8-K
CAMDEN NATIONAL CORP (CAC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 27, 2021
Camden National Corporation
(Exact name of registrant as specified in its charter)
| Maine | 01-28190 | 01-0413282 | |
|---|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |
| Two Elm Street | Camden | Maine | 04843 |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (207) 236-8821
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, without par value | CAC | The NASDAQ Stock Market LLC |
| Item 2.02 | Results of Operations and Financial Condition. | |
| --- | --- |
Camden National Corporation (the “Company”) issued a press release on July 27, 2021 announcing earnings for the fiscal quarter ended June 30, 2021. A copy of the press release is attached hereto as Exhibit 99.1. A quarterly letter from the Company's Chief Executive Officer to stockholders is attached as Exhibit 99.2. This information is being furnished pursuant to Item 2.02, and the information contained therein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) The following exhibits are filed with this Report:
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release announcing earnings for the fiscal quarter endedJune30, 2021. |
| 99.2 | Secondquarter 2021 shareholder letter and financial summary. |
| 101 | Cover Page Interactive Data - the cover page XBRL tags are embedded within the Inline XBRL document. |
| 104 | Cover Page Interactive Data File - Included in Exhibit 101. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: July 27, 2021
| CAMDEN NATIONAL CORPORATION<br>(Registrant) | |
|---|---|
| By: | /s/ GREGORY A. WHITE |
| Gregory A. White<br>Chief Financial Officer and Principal Financial & Accounting Officer |
Document
CONTACT:
Michael Archer
Senior Vice President
Corporate Controller
Camden National Corporation
(800) 860-8821
marcher@CamdenNational.com
FOR IMMEDIATE RELEASE
CAMDEN NATIONAL CORPORATION REPORTS
SECOND QUARTER 2021 FINANCIAL RESULTS
Camden National Corporation Reports Net Income of $18.1 Million for the Second Quarter of 2021
and $37.9 Million for the Six Months Ended June 30, 2021
CAMDEN, Maine, July 27, 2021/PRNewswire/--Camden National Corporation (NASDAQ: CAC; “Camden National” or the “Company”), a $5.2 billion bank holding company headquartered in Camden, Maine, reported net income of $18.1 million and diluted earnings per share ("EPS") of $1.21 for the second quarter of 2021, an increase of 66% over the second quarter of 2020. Net income and diluted EPS for the six months ended June 30, 2021 was $37.9 million and $2.52, respectively, increases of 55% and 56% compared to the same period of 2020. These strong financial results led to a return on average equity of 13.50% and return on average tangible equity (non-GAAP) of 16.60% for the second quarter of 2021, and a return on average equity of 14.24% and return on average tangible equity (non-GAAP) of 17.52% for the six months ended June 30, 2021.
"We have had an excellent first half of the year with very strong financial results that included net income of $37.9 million and diluted EPS of $2.52, superior asset quality, and continued momentum on our various strategic initiatives, all while navigating the intricacies of the pandemic and its impact on our customers and employees," said Gregory A. Dufour, President and Chief Executive Officer. "We are optimistic about the future based on vaccination rates, tourism and real estate activity within our markets. Our ongoing conversations with customers about economic recovery and growth further solidify this."
On a linked-quarter-basis, the Company's second quarter 2021 net income and diluted EPS each decreased 8% compared to the first quarter of 2021. This was driven by a shift in the Company's strategy in recent months to hold more of its residential mortgage loan production within its loan portfolio, which resulted in a decrease in mortgage banking income between periods.
In June 2021, the Company announced a cash dividend of $0.36 per share, payable on July 30, 2021, to shareholders of record on July 15, 2021, representing an annualized dividend yield of 3.02%, based on the Company's closing share price of $47.76, as reported by NASDAQ as of June 30, 2021.
"During the quarter, we welcomed Stephens, Inc. ('Stephens') to our group of stock analysts who provide research on our stock. With the addition of Stephens, we now have four stock analysts covering our stock," added Dufour.
SECOND QUARTER 2021 HIGHLIGHTS
•Net income increased by $7.2 million, or 66%, over the second quarter of 2020 and decreased $1.6 million, or 8%, compared to the first quarter of 2021.
•Net interest margin on a fully-taxable equivalent basis (“net interest margin”) for the second quarter of 2021 was 2.83%, compared to 3.11% for the second quarter of 2020 and 2.88% for the first quarter of 2021.
•Adjusted net interest margin (non-GAAP), which excludes Small Business Administration Paycheck Protection Program ("SBA PPP") average loans and related income, and average excess liquidity and related income, for the second quarter of 2021 was 2.89%, compared to 3.15% for the second quarter of 2020 and 2.91% for the first quarter of 2021.
•Loans grew 3% during the second quarter of 2021 and 2% over this same period last year, excluding SBA PPP loans (non-GAAP).
•Non-performing assets were 0.17% of total assets and loans 30-89 days past due were 0.02% of total loans at June 30, 2021, compared to 0.22% and 0.10% at December 31, 2020, respectively.
•Book value per share grew 2% and tangible book value per share (non-GAAP) grew 3% during the second quarter of 2021 to $36.49 and $29.99 at June 30, 2021, respectively, and grew 8% and 10%, respectively, over the last 12 months.
FINANCIAL CONDITION
As of June 30, 2021, total assets were $5.2 billion, an increase of $253.3 million, or 5%, since December 31, 2020. Asset growth for the first half of 2021 was driven by an increase in investment balances of $282.9 million, or 25%, and loan balances of $66.1 million, or 2%. The Company continues to deploy excess liquidity and its primary means of doing so has been through investment and loan growth.
•Through the first half of 2021, the Company purchased $482.2 million of debt securities, which continue to be primarily mortgage-backed securities and collateralized mortgage obligations. As of June 30, 2021, the weighted-average life was 5.9 years compared to 5.1 years as of December 31, 2020.
•Loan growth for the first half of 2021 was centered within residential mortgages and commercial real estate which increased $66.1 million, or 6%, and $54.4 million, or 4%, respectively. In the first quarter of 2021, the Company shifted its position and began holding more of its residential mortgage production within its loan portfolio. Through the first six months of 2021, the Company held 46%, or $263.1 million, of its residential mortgage originations within its loan portfolio, which included holding 60% of its originations for the second quarter of 2021. As of June 30, 2021, the Company's residential mortgage pipeline was $214.2 million with 70% designated to be held in its portfolio.
As of June 30, 2021, total deposits were $4.3 billion, an increase of $288.9 million, or 7%, since December 31, 2020. Deposit growth for the first half of 2021 was due to core deposit (non-GAAP) growth of $313.0 million, or 9%, which was driven by another round of government stimulus programs in response to the COVID-19 pandemic during the first quarter of 2021 and the beginning of seasonal inflows, as business activity accelerates across the Company's markets during the summer months. Of note, the Company redesigned its consumer checking account products in the second quarter of 2021, which resulted in many accounts and balances transitioning from interest to non-interest checking.
As of June 30, 2021, total borrowings were $214.7 million, a decrease of $32.0 million, or 13%, since December 31, 2020. In light of its liquidity position, the Company terminated a $25.0 million long-term borrowing contract with the Federal Home Loan Bank of Boston ("FHLBB") during the first quarter of 2021. The long-term borrowing contract had an interest rate of 0.98%, and the Company incurred a one-time prepayment penalty of $514,000 for terminating the contract. Also, given the strength of the Company's liquidity and capital position, the Company redeemed in full its $15.0 million of outstanding subordinated notes that carried a 5.50% interest rate, at a redemption price equal to the principal amount of the notes plus accrued and unpaid interest, during the second quarter of 2021.
The Company's loan-to-deposit ratio was 77% at June 30, 2021, compared to 80% at December 31, 2020.
