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Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 28, 2020
Camden National Corporation
(Exact name of registrant as specified in its charter)
 
Maine
 
01-28190
 
01-0413282
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
 
Two Elm Street, Camden, Maine
 
04843
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code: (207) 236-8821
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging Growth Company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, without par value
CAC
The NASDAQ Stock Market LLC





Item 2.02
Results of Operations and Financial Condition.
 
Camden National Corporation (the “Company”) issued a press release on July 28, 2020 announcing earnings for the fiscal quarter ended June 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1. A quarterly letter from the Company's Chief Executive Officer to stockholders is attached as Exhibit 99.2 and a supplemental presentation is attached as Exhibit 99.3. This information is being furnished pursuant to Item 2.02, and the information contained therein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933.

Item 9.01
Financial Statements and Exhibits.
 
(d)    The following exhibits are filed with this Report:
Exhibit No.
Description


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 

Dated: July 28, 2020
 
 
CAMDEN NATIONAL CORPORATION
(Registrant)
 
 
 
 
 
By: 
/s/ GREGORY A. WHITE
 
 
Gregory A. White
Chief Financial Officer and Principal Financial & Accounting Officer







(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
404764712_cncsignaturebrandmark_a01.jpg
CONTACT:                                
Michael Archer
Senior Vice President
Corporate Controller
Camden National Corporation
(800) 860-8821
[email protected]

FOR IMMEDIATE RELEASE


CAMDEN NATIONAL CORPORATION REPORTS
SECOND QUARTER 2020 FINANCIAL RESULTS

Second Quarter 2020 Net Income of $10.9 Million and Diluted Earnings Per Share of $0.73

CAMDEN, Maine, July 28, 2020/PRNewswire/--Camden National Corporation (NASDAQ: CAC; “Camden National” or the “Company”), a $5.0 billion bank holding company headquartered in Camden, Maine, reported net income for the second quarter 2020 of $10.9 million, a decrease of 17% compared to the second quarter of 2019, and diluted earnings per share ("EPS") of $0.73, a decrease of 14% over the same period. The decrease in net income between periods was driven by higher provision expense in response to the COVID-19 pandemic. Second quarter 2020 pre-tax, pre-provision earnings1 increased $5.4 million, or 31%, over the second quarter of 2019.

"Over the past several months, we have navigated new economic and social challenges as a result of the COVID-19 pandemic," said Gregory A. Dufour, President and Chief Executive Officer of the Company. "The health and financial well-being of our customers, employees, and communities has been top of mind and a significant factor in the decisions made to date. We recognize these are trying times for many, and we continue to diligently support our constituents, which included providing over 2,900 Paycheck Protection Program loans to small businesses and over 2,000 temporary loan payment deferrals to business and retail customers through June 30."

Dufour added, "While the total financial impact of the COVID-19 pandemic remains unclear, we remain well-positioned to withstand the uncertainty. We are fortifying our balance sheet as shown by our pre-tax, pre-provision earnings1 contribution, which is allowing us to build our reserves for loan losses that may occur due to the changing economy."

SECOND QUARTER 2020 HIGHLIGHTS

Net income decreased by 17% compared to the second quarter of 2019 and by 19% compared to the first quarter of 2020
Second quarter 2020 pre-tax, pre-provision earnings1 increased 31% over the second quarter of 2019 and 24% over the first quarter of 2020
We continue to support our communities and customers through the COVID-19 pandemic, highlighted by our lending and relief efforts, which included originating 10% of the Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans to small businesses across Maine, according to SBA data, and providing temporary debt relief on over 2,000 loans to business and retail customers through June 30, 2020



Asset quality remains strong with non-performing assets of 0.23% of total loans as of June 30, 2020 and second quarter 2020 annualized net charge-offs of 0.05% of average loans
Capital remains a source of strength with capital ratios well in excess of regulatory capital thresholds and an allowance for loan losses of 3.1 times non-performing loans as of June 30, 2020

FINANCIAL CONDITION

Assets. Total assets increased 12% since December 31, 2019, to $5.0 billion at June 30, 2020. Asset growth was driven by loan growth, including loans held for sale, of $255.8 million, or 8%, investments growth of $131.0 million, or 14%, and an increase in cash balances of $80.2 million, or 106%.

Loans. For the six months ended June 30, 2020, commercial loans grew $204.3 million, or 46%, driven by SBA PPP loans. Through June 30, 2020, the Company originated 2,919 PPP loans with total balances of $237.0 million. At June 30, 2020, outstanding PPP loan balances were $225.8 million.

Over the same period, commercial real estate loans grew $67.6 million, or 5%, driven by funding of prior period loan commitments, while consumer and home equity loans decreased 7% and residential mortgage loans decreased 2%.

Through the first six months of 2020, the Company originated $461.5 million of residential mortgages and sold 58% of its production to the secondary market. In comparison, for the same period last year, the Company originated $214.5 million and sold 46% of its production. Residential mortgage refinance activity was 67% of total production for the six months ended June 30, 2020, compared to 28% for the same period last year.

Cash and Investments. Strong deposit growth in the first half of 2020 of $458.6 million, or 13%, led to an increase in cash and investments. The Company designated its investment purchases as available-for-sale ("AFS") to secure its liquidity position. At June 30, 2020, the Company's AFS investments were in an unrealized gain position of $37.3 million, compared to $4.1 million at December 31, 2019, driven by the lower interest rate environment between periods.

Goodwill. In light of recent events related to the COVID-19 pandemic and its impact on the broad equity markets and economy, the Company assessed its goodwill for impairment in the second quarter of 2020 by calculating its estimated fair value and comparing to its book value. As of June 30, 2020, the Company concluded its goodwill was not impaired.

