CAC Camden National Corporation

Fourth Quarter Net Interest Margin Expansion and Solid Earnings Set the Stage Heading Into 2025

CAMDEN, Maine, Jan. 28, 2025 /PRNewswire/ -- Camden National Corporation (NASDAQ: CAC; "Camden National" or the "Company") today reported earnings for the quarter ended December 31, 2024, of $14.7 million and diluted earnings per share ("EPS") of $1.00, an increase of 12% and 11%, respectively, over the third quarter of 2024.

On January 2, 2025, the Company announced the successful closing of its merger with Northway Financial, Inc. ("Northway"), the parent company of Northway Bank. The all-stock transaction was originally announced on September 10, 2024. As of the closing, the combined institution had total assets of approximately $7.0 billion and 73 branches in Maine and New Hampshire. The conversion of Northway's banking products and services to Camden National systems is expected to occur in mid-March 2025.

Excluding the merger and acquisition costs incurred in the fourth quarter of 2024, on a non-GAAP basis, core net income for the fourth quarter of 2024 was $15.1 million and core diluted EPS was $1.03, an increase of 9% and 8%, respectively, over the third quarter of 2024.

"We are pleased with our fourth quarter and full-year financial performance. These results reflect our team's collective efforts and commitment to serving our customers and communities," said Simon Griffiths, president and chief executive officer of Camden National Corporation. "We enter 2025 with tremendous momentum across our franchise, highlighted by our fourth quarter financial results, which included core earnings growth of 9% for the quarter and signs of profitability returning to historical levels as our return on average assets surpassed 1%. As we enter 2025, we are excited to welcome our neighbors from Northway and bolster our franchise in New Hampshire. We remain confident in our plan to build the premier Northern New England community bank, and our strong 2024 financial performance provides us a solid foundation to do so."

For the year ended December 31, 2024, the Company reported net income of $53.0 million and diluted EPS of $3.62, each an increase of 22% over the year ended December 31, 2023. On a non-GAAP basis, core net income for the year ended December 31, 2024, was $53.4 million and core diluted EPS was $3.65, each an increase of 1% over the year ended December 31, 2023.

FOURTH QUARTER 2024 HIGHLIGHTS*

• Our net interest margin for the fourth quarter of 2024 was 2.57%, an increase of 11 basis points over the third quarter of 2024.
• For the fourth quarter of 2024, our return on average assets was 1.01%, our return on average equity was 10.99%, and, on a non-GAAP basis, our return on average tangible equity was 13.50%. Excluding merger and acquisition costs, on a non-GAAP basis, our core return on average assets was 1.04% and our core return on average tangible equity was 13.88%.
• For the fourth quarter of 2024, our efficiency ratio on a GAAP and non-GAAP basis was 59.62% and 58.51%, respectively, showing continued momentum.
• At and for the quarter ended December 31, 2024, asset quality remained strong without any signs of systemic stress. Loans 30-89 days past due at December 31, 2024, remained low and were 0.05% of total loans, an increase of 2 basis points from September 30, 2024. Non-performing loans at December 31, 2024, were 0.16% of total loans, an improvement of 1 basis point compared to September 30, 2024.
• At December 31, 2024, our capital position remained strong and well in excess of regulatory capital ratios. Our common equity ratio was 9.15%, and on a non-GAAP basis, our tangible common equity ratio was 7.64%, a slight decrease of 7 and 5 basis points, respectively, from September 30, 2024.

FINANCIAL CONDITION

As of December 31, 2024, total assets were $5.8 billion compared to $5.7 billion as of September 30, 2024.

Cash balances totaled $215.0 million at December 31, 2024, an increase of 54% since September 30, 2024. The increase is temporary, and we anticipate cash balances decreasing to prior period levels in the first quarter of 2025, in part as a result of the Company taking actions in early January 2025 to pay-off higher cost term borrowings of Northway and expected normal deposit outflows in the first quarter of each year due to seasonality within our markets.

Investments totaled $1.1 billion on December 31, 2024, a decrease of 2% since September 30, 2024. In the fourth quarter of 2024, the decrease in investment balances was due to the shifts in the interest rate environment, this led to a $17.7 million decrease in the fair value of our available-for-sale ("AFS") investment portfolio. As of December 31, 2024 and September 30, 2024, the duration of the Company's total investment portfolio was 5.2 years and 5.3 years, respectively. The duration of the AFS investment portfolio for both December 31, 2024 and September 30, 2024, was 4.3 years.

Loans totaled $4.1 billion on December 31, 2024, remaining largely consistent with reported balances as of September 30, 2024. During the fourth quarter of 2024, a few larger loan payoffs muted our commercial and commercial real estate loan growth. At December 31, 2024, our committed commercial and commercial real estate loan pipelines totaled $45.4 million. Within our retail loan business, we continue to sell the majority of our residential mortgage production. Our funded residential mortgage production for the fourth quarter was 14% higher than the previous quarter, and we sold 58% of our total fourth quarter residential mortgage production. Our committed retail loan production at December 31, 2024, totaled $41.8 million.

