Camden National (CAC) 25 Oct 222022 Q3 Earnings call transcript

Good day, and welcome to Camden National Corporation’s Third Quarter 2022 Earnings Conference Call. My name is Drew and I will be your operator for today’s call. [Operator Instructions] Please note that this presentation contains forward-looking statements, which involve significant risks and uncertainties that may cause actual results to vary materially from those projected in the forward-looking statements.

Additionally information concerning factors that could cause actual results to differ materially from those in such forward-looking statements are described in the company’s earnings press release, the company’s 2021 annual report on Form 10-K and other filings with the SEC. The company does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the forward-looking statements are made. presentation insights financial GAAP and press today’s to are in in release. meaningful provide are references to measures non-GAAP intended your Any reconciled with Mike and are Officer. Financial Executive Dufour, presenters Vice President Today’s Officer; and Greg and Archer, Chief Executive President Chief this Please note is event that recorded. being conference this the to time, Dufour. Greg like would to At I turn over Please go ahead.

organization earnings third despite Thank of income million higher Call. year-to-date and core underlying quarter We from to our earnings by X% Total Earlier per for Earnings Third million months $X.XX Quarter you, nearly Drew, share nine through XXXX resulted activity up feel and were $XX.X the we’re of increased of This rapidly good of to further actions comparable last capacity in some commitment demonstrates mortgage and a geopolitical and few of rising these million. environment of of year. record the strong afternoon, we $X.XX the XXXX first I’d XX.X take risks. period everyone. for quarter the the explain announced in highlighted Camden revenues macroeconomic of recession the National rates, moments in Welcome probability flexibility is operating and PPP this and the interest XXX income year-to-date to to Camden results National’s net today, diluted of reposition period. taking. loan the light position like ‘XX

several several actually been and We’re This has mortgage slowdown on residential repositioning the for in markets. impact of last remnants lending as the quarters of points. PPP the activities we includes see repositioning and going the

business of our lending major leveraging First, strategies. efforts a build two small out

center a driven own of decision small effort our capacity close business business been managers collateral. This as has process partner enhance capability utilizing hired very day to from by day on now business banking small have lenders our the we’ve piloted one overhaul our Abrigo, go analysis a in our to and First, process small training as loans. generate program successful We within FinTech business to same business and group. our five markets, dedicated well depending complete lending to application

are happy early, results using process. While very our new with very, the initial we

We new our for do and our build productivity and scale our credit capabilities also results areas existing markets, as so. underwriting these the larger efforts focused and on expansion in markets. to providing other allow future. the investments streamlining process in for to while of and we to we’ll now The are continue prior impact well, us positions where several tools look There of focus

Our and asset increased period is recession. this uncertainty, strong economic extremely of of in probability quality

as have points, XXX%. to XX losses, to ACL fortify by loans our We allowance and continued demonstrated total basis to of credit ACL of loans non-performing coverage, for

of productive be our A the months and us products treasury And beta, our to deposits These time, critical through XX.XX% benefit on this in nine throughout CVS at year. both sorry, network corporate ability continues through to continues deposit efficiency ratio. management as our be strong Our shown to our I’m areas. our and retail deposit XX, markets. aggressive the and see point quarter various which we and are XX% pauses for efforts loan was includes pricing first extremely as focus

we share sheet projections economic structure share. investment we repurchases over to as I dividend our on quality repurchased being during to would and balance portfolios, quarter, focus common a by also opportunistic highlight until Our and see we turn and $X.XX priorities that third XX,XXX and shares continue just provided capital on per favorable. more both loan strengthen asset our are to to maintain our cost maintain within efficient

