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| 8-K - 8-K - CAMDEN NATIONAL CORP | a8k_110514investorpresenta.htm |
November 5, 2014 NASDAQ: CAC 1
Safe Harbor Statement The information presented may contain forward‐looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon current beliefs and expectations and are subject to significant risks and uncertainties some of which are beyond Camden National Corporation’s control. Actual results may differ materially from the results discussed in these forward‐looking statements. Certain factors that could cause Camden National Corporation’s results to differ materially can be found in the risk factors set forth in Camden National Corporation’s Annual Report on Form 10‐K for the year ended December 31, 2013, as updated by Camden National Corporation’s Quarterly Reports on Form 10‐Q and other filings with the SEC. Camden National Corporation does not have any obligation to update forward‐looking statements. 2
Camden National Corporation Camden National Corporation is a Maine‐based community bank focused on delivering long‐ term shareholder value through banking, brokerage and wealth management services in Maine, New Hampshire and select markets of Northern New England. 3
Camden National Corporation Overview Corporate Snapshot • Headquartered in Camden, ME; Founded 1875 • Subsidiaries: • Camden National Bank ‐ $2.7 billion Assets • Acadia Trust ‐ $708 million AUM • 480 Employees • 44 Branch Locations Financial Overview Shareholder Profile • Shares Outstanding 7.4 million • Institutional /Mutual Funds 46% • Insiders 2% / Other 52% • Tangible Book Value per Share $25.80 • Tangible Common Equity/Tangible Assets 7.11% • Stock Price/ Tangible Book Value 158% (CAC stock closed at $40.71 on 10/30/14) Events • Opened commercial loan production office in Manchester, New Hampshire (2014) • Named “Financial Institution of the Year” by Finance Authority of Maine (last four years) • Sold 5 branches with $80 million of deposits and $46 million of loans (2013) • Acquired 14 branches and $287 million of deposits from Bank of America (2012) Sept 30, Dec 31, Dec 31, (in 000's) 2014 2013 2012 Loans $1,726 $1,580 $1,564 Assets $2,742 $2,604 $2,565 Deposits $1,929 $1,814 $1,929 Equity $240 $231 $234 Return on Assets 0.93% 0.88% 0.98% Return on Tangible Equity 13.71% 14.55% 13.19% 4
Camden National Corporation Profile • Founded 1875 in Camden, Maine • Largest publicly traded community bank in Maine and Northern New England • Second largest Maine based bank • Fourth in the state for deposit market share Source: SNL Financial 5
(in 000’s) 9/30/14 9/30/13 Loans (a) $1,726 $1,590 Investment Securities 804 803 Total Assets 2,742 2,597 Deposits (b) 1,929 1,973 Borrowings 541 347 Shareholders’ Equity 240 232 (a) Loan growth since 9/30/13 of $182.6 million, or 12%, after adjusting for $46.0 million of divested loans. (b) Deposit growth since 9/30/13 of $35.6 million, or 2%, after adjusting for sold deposits of $80.4 million. Financial Highlights As of September 30, 2014 and 2013 6
9/30/14 9/30/13 Net Income (in millions) (a) $18.5 $18.4 Diluted Earnings per Share $2.46 $2.39 Return on Tangible Equity 13.71% 14.01% Return on Assets 0.93% 0.95% Efficiency Ratio 61.01% 61.81% Net Interest Margin 3.10% 3.21% (a) 2013 results include net income contribution of $424,000 from branches sold in October 2013. Financial Highlights For nine months ended September 30, 2014 and 2013 7
Commercial 14% Commercial Real Estate 36% Residential Mortgages 33% Home Equity/ Consumer 17% Loan Mix 9/30/14 Total Loans: $1.73 billion Yield: 4.23% Loan Profile • $36 million legal lending limit • Largest relationship $28 million • Top industry exposures: • Nonresidential building operators of $168 million • Lodging of $163 million $‐ $150 $300 $450 $600 $750 $900 $1,050 2008 2009 2010 2011 2012 2013 2014 M i l l i o n s Commercial Retail Change in Portfolio Mix 8