Deposits and Borrowings. Deposits increased 13% since December 31, 2019, to $4.0 billion at June 30, 2020. For the six months ended June 30, 2020, checking account balances grew $355.8 million, or 21%, and savings and money market balances grew $159.4 million, or 14%. The increase in deposits was driven by various factors in response to the COVID-19 pandemic, including the federal government stimulus programs and a shift in consumer habits as the national personal savings rate reached 23% in May 2020.

The Company's loan-to-deposit ratio was 83% at June 30, 2020, compared to 87% at December 31, 2019 and 86% at June 30, 2019.

Total borrowings decreased 2% since December 31, 2019 to $330.2 million at June 30, 2020. The Company continues to primarily use short-term borrowings to supplement funding in the current low interest rate environment. In the first half of 2020, it also locked-in long-term funding at interest rates below 1%.

Shareholders' Equity. The Company continues to be well-positioned from a capital perspective to withstand the economic uncertainty surrounding the COVID-19 pandemic. At June 30, 2020, the Company's capital position was well in excess of regulatory requirements, including a total risk-based capital ratio of 14.56%, a tier 1 risk-based capital ratio of 13.01%, common equity tier 1 risk-based capital ratio of 11.69%, and a tier 1 leverage ratio of 8.95%. Additionally, at June 30, 2020, the Company's common equity ratio was 10.21% and tangible common



equity ratio1 was 8.41%.

In June 2020, the Company announced a cash dividend to shareholders of $0.33 per share, consistent with that issued for the first quarter of 2020. The cash dividend is payable to shareholders of record as of July 15, 2020, and shareholders will begin receiving payments on July 31, 2020. As of June 30, 2020, the Company's annualized dividend yield was 3.82% based on Camden National's closing share price of $34.54, as reported by NASDAQ.

The Company suspended its share repurchase program during the first quarter of 2020 in response to the COVID-19 pandemic. We will continue to evaluate our use of the share repurchase program as the impact and our response to the COVID-19 pandemic develops.

ASSET QUALITY

As of June 30, 2020, the Company's asset quality metrics continue to be stable and consistent with past quarters.
Non-performing assets were 0.23% of total assets at June 30, 2020, compared to 0.23% and 0.25% at March 31, 2020 and December 31, 2019, respectively.
Past due loans were 0.19% of total loans at June 30, 2020, compared to 0.24% and 0.17% at March 31, 2020 and December 31, 2019, respectively.
Net charge-offs (annualized) for the second quarter of 2020 were 0.05% of average loans, compared to 0.05% for the first quarter of 2020 and 0.09% for the fourth quarter of 2019.

COVID-19 Loan Modification Program. In March 2020, the Company began offering temporary debt relief to business and retail customers impacted by the COVID-19 pandemic. Generally, the terms of this initial temporary debt relief program provided customers with 90 to 180 days of payment deferral. All loan modifications made by the Company complied with the terms of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") or bank regulator guidance, and, thus, were not designated or accounted for as troubled-debt restructurings.

Through June 30, 2020, the Company had modified 2,064 business and retail customer loans to provide temporary debt relief to customers impacted by the COVID-19 pandemic. As of June 30, 2020, 1,763 customer loans with total loan balances of $546.7 million were still under the terms of a COVID-19 loan modification. As the original loan modification term matures, the Company may, at its discretion, extend or modify the loan terms again. With many of the original loan modifications maturing in July, the Company is currently engaged in discussion with these customers to determine if further payment relief is needed. The terms of those loan modifications will be on a case-by-case assessment, and may include an extension of payment deferral in full or in part.

Allowance for Credit Losses and Provision Expense. The provision for credit losses for the three and six months ended June 30, 2020 was $9.4 million and $11.2 million, respectively, compared to $1.2 million and $1.9 million for the three and six months ended June 30, 2019. While asset quality was strong at June 30, 2020, the increase in provision expense between periods reflects a measure of impact attributed to the COVID-19 pandemic, based on available information at that time, which includes consideration of loan modification levels and industry risk.

At June 30, 2020, the Company's allowance for loan losses was $35.5 million, or 1.07% of total loans and 3.1 times non-performing loans, compared to $25.2 million, or 0.81% of total loans and 2.3 times non-performing loans, at December 31, 2019.

CECL. In the first quarter of 2020, the Company chose to delay its implementation of the current expected credit losses model, commonly referred to as "CECL," in accordance with the provisions of the CARES Act. As such, the reported allowance for credit losses and related provision expense for the three and six months ended June 30, 2020 was accounted for under the incurred loss model. In accordance with the CARES Act, the Company will delay implementation of CECL until the earlier of (i) the date on which the national emergency concerning the COVID-19 pandemic terminates, or (ii) December 31, 2020.




While the Company has not yet adopted CECL, it estimates that as of June 30, 2020, the allowance for credit losses under CECL, which is comprised of allowance for loan losses and unfunded commitments, would have been $40.0 million to $44.0 million, or 1.20% to 1.32% of loans at June 30, 2020.

FINANCIAL OPERATING RESULTS (Q2 2020 vs. Q2 2019)

Net income for the second quarter of 2020 was $10.9 million, a decrease of $2.3 million, or 17%, compared to the second quarter of 2019. Diluted EPS for the second quarter of 2020 was $0.73, a decrease of $0.12, or 14%. Lower earnings between periods was driven by an increase in provision expense of $8.2 million.

Net Interest Income. Net interest income for the second quarter of 2020 was $34.5 million, an increase of $3.0 million, or 9%, over the second quarter of 2019 due to an increase in average interest-earning assets of 10%. Net interest margin for the second quarter of 2020 and 2019 was 3.11%.

