EX-99.1 2 ex991earningsreleaseq119.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 AN 11%
INCREASE IN FIRST QUARTER 2019 EARNINGS
Q1 2019 Net Income of $14.3 Million Sets Company Record
CAMDEN, Maine, April 30, 2019/PRNewswire/--Camden National Corporation (NASDAQ: CAC; “Camden National” or the “Company”), a $4.4 billion bank holding company headquartered in Camden, Maine, reported net income for the first quarter of 2019 of $14.3 million and diluted earnings per share ("EPS") of $0.91, representing increases over the first quarter of 2018 of 11%. The Company's return on average assets was 1.33% and return on average equity was 13.13% for the first quarter of 2019.
"We are thrilled to start 2019 on such a strong note, reporting record earnings for the quarter of $14.3 million," said Gregory A. Dufour, President and Chief Executive Officer of the Company. "Our financial results are the culmination of the strategic investments we have made in products, technology and talent, all focused to continuously expand our customer base and enhance the customer experience. These investments have translated into strong loan and deposit growth that includes a 10% increase in average loans and 17% increase in average core deposits 1 in the first quarter of 2019 over the first quarter last year.”
Dufour added, "In the first quarter of 2019, our net interest margin on a fully-taxable basis reached 3.18%, an increase of 8 basis points over the first quarter last year, as our core deposit growth outpaced loan growth. However, because we are asset sensitive, we anticipate that if interest rates remain at current levels or decrease there will be downward pressure on our net interest margin in future periods as funding costs continue to increase."
For the first quarter of 2019, Camden National declared a $0.30 dividend per share, which represents a $0.05 per share, or 20%, increase over the first quarter of 2018, and a dividend yield of 2.88% as of March 29, 2019 (the last business day of the first quarter).
"In January, we announced a stock repurchase plan of up to 775,000 shares of the Company's common stock. Through April 26, 2019, we repurchased 95,967 shares at an average price of $41.87 per share. We continue to be active in the market and prudently repurchase shares based on our market price," said Dufour.

FIRST QUARTER 2019 FINANCIAL HIGHLIGHTS

• | Net income and diluted EPS increased 11% over the first quarter of 2018 and 2% over last quarter.

• | Loan growth of $16.2 million and deposit growth of $113.7 million since December 31, 2018.

• | Average loan growth of 10% and deposit growth (excluding brokered deposits) of 13% over the first quarter of 2018, and a 3% increase over last quarter.

• | Net interest margin on a fully-taxable basis of 3.18% increased 8 basis points over the first quarter of 2018 and decreased 3 basis points over last quarter.

FINANCIAL CONDITION
Total assets increased 3% since December 31, 2018 to $4.4 billion at March 31, 2019. Loans grew $16.2 million, or less than 1%, over the same period, led by residential real estate loan growth of 2% and commercial loan growth of 2%. Commercial real estate loans decreased 1% over this same period, driven by larger loan prepayment activity that included a $39.2 million payout financed directly by a government-sponsored entity.
Total deposits increased 3% since December 31, 2018 to $3.6 billion at March 31, 2019. Checking balances grew 9% over this period while savings and money market balances decreased 7%. Our core deposit growth in the first quarter of 2019 was primarily driven by our larger commercial deposit relationships. These deposit relationships are subject to more variability in balances due to dependence on business-specific cash flow needs, interest rates and pricing, and other factors. Brokered deposits increased 19% over this same period, as this option provided a more cost efficient source of short-term funding.
At March 31, 2019, our loan-to-deposit ratio improved to 85%, compared to 87% at December 31, 2018 and 92% at March 31, 2018.
The Company's capital position at March 31, 2019 was well in excess of regulatory requirements, including a total risk-based capital ratio of 14.46% and a Tier I leverage ratio of 9.47%. At March 31, 2019, the Company's common equity ratio was 10.26% and tangible common equity ratio 2 was 8.21%.
ASSET QUALITY
Asset quality remained strong throughout the first quarter of 2019. At March 31, 2019, non-performing assets to total assets was 0.33%, a decrease of 0.01% since December 31, 2018. Loans past due 30-89 days to total loans improved 0.03% at March 31, 2019 to 0.26%, since year-end.
At March 31, 2019, the allowance for loan losses was 0.83% of total loans and 180.81% of non-performing loans, compared to 0.82% and 171.17%, respectively, at December 31, 2018.
OPERATING RESULTS (First Quarter 2019 vs. First Quarter 2018)
Net income for the first quarter of 2019 was $14.3 million, an increase of $1.5 million, or 11%, over the first quarter of 2018. Over the same period, diluted EPS increased $0.09, or 11%, to $0.91 for the first quarter of 2019.
Net interest income for the first quarter of 2019 was $31.9 million, an increase of $3.0 million, or 10%, over the same period last year. The increase was driven by average loan growth of $269.7 million, or 10%, and strong average core deposit growth of $376.6 million, or 17%, over this period. Net interest margin on a fully-taxable basis increased 8 basis points to 3.18% for the first quarter of 2019 as deposit growth outpaced loan growth resulting in a reduction in borrowings.

