(Source: Business Wire)
Gregory A. Dufour, president and chief executive officer of Camden National Corporation (NASDAQ: CAC; the "Company"), reported net income for the second quarter 2009 of $5.0 million, a decrease of $2.1 million, as compared to $7.1 million earned during the second quarter of 2008. Net income for the six months ended June 30, 2009 was $11.2 million, a decrease of $2.1 million from the $13.3 million earned during the same period in 2008. Diluted earnings per share for the second quarter of 2009 were $0.65 compared to $0.92 for the same period in 2008. Year-to-date diluted earnings per share were $1.47 in 2009 compared to $1.73 in 2008.
Earnings for the second quarter of 2009, when compared to the second quarter of 2008, were negatively impacted by an increase in loan loss provision and higher FDIC insurance premiums which resulted in an additional $3.9 million in pre-tax expense or $0.33 per diluted common share after tax. The Company's core results were solid with improvements in net interest margin, growth in fee income, and a reduction in operating expenses other than the FDIC cost.
"While the banking industry continues to face significant challenges, I am pleased that our solid earnings base is allowing us to absorb the increased FDIC assessments while continuing to strengthen our balance sheet reserves," commented Dufour. "Our capital levels continue to exceed the minimum standards to be considered "well capitalized" and we are providing support to our local economies through lending without the assistance of bailout funds from the U.S. Treasury's Troubled Asset Relief Program."
Operating Highlights
Net interest income for the second quarter of 2009 increased 3% to $18.3 million compared to $17.8 million for the second quarter of 2008. The net interest margin was 3.55% in the quarter just ended compared to 3.43% in the second quarter of 2008, an increase of 12 basis points. The Company's ability to improve pricing on deposits and borrowings and minimize the decline of interest rates on loans allowed improvement in the net interest margin.
Non-interest income for the second quarter of 2009 was $5.0 million compared to $4.7 million for the second quarter of 2008, an increase of $339,000 or 7%. The increase was primarily due to additional mortgage banking income of $501,000 related to service-retained loan sales during the quarter. Income from fiduciary services at Acadia Trust, N.A. decreased 11% primarily due to market value declines in assets under administration.
Non-interest expense for the second quarter of 2009 was $13.4 million compared to $11.9 million for the second quarter of 2008, an increase of $1.5 million or 13%. As noted above, FDIC and regulatory assessment fees increased, while other non-interest expense items for the second quarter of 2009 decreased by $139,000, or 1%, when compared to the second quarter of 2008.
For the second quarter of 2009, the returns on average equity and average assets were 11.54% and 0.88%, compared to 16.69% and 1.24%, respectively, for the second quarter of 2008.
Financial Condition
The Company's total assets at June 30, 2009 were $2.3 billion, a decrease of $7.2 million compared to total assets at June 30, 2008. Total loans (including residential loans held for sale) at June 30, 2009 were $1.5 billion, a decrease of $11.8 million over the same period one year ago. This decrease was due to a decline in commercial loans of $28.0 million partially offset by a $13.8 million increase in the consumer loan portfolio driven by increased home equity loan demand. Historically low mortgage rates have resulted in strong residential real estate loan activity. During the first half of 2009, the Company sold $44.0 million of the mortgage production for interest-rate risk management purposes. Investments decreased $7.2 million primarily due to increased cash flows that were not reinvested into the investment portfolio due to the current low interest-rate environment.
Total deposits of $1.5 billion at June 30, 2009 increased $67.6 million over the same period one year ago, reflecting growth of $59.1 million in retail certificates of deposit related to specific marketing campaigns and an increase in interest checking, savings and money market deposits of $23.8 million. Growth in core deposits was partially offset by decreases in brokered funds of $10.4 million and demand deposits of $4.9 million. Due in part to the increase in deposit balances, the Company's Federal Home Loan Bank borrowings decreased $120.1 million at June 30, 2009 compared to June 30, 2008.
Asset Quality
"Asset quality continues to be monitored closely at Camden National," said Dufour. "In the current economic environment, we need to be vigilant and when necessary respond quickly to take appropriate action to mitigate risks on our balance sheet. We feel our risk management processes as well as our reserve levels provide us the flexibility to take the appropriate steps when required."