At June 30, 2021, the Company's capital position remained well in excess of regulatory requirements, including a total risk-based capital ratio of 15.26% and a tier 1 leverage ratio of 9.48%. The Company's shareholders' equity to total assets position and tangible common equity ratio (non-GAAP) was 10.59% and 8.87% at June 30, 2021, respectively, compared to 10.81% and 8.99% at December 31, 2020.
In the first quarter of 2021, the Company initiated a new share repurchase program for up to 750,000 shares of its common stock, or approximately 5% of the Company's shares outstanding. This share repurchase program replaces the program that terminated in January 2021. The Company did not repurchase any shares of its common stock during the first half of 2021.
ASSET QUALITY AND COVID-19 SHORT-TERM LOAN DEFERMENTS
As of June 30, 2021, the Company's asset quality metrics remained very strong and continued to improve, with non-performing assets of 0.17% of total assets and loans 30-89 days past due of 0.02% of total loans. In comparison, at December 31, 2020, non-performing assets were 0.22% of total assets, and loans 30-89 days past due were 0.10% of total loans.
In response to the COVID-19 pandemic, the Company offered temporary debt relief to its business and retail customers impacted by COVID-19 in 2020 in accordance with the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and bank regulator guidance. The Company provided short-term debt payment relief to commercial and retail customers for periods up to 180 days, including full and partial principal and/or interest payment relief, and these loans were not individually assessed, designated or accounted for as troubled-debt restructurings. As of June 30, 2021, the Company had no loans operating under a short-term deferral arrangement, compared to $26.5 million as of December 31, 2020 and $546.7 million as of June 30, 2020. The majority of these loans have returned to normal payment status or have since fully paid-off. Of those loans that were previously operating under a short-term deferral arrangement, $1.3 million were classified as non-accrual and $536,000 were 30-89 days past due as of June 30, 2021.
In late December 2020, another stimulus package was signed into law to provide additional COVID-19 relief for businesses and consumers. This stimulus package permits the Company the opportunity to again provide temporary debt relief to borrowers impacted by COVID-19. As of June 30, 2021, the Company had not provided any additional temporary debt relief to borrowers; however, such relief may be made in the future on a case-by-case basis.
ALLOWANCE FOR CREDIT LOSSES ("ACL")
In the fourth quarter of 2020, the Company adopted the current expected credit loss methodology, commonly referred to as "CECL," to account for the ACL on loans and certain off-balance credit exposures, effective as of January 1, 2020. Interim periods prior to the fourth quarter of 2020 continue to be presented under the incurred loss methodology.
At June 30, 2021, the ACL on loans was $32.1 million, or 0.98% of total loans, compared to $37.9 million, or 1.18% of total loans, at December 31, 2020. The decrease in the allowance reflects the Company's strong asset quality and overall improvement in the current and forecasted market conditions over its forecast period. There have been no significant changes in the Company's CECL methodology since year-end.
FINANCIAL OPERATING RESULTS (Q2 2021 vs. Q2 2020)
Net income for the second quarter of 2021 was $18.1 million, an increase of $7.2 million, or 66%, over the second quarter of 2020. Diluted EPS for the second quarter of 2021 was $1.21, an increase of $0.48, or 66%, over the second quarter of 2020.
Net Interest Income and Net Interest Margin. Net interest income for the second quarter of 2021 was $33.5 million, a decrease of $1.0 million, or 3%, compared to the second quarter of 2020. Interest income decreased $2.9 million, or 7%, between periods, and was partially offset by a decrease in interest expense of $1.9 million, or 41%. The decrease in interest income between periods was driven by the change in the interest rate environment as the Company's average yield on interest-earning assets decreased 47 basis points to 3.06% for the second quarter of 2021. For the second quarter of 2021, the Company recognized $1.7 million of SBA PPP loan income, a decrease of $47,000 compared to the second quarter of 2020. Interest expense decreased $1.9 million between periods as interest rates fell and the Company's funding mix allocation shifted to lower cost deposits. The Company's cost of funds decreased 20 basis points between periods to 0.24% for the second quarter of 2021.
Net interest margin for the second quarter of 2021 was 2.83%, a decrease of 28 basis points compared to the second quarter of 2020. Adjusted net interest margin, which excludes SBA PPP loans and excess liquidity (non-GAAP), for the second quarter of 2021 was 2.89%, compared to 3.15% for the second quarter of 2020.
Provision for Credit Losses. The provision for credit losses for the second quarter of 2021 was reported using the CECL methodology, whereas the provision for credit losses for the second quarter of 2020 was reported using the incurred loss methodology.
The change in provision for credit losses between periods is highlighted in the table below:
| ($ in thousands) | CECL<br>Q2 2021 | Incurred<br>Q2 2020 | Increase /<br>(Decrease) | |||
|---|---|---|---|---|---|---|
| (Credit) provision for credit losses - loans | $ | (3,452) | $ | 9,400 | $ | (12,852) |
| (Credit) provision for credit losses - off-balance sheet credit exposures | 49 | (2) | 51 | |||
| (Credit) provision for credit losses | $ | (3,403) | $ | 9,398 | $ | (12,801) |
For the second quarter of 2020, the Company recorded $9.4 million of provision expense to increase its allowance for credit losses on loans in response to the COVID-19 pandemic as it recognized the credit risks the pandemic created as "stay at home" orders were issued, non-essential businesses were temporarily closed and wide-spread layoffs occurred throughout its markets. A full 12-months later, the Company's asset quality remains very strong with total non-performing loans of $8.4 million, or 0.26% of total loans, as of June 30, 2021, annualized net charge-offs for the second quarter of 2021 of 0.03% of average loans, and improving macroeconomic factors over this period. As such, in the second quarter of 2021, the Company released $3.5 million of allowance for credit losses on loans.
Non-Interest Income. Non-interest income for the second quarter of 2021 was $11.3 million, a decrease of $740,000, or 6%, over the second quarter of 2020. The decrease was driven by lower mortgage banking income of $2.1 million. In the first quarter of 2021, the Company shifted its strategy to hold more residential mortgage loans within its loan portfolio, and, as a result, the Company sold 40% of its residential mortgage production during the second quarter of 2021, compared to 65% for the second quarter of 2020. The decrease in mortgage banking income was partially offset by an increase in debit card income of $721,000 between periods. The increase in debit card income was driven by higher customer spending due to government stimulus provided in response to the COVID-19 pandemic.
Non-Interest Expense. Non-interest expense for the second quarter of 2021 was $25.6 million, an increase of $2.1 million, or 9%, compared to the second quarter of 2020. The increase was driven by higher performance-based incentive accruals of $1.8 million. The second quarter of 2020 marked the first full calendar quarter of the COVID-19 pandemic, and performance-based incentive accruals were carried at lower levels given the level of risk and uncertainty at that time, in comparison to the current state of the economy and markets for the second quarter of 2021.
FINANCIAL OPERATING RESULTS (Q2 2021 vs. Q1 2021)
Net income for the second quarter of 2021 decreased $1.6 million, or 8%, compared to the first quarter of 2021. On a linked-quarter-basis, diluted EPS decreased $0.10, or 8%.
Net Interest Income and Net Interest Margin. Net interest income for the second quarter of 2021 increased $1.2 million, or 4%, compared to the first quarter of 2021. Interest income increased $878,000, or 2%, between periods driven by increases in average investment balances of $179.6 million and loan balances of $9.3 million. SBA PPP loan income decreased $217,000, or 12%, compared to the first quarter of 2021. Interest expense decreased $287,000, or 9%, between periods as the cost of funds decreased 0.05% and average total borrowings decreased $8.6 million during between periods.
Net interest margin for the second quarter of 2021 decreased 5 basis points compared to the first quarter of 2021. Adjusted net interest margin, which excludes SBA PPP loans and excess liquidity (non-GAAP), for the second quarter of 2021 was 2.89%, compared to 2.91% for the first quarter of 2021.
