EX-99.1 2 ex991earningsreleaseq118.htm EXHIBIT 99.1
CONTACT:
Michael Archer
Senior Vice President
Corporate Controller
Camden National Corporation
(800) 860-8821
marcher@camdennational.com
FOR IMMEDIATE RELEASE
CAMDEN NATIONAL CORPORATION REPORTS RECORD
QUARTERLY NET INCOME OF $12.8 MILLION
CAMDEN, Maine, April 24, 2018/PRNewswire/--Camden National Corporation (NASDAQ: CAC; “Camden National” or the “Company”), a $4.1 billion bank holding company headquartered in Camden, Maine, reported net income for the first quarter of 2018 of $12.8 million and diluted earnings per share ("EPS") of $0.82 per share, representing increases over the first quarter of 2017 of 27% and 28%, respectively. For the three months ended March, 31, 2018, the Company's return on average assets was 1.28%, return on average equity was 12.91% and efficiency ratio 1 was 58.76%.
“We're very pleased to report first quarter 2018 net income growth of $2.7 million and diluted EPS growth of $0.18 per share over the same period last year," said Gregory A. Dufour, President and Chief Executive Officer of Camden National. "In the first quarter, we saw the benefit of the lower federal corporate income tax rate, which we estimate contributed $0.12 per diluted share to earnings for the first three months of 2018. Our strong first quarter results also reflect revenue 2 growth of $1.3 million and improved asset quality over the past year. Through our ongoing efforts, we were able to favorably resolve one large loan relationship that drove a negative credit loss provision for the first quarter of 2018. We are fortunate to have a highly experienced credit team that is focused on maximizing potential recoveries and protecting the Company's assets."
FIRST QUARTER 2018 FINANCIAL HIGHLIGHTS

• | Net income for the first quarter of 2018 increased 27% to $12.8 million over the first quarter of 2017.

• | Total loans at March 31, 2018 of $2.8 billion increased 5% over March 31, 2017 and low-cost deposits 3 of $2.3 billion at March 31, 2018 increased 8% over the same period.

• | First quarter 2018 efficiency ratio was 58.76%, compared to 58.00% for the first quarter of 2017.

• | Non-performing assets to total assets ratio was 0.47% at March 31, 2018, compared to 0.50% at December 31, 2017 and 0.68% at March 31, 2017.

_____________________________________________________________________________________

1 | This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures" for further details.

2 | Revenue is the sum of net interest income and non-interest income.

3 | Low-cost deposits include demand, interest checking, savings and money market.

FINANCIAL CONDITION
Total assets of $4.1 billion at March 31, 2018 increased 4% over March 31, 2017. Year over year, total loans increased $144.0 million, or 5%, to $2.8 billion driven by commercial loan growth of 8%, commercial real estate loan growth of 7% and residential real estate loan growth of 5%. The consumer and home equity loan portfolio over the same time period remained relatively flat.
The Company sold $47.1 million, or 55% of its residential mortgage production in the first quarter of 2018 and sold $231.5 million, or 55%, over the last 12-months.
Total deposits at March 31, 2018 grew $88.4 million, or 3%, to $3.0 billion over March 31, 2017 led by low-cost deposit growth of $178.3 million, or 8%, while borrowings increased $65.4 million, or 12%, over the same period. Average deposits (excluding brokered deposits) for the first three months of 2018 were $2.7 billion, representing an increase of $194.2 million, or 8%, over the same period last year, which was driven by average low-cost deposit growth of 9%.
At March 31, 2018, our loan-to-deposit ratio was 92%, compared to 90% at March 31, 2017.
The Company's capital position remained strong at March 31, 2018 with a total risk-based capital ratio of 14.32%, well in excess of regulatory requirements, and a tangible common equity ratio 1 of 7.59%.
ASSET QUALITY
The Company maintained strong asset quality across its loan portfolio throughout the first quarter of 2018 with non-performing loans to total loans of 0.69% at March 31, 2018, compared to 0.99% at March 31, 2017. Asset quality improvement over the past year led to a decrease in provision for credit losses of $1.1 million for the three months ended March 31, 2018 compared to the same period last year.
For the three months ended March 31, 2018, a negative credit loss provision of $497,000 was recognized primarily due to the favorable resolution of a large commercial real estate loan that was on non-accrual and credit quality improvement across our loan portfolio, which drove a 5 basis point decrease in the allowance for loan losses to total loans ratio since December 31, 2017.
OPERATING RESULTS
Net income for the first quarter of 2018 was $12.8 million, representing an increase over the first quarter of 2017 of $2.7 million, or 27%. The growth in net income between periods was driven by:

• | A decrease in income tax expense of $1.3 million primarily due to a decrease in the Company's effective income tax rate as the federal corporate income tax rate was reduced under the Tax Cuts and Jobs Act of 2017 ("Tax Act"), which went into effect in 2018.

• | A decrease in provision for credit losses of $1.1 million resulting from strong asset quality.

• | An increase in net interest income of $1.0 million, or 4%, driven by an increase in average loans of $156.4 million, or 6%, and an increase in average deposits of $194.2 million, or 8%.

