Net Interest Margin Expands, Asset Quality Remains Strong
CAMDEN, Maine, July 30, 2024 /PRNewswire/ — Camden National Corporation (NASDAQ:CAC, “, Camden National”, or the “, Company”, )) today reported earnings for the quarter ended June 30, 2024 of $12.0 million and diluted earnings per share (“EPS”) of $0.81, compared to $13.3 million and $0.91, respectively, for the first quarter of 2024.
On a non-GAAP-basis, earnings before provision expense and income tax expense (“Pre-tax, pre-provision income”) for the second quarter of 2024 was $15.5 million, compared to $14.2 million for the first quarter of 2024.
“This quarter’s results highlight the strength and stability of our long-standing organization,” said Simon Griffiths, president and chief executive officer of Camden National Corporation. “We’re benefiting from our strong capital position, disciplined credit culture and expense management. Our well-diversified and stable funding mix positions us well to win new client relationships and deepen existing ones through our relationship banking approach and exceptional customer service.”
For the first six months of 2024, the Company reported net income of $25.3 million and diluted EPS of $1.72, compared to $25.1 million and $1.72, respectively, for the six months ended June 30, 2023.
SECOND QUARTER 2024 HIGHLIGHTS
Our return on average assets was 0.84% for the second quarter of 2024, and our return on average equity was 9.60% and, on a non-GAAP basis, our return on average tangible equity was 11.96%.
Our net interest margin increased to 2.36% for the second quarter of 2024 from 2.30% for the first quarter of 2024.
Our asset quality continues to be very strong, highlighted by loans 30-89 days past due of 0.05% of total loans and non-performing loans of 0.23% of total loans at June 30, 2024.
Our capital position remained strong with regulatory capital ratios well in excess of required regulatory levels. At June 30, 2024, our common equity ratio was 8.88% and, on a non-GAAP basis, tangible common equity ratio was 7.34%.
At June 30, 2024, uninsured and uncollateralized1 deposits accounted for 14.6% of total deposits, and available liquidity sources were 2.0 times uninsured and uncollateralized deposits.
FINANCIAL CONDITION
As of June 30, 2024, total assets were $5.7 billion, a decrease of 1% since March 31, 2024. The decrease was driven by lower cash balances of $71.2 million between periods.
Investments totaled $1.1 billion on June 30, 2024, a decrease of 2% since March 31, 2024. We continue to redeploy monthly cash flows from the investment portfolio to fund loan growth to maximize our earning-asset yield. The investment portfolio represented 20% of total assets on June 30, 2024, and March 31, 2024. As of June 30, 2024, and March 31, 2024, the duration of the Company’s securities was 5.5 years, and the weighted average life was 7.2 years at each date.
Loans totaled $4.1 billion on June 30, 2024, an increase of $18.3 million since March 31, 2024, driven by a 3% increase in our commercial loans and a 2% increase in consumer and home equity loans during the quarter. In the second quarter of 2024, we sold 52% of our residential mortgage production.
Asset quality through the second quarter of 2024 remained strong. We continue to review our loan portfolio and, to-date, we have not identified any signs of systemic stress. On June 30, 2024, loans 30-89 days past due to total loans remained flat from March 31, 2024 at 0.05% of total loans. Annualized net charge-offs for the second quarter of 2024 increased 2 basis points from the first quarter of 2024 to 0.04% of average loans. The Company’s allowance for credit losses (“ACL”) on loans was 0.86% as of June 30, 2024, and March 31, 2024. On June 30, 2024, the ACL was 3.7 times the total non-performing loans, compared to 4.7 times on March 31, 2024.
Deposits totaled $4.5 billion on June 30, 2024, a decrease of 1% since March 31, 2024. Checking account balances decreased by 2% during the second quarter of 2024, primarily due to normal business activities of one of our large commercial relationships and managed outflow of high-cost municipal deposits to optimize our funding costs. In the second quarter of 2024, we launched a high-yield savings deposit product in an effort to raise cost effective deposits and drive new customer acquisition. Through this new product, we drove savings deposit growth of 8% during the second quarter of 2024.
In June 2024, we prepaid a portion of our Bank Term Funding Program (“BTFP”) funding totaling $55.0 million. As of June 30, 2024, the Company had remaining BTFP funding of $170.0 million at a fixed interest rate of 4.76% that is scheduled to mature in January 2025.
As of June 30, 2024, the Company’s regulatory capital ratios were each well in excess of regulatory capital requirements. The Company’s common equity ratio was 8.88%, and, on a non-GAAP basis, its tangible common equity ratio was 7.34%, compared to 8.66% and 7.12%, respectively, at March 31, 2024.