Provision for Credit Losses. The change in provision for credit losses between periods is highlighted in the table below:
| ($ in thousands) | CECL<br>Q2 2021 | CECL<br>Q1 2021 | Increase /<br>(Decrease) | |||
|---|---|---|---|---|---|---|
| (Credit) for credit losses - loans | $ | (3,452) | $ | (1,854) | $ | (1,598) |
| Provision (credit) for credit losses - off-balance sheet credit exposures | 49 | (102) | 151 | |||
| (Credit) for credit losses | $ | (3,403) | $ | (1,956) | $ | (1,447) |
Non-Interest Income. Non-interest income for the second quarter of 2021 decreased $3.9 million, or 26%, compared to the first quarter of 2021. The decrease between periods was driven by lower mortgage banking income of $4.5 million as the Company sold 40% of its residential mortgage loan production during the second quarter of 2021, compared to 66% during the first quarter of 2021. The change in percentage sold reflects the Company's shift in strategy as it looks to hold more residential mortgages within its loan portfolio. The decrease in mortgage banking income was partially offset by an increase in debit card income of $376,000 between periods. The increase in debit card income was driven by higher customer spending due to government stimulus provided in response to the COVID-19 pandemic.
Non-Interest Expense. Non-interest expense for the second quarter of 2021 increased $691,000, or 3%, compared to the first quarter of 2021. The increase was driven by an increase in compensation-related expenses of $796,000, or 5%, which was driven by annual merit increases that normally occur in March each year and an increase in incentive-based accruals of $374,000 based on year-to-date performance.
Q2 2021 CONFERENCE CALL
Camden National will host a conference call and webcast at 3:00 p.m., Eastern Time, on Tuesday, July 27, 2021 to discuss its second quarter 2021 financial results and outlook. Participants should dial in to the call 10 - 15 minutes before it begins. Information about the conference call is as follows:
Live dial-in (domestic): (888) 349-0139
Live dial-in (international): (412) 542-4154
Live webcast: https://services.choruscall.com/links/cac210727.html
A link to the live webcast will be available on Camden National's website under "Investor Relations" at www.CamdenNational.com prior to the meeting, and a replay of the webcast will be available on Camden National's website following the conference call. The transcript of the conference call will also be available on Camden National's website approximately two days after the conference call.
ABOUT CAMDEN NATIONAL CORPORATION
Camden National Corporation (NASDAQ:CAC) is the largest publicly traded bank holding company in Northern New England with $5.2 billion in assets and approximately 600 employees. Camden National Bank, its subsidiary, is a full-service community bank founded in 1875 in Camden, Maine. Dedicated to customers at every stage of their financial journey, the bank offers the latest in digital banking, complemented by personalized service with 58 banking centers, 24/7 live phone support, 68 ATMs, and additional lending offices in New Hampshire and Massachusetts. For the past three years, Camden National Bank was named a Customer Experience (CX) Leader by leading independent research firm, Greenwich Associates. In 2020, it received awards in two CX categories: U.S. Retail Banking and U.S. Commercial Small Business. The Finance Authority of Maine has awarded Camden National Bank as "Lender at Work for Maine" for eleven years, and Camden National Corporation received a 2020 Raymond James Community Bankers Cup award, placing it in the top 10% of community banks. Comprehensive wealth management, investment and financial planning services are delivered by Camden National Wealth Management. To learn more, visit CamdenNational.com. Member FDIC.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including certain plans, expectations, goals, projections and other statements, which are subject to numerous risks, assumptions and uncertainties. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures; changes in the interest rate environment; changes in general economic conditions; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; legislative and regulatory changes that adversely affect the business in which Camden National is engaged; changes in the securities markets and other risks and uncertainties disclosed from time to time in Camden National’s Annual Report on Form 10-K for the year ended December 31, 2020, as updated by other filings with the Securities and Exchange Commission ("SEC"). Further, statements about the potential effects of the COVID-19 pandemic on our business, results of operations and financial condition may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, action taken by government authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, service providers and on economies and markets more generally. Camden National does not have any obligation to update forward-looking statements.
USE OF NON-GAAP MEASURES
In addition to evaluating the Company's results of operations in accordance with generally accepted accounting principles in the United States ("GAAP"), management supplements this evaluation with certain non-GAAP financial measures, such as pre-tax, pre-provision earnings; return on average tangible equity; the efficiency and tangible common equity ratios; tangible book value per share; core deposits and average core deposits; adjusted yield on interest-earning assets and adjusted net interest margin (fully-taxable equivalent); and 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<br>Three Months Ended | At or For The<br>Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except number of shares and per share data) | June 30,<br>2021 | March 31,<br>2021 | June 30,<br>2020 | June 30,<br>2021 | June 30,<br>2020 | ||||||||||
| Financial Condition Data | |||||||||||||||
| Investments | $ | 1,415,695 | 1,131,178 | $ | 1,067,737 | $ | 1,415,695 | $ | 1,067,737 | ||||||
| Loans and loans held for sale | 3,301,056 | 3,259,275 | 3,362,631 | 3,301,056 | 3,362,631 | ||||||||||
| Allowance for credit losses on loans | 32,060 | 35,775 | 35,539 | 32,060 | 35,539 | ||||||||||
| Total assets | 5,152,069 | 5,089,279 | 4,959,016 | 5,152,069 | 4,959,016 | ||||||||||
| Deposits | 4,294,114 | 4,211,630 | 3,996,358 | 4,294,114 | 3,996,358 | ||||||||||
| Borrowings | 214,744 | 245,739 | 330,229 | 214,744 | 330,229 | ||||||||||
| Shareholders' equity | 545,548 | 532,120 | 506,467 | 545,548 | 506,467 | ||||||||||
| Operating Data | |||||||||||||||
| Net interest income | $ | 33,529 | $ | 32,364 | $ | 34,539 | $ | 65,893 | $ | 66,365 | |||||
| (Credit) provision for credit losses | (3,403) | (1,956) | 9,398 | (5,359) | 11,173 | ||||||||||
| Non-interest income | 11,320 | 15,215 | 12,060 | 26,535 | 23,463 | ||||||||||
| Non-interest expense | 25,590 | 24,899 | 23,509 | 50,489 | 48,070 | ||||||||||
| Income before income tax expense | 22,662 | 24,636 | 13,692 | 47,298 | 30,585 | ||||||||||
| Income tax expense | 4,519 | 4,896 | 2,752 | 9,415 | 6,152 | ||||||||||
| Net income | $ | 18,143 | $ | 19,740 | $ | 10,940 | $ | 37,883 | $ | 24,433 | |||||
| Key Ratios | |||||||||||||||
| Return on average assets | 1.42 | % | 1.62 | % | 0.90 | % | 1.52 | % | 1.05 | % | |||||
| Return on average equity | 13.50 | % | 15.00 | % | 8.81 | % | 14.24 | % | 10.03 | % | |||||
| GAAP efficiency ratio | 57.06 | % | 52.33 | % | 50.45 | % | 54.63 | % | 53.51 | % | |||||
| Net interest margin (fully-taxable equivalent) | 2.83 | % | 2.88 | % | 3.11 | % | 2.85 | % | 3.10 | % | |||||
| Non-performing assets to total assets | 0.17 | % | 0.20 | % | 0.23 | % | 0.17 | % | 0.23 | % | |||||
| Common equity ratio | 10.59 | % | 10.46 | % | 10.21 | % | 10.59 | % | 10.21 | % | |||||
| Tier 1 leverage capital ratio | 9.48 | % | 9.61 | % | 8.95 | % | 9.48 | % | 8.95 | % | |||||
| Total risk-based capital ratio | 15.26 | % | 16.00 | % | 14.56 | % | 15.26 | % | 14.56 | % | |||||
| Per Share Data | |||||||||||||||
| Basic earnings per share | $ | 1.21 | $ | 1.32 | $ | 0.73 | $ | 2.53 | $ | 1.62 | |||||
| Diluted earnings per share | $ | 1.21 | $ | 1.31 | $ | 0.73 | $ | 2.52 | $ | 1.62 | |||||
| Cash dividends declared per share | $ | 0.36 | $ | 0.36 | $ | 0.33 | $ | 0.72 | $ | 0.66 | |||||
| Book value per share | $ | 36.49 | $ | 35.64 | $ | 33.85 | $ | 36.49 | $ | 33.85 | |||||
| Non-GAAP Measures(1) | |||||||||||||||
| Return on average tangible equity | 16.60 | % | 18.47 | % | 11.09 | % | 17.52 | % | 12.68 | % | |||||
| Efficiency ratio | 56.72 | % | 50.96 | % | 50.13 | % | 53.76 | % | 53.17 | % | |||||
| Adjusted net interest margin (fully-taxable equivalent) | 2.89 | % | 2.91 | % | 3.15 | % | 2.90 | % | 3.11 | % | |||||
| Pre-tax, pre-provision earnings | $ | 19,259 | $ | 22,680 | $ | 23,090 | $ | 41,939 | $ | 41,758 | |||||
| Tangible common equity ratio | 8.87 | % | 8.71 | % | 8.41 | % | 8.87 | % | 8.41 | % | |||||
| Tangible book value per share | $ | 29.99 | $ | 29.12 | $ | 27.31 | $ | 29.99 | $ | 27.31 |
(1) Please see "Reconciliation of non-GAAP to GAAP Financial Measures (unaudited)."
