Camden National (CAC) 30 Jan 242023 Q4 Earnings call transcript

Good day, and welcome to Camden National Corporation's Fourth Quarter 2023 Earnings Conference Call. My name is Cole, and I'll be the 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 forward-looking statements.

Additional information concerning factors that could cause actual results to differ, supplemental earnings materials, the company's 2022 annual report on Form 10-K and other filings from the SEC. undertake circumstances to after or statements made. not statements any the does are reflect to events company any update obligation forward-looking forward-looking The that occur intended presentation with reconciled in your financial Any and today. GAAP to release in meaningful insights today's measures references are to press provide are non-GAAP

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

Thank and you, Good Camden afternoon. XXXX Cole, National Quarter Corporation's Fourth to Call. Earnings welcome

Officer I'd management an pleasure joining, last like took strength President I've join over honor myself. I start Executive and of our the the introducing the to their Since outstanding on November experience January an it's and joined on Camden and the X, absolute and been by National company. delivering customers. as with focus Corporation Chief team for impressed to and

members have small way. confirmed customer play and the these role with first National and to businesses Camden come how As is relationships communities realize the I products me our company I've customers, rooted and the along business from in to the to them teammates have customers serve, with the their and deeply large months strong the commercial we to services and grow, there we guide owners my momentum for can for deliver pivotal is meet team

and digital members. our utilizing process, has customers our technology The sophisticated products been and to advancements innovation team impressed the deliver robust aid data company team I'm automate also tools leverage to made. by driving the and has

a for the loss income of repositioning Earlier this $X.XX sale the of share securities. which earnings million generated of million $X.X per pretax our on fourth $X a we impact portfolio, quarter XXXX. of diluted included portion investment share, reported This the or morning, of net

impact, per that our for adjusted the or have earnings share. $X.XX quarter diluted non-GAAP would million Excluding been $XX.X

The balance margin, expect look provide changes XXXX opportunities and to company interest net adjust capital. to we in we and will optimize made the continues our the earnings for future to and benefits sheet,

sheet The of signs us on to position balance opportunities our broader shows normalization. growth continues as well to strength capitalize for the of market market and

to by Our tangible in highlighted XXXX. common remains at and ratio September XX, X.XX% improving an to compared capital the position X.XX% strong equity December XX, increase at XXXX,

We're and addition new New see of Commercial for years in remains pipeline We steady. by solid XX our we continue demand excited of loans the than with more serve, Banking to communities experience. a Hampshire in the that banking of Director

market, are expand presence. team already seeing market we'll continue strengthen to in and our positive We to and opportunities our momentum at look the

We strengthen remain tightly to full months. in yields our leveraging loan loyalty, new and robust the customer focused given relationship treasury recent decrease yield on sheet XX-year over managing balance banking, actively the

future actions Personally, make on work taken many within our our These to fortify value. us actions earnings shareholder have company drive to us margin, long-term for well position on opportunities future sheet capitalize the balance capacity for the positioned will and market. and successes. enable stabilize our and throughout impact opportunity net an I'm by with swift talented invigorated year, and build to a to The dedicated this steps their including the to interest team

the continue with that business priorities actions focus XXXX having offense a be on value long-term shareholder will to Our prudent mindset. manage a for to prioritize while

delivery our to road map the data growth. many and road have across exciting technology, capabilities AI analytics drive digital, continue map that We and will

continuing environment expense and in discipline with I'm a to our to changing to plan shareholder strategic strong drive provide The growth economic profitability to long-term confident adapt team ability while landscape, talented the remains laser-focused on by our value. complemented long-term stability, team. and

going into insights the our it I'm performance quarter. financial turn Mike Now for additional to some over provide to to

either This good morning, net year XXXX. and our results across for the macroeconomic included financial deposits afternoon, for failures, impacted and Like short-term income Simon, an results were conditions you, larger year we many Thank the banking and higher by industry. the yield the rates challenges reported others the industry, ended everyone. annual for defer and related other banking annual during fourth in financial across the regional year, faced quarter pricing focus bank inverted well-known compounded the curve, bringing which several and

conditions creation. We and our These liquidity events deposits growth and maintaining net included the capital throughout prioritizing remain value priorities well our position to interest shareholder and asset liquidity, optimize response Our margin market our to quality. for continue key us believe these fourth priorities strong quarter help and and and taking level steps today. reserve future

these yielding $XX.X income of investments $XX.X quarters each totaled results. decrease third $X.XX, we to million in a and results XXXX $X.X balance investment pretax the of and Signature the ended Net year to for XX, a write-off future on profitability, with XXXX, XX% bond. reposition driving within million this as lower December sold to annual financial year a was losses and Bank focus EPS are diluted earnings the million improve sheet, fourth compared as our Included as of well