Average interest-earning assets for the second quarter of 2020 were $4.5 billion, an increase of $394.5 million over the second quarter of 2019. The primary drivers for the growth between periods included (i) average loan growth of 8% and (ii) an increase in average cash and investment balances of 14%. The largest driver of average loan growth between periods was an increase in average PPP loans of $178.1 million during the second quarter of 2020.

Net interest margin for the second quarter of 2020 and 2019 was 3.11%. The make-up of net interest margin between periods varied significantly due to the change in interest rates and the roll-out of PPP loans in the second quarter of 2020.
The 10-year U.S. Treasury rate averaged 0.69% in the second quarter of 2020, compared to 2.34% for the second quarter of 2019. The decrease in benchmark interest rates drove a decrease in yield on interest-earnings assets of 0.65% to 3.53% for the second quarter of 2020, and was partially offset by $1.7 million of PPP loan income recognized in the second quarter of 2020 with an average yield of 3.79%.
The Federal Funds rate throughout the quarter was 0.25%, compared to 2.50% for the second quarter of 2019. In response to decreasing asset yields and funding rates, the Company effectively managed its cost of funds down to minimize the impact of the interest rate environment on net interest margin. Deposit costs decreased 0.51% between periods to 0.35% for the second quarter of 2020. Our cost of funds for the second quarter of 2020 was 0.44%, compared to 1.13% for the second quarter of 2019.

Provision for Credit Losses. The provision for credit losses for the second quarter of 2020 was $9.4 million, compared to $1.2 million for the second quarter of 2019. The increase in provision expense between periods was driven by an increase in allowance for loan losses due to estimates attributed to the COVID-19 pandemic.

Non-Interest Income. Non-interest income for the second quarter of 2020 was $12.1 million, an increase of $2.0 million, or 20%, over the second quarter of 2019.
Mortgage banking income for the second quarter of 2020 increased $2.9 million over the second quarter of 2019 as mortgage refinance activity was strong due to the low interest rate environment. Refinance activity was 71% of unit production in the second quarter of 2020, compared to 25% for the second quarter of 2019.
Service charges on deposit accounts for the second quarter of 2020 decreased $872,000, compared to the second quarter of 2019 due to lower overdraft fees and deposit account fees as customer deposit balances increased but the number of customer transactions decreased.

Non-Interest Expense. Non-interest expense for the second quarter of 2020 was $23.5 million, a decrease of $449,000, or 2%, compared to the second quarter of 2019. Certain costs were lower between periods as priorities shifted and employees transitioned to working remotely in response to the COVID-19 pandemic, while other costs increased to ensure the safety and health of our employees during this unprecedented time.




FINANCIAL OPERATING RESULTS (Q2 2020 vs. Q1 2020)

Net income between quarters decreased $2.6 million, or 19%, and diluted EPS decreased $0.16, or 18%, over the same period. Lower earnings between quarters was driven by an increase in provision expense of $7.6 million.

Net Interest Income. Net interest income increased $2.7 million, or 9%, between quarters as net interest margin increased 3 basis points to 3.11% for the second quarter of 2020 and average loan growth was $187.2 million, or 6%. The decrease in cost of funds between quarters of 0.42% outpaced the decrease in yield on interest-earning assets of 0.37%. The decrease in yields and cost of funds reflects the current interest rate environment as loans and deposits are originated and reprice to historically low levels. Average loan growth between periods was driven by PPP loan originations, which averaged $178.1 million for the second quarter of 2020.

Provision for Credit Losses. The provision for credit losses increased $7.6 million between quarters. The increase in provision expense between periods was driven by an increase in allowance for loan losses due to estimates attributed to the COVID-19 pandemic.

Non-Interest Income. Non-interest income increased $657,000, or 6%, between quarters.
Mortgage banking income increased $1.2 million, or 33%, between periods as mortgage and refinance activity momentum continued into the second quarter of 2020 and interest rates remained low.
Debit card income increased $250,000, or 12%, driven by higher customer spending as the increase in the average spend per transaction more than offset the decrease in the number of transactions.
Service charges on deposit accounts between quarters decreased $675,000, or 34%, due to lower overdraft fees and deposit account fees as customer deposit balances increased but the number of customer transactions decreased.

Non-Interest Expense. Non-interest expense decreased $1.1 million, or 4%, between quarters. The decrease was driven by (i) lower employee-related costs as employees transitioned to remote working in the second quarter of 2020; (ii) lower marketing costs; and (iii) a decrease in incentive accruals. This was partially offset by the annual equity award grant to Company directors in the second quarter of 2020.

CONFERENCE CALL

Camden National will host a conference call and webcast at 3:00 p.m., Eastern Time, on Tuesday, July 28, 2020 to discuss its second quarter 2020 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/cac200728.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) is the largest publicly traded bank holding company in Northern New England with $5.0 billion in assets and 650 employees. Camden National Bank, its subsidiary, is a full-service community bank founded in 1875 in Camden, Maine. Dedicated to customers at every stage of their financial journey, the bank offers the latest in digital banking, complemented by personalized service with 58 banking centers, 24/7 live phone support, 68 ATMs, and additional lending offices in New Hampshire and Massachusetts.



