Camden National Corporation Q2 FY2025 earnings call

• Strong performance in the first full quarter as a unified organization post-Northway Financial acquisition, with pretax pre-provision income up 13% from prior quarter.
• Reported quarterly earnings of $14.1 million, diluted EPS of $0.83, and non-GAAP adjusted earnings of $15.2 million or $0.89 per share.
• Tangible common equity ratio expanded to 6.77% and tangible book value increased 3% to $26.9 per share.
• Net interest margin expanded by two basis points and non-GAAP efficiency ratio improved to 55.5%.
• Average deposits down 1% due to seasonal trends but recent growth; average loans stable with consumer and commercial loan balances growing.
• Fiduciary and brokerage fee income grew 16% year over year; wealth management team realizing efficiencies from new platform.
• Launched roundup feature and Zogo digital financial literacy program with strong response.

In the second quarter, Camden National Corporation saw pretax pre-provision income excluding one-time merger-related expenses rise 13% from the prior quarter. Quarterly earnings were $14.1 million, resulting in diluted earnings per share of $0.83. On a non-GAAP basis, adjusted earnings were $15.2 million or $0.89 per share. The tangible common equity ratio expanded to 6.77% at June 30, and tangible book value increased 3% during the second quarter to $26.9 per share. Net interest margin expanded by two basis points, and the non-GAAP efficiency ratio improved to 55.5%. Average deposits were down 1% on a linked quarter basis due to seasonal trends but saw recent growth. Average loans were stable during the quarter, with ending loan balances growing in consumer and commercial businesses. Fiduciary and brokerage fee income organically grew 16% year over year. The mobile app's roundup feature and Zogo digital financial literacy program had strong responses, with over 140,000 roundup transactions and over 13,000 learning activities within 60 days.

• Noninterest income for the third quarter is estimated to range from $12 million to $13 million.
• Noninterest expenses excluding M&A costs and TDI amortization for the third quarter are anticipated to be closer to $34 million as cost synergy savings from Northway acquisition are realized.
• Anticipate net interest margin expansion in the third quarter due to seasonal deposit flows and continued expansion of earning asset yield.
• Credit related to the borrower that filed for bankruptcy is expected to be fully resolved later this year.

• In the second quarter, one commercial borrower filed for bankruptcy, resulting in additional provisioning on a $12 million loan; actively engaged with other lenders involved and anticipate resolution later this year.

Q: Good afternoon, guys. Maybe just starting here on the credit front. Hey, Mike. Just starting on the credit front here. Just curious. What type of C&I loan was it? And did the placement on nonaccrual here this quarter also impact net interest income?

A: Yeah. So that was one of our just C&I loans or what the syndication fee. Yeah. As mentioned in the comments, we're working with a small group of other vendors on that. And, certainly, you know, our credit team is working very closely and diligently trying to work through the resolution there and, as we mentioned, do anticipate that full resolution here a little bit later this year. It did impact net interest income for the quarter. Overall, it was about a basis point of net interest margin, core margin for the quarter.

Q: Good afternoon. Just on the C&I credit, a couple from me here. You know, you noted you're actively involved with other lenders on the note. Can you give us some sense for the ultimate size of this loan and what is your exposure, you know, overall with syndicated loans?

A: So our total exposure, Matt, is $12 million at quarter end. You know, I can certainly say there are five or six other banks in this group and total exposure for the is around the $200 million mark.

Q: Hey, everybody. This is Matt Rank filling in for Damon DelMonte. Hope everybody's doing okay today. Just as a follow-up on the fee income side of things, just kind of hoping to see how early wealth management conversations are going in New Hampshire and what do you think that business and franchise could maybe grow to over the next year?

A: Yeah. I think it's, you know, we've added in the main footprint. We've added a couple of wealth folks. So we see, you know, that potential with some investing into our core market where we've got strong relationships and certainly continuing to build that out. And seeing some very nice growth both within our brokerage business but also with our wealth franchise.