Camden National (CAC) 25 Jul 232023 Q2 Earnings call transcript

Good day and welcome to Camden National Corporation’s Second Quarter 2023 Earnings Conference Call. My name is Emily and I’ll 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.

Additional 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 and supplemental earnings material, the company’s 2022 Annual report on Form 10-K and other filings with the SEC. undertake circumstances to after or statements not statements any the does made. reflect to events company any update obligation forward-looking forward-looking The that occur to non-GAAP in GAAP with press measures presentation references your insights to Any are are today’s in intended provide release. reconciled meaningful and financial

like Officer; time, is Chief turn presenters Please Financial go to Today’s Executive note Greg I being Executive to Archer, that Please President Dufour, Mike are event recorded. Officer. this At Vice would Chief this over Dufour. conference and and President the and Greg sir. ahead,

and everyone, from turn reported of $XX.X the of the $XX.X few Emily, opening you, X% Archer. discussion National second Thank a first for quarter Earnings net income quarter then and Mike welcome, we the Corporation’s XXXX Second today, for Quarter down comments provide million million over Camden XXXX, I’ll $XX. reported of Call. we to to Earlier

from share, basis, EPS we an $X.XX On quarter per reported diluted of ‘XX. down the $X.XX first

continue rates curve and of results. the rising to interest yield our operating on impact inverted see We the

shared ratio at XX% comparing been quality. liquidity, XXXX. of the an our and asset focus our margin quarter’s deposits at and As I our earnings on our perspective, update quarters first From remained and last flat loan-to-deposit call, has second when

X.XX% during first quarter the Our net year. interest but margin was X.X% for reported estimates, down of the quarter, within from our the

assets assets in the total seen decrease nonperforming Asset growth quarter significant with a at basis quarters. quality X%, from points. recent continues remain to growth was to X Loan for strong rates

benefit net as reduce the call, this funds interest last margin our done reliance and ratio. to discussed loan-to-deposit maintain to borrower well in purposefully we our As as on higher-cost our to was

country, confident are activities many our on Our a are rates deposit they areas when that same sales and to market are very to support levels. remain activity. seeing high perspective, sales focused continue activity From increase and as of lending but conditions consumer-driven by the labor rates review including positioned priced well like time, market teams and we seasonal has deposit The quality. strong, inventory is loan mortgage which low we we business the residential also our our both align. support activities, many impact affecting opportunities generation customers. should challenges in appropriately Business At continue solid teams and to interest general of slowed, well are tourism, the driven as see our interest

our relationships retain It’s while this powder is keeping calls. deposits on months. see used course over what fierce, are of Fed win earnings and the as for take next other this competition deposits believe of ability pricing remains in I been few one But we action we environment. to best will our the action the Although with a term, satisfied dry our I’ve since

As we the continue the asset these with focus line of clearer to In our the managing we shareholders improves, sight short, both a long for the I well noted earlier, when levels, our are and and stabilizes, our positions margin for we us believe economic environment priorities rate capital interest quality overall curve customers. term coupled on have and our yield priorities. our activity. to strong deposits And organization and liquidity, be

like now Archer. I’d introduce to Mike

of margin down on respectively, and quarter. we which diluted net were quarterly EPS X% Greg, X%, and primarily interest second lower between quarters a points reported were of you, basis the the today, $X.XX, compression earnings $XX.X afternoon, to due good to basis. Earnings linked-quarter of X.X% XX everyone. Earlier Thank and for million

were also equity to our and on return tangible followed and Our return on average quarter-over-quarter. down assets average

and was XX.XX%. profitability quarter was reflects and average our earnings X.XX% assets second a and curve. interest tangible decrease average return on on current of inverted XXXX, the the rate equity environment For in our yield return The

levels capital financial sufficient on sheet balance we with a strong footing reserves. However, by and backed strong of remain

