Camden National (CAC) Q1 2026 Earnings Transcript

DATE

Tuesday, April 28, 2026 at 3 p.m. ET

CALL PARTICIPANTS

• President & Chief Executive Officer — Simon Griffiths
• Chief Financial Officer — Mike Archer

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TAKEAWAYS

• Net Income -- $21.9 million, with earnings per share of $1.29.
• Adjusted Net Income and EPS Growth -- Adjusted net income and adjusted diluted EPS increased 39% year over year, excluding non-core acquisition-related items.
• Tangible Common Equity Ratio -- Increased to 7.64% at quarter-end, indicating higher capital strength.
• Return on Average Assets -- 1.28%, as reported.
• Return on Average Tangible Equity -- 18.1% for the period.
• Non-GAAP Efficiency Ratio -- 53.21%, highlighting operating efficiency.
• Net Interest Margin -- 3.24%, up 20 basis points year over year but down 5 basis points versus the prior quarter, primarily due to lower fair value accretion income.
• Core Net Interest Margin Stability -- Core NIM held steady at 2.92% between periods.
• Anticipated Core NIM Expansion -- Management projects core net interest margin to expand 2-5 basis points in the next quarter given current conditions.
• Deposit Base -- Reached $5.6 billion at quarter-end, a 1% sequential increase supported by high-yield savings and commercial deposit flows.
• Home Equity Loan Portfolio -- Rose by $10.6 million during the quarter despite seasonal loan growth softness.
• Assets Under Administration (AUA) -- Held at $2.4 billion, flat sequentially, with 11% growth year over year and rising quarterly revenues.
• Noninterest Income -- Declined sequentially because of seasonality in fee income categories but is projected to rebound to roughly $13 million in the next quarter.
• Noninterest Expense -- $35.7 million, down 3% from the previous quarter; anticipated second-quarter expense is approximately $37.5 million due to seasonal factors.
• Shareholder Capital Return -- $8.6 million returned through dividends and share repurchases; 33,000 shares repurchased during the quarter.
• Tangible Book Value Per Share -- Increased 3% to $30.58, reflecting capital accretion and share repurchases.
• Nonperforming Loans -- Represented 22 basis points of total loans; past due loans at 6 basis points.
• Net Charge-Offs -- $506,000 or 4 basis points of average loans annualized.
• Allowance for Credit Losses -- 92 basis points of loans, up slightly from 91 basis points year-end, supporting a 4.2-times coverage of nonperforming loans.
• Fair Value Accretion Income -- $4.3 million for the quarter, with a near-term run-rate expectation of $4.5 million or higher.
• Commercial Loan Weighted Average Yield -- New commercial loan yields average just above 6%, with pricing pressure and heightened competition noted.
• Digital and AI Initiatives -- Launch of Candid IQ, PrepIQ, and LoanIQ platforms, designed to improve banker productivity and enhance loan decision-making efficiency.
• Loan Growth Outlook -- Management expects full-year loan growth in the low- to mid-single-digit range, citing positive pipelines and team expansion especially in New Hampshire and Maine.
• Fee Income Growth Expectations -- Management views mid-single-digit year-over-year growth in fee income as achievable for 2026.
• Residential Mortgage Mix -- About an even split between sold and retained loans, with balanced, relationship-driven growth expected rather than transactional expansion.
• Commercial Line Utilization Rates -- Currently at 35%-40%, stable versus six months ago.

SUMMARY

Camden National Corporation reported increased adjusted net income and higher capital ratios, positioning the company for further balance sheet growth and expanded capital returns. Management introduced new digital and AI tools that are driving measurable operating efficiencies and strengthening customer engagement capabilities. Sequential loan and fee growth were affected by seasonal trends, but both the commercial and home equity pipelines are expected to support renewed volume increases throughout the year. Deposit growth and disciplined funding cost strategies contributed to projected improvements in core net interest margin. Management flagged a brief period of expense normalization ahead. No new credit trends or material asset quality deterioration emerged; the company continues to prioritize balance sheet resilience and stable returns to shareholders.