Non-performing assets totaled $22.3 million, or 0.97%, of total assets at June 30, 2009 compared to $14.0 million, or 0.61%, of total assets at June 30, 2008 and $20.4 million, or 0.89%, of total assets at March 31, 2009. The allowance for loan losses was 1.23% of total loans at June 30, 2009 compared to 1.13% of total loans at June 30, 2008 and 1.20% of total loans at March 31, 2009.
The provision for loan losses was $2.8 million for the three months ended June 30, 2009 and $450,000 for the three months ended June 30, 2008. The Company's loan loss reserve analysis called for an increase in loan loss provision in the second quarter due to increased charge-offs resulting from a general weakening of the economy. Net charge-offs were $1.8 million for the three months ended June 30, 2009 and $163,000 for the three months ended June 30, 2008.
Dividends and Capital
The Board of Directors approved a dividend of $0.25 per share, payable on July 31, 2009 for shareholders of record on July 15, 2009, which is equal to the dividend declared in the same period last year.
At June 30, 2009, the Company had a total risk-based capital ratio of 12.78%, a tier 1 capital ratio of 11.53%, and a tier 1 leverage capital ratio of 7.64%. At June 30, 2009, the Bank reported a total risk-based capital ratio of 11.88%, a tier 1 capital ratio of 10.63%, and a tier 1 leverage capital ratio of 6.97%. 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 and all of its employees understand the important role we have as community bankers. While we are addressing issues caused by the economic downturn, we are simultaneously providing loans and savings vehicles to our Bank customers as well as providing superior investment advice to our wealth management clients."
Camden National Corporation, headquartered in Camden, Maine, and listed on the NASDAQ® Global Select Market 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 the value of investments securities or other assets; 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 Six Months Ended June 30, June 30, (In thousands, except number of shares and per share data) 2009 2008 2009 2008 Interest income Interest and fees on loans $ 21,270 $ 24,409 $ 42,891 $ 49,723 Interest on securities and other 7,424 7,668 15,345 15,269 Total interest income 28,694 32,077 58,236 64,992 Interest expense Interest on deposits 5,936 7,559 12,330 16,501 Interest on borrowings 4,414 6,673 9,061 13,477 Total interest expense 10,350 14,232 21,391 29,978 Net interest income 18,344 17,845 36,845 35,014 Provision for loan losses 2,784 450 4,514 950 Net interest income after provision for loan losses 15,560 17,395 32,331 34,064 Non-interest income Service charges on deposit accounts 1,350 1,466 2,582 2,692 Other service charges and fees 810 696 1,424 1,335 Income from fiduciary services 1,508 1,699 2,861 3,378 Mortgage banking income (loss), net 416 (85 ) 871 (215 ) Bank-owned life insurance 345 285 740 578 Other income 615 644 1,120 1,154 Total non-interest income before net investment securities gains 5,044 4,705 9,598 8,922 Net investment securities gains - - - 180 Total non-interest income 5,044 4,705 9,598 9,102 Non-interest expenses Salaries and employee benefits 6,446 6,400 12,124 13,051 Net occupancy 969 1,010 2,092 2,081 Furniture and equipment 879 982 1,716 1,834 Consulting and service fees 750 729 1,442 1,443 OREO and collection costs 282 172 1,162 399 Regulatory assessments 1,740 98 2,611 259 Donations and marketing 329 472 582 820 Communication costs 407 404 824 798 Other expenses 1,614 1,646 3,154 3,489 Total non-interest expenses 13,416 11,913 25,707 24,174 Income before income taxes 7,188 10,187 16,222 18,992 Income taxes 2,184 3,080 5,004 5,691 Net income $ 5,004 $ 7,107 $ 11,218 $ 13,301 Selected Financial and Per Share Data: Return on average equity 11.54 % 16.69 % 13.24 % 15.77 % Return on average tangible equity 15.79 % 23.21 % 18.24 % 22.21 % Return on average assets 0.88 % 1.24 % 0.99 % 1.17 % Efficiency ratio (1) 57.36 % 52.83 % 55.35 % 55.02 % Basic earnings per share $ 0.66 $ 0.92 $ 1.47 $ 1.73 Diluted earnings per share $ 0.65 $ 0.92 $ 1.47 $ 1.73 Cash dividends paid per share $ 0.25 $ 0.25 $ 0.50 $ 0.49 Weighted average number of shares outstanding 7,641,083 7,695,798 7,640,119 7,694,326 (1) Computed by dividing non-interest expense by the sum of net interest income and non-interest income (excluding net investment securities gains).
