Camden National Corporation Reports 12% Increase in Earnings for the Second Quarter of 2010
7/27/2010
CAMDEN, Maine, July 27, 2010: Camden National Corporation (NASDAQ: CAC; the “Company”) reported net income for the second quarter of 2010 of $5.6 million, or $0.73 per diluted share, compared to $5.0 million, or $0.65 per diluted share, for the second quarter of 2009 and $5.3 million, or $0.69 per diluted share, for the first quarter of 2010. For the three and six month periods ended June 30, 2010, return on assets was 0.98% for each period, and return on equity was 11.36% and 11.25%, respectively.
“We are pleased by our second quarter financial performance, especially in light of current economic conditions,” said Gregory A. Dufour, President and Chief Executive Officer of the Company. “We have remained focused on strengthening our balance sheet to position the Company for future growth and the potential impact of financial reform. Since June 30, 2009, we have improved our tangible capital to 6.83% of total assets from 5.78%, increased our allowance for credit losses to 1.45% of total loans from 1.23%, and improved our total risk based capital ratio to 13.99% from 12.78%,” Dufour said. “Throughout this difficult economy, we have continued to lend money to businesses and individuals and pay dividends to shareholders without the use of federal bailout monies.”
“Despite projections for an increase in bankruptcies and the potential for future declines in real estate values in Maine, we continue to demonstrate our commitment to support our borrowing customers by providing access to funds,” noted Dufour. “Our loans of $1.5 billion at June 30, 2010 were up $15.3 million from December 31, 2009 and up $26.9 million from June 30, 2009, growth achieved while still maintaining our credit standards.”
Asset Quality
The provision for credit losses was $2.0 million for the three months ended June 30, 2010, a decrease of $834,000 from the second quarter of 2009 and a decrease of $46,000 from the first quarter of 2010. “Non-performing assets, while higher than 2009 levels, showed some initial signs of stabilization during the second quarter of 2010,” said Dufour. “In addition, total past due loans for the most recent quarter were at the lowest level experienced in the past year. We are maintaining a cautious view for the next several quarters until unemployment and the housing market show signs of sustained improvement. In the meantime, we will continue to take the necessary steps to strengthen our balance sheet in light of the economic situation.”
Non-performing assets totaled $25.9 million, or 1.13% of total assets, at June 30, 2010 compared to $22.3 million at June 30, 2009 and $24.1 million at March 31, 2010. Loans past due for 30 to 89 days at June 30, 2010 totaled $4.0 million, or 0.26% of total loans, compared to $4.8 million, or 0.32% of total loans, at June 30, 2009 and $6.2 million, or 0.40% of total loans, at March 31, 2010. The Company’s allowance for credit losses was 1.45% of total loans at June 30, 2010, an increase from 1.23% of total loans at June 30, 2009 and 1.40% of total loans at March 31, 2010.
Balance Sheet
The Company’s total assets at June 30, 2010 were $2.3 billion, a decrease of 1% compared to June 30, 2009 and an increase of 3% from December 31, 2009. The $11.5 million decline in total assets at June 30, 2010 compared to June 30, 2009 reflects reductions in cash and due from banks of $14.4 million and investments of $23.8 million, partially offset by loan growth of $26.9 million. Comparing June 30, 2010 to June 30, 2009, loan balances reflected growth in commercial real estate, consumer loans, and residential real estate of $30.9 million, $15.4 million, and $9.8 million, respectively. These increases were partially offset by a decrease in commercial loans of $11.7 million and residential loans held for sale of $17.4 million. The increase in total assets from December 31, 2009 was due to increases in both the investment and loan portfolios of $53.9 million and $15.3 million, respectively.
Total deposits of $1.5 billion at June 30, 2010 represents an increase of $71.9 million from June 30, 2009 and an increase of $52.9 million compared to December 31, 2009. The deposit growth from June 30, 2009 reflects increases in core deposits, with interest checking, savings and money market deposits increasing by $50.5 million and demand deposit balances increasing by $22.9 million. Brokered funds also increased $59.5 million from June 30, 2009 to June 30, 2010 as a result of more favorable pricing compared to other funding alternatives. This growth was partially offset by a decline in retail certificates of deposit of $61.0 million. The increase in core deposits can be attributed to various deposit initiatives; however, a major contributing factor is the enhancement of municipal relationships.
Operating Highlights
Net interest income for the second quarter of 2010 increased to $18.6 million compared to $18.3 million for the second quarter of 2009 and $18.1 million for the first quarter of 2010. The net interest margin of 3.61% for the second quarter of 2010 represents an increase from 3.52% for the same period in 2009 and 3.58% for the first quarter of 2010. The net interest margin increase was due to a reduction in pricing on deposits and borrowings, which helped to mitigate the decline of yields on loans and investments.
