UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
Commission File No. 01-28190
CAMDEN NATIONAL CORPORATION
(Exact name of Resgistrant as specified in its charter)
Maine 01-0413282
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 Elm Street, Camden, ME 04843
(Address of principal executive offices) (Zip Code)
Registrants's telephone number, including area code (207) 236-8821
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, without par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter periods that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. ( )
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 11, 1997 is: Common stock - $69,570,501
The number of shares outstanding of each of the registrants's classes of
common stock, as of December 31, 1996 is: Common stock - 2,298,632
Listed hereunder are documents incorporated by reference and the Part of
the form 10-K into which the document is incorporated:
(1) Portions of the Annual Report to Stockholders for the year ended
December 31, 1996 are incorporated by reference into Part II,
Items 5, 6, 7 and 8.
(2) The definitive Proxy Statement for the 1997 Annual Meeting of
Shareholders to be filed with the commission prior to April 30, 1997,
pursuant to Regulation 14A of the General Rules and Regulations of The
Commission is incorporporated into Part III of the Form 10-K.
Index
Item # Description Page
- ------ ----------- ----
1 Business 1 - 6
2 Properties 6
3 Legal Proceedings 7
4 Submission of Matters to a Vote of Security Holders 7
5 Market for Registrant's Common Equity and Related
Stockholders Matters 7
6 Selected Financial Data 7
7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 17
8 Financial Statements and Supplementary Data 18
9 Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure 18
10 Directors and Executive Officers of the Registrant 18
11 Executive Compensation 18
12 Security Ownership of Certain Beneficial Owners
and Management 18
13 Certain Relationships and Related Transactions 19
14 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 19 - 20
PART I
Item 1. Business
Camden National Corporation, ("the Company") is a multi-bank and
financial services holding company headquartered in Camden, Maine. The
Company was founded on January 2, 1985 and as a result of a corporate
reorganization, in which the shareholders of Camden National Bank, which
was founded in 1875, exchanged their stock for shares of the Company, and
Camden National Bank became a wholly-owned subsidiary of the Company. As
of December 29, 1995 the Company acquired 100% of the outstanding stock of
United Bank and 51% of the outstanding stock of Trust Company of Maine by
merging with their then parent company, UNITEDCORP, Bangor, Maine. As of
December 31, 1996, the Company's securities consisted of one class of
common stock, no par value, of which there were 2,298,632 shares
outstanding held of record by approximately 835 shareholders.
The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, Camden National
Bank and United Bank, and its majority-owned subsidiary, Trust Company of
Maine, Inc. Trust Company of Maine, Inc's amounts include its wholly-owned
subsidiary -- Fiduciary Services, Inc. All intercompany accounts and
transactions have been eliminated in consolidation.
The Company's wholly-owned bank subsidiaries are independent
commercial banks with branches serving both mid-coast and central Maine.
The banks are full-service financial institutions that focus primarily on
attracting deposits from the general public through their branches and
using such deposits to originate residential mortgage loans, commercial
business loans, commercial real estate loans, and a variety of consumer
loans. Camden National Bank is a national banking organization based in
Camden, Maine, and offers services in the communities of Camden, Union,
Rockland, Thomaston and Belfast. Camden National Bank is the largest
independent commercial bank in Maine. United Bank is a banking
organization chartered under the laws of the State of Maine based in
Bangor, Maine, and offers services in the communities of Bangor, Corinth,
Hampden, Hermon and Jackman, Maine.
The Company's majority-owned trust company subsidiary, Trust Company
of Maine, Inc., offers a broad range of trust and trust investment
services, in addition to retirement and pension plan management services.
The financial services provided by the Trust Company of Maine, Inc.,
complement the services provided by the Company's bank subsidiaries by
offering customers investment management services.
The Company competes principally in mid-coast Maine through its
largest subsidiary, Camden National Bank. Camden National Bank considers
its primary market areas to be in the two counties in which it has banking
facilities, Knox and Waldo counties. These two counties have a combined
population of approximately 76,000 people. The economy of the these
counties is based primarily on tourism, and is also supported by a
substantial population of retirees. Major competitors in these markets
include local branches of large regional bank affiliates, as well as local
independent banks, thrift institutions and credit unions. Other
competitors for deposits and loans within Camden National Bank's market
include insurance companies, money market funds, consumer finance companies
and financing affiliates of consumer durable goods manufacturers.
The Company, through United Bank, also competes in the central Maine
area. United Bank has approximately a 5% share of the market in its
service area and competes principally on the basis of service. The greater
Bangor area has a population of approximately 100,000 people. Major
competitors in these markets include local branches of large regional bank
affiliates, as well as local independent banks, thrift institutions and
credit unions. Other competitors for deposits and loans within United
Bank's market include insurance companies, money market funds, consumer
finance companies and financing affiliates of consumer durable goods
manufacturers.
The Company is committed to the philosophy of serving the financial
needs of customers in local communities. The Company, through Camden
National Bank and United Bank has branches that are located in small towns
within the bank's geographic market areas. The Company believes that the
local needs, and its comprehensive retail and small business products,
together with rapid decision-making at the branch level, enable its banks
to compete effectively. No single person or group of persons provides a
material portion of the Company's deposits, the loss of any one or more of
which would have a materially adverse effect on the business of the
Company, nor is a material portion of the Company's loans concentrated
within a single industry or group of related industries.
The Company had consolidated asset growth of 6.1% or 29.4 million
during 1996. The primary contributing factor to this growth was the
increase in lending activity at both bank subsidiaries. As the business
continued to grow during this past year, each subsidiary positioned itself
to better serve its customers by enhancing its product offerings. Focusing
on customer convenience, Camden National Bank introduced debit cards. In
addition, the Belfast office of Camden National Bank was renovated and now
offers a larger banking office and the Bank's first drive-up ATM. Camden
National Bank also installed an ATM at their Union location. United Bank
began offering check imaging to its checking account customers, a new
automated 24-hour telephone banking system and installed its first ATM at
its Bangor location. The Trust Company of Maine, Inc., expanded its market
by offering trust and retirement plan services in the mid-coast area.
The Company employs approximately 165 people on a full-time basis.
Management believes that employee relations are good, and there are no
known disputes between management and employees. Employees who are at
least 21 years of age and who have worked for the Company for at least one
year are eligible for participation in the Company's Retirement Savings
401(k) Plan and Defined Benefit Retirement Plan. Certain eligible
employees of Company also receive group insurance benefits. Certain
Executive Officers of Company may also participate in the 1993 Stock Option
Plan and the Supplemental Executive Retirement Plan.
As a registered bank holding company under the Bank Holding Company
Act of 1956 (the "BHC Act"), the Company is subject to the regulations and
supervision of the FRB. The BHC Act requires the Company to file reports
with the FRB and provide additional information requested by the FRB. The
Company must receive the approval of the FRB before it may acquire all or
substantially all of the assets of any bank, or ownership or control of the
voting shares of any bank if, after giving effect to such acquisition of
shares, the Company would own or control more than 5 percent of the voting
shares of such bank.
The Company and its subsidiaries, including any it may acquire or
organize in the future, will be deemed to be affiliates of Camden National
Bank and United Bank under the Federal Reserve Act. That Act establishes
certain restrictions which limit bank transactions with affiliates. The
Company will also be subject to restrictions on the underwriting and the
public sale and distribution of securities. It is prohibited from engaging
in certain tie-in arrangements in connection with any extension of credit,
sale or lease of property, or furnishing of services.
The Company will be prohibited from engaging in, or acquiring direct
or indirect ownership or control of more than 5 percent of the voting
shares of any company engaged in non-banking activities, unless the FRB by
order or regulation has found such activities to be so closely related to
banking or managing or controlling banks as to be a proper incident
thereto.
Federal Reserve Regulation "Y" (12 C.F.R. Part 225) sets forth those
activities which are regarded as closely related to banking or managing or
controlling banks and, thus, are permissible activities that may be engaged
in by bank holding companies, subject to approval in individual cases by
the FRB. Litigation has challenged the validity of certain activities
authorized by the FRB for the bank holding companies, and the FRB has
various regulations and applications in this regard still under
consideration.
Under Maine law, dividends and other distributions by the Company with
respect to its stock are subject to declaration by the Board of Directors
at its discretion out of net assets. Dividends cannot be declared and paid
when such payment would make the Company insolvent or unable to pay its
debts as they come due.
FRB policy prohibits a bank holding company from declaring or paying a
cash dividend which would impose undue pressure on the capital of
subsidiary banks or would be funded only through borrowings or other
arrangements that might adversely affect the holding company's financial
position. The policy further declares that a bank holding company should
not continue its existing rate of cash dividends on its common stock unless
its net income is sufficient to fully fund each dividend and its
prospective rate of earnings retention appears consistent with its capital
needs, asset quality and overall financial condition. Other FRB policies
forbid the payment by bank subsidiaries to their parent companies of
management fees which are unreasonable in amount or exceed a fair market
value of the services rendered (or, if no market exists, actual costs plus
a reasonable profit).
In addition, the FRB has authority to prohibit banks that it regulates
from engaging in practices which in the opinion of the FRB are unsafe or
unsound. Such practices may include the payment of dividends under some
circumstances. Moreover, the payment of dividends may be inconsistent with
capital adequacy guidelines. The Company may be subject, under State
and/or Federal law, to assessment to restore the capital of the Bank should
it become impaired.
The Company is subject to the minimum capital requirements of the FRB.
As a result of these requirements, the growth in assets of the Company is
limited by the amount of its capital accounts as defined by the FRB.
Capital requirements may have an effect on profitability and the payment of
distributions by the Company. If the Company is unable to increase its
assets without violating the minimum capital requirements, or is forced
to reduce assets, its ability to generate earnings would be reduced.
The FRB has adopted guidelines utilizing a risk-based capital
structure. These guidelines apply on a consolidated basis to bank holding
companies with consolidated assets of $150 million or more. For bank
holding companies with less than $150 million in consolidated assets, the
guidelines apply on a bank only basis unless the holding company is engaged
in non-bank activities involving significant leverage or has a significant
amount of outstanding debt that is held by the general public. The Company
currently has consolidated assets of more than $150 million, and this is
not expected to change; accordingly, the risk-based capital guidelines
apply on a consolidated basis.
The risk-based guidelines require the Company to maintain a level of
capital based primarily on the risk of its assets and off-balance sheet
items. Assets and off-balance sheet items are placed in one of four risk
categories. Assets in the first category, such as cash, have no risk and,
therefore, carry a zero percent risk-weight and require no capital support.
Capital support is required for assets in the remaining three risk
categories--those categories having a risk-weight of 20 percent, 50 percent
and 100 percent, respectively.
A banking organization's risk-based capital ratio is calculated by
dividing its qualifying total capital base by its risk-weighted assets.
Qualifying capital is divided into two tiers. Core capital (Tier 1)
consists of common shareholders' equity capital, noncumulative perpetual
preferred stock and minority interests in equity capital accounts of
consolidated subsidiaries, less goodwill and other intangible assets.
Supplementary capital (Tier 2) consists of, among other items, allowance
for possible loan and lease losses, cumulative and limited-life preferred
stock, mandatory convertible securities and subordinated debt. Tier 2
capital will qualify as a part of the Bank's total capital up to a maximum
of 100 percent of the Bank's Tier 1 capital. Amounts in excess of these
limits may be issued but are not included in the calculation of the risk-
based capital ratio.
Under current guidelines, banking organizations must maintain a risk-
based capital ratio of 8 percent, of which at least 4 percent must be in
the form of core capital. The Company is and expects to remain in
compliance with these guidelines.
The purposes of the new risk-based capital guidelines are twofold--to
make capital requirements more sensitive to differences in risk profiled
among banking organizations, and to aid in making the definition of bank
capital uniform internationally. To achieve these purposes, the guidelines
recognize the riskiness of assets by lowering capital requirements for some
assets that clearly have less risk that others, and they recognize that
there are risks inherent in off-balance sheet activities. The guidelines
require that banking organizations hold capital to support such activities.
In addition, the guidelines establish a definition of capital and minimum
risk-based capital standards which are consistent on an international basis
and that place a greater emphasis on equity capital.
The FRB has also adopted a minimum leverage ratio which is intended to
supplement the risk-based capital requirements and to insure that all
financial institutions continue to maintain a minimum level of capital. As
with the risk-based capital guidelines, the leverage capital guidelines
apply on a consolidated basis to bank holding companies with at least $150
million in consolidated assets.
The leverage-based capital requirement stipulates that banking
organizations maintain a minimum level of Tier 1 capital to total assets.
The most highly rated banks in terms of safe and sound operation that are
not experiencing or anticipating significant growth are required to have
Tier 1 capital equal to at least 3 percent of total assets. All other
banks are expected to maintain a minimum leverage capital ratio (i.e., Tier
1 capital divided by total assets) in excess of the 3 percent minimum
level. The FDIC regulations require a financial institution to maintain a
minimum ratio of 4 percent to 5 percent, depending on the condition of the
institution.
The Company leverage ratio is and its management expects it to remain
in excess of regulatory requirements.
Camden National Bank is a national bank organized under the laws of
the United States. Camden National Bank is a member of the Federal Reserve
System and its deposits are insured by the FDIC. Camden National Bank is
subject to regulation, supervision and regular examination by the Office of
the Comptroller of the Currency (the "OCC"). The ability of Camden
National Bank to pay dividends is subject to the banking laws of the United
States and to the powers of the OCC and the FDIC. Under federal banking
law, dividends can only be paid out of the retained earnings of Camden
National Bank's current and two preceding fiscal years, or with the prior
approval of the OCC. Under federal banking regulation, a bank is
prohibited from declaring a dividend or from making any other capital
distribution if the payment or distribution would cause the bank to fail to
meet minimum capital requirements.
United Bank is a banking organization chartered under the laws of the
State of Maine. United Bank is subject to regulation, supervision and
regular examination by the Federal Deposit Insurance Corporation (the
"FDIC") and the Maine State Bureau of Banking. Under Maine law, dividends
are subject to declaration by the Board of Directors at its discretion.
Dividends cannot be declared and paid when such payment would make the bank
insolvent or unable to pay its debts as they come due.
The principal sources of funds essential to the business of banks and
bank holding companies are deposits, stockholders' equity, and borrowed
funds. The availability of these various sources of funds and other
potential sources, such as preferred stock or commercial paper, and the
extent to which they are utilized, depends on many factors, the most
important of which are the FRB's monetary policies and the relative costs
of different types of funds. An important function of the FRB is to
regulate the national supply of bank credit in order to combat recession
and curb inflationary pressure. Among the instruments of monetary policy
used by the FRB to implement these objectives are open market operations in
United States Government securities, changes in the discount rate on bank
borrowings, and changes in reserve requirement against bank deposits. The
monetary policies of the FRB have had a significant effect on the operating
results of commercial banks in the past and are expected to continue to do
so in the future. In view of the recent changes in regulations affecting
commercial banks and other actions and proposed actions by the federal
government and its monetary and fiscal authorities, including proposed
changes in the structure of banking in the United States, no predication
can be made as to future changes in interest rates, credit availability,
deposit levels, the overall performance of banks generally or of the
Company.
The Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 was enacted by Congress in September of 1994. Under the Act,
beginning on September 29, 1995, bank holding companies may acquire banks
in any state, notwithstanding contrary state law, and all banks commonly
owned by a bank holding company may act as agents for one another. An
agent bank may receive deposits, renew time deposits, accept payments, and
close and service loans for its principal bank, but will not be considered
a branch of that principal bank.
A bank may also merge with a bank in another state and operate either
office as a branch, notwithstanding pre-existing contrary state law. This
interstate merger provision becomes automatically effective in all states
on June 1, 1997, unless 1) the law becomes effective in a given state at
any earlier date selected by legislation in that state; or 2) the law does
not become effective at all in a given state because by legislation enacted
before June 1, 1997 that state opts out of coverage by the interstate
merger provision. Upon consummation of an interstate merger, the resulting
bank may acquire or establish branches on the same basis that any
participant in the Merger could have if the Merger had not taken place.
Banks may also merge with branches of banks in other states without
merging with the banks themselves, or may establish de novo branches in
other states, if the laws of the other states expressly permit such mergers
or such interstate de novo branching.
Item 2. Properties
The Company operates in thirteen facilities. The Main Office of the
Company and Camden National Bank is at Two Elm Street, Camden, Maine, and
is owned by Camden National Bank. The building has 15,500 square feet of
space on three levels. Camden National Bank also owns three of its
branches and the facility in which the operations departments of the
Company are located. None of the owned facilities is subject to a
mortgage. Camden National Bank also leases two branches under long-term
leases. Camden National Bank also has a lease at 89 Elm Street, with most
of the space subleased to one tenant. The lease at 89 Elm Street expires
in October of 1997. The Company does not plan on renewing this lease.
The Main Office of United Bank is at 145 Exchange Street, Bangor,
Maine, and is owned by United Bank. The building has 25,600 square feet of
space on two levels. United Bank occupies 16,975 square feet of space on
both floors. The Trust Company of Maine, Inc., a non-depository trust
company and a subsidiary of the Company leases 2,100 square feet of office
space on the second floor of the facility and its wholly owned subsidiary,
Fiduciary Services, Inc., leases 2,042 square feet on the first floor of
the facility. Other occupants of the facility include the Law Firm of
Russell, Lingley & Silver, P.A., 2,533 square feet on the second floor and
L&H Investors, a property management firm and Cullen Williams, CPA, who
have a joint lease on 1,920 square feet on the second floor. United Bank
also owns three of its other facilities, none of which is subject to a
mortgage. United Bank also leases one branch under a five-year lease,
which expires in September of 1997. It is expected that the lease will be
renewed for another five-year term.
Item 3. Pending Legal Proceedings
The Company is not involved in any material pending legal proceedings,
other than ordinary, routine litigation incidental to the business of the
Company and its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders
There were no items submitted to a vote of security holders of the
company during the fourth quarter of 1996.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholders
Matters
The information required is contained on page 15 of the Company's Annual
Report to Shareholders for the year ended December 31, 1996 and is
incorporated herein by reference.
Item 6. Selected Financial Data
Selected year-end financial information for the past five years is
contained on page 17 of the Company's Annual Report to Shareholders for the
year ended December 31, 1996 and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information contained in the section captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 10 through 15 of the Company's Annual Report to Shareholders for the
year ended December 31, 1996 should be read in conjunction with the following
text and tables, and is incorporated herein by reference.
