Camden National Corporation Annual Report 2014

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FY2014 Annual Report · Camden National Corporation

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2014
ANNUAL
REPORT

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CUSTOMERS
(Top Right)
Dr. Philip Goldthwait of Mainely Eyes
with Steve Thomas

SHAREHOLDERS
(Top Left)
Net Income and Diluted EPS Graph

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140 YEARS OF ENRICHING THE LIVES OF PEOPLE,

HELPING BUSINESSES SUCCEED AND

VITALIZING OUR COMMUNITIES.

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COMMUNITIES
(Bottom Left)
Ellsworth, Main Street branch

STAKEHOLDERS
(Bottom Right)
Greg Dufour presenting the
Commitment to the Shareholder Award to
Pam Kenniston

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DEAR FELLOW SHAREHOLDERS:

In 1875, six local business people

established Camden National Bank in the

backroom of Crockett’s Five and Ten store

on the same street corner in Camden where

we remain headquartered today—140 years

later. Our founders believed that a financial

institution’s role was to provide local citizens

a secure and convenient place to bank, to

reinvest in the community, and to encourage

economic development and social well-

being. As Charles C. Wood, Camden National

Bank’s president said in 1925, “We have

been privileged to help build Camden and

the welfare of Camden’s businesses and

individuals.” Today, we serve many more

communities, businesses and individuals, yet

Mr. Wood’s words still resonate in our Core

Purpose 90 years later—“We will enrich the

lives of people, help businesses succeed

and vitalize our communities.” In 2014, we

fulfilled our Core Purpose for the benefit

of our four constituencies— shareholders,

customers, communities, and stakeholders.

Evolving and being open to change is crucial in

today’s financial services environment. While our
founders may not have dreamt of serving customers
and communities across the state of Maine, and

now New Hampshire, our predecessors of just 20 years
ago wouldn’t have imagined accepting deposits by mobile
phone! Some of our strategies are bold, such as reshaping
our franchise through branch acquisitions and divestitures,
while others are cultural, such as our recent announcement

Gregory A. Dufour, President and Chief Executive Officer
Karen W. Stanley, Chair, Board of Directors

of creating an executive level role to oversee the experiences
we deliver our customers. We view these strategies as
investments in our future as an organization and in being
a vibrant economic entity in our communities. In this
year’s annual report, we will share how Camden National
Corporation’s strategic investments provide returns to each of
our four constituencies.

SHAREHOLDERS

A view from Main Street in Camden of Crockett’s Five and Ten store.
Circa early 1900’s.

Camden National is proud to be a shareholder-

owned company that is able to trace back the
ownership over several generations of families
and to have the roster of our board of directors be

filled with the names of influential community and business
leaders over the past 140 years. This is what makes us a
true community bank.

In 2014, we began to see the return on several major
investments we made over the past few years. Net income for
2014 of $24.6 million was up $1.8 million over 2013 resulting
in earnings per share growth of 10%. This reflects the impact
of realigning our branch franchise through strategic branch
acquisitions and divestitures in recent years. It also includes
the return on the investment we made in creating several
new commercial and retail lending positions and filling these
positions with talented, seasoned stakeholders to complement
the strength of our existing lending teams.

Our loan portfolio totaled $1.8 billion on December 31,
2014, a 12% increase from a year ago. We experienced
superior growth in our commercial loan portfolio and
solid growth, especially in the last half of 2014, from our

“In 1875, our initial deposit was $10,000 and on

December 31, 2014, our deposits totaled $1.9

billion, a 7% increase since December 31, 2013.”

retail lending products. Loan growth like this can only be
achieved by a strong credit culture, which starts at the
point of discussion with loan customers and through our
underwriting processes. Our lending teams work to provide
solutions that are advantageous to both our customers and
our organization. Over the last 18 months, we strengthened
our credit analysis talent through key team additions,
while enhancing our residential mortgage underwriting and
processing capabilities.