$X.XX, XXXX. EPS annual XXXX basis a respectively, diluted was earnings was and items, was on Adjusting Net of $X.XX, third decrease of XXXX non-GAAP XX% of non-GAAP quarter on for a this the $X.X compared diluted for our to a $XX quarter million to fourth XX% EPS the and basis year. of decreases a compared and XX%, million for each and income these

and comments, quarters, financial for each third at in a results the investments we earlier quarter. noted which sold fourth in our affected loss my As

earnings XX% $X.XX, losses, each and investment quarter Adjusting fourth for for was million the basis. $XX.X our decrease a a non-GAAP these on diluted linked-quarter of on a EPS basis were

the fourth net asset year results finishing improving operating and our quality. stabilizing, quarter excellent for with of ratios seeing our included margin Highlights signs interest capital

which point from basis X was X.XX%, margin last for Our net quarter quarter. interest the up fourth was

our interest margin to believe to and continue should generally markets do pressures to and winter in a continue overall We asset to to of months We remixing primarily continue redeploy fund deposit flows see we'll deposit net as as improve asset originations help anticipate level so. to loan cash we investment order through within continue yields funding outflows costs we stabilize on seasonal see shift. the our mix from this

us that new just were In yielded proceeds flexibility and slight the at of sale reinvested strength liquidity we to of quarter, strategy. continue of to a the purchased securities the our X%, portion leverage affords from The also that the the all above order deploy of fourth in position to securities a proceeds into the discount.

flow investment we cash to As to portfolio leverage continues support flow, to loan we'll continue fundings. our this produce cash expect

Our capital the at a from X.XX%, December TCE ratio across ratio XXXX, with regulatory of X.XX% the has book in fourth quarter, X.XX% September board year and the and up finished at and improved XX, XXXX. we XX,

capital of one it to position well growth Our strengths us be capitalize opportunities. market our to continues on positions and

average fourth loans At quality an asset to strong annualized quarter on were December assets very loans. of Net basis. for or Our the our past measures. of charge-offs our total as X.XX%, total XX, X.XX% loans were $XXX,XXX year-end, of X.XX% were due remain by assets nonperforming XXXX, all

from the loans by overall and criticized quarter, XX, positive, for at X.XX% X.XX% The base continues is from total but up which customer classified of XXXX. to of assets year-end, X.XX% down health at our be highlighted December third of very

material trends loan We continue or not date, to monitor any any identify systemic of our to seeing to signs early portfolio concerns. we're proactively And stress.

X%. driven overall of The the quarter. of decrease provision growth driven X% our increase loans in provision account loan third we take earnings Like and balances asset with expense as third we to loan third of loan our in fourth primarily on our forecast. levels the in linked $XXX,XXX quarter negative maintained In between the $X.X or and a quality provisioned during credit adjusted and loss the a was GAAP Whereas last quarters we reserve expense quarter, quarter, reported contributed by we macroeconomic the the X.XX% non-GAAP total into and quarter, by fourth of in million decrease basis.

noninterest the higher the of fee a the our quarter the primarily the Noninterest XX%, fair smaller third for including million, for fourth by banking, a of mortgage items, income these benefit million compared than income $XX.X $X third for to of annual investment have been securities $XXX,XXX to for by items, $XX.X third which Visa sale and quarter incentive and of loss for on was non-core reported our quarter. million adjustments, fourth quarter quarter fourth income Adjusting few value would driven the included the totaled quarter. bonus compared in

$X.X million near normal We recurring continue quarterly $XX in to million to noninterest be the term. estimate our will that income

