Camden National Corporation Reports Second Quarter 2013 Results

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Jul 30, 2013, 04:01 ET

CAMDEN, Maine, July 30, 2013 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company"), a $2.6 billion bank holding company headquartered in Camden, Maine, reported net income for the second quarter of 2013 of $6.3 million and diluted earnings per share of $0.82. The net income results of the second quarter of 2013 represent an increase of $669,000, or 12%, compared to the first three months of 2013. For the second quarter of 2013, the Company achieved a return on assets of 0.98%, a return on tangible equity of 13.78% and an efficiency ratio of 60.30%.

"Our second quarter 2013 results reflect revenue growth of $122,000 and lower operating costs of $852,000 compared to the prior quarter as we start to see growth and efficiencies through our new markets," said Gregory A. Dufour, president and chief executive officer of Camden National Corporation. "Total loans (excluding loans held for sale) have increased $38.7 million since year end, representing an annualized growth rate of 5%."

Balance Sheet

Total assets were $2.6 billion at June 30, 2013, representing a $37.0 million increase since year end. The growth in total assets was primarily due to an increase in loans (excluding loans held for sale), which grew by $38.7 million. Our loan growth continues to be led by the home equity and commercial real estate portfolios, which experienced increased balances of $23.5 million and $16.8 million, respectively. The growth in the home equity portfolio continues to be fueled by our ten-year fixed rate home equity promotion. The residential real estate portfolio, which decreased $2.8 million, was reduced through the sale of $19.8 million in 30-year fixed-rate production to manage our interest rate risk profile.

Total deposits of $1.9 billion decreased $35.4 million since year end as retail certificates of deposit decreased $25.3 million and core deposits (demand, checking, savings, and money market) decreased $16.4 million due to the seasonal outflow of deposits.

Second Quarter Operating Results

Our net interest income of $19.3 million for the second quarter of 2013 increased $82,000 compared to the previous quarter. The increase reflects growth in average loan balances of $21.9 million partially offset by a 4 basis point decline in the net interest margin on a fully-taxable basis to 3.23% for the second quarter of 2013. We continue to experience a decline in the net interest margin due to the low interest rate environment as the yield on average earning assets declined 5 basis points and our overall funding costs declined 2 basis points for the quarter.

Non-interest income for the second quarter of 2013 of $6.4 million increased $40,000 compared to the first quarter of 2013. The significant changes in non-interest income include:

Deposit-related and other service fees increased $155,000.
Net gains on sale of securities and other-than-temporary impairment declined $138,000 as there were no security sales during the second quarter.

Non-interest expense for the second quarter of 2013 of $15.6 million decreased $852,000, or 5%, compared to the first quarter of 2013. The significant changes in non-interest expense include:

Collection costs decreased $910,000 due to a recovery on servicing related claims combined with lower levels of foreclosures and OREO expenses.
Salaries and benefits decreased $400,000 primarily due to lower incentive compensation based on the Company's year-to-date 2013 financial performance compared to performance goals established by the Board of Directors and increased capitalization of loan origination salary costs.
Furniture, equipment and data processing costs increased $327,000 primarily due to the conversion of the core operating systems for Acadia Trust, N.A. and costs associated with the upgrade of the Company's ATM fleet.

Asset Quality

"Our overall credit quality continues to improve and reflects the stabilization of our economy and the hard work of our employees who ensure that we properly underwrite loans and are repaid by borrowers," said Dufour.

Our asset quality metrics for the second quarter of 2013 compare favorably to that of the previous quarter. Non-performing loans to total loans decreased to 1.63% from 1.72% and past due loans to total loans decreased to 0.27% from 0.39%. Annualized net charge-offs to average loans for the first six months of 2013 totaled 0.14% and the allowance for credit losses to total loans at June 30, 2013 was 1.45%.

Dividends and Capital

The board of directors approved a dividend of $0.27 per share, payable on July 31, 2013, to shareholders of record as of July 15, 2013. This distribution resulted in an annualized dividend yield of 3.04%, based on the June 28, 2013, closing price of Camden National's common stock at $35.47 per share as reported by NASDAQ.

