PR Newswire | Oct 26, 2021 08:31AM EDT

10/26 07:30 CDT

Camden National Corporation Reports Third Quarter 2021 Financial ResultsCamden National Corporation Reports Net Income of $52.5 Million for the Nine Months Ended September 30, 2021 and $14.6 Million for the Third Quarter of 2021 CAMDEN, Maine, Oct. 26, 2021

CAMDEN, Maine, Oct. 26, 2021 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company"), a $5.5 billion bank holding company headquartered in Camden, Maine, reported net income of $52.5 million and diluted earnings per share ("EPS") of $3.49 for the nine months ended September 30, 2021, an increase of 27% and 28%, respectively, compared to the same period in 2020. The Company's solid year-to-date earnings translated into a return on average equity of 12.96% and return on average tangible equity (non-GAAP) of 15.91% for the same period.

"We have much to be proud of here at Camden National," said Gregory A. Dufour, President and Chief Executive Officer. "We were recently named as one of the best places to work in Maine for 2021 by an independent group and we just received our latest internal engagement scores showing positive growth and momentum. The commitment and dedication of our team here at Camden National resonates loud and clear, and it translated directly into shareholder value through record earnings for the first nine months of the year with net income of $52.5 million and diluted earnings per share of $3.49."

Dufour added, "In response to the historically challenging job market we find ourselves facing, in late-September, we communicated to our employees that effective early-October their wages were increasing at a minimum of 3%, and our starting minimum wage was increasing from $15 to $17 per hour. These adjustments were made to attract new talent, and retain and recognize the value our current employees continuously provide."

Net income for the third quarter of 2021 was $14.6 million and diluted earnings per share ("EPS") was $0.97, a decrease of 13%, respectively, compared to the third quarter of 2020. The decrease was driven by a shift in the Company's strategy to hold more of its residential mortgage production within its loan portfolio.

Net income and diluted EPS for the third quarter of 2021 decreased 19% and 20%, respectively, compared to the second quarter of 2021. The decrease was driven by growth within our loan portfolio and pipeline that resulted in provision expense for the third quarter of 2021 of $939,000, compared to a provision release of $3.4 million last quarter. On a pre-tax, pre-provision-basis (non-GAAP), third quarter 2021 earnings increased 2% over last quarter.

In September, the Company announced a cash dividend of $0.36 per share, payable on October 29, 2021, to shareholders of record on October 15, 2021, representing an annualized dividend yield of 3.01%, based on the Company's closing share price of $47.90, as reported by NASDAQ as of September 30, 2021.

THIRD QUARTER 2021 HIGHLIGHTS

* Net income decreased by $2.1 million, or 13%, compared to the third quarter of 2020 and decreased $3.5 million, or 19%, compared to the second quarter of 2021. * Pre-tax, pre-provision earnings (non-GAAP) decreased $2.4 million, or 11%, compared to third quarter of 2020, and increased $323,000, or 2%, over the second quarter of 2021. * Net interest margin on a fully-taxable equivalent basis ("net interest margin") for the third quarter of 2021 was 2.76%, compared to 3.00% for the third quarter of 2020 and 2.83% for the second quarter of 2021. * Adjusted net interest margin (non-GAAP), which excludes Small Business Administration Paycheck Protection Program ("SBA PPP") average loans and related income, and average excess liquidity and related income, for the third quarter of 2021 was 2.82%, compared to 3.04% for the third quarter of 2020 and 2.89% for the second quarter of 2021. * Loans grew 3% during the nine months ended September 30, 2021, and excluding SBA PPP loans (non-GAAP), grew 5% during the same period. * Non-performing assets were 0.14% of total assets and loans 30-89 days past due were 0.06% of total loans at September 30, 2021, compared to 0.22% and 0.10% at December 31, 2020, respectively. * Repurchased 106,502 shares of the Company's common stock during the third quarter of 2021.

FINANCIAL CONDITION

As of September 30, 2021, total assets were $5.5 billion, an increase of $604.2 million, or 12%, since December 31, 2020. Asset growth for the nine months ended September 30, 2021 was driven by: (1) an increase in investment balances of $338.3 million, or 30%, (2) an increase in cash balances of $233.9 million, or 160%, and (3) an increase in loan balances of $95.5 million, or 3%.

* Through the nine months ended September 30, 2021, the Company purchased $618.7 million of debt securities, which continue to be primarily mortgage-backed securities and collateralized mortgage obligations. As of September 30, 2021, the weighted-average life of the Company's debt securities portfolio was 6.0 years compared to 5.1 years as of December 31, 2020. At September 30, 2021, the investment portfolio was 27% of total assets, compared to 23% as of December 31, 2020. * The increase in cash balances was driven by strong deposit growth of 15% since December 31, 2020. The Company has and continues to take certain actions to manage its liquidity position, including paying-off borrowings, managing depositor relationships, increasing investments and growing loans. * Loan balances grew 3% during the nine months ended September 30, 2021, and excluding SBA PPP loans (non-GAAP), grew $148.6 million, or 5% over the same period. During the nine months ended September 30, 2021, residential loans grew $167.3 million, or 16%, and commercial real estate loans grew $50.2 million, or 4%. Loan growth within these two loan portfolios was partially offset by a decrease across the other product lines, including a decrease in SBA PPP loans of $53.1 million, consumer and home equity loans of $39.9 million, and commercial loans of $29.0 million during the same period.