$X.X of increase an million, basis. a $XX.X was quarter or fourth the for on expense Noninterest X% million linked-quarter

various the incentive during normal true-ups, factors, last As timing seasonal including and increased costs costs anticipated, given months. operating leader the over of winter accrual transition quarter costs senior

noninterest fourth translated the quarter. ratio for efficiency of Higher XX.XX% non-GAAP expense for into the a quarter

through first we accruals forward, and ] costs. range we to work as expenses of million transition As reset the $XX.X will we quarter and look and for $XX [ target anticipate higher XXXX to tick between noninterest continue million levels, incentive

take throughout to and are taken managing efficiency lower our to focused and on have steps We costs manage continue we XXXX. ratio

a This we XX.X% XXXX XXXX last energy questions. call a XX.X%. effective we tax for We rate project. compared In saw XX.X% renewable our touch of are up fourth our tax decrease quarter, effective our for rate. participated now in solar comments. And item estimating for concludes result, I'll effective currently open on as the rate for is to tax the XXXX. The an We'll to

Instructions] Steve is [Operator from James. with Our question Raymond Moss first

starting starting aboard. and afternoon, here. welcome just Simon, just on maybe loan growth -- Maybe Good

loan guys pipeline, how days about on Just are long commercial feeling curious these pricing how and is? side the the you especially

the question, Steve. Thanks Yes. for

first I single-digit year, throughout quarter. think anticipate loan for the we the growth low

demand environment continue communities, resilience and client I I obviously balance particularly the I deepen to support sectors. to see We -- the and think the at as we year customer And solid continue we're think to certainly expectations see a leverage as our continue in move our overall, and positive the solid to of see to our going relationships rate level passes key year. certainly outlook, at we But sheet look through. interest driver as across throughout a the

to going just probably the cut And in rates of helpful. That's Okay. Fed year. this terms maybe

are rate Just curious about I margin impact out. with on a cuts. cold the thinking month realize [indiscernible] And be guys you the how

do how pressures Just term here the see sector? near thinking you deposit pricing margin some obviously about the given you're in

I I margin on of would at we're certainly, on the the the now -- can right take XXX say near seeing one, end term, Sure. we're that Steve. quarter.

points overall. that to about I months, would a being X next margin I think minus basis X flattish, as about think or the we thinking say few plus we're

first Certainly, continue. we the seasonal seeing deposit impactful to remix that -- continue perspective from have the We're in a deposit are asset quarter, us. excuse generally also outflows remix some me,

We've side. a relationship, you we're the long think story done short deposit the higher funding So on also things optimize of think on extent well find trying cost, really that. half, flattish. pretty have to out I'm help to and first first certainly as we to is, some alternate the we on less to I can trying funding the optimize really But certainly in should for -- the where we'll side, be that some that if will, focused quarter.

said, costs to on margin do we'll is see want envisioning through from see the it and see anticipate second deposit will competitive We we We're be think that. to rate rates level that I'm that do with I to expansion others do that will time think cuts deposit half, But and recognizing there. that -- in side. sure certainly and a market, we lower, We to also but able being benefit. of push very funding recognizing take that some certainly our that the come happen some when

Okay. Great. X just color. here. Appreciate on that And expenses

quarter, costs. I mentioned for think first with million transition $XX you guide million was the some the Mike, $XX.X to

maybe about investments upcoming little curious, [ from bit of back to $XX million the some a a of and for kind for Or rest does should year? we down the quarter? there's there closer think year ongoing range stay we Just ] it the

Yes.

to we'll are a And certainly his of there. some I XX% on is a the I at than from think spoke to on to the that I and being probably in there, same rate we'll continue think on right eye efficiency expenses normal that and comments least like be probably do we We, Simon and mine so. Steve. XX% closer norm focused realistically, do very as perspective, always ratio historically of think watchful to an in and we we're prudent now, have run on keep basis, XX.X%.

making trying term for were to with we're we long short sure the of management expenses But continuing also reinvest that the to balance term. certainly

strike to right balance. So we're trying that

spot add, just Steve, I'll Yes. I on. think that's

the -- the provide I personal the and can drive think think it's team's of And very over I've been process that improvement organization. have is just And example, for productivity XXXth data just staffing work. our long-term I that process work specific actions other actually impressed and we focus, managing, identify X the automation, levels transactions. kind efficiencies. And and great short-term million to in Steve, obviously, and think automation I us really made X side some sort areas On doing of opportunities we that that on we've of team efficiency and got had the other with work investments. are incremental allowing and really our

a think us. obviously that an some opportunity leveraging So near-term focus, technology of but I is that's for

the Okay. appreciate I Great. all color.