Xx to uncollateralized of for as Net liquidity of continue was billion quarter also uninsured million of second amount have the totaled We a compared of the healthy XX. the deposits of access X% to of to position June included and XXXX XXXX. $XX.X interest which a funding, decrease first that income quarter $X.X

basis in interest due quarters between basis As the continue to and noted including rise increased quarter a margin points in earlier, our Fed interest quarter. the first the funds second to another funding basis points rate costs XX net increase XX point as increase rates in decreased XX

rates XX XXXX, second the more interest which of between quarters points quarters a for XX.X% X.XX% quarter rates to benefited interest funding than offset represented increased higher increase the the of increased second to quarter. Although Funding benefit. yield, our due basis basis quarter, XX between of the for points costs the which for reached and asset higher X.XX% beta costs

XXXX, June was XXXX, X, through Our XX.X%. cumulative January beta XX, measured from

see in near for quarter on continue of competitive and On we’ll representing remained acquisition to the reached second and costs and markets XX increased the deposit for we pressures very the pricing Deposit anticipate XX.X% quarter. XXXX, a basis the our see X.XX% deposit pricing throughout a linked to quarter fully beta term. continue side, points basis

the mix we from through Like savings banking led which lower to quarter of industry, non-interest measured XX, Our higher-yielding many XXXX, balances XXXX, balances, and funds effects checking in CD deploy part, average quarter period. as to from interest-bearing look second XX% June This decreased average XX.X%. accounts. January X% each experienced X, has, the others first into and have over same growing beta deposit to shift across customers cumulative the was deposit

move said, growth environment. A we to continue positioning and for moving with and and few include residential forward for XXXX optimizing volume. remain we strategy Loan more on slowing growth in quarter interest margin our ourselves of the current have expansion focused driving taken X% forward. through we pricing net loan As have steps higher mortgage second salable we was loan the

growth. investment cash loan fund redeploying Another to flows is

The rising actively year, million $XXX our We’re our while to acquisition the net me, managing first of as rate last through interest the out of I interest rate rolled swap interest by at rate locked with second half swaps through objective. $X.X year. step quarter. to $X.X Fed the interest current at like deposit a we excuse rate customer X.X% that added rates costs reduce campaigning during the over help X-year including second during program while Also funding this also level. highlight of income we million we interest would same interest funding $XX the through prudent existing a $XXX term the view million with We period. deposits quarter, – of manage this derivatives is as us half environment X-year These million In earlier this the of funding rates. lower million added favorable optionality rate item to another providing XXXX, move in in exposure to the first early interest for also the executed bank July, swap the

Now switching to credit.

strong with the of and total Our across loans credit of June of X very last loans quality points were portfolio both XX, X.XX% as Non-performing loans were consistent delinquencies XXXX, overall. total basis quarter. loan remains

levels. of of quarter, loans basis stood improved point down at While total of of reserve loan portfolio, at and the the maintain X.XX% first June total as X and end, of criticized strength led quarter-over-quarter loans total to also within from a a recognizing expense reflecting quarter classified loan at Total broader the reserves potential second the XX. This our loan loans our quarter small macro risk X.X% provision the but ongoing downturn. environment stood to for

Last included supplemental materials information CRE reported our a quarter, that office loan portfolio, filed. earnings on we we in which detailed the

monitor closely. this We continue portfolio to loan

quarter seen X% through quarter. the material the for quarter an portfolio the changes increase We million, in the second XXXX Non-interest over of this year. of any have income totaled $XX.X second first not

XXXX, we For of the mortgage can origination originations we our quarter of and XX% to push residential continue second to salable. volume more sold of

pipeline our higher totaled XX, Non-interest for quarter. was than June of designated million, for quarter which X% committed XX% residential sale. mortgage expense last $XX.X the was second As of

expenses quarter’s operating call. quarter-over-quarter were the increased and quarter projections consistent – with for total expenses earnings as expected discussed last our total Although operating second on

the expenses first quarter. the over our as is and Our calculated quarterly XX% overhead which higher in for over second just average operating quarterly non-GAAP than quarter both was ratio assets annualized ratio, efficiency X.X%, was

ratio As a end both ratios excess quarter capital our of ‘XX, quarter. of GAAP and up the from TCE requirements. the last and basis X.XX%, end on second capital X At be was capital the of of well in second to position regulatory our continue measured quarter, strong, basis. of the point regulatory remains