For the past two years, Camden National Bank was named "Customer Experience Leader in U.S. Retail Banking" by Greenwich Associates, and in 2019, it was the only New England based organization included in Sandler O'Neill's "Bank and Thrift Sm-All Star" list of high-performing financial institutions. The Finance Authority of Maine has awarded Camden National Bank as "Lender at Work for Maine" for ten years. Comprehensive wealth management, investment and financial planning services are delivered by Camden National Wealth Management. To learn more, visit 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, 2019, as updated by other filings with the Securities and Exchange Commission ("SEC"). Further, statements about the potential effects of the COVID-19 pandemic on our business, results of operations and financial condition may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, action taken by government authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, service providers and on economies and markets more generally. 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 pre-tax, pre-provision earnings; return on average tangible equity; the efficiency and tangible common equity ratios; tangible book value per share; core deposits and average core deposits. 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 measure 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
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
 
At or For The
Six Months Ended
(In thousands, except number of shares and per share data)
 
June 30,
2020
 
March 31,
2020
 
June 30,
2019
 
June 30,
2020
 
June 30,
2019
Financial Condition Data
 
 
 
 
 
 
 
 
 
 
Investments
 
$
1,064,089

 
$
976,487

 
$
933,100

 
$
1,064,089

 
$
933,100

Loans and loans held for sale
 
3,362,631

 
3,185,492

 
3,113,437

 
3,362,631

 
3,113,437

Allowance for loan losses
 
35,539

 
26,521

 
26,163

 
35,539

 
26,163

Total assets
 
4,959,016

 
4,594,539

 
4,447,038

 
4,959,016

 
4,447,038

Deposits
 
3,996,358

 
3,563,705

 
3,591,610

 
3,996,358

 
3,591,610

Borrowings
 
330,229

 
420,877

 
310,638

 
330,229

 
310,638

Shareholders' equity
 
506,467

 
492,680

 
467,759

 
506,467

 
467,759

Operating Data
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
34,539

 
$
31,826

 
$
31,573

 
$
66,365

 
$
63,468

Provision for credit losses
 
9,398

 
1,775

 
1,173

 
11,173

 
1,917

Non-interest income
 
12,060

 
11,403

 
10,037

 
23,463

 
19,426

Non-interest expense
 
23,509

 
24,561

 
23,958

 
48,070

 
46,741

Income before income tax expense
 
13,692

 
16,893

 
16,479

 
30,585

 
34,236

Income tax expense
 
2,752

 
3,400

 
3,275

 
6,152

 
6,759

Net income
 
$
10,940

 
$
13,493

 
$
13,204

 
$
24,433

 
$
27,477

Key Ratios
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
0.90
%
 
1.21
%
 
1.21
%
 
1.05
%
 
1.27
%
Return on average equity
 
8.81
%
 
11.30
%
 
11.63
%
 
10.03
%
 
12.36
%
GAAP efficiency ratio
 
50.45
%
 
56.82
%
 
57.58
%
 
53.51
%
 
56.39
%
Net interest margin (fully-taxable equivalent)
 
3.11
%
 
3.08
%
 
3.11
%
 
3.10
%
 
3.14
%
Non-performing assets to total assets
 
0.23
%
 
0.23
%
 
0.34
%
 
0.23
%
 
0.34
%
Common equity ratio
 
10.21
%
 
10.72
%
 
10.52
%
 
10.21
%
 
10.52
%
Tier 1 leverage capital ratio
 
8.95
%
 
9.53
%
 
9.51
%
 
8.95
%
 
9.51
%
Common equity tier 1 risk-based capital ratio
 
11.69
%
 
11.27
%
 
11.47
%
 
11.69
%
 
11.47
%
Tier 1 risk-based capital ratio
 
13.01
%
 
12.56
%
 
12.82
%
 
13.01
%
 
12.82
%
Total risk-based capital ratio
 
14.56
%
 
13.81
%
 
14.12
%
 
14.56
%
 
14.12
%
Per Share Data
 
 
 
 
 
 
 
 
 
 
Basic earnings per share
 
$
0.73

 
$
0.89

 
$
0.85

 
$
1.62

 
$
1.76

Diluted earnings per share
 
$
0.73

 
$
0.89

 
$
0.85

 
$
1.62

 
$
1.76

Cash dividends declared per share
 
$
0.33

 
$
0.33

 
$
0.30

 
$
0.66

 
$
0.60

Book value per share
 
$
33.85

 
$
32.95

 
$
30.26

 
$
33.85

 
$
30.26

Non-GAAP Measures(1)
 
 
 
 
 
 
 
 
 
 
Return on average tangible equity
 
11.09
%
 
14.35
%
 
15.00
%
 
12.68
%
 
16.01
%
Efficiency ratio
 
50.13
%
 
56.45
%
 
57.27
%
 
53.17
%
 
56.07
%
Pre-tax, pre-provision earnings
 
$
23,090

 
$
18,668

 
$
17,652

 
$
41,758

 
$
36,153

Tangible common equity ratio
 
8.41
%
 
8.78
%
 
8.49
%
 
8.41
%
 
8.49
%
Tangible book value per share
 
$
27.31

 
$
26.39

 
$
23.88

 
$
27.31

 
$
23.88

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




Consolidated Statements of Condition Data
(unaudited)
 
 
 
(In thousands)
 
June 30,
2020
 
December 31,
2019
 
June 30,
2019
ASSETS
 
 

 
 

 
 

Cash and due from banks
 
$
56,292

 
$
39,586

 
$
48,153

Interest-bearing deposits in other banks (including restricted cash)
 
99,536

 
36,050

 
38,083

Total cash, cash equivalents and restricted cash
 
155,828

 
75,636

 
86,236

Investments:
 
 

 
 

 
 

Available-for-sale securities, at fair value (book value of $1,010,325, $913,978 and $915,099, respectively)
 
1,047,663

 
918,118

 
920,083

Held-to-maturity securities, at amortized cost (fair value of $1,388, $1,359 and $1,335, respectively)
 
1,299

 
1,302

 
1,304

Other investments
 
15,127

 
13,649

 
11,713

Total investments
 
1,064,089

 
933,069

 
933,100

Loans held for sale, at fair value (book value of $35,909, $11,915 and $13,088, respectively)
 
