Camden National Corporation Reports 2017 Fourth Quarter Financial Results

Camden, Maine, Jan. 30, 2018 - Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company"), a $4.1 billion bank holding company headquartered in Camden, Maine, reported net income for 2017 of $28.5 million and diluted earnings per share ("EPS") of $1.82 per share, compared to $40.1 million and $2.57 per share, respectively, a year ago. In the fourth quarter of 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was passed, and the Company recognized $14.3 million of additional income tax expense upon the revaluation of its deferred tax assets and liabilities. The Company's 2017 adjusted operating income 1 , which excludes the effect of the Tax Act, was $42.7 million, representing an increase of 7% over last year.

"The Company produced another year of strong financial results in 2017 led by loan growth of 7%, deposit growth of 6%, and improved asset quality over last year," said Gregory A. Dufour, President and Chief Executive Officer of the Company. "Like many other financial institutions and companies, we revalued our deferred tax balances using the lower federal corporate tax rate in the fourth quarter of 2017 that resulted in a one-time income tax charge. While the lower federal corporate tax rate drove a reported net loss for the fourth quarter and lowered our reported earnings for 2017, we expect that it will prove beneficial over the long-run through higher earnings and continued investment in our company to create long-term shareholder value."

The Company reported a net loss of $3.2 million for the fourth quarter of 2017. Adjusted operating income 1 , excluding the effect of the Tax Act, was $11.1 million, compared to $11.3 million for the third quarter of 2017.

"The anticipated future tax savings provided us an opportunity to recognize the dedication and contribution of our employees as we provided a special bonus to all non-executive employees. Additionally, we announced an increase in funds for future compensation practices and education to help ensure we attract and retain the best talent possible," shared Dufour. "Complementing our employee investments, we announced that we will also increase our philanthropic efforts in 2018, reflecting our continued commitment to our communities."

Mr. Dufour added, "In December, the Company announced a 9% increase in the fourth quarter 2017 dividend to $0.25 per share. At December 31, 2017, the Company exceeded all regulatory capital standards and reported a tangible common equity ratio 1 of 7.66%."



1

This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures" for further details.

YEAR-TO-DATE 2017 FINANCIAL HIGHLIGHTS

  • Adjusted operating income was $42.7 million, representing a $2.7 million, or 7%, increase over last year
  • Adjusted operating return on average assets 1 was 1.07% and adjusted operating return on average equity was 10.51%
  • Efficiency ratio 1 was 57.05%
  • Total loans grew 7% in 2017 and deposits grew 6% over the same period
  • Increased the fourth quarter 2017 dividend $0.02 per share, or 9%, to $0.25 per share

FINANCIAL CONDITION

Total assets at December 31, 2017 grew 5% over last year to $4.1 billion. The loan portfolio reached $2.8 billion at December 31, 2017, representing loan growth of $187.9 million, or 7%, in 2017. Commercial real estate loans led the way with growth of $113.2 million, or 11%, followed by residential mortgage loan growth of 7% and commercial loan growth of 6% in 2017. Over the same period, we experienced a 2% decline in consumer and home equity balances.

Total deposits at December 31, 2017 grew 6% over last year to $3.0 billion. Checking account growth led the way with an increase in demand and interest checking balances of 18% and 22%, respectively. Total borrowings for the Company increased 2% in 2017 to $552.6 million at December 31, 2017.

The Company's loan-to-deposit ratio at December 31, 2017 was 93%, compared to 92% at December 31, 2016.

Total shareholders' equity at December 31, 2017 increased 3% to $403.4 million since December 31, 2016. The Company's capital position remains in excess of regulatory requirements for "well capitalized" status with a total risk-based capital ratio of 14.14%.

ASSET QUALITY

The Company continues to have strong asset quality metrics with lower non-performing asset levels and lower net charge-offs. Non-performing loans at December 31, 2017 were $20.3 million, compared to $25.1 million at December 31, 2016. The Company's non-performing loans to total loans ratio at December 31, 2017 was 0.73%, compared to 0.97% at December 31, 2016.

The provision for credit losses for 2017 totaled $3.0 million, compared to $5.3 million last year. The decrease in expense of $2.2 million was driven by a decline in net charge-offs of $1.3 million and overall improved asset quality. The Company's annualized charge-offs to average loans ratio for 2017 was 0.07%, compared to 0.13% last year.