Portfolio Stats Market Value $783 Million Average Yield 2.25% Duration 3.87 Years Premium $7.4 Million Premium as % of Portfolio 0.95% Investment Portfolio As of 9/30/14 Excludes FRB/FHLB stock of $20 million MBS 48% Agency CMO 46% Municipals 5% Non‐Agency 1% Book Value ‐ $788 Million 9
Checking 31% Savings/Money Market 27% CD's 20% Borrowings 22% Funding Mix Funding: $2.47 billion Total Funding Cost: 0.50% Deposit Cost: 0.28% Funding As of 9/30/14 $‐ $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2008 2009 2010 2011 2012 2013 2014 M i l l i o n s Core Deposits CDs & Borrowings Change in Funding Mix 10
Net Interest Margin 3.55% 3.58% 3.60% 3.54% 3.47% 3.64% 3.51% 3.53% 3.45% 3.37% 3.29% 3.19% 3.24% 3.22% 3.14% 3.10% 3.05% 3.10% 3.10% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% Quarterly NIM Estimated Changes In Net Interest Income Year 1 +400bp ‐6.0% +200 bp ‐6.1% ‐100 bp ‐0.4% Year 2 +400bp ‐10.6% +200 bp ‐5.2% ‐100 bp ‐3.4% 6.03% 5.42% 5.04% 4.65% 4.14% 3.73% 3.59% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 2008 2009 2010 2011 2012 2013 2014Q2 2.69% 1.94% 1.47% 1.12% 0.81% 0.55% 0.51% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 2008 2009 2010 2011 2012 2013 2014Q2 Cost of FundsAverage Asset Yield Proxy Peer – Average of 17 publicly traded commercial and savings banks in the Northeast (as of 6/30/14) National Peer – 227 Banks and Thrifts $1‐$5 billion‐excl. merger targets (as of 6/30/14) Source: SNL Financial Interest Rate Risk (Assumes flat balance sheet and no change in asset/funding mix) 11
Why Camden National? • Earnings power and capital generation to fund growth • Successful record of acquired and organic growth • Disciplined risk management • Strategic repositioning for future shareholder value • Long‐term value and return to shareholders 12
Solid Earnings Performance to Fund Growth • Investment in branches, lenders, and technology impact financial performance in the short‐term • Driven to create consistent returns for our shareholders • Efficient operations focused on revenue generation Proxy Peer – Average of 17 publicly traded commercial and savings banks in the Northeast (as of 6/30/14) National Peer – 227 Banks and Thrifts $1‐$5 billion‐excl. merger targets (as of 6/30/14) Source: SNL Financial Highlights Return on Average Assets Return on Average Tangible Common Equity Efficiency Ratio (FTE) 12.71% 17.67% 16.40% 15.66% 13.15% 13.94% 13.50% 0.00% 5.00% 10.00% 15.00% 20.00% 2008 2009 2010 2011 2012 2013 2014Q2 0.67% 1.00% 1.09% 1.13% 0.98% 0.88% 0.91% ‐0.50% 0.00% 0.50% 1.00% 1.50% 2008 2009 2010 2011 2012 2013 2014Q2 52.44% 54.26% 55.74% 54.68% 57.45% 62.78% 62.07% 40.00% 50.00% 60.00% 70.00% 80.00% 2008 2009 2010 2011 2012 2013 2014Q2 13
Solid Track Record of Organic and Acquired Growth Asset Growth History Source: SNL Financial $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total Assets (in millions) United Corp. $54 million KSB Bancorp $179 million Union Bankshares $565 million Bank of America 14 Branches $6 million loans $287 million deposits Branch Sale 5 Branches $46 million loans $80 million depositsOver 20 year period Organic growth $1,146 million Acquired growth 1,140 million Total growth $2,286 million Key Bank 4 Branches $54 million 14
