(Source: Business Wire)
Gregory A. Dufour, president and chief executive officer of Camden National Corporation (NASDAQ: CAC; the "Company"), reported net income for the first quarter of 2009 of $6.2 million, an increase of $20,000 over the net income reported for the first quarter of 2008. Diluted earnings per share for the three months ended March 31, 2009 increased to $0.81 compared to $0.80 per diluted share for the same period a year ago. For the three months ended March 31, 2009, the returns on average equity and average assets were 15.01% and 1.09%, compared to 14.83% and 1.09%, respectively, for the three months ended March 31, 2008.
First Quarter 2009 Compared to First Quarter 2008
Net interest income increased 8% due to an increase in net interest margin.
Non-interest income was up 4% due to increased mortgage banking income and bank-owned life insurance earnings.
Non-interest expenses were flat as a 15% reduction in personnel costs associated with the Union Trust integration was offset by increased FDIC deposit insurance cost and write-downs on other real estate owned.
Non-performing assets totaled $20.4 million or 0.89% of total assets at March 31, 2009, which increased from $16.1 million or 0.70% of total assets at March 31, 2008.
At March 31, 2009, Camden National Bank (the "Bank") and the Company exceeded the "well-capitalized" regulatory capital guidelines with total risk-based capital ratios of 12.04% and 12.91%, respectively, which exceeded the March 31, 2008 ratios of 11.26% and 12.26%, respectively.
Results of Operations
Net interest income for the first quarter of 2009 increased 8% to $18.5 million, compared to $17.2 million for the same period of 2008. The increase in net interest income was attributable to an increase in the net interest margin of 25 basis points, to 3.58%, for the three months ended March 31, 2009 compared to the same period of 2008. The increase in the net interest margin resulted from a decrease in the cost of funds, offset in part by a decrease in income on earning assets, both of which were caused by the decline in the rate environment over the 12 month period. In comparing the first quarters of 2009 and 2008, the Company's cost of funds has been reduced by 101 basis points and the asset yield has decreased by 63 basis points.
Non-interest income for the first quarter of 2009 was $4.6 million, a 4% increase over the same quarter a year ago. The increase was driven by increases in mortgage banking income of $585,000 due to the service-retained loan sales in the first quarter of 2009 and a $102,000 increase in earnings on bank-owned life insurance due to policy purchases in 2008. Income from fiduciary services at Acadia Trust, N.A. ("AT") decreased 19% resulting primarily from market value declines in assets under administration reflecting decreased stock market values.
"Although revenues from our trust and wealth management subsidiary, Acadia Trust, N.A., have been impacted by declines in the market, the investment performance of AT has exceeded its benchmarks over an extended time horizon," commented Dufour, "which has increased the strength of the value proposition to new and existing clients."
Non-interest expense for the first quarter of 2009 was $12.3 million, an increase of $30,000 over the same quarter in the prior year. The increase was due to a $717,000 increase in FDIC deposit insurance assessment and a $666,000 write-down of land development property held in other real estate owned. The increases in non-interest expenses were offset by a 15% decline in salary and benefit costs of $994,000 as the first quarter of 2008 included higher staffing levels to facilitate the Union Trust merger, and the amortization of the core deposit intangible decreased $185,000 as the 1998 branch purchases were fully amortized in 2008. The Company's efficiency ratio (excluding net investment securities gains) for the three months ended March 31, 2009 was 53.31%, which was an improvement over the prior year ratio of 57.33%.
Asset Quality
"Asset quality continues to be a primary focus for Camden National," said Dufour. "Although we are not immune to the current economic cycle, we are positioning ourselves, both with our customers and within our balance sheet, to weather the current recession."
During the first quarter of 2009, the Company provided $1.7 million to the allowance for loan losses (ALL) compared to $500,000 for the same quarter of 2008. The increase in the provision to the ALL resulted from an increase in net charge-offs and non-performing assets. Net charge-offs to average loans were 0.46% for the three months ended March 31, 2009 compared to 0.41% for the three months ended March 31, 2008. The higher level of net charge-off activity for 2009 was mainly associated with commercial real estate and commercial real estate development loans. Non-performing assets as a percentage of total assets amounted to 0.89% at March 31, 2009, compared to 0.70% at March 31, 2008. The ALL was 1.20% of total loans outstanding and 102.6% of total non-performing loans at March 31, 2009, compared to 1.12% and 109.2%, respectively, at March 31, 2008. At December 31, 2008, net charge-offs to average loans, non-performing assets to total assets, ALL to total loans, and ALL to total non-performing loans were 0.31%, 0.71%, 1.18%, and 139.2%, respectively.
Financial Condition
The Company's total assets at March 31, 2009 were $2.3 billion, a decrease of $4.9 million compared to total assets at March 31, 2008. Total loans at March 31, 2009 were $1.5 billion, a decrease of $39.7 million compared to total loans at March 31, 2008, which was due to declines of $30.6 million and $29.2 million in the commercial real estate and commercial loan portfolios, respectively, offset by an increase in home equity loan demand resulting in a $24.7 million increase in the consumer loan portfolio. As a result of recent declines in mortgage rates, residential real estate loan activity has been strong; however, residential real estate loans decreased $7.9 million compared to March 31, 2008 as a result of mortgage loan sales of $20.0 million during the first quarter of 2009. The Bank retains the servicing of its sold residential loans. Investments increased $32.5 million primarily due to purchases of mortgage-backed securities issued or guaranteed by U.S. government sponsored enterprises.