Camden National's total risk-based capital ratio was 15.82% at June 30, 2013, compared to 15.56% at December 31, 2012. Camden National Corporation and its wholly-owned subsidiary, Camden National Bank, exceeded the minimum total risk-based, Tier 1, and Tier 1 leverage ratios of 10.0%, 6.0%, and 5.0%, respectively, required by the Federal Reserve for an institution to be considered "well capitalized."

About Camden National Corporation

Camden National Corporation, recognized by Forbes as one of "America's Most Trustworthy Companies" in 2012 and 2013*, is the holding company employing more than 500 Maine residents for two financial services companies including 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 49 banking offices throughout Maine. Acadia Trust offers investment management and fiduciary services with offices in Portland and Ellsworth. Located at Camden National Bank, Camden Financial Consultants offers full-service brokerage and insurance services. Learn more at www.CamdenNational.com. Member FDIC. *From Forbes.com March 18, 2013. © 2013 Forbes.com LLC. All rights reserved. Used by permission and protected by the Copyright Laws of the United States."

Forward-Looking Statements

This press release and the documents incorporated by reference herein contain certain statements that may be considered forward-looking statements under the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, projections, and statements, which are subject to numerous risks, assumptions, and uncertainties. Forward-looking statements can be identified by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "plan," "target," or "goal," or future or conditional verbs such as "will," "may", "might", "should," "would", "could" and other expressions which predict or indicate future events or trends and which do not relate to historical matters. Forward-looking statements should not be relied on, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of Camden National. These risks, uncertainties and other factors may cause the actual results, performance or achievements of Camden National to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.

Some of the factors that might cause these differences include, but are not limited to, the following: continued weakness in the United States economy in general and the regional and local economies within the New England region and Maine, which could result in a deterioration of credit quality, a change in the allowance for loan losses, or a reduced demand for the Company's credit or fee-based products and services; adverse changes in the local real estate market could result in a deterioration of credit quality and an increase in the allowance for loan loss, as most of the Company's loans are concentrated in Maine, and a substantial portion of these loans have real estate as collateral; changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; competitive pressures, including continued industry consolidation, the increased financial services provided by non-banks and banking reform; continued volatility in the securities markets that could adversely affect the value or credit quality of the Company's assets, impairment of goodwill, the availability and terms of funding necessary to meet the Company's liquidity needs, and the Company's ability to originate loans and could lead to impairment in the value of securities in the Company's investment portfolios; changes in information technology that require increased capital spending; changes in consumer spending and savings habits; new laws and regulations regarding the financial services industry; changes in laws and regulations including laws and regulations concerning taxes, banking, securities and insurance; and changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters. Additional factors that could also cause results to differ materially from those described above can be found in the Company's Annual Report on Form 10-K, as updated by our Quarterly Reports on Form 10-Q and other filings with the SEC. All of these factors should be carefully reviewed, and readers should not place undue reliance on these forward-looking statements.

These forward-looking statements were based on information, plans and estimates at the date of this press release, and Camden National does not promise and assumes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Use of Non-GAAP Financial Measures

In addition to evaluating the Company's results of operations in accordance with GAAP, management supplements this evaluation with certain non-GAAP financial measures, such as the efficiency and tangible equity ratios, tangible book value per share, and tax-equivalent net interest income. Management believes these non-GAAP financial measures help investors in understanding the Company's operating performance and trends and allow for better performance comparisons to other banks. 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. The reconciliation to the comparable GAAP financial measure can be found in this document or the Form 8-K related to this document, all of which can be found on Camden National's website at www.camdennational.com.

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.