The Analysis of Change in Net Interest Margin on Earnings Assets,
Average Daily Balance Sheets, and the Analysis of Volume and Rate Changes on
Net Interest Income and Expenses are provided to enable the reader to
understand the components and past trends of the Company's interest income
and expenses. The first of these tables provides an analysis of changes in
net interest margin; reflecting interest income earned and interest expense
paid and average rates earned and paid. Nonaccrual loans are included in
total average loans. Interest income on loans includes fee on loans of $968
in 1996, $823 in 1995, and $705 in 1994. In addition, net interest income of
$111 in 1996, $(2) in 1995 and $375 in 1994, from interest rate swaps was
also included in loan interest income.
Years ended December 31
1996 1995 1994
----------------- ----------------- ----------------
Dollars in thousands Amount Average Amount Average Amount Average
of Yield/ of Yield/ of Yield/
interest Rate interest Rate interest Rate
-------- ------- -------- ------- -------- -------
Interest-earning assets:
Securities - taxable $ 9,793 6.35% $ 9,297 6.40% $ 9,561 6.72%
Securities - nontaxable 472 6.48% 647 6.27% 847 6.73%
Federal funds sold 177 5.25% 121 5.56% 40 3.98%
Loans 29,737 9.96% 27,718 9.88% 22,934 9.05%
------- ----- ------- ----- ------- -----
Total earning assets 40,179 8.67% 37,783 8.62% 33,382 8.16%
Interest-bearing liabilities:
NOW accounts 531 1.34% 675 1.70% 740 1.76%
Savings accounts 2,130 3.35% 2,183 3.46% 1,981 2.88%
Money Market accounts 809 3.19% 1,025 3.27% 1,525 3.05%
Certificates of deposit 10,260 5.16% 9,459 5.61% 6,606 4.57%
Short-term borrowings 3,980 5.45% 3,728 6.01% 1,875 4.47%
Broker certificates 255 6.52% 401 6.62% -0- NA
------- ----- ------- ----- ------- -----
Total interest-bearing
liabilities 17,965 4.62% 17,471 4.71% 12,727 3.66%
Net interest income $22,214 $20,312 $20,655
======= ======= =======
Net interest rate spread 4.05% 3.91% 4.49%
===== ===== =====
Net interest margin 4.79% 4.63% 5.05%
===== ===== =====
The following table shows the Company's average daily balance sheets for years
ended December 31, 1996, 1995 and 1994.
Dollars in thousands
Years ended December 31, 1996 1995 1994
---- ---- ----
Interest-earning assets:
Securities - taxable $154,102 $145,303 $142,287
Securities - nontaxable 7,279 10,326 12,590
Federal funds sold 3,369 2,175 1,004
Loans 298,596 280,566 253,439
-------- -------- --------
Total earning assets 463,346 438,370 409,320
Cash and due from banks 13,250 12,790 13,796
Other assets 20,076 19,651 15,347
Less allowance for loan losses (4,290) (3,978) (4,079)
-------- -------- --------
Total assets $492,382 $466,833 $434,384
======== ======== ========
Interest-bearing liabilities:
NOW accounts $ 39,745 $ 39,771 $ 42,001
Savings accounts 63,536 63,071 68,694
Money market accounts 25,340 31,368 50,063
Certificates of deposits 182,926 168,564 144,682
Short-term borrowings 73,069 62,044 41,955
Broker certificates 3,910 6,058 -0-
-------- -------- --------
Total interest-bearing liabilities 388,526 370,876 347,395
Demand deposits 41,569 40,335 38,589
Other liabilities 3,116 5,114 4,130
Shareholders' equity 59,171 50,508 44,270
-------- -------- --------
Total liabilities and
stockholders' equity $492,382 $466,833 $434,384
======== ======== ========
The following tables present the changes in interest income and the
changes in interest expense attributable to the change in interest rates and
the change in volume for the periods indicated. Tax-exempt income has been
calculated on a tax-equivalent basis, 34% being the tax rate used.
1996 Over 1995
--------------
Change Change
Due to Due to Total
In thousands Volume Rate Change
------- ------ ------
Interest-earning assets:
Securities--taxable 563 (67) 496
Securities--nontaxable (191) 16 (175)
Federal funds sold 66 (10) 56
Loans 1,781 238 2,019
------ ------ ------
Total interest income 2,219 177 2,396
Interest-bearing liabilities:
NOW accounts 0 (144) (144)
Savings accounts 16 (69) (53)
Money market accounts (197) (19) (216)
Certificates of deposit 806 (5) 801
Short-term borrowings 662 (410) 252
Broker deposits (142) (4) (146)
------ ------- ------
Total interest expense 1,145 (651) 494
------ ------ ------
Net interest income 1,074 828 1,902
====== ====== ======
1995 Over 1994
--------------
Change Change
Due to Due to Total
In thousands Volume Rate Change
------- ------- -------
Interest-earning assets:
Securities--taxable 203 (467) (264)
Securities--nontaxable (151) (49) (200)
Federal funds sold 47 34 81
Loans 2,455 2,329 4,784
------ ------ ------
Total interest income 2,554 1,847 4,401
Interest-bearing liabilities:
NOW accounts (39) (26) (65)
Savings accounts (162) 364 202
Money market accounts (569) 69 (500)
Certificates of deposit 1,090 1,763 2,853
Short-term borrowings 898 955 1,853
Broker deposits 401 0 401
------ ------ ------
Total interest expense 1,619 3,125 4,744
------ ------ ------
Net interest income 935 (1,278) (343)
====== ====== ======
The following table set forth the Company's investment securities at book
carrying amount as of December 31, 1996, 1995, and 1994.
Dollars in thousands 1996 1995 1994
---- ---- ----
Securities available for sale:
U.S. Treasury and agency $ 12,615 $ 19,836 $ 2,915
Mortgage-backed securities -0- -0- -0-
State and political subdivisions 32 1 326
-------- -------- --------
12,647 19,837 3,241
-------- -------- --------
Securities held to maturity:
U.S. Treasury and agency 58,433 67,512 86,319
Mortgage-backed securities 79,259 59,722 53,570
State and political subdivisions 5,524 7,897 11,126
Other securities -0- -0- -0-
-------- -------- --------
143,221 135,136 151,015
-------- -------- --------
$155,868 $154,973 $154,256
======== ======== ========
To enhance the Company's ability to manage liquidity, the investment
portfolio is divided into two parts: Investments available for sale and
investments held to maturity. The ability to use securities as collateral for
Federal Home Loan Bank loans enables the Company to hold the largest portion
of the portfolio to maturity. The following table summarizes the investment
portfolio maturities and yields at December 31, 1996.
Available for sale Held to maturity
------------------ ----------------
Book Yield to Amortized Yield to
Value maturity Cost maturity
------- -------- --------- --------
Dollars in thousands
U.S. Treasury and Agency:
Due in 1 year or less $ 8,330 6.23% $ 4,901 4.97%
Due in 1 to 5 years 2,297 6.19% 32,127 6.12%
Due in 5 to 10 years -0- 0.00% -0- 0.00%
Due after 10 years -0- 0.00% -0- 0.00%
------- -------- -------- --------
10,627 6.22% 37,028 5.97%
------- -------- -------- --------
Structured notes:
Due in 1 year or less -0- 0.00% 5,000 3.24%
Due in 1 to 5 years 1,988 5.09% 16,106 3.98%
Due in 5 to 10 years -0- 0.00% 300 4.96%
Due after 10 years -0- 0.00% -0- 0.00%
------- -------- -------- --------
1,988 5.09% 21,406 3.82%
------- -------- -------- --------
Mortgage-backed securities:
Due in 1 year or less -0- 0.00% 1,166 5.55%
Due in 1 to 5 years -0- 0.00% 6,215 6.10%
Due in 5 to 10 years -0- 0.00% 9,478 6.96%
Due after 10 years -0- 0.00% 62,400 7.91%
------- -------- -------- --------
-0- 0.00% 79,259 7.62%
------- -------- -------- --------
State and political subdivisions:
Due in 1 year or less -0- 0.00% 2,471 6.02%
Due in 1 to 5 years -0- 0.00% 2,202 6.34%
Due in 5 to 10 years -0- 0.00% 750 6.30%
Due after 10 years -0- 0.00% 100 9.67%
------- -------- -------- --------
-0- 0.00% 5,523 6.25%
------- -------- -------- --------
GIC securities:
Due in 1 year or less -0- NA -0- 0.00%
Due in 1 to 5 years 32 0.00% -0- 0.00%
Due in 5 to 10 years -0- 0.00% -0- 0.00%
Due after 10 years -0- 0.00% -0- 0.00%
------- -------- -------- --------
32 NA -0- 0.00%
------- -------- -------- --------
$12,647 6.03% $143,216 6.57%
======= ======== ======== ========
Total loans increased by $26.1 million, or 9.2%, in 1996. The following
table provides a summary of the loan portfolio for the past five years.
Management does not foresee any significant changes occurring in the loan mix
during the coming year.
Dollars in thousands
As of December 31, 1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Commercial, other $ 95,926 $ 82,622 $ 77,126 $ 69,692 $ 64,556
Commercial, real estate 58,872 56,397 53,766 42,264 35,812
Real estate construction 2,706 2,123 3,445 3,911 2,900
Residential real estate 127,494 116,451 103,492 88,045 81,411
Consumer 26,248 27,509 27,647 24,997 23,259
-------- -------- -------- -------- --------
$311,246 $285,102 $265,476 $228,909 $207,938
======== ======== ======== ======== ========
Loan demand also affects the Company's liquidity position. However, of
the loans maturing over one year, approximately 45% are variable rate loans.
The following table presents the maturities of loans at December 31, 1996.
Dollars in thousands Through More Than
<1 Year 5 Years 5 Years Total
------- ------- --------- -----
Maturity Distribution:
Fixed Rate:
Commercial, other $ 7,511 $13,734 $ 4,905 $ 26,150
Commercial, real estate 4,679 6,494 1,489 12,662
Real estate construction 2,706 -0- -0- 2,706
Residential real estate 1,338 597 30,282 32,217
Consumer 5,600 16,315 4,333 26,248
Variable Rate:
Commercial, other 28,785 16,062 24,929 70,270
Commercial, real estate 1,626 8,629 35,955 46,334
Real estate construction -0- -0- -0- -0-
Residential real estate 23 11,416 83,838 94,660
Consumer -0- -0- -0- -0-
State and municipal -0- -0- -0- -0-
------- ------- -------- --------
$52,268 $73,247 $185,731 $311,246
======= ======= ======== ========
Management considers both the adequacy of the collateral and the other
resources of the borrower in determining the steps to be taken to collect
non-accrual and charged-off loans. Alternatives that are considered are
foreclosure, collecting on guarantees, restructuring the loan, or collection
lawsuits.
The following table sets forth the amount of the Company's non-performing
assets as of the dates indicated:
Dollars in thousands
As of December 31, 1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Nonperforming loans:
Non-accrual loans $1,674 $2,631 $1,660 $1,553 $1,836
Accruing loans past due
90 days or more 599 353 1,217 428 352
Restructured loans (in
compliance with
modified terms) -0- -0- -0- -0- 132
------ ------ ------ ------ ------
Total nonperforming loans 2,273 2,984 2,877 1,981 2,320
Other real estate owned 1,264 1,086 1,606 1,667 1,301
------ ------ ------ ------ ------
Total Nonperforming assets $3,537 $4,070 $4,483 $3,648 $3,621
====== ====== ====== ====== ======
Ratios:
Nonperforming loans to
total loans 0.73% 1.05% 1.08% 0.87% 1.12%
Allowance for loan losses
to nonperforming loans 196.74% 136.73% 130.38% 204.44% 161.59%
Nonperforming assets to
total assets 0.69% 0.85% 0.98% 0.88% 0.94%
Allowance for loan losses
to nonperforming assets 126.43% 100.25% 83.67% 111.02% 103.53%
Interest foregone on non-accrual loans was approximately $178,000,
$207,000, $98,000, $117,000 and $160,000 for 1996, 1995, 1994, 1993 and 1992,
respectively. Interest income recognized on non-accrual loans during 1996 was
$219,826.
Management believes that the level of the allowance for loan losses at
December 31, 1996 of $4.5 million, or 1.44% of total loans outstanding was
appropriate given the current economic conditions in the Company's service
area and the overall condition of the loan portfolio. When determining the
amount of provision for loan losses annually management relies on its review
of the loan portfolio both to ascertain whether there are probable losses to
be written off, projected loan mix and loan volumes, historical net loan loss
experience, and to assess the loan portfolio in the aggregate.
The following table summarizes the activity in the allowance for loan
losses for the years ended December 31, 1996, 1995, 1994, 1993 and 1992.
Dollars in thousands
As of December 31, 1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Balance beginning
of period $4,080 $3,751 $4,050 $3,749 $2,931
Provisions for loan losses 838 899 216 683 1,582
Charge-offs:
Commercial 222 413 392 235 513
Residential real estate 191 248 188 155 188
Consumer 243 198 106 274 264
------ ------ ------ ------ ------
Total Charge-offs 656 859 686 664 965
Recoveries:
Commercial 55 174 62 143 97
Residential real estate 27 4 3 32 -0-
Consumer 128 111 106 107 104
------ ------ ------ ------ ------
Total Recoveries 210 298 171 282 201
Net Charge-offs 446 570 515 382 764
------ ------ ------ ------ ------
Balance end of period $4,472 $4,080 $3,751 $4,050 $3,749
====== ====== ====== ====== ======
Average loans
outstanding $298,596 $282,094 $253,439 $219,840 $211,768
Net charge-offs as a
percentage of average
loans 0.15% 0.20% 0.20% 0.17% 0.36%
Provision for loan losses
to average loans 0.28% 0.32% 0.09% 0.31% 0.75%
Ending allowance for loan
losses to:
Total loans at end
of period 1.44% 1.43% 1.41% 1.77% 1.80%
Net charge-offs during
period 1002.69% 715.79% 728.35% 1060.21% 490.71%
Nonperforming loans at
end of period 196.74% 136.73% 130.38% 204.44% 161.59%
The following table summarizes the allocation of the allowance for loan
losses among the Company's loan categories for the years ended December 31,
1996, 1995, 1994, 1993 and 1992.
Dollars in thousands
As of December 31, 1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Balance at
end of period
applicable to: Amount % Amount % Amount % Amount % Amount %
------ - ------ - ------ - ------ - ------ -
Commercial, other $1,711 31% $1,510 29% $1,500 29% $1,388 30% $1,261 31%
Commercial,
real estate 1,100 18% 753 20% 658 20% 526 18% 489 17%
Residential
real estate 662 42% 433 40% 522 39% 482 40% 458 41%
Consumer 381 8% 361 10% 372 10% 347 11% 310 11%
Guaranteed loans 69 1% 26 2% 16 1% 12 0% 11 0%
Unfunded commitments 252 NA 211 NA 221 NA 234 NA 132 NA
Unallocated 297 NA 786 NA 462 NA 1,061 NA 1,088 NA
------ ---- ------ ---- ------ ---- ------ ---- ------ ----
Total $4,472 100% $4,080 100% $3,751 100% $4,050 100% $3,749 100%
====== ==== ====== ==== ====== ==== ====== ==== ====== ====
The maturity of certificates of deposit in denominations of $100,000 or
more is set forth in the following table. These deposits are generally
considered to be more rate sensitive than other deposits and, therefore, more
likely to be withdrawn to obtain higher yields elsewhere if available.
Dollars in thousands
December 31, 1996
----
Time remaining until maturity:
Less than 3 months $10,539
3 months through 6 months 5,888
6 months through 12 months 5,014
Over 12 months 3,073
-------
$24,514
=======
The dividend payout ratio was 27.59%, 18.67%, 12.78%, 9.51%, and 12.83%
for 1996, 1995, 1994, 1993 and 1992 respectively. The average equity to
average assets ratio was 11.32%, 10.92%, 10.24%, 9.39%, and 8.81% for 1996,
1995, 1994, 1993 and 1992 respectively.
The borrowings utilized by the Company primarily have been advances from
the FHLB of Boston. In addition, the Company, utilizes fed funds, treasury,
tax and loan deposits, and repurchase agreements, secured by the United States
Government or Agency securities. The major portion of all borrowings matures
or reprices within the next six months. The following table sets forth
certain information regarding borrowed funds for the years ended December 31,
1996, 1995, and 1994.
Dollars in thousands
Total borrowings:
At or For the year ended
December 31, 1996 1995 1994
---- ---- ----
Average balance outstanding $73,069 $47,248 $41,951
Maximum amount outstanding at
any month-end during the year 93,760 43,125 63,174
Balance outstanding at end of year 93,760 43,125 62,444
Weighted average interest rate
during the year 5.45% 6.18% 4.47%
Weighted average interest rate
at end of year 5.35% 5.79% 5.89%
Interest rate sensitivity or "Gap" management involves the maintenance
of an appropriate balance between interest sensitive assets and interest
sensitive liabilities to reduce interest rate risk exposure while also
providing liquidity to satisfy the cash flow requirements of operations and
to meet customers' fluctuating demands for funds, either in terms of loan
requests or deposit withdrawals. Major fluctuations in net interest income
and net earnings could occur due to imbalances between the amounts of
interest-earning assets and interest-bearing liabilities, as well as different
repricing characteristics. Gap management seeks to protect earnings by
maintaining an appropriate balance between interest-earning assets and
interest-bearing liabilities in order to minimize fluctuations in the net
interest margin and net earnings in periods of volatile interest rates.
The following table set forth the amount of interest-earning assets and
interest-bearing liabilities outstanding, at December 31, 1996 which are
anticipated by the Company, based upon certain assumptions, to reprice or
mature in each of the future time periods shown.
Dollars in thousands Through More Than
<1 Year 5 Years 5 Years Total
------- ------- --------- -----
Interest-earning assets:
Loans
Fixed $ 21,834 $37,140 $ 41,008 $ 99,982
Variable 211,264 -0- -0- 211,264
Investment securities
Available for sale 8,362 4,285 -0- 12,647
Held to maturity 13,538 56,650 73,028 143,216
-------- ------- -------- --------
Total interest-earning assets 254,998 98,075 114,036 467,109
-------- ------- -------- --------
Interest-bearing liabilities:
Savings accounts 15,000 -0- 48,597 63,597
NOW accounts -0- -0- 41,715 41,715
Money market accounts 24,076 -0- -0- 24,076
Certificate accounts 139,797 34,339 1,967 176,103
Borrowings 93,330 430 -0- 93,760
-------- ------- -------- --------
Total interest-bearing
liabilities 272,203 34,769 92,279 399,251
-------- ------- -------- --------
Effect of interest rate swap 20,000
--------
Interest sensitivity gap
per period $(37,205) $63,306 $ 21,757
======== ======= ========
Cumulative interest
sensitivity gap $(37,205) $26,101 $ 47,858
======== ======= ========
Cumulative interest
sensitivity gap as a
percentage of total assets (7%) 5% 9%
Cumulative interest-earning
assets as a percentage of
interest-sensitive liabilities 94% 115% 117%
Item 8. Financial Statements and Supplementary Data
The following financial statements and report of independent accountant,
included in the Company's 1996 Annual Report to Shareholders, are incorporated
herein by reference. Exhibit 13.