36,590

 
11,854

 
13,113

Loans:
 
 
 
 
 
 
Commercial real estate
 
1,310,985

 
1,243,397

 
1,260,639

Commercial(1)
 
428,186

 
442,701

 
456,692

SBA PPP
 
218,803

 

 

Residential real estate
 
1,054,333

 
1,070,374

 
1,035,792

Consumer and home equity
 
313,734

 
338,551

 
347,201

Total loans
 
3,326,041

 
3,095,023

 
3,100,324

      Less: allowance for loan losses
 
(35,539
)
 
(25,171
)
 
(26,163
)
       Net loans
 
3,290,502

 
3,069,852

 
3,074,161

Goodwill
 
94,697

 
94,697

 
94,697

Core deposit intangible assets
 
3,184

 
3,525

 
3,877

Bank-owned life insurance
 
93,647

 
92,344

 
91,116

Premises and equipment, net
 
41,109

 
41,836

 
41,402

Deferred tax assets
 
10,705

 
16,823

 
16,836

Other assets
 
168,665

 
89,885

 
92,500

Total assets
 
$
4,959,016

 
$
4,429,521

 
$
4,447,038

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 

 
 

 
 
Liabilities
 
 

 
 

 
 
Deposits:
 
 

 
 

 
 
Non-interest checking
 
$
712,146

 
$
552,590

 
$
505,355

Interest checking
 
1,349,456

 
1,153,203

 
1,111,424

Savings and money market
 
1,278,603

 
1,119,193

 
1,074,094

Certificates of deposit
 
431,376

 
521,752

 
547,786

Brokered deposits
 
224,777

 
191,005

 
352,951

Total deposits
 
3,996,358

 
3,537,743

 
3,591,610

Short-term borrowings
 
245,998

 
268,809

 
241,647

Long-term borrowings
 
25,000

 
10,000

 
10,000

Subordinated debentures
 
59,231

 
59,080

 
58,991

Accrued interest and other liabilities
 
125,962

 
80,474

 
77,031

Total liabilities
 
4,452,549

 
3,956,106

 
3,979,279

Shareholders’ equity
 
506,467

 
473,415

 
467,759

Total liabilities and shareholders’ equity
 
$
4,959,016

 
$
4,429,521

 
$
4,447,038

(1) Includes the HPFC loan portfolio.





Consolidated Statements of Income Data
(unaudited)
 
 
For The
Three Months Ended
(In thousands, except per share data)
 
June 30,
2020
 
March 31,
2020
 
June 30,
2019
Interest Income
 
 

 
 

 
 

Interest and fees on loans
 
$
33,120

 
$
34,045

 
$
36,092

Taxable interest on investments
 
4,883

 
4,878

 
4,941

Nontaxable interest on investments
 
828

 
787

 
624

Dividend income
 
167

 
168

 
174

Other interest income
 
180

 
335

 
606

Total interest income
 
39,178

 
40,213

 
42,437

Interest Expense
 
 

 
 

 
 

Interest on deposits
 
3,392

 
6,662

 
9,156

Interest on borrowings
 
359

 
838

 
885

Interest on subordinated debentures
 
888

 
887

 
823

Total interest expense
 
4,639

 
8,387

 
10,864

Net interest income
 
34,539

 
31,826

 
31,573

Provision for credit losses
 
9,398

 
1,775

 
1,173

Net interest income after provision for credit losses
 
25,141

 
30,051

 
30,400

Non-Interest Income
 
 

 
 

 
 

Mortgage banking income, net
 
4,691

 
3,534

 
1,742

Debit card income
 
2,391

 
2,141

 
2,281

Service charges on deposit accounts
 
1,337

 
2,012

 
2,209

Income from fiduciary services
 
1,603

 
1,502

 
1,545

Bank-owned life insurance
 
614

 
689

 
603

Brokerage and insurance commissions
 
622

 
657

 
732

Customer loan swap fees
 
57

 
114

 
285

Net gain on sale of securities
 

 

 
27

Other income
 
745

 
754

 
613

Total non-interest income
 
12,060

 
11,403

 
10,037

Non-Interest Expense
 
 

 
 

 
 

Salaries and employee benefits
 
13,627

 
14,327

 
13,461

Furniture, equipment and data processing
 
2,710

 
2,790

 
2,723

Net occupancy costs
 
1,997

 
2,003

 
1,639

Consulting and professional fees
 
1,181

 
783

 
974

Debit card expense
 
878

 
934

 
883

Regulatory assessments
 
299

 
162

 
437

Amortization of core deposit intangible assets
 
171

 
170

 
176

Other real estate owned and collection costs, net
 
98

 
101

 
409

Other expenses
 
2,548

 
3,291

 
3,256

Total non-interest expense
 
23,509

 
24,561

 
23,958

Income before income tax expense
 
13,692

 
16,893

 
16,479

Income Tax Expense
 
2,752

 
3,400

 
3,275

Net Income
 
$
10,940

 
$
13,493

 
$
13,204

Per Share Data
 
 

 
 

 
 

Basic earnings per share
 
$
0.73

 
$
0.89

 
$
0.85

Diluted earnings per share
 
$
0.73

 
$
0.89

 
$
0.85







Consolidated Statements of Income Data
(unaudited)
 
 
For The
Six Months Ended
June 30,
(In thousands, except per share data)
 
2020
 
2019
Interest Income
 
 

 
 

Interest and fees on loans
 
$
67,165

 
$
71,813

Taxable interest on investments
 
9,761

 
9,935

Nontaxable interest on investments
 
1,615

 
1,268

Dividend income
 
335

 
404

Other interest income
 
515

 
1,026

Total interest income
 
79,391

 
84,446

Interest Expense
 
 
 
