CAMDEN, Maine, Oct. 29, 2019 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company"), a $4.5 billion bank holding company headquartered in Camden, Maine, reported net income for the third quarter of 2019 of $14.5 million, an increase of 3% over the third quarter of 2018, and diluted earnings per share ("EPS") of $0.94, an increase of 4% over the same period. For the third quarter of 2019, the Company's return on average assets was 1.29% and return on average equity was 12.26%.

"We are pleased with our financial results for the third quarter with 3% growth in net income over the third quarter last year, and 7% growth through the first nine months over the same period last year," said Gregory A. Dufour, President and Chief Executive Officer of the Company. "We look to finish 2019 strong to cap off another outstanding year, despite the challenges of a low interest rate environment and inverted yield curve. As we gear up for 2020, we will continue to focus on driving profitable growth and managing our net interest margin to promote the long-term financial success for our Company and shareholders."

In September 2019, Camden National was named to the Sandler O'Neill Sm-All Stars Class of 2019. Camden National was one of 30 publicly traded banks and thrifts—and the only bank headquartered in New England—to be recognized. To earn Sm-All Star status, companies needed to have a market capitalization below $2.5 billion, and were selected based on various financial screening criteria, including growth, profitability, credit quality and capital strength.

"Camden National is thrilled to be selected for the Sandler O'Neill Sm-All Stars from among 394 qualifying financial institutions nationwide," said Dufour. "This recognition is a testament to the success of our measured, balanced approach and to the outstanding dedication of our talented employees."

For the third quarter of 2019, Camden National declared a $0.30 dividend per share, representing an annualized dividend yield of 2.77% as of September 30, 2019.

The Company continues to actively repurchase shares of its common stock through its open share repurchase program. As of October 10, 2019, the Company repurchased 433,953 shares of its common stock, or 56% of its allotted program shares, at a weighted-average share price of $42.47.

FINANCIAL HIGHLIGHTS

• Third quarter 2019 net income increased 3% over the third quarter of 2018 and 10% over the previous quarter.
• Third quarter 2019 efficiency ratio, calculated as non-interest expense divided by total revenues¹, was 55.67%.
• Third quarter 2019 average deposits grew 15% over the third quarter of 2018 and 4% over the previous quarter. Average core deposits² grew 16% over the third quarter of 2018 and 4% over the previous quarter.
• Third quarter 2019 net interest margin was 3.09% on a fully-taxable basis, a decrease of 5 basis points compared to the third quarter of 2018 and a decrease of 2 basis points compared to the previous quarter.
• Increased deposit market share for the State of Maine to 11.4% based on the FDIC's June 30, 2019 Summary of Deposits report, retaining our #2 ranking.

FINANCIAL CONDITION

Total assets increased 5% since December 31, 2018, to $4.5 billion at September 30, 2019. Over this period, the loan portfolio grew $84.4 million, or 3%, led by residential real estate loan growth of $69.0 million, or 7%, and commercial loan growth of $30.0 million, or 7%. The commercial real estate loan portfolio decreased $14.0 million, or 1%, since December 31, 2018, due to elevated prepayments. Commercial real estate loan activity continues to be steady within our markets. While we continue to actively review many of these commercial real estate opportunities, we remain disciplined in our lending as we are focused on the Company's long-term success, which includes appropriate credit structures and prudent management of net interest margin in the current environment.

Total deposits increased 4% since December 31, 2018, to $3.6 billion at September 30, 2019, led by checking account growth of 13% and certificates of deposits ("CDs") growth of 22%, while savings and money market balances decreased 3%. In the second half of each year, the Company typically benefits from an increase in seasonal low-cost deposits, and, as a result, checking deposits grew 6% during the third quarter of 2019. The growth in CDs for the nine months ended September 30, 2019, was primarily due to one large depositor shifting $70.0 million of funding from interest checking to CDs in the second quarter of 2019. The Company's loan-to-deposit ratio improved to 86% at September 30, 2019, compared to 87% at December 31, 2018.

The Company's capital position at September 30, 2019 was well in excess of regulatory requirements, including a total risk-based capital ratio of 13.97% and a Tier I leverage ratio of 9.39%. At September 30, 2019, the Company's common equity ratio was 10.43% and tangible common equity ratio³ was 8.44%.

ASSET QUALITY

As of September 30, 2019, the Company's asset quality remained very strong with non-performing assets of $13.5 million, or 0.30% of total assets, and past due loans of $5.8 million, or 0.19% of total loans. Net charge-offs to average loans for the third quarter 2019 increased to 0.16% primarily due to two residential foreclosures impacting the residential mortgage and home equity loan portfolios. Net charge-offs to average loans for the nine months ended September 30, 2019 and 2018 remained consistent at 0.07%.

The provision for credit losses for the third quarter of 2019 was $730,000, or 0.09% of average loans for the quarter on an annualized basis, compared to 0.15% of average loans for the previous quarter and 0.05% of average loans for the third quarter of 2018.