◦ | Net interest margin on a fully-taxable equivalent basis, excluding loan and CD fair value mark accretion income and collection of previously charged-off loans, decreased 2 basis points to 3.04% for the first quarter of 2018, compared to the first quarter of 2017. The decrease between periods was due to the lower federal corporate income tax rate, effective January 1, 2018.

_________________________________________________________________________________

1 | This is a non-GAAP measure. Please refer to "Reconciliation of non-GAAP to GAAP Financial Measures" for further details.

• | An increase in non-interest income of $232,000, or 3%.

• | Partially offset by an increase in non-interest expense of $876,000, or 4%, due to (i) normal merit increases and continued wage inflation, an increase in headcount, and other personnel-related expenses; (ii) an increase in data processing costs due to recent technology investments and advancements over the past year; and (iii) an increase in recruiting, training, donation and marketing costs.

FIRST QUARTER 2018 DIVIDEND
The Company declared a first quarter 2018 dividend of $0.25 per share, payable on April 30, 2018, to shareholders of record as of April 13, 2018. This distribution represents an annualized dividend yield of 2.25%, based on the March 29, 2018 (last business day) closing price of Camden National's common stock at $44.50 per share as reported by NASDAQ.
ANNUAL MEETING
Camden National has scheduled its annual meeting of shareholders for Tuesday, April 24, 2018, at 3:00 p.m. local time, at Point Lookout Resort and Conference Center, 67 Atlantic Highway, Northport, Maine 04849. The date for determining the Company's shareholders of record for the annual meeting was February 23, 2018.
CONFERENCE CALL
Camden National will host a conference call and webcast at 1:00 p.m., Eastern time, on Tuesday, April 24, 2018 to discuss its first quarter 2018 financial results and outlook. Participants should dial in to the call 10 - 15 minutes before it begins. Information about the conference call is as follows:
Live dial-in (domestic): (888) 349-0139
Live dial-in (international): (412) 542-4154
Live webcast: http://services.choruscall.com/links/cac180424.html
A link to the live webcast will be available on Camden National's website under "Investor Relations" at www.CamdenNational.com prior to the meeting, and a replay of the webcast will be available on Camden National's website following the conference call. The transcript of the conference call will also be available on Camden National's website approximately two days after the conference call.
ABOUT CAMDEN NATIONAL CORPORATION
Camden National Corporation (NASDAQ:CAC), headquartered in Camden, Maine, is the largest publicly traded bank holding company in Northern New England with $4.1 billion in assets and nearly 650 employees. Camden National Bank, its subsidiary, is a full-service community bank founded in 1875 that offers an array of consumer and business financial products and services, accompanied by the latest in digital banking technology to empower customers to bank the way they want. The Bank provides personalized service through a network of 60 banking centers, 74 ATMs, and lending offices in New Hampshire and Massachusetts, all complemented by 24/7 live phone support. This year marks the 8th time Camden National Bank has received the "Lender at Work for Maine" Award from the Finance Authority of Maine. Comprehensive wealth management, investment, and financial planning services are delivered by Camden National Wealth Management. To learn more, visit www.CamdenNational.com. Member FDIC.

FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, projections and other statements, which are subject to numerous risks, assumptions and uncertainties. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, changes in general economic conditions, operational risks including, but not limited to, cybersecurity, fraud and natural disasters, legislative and regulatory changes that adversely affect the business in which Camden National is engaged, changes in the securities markets and other risks and uncertainties disclosed from time to time in in Camden National’s Annual Report on Form 10-K for the year ended December 31, 2017, as updated by other filings with the Securities and Exchange Commission ("SEC"). Camden National does not have any obligation to update forward-looking statements.
USE OF NON-GAAP MEASURES
In addition to evaluating the Company's results of operations in accordance with generally accepted accounting principles in the United States ("GAAP"), management supplements this evaluation with certain non-GAAP financial measures, such as adjusted net income, adjusted diluted EPS, adjusted return on average assets, adjusted return on average equity and average tangible equity; the efficiency and tangible common equity ratios; and tangible book value per share. Management utilizes these non-GAAP financial measures for purposes of measuring our performance against our peer group and other financial institutions and analyzing our internal performance. We also believe these non-GAAP financial measures help investors better understand the Company's operating performance and trends and allow for better performance comparisons to other financial institutions. In addition, these non-GAAP financial measures remove the impact of unusual items that may obscure trends in the Company's underlying performance. These disclosures should not be viewed as a substitute for GAAP operating results, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other financial institutions. Reconciliation to the comparable GAAP financial measure can be found in this document.
ANNUALIZED DATA
Certain returns, yields and performance ratios are presented on an “annualized” basis. This is done for analytical and decision-making purposes to better discern underlying performance trends when compared to full-year or year-over-year amounts.