Consolidated Statements of Condition Data
(unaudited)
| (In thousands) | June 30,<br>2021 | December 31,<br>2020 | June 30,<br>2020 | |||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash, cash equivalents and restricted cash | $ | 103,733 | $ | 145,774 | $ | 155,828 |
| Investments: | ||||||
| Trading securities | 4,354 | 4,161 | 3,648 | |||
| Available-for-sale securities, at fair value (book value of $1,381,864, $1,078,474 and $1,010,325, respectively) | 1,399,823 | 1,115,813 | 1,047,663 | |||
| Held-to-maturity securities, at amortized cost (fair value of $1,397, $1,411 and $1,388, respectively) | 1,294 | 1,297 | 1,299 | |||
| Other investments | 10,224 | 11,541 | 15,127 | |||
| Total investments | 1,415,695 | 1,132,812 | 1,067,737 | |||
| Loans held for sale, at fair value (book value of $14,887, $40,499 and $35,909, respectively) | 15,140 | 41,557 | 36,590 | |||
| Loans: | ||||||
| Commercial real estate | 1,423,897 | 1,369,470 | 1,310,985 | |||
| Commercial(1) | 367,093 | 381,494 | 428,186 | |||
| SBA PPP | 126,064 | 135,095 | 218,803 | |||
| Residential real estate | 1,120,917 | 1,054,798 | 1,054,333 | |||
| Consumer and home equity | 247,945 | 278,965 | 313,734 | |||
| Total loans | 3,285,916 | 3,219,822 | 3,326,041 | |||
| Less: allowance for credit losses on loans | (32,060) | (37,865) | (35,539) | |||
| Net loans | 3,253,856 | 3,181,957 | 3,290,502 | |||
| Goodwill and core deposit intangible assets | 97,213 | 97,540 | 97,881 | |||
| Other assets | 266,432 | 299,105 | 310,478 | |||
| Total assets | $ | 5,152,069 | $ | 4,898,745 | $ | 4,959,016 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Liabilities | ||||||
| Deposits: | ||||||
| Non-interest checking | $ | 1,183,403 | $ | 792,550 | $ | 712,146 |
| Interest checking | 1,138,273 | 1,288,575 | 1,349,456 | |||
| Savings and money market | 1,355,316 | 1,282,886 | 1,278,603 | |||
| Certificates of deposit | 334,336 | 357,666 | 431,376 | |||
| Brokered deposits | 282,786 | 283,567 | 224,777 | |||
| Total deposits | 4,294,114 | 4,005,244 | 3,996,358 | |||
| Short-term borrowings | 170,413 | 162,439 | 245,998 | |||
| Long-term borrowings | — | 25,000 | 25,000 | |||
| Subordinated debentures | 44,331 | 59,331 | 59,231 | |||
| Accrued interest and other liabilities | 97,663 | 117,417 | 125,962 | |||
| Total liabilities | 4,606,521 | 4,369,431 | 4,452,549 | |||
| Shareholders’ equity | 545,548 | 529,314 | 506,467 | |||
| Total liabilities and shareholders’ equity | $ | 5,152,069 | $ | 4,898,745 | $ | 4,959,016 |
(1) Includes the Healthcare Professional Funding Corporation ("HPFC") loan portfolio.
Consolidated Statements of Income Data
(unaudited)
| For The<br>Three Months Ended | For The<br>Six Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except per share data) | June 30,<br>2021 | March 31,<br>2021 | June 30,<br>2020 | June 30,<br>2021 | June 30,<br>2020 | |||||
| Interest Income | ||||||||||
| Interest and fees on loans | $ | 30,865 | $ | 30,560 | $ | 33,120 | $ | 61,425 | $ | 67,165 |
| Taxable interest on investments | 4,376 | 3,829 | 4,883 | 8,205 | 9,761 | |||||
| Nontaxable interest on investments | 763 | 728 | 828 | 1,491 | 1,615 | |||||
| Dividend income | 102 | 105 | 167 | 207 | 335 | |||||
| Other interest income | 160 | 166 | 180 | 326 | 515 | |||||
| Total interest income | 36,266 | 35,388 | 39,178 | 71,654 | 79,391 | |||||
| Interest Expense | ||||||||||
| Interest on deposits | 1,921 | 2,063 | 3,392 | 3,984 | 10,054 | |||||
| Interest on borrowings | 176 | 156 | 359 | 332 | 1,197 | |||||
| Interest on subordinated debentures | 640 | 805 | 888 | 1,445 | 1,775 | |||||
| Total interest expense | 2,737 | 3,024 | 4,639 | 5,761 | 13,026 | |||||
| Net interest income | 33,529 | 32,364 | 34,539 | 65,893 | 66,365 | |||||
| (Credit) provision for credit losses(1) | (3,403) | (1,956) | 9,398 | (5,359) | 11,173 | |||||
| Net interest income after (credit) provision for credit losses | 36,932 | 34,320 | 25,141 | 71,252 | 55,192 | |||||
| Non-Interest Income | ||||||||||
| Mortgage banking income, net | 2,598 | 7,109 | 4,691 | 9,707 | 8,225 | |||||
| Debit card income | 3,112 | 2,736 | 2,391 | 5,848 | 4,532 | |||||
| Income from fiduciary services | 1,707 | 1,526 | 1,603 | 3,233 | 3,105 | |||||
| Service charges on deposit accounts | 1,517 | 1,539 | 1,337 | 3,056 | 3,349 | |||||
| Brokerage and insurance commissions | 939 | 953 | 622 | 1,892 | 1,279 | |||||
| Bank-owned life insurance | 591 | 594 | 614 | 1,185 | 1,303 | |||||
| Customer loan swap fees | — | — | 57 | — | 171 | |||||
| Other income | 856 | 758 | 745 | 1,614 | 1,499 | |||||
| Total non-interest income | 11,320 | 15,215 | 12,060 | 26,535 | 23,463 | |||||
| Non-Interest Expense | ||||||||||
| Salaries and employee benefits | 15,318 | 14,522 | 13,627 | 29,840 | 27,954 | |||||
| Furniture, equipment and data processing | 2,947 | 3,027 | 2,710 | 5,974 | 5,500 | |||||
| Net occupancy costs | 1,805 | 1,951 | 1,997 | 3,756 | 4,000 | |||||
| Debit card expense | 1,074 | 986 | 878 | 2,060 | 1,812 | |||||
| Consulting and professional fees | 997 | 863 | 1,181 | 1,860 | 1,964 | |||||
| Regulatory assessments | 487 | 503 | 299 | 990 | 461 | |||||
| Amortization of core deposit intangible assets | 164 | 164 | 171 | 328 | 341 | |||||
| Other real estate owned and collection (recoveries) costs, net | (25) | (191) | 98 | (216) | 199 | |||||
| Other expenses | 2,823 | 3,074 | 2,548 | 5,897 | 5,839 | |||||
| Total non-interest expense | 25,590 | 24,899 | 23,509 | 50,489 | 48,070 | |||||
| Income before income tax expense | 22,662 | 24,636 | 13,692 | 47,298 | 30,585 | |||||
| Income Tax Expense | 4,519 | 4,896 | 2,752 | 9,415 | 6,152 | |||||
| Net Income | $ | 18,143 | $ | 19,740 | $ | 10,940 | $ | 37,883 | $ | 24,433 |
| Per Share Data | ||||||||||
| Basic earnings per share | $ | 1.21 | $ | 1.32 | $ | 0.73 | $ | 2.53 | $ | 1.62 |
| Diluted earnings per share | $ | 1.21 | $ | 1.31 | $ | 0.73 | $ | 2.52 | $ | 1.62 |
(1) Reported balances for the three months ended June 30 and March 31, 2021, and the six months ended June 30, 2021, have been accounted for under the CECL model. Reported balances for the three and six months ended June 30, 2020 have been accounted for under the incurred loss method.