Report of Independent Public Accountant
Consolidated Statements of Financial Condition
December 31, 1996 and 1995
Consolidated Statements of Earnings for the years ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Changes in the Stockholders' Equity
for the years ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
During the past two years the Company has not made changes in and has not
had disagreements with its independent accountant.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Company responds to this item by incorporating herein by reference
the material responsive to such item in the Company's definitive Proxy
Statement for the 1996 Annual Meeting of Shareholders to be filed with the
Commission prior to April 30, 1997.
Item 11. Executive Compensation
The Company responds to this item by incorporating herein by reference to
the material responsive to such item in the Company's definitive Proxy
Statement for the 1996 Annual Meeting of Shareholders to be filed with the
Commission prior to April 30, 1997.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The Company responds to this item by incorporating herein by reference to
the material responsive to such item in the Company's definitive Proxy
Statement for the 1997 Annual Meeting of Shareholders to be filed with the
Commission prior to April 30, 1997.
Item 13. Certain Relationships and Related Transactions
The Company responds to this item by incorporating herein by reference
to the material responsive to such item in the Company's definitive Proxy
Statement for the 1997 Annual Meeting of Shareholders to be filed with the
Commission prior to April 30, 1997.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Index to Financial Statements:
A list of the consolidated financial statements of the Company and
report of independent public accountant incorporated herein is included in
Item 8 of this Report.
2. Financial Statement Schedules:
Schedules have been omitted because they are not applicable or
are not required under the instructions contained in Regulation S-X or because
the information required to be set forth therein is included in the
consolidated financial statements or notes thereto.
3. Exhibits filed herewith:
(3.i) The Articles of Incorporation of Camden National Corporation,
as amended to date, Exhibit 3.i to the Company's Registration
statement Form S-4 filed with the Commission on September 25
1995, file number 33-97340, are incorporated herein by reference.
(3.i) The Bylaws of Camden National Corporation, as amended to date,
Exhibit 3.ii to the Company's Registration Statement on Form S-4
filed with the Commission on September 25, 1995, file number 33-
97340, are incorporated herein by reference.
(10.1) Lease Agreement for the facility occupied by the Thomaston Branch
of Camden National Bank, between Knox Hotel Associates(Lessor)
and Camden National Bank (Lessee)filed with Form 10-K, December
31, 1995, and is incorporated herein by reference.
(10.2) Lease Agreement for the facility occupied by the Camden Square
Branch of Camden National Bank, between Milliken, Tomlinson
Company (Lessor) and Camden National Bank (Lessee) filed with
Form 10-K, December 31, 1995, and is incorporated herein by
reference.
(10.3) Lease Agreement for the facility occupied by the Company's audit
department and one other tenant, between Leo A. Laukka (Lessor)
and Camden National Bank (Lessee) filed with Form 10-K, December
31, 1995, and is incorporated herein by reference.
(10.4) Lease Agreement for the facility occupied by the Hampden Branch of
United Bank, Parway Realty Development Corporation (Lessor) and
United Bank (Lessee) filed with Form 10-K, December 31, 1995, and
is incorporated herein by reference.
(10.5) Camden National Corporation 1993 Stock Option Plan, filed with Form
10-K, December 31, 1995, and is incorporated herein by reference.
(10.6) UNITEDCORP Stock Option Plan, filed with Form 10-K, December 31,
1995, and is incorporated herein by reference.
(13) Camden National Corporation's 1996 Annual Report to Shareholders.*
(21) Subsidiaries of the Company
(27) Financial Data Schedule
*Deemed filed only with respect to those portions thereof incorporated herein
by reference
(b) Reports on Form 8-K. None filed.
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CAMDEN NATIONAL CORPORATION (Registrant)
Keith C. Patten (signature) 3/27/97
- ---------------------------------------------------------
Keith C. Patten Date
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Keith C. Patten (signature) 3/27/97 Susan M. Westfall (signature) 3/27/97
- ------------------------------------- -------------------------------------
Keith C. Patten Date Susan M. Westfall Date
President and Director Treasurer and
Chief Executive Officer Chief Financial Officer
David H. Montgomery (signature)3/27/97 Rendle A. Jones (signature) 3/27/97
- ------------------------------------- -------------------------------------
David H. Montgomery Date Rendle A. Jones, Director Date
Chairman and Director
John S McCormick, Jr (signature)3/27/97
- ------------------------------------- -------------------------------------
Kenneth C. Dickey, Director Date John S. McCormick, Jr, Director Date
Peter T. Allen (signature) 3/27/97 Richard N. Simoneau (signature) 3/27/97
- ------------------------------------- -------------------------------------
Peter T. Allen, Director Date Richard N. Simoneau, Director Date
Ann W. Bresnahan (signature) 3/27/97 Arthur E. Strout (signature) 3/27/97
- ------------------------------------- -------------------------------------
Ann W. Bresnahan, Director Date Arthur E. Strout, Director Date
Robert J. Gagnon (signature) 3/27/97 Robert W. Daigle (signature) 3/27/97
- ------------------------------------- -------------------------------------
Robert J. Gagnon, Director Date Robert W. Daigle, Director Date
John W. Holmes (signature) 3/27/97 Bruce D. Bartlett (signature) 3/27/97
- ------------------------------------- -------------------------------------
John W. Holmes, Director Date Bruce D. Bartlett, Director Date
- -------------------------------------
E. Maymard Graffam, Jr, Director Date
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.
(c) No annual report to shareholders or proxy material has been sent to
security-holders as of the date of this Report. An annual report to
shareholders and proxy material are to be furnished to security-holders
subsequent to the filing of the annual report on this form, and copies will
be furnished to the Commission when they are sent to security-holders.
Exhibit #21 Subsidiaries of the Company
Camden National Bank
United Bank
Trust Company of Maine, Inc.
EXHIBIT 13
ANNUAL REPORT - CAMDEN NATIONAL CORPORATION
[COVER OF ANNUAL REPORT]
Corporation
Logo
Corporation
Logo
Corporation
Logo
Corporation
Logo
Corporation
Logo
Corporation
Logo
Corporation Camden National Corporation
Logo Annual Report 1996
[PAGE 1- ANNUAL REPORT]
COMMUNITY
Corporation
Logo
CNC
"On your corner, in your corner" ... this is what community
banking is all about. Camden National Bank, United Bank,
and the Trust Company of Maine, Inc., subsidiaries of the
Camden National Corporation, serve people in communities
from the hills of Jackman to the shores of Camden. With
managers and staff who live and work in the communities, we
fully understand the personal and business financial needs of
our neighbors. We support and strengthen local communities
through the loans we make to our customers. We work with
you and for you.
Three qualities set us apart as you community bank:
Trust
Loyalty
Caring
Every day, these values are evident at Camden National Bank,
United Bank, and the Trust Company of Maine, Inc. They
reflect our way of doing business.
"On your corner, in your corner" ... this symbol for community
banking points in all directions, just as Camden National
Bank, United Bank, and the Trust Company of Maine, Inc.,
under the one roof of Camden National Corporation, reach
out to serve the financial needs of communities in every corner
of our market.
ON YOUR CORNER. IN YOUR CORNER.
LOGO
(Diamond shape with the following written inside:
YOUR COMMUNITY BANK
Member Independent Bankers
Association of America)
[PAGE 2 - ANNUAL REPORT]
Camden National Corporation
(Corp Logo behind)
Dear Shareholders:
Through the combined efforts of the subsidiaries, the Camden National
Corporation once again posted exceptional earnings for 1996. Year-end
earnings were $8,115,000 which is a 9.6 percent increase over last year
and converts to a very respectable 1.65 percent return on average
assets.
A plan to repurchase outstanding shares of stocks in the Corporation is
in place with the aim of improving our already attractive return on
stockholder equity of 14.56 percent for 1996. To date 58,000 shares of
stock have been repurchased. The buy back program will reduce the number
of outstanding shares of stock that will share in the future earnings of
your company. Dividends were also increased from $.59 per share in
1995 to $.96 in 1996. With primary capital of 11.34 percent at year end
1996, our corporation will remain very well capitalized even after the
payment of higher dividends and the implementation of the stock buy
back program.
I am pleased to report that since the consolidation, each subsidiary
continues to maintain its own unique characteristics and each continue
to operate as an independent, community bank or trust company. Maintaining
this individualism contributes to our ongoing success. Operating Camden
National Bank, United Bank and the Trust Company of Maine, Inc. as independent
entities permits each company to personalize the services they provide to
the individuals and businesses within their local communities - the foundation
on which our corporation was built.
During the year, each subsidiary positioned itself to better serve its
customers and enhance its product offerings. United Bank began to offering
check imaging and Access 24 telephone banking, and installed its first ATM.
Camden National Bank introduced debit cards. In addition, the Belfast Office
of Camden National Bank was renovated and now offers a larger banking office
and Camden National Bank's first drive-up ATM. The Trust Company of Maine,
Inc. expanded its market by offering trust and retirement plan services in the
mid-coast area.
In June 1996, C. R. "Cap" de Rochemont retired after 20 years as a
Director of Camden National Bank and Camden National Corporation. Cap's
keen sense and perception of customer service will be greatly missed.
We all sincerely thank Cap for his dedication and commitment throughout the
years.
Our Directors elected Robert "Bob" J. Gagnon, Manager of Rockland's Shop 'n
Save, to succeed Cap. Bob has proven to be an effective representative of
the Rockland area community. Our Directors believed it was vital that Cap's
successor be from the Rockland market and have strong ties with its people in
an effort to continue the productive link that had been previously
established.
Maintaining effective and efficient marketing of the products and
services of our subsidiaries is always challenging. In November 1996,
our Corporation invested in a computer software program to enhance the
marketing efforts of United Bank and Camden National Bank. Marketing Customer
Information Files (MCIF) software was purchased to allow both banks the
ability to analyze customer bases and profitability, provide information to
cross sell more effectively, and perform target marketing; all of which are
designed to expand and add new customer relationships.
During 1996, the Directors of our Corporation approved a new initiative
to maximize long-term shareholder value. A new performance compensation
program was introduced to all employees, and became effective January
1, 1997. The basis of the compensation methodology is to empower
employees to become "Stakeholders" of our business. Employees will be
motivated by and rewarded for contributions made towards balancing
profit with growth and quality with product. The program is designed to give
employees a better appreciation for the business of banking, to take ownership
and pride in the success of the company, and be compensated accordingly. Our
participation in the new "Performance Compensation for Stakeholders" program
will help maximize the long-term success of the company.
To provide for anticipated growth, additional land adjacent to the Fox Ridge
Operations Center has been purchased. While there are no immediate plans to
build another building, additional parking is necessary to further utilize
unused space in the existing building.
Our Corporation continues to be a leader in the financial services
industry thanks to its wealth of knowledgeable and dedicated employees.
I also commend our Board of Directors for their guidance, dedication,
and commitment to ensuring our ongoing success. Thank you, our
shareholders, for your continuing support and belief in our ability to
serve the financial needs of our customers while providing you with an
attractive return on your investment.
Sincerely,
(Signature: Keith C. Patten)
Keith C. Patten
President and Chief Executive Officer
Camden National Corporation
[PAGE 3 - ANNUAL REPORT]
(Three letters from CEO of each subsidiary in columns)
Camden National Bank
(Corp logo behind)
Dear Shareholders:
If one subscibes to the notion that change creates opportunity, then 1996
can best be described as the year in which Camden National Bank seized the
opportunities afforded by change.
Earnings of $7,515,000 were up 10% compared to the previous year with an
improved return on assets of 1.75%, compared to 1995's 1.67% which continued
to be well above our Bank's national peer group average. Contributing
significantly to this success was quality loan growth and diligence on the
expense-control side.
A reconstituted management team helped set the stage for a renewed commitment
to customer service. Joanne Campbell joined us in March 1996 as head of the
Residential Mortgage Department and brought with her an extensive background
in mortgage banking. Charlie Wootton took on added responsibilities for the
branch system, as well as for consumer credit and employee training and
development. Together with the other members of our senior management team,
these individuals helped fill vital roles that will significantly impact our
company's future growth plans.
Focusing on customer convenience, we introduced CHECK~MATE, our highly-
anticipated debit card. We made facility enhancements to several offices
including an ATM in Union, a remodeled entry way in Rockland and a complete
overhaul of the Belfast office which doubled in size and now features our
first drive-up ATM.
Finally, no recap of a fiscal period would be complete without mention of
our most valuable asset, our employees. They are the once constant that makes
the process of change manageable. Their dedication to delivering top-notch
service is complemented by their community volunteerism, including the most
successful "Community Spirit of Christmas Project" ever. We salute each of
them for the invaluable role they played in making this past year one of our
most successful ever.
Sincerely,
(Signature: Robert W. Daigle)
Robert W. Daigle
President & Chief Executive Officer
Camden National Bank
United Bank
(Corp logo behind)
Dear Shareholders:
The management and staff at United Bank will look back upon 1996 as a
time of significant transition. It was a period during which the
abilities and commitment of our staff was often tested as we completed
the integration of our data-processing, accounting, and other internal
functions into the Camden National Corporation. I am very pleased to
report that the staff members at United Bank and those involved in the
transition at the Camden organization performed at an extraordinarily
well during this period. The transition is complete and the many
planned operating enhancements are in place--all with virtually no
disruption to the high level of service to which the customers of
United Bank are accustomed.
Despite a significant charge to operating expense, United Bank provided
a net return on average assets of 1.05% and a return on average equity
of nearly 13% in 1996. In light of the transitional nature of the past
year, I consider this performance to be outstanding. It reaffirms our
confidence in the dedication and abilities of our staff members and our
Board of Directors. We look forward to 1997 with great anticipation as
we bring the combined strengths of both banks and the trust company to
the marketplace.
Sincerely,
(Signature: Bruce D. Bartlett)
Bruce D. Bartlett
President and Chief Executive Officer
United Bank
Trust Company of Maine, Inc.
(Corp logo behind)
Dear Shareholders:
The Trust Company of Maine, Inc., is a relatively new company having
opened for business on April 1, 1994. The company has devoted
substantial time and effort in developing a full-service retirement
plan product which can compete with any available in the country.
Although this has been our main focus, we also provide traditional
trust and investment management services.
During 1996 we made substantial investments in software and computer
technology to allow us to continue to provide the same level of service
to our current and future clients as the company grows. Our record
keeping function is now fully integrated and networked. Our operations
were consolidated at one location in late 1996, which should enable us
to function even more efficiently in the future.
The process of integrating the Trust Company into the overall operation
of the holding company began with the announcement that Camden National
Corporation now offers trust services. As a part of this process the
Trust Company assumed responsibility for the administration and
management of the Camden National Corporation retirement plans and
steps were taken to transfer existing trust relationships to the Trust
Company.
Sincerely,
(Signature: Andrew P. Averill)
Andrew P. Averill
Chairman & Chief Executive Officer
Trust Company of Maine, Inc.
[Page 4 & 5 have a beach scene with family picnicking sketched in the
background]
Customers trust our honesty
and integrity in assisting them
with their financial needs.
[Page 5]
TRUST
Trust is not given, it is earned.
Our customers develop trust in Camden
National Bank, United Bank, and the
Trust Company of Maine, Inc., just as a
child developes trust in a parent. It is
a value we treasure and develop each
day as our directors, managers, and
staff work to enhance the relationships
with our customers. Establishing an
ongoing bond of trust empowers us to
work together to meet our customers'
personal and business financial needs.
[Page 6 & 7 have a lake scene with a man, his dog and mountains
sketched in background.]
Loyalty of customers and employees
working together over time is the key
to secure financial well-being.
[Page 7]
LOYALTY
Customers and employees share
a sense of loyalty that comes from
working closely together over time.
In the same way that a man and his
dog develop an unspoken bond, our
customers benefit from our dedication
to service and attention to their financial
needs. The result is a relationship based
on satisfaction, confidence, and loyalty
that provides customers with peace of
mind concerning their financial affairs.
[Page 8 & 9 have a picture of a woman giving an elderly woman some
baked goods sketched in the background.]
Caring begins with our employees who
volunteer within our communities
bringing people closer together.
[Page 9]
CARING
Believing that caring begins at home, the
employees of Camden National Corporation
are dedicated to volunteering their time to the
people and organizations in our communities.
We are proud of their generosity and spirit of
giving, as it clearly shows the commitment of
the employees of Camden National Bank, United Bank,
and the Trust Company of Maine, Inc., to serve
their neighborhoods.
We recognize our employees for their many volunteer contributions to
the following organizations throughout the year:
Meals on Wheels Camden Area YMCA Community Spirit of Christmas
ElderServe Orrington Music Program Camden-Rockport Youth Basketball
Miles Love School Jackman Close-up Program United Methodist Women's
Group & Sunday School Bangor Lions Club Rockland Elks Club
Windjammer Weekend Camden Women's Club Mid-Coast Habitat for Humanity
Mid Coast Home Builders Border Riders of Jackman East Orrington
Congregational Church Kiwanis Club of Bangor Rockland Lobster
Festival Penobscot County Chapter of AICPA Pen Bay Board of Realtors
Hampden Children's Day Hampden Academy Project Graduation St. Joseph
Hospital March of Dimes of Bangor Rockland Congregational Church
Bartlett Woods Cub Scouts of Jackman Teen Center Development Task
Force Realty Resources Maine Association of Realtors Marshall Point
Lighthouse Museum Old Town Assessors Girl Scouts of Jackman Ronald
McDonald House of Bangor West Bay Rotary Club Kiwanis Club of Hermon
Owls Head Transportation Museum Union Fair Methodist Conference Home
Fourteenth Street Elementary School Camden Rotary Club Camden Area
Salvation Army Jackman Chamber of Commerce Bangor - Brewer YWCA
United Way of Eastern Maine Town of Warren Board of Assessment
Rockland Rotary Club Exeter Budget Committee North Orrington School
Band University of Maine Jackman Fellowship Alliance Belfast Area
Chamber of Commerce Edith Dyer Library March of Dimes Walk America
Maine Forest and Logging Museum Belfast Rotary Club Bangor Chamber
of Commerce Camden Downtown Business Group Riley School Camden-
Rockport Little League Foster Parent - Crisis Intervention Home
Hermon Fun Days Union Chamber of Commerce Camden-Rockport Animal
Rescue League Belfast Lions Club Literacy Volunteers of America
Eastern Maine Development Corporation Girl Scouts of America Rockport
Volunteer Firefighters Mid Coast Development Corporation Camden Lions Club
Girl Scouts of Orrington St. Mary's Parish Council & Finance Committee
Kiwanis Club of Rockland Rockport-Camden-Lincolnville Chamber of
Commerce Rockland-Thomaston Chamber of Commerce Camden Public Library
John Street United Methodist Church Corinthian Manor Waldo County
Board of Realtors Mid-Coast Coalition to Prevent Domestic Abuse Big
Brothers/Big Sisters American Institute of Banking Summer St.