Selected Financial Data (unaudited)
|  | At or For The Three Months Ended
(In thousands, except number of shares and per share data) |  | March 31, 2018 |  | December 31, 2017 |  | March 31, 2017
Financial Condition Data |  |  |  |  |  |
Investments |  | $ | 913,653 |  |  | $ | 907,642 |  |  | $ | 943,061 |
Loans and loans held for sale |  | 2,798,696 |  |  | 2,790,542 |  |  | 2,650,818 |
Allowance for loan losses |  | 22,990 |  |  | 24,171 |  |  | 23,721 |
Total assets |  | 4,113,185 |  |  | 4,065,398 |  |  | 3,938,465 |
Deposits |  | 3,025,580 |  |  | 3,000,491 |  |  | 2,937,183 |
Borrowings |  | 622,347 |  |  | 611,498 |  |  | 556,922 |
Shareholders' equity |  | 404,055 |  |  | 403,413 |  |  | 397,827 |
Operating Data |  |  |  |  |  |
Net interest income |  | $ | 28,902 |  |  | $ | 29,659 |  |  | $ | 27,855 |
(Credit) provision for credit losses |  | (497 | ) |  | 238 |  |  | 579 |
Non-interest income |  | 8,804 |  |  | 9,840 |  |  | 8,572 |
Non-interest expense |  | 22,304 |  |  | 23,099 |  |  | 21,428 |
Income before income tax expense |  | 15,899 |  |  | 16,162 |  |  | 14,420 |
Income tax expense |  | 3,079 |  |  | 19,335 |  |  | 4,344 |
Net income (loss) |  | $ | 12,820 |  |  | $ | (3,173 | ) |  | $ | 10,076 |
Key Ratios |  |  |  |  |  |
Return on average assets |  | 1.28 | % |  | (0.31 | )% |  | 1.05 | %
Return on average equity |  | 12.91 | % |  | (3.02 | )% |  | 10.36 | %
Net interest margin |  | 3.10 | % |  | 3.20 | % |  | 3.15 | %
Non-performing loans to total loans |  | 0.69 | % |  | 0.73 | % |  | 0.99 | %
Non-performing assets to total assets |  | 0.47 | % |  | 0.50 | % |  | 0.68 | %
Annualized net charge-offs to average loans |  | 0.10 | % |  | 0.07 | % |  | 0.00 | %
Tier I leverage capital ratio |  | 9.23 | % |  | 9.07 | % |  | 8.90 | %
Total risk-based capital ratio |  | 14.32 | % |  | 14.14 | % |  | 14.05 | %
Per Share Data |  |  |  |  |  |
Basic earnings per share |  | $ | 0.82 |  |  | $ | (0.20 | ) |  | $ | 0.65 |
Diluted earnings per share |  | $ | 0.82 |  |  | $ | (0.20 | ) |  | $ | 0.64 |
Cash dividends declared per share |  | $ | 0.25 |  |  | $ | 0.25 |  |  | $ | 0.23 |
Book value per share |  | $ | 25.96 |  |  | $ | 25.99 |  |  | $ | 25.65 |
Weighted average number of common shares outstanding |  | 15,541,975 |  |  | 15,521,447 |  |  | 15,488,848 |
Diluted weighted average number of common shares outstanding |  | 15,603,380 |  |  | 15,521,447 |  |  | 15,568,639 |
Non-GAAP Measures(1) |  |  |  |  |  |
Adjusted net income |  | $ | 12,820 |  |  | $ | 11,090 |  |  | $ | 10,076 |
Adjusted return on average assets |  | 1.28 | % |  | 1.09 | % |  | 1.05 | %
Adjusted return on average equity |  | 12.91 | % |  | 10.56 | % |  | 10.36 | %
Adjusted return on average tangible equity |  | 17.35 | % |  | 14.20 | % |  | 14.37 | %
Tangible common equity ratio |  | 7.59 | % |  | 7.66 | % |  | 7.74 | %
Tangible book value per share |  | $ | 19.57 |  |  | $ | 19.57 |  |  | $ | 19.14 |
Adjusted diluted earnings per share |  | $ | 0.82 |  |  | $ | 0.71 |  |  | $ | 0.64 |
Efficiency ratio |  | 58.76 | % |  | 57.75 | % |  | 58.00 | %

