CAMDEN NATIONAL CORP Q3 FY2024 earnings call

• Announced the acquisition of Northway Financial on September 10th, with the merger expected to complete in the first quarter of 2025.
• Third quarter net income increased 9% from the second quarter, and non-GAAP net income was up 14%.
• Net interest margin expanded 10 basis points due to an increasing interest earning asset yield and flat funding costs.
• Deposits grew 1% compared to the previous quarter, with high yield savings deposits up 8% for the quarter.
• There was a strong commercial pipeline, with two strategic commercial lenders added in New Hampshire and one in the Lewiston-Auburn market.
• The account opening process transformation is on track for a year-end launch, enabling complete accounts opening and funding within minutes from mobile and online devices.
• Asset quality remained robust, with past due loans and non-performing loans decreasing from prior quarters.

In the third quarter of 2024, Camden National reported net income of $13.1 million or $0.90 diluted earnings per share, an increase of 9% and 11% respectively compared to the second quarter. The net interest margin expanded by 10 basis points to 2.46%. Deposits saw a 1% increase from the previous quarter. Loan balances were $4.1 billion, a 1% decrease, while investment balances rose by 2%. Asset quality remained strong with past due loans at 3 basis points of total loans and non-performing loans at 17 basis points. Non-interest income for the quarter increased 7% over the previous quarter, and non-interest expenses excluding M&A costs rose 3%.

• The merger with Northway Financial is expected to be completed in the first quarter of 2025.
• The margin outlook for the next quarter is projected to be in the range of 2 to 5 basis points around 250 basis points.
• Loan growth is expected to be 1% to 3% excluding the impact of the Northway acquisition in 2025, dependent on the interest rate environment.

• Macroeconomic conditions and interest rate fluctuations could impact financial performance.
• Regulatory approvals and integration challenges related to the acquisition of Northway Financial pose potential risks.

Q: Maybe just starting here on the margin here. I'm curious with regard to the rate cuts we just had in September and probably a couple more coming. What are you guys seeing for deposit pricing here and kind of how do we think about that translate into the margin?

A: I think, broadly, we see the back end of the year in line with the October net interest margin. We continue to be very, very disciplined in our pricing and demonstrated that over the last quarter when we saw the two rate cuts. We have two rate cuts in the ballpark for the back end of the year, which is pretty in line with expectations. And we'll continue to manage that very carefully as we look out towards the next couple of months.

Q: And in terms of hiring here, Simon, you mentioned, I think, two hires during the quarter, if I heard you correctly. Just curious, what kind of book of business are they bringing? And kind of how you're thinking about any additional hires?

A: Yes, I think as we've discussed on previous calls, we continue to see really a nice opportunity on the south and southern end of our market and continue to invest in that -- those geographies. We've got, as I say, some nice momentum there. We have some nice momentum out in the New Hampshire market as well and just really continue to see opportunities to push into those markets. We see nice opportunities certainly in the multifamily housing area. We see strong C&I demand, particularly in the equipment space right now. But really it just continues to be, Steve, through that lens of quality. We definitely aren't chasing deals. We're looking for the right deal, right relationship and really pushing into those deep long term strategic relationships that are long term value for the client and long term value to Camden National.