Camden National Corporation Reports Second Quarter 2018 Earnings

Q2 2018 vs. Q2 2017 Increase in Net Income of 19% and Diluted Earnings Per Share of 18%

PR Newswire

CAMDEN, Maine, July 31, 2018

CAMDEN, Maine, July 31, 2018 /PRNewswire/ -- Camden National Corporation CAC ", Camden National", or the ", Company", ))), a $4.2 billion bank holding company headquartered in Camden, Maine, reported net income for the second quarter of 2018 of $12.2 million and diluted earnings per share ("EPS") of $0.78 per share, representing increases over the second quarter of 2017 of 19% and 18%, respectively. For the second quarter of 2018, the Company's return on average assets was 1.19%, return on average equity was 12.10% and efficiency ratio¹ was 58.39%.

"We reported record high net income of $25.0 million for the first half of 2018 due to strong operating performance, solid asset quality and the benefit of the federal tax reform," said Gregory A. Dufour, President and Chief Executive Officer of Camden National. "Our return on average equity during this period was 12.50%, compared to 10.27% for the same period last year. We continue to deliver on our consistent, long-term strategy to gain market share and build and cultivate long-term relationships with our customers."

Dufour added, "We continue to focus on generating shareholder value. Late last year, we announced a 9% increase in our fourth quarter 2017 dividend, and recently announced a 20% increase in our second quarter 2018 dividend bringing the quarterly dividend to $0.30 per share."

For the six months ended June 30, 2018, the Company reported net income of $25.0 million and diluted EPS of $1.60 per share, representing increases over the same period last year of 23%. For the six months ended June 30, 2018, the Company's return on average assets was 1.24% and efficiency ratio was 58.57%.

"In April, we announced the re-appointment of Robin A. Sawyer, CPA as a member of the Company's Board of Directors," said Dufour. "We are thrilled to have Robin back. Her skill-set and experience within the financial industry and large-company experience complement the strengths of our already distinguished Board of Directors."



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

SECOND QUARTER 2018 FINANCIAL HIGHLIGHTS

Net income for the second quarter of 2018 increased $2.0 million, or 19%, over the second quarter of 2017, and decreased $603,000, or 5%, compared to last quarter.
Total loans grew $78.4 million in the second quarter of 2018, representing annualized loan growth of 11%.
Average low-cost deposits² for the second quarter of 2018 of $2.3 billion increased 10% over the second quarter of 2017, and 1% over last quarter.
Quarterly dividend to shareholders increased $0.05 per share, or 20%, to $0.30 per share, compared to the first quarter of 2018.

FINANCIAL CONDITION

Total assets of $4.2 billion at June 30, 2018 increased 3% since December 31, 2017 driven by loan growth, including loans held for sale, of $89.6 million, or 3%. For the first half of 2018, loan growth was driven by residential mortgages of $49.5 million, or 6%, followed by commercial real estate loan growth of $26.0 million, or 2%, and commercial loan growth, excluding the Healthcare Professional Funding Corporation ("HPFC"), of $13.0 million, or 3%.

The Company sold $93.0 million, or 47%, of its residential mortgage production originated in the first half of 2018, compared to $78.7 million sold, or 50%, over the same period last year.

Total funding at June 30, 2018 was $3.7 billion, representing an increase of 3% since December 31, 2017 led by low-cost deposit growth of $46.7 million, or 2%, and borrowings of $49.9 million, or 8%. Average deposits (excluding brokered deposits) for the six months ended June 30, 2018 were $2.8 billion, representing an increase of $206.2 million, or 8%, over the same period last year, which was driven by average low-cost deposit growth of 9%.

At June 30, 2018, our loan-to-deposit ratio was 94%, compared to 93% at December 31, 2017 and June 30, 2017.

The Company's capital position at June 30, 2018 was well in excess of regulatory requirements, including a total risk-based capital ratio of 14.33% and a Tier I leverage ratio of 9.30%. At June 30, 2018, the Company's tangible common equity ratio¹ was 7.59%.