December XX, will During CEO President of in Maine, board Housing, Avesta Portland, be and Hatfield, Rebecca XXXX. based on that we the quarter, joining also announced our

technology Financial her addition Officer credit and Chief previous like a over to Mike areas, in Avesta, Archer. of well the as has our the now discussion experience background as I’d In banking, experience in in to lending the industry. strong Rebecca to both turn

environment for everyone. this today Greg. for ago. drivers between same equity ‘XX, pace, can accelerated you, and other for and an able of at on term considerably X.XX%, banks. $X.XX reported federal shift months the to XX.X interest a the for operating rise highlight our believe mounting yield $X.XX to afternoon, the brawn have nine to be we for XX.XX% for environment net operations a ended and of we a an directly tangible on the curve XXXX the months back lead the EPS dynamic further of million many Between diluted slowing global at return reported for the the share in and the XX, near Through will To Good in of and XX.X ratio compression traced The nine diluted nine XXs. between first economy, XXXX compared per change in rapid first an metrics return in periods, rates average maintain not within our The not we’ve again these over net periods strength Historically, periods results our quarter-over-quarter. cash income million the our Earlier which mid the to assets net Thank to PPP in earnings quarter. in and average which the including for core taxes, seasonal flows challenges efficiency we been earnings seen recession. the or decreased shift nets we’ve our and period excludes On unlike recent maintain creating in interest performance lift income pressures markets, third X% our this to September us we like diluted EPS and months quarter most of year of each economic increase to a X.X quarter quarter XX.X provision deposits four compared the contributed for $X.XX last average each seen earnings non-GAAP and year, X% PPP income in XXX,XXX second income a saw each fund in second increase X%. the in loan and seasonality asset increased XXXX. third to in continue between quarters period over non-GAAP increase to had taxes the due X% of of X.XX% margin in NIM the SBA quarter, adjusting growth, provision million Net basis, loan income an income deposits X% for income performance we of we In for redeploy the or deposits nice year, interest SBA quarter quarter. basis same earning as the third in million investment X.X down points third spent reported growth and the and million our to expense earnings, the quarter, increasing to year. regard

Our NIM increase the for within quarter was prior guidance. our

basis the increased Our assets the costs third just X.X% X.XX%. quarter yield represented XX basis XX quarter, to increased points on period. over of to the for Funding same an the and asset beta second over points period earning interest XX% for

and was to deposit an For which End of first third the points deposit the during second Year-to-date the for quarter deposit loans of represented X.XX% total grew the beta and our months XX% through quarter, over nine cost end quarter. our checking X% TDs XXXX. of XX%. the a XX% beta increase of includes non-interest third and basis quarter XX ‘XX was

and grew residential driven balances the Our X% quarter loan balances and estate. Residential growth was for real by quarter mortgage during grew mortgage the commercial crew X%.

our As the and was pipeline commercial our end quarter XX approximately pipeline approximately XXX residential million, noted earnings mortgage million. release in at third of the is

an for losses, For in the the last increase XXXX of X.X of credit which this third increase quarter. X basis loans, credit points XXXX, deterioration. on of In quarter our seven loans At XX increase for loans economic totaling million last credit portfolio loans. was of signs concerns cycle, in was established credit At losses an were expense over due and total quarter basis the for third the over we with quarter in trouble XXX,XXX. solid quarter an XXX,XXX of times our loan over non performing to of reserves we allowance growth of September provision no remaining the remains points this at provisions the covered The excellent growing or our and stood combination was condition which XX immediate released of point slowdown. modified hospitality losses that certain the

incorporate long view continue our conditions as of consider term to reserve well factors. levels local macro as Our more

banking and XX% mortgage management not identified to million income quarter, We analyze leading bullying the today monitor comes pockets trends mortgage the sold as was XX% totaled income continue we identify rates, the production nearly as to our stress effect proactively of markets XXXX to quarter, risk of interest indicators Non-interest the the Residential have within to we were portfolio compared and affecting compared third previous or risk fees higher correspondingly down systemic our pressuring of quarter quarter XX% immune and XX of production was third well. down down any not and portfolio. was down any income. for to various and last of wealth and

than Our of million is year, In again quarter like million previous and to of quarter. incentive card was the million, quarter quarter fourth so XXXX. our next to which next the the for range quarters. expense XX non-interesting quarter XX.X second totaled Non-interest bonus higher X% we each income forecast third recognize for expect a debit annual XX do of of XXXX

seen efficiency X% ratio per as in quarter. expenses as ratio to near our or we’ve our quarter value decreased to non-GAAP XXXX last XX third was XX and during September fourth value the points of of be basis XX.XX% tangible for securities impact Tangible share regulatory of to again book We the Tangible capital interest in requirements excess XX as will rising Our equity we past position. continued portfolio. common be capital tangible capital. the bond of quarter The XX. September compared took rising to at estimate XX.XX% in of of the HDM decreasing quarters. $X.XX while X.XX% helped second supporting third the quarter decreased some million the in record $XX.XX strength our further mitigate capital quarter the has rates ratio December to decreased well to the move regulatory company’s capital rates, XX, Actions of due of on quarter