FINANCIAL OPERATING RESULTS (linked quarter)

The Company reported a net loss of $3.2 million for the fourth quarter of 2017 driven by additional income tax expense of $14.3 million as it revalued its deferred tax assets and liabilities for the lower federal corporate tax rate that was enacted in late December. Adjusted operating income 1 for the fourth quarter decreased $249,000 to $11.1 million, compared to last quarter. The decrease in adjusted operating income 1 between quarters was driven by:

  • An increase in non-interest expense of $1.3 million due to:
    • A discretionary cash bonus and related taxes totaling $709,000 awarded to all non-executive employees of the Company.
    • An increase in furniture, equipment and data processing costs of $261,000 due to new technology investments in the fourth quarter of 2017, including a commercial loan platform and a deposit account platform.
  • A decrease in non-interest income of $459,000 as the Company recognized $827,000 of gains on sale of investment securities last quarter, compared to $28,000 in the fourth quarter, partially offset by an increase in fees generated from the back-to-back commercial loan swap program of $637,000.
  • An increase in net interest income of $499,000 due to:
    • An increase in our loan yield of 3 basis points to 4.26% as a portion of our loan portfolio repriced due to increases in short-term interest rates; and
    • A change in our funding mix in the fourth quarter with strong core deposit growth driving a 2 basis point decrease in our cost of funds to 0.60%.
  • A decrease in the provision for credit losses of $579,000 driven by a decrease in net charge-offs of $301,000.


1

This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures" for further details.

FOURTH QUARTER 2017 DIVIDEND

The Company increased its fourth quarter 2017 dividend by $0.02 per share, or 9%, to $0.25 per share, payable on January 31, 2018, to shareholders of record as of January 15, 2018. This distribution represents an annualized dividend yield of 2.37%, based on the December 29, 2017 (last business day) closing price of Camden National's common stock at $42.13 per share as reported by NASDAQ.

ANNUAL MEETING

Camden National has scheduled its annual meeting of shareholders for Tuesday, April 24, 2018, at 3:00 p.m. local time, at Point Lookout Resort and Conference Center, 67 Atlantic Highway, Northport, Maine 04849. The date for determining the Company's shareholders of record for the annual meeting is February 23, 2018.

CONFERENCE CALL

Camden National will host a conference call and webcast at 3:30 p.m. eastern time on January 30, 2018 to discuss our fourth quarter and year-to-date 2017 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:

http://services.choruscall.com/links/cac180130.html

A link to the live webcast will be will be available on Camden National's website under "Investors" at CamdenNational.com prior to the meeting. The transcript of the conference call will also be available on Camden National's website approximately two business days after the conference call.

ABOUT CAMDEN NATIONAL CORPORATION

Camden National Corporation (NASDAQ:CAC), founded in 1875 and headquartered in Camden, Maine, is the largest publicly traded bank holding company in Northern New England with $4.1 billion in assets and nearly 650 employees. Camden National Bank, its subsidiary, is a full-service community bank that offers an array of consumer and business financial products and services, accompanied by the latest in digital banking technology to empower customers to bank the way they want. The Bank provides personalized service through a network of 60 banking centers, 76 ATMs, and lending offices in New Hampshire and Massachusetts, all complemented by 24/7 live phone support. This year marks the 8th time Camden National Bank has received the "Lender at Work for Maine" Award from the Finance Authority of Maine. 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, 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 changes in general economic conditions, changes in the interest rate environment, increased competitive pressures, operational risks including, but not limited to, cybersecurity, fraud and natural disasters, legislative and regulatory changes that adversely affect the business in which the Company is engaged, changes in the securities markets, and other risks and uncertainties disclosed from time to time in in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, as updated by other filings with the Securities and Exchange Commission ("SEC"). The Company 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 the efficiency ratio; tangible common equity ratio; adjusted operating income; adjusted operating diluted EPS; adjusted operating return on average assets; adjusted operating return on average equity; adjusted operating return on average tangible equity; and tangible book value per share. Management believes these non-GAAP financial measures help investors in understanding the Company's operating performance and trends and allow for better performance comparisons to other banks. 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.