The Company announced a cash dividend of $0.42 per share, representing an annualized dividend yield of 5.09%, based on the Company’s closing share price of $33.00, as reported by NASDAQ on June 28, 2024 (the last trading day of the second quarter of 2024), payable on July 31, 2024, to shareholders of record on July 15, 2024.
The Company repurchased 50,000 shares of its common stock at an average price of $32.19 per share through the first six months of 2024.
1 Uncollateralized deposits are customer deposits for which the Company has not pledged any of its assets, including investment securities, or provided any other type of guarantee
FINANCIAL OPERATING RESULTS (Q2 2024 vs. Q1 2024)
Net income for the second quarter of 2024 was $12.0 million, a decrease of $1.3 million, or 10%, compared to the first quarter of 2024. The decrease was driven by negative provision expense in the first quarter of 2024 of $2.1 million compared to provision expense of $650,000 for the second quarter. On a non-GAAP basis, pre-tax, pre-provision income was $15.5 million an increase $1.3 million, or 9%, between the same periods.
Net interest income for the second quarter of 2024 was $32.2 million, an increase of $911,000, or 3%, compared to the first quarter of 2024. The increase was driven by net interest margin expansion of six basis points between periods to 2.36% for the second quarter of 2024. Interest-earning asset yields increased 14 basis points to 4.58% for the second quarter of 2024, primarily due to the deployment of investment cash flows to fund new loan originations at current market interest rates and the maturity of a $100.0 million balance sheet derivative in June 2024 that contributed to the yield increase in the commercial real estate loan portfolio. The increase in our earning-asset yield more than offset the increase in funding costs, which increased eight basis points to 2.35% for the second quarter of 2024, led by an eight basis point increase in deposit costs to 2.05% over the same period.
Provision expense of $650,000 was recorded for the second quarter of 2024, consisting of provision for loan losses of $188,000 and the provision for unfunded commitments of $462,000. The provision for loan losses for the second quarter of 2024 was driven by modest loan growth. The provision for unfunded commitment for the second quarter of 2024 was driven by the increase in the committed commercial loan pipeline to $148.4 million as of June 30, 2024 compared to $86.0 million as of March 31, 2024.
Non-interest income for the second quarter of 2024 was $10.6 million, an increase of $323,000, or 3%, over the first quarter of 2024. The increase between periods was driven by an increase in debit card income of $203,000, and brokerage and wealth management income of $323,000 in total. Mortgage banking income was lower by $292,000 between periods and was driven by the change in fair value on loans held for sale and loan pipelines.
Non-interest expense for the second quarter of 2024 was $27.3 million, a decrease of $52,000, compared to the first quarter of 2024. We continue to manage costs in response to revenue pressures from the current economic environment. Our GAAP efficiency ratio for the second quarter of 2024 was 63.77% and non-GAAP efficiency ratio was 63.53%, compared to 65.78% and 65.55% for the first quarter of 2024, respectively.
Q2 2024 CONFERENCE CALL
Camden National Corporation will host a conference call and webcast at 3:00 p.m., Eastern Time, on Tuesday, July 30, 2024 to discuss its second quarter 2024 financial results and outlook. Participants should dial into the call 10 – 15 minutes before it begins. Information about the conference call is as follows:
Live dial-in (Domestic):
(833) 470-1428
Live dial-in (All other locations):
(929) 526-1599
Participant access code:
401866
Live webcast:
A link to the live webcast will be available on Camden National’s website under “About — Investor Relations” at CamdenNational.bank prior to the meeting, and a replay of the webcast will be available on Camden National’s website following the conference call. The transcript of the conference call will also be available on Camden National’s website approximately two days after the conference call.
ABOUT CAMDEN NATIONAL CORPORATION
Camden National Corporation (NASDAQ:CAC) is Northern New England’s largest publicly traded bank holding company, with $5.7 billion in assets and 57 banking centers in Maine and New Hampshire. Founded in 1875, Camden National Bank is a full-service community bank, offering the latest digital banking, complemented by award-winning, personalized service. Camden National Bank has been recognized as one of the Best Places to Work by Best Companies Group for three years in a row. To learn more, visit CamdenNational.bank. Member FDIC. Equal Housing Lender.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including certain plans, expectations, goals, projections, and other statements, which are subject to numerous risks, assumptions, and uncertainties. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures; inflation; ongoing competition in labor markets and employee turnover; deterioration in the value of Camden National’s investment securities; changes in consumer spending and savings habits; changes in the interest rate environment; changes in general economic conditions; operational risks including, but not limited to, cybersecurity, fraud, pandemics and natural disasters; legislative and regulatory changes that adversely affect the business in which Camden National is engaged; turmoil and volatility in the financial services industry, including failures or rumors of failures of other depository institutions which could affect Camden National’s ability to attract and retain depositors, and could affect the ability of financial services providers, including the Company, to borrow or raise capital; actions taken by governmental agencies to stabilize the financial system and the effectiveness of such actions; changes to regulatory capital requirements in response to recent developments affecting the banking sector; changes in the securities markets and other risks and uncertainties disclosed from time to time in Camden National’s Annual Report on Form 10-K for the year ended December 31, 2023, as updated by other filings with the Securities and Exchange Commission (“SEC”). Further, statements regarding the potential effects of the war in Ukraine, conflict in the Middle East and other notable and global current events on the Company’s business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possible materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the Company’s control. Camden National does not have any obligation to update forward-looking statements.