June of XX, of effect ratios June investments, to While million not on the regulatory requirements will note the the as of capital $XXX.X were continue unrealized capital pleased the as XXXX, our losses calculation that they does to which to the of company company’s regulatory excess losses we on if calculated are totaled even unrealized include include investments. XX, be in of

capital the Through of through half share million year, dividends we to returned shareholders the $XX.X and first of repurchases.

results. our first the Through comments June of per XX,XXX second based stock at June quarter This our $XX.XX that was average as XX, dividend quarter common price closing second of for concludes per represented and dividends of share repurchased our an X.XX% on an quarterly and cash Our XX of shares date. yield our $X.XX on annualized share we on price share.

open We for will call the up now questions.

Thank go comes first James. Moss question you. please Instructions] from the with of ahead. Steve Raymond Steve, [Operator Our line

now Your open. line is

afternoon. Good

Steve. Hi,

Hi, Steve.

appreciate pressure, here. another and On Maybe just quarter. here, starting I do this moderating have derivatives you with here the is going? helped the definitely it added margin How one margin margin the

the of margin feeling current about deposit the the curious are how environment. kind for you Just in outlook

Yes.

about kind of perspective, right Steve, a we’re next XXX the sort you think So as a from now. I think quarter, of in margin

or than here depends historically plus bit think XX say to I a minus part it broader probably of points. what would the in range does But flat a Fed thinking given. it’s on We’re I basis days. X few we’ve

were also in the flows. You deposit seasonal

something watch seeing we’re that continuing and monitor. to And in, so we’re come

the mix seen or and I higher continue the good be the continue? how or that around So range, think much but slightly is other item lower. see feel just see that right that I pretty we think now, deposit shift have does could we we to XXX

for – And are new on that. yields here, of loan kind what just originations terms days? Appreciate of coming these Okay. loan pricing curious where in

Sure.

pipeline quarter, now. on I over at So our me. X% think Second a out think, – X%, a over for From well X% X.XX% a at originations came largely with on, over around new weighted basis, the we’re little or perspective, X%, I

commercial pipeline is neighborhood of I want think is portfolio the And our say over. X.XX% CRE to in plus. slightly X.X% I somewhere residential the or

really we’re – that trying to about, very side that on have are and we putting for rate So our talked we anything been growth right prudent and the as price books, sure we’re get make it. we’ve we on the

As the XX you know, XX on. a function just days, of to loans it lag effect these that, call to is come course, for think of where

Right.

helpful. And just That’s me. more Okay. then one for

Just bad on a quarter, growth, this but loan it did moderate pace more still given not environment. a challenging the

be think from Or do run rate, for digits year? curious, you low of it kind Just rate levels? would mid-single a decent to the further the second annualized moderation maybe current of half

Greg. primarily on say probably the really on felt away loan good, we focus are table Stephen. Yes. we We lower pretty It’s Again, I’d margin. X%. to pushing honestly, growth, it ourselves know pricing about the single-digit. from

So loan the we’re on focused growth necessarily yet. not

to… thing add might there only the I Steve,

Alright. color. much all Thanks very for the

with DelMonte KBW. Our Damon, please Damon next ahead. go question from comes

open. now is line Your

afternoon Good hope well you today. are I Hey. doing both guys.

the to So, hear. – kind I to on circle margin wanted back of just good

wanted circle back on margin the commentary. Just to

to at more that So, that think assuming that – I Does tomorrow, Mike, tomorrow like end rates the does lower about more play the one is benefit margin, least its you Fed that that’s or you is on going range? think into to going raises the commentary, the your the do of how meeting. time, like put

quarter, a of some increase, deposits, – I the pricing I mean swaps that, the deposits of side a and But of funding out the level a coupled impact. cost the this little the that of I – more – both lower of We neutralize help done that’s we with that the certainly the certainly a anticipate as have for course on bit think well. will deposit pressure should help that it side, from Fed some seasonal borrowing flows, from the which do will just Damon. think we put on

the think about for I So, quarter. margin or that’s we think third quarter when next

funding or of where good minus basis another certainly I some land and that midpoint are rate are X.XX% we are I all various think where hey, those going a an immediate pretty points those there. But the help we I Fed think saying, variables is that we probably from factors we isn’t to may in could it’s that considering knowing baking we plus perspective. think are

Got it.

to Okay. – And spot do for you the month margin have of of happen as June? the

our monthly margin was June, X.XX%, I For believe.