In 1875, our initial deposit was $10,000 and on
December 31, 2014, our deposits totaled $1.9 billion,
a 7% increase since December 31, 2013. Non-interest
bearing demand deposits, or checking accounts, which
are our lowest cost source of funds, were $263.0 million
on December 31, 2014, an increase of 9% from a
year earlier. This reflects the benefits of our franchise
realignment, enhancements to corporate deposit service
products and improved sales training.

In December 2014, we announced an 11% dividend increase
for shareholders, bringing our annualized dividend to $1.20
per common share. We also named Catherine Longley, Senior
Vice President of Finance and Administration & Treasurer at
Bowdoin College, to our Board of Directors in April 2014,
and Lawrence Sterrs, Chair of the Unity Foundation, to our
Board in January 2015.

CUSTOMERS

Our customers continue to change the way they

bank, and Camden National remains committed
to being a leader in banking technology by
providing our customers with a secure and

convenient way to conduct financial transactions on their
schedule. In 2014, we introduced over 10 enhancements to
our online and mobile banking platforms. These ranged from
mobile deposit and text banking to enhancing technology to
ensure that our customers always have access to a secure
and convenient way to bank.

“In 2014, we introduced over 10 enhancements to

our online and mobile banking platforms.”

In 2014, several leading retailers were subject to cyber-
attacks and we took swift action when faced with situations
where our customers’ information had been compromised
by breaches at these organizations. We take protecting our
customers’ information seriously.

Reflecting our founders’ commitment to “helping
businesses succeed,” Camden National Bank was
recognized by the Finance Authority of Maine (FAME) as
its “Financial Institution of the Year” for 2014. This is
the fifth time in the past six years that our small business
lending efforts were recognized by FAME. Championed
by our Executive Vice President of Commercial Lending,
Tim Nightingale, we helped create or retain 3,500 jobs in
Maine, provided over $100 million of capital to over 160
Maine businesses, and counseled numerous small business
owners and entrepreneurs.

We continued to strengthen our investment product
lines as well. Camden Financial Consultants added
additional brokers, reflecting the growing demand for
retail brokerage services in our branch network. Acadia
Trust also strengthened its ranks with two individuals
receiving the Certified Trust and Financial Advisors (CTFA)
designation. This complements an already strong team that
includes individuals who are chartered financial analysts,
certified public accountants and three wealth management
professionals who are also lawyers and trust officers.

A stakeholder explains the benefits of our Online Banking system to a
local business customer.

A customer sits in the Orono branch’s “Camden Landing” while
checking her account using the Camden National Mobile App.

“ Reflecting our founders’ commitment

to ‘helping businesses succeed,’

Camden National Bank was

recognized by the Finance Authority

of Maine (FAME) as its ‘Financial

Institution of the Year’ for 2014.

This is the fifth time in the past six

years that our small business lending

efforts were recognized by FAME.”

As the FAME Bank of the year for the past 5 out of

6 years, we have worked with Mainers to create jobs

and help local businesses succeed.

Camden National Bank lenders have helped:

Cheryl Carrier
Toddle Inn Child Care
and Private Elementary Schools
Camden National Bank customer
and recipient of a 2014 FAME loan

• Create over 3,500 jobs

• 160 businesses make their dreams a reality

• To provide over $100 million in financing to

Maine-based businesses

“ We continued to strengthen our

investment product lines as well.

Camden Financial Consultants

added additional brokers, reflecting

the growing demand for brokerage

and investment services in our

branch network.”

Camden Financial Consultant, Charlie White, helps a customer over the phone.

COMMUNITIES

L ike many other community banks, we believe local

charitable groups need the financial support from
us and the community. However, what brings our
philanthropic efforts to life at Camden National is
the dedication of our employees. In 1991, Camden National
employees established the “Community Spirit of Giving.”
This program raises money through various fundraisers
throughout the year to help those community members who
are less fortunate. As our organization has grown, so has the
involvement of our employees. We are proud to share with you
that in 2014, the Community Spirit of Giving efforts raised
funds to support 32 local food banks throughout Maine, and
resulted in providing nearly 74,000 meals to members of our
community who could not otherwise afford food.