• Management reiterated selectivity toward M&A, stating a preference for contiguous-market opportunities while prioritizing organic growth and capital rebuild.
• CFO Mike Archer said, "Overall, on the funding base, we think that 2 to 5 basis points is where we can see some margin expansion in the second quarter," directly highlighting expected near-term margin expansion driven by deposit dynamics.
• Competitive intensity has increased across commercial lending and deposits over the past six months, as confirmed by CEO Simon Griffiths, yet customer demand remains healthy in target markets.
• Line utilization rates remain stable across commercial portfolios and home equity versus six months ago.
• Fee income momentum is supported by growth in wealth management and brokerage channels, with high single-digit year-over-year revenue increase seen in wealth during the first quarter.

INDUSTRY GLOSSARY

• Tangible Common Equity Ratio: A measure of core capital as a percentage of tangible assets, excluding intangible assets and goodwill, indicating loss-absorbing capacity for banks.
• Fair Value Accretion Income: The recognition of income from the revaluation of acquired financial assets to fair value following a business combination.
• Efficiency Ratio (Non-GAAP): A non-GAAP metric calculating noninterest expense as a percentage of revenue, used to assess bank operating efficiency.
• Core Net Interest Margin: The net interest margin adjusted to exclude nonrecurring or non-core items, providing a normalized view of earning asset yields and funding costs.
• Line Utilization Rate: The percentage of a committed credit facility, such as a commercial line of credit, that has been drawn by the borrower.
• Assets Under Administration (AUA): The total market value of assets managed or administered on behalf of clients, a key metric for wealth management businesses.
• LoanIQ/PrepIQ/Candid IQ: Camden National Corporation’s internally developed artificial intelligence and workflow platforms for loan processing, customer data integration, and banker productivity.

Full Conference Call Transcript

Simon Griffiths: Good afternoon, everyone, and thank you, Renée. Early this morning, we reported strong first quarter results, with net income of $21.9 million and earnings per share of $1.29. Excluding non-core acquisition-related items from last year, adjusted net income and adjusted diluted EPS increased 39% year over year in 2026. We are pleased that these results were near our record earnings reported last quarter, reflecting the continued value generated by the Northway Financial acquisition and ongoing organic financial improvements across the franchise, despite macroeconomic headwinds and the seasonal softening we typically experience in the first quarter.

These results demonstrate continued progress against our strategic priorities of growing the franchise, operating with discipline, and adapting our capabilities to better serve our customers and communities. Our balance sheet remains a source of strength, supported by strong and building capital levels, reserves that we believe are appropriately aligned with loan quality, and solid liquidity. We continue to maintain regulatory capital well in excess of required levels and internal targets, with our tangible common equity ratio increasing to 7.64% at quarter-end. Our disciplined credit approach continues to deliver strong asset quality, with past due loans and nonperforming assets remaining at very low levels in the first quarter.

Although loan growth was tempered this quarter due primarily to typical seasonality within our markets, we saw continued growth in our home equity loan portfolio, which increased $10.6 million during the quarter. We are encouraged by the continued strengthening of our commercial team, with recent key hires already making meaningful contributions. Our production pipeline reflects healthy customer demand across our markets, even as quarterly balances are impacted by payoffs and seasonality. As we head into the spring and summer months, loan pipelines continue to build, reinforced by the talent added to our commercial and retail teams.

As we build commercial capacity, we are deepening engagement with small and middle market businesses and positioning Camden National Corporation as a primary banking partner for a full suite of lending and treasury management solutions. Our deposit base reached $5.6 billion at March 31, representing a 1% increase from the prior quarter. Given the cyclical nature of our deposit flows, we are pleased with this level of growth in the first quarter, as it reflects our continued success with our high-yield savings accounts and recent wins by our commercial and treasury management teams. We are focused on relationship deposits, attracting deposits through service, convenience, and disciplined pricing.