ASSET QUALITY

The Company maintained strong asset quality across its loan portfolio with non-performing loans to total loans of 0.69% at June 30, 2018, compared to 1.12% at June 30, 2017. Asset quality improvement over the past year led to a decrease in the provision for credit losses of $1.5 million for the six months ended June 30, 2018 compared to the same period last year.

For the second quarter of 2018, a $983,000 provision for credit losses was recognized primarily attributable to loan growth of $78.4 million. Annualized net charge-offs to average loans for the second quarter of 2018 were 0.04%, compared to 0.11% for the second quarter of 2017. Loans 30-89 days past due to total loans at June 30, 2018 were 0.20%.



1	This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures" for further details.
2	Low-cost deposits include demand, interest checking, savings and money market.

OPERATING RESULTS (Second Quarter 2018 vs. Second Quarter 2017)

Net income for the second quarter of 2018 was $12.2 million, representing an increase over the second quarter of 2017 of $2.0 million, or 19%. The increase between periods was driven by:

A decrease in income tax expense of $1.8 million, or 39%, primarily due to a decrease in the Company's effective income tax rate as the federal corporate income tax rate was reduced under the Tax Cuts and Jobs Act of 2017 ("Tax Act"), which went into effect in 2018.
An increase in net interest income of $855,000, or 3%, driven by:

Average loan growth of 5% and a shift in funding mix due to strong average low-cost deposit growth of 10% between periods. For the second quarter of 2018, average low-cost deposits were 63% of average total funding, compared to 59% for the second quarter of 2017.
Net interest margin on a fully-taxable basis decreased 6 basis points between periods to 3.10% for the second quarter of 2018. The decrease in net interest margin between periods was due to (i) lower fair value mark accretion and recoveries on previously charged-off acquired loans of $283,000, which resulted in a decrease of 3 basis points between periods, and (ii) the change in the federal corporate income tax rate in 2018 accounted for a 3 basis points decrease between periods.

A decrease in provision for credit losses of $418,000 resulting from improved overall asset quality between periods.
Partially offset by:

An increase in non-interest expense of $737,000, or 3%, due to (i) an increase in employee-related costs of $566,000, or 5%, including normal merit increases, an increase in headcount, and other personnel-related expenses; (ii) an increase in professional and consulting fees of $263,000; and (iii) an increase in other expenses of $180,000 driven by recruiting and training costs. Intangible amortization expense decreased $291,000 between periods partially offsetting the aforementioned increases.
A decrease in non-interest income of $387,000, or 4%, primarily due to (i) a decrease in fees generated from the back-to-back commercial loan swap program of $483,000 and (ii) a decrease in mortgage banking income of $328,000 primarily driven by a decrease in fair value mark accounting on mortgage banking activities and lower gains on mortgage sales due to a 30 basis points decrease in the average gain rate.

OPERATING RESULTS (Linked Quarter)

Net income for the second quarter of 2018 decreased $603,000, or 5%, and diluted EPS decreased $0.04 per share, or 5%, compared to the previous quarter. The decrease between periods was driven by:

An increase in provision for credit losses of $1.5 million driven by 3% loan growth and the resolution of a large commercial real estate loan last quarter that drove a significant allowance for loan loss reversal.
An increase in non-interest expense of $591,000, or 3%, due to an increase in professional and consulting fees, collection-related costs and recruiting and training costs. Net occupancy costs decreased between periods as we enter the summer months.
Partially offset by an increase in revenues³ of $1.3 million, or 3%.

Non-interest income increased $697,000, or 8%, driven by an increase in mortgage banking income of $218,000, debit card income of $197,000 and fiduciary income, including brokerage and wealth management fees, totaling $124,000.
Net interest income increased $579,000, or 2%, driven by an increase in average interest-earning assets of $49.2 million led by average loan growth between periods. Net interest margin on a fully-taxable basis remained at 3.10% across periods.