Camden National employees serve the communities in many
different ways outside of work—from participating in the
local government and coaching youth sports to serving on
the boards of many non-profit organizations. In 2014, our
stakeholders donated over 11,000 hours of their own time
to organizations, cities, and towns across the state. They are
truly “vitalizing our communities.”

“In 2014, our stakeholders donated over 11,000

hours of their own time to organizations, cities,

and towns across the state.”

In January 2015, Camden National Bank took on a
significant leadership role in helping the homeless of
Maine through the introduction of “Hope@Home - helping
Maine’s homeless find a way home.” This program is our
effort to support organizations that provide food, shelter,
life skills and, most importantly, hope to more than 7,500
homeless individuals and families across Maine. In addition
to leveraging our community-minded employees, we have
committed to donating $100 to a local homeless shelter when
a person purchases a new home and finances their mortgage
through Camden National Bank. We intend to use our
leadership position to raise the awareness of homelessness
and reduce its occurrence. We encourage you to visit
HopeatHomeMaine.com to learn more about this program and
the organizations that are dedicated to helping the homeless.

Stakeholders gather at the Hanley Center, in Rockport, Maine, to promote
Community Spirit of Giving’s contributions to food pantries across Maine.

An image of a thriving downtown Camden featured in an ad for
the Penobscot Bay Regional Chamber of Commerce’s annual
publication, The Jewel, reflecting Camden National’s belief that
communities are vital.

“ In January 2015, Camden National

Bank took on a significant leadership

role in helping the homeless of

Maine through the introduction

of ‘Hope@Home—helping Maine’s

homeless find a way home.’ This

program is our effort to support

organizations that provide food,

shelter, life skills and, most

importantly, hope to more than

7,500 homeless individuals and

families across Maine.”

The Hope@Home initiative was

officially launched at a press

conference at Camden National’s

Exchange Street branch in Bangor

on January 22, 2015. Pictured at

top: Greg Dufour, Camden National’s

President and Chief Executive Officer,

stands with Cullen Ryan, Executive

Director of the Community Housing

of Maine, next to a poster for the

program. Pictured below: Greg

Dufour presents a Hope@Home

program funded check to New Hope

for Women in Rockland, Maine.

STAKEHOLDERS

1. Officer Award Winners:

Left to Right:
Ryan Smith, Officer of the Year
Jim Butler, Bob Daigle Excellence in Innovation Award
Taylor Black, Commitment to the Customer
Greg Dufour, President and Chief Executive Officer
Pam Kenniston, Commitment to the Shareholder
Devon Perry, Commitment to the Core Values
Paul Gimlewicz, Commitment to the Stakeholder
Not Pictured:
Richard Rotella, Commitment to the Community

2. Officer of the Year, Ryan Smith

with his wife, Tanya, daughter, Hannah, and son, Drew

3. Horizons 200 Graduates:
Left to Right, Back Row:
Libby Arrico, Carissa Christie, Greg Dufour, Candace Gray,
Wendy Brooks, Jordan Betts, Mark Graham
Left to Right, Front Row:
Virginia Gleich, Tatiana Chipilova, Erin McAvoy, Jim Butler

4. Officer Promotions, Fall 2014:

Left to Right:
Aline Taylor, Cynthia Bergin, Natalie Dame, Elizabeth
Winslow, Penelope Johnson, David Ackley, Tena Wallace,
Marcella Eldridge, Betsy Maguire, Jordan Betts,
Christina Bendtson

T he goal of Camden National is to provide

development opportunities for all employees to
help them become leaders, both at work and
outside of work. Our view is that it is not the

Company’s place to dictate what a person’s ambitions are,
but to provide them opportunities to pursue their own goals.
We ask that all employees, regardless of the role they may
hold, view themselves as leaders. We consistently provide
over 40 hours on average per stakeholder of training each
year, which ranges from specific required skills in such areas
as compliance and information security to formal courses
such as Principles of Banking, and includes our regionally
and nationally recognized leadership development program,
Horizons. In 2014, 75 of our employees were promoted to
new positions of responsibility.