 
Interest on deposits
 
10,054

 
17,579

Interest on borrowings
 
1,197

 
1,859

Interest on subordinated debentures
 
1,775

 
1,540

Total interest expense
 
13,026

 
20,978

Net interest income
 
66,365

 
63,468

Provision for credit losses
 
11,173

 
1,917

Net interest income after provision for credit losses
 
55,192

 
61,551

Non-Interest Income
 
 
 
 
Mortgage banking income, net
 
8,225

 
2,994

Debit card income
 
4,532

 
4,291

Service charges on deposit accounts
 
3,349

 
4,232

Income from fiduciary services
 
3,105

 
2,937

Bank-owned life insurance
 
1,303

 
1,197

Brokerage and insurance commissions
 
1,279

 
1,317

Customer loan swap fees
 
171

 
810

Net gain on sale of securities
 

 
27

Other income
 
1,499

 
1,621

Total non-interest income
 
23,463

 
19,426

Non-Interest Expense
 
 
 
 
Salaries and employee benefits
 
27,954

 
26,439

Furniture, equipment and data processing
 
5,500

 
5,403

Net occupancy costs
 
4,000

 
3,553

Consulting and professional fees
 
1,964

 
1,787

Debit card expense
 
1,812

 
1,706

Regulatory assessments
 
461

 
909

Amortization of core deposit intangible assets
 
341

 
352

Other real estate owned and collection costs, net
 
199

 
102

Other expenses
 
5,839

 
6,490

Total non-interest expense
 
48,070

 
46,741

Income before income tax expense
 
30,585

 
34,236

Income Tax Expense
 
6,152

 
6,759

Net Income
 
$
24,433

 
$
27,477

Per Share Data
 
 

 
 

Basic earnings per share
 
$
1.62

 
$
1.76

Diluted earnings per share
 
$
1.62

 
$
1.76





Quarterly Average Balance and Yield/Rate Analysis
(unaudited)
 
 
Average Balance
 
Yield/Rate
 
 
For The Three Months Ended
 
For The Three Months Ended
(Dollars in thousands)
 
June 30,
2020
 
March 31,
2020
 
June 30,
2019
 
June 30,
2020
 
March 31,
2020
 
June 30,
2019
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits in other banks and other interest-earning assets
 
$
168,221

 
$
66,180

 
$
59,901

 
0.06
%
 
1.24
%
 
2.34
%
Investments - taxable
 
836,885

 
809,041

 
839,714

 
2.49
%
 
2.56
%
 
2.56
%
Investments - nontaxable(1)
 
124,101

 
117,537

 
90,087

 
3.38
%
 
3.39
%
 
3.51
%
Loans(2):
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
1,302,393

 
1,273,538

 
1,255,172

 
3.83
%
 
4.24
%
 
4.68
%
Residential real estate
 
1,084,931

 
1,078,836

 
1,032,215

 
4.06
%
 
4.19
%
 
4.34
%
Commercial(1)
 
404,545

 
416,527

 
389,166

 
3.78
%
 
4.21
%
 
4.72
%
Consumer and home equity
 
321,019

 
334,771

 
347,141

 
4.29
%
 
5.03
%
 
5.47
%
SBA PPP
 
178,119

 

 

 
3.79
%
 
%
 
%
HPFC
 
17,659

 
20,336

 
29,472

 
9.28
%
 
7.83
%
 
7.83
%
Municipal(1)
 
19,567

 
16,990

 
20,117

 
3.62
%
 
3.67
%
 
3.56
%
     Total loans 
 
3,328,233

 
3,140,998

 
3,073,283

 
3.97
%
 
4.32
%
 
4.68
%
Total interest-earning assets
 
4,457,440

 
4,133,756

 
4,062,985

 
3.53
%
 
3.90
%
 
4.18
%
Other assets
 
414,225

 
354,436

 
315,604

 
 
 
 
 
 
Total assets
 
$
4,871,665

 
$
4,488,192

 
$
4,378,589

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities & Shareholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest checking
 
$
664,605

 
$
529,501

 
$
485,724

 
%
 
%
 
%
Interest checking
 
1,298,468

 
1,146,783

 
1,110,567

 
0.28
%
 
0.70
%
 
1.01
%
Savings
 
518,803

 
476,849

 
476,104

 
0.06
%
 
0.07
%
 
0.09
%
Money market
 
717,056

 
650,383

 
581,638

 
0.37
%
 
0.98
%
 
1.28
%
Certificates of deposit
 
477,068

 
552,079

 
516,972

 
1.34
%
 
1.61
%
 
1.60
%
Total deposits
 
3,676,000

 
3,355,595

 
3,171,005

 
0.35
%
 
0.70
%
 
0.86
%
Borrowings:
 
 
 
 
 
 
 
 
 
 
 
 
Brokered deposits
 
234,823

 
208,084

 
370,448

 
0.28
%
 
1.54
%
 
2.53
%
Customer repurchase agreements
 
209,302

 
236,351

 
246,935

 
0.56
%
 
1.08
%
 
1.30
%
Subordinated debentures
 
59,194

 
59,119

 
58,985

 
6.03
%
 
6.04
%
 
5.60
%
Other borrowings
 
76,983

 
59,257

 
15,940

 
0.35
%
 
1.39
%
 
2.17
%
Total borrowings
 
580,302

 
562,811

 
692,308

 
0.98
%
 
1.80
%
 
2.34
%
Total funding liabilities
 
4,256,302

 
3,918,406

 
3,863,313

 
0.44
%
 
0.86
%
 
1.13
%
Other liabilities
 
115,914

 
89,612

 
59,747

 
 
 
 
 
 
Shareholders' equity
 
499,449

 
480,174

 
455,529

 
 
 
 
 
 
Total liabilities & shareholders' equity
 
$
4,871,665

 
$
4,488,192

 
$
4,378,589

 
 
 
 
 
 
Net interest rate spread (fully-taxable equivalent)
 
3.09
%
 
3.04
%
 
3.05
%
Net interest margin (fully-taxable equivalent)
 
3.11
%
 
3.08
%
 
3.11
%
Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection of previously charged-off acquired loans(3)
 
3.07
%
 
3.06
%
 
3.07
%
(1) 
Reported on a tax-equivalent basis calculated using the federal corporate income 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 June 30, 2020, March 31, 2020 and June 30, 2019 totaling $403,000, $283,000 and $439,000, respectively.