Our goal is to build long-term customer relationships rather than simply pursue rate-driven volume. At the same time, we remain disciplined stewards of our capital and, with strong capital levels, we are focused on balancing reinvestment in the franchise and returning capital to shareholders, including through our recently announced share repurchase program and regular cash dividend. We continue to advance our digital strategy by equipping our bankers with practical, time-saving tools. Our internally developed AI platform, Candid IQ, anchors our AI initiatives, which operate within an established governance framework designed to drive productivity while remaining aligned with our moderate risk profile and value-driven, people-centered culture.

Recently, we launched PrepIQ, which delivers a real-time, integrated view of customer information across platforms, enabling more informed and productive conversations. LoanIQ, another internally developed tool, further enhances efficiency by streamlining access to loan policy and supporting faster, more consistent decision-making. We are encouraged by the rapid adoption and early benefits of these tools. Expanded use of automation continues to improve efficiency and redeploy capacity toward higher-value customer interactions, supporting our disciplined approach to expense management. Overall, our first quarter performance reflects the effectiveness of our strategy: maintaining a resilient balance sheet, driving high-quality growth, and staying relentlessly focused on delivering value for our customers, communities, and shareholders. We believe we are well positioned for the remainder of 2026.

With that, I will hand over to Mike to provide additional financial details for the quarter.

Mike Archer: Good afternoon. As Simon noted, we had a strong start to the year, delivering solid earnings for the first quarter and, importantly, our financial operating metrics continue to trend favorably, including a reported return on average assets of 1.28%, a return on average tangible equity of 18.1%, and a non-GAAP efficiency ratio of 53.21%. We continue to be focused on growing the franchise and delivering shareholder value. For the first quarter, we reported a net interest margin of 3.24%, which was up 20 basis points year over year and down 5 basis points from the previous quarter. The decrease on a linked-quarter basis was driven by lower fair value mark accretion income of $956 thousand.

Our underlying core net interest margin remained stable at 2.92% between periods. As we move into the second quarter, we anticipate net interest margin expansion of 2 to 5 basis points on a core basis. Our current interest rate outlook calls for slower and more gradual net interest margin expansion throughout 2026 as the likelihood of further Fed rate cuts has decreased. Noninterest income fell on a linked-quarter basis largely due to normal seasonality across many of our fee income categories, including debit card, mortgage banking, and swap fee income. Despite market volatility, assets under administration across our wealth and brokerage business remained essentially flat during the first quarter and were $2.4 billion at March 31.

We continue to be focused on growing our wealth channels. We are pleased to see AUA grow 11% year over year and quarterly revenues continuing to grow. As we move into the second quarter, we anticipate noninterest income to rebound to approximately $13 million. On the expense front, noninterest expenses totaled $35.7 million in the first quarter, down 3% from the previous quarter. For the second quarter, we anticipate our expense base to normalize, as we benefited from the true-up of our incentive accrual bonus payout in the first quarter, and, as in prior years, our annual merit cycle and other seasonal costs will be recognized in the second quarter.

We are currently estimating noninterest expense of approximately $37.5 million for the second quarter. Our credit quality across our loan portfolio continued to be very strong at March 31. Nonperforming loans were just 22 basis points of total loans, and past due loans were just 6 basis points of total loans. Net charge-offs for the quarter totaled $506 thousand, or 4 basis points of average loans annualized, and were the driver of our first quarter provision expense of $553 thousand. Our allowance for credit losses on March 31 was 92 basis points compared to 91 basis points at year-end.

Given the strength of our loan portfolio and our overall loan mix, we continue to believe we are appropriately reserved at this level, as evidenced by a 4.2-times coverage ratio of nonperforming loans at quarter-end. Lastly, I wanted to note that our capital continues to rebuild following our acquisition of Northway Financial last year, supporting both balance sheet strength and ongoing capital returns to shareholders. During 2026, our tangible book value per share grew 3% to $30.58 at March 31, which included the repurchase of just over 33 thousand shares during the quarter. Through regular cash dividends and share repurchases, the company returned $8.6 million in capital to its shareholders. This concludes our comments.

We will now open the call for questions.