OPERATING RESULTS (Third Quarter 2019 vs. Third Quarter 2018)

Net income for the third quarter of 2019 was $14.5 million, an increase of $431,000, or 3%, over the third quarter of 2018. Diluted EPS for the third quarter of 2019 was $0.94, an increase of $0.04, or 4%, over the third quarter of 2018.

Net interest income for the third quarter of 2019 was $31.9 million, an increase of $1.5 million, or 5%, over the third quarter of 2018.

• Average loans grew $221.6 million, or 8%, to $3.1 billion.
• Average deposits grew $440.7 million, or 15%, to $3.3 billion driven by average core deposit² growth of 16%.
• Net interest margin decreased 5 basis points to 3.09% as the cost of funds increased 20 basis points, compared to an increase in asset yield of 14 basis points.

Non-interest income for the third quarter of 2019 was $10.7 million, an increase of $347,000, or 3%, over the third quarter of 2018. Non-interest income for the third quarter of 2019 and 2018 represented 25% of total revenues¹.

• Mortgage banking income for the third quarter increased $910,000, or 52%, over the third quarter of 2018 driven by a 49% increase in loans sold between periods and a significant increase in the residential mortgage pipeline between periods.
• An increase in debit card income of $259,000 driven by an increase in customer transactions.
• The increase was partially offset by a $663,000 decrease in investment security gains.

Non-interest expense for the third quarter of 2019 was $23.7 million, an increase of $582,000, or 3%. The Company's non-GAAP efficiency ratio³ for the third quarter of 2019 was 55.32%, compared to 57.33% for the third quarter of 2018.

• Compensation related costs increased $461,000, or 4%, between periods driven by normal merit increases year-over-year and additional employees.
• Furniture, equipment and data processing costs increased $133,000, or 5%, between periods driven by our continued investment in technology solutions.
• The increase was partially offset by a decrease in regulatory assessments of $265,000 as the Company received a Small Bank Assessment Credit from the FDIC for its second quarter 2019 fees in the third quarter of 2019. The Company anticipates further assessment fee credits in future quarters should the FDIC Deposit Insurance Fund reserve ratio continue to exceed its regulatory limit.

OPERATING RESULTS (Linked Quarter)

Net income for the third quarter of 2019 increased $1.3 million, or 10%, compared to the previous quarter. Diluted EPS increased $0.09, or 11%, over the same period.

Net interest income for the third quarter of 2019 increased $350,000, or 1%, over last quarter.

• Average loans grew 1% over the previous quarter.
• Average deposits grew 4% over the previous quarter driven by average checking account growth between quarters of $74.9 million, or 5%, as we benefit from seasonal deposit inflows.
• Net interest margin on a fully-taxable equivalent basis between periods decreased 2 basis points between quarters to 3.09% for the third quarter of 2019. The asset yield declined 7 basis points between quarters reflective of the overall interest rate environment, which included (i) two Fed Funds rate cuts in the third quarter of 2019 for a total of 50 basis points and (ii) a decrease in the average 10-year treasury yield between quarters of 48 basis points to 1.86% for the third quarter of 2019. Funding costs decreased 5 basis points to 1.08% between quarters driven by the repricing of indexed deposits and borrowings, and active management of exception pricing.

Non-interest income for the third quarter of 2019 increased $702,000, or 7%, over the last quarter led by a 53% increase in mortgage banking income between quarters driven primarily by seasonality of business within our markets.

Non-interest expense for the third quarter of 2019 decreased $210,000, or 1%, compared to the previous quarter primarily due to a decrease in regulatory assessment fees of $255,000 as a result of the FDIC Small Bank Assessment Credit received in the third quarter of 2019.

CONFERENCE CALL

Camden National will host a conference call and webcast at 3:00 p.m., Eastern Time, on Tuesday, October 29, 2019 to discuss its third quarter 2019 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/cac191029.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 $4.5 billion in assets and nearly 650 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 61 banking centers, 24/7 live phone support, 71 ATMs, and lending offices in New Hampshire and Massachusetts. Camden National Bank was named one of two "Customer Experience Leaders in U.S. Retail Banking" by Greenwich Associates, and in 2019, it was the only New England based organization included in Sandler O'Neill's "Bank and Thrift Sm-All Star" list of high-performing financial institutions. The Finance Authority of Maine has awarded Camden National Bank as "Lender at Work for Maine" for nine years. 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 in Camden National's Annual Report on Form 10-K for the year ended December 31, 2018, as updated by other filings with the Securities and Exchange Commission ("SEC"). 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 return on average tangible equity; the efficiency and tangible common equity ratios; and tangible book value per share. 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. 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.

1 Revenue is the sum of net interest income and non-interest income.
2 Core deposits include non-interest checking, interest checking, savings and money market deposits.
3 This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures" for further details.