As of and for the quarter ended December 31, 2024, the Company's asset quality remained very strong across all key metrics. At December 31, 2024, loans 30-89 days past due were 0.05% of total loans, non-performing assets were 0.11% of total assets, and annualized net charge-offs for the fourth quarter of 2024 were 0.04% of average loans. We continue to review our loan portfolio regularly for any potential concerns, and as of December 31, 2024, we have not identified any signs of systemic stress or elevated risks across our loan portfolio. The Company's allowance for credit losses ("ACL") on loans increased by 1 basis point in the fourth quarter of 2024 to 0.87%. At December 31, 2024, the ACL was 5.5 times the total non-performing loans, increasing from 5.1 times as of September 30, 2024.

Deposits totaled $4.6 billion on December 31, 2024, an increase of 1% since September 30, 2024. On a non-GAAP basis, core deposits grew 2% in the fourth quarter of 2024 to $3.9 billion, primarily driven by the continued growth within savings deposits of 7% in the quarter and a temporary deposit of $61.8 million deposited by one large customer relationship that we anticipate being drawn down in the first quarter of 2025.

As of December 31, 2024, the Company's regulatory capital ratios were each well in excess of regulatory capital requirements. The Company's common equity ratio was 9.15%, and, on a non-GAAP basis, its tangible common equity ratio was 7.64%, a decrease of 7 and 5 basis points, respectively, from September 30, 2024. The decrease in the common equity ratio and tangible common equity ratios was driven by the shift in the interest rate curve, which drove down the valuation on the Company's AFS investment portfolio between quarters.

The Company announced a cash dividend of $0.42 per share, representing an annualized dividend yield of 3.93%, based on the Company's closing share price of $42.74 as reported by NASDAQ on December 31, 2024, payable on January 31, 2025, to shareholders of record on January 15, 2025.

FINANCIAL OPERATING RESULTS (Q4 2024 vs. Q3 2024)

Net income for the fourth quarter of 2024 was $14.7 million, an increase of $1.6 million, or 12%, compared to the third quarter of 2024. The increase was driven by the strong revenue growth of 6% in the fourth quarter and lower operating expenses of 2% between periods. Excluding merger and acquisition costs related to the acquisition of Northway in January of 2025, on a non-GAAP basis, core net income for the fourth quarter of 2024 grew by $1.3 million, or 9%, over the third quarter of 2024.

Net interest income for the fourth quarter of 2024 increased $1.8 million, or 5%, to $35.4 million, compared to the third quarter of 2024. The increase was driven by net interest margin expansion of 11 basis points between quarters to 2.57% for the fourth quarter. Our improved net interest margin between periods reflects the macroeconomic shift in short-term interest rates during the second half of 2024 and our ability to effectively lower deposit rates, which resulted in our average cost of funds declining 19 basis points between quarters to 2.16% for the fourth quarter of 2024.

Provision expense of $809,000 was recorded for the fourth quarter of 2024, consisting of a provision for loan losses of $746,000 and a provision for unfunded commitments of $63,000. The Company increased its ACL to loans coverage ratio 1 basis point to 0.87% for the fourth quarter of 2024.

Non-interest income for the fourth quarter of 2024 was $12.2 million, reflecting an increase of $760,000, or 7%, over the third quarter of 2024. The growth between periods was primarily driven by the recognition of our annual Visa bonus in the fourth quarter of 2024, which drove the increase in debit card income of $384,000 and an increase in back-to-back loan swap fee income of $232,000.

Non-interest expense for the fourth quarter of 2024 was $28.4 million, a decrease of $536,000, or 2%, compared to the third quarter of 2024. The primary drivers for the decline were lower salaries and employee benefits costs of 3% and lower Northway merger and acquisition costs. During the first quarter of 2025, we anticipate higher merger and acquisition costs as we integrate Northway with the Company following the closing of the Northway acquisition on January 2, 2025. Our GAAP efficiency ratio for the fourth quarter of 2024 was 59.62% and our non-GAAP efficiency ratio was 58.51%, compared to 64.23% and 62.39% for the third quarter of 2024, respectively.

NORTHWAY ACQUISITION

On January 2, 2025, the Company completed its previously announced acquisition of Northway in an all-stock transaction. At the effective time of the Merger, each share of Northway's common stock was converted into the right to receive 0.83 shares of the Company's common stock, which resulted in the issuance of approximately 2.3 million shares to Northway's shareholders. The total consideration paid by the Company was approximately $96.5 million, based on the Company's January 2, 2025 closing price of $42.25 per share as reported by Nasdaq.

Q4 2024 CONFERENCE CALL

Camden National will host a conference call and webcast at 3:00 p.m., Eastern Time, on Tuesday, January 28, 2025, to discuss its fourth 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:

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 approximately $7.0 billion in assets. Founded in 1875, Camden National Bank has 73 branches in Maine and New Hampshire, is a full-service community bank offering the latest digital banking, complemented by award-winning, personalized service. Additional information is available at CamdenNational.bank. Member FDIC. Equal Housing Lender.

Comprehensive wealth management, investment, and financial planning services are delivered by Camden National Wealth Management.

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. This release may also contain forward-looking statements relating to the Company's acquisition of Northway. Factors that could cause actual results to differ materially include the following: the reaction to the transaction of the companies' customers, employees and counterparties; customer disintermediation; expected synergies, cost savings and other financial benefits of the proposed transaction might not be realized within the expected timeframes or might be less than projected; credit and interest rate risks associated with Camden's and Northway's respective businesses, customers, borrowings, repayment, investment and deposit practices; and other risks. 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: core net income; core diluted earnings per share; core return on average assets; core return on average equity; pre-tax, pre-provision income; return on average tangible equity and core 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.