Camden National Corporation Reports Third Quarter 2009 Results

• Press Release
• Source: Camden National Corporation
• On 4:06 pm EDT, Tuesday October 27, 2009

CAMDEN, Maine--(BUSINESS WIRE)--Camden National Corporation (NASDAQ: CAC; the “Company”), reported net income for the third quarter 2009 of $6.3 million, or $0.83 per diluted share. This resulted in year-to-date earnings of $17.5 million or $2.29 per diluted share. For the three and nine month periods ended September 30, 2009, return on assets was 1.10% and 1.02%, respectively, and return on equity was 13.93% and 13.48%, respectively.

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Symbol	Price	Change
CAC	30.53	-2.07

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“We are pleased by our third quarter performance in light of the current economic conditions,” said Gregory A. Dufour, President and Chief Executive Officer of the Company. “Our markets have not yet seen a recovery in employment levels or housing, two major building blocks of the Maine economy, and we continue to aggressively manage asset quality issues and limit our interest rate risk exposure in the current market.”

Dufour also announced that during the quarter Camden National Corporation and its subsidiaries received significant national and local recognition for its service to its four constituencies. These recognitions, by constituency, are:

• Customers: Camden National Bank will be recognized as “Bank of the Year” by the Finance Authority of Maine (“FAME”) at its November 10, 2009 annual meeting. FAME’s award is bestowed in recognition of Camden National’s outstanding commitment to Maine people and businesses through innovative financial solutions during challenging economic times.
• Shareholders: 11^th Best Performing Mid-Tier Financial Institution. The national magazine, USBanker, named Camden National Corporation the 11^th best performing mid-tier bank for 2008 based on CNC’s three year average return on equity.
• Communities: “Outstanding” Community Reinvestment Act (“CRA”) rating by the Office of the Comptroller of the Currency. Camden National Bank received the highest examination rating for its work in supporting its communities through investments, loans, donations and volunteerism.
• Stakeholders (a term used to describe CNC’s employees): “A Best Place to Work in Maine.” Camden National Corporation was named a Best Place to Work in Maine by the Maine State Council of the Society for Human Resources Management, one of only 31 companies in Maine recognized in 2009.

“These recognitions reflect our organization’s dedication to the principles of being a community bank,” Dufour said. “We are proud of these accomplishments but recognize that they are milestones on a much larger journey.”

Comparison to last year’s results is impacted by the $14.0 million write-down in the third quarter of 2008 of other-than-temporarily impaired securities resulting from investments in auction pass-through certificates with Federal Home Loan Mortgage Corporation preferred stock assets. This third quarter 2008 event resulted in a net loss for the three months ended September 30, 2008 of $(8.0) million or $(1.05) per diluted share, and year-to-date net income for nine months of 2008 of $5.3 million or $0.69 per diluted share.

In 2008, certain non-core items were included in the computation of earnings in accordance with generally accepted accounting principles (“GAAP”). In an effort to provide shareholders information regarding our core results, we have disclosed in the table below certain non-GAAP information which we believe provides useful information. This information should not be viewed as a substitute for operating results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP information which may be presented by other companies.

The Company’s core net income for the three months ended September 30, 2009 compared to the same period in 2008 increased $398,000 or 7%. Core earnings growth was due to an increase in net interest income driven by a higher net interest margin as well as growth in fee income which was partially offset by an increase in the loan loss provision.

The Company’s core net income for the nine months ended September 30, 2009 compared to the same period one year ago declined $1.7 million or 9%. Earnings were negatively impacted by an increase in loan loss provision, higher FDIC insurance premiums and increased costs associated with foreclosed properties.

“The impact of the economic turmoil our industry has faced in recent times continues; we need to be prepared for the unexpected,” commented Dufour. “Camden National’s capital levels continue to exceed the minimum standards to be considered ‘well capitalized,’ and with our solid earnings base we absorbed the increased FDIC assessments while continuing to take necessary steps to strengthen our balance sheet and capital position.”

Operating Highlights

Net interest income for the third quarter of 2009 increased 4% to $18.2 million compared to $17.5 million for the same period one year ago due to an increase in the net interest margin of 18 basis points to 3.51% for the third quarter of 2009. The Company’s ability to improve pricing on deposits and borrowings and minimize the decline of interest rates on loans and investments resulted in the improvement in the net interest margin.

Non-interest income for the third quarter of 2009 was $5.1 million compared to $3.7 million for the third quarter of 2008, an increase of $1.5 million or 39%. The increase was primarily due to additional mortgage banking income of $352,000 related to service-retained loan sales during the third quarter of 2009 and net losses on the sale of securities of $804,000 recorded in the third quarter of 2008.

Non-interest expense for the third quarter of 2009 was $12.1 million compared to $11.7 million for the third quarter of 2008, an increase of $493,000 or 4%. The increase is related to increased costs associated with foreclosed properties of $660,000 and an increase in FDIC and regulatory assessment fees of $276,000. Most other expense items, including salaries and employee benefits, declined during the third quarter of 2009 compared to the third quarter of 2008.