Selected Financial Data (unaudited)
	Three Months Ended									Six Months Ended
	June 30, 2013			March 31, 2013			June 30, 2012			June 30, 2013			June 30, 2012
Selected Financial and Per Share Data:
Return on average assets	0.98		%	0.90		%	1.10		%	0.94		%	1.12		%
Return on average equity	10.71		%	9.81		%	11.48		%	10.26		%	11.74		%
Return on average tangible equity	13.78		%	12.69		%	14.33		%	13.24		%	14.71		%
Tangible equity to tangible assets (non-GAAP)	6.94		%	7.19		%	7.69		%	6.94		%	7.69		%
Efficiency ratio	60.30		%	63.88		%	56.10		%	62.08		%	55.26		%
Net interest margin	3.23		%	3.27		%	3.40		%	3.25		%	3.44		%
Tier 1 leverage capital ratio	9.05		%	8.95		%	9.64		%	9.05		%	9.64		%
Tier 1 risk-based capital ratio	14.57		%	14.34		%	14.97		%	14.57		%	14.97		%
Total risk-based capital ratio	15.82		%	15.60		%	16.22		%	15.82		%	16.22		%
Basic earnings per share	$	0.83		$	0.74		$	0.84		$	1.57		$	1.69
Diluted earnings per share	$	0.82		$	0.74		$	0.83		$	1.56		$	1.69
Cash dividends declared per share	$	0.27		$	0.27		$	0.25		$	0.54		$	0.50
Book value per share	$	30.05		$	30.85		$	29.67		$	30.05		$	29.67
Tangible book value per share (non-GAAP)	$	23.15		$	23.91		$	23.82		$	23.15		$	23.82
Weighted average number of common shares outstanding	7,637,433			7,627,691			7,675,819			7,632,586			7,673,927
Diluted weighted average number of common shares outstanding	7,652,199			7,643,267			7,687,620			7,646,742			7,686,747

Statement of Condition Data (unaudited)
(In thousands, except number of shares)	June 30, 2013		December 31, 2012		June 30, 2012
ASSETS
Cash and due from banks	$	44,896	$	58,290	$	40,478
Securities
Securities available-for-sale, at fair value	789,369		781,050		677,262
Federal Home Loan Bank and Federal Reserve Bank stock, at cost	19,724		21,034		21,034
Total securities	809,093		802,084		698,296
Trading account assets	2,281		2,300		2,184
Loans held for sale	2,826		—		—
Loans	1,602,559		1,563,866		1,536,464
Less allowance for loan losses	(23,321)		(23,044)		(23,262)
Net loans	1,579,238		1,540,822		1,513,202
Goodwill and other intangible assets	52,725		53,299		44,629
Bank-owned life insurance	45,705		45,053		44,352
Premises and equipment, net	26,890		28,059		23,913
Deferred tax asset	13,962		7,663		8,531
Interest receivable	6,506		6,215		6,530
Other real estate owned	2,155		1,313		1,697
Other assets	15,501		19,659		20,045
Total assets	$	2,601,778	$	2,564,757	$	2,403,857
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Demand	$	232,535	$	240,749	$	271,648
Interest checking, savings and money market	1,160,933		1,169,148		858,617
Retail certificates of deposit	393,158		418,442		372,982
Brokered deposits	107,461		101,130		98,614
Total deposits	1,894,087		1,929,469		1,601,861
Federal Home Loan Bank advances	186,147		56,404		251,613
Other borrowed funds	218,318		259,940		232,432
Junior subordinated debentures	43,870		43,819		43,768
Accrued interest and other liabilities	29,736		41,310		48,095
Total liabilities	2,372,158		2,330,942		2,177,769
Shareholders' Equity
Common stock, no par value; authorized 20,000,000 shares, issued and outstanding 7,640,712, 7,619,009 and 7,622,750 shares on June 30, 2013 and 2012 and December 31, 2012, respectively.	49,909		49,667		49,273
Retained earnings	189,007		181,151		174,500
Accumulated other comprehensive income (loss)
Net unrealized (losses) gains on securities available-for-sale, net of tax	(2,590)		12,943		12,082
Net unrealized losses on derivative instruments, at fair value, net of tax	(4,059)		(7,205)		(8,018)
Net unrecognized losses on postretirement plans, net of tax	(2,647)		(2,741)		(1,749)
Total accumulated other comprehensive income (loss)	(9,296)		2,997		2,315
Total shareholders' equity	229,620		233,815		226,088
Total liabilities and shareholders' equity	$	2,601,778	$	2,564,757	$	2,403,857