Year-to-Date Average Balance and Yield/Rate Analysis
(unaudited)
 
 
Average Balance
 
Yield/Rate
 
 
For The Six Months Ended
 
For The Six Months Ended
(Dollars in thousands)
 
June 30,
2020
 
June 30,
2019
 
June 30,
2020
 
June 30,
2019
Assets
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
Interest-bearing deposits in other banks and other interest-earning assets
 
$
117,201

 
$
48,301

 
0.39
%
 
2.27
%
Investments - taxable
 
822,963

 
845,583

 
2.52
%
 
2.56
%
Investments - nontaxable(1)
 
120,819

 
92,386

 
3.38
%
 
3.48
%
Loans(2):
 
 
 
 
 
 
 
 
Commercial real estate
 
1,287,965

 
1,268,264

 
4.03
%
 
4.71
%
Residential real estate
 
1,081,884

 
1,020,316

 
4.12
%
 
4.32
%
Commercial(1)
 
410,563

 
379,552

 
4.00
%
 
4.71
%
Consumer and home equity
 
327,895

 
347,097

 
4.66
%
 
5.46
%
SBA PPP
 
89,033

 

 
3.79
%
 
%
HPFC
 
18,997

 
30,814

 
8.50
%
 
7.87
%
Municipal(1)
 
18,279

 
17,738

 
3.64
%
 
3.58
%
     Total loans 
 
3,234,616

 
3,063,781

 
4.14
%
 
4.69
%
Total interest-earning assets
 
4,295,599

 
4,050,051

 
3.71
%
 
4.19
%
Other assets
 
384,330

 
308,579

 
 
 
 
Total assets
 
$
4,679,929

 
$
4,358,630

 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities & Shareholders' Equity
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
Non-interest checking
 
$
597,053

 
$
488,040

 
%
 
%
Interest checking
 
1,222,626

 
1,098,003

 
0.48
%
 
0.99
%
Savings
 
497,826

 
480,849

 
0.07
%
 
0.08
%
Money market
 
683,720

 
582,158

 
0.66
%
 
1.25
%
Certificates of deposit
 
514,573

 
480,244

 
1.48
%
 
1.48
%
Total deposits
 
3,515,798

 
3,129,294

 
0.52
%
 
0.82
%
Borrowings:
 
 
 
 
 
 
 
 
Brokered deposits
 
221,454

 
388,045

 
0.87
%
 
2.51
%
Customer repurchase agreements
 
222,827

 
242,740

 
0.83
%
 
1.27
%
Subordinated debentures
 
59,157

 
58,996

 
6.03
%
 
5.26
%
Other borrowings
 
68,120

 
30,237

 
0.80
%
 
2.21
%
Total borrowings
 
571,558

 
720,018

 
1.38
%
 
2.31
%
Total funding liabilities
 
4,087,356

 
3,849,312

 
0.64
%
 
1.10
%
Other liabilities
 
102,762

 
61,000

 
 
 
 
Shareholders' equity
 
489,811

 
448,318

 
 
 
 
Total liabilities & shareholders' equity
 
$
4,679,929

 
$
4,358,630

 
 
 
 
Net interest rate spread (fully-taxable equivalent)
 
3.07
%
 
3.09
%
Net interest margin (fully-taxable equivalent)
 
3.10
%
 
3.14
%
Net interest margin (fully-taxable equivalent), excluding fair value mark accretion and collection of previously charged-off acquired loans(3)
 
3.06
%
 
3.10
%
(1) 
Reported on a tax-equivalent basis calculated using the federal corporate income 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 six months ended June 30, 2020 and June 30, 2019 totaling $687,000 and $829,000, respectively.





Asset Quality Data
(unaudited)
(In thousands)
 
At or For The
Six Months Ended
June 30, 2020
 
At or For The
Three Months Ended
March 31, 2020
 
At or For The
Year Ended
December 31, 2019
 
At or For The
Nine Months Ended
September 30, 2019
 
At or For The
Six Months Ended
June 30, 2019
Non-accrual loans:
 
 
 
 
 
 
 
 
 
 
Residential real estate
 
$
4,664

 
$
3,499

 
$
4,096

 
$
5,152

 
$
5,566

Commercial real estate
 
432

 
646

 
1,122

 
1,156

 
1,590

Commercial 
 
699

 
748

 
420

 
751

 
785

Consumer and home equity
 
2,371

 
2,102

 
2,154

 
2,616

 
3,039

HPFC
 
392

 
322

 
364

 
450

 
465

Total non-accrual loans
 
8,558

 
7,317

 
8,156

 
10,125

 
11,445

Loans 90 days past due and accruing
 

 

 

 

 
14

   Accruing troubled-debt restructured loans not included above
 
2,874

 
3,008

 
2,993

 
3,259

 
3,511

Total non-performing loans
 
11,432

 
10,325

 
11,149

 
13,384

 
14,970

Other real estate owned
 
118

 
94

 
94

 
94

 
130

Total non-performing assets
 
$
11,550

 
$
10,419

 
$
11,243

 
$
13,478

 
$
15,100

Loans 30-89 days past due:
 