The provision for credit losses for the first quarter of 2019 was $744,000, or 10 basis points of average loans for the quarter on an annualized basis, an increase of $1.2 million over the first quarter of 2018. In the first quarter of 2018, a large commercial real estate loan that was previously on non-accrual status was favorably resolved and resulted in a $978,000 release of provision expense for this loan.
Non-interest income for the first quarter of 2019 was $9.4 million, an increase of $585,000, or 7%, over the same period last year. The increase was primarily driven by an increase in customer loan swap fees of $438,000.
Non-interest expense for the first quarter of 2019 was $22.8 million, an increase of $479,000, or 2%, over the same period last year. Compensation-related costs increased 3% over this period primarily due to normal merit increases and an increase in health insurance premiums. Partially offsetting these increases was the recovery of certain collection costs in the first quarter of 2019 that resulted in a net recovery of other real estate and collection costs for the quarter of $307,000. The Company's efficiency ratio calculated in accordance with generally accepted accounting principles ("GAAP") for the first quarter was 55.19%, compared to 59.15% for the same period last year. The Company's non-GAAP efficiency ratio for the first quarter of 2019 was 54.86% compared to 58.76% for the same period last year.
OPERATING RESULTS (Linked Quarter)
Net income for the first quarter of 2019 increased $296,000, or 2%, and diluted EPS increased $0.02, or 2%, compared to the previous quarter. The increase between periods was led by a reduction in non-interest expense of $797,000 and revenue growth of $218,000.
Net interest income for the first quarter of 2019 increased $308,000, or 1%, over the last quarter. The increase was driven by an increase in average loans and deposits of 3%, and was partially offset by a decrease in net interest margin on a fully-taxable basis of 3 basis points to 3.18% for the first quarter of 2019. The decrease in net interest margin on a fully-taxable basis between periods was due to a decrease in fair value mark accretion income of $296,000. Net interest margin on a fully-taxable basis, excluding fair value mark accretion, remained consistent at 3.14% for the first quarter of 2019 and the fourth quarter of 2018.
The provision for credit losses for the first quarter of 2019 increased $737,000 over the last quarter primarily as the Company recorded $1.2 million of net recoveries in the fourth quarter upon the favorable resolution of a large commercial credit relationship.
Non-interest income for the first quarter of 2019 decreased $90,000, or 1%, over the last quarter. The decrease was driven by a decrease in debit card income of $829,000 as debit card activity peaks in the fourth quarter and fourth quarter debit card income includes an annual debit card incentive bonus. This was partially offset by an increase in customer loan swap fees of $124,000 and investment losses of $420,000 recorded in the fourth quarter of 2018.
Non-interest expense for the first quarter of 2019 decreased $797,000, or 3%, over last quarter. The decrease was largely driven by a decrease in other real estate and collection costs of $677,000 between periods as the Company recovered certain collection costs in the first quarter of 2019 that were incurred in prior periods.
ANNUAL MEETING
Camden National has scheduled its annual meeting of shareholders for Tuesday, April 30, 2019, at 3:00 p.m. local time, at Point Lookout Conference Center, The Summit, 67 Atlantic Highway, Northport, Maine 04849. The date for determining the Company's shareholders of record for the annual meeting was February 22, 2019.

CONFERENCE CALL
Camden National will host a conference call and webcast at 1:00 p.m., Eastern Time, on Tuesday, April 30, 2019 to discuss its first quarter 2019 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: https://services.choruscall.com/links/cac190430.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 $4.4 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, 71 ATMs, and lending offices in New Hampshire and Massachusetts, all complemented by 24/7 live phone support. Greenwich Associates named Camden National Bank a 2018 Greenwich Customer Experience (CX) Leader in U.S. Retail Banking, a designation that recognizes top U.S. banks in customer experience. In 2018, Camden National Bank 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, as amended, including certain plans, expectations, goals, projections and other statements, which are subject to numerous risks, assumptions and uncertainties. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures; changes in the interest rate environment; changes in general economic conditions; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; legislative and regulatory changes that adversely affect the business in which Camden National is engaged; changes in the securities markets and other risks and uncertainties disclosed from time to time in in Camden National’s Annual Report on Form 10-K for the year ended December 31, 2018, 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 return on 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. Annualized data may not be indicative of any four-quarter period, and are presented for illustrative purposes only.
_____________________________________________________________________________________________

1 | Core deposits includes non-interest checking, interest checking, savings and money market accounts.