is Our DelMonte with Damon KBW. next question from

Hope and well is everybody welcome doing Simon. aboard,

wanted on Just follow to color commentary Mike, the I the appreciate the that margin, gave. you around up

additional those are Or doing you of any done? here the part do 'XX? Just you in restructurings wondering, do think anticipate early

that, would makes it to our I though, opportunities financial nothing and say if sense ultimate will we're meet evaluating to constantly imminent, I but say just parameters. optimize Damon,

Got you.

up the Okay. between of of Or you in now? side? been it low demand to pipelines And digit Kind that and on for had C&I increase with year. growth, how kind regards estate are And the I for the there CRE. is think more commercial C&I real Has the split single shaping how said outlook any loan right driven? . is

probably as some come from estate across certainly start is pick seeing spring certainly, an and But we're side seeing of footprint I nice some Midcoast areas, going to the the we're well. obviously our up, then well the from for season. to C&I resi nice as a demand think down, think That's is us. the And real strength the into in clients. southern And particularly the as I and that's think the I of across area side. which rates focus

a be demand think this out strategic we the that position and balance the focused is definitely continue And on there I So that's and that's strength something lend. sheet have there, the I think we'll very to with year. to

lastly, here. X just in then if And sneak Great. Okay. I could more

the for outlook On provision. the

of low look of As reserve at level, to kind you that the reserve XXXX. . get you pretty level and provision flat Do flat of basically over the keep it's that of your kind then course you keeping charge-offs growth just the envision and flat? that kind supporting

fair, Damon. I that's Yes, think

and macro basis right from it is outlook. certainly call shake over clear XX I release to now what and a opportunity think macro there at think our forward the the to potentially on There start points position we becomes reserves. light view that path to and the the feel do I time a things on extent considering good out normalization.

was we were XX the points. around accounting it think when basis XX, did, CECL we adopted we or I method before

I opportunity have So do we some that think there.

depend will overall on it But things look course, macro good. quality and now, credit conditions Of metrics. certainly right just

Great.

Okay. very all had. much. That's I you . Thank

next Matthew from Stephens question Inc. is Breese Our with

rate this a credit Mike, the of first that the wanted year, assuming tax had the range partly investments. like to mentioned it's A me. step I sounds XX% few to is of -- in start be you questions lower range. going with for tax because I'm kind it down

that in correct? fact So is one,

usually through credits, If is income fees. expense item what us to guidance in overall some when could folks Two, included case, that as that's and in enlighten or of you just sort And flows that you historically the what from that tax how the provided? there's is contract invest I've seen the much?

Sure. question, Matt. Great

Matt, tax-exempt energy rate So, if a is be project In the driving we you that's our as changing just renewable over the XX.X%. anticipate . our there, some larger in to makeup I tax come our sources, part, lower rate down, before around the to a will, of percentage get the just income of revenue effective just revenues now. [indiscernible] time right part, is rationale our

renewable project, perspective, will account for line we about item. we project, an income within As all the accounting that, think solar energy from tax the that

do that not So expenses. of running anticipate we through the any operating

I think now the new for we're allowed those. accounting method out proportional amortization to that use

So statement to intent it income I from that's and our think ultimately just expense. it cleaner overall it a an little run the through income tax bit makes perspective,

Yes, you agree with I completely there.

I'm I answer and wanted love on, exact your second here, to touch would an thing but The get probably going not to thoughts.

what's resi. think less to than lower-yielding environment, such yields that's slow rate you've as higher there's on been deposit in all during is that I front this reprice loans chunk Camden the held a margin done about in are As good deposits. the loan pretty buckets cost kind the But unfolded up of thing well [indiscernible] for of and with have of

bucket so loan the of portfolio, the call What you that as to repaying of maturity, at end flowing to the think some X% yielding is how spectrum, lower we the of how book? and long the it, higher on lower-yielding is of on is the below. that or And And paper about take? going look entirety duration on the yielding much as and

onto there. have our some probably our think think a X.X certainly it portfolio I 'XX do some in those 'XX, question, point, [ It's flow -- make I was and your it call do and those answer portfolio it, book coupons to take good during, that mean, in X, on I commercial particular, their for or think, residential a certainly a will ], for cash way from to we a bit off do chunk quite great time, I you normal just of certainly, side, Matt. direct the don't at But we have were loss. the resi I the coupons adding on

bit will picking of we compression terms those a the So there. in on resi asset side the of I up. term think see from long do yields