Statement of Income Data (unaudited)
	Three Months Ended
(In thousands, except number of shares and per share data)	June 30, 2013		March 31, 2013		June 30, 2012
Interest Income
Interest and fees on loans	$	18,059	$	17,795	$	18,268
Interest on U.S. government and sponsored enterprise obligations	4,074		4,276		4,118
Interest on state and political subdivision obligations	292		305		355
Interest on federal funds sold and other investments	56		50		56
Total interest income	22,481		22,426		22,797
Interest Expense
Interest on deposits	1,828		1,819		2,390
Interest on borrowings	767		818		1,409
Interest on junior subordinated debentures	636		621		632
Total interest expense	3,231		3,258		4,431
Net interest income	19,250		19,168		18,366
Provision for credit losses	695		674		835
Net interest income after provision for credit losses	18,555		18,494		17,531
Non-Interest Income
Service charges on deposit accounts	1,755		1,684		1,315
Other service charges and fees	1,513		1,429		956
Income from fiduciary services	1,275		1,143		1,289
Mortgage banking income, net	584		574		132
Brokerage and insurance commissions	409		412		410
Bank-owned life insurance	314		338		342
Net gain on sale of securities and other-than-temporary impairment of securities	—		138		751
Other income	526		618		559
Total non-interest income	6,376		6,336		5,754
Non-Interest Expenses
Salaries and employee benefits	7,961		8,361		6,972
Furniture, equipment and data processing	1,931		1,604		1,295
Net occupancy	1,407		1,552		1,020
Other real estate owned and collection costs (recoveries), net	(22)		888		497
Consulting and professional fees	585		547		608
Regulatory assessments	500		499		432
Amortization of intangible assets	287		288		145
Branch acquisition/divestiture costs	71		161		—
Other expenses	2,928		2,600		3,010
Total non-interest expenses	15,648		16,500		13,979
Income before income taxes	9,283		8,330		9,306
Income Taxes	2,952		2,668		2,894
Net Income	$	6,331	$	5,662	$	6,412
Per Share Data
Basic earnings per share	$	0.83	$	0.74	$	0.84
Diluted earnings per share	$	0.82	$	0.74	$	0.83

Statement of Income Data (unaudited) - continued
	Six Months Ended June 30,
(In thousands, except number of shares and per share data)	2013		2012
Interest Income
Interest and fees on loans	$	35,854	$	36,703
Interest on U.S. government and sponsored enterprise obligations	8,350		8,234
Interest on state and political subdivision obligations	597		720
Interest on federal funds sold and other investments	106		105
Total interest income	44,907		45,762
Interest Expense
Interest on deposits	3,647		4,928
Interest on borrowings	1,585		2,827
Interest on junior subordinated debentures	1,257		1,270
Total interest expense	6,489		9,025
Net interest income	38,418		36,737
Provision for credit losses	1,369		1,840
Net interest income after provision for credit losses	37,049		34,897
Non-Interest Income
Service charges on deposit accounts	3,439		2,471
Other service charges and fees	2,942		1,801
Income from fiduciary services	2,418		2,728
Mortgage banking income, net	1,158		468
Brokerage and insurance commissions	821		749
Bank-owned life insurance	652		681
Net gain on sale of securities and other-than-temporary impairment of securities	138		872
Other income	1,144		1,212
Total non-interest income	12,712		10,982
Non-Interest Expenses
Salaries and employee benefits	16,322		13,880
Furniture, equipment and data processing	3,535		2,518
Net occupancy	2,959		2,131
Other real estate owned and collection costs	866		1,123
Consulting and professional fees	1,132		1,098
Regulatory assessments	999		867
Amortization of intangible assets	574		289
Branch acquisition/divestiture costs	232		—
Other expenses	5,529		4,992
Total non-interest expenses	32,148		26,898
Income before income taxes	17,613		18,981
Income Taxes	5,620		5,986
Net Income	$	11,993	$	12,995
Per Share Data
Basic earnings per share	$	1.57	$	1.69
Diluted earnings per share	$	1.56	$	1.69