In addition to creating future leaders, we also believe
in providing access to affordable health care as well as
preventative services. Our wellness programs, which include
bi-annual on-site health check-ups as well as access to
“Weight Watchers at Work” and a fitness reimbursement
program, have a participation rate of 85%. The benefit of
our investment in health and wellness programs translated
to a one month insurance premium holiday in 2014 for all
stakeholders as well as lower premiums in 2015.

Working with IBM Consulting, we conducted an extensive
survey of our employees’ engagement with the Company.
We took on this effort in order to ensure we are creating
an environment that encourages the best people to do the
right things for those around them including our customers,
our communities, our shareholders and each other. We
believe the return on this investment will be in the form of
a higher quality workplace that will attract and retain the
best employees and provide superior experiences for our
customers and returns to our shareholders.

The composition of our employee base has certainly changed
since six men founded Camden National Bank in 1875.
Today, our Company Board includes four women and is
chaired by Karen Stanley and our eight-member senior
management committee is comprised of three men and five
women. On January 1, 2015, Debbie Jordan was promoted
to Executive Vice President, Chief Operating Officer and
Chief Financial Officer of the Company and Camden National
Bank. Leveraging her exceptional financial capabilities,

she will also oversee Human Resources, Credit, Project
Management, Operations and Technology of the Company.
This will allow our President and Chief Executive Officer,
Greg Dufour, to focus his energies on customer relationships,
strategic development, and working closely with the newly
established position of Chief Customer Experience Officer. At
the time of this writing, a national search is being conducted
for this individual.

FUTURE

In many ways, the way we do business today would be
unrecognizable to our founders. As we look to the future,
we anticipate rapid changes driven by the behaviors of
our customers and opportunities presented by technology.
Regardless of the size of our franchise, whether a customer
interacts with us in person or on their smartphone, or we
process paper or digital images, the one thing our founders
would recognize is our dedication to serving our customers,
our communities, our shareholders and our stakeholders.
This can only be possible through the support of today’s
owners, our shareholders. Your commitment to Camden
National Corporation and its Core Purpose is deeply
appreciated.

Sincerely,

Gregory A. Dufour
President and Chief Executive Officer

Karen Stanley
Chair, Board of Directors

SELECTED FINANCIAL DATA
(Dollars in thousands, except per share data)

At or for the year ended December 31st

2014

2013

2012

2011

2010

FINANCIAL CONDITION DATA
Investments
Loans and loans held for sale
Allowance for loan losses
Total assets
Deposits
Borrowings
Shareholders’ equity

OPERATING DATA
Net interest income
Provision for credit losses
Non-interest income
Non-interest expenses
Net income

SELECTED FINANCIAL RATIOS
Return on average assets
Return on average equity
Return on average tangible equity (non-GAAP)
Tier I leverage capital ratio
Total risk-based capital ratio
Net interest margin
Efficiency ratio (non-GAAP)
Allowance for credit losses to total loans
Net charge-offs to average loans
Non-performing loans to total loans
Non-performing assets to total assets

PER SHARE DATA
Basic earnings per share
Diluted earnings per share
Dividends declared per share
Book value per share
Tangible book value per share (non-GAAP)
Dividend payout ratio