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

Consolidated Statements of Condition Data (unaudited)
(In thousands, except number of shares) |  | March 31, 2018 |  | December 31, 2017 |  | March 31, 2017
ASSETS |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 48,159 |  |  | $ | 44,057 |  |  | $ | 43,634 |
Interest-bearing deposits in other banks |  | 76,950 |  |  | 58,914 |  |  | 34,461 |
Total cash and cash equivalents |  | 125,109 |  |  | 102,971 |  |  | 78,095 |
Investments: |  |  |  |  |  |  |  |  |
Available-for-sale debt securities, at fair value |  | 796,687 |  |  | 789,093 |  |  | 822,465 |
Held-to-maturity debt securities, at amortized cost (fair value of $91.9 million, $94.9 million and $94.3 million, respectively) |  | 93,192 |  |  | 94,073 |  |  | 94,474 |
Other investments |  | 23,774 |  |  | 24,476 |  |  | 26,122 |
Total investments |  | 913,653 |  |  | 907,642 |  |  | 943,061 |
Loans held for sale, at fair value |  | 9,548 |  |  | 8,103 |  |  | 5,679 |
Loans: |  |  |  |  |  |
Residential real estate |  | 860,533 |  |  | 858,369 |  |  | 819,639 |
Commercial real estate |  | 1,169,533 |  |  | 1,164,023 |  |  | 1,096,475 |
Commercial(1) |  | 420,429 |  |  | 418,520 |  |  | 389,530 |
Consumer and home equity |  | 338,653 |  |  | 341,527 |  |  | 339,495 |
Total loans |  | 2,789,148 |  |  | 2,782,439 |  |  | 2,645,139 |
Less: allowance for loan losses |  | (22,990 | ) |  | (24,171 | ) |  | (23,721 | )
Net loans |  | 2,766,158 |  |  | 2,758,268 |  |  | 2,621,418 |
Goodwill |  | 94,697 |  |  | 94,697 |  |  | 94,697 |
Other intangible assets |  | 4,774 |  |  | 4,955 |  |  | 6,292 |
Bank-owned life insurance |  | 88,097 |  |  | 87,489 |  |  | 78,697 |
Premises and equipment, net |  | 41,545 |  |  | 41,891 |  |  | 42,100 |
Deferred tax assets |  | 23,181 |  |  | 22,776 |  |  | 37,278 |
Other assets |  | 46,423 |  |  | 36,606 |  |  | 31,148 |
Total assets |  | $ | 4,113,185 |  |  | $ | 4,065,398 |  |  | $ | 3,938,465 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |
Liabilities |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |
Demand |  | $ | 463,496 |  |  | $ | 478,643 |  |  | $ | 387,173 |
Interest checking |  | 840,054 |  |  | 855,570 |  |  | 767,521 |
Savings and money market |  | 1,005,329 |  |  | 985,508 |  |  | 975,856 |
Certificates of deposit |  | 471,155 |  |  | 475,010 |  |  | 458,069 |
Brokered deposits |  | 245,546 |  |  | 205,760 |  |  | 348,564 |
Total deposits |  | 3,025,580 |  |  | 3,000,491 |  |  | 2,937,183 |
Short-term borrowings |  | 552,624 |  |  | 541,796 |  |  | 487,287 |
Long-term borrowings |  | 10,773 |  |  | 10,791 |  |  | 10,841 |
Subordinated debentures |  | 58,950 |  |  | 58,911 |  |  | 58,794 |
Accrued interest and other liabilities |  | 61,203 |  |  | 49,996 |  |  | 46,533 |
Total liabilities |  | 3,709,130 |  |  | 3,661,985 |  |  | 3,540,638 |
Shareholders’ equity |  | 404,055 |  |  | 403,413 |  |  | 397,827 |
Total liabilities and shareholders’ equity |  | $ | 4,113,185 |  |  | $ | 4,065,398 |  |  | $ | 3,938,465 |

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