Non-interest income for the second quarter of 2010 was $4.4 million compared to $5.0 million for the second quarter of 2009 and $4.6 million for the first quarter of 2010. The decrease of $619,000, or 12%, for the second quarter of 2010 compared to the same period in 2009 was primarily due to a $333,000 reduction in mortgage banking income, a $249,000 decrease in the investment market value in the Company’s deferred executive and director compensation plan due to market depreciation, and a $131,000 other-than-temporary impairment write-down on private issue collateralized mortgage obligations. These decreases were partially offset by increases in debit card interchange income of $86,000 and brokerage fee income of $71,000.
Non-interest income of $9.0 million for the six months ended June 30, 2010 represents a decrease of $601,000, or 6%, compared to the same period in 2009. This decrease was primarily due to a $699,000 reduction in mortgage banking income related to the sale of $44.0 million in residential mortgage loans during the first half of 2009 and a $179,000 other-than-temporary impairment write-down on private issue collateralized mortgage obligations in 2010. These reductions were partially offset by increases in fiduciary services income of $218,000, or 8%, and other fees of $138,000, or 10%, resulting from increased stock market values and interchange activity, respectively.
Non-interest expense for each the second quarter of 2010 and the first quarter of 2010 was $12.9 million, compared to $13.4 million for the second quarter of 2009. The decrease of $559,000, or 4%, for the second quarter of 2010 compared to the same period in 2009 resulted from the Federal Deposit Insurance Corporation’s special assessment of $1.1 million in May 2009 which was offset by an increase in other real estate owned (“OREO”) and collection costs of $876,000. OREO and collection expenses included a $584,000 write-off related to one foreclosed property which was under contract at quarter end, effectively capping the Company’s loss on that particular loan relationship.
Non-interest expense of $25.8 million for the six months ended June 30, 2010 represents an increase of $72,000 compared to the same period in 2009. Regulatory assessment costs decreased $1.3 million and OREO and collection costs increased $970,000, while all other operating expenses increased $396,000, or less than 2%.
Dividends and Capital
The Board of Directors approved a dividend of $0.25 per share, payable on July 30, 2010 to shareholders of record on July 16, 2010. This resulted in a dividend yield of 3.64% based on the June 30, 2010 closing price of the Company’s common stock of $27.47 per share as reported by NASDAQ.
The Company’s total risk-based capital ratio increased to 13.99% at June 30, 2010 compared to 12.78% at June 30, 2009 and 13.49% at December 31, 2009 as capital levels increased from retained earnings and the deleveraging of the Company’s balance sheet. The Company and Camden National Bank exceeded the minimum total risk-based, tier 1, and tier 1 leverage ratios of 10.0%, 6.0%, and 5.0%, respectively, required by the Federal Reserve for an institution to be considered “well capitalized.”
About Camden National Corporation
Camden National Corporation, ranked 11th in USBanker's 2009 list of top-performing mid-tier banks, is the holding company employing more than 400 Maine residents for two financial services companies: Camden National Bank, along with its division Union Trust, and the wealth management company, Acadia Trust, N.A. Camden National Bank, named in 2009 as the Finance Authority of Maine’s “Financial Institution of the Year,” is a full-service community bank with a network of 37 banking offices serving coastal, western, central, and eastern Maine, plus online banking at CamdenNational.com and UnionTrust.com. Acadia Trust offers investment management and fiduciary services with offices in Portland, Bangor, and Ellsworth. Located at Camden National Bank, Acadia Financial Consultants offers full-service brokerage and insurance services.
Forward-Looking Statements
This press release and the documents incorporated by reference herein contain certain statements that may be considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. 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: general, national, regional or local economic conditions which are less favorable than anticipated; changes in loan default and charge-off rates; declines in the equity and financial markets; reductions in deposit levels; declines in mortgage loan refinancing, equity loan and line of credit activity; changes in the domestic interest rate environment and inflation; changes in the carrying value of investment securities and other assets; further actions by the U.S. government and Treasury Department, including actions similar to the Federal Home Loan Mortgage Corporation conservatorship, which could have a negative impact on the Company’s investment portfolio and earnings; misalignment of the Company’s interest-bearing assets and liabilities; increases in loan repayment rates affecting interest income and the value of mortgage servicing rights; changing business, banking, or regulatory conditions or policies, or new legislation affecting the financial services industry, that could lead to changes in the competitive balance among financial institutions, restrictions on bank activities, changes in costs (including deposit insurance premiums), increased regulatory scrutiny, declines in consumer confidence in depository institutions, or changes in the secondary market for bank loan and other products; and changes in accounting rules, Federal and State laws, Internal Revenue Service regulations, and other regulations and policies governing financial holding companies and their subsidiaries which may impact our ability to take appropriate action to protect our financial interests in certain loan situations. Other factors could also cause these differences. For more information about these factors please see our Annual Report on Form 10-K, as updated by our Quarterly Reports on Form 10-Q and other filings 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:
Chance Farago
Public Relations Officer
Camden National Corporation
207.230.2120
cfarago@camdennational.com