In response to the Company's interest rate risk and liquidity positions, in recent quarters the Company began holding more of its residential mortgage production within its loan portfolio. For the nine months ended September 30, 2021, the Company held 53%, or $441.2 million, of its residential mortgage production within its loan portfolio, which includes holding 67% of its originations for the third quarter of 2021. As of September 30, 2021, 69% of the Company's residential mortgage pipeline was designated to be held in its portfolio.

As of September 30, 2021, the Company's loan pipelines were robust and included $222.0 million of residential and home equity loans, and $147.1 million of commercial and commercial real estate loans, of which $55.8 million were construction loans and credit lines. Loan prepayments continue to run at elevated levels, particularly within the commercial loan portfolios primarily due to customers having excess liquidity and business sales. Based on current conditions, the Company expects continued pressure from prepayment activity.

As of September 30, 2021, total deposits were $4.6 billion, an increase of $599.9 million, or 15%, since December 31, 2020. Deposit growth for the nine months ended September 30, 2021 was primarily due to core deposit (non-GAAP) growth of $628.8 million, or 19%, which was driven by additional government stimulus programs in response to the COVID-19 pandemic during the first quarter of 2021 and seasonal inflows throughout the summer months. The Company's loan-to-deposit ratio was 72% at September 30, 2021, compared to 80% at December 31, 2020.

As of September 30, 2021, total borrowings were $255.9 million, an increase of $9.1 million, or 4%, since December 31, 2020. Repurchase agreements increased $49.1 million over this period, offsetting other actions taken by the Company in light of its capital and liquidity position, including early termination of a $25.0 million long-term borrowing contract during the first quarter of 2021, and full redemption of its $15.0 million of subordinated notes during the second quarter of 2021.

As of September 30, 2021, the Company's capital position remained well in excess of regulatory requirements, including a total risk-based capital ratio of 15.06% and a tier 1 leverage ratio of 9.13%. The Company's shareholders' equity to total assets position and tangible common equity ratio (non-GAAP) was 9.92% and 8.30% at September 30, 2021, respectively, compared to 10.81% and 8.99% at December 31, 2020.

In the first quarter of 2021, the Company initiated a new share repurchase program for up to 750,000 shares of its common stock, or approximately 5% of the Company's shares outstanding. This share repurchase program replaces the program that terminated in January 2021. For the three and nine months ended September 30, 2021, the Company repurchased 106,502 shares for $4.9 million.

ASSET QUALITY

As of September 30, 2021, the Company's asset quality metrics remained very strong with non-performing assets of 0.14% of total assets and loans 30-89 days past due of 0.06% of total loans. In comparison, at December 31, 2020, non-performing assets were 0.22% of total assets, and loans 30-89 days past due were 0.10% of total loans.

ALLOWANCE FOR CREDIT LOSSES ("ACL")

In the fourth quarter of 2020, the Company adopted the current expected credit loss methodology, commonly referred to as "CECL," to account for the ACL on loans and certain off-balance credit exposures, effective as of January 1, 2020. Interim periods prior to the fourth quarter of 2020 continue to be presented under the incurred loss methodology.

At September 30, 2021, the ACL on loans was $32.3 million, or 0.97% of total loans, compared to $37.9 million, or 1.18% of total loans, at December 31, 2020. The decrease in the allowance reflects the Company's strong asset quality and overall improvement in the current and forecasted market conditions over its forecast period. There have been no significant changes in the Company's CECL methodology since year-end.

FINANCIAL OPERATING RESULTS (Q3 2021 vs. Q3 2020)

Net income for the third quarter of 2021 was $14.6 million, a decrease of $2.1 million, or 13%, compared to the third quarter of 2020. Diluted EPS for the third quarter of 2021 was $0.97, a decrease of $0.14, or 13%, compared to the same period last year.

Net Interest Income and Net Interest Margin.Net interest income for the third quarter of 2021 was $34.7 million, an increase of $265,000, or 1%, over the third quarter of 2020. Interest income decreased $1.3 million, or 3%, between periods, but was offset by a decrease in interest expense of $1.6 million, or 37%.

* The decrease in interest income between periods was driven by a 40 basis point decrease in the Company's interest-earning asset yield to 2.97% for the third quarter of 2021. The pressure on asset yields was driven by higher cash balances, and the current interest rate environment as assets reprice, customers refinance and new assets are originated at lower yields. Additionally, SBA PPP income earned for the third quarter of 2021 of $2.0 million, was $407,000 lower than that earned for the same period last year. * The decrease in interest expense between periods was driven by a lower cost of funds of 16 basis points falling to 0.22% for the third quarter of 2021. The decrease in cost of funds between periods reflects certain actions taken to manage deposit and borrowing costs lower.

Net interest margin for the third quarter of 2021 was 2.76%, a decrease of 24 basis points compared to the third quarter of 2020. Adjusted net interest margin, which excludes SBA PPP loans and excess liquidity (non-GAAP), for the third quarter of 2021 was 2.82%, decreased 22 basis points compared to the third quarter of 2020.

Provision for Credit Losses. The provision for credit losses for the third quarter of 2021 was reported using the CECL methodology, whereas the provision for credit losses for the third quarter of 2020 was reported using the incurred loss methodology.