Quarterly Average Balance, Interest and Yield/rate Analysis (unaudited)
	At or for the Three Months Ended						At or for the Three Months Ended
	June 30, 2013						June 30, 2012
(In thousands)	Average Balance		Interest		Yield/Rate		Average Balance		Interest		Yield/Rate
Assets
Interest-earning assets:
Securities - taxable	$	774,916	$	4,130	2.13	%	$	608,205	$	4,167	2.74	%
Securities - nontaxable (1)	30,800		449		5.83	%	38,246		548		5.73	%
Trading account assets	2,245		—		—	%	2,182		6		1.13	%
Loans: (1) (2)
Residential real estate	572,920		6,596		4.61	%	571,619		6,906		4.83	%
Commercial real estate	511,115		6,227		4.82	%	491,976		6,092		4.90	%
Commercial	178,887		1,964		4.34	%	168,476		1,989		4.67	%
Municipal	12,949		136		4.21	%	14,023		175		5.03	%
Consumer	315,197		3,184		4.05	%	286,594		3,167		4.44	%
Total loans	1,591,068		18,107		4.53	%	1,532,688		18,329		4.77	%
Total interest-earning assets	2,399,029		22,686		3.77	%	2,181,321		23,050		4.21	%
Cash and due from banks	43,758						36,332
Other assets	166,333						153,939
Less: allowance for loan losses	(23,395)						(23,298)
Total assets	$	2,585,725					$	2,348,294

Liabilities & Shareholders' Equity
Retail deposits:
Non-interest bearing demand deposits	$	230,152	$	—	—	%	$	264,545	$	—	—	%
Interest checking accounts	469,820		90		0.08	%	289,544		81		0.11	%
Savings accounts	236,277		33		0.06	%	187,551		86		0.18	%
Money market accounts	445,585		337		0.30	%	351,181		515		0.59	%
Certificates of deposit	399,864		1,013		1.02	%	377,458		1,257		1.34	%
Total retail deposits	1,781,698		1,473		0.33	%	1,470,279		1,939		0.53	%
Borrowings:
Brokered deposits	123,151		355		1.16	%	130,665		451		1.39	%
Junior subordinated debentures	43,858		636		5.82	%	43,756		632		5.80	%
Other borrowings	368,183		767		0.84	%	446,173		1,409		1.27	%
Total borrowings	535,192		1,758		1.32	%	620,594		2,492		1.62	%
Total funding liabilities	2,316,890		3,231		0.56	%	2,090,873		4,431		0.85	%
Other liabilities	31,669						32,833
Shareholders' equity	237,166						224,588
Total liabilities & shareholders' equity	$	2,585,725					$	2,348,294

Net interest income (fully-taxable equivalent)			19,455						18,619
Less: fully-taxable equivalent adjustment			(205)						(253)
Net interest income			$	19,250					$	18,366

Net interest rate spread (fully-taxable equivalent)					3.21	%					3.36	%
Net interest margin (fully-taxable equivalent)					3.23	%					3.40	%

(1) Reported on tax-equivalent basis calculated using a tax rate of 35%.
(2) Non-accrual loans and loans held for sale are included in total average loans.

Year-to Date Average Balance, Interest and Yield/Rate Analysis (unaudited)
	At or for the Six Months Ended						At or for the Six Months Ended
	June 30, 2013						June 30, 2012
(In thousands)	Average Balance		Interest		Yield/Rate		Average Balance		Interest		Yield/Rate
Assets
Interest-earning assets:
Securities - taxable	$	772,469	$	8,445	2.19	%	$	588,892	$	8,329	2.83	%
Securities - nontaxable (1)	31,238		919		5.88	%	38,863		1,109		5.71	%
Trading account assets	2,241		12		1.05	%	2,189		10		0.88	%
Loans: (1) (2)
Residential real estate	574,031		13,171		4.59	%	576,442		14,010		4.86	%
Commercial real estate	507,478		12,301		4.82	%	483,639		12,123		4.96	%
Commercial	177,718		3,935		4.40	%	168,903		4,028		4.72	%
Municipal	12,267		267		4.39	%	13,540		347		5.16	%
Consumer	308,700		6,272		4.10	%	284,076		6,316		4.47	%
Total loans	1,580,194		35,946		4.55	%	1,526,600		36,824		4.81	%
Total interest-earning assets	2,386,142		45,322		3.80	%	2,156,544		46,272		4.28	%
Cash and due from banks	44,249						36,095
Other assets	166,517						154,375
Less: allowance for loan losses	(23,331)						(23,189)
Total assets	$	2,573,577					$	2,323,825