Operator: Thank you. We will now open the call for questions. To ask a question, press star then 1 on your touchtone phone keypad. If you use a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 1 again. At this time, we will pause momentarily to assemble our roster. Your first question comes from the line of Damon Del Monte from KBW. Damon, please go ahead.

Damon Del Monte: Good afternoon, guys. I hope everybody is doing well today. First question, Mike, just wanted to talk a little bit about the margin. I got your comments there about 2 to 5 basis points of core expansion. Could you talk about some of the dynamics behind that? Is that more on the liability side, or is that going to be driven by the expected rebound in loan growth as we progress through the year?

Mike Archer: Hey, Damon. Good question. Primarily on the liability side. As we get into some of the seasonal months, we anticipate some continued benefit there from normal deposit flows. As CDs continue to reprice, there will be some benefits as that continues to roll. On the derivative front as well, as we get into the back half, we will start to see some benefit there as some of our derivatives start to roll off. On the asset side, albeit at a slower pace, new loan volume is certainly an opportunity for us to continue to squeak out some basis points on the earning asset yield.

Lastly, strategically, one of the things that we are focused on is redeploying our investment cash flow where we can—wanting to optimize funding, but ideally to fund loan growth on a go-forward basis. Lots of pieces there, but that summarizes it.

Damon Del Monte: Got it. Okay. That is helpful. And then from the fair value accretion standpoint, I think it was what—like $4.5 million this quarter? Is that right? And what is your outlook going forward?

Mike Archer: Good question. Overall, it was about $4.3 million for the quarter. I would still say $4.5 million, maybe a little bit north of that, is still a pretty good run-rate estimate for now.

Damon Del Monte: Okay, great. And then with regards to the loan growth and the outlook there, Simon, I heard the callout on the home equity line doing quite well. Can you just talk about some of the other expectations on the commercial side—CRE and C&I—and what are some of the key factors behind that driving that outlook?

Simon Griffiths: Thanks, Damon. I think overall we continue to see strength across our business. Obviously, there is a lot of macroeconomic uncertainty out there, but the underlying continues to be positive. On the commercial side, we see some nice momentum and businesses wanting to get out and invest. As we get into the spring and summer months, that comes into focus as they get investments ready for the summer. We see nice momentum around the residential business as well. We talked about home equity, which I think is strong, and we continue to see nice momentum on that business.

We talked a little bit in our script about some of the additions we are making and the strengthening of the team in New Hampshire. I was out with them a couple of weeks ago. I am really excited by the opportunities we are starting to see in the Southern New Hampshire market and the strength of the team there. All of these pieces together lead to a positive outlook.

Damon Del Monte: Would you expect to get low to mid-single-digit growth on a full-year basis? Is that a reasonable assumption?

Simon Griffiths: Yes, that feels reasonable. Obviously, there is a lot going on this year, but where we sit right now, low to mid-single digits seems a good range.

Damon Del Monte: Okay. That is all that I had for now. Thanks so much for taking my questions.

Operator: Your next question comes from Steve Moss from Raymond James. Steve, go ahead.

Steve Moss: Good afternoon, guys. Maybe just starting here—following up on the new hires in New Hampshire. I am curious about the type of talent you are seeing and the opportunity you are seeing to hire, and any thoughts on potential expenses beyond the second quarter if there are more incremental adds?

Simon Griffiths: Steve, thanks for the question. We continue to be extremely disciplined, as we have talked about in previous calls with you. Our focus is on self-funding reinvestment, finding efficiencies across our business. We do not see a material impact to the expense side. Some of those hires are replacing existing positions. We see opportunities in the southern-end markets—there has been a lot of disruption, some M&A—and we are picking up some great hires from those situations. They are very attracted to the Camden story. They see the opportunity here. We have a lot of ambition to continue to grow. The Northway acquisition has provided a great platform, and we are continuing to invest.

We are seeing that opportunity, and we will continue at a steady, measured pace to make those investments throughout this year and into next.

Steve Moss: Appreciate that color. On the commercial loan pipeline, where are you seeing pricing these days, and what are you expecting there?