Housing Preservation, Inc. Friends of Montpelier Bangor Rec. Soccer
Program Mid-Coast Marine Mammal Rescue Program Order of the Eastern
Star Maine Public Television Telethon
[pages 10 - 15]
Camden National Corporation and Subsidiaries
Management's Discussion and Analysis of Financial Condition
and Results of Operations
In addition to the historical information contained herein, this Annual
Report contains certain forward-looking statements. The reader of this
Annual Report should understand that all such forward-looking statements
are subject to various uncertainties and risks that could affect their
outcome. The Company's actual results could differ materially from those
suggested by such forward-looking statements. Factors that could cause
or contribute to such differences include, but are not limited to,
variances in the actual versus projected growth in assets, return on
assets, loan losses, expenses, rates charged on loans and earned on
securities investments, rates paid on deposits, competition effects, fee
and other non-interest income earned, as well as other factors. This
entire Annual Report should be read to put such forward-looking
statements in context and to gain a more complete understanding of the
uncertainties and risks involved in the Company's business.
- -------------------------------------------------------------------------
GENERAL
Overview of Company.
Camden National Corporation (the "Company") is a multi-bank and
financial services holding company headquartered in Camden, Maine. The
Company's bank subsidiaries, both of which are wholly owned, are Camden
National Bank, a national banking organization, based in Camden, Maine,
and United Bank, a banking organization chartered under the laws of the
State of Maine, based in Bangor, Maine. The Company also has one non-
bank subsidiary, Trust Company of Maine, Inc., which provides trust and
retirement management services throughout central Maine. Up until mid-
year the Company had a second non-bank subsidiary, Camden Appraisal
Company, which was engaged in the real estate appraisal business in mid-
coast Maine. That operation was consolidated into Camden National Bank.
1995 Merger of UnitedCorp.
On December 31, 1995, UnitedCorp, a one-bank holding company with
two principal subsidiaries, United Bank and Trust Company of Maine, Inc.,
was merged into the Company. The merger was accounted for under the
pooling-of-interests method and accordingly, the consolidated financial
statements of the Company have been restated to reflect the acquisition
as though it occured at the beginning of each period presented.
Business.
The Company's wholly-owned bank subsidiaries are independent
commercial banks with branches serving both mid-coast and central Maine.
The banks are full-service financial institutions that focus primarily on
attracting deposits from the general public through their branches and
using such deposits to originate residential mortgage loans, commercial
business loans, commercial real estate loans and a variety of consumer
loans. Camden National Corporation takes pride in supporting the
communities it serves by having local community banks that not only offer
their customers a wide variety of deposit accounts and services as well
as competitive rates, but also make lending decisions locally.
The Company's majority-owned trust company subsidiary, Trust Company
of Maine, Inc., offers a broad range of trust and trust investment
services, in addition to retirement and pension plan management services.
The financial services provided by Trust Company of Maine, Inc.
complement the services provided by the Company's bank subsidiaries by
offering customers investment management services.
REVIEW OF FINANCIAL STATEMENTS
The discussion and analysis which follows focuses on the factors
affecting the Company's financial condition at December 31, 1996 and
1995, and financial results of operations during 1996, 1995, and 1994.
The Consolidated Financial Statements and related Notes beginning on
page 18 of this report should be read in conjunction with this review.
FINANCIAL CONDITION
Overview.
At December 31, 1996, the Company had consolidated assets of $510.1
million, an increase of $29.4 million, or 6.1%, from December 31, 1995.
The change in assets consisted primarily of a $26.1 million increase in
loans and an increase of $2.0 million in investment securities. The
corresponding increase in liabilities and shareholders' equity consisted
primarily of a $41.8 million increase in total borrowings and a $4.1
million increase in total shareholders' equity. These increases in
borrowings and shareholders' equity were in part offset by a $16.6
million decrease in deposits.
Investment Securities.
Total investment securities increased $2.0 million, or 1.3%, to $163
million at December 31, 1996. When the Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," on
January 1, 1994, the major portion of the Company's investment portfolio
was classified as held to maturity, meaning that the Company has both the
intent and ability to hold the securities until maturity. The ability to
use these securities as collateral for Federal Home Loan Bank loans
enhances the Company's ability to hold the securities to maturity. The
Company did, however, classify a small portion of the investment
portfolio as available for sale. During 1995 securities classified as
available for sale increased by $18.7 million, or 253%. This increase was
due in part to the transfer of $11.1 million in the held to maturity
portion of the portfolio to the available for sale section on December
31, 1995. This transfer from held to maturity to available for sale also
contributed to the decrease of $15.9 million, or 10.5%, in the securities
held to maturity during 1995. When FASB gave financial institutions the
opportunity to transfer securities between categories, during the latter
part of 1995, the Company transferred the majority of U.S. Treasury and
Agency securities with maturities of less than 18 months to available for
sale. This move did not change management's normal philosophy of holding
investments to maturity. It was an asset/liability positioning of
shorter maturities that would give the Company the opportunity to sell
and re-invest if the rate environment were to change in the near future.
During 1996 the majority of purchases in the investment portfolio were
classified as held to maturity. This resulted in an increase in the
securities held to maturity of $8.0 million. The available for sale
portion of the portfolio decreased $7.2 million due to maturities. There
were no sales in available for sale or held to maturity portfolios during
1996 and 1995. In addition, no significant sales of available for sale
securities are contemplated in the near future, and therefore, no
material impact on earnings is anticipated. Other securities increased
in 1996 from $6.4 milliion to $7.5 million due to the purchase of Federal
Home Loan Bank stock.
With increased loan demand during 1995 and 1996, additions to the
investment portfolio have been minimal. In addition, rather than
aggressively purchasing new securities during a time of relatively low
interest rates, most new investments replaced investments that matured
during 1996.
Loans.
The loan portfolio experienced growth in all areas, with the
exception of the consumer portfolio, during 1996. Loans held for sale
and in the portfoliio totaled $311.2 million at December 31, 1996, a
9.2% increase from total loans of $285.1 million at December 31, 1995.
During 1995 total loans increased by $19.5 million, or 7.4%. Last year's
growth was a continuation of the loan growth experienced by the
Company for the past several years. This growth trend is attributable to
an improved local economy. The increase in loans was comprised of a
$15.1 million, or 11.2% increase in commercial loans, $11.2 million, or
9.7% increase in residential real estate mortgages, $1.2 million, or 4.5%,
decrease in consumer loans, and a slight increase of $617,000 in
municipal loans. The decrease in the consumer loans during 1996 was due
to the sale of the student loan portfolio of approximately $1.4 million.
The Company still offers student loans. However, it is more cost
effective to outsource the servicing of these loans.
Non-performing loans, defined as non-accrual loans plus accruing
loans 90 days or more past due, totaled $2.2 million or .73% of total
loans at December 31, 1996, compared to $3.0 million or 1.05% and $2.9
million or 1.08% of total loans at December 31, 1995 and 1994,
respectively. The major reason for the favorable decrease was the
removal of two properties totaling over $800,000, from non-accrual
status, when the properties were sold and the loans paid off. It is the
Company's policy to discontinue accrual of interest on loans when, in the
opinion of management, there is an indication that the borrower may be
unable to meet payments as they become due. Upon such discontinuance,
all accrued but unpaid interest is reversed.
Delinquent real estate loans are not reclassified as Other Real
Estate Owned ("OREO") until the Company takes title to the property,
either through foreclosure or upon receipt of a deed in lieu of
foreclosure. In such situations, the secured loan is reclassified on the
balance sheet as OREO at the lesser of the fair value of the underlying
collateral less estimated selling costs, or the recorded amount of the
loan. The balances of Other Real Estate Owned were $1.3 million and $1.1
million, as of December 31, 1996 and 1995, respectively. Although, there
were a number of sales of OREO properties during the year, a number of
properties were also added resulting in the increase. Losses arising
from the acquisition of such properties are charged against the allowance
for loan losses. Operating expenses and any subsequent provisions to
reduce the carrying value are charged to operations. Gains and losses
upon disposition are reflected in earnings as realized.
Allowance for Loan Losses / Provision for Loan Losses.
In determining the adequacy of the loan loss allowance, management
relies primarily on its review of the loan portfolio both to ascertain
whether there are probable losses to be written off, and to assess the
loan portfolio in the aggregate. Non-performing loans are examined on an
individual basis to determine estimated probable loss. In addition,
management considers current and projected loan mix and loan volumes,
historical net loan loss experience for each loan category, and current
and anticipated economic conditions affecting each loan category. No
assurance can be given, however, that adverse economic conditions or
other circumstances will not result in increased losses in the portfolio.
The Company continues to monitor and modify its allowance for loan losses
as conditions dictate.
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan" was
adopted January 1, 1995. This statement applies to all troubled debt
restructurings involving a modification of terms. The adoption of this
standard had an immaterial impact on net income and retained earnings.
During 1996 the Company provided $838,000 for possible loan losses,
compared to $899,000 and $216,000 in 1995 and 1994, respectively. During
1994 management's analysis of the adequacy of the allowance for loan
losses indicated that the Company had a reserve larger than needed;
therefore, the provision during that year was smaller than normal. This
was due in part to the improved economy. During 1995 the increase in
the provision was due to the increase in loan volume and was not due to a
deterioration of loan quality. Management believes that the level of the
provision at December 31, 1996, and the resulting allowance of $4.5
million or 1.44% of total loans outstanding was appropriate given the
current economic conditions in the Company's service area and the overall
condition of the loan portfolio. The allowance for loan losses as a
percentage of total loans outstanding was 1.43% and 1.42%, in 1995 and
1994, respectively.
LIQUIDITY
The primary objective of liquidity management is to maintain a
balance between sources and uses of funds to meet the cash flow needs of
the Company in the most economical and expedient manner. The liquidity
needs of the Company's financial institutions require the availability of
cash to meet the withdrawal demands of depositors and the credit
commitments to borrowers. Due to the potential for unexpected
fluctuations in both these areas -- deposits and loans -- active
management of the Company's liquidity is critical. The Company seeks to
maintain various sources of funding and prudent levels of liquid assets
in order to satisfy its varied liquidity demands. In order to respond to
the various circumstances, the Company has both on- and off-balance sheet
funding in place.
Each of the Company's banking subsidiaries monitors its liquidity in
accordance with guidelines established by the Company and applicable
regulatory requirements. As of December 31, 1996 and 1995, the Company's
level of liquidity exceeded its target level. Management believes that
the Company's banking subsidiaries currently have adequate liquidity
available to respond to both expected and unexpected liquidity demands.
Sources of funds utilized by the Company's banking subsidiaries consist
of deposits, borrowings from the FHLB of Boston and other sources, cash
flows from operations, prepayments and maturities of outstanding loans,
investments and mortgage-backed securities, and the sale of mortgage
loans. Deposits still represent the Company's primary source of funds.
However, in 1996 total deposits decreased by $16.6 million, or 4.5% from
1995. This decrease was primarily in the certificates of deposit
accounts. Broker certificates decreased $7.8 million or 85.9%. During
1995 management decided to add approximately $10 million in broker
certificates to the deposit base, due to somewhat slow deposit growth.
Broker certificates totaled $9.1 million at December 31, 1995. However,
during 1996 the Company replaced maturing broker certificates with
borrowed funds, primarily from the Federal Home Loan Bank that were more
reasonably priced. Other certificates of deposit categories decreased
$7.1 million or 3.9%. The Company's remaining deposit categories
remained relatively level with the exception of money market accounts
that decreased $3.0 million or 12.4%. The Company's banking subsidiaries
have both experienced extreme competition by competitors for deposits.
Like the banking industry in general, the Company's banking subsidiaries
have experienced a decline in deposit growth over the past several years.
Therefore, other funding sources have had to be pursued and utilized.
Borrowings provide liquidity in the form of federal funds
purchased, securities sold under agreements to repurchase, treasury tax
and loan accounts, and borrowings from the Federal Home Loan Bank. Total
borrowings were $93.8 million at December 31, 1996, compared to $52.0
million at December 31, 1995, an increase of $41.8 million or 80.0%. The
increase was necessary to meet funding needs not met by deposits. The
Company views borrowed funds as a resonable priced alternative funding
source that should be utilized.
CAPITAL RESOURCES
Under Federal Reserve Board (FRB) guidelines, bank holding companies
such as the Company are required to maintain capital based on "risk-
adjusted" assets. These guidelines apply to the Company on a
consolidated basis. Under the current guidelines, banking organizations
must maintain a risk-based capital ratio of 8 percent, of which at least
4 percent must be in the form of core capital. The Company's Tier I
capital to risk weighted assets was 19.2%,and 19.4% for December 31, 1996
and 1995, respectively. For other capital ratios see Note 17 to the
Consolidated Financial Statements. In addition to risk-based capital
requirements, the FRB requires bank holding companies to maintain a
minimum leverage capital ratio of core capital to total assets of 4
percent. Total assets for this purpose do not include goodwill and any
other intangible assets and investments that the FRB determines should be
deducted. The Company's leverage ratios at December 31, 1996 and 1995
were 11.3% and 11.2%, respectively.
As part of the Company's goal to operate a safe, sound, and
profitable financial organization, the Company strives to maintain a
strong capital base. This strong capital base positions the Compnay to
be able to respond to opportunities, as was the case in 1995, with the
merger with UnitedCorp. The Company's capital base totaled $57.8 million
and $53.7 million or 11.3% and 11.2% of total assets at December 31, 1996
and 1995, respectively. The $4.1 million or, 7.7%, increase in
shareholders' equity was primarily attributable to net income of $8.1
million less net treasury transactions of $1.7 and $2.2 million in cash
dividends. Dividends paid on the Company's common stock in 1996
represented a 63.0% increase over 1995.
The principal cash requirement of the Company is dividends on common
stock when declared. The Company is primarily dependent upon the payment
of cash dividends by Camden National Bank to service its commitments.
The Company, as the sole shareholder of Camden National Bank and
United Bank, is entitled to the dividends when and as declared by each
Bank's Board of Directors, out of funds legally available; therefore,
subject to the powers of the state of Maine and Federal regulators.
Camden National Bank declared dividends in the aggregate amount of
$2,239,000 and $1,374,000 in 1996 and 1995, respectively. United Bank
declared no dividends in 1996. During 1995 United Bank declared
dividends in the aggregate amount of $20,968. As of December 31, 1996,
and subject to the limitations and restrictions under applicable law,
Camden National Bank and United Bank had funds available for dividends to
the Company sufficient to meet the Company's cash requirements, although
there is no assurance that dividends will be paid at any time in any
amount.
RESULTS OF OPERATIONS
Overview.
The Company reported net income of $8.1 million in 1996, $7.4
million in 1995 and $8.2 million in 1994. Earnings per share were $3.48
in 1996, $3.16 in 1995 and $3.52 in 1994. Return on average assets was
1.65% in 1996 compared with 1.59% in 1995, and 1.90% in 1994 . Return on
average equity was 14.56% in 1996 compared to 14.53% and 18.56% in 1995
and 1994, respectively. In 1995 the Company experienced a decline in
ROE. Historically, the Company has retained a significant portion of
earnings to support strong asset growth. During the past few years asset
growth has slowed and earnings have increased. This trend has resulted
in surplus equity; therefore, the Company has substantially increased
the dividend payout over the past two years. The Company experienced an
increase in earnings for 1996 of $712,000 or 9.6%. The primary reason
for the improved results in 1996 was the improvement in net interest
income at a faster rate than the increase in operating expenses. The
decline in earnings in 1995 was the result of a decline in net interest
income combined with increases in the provision for loan losses and
operating expenses. Management recognized at the beginning of 1995 that
1994's level of performance could not realistically be maintained if the
Company were to remain competitive in the future. As part of the
Company's strategic planning, a number of large capital expenditures were
required in 1995. These expenditures, combined with the narrowing of the
net interest spread and the increase over 1994's provision for loan
losses, meant a reduction in earnings. The earnings performance in 1994
reflected the positive growth trends in loans during the year and the
significant reduction in the amount added to the allowance for loan
losses. Net income in 1994 reflected the cumulative effect of adopting
the required accounting change (FAS 106), "Employers' Accounting for Post
Retirement Benefits Other Than Pensions", by Camden National Bank. FAS
106 requires that the estimated cost of postretirement benefits other
than pensions be accrued over the period earned rather than expensed as
incurred. This resulted in a one time after tax expense of $230,000.
The operating results of the Company depend greatly on its net
interest income, which is the difference between interest and dividend
income on loans and securities, and interest expense on deposits and
borrowings. The Company's results of operations also are affected by
other non-interest income and expenses. Each of these principal
components of the Company's operating results is discussed below.
Net Interest Income.
The Company's primary source of operating income is net interest
income. Net interest income was $21.9 million, $19.8 million, and $20.1
million in 1996, 1995 and 1994, respectively. Changes in net interest
income are the results of interest rate movements, changes in the
amounts and the mix of earning assets and interest-bearing liabilities,
and changes in the level of non-earning assets and non-interest-bearing
liabilities.
Net interest income increased by $1.9 million or 9.4%, on a fully-
taxable equivalent basis in 1996 compared to 1995. This increase was
primarily due to the increase in loan volume. During 1995 net interest
income decreased by $343,000, or 1.7%, on a fully-taxable equivalent
basis compared to 1994. This decrease in net interest income was
attributable to the fact that the Company's cost of funds (interest on
deposits and borrowings), increased faster than the yield on earning
assets (loans and securities), because of the need to pay higher interest
rates on deposits during 1995 to meet funding needs. In 1994 net
interest income increased by $1.8 million or 9.8%. The increase in net
interest income in 1994 was attributable to the decrease in the interest
rates paid on deposits and borrowed funds. This decrease was the result
of a declining rate environment. These decreases more than offset the
reduction in interest income as a result of a decrease in the yield on
loans and investments. Net interest income, expressed as a percentage of
average earning assets, was 4.79% in 1996, 4.63% in 1995, and 5.05% in
1994.