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

Selected Financial Data (unaudited)
|  | At or For The Three Months Ended
(In thousands, except number of shares and per share data) |  | March 31, 2019 |  | December 31, 2018 |  | March 31, 2018
Financial Condition Data |  |  |  |  |  |
Investments |  | $ | 936,859 |  |  | $ | 926,678 |  |  | $ | 912,368 |
Loans and loans held for sale |  | 3,051,237 |  |  | 3,030,625 |  |  | 2,798,696 |
Allowance for loan losses |  | 25,201 |  |  | 24.712 |  |  | 22,990 |
Total assets |  | 4,421,189 |  |  | 4,297,435 |  |  | 4,112,176 |
Deposits |  | 3,578,197 |  |  | 3,464,474 |  |  | 3,025,580 |
Borrowings |  | 325,159 |  |  | 341,515 |  |  | 622,347 |
Shareholders' equity |  | 453,718 |  |  | 435,825 |  |  | 403,046 |
Operating Data |  |  |  |  |  |
Net interest income |  | $ | 31,895 |  |  | $ | 31,587 |  |  | $ | 28,902 |
Provision (credit) for credit losses |  | 744 |  |  | 7 |  |  | (497 | )
Non-interest income |  | 9,389 |  |  | 9,479 |  |  | 8,804 |
Non-interest expense |  | 22,783 |  |  | 23,580 |  |  | 22,304 |
Income before income tax expense |  | 17,757 |  |  | 17,479 |  |  | 15,899 |
Income tax expense |  | 3,484 |  |  | 3,502 |  |  | 3,079 |
Net income |  | $ | 14,273 |  |  | $ | 13,977 |  |  | $ | 12,820 |
Key Ratios |  |  |  |  |  |
Return on average assets |  | 1.33 | % |  | 1.32 | % |  | 1.28 | %
Return on average equity |  | 13.13 | % |  | 13.19 | % |  | 12.91 | %
Net interest margin (fully-taxable equivalent) |  | 3.18 | % |  | 3.21 | % |  | 3.10 | %
Non-performing loans to total loans |  | 0.46 | % |  | 0.48 | % |  | 0.69 | %
Non-performing assets to total assets |  | 0.33 | % |  | 0.34 | % |  | 0.47 | %
Annualized net charge-offs (recoveries) to average loans |  | 0.03 | % |  | (0.16 | )% |  | 0.10 | %
Tier I leverage capital ratio |  | 9.47 | % |  | 9.53 | % |  | 9.23 | %
Total risk-based capital ratio |  | 14.46 | % |  | 14.36 | % |  | 14.32 | %
Per Share Data |  |  |  |  |  |
Basic earnings per share |  | $ | 0.91 |  |  | $ | 0.90 |  |  | $ | 0.82 |
Diluted earnings per share |  | $ | 0.91 |  |  | $ | 0.89 |  |  | $ | 0.82 |
Cash dividends declared per share |  | $ | 0.30 |  |  | $ | 0.30 |  |  | $ | 0.25 |
Book value per share |  | $ | 29.16 |  |  | $ | 27.95 |  |  | $ | 25.89 |
Weighted average number of common shares outstanding |  | 15,592,141 |  |  | 15,589,310 |  |  | 15,541,975 |
Diluted weighted average number of common shares outstanding |  | 15,634,126 |  |  | 15,646,540 |  |  | 15,603,380 |
Non-GAAP Measures(1) |  |  |  |  |  |
Return on average tangible equity |  | 17.08 | % |  | 17.43 | % |  | 17.35 | %
Efficiency ratio |  | 54.86 | % |  | 56.50 | % |  | 58.76 | %
Tangible common equity ratio |  | 8.21 | % |  | 8.02 | % |  | 7.57 | %
Tangible book value per share |  | $ | 22.81 |  |  | $ | 21.61 |  |  | $ | 19.50 |

