Camden National
Annual Report 2015

Plain-text annual report

2015 ANNUAL REPORT A year of growth. opportunity. A future of Greenville Dover-Foxcroft Milo Bingham Corinth Madison Hermon Newport Hampden Old Town Orono Bangor (3) Brewer Waterville (2) Oakland Bucksport Ellsworth (2) Belfast (2) Blue Hill Town Hill Milbridge Calais Machias Jonesport Manchester Winthrop Hallowell Richmond Augusta (4) Randolph Gardiner Lewiston Auburn Union Castine Camden (2) Bar Harbor Rockland Stonington Vinalhaven Waldoboro Thomaston Damariscotta Wiscasset Bath Topsham Brunswick (2) Falmouth Portland (2) Saco Kennebunk Manchester York Braintree Boothbay Harbor LOCATION KEY Camden National Bank Acadia Trust From here. Anywhere. Dear Fellow Shareholders: Camden National has undergone a deliberate transformation during the past twelve months, highlighted by the acquisition of SBM, Financial Inc., the parent company of The Bank of Maine, combined with several other strategic investments. Today, our presence extends from Central, Downeast, and the company’s home territory of Midcoast Maine through Southern Maine and select markets in New Hampshire and Massachusetts. In just a short time, we have evolved from “that bank on the coast of Maine” to the largest and strongest financial institution headquartered in Northern New England. Our investments in 2015 went beyond acquisitions that extended our geographic reach to include technological advances and product enhancements, as well as heightened community and employee involvement. These actions are part of our long-term commitment to providing the best banking experience for our four constituencies—customers, shareholders, communities and employees, who we call and consider stakeholders. Developed by management and our Board of Directors, our strategic plan ensures the relevance, viability and success of our organization in a rapidly changing environment. The strategic objective is to strengthen our company through profitable growth that aligns with our commitment to banking and other financial services delivered through our community-based model. This is our key differentiator—we offer the same advanced products and services as our largest competitors, while staying true to our roots as a local, genuine Maine bank. 1 2 Strategic aquisition for continued growth. The acquisition of The Bank of Maine advanced our strategic goal to increase market share by expanding our presence in Central Maine and entering new markets in the more economically vibrant southern tier of the state. We also expanded our mortgage lending capability by leveraging The Bank of Maine’s previous investments in that business line, which included mortgage origination capabilities in Massachusetts as well as in all fifty states and a robust secondary sales program. Today we are the second- largest originator of mortgages in Maine, offering a wide array of mortgage products through 30 mortgage loan originators and 64 banking centers. Our business and commercial services now include a strong Portland-based team of commercial lenders serving Southern Maine. This leverages our investment in our business cash management product line—now called Treasury Management Services which provides sophisticated corporate treasury management services to businesses, government and non-profit organizations through a locally based and highly specialized group. Retail and consumer services also benefited from the acquisition with the addition of 24 banking centers and now with 85 ATMs throughout Maine, offering even more convenience to our customers. Additionally, we have enhanced our consumer deposit products by introducing Promise Rewards checking accounts that directly benefit customers as their banking relationships grow with us. Our growth into Southern Maine also allows us to leverage both of our wealth management and brokerage services through Acadia Trust and Camden Financial Consultants, and is complemented by our expanded commercial and retail franchise which will deepen relationships with new and prospective customers. We are excited about the potential to grow these organizations and anticipate higher levels of investment in the future. 3 New brand. Same lasting values. Our expansion and growth in 2015 prompted a rebranding of Camden National Corporation and Camden National Bank to reflect our new position as the preeminent financial institution in Northern New England. Our updated brand mark acknowledges our past through the use of the anchor, a symbol of the company since the early 1900s, and the more stylized, modern look and distinctive arch speaks to our solid footing in modern banking as well as our optimism for the future. 