The average amount of loans outstanding increased by $18.0 million,
or 6.4%, in 1996 over 1995 and $27.1 million, or 10.7%, in 1995 over 1994
which has contributed to the increase in interest income. Interest income
on loans increased by $2.0 million in 1996 compared with 1995 and by $5.0
million in 1995 compared to 1994. The weighted average yield on loans
increased from 9.05% in 1994 to 9.88% in 1995 and then increased to 9.96%
in 1996. Commercial loan interest yields increased in part due to a .5%
increase in the prime rate during 1995.
The average amount of non-accrual loans also affects the average
yield earned on all outstanding loans. The average amount of non-accrual
loans for 1996, 1995, and 1994 were minimal, and therefore, had an
insignificant effect on average loan yield.
Interest and dividends on investment securities increased by
$377,000, on a fully-taxable equivalent basis, in 1996 compared with
1995. The primary reason for the increase was the increased volume.
During 1995 the investment portfolio had experienced decreased earnings
of $383,000, on a fully-taxable equivalent basis, compared with 1994.
The primary reason for the decline was the fact that previously higher-
yielding investments repriced at current lower rates. The average
balance of investments outstanding increased from $155.9 million in 1994
to $157.8 million in 1995 and then to $164.7 million in 1996. The
weighted average yield on investment securities, however, decreased from
6.70% in 1994 to 6.38% in 1995, and to 6.34% in 1996. Again, the decline
in overall yield is the result of higher yeilding investments maturing
and being replaced with current lower yields. During 1996 the Company
recovered $54,000 of principal and interest on several municipal
investments that had previously defaulted and for which a permanent
decline had been recognized. The Company also recovered $417,000 and
$377,175 of principal and interest on those same investments for 1995 and
1994, respectively.
Interest expense on deposits and borrowings increased by $494,000,
or 2.8%, in 1996 compared with 1995. The increase is attributable to
both the increases in borrowings and to the interest rates paid on
borrowings and certificates of deposit. During 1995 interest rates in
general experienced increases that contributed to the increase of $4.7
million, or 37.2%, in interest expense over 1994. Again, deposit growth
was in higher yielding certificates of deposits. This type of growth
results in a narrowing of the net interest margin that must be offset by
loan growth, increased yields on earning assets or by a reduction of
overhead expenses. Interest expense increased only slightly in 1994
over 1993, due in part to the fact that rates in general decreased during
1994. The weighted average rate on interest bearing deposits and
borrowings increased from 3.66% in 1994 to 4.71% in 1995 and then
decreased to 4.62% in 1996. The average balance of deposits outstanding
increased $7.9 million or 2.3% in 1996 compared to 1995 and $5.1 million,
or 1.5%, in 1995 compared to 1994.
The Company utilizes off-balance sheet instruments such as interest
rate swap agreements that have an effect on net interest income. The net
result was an increase in net interest income of $112,000 in 1996 over
1995, a decrease in net interest income of $377,000 in 1995 from 1994,
and a decrease of $87,000 in 1994 from 1993. Entering into interest rate
swap agreements involves not only the risk of dealing with counterparties
and their ability to meet the terms of the contracts, but also the
interest rate risk associated with unmatched positions. Notional
principal amounts are used to express the volume of these transactions,
but the amounts potentially subject to credit risk are much smaller.
During 1996, 1995, and 1994, the Company was a party in several
agreements to assume variable market-indexed interest payments in
exchange for fixed rate interest payments (interest-rate swaps). The
notional principal amount of interest-rate swaps outstanding was
$20,000,000 at December 31, 1996 and 1995, and $25,000,000 at December
31, 1994. The variable rates being paid by the Company on the swaps
decreased during 1996 resulting in an increase in the spread between what
the Company was paying (variable rate) and receiving (fixed rate) on
these agreements. During 1995 and 1994 an increase in the variable rates
being paid by the Company on the swaps resulted in a narrowing of spread
between what the Company was paying and receiving.
Noninterest Income.
Total noninterest income decreased by $133,000 in 1996 compared to
1995. Service charges on deposit accounts declined by $43,000, or 4.7%,
in 1996 compared to 1995. However, other service charges and fees increased
$104,000, or 8.1%, in 1996 compared to 1995. The largest contributing factor
was credit card assessment fees that increased $76,000 over 1995. Other
income decrease $194,000. The major contributing factor to this decline was
an unusually large investment recovery of $417,000 in 1995 compared to only
$54,000 in 1996. However, within this category, trust fees increased
$146,000. Noninterest income increased $487,000 in 1995 compared with 1994.
Services charges on deposit accounts totaled $908,000 in 1995, a 7.8%
increase over 1994's total of $842,000. Other service charges and fees
increased $418,000, or 48.0%, in 1995 compared to 1994. The various
contributing factors for this increase included an increase in trust income
fees of $122,000 over 1994, an increase in credit card assessment fees of
$113,000 and an increase in loan document preparation fees of $48,000.
Other income remained relatively stable from 1994 to 1995 at $1.3 million.
Noninterest Expenses.
Salary and benefits expense increased by $796,000m or 14.4%m in 1996
from 1995. This reflects added staff and normal increases in salary and
in cost of benefits. During 1996 a number of positions were added due to
the addition of United Bank to the Company. In addition, United Bank
employees were added the the defined benefit pension plan. Salary and
benefits expense increased by $300,000, or 5.8%, in 1995 compared to
1994. This increase resulted from pay range adjustments, an increase in
the cost of benefits, and the addition of staff.
In 1996 other operating expenses remained relatively level, with no
unusual increases or decreases in any category. During 1995 other
operating expenses increased $755,000 or 16.3%. These increased costs
were related in part to greater consulting fees, depreciation of
equipment, and expenses on or writedown of OREO properties. During the
latter part of 1994, management of the Company started an analysis of new
technologies and services that would enhance customer satisfaction and in
the long term assist in containing overhead costs. However, it was
recognized that initially a number of large capital purchases would be
necessary. Costs related to equipment and depreciation totaling $222,000
are reflected in 1995. In addition, due to the merger with UnitedCorp,
the Company experienced increased legal and accounting cost in 1995 of
$152,000.
Impact of Inflation and Changing Prices.
The Consolidated Financial Statements and related Notes thereto
presented elsewhere herein have been prepared in accordance with
generally accepted accounting principles which require the measurement of
financial position and operating results in terms of historical dollars
without considering changes in the relative purchasing power of money
over time due to inflation.
Unlike many industrial companies, substantially all of the assets
and virtually all of the liabilities of the Company are monetary in
nature. As a result, interest rates have a more significant impact on
the Company's performance than the general level of inflation. Over
short periods of time, interest rates may not necessarily move in the
same direction or in the same magnitude as inflation.
Recent Accounting Pronouncements.
In October of 1994, FASB issued SFAS No. 119, "Disclosure About
Derivative Financial Instruments and Fair Value of Financial Instrument."
SFAS No. 119 is limited to financial statement disclosures, and does not
have an impact on investments, net income, or retained earnings. The
Company adopted SFAS No. 119 on December 31, 1994.
In 1995, FASB issued SFAS No. 121, "Accounting for Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No.
121 establishes standards for recognizing and measuring impairment of
long-lived assets, certain identifiable intangibles, and goodwill. SFAS
No. 121 does not apply to long-term customer relationships of a financial
institution. The Company adopted the new standard in 1996. This
standard did not have an impact on assets, net income, or retained
earnings.
SFAS No. 122, "Accounting for Mortgage Servicing Rights," was issued
in May of 1995. Where mortgage loans are sold or securitized but the
rights to service those loans are retained by the creditor, the standard
requires that the total cost of such loans (whether originated or
acquired) be allocated between the mortgage servicing rights and the
loans themselves based on their relative fair values. SFAS No. 122 also
addresses measurement of impairment of the capitalized mortgage servicing
rights. The Company adopted SFAS No. 122 in 1996 for all loans sold
after December 31, 1995, with servicing rights retained. This standard
increased assets, income, and retained earnings by a minimal amount.
The Company adopted SFAS No. 123, "Accounting for Stock Based
Compensation," and has elected the intrinsic value method whereby
additional disclosures of stock based compensation are required; however,
the financial statements are not affected.
SFAS No. 125 and No. 127 relate to the accounting for transfers and
servicing of financial assets and extinguishment of certain liabilities
and are effective for years beginning January 1,1997. The adoption of
these standards is not expected to have a material effect on the
financial statements.
On November 15, 1995, FASB issued a Special Report, "A Guide to
Implementation of Statement 115 on Accounting for Certain Investments in
Debt and Equity Securities." Concurrent with the adoption of this
implementation guidance but no later than December 31, 1995, a financial
institution wass permitted to reassess the appropriateness of the
classifications of all securities held at that time and to account for
any resulting reclassification at fair value. Reclassification from the
held to maturity category to the available for sale category resulting
from this one-time reassessment would not call into question the intent
of a financial institution to hold other debt securities to maturity in
the future. Management in its reassessment of the appropriateness of the
classifications of securities decided to transfer a small portion of
securities held to maturity to the available for sale category.
Common Stock Information
The Common Stock of the Company is not traded on any exchange.
However, the Company does maintain an informal market in its stock, and
during 1996 and 1995 has stood ready to purchase shares as treasury
stock. There are other informal makers of markets in the Company stock,
as well. In 1995 and 1996, the Company stock traded in the range of
$35.00 to $40.00 per share, and the most recent sale of the Company stock
was in December of 1996 at a price of $37.00 per share.
The Company has paid quarterly dividends since its inception in
1985. The following table summarizes dividends declared per share for
1995 and 1996:
1995 1996 Increase
First Quarter $ .13 $ .18 $ .05
Second Quarter .15 .25 .10
Third Quarter .15 .26 .11
Fourth Quarter .16 .27 .11
----- ----- -----
Total $ .59 $ .96 $ .37
===== ===== =====
As of December 31, 1996, there were 2,298,632 shares of Camden
National Corporation Stock outstanding, held of record by approximately
835 shareholders.
[page 16]
Camden National Corporation and Subsidiaries
Summary of Financial Performance
[This page contains six bar graphs showing 5 years of the information
detailed below:]
Net income Assets
(in millions) (in millions)
'96 XXXXXXXXXXXXXXXXX 8.115 '96 XXXXXXXXXXXXXXXXX 510.1
'95 XXXXXXXXXXXXXXX 7.403 '95 XXXXXXXXXXXXXXX 480.6
'94 XXXXXXXXXXXXXXXXXX 8.258 '94 XXXXXXXXXXXX 455.6
'93 XXXXXXXXXXXXXX 7.135 '93 XXXXXXXXXX 414.0
'92 XXXXXXXXXXX 6.108 '92 XXXXXXXX 386.3
Deposits Loans
(in millions) (in millions)
'96 XXXXXXXXXXXXXXXX 353.2 '96 XXXXXXXXXXXXXXXX 311.2
'95 XXXXXXXXXXXXXXXXX 370.0 '95 XXXXXXXXXXXXXX 283.0
'94 XXXXXXXXXXXXX 340.2 '94 XXXXXXXXXXXX 263.6
'93 XXXXXXXXXXXXXX 343.6 '93 XXXXXXXXX 228.9
'92 XXXXXXXXXXXX 334.9 '92 XXXXXXX 207.9
Earnings per share Book Value per share
(in dollars) (in dollars)
'96 XXXXXXXXXXXXXXXXX 3.48 '96 XXXXXXXXXXXXXXXXXXX 25.16
'95 XXXXXXXXXXXXXXX 3.16 '95 XXXXXXXXXXXXXXXXX 22.88
'94 XXXXXXXXXXXXXXXXXX 3.52 '94 XXXXXXXXXXXXXX 20.57
'93 XXXXXXXXXXXXX 3.05 '93 XXXXXXXXXXX 17.41
'92 XXXXXXXXXX 2.65 '92 XXXXXXXX 14.65
Camden National Corporation and Subsidiaries
Selected Five-Year Financial Data
(In Thousands, except per share data) December 31,
- ------------------------------------------------------------------------
Financial Condition Data 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------
Assets $510,078 $480,685 $455,615 $414,044 $386,341
Loans 311,246 285,102 265,476 228,909 207,938
Allowance for Loan Losses 4,472 4,080 3,751 4,050 3,749
Investments 163,379 161,332 158,434 160,253 152,445
Deposits 353,240 369,880 340,244 343,643 334,950
Borrowings 93,760 51,980 62,444 26,396 13,764
Shareholders' Equity 57,822 53,680 48,258 40,724 34,312
December 31,
- --------------------------------------------------------------------------
Operations Data 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------
Interest Income $ 41,015 $ 38,661 $ 33,958 $ 31,529 $ 31,688
Interest Expense 19,105 18,853 13,766 13,185 15,366
-------- -------- -------- -------- --------
Net Interest Income 21,910 19,808 20,192 18,344 16,322
Provision for Loan Losses 838 899 216 683 1,610
Net Interest Income after -------- -------- -------- -------- --------
Provision for Loan Losses 21,072 18,909 19,976 17,661 14,712
Non-interest Income 3,411 3,544 3,057 2,499 2,544
Non-interest Expense 12,338 11,707 10,581 9,596 8,873
Income before Provision -------- -------- -------- -------- --------
for Income Tax 12,145 10,746 12,452 10,564 8,383
Income Tax Expense 4,030 3,343 3,964 3,429 2,275
Accounting Change for
Postretirement Benefits - - 230 - -
-------- -------- -------- -------- --------
Net Income $ 8,115 $ 7,403 $ 8,258 $ 7,135 $ 6,108
======== ======== ======== ======== ========
At or For the Year Ended December 31,
- ---------------------------------------------------------------------------
Other Data 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------
Return on Average Assets 1.65% 1.59% 1.90% 1.79% 1.69%
Return on Average Equity 14.56% 14.53% 18.56% 19.02% 19.16%
Net Income Per Share $ 3.48 $ 3.16 $ 3.52 $ 3.05 $ 2.65
Dividends Per Share $ .96 $ .59 $ .45 $ .29 $ .34
Book Value Per Share $25.16 $22.88 $20.57 $17.41 $14.65
Allowance for Loan Losses
to Total Loans 1.44% 1.43% 1.42% 1.77% 1.80%
Non-Performing Loans to
Total Loans .73% 1.05% 1.08% 0.87% 1.12%
Camden National Corporation and Subsidiaries
Consolidated Statements of Condition
- ---------------------------------------------------------------------------
(In Thousands, except number of December 31,
shares and per share data) 1996 1995
- ---------------------------------------------------------------------------
Assets
Cash and due from banks $ 17,233 $ 16,356
Federal funds sold 2,075 1,700
Securities available for sale, at market 12,647 19,837
Securities held to maturity (market value $143,220 and
$135,808 at December 31,1996 and 1995, respectively 143,216 135,136
Other securities 7,516 6,359
Residential mortgages held for sale 2,544 2,083
Loans, less allowance for loan losses of $4,472 and
$4,080 at December 31, 1996 and 1995, respectively 304,230 278,939
Bank premises and equipment 8,944 8,495
Other real estate owned 1,264 1,086
Interest receivable 3,920 4,252
Other assets 6,489 6,442
-------- --------
Total assets $510,078 $480,685
Liabilities ======== ========
Deposits:
Demand $ 47,749 $ 46,034
NOW 41,715 42,192
Money market 24,076 27,066
Savings 63,597 63,503
Certificates of deposit 176,103 191,085
-------- --------
Total deposits 353,240 369,880
Borrowings from Federal Home Loan Bank 67,051 39,387
Other borrowed funds 26,709 12,593
Accrued interest and other liabilities 5,211 5,056
Minority interest in subsidiary 45 89
-------- --------
Total liabilities 452,256 427,005
Commitments (Note 16) -------- --------
Stockholders' Equity
Common stock, no par value; authorized
2,500,000 shares, issued 2,376,080 shares 2,436 2,436
Surplus 1,226 1,226
Retained earnings 56,827 50,951
Net unrealized appreciation on securities
available for sale, net of income tax 32 104
-------- --------
60,521 54,717
Less cost of 77,448 and 31,521 shares of
treasury stock on December 31, 1996 and 1995 2,699 1,037
-------- --------
Total stockholders' equity 57,822 53,680
-------- --------
Total liabilities and stockholders' equity $510,078 $480,685
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
Camden National Corporation and Subsidiaries
Consolidated Statements of Income
- -----------------------------------------------------------------------------
(In Thousands, except number Year Ended December 31,
of shares and per share data) 1996 1995 1994
- -----------------------------------------------------------------------------
Interest Income
Interest and fees on loans $29,483 $27,439 $22,373
Interest on US Government and agency obligations 9,321 8,810 9,210
Interest on state and political subdivisions 338 478 740
Interest on interest rate swap agreements 1,251 1,380 1,414
Interest on federal funds sold and other investments 622 554 221
------- ------- -------
Total interest income 41,015 38,661 33,958
Interest Expense ------- ------- -------
Interest on deposits 13,982 13,743 10,852
Interest on other borrowings 3,983 3,728 1,875
Interest on interest rate swap agreements 1,140 1,382 1,039
------- ------- -------
Total interest expense 19,105 18,853 13,766
------- ------- -------
Net interest income 21,910 19,808 20,192
Provision for Loan Losses 838 899 216
Net interest income after provision ------- ------- -------
for loan losses 21,072 18,909 19,976
Other Income ------- ------- -------
Service charges on deposit accounts 865 908 842
Other service charges and fees 1,392 1,288 870
Other income 1,154 1,348 1,345
------- ------- -------
Total other income 3,411 3,544 3,057
------- ------- -------
24,483 22,453 23,033
Operating Expenses ------- ------- -------
Salaries and employee benefits 6,303 5,507 5,207
Net occupancy 736 815 744
Furniture, equipment and data processing 1,254 1,215 993
Other 4,045 4,170 3,637
------- ------- -------
Total operating expenses 12,338 11,707 10,581
Income before income taxes and cumulative ------- ------- -------
effect of accounting change 12,145 10,746 12,452
Income Taxes 4,030 3,343 3,964
Net income before cumulative effect ------- ------- -------
of accounting change 8,115 7,403 8,488
Cumulative effect of change in accounting for ------- ------- -------
postretirement benefits net of income tax
benefit of $119,000 in 1994 - - 230
------- ------- -------
Net Income $ 8,115 $ 7,403 $ 8,258
Per Share Data ======= ======= =======
Earnings per share before cumulative effect of
accounting change $ 3.48 $ 3.16 $ 3.62
Cumulative effect of change in account for
postretirement benefits net of income tax benefit - - (0.10)
Earnings per share 3.48 3.16 3.52
Weighted average number of shares outstanding 2,329,989 2,345,774 2,346,106
The accompanying notes are an integral part of these consolidated financial
statements.