(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, 2019 |  | December 31, 2018 |  | March 31, 2018
ASSETS |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 43,722 |  |  | $ | 52,240 |  |  | $ | 48,159 |
Interest-bearing deposits in other banks (including restricted cash) |  | 95,846 |  |  | 14,759 |  |  | 76,950 |
Total cash, cash equivalents and restricted cash |  | 139,568 |  |  | 66,999 |  |  | 125,109 |
Investments: |  |  |  |  |  |  |  |  |
Available-for-sale securities, at fair value (book value of $933,135, $933,399 and $914,335, respectively) |  | 924,311 |  |  | 910,692 |  |  | 887,283 |
Held-to-maturity securities, at amortized cost (fair value of $1,324, $1,291 and $1,277, respectively) |  | 1,306 |  |  | 1,307 |  |  | 1,311 |
Other investments |  | 11,242 |  |  | 14,679 |  |  | 23,774 |
Total investments |  | 936,859 |  |  | 926,678 |  |  | 912,368 |
Loans held for sale, at fair value (book value of $8,711, $4,314 and $9,502, respectively) |  | 8,795 |  |  | 4,403 |  |  | 9,548 |
Loans: |  |  |  |  |  |
Commercial real estate |  | 1,258,474 |  |  | 1,269,533 |  |  | 1,169,533 |
Residential real estate |  | 1,017,442 |  |  | 992,866 |  |  | 860,533 |
Commercial(1) |  | 421,824 |  |  | 415,436 |  |  | 420,429 |
Consumer and home equity |  | 344,702 |  |  | 348,387 |  |  | 338,653 |
Total loans |  | 3,042,442 |  |  | 3,026,222 |  |  | 2,789,148 |
Less: allowance for loan losses |  | (25,201 | ) |  | (24,712 | ) |  | (22,990 | )
Net loans |  | 3,017,241 |  |  | 3,001,510 |  |  | 2,766,158 |
Goodwill |  | 94,697 |  |  | 94,697 |  |  | 94,697 |
Other intangible assets |  | 4,054 |  |  | 4,230 |  |  | 4,774 |
Bank-owned life insurance |  | 90,513 |  |  | 89,919 |  |  | 88,097 |
Premises and equipment, net |  | 42,033 |  |  | 42,495 |  |  | 41,545 |
Deferred tax assets |  | 18,854 |  |  | 23,053 |  |  | 23,457 |
Other assets |  | 68,575 |  |  | 43,451 |  |  | 46,423 |
Total assets |  | $ | 4,421,189 |  |  | $ | 4,297,435 |  |  | $ | 4,112,176 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |
Liabilities |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |
Non-interest checking |  | $ | 492,306 |  |  | $ | 496,729 |  |  | $ | 463,496 |
Interest checking |  | 1,163,678 |  |  | 1,023,373 |  |  | 840,054 |
Savings and money market |  | 1,059,897 |  |  | 1,137,356 |  |  | 1,005,329 |
Certificates of deposit |  | 428,487 |  |  | 443,912 |  |  | 471,155 |
Brokered deposits |  | 433,829 |  |  | 363,104 |  |  | 245,546 |
Total deposits |  | 3,578,197 |  |  | 3,464,474 |  |  | 3,025,580 |
Short-term borrowings |  | 256,181 |  |  | 270,868 |  |  | 552,624 |
Long-term borrowings |  | 10,000 |  |  | 11,580 |  |  | 10,773 |
Subordinated debentures |  | 58,978 |  |  | 59,067 |  |  | 58,950 |
Accrued interest and other liabilities |  | 64,115 |  |  | 55,621 |  |  | 61,203 |
Total liabilities |  | 3,967,471 |  |  | 3,861,610 |  |  | 3,709,130 |
Shareholders’ equity |  | 453,718 |  |  | 435,825 |  |  | 403,046 |
Total liabilities and shareholders’ equity |  | $ | 4,421,189 |  |  | $ | 4,297,435 |  |  | $ | 4,112,176 |

(1) Includes the HPFC loan portfolio.