Selected Financial Data

(unaudited)



At or For The

Three Months Ended


At or For The
Year Ended

(In thousands, except number of shares and per share data)


December 31,
 2017


September 30,
 2017


December 31,
 2016


December 31,
 2017


December 31,
 2016

Financial Condition Data











Investments


$

907,642



$

916,018



$

897,679



$

907,642



$

897,679


Loans and loans held for sale


2,790,542



2,761,287



2,609,400



2,790,542



2,609,400


Allowance for loan losses


24,171



24,413



23.116



24,171



23,116


Total assets


4,065,398



4,039,943



3,864,230



4,065,398



3,864,230


Deposits


3,000,491



2,956,413



2,828,529



3,000,491



2,828,529


Borrowings


611,498



608,607



599,675



611,498



599,675


Shareholders' equity


403,413



414,366



391,547



403,413



391,547


Operating Data











Net interest income


$

29,659



$

29,160



$

28,244



$

115,300



$

113,072


Provision for credit losses


238



817



255



3,035



5,258


Non-interest income


9,840



10,299



10,151



38,599



39,621


Non-interest expense


23,099



21,825



22,508



88,510



89,896


Income before income tax expense


16,162



16,817



15,632



62,354



57,539


Income tax expense


19,335



5,478



4,730



33,878



17,472


Net income (loss)


$

(3,173)



$

11,339



$

10,902



$

28,476



$

40,067


Key Ratios











Return on average assets


(0.31)

%


1.12

%


1.12

%


0.71

%


1.04

%

Return on average equity


(3.02)

%


10.93

%


11.01

%


7.00

%


10.47

%

Net interest margin


3.24

%


3.19

%


3.26

%


3.23

%


3.32

%

Non-performing loans to total loans


0.73

%


0.72

%


0.97

%


0.73

%


0.97

%

Non-performing assets to total assets


0.50

%


0.50

%


0.67

%


0.50

%


0.67

%

Annualized charge-offs to average loans


0.07

%


0.11

%


0.07

%


0.07

%


0.13

%

Tier I leverage capital ratio


9.07

%


9.01

%


8.83

%


9.07

%


8.83

%

Total risk-based capital ratio


14.14

%


14.09

%


14.04

%


14.14

%


14.04

%

Per Share Data











Basic earnings per share


$

(0.20)



$

0.72



$

0.70



$

1.83



$

2.59


Diluted earnings per share


$

(0.20)



$

0.72



$

0.70



$

1.82



$

2.57


Cash dividends declared per share


$

0.25



$

0.23



$

0.23



$

0.94



$

0.83


Book value per share


$

25.99



$

26.71



$

25.30



$

25.99



$

25.30


Weighted average number of common shares outstanding


15,521,447



15,515,189



15,457,498



15,509,665



15,422,160


Diluted weighted average number of common shares 
outstanding


15,521,447



15,589,008



15,569,346



15,588,347



15,504,239


Non-GAAP Measures(1)











Adjusted operating income


$

11,090



$

11,339



$

10,902



$

42,739



$

40,067


Adjusted operating return on average assets


1.09

%


1.12

%


1.12

%


1.07

%


1.04

%

Adjusted operating return on average equity


10.56

%


10.93

%


11.01

%


10.51

%


10.47

%

Adjusted operating return on average tangible equity


14.20

%


14.85

%


15.26

%


14.35

%


14.76

%

Tangible common equity ratio


7.66

%


7.98

%


7.71

%


7.66

%


7.71

%

Tangible book value per share


$

19.57



$

20.26



$

18.74



$

19.57



$

18.74


Adjusted operating diluted earnings per share


$

0.71



$

0.72



$

0.70



$

2.73



$

2.57


Efficiency ratio


57.75

%


55.72

%


57.89

%


57.05

%


57.53

%




(1) Please see "Reconciliation of non-GAAP to GAAP Financial Measures."



