Key Highlights

  • CAC reported third-quarter diluted EPS of $1.34, up from $1.25 a year earlier and in line with the estimate.
  • Net income was $22.8 million, an 8% increase from $21.2 million.
  • Net interest margin on a fully taxable equivalent basis widened to 3.41% from 3.26% in the second quarter.
  • Total deposits reached $5.85 billion, up 5% from the second quarter and 8% from a year earlier.
  • Nonperforming loans fell to 0.16% of total loans from 0.24% in the second quarter.

Camden National Earnings: Is Margin Expansion Driving Profit While Loans Stall?

Camden National (NASDAQ:CAC) reported third-quarter results on Tuesday, October 27, with diluted earnings per share of $1.34 versus $1.25 a year earlier, a gain of about 7%. Net income was $22.8 million compared with $21.2 million, and the result matched the $1.34 estimate, a 0.15% shortfall as screened.

Earnings dipped from $1.35 and $23.0 million in the second quarter. Nine-month net income reached a record $67.7 million, or $3.98 per diluted share, up from $42.6 million.

Net interest income rose 8% year over year and 5% from the second quarter to $55.4 million. Total loans were flat at $5.00 billion, so the profit growth came from margin and funding costs rather than balance sheet growth.

Camden National Margin: What Pushed the Net Interest Margin to 3.41%?

Camden National is the holding company for a bank with 72 banking centers in Maine and New Hampshire and about $7.1 billion in assets. Net interest margin on a fully taxable equivalent basis was 3.41%, up 15 basis points from the second quarter and 25 basis points from 3.16% a year earlier.

Net fair value mark accretion was $4.2 million and added 31 basis points to the margin. Interest expense fell to $25.1 million from $29.6 million a year earlier, and average borrowings dropped 26% from the second quarter as average deposits grew 3%.

Non-interest income fell 8% from the second quarter to $13.2 million, mainly on lower mortgage banking and bank-owned life insurance income. The GAAP efficiency ratio improved to 54.60% from 55.42% in the second quarter.

Camden National Balance Sheet: How Did Deposits Grow While Loan Balances Held?

Deposits rose to $5.85 billion, up 5% from June 30 and 8% from a year earlier. Core deposits were $5.2 billion, or 88% of the total. Non-interest checking rose 10% from the second quarter to $1.18 billion.

Borrowings fell 34% to $374.4 million, and the loan-to-deposit ratio fell to 86% from 90%.

Commercial real estate loans fell 2% to $2.15 billion and commercial loans fell 3%, both on large prepayments. Residential real estate loans rose 1% to $2.02 billion, and home equity loans rose 7%.

Rising rates lifted unrealized losses on available-for-sale securities by $32.6 million to $77.5 million. Tangible book value per share was $31.40, up 10% from a year earlier.

Camden National Credit and Capital: Are Reserves Keeping Pace Before the Next Report?

Provision for credit losses was $1.9 million versus $0.7 million in the second quarter, reflecting macroeconomic factors and unfunded commitments. The allowance on loans was $46.2 million, or 0.92% of total loans, covering nonperforming loans 577%. Annualized net charge-offs were 0.07% of average loans, compared with 0.89% a year earlier.

The Common Equity Tier 1 ratio was 12.53% and the total risk-based ratio 14.82%.Return on average assets was 1.31%. The board declared a dividend of $0.42 per share, payable October 30 to holders of record on October 15. No shares were repurchased in the quarter.

Watch next for loan balances after the prepayments, how long the margin accretion lasts and deposit growth.