Total deposits of $1.5 billion at March 31, 2009 increased $90.2 million over the same period a year ago, reflecting growth of $101.7 million in retail certificates of deposit ("CD") related to specific marketing campaigns and an increase in brokered deposits of $38.3 million. Interest checking, savings and money market account balances declined $48.5 million as customers shifted balances to CDs and repurchase agreements included in other borrowed funds. As a result of the increase in deposit balances, the Company's Federal Home Loan Bank borrowings decreased $134.9 million at March 31, 2009 compared to March 31, 2008.
Dividends and Capital
The Company reported earlier that the Board of Directors approved a dividend of $0.25 per share, payable on April 30, 2009 for shareholders of record on April 15, 2009, which is equal to the dividend declared in the same period last year.
At March 31, 2009, the Company had a total risk-based capital ratio of 12.91%, Tier 1 capital ratio of 11.68%, and Tier 1 leverage capital ratio of 7.40%. At March 31, 2009, the Bank reported a total risk-based capital ratio of 12.04%, Tier 1 capital ratio of 10.79%, and Tier 1 leverage capital ratio of 6.77%. The Company and the Bank exceeded the minimum ratios of 10.0%, 6.0%, and 5.0%, respectively, required by the Federal Reserve for an institution to be considered "well capitalized."
In closing, Dufour noted, "Camden National understands the value of being able to be relied upon in difficult economic times. As a community bank, we are uniquely positioned to provide leadership, guidance and outstanding products and services to our customers and communities. For us, loans are not just about lending money, but about turning deposits from the community into productive investments in that community. This has been part of the guiding philosophy of Camden National since its founding in 1875."
Camden National Corporation, ranked in the top 20 in USBanker's 2008 list of top-performing mid-tier banks, headquartered in Camden, Maine, and listed on the NASDAQ® Global Select Market ("NASDAQ") under the symbol CAC, is the holding company employingmore than 400 Maine residents for two financial services companies, including Camden National Bank (CNB), a full-service community bank with a network of 37 banking offices serving coastal, western, central, and eastern Maine, and Acadia Trust, N.A., offering investment management and fiduciary services with offices in Portland, Bangor, and Ellsworth. Located at Camden National Bank, Acadia Financial Consultants offers full-service brokerage and insurance services.
This press release and the documents incorporated by reference herein contain certain statements that may be considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "will," "should," and other expressions which predict or indicate future events or trends and which do not relate to historical matters. Forward-looking statements should not be relied on, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of the Company. These risks, uncertainties and other factors may cause the actual results, performance or achievements of the Company to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.
Some of the factors that might cause these differences include the following: changes in general, national or regional economic conditions; changes in loan default and charge-off rates; reductions in deposit levels necessitating increased borrowing to fund loans and investments; changes in interest rates; changes in laws and regulations, including changes in tax treatment; changes in the size and nature of the Company's competition; and changes in the assumptions used in making such forward-looking statements. Other factors could also cause these differences. For more information about these factors please see our Annual Report on Form 10-K, as updated by our Quarterly Reports on Form 10-Q and other filings on file with the SEC. All of these factors should be carefully reviewed, and readers should not place undue reliance on these forward-looking statements.
These forward-looking statements were based on information, plans and estimates at the date of this press release, and the Company does not promise to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.
Statement of Income Data (unaudited) Three Months Ended March 31, (In thousands, except number of shares and per share data) 2009 2008 Interest income Interest and fees on loans $ 21,621 $ 25,314 Interest on securities and other 7,915 7,595 Total interest income 29,536 32,909 Interest expense Interest on deposits 6,394 8,942 Interest on borrowings 4,647 6,804 Total interest expense 11,041 15,746 Net interest income 18,495 17,163 Provision for loan losses 1,730 500 Net interest income after provision for loan losses 16,765 16,663 Non-interest income Service charges on deposit accounts 1,233 1,227 Other service charges and fees 613 639 Income from fiduciary services 1,354 1,677 Mortgage banking income, net 455 (130 ) Bank-owned life insurance 395 293 Other income 510 517 Total non-interest income before net investment securities gains 4,560 4,223 Net investment securities gains - 180 Total non-interest income 4,560 4,403 Non-interest expenses Salaries and employee benefits 5,658 6,652 Net occupancy 1,123 1,089 Furniture and equipment 837 852 Consulting and service fees 711 714 OREO and collection costs 880 227 Regulatory assessments 872 161 Donations and marketing 253 348 Communication costs 417 393 Other expenses 1,540 1,825 Total non-interest expenses 12,291 12,261 Income before income taxes 9,034 8,805 Income taxes 2,820 2,611 Net income $ 6,214 $ 6,194 Efficiency ratio (1) 53.31 % 57.33 % Return on average equity 15.01 % 14.83 % Return on average tangible equity 20.84 % 20.63 % Return on average assets 1.09 % 1.09 % Per Share Data Basic earnings per share $ 0.81 $ 0.81 Diluted earnings per share 0.81 0.80 Cash dividends declared per share $ 0.25 $ 0.24 Weighted average number of shares outstanding 7,639,169 7,692,726 (1) Computed by dividing non-interest expense by the sum of net interest income and non-interest income (excluding net investment securities gains).
