portfolio.
• Total deposits increased $18.2 million during the second quarter to end at $1.4 billion.
• Asset quality data improved quarter-on-quarter, as measured by a decrease in non-performing assets of $2.1 million, or 12.8%, a decrease in quarterly net charge-offs which were $1.5 million in the first quarter compared to $163,000 in the second quarter, and a decrease in non-performing loans to total loans which improved to 0.90% from 1.02%. The Company reduced the provision to $450,000 for the second quarter compared to $500,000 in the first quarter.
The Company reported earlier that the Board of Directors approved a dividend of $0.25 per share, payable on July 31, 2008 for shareholders of record on July 15, 2008, which is a 4.2% increase over the dividend declared in the same period last year. In addition, the Board of Directors approved the extension of the Company's Common Stock Repurchase Program for an additional one-year term.
At June 30, 2008, the Company's total risk-based capital ratio of 11.95% and Tier 1 capital ratio of 10.77% compared favorably to the minimum ratios of 10.0% and 6.0%, respectively, required by the Federal Reserve for a bank holding company to be considered "well capitalized." In addition, the capital ratios at June 30th compared favorably to the capital ratios at March 31, 2008, which were 11.69% and 10.53%, respectively.
"We are committed to preserving capital to withstand the adverse effects of an economic down cycle, while at the same time ensuring for well-supported dividend distributions, share repurchases when the market is not properly valuing our stock, and opportunistic acquisitions aimed at strengthening the future of our existing franchise," Daigle noted in concluding his remarks.
Camden National Corporation, ranked in the top 20 in USBanker's 2008 list of top-performing mid-tier banks, headquartered in Camden, Maine, and listed on the NASDAQ® Global Select Market ("NASDAQ") under the symbol CAC, is the holding company employing 440 Maine residents for two financial services companies, including Camden National Bank (CNB), a full-service community bank with a network of 37 banking offices serving coastal, western, central, and eastern Maine, and Acadia Trust, N.A., offering investment management and fiduciary services with offices in Portland, Bangor, and Ellsworth. Acadia Financial Consultants is a division of CNB, offering full-service brokerage services.
This press release and the documents incorporated by reference herein contain certain statements that may be considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "will," "should," and other expressions which predict or indicate future events or trends and which do not relate to historical matters. Forward-looking statements should not be relied on, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of the Company. These risks, uncertainties and other factors may cause the actual results, performance or achievements of the Company to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.
Some of the factors that might cause these differences include the following: changes in general, national or regional economic conditions; changes in loan default and charge-off rates; reductions in deposit levels necessitating increased borrowing to fund loans and investments; changes in interest rates; changes in laws and regulations; changes in the size and nature of the Company's competition; and changes in the assumptions used in making such forward-looking statements. Other factors could also cause these differences. For more information about these factors please see our Annual Report on Form 10-K on file with the SEC. All of these factors should be carefully reviewed, and readers should not place undue reliance on these forward-looking statements.
These forward-looking statements were based on information, plans and estimates at the date of this press release, and the Company does not promise to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.
Contact:
Suzanne Brightbill
Public Relations Officer
Camden National Corporation
207.230.2120
sbrightbill@camdennational.com
