Camden National
Annual Report 2019

Plain-text annual report

“Over the year, we received accolades for our financial performance, customer experience, and service to our communities. It is rewarding to see our whole team’s hard work recognized by those we serve in many different ways.” – Greg Dufour, President & CEO Congratulations to the 2019 Horizons 200 class pictured here at their graduation ceremony in Portland, Maine. Inspired by Our Values and Vision About Us 630+ Employees 61 Banking Centers $4.4 Billion in Assets 71 ATMs $1.0 Billion in Assets Under Management 2 Loan Production Offices 24/7 Live Phone Support Our Core Values Honesty and Integrity above all else Responsibility to use our resources for the greater good Trust built on fairness Excellence through hard work and lifelong learning Service that creates remarkable experiences Investing in learning and development Through professional growth opportunities, leadership development, and educational benefits, our employees build rewarding, meaningful careers at Camden National Bank. In 2019: 31,000+ Hours Dedicated to Employee Training 226 Bank Officers Attended Our Leadership Conferences 24 Employees Participated in Our Horizons 100 and 200 Leadership Development Programs 2019 Awards and Recognition Thanks to dedicated service, teamwork, and commitment to our core values, we continue to make a meaningful impact. Our efforts have been recognized and rewarded as we continue to focus on responsible lending, sustainability, diversity, ethical governance, and financial performance. 2019 Financial Highlights 2019 U.S. SMALL 2019 GREENWICH CUSTOMER BUSINESS ADMINISTRATION EXPERIENCE (CX) LEADER IN (SBA) DISTRICT DIRECTOR AWARD U.S. RETAIL BANKING (2 Years in a Row) $57.2 Million Record Net Income 1.30% Return on Average Assets 14% Growth in Average Deposits 2019 FINANCE AUTHORITY CAMDEN NATIONAL OF MAINE (FAME) LENDER AT CORPORATION WAS NAMED WORK FOR MAINE AWARD TO SANDLER O’NEILL SM-ALL (10 Years) STARS CLASS OF 2019 9% Increase in Diluted Earnings Per Share 12.44% Return on Average Equity 8% Growth in Average Loans A record year for Camden National It is with great pride that we share Camden National Corporation’s strong financial results for 2019 and are pleased to report record net income of $57.2 million and earnings per diluted share of $3.69, an 8% and 9% increase, respectively, over 2018. Our performance is the result of the strategic investments we have made in our business, as well as the dedication and teamwork of our valuable employees. Whether we’re guiding first-time homebuyers or we’re helping a local business grow, our caring employees develop trusted relationships with our customers. Since our founding, we’ve brought passion and innovation to community banking, and we have taken a personal approach to doing business, supporting our customers no matter where they are on their financial journey. We are also proud to be a strong corporate partner who cares deeply for our neighbors and employees, and we conduct socially responsible business under the most transparent governance. We maintain our focus on responsible lending, sustainability, and diversity. Everything we do, either in the office or out in the community, is guided and inspired by our core values, and we continue to make meaningful progress toward achieving our vision of providing the best banking experience for every customer. In 2019, we were recognized by local and national organizations for our accomplishments. Over the year, we received accolades for our financial performance, customer experience, and community dedication. It is rewarding to see our entire team’s hard work celebrated by those we serve. As we reflect on 2019, we want to express our sincere gratitude to you—our shareholders, customers, employees, and communities—for your loyalty and support. Together, we move into the next decade with much to celebrate and look forward to. Lawrence J. Sterrs Chair, Board of Directors Gregory A. Dufour President & CEO Personalizing solutions for Our Valued Customers Focusing on customer experience Seamless service, both in person and online Our vision unites us around providing the best banking experience, no matter how customers choose to bank with us—in person, online, or by phone. When a customer or employee believes we’re doing something well or can improve, we want to hear about it. Through CamdenCircle, our customer experience program, we collect opinions, comments, and feedback which shape our personal approach to doing business. CamdenCircle inspires us to develop new solutions, improve processes, and better serve our customers each day. “I love the mobile app and the warm ‘like family’ way I’m treated as a customer at my local branch. I love the rewards for using my debit card. I recently