Liabilities & Shareholders' Equity
Retail deposits:
Non-interest bearing demand deposits	$	227,721	$	—	—	%	$	259,360	$	—	—	%
Interest checking accounts	472,634		157		0.07	%	278,144		155		0.11	%
Savings accounts	233,219		65		0.06	%	184,900		181		0.20	%
Money market accounts	450,929		710		0.32	%	353,088		1,056		0.60	%
Certificates of deposit	407,407		2,000		0.99	%	384,630		2,598		1.36	%
Total retail deposits	1,791,910		2,932		0.33	%	1,460,122		3,990		0.55	%
Borrowings:
Brokered deposits	124,607		715		1.16	%	130,248		938		1.45	%
Junior subordinated debentures	43,845		1,257		5.78	%	43,743		1,270		5.84	%
Other borrowings	343,328		1,585		0.93	%	433,562		2,827		1.31	%
Total borrowings	511,780		3,557		1.40	%	607,553		5,035		1.67	%
Total funding liabilities	2,303,690		6,489		0.57	%	2,067,675		9,025		0.88	%
Other liabilities	34,208						33,638
Shareholders' equity	235,679						222,512
Total liabilities & shareholders' equity	$	2,573,577					$	2,323,825

Net interest income (fully-taxable equivalent)			38,833						37,247
Less: fully-taxable equivalent adjustment			(415)						(510)
Net interest income			$	38,418					$	36,737

Net interest rate spread (fully-taxable equivalent)					3.23	%					3.40	%
Net interest margin (fully-taxable equivalent)					3.25	%					3.44	%

(1) Reported on tax-equivalent basis calculated using a tax rate of 35%.
(2) Non-accrual loans and loans held for sale are included in total average loans.

*Asset Quality Data (unaudited)*

	At or for Six Months Ended			At or for Three Months Ended			At or for Twelve Months Ended			At or for Nine Months Ended			At or for Six Months Ended
(In thousands)	June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012
Non-accrual loans:
Residential real estate	$	8,624		$	10,311		$	10,584		$	9,459		$	10,349
Commercial real estate	6,634			5,782			6,719			7,121			7,362
Commercial	3,233			3,134			3,409			3,765			4,687
Consumer	1,945			2,341			1,771			1,929			1,912
Total non-accrual loans	20,436			21,568			22,483			22,274			24,310
Loans 90 days past due and accruing	—			49			611			246			562
Renegotiated loans not included above	5,701			5,491			4,674			3,162			3,177
Total non-performing loans	26,137			27,108			27,768			25,682			28,049
Other real estate owned:
Residential real estate	1,038			1,101			669			421			1,045
Commercial real estate	1,117			812			644			175			652
Total other real estate owned	2,155			1,913			1,313			596			1,697
Total non-performing assets	$	28,292		$	29,021		$	29,081		$	26,278		$	29,746
Loans 30-89 days past due:
Residential real estate	$	1,827		$	1,165		$	1,658		$	1,256		$	780
Commercial real estate	1,591			3,375			2,618			1,938			2,122
Commercial	202			731			1,043			1,135			762
Consumer	716			962			2,721			452			310
Total loans 30-89 days past due	$	4,336		$	6,233		$	8,040		$	4,781		$	3,974
Allowance for loan losses at the beginning of the period	$	23,044		$	23,044		$	23,011		$	23,011		$	23,011
Provision for loan losses	1,384			684			3,791			2,676			1,817
Charge-offs:
Residential real estate	347			145			1,197			1,024			446
Commercial real estate	171			80			593			209			209
Commercial	444			277			1,393			1,146			416
Consumer	470			85			1,319			987			879
Total charge-offs	1,432			587			4,502			3,366			1,950
Total recoveries	325			228			744			530			384
Net charge-offs	1,107			359			3,758			2,836			1,566
Allowance for loan losses at the end of the period	$	23,321		$	23,369		$	23,044		$	22,851		$	23,262
Components of allowance for credit losses:
Allowance for loan losses	$	23,321		$	23,369		$	23,044		$	22,851		$	23,262
Liability for unfunded credit commitments	30			35			45			51			43
Balance of allowance for credit losses	$	23,351		$	23,404		$	23,089		$	22,902		$	23,305
Ratios:
Non-performing loans to total loans	1.63		%	1.72		%	1.78		%	1.67		%	1.83		%
Non-performing assets to total assets	1.09		%	1.12		%	1.13		%	1.06		%	1.24		%
Allowance for credit losses to total loans	1.45		%	1.48		%	1.48		%	1.49		%	1.52		%
Net charge-offs to average loans (annualized)
Quarter-to-date	0.20		%	0.09		%	0.24		%	0.33		%	0.15		%
Year-to-date	0.14		%	0.09		%	0.24		%	0.25		%	0.21		%
Allowance for credit losses to non-performing loans	89.34		%	86.34		%	83.15		%	89.18		%	83.09		%
Loans 30-89 days past due to total loans	0.27		%	0.39		%	0.51		%	0.31		%	0.26		%