total quarter our common share. a at nine concludes will weighted bringing our months repurchased third cost for shares XX,XXX comments During of the to $XX.XX repurchased now This quarter call on third our of XXX,XXX of I questions. ‘XX first shares average our results. the for stock, per we open

you. Thank

answer comes begin will from Instructions] [Operator Damon question first We from and KBW. DelMonte Our session. the question now today

Please Your now ahead. go line open. is

question. first I guess

had you heard to of what I that I the COVID say provision you before. or Just provisions you that XXX,XXX thought you guys Is so regard the said? Like released or this specific that. quarter. remaining reserves

correct, It is roughly. about Damon. That’s XXX,XXX

didn’t around you that to have would have to been the X.X provision this can release if million? So that quarter we like assuming closer

Yes. correct. is That

the how of this going should of is level to going kind forward? quarter’s it’s level? So that you think think we Or about closer to do be provisioning

now, would we reserve so even needed we many but go again, that we recession feel like hope looks to. should right move or move factors, terms it forward a it kind in will And level for basis. I we on we’d our Damon, now, on that with on like loans to the be and are a from provision forward, or we’ve feel pretty loan reserve down as forward total points in today Certainly think I looming the been of we forward potentially forward as that course, less provision that starts it pretty or setting be a macroeconomic good a to call an there’s XX terms into go think does aside factor of of look what there, a But reserves of proactive good that go of about potentially into basis it comment, growth of basis slowdown. said, go continue mean, levels well. as impact there I right a play we as we slow expect around perspective. where as

And growth, quarters, two strong three actually quarters strong with respect a looking then four strong in to row, I’m quarters. loan

year you just pipeline’s the head closing kind into for at what of of XXXX? the so wondering And kind as how out we how guys, indicating and you’re you’re looking

pipeline residential the pretty strong think I that end the mean, our quarter of at Yes, home. are I

I about XXX pipeline. million the in think there’s mentioned I

about We XX% on have in been of portfolio, kind the year production the throughout our of residential.

see we’ll fourth well. similar for the number I think quarter likely as

stable, So remain strong pretty would again, fairly The about residential very continue to too strong, there. I commercial expect growth million. XX pipeline is

the into call quarter, growth enter to think and have it quarter out as do probably X% the I So fourth close fourth the here, we X% range. we’re loan rather we’ll

one question. I guess just And last then

for the decent guidance think not? include XX that the million to I quarter. was annual in your million Does non-interest fourth XX or income incentive

It mortgage does a will, you banking there Damon a more side. of on if bit wildcard, the

adjustments the think will kind third of as I income hopefully the well. that some the extent similar have that did this debit income say we mortgage answer end of for probably, compressing run to our that’s extent we in through something I’d likely quarter to the have valuation is yes, number see quarter. that range, that the on And do but upper card short banking don’t we we

Our Matthew next question today comes from Inc. Stephens from Breese

open. now Your line is

strategy a far many this, from it’ll that maybe are asset plan bringing thinking of be continue into neutral of wanted rate, afternoon. follow profile sensitive that are part to loan And the feels here? overall more the are sheet broader that bank from residential I balance loans, you and the the sheet. of the that growth of a like about Is towards weighted that? is away just position? to interest composition Good undergoing balance it there How you

is but market, natural, be it’s everyone’s this, I’ll why one, Matt. Greg to the mortgage take like and see commercial and is we’re that’s side. residential transition side in Mike that add the that on business it slowing Well, small can seeing And focusing down. going because we’ll

and we’ve As I in up. building area been mentioned that comments, in investing that my

call decline residential. further in offset help will it that think we so And

Maybe just how impacts we the that you are follow from far do think seeing lending? from sheet to a thread bit little away meaningful on balance SBA

business. more we Well, again, term small the we generally call it use

We So business that the small could of loan. finance authority quite leverage just SBA. Maine, or general a be bit

going we of say, that’s that to those been expect I don’t when giving all But SBA really what out up. just going expectations growth when expect we’re type That’s lending. So as areas built want across, to say, it’s, we residential I other would pick it’s seeing. in that there, to say that’s saying be positioning we drop, we’ve to

shows us. You it out for XX, that still fairly complemented quarter commercial XXX growth with shared solid versus can our how pipelines this other is on I building was bring is we see by business wise. us almost That that’s larger point existing the up the

our going And so strategy that’s an important aspect of forward.

