CAMDEN, Maine, April 24, 2012 - Camden National Corporation (NASDAQ: CAC; "Camden National" or "the Company") reported net income of $6.6 million for the first quarter of 2012, an increase of $244,000, or 4%, compared to the first quarter of 2011. Earnings per diluted share increased to $0.86 for the first quarter of 2012, from the $0.83 reported for the first quarter of 2011.
"Although the economic environment continues to be challenging, we are pleased to report that our earnings have remained strong," said Gregory A. Dufour, president and chief executive officer of Camden National Corporation. "Our return on assets increased to 1.15% for the first quarter of 2012, compared to 1.11% for the same period a year ago, and return on equity was 12.01% and 12.45% for the first quarters of 2012 and 2011, respectively."
First Quarter 2012 Financial Highlights
Earnings growth – net income grew 4% compared to a year ago, translating to a return on assets of 1.15%.
- Higher capital levels – Tier 1 leverage capital ratio increased to 9.70% at March 31, 2012, up from 8.93% a year ago.
- Stable revenue – non-interest income increased 2% and net interest income declined 1% from a year ago.
- Lower operating costs – non-interest expense decreased 3% compared to the first quarter of 2011.
- Stability of asset quality – non-performing asset levels have been consistent over the last three quarters and total past due loans have declined since year-end.
"Beyond strong financial results, our shareholders and customers want a bank they can trust," said Dufour. "I am proud to say that we were recently recognized by Forbes as one of America's '100 Most Trustworthy Companies.' This recognition reflects our culture and the service we provide to our customers, which are fundamental to being a trustworthy community bank."
Total assets at March 31, 2012, were $2.3 billion, an increase of $841,000 compared to March 31, 2011. At March 31, 2012, total loans were $1.5 billion, a decrease of $11.1 million, or 1%, compared to a year ago. The decrease in total loans was primarily related to the residential real estate portfolio, which declined $12.7 million as a result of the continued sale of thirty-year fixed rate mortgages, and a $2.5 million decline in the commercial loan portfolios, partially offset by an increase in the home equity portfolio of $3.8 million.
Total deposits were $1.6 billion at March 31, 2012, an increase of $11.1 million, or 1%, from a year ago. Core deposits, representing checking, savings, and money market accounts, grew $61.2 million, or 6%, partially offset by a $70.5 million decline in retail certificates of deposit as customers continue to migrate away from time deposits. The overall growth across the core deposit products reflects excess customer liquidity.
Asset Quality and the Provision for Credit Losses
"Camden National's overall credit quality remained stable during the first quarter of 2012," said Dufour. "Over the last three quarters, the non-performing asset level remained consistent; however, we continue to see a shift in our non-performing asset mix, with the stabilization of commercial credits and increased stresses in the residential and consumer portfolios."
Non-performing assets of $29.2 million, or 1.25% of total assets, at March 31, 2012, improved slightly compared to $29.3 million, or 1.27% of total assets, at December 31, 2011. The annualized net charge-offs of 0.26% for the first quarter of 2012 were lower than the fourth quarter 2011 ratio of 0.39%, and the allowance for credit losses to total loans decreased to 1.51% at March 31, 2012, compared to 1.52% at December 31, 2011. The provision for credit losses for the first quarter of 2012 was $1.0 million compared to $1.1 million for the same period a year ago.
Net Interest Income
Net interest income for the first quarter of 2012 was $18.4 million, a decrease of $188,000, or 1%, compared to the same period a year ago. The decrease in net interest income was primarily due to a $26.4 million decline in our average earning assets and a slight decline in our tax equivalent net interest margin of 1 basis point, to 3.48%, partially offset by a $40.3 million increase in average demand deposits and shareholders' equity.
Our average cost of interest-bearing liabilities decreased 34 basis points to 1.03% during the first quarter of 2012, compared to 1.37% for the same period in 2011, as we continued to lower deposit rates and experienced deposit growth in lower-costing core deposits. Yields on our earning assets declined 34 basis points to an average of 4.34% during the first quarter of 2012, from 4.68% in 2011, as cash flows were reinvested at lower rates.
Non-Interest Income and Non-Interest Expense
Non-interest income for the first quarter of 2012 was $5.2 million, an increase of $110,000, or 2%, compared to the same period in 2011. The increase was primarily due to an increase in mortgage banking income of $256,000 and a $183,000 increase in gains on the sale of securities, partially offset by a decline in bank-owned life insurance, resulting from non-recurring proceeds of $170,000 received during the first quarter last year.