 
 
 
 
 
 
 
 
 
Residential real estate
 
$
4,016

 
$
1,781

 
$
2,227

 
$
1,447

 
$
2,536

Commercial real estate
 
1,625

 
2,641

 
1,582

 
2,242

 
3,378

Commercial 
 
95

 
1,560

 
548

 
1,135

 
1,400

Consumer and home equity
 
388

 
1,379

 
750

 
822

 
907

HPFC
 
128

 
165

 
243

 
193

 
171

Total loans 30-89 days past due
 
$
6,252

 
$
7,526

 
$
5,350

 
$
5,839

 
$
8,392

Allowance for loan losses at the beginning of the period
 
$
25,171

 
$
25,171

 
$
24,712

 
$
24,712

 
$
24,712

Provision for loan losses
 
11,172

 
1,772

 
2,862

 
2,658

 
1,925

Charge-offs:
 
 
 
 
 
 
 
 
 
 
Residential real estate
 
96

 
96

 
462

 
436

 
25

Commercial real estate
 
71

 
50

 
300

 
157

 
65

Commercial 
 
673

 
253

 
1,167

 
636

 
453

Consumer and home equity
 
134

 
91

 
713

 
670

 
64

HPFC
 

 

 
71

 
11

 

Total charge-offs 
 
974

 
490

 
2,713

 
1,910

 
607

Total recoveries 
 
(170
)
 
(68
)
 
(310
)
 
(228
)
 
(133
)
Net charge-offs
 
804

 
422

 
2,403

 
1,682

 
474

Allowance for loan losses at the end of the period
 
$
35,539

 
$
26,521

 
$
25,171

 
$
25,688

 
$
26,163

Components of allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses
 
$
35,539

 
$
26,521

 
$
25,171

 
$
25,688

 
$
26,163

Liability for unfunded credit commitments
 
22

 
24

 
21

 
11

 
14

Allowance for credit losses 
 
$
35,561

 
$
26,545

 
$
25,192

 
$
25,699

 
$
26,177

Ratios:
 
 
 
 
 
 
 
 
 
 
Non-performing loans to total loans
 
0.34
%
 
0.33
%
 
0.36
%
 
0.43
%
 
0.48
%
Non-performing assets to total assets
 
0.23
%
 
0.23
%
 
0.25
%
 
0.30
%
 
0.34
%
Allowance for loan losses to total loans
 
1.07
%
 
0.84
%
 
0.81
%
 
0.83
%
 
0.84
%
Net charge-offs to average loans (annualized):
 
 
 
 
 
 
 
 
 
 
Quarter-to-date
 
0.05
%
 
0.05
%
 
0.09
%
 
0.16
%
 
0.03
%
Year-to-date
 
0.05
%
 
0.05
%
 
0.08
%
 
0.07
%
 
0.03
%
Allowance for loan losses to non-performing loans
 
310.87
%
 
256.86
%
 
225.77
%
 
191.93
%
 
174.77
%
Loans 30-89 days past due to total loans
 
0.19
%
 
0.24
%
 
0.17
%
 
0.19
%
 
0.27
%






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

Return on Average Tangible Equity:
 
 
 
 
 
 
For the
Three Months Ended
 
For the
Six Months Ended
(Dollars in thousands)
 
June 30,
2020
 
March 31,
2020
 
June 30,
2019
 
June 30,
 2020
 
June 30,
 2019
Net income, as presented
 
$
10,940

 
$
13,493

 
$
13,204

 
$
24,433

 
$
27,477

Add: amortization of intangible assets, net of tax(1)
 
135

 
134

 
139

 
269

 
278

Net income, adjusted for amortization of intangible assets
 
$
11,075

 
$
13,627

 
$
13,343

 
$
24,702

 
$
27,755

Average equity, as presented
 
$
499,449

 
$
480,174

 
$
455,529

 
$
489,811

 
$
448,318

Less: average goodwill and other intangible assets
 
(97,965
)
 
(98,143
)
 
(98,660
)
 
(98,054
)
 
(98,749
)
Average tangible equity
 
$
401,484

 
$
382,031

 
$
356,869

 
$
391,757

 
$
349,569

Return on average equity
 
8.81
%
 
11.30
%
 
11.63
%
 
10.03
%
 
12.36
%
Return on average tangible equity
 
11.09
%
 
14.35
%
 
15.00
%
 
12.68
%
 
16.01
%
(1) Assumed a 21% tax rate.


Efficiency Ratio:
 
 
 
 
 
 
 
 
 
 
 
 
For the
Three Months Ended
 
For the
Six Months Ended
(Dollars in thousands)
 
June 30,
2020
 
March 31,
2020
 
June 30,
2019
 
June 30,
2020
 
June 30,
2019
Non-interest expense, as presented
 
$
23,509

 
$
24,561

 
$
23,958

 
$
48,070

 
$
46,741

Net interest income, as presented
 
$
34,539

 
$
31,826

 
$
31,573

 
$
66,365

 
$
63,468

Add: effect of tax-exempt income(1)
 
295

 
280

 
248

 
574

 
491

Non-interest income, as presented
 
12,060

 
11,403

 
10,037

 
23,463

 
19,426

Less: net gain on sale of securities
 

 

 
(27
)
 

 
(27
)
Adjusted net interest income plus non-interest income
 
$
46,894

 
$
43,509

 
$
41,831

 
$
90,402

 
$
83,358

GAAP efficiency ratio
 
50.45
%
 
56.82
%
 
57.58
%
 
53.51
%
 
56.39
%
Non-GAAP efficiency ratio