Consolidated Statements of Condition Data

(unaudited)






(In thousands, except number of shares)


December 31,
 2017


December 31,
 2016

ASSETS





Cash and due from banks


$

102,971



$

87,707


Investments:





Available-for-sale securities, at fair value


789,899



779,867


Held-to-maturity securities, at amortized cost


94,073



94,609


Federal Home Loan Bank and Federal Reserve Bank stock, at cost


23,670



23,203


Total investments


907,642



897,679


Loans held for sale, at fair value


8,103



14,836


Loans:





Residential real estate


858,369



802,494


Commercial real estate


1,164,023



1,050,780


Commercial(1)


418,520



394,051


Consumer and home equity


341,527



347,239


Total loans


2,782,439



2,594,564


Less: allowance for loan losses


(24,171)



(23,116)


Net loans


2,758,268



2,571,448


Goodwill


94,697



94,697


Other intangible assets


4,955



6,764


Bank-owned life insurance


87,489



78,119


Premises and equipment, net


41,891



42,873


Deferred tax assets


22,776



39,263


Other assets


36,606



30,844


Total assets


$

4,065,398



$

3,864,230


LIABILITIES AND SHAREHOLDERS' EQUITY





Liabilities





Deposits:





Demand


$

478,643



$

406,934


Interest checking


855,570



701,494


Savings and money market


985,508



979,263


Certificates of deposit


475,010



468,203


Brokered deposits


205,760



272,635


Total deposits


3,000,491



2,828,529


Short-term borrowings


541,867



530,129


Long-term borrowings


10,720



10,791


Subordinated debentures


58,911



58,755


Accrued interest and other liabilities


49,996



44,479


Total liabilities


3,661,985



3,472,683


Shareholders' equity


403,413



391,547


Total liabilities and shareholders' equity


$

4,065,398



$

3,864,230



(1) Includes the Healthcare Professional Funding Corporation ("HPFC") loan portfolio.

Consolidated Statements of Income Data

(unaudited)



For The

Three Months Ended

(In thousands, except per share data)


December 31,

2017


September 30,

2017


December 31,

2016

Interest Income







Interest and fees on loans


$

29,728



$

29,350



$

27,107


Interest on U.S. government and sponsored enterprise obligations


4,091



4,177



4,027


Interest on state and political subdivision obligations


685



686



709


Interest on federal funds sold and other investments


536



497



433


Total interest income


35,040



34,710



32,276


Interest Expense







Interest on deposits


3,243



3,027



2,278


Interest on borrowings


1,283



1,665



896


Interest on subordinated debentures


855



858



858


Total interest expense


5,381



5,550



4,032


Net interest income


29,659



29,160



28,244


Provision for credit losses


238



817



255


Net interest income after provision for credit losses


29,421



28,343



27,989


Non-Interest Income







Debit card income


2,192



2,061



1,928


Service charges on deposit accounts


1,897



1,852



1,854


Mortgage banking income, net


1,797



2,076



1,337


Income from fiduciary services


1,277



1,229



1,224


Bank-owned life insurance


620



603



695


Brokerage and insurance commissions


546



600



505


Other service charges and fees


471



589



468


Net gain on sale of securities


28



827



47


Other income


1,012



462



2,093


Total non-interest income


9,840



10,299



10,151


Non-Interest Expense







Salaries and employee benefits


13,083



12,359



12,438


Furniture, equipment and data processing


2,690



2,429



2,400


Net occupancy costs


1,650



1,599



1,736


Consulting and professional fees


706



714



625


Debit card expense


721



662



477


Regulatory assessments


559



574



615


Amortization of intangible assets


392



473



476


Other real estate owned and collection costs, net


413



258



1,099


Other expenses


2,885



2,757



2,642


Total non-interest expense


23,099



21,825



22,508


Income before income tax expense


16,162



16,817



15,632


Income tax expense


19,335



5,478



4,730


Net income (loss)


$

(3,173)



$

11,339



$

10,902


Per Share Data:







Basic earnings per share


$

(0.20)



$

0.72



$

0.70


Diluted earnings per share


$

(0.20)



$

0.72



$

0.70


Consolidated Statements of Income Data

(unaudited)



Year Ended

 December 31,

(In thousands, except per share data)