Mike Archer: Steve, it is Mike. Overall, on average, deals are net in the low 6s—call it around 6% or a little higher. There is certainly a premium for credit quality these days and aggressive competition in the market. As we think about loan growth, we want to maintain our discipline. That is who we are and who we will continue to be. But on a weighted basis, it is probably closer to 6% at this point or a little higher.

Steve Moss: Maybe one last one on M&A. You have integrated the Northway deal and done a good job with it. What are your updated thoughts on deal activity post-integration—where are M&A discussions and your thinking on the deal front these days?

Simon Griffiths: Northway went very, very well. We are very proud of the work there. I was out in New Hampshire last week and saw a lot of energy from our clients and customers. I am really proud of the New Hampshire team and the traction we are getting in the markets—they are excited to be part of the Camden franchise. Looking forward, we continue to look for opportunities. We have said publicly we are interested, but they need to be the right opportunities for Camden. We have tremendous opportunities on the organic growth front. Capital rebuild is going well. The acquisition has been highly accretive from an income perspective, and there are lots of opportunities there.

We do not feel pressured to make a deal, but we are certainly looking. We have talked about contiguous markets, sticking to our DNA as an organization, and targeting organizations with a similar footprint and culture that would assimilate well. We are open to those opportunities, but we will not overreach. It is a balanced, thoughtful approach, with continued focus on the core business, driving performance, and continuing the path toward top-quartile returns.

Steve Moss: Great. I appreciate all the color there, Simon and Mike. I will step back in queue. Thank you very much.

Simon Griffiths: Thanks, Steve. Appreciate it.

Operator: Your next question comes from the line of Matthew Breese from Stephens. Matthew, go ahead.

Matthew Breese: Hey, good afternoon. Mike, I wanted to drill into your comment on margin expansion being driven by the liability side. Could you provide a little more color on the areas where you see the most potential for improvement? One thing I was focusing on was the cost of CDs at 3.17%—that seems like a pretty low starting point to begin with. Where else do you see opportunities?

Mike Archer: Matt, as you know, for the second quarter and beyond, part of the opportunity is just the remix of our deposit base as we get into the spring and summer season. Generally, late May into June, we start to see seasonal deposits come in. We fully anticipate that again this year. We also have some derivatives rolling off—some of those have served us really well over the last few years but, given the Fed position today, are a little underwater. As they roll, there is opportunity. Overall, on the funding base, we think that 2 to 5 basis points is where we can see some margin expansion in the second quarter.

We feel pretty good that, even with the Fed holding, as we get to the back half of the year there could be an opportunity for a restart approaching 3% on a core margin basis. We do see core margin expansion over the next few quarters.

Matthew Breese: For loan growth this quarter, how much of the sluggishness was seasonality versus competition? We have heard a lot about prepays and prepayment. What gives you confidence—maybe some color on the pipeline—that you will get back into that low to mid-single-digit range for the remainder of the year?

Mike Archer: We are seeing pipelines build—that gives us confidence. Year over year, we are seeing it. As Simon mentioned, we added strong talent across the New Hampshire franchise, and really activating that this year is an incredible opportunity for the organization. At the same time, we have made some nice adds in our Maine franchise and in markets we have been in for quite some time, and we see upside there. On the retail franchise, we have a strategy we are executing on—we continue to add bankers selling residential mortgages and home equities, which have been really strong for us, as well as small business. First quarter is normally sluggish for us.

We are starting to see pipelines build, and generally the back half of the year is where we typically see it play out. All signs point to that at this point, so low to mid-single-digit growth remains a good range estimate.

Matthew Breese: Got it. Two others for me. First, focusing on the residential loan category: What is the current breakdown between loans being sold into the secondary market versus held for balance sheet at this point? And should we think about that portfolio as a growth category or more stable?

Mike Archer: Generally plus or minus 50/50, though it can move a little quarter to quarter. Overall for the residential portfolio, we are thinking about slower, relationship-based growth—less transactional—as we position our loan portfolio and balance sheet over time. I would not say our expectation is flat, but I also would not expect mid-single-digit growth there.