Consolidated Statements of Income Data (unaudited)
|  | For The Three Months Ended
(In thousands, except per share data) |  | March 31, 2018 |  | December 31, 2017 |  | March 31, 2017
Interest Income |  |  |  |  |  |  |  |  |
Interest and fees on loans |  | $ | 29,834 |  |  | $ | 29,728 |  |  | $ | 27,062 |
Interest on U.S. government and sponsored enterprise obligations (taxable) |  | 4,225 |  |  | 4,091 |  |  | 4,256 |
Interest on state and political subdivision obligations (nontaxable) |  | 672 |  |  | 685 |  |  | 702 |
Interest on deposits in other banks and other investments |  | 547 |  |  | 536 |  |  | 394 |
Total interest income |  | 35,278 |  |  | 35,040 |  |  | 32,414 |
Interest Expense |  |  |  |  |  |  |  |  |
Interest on deposits |  | 3,749 |  |  | 3,243 |  |  | 2,554 |
Interest on borrowings |  | 1,780 |  |  | 1,283 |  |  | 1,161 |
Interest on subordinated debentures |  | 847 |  |  | 855 |  |  | 844 |
Total interest expense |  | 6,376 |  |  | 5,381 |  |  | 4,559 |
Net interest income |  | 28,902 |  |  | 29,659 |  |  | 27,855 |
(Credit) provision for credit losses |  | (497 | ) |  | 238 |  |  | 579 |
Net interest income after (credit) provision for credit losses |  | 29,399 |  |  | 29,421 |  |  | 27,276 |
Non-Interest Income |  |  |  |  |  |  |  |  |
Debit card income |  | 1,929 |  |  | 2,192 |  |  | 1,834 |
Service charges on deposit accounts |  | 1,836 |  |  | 1,897 |  |  | 1,823 |
Mortgage banking income, net |  | 1,391 |  |  | 1,797 |  |  | 1,553 |
Income from fiduciary services |  | 1,283 |  |  | 1,277 |  |  | 1,247 |
Brokerage and insurance commissions |  | 650 |  |  | 546 |  |  | 453 |
Bank-owned life insurance |  | 608 |  |  | 620 |  |  | 577 |
Other service charges and fees |  | 462 |  |  | 471 |  |  | 468 |
Net gain on sale of securities |  | — |  |  | 28 |  |  | — |
Other income |  | 645 |  |  | 1,012 |  |  | 617 |
Total non-interest income |  | 8,804 |  |  | 9,840 |  |  | 8,572 |
Non-Interest Expense |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  | 12,562 |  |  | 12,866 |  |  | 11,933 |
Furniture, equipment and data processing |  | 2,586 |  |  | 2,690 |  |  | 2,325 |
Net occupancy costs |  | 1,873 |  |  | 1,650 |  |  | 1,946 |
Consulting and professional fees |  | 804 |  |  | 706 |  |  | 845 |
Debit card expense |  | 730 |  |  | 721 |  |  | 660 |
Regulatory assessments |  | 499 |  |  | 559 |  |  | 545 |
Amortization of intangible assets |  | 181 |  |  | 392 |  |  | 472 |
Other real estate owned and collection costs (recoveries), net |  | 75 |  |  | 413 |  |  | (44 | )
Other expenses |  | 2,994 |  |  | 3,102 |  |  | 2,746 |
Total non-interest expense |  | 22,304 |  |  | 23,099 |  |  | 21,428 |
Income before income tax expense |  | 15,899 |  |  | 16,162 |  |  | 14,420 |
Income tax expense |  | 3,079 |  |  | 19,335 |  |  | 4,344 |
Net Income (Loss) |  | $ | 12,820 |  |  | $ | (3,173 | ) |  | $ | 10,076 |
Per Share Data |  |  |  |  |  |  |  |  |
Basic earnings per share |  | $ | 0.82 |  |  | $ | (0.20 | ) |  | $ | 0.65 |
Diluted earnings per share |  | $ | 0.82 |  |  | $ | (0.20 | ) |  | $ | 0.64 |