Consolidated Statements of Income Data (unaudited)
|  | For The Three Months Ended
(In thousands, except per share data) |  | March 31, 2019 |  | December 31, 2018 |  | March 31, 2018
Interest Income |  |  |  |  |  |  |  |  |
Interest and fees on loans |  | $ | 35,721 |  |  | $ | 34,532 |  |  | $ | 29,834 |
Taxable interest on investments |  | 4,994 |  |  | 4,708 |  |  | 4,225 |
Nontaxable interest on investments |  | 644 |  |  | 659 |  |  | 672 |
Dividend income |  | 230 |  |  | 319 |  |  | 286 |
Other interest income |  | 420 |  |  | 235 |  |  | 261 |
Total interest income |  | 42,009 |  |  | 40,453 |  |  | 35,278 |
Interest Expense |  |  |  |  |  |  |  |  |
Interest on deposits |  | 8,423 |  |  | 6,650 |  |  | 3,749 |
Interest on borrowings |  | 974 |  |  | 1,357 |  |  | 1,780 |
Interest on subordinated debentures |  | 717 |  |  | 859 |  |  | 847 |
Total interest expense |  | 10,114 |  |  | 8,866 |  |  | 6,376 |
Net interest income |  | 31,895 |  |  | 31,587 |  |  | 28,902 |
Provision (credit) for credit losses |  | 744 |  |  | 7 |  |  | (497 | )
Net interest income after provision (credit) for credit losses |  | 31,151 |  |  | 31,580 |  |  | 29,399 |
Non-Interest Income |  |  |  |  |  |  |  |  |
Service charges on deposit accounts |  | 2,023 |  |  | 2,145 |  |  | 1,967 |
Debit card income |  | 2,010 |  |  | 2,839 |  |  | 1,929 |
Income from fiduciary services |  | 1,392 |  |  | 1,347 |  |  | 1,283 |
Mortgage banking income, net |  | 1,252 |  |  | 1,156 |  |  | 1,391 |
Bank-owned life insurance |  | 594 |  |  | 607 |  |  | 608 |
Brokerage and insurance commissions |  | 585 |  |  | 665 |  |  | 650 |
Customer loan swap fees |  | 525 |  |  | 401 |  |  | 87 |
Net loss on sale of securities |  | — |  |  | (420 | ) |  | — |
Other income |  | 1,008 |  |  | 739 |  |  | 889 |
Total non-interest income |  | 9,389 |  |  | 9,479 |  |  | 8,804 |
Non-Interest Expense |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  | 12,978 |  |  | 13,080 |  |  | 12,562 |
Furniture, equipment and data processing |  | 2,680 |  |  | 2,649 |  |  | 2,586 |
Net occupancy costs |  | 1,914 |  |  | 1,764 |  |  | 1,873 |
Debit card expense |  | 823 |  |  | 841 |  |  | 730 |
Consulting and professional fees |  | 813 |  |  | 874 |  |  | 804 |
Regulatory assessments |  | 472 |  |  | 490 |  |  | 499 |
Amortization of intangible assets |  | 176 |  |  | 181 |  |  | 181 |
Other real estate owned and collection (recoveries) costs, net |  | (307 | ) |  | 370 |  |  | 75 |
Other expenses |  | 3,234 |  |  | 3,331 |  |  | 2,994 |
Total non-interest expense |  | 22,783 |  |  | 23,580 |  |  | 22,304 |
Income before income tax expense |  | 17,757 |  |  | 17,479 |  |  | 15,899 |
Income tax expense |  | 3,484 |  |  | 3,502 |  |  | 3,079 |
Net Income |  | $ | 14,273 |  |  | $ | 13,977 |  |  | $ | 12,820 |
Per Share Data |  |  |  |  |  |  |  |  |
Basic earnings per share |  | $ | 0.91 |  |  | $ | 0.90 |  |  | $ | 0.82 |
Diluted earnings per share |  | $ | 0.91 |  |  | $ | 0.89 |  |  | $ | 0.82 |