Disciplined Risk Management Culture • Strong capital growth to support future growth • Credit quality consistent with Northeast peer group • Stable asset quality through economic downturn NPAs to Total Assets Net Charge Offs to Average Loans Total Risk Based CapitalHighlights 12.32% 13.49% 15.05% 15.95% 15.56% 16.45% 15.32% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 2008 2009 2010 2011 2012 2013 2014Q2 0.71% 1.07% 1.05% 1.26% 1.11% 1.16% 1.05% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 2008 2009 2010 2011 2012 2013 2014Q2 0.31% 0.37% 0.28% 0.26% 0.24% 0.22% 0.10% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 2008 2009 2010 2011 2012 2013 2014Q2 Proxy Peer – Average of 17 publicly traded commercial and savings banks in the Northeast (as of 6/30/14) National Peer – 227 Banks and Thrifts $1‐$5 billion‐excl. merger targets (as of 6/30/14) Source: SNL Financial 15
Source: SNL Financial Strategic Repositioning Focus on Growth Markets Franklin County Branch Divestiture ($80MM Deposits) I‐95 Corridor BofA Branch Acquisition ($287MM Deposits) Mid‐Coast Region ($917MM Deposits) 16
• Branch Acquisitions • Acquisition of 14 branches from Bank of America resulted in $287 million in core deposits • Increased our market share in Maine and improved presence in growth markets • Earn back of Tangible Book Value within four years • Branch Divestitures/Consolidation • Sold five branches in Franklin County in 2013 • $80 million of deposits and $46 million of loans at deposit premium of 3.5% • 2014 EPS dilution of 3% will be mitigated by stock repurchases • Combined two Kennebunk branches during 2nd quarter 2013 Strategic Repositioning Preparing for the Future 17
• Talent Acquisition and Development • Hired 10 commercial bankers and mortgage originators • Improved credit administration • Internal management programs • New Markets – Manchester, New Hampshire • Experienced commercial real estate lender with 25 years • Loan production office based delivery platform • Technology Investments • Web, mobile, phone banking – Q2 • Outsource core processing – Jack Henry Outlink • Mortgage loan platform – Encompass 360 • AML/BSA system – Verafin Strategic Repositioning Preparing for the Future 18
Long Term Value Consistent Shareholder Returns • Earnings per share compound annual growth of 6.53% over a 15‐year period • Tangible book value compound annual growth of 7.62% over a 15‐year period $1.27 $1.69 $1.89 $2.11 $2.38 $2.53 $2.80 $2.93 $3.09 $2.00 $2.98 $3.23 $3.40 $3.05 $2.97 $3.28 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Earnings Per Share $8.57 $10.34 $11.81 $13.77$14.48 $15.65$16.40$15.40 $17.79 $15.62 $18.86 $20.91 $22.66 $23.68$23.98 $25.80 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Tangible Book Value 19
• Consistent quarterly dividends and periodic special dividends • Dividend yield compared to National Peer Long Term Value Dividend Commitment Dividend Yield 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 2008Y 2009Y 2010Y 2011Y 2012Y 2013Y MRQ Current Nationwide Peer Group ( Banks and Thrifts $1-5B, excl. Merger Targets) Median Camden National Corporation $0.99 $1.00 $1.00 $1.50 $1.00 $1.08 $1.08 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 2008 2009 2010 2011 2012 2013 2014 Dividends Per Share 20
• Compared to NASDAQ Bank and S&P 500 Bank • Compared to Proxy Peer Group Long Term Value Relative Total Return Performance (10‐Year) 55.4% (15.8%) (37.9%) (100.0%) (80.0%) (60.0%) (40.0%) (20.0%) 0.0% 20.0% 40.0% 60.0% 80.0% Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 CAC NASDAQ Bank S&P 500 Bank 55.4% 42.2% (60.0%) (40.0%) (20.0%) 0.0% 20.0% 40.0% 60.0% 80.0% Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 CAC CAC Proxy Peers 21
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Seasoned Management Team Age Years of Banking Experience Year joined Camden Greg Dufour, President and CEO 54 25+ 2001 Debbie Jordan, CPA, EVP and CFO 49 20+ 2008 Joanne Campbell, EVP Risk Management 52 30+ 1996 Peter Greene, EVP Operations and Technology 55 30+ 2008 Tim Nightingale, EVP Senior Loan Officer 57 30+ 2000 June Parent, EVP Retail Banking 51 25+ 1995 23