3	Revenue is the sum of net interest income and non-interest income.

SECOND QUARTER 2018 DIVIDEND

The Company declared a second quarter 2018 dividend of $0.30 per share, payable on July 31, 2018, to shareholders of record as of July 13, 2018. This distribution represents an annualized dividend yield of 2.63%, based on the June 29, 2018 (last business day) closing price of Camden National's common stock at $45.71 per share as reported by NASDAQ.

CONFERENCE CALL

Camden National will host a conference call and webcast at 1:00 p.m., Eastern time, on Tuesday, July 31, 2018 to discuss its second quarter 2018 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/cac180731.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 CAC, headquartered in Camden, Maine, is the largest publicly traded bank holding company in Northern New England with $4.2 billion in assets and nearly 650 employees. Camden National Bank, its subsidiary, is a full-service community bank founded in 1875 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, 71 ATMs, and lending offices in New Hampshire and Massachusetts, all complemented by 24/7 live phone support. 2017 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 www.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 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, 2017, 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.

Selected Financial Data
(unaudited)

	At or For The Three Months Ended						At or For The Six Months Ended
(In thousands, except number of shares and per share data)	June 30, 2018		March 31, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Financial Condition Data
Investments	$	918,404	$	913,653	$	932,338	$	918,404	$	932,338
Loans and loans held for sale	2,880,185		2,798,696		2,747,053		2,880,185		2,747,053
Allowance for loan losses	23,668		22,990		24,394		23,668		24,394
Total assets	4,193,782		4,113,185		4,036,367		4,193,782		4,036,367
Deposits	3,056,119		3,025,580		2,940,866		3,056,119		2,940,866
Borrowings	661,393		622,347		641,662		661,393		641,662
Shareholders' equity	409,939		404,055		406,960		409,939		406,960
Operating Data
Net interest income	$	29,481	$	28,902	$	28,626	$	58,383	$	56,481
Provision (credit) for credit losses	983		(497)		1,401		486		1,980
Non-interest income	9,501		8,804		9,888		18,305		18,460
Non-interest expense	22,895		22,304		22,158		45,199		43,586
Income before income tax expense	15,104		15,899		14,955		31,003		29,375
Income tax expense	2,887		3,079		4,721		5,966		9,065
Net income	$	12,217	$	12,820	$	10,234	$	25,037	$	20,310
Key Ratios
Return on average assets	1.19%		1.28%		1.03%		1.24%		1.04%
Return on average equity	12.10%		12.91%		10.17%		12.50%		10.27%
Net interest margin	3.10%		3.10%		3.16%		3.10%		3.15%
Non-performing loans to total loans	0.69%		0.69%		1.12%		0.69%		1.12%
Non-performing assets to total assets	0.48%		0.47%		0.77%		0.48%		0.77%
Annualized net charge-offs to average loans	0.04%		0.10%		0.11%		0.07%		0.05%
Tier I leverage capital ratio	9.30%		9.23%		8.92%		9.30%		8.92%
Total risk-based capital ratio	14.33%		14.32%		13.87%		14.33%		13.87%
Per Share Data
Basic earnings per share	$	0.78	$	0.82	$	0.66	$	1.60	$	1.31
Diluted earnings per share	$	0.78	$	0.82	$	0.66	$	1.60	$	1.30
Cash dividends declared per share	$	0.30	$	0.25	$	0.23	$	0.55	$	0.46
Book value per share	$	26.32	$	25.96	$	26.23	$	26.32	$	26.23
Weighted average number of common shares outstanding	15,572,848		15,541,975		15,512,761		15,557,500		15,500,862
Diluted weighted average number of common shares outstanding	15,629,779		15,603,380		15,586,571		15,615,038		15,576,711
Non-GAAP Measures⁽¹⁾
Return on average tangible equity	16.23%		17.35%		13.96%		16.78%		14.16%
Efficiency ratio	58.39%		58.76%		56.76%		58.57%		57.36%
Tangible common equity ratio	7.59%		7.59%		7.79%		7.59%		7.79%
Tangible book value per share	$	19.94	$	19.57	$	19.75	$	19.94	$	19.75

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

Consolidated Statements of Condition Data
(unaudited)