Quarterly Average Balance and Yield/Rate Analysis (unaudited)
|  | Average Balance |  | Yield/Rate
|  | For The Three Months Ended |  | For The Three Months Ended
(In thousands) |  | March 31, 2019 |  | December 31, 2018 |  | March 31, 2018 |  | March 31, 2019 |  | December 31, 2018 |  | March 31, 2018
Assets |  |  |  |  |  |  |  |  |  |  |  |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing deposits in other banks |  | $ | 29,985 |  |  | $ | 24,620 |  |  | $ | 52,510 |  |  | 2.63 | % |  | 1.57 | % |  | 1.40 | %
Investments - taxable |  | 851,516 |  |  | 830,097 |  |  | 826,529 |  |  | 2.56 | % |  | 2.49 | % |  | 2.22 | %
Investments - nontaxable(1) |  | 94,710 |  |  | 97,192 |  |  | 99,560 |  |  | 3.44 | % |  | 3.43 | % |  | 3.42 | %
Loans(2): |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | 1,281,501 |  |  | 1,230,791 |  |  | 1,171,598 |  |  | 4.73 | % |  | 4.60 | % |  | 4.20 | %
Residential real estate |  | 1,008,285 |  |  | 973,124 |  |  | 860,783 |  |  | 4.30 | % |  | 4.29 | % |  | 4.12 | %
Commercial(1) |  | 369,832 |  |  | 364,253 |  |  | 349,963 |  |  | 4.70 | % |  | 4.50 | % |  | 4.27 | %
Consumer and home equity |  | 347,052 |  |  | 346,494 |  |  | 341,078 |  |  | 5.46 | % |  | 5.36 | % |  | 4.76 | %
HPFC |  | 32,171 |  |  | 35,163 |  |  | 43,757 |  |  | 7.91 | % |  | 7.66 | % |  | 7.99 | %
Municipal(1) |  | 15,333 |  |  | 17,520 |  |  | 17,277 |  |  | 3.60 | % |  | 3.28 | % |  | 3.33 | %
Total loans |  | 3,054,174 |  |  | 2,967,345 |  |  | 2,784,456 |  |  | 4.70 | % |  | 4.60 | % |  | 4.30 | %
Total interest-earning assets |  | 4,030,385 |  |  | 3,919,254 |  |  | 3,763,055 |  |  | 4.20 | % |  | 4.11 | % |  | 3.78 | %
Other assets |  | 308,064 |  |  | 294,178 |  |  | 292,312 |  |  |  |  |  |  |
Total assets |  | $ | 4,338,449 |  |  | $ | 4,213,432 |  |  | $ | 4,055,367 |  |  |  |  |  |  |
Liabilities & Shareholders' Equity |  |  |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |  |
Non-interest checking |  | $ | 490,382 |  |  | $ | 523,283 |  |  | $ | 452,629 |  |  | — | % |  | — | % |  | — | %
Interest checking |  | 1,085,301 |  |  | 995,333 |  |  | 833,410 |  |  | 0.98 | % |  | 0.76 | % |  | 0.38 | %
Savings |  | 485,646 |  |  | 483,651 |  |  | 493,660 |  |  | 0.08 | % |  | 0.06 | % |  | 0.06 | %
Money market |  | 582,685 |  |  | 553,785 |  |  | 487,685 |  |  | 1.21 | % |  | 1.07 | % |  | 0.66 | %
Certificates of deposit |  | 443,107 |  |  | 444,769 |  |  | 472,213 |  |  | 1.34 | % |  | 1.26 | % |  | 1.00 | %
Total deposits |  | 3,087,121 |  |  | 3,000,821 |  |  | 2,739,597 |  |  | 0.78 | % |  | 0.65 | % |  | 0.42 | %
Borrowings: |  |  |  |  |  |  |  |  |  |  |  |
Brokered deposits |  | 405,837 |  |  | 307,559 |  |  | 238,870 |  |  | 2.50 | % |  | 2.28 | % |  | 1.59 | %
Customer repurchase agreements |  | 238,499 |  |  | 265,675 |  |  | 237,056 |  |  | 1.24 | % |  | 1.22 | % |  | 0.72 | %
Subordinated debentures |  | 59,007 |  |  | 59,048 |  |  | 58,930 |  |  | 4.93 | % |  | 5.77 | % |  | 5.83 | %
Other borrowings |  | 44,711 |  |  | 93,181 |  |  | 328,141 |  |  | 2.22 | % |  | 2.29 | % |  | 1.68 | %
Total borrowings |  | 748,054 |  |  | 725,463 |  |  | 862,997 |  |  | 2.27 | % |  | 2.18 | % |  | 1.68 | %
Total funding liabilities |  | 3,835,175 |  |  | 3,726,284 |  |  | 3,602,594 |  |  | 1.07 | % |  | 0.94 | % |  | 0.72 | %
Other liabilities |  | 62,247 |  |  | 66,805 |  |  | 50,147 |  |  |  |  |  |  |
Shareholders' equity |  | 441,027 |  |  | 420,343 |  |  | 402,626 |  |  |  |  |  |  |
Total liabilities & shareholders' equity |  | $ | 4,338,449 |  |  | $ | 4,213,432 |  |  | $ | 4,055,367 |  |  |  |  |  |  |
Net interest rate spread (fully-taxable equivalent) |  | 3.13 | % |  | 3.17 | % |  | 3.06 | %
Net interest margin (fully-taxable equivalent) |  | 3.18 | % |  | 3.21 | % |  | 3.10 | %
Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection of previously charged-off acquired loans(3) |  | 3.14 | % |  | 3.14 | % |  | 3.04 | %

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

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

(3) | 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, 2019, December 31, 2018 and March 31, 2018 totaling $390,000, $686,000 and $558,000, respectively.