Financial Condition

The Company’s total assets at September 30, 2009 were $2.3 billion, a decrease of $38.5 million compared to total assets at September 30, 2008. Total loans (including residential loans held for sale) at September 30, 2009 were $1.5 billion, a decrease of $1.6 million over the same period a year ago. This decrease was due to a decline in commercial loans of $29.8 million offset by a $10.7 million increase in the consumer loan portfolio driven by increased home equity loan demand and an increase in commercial real estate loans of $18.1 million. Historically-low mortgage rates have resulted in strong residential real estate loan activity and during the nine months of 2009, the Company sold $70.6 million of the mortgage production for interest-rate risk management purposes. Investments decreased $27.5 million primarily due to increased cash flows that were not reinvested into the investment portfolio due to the current low interest-rate environment.

Total deposits of $1.5 billion at September 30, 2009 increased $3.9 million from the same period one year ago, reflecting growth of $23.9 million in retail certificates of deposit related to specific marketing campaigns during the fourth quarter of 2008 and an increase in interest checking, savings and money market deposits of $23.6 million. Growth in deposits was partially offset by a decline in brokered funds of $39.1 million and demand deposits of $4.5 million. Due to a decline in total assets and an increase in deposit balances, Federal Home Loan Bank borrowings decreased $99.3 million at September 30, 2009 compared to September 30, 2008.

Asset Quality

Non-performing assets totaled $23.7 million, or 1.04%, of total assets at September 30, 2009 compared to $15.9 million, or 0.69%, of total assets at September 30, 2008 and $22.3 million, or 0.97%, of total assets at June 30, 2009. The allowance for loan losses (“ALL”) was 1.28% of total loans at September 30, 2009 compared to 1.13% of total loans at September 30, 2008 and 1.23% of total loans at June 30, 2009.

The provision for loan losses was $2.0 million for the three months ended September 30, 2009 and $1.2 million for the three months ended September 30, 2008. The Company’s loan loss reserve analysis called for an increase in the ALL based on a continued increase in non-performing asset levels. Net charge-offs were $1.2 million for the three months ended September 30, 2009 and $1.2 million for the three months ended September 30, 2008.

“In this challenging economic environment our strong risk management processes and reserve levels provide us with the tools to respond to potential risks on our balance sheet,” said Dufour. “Asset quality continues to be of the highest priority at Camden National, requiring vigilance of all of our stakeholders during this time of economic uncertainty.”

Dividends and Capital

The Board of Directors approved a dividend of $0.25 per share, payable on October 30, 2009 for shareholders of record on October 15, 2009, which is equal to the dividend declared in the same period last year.

At September 30, 2009, the Company had a total risk-based capital ratio of 13.15%, a Tier 1 capital ratio of 11.89%, and a Tier 1 leverage capital ratio of 7.87% and Camden National Bank reported a total risk-based capital ratio of 12.18%, a Tier 1 capital ratio of 10.93%, and a Tier 1 leverage capital ratio of 7.17%. The Company and Camden National Bank exceeded the minimum ratios of 10.0%, 6.0%, and 5.0%, respectively, required by the Federal Reserve for an institution to be considered “well capitalized.”

Recent Developments

On October 16, 2009, the Company’s security group discovered that a Camden National Bank employee engaged in a series of improper and unauthorized transactions. The Company’s investigation into this matter is ongoing, and no determination has been made as to whether any amounts will be recorded as a loss by the Company. The Company is in discussions with its insurance carrier and aggressively taking steps to recover the funds, including cooperating with law enforcement authorities. To date, transactions involving approximately $850,000 have been identified.

Camden National Corporation ,ranked 11^th in the USBanker’s 2009 list of top-performing mid-tier banks, headquartered in Camden, Maine, and listed on the NASDAQ^® Global Select Market under the symbol CAC, is the holding company employing more than 400 Maine residents for two financial services companies, including Camden National Bank, a full-service community bank with a network of 37 banking offices serving coastal, western, central, and eastern Maine, and Acadia Trust, N.A., offering investment management and fiduciary services with offices in Portland, Bangor, and Ellsworth. Located at Camden National Bank, Acadia Financial Consultants offers full-service brokerage and insurance services.

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. Forward-looking statements can be identified by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “will,” “should,” 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 the Company. These risks, uncertainties and other factors may cause the actual results, performance or achievements of the Company 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 the following: changes in general, national or regional economic conditions; changes in loan default and charge-off rates; reductions in deposit levels necessitating increased borrowing to fund loans and investments; changes in interest rates; changes in the value of investments securities or other assets; changes in laws and regulations, including changes in tax treatment; changes in the size and nature of the Company's competition; and changes in the assumptions used in making such forward-looking statements. Other factors could also cause these differences. For more information about these factors please see our Annual Report on Form 10-K, as updated by our Quarterly Reports on Form 10-Q and other filings on file 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 the Company does not promise to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Camden National Corporation
Diane Norton, 207-230-2176
Vice President – Marketing & Communications
dnorton@camdennational.com