(In thousands, except number of shares)	June 30, 2018		December 31, 2017		June 30, 2017
ASSETS
Cash and due from banks	$	49,542	$	44,057	$	46,989
Interest-bearing deposits in other banks	67,604		58,914		46,044
Total cash, cash equivalents and restricted cash	117,146		102,971		93,033
Investments:
Available-for-sale securities, at fair value	799,000		789,899		810,858
Held-to-maturity securities, at amortized cost (fair value of $91.6 million, $94.9 million and $95.0 million, respectively)	93,062		94,073		94,340
Other investments	26,342		23,670		27,140
Total investments	918,404		907,642		932,338
Loans held for sale, at fair value	12,656		8,103		10,784
Loans:
Residential real estate	907,910		858,369		831,577
Commercial real estate	1,190,052		1,164,023		1,138,756
Commercial⁽¹⁾	426,390		418,520		421,818
Consumer and home equity	343,177		341,527		344,118
Total loans	2,867,529		2,782,439		2,736,269
Less: allowance for loan losses	(23,668)		(24,171)		(24,394)
Net loans	2,843,861		2,758,268		2,711,875
Goodwill	94,697		94,697		94,697
Other intangible assets	4,592		4,955		5,820
Bank-owned life insurance	88,706		87,489		79,266
Premises and equipment, net	41,017		41,891		42,362
Deferred tax assets	25,506		22,776		36,532
Other assets	47,197		36,606		29,660
Total assets	$	4,193,782	$	4,065,398	$	4,036,367
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Demand	$	496,368	$	478,643	$	424,174
Interest checking	879,668		855,570		737,532
Savings and money market	990,408		985,508		971,156
Certificates of deposit	472,215		475,010		456,227
Brokered deposits	217,460		205,760		351,777
Total deposits	3,056,119		3,000,491		2,940,866
Short-term borrowings	591,648		541,796		572,004
Long-term borrowings	10,756		10,791		10,825
Subordinated debentures	58,989		58,911		58,833
Accrued interest and other liabilities	66,331		49,996		46,879
Total liabilities	3,783,843		3,661,985		3,629,407
Shareholders' equity	409,939		403,413		406,960
Total liabilities and shareholders' equity	$	4,193,782	$	4,065,398	$	4,036,367

(1) Includes the HPFC loan portfolio.

Consolidated Statements of Income Data
(unaudited)

	For The Three Months Ended
(In thousands, except per share data)	June 30, 2018		March 31, 2018		June 30, 2017
Interest Income
Interest and fees on loans	$	31,367	$	29,834	$	28,423
Interest on U.S. government and sponsored enterprise obligations (taxable)	4,386		4,225		4,355
Interest on state and political subdivision obligations (nontaxable)	658		672		691
Interest on deposits in other banks and other investments	678		547		471
Total interest income	37,089		35,278		33,940
Interest Expense
Interest on deposits	4,459		3,749		2,987
Interest on borrowings	2,298		1,780		1,476
Interest on subordinated debentures	851		847		851
Total interest expense	7,608		6,376		5,314
Net interest income	29,481		28,902		28,626
Provision (credit) for credit losses	983		(497)		1,401
Net interest income after provision (credit) for credit losses	28,498		29,399		27,225
Non-Interest Income
Debit card income	2,126		1,929		1,992
Service charges on deposit accounts	1,933		1,836		1,957
Mortgage banking income, net	1,609		1,391		1,937
Income from fiduciary services	1,407		1,283		1,355
Brokerage and insurance commissions	685		650		548
Bank-owned life insurance	609		608		570
Other service charges and fees	506		462		501
Net gain on sale of securities	31		—		—
Other income	595		645		1,028
Total non-interest income	9,501		8,804		9,888
Non-Interest Expense
Salaries and employee benefits	12,728		12,562		12,162
Furniture, equipment and data processing	2,549		2,586		2,450
Net occupancy costs	1,625		1,873		1,689
Consulting and professional fees	1,116		804		853
Debit card expense	776		730		712
Regulatory assessments	501		499		488
Amortization of intangible assets	181		181		472
Other real estate owned and collection costs, net	251		75		344
Other expenses	3,168		2,994		2,988
Total non-interest expense	22,895		22,304		22,158
Income before income tax expense	15,104		15,899		14,955
Income tax expense	2,887		3,079		4,721
Net Income	$	12,217	$	12,820	$	10,234
Per Share Data
Basic earnings per share	$	0.78	$	0.82	$	0.66
Diluted earnings per share	$	0.78	$	0.82	$	0.66