The change in provision for credit losses between periods is highlighted in the table below:

CECL IncurredIncrease /($ in thousands) Q3 2021Q3 2020 (Decrease)

Provision for credit losses - loans $269 $1,000$ (731)

Provision (credit) for credit losses - off-670 (13) 683 balance sheet credit exposures

Provision for credit losses $939 $987 $ (48)

For the third quarter of 2021, the Company recorded $269,000 in provision for credit losses on loans. The provision expense for the quarter accounts for the increase in loan balances, excluding SBA PPP loans (non-GAAP), the Company's strong asset quality and minimal net charge-offs for the quarter of $57,000 and improved economic conditions. In comparison, at this time last year, the Company was still operating in very volatile and uncertain market conditions, and although its asset quality remained strong and net charge-offs were not elevated, $1.0 million of provision expense related to loan balances was recognized to reflect current market conditions at that time.

The provision (credit) for credit losses on off-balance sheet credit exposures accounts reflects the change between periods on the Company's future expected credit losses on funding commitments, which includes the unfunded portion of its construction loans, credit lines, and committed loan pipeline. As of September 30, 2021, the allowance for credit losses on its off-balance sheet credit exposures was $3.2 million, compared to $2.5 million as of June 30, 2021 and $9,000 as of September 30, 2020.

Non-Interest Income. Non-interest income for the third quarter of 2021 was $11.1 million, a decrease of $1.6 million, or 13%, compared to the third quarter of 2020. The decrease was driven by lower mortgage banking income of $2.8 million. In early-2021, the Company shifted its strategy to hold more residential mortgage loans within its loan portfolio, and, as a result, the Company sold 33% of its residential mortgage production during the third quarter of 2021, compared to 69% for the third quarter of 2020. The decrease in mortgage banking income was partially offset by an increase in debit card income of $651,000, an increase in both fiduciary income and brokerage income totaling $361,000, and an increase in service charges fees of $138,000.

Non-Interest Expense. Non-interest expense for the third quarter of 2021 was $26.3 million, an increase of $1.0 million, or 4%, compared to the third quarter of 2020. Compensation and related costs for the third quarter of 2021 increased $2.2 million, or 16%, over the third quarter of 2020 and was driven by: (1) higher performance-based incentive accruals of $1.2 million due to the Company's year-to-date financial performance, and (2) higher wages of $545,000, or 6%. The increase in compensation and related costs was partially offset by a decrease in other expenses between periods of $1.1 million as the Company accrued in the third quarter of 2020 $1.2 million for a legal matter.

Effective October 3, 2021, the Company provided a minimum 3% wage increase to all of its employees and increased its starting minimum wage $2 per hour to $17 per hour. The off-cycle wage adjustment was in response to the challenging job market and need to retain and attract talent. This off-cycle wage adjustment is not in replacement of the Company's normal merit cycle in March each year. Beginning in 2022, the Company will suspend its profit sharing contribution to employees' 401(k) accounts to partially fund the impact of the off-cycle wage adjustment.

FINANCIAL OPERATING RESULTS (Q3 2021 vs. Q2 2021)

Net income for the third quarter of 2021 decreased $3.5 million, or 19%, compared to the second quarter of 2021. On a linked-quarter-basis, diluted EPS decreased $0.24, or 20%.

Net Interest Income and Net Interest Margin.Net interest income for the third quarter of 2021 increased $1.2 million, or 4%, compared to the second quarter of 2021. On a linked-quarter basis, interest income increased $1.1 million, or 3%, and interest expense decreased $104,000, or 4%.

* The increase in interest income between periods was driven by: (1) an increase in average investment balances of $154.4 million, or 12%, and an increase in average loan balances of $30.1 million, or 1%, and (2) an increase in SBA PPP income of $291,000 due to elevated payoffs, offsetting continued yield pressures on the Company's core loan segments, including residential real estate, commercial real estate and commercial loans. * The decrease in interest expense between periods was driven by a decrease in cost of funds of 2 basis points to 0.22% led by lower interest rates on certificates of deposit, repurchase agreements and subordinated debentures, as the Company called its subordinated notes in the second quarter of 2021.

Net interest margin for the third quarter of 2021 decreased 7 basis points compared to the second quarter of 2021. Adjusted net interest margin, which excludes SBA PPP loans and excess liquidity (non-GAAP), for the third quarter of 2021 was 2.82%, a decrease of 7 basis points compared to the second quarter of 2021.

Provision for Credit Losses. The change in provision for credit losses between periods is highlighted in the table below:

CECL CECL Increase /($ in thousands) Q3 2021Q2 2021 (Decrease)

Provision (credit) for credit losses - loans$269 $(3,452)$ 3,721

Provision for credit losses - off-balance 670 49 621 sheet credit exposures

Provision (credit) for credit losses $939 $(3,403)$ 4,342

For the third quarter of 2021, the Company recorded $269,000 of provision for credit losses on loans primarily due to loan growth, excluding SBA PPP loans (non-GAAP), of $73.5 million, whereas the previous quarter it recorded a credit for provision expense of $3.5 million related to its loan balances because of improving current and forecasted market conditions.

On a linked-quarter-basis, the increase in the provision for credit losses on off-balance sheet credit exposures was driven by strong growth within its unfunded loan commitments and loan pipeline of $96.5 million led by the commercial and commercial real estate loan pipelines.

Non-Interest Income. Non-interest income for the third quarter of 2021 decreased $221,000, or 2%, compared to the second quarter of 2021. The decrease between periods was driven by lower mortgage banking income of $685,000 as the Company sold 33% of its residential mortgage loan production during the third quarter of 2021, compared to 40% during the second quarter of 2021. The change in percentage sold reflects the Company's shift in strategy as it looks to hold more residential mortgages within its loan portfolio. The decrease in mortgage banking income was partially offset by: (1) an increase service charge income of $227,000 due to the redesign of its consumer checking products in the second quarter of 2021, and (2) debit card income of $166,000.