We are now what That mortgages, XX-year -- in put recently, terms in dropping know, not to perspective of market the in rates, and moment. of that terms pressure residential with very be lot terms pricing the there said, of you we're of a as trying rates. we something just on are prudent a seeing we're certainly the a that pricing now, perspective, an Right something but resi with the low overall of we're from in competitive Xs. is at we side, dealing on

So answered your moment. have don't I the I but I Matt, in the don't know right of there duration piece front question at if directly, me

you way. kind it There is we of there When into I'll continues Well, an do back half Camden optimism rate to that the above ROA X% as can we're XXXX. try the of in and back think to? year another used assuming that earning to get cuts get some all

Yes.

will I of we're made I and our Then been the with have you -- repricing, that over margin some estate commercial -- year, rate pickup. has the back of -- neighborhood I We even over derivative the reprices that of X next comment think off I to in book that the think just the half see CDs going alone couple think X a of our anticipate $XXX CD that falling points be be to expansion set basis somewhere we cuts a Fed of on XX% year. today will level aside, anticipate drag. XX we margin this real it's million to book earlier, to

benefit So there. some we'll get

asset to well. going and investment investment we as really So down, continued higher with repricing and our book flow and coupled certainly, those then yields reprice. just into leveraging cash it's continue And anticipate the

anticipate So we up. our margin do picking

think So next to making we the direction north course an looking realistically. probably we're think the we're strides back right probably the ROA over there. get when year, year But about of X%, into in I of

it. Got

a mind. just couple for Simon, Okay. you, you if more don't

you Camden? you've geographies is welcome, as in curious, And just soon? all kind spent be greatest all, are business Camden -- of there of where various or that potential with could do what for see currently within lines, the involved opportunities change the not time today, First but

question, think, ways. it it. think Matt. appreciate Thanks growth look, Yes. a the I in I from And Really about of a perspective, for think couple I

to the East offers down deepen footprint, relationships Midcoast and think the I existing I in think, our opportunities market. continued

I in I high opportunities for great think to is markets, think business wealth strength. looking obviously And business that well a strong us. opportunities have think around particular to continue We share strengthen. continue I banking, see we're those -- to but as the business

think obviously other well. there's as I new markets

less markets develop have think, us the lower market relationships. some We end, I on share, [indiscernible] to and great and continue share the opportunities southern of end, market in the to southern offered for

along that We have the And franchise, strength look and we markets. we can to and you commercial out to and have that deepen on a strong commercial wealth I particularly the side. build continue there relationships in think the as have those operates those relationships and again, know, we

business and community, tremendous foundation the that another struck by have component of It's for and partnership got great is been I And have in to on. with is that's to us the nice I a another meeting my I'm stakeholders the in continue at. business. customers colleagues and our interests think X us and And that's just residential opportunities with grow. area think our But to some think excited looking just I've we're relationships is equity thing a they footprint. nice our colleagues, the Home I that build

that. appreciate I

that's organic that and Just here your to over think overall growth forward? the term. is an sure long balance the to repertoire over perspective look last this something going thoughts are M&A. of point, drive hold metric M&A? What and the growth the on older mix at X I but XX XX-XX Historically, so M&A that probably or . be sheet will is a it's And part years, if XX, XX-XX kind love last you X of Camden, is back between I on would

to of -- do affords us Yes. position think to pressure I opportunistic feel right have with makes it's think be M&A we don't financially. always the unless same The going the time, Thanks, to regard deal us it be obviously And at strength sense a for I not a and anything grow. We've part And markets, to hill. team think, we chase got right of tremendous certainly, the of deal. to be great opportunity a and we opportunity there. We're if great opportunistic, have playbook. opportunities going the and along, over plenty but see Martin. our came we'll to that's I organic But

all a I know appreciate had. winded, That's questions. my but Understood. I all it's taking little I long

We have no further questions registered.

would question-and-answer the turn concludes to this our remarks. Simon conference So for session. to I like back over closing

And a want to lot, all thank you Corporation. of for rest just National . course, your of today. day. a We have your joining. Thanks interest in great wish for Camden all Thanks I your you time and

That for you today's attending Thank concludes all call. today's presentation.

now You your may disconnect line.