CAMDEN NATIONAL CORP Q1 FY2025 earnings call

• Successfully closed merger with Northway Financial on January 2nd, welcomed over 28,000 new customers and over 100 new team members. Completed full systems integration 74 days later. Camden National Bank has 73 branches and $7 billion in assets.
• On track to achieve 35% cost savings from Northway's operating expenses, expecting to realize 75% in 2025 with savings materializing in Q2. Likely to come in under pre-tax merger cost target of $13.5 million.
• Core net income $16 million led by strong fundamentals. Net interest margin 3.04%, core net interest margin expanded 11 basis points to 2.68%.
• Asset quality strong, non-performing and delinquent loans low. Allowance to loan ratio increased to 0.96% due to macro environment uncertainty.
• Launched online consumer and business account opening platform in January. Celebrating 150th anniversary, focused on deepening customer relationships and growing New Hampshire presence.

Core net income was $16 million. GAAP net income was $7.3 million or $0.43 of diluted EPS. Net interest margin was 3.04% for the first quarter. Non-performing loans were 15 basis points of total loans, delinquent loans were 7 basis points. Non-interest income was $11.2 million, non-interest expense was $44.5 million including acquisition-related costs. Loans totaled $4.9 billion, deposits totaled $5.6 billion.

• Expect core net interest margin to continue expanding, maybe additional 2-5 basis points in Q2, bringing core net interest margin to 270-275 basis points range.
• Purchase accounting accretion midpoint around $5 million, with potential for acceleration if yield curve changes.
• Fee income expected to be in $12-12.5 million range in Q2, moving towards $12.5-13 million run rate by year end.
• Expenses expected to be in $34.5-35 million range core basis before M&A costs and CDI amortization, with further cost savings materializing in second half of 2025.
• Capital ratios strong, expect to rebuild capital at accelerated pace due to combined franchise's earnings power.

• Macroeconomic uncertainty due to tariffs and potential federal actions may temper loan growth in short-term.
• Credit portfolio risk consideration due to macro environment, with allowance to loan ratio increased as a prudent move.
• Potential customer attrition from Northway's legacy customer base, though results to date have been positive.

Q: How are core margin expectations for Q2?

A: Mike Archer thinks core net interest margin will continue to expand, maybe additional 2-5 basis points, bringing core net interest margin to 270-275 basis points range.

Q: Purchase accounting accretion, will there be a step-up from the $5 million seen this quarter?

A: Mike Archer says $5 million is a good midpoint, with potential for things to slow but overall $5 million is a good number.

Q: On fee income, when will we get to $13 million quarterly run rate?

A: Mike Archer says in Q2, fee income could be in $12-12.5 million range, moving towards $12.5-13 million by year end.

Q: On loan growth outlook and provisioning, should we expect higher provisioning?

A: Simon Griffiths says they took an early bite at provisioning based on macroeconomic uncertainty, will look at progress in Q2 and continue to ensure well-reserved.