Quarterly Average Balance and Yield/Rate Analysis
(unaudited)
| Average Balance | Yield/Rate | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For The Three Months Ended | For The Three Months Ended | |||||||||||||||||
| (Dollars in thousands) | June 30,<br>2021 | March 31,<br>2021 | June 30,<br>2020 | June 30,<br>2021 | March 31,<br>2021 | June 30,<br>2020 | ||||||||||||
| Assets | ||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||
| Interest-bearing deposits in other banks and other interest-earning assets | $ | 235,676 | $ | 210,844 | $ | 168,221 | 0.09 | % | 0.09 | % | 0.06 | % | ||||||
| Investments - taxable | 1,129,682 | 946,456 | 836,885 | 1.62 | % | 1.71 | % | 2.49 | % | |||||||||
| Investments - nontaxable(1) | 114,811 | 118,469 | 124,101 | 3.36 | % | 3.11 | % | 3.38 | % | |||||||||
| Loans(2): | ||||||||||||||||||
| Commercial real estate | 1,407,374 | 1,382,795 | 1,302,393 | 3.60 | % | 3.58 | % | 3.83 | % | |||||||||
| Commercial(1) | 319,100 | 333,458 | 404,545 | 3.78 | % | 3.74 | % | 3.78 | % | |||||||||
| SBA PPP | 158,258 | 154,900 | 178,119 | 4.15 | % | 4.85 | % | 3.79 | % | |||||||||
| Municipal(1) | 26,137 | 24,133 | 19,567 | 3.26 | % | 3.33 | % | 3.62 | % | |||||||||
| HPFC | 10,775 | 12,549 | 17,659 | 9.89 | % | 7.18 | % | 9.28 | % | |||||||||
| Residential real estate | 1,093,502 | 1,083,101 | 1,084,931 | 3.77 | % | 3.72 | % | 4.06 | % | |||||||||
| Consumer and home equity | 253,825 | 268,711 | 321,019 | 4.17 | % | 4.17 | % | 4.29 | % | |||||||||
| Total loans | 3,268,971 | 3,259,647 | 3,328,233 | 3.76 | % | 3.76 | % | 3.97 | % | |||||||||
| Total interest-earning assets | 4,749,140 | 4,535,416 | 4,457,440 | 3.06 | % | 3.15 | % | 3.53 | % | |||||||||
| Other assets | 381,677 | 401,973 | 414,225 | |||||||||||||||
| Total assets | $ | 5,130,817 | $ | 4,937,389 | $ | 4,871,665 | ||||||||||||
| Liabilities & Shareholders' Equity | ||||||||||||||||||
| Deposits: | ||||||||||||||||||
| Non-interest checking | $ | 970,446 | $ | 817,631 | $ | 664,605 | — | % | — | % | — | % | ||||||
| Interest checking | 1,311,400 | 1,289,511 | 1,298,468 | 0.18 | % | 0.19 | % | 0.28 | % | |||||||||
| Savings | 659,892 | 626,591 | 518,803 | 0.04 | % | 0.04 | % | 0.06 | % | |||||||||
| Money market | 703,780 | 685,026 | 717,056 | 0.29 | % | 0.31 | % | 0.37 | % | |||||||||
| Certificates of deposit | 338,595 | 351,555 | 477,068 | 0.53 | % | 0.63 | % | 1.34 | % | |||||||||
| Total deposits | 3,984,113 | 3,770,314 | 3,676,000 | 0.16 | % | 0.19 | % | 0.35 | % | |||||||||
| Borrowings: | ||||||||||||||||||
| Brokered deposits | 284,194 | 284,620 | 234,823 | 0.44 | % | 0.45 | % | 0.28 | % | |||||||||
| Customer repurchase agreements | 184,663 | 165,721 | 209,302 | 0.38 | % | 0.29 | % | 0.56 | % | |||||||||
| Subordinated debentures | 46,639 | 59,331 | 59,194 | 5.50 | % | 5.50 | % | 6.03 | % | |||||||||
| Other borrowings | — | 14,444 | 76,983 | — | % | 0.99 | % | 0.35 | % | |||||||||
| Total borrowings | 515,496 | 524,116 | 580,302 | 0.88 | % | 0.99 | % | 0.98 | % | |||||||||
| Total funding liabilities | 4,499,609 | 4,294,430 | 4,256,302 | 0.24 | % | 0.29 | % | 0.44 | % | |||||||||
| Other liabilities | 92,261 | 109,314 | 115,914 | |||||||||||||||
| Shareholders' equity | 538,947 | 533,645 | 499,449 | |||||||||||||||
| Total liabilities & shareholders' equity | $ | 5,130,817 | $ | 4,937,389 | $ | 4,871,665 | ||||||||||||
| Net interest rate spread (fully-taxable equivalent) | 2.82 | % | 2.86 | % | 3.09 | % | ||||||||||||
| Net interest margin (fully-taxable equivalent) | 2.83 | % | 2.88 | % | 3.11 | % | ||||||||||||
| Adjusted net interest margin (fully-taxable equivalent) (non-GAAP) | 2.89 | % | 2.91 | % | 3.15 | % |
(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,<br>2021 | June 30,<br>2020 | June 30,<br>2021 | June 30,<br>2020 | ||||
| Assets | ||||||||
| Interest-earning assets: | ||||||||
| Interest-bearing deposits in other banks and other interest-earning assets | $ | 223,329 | $ | 117,201 | 0.09 | % | 0.39 | % |
| Investments - taxable | 1,038,575 | 822,963 | 1.66 | % | 2.52 | % | ||
| Investments - nontaxable(1) | 116,630 | 120,819 | 3.24 | % | 3.38 | % | ||
| Loans(2): | ||||||||
| Commercial real estate | 1,395,152 | 1,287,965 | 3.59 | % | 4.03 | % | ||
| Commercial(1) | 326,240 | 410,563 | 3.76 | % | 4.00 | % | ||
| SBA PPP | 156,588 | 89,033 | 4.49 | % | 3.79 | % | ||
| Municipal(1) | 25,141 | 18,279 | 3.29 | % | 3.64 | % | ||
| HPFC | 11,657 | 18,997 | 8.44 | % | 8.50 | % | ||
| Residential real estate | 1,088,330 | 1,081,884 | 3.75 | % | 4.12 | % | ||
| Consumer and home equity | 261,227 | 327,895 | 4.17 | % | 4.66 | % | ||
| Total loans | 3,264,335 | 3,234,616 | 3.76 | % | 4.14 | % | ||
| Total interest-earning assets | 4,642,869 | 4,295,599 | 3.10 | % | 3.71 | % | ||
| Other assets | 391,768 | 384,330 | ||||||
| Total assets | $ | 5,034,637 | $ | 4,679,929 | ||||
| Liabilities & Shareholders' Equity | ||||||||
| Deposits: | ||||||||