4 A focus on technology. Our ability to adopt new technologies as well as products and services, and leverage those resources to meet customer, regulatory and operational demands, is critical to our success. Scale matters more than ever, so it’s also important to have the capital, financial and human resources to meet these ever increasing demands. Some of our technology investments in 2015 included: „ Creating a “unified user experience” for our mobile and online banking platforms „ Initiating a multi-year project to implement a Customer Relationship Management system to better serve customers as well as enhance our sales process „ Implementing EMV chip-based debit cards to protect our customers from debit card-based fraud – we are one of the first banks in Maine to do so „ Expanding the use of our residential mortgage based system to meet the new regulatory requirements of the TILA-RESPA Integrated Disclosure rule, which is designed to make it easier for our customers to understand key features of their mortgage loan „ Expanding and strengthening our information security capabilities to protect both the company and our customers from cyber-based fraud and intrusion 5 Financial Highlights. Camden National Corporation is a $3.7 billion diversified bank holding company, headquartered in Camden, Maine, that employs more than 650 employees at 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 64 banking centers and 85 ATMs throughout Maine, as well as lending offices in Massachusetts and New Hampshire. The bank has been in business since 1875 and has a well-established reputation for financial stability, growth and community impact. 2014 2013 2015 2014 Year-over-Year Change (Dollars in thousands, except per share data) Earnings and Dividends Total revenues Total operating expenses Net income Core operating earnings(2) Dividends declared on common shares Per Share Data Diluted earnings per share Core operating earnings per share(2) Cash dividends per share Book value at end of period Tangible book value at end of period(3) Closing stock price (1) 2015 $ 113,934 $ 81,139 $ 20,952 $ 28,186 $ 10,602 $ 2.60 $ 3.49 $ 1.20 $ 35.54 $ 25.33 $ 44.09 $ 100,627 $ 103,276 $ 62,397 $ 66,333 $ 24,570 $ 22,783 $ 24,277 $ 20,734 $ 8,251 $ 8,274 $ 3.28 $ 2.97 $ 3.24 $ 2.70 $ 1.11 $ 1.08 $ 33.01 $ 30.49 $ 26.52 $ 23.98 $ 39.84 $ 41.84 At Year End Total assets $ 3,709,871 $ 2,789,853 $2,603,829 Total investment securities $ 855,995 $ 803,633 $ 828,201 Total loans and loans held for sale $ 2,501,164 $ 1,772,610 $ 1,580,402 Total deposits $ 2,726,379 $ 1,932,097 $ 1,813,824 Total sharesholders' equity $ 363,190 $ 245,109 $ 231,096 13% 30% (15)% 16% 28% (21)% 8% 8% 8% (4)% 11% 33% 7% 41% 41% 48% (3)% (6)% 8% 17% 0% 11% 20% 3% 8% 11% (5)% 7% (3)% 12% 7% 6% Financial Ratios Return on average assets Core return on average assets(2) Return on average equity Core return on average tangible equity(2) Net interest margin Efficiency ratio(4) 0.70% 0.94% 7.54% 13.20% 3.19% 61.13% Total risk-based capital ratio • 1 12.98% Non-performing assets to total assets 0.66% 0.92% 0.90% 10.37% 13.30% 3.11% 61.58% 15.16% 0.82% 0.88% 0.80% 9.74% 12.84% 3.20% 62.78% 16.45% 1.18% (1) Includes SBM Financial, Inc.’s acquired assets and liabilities. (2) Excludes non-core revenues and operating expenses. (3) Excludes balance sheet impact of intangible assets generated through acquisitions on shareholders’ equity and/or total assets. (4) Operating expenses (less acquisition-related costs and other one-time costs) as a percentage of fully tax-equivalent net interest income plus fee revenue (excluding gains or losses on investment securities and other one-time gains). For a complete set of Consolidated Financial Statements, refer to the Company’s 2015 Annual Report on Form 10-K. 6 Looking forward. Financially strong. Typically, when an organization goes through such a strategic transformation, the day-to-day business becomes a secondary priority. We’re proud of everyone who took on the challenge to equally prioritize daily operations and acquisition-related activities. We reached new heights with total assets of $3.7 billion as of December 31, 2015 and record core operating earnings of $28.2 million, when excluding costs related to the acquisition. Our core earnings per diluted share for 2015 increased 8% to $3.49 $3.7 $2.8 $2.6 per common share, while core return on average tangible equity Total Assets ($ Billions) $28.2 $24.3 $20.7 declined 10 basis points to 13.20% reflecting our expanded capital base. We experienced strong loan growth in our markets with organic loan growth of 6%, or $102.4 million, in 2015. When organic growth is combined with the $615.2 million acquired portfolio from The Bank of Maine, our total loans outstanding totaled $2.5 billion as of December 31, 2015. Supporting our loans is a strong deposit base that was $2.7 billion as of December 31, 2015, reflecting organic deposit growth of 6%, or $107.3 million, and acquired additional deposits of $687.0 million. Through these changes, our asset quality and capital levels also remained strong. Net charge-offs to average loans were 0.10% in Core Operating Earnings ($ Millions) 2015 compared to 0.16% in 2014, and our non-performing assets to $3.49 $3.24 $2.70 Core EPS total assets declined 16 basis points to 0.66% as of December 31, 2015. We remain a “well capitalized” organization, as defined by our regulators on December 31, 2015, with total risk-based capital of 12.98%. During 2015, we paid $1.20 of dividends per common share. We remain focused on the tangible book value of our common shares, which declined 4% to $25.33 as of December 31, 2015 as a result of the issuance of 2.7 million shares in connection with the SBM Financial acquisition. As reported when we announced the acquisition, we expect to recapture that dilution within five years. 