Consolidated Statements of Income Data
(unaudited)
	For The Six Months Ended June 30,
(In thousands, except per share data)	2018		2017
Interest Income
Interest and fees on loans	$	61,201	$	55,485
Interest on U.S. government and sponsored enterprise obligations (taxable)	8,611		8,611
Interest on state and political subdivision obligations (nontaxable)	1,330		1,393
Interest on federal funds sold and other investments	1,225		865
Total interest income	72,367		66,354
Interest Expense
Interest on deposits	8,208		5,541
Interest on borrowings	4,078		2,637
Interest on subordinated debentures	1,698		1,695
Total interest expense	13,984		9,873
Net interest income	58,383		56,481
Provision for credit losses	486		1,980
Net interest income after provision for credit losses	57,897		54,501
Non-Interest Income
Debit card income	4,055		3,826
Service charges on deposit accounts	3,769		3,780
Mortgage banking income, net	3,000		3,490
Income from fiduciary services	2,690		2,602
Brokerage and insurance commissions	1,335		1,001
Bank-owned life insurance	1,217		1,147
Other service charges and fees	968		969
Net gain on sale of securities	31		—
Other income	1,240		1,645
Total non-interest income	18,305		18,460
Non-Interest Expense
Salaries and employee benefits	25,290		24,095
Furniture, equipment and data processing	5,135		4,775
Net occupancy costs	3,498		3,635
Consulting and professional fees	1,920		1,698
Debit card expense	1,506		1,372
Regulatory assessments	1,000		1,033
Amortization of intangible assets	362		944
Other real estate owned and collection costs	326		300
Other expenses	6,162		5,734
Total non-interest expense	45,199		43,586
Income before income tax expense	31,003		29,375
Income tax expense	5,966		9,065
Net Income	$	25,037	$	20,310
Per Share Data
Basic earnings per share	$	1.60	$	1.31
Diluted earnings per share	$	1.60	$	1.30

Quarterly Average Balance and Yield/Rate Analysis
(unaudited)
	For The Three Months Ended
	Average Balance						Yield/Rate
(In thousands)	June 30, 2018		March 31, 2018		June 30, 2017		June 30, 2018	March 31, 2018	June 30, 2017
Assets
Interest-earning assets:
Interest-bearing deposits in other banks⁽¹⁾	$	58,500	$	52,510	$	37,337	1.57%	1.40%	1.01%
Securities - taxable	834,675		826,529		843,370		2.32%	2.22%	2.24%
Securities - nontaxable⁽²⁾	98,015		99,560		101,807		3.40%	3.42%	4.17%
Loans⁽³⁾⁽⁴⁾:
Residential real estate	884,977		860,783		826,353		4.20%	4.12%	4.12%
Commercial real estate	1,180,421		1,171,598		1,114,508		4.35%	4.20%	4.05%
Commercial⁽²⁾	351,711		349,963		334,761		4.42%	4.27%	4.23%
Municipal⁽²⁾	21,993		17,277		18,268		3.13%	3.33%	3.42%
Consumer and home equity	340,782		341,078		341,544		5.01%	4.76%	4.36%
HPFC	41,182		43,757		53,843		7.80%	7.99%	8.78%
Total loans	2,821,066		2,784,456		2,689,277		4.43%	4.30%	4.23%
Total interest-earning assets⁽¹⁾	3,812,256		3,763,055		3,671,791		3.90%	3.78%	3.74%
Other assets	294,752		292,312		307,608
Total assets	$	4,107,008	$	4,055,367	$	3,979,399