Camden National Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
Years Ended December 31, 1996, 1995 and 1994
- -----------------------------------------------------------------------------
(In Thousands, except number of shares and per share data)
- -----------------------------------------------------------------------------
Net Unrealized
Appreciation
on Total
Securities Stock-
Common Retained Available Treasury holders'
Stock Surplus Earnings For Sale Stock Equity
Balance at
January 1, 1994 $2,436 $1,194 $37,708 $ - $ (614) $40,724
Net income for 1994 - - 8,258 - - 8,258
Cumulative effect to record
appreciation on securities
available for sale - - - 182 - 182
Unrealized depreciation on
securities available for sale - - - (45) - (45)
Purchase of treasury
stock (553 shares) - - - - (12) (12)
Sale of treasury
stock (10,864 shares) - 14 - - 181 195
Cash dividends
($.45 per share) - - (1,044) - - (1,044)
Balance at ------ ------ ------- ----- ------ -------
December 31, 1994 $2,436 $1,208 $44,922 $ 137 $ (445) $48,258
Net income for 1995 - - 7,403 - - 7,403
Change in unrealized gains (losses)
on securities available for sale,
net of tax benefit of $16 - - - (33) - (33)
Purchase of treasury
stock (25,200 shares) - - - - (937) (937)
Sale of treasury
stock (20,629 shares) - 25 - - 338 363
Retirement of treasury
stock (322 shares) - (7) - - 7 -
Cash dividends
($.59 per share) - - (1,374) - - (1,374)
Balance at ------ ------ ------- ----- ------ -------
December 31, 1995 $2,436 $1,226 $50,951 $ 104 $(1,037) $53,680
Net income for 1996 - - 8,115 - - 8,115
Change in unrealized gains (losses)
on securities available for sale,
net of tax benefit of $37 - - - (72) - (72)
Purchase of treasury
stock (47,261 shares) - - - - (1,712) (1,712)
Sale of treasury
stock (1,334 shares) - - - - 50 50
Cash dividends
($.96 per share) - - (2,239) - - (2,239)
Balance at ------ ------ ------- ----- ------ -------
December 31, 1996 $2,436 $1,226 $56,827 $ 32 $(2,699) $57,822
====== ====== ======= ===== ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
Camden National Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Year Ended December 31,
- -----------------------------------------------------------------------------
(In Thousands) 1996 1995 1994
- -----------------------------------------------------------------------------
Operating Activities
Net Income $ 8,115 $ 7,403 $ 8,258
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 838 899 216
Depreciation and amortization 1,016 801 729
Decrease (increase) in interest receivable 332 101 (1,098)
Increase in other assets (55) (1,596) (78)
Increase in other liabilities 193 508 1,104
Cash receipts from sale of residential loans 1,505 6,784 7,388
Origination of mortgage loans held for sale (1,966) (6,976) (5,573)
Loss on disposal of assets 82 - -
Other, net 5 (7) 18
-------- -------- --------
Net cash provided by operating activities 10,065 7,917 10,964
Investing Activities -------- -------- --------
Proceeds from sale and maturities of
securities held to maturity 32,252 29,639 45,023
Proceeds from sale and maturities of
securities available for sale 9,400 473 1,721
Purchase of securities to be held to maturity (40,332) (28,104) (41,215)
Purchase of securities available for sale (2,301) (2,308) (757)
Purchase of Federal Home Loan Bank Stock (1,157) (2,181) (2,733)
Increase in loans (26,129) (20,246) (38,941)
Net (increase) decrease in other real estate (178) 520 61
Purchase of premises and equipment (1,572) (1,988) (3,666)
Proceeds from sale of premises and equipment 9 - -
(Increase) decrease in minority position (44) (28) 94
Net purchase of federal funds (375) (1,700) -
-------- -------- --------
Net cash used by investing activities (30,427) (25,923) (40,413)
Financing Activities -------- -------- --------
Net decrease in demand deposits,NOW accounts,
and savings accounts (1,658) (9,851) (14,905)
Net (decrease) increase in certificates
of deposit (14,982) 39,487 11,506
Net increase (decrease) in short-term borrowings 41,780 (10,454) 36,047
Reduction in long-term debt - (9) -
Purchase of treasury stock (1,712) (937) (12)
Sale of treasury stock 50 363 195
Cash dividends (2,239) (1,396) (1,044)
-------- -------- --------
Net cash provided by financing activities 21,239 17,203 31,787
-------- -------- --------
Increase (decrease) in cash and equivalents 877 (803) 2,338
Cash and cash equivalents at beginning of year 16,356 17,159 14,821
-------- -------- --------
Cash and cash equivalents at end of year $ 17,233 $ 16,356 $ 17,159
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest paid $ 19,270 $ 17,615 $ 13,350
Income tax paid 3,599 3,369 4,178
Non-Cash transactions:
Transfer from loans to real estate owned 1,333 974 403
Transfer of securities from held to maturity
to available for sale - 11,175 -
The accompanying notes are an integral part of these consolidated financial
statements.
[Notes to Consolidated Financial Statements are on pages 22 - 37]
Camden National Corporation and Subsidiaries
Notes to Consolidated Financial Statements
- ----------------------------------------------------------------------------
NATURE OF OPERATIONS.
Camden National Corporation (the "Company") is a multi-bank and financial
services holding company. The Company's bank subsidiaries, both of which
are wholly owned, are Camden National Bank, a national banking organization,
based in Camden, Maine, and United Bank, a banking organization chartered
under the laws of the State of Maine, based in Bangor, Maine. The Company
also has one non-bank subsidiary, Trust Company of Maine, Inc., which
provides trust and retirement management services throughout the central
Maine area.
- ----------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies conform to generally accepted
accounting principles and to general practice within the banking industry.
The following is a summary of the significant accounting and reporting
policies.
Principles of Consolidation. The accompanying consolidated financial
statements include the accounts of Camden National Corporation, its
wholly-owned subsidiaries, Camden National Ban k and United Bank, and its
majority-owned subsidiary, Trust Company of Maine, Inc. Trust Company of
Maine, Inc.'s financial statements include its wholly-owned subsidiary -
Fiduciary Services, Inc. All intercompany accounts and transactions have
been eliminated in consolidation.
Use of Estimates in the Preparation of Financial Statements. The
preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results may differ from those
estimates. Material estimates that are particularly susceptible to
significant change in the near term relate to the determination of the
allowance for loan losses and the valuation of real estate acquired in
connection with foreclosures or in satisfaction of loans. In connection
with the determination of the allowance for loan losses and the carrying
value of real estate owned, management obtains independent appraisals for
significant properties.
Investment Securities. The Company has classified its investment
securities into investments available for sale and investments held to
maturity.
Securities Available for Sale. Debt and other securities that are to
be held for indefinite periods of time, are stated at market value.
Changes in net unrealized gains or losses are recorded as an adjustment
to stockholders' equity until realized.
Market values of securities are determined by prices obtained from
independent market sources. Realized gains and losses on securities sold
are computed on the identified cost basis on the trade date.
Securities to be Held to Maturity. Bonds, notes, and debentures for
which the Company has the positive intent and ability to hold to maturity
are reported at cost, adjusted for amortization of premiums and accretion
of discounts which are recognized in interest income using the interest
method over the period to maturity.
Residential Mortgages Held for Sale. Residential mortgages held for
sale are primarily one to four family real estate loans which are valued
at the lower of cost or market, as determined by outstanding commitments
from investors or current investor yield requirements. Gains and losses
from sales of residential mortgages held for sale are recognized upon
settlement with investors and recorded in noninterest income. These
activities, together with underwriting residential mortgage loans,
comprise the Company's mortgage banking business.
Loan Servicing. SFAS No. 122, "Accounting for Mortgage Servicing
Rights," was adopted at January 1, 1996. The cost of mortgage servicing
rights is amortized in proportion to, and over the period of, estimated
net servicing revenues. Impairment of mortgage servicing rights is
assessed based on the fair value of those rights. Fair values are
estimated using discounted cash flows based on a current market interest
rate. For purposes of measuring impairment, the rights are stratified
based on the following predominant risk characteristics of the underlying
loans: interest rate, fixed versus variable rate, and period of
origination. The amount of impairment recognized is the amount by which
the capitalized mortgage servicing rights for a stratum exceed their fair
value. The amortized cost approximates fair value at December 31, 1996.
The impact of adopting SFAS No. 122 was immaterial to the financial
statements.
Loans. Interest on loans is accrued and credited to income based on
the principal amount outstanding. The accrual of interest on loans is
discontinued when, in the opinion of management, there is an indication
that the borrower may be unable to meet payments as they become due.
Upon such discontinuance, all unpaid accrued interest is reversed.
Fees received and direct costs incurred for the origination of loans
are deferred and recognized as an adjustment of loan yield.
The allowance for loan losses is maintained at a level adequate to
absorb future charge-offs of loans deemed uncollectible. Management
determines the adequacy of the allowance based upon reviews of individual
credits, recent loss experience, current economic conditions, known and
inherent risk characteristics of the various categories of loans, adverse
situations that may affect the borrower's ability to repay, estimated
value of underlying collateral, and other pertinent factors. The
allowance is increased by provisions charged to operating expense and by
recoveries on loans previously charged off. Credits deemed uncollectible
are charged against the allowance.
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," as
amended by SFAS No. 118, was adopted January 1, 1995. This statement
applies to all troubled debt restructurings involving a modification of
terms. The adoption of this standard had no impact on net income and
retained earnings.
Under this standard, loans considered to be impaired are reduced to the
present value of expected future cash flows or to the fair value of
collateral, by allocating a portion of the allowance for loan losses to
such loans. If these allocations cause the allowance for loan losses to
require an increase, such increase is reported as provision for loan
losses.
The carrying values of impaired loans are periodically adjusted to
reflect cash payments, revised estimates of future cash flows, and
increases in the present value of expected cash flows due to the passage
of time. Cash payments representing interest income are reported as
such. Other cash payments are reported as reductions in carrying value,
while increases or decreases due to changes in estimates of future
payments and due to the passage of time are reported as provision for
loan losses.
Other Real Estate Owned. Other real estate owned represents real
estate acquired through foreclosure and is recorded at the lower of cost
or fair market value, determined by an independent appraisal, with any
difference at the time of acquisition treated as a loan loss. Subsequent
reductions in fair market value below cost are charged directly to other
operating expenses.
Premises and Equipment. Premises and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization
are computed on the straight-line method over the estimated useful lives
of the related assets.
Intangible Assets. The value of core deposits premium is being
amortized over a period of fifteen years using the straight-line method.
Other intangible assets including goodwill and recapitalization costs are
being amortized over twenty to twenty-five years using the straight-line
method. Amortization of software is recognized using the straight-line
method over the estimated useful liFe of the various softwares.
Other Borrowed Funds and Securities Sold Under Repurchase Agreements.
Other borrowed funds consist of commercial and consumer repurchase
agreements and treasury tax and loan deposits that generally do not have
fixed maturity dates. Securities sold under agreements to repurchase
generally mature within thirty days.
Employee Pension and Postretirement Benefits. The Company has a
defined benefit noncontributory pension plan covering substantially all
employees. Actuarilly determined pension costs are charged to current
operations. The funding policy is to pay at least the minimum amounts
required by the Employee Retirement Income Security Act of 1974. In
addition, the Company has a supplemental pension plan covering several
executive officers. This plan was designed to keep the percentage level
of pension benefits consistent for all employees.
The Company also provides a voluntary savings plan for the benefit of
its employees which qualifies under 401(k) of the Internal Revenue Code.
Employees can contribute up to the maximum amount allowed by law. The
Company matches a percentage of employee contributions. The Company's
postretirement plans also provide medical and life insurance to certain
eligible retired employees.
Income Taxes. Deferred tax assets and liabilities are determined based
on the differences between the financial statement and tax bases of
assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse. Principal timing
differences include pension and other postretirement benefits,
depreciation, and provision for loan losses.
Earnings Per Share. Earnings per share data are based on the
weighted average number of common shares outstanding during each year
after giving consideration to the dilutive effect of outstanding stock
options.
Statement of Cash Flows. For purposes of this statement, cash
equivalents include interest bearing deposits in banks.
Financial Instruments with Off Balance Sheet Risk. The Company uses
off-balance sheet financial instruments as part of its asset/liability
management activities. The Company does not intend to sell any of these
instruments.
Interest Rate Exchange Agreements (swaps) are accounted for using the
accrual method. Net interest income (expense) resulting from the
differential between exchanging floating and fixed-rate interest payments
is recorded on a current basis.
Interest Rate Floors are contracts in which a floor is established at
a specified rate and period of time. The premium paid for the contract
is amortized over its life. Any cash payments received are recorded as
an adjustment to net interest income.
In the ordinary course of business the Company has entered into off
balance sheet financial instruments consisting of commitments to extend
credit, commitments under credit card arrangements, commercial letters of
credit, and standby letters of credit. Such financial instruments are
recorded in the financial statements when they are funded.
Fair Value Disclosures. The following methods and assumptions were
used by the Company in estimating its fair value disclosures for
financial instruments:
Cash and cash equivalents, including cash and due from banks and federal
funds sold: The carrying amounts of cash and equivalents approximates their
fair value.
Investment securities and securities available for sale: Fair values for
investment securities are based on quoted market prices, where available.
If quoted market prices are not available, fair values are based on quoted
market prices of comparable instruments.
Residential mortgages held for sale: Fair values are based on quoted
market prices from the Federal Home Loan Mortgage Corporation (Freddie Mac).
Loans receivable: For variable rate loans that reprice frequently and
have no significant change in credit risk, fair values are based on carrying
values. The fair value of other loans is estimated by discounting the
future cash flows using the current rates at which similar loans would be
made to borrowers with similar credit ratings and for the same remaining
maturities.
Interest receivable: The carrying amount of interest receivable
approximates fair value.
Off-balance sheet instruments: Fair values for interest rate swaps
and floor and cap contracts are based on quoted market prices. Fair value
of commitments to extend credit has not been presented as the future revenue
derived from such commitments is not significant.
Deposits: The fair value of demand deposits, savings accounts, and
certain money market deposits is the amount payable on demand. The fair
value of fixed-maturity certificates of deposit is estimated using the rates
currently offered in the Company's market for deposits of similar remaining
maturities.
Short-term borrowings: The carrying amounts of borrowings from the Federal
Home Loan Bank, under repurchase agreements and other short-term borrowings,
approximates fair value.
Effect of New Financial Accounting Standards. During 1995, the Financial
Accounting Standards Board issued SFAS No. 121, "Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 121 is
effective for fiscal years beginning after December 15, 1995. SFAS No. 121
requires entities to review long-lived assets and certain identifiable
intangibles for impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable. The
adoption of SFAS No. 121 did not have an effect on the financial statements.
SFAS No. 122, "Accounting for Mortgage Servicing Rights," was adopted in
1996. SFAS No. 122 requires the recognition of rights to service mortgage
loans for others as separate assets, regardless of whether the rights were
originated or purchased, and subsequent, periodic evaluations of the
capitalized rights for impairment. Prior to SFAS No. 122, only purchased
servicing rights were capitalized. The adoption of this statement did not
have a material effect on the financial statements.
The company adopted SFAS No. 123, "Accounting for Stock Based Compensation,"
and has elected the intrinsic value method whereby additional disclosures of
stock based compensation are required, however; the financial statements are
not affected.
SFAS No. 125 and No. 127 relate to the accounting for transfers and
servicing of financial assets and extinguishment of certain liabilities and
are effective for years beginning January 1, 1997. The adoption of these
standards is not expected to have a material effect on the financial
statements.
Reclassification. Certain items from the prior year were restated to
conform with current year presentation.
- ---------------------------------------------------------------------------
2. MERGER.
On December 31, 1995, UnitedCorp was merged into the Company. The merger
was accounted for under the pooling-of-interests method. At December 31,
1995, UnitedCorp had total assets of $61,440,000 and total shareholders'
equity of $4,918,900. The Company exchanged approximately 162,000 shares
of its common stock for approximately 190,000 shares of UnitedCorp. Under
the pooling-of-interest method, the recorded amounts of assets and
liabilities of the Company and UnitedCorp have been carried forward at
their previously recorded amounts. All prior period financial statements
presented have been restated as if the merger took place at the beginning
of such periods.
The following table sets forth the results of operations for the years
ended December 31, 1995 and 1994:
1995 1994
- -----------------------------------------------------------------------
Net Income
UnitedCorp $ 540,000 $ 581,000
Camden National Corporation 6,863,000 7,677,000
---------- ----------
Combined $7,403,000 $8,258,000
========== ==========
Earnings per share
UnitedCorp $2.83 $2.92
Camden National Corporation 3.14 3.62
Combined 3.16 3.52
Dividends per share
UnitedCorp $ .18 $ .21
Camden National Corporation .61 .46
Combined .59 .45
- ---------------------------------------------------------------------------
3. INVESTMENT SECURITIES
The following tables summarize the amortized costs and market values of
securities available for sale and held to maturity:
December 31, 1996
- -----------------------------------------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- -----------------------------------------------------------------------------
Available for sale
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $ 12,596,774 $ 55,938 $ (37,087) $ 12,615,625
Obligations of states and
political subdivisions - 31,581 - 31,581
------------ ---------- ----------- ------------
Total available for sale $ 12,596,774 $ 87,519 $ (37,087) $ 12,647,206
============ ========== =========== ============
Held to maturity
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $ 58,433,117 $ 181,174 $ (862,448) $ 57,751,843
Obligations of states and
political subdivisions 5,523,736 44,075 (11,644) 5,556,167
Mortgage-backed securities 79,258,807 1,301,301 (647,545) 79,912,563
------------ ---------- ----------- ------------
Total held to maturity $143,215,660 $1,526,550 $(1,521,637) $143,220,573
============ ========== =========== ============
December 31, 1995
- -----------------------------------------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- -----------------------------------------------------------------------------
Available for Sale
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $ 19,679,083 $ 227,359 $ (70,029) $ 19,836,413
Obligations of states and
political subdivisions - 1,044 - 1,044
------------ ---------- ----------- ------------
Total available for sale $ 19,679,083 $ 228,403 $ (70,029) $ 19,837,457
============ ========== =========== ============
Held to maturity
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $ 67,517,116 $ 415,016 $(1,458,830) $ 66,473,302
Obligations of states and
political subdivisions 7,896,511 48,780 (9,712) 7,935,579
Mortgage-backed securities 59,722,104 1,868,954 (191,536) 61,399,522
------------ ---------- ----------- ------------
Total held to maturity $135,135,731 $2,332,750 $(1,660,078) $135,808,403
============ ========== =========== ============
The amortized cost and fair values of debt securities by contractual maturity
at December 31, 1996, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
Amortized Fair
Cost Value
- -----------------------------------------------------------------------------
Available for sale
Due in one year or less $ 8,283,683 $ 8,329,797
Due after one year through five years 4,313,091 4,317,409
------------ ------------
$ 12,596,774 $ 12,647,206
============ ============
Amortized Fair
Cost Value
- -----------------------------------------------------------------------------
Held to maturity
Due in one year or less $ 13,537,818 $ 13,489,266
Due after one year through five years 56,650,010 56,023,936
Due after five years through ten years 10,528,483 10,526,779
Due after ten years 62,499,349 63,180,592
------------ ------------
$143,215,660 $143,220,573
============ ============
For purposes of the maturity table, mortgage-backed securities, which are not
due at a single maturity date, have been allocated over maturity groupings
based on the weighted-average contractual maturities of underlying collateral.