2017


2016

Interest Income





Interest and fees on loans


$

114,563



$

109,224


Interest on U.S. government and sponsored enterprise obligations


16,879



16,082


Interest on state and political subdivision obligations


2,764



2,836


Interest on federal funds sold and other investments


1,898



1,484


Total interest income


136,104



129,626


Interest Expense





Interest on deposits


11,811



8,633


Interest on borrowings


5,585



4,506


Interest on subordinated debentures


3,408



3,415


Total interest expense


20,804



16,554


Net interest income


115,300



113,072


Provision for credit losses


3,035



5,258


Net interest income after provision for credit losses


112,265



107,814


Non-Interest Income





Debit card income


8,079



7,578


Service charges on deposit accounts


7,529



7,210


Mortgage banking income, net


7,363



6,258


Income from fiduciary services


5,108



4,960


Bank-owned life insurance


2,370



2,594


Brokerage and insurance commissions


2,147



2,074


Other service charges and fees


2,029



1,962


Net gain on sale of securities


855



51


Other income


3,119



6,934


Total non-interest income


38,599



39,621


Non-Interest Expense





Salaries and employee benefits


49,965



48,072


Furniture, equipment and data processing


9,894



9,557


Net occupancy costs


6,884



7,088


Consulting and professional fees


3,118



3,234


Debit card expense


2,755



2,584


Regulatory assessments


2,166



2,777


Amortization of intangible assets


1,809



1,903


Other real estate owned and collection costs, net


971



3,128


Merger and acquisition costs




866


Other expenses


10,948



10,687


Total non-interest expense


88,510



89,896


Income before income tax expense


62,354



57,539


Income tax expense


33,878



17,472


Net income


$

28,476



$

40,067


Per Share Data:





Basic earnings per share


$

1.83



$

2.59


Diluted earnings per share


$

1.82



$

2.57


Quarterly Average Balance, Interest and Yield/Rate Analysis

(unaudited)



 For the Three Months Ended



Average Balance


Yield/Rate

(In thousands)


December 31,

2017


September 30,

2017


December 31,

2016


December 31,

2017


September 30,

2017


December 31,

2016

Assets













Interest-earning assets:













Securities - taxable


$

811,006



$

819,778



$

791,565



2.28

%


2.28

%


2.25

%

Securities - nontaxable(1)


101,371



101,507



103,904



4.16

%


4.16

%


4.20

%

Loans(2)(3):













Residential real estate


861,658



851,828



813,846



4.15

%


4.09

%


4.15

%

Commercial real estate


1,153,842



1,136,851



1,051,346



4.15

%


4.07

%


3.92

%

Commercial(1)


343,921



347,469



299,425



4.12

%


4.18

%


3.96

%

Municipal(1)


18,442



24,847



20,971



3.73

%


3.24

%


2.90

%

Consumer and home equity


343,942



345,533



349,202



4.54

%


4.58

%


4.23

%

HPFC


46,565



49,619



63,662



8.14

%


8.38

%


8.44

%

Total loans


2,768,370



2,756,147



2,598,452



4.26

%


4.23

%


4.14

%

Total interest-earning assets


3,680,747



3,677,432



3,493,921



3.82

%


3.79

%


3.72

%

Other assets


358,349



352,711



368,323








Total assets


$

4,039,096



$

4,030,143



$

3,862,244





















Liabilities & Shareholders' Equity













Deposits:













Demand


$

486,753



$

450,350



$

428,057



%


%


%

Interest checking


824,247



727,959



728,563



0.28

%


0.19

%


0.15

%

Savings


497,929



493,447



481,630



0.06

%


0.07

%


0.06

%

Money market


489,426



469,458



503,688



0.58

%


0.53

%


0.41

%

Certificates of deposit(3)


490,779



454,013



477,569



0.90

%


0.83

%


0.80

%

Total deposits


2,789,134



2,595,227



2,619,507



0.36

%


0.31

%


0.28

%

Borrowings:













Brokered deposits


217,328



310,207



276,347



1.35

%


1.30

%


0.65

%

Customer repurchase agreements


254,529



222,386



229,020



0.50

%


0.51

%


0.29

%

Subordinated debentures


58,892



58,853



58,736



5.76

%


5.78

%


5.81

%

Other borrowings


257,420



386,643



231,688



1.48

%


1.42

%


1.25

%

Total borrowings


788,169



978,089



795,791



1.45

%


1.43

%


1.10

%

Total funding liabilities


3,577,303



3,573,316



3,415,298



0.60

%


0.62

%


0.47

%

Other liabilities


44,979



45,330



52,942








Shareholders' equity


416,814



411,497



394,004








Total liabilities & shareholders' equity


$

4,039,096



$

4,030,143



$

3,862,244








Net interest rate spread (fully-taxable equivalent)