Market Demographics Current Southern Southern Footprint ME NH Market Segments & Growth Total Households 291,602 202,605 453,657 Projected Growth, 2014 to 2019 0.2% 1.9% 1.3% Mass Affluent Households 78,216 102,179 259,169 % of Total Households 26.8% 50.4% 57.1% Number of Businesses 41,767 32,627 65,959 Data Source: Nielsen, Inc. 24
Deposit Market Share 62% 6% 16% 10% 8% 25% 7% 2% 6% 41% 7% Source: SNL Financial FDIC Deposit Market Share data as of 6/30/14. (excludes credit unions) Maine 2014 Rank Institution 2014 Number of Branches 2014 Total Deposits in Market ($000) 2014 Total Market Share (%) 1 Toronto‐Dominion Bank 50 3,169,533 13.3 2 KeyCorp (OH) 53 2,998,177 12.6 3 Bangor Bancorp MHC (ME) 59 2,115,508 8.9 4 Camden National Corp. (ME) 44 1,876,095 7.9 5 Bank of America Corp. (NC) 18 1,660,220 6.9 6 First Bancorp Inc. (ME) 16 1,033,887 4.3 7 Machias Bancorp MHC (ME) 17 908,062 3.8 8 People's United Financial Inc. (CT) 26 889,558 3.7 9 Bar Harbor Bankshares (ME) 16 837,692 3.5 10 Norway Bancorp MHC (ME) 23 810,448 3.4 All Others in State (23) 177 7,553,366 31.7 Total For Institutions In Market 499 23,852,546 100.00 25
Proxy Peer Group Arrow Financial Corporation ‐ NY Bar Harbor Bankshares ‐ME Berkshire Hills Bancorp, Inc. ‐MA Brookline Bancorp, Inc. ‐MA Century Bancorp, Inc. ‐MA Chemung Financial Corporation ‐ NY Enterprise Bancorp, Inc. ‐MA Financial Institutions, Inc. ‐ NY First Bancorp, Inc. – ME Independent Bank Corp. ‐MA Merchants Bancshares, Inc. ‐ VT NH Thrift Bancshares, Inc. ‐ NH Tompkins Financial Corporation ‐ NY TrustCo Bank Corp NY ‐ NY United Financial Bancorp, Inc. ‐MA Washington Trust Bancorp, Inc. ‐ RI Westfield Financial, Inc. – MA 26
Reconciliation of non‐GAAP to GAAP Financial Measures 27 Non-interest expense, as presented $ 46,096 $ 47,347 $ 66,333 $ 59,031 Less: branch acquisition and divestiture costs Less: goodwill impairment Less: prepayment penalties on borrowings Adjusted non-interest expense $ 46,096 $ 47,068 $ 63,129 $ 54,677 Net interest income, as presented $ 57,032 $ 57,125 $ 75,475 $ 73,745 Add: effect of tax-exempt income Non-interest income, as presented Less: gain on branch divestiture/branch facility Less: net gain on sale of securities Adjusted net interest income plus non-interest income $ 75,555 $ 76,145 $ 100,557 $ 95,168 Non-GAAP efficiency ratio % % % % GAAP efficiency ratio % % % % The following table provides a reconciliation between tax-equivalent net interest income to GAAP net interest income using a 35.0% tax rate: Net interest income, as presented $ 57,032 $ 57,125 $ 75,475 $ 73,745 Add: effect of tax-exempt income Net interest income, tax equivalent $ 57,868 $ 57,743 $ 76,283 $ 74,733 — — 2,742 479 — 2,030 — — 2,830 — September 30, 279— Nine Months Ended September 30, 2013 Nine Months Ended — — 618836 December 31, 2012 808 988 December 31, 201320132014 September 30, (In Thousands) 61.32 62.04 64.23 60.76 Twelve Months Ended 451 785 785 2,498 61.01 61.81 62.78 57.45 836 618 808 988 18,138 19,187 27,801 23,412 December 31, 2012 374 2,324 December 31, 2013 Camden National presents its efficiency ratio using non-GAAP information. The GAAP-based efficiency ratio is non-interest expense divided by net interest income plus non-interest income from the consolidated statements of income. The non-GAAP efficiency ratio excludes branch acquisition and divestiture costs from non-interest expense, excludes net gain on sale of securities from non-interest income, and adds the tax-equivalent adjustment (assumed 35.0% tax rate) to net interest income. The following table provides a reconciliation between the GAAP and non-GAAP efficiency ratio: Twelve Months Ended (In Thousands) September 30, 2014