Non-Interest Expense. Non-interest expense for the third quarter of 2021 increased $673,000, or 3%, compared to the second quarter of 2021. The increase was driven by an increase in compensation-related expenses of $584,000, or 4%, which was driven by an increase in incentive-based accruals of $366,000 based on year-to-date financial performance.

Q3 2021 CONFERENCE CALL

Camden National will host a conference call and webcast at 3:00 p.m., Eastern Time, on Tuesday, October 26, 2021 to discuss its third quarter 2021 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): (844) 200-6205

Live dial-in (international): (929) 526-1599

Participant access code: 175893

Live https://services.choruscall.com/links/webcast: cac211026.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 (NASDAQ:CAC) is the largest publicly traded bank holding company in Northern New England with $5.5 billion in assets and approximately 600 employees. Camden National Bank, its subsidiary, is a full-service community bank founded in 1875 in Camden, Maine. Dedicated to customers at every stage of their financial journey, the bank offers the latest in digital banking, complemented by personalized service with 58 banking centers, 24/7 live phone support, 68 ATMs, and additional lending offices in New Hampshire and Massachusetts. For the past three years, Camden National Bank was named a Customer Experience (CX) Leader by leading independent research firm, Greenwich Associates. In 2020, it received awards in two CX categories: U.S. Retail Banking and U.S. Commercial Small Business. The Finance Authority of Maine has awarded Camden National Bank as "Lender at Work for Maine" for eleven years, and the bank was included in the 2021 list of Best Places to Work in Maine. Comprehensive wealth management, investment and financial planning services are delivered by Camden National Wealth Management. To learn more, visit 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, as amended, 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 Camden National's Annual Report on Form 10-K for the year ended December 31, 2020, as updated by other filings with the Securities and Exchange Commission ("SEC"). Further, statements about the potential effects of the COVID-19 pandemic on our business, results of operations and financial condition may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, action taken by government authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, service providers and on economies and markets more generally. 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 pre-tax, pre-provision earnings; return on average tangible equity; the efficiency and tangible common equity ratios; tangible book value per share; core deposits and average core deposits; adjusted yield on interest-earning assets and adjusted net interest margin (fully-taxable equivalent); and total loans, excluding SBA PPP loans. 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 measure 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. Annualized data may not be indicative of any four-quarter period, and are presented for illustrative purposes only.

Selected Financial Data (unaudited)



At or For The At or For The Three Months Ended Nine Months Ended

September 30,June 30, September 30,September 30,September 30,(In thousands, except number of shares and per share data) 2021 2021 2020 2021 2020

Financial Condition Data

Investments $1,471,118 1,415,695 $1,125,360 $1,471,118 $1,125,360

Loans and loans held for sale 3,326,129 3,301,056 3,312,777 3,326,129 3,312,777

Allowance for credit losses on loans 32,272 32,060 36,414 32,272 36,414

Total assets 5,502,902 5,152,069 5,153,793 5,502,902 5,153,793

Deposits 4,605,180 4,294,114 4,224,044 4,605,180 4,224,044

Borrowings 255,883 214,744 294,361 255,883 294,361

Shareholders' equity 545,984 545,548 517,522 545,984 517,522

Operating Data

Net interest income $34,746 $ 33,529 $34,481 $100,639 $100,846

Provision (credit) for credit losses 939 (3,403) 987 (4,420) 12,160

Non-interest income 11,099 11,320 12,696 37,634 36,159

Non-interest expense 26,263 25,590 25,221 76,752 73,291

Income before income tax expense 18,643 22,662 20,969 65,941 51,554

Income tax expense 4,003 4,519 4,194 13,418 10,346

Net income $14,640 $ 18,143 $16,775 $52,523 $41,208

Key Ratios

Return on average assets 1.08 %1.42 %1.34 %1.36 %1.15 %

Return on average equity 10.51 %13.50 %13.01 %12.96 %11.06 %

GAAP efficiency ratio 57.29 %57.06 %53.46 %55.51 %53.50 %

Net interest margin (fully-taxable equivalent) 2.76 %2.83 %3.00 %2.82 %3.06 %

Non-performing assets to total assets 0.14 %0.17 %0.22 %0.14 %0.22 %

Common equity ratio 9.92 %10.59 %10.04 %9.92 %10.04 %

Tier 1 leverage capital ratio 9.13 %9.48 %8.96 %9.13 %8.96 %

Total risk-based capital ratio 15.06 %15.26 %15.15 %15.06 %15.15 %

Per Share Data

Basic earnings per share $0.98 $ 1.21 $1.12 $3.51 $2.74

Diluted earnings per share $0.97 $ 1.21 $1.11 $3.49 $2.73

Cash dividends declared per share $0.36 $ 0.36 $0.33 $1.08 $0.99

Book value per share $36.77 $ 36.49 $34.69 $36.77 $34.69

Non-GAAP Measures^(1)

Return on average tangible equity 12.86 %16.60 %16.21 %15.91 %13.91 %

Efficiency ratio 57.00 %56.72 %50.60 %54.83 %52.29 %

Adjusted net interest margin (fully-taxable equivalent) 2.82 %2.89 %3.04 %2.87 %3.10 %