On December 31, 1995, the Company made a one-time transfer of securities held
to maturity to securities available for sale at a market value totalling
$11,175,469 in accordance with the Financial Accounting Standards Board
implementation guidance issued in November of 1995. This transfer resulted
in an unrealized gain of $217,200. The transfer was the result of current
asset/liability planning.
There were no sales in available for sale or held to maturity portfolios
during 1996 and 1995. Proceeds from sale of investments classified as held
to maturity during 1994 were $2,002,344, which resulted in a realized gain
of $2,344. The investments were sold within three months of the call date.
In 1994, gross realized gains and losses on securities available for sale
were $942 and $2,453.
At December 31, 1996, securities with a book value of $38,846,585 and a
fair value of $38,653,266 were pledged to secure public deposits and
securities sold under agreements to repurchase and other purposes required
or permitted by law.
- -----------------------------------------------------------------------------
4. LOANS
The composition of the Company's loan portfolio at December 31 was as follows:
1996 1995
- ----------------------------------------------------------------------------
Commercial loans $ 149,837,504 $ 134,724,730
Residential real estate loans 127,656,412 116,420,831
Consumer loans 26,117,643 27,334,439
Municipal loans 5,578,064 4,960,666
Other loans 129,753 175,664
------------- -------------
Total loans 309,319,376 283,616,330
Less deferred loan fees net of cost 617,363 597,219
Less allowance for loan losses 4,472,447 4,080,308
------------- -------------
$ 304,229,566 $ 278,938,803
============= =============
The Company's lending activities are conducted in mid-coast and central Maine.
The Company grants single family and multi-family residential loans,
commercial real estate loans, business and a variety of consumer loans. In
addition, the Company grants loans for the construction of residential homes,
multi-family properties and commercial real estate properties. The ability
and willingness of borrowers to honor their repayment commitments is generally
dependent on the level of overall economic activity within the geographic area
and the general economy.
As of December 31, 1996 and 1995, nonaccrual loans were $1,674,000 and
$2,631,000, respectively. Interest foregone was approximately $178,000,
$207,000 and $98,000 for 1996, 1995 and 1994, respectively.
- ------------------------------------------------------------------------------
5. ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses were as follows:
December 31,
- --------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------
Beginning Balance $4,080,308 $3,751,321 $4,050,329
Provision for loan losses 837,800 898,547 216,136
Recoveries 209,931 289,659 170,683
Loans charged off (655,592) (859,219) (685,827)
---------- ---------- ----------
Net charge offs (445,661) (569,560) (515,144)
---------- ---------- ----------
Ending Balance $4,472,447 $4,080,308 $3,751,321
========== ========== ==========
Information regarding impaired loans is as follows:
December 31,
- --------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------
Average investment in impaired loans $ 1,864,441 $ 1,505,466
Interest income recognized on impaired loans,
all on cash basis 219,826 36,327
Balance of impaired loans 1,666,745 1,785,332
Less portion for which no allowance for loan
losses is allocated - -
Portion of impaired loan balance for which an
allowance for credit losses is allocated 1,666,745 1,785,332
Portion of allowance for loan losses allocated
to the impaired loan balance 340,229 266,670
- -----------------------------------------------------------------------------
6. MORTGAGE SERVICING
Residential real estate mortgages are originated by the Company for both
portfolio and for sale into the secondary market. The sale of loans are to
institutional investors such as the Federal Home Loan Mortgage Corporation
("Freddie Mac"). Under loan sale and servicing agreements with the
investor, the Company generally continues to service the residential real
estate mortgages. The Company pays the investor an agreed-upon rate on the
loan, which, including a guarantee fee paid to Freddie Mac, is less than the
interest rate the Company receives from the borrower. The difference is
retained by the Company as a fee for servicing the residential real estate
mortgages. As required by SFAS No. 122, the Company capitalizes mortgage
servicing rights at their fair value upon sale of the related loans. The
Company's activity in the secondary market was minimal during 1996.
Therefore, capitalized servicing rights were not material.
Mortgage loans serviced for others are not included in the accompanying
consolidated statements of condition. The unpaid principal balances of
mortgage loans serviced for others was $45,913,503 and $52,006,411 at
December 31, l996 and 1995, respectively.
Custodial escrow balances maintained in connection with the foregoing loan
servicing, and included in demand deposits, were $98,541 and $106,652 at
December 31, 1996 and 1995, respectively.
- -----------------------------------------------------------------------------
7. BANK PREMISES AND EQUIPMENT
Details of premises and equipment, at cost, at December 31 were as follows:
1996 1995
- ----------------------------------------------------------------------------
Land and buildings $ 7,484,699 $ 7,350,908
Furniture, fixture and equipment 6,523,977 5,836,822
Leasehold improvements 401,685 402,595
Construction in process 530,770 -
----------- -----------
14,941,131 13,590,325
Less: Accumulated depreciation and amortization 5,997,576 5,095,271
----------- -----------
$ 8,943,555 $ 8,495,054
=========== ===========
- -----------------------------------------------------------------------------
8. OTHER REAL ESTATE OWNED
The transactions in other real estate owned for the years ended December 31
were as follows:
1996 1995
- ----------------------------------------------------------------------------
Beginning balance $ 1,086,000 $ 1,606,000
Additions 1,333,000 1,607,000
Properties sold 912,000 1,915,000
Writedowns 243,000 212,000
----------- -----------
Ending balance $ 1,264,000 $ 1,086,000
=========== ===========
- -----------------------------------------------------------------------------
9. DEPOSITS
The aggregate amount of certificates of deposit, each with a minimum
denomination of $100,000, was approximately $24,514,000 and $24,387,000 in
1996 and 1995, respectively. Certificates of deposit included brokered
deposits in the amount of $1,282,000 and $9,108,000 at December 31, 1996 and
1995, respectively.
At December 31, 1996, the scheduled maturities of certificates of deposit are
as follows:
1997 $139,797,000
1998 18,082,000
1999 9,428,000
2000 5,275,000
2001 1,554,000
Thereafter 1,967,000
------------
$176,103,000
============
- ------------------------------------------------------------------------------
10. BORROWINGS FROM FEDERAL HOME LOAN BANK
A summary of the borrowings from the Federal Home Loan Bank (FHLB) of Boston
is as follows:
December 31, 1996
- ---------------------------------------------------------------------------
Principal Amounts Interest Rates Maturity Date
- ---------------------------------------------------------------------------
$66,620,000 5.38% - 7.32% 1997
430,566 6.58% 1999
-----------
$67,050,566
===========
December 31, 1996
- ---------------------------------------------------------------------------
Principal Amounts Interest Rates Maturity Date
- ---------------------------------------------------------------------------
$38,063,685 5.62% - 6.31% 1996
750,000 6.30% - 6.67% 1997
573,728 6.58% 1999
-----------
$39,387,413
===========
Short and long term borrowings from the FHLB consist of both fixed and
adjustable rate borrowings and are collateralized by all stock in the FHLB
and qualifying first mortgage loans.
- ----------------------------------------------------------------------------
11. EMPLOYEE RETIREMENT PLANS
The Company has a trusteed defined benefit noncontributory pension plan
covering substantially all eligible employees over 21 years of age with one
year of employment. The benefits are based on years of service and salary
earned during an employee's last five years of employment. The assets of
the plans are primarily invested in listed stocks.
The Company also provides a supplemental pension plan for certain executive
employees to restore pension benefits which have been reduced by income tax
regulations. These plans are unfunded and nonqualified.
Net periodic pension cost for these plans includes the following
components:
1996 1995 1994
- ---------------------------------------------------------------------------
Service Cost
Qualified plan $ 280,000 $ 136,000 $ 152,000
Supplemental plan 72,000 37,000 53,000
Interest cost
Qualified plan 193,500 169,000 161,000
Supplemental plan 64,000 56,000 27,000
Return on plan assets (153,300) (152,000) (159,000)
Net amortization and deferral
Qualified plan (8,600) (13,000) (8,000)
Supplemental plan 39,000 31,000 22,000
--------- --------- ---------
Net periodic pension cost $ 487,200 $ 264,000 $ 248,000
========= ========= =========
The funded status of the plan and amounts recognized in the balance
sheets at December 31 are as follows:
QUALIFIED PLAN 1996 1995
- ----------------------------------------------------------------------------
Actuarial present value of projected
benefit obligation:
Vested $ 1,860,000 $ 1,563,000
Nonvested 40,000 32,000
----------- -----------
Accumulated benefits obligation 1,900,000 1,595,000
Effect of future compensation 1,200,000 1,182,000
----------- -----------
Projected benefit obligation 3,100,000 2,777,000
Plan assets at fair value (2,200,000) (2,007,000)
Unfunded excess of projected obligation ----------- -----------
over plan assets 900,000 770,000
Unrecognized transition asset 123,300 95,000
Unrecognized net loss (477,900) (562,000)
Unrecognized prior service cost 87,900 132,000
Pension liability included in accrued ----------- -----------
other liabilities $ 633,300 $ 435,000
=========== ===========
The following assumptions were used:
Discount rate 7.5% 7.5%
Increase in compensation 6.0% 6.0%
Expected long term rate of return on assets 7.5% 7.5%
SUPPLEMENTAL PLAN 1996 1995
- ----------------------------------------------------------------------------
Actuarial present value of projected
benefit obligation:
Vested $ 502,000 $ 404,000
Nonvested 152,000 29,000
----------- -----------
Accumulated benefits obligation 654,000 433,000
Effect of future compensation 338,000 474,000
----------- -----------
Projected benefit obligation 992,000 907,000
Plan assets at fair value - -
Unfunded excess of projected obligation ----------- -----------
over plan assets 992,000 907,000
Unrecognized transition obligation (182,000) (271,000)
Unrecognized net loss (281,000) (290,000)
Unrecognized prior service cost - -
Pension liability included in accrued ----------- -----------
liabilities $ 529,000 $ 346,000
=========== ===========
The following assumptions were used:
Discount rate 7.5% 7.5%
Increase in compensation 6.0% 6.0%
- -----------------------------------------------------------------------------
12. POSTRETIREMENT BENEFITS
The Company's postretirement plans provide medical and life insurance to
certain eligible retired employees.
Effective January 1, 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." This statement requires that
the estimated cost of postretirement benefits other than pensions be accrued
over the period earned rather than expensed as incurred.
The Company elected to immediately recognize the accumulated postretirement
benefit obligation of $349,000. The accounting change resulted in a one-time
charge to earnings of $230,000, net of a tax benefit of $119,000, or (.10)
per share.
Net periodic postretirement benefit cost includes the following components:
1996 1995
- -----------------------------------------------------------------------------
Service cost of benefits earned $ 20,000 $ 31,000
Interest cost on accumulated postretirement
benefit obligation 22,000 27,000
Amortization of prior service cost (16,000) -
-------- --------
Net periodic postretirement benefit cost $ 26,000 $ 58,000
======== ========
It is the Company's policy to fund the cost of postretirement health care and
life insurance plans as premiums are paid.
The amounts recognized in the Company's balance sheets at December 31, are:
1996 1995
- -----------------------------------------------------------------------------
Accumulated Postretirement Benefit Obligation
Retirees $ 74,000 $ 78,000
Fully eligible active plan participants 88,000 49,000
Other active plan participants 153,000 156,000
-------- --------
315,000 283,000
Unrecognized transition asset 158,000 174,000
-------- --------
$473,000 $457,000
======== ========
Benefit costs were generally estimated assuming retiree health care cost would
initially increase at a 12% annual rate, decrease gradually to a 6% annual
growth rate after 10 years, and remain at a 6% annual growth rate thereafter.
The discount rate used at December 31, 1996 and 1995, to estimate the
accumulated postretirement benefit obligation was 7.5%. A 1% increase in the
assumed health care cost trend rate would not have a materical impact on the
accumulated postretirement benefit obligation due to a built-in cap on annual
benefits.
- ------------------------------------------------------------------------------
13. STOCKHOLDERS' EQUITY
The Company has a fixed stock option plan accounted for under APB Opinion 25
and related interpretations. The plan allows the company to grant options to
employees for up to 140,000 shares of common stock. The options are
immediately vested when granted, and expire ten years from the date the
option is granted. The excercise price of each option equals the market price
of the Company's stock on the date of grant. Accordingly, no compensation cost
has been recognized for the plan. Had compensation cost for the plan been
determined based on the fair value of the options at the grant dates
consistent with the method of Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation," the company's net income and
earnings per share would have been reduced to the pro forma amounts indicated
below.
1996 1995
- ----------------------------------------------------------------------------
Net income As reported $8,115,000 $7,403,000
Pro forma $7,949,000 $7,393,000
Earnings per share As reported $ 3.48 $ 3.16
Pro forma $ 3.41 $ 3.15
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes options-pricing model with the following weighted-average
assumptions used for all grants in 1996 and 1995: dividend yield of 2.6%,
expected volatility of 5%, risk-free interest rate of 6.5%, and expected lives
of 10 years.
A summary of the status of the company's fixed stock option plan as of
December 31, 1996 and 1995, and changes during the years ending on those dates
is presented below.
1996 1995
- ----------------------------------------------------------------------------
Weighted Weighted
Number Average Number Average
of Exercise of Exercise
Shares Price Shares Price
Outstanding at beginning of year 68,508 $17.38 87,006 $17.36
Granted during the year 27,250 37.00 1,702 18.25
Exercised during the year 0 - 20,200 17.50
------ ------
Outstanding and exercisable at end of year 95,758 22.96 68,508 17.38
====== ======
Weighted-average fair value of
options granted during the year $9.25 $9.25
The following information applies to options outstanding at December 31, 1996.
Number outstanding 95,758
Range of exercise prices $14.50 - $37.00
Weighted-average exercise price $22.96
Weighted-average remaining contractual life 7.8 years
During 1994, 1,702 shares were issued and 9,800 shares were exercised, leaving
87,006 options outstanding at December 31, 1994.
- -----------------------------------------------------------------------------
14. INCOME TAXES
The current and deferred components of income tax expense were as follows:
1996 1995 1994
- -----------------------------------------------------------------------------
Current:
Federal $ 4,024,000 $ 3,336,000 $ 3,885,000
State 121,000 112,000 119,000
----------- ----------- -----------
4,145,000 3,448,000 4,004,000
Deferred:
Federal (115,000) (105,000) (40,000)
----------- ----------- -----------
$ 4,030,000 $ 3,343,000 $ 3,964,000
=========== =========== ===========
Items which give rise to deferred income tax assets and liabilities and the
tax effect of each are as follows:
1996 1995
- ------------------------------------------------------------------------------
Asset Liability Asset Liability
- ------------------------------------------------------------------------------
Allowance for possible losses
on loans $1,206,000 $ - $1,090,000 $ -
Allowance for investment losses 110,000 - 125,000 -
Capitalized costs - 14,000 42,500 -
Pension and other benefits 463,000 - 385,700 -
Depreciation - 143,000 - 78,200
Deferred loan origination fees 9,000 - 74,400 -
Deferred compensation and benefits 140,000 - 127,800 -
Unrealized appreciation of
investments available for sale - 17,000 - 50,600
Unrealized appreciation in loans
held for sale - 5,000 11,300 -
Valuation of other real estate owned 48,000 - 19,200 -
Interest receivable 40,000 - 59,800 -
Other 61,000 - 24,200 -
---------- -------- ---------- --------
$2,077,000 $179,000 $1,959,900 $128,800
========== ======== ========== ========
The actual expense differs from the expected tax expense computed by applying
the applicable U.S. Federal corporate income tax rate to earnings before
income taxes, as follows:
1996 1995 1994
- ------------------------------------------------------------------------------
Computed tax expense $4,151,000 $3,654,000 $4,233,000
Increase (reduction) in income
taxes resulting from:
Tax exempt Income (209,000) (234,000) (258,000)
State taxes, net of federal benefit 79,000 74,000 79,000
Compensation expense from stock
options exercised - (134,000) (58,000)
Other 9,000 (17,000) (32,000)
---------- ---------- ----------
$4,030,000 $3,343,000 $3,964,000
========== ========== ==========
The related income taxes have been calculated using a rate of 34%. No
valuation allowance is deemed necessary for the deferred tax asset, which is
included in other assets.
- ------------------------------------------------------------------------------
15. LOANS TO RELATED PARTIES
In the ordinary course of business, the Company has granted loans to certain
officers and directors and the companies with which they are associated. All
such loans were made under terms that are consistent with the Company's normal
lending policies. Changes in the composition of the board of directors or the
group comprising executive officers result in additions to or deductions from
loans outstanding to directors, executive officers, or principal shareholders.
Loans to related parties which in aggregate exceed $60,000 were as follows:
1996 1995
- ------------------------------------------------------------------------------
Balance, January 1, $9,058,000 $5,576,000
Loans made/advanced and additions 7,188,000 6,695,000
Repayments and reductions 8,536,000 3,213,000
---------- ----------
Balance, December 31 $7,710,000 $9,058,000
========== ==========
- ------------------------------------------------------------------------------
16. FINANCIAL INSTRUMENTS
In the normal course of business, the Company is a party to financial
instruments with off-balance sheet risk, which are not reflected in the
accompanying consolidated balance sheets. The Company's significant off-
balance sheet risks are lending commitments, letters of credit, interest rate
floors, caps, and interest rate swap agreements. Those instruments involve
varying degrees of credit and interest rate risk in excess of the amount
recognized in the statement of condition.