7 201520142013201520142013201520142013New faces on the Board. Two directors of SBM Financial joined our board during the year. With over 40 years of banking experience, David Ott deepens the Board’s understanding of the banking industry and Maine. He previously served as Senior Executive Vice President and Chief Banking Officer at TD Bank and held other executive- level positions at Bank North and Fleet Bank of Maine. Carl Soderberg provides additional banking experience gained through his service at both SBM Financial and First Citizens Bank, a predecessor to SBM. He is an accomplished businessman with interests throughout Maine, as well as an active community member and supporter. Our focus in 2016 is to align our organizational resources for growth by leveraging our considerable strengths. At the same time, we will look for opportunities that match our strategic and operational objectives. As always, your support is greatly appreciated. Sincerely, Karen W. Stanley Chair, Board of Directors Gregory A. Dufour President and CEO 8 Camden National Corporation Board of Directors: Pictured from left to right: Craig S. Gunderson, John M. Rohman, John W. Holmes, Ann W. Bresnahan, James H. Page, Ph.D., S. Catherine Longley, Gregory A. Dufour, Karen W. Stanley (Chair), David C. Flanagan, Robin A. Sawyer, CPA, Carl J. Soderberg, Lawrence J. Sterrs, and David J. Ott. Camden National Bank Board of Directors: Pictured from left to right (back row): Carl J. Soderberg, John M. Rohman, John W. Holmes, Ann W. Bresnahan, James L. Markos, Jr., Esq., Gregory A. Dufour, Robert D. Merrill, David J. Ott, and David C. Flanagan; (front row, seated): William P. Dubord, Karen W. Stanley (Chair), and Rosemary B. Weymouth Executive Management: Pictured left to right (back row): Joanne T. Campbell, Edmund M. Hayden III, Gregory A. Dufour, Deborah A. Jordan, CPA, and Timothy P. Nightin- gale; (front row): June B. Parent, Renée D. Smyth, and Carolyn C. Crosby Corporate Information Common Stock Camden National Corporation’s common stock is listed on the NASDAQ Global Select Market and is traded under the symbol CAC. Annual Meeting Camden National’s 2016 Annual Meeting of the Shareholders will be held Tuesday, April 26th at 3:00 pm at the Point Lookout Conference Center, Hedges Hall, Lincolnville, Maine. Shareholder Services Camden National’s shareholder services are provided by American Stock Transfer & Trust Company, LLC (AST). Shareholders may contact AST through one of the following methods: ONLINE Registered shareholders can view their account inform- ation through AST’s website, www.amstock.com, by clicking on Shareholders/Account Access. This website provides instructions on how to gain access to shareholder account information, perform certain transactions, request forms or participate in the Investors Choice Dividend Reinvestment & Direct Stock Purchase and Sale Plan. Shareholders may also e-mail our transfer agent at info@amstock.com. TELEPHONE Shareholders may call AST’s toll-free number (800) 937-5449 for assistance. WRITTEN CORRESPONDENCE Shareholders should mail written account inquiries or other requests for assistance regarding stock ownership to: Camden National Corporation c/o American Stock Transfer & Trust Co., LLC Operations Center 6201 15th Avenue Brooklyn, NY 11219 Dividend Reinvestment and Stock Purchase and Sale Camden National is pleased to offer the Investors Choice Dividend Reinvestment & Direct Stock Purchase and Sale Plan (Plan), a voluntary plan administered by AST. Under the Plan, shareholders may reinvest dividends, purchase additional shares, sell all or part of shares owned or deposit their Camden National stock certificates for safekeeping or sale. For more information, call (800) 937-5449 or visit AST’s website at www.amstock.com. Financial Publications Available at No Charge Additional copies of Camden National’s Annual Report on Form 10-K, quarterly reports and other corporate publications are available, without charge, at www.CamdenNational.com or upon request by emailing IR@CamdenNational.com, calling (800) 860-8821 or by writing to: Camden National Corporation, P.O. Box 310, Camden, ME  04843 Media Inquiries Media representatives seeking general information should contact: Renée Smyth Chief Marketing Officer (207) 518-5607 rsmyth@CamdenNational.com Analyst Coverage The following analysts published research about Camden National in 2015: Keefe, Bruyette & Woods, Inc. Piper Jaffray In every community an opportunity to help. Hope@Home is our statewide program to help Maine’s homeless and raise awareness around this issue by donating $100 to a community shelter in Maine every time a customer finances a new home through Camden National Bank. In 2015, Camden National Bank donated over $44,000 to homeless shelters in Maine, and we hope to give even more in the years to come. FAME Bank of the Year Camden National Bank was once again 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 (FAME) as its Financial Institution of the Year, marking the sixth year out of the last seven that the bank has received this distinction. 9 2 Elm Street | PO Box 310 | Camden, ME 04843 | CamdenNational.com 

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