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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
_________________________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.
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.
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.
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.
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.
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.
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:
Live dial-in (Domestic): | (833) 470-1428 |
Live dial-in (All other locations): | (929) 526-1599 |
Participant access code: | 414870 |
Live webcast: |
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. |
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SOURCE Camden National Corporation