Reconciliation of non-Generally Accepted Accounting Principals ("GAAP") to GAAP Financial Measures

Camden National presents its efficiency ratio using non-GAAP information. The GAAP-based efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income. The non-GAAP efficiency ratio excludes branch acquisition costs from non-interest expenses, excludes net gains on sale of securities from non-interest income, and adds the tax-equivalent adjustment to net interest income. The following table provides a reconciliation between the GAAP and non-GAAP efficiency ratio:

	Three Months Ended									Six Months Ended
(In Thousands)	June 30, 2013			March 31, 2013			June 30, 2012			June 30, 2013			June 30, 2012
Non-interest expense, as presented	$	15,648		$	16,500		$	13,979		$	32,148		$	26,898
Less branch acquisition costs	71			161			—			232			—
Less prepayment fees on borrowings	—			—			728			—			728
Adjusted non-interest expense	$	15,719		$	16,339		$	13,979		$	32,380		$	26,898

Net interest income, as presented	$	19,250		$	19,168		$	18,366		$	38,418		$	36,737
Effect of tax-exempt income	205			210			253			415			510
Non-interest income, as presented	6,376			6,336			5,754			12,712			10,982
Less gains on sale of securities, net of other-than-temporary impairments	—			138			(751)			(138)			(872)
Adjusted net interest income plus non-interest income	$	25,831		$	25,576		$	23,622		$	51,407		$	47,357
Non-GAAP efficiency ratio	60.30		%	63.88		%	56.10		%	62.08		%	55.26		%
GAAP efficiency ratio	61.06		%	64.70		%	57.96		%	62.88		%	56.37		%

The following table provides a reconciliation between tax-equivalent net interest income to GAAP net interest income using a 35.0% tax rate.

	Three Months Ended						Six Months Ended
(In Thousands)	June 30, 2013		March 31, 2013		June 30, 2012		June 30, 2013		June 30, 2012
Net interest income, as presented	$	19,250	$	19,168	$	18,366	$	38,418	$	36,737
Effect of tax-exempt income	205		210		253		415		510
Net interest income, tax equivalent	$	19,455	$	19,378	$	18,619	$	38,833	$	37,247

The following table provides a reconciliation between tangible book value per share and book value per share, which has been prepared in accordance with GAAP:

	At June 30,		At March 31,		December 31,		At June 30,
(In Thousands)	2013		2013		2012		2012
Shareholders' equity, as presented	$	229,620	$	235,575	$	233,815	$	226,088
Less goodwill and other intangibles	52,725		53,011		53,299		44,629
Tangible shareholders' equity	$	176,895	$	182,564	$	180,516	$	181,459
Shares outstanding at period end	7,640,712		7,635,957		7,622,750		7,619,009
Tangible book value per share	$	23.15	$	23.91	$	23.68	$	23.82
Book value per share	$	30.05	$	30.85	$	30.67	$	29.67

The following table provides a reconciliation between tangible equity to tangible assets and equity to assets, which has been prepared in accordance with GAAP:

	At June 30,			At March 31,			At December 31,			At June 30,
(In Thousands)	2013			2013			2012			2012
Shareholders' equity, as presented	$	229,620		$	235,575		$	233,815		$	226,088
Less goodwill and other intangibles	52,725			53,011			53,299			44,629
Tangible shareholders' equity	$	176,895		$	182,564		$	180,516		$	181,459
Total assets	$	2,601,778		$	2,590,817		$	2,564,757		$	2,403,857
Less goodwill and other intangibles	52,725			53,011			53,299			44,629
Tangible assets	$	2,549,053		$	2,537,806		$	2,511,458		$	2,359,228
Tangible equity to tangible assets	6.94		%	7.19		%	7.19		%	7.69		%
Equity to assets	8.83		%	9.09		%	9.12		%	9.41		%