USE OF NON-GAAP MEASURES
In addition to evaluating the Company’s results of operations in accordance with generally accepted accounting principles in the United States (“GAAP”), management supplements this evaluation with certain non-GAAP financial measures such as: adjusted net income; adjusted diluted earnings per share; adjusted return on average assets; adjusted return on average equity; pre-tax, pre-provision income; return on average tangible equity and adjusted return on average tangible equity; the efficiency and tangible common equity ratios; tangible book value per share; core deposits and average core deposits. Management utilizes these non-GAAP financial measures for purposes of measuring our performance against our peer group and other financial institutions and analyzing our internal performance. We also believe these non-GAAP financial measures help investors better understand the Company’s operating performance and trends and allow for better performance comparisons to other financial institutions. In addition, these non-GAAP financial measures remove the impact of unusual items that may obscure trends in the Company’s underlying performance. These disclosures should not be viewed as a substitute for GAAP operating results, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other financial institutions. Reconciliations to the comparable GAAP financial measures can be found in this document.
ANNUALIZED DATA
Certain returns, yields and performance ratios are presented on an “annualized” basis. This is done for analytical and decision-making purposes to better discern underlying performance trends when compared to full-year or year-over-year amounts. Annualized data may not be indicative of any four-quarter period and is presented for illustrative purposes only.
Selected Financial Data
(unaudited)
At or For The
Three Months Ended
At or For The
Six Months Ended
(In thousands, except number of shares and per share data)
June 30,
2024
March 31,
2024
June 30,
2023
June 30,
2024
June 30,
2023
Financial Condition Data
Loans
$ 4,139,361
$ 4,121,040
$ 4,100,131
$ 4,139,361
$ 4,100,131
Total assets
5,724,380
5,794,785
5,743,931
5,724,380
5,743,931
Deposits
4,514,020
4,551,524
4,693,745
4,514,020
4,693,745
Shareholders’ equity
508,286
501,577
467,376
508,286
467,376
Operating Data and Per Share Data
Net income
$ 11,993
$ 13,272
$ 12,389
$ 25,265
$ 25,116
Adjusted net income (non-GAAP)(1)
11,993
12,553
12,389
24,546
27,340
Pre-tax, pre-provision income (non-GAAP)(1)
15,519
14,233
15,657
29,752
33,638
Diluted EPS
0.81
0.91
0.85
1.72
1.72
Adjusted diluted EPS (non-GAAP)(1)
0.81
0.86
0.85
1.67
1.82
Profitability Ratios
Return on average assets
0.84 %
0.93 %
0.87 %
0.89 %
0.89 %
Adjusted return on average assets (non-GAAP)(1)
0.84 %
0.88 %
0.87 %
0.87 %
0.95 %
Return on average equity
9.60 %
10.77 %
10.66 %
10.18 %
10.91 %
Adjusted return on average equity (non-GAAP)(1)
9.60 %
10.19 %
10.66 %
9.89 %
11.54 %
Return on average tangible equity (non-GAAP)(1)
11.96 %
13.46 %
13.55 %
12.70 %
13.88 %
Adjusted return on average tangible equity (non-GAAP)(1)
11.96 %
12.74 %
13.55 %
12.34 %
15.10 %
GAAP efficiency ratio
63.77 %
65.78 %
63.42 %
64.76 %
61.31 %
Efficiency ratio (non-GAAP)(1)
63.53 %
65.55 %
63.07 %
64.52 %
60.99 %
Net interest margin (fully-taxable equivalent)
2.36 %
2.30 %
2.40 %
2.32 %
2.47 %
Asset Quality Ratios
ACL on loans to total loans
0.86 %
0.86 %
0.90 %
0.86 %
0.90 %
Non-performing loans to total loans
0.23 %
0.19 %
0.13 %
0.23 %
0.13 %
Annualized net charge-offs to average loans
0.04 %
0.02 %
0.04 %
0.03 %
0.03 %
Capital Ratios
Common equity ratio
8.88 %
8.66 %
8.14 %
8.88 %
8.14 %
Tangible common equity ratio (non-GAAP)(1)
7.34 %
7.12 %
6.58 %
7.34 %
6.58 %
Tier 1 leverage capital ratio
9.64 %
9.59 %
9.29 %
9.64 %
9.29 %
Total risk-based capital ratio
14.46 %
14.52 %
13.95 %
14.46 %
13.95 %
(1) This is a non-GAAP measure, please see “Reconciliation of non-GAAP to GAAP Financial Measures (unaudited).