Asset Quality Data
(unaudited)
(In thousands) |  | At or For The Three Months Ended March 31, 2019 |  | At or For The Year Ended December 31, 2018 |  | At or For The Nine Months Ended September 30, 2018 |  | At or For The Six Months Ended June 30, 2018 |  | At or For The Three Months Ended March 31, 2018
Non-accrual loans: |  |  |  |  |  |  |  |  |  |
Residential real estate |  | $ | 5,415 |  |  | $ | 5,492 |  |  | $ | 4,720 |  |  | $ | 5,742 |  |  | $ | 6,185 |
Commercial real estate |  | 975 |  |  | 1,380 |  |  | 5,517 |  |  | 5,600 |  |  | 4,603 |
Commercial |  | 802 |  |  | 1,279 |  |  | 2,402 |  |  | 1,934 |  |  | 1,991 |
Consumer and home equity |  | 2,476 |  |  | 1,861 |  |  | 1,647 |  |  | 1,700 |  |  | 1,464 |
HPFC |  | 485 |  |  | 518 |  |  | 591 |  |  | 834 |  |  | 655 |
Total non-accrual loans |  | 10,153 |  |  | 10,530 |  |  | 14,877 |  |  | 15,810 |  |  | 14,898 |
Loans 90 days past due and accruing |  | 14 |  |  | 14 |  |  | 14 |  |  | — |  |  | — |
Accruing troubled-debt restructured loans not included above |  | 3,771 |  |  | 3,893 |  |  | 4,039 |  |  | 4,000 |  |  | 4,361 |
Total non-performing loans |  | 13,938 |  |  | 14,437 |  |  | 18,930 |  |  | 19,810 |  |  | 19,259 |
Other real estate owned |  | 673 |  |  | 130 |  |  | 185 |  |  | 130 |  |  | 130 |
Total non-performing assets |  | $ | 14,611 |  |  | $ | 14,567 |  |  | $ | 19,115 |  |  | $ | 19,940 |  |  | $ | 19,389 |
Loans 30-89 days past due: |  |  |  |  |  |  |  |  |  |
Residential real estate |  | $ | 2,265 |  |  | $ | 4,833 |  |  | $ | 3,816 |  |  | $ | 2,222 |  |  | $ | 2,777 |
Commercial real estate |  | 2,947 |  |  | 2,130 |  |  | 574 |  |  | 309 |  |  | 1,121 |
Commercial |  | 1,205 |  |  | 169 |  |  | 723 |  |  | 1,490 |  |  | 243 |
Consumer and home equity |  | 1,430 |  |  | 1,467 |  |  | 902 |  |  | 1,258 |  |  | 1,190 |
HPFC |  | 187 |  |  | 183 |  |  | 1,078 |  |  | 455 |  |  | 528 |
Total loans 30-89 days past due |  | $ | 8,034 |  |  | $ | 8,782 |  |  | $ | 7,093 |  |  | $ | 5,734 |  |  | $ | 5,859 |
Allowance for loan losses at the beginning of the period |  | $ | 24,712 |  |  | $ | 24,171 |  |  | $ | 24,171 |  |  | $ | 24,171 |  |  | $ | 24,171 |
Provision (credit) for loan losses |  | 750 |  |  | 845 |  |  | 845 |  |  | 490 |  |  | (500 | )
Charge-offs: |  |  |  |  |  |  |  |  |  |
Residential real estate |  | 11 |  |  | 173 |  |  | 231 |  |  | 116 |  |  | 31 |
Commercial real estate |  | 65 |  |  | 512 |  |  | 512 |  |  | 512 |  |  | 426 |
Commercial |  | 236 |  |  | 736 |  |  | 448 |  |  | 298 |  |  | 171 |
Consumer and home equity |  | 24 |  |  | 572 |  |  | 451 |  |  | 266 |  |  | 175 |
HPFC |  | — |  |  | 255 |  |  | 209 |  |  | — |  |  | — |
Total charge-offs |  | 336 |  |  | 2,248 |  |  | 1,851 |  |  | 1,192 |  |  | 803 |
Total recoveries |  | (75 | ) |  | (1,944 | ) |  | (361 | ) |  | (199 | ) |  | (122 | )
Net charge-offs |  | 261 |  |  | 304 |  |  | 1,490 |  |  | 993 |  |  | 681 |
Allowance for loan losses at the end of the period |  | $ | 25,201 |  |  | $ | 24,712 |  |  | $ | 23,526 |  |  | $ | 23,668 |  |  | $ | 22,990 |
Components of allowance for credit losses: |  |  |  |  |  |  |  |  |  |
Allowance for loan losses |  | $ | 25,201 |  |  | $ | 24,712 |  |  | $ | 23,526 |  |  | $ | 23,668 |  |  | $ | 22,990 |
Liability for unfunded credit commitments |  | 16 |  |  | 22 |  |  | 15 |  |  | 16 |  |  | 23 |
Allowance for credit losses |  | $ | 25,217 |  |  | $ | 24,734 |  |  | $ | 23,541 |  |  | $ | 23,684 |  |  | $ | 23,013 |
Ratios: |  |  |  |  |  |  |  |  |  |
Non-performing loans to total loans |  | 0.46 | % |  | 0.48 | % |  | 0.65 | % |  | 0.69 | % |  | 0.69 | %
Non-performing assets to total assets |  | 0.33 | % |  | 0.34 | % |  | 0.46 | % |  | 0.48 | % |  | 0.47 | %
Allowance for loan losses to total loans |  | 0.83 | % |  | 0.82 | % |  | 0.81 | % |  | 0.83 | % |  | 0.82 | %
Net charge-offs (recoveries) to average loans (annualized): |  |  |  |  |  |  |  |  |  |
Quarter-to-date |  | 0.03 | % |  | (0.16 | )% |  | 0.07 | % |  | 0.04 | % |  | 0.10 | %
Year-to-date |  | 0.03 | % |  | 0.01 | % |  | 0.07 | % |  | 0.07 | % |  | 0.10 | %
Allowance for loan losses to non-performing loans |  | 180.81 | % |  | 171.17 | % |  | 124.28 | % |  | 119.48 | % |  | 119.37 | %
Loans 30-89 days past due to total loans |  | 0.26 | % |  | 0.29 | % |  | 0.24 | % |  | 0.20 | % |  | 0.21 | %

