Camden National (CAC) 31 Jan 232022 Q4 Earnings call transcript

Thank you, and welcome everyone to Camden National Corporation's Fourth Quarter 2022 Earnings Call.

For the fourth quarter of 2022, we reported net income of $15.4 million or earnings per diluted share of $1.05, which was 8% better than the third quarter of ‘22. This resulted in total annual earnings for 2022 of $61.4 million, an 11% decrease from our record earnings of $69 million recorded in 2021 and a 9% decrease in diluted earnings per share over the same period. We were pleased with our fourth quarter performance in several areas. Non-interest income, excluding a $903,000 pre-tax security loss was $10.7 million and was on the higher end of our expectations. in restructuring quarter his that record a part comments. loss sheet balance Mike security the is fourth of The described during we Operating quarter a million $XX non-GAAP expected, as XX.X% expenses in and ratio. in efficiency resulted of was the

strong credit of see measures At levels XX our asset our and levels asset to quarter. see those down outlook from the earnings to the are our basis no we begin quality could call covering should all last and year. allowance was reserve $X.X X.X our Finally, times. losses at positioned remain fourth non-performing the we in strong levels $XXX,XXX, loans provision We recorded to loan changes million that ended stabilize by on the allowance quality as during We for current X.XX%, occurring in materialize close signaled well quarter. an feel year from points remained this with provision our pleased assets third significant very We're quarter, we economic total portfolio. to the

a XX continue net the prior negative to see to the margin of and interest quarter. inverted basis down points also yield for which fourth contributed impact quarter, prolonged for curve, We significant the X.XX% the

be will this quarters. flat will strategic during Mike to share You'll relatively materialize. like down slightly to where quarter, point for his conference margin we call the did comments. is our last the not was recall during more quarter's I'd at to a indicated our remain at coming detailed focus What which for fourth provide expectation explanation

interest net margin net interest we through several focused strategies. First, and are income on

are on and focused we both foremost, loans pricing and First deposits. on

was our and total beta of deposit was our over over cycle beta just through XX%. XX% far earning funding was our asset while just beta year the XX%, so end, As

relationships our and us chasing versus developing be and objective transactions in on past, loans new for existing primary the will As you've the both ones do seen strengthening deposits.

logically pursue both the risk to current Secondly, such those based done in we will sense to have our long the pursued our We'll sheet as analyze balance fit the make cycle. that continue well as opportunities into interest as reposition profile, restructuring that and rate future opportunities that quarter. term and fourth on was

the we Finally, we accept deals mid and on recognize that lower focus our that comfortable hyper we'll which in to the on long for of Accordingly, environment see growth we're prices, operating and a the we anticipate competitive side we're year, in order with. loan to not be digits single loan term. on

asset Turning focus to continues major be ours. to of a quality. It

to benefits we structure not such our of as granted. migration that we first risk distress. strong the with of Today, our FICO management at do potential strong efforts enjoying include signs of but are for of all While weakness. Those to working it sign swiftly we customers with the today, way for take complement the may underwriting look scores, analysis

is structure. area focus expense our Another

helped make have While areas productive. automation parameters, many and within we're expected efficient previous our investments more our operating process and

the our streamline fourth the shared improvements XX% total target stride its seeing from processing our quarter example, within and to and to range effort already That our is efficiency efficiency previously I overall to our ratio efforts. hit organization of and XX% For processing business loan in efficiency, XX% XX%. efforts we're commercial small ranging for

million XXXX in to December. capital been, always on ample Finally, dividend we as of we and capital, grow resources announce our $XX.X us as provides X% reward shareholders, earnings we our are focused have including our increase

comments. his Mike let I'll pause review and provide and here

these company years. the last $XX.X between pre-provision earnings On annual light year's record non-GAAP of Earlier and million basis, of a $XX.X results, EPS million significant $X.XX year in pretax the from dynamics certainly from for we're with down XXXX ended the recorded reported today, year. X% Greg, market we of and earnings, in afternoon, for last change you, pleased income particularly diluted Thank good of everyone. the year, and net down

earnings long adjusting confident million, addition, for navigating In a results core term year. short remaining over today's PPP SBA focused while last loan increase make totaled on income, $XX.X These us X% in challenges the term.