3.22

%


3.17

%


3.25

%

Net interest margin (fully-taxable equivalent)


3.24

%


3.19

%


3.26

%

Net interest margin (fully-taxable equivalent), excluding fair value mark 
accretion and collection of previously charged-off acquired loans(3)


3.17

%


3.11

%


3.14

%



(1)

Reported on tax-equivalent basis calculated using a tax rate of 35%, including certain commercial loans.

(2)

Non-accrual loans and loans held for sale are included in total average loans.

(3)

Excludes the impact of the fair value mark accretion on loans and certificates of deposit generated in purchase accounting 
and collection of previously charged-off acquired loans for the three months ended December 31, 2017, September 30, 2017 and 
December 31, 2016 totaling $689,000, $804,000 and $1.0 million, respectively.

Year-to-Date Average Balance, Interest and Yield/Rate Analysis

(unaudited)



For the Year Ended



Average Balance


Yield/Rate

(In thousands)


December 31,

2017


December 31,

2016


December 31,

2017


December 31,

2016

Assets









Interest-earning assets:









Securities - taxable


$

826,749



$

796,423



2.27

%


2.21

%

Securities - nontaxable(1)


101,898



103,086



4.17

%


4.23

%

Loans(2)(3):









Residential real estate


838,781



822,690



4.12

%


4.18

%

Commercial real estate


1,120,591



1,004,169



4.11

%


4.11

%

Commercial(1)


336,685



292,709



4.21

%


4.22

%

Municipal(1)


19,428



19,238



3.43

%


2.97

%

Consumer and home equity


343,457



358,098



4.45

%


4.22

%

HPFC


52,031



70,188



8.53

%


8.82

%

Total loans


2,710,973



2,567,092



4.25

%


4.28

%

Total interest-earning assets


3,639,620



3,466,601



3.80

%


3.80

%

Other assets


348,986



370,096






Total assets


$

3,988,606



$

3,836,697















Liabilities & Shareholders' Equity









Deposits:









Demand


$

430,706



$

386,189



%


%

Interest checking


750,543



724,222



0.21

%


0.13

%

Savings


492,483



461,794



0.06

%


0.06

%

Money market


480,119



490,155



0.52

%


0.42

%

Certificates of deposit(3)


466,418



489,040



0.88

%


0.78

%

Total deposits


2,620,269



2,551,400



0.32

%


0.28

%

Borrowings:









Brokered deposits


296,261



231,610



1.13

%


0.69

%

Customer repurchase agreements


232,762



198,403



0.46

%


0.28

%

Subordinated debentures


58,834



58,718



5.79

%


5.82

%

Other borrowings


329,988



359,281



1.37

%


1.10

%

Total borrowings


917,845



848,012



1.35

%


1.12

%

Total funding liabilities


3,538,114



3,399,412



0.59

%


0.49

%

Other liabilities


43,864



54,778






Shareholders' equity


406,628



382,507






Total liabilities & shareholders' equity


$

3,988,606



$

3,836,697






Net interest rate spread (fully-taxable equivalent)


3.21

%


3.31

%

Net interest margin (fully-taxable equivalent)


3.23

%


3.32

%

Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection of previously charged-off acquired loans(3)


3.14

%


3.15

%



(1)

Reported on tax-equivalent basis calculated using a tax rate of 35%, including certain commercial loans.

(2)

Non-accrual loans and loans held for sale are included in total average loans.

(3)

Excludes the impact of the fair value mark accretion on loans and certificates of deposit generated in purchase accounting
and collection of previously charged-off acquired loans for the year ended December 31, 2017 and 2016 totaling $3.2 million 
and $6.2 million, respectively.