Pre-tax, pre-provision earnings $19,582 $ 19,259 $21,956 $61,521 $63,714

Tangible common equity ratio 8.30 %8.87 %8.30 %8.30 %8.30 %

Tangible book value per share $30.23 $ 29.99 $28.14 $30.23 $28.14

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

Consolidated Statements of Condition Data (unaudited)



September 30,December 31,September 30,(In thousands) 2021 2020 2020

ASSETS

Cash, cash equivalents and restricted cash $379,656 $145,774 $346,389

Investments:

Trading securities 4,335 4,161 3,648

Available-for-sale securities, at fair value (book value of $1,443,800, $1,078,474 and 1,455,210 1,115,813 1,107,069 $1,070,479, respectively)

Held-to-maturity securities, at amortized cost (fair value of $1,390, $1,411 and $1,403, 1,293 1,297 1,298 respectively)

Other investments 10,280 11,541 13,345

Total investments 1,471,118 1,132,812 1,125,360

Loans held for sale, at fair value (book value of $10,789, $40,499 and $37,301, 10,826 41,557 37,935 respectively)

Loans:

Commercial real estate 1,419,677 1,369,470 1,333,733

Commercial^(1) 352,533 381,494 375,548

SBA PPP 81,959 135,095 223,838

Residential real estate 1,222,084 1,054,798 1,044,103

Consumer and home equity 239,050 278,965 297,620

Total loans 3,315,303 3,219,822 3,274,842

Less: allowance for credit losses on loans (32,272) (37,865) (36,414)

Net loans 3,283,031 3,181,957 3,238,428

Goodwill and core deposit intangible assets 97,049 97,540 97,711

Other assets 261,222 299,105 307,970

Total assets $5,502,902 $4,898,745$5,153,793

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Deposits:

Non-interest checking $1,289,018 $792,550 $800,582

Interest checking 1,266,242 1,288,575 1,419,544

Savings and money market 1,437,550 1,282,886 1,306,868

Certificates of deposit 323,395 357,666 405,434

Brokered deposits 288,975 283,567 291,616

Total deposits 4,605,180 4,005,244 4,224,044

Short-term borrowings 211,552 162,439 210,055

Long-term borrowings - 25,000 25,000

Subordinated debentures 44,331 59,331 59,306

Accrued interest and other liabilities 95,855 117,417 117,866

Total liabilities 4,956,918 4,369,431 4,636,271

Shareholders' equity 545,984 529,314 517,522

Total liabilities and shareholders' equity $5,502,902 $4,898,745$5,153,793

(1) Includes the Healthcare Professional Funding Corporation ("HPFC") loan portfolio.

Consolidated Statements of Income Data (unaudited)



For The For The Three Months Ended Nine Months Ended

September 30,June 30, September 30,September 30,September 30,(In thousands, except per share data) 2021 2021 2020 2021 2020

Interest Income

Interest and fees on loans $31,185 $30,865$33,025 $92,610 $100,190

Taxable interest on investments 5,157 4,376 4,480 13,362 14,241

Nontaxable interest on investments 756 763 823 2,247 2,438

Dividend income 99 102 163 306 498

Other interest income 182 160 176 508 691

Total interest income 37,379 36,266 38,667 109,033 118,058

Interest Expense

Interest on deposits 1,973 1,921 2,899 5,957 12,953

Interest on borrowings 122 176 394 454 1,591

Interest on subordinated debentures 538 640 893 1,983 2,668

Total interest expense 2,633 2,737 4,186 8,394 17,212

Net interest income 34,746 33,529 34,481 100,639 100,846

Provision (credit) for credit losses^(1) 939 (3,403) 987 (4,420) 12,160

Net interest income after provision (credit) for credit 33,807 36,932 33,494 105,059 88,686 losses

Non-Interest Income

Mortgage banking income, net 1,913 2,598 4,664 11,620 12,889

Debit card income 3,278 3,112 2,627 9,126 7,159

Income from fiduciary services 1,627 1,707 1,504 4,860 4,609

Service charges on deposit accounts 1,744 1,517 1,606 4,800 4,955

Brokerage and insurance commissions 993 939 755 2,885 2,034

Bank-owned life insurance 589 591 615 1,774 1,918

Customer loan swap fees - - 51 - 222

Other income 955 856 874 2,569 2,373

Total non-interest income 11,099 11,320 12,696 37,634 36,159

Non-Interest Expense

Salaries and employee benefits 15,902 15,318 13,739 45,742 41,693

Furniture, equipment and data processing 2,980 2,947 3,076 8,954 8,576

Net occupancy costs 1,813 1,805 1,785 5,569 5,785

Debit card expense 1,106 1,074 972 3,166 2,784

Consulting and professional fees 792 997 913 2,652 2,877

Regulatory assessments 522 487 510 1,512 971

Amortization of core deposit intangible assets 163 164 170 491 511

Other real estate owned and collection costs (recoveries), net60 (25) 71 (156) 270

Other expenses 2,925 2,823 3,985 8,822 9,824

Total non-interest expense 26,263 25,590 25,221 76,752 73,291

Income before income tax expense 18,643 22,662 20,969 65,941 51,554

Income Tax Expense 4,003 4,519 4,194 13,418 10,346

Net Income $14,640 $18,143$16,775 $52,523 $41,208

Per Share Data

Basic earnings per share $0.98 $1.21 $1.12 $3.51 $2.74

Diluted earnings per share $0.97 $1.21 $1.11 $3.49 $2.73

Reported balances for the three months ended September 30 and June 30, 2021, and the nine months ended September 30, 2021, have been(1) accounted for under the CECL model. Reported balances for the three and nine months ended September 30, 2020 have been accounted for under the incurred loss method.