Consolidated Statements of Condition Data
(unaudited)
(In thousands)
June 30,
2024
March 30,
2024
June 30,
2023
% Change
Jun 2024
vs. Mar
2024
% Change
Jun 2024
vs. Jun
2023
ASSETS
Cash, cash equivalents and restricted cash
$ 105,560
$ 176,719
$ 94,278
(40) %
12 %
Investments:
Trading securities
4,959
4,847
4,235
2 %
17 %
Available-for-sale securities, at fair value
579,534
601,576
658,205
(4) %
(12) %
Held-to-maturity securities, at amortized cost
533,600
540,349
534,584
(1) %
— %
Other investments
17,105
16,392
14,655
4 %
17 %
Total investments
1,135,198
1,163,164
1,211,679
(2) %
(6) %
Loans held for sale, at fair value
14,321
9,524
12,036
50 %
19 %
Loans:
Commercial real estate
1,697,979
1,702,952
1,677,002
— %
1 %
Commercial
409,682
397,395
422,437
3 %
(3) %
Residential real estate
1,768,357
1,762,482
1,748,303
— %
1 %
Consumer and home equity
263,343
258,211
252,389
2 %
4 %
Total loans
4,139,361
4,121,040
4,100,131
— %
1 %
Less: allowance for credit losses on loans
(35,412)
(35,613)
(36,983)
(1) %
(4) %
Net loans
4,103,949
4,085,427
4,063,148
— %
1 %
Goodwill and core deposit intangible assets
95,390
95,529
95,964
— %
(1) %
Other assets
269,962
264,422
266,826
2 %
1 %
Total assets
$ 5,724,380
$ 5,794,785
$ 5,743,931
(1) %
— %
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits:
Non-interest checking
$ 921,605
$ 929,314
$ 1,015,184
(1) %
(9) %
Interest checking
1,465,560
1,503,045
1,627,250
(2) %
(10) %
Savings and money market
1,399,464
1,379,437
1,377,791
1 %
2 %
Certificates of deposit
576,563
585,786
449,265
(2) %
28 %
Brokered deposits
150,828
153,942
224,255
(2) %
(33) %
Total deposits
4,514,020
4,551,524
4,693,745
(1) %
(4) %
Short-term borrowings
552,606
601,499
448,182
(8) %
23 %
Junior subordinated debentures
44,331
44,331
44,331
— %
— %
Accrued interest and other liabilities
105,137
95,854
90,297
10 %
16 %
Total liabilities
5,216,094
5,293,208
5,276,555
(1) %
(1) %
Commitments and Contingencies
Shareholders’ Equity
Common stock, no par value
115,543
116,449
114,302
(1) %
1 %
Retained earnings
493,974
488,143
475,008
1 %
4 %
Accumulated other comprehensive loss:
Net unrealized loss on debt securities, net of tax
(110,308)
(111,357)
(127,829)
(1) %
(14) %
Net unrealized gain on cash flow hedging derivative instruments, net of tax
9,327
8,587
6,213
9 %
50 %
Net unrecognized loss on postretirement plans, net of tax
(250)
(245)
(318)
2 %
(21) %
Total accumulated other comprehensive loss
(101,231)
(103,015)
(121,934)
(2) %
(17) %
Total shareholders’ equity
508,286
501,577
467,376
1 %
9 %
Total liabilities and shareholders’ equity
$ 5,724,380
$ 5,794,785
$ 5,743,931
(1) %
— %
Consolidated Statements of Income Data
(unaudited)
For The
Three Months Ended
(In thousands, except per share data)
June 30,
2024
March 31,
2024
June 30,
2023
% Change Jun
2024 vs. Mar
2024
% Change Jun
2024 vs. Jun
2023
Interest Income
Interest and fees on loans
$ 53,422
$ 51,709
$ 48,645
3 %
10 %
Taxable interest on investments
6,807
7,027
5,852
(3) %
16 %
Nontaxable interest on investments
461
465
762
(1) %
(40) %
Dividend income
521
312
267
67 %
95 %
Other interest income
951
670
529
42 %
80 %
Total interest income
62,162
60,183
56,055
3 %
11 %
Interest Expense