and to returns focus shareholder earnings capital strategies the on core franchise. generating and organically deploying We through sustainable strong grow to continue

prudently return of mix to and We a also for dividends share shareholders capital repurchases. continue to

ratio the that year increase dividend in XXXX ended quarter, XX%, X% our year. announced a or we pay XXX,XXX the shares dividend for the and common Our of in fourth we $X.XX quarterly stock our was which repurchased included throughout

net the million, despite basis the as fourth percent quarter X% return a track short for metrics the we linked Many of term each an pre-provision XX.X% and growing assets the of decrease XX.X%. remain inverted rising efficiency quarter third the XXXX. a basis, diluted a fourth $XX.X the equity earning including margin financial for non-GAAP quarter, interest tangible the of yield third of X.XX%, $XX.X we quickly a solid on for from X% decreased basis. income of a on increase we average quarter other $X.XX points quarter that reported EPS over pre-tax average quarter. have a from net linked the an of key and On the quarter, unlike quarter. interest X% basis, million assets return throughout felt were impact rates compressed Net On our average for curve of too interest last banks, fourth Not fourth quarter X% earnings of ratio income XX with on

leverage as fund continuing basis the during we quarter over investment Our the points grew asset to continue cash interest we continue increase. investment and fourth flow earning to X.XX% growth and quarters. do to yield see to to loan loan our anticipate Generally, XX coming so yields

of interest as moderate the XXXX the to To margin that protect the environment value. our drop loan we end end, we and pipelines anticipate loan franchise third growth long and term net mentioned in quarter. in current Greg have considerably seen As our manage his comments, from we

our deposit residential been In hovering residential put committed average points grew mortgage from portfolio representing we actions basis loan ranging and portfolios grown deposit More for production. Through have cost XX%. $XX pipeline around mortgage recently X.X% these fourth the million each mortgage X.X%. to and rates fourth of of and designated pipelines our sale to quarter, X.XX%, quarter, in XX XX% XX%. weighted current to a beta into residential strategies taken commercial In has the have

had was continues not unexpected quarter quarters, faster the and it at cost XXX in previous competition our Fed grew the up. While deposit it during a fourth heat rates points throughout as another markets to rate quarter raise our deposit the during than basis

and look We other strategies. alternative borrowing have continue considered at to

over for forecast our coming deposit all quarters. During our months. and the Overall and XX rate quarter, of approximately Doing in XXXX, entered year beta lock within was on continued stretches our target. XX.X% we us based funding over allowed laddered ended should us to in into was the $XXX term current to a XX%, beta CD strategy be benefit which so broker that million short funding

quarter combined first quarter. first in the normal do compression by peak We expected the outflows we the further margin of with interest the ‘XX hikes are of seasonal anticipate further as rate in Fed

points full income following Fed executed lift and on expected yields. net loss based net points X currently loans $XX and tied additional and Fed expected and with to fixed We flows margin securities continue repurchased basis net sold approximately The benefit. completed optimize X to the for securities rate higher we on swapping to of benefit quarter of provide million on lift over market's true. executed Recently, of margin rate flows earn interest swap immediately In funds X quarter, million the restructure additional points the with quarter the to provide a these one strategies have cash interest basis on $XX of year million net anticipated to margin. an whereby interest and we've a of funds year strategies. investment $XXX provide current we review fourth current We two approximately expectation income market of full interest we basis at should week, $XXX,XXX is about back Last the interest estimated strategies, is rate variable hold Based swaps to funds. expectations rate. points a Fed cash interest curve, swap X on on basis to

a For the $XXX,XXX compared XXXX, of losses, expected quarter. of expense provisioned is decrease which million $X.X to for quarter fourth last credit of we

XX, totaling non-performing Our points last pristine quarter at X credit points off consistent last in and conditions loans of at total XXXX XX, December delinquent compared net charge minimal of loans XX remains of supported loans quarter. with XXXX loans to portfolio by December basis basis total X.XX%

our based market assess of continue portfolios We on and to conditions. loan for monitor signs current forecasted actively and distress

quarter. year, XXXX, X% was Non-interest between residential fourth the trade XX, of earlier. not the XX% on to saleable But a income with our recognized quarter knowing quarters. our compared debit a last production non-interest However, down banking the trends [sold] $XXX,XXX non-interest identified million, this income $XXX,XXX [losses] we've last stood quarter. consistent level was debit quarter In reserve quarters. is non-performing as fair card investment [lot] total quarter the banking any between the value $X.X loan investment of down XX, coverage points production December last loss, down The allowance X times income We given was increase This credit X.XX%, X%. XXXX Otherwise, was in basis, each fourth XXXX Mortgage X.X appropriate would've our our between year, last higher. loss the totaled result strength date. quarter basis increased and incentive. at discussed annual to quarter. over the our loans incentive quarters compared quarter. to pipeline in income at it was trade also is income would've on loans which believe the change decreased excluding and for On residential the to ratio the total with linked that such fourth from December drove we card for mortgage including income down XX% the mortgage fourth of quarter increase At based volume been in provides and us

is quarter million. next Our for million non-interest $X forecast to income $X.X

fourth last Non-interest quarter the from expense quarter. $XX million, slightly totaled for down

with Our first core quarter. capital normal to and ratios impact points our equity well position. FDIC company's be the capital $X.XX all quarter also increased of value XXst. partial regulatory X% quarter of in our to capital impact XXXX, during takes increase merit at ratio tangible December of as was quarter The to December the requirements supporting excess X% We quarter X% regulatory and in ratio increased tick our up will expenses XX that and the banks X.XX% non-GAAP for XXXX XX, insured XX.X%, $XX.XX share assessment basis at or last to efficiency the continue of was of estimate to December Tangible quarter XX, the common the consistent effect for fourth factoring book to increases. strength XXXX per

concludes our on Greg. results. our I’ll the And quarter This turn fourth now to comments back call