$803,633
1,772,610
21,116
2,789,853
1,932,097
577,002
245,109

$76,293
2,220
24,334
62,397
24,570

0.92%
10.37%
13.46%
9.26%
15.16%
3.11%
61.58%
1.19%
0.16%
1.19%
0.82%

$3.29
3.28
1.11
33.01
26.52
33.73%

$828,201
1,580,402
21,590
2,603,829
1,813,824
530,092
231,096

$75,475
2,028
27,801
66,333
22,783

0.88%
9.74%
14.55%
9.43%
16.45%
3.20%
62.78%
1.37%
0.22%
1.80%
1.18%

$2.98
2.97
1.08
30.49
23.98
36.30%

$802,084
1,563,866
23,044
2,564,757
1,929,469
360,163
233,815

$73,745
3,816
23,412
59,031
23,428

0.98%
10.31%
13.19%
8.94%
15.56%
3.36%
57.45%
1.48%
0.24%
1.78%
1.13%

$3.06
3.05
1.00
30.67
23.68
32.73%

$611,998
1,520,089
23,011
2,302,720
1,591,366
456,233
218,876

$75,219
4,735
23,053
55,579
26,177

1.13%
12.16%
15.67%
9.59%
15.95%
3.57%
54.63%
1.52%
0.26%
1.82%
1.27%

$3.41
3.40
1.50
28.56
22.66
44.05%

$611,643
1,530,280
22,293
2,306,007
1,515,811
559,919
205,995

$74,290
6,299
20,825
52,937
24,766

1.09%
12.42%
16.40%
8.77%
15.05%
3.60%
55.74%
1.46%
0.28%
1.47%
1.08%

$3.23
3.23
1.00
26.90
20.91
30.95%

For a complete set of consolidated financial statements, refer to the Company’s 2014 Annual Report on Form 10-K.

$2.5

$2.0

$1.5

1.50%

Net Income and Diluted EPS

s
d
n
a
s
u
o
h
T

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

e
r
a
h
S
r
e
P

$3.50

$3.40

$3.30

$3.20

$3.10

$3.00

$2.90

$2.80

$2.70

Camden National reported net income for 2014 of $24.6
million, an increase over 2013 of $1.8 million. Diluted

earnings per share increased 10% to $3.28 per share and

our return on average equity improved 63 basis points to

10.37% compared to 2013.

2010

2011

2012

2013

2014

Total Loans
(In Billions)

$2.0

$1.5

$1.0

$0.5

$3.0

$2.5

$2.0

$1.5

$1.0

$0.5

$0.0

58%

68%

55%

54%

42%

32%

45%

46%

49%

51%

2010

2011

2012

2013

2014

n Commercial n Consumer

Funding Mix
(In Billions)

16%

23%

27%

22%

73%

78%

84%

77%

2010

2011

2012

2013

2014

n Deposits n Borrowings

Non-Performing Loans to Total Loans
(as a percentage)

2.00%

1.50%

1.00%

0.50%

0.00%

2010

2011

2012

2013

2014

Other financial highlights for
2014 include:

›› Core deposits increased $25.8

million to $1.4 billion over 2013.

›› Net interest income on a fully-

taxable basis increased $1.2 million
to $77.5 million over 2013 largely
attributable to the loan growth
during 2014, partially offset by a
decrease in the net interest margin
to 3.11%.

›› Non-interest income decreased $3.5
million to $24.3 million compared to
2013 due to a one-time gain on the
branch divestiture in 2013 and lower
mortgage banking income.

›› Non-interest expenses decreased
$3.9 million to $62.4 million
compared to 2013 driven by a one-
time impairment charge in 2013 and
lower operating expenses due to the
branch divestiture in 2013.

›› The provision for credit losses

increased $192,000 in 2014 over
2013. Our improving asset quality
enabled us to minimize the provision
increase in 2014.

We ended the year with total assets
of $2.8 billion. Our solid financial
performance in 2014 was largely
attributable to our strong loan
growth in 2014 of $192.2 million,
representing a 12% increase. Our
loan growth, particularly within the
commercial portfolio, is, in part, the
return on the strategic investments
made over recent years, including (i)
the branch acquisitions, (ii) expanding
our footprint across northern New
England by opening a commercial
loan office in Manchester, New
Hampshire, and (iii) expanding our
lending and administration teams
through strategic hiring.

In 2014, our asset quality metrics
improved as Maine’s economy steadily
rebounded and as non-performing
loans resolved. Our net loan charge-
off ratio declined to 0.16% in 2014
from 0.22% in 2013 and our level
of non-performing loans of 1.19%
reached its lowest level since the
third quarter of 2009.

As a result of strong performance
in 2014, we increased our fourth
quarter 2014 dividend $0.03 to
$0.30 per share. We remain focused
on balancing our capital needs and
regulatory requirements while driving
shareholder value.

CORPORATE INFORMATION

BOARD OF DIRECTORS

Ann W. Bresnahan
Civic Leader

Gregory A. Dufour
President &
Chief Executive Officer,
Camden National Corporation

David C. Flanagan
President,
Viking Lumber, Inc.