| Non-interest checking | $ | 894,460 | $ | 597,053 | — | % | — | % |
| Interest checking | 1,300,516 | 1,222,626 | 0.19 | % | 0.48 | % | ||
| Savings | 643,333 | 497,826 | 0.04 | % | 0.07 | % | ||
| Money market | 694,455 | 683,720 | 0.30 | % | 0.66 | % | ||
| Certificates of deposit | 345,039 | 514,573 | 0.58 | % | 1.48 | % | ||
| Total deposits | 3,877,803 | 3,515,798 | 0.17 | % | 0.52 | % | ||
| Borrowings: | ||||||||
| Brokered deposits | 284,406 | 221,454 | 0.44 | % | 0.87 | % | ||
| Customer repurchase agreements | 175,245 | 222,827 | 0.34 | % | 0.83 | % | ||
| Subordinated debentures | 52,950 | 59,157 | 5.50 | % | 6.03 | % | ||
| Other borrowings | 7,182 | 68,120 | 0.99 | % | 0.80 | % | ||
| Total borrowings | 519,783 | 571,558 | 0.93 | % | 1.38 | % | ||
| Total funding liabilities | 4,397,586 | 4,087,356 | 0.26 | % | 0.64 | % | ||
| Other liabilities | 100,740 | 102,762 | ||||||
| Shareholders' equity | 536,311 | 489,811 | ||||||
| Total liabilities & shareholders' equity | $ | 5,034,637 | $ | 4,679,929 | ||||
| Net interest rate spread (fully-taxable equivalent) | 2.84 | % | 3.07 | % | ||||
| Net interest margin (fully-taxable equivalent) | 2.85 | % | 3.10 | % | ||||
| Adjusted net interest margin (fully-taxable equivalent) (non-GAAP) | 2.90 | % | 3.11 | % |
(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<br>Six Months Ended<br>June 30, 2021 | At or For The<br>Three Months Ended<br>March 31, 2021 | At or For The<br><br>Year Ended<br><br>December 31, 2020(1) | At or For The<br>Nine Months Ended<br>September 30, 2020 | At or For The<br>Six Months Ended<br>June 30, 2020 | ||||||||||
| Non-accrual loans: | |||||||||||||||
| Residential real estate | $ | 2,725 | $ | 3,637 | $ | 3,477 | $ | 4,017 | $ | 4,664 | |||||
| Commercial real estate | 222 | 309 | 512 | 565 | 432 | ||||||||||
| Commercial(1) | 1,511 | 1,737 | 1,607 | 1,114 | 1,091 | ||||||||||
| Consumer and home equity | 1,424 | 1,897 | 2,000 | 2,503 | 2,371 | ||||||||||
| Total non-accrual loans | 5,882 | 7,580 | 7,596 | 8,199 | 8,558 | ||||||||||
| Accruing troubled-debt restructured loans not included above | 2,519 | 2,579 | 2,818 | 2,952 | 2,874 | ||||||||||
| Total non-performing loans | 8,401 | 10,159 | 10,414 | 11,151 | 11,432 | ||||||||||
| Other real estate owned | 165 | 204 | 236 | — | 118 | ||||||||||
| Total non-performing assets | $ | 8,566 | $ | 10,363 | $ | 10,650 | $ | 11,151 | $ | 11,550 | |||||
| Loans 30-89 days past due: | |||||||||||||||
| Residential real estate | $ | 303 | $ | 772 | $ | 2,297 | $ | 1,784 | $ | 4,016 | |||||
| Commercial real estate | 99 | 177 | 50 | 2,056 | 1,625 | ||||||||||
| Commercial(2) | 183 | 425 | 430 | 1,638 | 223 | ||||||||||
| Consumer and home equity | 214 | 264 | 440 | 434 | 388 | ||||||||||
| Total loans 30-89 days past due | $ | 799 | $ | 1,638 | $ | 3,217 | $ | 5,912 | $ | 6,252 | |||||
| ACL on loans at the beginning of the period | $ | 37,865 | $ | 37,865 | $ | 25,171 | $ | 25,171 | $ | 25,171 | |||||
| Impact of CECL adoption | — | — | 233 | — | — | ||||||||||
| (Credit) provision for loan losses | (5,306) | (1,854) | 13,215 | 12,172 | 11,172 | ||||||||||
| Charge-offs: | |||||||||||||||
| Residential real estate | 88 | 53 | 121 | 121 | 96 | ||||||||||
| Commercial real estate | — | — | 103 | 104 | 71 | ||||||||||
| Commercial(1) | 406 | 147 | 1,130 | 857 | 673 | ||||||||||
| Consumer and home equity | 213 | 87 | 484 | 199 | 134 | ||||||||||
| Total charge-offs | 707 | 287 | 1,838 | 1,281 | 974 | ||||||||||
| Total recoveries | (208) | (51) | (1,084) | (352) | (170) | ||||||||||
| Net charge-offs | 499 | 236 | 754 | 929 | 804 | ||||||||||
| ACL on loans at the end of the period | $ | 32,060 | $ | 35,775 | $ | 37,865 | $ | 36,414 | $ | 35,539 | |||||
| Components of ACL: | |||||||||||||||
| ACL on loans | $ | 32,060 | $ | 35,775 | $ | 37,865 | $ | 36,414 | $ | 35,539 | |||||
| ACL on off-balance sheet credit exposures(3) | 2,515 | 2,466 | 2,568 | 9 | 22 | ||||||||||
| ACL, end of period | $ | 34,575 | $ | 38,241 | $ | 40,433 | $ | 36,423 | $ | 35,561 | |||||
| Ratios: | |||||||||||||||
| Non-performing loans to total loans | 0.26 | % | 0.31 | % | 0.32 | % | 0.34 | % | 0.34 | % | |||||
| Non-performing assets to total assets | 0.17 | % | 0.20 | % | 0.22 | % | 0.22 | % | 0.23 | % | |||||
| ACL on loans to total loans | 0.98 | % | 1.11 | % | 1.18 | % | 1.11 | % | 1.07 | % | |||||
| Net charge-offs (recoveries) to average loans (annualized): | |||||||||||||||
| Quarter-to-date | 0.03 | % | 0.03 | % | (0.02) | % | 0.01 | % | 0.05 | % | |||||
| Year-to-date | 0.03 | % | 0.03 | % | 0.02 | % | 0.04 | % | 0.05 | % | |||||
| ACL on loans to non-performing loans | 381.62 | % | 352.15 | % | 363.60 | % | 326.55 | % | 310.87 | % | |||||
| Loans 30-89 days past due to total loans | 0.02 | % | 0.05 | % | 0.10 | % | 0.18 | % | 0.19 | % |
(1) Period ended December 31, 2020, includes a $3.3 million increase upon adoption of CECL. Prior interim periods were not restated for CECL.
(2) Includes the HPFC loan portfolio.