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

Return on Average Tangible Equity:
|  | For the Three Months Ended
(In thousands) |  | March 31, 2019 |  | December 31, 2018 |  | March 31, 2018
Net income, as presented |  | $ | 14,273 |  |  | $ | 13,977 |  |  | $ | 12,820 |
Add: amortization of intangible assets, net of tax(1) |  | 139 |  |  | 143 |  |  | 143 |
Net income, adjusted for amortization of intangible assets |  | $ | 14,412 |  |  | $ | 14,120 |  |  | $ | 12,963 |
Average equity, as presented |  | $ | 441,027 |  |  | $ | 420,343 |  |  | $ | 402,626 |
Less: average goodwill and other intangible assets |  | (98,838 | ) |  | (99,015 | ) |  | (99,568 | )
Average tangible equity |  | $ | 342,189 |  |  | $ | 321,328 |  |  | $ | 303,058 |
Return on average equity |  | 13.13 | % |  | 13.19 | % |  | 12.91 | %
Return on average tangible equity |  | 17.08 | % |  | 17.43 | % |  | 17.35 | %

(1) Assumed a 21% tax rate.

Efficiency Ratio: |  |  |  |  |  |
|  | For the Three Months Ended
(In thousands) |  | March 31, 2019 |  | December 31, 2018 |  | March 31, 2018
Non-interest expense, as presented |  | $ | 22,783 |  |  | $ | 23,580 |  |  | $ | 22,304 |
Net interest income, as presented |  | $ | 31,895 |  |  | $ | 31,587 |  |  | $ | 28,902 |
Add: effect of tax-exempt income(1) |  | 244 |  |  | 251 |  |  | 254 |
Non-interest income, as presented |  | 9,389 |  |  | 9,479 |  |  | 8,804 |
Add: net loss on sale of securities |  | — |  |  | 420 |  |  | — |
Adjusted net interest income plus non-interest income |  | $ | 41,528 |  |  | $ | 41,737 |  |  | $ | 37,960 |
GAAP efficiency ratio |  | 55.19 | % |  | 57.42 | % |  | 59.15 | %
Non-GAAP efficiency ratio |  | 54.86 | % |  | 56.50 | % |  | 58.76 | %

(1) Assumed a 21% tax rate.

Tangible Book Value Per Share and Tangible Common Equity Ratio:
|  | March 31, 2019 |  | December 31, 2018 |  | March 31, 2018
(In thousands, except number of shares and per share data) |
Tangible Book Value Per Share: |  |  |  |  |  |
Shareholders' equity, as presented |  | $ | 453,718 |  |  | $ | 435,825 |  |  | $ | 403,046 |
Less: goodwill and other intangible assets |  | (98,751 | ) |  | (98,927 | ) |  | (99,471 | )
Tangible shareholders' equity |  | $ | 354,967 |  |  | $ | 336,898 |  |  | $ | 303,575 |
Shares outstanding at period end |  | 15,560,565 |  |  | 15,591,914 |  |  | 15,565,868 |
Tangible book value per share |  | $ | 22.81 |  |  | $ | 21.61 |  |  | $ | 19.50 |
Book value per share |  | $ | 29.16 |  |  | $ | 27.95 |  |  | $ | 25.89 |
Tangible Common Equity Ratio:
Total assets |  | $ | 4,421,189 |  |  | $ | 4,297,435 |  |  | $ | 4,112,176 |
Less: goodwill and other intangibles |  | (98,751 | ) |  | (98,927 | ) |  | (99,471 | )
Tangible assets |  | $ | 4,322,438 |  |  | $ | 4,198,508 |  |  | $ | 4,012,705 |
Common equity ratio |  | 10.26 | % |  | 10.14 | % |  | 9.80 | %
Tangible common equity ratio |  | 8.21 | % |  | 8.02 | % |  | 7.57 | %