Mike. Thanks,

call We're focused positioning the to swap more this equally, opening restructure like out executed, improve so, to including strategy. some point strategies described for environment. Mike in few Before thoughts organic a not investment I'd our closing up portfolio, strategies we've if here. on questions, and

which pipelines competing loan X.X%, Some in lower. we're the our those if the in demonstrated of X% not that range, are pricing strong low routinely above have in against is yields considering

ratio of equity Our and also an Also, deposit points our normal positioned. XXXX. and complemented we'll With it ACL operating that in non-performing as X times of and within we ratio total perspective, with up XX% assets. XX demonstrates well coverage loan Tangible is open is backdrop, on from core XX% common is range X.XX% for mentioned, questions as a of our ratio our to basis by growing along value loan deposit to efficiency we're X% ratio our risk franchise please.

James. Raymond [Operator Instructions] from of with comes line the Our Steve first question Moss

Maybe off the margin here. on just start

to curious kind how thoughts about about, goes pricing how updated of kind you have go throughout we just and may are the thinking cycle deposit you're you here. holds Fed the as the maybe any year, through And rest Just of the margin? if guys thinking of X around the

to XX%, deposit side, the terms particularly Fed probably the the we'll I XX% think in continue to of we're deposit quarter, range. in beta first continues the expecting, hike, see in

call up. Let's close where maybe it to were, slightly we

in both the I I pick comments, myself our and think to seeing there, side think that up. certainly the And Greg the alluded other on just deposit is certainly we factor just competition. are

hopes just, probably give guidance would minus basis just with as factors here. normal certainly or I would it's we From that likely of inflows that I some there caveated others my X starting We seasonal heavily by actually we but market. current competitors XXX, market to for a that compression probably be a from competition, quarter and the over to to spot we overall on points margin But margin But come all to well some in, in see are what loans that thinking that end. the are all But terms know either of after I the in is of expecting first anticipate place. quarter at a all have a to of that have quarter. margin not forward thinking X mentioned in as -- we thinking to there, would starts some also the from there around mentioned, market first perspective, say again, play plus would looking from Fed into and liquidity of reprice. Greg in put just rebound. in well and on the as think that start rates loan and seen for continuing that Overall, that terms too, the in we factors last rates, as pipelines stabilize local I slowdown the we're comments, as the the to lot that does strategies we're strong Fed And and

And terms loan these are days. the maybe guys seeing just of you in demand

curious you're in what parts growth Just the of on about how you to expect thinking drive portfolio XXXX?

market. competitors. residential a it. shift What of, seeing That I'd estate our pricing Previously, is really. call But overall we're obviously, real than the say is is just pricing, we're that it, market because lower, driving partly higher

the small balance run over that up helps business justify tend seeing and the commercial, that's higher up us reengineering And especially business start we're for the in, the and markets to that great software really product leverages where And helps is new balances. that's and sheet business small and experiencing really, been did they we So that ramping higher for on structure we're commercial our shift within And us side, to side. that on that we a have the side. and small ability our the the a size rate.

collateral now can command which higher close need within is a instant few we So the a really days, on on depending decision, customer serving us and that. helps yield

comes question KBW. DelMonte Our next the line of Damon with from

a So the I to provision. just on wanted outlook for here get little perspective

X at covering that It's good believe. basis pretty level. noted I points, that you about XX You over times feel reserve NPLs,

the the of 'XX half portfolio year? first the today. expect in of quarter fourth remaining least health off of slowing, saw in expectation we similar the at So loan with as the intact growth of as Would the and you for level like a start we provisioning of

would would we that if XX, we change. But in about so guess XX about to assuming no credit holds outlook could part, and we're we the now, hold basis of on is, -- in and to constant, maybe we I and think issues I good points But it's assuming it kind I say Again, in I to hover. everything terms the stand feel economics mentioned, are somewhere depend way talk the should XX, as signs of pretty ahead. of right we going that. where there, that economic at So continue

$XX to million. mentioned And The repositioning to margin you first, steps then the the the the try you little preserve go back with to took here? two could just you

sold those you you $XX reinvested and proceeds. that said of million Is securities then correct? You

That's right, yes.

a I those -- another essentially million essentially yields were we we X% securities [XXX], So on think around yield. $XX those around purchased then and with