Quarterly Average Balance and Yield/Rate Analysis (unaudited)
|  | For The Three Months Ended
|  | Average Balance |  | Yield/Rate
(In thousands) |  | March 31, 2018 |  | December 31, 2017 |  | March 31, 2017 |  | March 31, 2018 |  | December 31, 2017 |  | March 31, 2017
Assets |  |  |  |  |  |  |  |  |  |  |  |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing deposits in other banks(1) |  | $ | 52,510 |  |  | $ | 51,020 |  |  | $ | 34,529 |  |  | 1.40 | % |  | 1.08 | % |  | 0.69 | %
Securities - taxable |  | 826,529 |  |  | 811,006 |  |  | 833,162 |  |  | 2.22 | % |  | 2.21 | % |  | 2.20 | %
Securities - nontaxable(2) |  | 99,560 |  |  | 101,371 |  |  | 102,928 |  |  | 3.42 | % |  | 4.16 | % |  | 4.20 | %
Loans(3)(4): |  |  |  |  |  |  |  |  |  |  |  |
Residential real estate |  | 860,783 |  |  | 861,658 |  |  | 814,626 |  |  | 4.12 | % |  | 4.15 | % |  | 4.10 | %
Commercial real estate |  | 1,171,598 |  |  | 1,153,842 |  |  | 1,076,788 |  |  | 4.20 | % |  | 4.15 | % |  | 3.93 | %
Commercial(2) |  | 349,963 |  |  | 343,921 |  |  | 319,556 |  |  | 4.27 | % |  | 4.12 | % |  | 4.09 | %
Municipal(2) |  | 17,277 |  |  | 18,442 |  |  | 16,071 |  |  | 3.33 | % |  | 3.73 | % |  | 3.39 | %
Consumer and home equity |  | 341,078 |  |  | 343,942 |  |  | 342,775 |  |  | 4.76 | % |  | 4.54 | % |  | 4.33 | %
HPFC |  | 43,757 |  |  | 46,565 |  |  | 58,252 |  |  | 7.99 | % |  | 8.14 | % |  | 8.34 | %
Total loans |  | 2,784,456 |  |  | 2,768,370 |  |  | 2,628,068 |  |  | 4.30 | % |  | 4.26 | % |  | 4.15 | %
Total interest-earning assets(1) |  | 3,763,055 |  |  | 3,731,767 |  |  | 3,598,687 |  |  | 3.78 | % |  | 3.77 | % |  | 3.67 | %
Other assets |  | 292,312 |  |  | 307,329 |  |  | 305,155 |  |  |  |  |  |  |
Total assets |  | $ | 4,055,367 |  |  | $ | 4,039,096 |  |  | $ | 3,903,842 |  |  |  |  |  |  |
Liabilities & Shareholders' Equity |  |  |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |  |
Demand |  | $ | 452,629 |  |  | $ | 486,753 |  |  | $ | 391,671 |  |  | — | % |  | — | % |  | — | %
Interest checking |  | 833,410 |  |  | 824,247 |  |  | 716,940 |  |  | 0.38 | % |  | 0.28 | % |  | 0.15 | %
Savings |  | 493,660 |  |  | 497,929 |  |  | 489,041 |  |  | 0.06 | % |  | 0.06 | % |  | 0.06 | %
Money market |  | 487,685 |  |  | 489,426 |  |  | 483,914 |  |  | 0.66 | % |  | 0.58 | % |  | 0.45 | %
Certificates of deposit(4) |  | 472,213 |  |  | 490,779 |  |  | 463,786 |  |  | 1.00 | % |  | 0.90 | % |  | 0.88 | %
Total deposits |  | 2,739,597 |  |  | 2,789,134 |  |  | 2,545,352 |  |  | 0.42 | % |  | 0.36 | % |  | 0.30 | %
Borrowings: |  |  |  |  |  |  |  |  |  |  |  |
Brokered deposits |  | 238,870 |  |  | 217,328 |  |  | 308,594 |  |  | 1.59 | % |  | 1.35 | % |  | 0.87 | %
Customer repurchase agreements |  | 237,056 |  |  | 254,529 |  |  | 221,590 |  |  | 0.72 | % |  | 0.50 | % |  | 0.32 | %
Subordinated debentures |  | 58,930 |  |  | 58,892 |  |  | 58,775 |  |  | 5.83 | % |  | 5.76 | % |  | 5.83 | %
Other borrowings |  | 328,141 |  |  | 257,420 |  |  | 330,918 |  |  | 1.68 | % |  | 1.48 | % |  | 1.21 | %
Total borrowings |  | 862,997 |  |  | 788,169 |  |  | 919,877 |  |  | 1.68 | % |  | 1.45 | % |  | 1.18 | %
Total funding liabilities |  | 3,602,594 |  |  | 3,577,303 |  |  | 3,465,229 |  |  | 0.72 | % |  | 0.60 | % |  | 0.53 | %
Other liabilities |  | 50,147 |  |  | 44,979 |  |  | 44,337 |  |  |  |  |  |  |
Shareholders' equity |  | 402,626 |  |  | 416,814 |  |  | 394,276 |  |  |  |  |  |  |
Total liabilities & Shareholders' Equity |  | $ | 4,055,367 |  |  | $ | 4,039,096 |  |  | $ | 3,903,842 |  |  |  |  |  |  |
Net interest rate spread (fully-taxable equivalent)(1) |  | 3.06 | % |  | 3.17 | % |  | 3.14 | %
Net interest margin (fully-taxable equivalent)(1) |  | 3.10 | % |  | 3.20 | % |  | 3.15 | %
Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection of previously charged-off acquired loans(1)(4) |  | 3.04 | % |  | 3.12 | % |  | 3.06 | %