(3) 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<br>Three Months Ended | For the<br>Six Months Ended | ||||||||||||||
| (Dollars in thousands) | June 30,<br>2021 | March 31,<br>2021 | June 30, <br>2020 | June 30,<br> 2021 | June 30,<br> 2020 | ||||||||||
| Net income, as presented | $ | 18,143 | $ | 19,740 | $ | 10,940 | $ | 37,883 | $ | 24,433 | |||||
| Add: amortization of core deposit intangible assets, net of tax(1) | 130 | 130 | 135 | 259 | 269 | ||||||||||
| Net income, adjusted for amortization of core deposit intangible assets | $ | 18,273 | $ | 19,870 | $ | 11,075 | $ | 38,142 | $ | 24,702 | |||||
| Average equity, as presented | $ | 538,947 | $ | 533,645 | $ | 499,449 | $ | 536,311 | $ | 489,811 | |||||
| Less: average goodwill and core deposit intangible assets | (97,292) | (97,463) | (97,965) | (97,377) | (98,054) | ||||||||||
| Average tangible equity | $ | 441,655 | $ | 436,182 | $ | 401,484 | $ | 438,934 | $ | 391,757 | |||||
| Return on average equity | 13.50 | % | 15.00 | % | 8.81 | % | 14.24 | % | 10.03 | % | |||||
| Return on average tangible equity | 16.60 | % | 18.47 | % | 11.09 | % | 17.52 | % | 12.68 | % |
(1) Assumed a 21% tax rate.
| Efficiency Ratio: | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For the<br>Three Months Ended | For the<br>Six Months Ended | ||||||||||||||
| (Dollars in thousands) | June 30,<br>2021 | March 31, <br>2021 | June 30, <br>2020 | June 30,<br>2021 | June 30, <br>2020 | ||||||||||
| Non-interest expense, as presented | $ | 25,590 | $ | 24,899 | $ | 23,509 | $ | 50,489 | $ | 48,070 | |||||
| Less: prepayment penalty on borrowings | — | (514) | — | (514) | — | ||||||||||
| Adjusted non-interest expense | $ | 25,590 | $ | 24,385 | $ | 23,509 | $ | 49,975 | $ | 48,070 | |||||
| Net interest income, as presented | $ | 33,529 | $ | 32,364 | $ | 34,539 | $ | 65,893 | $ | 66,365 | |||||
| Add: effect of tax-exempt income(1) | 265 | 271 | 295 | 536 | 574 | ||||||||||
| Non-interest income, as presented | 11,320 | 15,215 | 12,060 | 26,535 | 23,463 | ||||||||||
| Adjusted net interest income plus non-interest income | $ | 45,114 | $ | 47,850 | $ | 46,894 | $ | 92,964 | $ | 90,402 | |||||
| GAAP efficiency ratio | 57.06 | % | 52.33 | % | 50.45 | % | 54.63 | % | 53.51 | % | |||||
| Non-GAAP efficiency ratio | 56.72 | % | 50.96 | % | 50.13 | % | 53.76 | % | 53.17 | % |
(1) Assumed a 21% tax rate.
| Pre-tax, Pre-provision Earnings: | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| For the<br>Three Months Ended | For the<br>Six Months Ended | |||||||||
| (In thousands) | June 30,<br>2021 | March 31, <br>2021 | June 30, <br>2020 | June 30,<br>2021 | June 30, <br>2020 | |||||
| Net income, as presented | $ | 18,143 | $ | 19,740 | $ | 10,940 | $ | 37,883 | $ | 24,433 |
| Add: (credit) provision for credit losses | (3,403) | (1,956) | 9,398 | (5,359) | 11,173 | |||||
| Add: income tax expense | 4,519 | 4,896 | 2,752 | 9,415 | 6,152 | |||||
| Pre-tax, pre-provision earnings | $ | 19,259 | $ | 22,680 | $ | 23,090 | $ | 41,939 | $ | 41,758 |
| Adjusted Yield on Interest-Earning Assets: | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| For the<br>Three Months Ended | For the<br>Six Months Ended | |||||||||
| June 30,<br>2021 | March 31, <br>2021 | June 30, <br>2020 | June 30,<br>2021 | June 30,<br>2020 | ||||||
| Yield on interest-earning assets, as presented | 3.06 | % | 3.15 | % | 3.53 | % | 3.10 | % | 3.71 | % |
| Add: effect of excess liquidity on yield on interest-earning assets | 0.12 | % | 0.10 | % | 0.08 | % | 0.11 | % | 0.04 | % |
| Less: effect of SBA PPP loans on yield on interest-earning assets | (0.04) | % | (0.06) | % | (0.02) | % | (0.05) | % | (0.01) | % |
| Adjusted yield on interest-earning assets | 3.14 | % | 3.19 | % | 3.59 | % | 3.16 | % | 3.74 | % |
| Adjusted Net Interest Margin (Fully-Taxable Equivalent): | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| For the<br>Three Months Ended | For the<br>Six Months Ended | |||||||||
| June 30,<br>2021 | March 31, <br>2021 | June 30, <br>2020 | June 30,<br>2021 | June 30,<br>2020 | ||||||
| Net interest margin (fully-taxable equivalent), as presented | 2.83 | % | 2.88 | % | 3.11 | % | 2.85 | % | 3.10 | % |
| Add: effect of excess liquidity on net interest margin (fully-taxable equivalent) | 0.11 | % | 0.10 | % | 0.07 | % | 0.10 | % | 0.03 | % |
| Less: effect of SBA PPP loans on net interest margin (fully-taxable equivalent) | (0.05) | % | (0.07) | % | (0.03) | % | (0.05) | % | (0.02) | % |
| Adjusted net interest margin (fully-taxable equivalent) | 2.89 | % | 2.91 | % | 3.15 | % | 2.90 | % | 3.11 | % |
| Tangible Book Value Per Share and Tangible Common Equity Ratio: | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| June 30, <br>2021 | March 31, <br>2021 | June 30, <br>2020 | ||||||||
| (In thousands, except number of shares, per share data and ratios) | ||||||||||
| Tangible Book Value Per Share: | ||||||||||
| Shareholders' equity, as presented | $ | 545,548 | $ | 532,120 | $ | 506,467 | ||||
| Less: goodwill and other intangible assets | (97,213) | (97,377) | (97,881) | |||||||
| Tangible shareholders' equity | $ | 448,335 | $ | 434,743 | $ | 408,586 | ||||
| Shares outstanding at period end | 14,951,067 | 14,928,434 | 14,963,041 | |||||||
| Book value per share | $ | 36.49 | $ | 35.64 | $ | 33.85 | ||||
| Tangible book value per share | $ | 29.99 | $ | 29.12 | $ | 27.31 | ||||
| Tangible Common Equity Ratio: | ||||||||||
| Total assets | $ | 5,152,069 | $ | 5,089,279 | $ | 4,959,016 | ||||
| Less: goodwill and other intangible assets | (97,213) | (97,377) | (97,881) | |||||||
| Tangible assets | $ | 5,054,856 | $ | 4,991,902 | $ | 4,861,135 | ||||
| Common equity ratio | 10.59 | % | 10.46 | % | 10.21 | % | ||||
| Tangible common equity ratio | 8.87 | % | 8.71 | % | 8.41 | % | ||||
| Core Deposits: | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| (In thousands) | June 30,<br>2021 | March 31,<br> 2021 | June 30,<br>2020 | |||||||
| Total deposits | $ | 4,294,114 | $ | 4,211,630 | $ | 3,996,358 | ||||
| Less: certificates of deposit | (334,336) | (346,046) | (431,376) | |||||||
| Less: brokered deposits | (282,786) | (288,758) | (224,777) | |||||||
| Core deposits | $ | 3,676,992 | $ | 3,576,826 | $ | 3,340,205 | ||||
| Average Core Deposits: | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| For the<br>Three Months Ended | For the<br>Six Months Ended | |||||||||
| (In thousands) | June 30,<br>2021 | March 31,<br> 2021 | June 30,<br>2020 | June 30,<br>2021 | June 30,<br>2020 | |||||
| Total average deposits | $ | 3,984,113 | $ | 3,770,314 | $ | 3,676,000 | $ | 3,877,803 | $ | 3,515,798 |
| Less: average certificates of deposit | (338,595) | (351,555) | (477,068) | (345,039) | (514,573) | |||||
| Average core deposits | $ | 3,645,518 | $ | 3,418,759 | $ | 3,198,932 | $ | 3,532,764 | $ | 3,001,225 |
| Total loans, excluding SBA PPP loans: | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| (In thousands) | June 30,<br>2021 | March 31,<br>2021 | June 30,<br>2020 | |||||||
| Total loans, as presented | $ | 3,285,916 | $ | 3,237,046 | $ | 3,326,041 | ||||
| Less: SBA PPP loans | (126,064) | (169,407) | (218,803) | |||||||
| Total loans, excluding SBA PPP loans | $ | 3,159,852 | $ | 3,067,639 | $ | 3,107,238 |
Document
Second Quarter Report - 2021
Dear Fellow Shareholders:
As we mark the halfway point of 2021, we remain committed to delivering upon our strategic investments and our employees’ unwavering dedication to our customers and communities. With a 3% percent increase in total revenue compared to the first half of 2020, it is clear that our investments and focus are producing solid results. We're also encouraged by vaccination rates, tourism recovery, and real estate activity in our markets. While we are all still dealing with the lingering effects of the pandemic, our ongoing conversations with customers reflect optimism about further economic recovery and growth.