Reconciliation of non‐GAAP to GAAP Financial Measures 28 Net income, as presented $ 18,482 $ 18,359 $ 22,783 $ 23,428 Add: tax-effected goodwill impairment — — 2,830 — Add: tax-effected amortization of intangible assets Net income, adjusted $ 19,042 $ 18,920 $ 26,360 $ 23,855 Average equity $ 234,574 $ 233,398 $ 233,888 $ 227,129 Less: average goodwill and other intangible assets Average tangible equity $ 185,695 $ 180,537 $ 181,180 $ 180,876 Return on average tangible equity % % % % Return on average equity % % % % The following table provides a reconciliation between tangible book value per share and GAAP book value per share: Shareholders' equity, as presented $ 239,912 $ 232,282 $ 231,096 $ 233,815 Less: goodwill and other intangible assets Tangible equity $ 191,454 $ 179,846 $ 181,777 $ 180,516 Shares outstanding at period end Tangible book value per share $ 25.80 $ 23.52 $ 23.98 $ 23.68 Book value per share $ 32.33 $ 30.38 $ 30.49 $ 30.67 2013 2012 Return on average tangible equity is the ratio of (i) net income, adjusted for tax-effected amortization of intangible assets to (ii) average equity, adjusted for goodwill and other intangible assets. The following table reconciles the return on average tangible equity to GAAP return on average equity: September 30, December 31, December 31, 53,299 7,622,750 561560 Nine Months Ended 7,421,595 7,646,664 7,579,913 48,458 52,436 49,319 September 30, 2014 2013 10.53 10.52 9.74 10.31 (In Thousands, Except Number of Shares and Per Share Data) 48,879 52,861 52,708 46,253 13.71 14.01 14.55 13.19 December 31, 2012 747 427 December 31, 2013 Twelve Months Ended (In Thousands) September 30, 2014 September 30, 2013
Reconciliation of non‐GAAP to GAAP Financial Measures The following table provides a reconciliation between tangible equity to tangible assets and GAAP equity to assets: Shareholders' equity, as presented $ 239,912 $ 232,282 $ 231,096 $ 233,815 Less: goodwill and other intangibles Tangible equity $ 191,454 $ 179,846 $ 181,777 $ 180,516 Total assets $ 2,741,989 $ 2,597,255 $ 2,603,829 $ 2,564,757 Less: goodwill and other intangibles Tangible assets $ 2,693,531 $ 2,544,819 $ 2,554,510 $ 2,511,458 Tangible equity to tangible assets % % % % Equity to assets % % % % GAAP, Net interest income $ 57,125 $ 1,273 $ 55,852 Provision for credit losses Non-interest income Non-interest expense Income before income taxes Income taxes Net income $ 18,359 $ 424 $ 17,935 Diluted EPS $ 2.39 $ 0.06 $ 2.33 2012 In the fourth quarter of 2013, the Company divested its five Franklin County branches and, as a result, these branches are not included within the Company's financial results for the nine months ended September 30, 2014. The following table reconciles the Company's nine months ended September 30, 2013 GAAP (as reported) operating results to the Company's normalized nine months ended September 30, 2013 operating results (excluding the divested branches operating results). The Company utilizes such analysis when comparing its nine months ended September 30, 2014 operating results to the same period in 2013 as it believes it provides a more meaningful representation of current year performance. County Operating September 30, September 30, December 31, December 31, 2014 2013 2013 53,299 53,299 7.19 9.12 26,931 653 26,278 8,572 229 8,343 19,187 552 18,635 47,347 1,125 46,222 Franklin Results Normalized adjusted 2,034 47 1,987 Operating Results, as For The Nine Months Ended September 30, 2013 (In Thousands) as reported 7.11 7.07 7.12 8.75 8.94 8.88 48,458 52,436 49,319 48,458 52,436 49,319 (In Thousands) 29