(1) | Prior periods were revised to include average interest-bearing deposits in other banks in total average interest-earning assets. Previously, average interest-bearing deposits in other banks was presented in other assets.

(2) | Reported on a tax-equivalent basis using the corporate federal income tax rate in effect for the period, including certain commercial loans.

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

(4) | Excludes the impact of the fair value mark accretion on loans and certificates of deposit generated in purchase accounting and collection of previously charged-off acquired loans for the three months ended March 31, 2018, December 31, 2017 and March 31, 2017 totaling $558,000, $689,000 and $804,000, respectively.

Asset Quality Data
(unaudited)
(In thousands) |  | At or For The Three Months Ended March 31, 2018 |  | At or For The Year Ended December 31, 2017 |  | At or For The Nine Months Ended September 30, 2017 |  | At or For The Six Months Ended June 30, 2017 |  | At or For The Three Months Ended March 31, 2017
Non-accrual loans: |  |  |  |  |  |  |  |  |  |
Residential real estate |  | $ | 6,185 |  |  | $ | 4,979 |  |  | $ | 4,465 |  |  | $ | 4,890 |  |  | $ | 4,105 |
Commercial real estate |  | 4,603 |  |  | 5,642 |  |  | 5,887 |  |  | 16,291 |  |  | 12,858 |
Commercial |  | 1,991 |  |  | 2,000 |  |  | 1,830 |  |  | 2,056 |  |  | 1,994 |
Consumer |  | 1,464 |  |  | 1,650 |  |  | 1,626 |  |  | 1,371 |  |  | 1,552 |
HPFC |  | 655 |  |  | 1,043 |  |  | 838 |  |  | 1,083 |  |  | 1,014 |
Total non-accrual loans |  | 14,898 |  |  | 15,314 |  |  | 14,646 |  |  | 25,691 |  |  | 21,523 |
Loans 90 days past due and accruing |  | — |  |  | — |  |  | — |  |  | 76 |  |  | — |
Accruing troubled-debt restructured loans not included above |  | 4,361 |  |  | 5,012 |  |  | 5,154 |  |  | 4,809 |  |  | 4,558 |
Total non-performing loans |  | 19,259 |  |  | 20,326 |  |  | 19,800 |  |  | 30,576 |  |  | 26,081 |
Other real estate owned |  | 130 |  |  | 130 |  |  | 341 |  |  | 341 |  |  | 621 |
Total non-performing assets |  | $ | 19,389 |  |  | $ | 20,456 |  |  | $ | 20,141 |  |  | $ | 30,917 |  |  | $ | 26,702 |
Loans 30-89 days past due: |  |  |  |  |  |  |  |  |  |
Residential real estate |  | $ | 2,777 |  |  | $ | 5,277 |  |  | $ | 3,169 |  |  | $ | 3,020 |  |  | $ | 2,379 |
Commercial real estate |  | 1,121 |  |  | 1,135 |  |  | 2,297 |  |  | 3,442 |  |  | 2,531 |
Commercial |  | 243 |  |  | 518 |  |  | 712 |  |  | 269 |  |  | 168 |
Consumer |  | 1,190 |  |  | 1,197 |  |  | 1,256 |  |  | 1,378 |  |  | 1,008 |
HPFC |  | 528 |  |  | 887 |  |  | 938 |  |  | 639 |  |  | 777 |
Total loans 30-89 days past due |  | $ | 5,859 |  |  | $ | 9,014 |  |  | $ | 8,372 |  |  | $ | 8,748 |  |  | $ | 6,863 |
Allowance for loan losses at the beginning of the period |  | $ | 24,171 |  |  | $ | 23,116 |  |  | $ | 23,116 |  |  | $ | 23,116 |  |  | $ | 23,116 |
(Credit) provision for loan losses |  | (500 | ) |  | 3,026 |  |  | 2,786 |  |  | 1,984 |  |  | 581 |
Charge-offs: |  |  |  |  |  |  |  |  |  |
Residential real estate |  | 31 |  |  | 482 |  |  | 433 |  |  | 195 |  |  | 5 |
Commercial real estate |  | 426 |  |  | 124 |  |  | 81 |  |  | 12 |  |  | 3 |
Commercial |  | 171 |  |  | 1,014 |  |  | 650 |  |  | 281 |  |  | 136 |
Consumer |  | 175 |  |  | 558 |  |  | 493 |  |  | 454 |  |  | 15 |
HPFC |  | — |  |  | 290 |  |  | 274 |  |  | 81 |  |  | — |
Total charge-offs |  | 803 |  |  | 2,468 |  |  | 1,931 |  |  | 1,023 |  |  | 159 |
Total recoveries |  | (122 | ) |  | (497 | ) |  | (442 | ) |  | (317 | ) |  | (183 | )
Net charge-offs (recoveries) |  | 681 |  |  | 1,971 |  |  | 1,489 |  |  | 706 |  |  | (24 | )
Allowance for loan losses at the end of the period |  | $ | 22,990 |  |  | $ | 24,171 |  |  | $ | 24,413 |  |  | $ | 24,394 |  |  | $ | 23,721 |
Components of allowance for credit losses: |  |  |  |  |  |  |  |  |  |
Allowance for loan losses |  | $ | 22,990 |  |  | $ | 24,171 |  |  | $ | 24,413 |  |  | $ | 24,394 |  |  | $ | 23,721 |
Liability for unfunded credit commitments |  | 23 |  |  | 20 |  |  | 22 |  |  | 7 |  |  | 9 |
Allowance for credit losses |  | $ | 23,013 |  |  | $ | 24,191 |  |  | $ | 24,435 |  |  | $ | 24,401 |  |  | $ | 23,730 |
Ratios: |  |  |  |  |  |  |  |  |  |
Non-performing loans to total loans |  | 0.69 | % |  | 0.73 | % |  | 0.72 | % |  | 1.12 | % |  | 0.99 | %
Non-performing assets to total assets |  | 0.47 | % |  | 0.50 | % |  | 0.50 | % |  | 0.77 | % |  | 0.68 | %
Allowance for loan losses to total loans |  | 0.82 | % |  | 0.87 | % |  | 0.89 | % |  | 0.89 | % |  | 0.90 | %
Net charge-offs to average loans (annualized): |  |  |  |  |  |  |  |  |  |
Quarter-to-date |  | 0.10 | % |  | 0.07 | % |  | 0.11 | % |  | 0.11 | % |  | — | %
Year-to-date |  | 0.10 | % |  | 0.07 | % |  | 0.07 | % |  | 0.05 | % |  | — | %
Allowance for loan losses to non-performing loans |  | 119.37 | % |  | 118.92 | % |  | 123.30 | % |  | 79.78 | % |  | 90.95 | %
Loans 30-89 days past due to total loans |  | 0.21 | % |  | 0.32 | % |  | 0.30 | % |  | 0.32 | % |  | 0.26 | %