The Company follows the same credit policies in making commitments to extend
credit and conditional obligations as it does for on-balance sheet
instruments, including requiring similar collateral or other security to
support financial instruments with credit risk. The Company's exposure to
credit loss in the event of nonperformance by the customer is represented by
the contractual amount of those instruments. Since many of the commitments
are expected to expire without being drawn upon, the total amount does not
necessarily represent future cash requirements.
The Company uses off-balance sheet derivative instruments as hedges against
large fluctuations in interest rates. The Company uses interest rate swaps
and floor instruments to hedge against potentially lower yields on the
variable prime rate loan category in a declining rate environment. If rates
were to decline, resulting in reduced income on the adjustable rate loans,
there would be an increased income flow from the interest rate swap and floor
instruments. The Company also uses cap instruments to hedge against increases
in short-term borrowing rates. If rates were to rise, resulting in an
increased interest cost, there would be an increased income flow from the cap
instruments.
All off-balance sheet positions are reviewed as part of the asset/liability
management process at least quarterly basis. The instruments are factored
into the Company's overall interest rate risk position. The Company regularly
reviews the credit quality of the counterparties from which the instruments
have been purchased. As of December 31, 1996, the Company had $20 million
(notional principal amount) in interest-rate swaps, $15 million in cap
contracts, and $20 million in floor contracts. The Company has interest-rate
swaps maturing in 1997 and 1998. The two floor contracts ($10 million each)
have a strike rate of 5%, and both mature in 1999. The two cap contracts ($10
million and $5 million) have strike rates of 6.5%, and both mature in 1997.
1996 1995
- ------------------------------------------------------------------------------
Commitments to extend credit 63,138,000 $51,521,000
Letters of credit 924,000 905,000
Swaps 20,000,000 20,000,000
The estimated fair values of the Company's financial instruments were as
follows:
December 31, 1996 December 31, 1995
- ----------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- ----------------------------------------------------------------------------
Financial assets:
Cash and cash equivalents,
including cash and due
from banks and federal
funds sold $ 19,308,000 $ 19,308,000 $ 18,056,000 $ 18,056,000
Securities available
for sale 12,647,000 12,647,000 19,837,000 19,837,000
Securities held to
maturity 143,216,000 143,220,000 135,136,000 135,808,000
Other investments 7,516,000 7,516,000 6,359,000 6,359,000
Loans held for sale 2,544,000 2,544,000 2,083,000 2,116,000
Loans receivable 304,230,000 302,000,000 278,939,000 276,000,000
Interest receivable 3,920,000 3,920,000 4,252,000 4,252,000
Financial liabilities:
Deposits 353,240,000 353,826,000 369,880,000 370,815,000
Borrowings from Federal
Home Loan Bank 67,051,000 67,074,000 39,387,000 39,417,000
Other borrowed funds 26,709,000 26,709,000 12,593,000 12,593,000
The estimated fair values of the Bank's off-balance sheet instruments were as
follows:
December 31, 1996
- ------------------------------------------------------------------------------
Market Value
Notional Principal Contract Date Maturity Date Including Accruals
- ------------------------------------------------------------------------------
SWAPS $ 10,000,000 24-Jan-92 24-Jan-97 $ (48,680)
5,000,000 09-Feb-94 09-Feb-98 (33,860)
5,000,000 04-May-94 04-May-97 (17,970)
------------ ----------
$ 20,000,000 $ (100,510)
============ ==========
FLOORS $ 10,000,000 03-Jun-94 03-Jun-99 $ 28,000
10,000,000 13-Sep-94 13-Sep-99 23,000
------------ ----------
$ 20,000,000 $ 51,000
============ ==========
CAPS $ 10,000,000 30-May-95 30-May-97 $ 0
5,000,000 06-Jun-95 06-Jun-97 0
------------ ----------
$ 15,000,000 $ 0
============ ==========
December 31, 1995
- ------------------------------------------------------------------------------
Market Value
Notional Principal Contract Date Maturity Date Including Accruals
- ------------------------------------------------------------------------------
SWAPS $ 10,000,000 24-Jan-92 24-Jan-97 $ (154,357)
5,000,000 09-Feb-94 09-Feb-98 (82,447)
5,000,000 04-May-94 04-May-97 (61,195)
------------ -----------
$ 20,000,000 $ (297,999)
============ ===========
FLOORS $ 10,000,000 03-Jun-94 03-Jun-99 $ 128,000
10,000,000 13-Sep-94 13-Sep-99 123,000
------------ -----------
$ 20,000,000 $ 251,000
============ ===========
CAPS $ 10,000,000 30-May-95 30-May-97 $ 4,000
5,000,000 06-Jun-95 06-Jun-97 2,500
------------ -----------
$ 15,000,000 $ 6,500
============ ===========
- ------------------------------------------------------------------------------
17. REGULATORY MATTERS
The Company, and it's bank subsidiaries, are subject to various regulatory
capital requirements administered by the Comptroller of the Currency, the
Federal Reserve Board, and the Federal Deposit Insurance Corporation. These
capital requirements represent quantitative measures of the Company's assets,
liabilities, and certain off-balance sheet items as calculated under
regulatory accounting principles. The Company's capital classification is
also subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital to average assets (as
defined). Management believes that, as of December 31, 1996, the Company
meets all capital requirements to which it is subject.
As of December 31, 1996, both bank subsidiaries were categorized by their
regulatory agencies as well capitalized. To be categorized as well
capitalized the banks must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the table. There are
no conditions or events that management believes have changed the bank's
category.
The Company's actual capital amounts and ratios are also presented in the
table.
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
- ------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
>/= >/= >/= >/=
- ------------------------------------------------------------------------------
As of December 31, 1996
Total Capital (To Risk Weighted Assets):
Consolidated $61,320,104 20.4% $23,996,203 8.0% N/A
Camden National Bank 55,277,407 22.0% 20,125,530 8.0% $25,156,912 10.0%
United Bank 5,722,596 11.8% 3,874,455 8.0% 4,843,069 10.0%
Tier I Capital (To Risk Weighted Assets):
Consolidated $57,570,697 19.2% $11,998,101 4.0% N/A
Camden National Bank 52,155,845 20.7% 10,062,765 4.0% $15,094,147 6.0%
United Bank 5,123,282 10.6% 1,937,228 4.0% 2,905,842 6.0%
Tier I Capital (To Average Assets):
Consolidated $57,570,697 11.7% $19,707,221 4.0% N/A
Camden National Bank 52,155,845 12.1% 17,184,148 4.0% $21,480,185 5.0%
United Bank 5,123,282 8.2% 2,511,073 4.0% 3,138,841 5.0%
As of December 31, 1995
Total Capital (To Risk Weighted Assets):
Consolidated $56,787,822 20.6% $22,010,991 8.0% N/A
Camden National Bank 51,695,023 22.4% 18,464,828 8.0% $23,081,035 10.0%
United Bank 4,941,074 11.2% 3,519,200 8.0% 4,399,001 10.0%
Tier I Capital (To Risk Weighted Assets):
Consolidated $53,380,693 19.4% $11,005,495 4.0% N/A
Camden National Bank 48,809,894 21.2% 9,232,414 4.0% $13,848,621 6.0%
United Bank 4,419,074 10.1% 1,759,600 4.0% 2,639,400 6.0%
Tier I Capital (To Average Assets):
Consolidated $53,380,693 11.4% $18,681,280 4.0% N/A
Camden National Bank 48,809,894 11.9% 16,377,220 4.0% $20,471,526 5.0%
United Bank 4,419,074 7.7% 2,296,080 4.0% 2,870,100 5.0%
- ------------------------------------------------------------------------------
18. BANK HOLDING COMPANY
Following are the condensed statements of condition, income statements, and
statements of cash flow for Camden National Corporation, a multi-bank and
financial services holding company.
Statements of Condition
December 31
1996 1995
- ----------------------------------------------------------------------------
Assets
Cash $ 11,738 $ 59,710
Investment in subsidiaries:
Banking subsidiaries 57,519,175 53,370,423
Other subsidiaries 101,668 158,482
Amounts receivable from subsidiaries 130,327 53,359
Goodwill 59,574 64,007
------------ ------------
Total asset $ 57,822,482 $ 53,705,981
============ ============
Liabilities & Stockholders' Equity
Fractional shares payable $ 98 $ 3,571
Accrued expenses 0 21,981
Stockholders' equity 57,822,384 53,680,423
------------ ------------
Total liabilities and stockholders' equity $ 57,822,482 $ 53,705,975
============ ============
Statements of Income
For Years Ended December 31
1996 1995 1994
- -----------------------------------------------------------------------------
Operating Income
Dividend income from subsidiaries $ 3,950,754 $ 1,927,983 $ 894,335
Fees from subsidiaries 76,968 - -
----------- ----------- -----------
Total operating income 4,027,722 1,927,983 894,335
----------- ----------- -----------
Operating Expenses
Legal and accounting 49,230 151,794 -
Other operating expenses 27,738 43,400 3,623
----------- ----------- -----------
Total operating expenses 76,968 195,194 3,623
----------- ----------- -----------
Income before equity in undistributed
earnings of subsidiaries 3,950,754 1,732,789 890,712
Equity in undistributed earnings
of subsidiaries 4,164,317 5,483,005 7,309,742
----------- ----------- -----------
Net income before tax 8,115,071 7,215,794 8,200,454
Income tax benefit - 187,359 58,000
----------- ----------- -----------
Net Income $ 8,115,071 $ 7,403,153 $ 8,258,454
=========== =========== ===========
Statements of Cash Flows
For Years Ended December 31
1996 1995 1994
- ---------------------------------------------------------------------------
Operating Activities
Net income $ 8,115,071 $ 7,403,153 $ 8,258,454
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Undistributed net income from
subsidiaries (4,164,317) (5,483,005) (7,309,742)
Amortization of goodwill 4,434 4,831 3,623
(Increase) decrease in amounts
receivable from subsidiaries (76,968) 25,651 (58,000)
(Decrease) increase in payables (25,454) 21,987 66
----------- ----------- -----------
Net cash provided by
operating activities 3,852,766 1,972,617 894,401
----------- ----------- -----------
Investing Activities
Investment in Trust Company
of Maine, Inc. - - (200,000)
----------- ----------- -----------
Net cash used in investing
activities - - (200,000)
Financing Activities
Proceeds from sale of treasury stock 50,016 363,202 194,636
Purchase of treasury stock (1,711,858) (937,075) (12,213)
Dividends paid (2,238,896) (1,395,707) (1,044,416)
----------- ----------- -----------
Net cash used in financing
activities (3,900,738) (1,969,580) (861,993)
----------- ----------- -----------
Net (decrease) increase in cash and
cash equivalents (47,972) 3,037 (167,592)
Cash and cash equivalents at
beginning of year 59,710 56,673 224,265
Cash and cash equivalents at ----------- ----------- -----------
end of year $ 11,738 $ 59,710 $ 56,673
=========== =========== ===========
[page 38 - Auditors' Letter]
Auditors' Letter
BERRY, DUNN, MECNEIL & PARKER
CERTIFIED PUBLIC ACCOUNTANTS
MANAGEMENT CONSULTANTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Stockholders and Board of Directors
Camden National Corporation
We have audited the accompanying consolidated statements of financial
condition
of Camden National Corporation and Subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Camden National
Corporation and Subsidiaries as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
tree years in the period ended December 31, 1996, in conformity with
generally accepted accounting priciples.
As discussed in Note 12 to the financial statements, the Company changed its
method of accounting for postretirement benefits other than pensions during
the year ended December 31, 1994.
Berry, Dunn, McNeil & Parker (signature)
Portland, Maine
January 24, 1997
[Page 39 & 40 have a list of the Directors and Administration at the
Corporation and the Subsidiaries]
Boards of Direcotrs and Bank Administrations
- -----------------------------------------------------------------
Directors of Camden National Corporation and Camden National Bank
Peter T. Allen
President, Cutting-Allen, Inc.
Bruce D. Bartlett
Director of Camden National Corporation
President, Treasurer & CEO, United Bank
Ann W. Bresnehan
Civic Leader
Robert W. Daigle
President & CEO, Camden National Bank
Kenneth C. Dickey
Vice Chairman, Camden National Corporation
Vice Chairman, Haskell & Corthell Real Estate
Robert J. Gagnon
Store Manager, Rockland Shop 'n Save
E Maynard Graffam, Jr.
Treasurer, Penobscot Bay Ice, Inc.
John W. Holmes
President, Consumers Fuel Co.
Rendle A. Jones
Attorney & Partner-Harmon, Jones & Sanford
John S. McCormick, Jr.
Engineer & Developer Consolidated Real Estate and Engineering
David H. Montgomery
Chairman, Camden National Corporation
Past Chairman, Allen Agency
Keith C. Patten
President & CEO, Camden National Corporation
Chairman, Camden National Bank
Richard N. Simoneau, C.P.A
Tax Partner, Simoneau & Norton, P.A.
Arthur E. Strout
Attorney & Partner, Strout & Payson, P.A.
- ------------------------------------------------------------------
Associate Directors of Camden National Bank
William S. Brawn
Retired Treasurer, French & Brawn, Inc.
C.R. deRochemont
Realtor, C.R. deRochemont Realtor
Frederick G. "Ted" Hanley
Retired Executive Vice President, Camden National Bank
Gilbert Harmon
Retired Attorney & Partner-Harmon, Jones & Sanford
Lawrence N. Hopkins
Retired President, Camden National Bank
- -----------------------------------------------------------------
Administration of Camden National Corporation
Keith C. Patten
President & CEO
Susan M. Westfall
Treasurer & CFO
Randall A. Bishop
Vice President & Operations Officer
Steven D. Dailey
Vice President & Data Processing Officer
June B. Parent
Personnel Manager
Anna M. Johnson
Auditor
Kathryn M. Ryder
Manager, Accounting Department
Brenda B. Munroe
Manager, Operations Department
David B. Mitchell
Information Systems Officer
Timothy J. Pratt
Manager, Item Processing Department
- -----------------------------------------------------------------
Administration of Camden National Bank
Keith C. Patten
Chairman
Robert W. Daigle
President & CEO
John P. (Jack) Williams
Senior Vice President, Commercial Loan & Business Development Officer
Robert E. Worthing
Vice President, Cashier & Investment and Trust Officer
Michael A. McAvoy
Vice President & Senior Loan Officer
Charles A. Wootton
Vice President, Commercial Loan & Branch Administration Officer
Joanne T. Campbell
Vice President & Residential Real Estate Officer
Stephen C. Staples
Vice President & Commercial Loan Officer
Main Office, Camden
Barbara B. Hanson
Assistant Vice President & Commercial Loan Officer
Main Office, Camden
Richard E. Littlefield
Assistant Vice President & Commercial Loan Officer
Belfast Office
Craig S. Dahlberg
Commercial Loan Officer
Camden Square Office
Kimberly J. Nason
Mortgage Loan Underwriter
LeeAnn Szelog
Marketing Manager
John E. Davis
Manager, Collections Department
Anne W. Gibbons
Compliance & CRA Officer
Shary C. Fellows
Training Officer
Diane D. Townsend
Credit Analyst & Manager, Loan Processing
- -----------------------------------------------------------------
Branch Administration of Camden National Bank
Peggy C. Chapman
Manager, Rockland Office
Dolores C. Hyssong
Manager, Camden Square Branch
Debra V. Laite
Manager, Union Office
Scott D. Palmer
Manager, Main Office, Camden
Vera E. Rand
Manager, Belfast Office
Maryanne Marshall
Branch Management, Thomaston Office
- ------------------------------------------------------------------
Directors of United Bank
Kermit P. Allen
Treasurer, G.M. Allen & Son, Inc.
Bruce D. Bartlett
President & CEO, United Bank
Royce M. Cross
Chairman, United Bank
President, Woodrow W. Cross Agency
Edward D. Dysart
President, Dysart Transportation Services, Inc.
William T. Gardner
President, William T. Gardner & Sons, Inc.
Rendle A. Jones, Esq.
Attorney & Partner-Harmon, Jones & Sanford
C. Charles Lumbert
President, Moose River Lumber Co., Inc.
William T. Meucci
President, Meucci Enterprises, Inc.
David H. Montgomery
Chairman, Camden National Corporation
Past Chairman, Allen Agency
Keith C. Patten
President & CEO, Camden National Corporation
Chairman, Camden National Bank
Carroll R. Pickard
President, Pleasant Hill Diversities
LaJune S. Means
Private Investor, Director Emeritus
- -----------------------------------------------------------------
Bank Administration of United Bank
Bruce D. Bartlett
President & CEO
James M. Kimball
Vice President & Senior Loan Officer
Mark E. Russell
Vice President & Mortgage Loan Manager
Lori L. Martin
Assistant Vice President & Administrative Officer
- -----------------------------------------------------------------
Branch Administration of United Bank
Brent A. Folster
Vice President & Branch Administrator
Manager, Bangor Office
Darcel S. Bryant
Manager, Hermon Office
Linda J. Colbath
Manager, East Corinth Office
Laura J. Hollis
Manager, Hampden Office
Marilyn J. Chalker
Supervisor and Acting Manager, Jackman Office
- -----------------------------------------------------------------
Directors of Trust Company of Maine, Inc.
Andrew P. Averill
Chairman & CEO, Trust Company of Maine, Inc.
Bruce D. Bartlett
President & CEO, United Bank
Randall A. Bishop
Vice President & Operations Officer, Camden National Corporation
Robert W. Daigle
President & CEO, Camden National Bank
Shirley B. Kile
Treasurer, Trust Company of Maine, Inc.
R. Paul Pasquine
President, Trust Company of Maine, Inc.
Arthur E. Strout
Attorney & Partner, Strout & Payson, P.A.
- -----------------------------------------------------------------
Officers of Trust Company of Maine, Inc.
Andrew P. Averill
Chairman & CEO
R. Paul Pasquine
President, COO & Senior Trust Officer
Susan L. Kenney
Assistant Vice President & Trust Officer
Robert M. Parker
Assistant Vice President & Trust Officer
Shirley B. Kile
Treasurer
Credits
Peggy Mason Graphics
Design & Typesetting
Joanne Miller
Copy Editing
Donna Stackhouse
Illustrations
Annual Meeting, Camden National Corporation
Tuesday, May 6, 1997, 3:30 p.m.
The Company will provide, without charge, upon written request, a copy of
Camden National Corporation's Annual Report to the Securities and Exchange
Commission, Form 10-K for the 1996 fiscal year.
Please contact:
Robert E. Worthing
Camden National Corporation
P.O. Box 310-Camden, Maine 04843
207-236-8821
Corporation Camden National Corporation
Logo Member FDIC