recommended Camden National Bank to a friend, and she opened an account!” – Lydia, Portland, ME “From start to finish, Camden National Bank’s employees and mortgage process were outstanding— friendly, knowledgeable, efficient, and speedy. I have done many transactions and rate this one at the top.” -Mortgage Customer 9% increase in total outreach to our 24/7 Customer Care Team 45% increase in live chats 2,652,000+ total teller transactions 1,279,000+ total ATM transactions 8% increase in total debit card transactions Continuously enhancing digital banking 41% growth in total digital banking logins 15% growth in total accounts with eStatements 18% growth in total mobile deposit customers 27% growth in person- to-person payment users with 93% growth in total payments made 25% of funded residential loan applications were submitted using MortgageTouchTM 59,457 54,729 247,773 222,375 50,579 47,543 185,578 148,256 2016 2017 2018 2019 2016 2017 2018 2019 TOTAL ACTIVE DIGITAL BANKING ACCOUNTS TOTAL MOBILE DEPOSITS Local guidance and sophisticated solutions Robust digital capabilities through TreasuryLinkTM Comprehensive wealth management and investment solutions Our expert teams build strong relationships with individuals, families, and businesses to help them achieve their financial goals. Additionally, we provide consultation and support for businesses of all sizes, from start-up ventures to large commercial clients across New England, fueling their growth and success. For businesses with complex cash management needs, our TreasuryLinkTM online banking platform provides customizable reports, automated alerts, and user controls for managing liquidity and payments. The majority of our TreasuryLinkTM customers also utilize fraud prevention services, such as Positive Pay, plus ACH blocks, dual controls, and multifactor authentication to protect their transactions and accounts. Camden National Wealth Management provides investment management, financial planning, and trust and estate services tailored for individual and institutional clients throughout Maine and the United States. Our team of local, trusted professionals delivers personalized advice and solutions, created for each client’s unique objectives. In 2019, we expanded our Treasury Management team and added international expertise to support organizations with secure foreign transaction commerce. We also partnered with SWIFT, making it easier for customers to receive international payments. Camden National Wealth Management assets under management grew 20% to $1 billion in 2019. “Camden National Bank has been Down East’s partner since the 1980s, and we’ve always been impressed by their in-depth knowledge of our business and needs. They are just the right size for us: large enough to provide competitive products and services, yet small enough for close relationships.” “Our experience as a customer has been nothing but exceptional from our first meeting on. We’re always impressed by your willingness to go the extra mile. As our business—and banking product needs—has grown, you’ve been there to guide us, answer all of our questions, and make the process seamless.” – Bob Fernald President, Publisher, and CEO, Down East Magazine – Annette Goldberg, Operations Manager, and Melanie Tromblee, Relationship Manager, Red Door Title Bringing out the best in our Employees and Communities We’re attracting, retaining, and rewarding top talent, and we’re proud to share that, in 2019, 35% of open positions were filled by internal candidates. Recognizing employee achievements Our employees contribute to our success each day, and we’re incredibly proud of their accomplishments over the past year. At our 2019 Employee Appreciation Night, we celebrated together and awarded 14 employees for their leadership, innovation, and commitment to our vision and core values. Supporting health and wellness We work to create an energized, engaged culture by empowering our employees in a safe and welcoming workplace environment with resources for healthy lifestyles and financial well-being. This includes a robust health benefits package, in addition to special benefits such as: Retirement account contributions Online financial training 1 in 3 employees completed lessons in our Financial Fitness program Gym and fitness class reimbursements More than $30,000 reimbursed in 2019 Employee Assistance Program Resources to help employees and their families cope with life’s unpredictable challenges Employee Emergency Fund Provides confidential funds to help an employee with a personal or family emergency need Workplace enhancements In 2019, we made significant updates to offices in Portland, Gardiner, and Rockport Employees in Rockport, Maine, celebrate a large employee-raised donation to Good Shepherd Food Bank. $480,000+ Donated since 2015 to local homeless shelters through Hope@Home $500,000 Pledged to Pen Bay Healthcare and Maine Medical Center supporting health and wellness $150,000 Donated since 2011 to Maine nonprofits on behalf of 43 Leaders & Luminaries Awardees 2019 Donations 35% Health & Wellness 20% Youth & Education 19% Hope@Home 10% Community 8% Arts 8% Economic Development & Charities $17,000 Donated to Big Brothers Big Sisters chapters in Maine $15,000 Multiyear gift pledged to the Olympia Snowe Women’s Leadership Institute 14,000+ Employee volunteer hours for local community organizations Rooted in our communities As we’ve grown over the years, our commitment to social responsibility and giving back has deepened. In 2019, we donated to a broad cross-section of nonprofits in our communities. Key areas of focus included support for organizations in the health and wellness space, as well as those dedicated to youth and education. Delivering record Financial Results Consistently strong financial performance In 2019, Camden National Corporation reported record net income of $57.2 million and diluted earnings per share (EPS) of $3.69, as well as strong financial performance metrics, including a return on average assets of 1.30% and return on average tangible equity of 15.99%. Our efficiency ratio fell below 56% in 2019, representing an improvement of nearly 2% over last year as we see the benefits of our investments in people and technology driving revenue growth of 7% and an operating expense increase of 4%. In 2019, we built on our successes from last year, and by working collaboratively across business lines, we continued expanding our customer base and market presence. Average deposits grew 14% year over year, driven by checking and money market growth. According to the FDIC, Camden National Bank increased its deposit market share for the state of Maine to 11.4% as of June 30, 2019, maintaining our rank of second in the state and first for community banks. Average loans grew 8% year over year, and total loans were $3.1 billion at December 31, 2019. In 2019, our loan production in southern Maine, New Hampshire, and Massachusetts increased 11% over 2018 as we continued to expand our presence within those markets. $169.7 $158.6 $57.2 $53.1 $153.9 $152.7 61.13% $40.1 $28.5 $21.0 $113.9 57.53% 57.71% 57.05% 55.77% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 NET INCOME ($ Millions) REVENUES1 ($ Millions) EFFICIENCY RATIO2 (Non-GAAP) (1) Revenues is the sum of net interest and non-interest income. (2) Efficiency ratio is non-interest expense divided by total revenues, each may be adjusted for certain items. This is a non-GAAP measure. 5 Year Cumulative Total Return 12/31/14 - 12/31/19 98.18% 82.85% 48.49% Net income grew 8% and diluted EPS grew 9% over last year. Source: S&P Global Market Intelligence We also reported historically strong asset quality metrics, with nonperforming assets of just 0.25% of total assets and loans 30-89 days past of 0.17% of total loans at year end. Our prudent and unwavering approach to lending has served us well in all business and macro environments, allowing us to focus on growth while delivering consistent financial returns to our shareholders. Because of our strong financial position and continued success, we deployed nearly $21 million of capital in 2019 through the repurchase of over 488,000 shares of Camden National Corporation common stock, while simultaneously increasing our fourth quarter 2019 cash dividend to shareholders by 10%. Through our collective efforts in 2019 and over the past several years, we delivered a total return of 31.78% on Camden National Corporation common stock in 2019 and a 98.18% total return over the last five years. Camden National Corporation SNL U.S. Bank $1B-$5B Assets Index Russell 2000 Index Common Stock & Analysts Camden National Corporation’s common stock is listed on the NASDAQ Global Select Market and is traded under the symbol “CAC”. The following analysts publish research about Camden National Corporation: Keefe, Bruyette & Woods, Inc., Raymond James and Associates, and Janney Montgomery Scott LLC. Camden National Corporation was one of 30 publicly traded, top-performing banks and thrifts named to the Sandler O’Neil Sm-All Stars Class of 2019. To earn Sm-All Star status, companies were required to have a market capitalization below $2.5 billion and were selected based on various financial screening criteria, including growth, profitability, credit quality, and capital strength. We were the only bank headquartered in New England to be recognized with this award in 2019. (Dollars in thousands, except per share data) 2019 2018 $ Change % Change Operating Data Net interest income Provision for credit losses Non-interest income Non-interest expense Pre-tax income