Asset Quality Data (unaudited)

(In thousands)


At or For The

Year Ended

December 31, 2017


At or For The
Nine Months Ended 
September 30, 2017


At or For The
Six Months Ended 
June 30, 2017


At or For The
Three Months Ended 
March 31, 2017


At or For The
Year Ended 
December 31, 2016

Non-accrual loans:











Residential real estate


$

4,979



$

4,465



$

4,890



$

4,105



$

3,945


Commercial real estate


5,642



5,887



16,291



12,858



12,849


Commercial


2,000



1,830



2,056



1,994



2,088


Consumer


1,650



1,626



1,371



1,552



1,624


HPFC


1,043



838



1,083



1,014



207


Total non-accrual loans


15,314



14,646



25,691



21,523



20,713


Loans 90 days past due and accruing






76






Accruing troubled-debt restructured loans not 
included above


5,012



5,154



4,809



4,558



4,338


Total non-performing loans


20,326



19,800



30,576



26,081



25,051


Other real estate owned:











Residential real estate








14



14


Commercial real estate


130



341



341



607



908


Total other real estate owned


130



341



341



621



922


Total non-performing assets


$

20,456



$

20,141



$

30,917



$

26,702



$

25,973


Loans 30-89 days past due:











Residential real estate


$

5,277



$

3,169



$

3,020



$

2,379



$

2,470


Commercial real estate


1,135



2,297



3,442



2,531



971


Commercial


518



712



269



168



851


Consumer


1,197



1,256



1,378



1,008



1,018


HPFC


887



938



639



777



1,029


Total loans 30-89 days past due


$

9,014



$

8,372



$

8,748



$

6,863



$

6,339


Allowance for loan losses at the beginning of 
the period


$

23,116



$

23,116



$

23,116



$

23,116



$

21,166


Provision for loan losses


3,026



2,786



1,984



581



5,269


Charge-offs:











Residential real estate


482



433



195



5



356


Commercial real estate


124



81



12



3



315


Commercial


1,014



650



281



136



2,218


Consumer


558



493



454



15



409


HPFC


290



274



81





507


Total charge-offs


2,468



1,931



1,023



159



3,805


Total recoveries


(497)



(442)



(317)



(183)



(486)


Net charge-offs (recoveries)


1,971



1,489



706



(24)



3,319


Allowance for loan losses at the end of the 
period


$

24,171



$

24,413



$

24,394



$

23,721



$

23,116


Components of allowance for credit losses:











Allowance for loan losses


$

24,171



$

24,413



$

24,394



$

23,721



$

23,116


Liability for unfunded credit commitments


20



22



7



9



11


Allowance for credit losses


$

24,191



$

24,435



$

24,401



$

23,730



$

23,127


Ratios:











Non-performing loans to total loans


0.73

%


0.72

%


1.12

%


0.99

%


0.97

%

Non-performing assets to total assets


0.50

%


0.50

%


0.77

%


0.68

%


0.67

%

Allowance for loan losses to total loans


0.87

%


0.89

%


0.89

%


0.90

%


0.89

%

Net charge-offs to average loans (annualized)











Quarter-to-date


0.07

%


0.11

%


0.11

%


%


0.07

%

Year-to-date


0.07

%


0.07

%


0.05

%


%


0.13

%

Allowance for loan losses to non-performing loans


118.92

%


123.30

%


79.78

%


90.95

%


92.28

%

Loans 30-89 days past due to total loans


0.32

%


0.30

%


0.32

%


0.26

%


0.24

%

Reconciliation of non-GAAP to GAAP Financial Measures (unaudited)


Efficiency Ratio:



For the

Three Months Ended


For the
Year Ended

(In thousands)


December 31,
 2017


September 30,
 2017


December 31,
 2016


December 31,
 2017


December 31,
 2016

Non-interest expense, as presented


$

23,099



$

21,825



$

22,508



$

88,510



$

89,896


Less: merger and acquisition costs










(866)


Adjusted non-interest expense


$

23,099



$

21,825



$

22,508



$

88,510



$

89,030


Net interest income, as presented


$

29,659



$

29,160



$

28,244



$

115,300



$

113,072


Add: effect of tax-exempt income(1)


525



535



533



2,105



2,121


Non-interest income, as presented


9,840



10,299



10,151



38,599



39,621


Less: net gain on sale of securities


(28)



(827)



(47)



(855)



(51)


Adjusted net interest income plus non-interest income