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

Adjusted Net Income; Adjusted Diluted EPS; and Adjusted Return on Average Assets:
|  | For the Three Months Ended
(In thousands, except per share data) |  | March 31, 2018 |  | December 31, 2017 |  | March 31, 2017
Adjusted Net Income: |  |  |  |  |  |
Net income (loss), as presented |  | $ | 12,820 |  |  | $ | (3,173 | ) |  | $ | 10,076 |
Add: impact of the revaluation of deferred tax assets and liabilities due to the Tax Act |  | — |  |  | 14,263 |  |  | — |
Adjusted net income |  | $ | 12,820 |  |  | $ | 11,090 |  |  | $ | 10,076 |
Adjusted Diluted EPS: |  |  |  |  |  |
Diluted EPS, as presented |  | $ | 0.82 |  |  | $ | (0.20 | ) |  | $ | 0.64 |
Add: impact of the revaluation of deferred tax assets and liabilities due to the Tax Act |  | — |  |  | 0.91 |  |  | — |
Adjusted diluted EPS |  | $ | 0.82 |  |  | $ | 0.71 |  |  | $ | 0.64 |
Adjusted Return on Average Assets: |  |  |  |  |  |
Return on average assets, as presented |  | 1.28 | % |  | (0.31 | )% |  | 1.05 | %
Add: impact of the revaluation of deferred tax assets and liabilities due to the Tax Act |  | — | % |  | 1.40 | % |  | — | %
Adjusted return on average assets |  | 1.28 | % |  | 1.09 | % |  | 1.05 | %

Adjusted Return on Average Tangible Equity and Adjusted Return on Average Equity:
|  | For the Three Months Ended
(In thousands) |  | March 31, 2018 |  | December 31, 2017 |  | March 31, 2017
Net income (loss), as presented |  | $ | 12,820 |  |  | $ | (3,173 | ) |  | $ | 10,076 |
Add: impact of the revaluation of deferred tax assets and liabilities due to the Tax Act |  | — |  |  | 14,263 |  |  | — |
Adjusted net income |  | 12,820 |  |  | 11,090 |  |  | 10,076 |
Add: amortization of intangible assets, net of tax(1) |  | 143 |  |  | 255 |  |  | 307 |
Adjusted tangible net income |  | $ | 12,963 |  |  | $ | 11,345 |  |  | $ | 10,383 |
Average equity |  | $ | 402,626 |  |  | $ | 416,814 |  |  | $ | 394,276 |
Less: average goodwill and other intangible assets |  | (99,568 | ) |  | (99,823 | ) |  | (101,229 | )
Average tangible equity |  | $ | 303,058 |  |  | $ | 316,991 |  |  | $ | 293,047 |
Adjusted return on average tangible equity |  | 17.35 | % |  | 14.20 | % |  | 14.37 | %
Adjusted return on average equity |  | 12.91 | % |  | 10.56 | % |  | 10.36 | %
Return on average equity |  | 12.91 | % |  | (3.02 | )% |  | 10.36 | %

(1) Reported on a tax-equivalent basis using the corporate federal income tax rate in effect for the period.

Efficiency Ratio: |  |  |  |  |  |
|  | For the Three Months Ended
(In thousands) |  | March 31, 2018 |  | December 31, 2017 |  | March 31, 2017
Non-interest expense, as presented |  | $ | 22,304 |  |  | $ | 23,099 |  |  | $ | 21,428 |
Net interest income, as presented |  | $ | 28,902 |  |  | $ | 29,659 |  |  | $ | 27,855 |
Add: effect of tax-exempt income(1) |  | 254 |  |  | 525 |  |  | 520 |
Non-interest income, as presented |  | 8,804 |  |  | 9,840 |  |  | 8,572 |
Less: net gain on sale of securities |  | — |  |  | (28 | ) |  | — |
Adjusted net interest income plus non-interest income |  | $ | 37,960 |  |  | $ | 39,996 |  |  | $ | 36,947 |
Non-GAAP efficiency ratio |  | 58.76 | % |  | 57.75 | % |  | 58.00 | %
GAAP efficiency ratio |  | 59.15 | % |  | 58.48 | % |  | 58.82 | %

(1) Reported on a tax-equivalent basis using the corporate federal income tax rate in effect for the period.

Tangible Book Value Per Share and Tangible Common Equity Ratio:
|  | March 31, 2018 |  | December 31, 2017 |  | March 31, 2017
(In thousands, except number of shares and per share data) |
Tangible Book Value Per Share: |  |  |  |  |  |
Shareholders' equity, as presented |  | $ | 404,055 |  |  | $ | 403,413 |  |  | $ | 397,827 |
Less: goodwill and other intangible assets |  | (99,471 | ) |  | (99,652 | ) |  | (100,989 | )
Tangible equity |  | $ | 304,584 |  |  | $ | 303,761 |  |  | $ | 296,838 |
Shares outstanding at period end |  | 15,565,868 |  |  | 15,524,704 |  |  | 15,508,025 |
Tangible book value per share |  | $ | 19.57 |  |  | $ | 19.57 |  |  | $ | 19.14 |
Book value per share |  | $ | 25.96 |  |  | $ | 25.99 |  |  | $ | 25.65 |
Tangible Common Equity Ratio:
Total assets |  | $ | 4,113,185 |  |  | $ | 4,065,398 |  |  | $ | 3,938,465 |
Less: goodwill and other intangibles |  | (99,471 | ) |  | (99,652 | ) |  | (100,989 | )
Tangible assets |  | $ | 4,013,714 |  |  | $ | 3,965,746 |  |  | $ | 3,837,476 |
Tangible common equity ratio |  | 7.59 | % |  | 7.66 | % |  | 7.74 | %
Shareholders' equity to total assets |  | 9.82 | % |  | 9.92 | % |  | 10.10 | %