Liabilities & Shareholders' Equity
Deposits:
Demand	$	464,164	$	452,629	$	392,789	—%	—%	—%
Interest checking	839,510		833,410		732,096		0.47%	0.38%	0.18%
Savings	483,192		493,660		489,408		0.06%	0.06%	0.06%
Money market	507,545		487,685		477,734		0.82%	0.66%	0.49%
Certificates of deposit⁽⁴⁾	472,637		472,213		456,933		1.06%	1.00%	0.92%
Total deposits	2,767,048		2,739,597		2,548,960		0.48%	0.42%	0.32%
Borrowings:
Brokered deposits	239,105		238,870		349,762		1.89%	1.59%	1.08%
Customer repurchase agreements	247,789		237,056		232,295		1.03%	0.72%	0.49%
Subordinated debentures	58,970		58,930		58,814		5.79%	5.83%	5.80%
Other borrowings	330,096		328,141		345,155		2.02%	1.68%	1.38%
Total borrowings	875,960		862,997		986,026		1.96%	1.68%	1.33%
Total funding liabilities	3,643,008		3,602,594		3,534,986		0.84%	0.72%	0.60%
Other liabilities	59,126		50,147		40,790
Shareholders' equity	404,874		402,626		403,623
Total liabilities & shareholders' equity	$	4,107,008	$	4,055,367	$	3,979,399
Net interest rate spread (fully-taxable equivalent)⁽¹⁾							3.06%	3.06%	3.14%
Net interest margin (fully-taxable equivalent)⁽¹⁾							3.10%	3.10%	3.16%
Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection of previously charged-off acquired loans⁽¹⁾⁽⁴⁾							3.04%	3.04%	3.06%


(1)	Balances for the three months ended June 30, 2017 were revised to include average interest-bearing deposits in other banks in total average interest-earning assets. Previously, average interest-bearing deposits in other banks was presented in other assets.
(2)	Reported on a tax-equivalent basis using the corporate federal income tax rate in effect for the period, including certain commercial loans.
(3)	Non-accrual loans and loans held for sale are included in total average loans.
(4)	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 June 30, 2018, March 31, 2018 and June 30, 2017 totaling $578,000, $558,000 and $861,000, respectively.

Year-to-Date Average Balance and Yield/Rate Analysis (unaudited)
	For The Six Months Ended
	Average Balance				Yield/Rate
(In thousands)	June 30, 2018		June 30, 2017		June 30, 2018	June 30, 2017
Assets
Interest-earning assets:
Interest-bearing deposits in other banks⁽¹⁾	$	55,254	$	35,911	1.50%	0.86%
Securities - taxable	830,624		838,294		2.27%	2.22%
Securities - nontaxable⁽²⁾	98,783		102,364		3.41%	4.19%
Loans⁽³⁾⁽⁴⁾:
Residential real estate	872,947		820,522		4.16%	4.11%
Commercial real estate	1,176,034		1,095,425		4.28%	3.99%
Commercial⁽²⁾	350,842		327,527		4.35%	4.16%
Municipal⁽²⁾	19,648		17,176		3.22%	3.41%
Consumer and home equity	340,929		342,156		4.88%	4.34%
HPFC	42,462		56,035		7.89%	8.55%
Total loans	2,802,862		2,658,841		4.37%	4.19%
Total interest-earning assets⁽¹⁾	3,787,523		3,635,410		3.84%	3.70%
Other assets	293,807		306,419
Total assets	$	4,081,330	$	3,941,829