Craig S. Gunderson
President &
Chief Executive Officer,
Oxford Networks

John W. Holmes
President,
Consumers Fuel Company

S. Catherine Longley
Senior Vice President
of Finance and Administration &
Treasurer, Bowdoin College

James H. Page, Ph.D.
Chancellor,
University of Maine System

John M. Rohman
Civic Leader
Retired Chief Executive Officer,
WBRC Architects & Engineers

Robin A. Sawyer, CPA
Vice President &
Corporate Controller,
WEX, Inc.

EXECUTIVE TEAM

Karen W. Stanley
Chair,
Camden National Corporation,
Civic Leader
Retired Co-Owner, Stanley Subaru

Lawrence J. Sterrs
Chair,
The Unity Foundation

Joanne T. Campbell
Executive Vice President &
Risk Management Officer

Gregory A. Dufour
President &
Chief Executive Officer

Peter F. Greene
Executive Vice President,
Operations &
Technology Officer

Deborah A. Jordan, CPA
Executive Vice President
Chief Operating Officer &
Chief Financial Officer

Timothy P. Nightingale
Executive Vice President &
Senior Lending Officer

June B. Parent
Executive Vice President &
Senior Retail Banking Officer

ANNUAL MEETING
The 2015 Annual Meeting of the Shareholders will be
held April 28th at 3:00 pm at the Point Lookout Resort,
The Summit, Lincolnville, Maine.

FORM 10-K AND OTHER REPORTS
Camden National Corporation will provide, upon written
request and without charge, a copy of the Company’s
2014 Annual Report and Form 10-K. You may contact
our Corporate Clerk for information, or may view
Company reports under Investor Relations at
CamdenNational.com.

DIVIDEND REINVESTMENT AND
STOCK PURCHASE PLAN
Shareholders wishing to receive a prospectus for the
Dividend and Stock Purchase Plan are invited to contact
our Corporate Clerk or our transfer agent.

CORPORATE CLERK
Joanne Campbell
Camden National Corporation
P.O. Box 310
Camden, ME 04843-0310
(207) 230-2089 or IR@CamdenNational.com

TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11038
(800) 937-5449 or amstock.com

Camden National Corporation is headquartered in
Camden, Maine. Listed on the NASDAQ® Global
Select Market under the symbol CAC, Camden National
Corporation is the holding company employing more
than 460 Maine residents for two financial services
companies, including Camden National Bank and the
wealth management company, Acadia Trust, N.A.

Headquartered in Camden, Maine, Camden National
Bank is a full-service community bank with a network of
44 banking offices throughout Maine, plus a commercial
lending office in Manchester, New Hampshire. The Bank
also provides a system of ATM-only locations as well as
online and mobile banking services. Located at Camden
National Bank, Camden Financial Consultants offers full-
service brokerage and insurance services. Learn more at
CamdenNational.com.

Acadia Trust, N.A., a direct, wholly-owned
subsidiary of Camden National Corporation, provides
comprehensive wealth management and trust services
for individuals, families, and non-profit organizations
throughout Maine and New England, with offices in
Portland, Bangor and Ellsworth.

FAME BANK OF THE YEAR
Camden National Bank was recognized for its commitment to helping businesses secure the financing
they need to grow and flourish. We were recognized by the Finance Authority of Maine as its Financial
Institution of the Year for the fifth time in the past six years.

« Acadia Trust, N.A.
« Camden National Bank

Greenville

Dover-Foxcroft

Milo

Bingham

Madison

Corinth

Hermon

Hampden

Newport

Bucksport

Old Town

Orono

Bangor (3)

Brewer

Ellsworth (2)

Jonesport

Blue Hill

Town Hill Milbridge

Waterville

Belfast (2)

Union

Augusta (3)
Gardiner
Waldoboro

Lewiston

Auburn

Bar Harbor

Castine
Camden (2)

Rockland

Stonington

Vinalhaven

Thomaston

Damariscotta

Portland

Kennebunk

Manchester

2 Elm Street, Camden, ME 04843