Quarterly Average Balance and Yield/Rate Analysis (unaudited)



Average Balance Yield/Rate

For The Three Months Ended For The Three Months Ended

September 30,June 30, September 30,September 30,June 30,September 30,(Dollars in thousands) 2021 2021 2020 2021 2021 2020

Assets

Interest-earning assets:

Interest-bearing deposits in other banks$304,594 $235,676 $216,027 0.12 % 0.09 % 0.09 % and other interest-earning assets

Investments - taxable 1,284,851 1,129,682 906,374 1.66 % 1.62 % 2.11 %

Investments - nontaxable^(1) 114,033 114,811 122,204 3.36 % 3.36 % 3.41 %

Loans^(2):

Commercial real estate 1,410,201 1,407,374 1,315,958 3.59 % 3.60 % 3.74 %

Commercial^(1) 339,638 319,100 372,416 3.49 % 3.78 % 3.73 %

SBA PPP 105,742 158,258 221,672 7.22 % 4.15 % 4.16 %

Municipal^(1) 17,021 26,137 19,072 3.41 % 3.26 % 3.52 %

HPFC 8,981 10,775 16,104 7.45 % 9.89 % 8.09 %

Residential real estate 1,174,559 1,093,502 1,083,052 3.53 % 3.77 % 4.00 %

Consumer and home equity 242,921 253,825 305,194 4.27 % 4.17 % 4.31 %

Total loans 3,299,063 3,268,971 3,333,468 3.73 % 3.76 % 3.92 %

Total interest-earning assets 5,002,541 4,749,140 4,578,073 2.97 % 3.06 % 3.37 %

Other assets 384,766 381,677 417,956

Total assets $5,387,307 $5,130,817$4,996,029



Liabilities & Shareholders' Equity

Deposits:

Non-interest checking $1,251,492 $970,446 $741,757 - % - % - %

Interest checking 1,246,634 1,311,400 1,339,389 0.20 % 0.18 % 0.26 %

Savings 688,331 659,892 557,718 0.04 % 0.04 % 0.06 %

Money market 709,705 703,780 737,782 0.29 % 0.29 % 0.35 %

Certificates of deposit 327,802 338,595 417,788 0.49 % 0.53 % 1.07 %

Total deposits 4,223,964 3,984,113 3,794,434 0.15 % 0.16 % 0.29 %

Borrowings:

Brokered deposits 289,374 284,194 242,390 0.45 % 0.44 % 0.26 %

Customer repurchase agreements 182,114 184,663 194,937 0.26 % 0.38 % 0.42 %

Subordinated debentures 44,331 46,639 59,269 4.81 % 5.50 % 6.00 %

Other borrowings - - 73,370 - % - % 1.02 %

Total borrowings 515,819 515,496 569,966 0.76 % 0.88 % 1.01 %

Total funding liabilities 4,739,783 4,499,609 4,364,400 0.22 % 0.24 % 0.38 %

Other liabilities 94,803 92,261 118,727

Shareholders' equity 552,721 538,947 512,902

Total liabilities & shareholders' equity$5,387,307 $5,130,817$4,996,029

Net interest rate spread (fully-taxable equivalent) 2.75 % 2.82 % 2.99 %

Net interest margin (fully-taxable equivalent) 2.76 % 2.83 % 3.00 %

Adjusted net interest margin (fully-taxable equivalent) (non-GAAP) 2.82 % 2.89 % 3.04 %

(1) Reported on a tax-equivalent basis calculated using the federal corporate income tax rate of 21%, including certain commercial loans.

(2) Non-accrual loans and loans held for sale are included in total average loans.

Year-to-Date Average Balance and Yield/Rate Analysis (unaudited)



Average Balance Yield/Rate

For The Nine Months Ended For The Nine Months Ended

September 30,September 30,September 30,September 30,(Dollars in thousands) 2021 2020 2021 2020

Assets

Interest-earning assets:

Interest-bearing deposits in other banks and other interest-earning assets$ 250,715 $ 150,383 0.10 % 0.25 %

Investments - taxable 1,121,569 850,970 1.66 % 2.37 %

Investments - nontaxable^(1) 115,755 121,284 3.28 % 3.39 %

Loans^(2):

Commercial real estate 1,400,224 1,297,364 3.59 % 3.93 %

Commercial^(1) 330,755 397,754 3.67 % 3.91 %

SBA PPP 139,453 133,569 5.19 % 4.00 %

Municipal^(1) 22,404 18,545 3.32 % 3.60 %

HPFC 10,755 18,026 8.16 % 8.38 %

Residential real estate 1,117,389 1,082,276 3.67 % 4.08 %

Consumer and home equity 255,058 320,273 4.20 % 4.55 %

Total loans 3,276,038 3,267,807 3.75 % 4.06 %

Total interest-earning assets 4,764,077 4,390,444 3.06 % 3.59 %

Other assets 389,409 395,621

Total assets $ 5,153,486$ 4,786,065



Liabilities & Shareholders' Equity

Deposits:

Non-interest checking $ 1,014,778$ 645,640 - % - %

Interest checking 1,282,358 1,261,831 0.19 % 0.40 %

Savings 658,497 517,936 0.04 % 0.06 %

Money market 699,594 701,872 0.30 % 0.55 %

Certificates of deposit 339,230 482,076 0.55 % 1.36 %

Total deposits 3,994,457 3,609,355 0.17 % 0.44 %

Borrowings:

Brokered deposits 286,080 228,483 0.45 % 0.65 %

Customer repurchase agreements 177,559 213,463 0.31 % 0.71 %

Subordinated debentures 50,045 59,195 5.30 % 6.02 %

Other borrowings 4,762 69,883 0.99 % 0.88 %

Total borrowings 518,446 571,024 0.88 % 1.26 %

Total funding liabilities 4,512,903 4,180,379 0.25 % 0.55 %

Other liabilities 98,742 108,122

Shareholders' equity 541,841 497,564

Total liabilities & shareholders' equity $ 5,153,486$ 4,786,065

Net interest rate spread (fully-taxable equivalent) 2.81 % 3.04 %

Net interest margin (fully-taxable equivalent) 2.82 % 3.06 %

Adjusted net interest margin (fully-taxable equivalent) (non-GAAP) 2.87 % 3.10 %

(1) Reported on a tax-equivalent basis calculated using the federal corporate income tax rate of 21%, including certain commercial loans.

(2) Non-accrual loans and loans held for sale are included in total average loans.

Asset Quality Data

(unaudited)

At or For The At or For The At or For The At or For The At or For The (In thousands) Nine Months Ended Six Months EndedThree Months EndedYear Ended Nine Months Ended September 30, 2021June 30, 2021 March 31, 2021 December 31, 2020^(1)September 30, 2020

Non-accrual loans:

Residential real estate $2,576 $ 2,725 $3,637 $ 3,477 $ 4,017

Commercial real estate 207 222 309 512 565

Commercial^(1) 860 1,511 1,737 1,607 1,114

Consumer and home equity 1,429 1,424 1,897 2,000 2,503

Total non-accrual loans 5,072 5,882 7,580 7,596 8,199

Accruing troubled-debt restructured loans not2,564 2,519 2,579 2,818 2,952 included above

Total non-performing loans 7,636 8,401 10,159 10,414 11,151

Other real estate owned 165 165 204 236 -

Total non-performing assets $7,801 $ 8,566 $10,363 $ 10,650 $ 11,151

Loans 30-89 days past due:

Residential real estate $1,195 $ 303 $772 $ 2,297 $ 1,784

Commercial real estate - 99 177 50 2,056

Commercial^(2) 557 183 425 430 1,638

Consumer and home equity 386 214 264 440 434

Total loans 30-89 days past due $2,138 $ 799 $1,638 $ 3,217 $ 5,912

ACL on loans at the beginning of the period $37,865 $ 37,865 $37,865 $ 25,171 $ 25,171

Impact of CECL adoption - - - 233 -

(Credit) provision for loan losses (5,037) (5,306) (1,854) 13,215 12,172

Charge-offs:

Residential real estate 92 88 53 121 121

Commercial real estate - - - 103 104

Commercial^(1) 503 406 147 1,130 857

Consumer and home equity 233 213 87 484 199

Total charge-offs 828 707 287 1,838 1,281

Total recoveries (272) (208) (51) (1,084) (352)

Net charge-offs 556 499 236 754 929

ACL on loans at the end of the period $32,272 $ 32,060 $35,775 $ 37,865 $ 36,414

Components of ACL:

ACL on loans $32,272 $ 32,060 $35,775 $ 37,865 $ 36,414

ACL on off-balance sheet credit exposures^(3)3,185 2,515 2,466 2,568 9

ACL, end of period $35,457 $ 34,575 $38,241 $ 40,433 $ 36,423

Ratios:

Non-performing loans to total loans 0.23 % 0.26 % 0.31 % 0.32 % 0.34 %

Non-performing assets to total assets 0.14 % 0.17 % 0.20 % 0.22 % 0.22 %

ACL on loans to total loans 0.97 % 0.98 % 1.11 % 1.18 % 1.11 %

Net charge-offs (recoveries) to average loans (annualized):

Quarter-to-date 0.01 % 0.03 % 0.03 % (0.02) % 0.01 %

Year-to-date 0.02 % 0.03 % 0.03 % 0.02 % 0.04 %

ACL on loans to non-performing loans 422.63 % 381.62 % 352.15 % 363.60 % 326.55 %

Loans 30-89 days past due to total loans 0.06 % 0.02 % 0.05 % 0.10 % 0.18 %

(1) Period ended December 31, 2020, includes a $3.3 million increase upon adoption of CECL. Prior interim periods were not restated for CECL.

(2) Includes the HPFC loan portfolio.

(3) Presented within accrued interest and other liabilities on the consolidated statements of condition.

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

Return on Average Tangible Equity:

For the For the Three Months Ended Nine Months Ended

September 30, June 30, September 30, September 30, September 30, (Dollars in thousands) 2021 2021 2020 2021 2020

Net income, as presented $ 14,640 $18,143 $ 16,775 $ 52,523 $ 41,208

Add: amortization of core deposit 129 130 134 388 404 intangible assets, net of tax^(1)

Net income, adjusted for amortization of$ 14,769 $18,273 $ 16,909 $ 52,911 $ 41,612 core deposit intangible assets

Average equity, as presented $ 552,721 $538,947 $ 512,902 $ 541,841 $ 497,564

Less: average goodwill and core deposit (97,128) (97,292) (97,794) (97,293) (97,967) intangible assets

Average tangible equity $ 455,593 $441,655 $ 415,108 $ 444,548 $ 399,597

Return on average equity 10.51 % 13.50 %13.01 % 12.96 % 11.06 %

Return on average tangible equity 12.86 % 16.60 %16.21 % 15.91 % 13.91 %

(1) Assumed a 21% tax rate.