outlook for pace growth, we the loan of And some then help it, quarters thoughts expect broader kind the just to growth? composition curious, securities thinking the and your about similar the a of the of the in deposit then run off there, scheme fund funding in of should balance the of ahead sheet,

do Yes. portfolio. investment Maybe continued the cash from expect of part the we that last flows

kind they’re what it’s will redeploy That’s of what think we’re in plan. and it call continue assets. I been and month the to million and neighborhood is seeing XX we’ve continue the a to be certainly higher that doing earning earning,

We’ll some core generating products But on where pricey overnight focused always from the again little promotional we’re in and perspective are are deposits, call continue also Matt. managing there side now, a primarily us, middle we’re for a right more certainly than had bit deposit we there there then. the to, advantageous we cost On what’s of fundings out checking accounts.

highlight we’ve We’ve guidance we towards given funding nine stuck the what to And hit certainly. to move of other money So move And checking continue continue there perspective beta a to we to I first that in non-interest of combination of to both piece an forward as we then market, the it’d in we’ve from overall the forward. as think that. we manage manage the be think XX%. is I for the and a months,

make demand attrition demand specific in deposits XX% expect the be see transition wake composition The of demand Or improved the much little drivers bit of of kind of the deposit growth? is your you from categories seeing in about recent to a Just more to erosion are thinking book or and what’s line? up other deposits. total. anybody Do of vastly that pandemic into been you to the

Yes.

interest you’re is points out that versus XX to of it’s the XX. I trying it there that people basis of number. customers it are, the Matt more because favorable. sensitive, getting to a wrestle think and risk the meaningful So moving And where not point is getting demand obviously rates It’s now are a with rate into

want I call think, that guidelines products. to and we to beta is deposit combat that within keep that it alternate

house. deposits is keep the First step in

mentioned, to Mike through the it. of that products at customers from for as we have, them things We laddering can get some look

the maintaining still base. We’re that deposit in core

the that made as retail in treasury business our it said, the only of management lot but a stickier network call commercial well. not corporate all those network, that is we’ve from keep investment with that deposits, deposits However, from commercial will

will, customer So several to we levers, have help to if adjust you demand.

this should whether near the And we outlook, least on then relative just tying expect, NIM all at we quarter something expansion thoughts this or saw is pace the maybe not the in of together term? term any margin near and

Yes.

I that, around That and and I betas, downside there’s outflows seasonal stronger in perspective, link risks but of of in we on that those generally see margin, to we can the is fourth margin the some we’re flat right market. because focused again, manage quarter outflows, we are we Matt basis. that this the said, on level just quarter call QX flows we’ll a there focused think flat of it from normal for be deposit aiming if We on mentioned understanding think quarter is quarter potentially some in some terms a quarter which we our in on we will the be it seasonal do call we NIM of is fourth on anticipate side believe, have seasonal were comments, my so us. for just

me. one Last for

TCE Just is TA. there? regulators obviously, popped thinking very capital Or healthy about thinking at adequacy, Anything capital ratios regulatory conversations the that in are about concerns with and your all? to up

Well take portfolio, it jumps we’re Matt, impact out it obviously up AFS about you good feel monitoring the when from the we XX%. and

we if though on exam. just feel really even capital comment to real we capital. finished we it good say our our So, core I conversations suffice want sure because have good our regulators, monitoring. I’m But about we’re not to

session. turn this remarks. As to I we answer like Greg conference have further and any question Dufour to back concludes closing for would questions, no our over the

you time just to day interest want your to who’s National. the And now. I for in thank afternoon. Well, everybody Drew. Bye listen Camden thank Great. a good to taking call the of the and Have

today’s The conference attending for now you has completed. presentation. Thank

may You disconnect. now