We continue to deepen our relationships with customers by providing personalized solutions and financial guidance combined with technology solutions that make banking easier. Recently, we streamlined our personal checking accounts and launched “You Can Ask Us,” an online tool empowering customers to ask us their most common financial questions with follow-up from our team in-person and online.
Favorable Financial Metrics and Stability. For the six months ended June 30, 2021, we reported net income of $37.9 million and diluted earnings per share of $2.52, compared to $24.4 million and $1.62, respectively, for the same period last year. For the first six months of 2021, our return on average assets was 1.52% and return on average tangible equity was 17.52%, compared to 1.05% and 12.68%, respectively, for the same period last year.
I’m pleased to report that asset quality remains very strong as of June 30, 2021 with non-performing loans to total loans of 0.26% and loans 30-89 days past due of total loans of 0.02%. Given our continued asset quality strength and improving macroeconomic conditions, we released $5.4 million of allowance, bringing our allowance for credit losses to total loans as of June 30, 2021 to 0.98%. This compares to an allowance for credit losses to total loans of 1.07% as of June 30, 2020 as we recorded an $11.2 million provision to strengthen our balance sheet in light of the pandemic conditions at that time. Our current allowance for credit losses to total loans of 0.98% compares favorably to our pre-pandemic ratio on December 31, 2019 of 1.18% as well as our adoption of CECL at the end of 2020.
At June 30, 2021, our total risk-based capital ratio of 15.26% and common equity tier 1 ratio of 12.94% were each well in excess of regulatory requirements. Our tangible common equity ratio was 8.87% at June 30, 2021. Our strong capital position has allowed us to consistently declare a quarterly cash dividend and to increase cash dividend payments for the past nine years.
Awarded and Recognized for Superior Customer Service and Financial Performance. Earlier this quarter, Forbes announced its 2021 list of World’s Best
Banks, and this year’s rankings included Camden National Bank in the top 10 of the 75 U.S. banks being recognized, out of 4,978 commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) in the United States, as of March 2021. Banks were ranked based on general satisfaction, how likely customers were to recommend them, and key attributes like trust, fees, digital services, and financial advice. Additionally, we were presented with the Raymond James Community Bankers Cup award, which recognizes the top 10% of community banks based on various profitability, operational efficiency, and balance sheet metrics. I am incredibly proud of our employees who make these type of recognitions possible through their tireless dedication to our customers, communities, and shareholders.
Enhancing Shareholder Value and Services. Camden National’s share price closed at $47.76 on June 30, 2021, representing a 38% increase over the closing share price of $34.54 on June 30, 2020. The Board of Directors approved a dividend of $0.36 per share for the second quarter of 2021, which resulted in a dividend yield of 3.02%, based on Camden National’s closing share price of $47.76, as reported by NASDAQ on June 30, 2021. During the quarter, we welcomed Stephens, Inc. to our group of stock analysts who provide research on our stock. We now have four analysts covering our stock; two, including Stephens, have rated us “overweight” and the other two as “stable.”
Our goal is to provide our shareholders with the best support and service possible. We recently mailed a shareholder communication announcing that we replaced our transfer agent American Stock Transfer & Trust Company, LLC (“AST”) with Broadridge Corporate Issuer Solutions, Inc. (“Broadridge”). Broadridge provides a robust set of services for shareholders to aid us and expand our offerings. Should you need assistance with this transition, please reach out to Broadridge Shareholder Services at shareholder@broadridge.com or 1-877-830-4936. For more information visit www.CamdenNationalCorporation.com.
We are excited about the ongoing opportunities in our markets and look forward to the rest of 2021. Thank you for being a valued shareholder of Camden National Corporation.
Sincerely,
Gregory A. Dufour
President and Chief Executive Officer
Financial Highlights (unaudited)
| Three Months Ended <br>June 30, | Six Months Ended <br>June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands, except per share data) | 2021 | 2020 | 2021 | 2020 | ||||||||
| Earnings and Dividends | ||||||||||||
| Net interest income | $ | 33,529 | $ | 34,539 | $ | 65,893 | $ | 66,365 | ||||
| Non-interest income | 11,320 | 12,060 | 26,535 | 23,463 | ||||||||
| Non-interest expense | (25,590) | (23,509) | (50,489) | (48,070) | ||||||||
| Pre-tax, pre-provision earnings(1) | 19,259 | 23,090 | 41,939 | 41,758 | ||||||||
| (Credit) provision for credit losses | 3,403 | (9,398) | 5,359 | (11,173) | ||||||||
| Income before income tax expense | 22,662 | 13,692 | 47,298 | 30,585 | ||||||||
| Income tax expense | (4,519) | (2,752) | (9,415) | (6,152) | ||||||||
| Net income | $ | 18,143 | $ | 10,940 | $ | 37,883 | $ | 24,433 | ||||
| Diluted earnings per share | $ | 1.21 | $ | 0.73 | $ | 2.52 | $ | 1.62 | ||||
| Cash dividends declared per share | 0.36 | 0.33 | 0.72 | 0.66 | ||||||||
| Performance Ratios | ||||||||||||
| Return on average assets | 1.42 | % | 0.90 | % | 1.52 | % | 1.05 | % | ||||
| Return on average equity | 13.50 | % | 8.81 | % | 14.24 | % | 10.03 | % | ||||
| Net interest margin (fully-taxable equivalent) | 2.83 | % | 3.11 | % | 2.85 | % | 3.10 | % | ||||
| Efficiency ratio1 | 56.72 | % | 50.13 | % | 50.96 | % | 53.17 | % | ||||
| Balance sheet (end of period) | ||||||||||||
| Investments | $ | 1,415,695 | $ | 1,067,737 | ||||||||
| Loans and loans held for sale | 3,301,056 | 3,362,631 | ||||||||||
| Allowance for credit losses on loans | 32,060 | 35,539 | ||||||||||
| Total assets | 5,152,069 | 4,959,016 | ||||||||||
| Deposits | 4,294,114 | 3,996,358 | ||||||||||
| Borrowings | 214,744 | 330,229 | ||||||||||
| Shareholders' equity | 545,548 | 506,467 | ||||||||||
| Book Value per Share and Capital Ratios | ||||||||||||
| Book value per share | $ | 36.49 | $ | 33.85 | ||||||||
| Tangible book value per share1 | 29.99 | 27.31 | ||||||||||
| Tangible common equity ratio1 | 8.87 | % | 8.41 | % | ||||||||
| Tier I leverage capital ratio | 9.48 | % | 8.95 | % | ||||||||
| Total risk-based capital ratio | 15.26 | % | 14.56 | % | ||||||||
| Asset Quality | ||||||||||||
| Allowance for credit losses on loans to total loans | 0.98 | % | 1.07 | % | ||||||||
| Net charge-offs to average loans (annualized) | 0.03 | % | 0.05 | % | ||||||||
| Non-performing loans to total loans | 0.26 | % | 0.34 | % | ||||||||
| Non-performing assets to total assets | 0.17 | % | 0.23 | % |
1 This is a non-GAAP measure. A reconciliation of non-GAAP to GAAP financial measures can be found in the Company's earnings release dated and filed with the SEC on July 27, 2021.