Efficiency Ratio:

For the For the Three Months Ended Nine Months Ended

September 30, June 30, September 30, September 30, September 30, (Dollars in thousands) 2021 2021 2020 2021 2020

Non-interest expense, as presented $ 26,263 $25,590 $ 25,221 $ 76,752 $ 73,291

Less: legal settlement - - (1,200) - (1,200)

Less: prepayment penalty on borrowings - - - (514) -

Adjusted non-interest expense $ 26,263 $25,590 $ 24,021 $ 76,238 $ 72,091

Net interest income, as presented $ 34,746 $33,529 $ 34,481 $ 100,639 $ 100,846

Add: effect of tax-exempt income^(1) 228 265 292 764 865

Non-interest income, as presented 11,099 11,320 12,696 37,634 36,159

Adjusted net interest income plus non-interest income$ 46,073 $45,114 $ 47,469 $ 139,037 $ 137,870

GAAP efficiency ratio 57.29 % 57.06 %53.46 % 55.51 % 53.50 %

Non-GAAP efficiency ratio 57.00 % 56.72 %50.60 % 54.83 % 52.29 %

(1) Assumed a 21% tax rate.

Pre-tax, Pre-provision Earnings:

For the For the Three Months Ended Nine Months Ended

September 30,June 30, September 30,September 30,September 30,(In thousands) 2021 2021 2020 2021 2020

Net income, as presented $ 14,640 $18,143$ 16,775 $ 52,523 $ 41,208

Add: provision (credit) for credit losses939 (3,403) 987 (4,420) 12,160

Add: income tax expense 4,003 4,519 4,194 13,418 10,346

Pre-tax, pre-provision earnings $ 19,582 $19,259$ 21,956 $ 61,521 $ 63,714

Adjusted Yield on Interest-Earning Assets:

For the For the Three Months Ended Nine Months Ended

September 30,June 30,September 30,September 30,September 30, 2021 2021 2020 2021 2020

Yield on interest-earning assets, as presented2.97 %3.06 %3.37 %3.06 %3.59 %

Add: effect of excess liquidity on 0.16 %0.12 %0.10 %0.12 %0.06 %yield on interest-earning assets

Less: effect of SBA PPP loans on (0.09) %(0.04)%(0.04) %(0.06) %(0.01) %yield on interest-earning assets

Adjusted yield on interest-earning assets 3.04 %3.14 %3.43 %3.12 %3.64 %

Adjusted Net Interest Margin (Fully-Taxable Equivalent):

For the For the Three Months Ended Nine Months Ended

September 30,June 30,September 30,September 30,September 30, 2021 2021 2020 2021 2020

Net interest margin (fully-taxable equivalent), as presented2.76 % 2.83 %3.00 % 2.82 % 3.06 %

Add: effect of excess liquidity on net 0.15 % 0.11 %0.10 % 0.12 % 0.06 % interest margin (fully-taxable equivalent)

Less: effect of SBA PPP loans on net (0.09) % (0.05)%(0.06) % (0.07) % (0.02) % interest margin (fully-taxable equivalent)

Adjusted net interest margin (fully-taxable equivalent) 2.82 % 2.89 %3.04 % 2.87 % 3.10 %

Tangible Book Value Per Share and Tangible Common Equity Ratio:

September 30,June 30, September 30, (In thousands, except number of shares, per share data and ratios)2021 2021 2020

Tangible Book Value Per Share:

Shareholders' equity, as presented $545,984 $545,548 $517,522

Less: goodwill and other intangible assets (97,049) (97,213) (97,711)

Tangible shareholders' equity $448,935 $448,335 $419,811

Shares outstanding at period end 14,849,327 14,951,067 14,917,344

Book value per share $36.77 $36.49 $34.69

Tangible book value per share $30.23 $29.99 $28.14

Tangible Common Equity Ratio:

Total assets $5,502,902 $5,152,069 $5,153,793

Less: goodwill and other intangible assets (97,049) (97,213) (97,711)

Tangible assets $5,405,853 $5,054,856 $5,056,082

Common equity ratio 9.92 %10.59 %10.04 %

Tangible common equity ratio 8.30 %8.87 %8.30 %

Core Deposits:

September 30,June 30, September 30,(In thousands) 2021 2021 2020

Total deposits $4,605,180 $4,294,114$4,224,044

Less: certificates of deposit(323,395) (334,336) (405,434)

Less: brokered deposits (288,975) (282,786) (291,616)

Core deposits $3,992,810 $3,676,992$3,526,994

Average Core Deposits:

For the For the Three Months Ended Nine Months Ended

September 30,June 30, September 30,September 30,September 30,(In thousands) 2021 2021 2020 2021 2020

Total average deposits $ 4,223,964$3,984,113$ 3,794,434$ 3,994,457$ 3,609,355

Less: average certificates of deposit(327,802) (338,595) (417,788) (339,230) (482,076)

Average core deposits $ 3,896,162$3,645,518$ 3,376,646$ 3,655,227$ 3,127,279

Total loans, excluding SBA PPP loans:

September 30,June 30, September 30,(In thousands) 2021 2021 2020

Total loans, as presented $3,315,303 $3,285,916$3,274,842

Less: SBA PPP loans (81,959) (126,064) (223,838)

Total loans, excluding SBA PPP loans $3,233,344 $3,159,852$3,051,004

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SOURCE Camden National Corporation