Matthew Breese: Lastly, on share repurchases. Historically, I do not remember Camden being a prolific repurchaser of your own stock. You talked a bit about that in your opening comments. To what extent might that fit on a go-forward basis? How much in the way of share repurchases should we be thinking about?

Mike Archer: We joke internally that one of our challenges is we generate lots of capital and have to put it to work. We are focused on organic growth, positioning our capital levels so we can be opportunistic, as well as deploying it in share repurchases and dividends. It will play into the mix. On share repurchases, I would not quote a target number. It will continue to be opportunistic. The shares we bought this past quarter followed a dip in our share price, and given the valuation, that made sense. I would envision we continue to play that out a bit over the coming quarters, but it will depend in large part on our share price.

Matthew Breese: Alright, I appreciate all that. I will leave it there. Thank you.

Operator: Your next question comes from the line of Daniel Cardenas from Breen Capital. Daniel, go ahead.

Daniel Cardenas: Good afternoon, guys. Maybe give me a little color on competitive factors—both on the loan side and deposit side. Have they become more intense or less intense, and is the competition rational?

Simon Griffiths: Thank you, Daniel. We have definitely felt a pickup in competition over the last three to six months. That said, there is still plenty of room when we can demonstrate the value we bring around our products, the value of our people, conversations, advice, treasury, and other capabilities. There has been a pickup in pressure and focus on assets over the last six months, and that shows up a bit in the pricing pressure we have talked about. That said, I see a lot of positives in the New Hampshire and Maine markets. We are seeing customers wanting to get out and invest.

We have lots of active conversations and our pipelines are sharpening, which puts us in a good position heading into the second quarter. We feel well positioned, and the talent we are bringing in gives us a tailwind and momentum for the rest of the year.

Daniel Cardenas: What are your customers telling you in terms of the current economic environment? Are they becoming more cautious, or is it more business as usual?

Simon Griffiths: It is a mixed picture. Consumer spend remains steady with a stable outlook, which impacts many of our businesses. Business investment is measured but positive. I visited a business in the Mid Coast recently, and they are looking to expand—measured expansion and certainly on the capital front. We are seeing that across clients. There are pockets of particular strength, certainly areas like Bangor and a couple of other areas—given demographics and other factors, we see momentum there. We do not see AI-related expansion showing up with our customers. It is really on core capabilities, core infrastructure, and capital spend. The labor market remains tight in Maine and New Hampshire.

For tourism- and hotel-related areas, they are seeing a decent start to the year in terms of bookings and their outlook for the summer. How that plays out with fuel costs and other factors will be interesting. Maine tends to be steady down the middle of the fairway—we do not see the highs of the highs nor the lows of the lows. That stability should show up well this year given the macroeconomic concerns out there. Overall, it is a mixed picture but generally favorable, and it sets us up for a good year.

Daniel Cardenas: What are line utilization rates looking like right now on your commercial portfolio, and how does that compare to, say, six months ago?

Mike Archer: We are in the 35% to 40% neighborhood, and generally the same on the home equity front as well.

Daniel Cardenas: Last question for me. As I think about fee income growth in 2026, I know Q1 is a little seasonally soft, but is mid-single-digit year-over-year growth an achievable objective on the fee income side?

Mike Archer: Yes, I think that is fair, Dan.

Simon Griffiths: I would just add that we have a strong wealth strategy. There are a lot of moving parts in fee income—consumer fee income is a key part of that—but we are investing in both the Camden Financial Consultants business and the wealth business. We added a couple of key hires last year, building out important markets, and are seeing nice growth. On the CFC side, our brokerage business saw very nice growth last year, and that momentum should continue this year. In the wealth business, we are seeing high single-digit growth in the first quarter and good momentum. Residential is a core strength of Camden. We also see nice pieces coming out of the commercial business on the swap front.

It was a bit of a soft start to the year, but as we get into the second, third, and fourth quarters, we expect momentum to build.

Daniel Cardenas: Okay, great. Thank you. That is all I have for right now.

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

Simon Griffiths: Thank you for your time today and your continued interest in Camden National Corporation. We truly appreciate your support. Have a great day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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