And were what securities of those? kind

It was and primarily, MBS, I a of corporate. mix corporates believe,

the specifics could agreements, again? you then And two just those go over swap

was it get have I in think variable. pay notional million this, $XXX did received we about fixed, this right, million So three year, total, to $XXX always receive

we million those amount and and was was for on that another payout pay $XXX year amount on -- a five that $XX the both on OIS. are Fed receiving then the the think $XXX and pay of did fund I swap was that million, million

the and I lift you that? X% then quarter after do Overall, the outlook, into entire year first. expect on And first the X% from then like to guess X% to fourth that quarter the expense said is or the you X% from another just for

first and the listed merit. for generally was guidance factors fees there FDIC I a that normal in the couple in quarter. just So of

about item half it, that to year it, we've call one we'll highlight within range about The ratio million, is, million. and say and I manage XX%, the to continued XX% I just certainly expectation. throughout so of our historically, So efficiency would that's do our that's $XX.X call would

Breese Our the next comes from question Matthew with line of Stephens Inc.

where forecast. quarter, at the NIM XX%. Just year was that, at about down this Pre-COVID, overall end in the XX%. was thinking think I do of have demand going Within to deposits you curious it

If you XX% crisis. kind in XX% go was further pre to operating great of financial back, a range Camden

So think estimates? you just curious during where figure this structurally and do keeps cycle, your you what around tightening this goes

customers Matt. So commercial terms looking I some that of we're of we the pressure for interest. some to just But in have pull number, comment seen would -- trying that sophisticated bigger commercial

interest from we've some seen mix if now to DDA So or over shift, you checking. will,

some we've shift of that So occur. seen

customers. is our that on primarily the become with we're -- our pressure I think proactive having that. that's managing business there But internally, more more common. conversations Certainly, certainly,

about… we think As

to offline you on specifically. we connect thoughts some give and the going to was I DDA can that, say,

could If reliance maybe 'XX? on further broker what in comment growth you areas? Do on you so, deposit deposits? expect And

executed. So we haven't

are looking to some going million at as it we additional looking just to funds $XXX supplement be to and is move more funding right to particularly anticipate broker now at deposits, cost effective, are having million we Fed $XX We higher. continue

at look kind of a likely XX laddered spoke your of at months there. We'll just are first the CD we looking And what So question that. part I apologize, was about stretching out like we over there?

kind of What the growth, year? deposit the outlook for

I believe mid deposit growth digits perspective. from single was a it

to job. And a is done gets mind still my team retail that of of strong relationships. I franchise, that and has very a in back into on couple a Matt, comment strategically, great we have would keep The say, focusing things

Although deposits of the at strengthening through to as side. internal you incentives, promotions, have promotions, that through always time know, been external a focus this ours, relationship build

is The focus other over we our years alluded is ramped on more have, and side to management thing we deposit past big commercial within what Mike the some of the has that have. that up depositors the few treasury

lever we have. that's set So tools of that another

focused We gives on have the can that, focused even that flexibility from on. and said are perspective, seeing, in a much management we the With hypercompetitive our And said, more rate very deposit And prudently. side. loan on sales that's with that But us more our markets great stabilize just it that where we of I'll call we're that we'll I focus think team deposit that's said, note lending on and or all markets, growth. rate, I within that are that a do the it, drive down side. side we it

had see from flow that And remarks. at continue What in securities growth. assisting this of portfolio is point? assume you then the growth cash securities the we year, your mentioned kind the Michael, to with loan I’d monthly for just

It's $XX average we're generally on million seeing cash to flow. the $X on million

funding on into based or borrowings continue those we'll investment we'll yields, growth either into or I just something offsetting loan throughout call but year. Matt, current to flows the monitor probably think funding fund realistically, overnight it, cash redeploy realistically,

on is renewed me just I it was for shares. XXX,XXX think authorization, one repurchase Last the

recently something to pretty continue been these expect You've execute levels. at on? we that Is should active to you

especially kind a potential just I want believe factor balance capability always, is the of we deploying that Right our TCE. right what have That's I'd building call as to economic to needs now. capital of building on now of than make annual use. capital well rather focused as that That's up, shelf I that more, capital, it, if out position recession renewal now, we're capital. sure from as sure feel use the it we we on be to make right coming our on

So lot put I wouldn't for us. that lever a on

Instructions]. There this are questions no further leading at [Operator time

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

good that all to Thank I into as Rest interest will the feeling assured have term interest stock hopefully Great. our your that you that you. an are focused just growth, analysts Camden as want are National. always and appreciate And long other our we're long you wish a thank, obviously, callers and the well we value. on as Goodbye. taking following franchise term day.

now today's The concluded. attending you conference for Thank presentation. has

You disconnect. may now