Liabilities & Shareholders' Equity
Deposits:
Demand	$	458,428	$	392,233	—%	—%
Interest checking	836,477		724,560		0.42%	0.17%
Savings	488,397		489,226		0.06%	0.06%
Money market	497,670		480,807		0.74%	0.47%
Certificates of deposit⁽⁴⁾	472,426		460,340		1.03%	0.90%
Total deposits	2,753,398		2,547,166		0.45%	0.31%
Borrowings:
Brokered deposits	238,988		329,292		1.74%	0.98%
Customer repurchase agreements	242,452		226,972		0.88%	0.41%
Subordinated debentures	58,950		58,795		5.81%	5.81%
Other borrowings	329,124		338,076		1.85%	1.30%
Total borrowings	869,514		953,135		1.82%	1.26%
Total funding liabilities	3,622,912		3,500,301		0.78%	0.57%
Other liabilities	54,662		42,552
Shareholders' equity	403,756		398,976
Total liabilities & shareholders' equity	$	4,081,330	$	3,941,829
Net interest rate spread (fully-taxable equivalent)⁽¹⁾					3.06%	3.13%
Net interest margin (fully-taxable equivalent)⁽¹⁾					3.10%	3.15%
Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection of previously charged- off acquired loans⁽¹⁾⁽⁴⁾					3.04%	3.06%


(1)	Balances for the six months ended June 30, 2017 were revised to include average interest-bearing deposits in other banks in total average interest-earning assets. Previously, average interest-bearing deposits in other banks was presented in other assets.
(2)	Reported on a tax-equivalent basis using the corporate federal income tax rate in effect for the period, including certain commercial loans.
(3)	Non-accrual loans and loans held for sale are included in total average loans.
(4)	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 six months ended June 30, 2018 and 2017 totaling $1.1 million and $1.7 million, respectively.

Asset Quality Data
(unaudited)

(In thousands)	At or For The Six Months Ended June 30, 2018		At or For The Three Months Ended March 31, 2018		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
Non-accrual loans:
Residential real estate	$	5,742	$	6,185	$	4,979	$	4,465	$	4,890
Commercial real estate	5,600		4,603		5,642		5,887		16,291
Commercial	1,934		1,991		2,000		1,830		2,056
Consumer	1,700		1,464		1,650		1,626		1,371
HPFC	834		655		1,043		838		1,083
Total non-accrual loans	15,810		14,898		15,314		14,646		25,691
Loans 90 days past due and accruing	—		—		—		—		76
Accruing troubled-debt restructured loans not included above	4,000		4,361		5,012		5,154		4,809
Total non-performing loans	19,810		19,259		20,326		19,800		30,576
Other real estate owned	130		130		130		341		341
Total non-performing assets	$	19,940	$	19,389	$	20,456	$	20,141	$	30,917
Loans 30-89 days past due:
Residential real estate	$	2,222	$	2,777	$	5,277	$	3,169	$	3,020
Commercial real estate	309		1,121		1,135		2,297		3,442
Commercial	1,490		243		518		712		269
Consumer	1,258		1,190		1,197		1,256		1,378
HPFC	455		528		887		938		639
Total loans 30-89 days past due	$	5,734	$	5,859	$	9,014	$	8,372	$	8,748
Allowance for loan losses at the beginning of the period	$	24,171	$	24,171	$	23,116	$	23,116	$	23,116
Provision (credit) for loan losses	490		(500)		3,026		2,786		1,984
Charge-offs:
Residential real estate	116		31		482		433		195
Commercial real estate	512		426		124		81		12
Commercial	298		171		1,014		650		281
Consumer	266		175		558		493		454
HPFC	—		—		290		274		81
Total charge-offs	1,192		803		2,468		1,931		1,023
Total recoveries	(199)		(122)		(497)		(442)		(317)
Net charge-offs	993		681		1,971		1,489		706
Allowance for loan losses at the end of the period	$	23,668	$	22,990	$	24,171	$	24,413	$	24,394
Components of allowance for credit losses:
Allowance for loan losses	$	23,668	$	22,990	$	24,171	$	24,413	$	24,394
Liability for unfunded credit commitments	16		23		20		22		7
Allowance for credit losses	$	23,684	$	23,013	$	24,191	$	24,435	$	24,401
Ratios:
Non-performing loans to total loans	0.69%		0.69%		0.73%		0.72%		1.12%
Non-performing assets to total assets	0.48%		0.47%		0.50%		0.50%		0.77%
Allowance for loan losses to total loans	0.83%		0.82%		0.87%		0.89%		0.89%
Net charge-offs to average loans (annualized):
Quarter-to-date	0.04%		0.10%		0.07%		0.11%		0.11%
Year-to-date	0.07%		0.10%		0.07%		0.07%		0.05%
Allowance for loan losses to non-performing loans	119.48%		119.37%		118.92%		123.30%		79.78%
Loans 30-89 days past due to total loans	0.20%		0.21%		0.32%		0.30%		0.32%