Non-interest expense of $12.9 million for the first quarter of 2012 decreased $366,000, or 3%, compared to the first quarter of 2011. The decrease was primarily due to a $268,000 reduction in regulatory assessments as a result of a lower FDIC deposit assessment rate, a $184,000 decrease in consulting and professional fees, and $133,000 in reduced advertising costs. Other real estate owned ("OREO") and collections costs increased 27%, primarily due to the ongoing foreclosure costs associated with our consumer portfolio and a $96,000 increase in losses on the sale of OREO properties during the first quarter of 2012.
Dividends and Capital
The board of directors approved a dividend of $0.25 per share, payable on April 30, 2012, to shareholders of record on April 13, 2012. This resulted in an annualized dividend yield of 2.84%, based on the March 30, 2012, closing price of Camden National's common stock of $35.15 per share as reported by NASDAQ.
Camden National's total risk-based capital ratio increased to 16.16% at March 31, 2012, compared to 15.10% at March 31, 2011, as capital levels increased from retained earnings. Camden National and its wholly-owned subsidiary, Camden National Bank, exceeded the minimum total risk-based, Tier 1, and Tier 1 leverage ratios of 10.0%, 6.0%, and 5.0%, respectively, required by the Federal Reserve for an institution to be considered "well capitalized."
On September 27, 2011, the board of directors authorized the 2011 Common Stock Repurchase Program ("2011 Plan") for the repurchase of up to 500,000 shares, or approximately 6.5% of the Company's outstanding common stock. Under the 2011 Plan, Camden National has repurchased 13,241 shares of common stock at an average price of $29.34. The 2011 Plan will expire on October 1, 2012.
About Camden National Corporation
Camden National Corporation, recently recognized by Forbes as one of "America's Most Trustworthy Companies," is the holding company employing more than 400 Maine residents for two financial services companies including Camden National Bank and the wealth management company, Acadia Trust, N.A. Camden National Bank is a full-service community bank with a network of 38 banking offices throughout Maine. Acadia Trust offers investment management and fiduciary services with offices in Portland and Ellsworth. Located at Camden National Bank, Camden 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, including certain plans, expectations, goals, projections, and statements, which are subject to numerous risks, assumptions, and uncertainties. Forward-looking statements can be identified by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "plan," "target," or "goal," or future or conditional verbs such as "will," "may", "might", "should," "would", "could" 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 Camden National. These risks, uncertainties and other factors may cause the actual results, performance or achievements of Camden National 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, but are not limited to, the following: continued weakness in the United States economy in general and the regional and local economies within the New England region and Maine, which could result in a deterioration of credit quality, a change in the allowance for loan losses, or a reduced demand for the Company's credit or fee-based products and services; adverse changes in the local real estate market could result in a deterioration of credit quality and an increase in the allowance for loan loss, as most of the Company's loans are concentrated in Maine, and a substantial portion of these loans have real estate as collateral; changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; adverse changes in asset; competitive pressures, including continued industry consolidation, the increased financial services provided by non-banks and banking reform; continued volatility in the securities markets that could adversely affect the value or credit quality of the Company's assets, impairment of goodwill, the availability and terms of funding necessary to meet the Company's liquidity needs, and the Company's ability to originate loans and could lead to impairment in the value of securities in the Company's investment portfolios; changes in information technology that require increased capital spending; changes in consumer spending and savings habits; new laws and regulations regarding the financial services industry including but not limited to, the Dodd-Frank Wall Street Reform & Consumer Protection Act; changes in laws and regulations including laws and regulations concerning taxes, banking, securities and insurance; and changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters. Additional factors that could also cause results to differ materially from those described above can be found in our Annual Report on Form 10-K, as updated by our Quarterly Reports on Form 10-Q and other filings 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 Camden National does not promise and assumes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.
Use of Non-GAAP Financial Measures
In addition to evaluating the Company's results of operations in accordance with GAAP, management supplements this evaluation with certain non-GAAP financial measures, such as the efficiency and tangible equity ratios, tangible book value per share, and tax equivalent net interest income. We believe 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. The reconciliation to the comparable GAAP financial measure can be found in this document or the Form 8-K related to this document, all of which can be found on Camden National's website at www.camdennational.com.
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.