Okay. is the as guys about we the and that about we of quality flat slower half pace loan XX trends loan that keeping back provisioning Great. we then targeting strong of kind the growth in reserve think think Thank just reasonable? exhibit, maybe should you. And think at you credit points, basis this of year, about loss minimal

Yes.

spot reserve, down mean for I like stays the slightly, basis if think certainly, now. move I that’s think XX us it it up environment but think I that good I a or points macro is, right pretty again, could

side, comfortable you fee seem this it quarter’s like lot it so that’s rate And a sounded with reasonable and on Okay. this to run doesn’t level, of income noise probably pretty the feel quarter. be then a

No.

million think rate run a I pretty the quarter. it’s this something $XX we kind for saw is like good of

Okay. I Thank you that Great. all very had. much. That’s

welcome. You’re

Thank you.

[Operator Matthew with of go Breese line question comes ahead. from please the Matthew, Instructions] The next Stephens.

Your open. line is now

to how way of or the their demand kind Was intensification end versus towards quarter, run quarter curious, was deposit Good the in of flows deposit provide off of to the you that was just monitor of could regards flows, I there as month-by-month? on of sort the kind start color Hey. more there you of afternoon. beginning kind anything any subside? throughout worked

down on don’t average I areas Matt. side, those are consumer continue nothing the on that watch the really the one things we just – I saw that average say environment. we peak of that we out And particularly balances, pressure to this I sticks balances one in me, at or would just mean seeing is, pull of pandemic. the is just

one that’s think big that variables I So, the of there. out are

what seasonal And side, would we accounts the and that are that seeing deposit reality and flows end, on the accounts, to is one continue consumer there. business to is happens expect, also on see we the of the are we thing grow monitoring think We our but that to the basis. other continue monitor which side we I number

we are in not outflow call So, customer regard. seeing, that it,

Got it.

NIM get minus, like outlook. term to little Okay. the And bit models, NIM that’s year, a then to loan to maybe place a the plus start going overtake you just point and or your on model deposit through as into do feel end trying of in what good to of the back see – longer a internal you incrementally costs? higher The the to maybe early you start XXXX? And at expansion at do look yields X.XX%

question. good a It’s Yes.

modeling I of probably perspective X.XX% remainder a think from decent the probably a for pretty the is spot year.

into get the seasonal little to we for months the bit As the a go us, other winter flows way. start

we But rates I and to to get seeing the margin QX start start as inversion steep reality So, and not is start a the as to generally bit down start into be QX back think there lumpiness when that on is see margin. just we as we in real when little go benefit of that between QX.

do you is you and Okay. to in of believe the And restructures, thought that? additional there pressures help think loan these any additional how balance either of portfolio NIM-related some then or securities at about around sort sheet

I everything, we what of just are is guess normal process constantly that would think go the I part Matt, through. at say, we I looking

at So, this say is want to the I anything table don’t off point.

– to look portfolio a now, the do continue certainly is our normal that. weigh margin. This to continues right is down investment We at Understanding will process.

look will continue to short at that. answer the is we So, yes,

one Last me. for Okay.

you quarter. bit into that share I stock little or a count? was overall read to of of repurchased Just saw that Anything kind this just managing

when mean No, sense I the opportunistic perspective. will – when in I us, makes the certainly think we we think a we tranche, time a it’s just But us market. cautious I and be small price capital being opportunistic. comes are being the did for from

So, that’s into guess that. I read I how would

Got it.

Okay. taking leave there. will it questions. Understood. for my Thanks I

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

for Well, company, want interest the Take in you to Great. thank have everybody, day. call thank I and being taking a great you, the and and on care.

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

may You now disconnect.