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

*Return on Average Tangible Equity:*
	For the Three Months Ended						For the Six Months Ended
(In thousands)	June 30, 2018		March 31, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Net income, as presented	$	12,217	$	12,820	$	10,234	$	25,037	$	20,310
Add: amortization of intangible assets, net of tax⁽¹⁾	143		143		307		286		614
Net income, adjusted for amortization of intangible assets	$	12,360	$	12,963	$	10,541	$	25,323	$	20,924
Average equity	$	404,874	$	402,626	$	403,623	$	403,756	$	398,976
Less: average goodwill and other intangible assets	(99,377)		(99,568)		(100,745)		(99,472)		(100,986)
Average tangible equity	$	305,497	$	303,058	$	302,878	$	304,284	$	297,990
Return on average tangible equity	16.23%		17.35%		13.96%		16.78%		14.16%
Return on average equity	12.10%		12.91%		10.17%		12.50%		10.27%

(1) Reported on a tax-equivalent basis using the corporate federal income tax rate in effect for the respective period.



*Efficiency Ratio:*
	For the Three Months Ended						For the Six Months Ended
(In thousands)	June 30, 2018		March 31, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Non-interest expense, as presented	$	22,895	$	22,304	$	22,158	$	45,199	$	43,586
Net interest income, as presented	$	29,481	$	28,902	$	28,626	$	58,383	$	56,481
Add: effect of tax-exempt income⁽¹⁾	257		254		525		511		1,045
Non-interest income, as presented	9,501		8,804		9,888		18,305		18,460
Less: net gain on sale of securities	(31)		—		—		(31)		—
Adjusted net interest income plus non- interest income	$	39,208	$	37,960	$	39,039	$	77,168	$	75,986
Non-GAAP efficiency ratio	58.39%		58.76%		56.76%		58.57%		57.36%
GAAP efficiency ratio	58.73%		59.15%		57.53%		58.94%		58.16%

(1) Reported on a tax-equivalent basis using the corporate federal income tax rate in effect for the respective period.



*Tangible Book Value Per Share and Tangible Common Equity Ratio:*
(In thousands, except number of shares and per share data)					June 30, 2018		March 31, 2018		June 30, 2017
*Tangible Book Value Per Share:*
Shareholders' equity, as presented					$	409,939	$	404,055	$	406,960
Less: goodwill and other intangible assets					(99,289)		(99,471)		(100,517)
Tangible shareholders' equity					$	310,650	$	304,584	$	306,443
Shares outstanding at period end					15,576,249		15,565,868		15,512,914
Tangible book value per share					$	19.94	$	19.57	$	19.75
Book value per share					$	26.32	$	25.96	$	26.23
*Tangible Common Equity Ratio:*
Total assets					$	4,193,782	$	4,113,185	$	4,036,367
Less: goodwill and other intangibles					(99,289)		(99,471)		(100,517)
Tangible assets					$	4,094,493	$	4,013,714	$	3,935,850
Tangible common equity ratio					7.59%		7.59%		7.79%
Shareholders' equity to total assets					9.77%		9.82%		10.08%

www.camdennational.com. (PRNewsFoto/Camden National Corporation) (PRNewsfoto/Camden National Corporation)

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SOURCE Camden National Corporation

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Camden National Corporation Reports Second Quarter 2018 Earnings

Camden National Corporation Reports Second Quarter 2018 Earnings

Q2 2018 vs. Q2 2017 Increase in Net Income of 19% and Diluted Earnings Per Share of 18%

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