Income tax expense Net income Per Share Data Diluted earnings per share Cash dividends per share Book value at end of period Tangible book value at end of period(1) Closing stock price (at December 31st) Balance Sheet at Year End Assets Investment securities Loans and loans held for sale Deposits Shareholders’ equity Financial & Performance Ratios Return on average assets Return on average tangible equity(1) Net interest margin Efficiency ratio(1) Tier I leverage capital ratio Nonperforming assets to total assets Net charge-offs to average loans $ 127,630 $ 120,393 2,861 42,113 95,303 71,579 14,376 57,203 $ 3.69 1.23 31.26 24.77 46.06 847 38,176 91,945 65,777 12,706 53,071 $ 3.39 1.15 27.95 21.61 35.97 $ 7,237 2,014 3,937 3,358 5,802 1,670 4,132 $ 0.30 0.08 3.31 3.16 10.09 $ 4,429,521 $ 4,297,435 $ 132,086 933,069 926,678 3,106,877 3,030,625 3,537,743 3,464,474 473,415 435,825 6,391 76,252 73,269 37,590 6% 238% 10% 4% 9% 13% 8% 9% 7% 12% 15% 28% 3% 1% 3% 2% 9% 1.30% 15.99% 3.15% 55.77% 9.55% 0.25% 0.08% 1.28% 17.22% 3.16% 57.71% 9.53% 0.34% 0.01% (1) This is a non-GAAP measure. Refer to “Non-GAAP Financial Measures and Reconciliation to GAAP” in the Company’s 2019 Annual Report on Form 10-K for a reconciliation of GAAP to non-GAAP financial measures. For a complete set of Consolidated Financial Statements, refer to the Company’s 2019 Annual Report on Form 10-K. Guidance through Leadership and Example Strong corporate governance Our directors and executive management team are committed to setting the tone, expectations, and corporate culture from the top, and we believe in the importance of sound and effective corporate governance for responsible growth. Our Board of Directors provides oversight, support, and guidance to all constituents, and it plays a vital role in our shared success. Our board directors are customers, advocates, and advisors, making us a stronger financial institution and community leader. In early 2020, we prepared our inaugural environmental, social, and governance (ESG) report, available on our website at www.CamdenNationalCorporation.com. Our commitment to enhancing and showcasing ESG practices reinforces our focus on building a strong corporate culture across our teams. Board diversity is vital to our success We seek to have a board composed of directors with diverse experience in business and in areas relevant to the Company. Our directors possess the highest personal and professional ethics, integrity, and values, and they are committed to representing the long-term interests of the shareholders. The role of Chair of the Board is held by an independent, non-executive director, Lawrence J. Sterrs, who has served as chair since 2017. 40% of directors are women 90% of directors are independent 80% of directors have tenure over five years 40% of directors have financial services expertise Board of Directors Lawrence J. Sterrs, Chair Board Chair, UniTek/UniTel & Chair CEO, Unity Foundation Ann W. Bresnahan Civic Leader Craig N. Denekas Trustee, Chairman and CEO, Libra Foundation Gregory A. Dufour President & CEO, Camden National Corporation and Camden National Bank David C. Flanagan President, Viking Lumber, Inc. Robert D. Merrill President, Merrill Furniture S. Catherine Longley EVP and COO, The Jackson Laboratory James H. Page, Ph.D. Retired Chancellor, University of Maine System James L. Markos Jr., Esq. General Manager, Maine Shellfish Company Marie J. McCarthy Chief Operations & People Officer, L.L.Bean Robin A. Sawyer, CPA Retired Vice President of Corporate Finance and Corporate Controller, Wex Inc. Carl J. Soderberg President, Soderberg Company, Inc. Camden National Corporation Camden National Bank “ We are proud to be a strong corporate partner who cares deeply for our neighbors and employees, and we conduct business in a socially responsible manner under the most transparent governance.” – Lawrence “Larry” J. Sterrs, Chair, Board of Directors Lewiston Auburn Greenville Dover-Foxcroft Milo Bingham Corinth Old Town Madison Newport Hermon Hampden Bangor (2) Brewer Waterville (2) Oakland Bucksport Ellsworth (2) Belfast (2) Blue Hill Manchester Winthrop Hallowell Richmond Camden (2) Augusta (4) Randolph Union Gardiner Rockland Waldoboro Thomaston Damariscotta Wiscasset Bath Boothbay Harbor Castine Bar Harbor Stonington Vinalhaven Calais Machias Milbridge Jonesport Topsham Brunswick (2) Falmouth Portland Saco Kennebunk York Manchester Portsmouth Camden National Bank Camden National Wealth Management Braintree As announced in January 2020, our Corinth, Hampden and Milo banking centers will close in April 2020. 2 Elm Street | Camden, ME 04843 | CamdenNational.com | For You 24/7: 800-860-8821 Member FDIC | Equal Housing Lender 

Continue reading text version or see original annual report in PDF format above