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Date
Tuesday, July 29, 2025 at 7:00 p.m. ET
Call participants
President and Chief Executive Officer — Simon Griffiths
Executive Vice President and Chief Financial Officer — Mike Archer
Executive Vice President, Chief Experience and Marketing Officer — Renée Smyth
For analyst commentary, contact [email protected]
Risks
The CFO reported an elevated provision expense of $6.9 million for Q2 2025, driven by a $12 million syndicated commercial and industrial loan placed on nonaccrual after the borrower filed for bankruptcy, noting, "It did impact net interest income for the quarter. Overall, it was about a basis point of net interest margin, core margin for the quarter."
Takeaways
GAAP net income: GAAP net income was $14.1 million for Q2 2025, up 92% from the prior quarter.
Diluted earnings per share: GAAP diluted earnings per share was $0.83 for Q2 2025, up 93% from the previous quarter.
Non-GAAP adjusted earnings: Non-GAAP adjusted earnings were $15.2 million, or $0.89 per share, for Q2 2025.
Pretax pre-provision income (excluding M&A costs): Pretax pre-provision net income, excluding M&A-related costs (non-GAAP), was $26.1 million for Q2 2025, up 13% over last quarter.
Total revenues: Total revenues increased 4% over the prior quarter to $62.3 million.
Net interest margin: Net interest margin was 3.06%, a two-basis-point sequential expansion.
Core net interest margin (non-GAAP): Non-GAAP core net interest margin was 2.7%, also up two basis points quarter over quarter.
Noninterest income: Noninterest income reached $13.1 million, exceeding the prior quarter's guidance.
Efficiency ratio (non-GAAP): Non-GAAP efficiency ratio was 55.5%, representing the lowest level since 2022.
Noninterest expense (excluding M&A costs): Noninterest expense excluding M&A costs was $36.2 million, a 2% decrease compared to the prior quarter, with a third quarter target near $34 million.
Allowance for loan losses: Raised to $6 million on the impaired credit; the allowance coverage ratio increased by 12 basis points to 1.08% as of June 30, 2025.
Loan growth: Total loans grew by 1%, primarily from commercial and home equity segments.
Commercial loan pipeline: Committed loan pipeline stood at $150 million as of June 30, marking a 40% sequential increase.
Home equity loan balances: Home equity loan balances grew by $16.7 million in the second quarter, compared to $1 million during the entire prior year.
Fiduciary and brokerage fee income: Fiduciary and brokerage fee income increased 16% year over year.
Deposits: Average deposits decreased by 1% from the previous quarter, attributed to seasonal effects; recent trends indicate positive growth.
Tangible book value: Tangible book value per share increased 3%, reaching $26.9 per share.
Tangible common equity ratio: Tangible common equity ratio increased to 6.77% as of June 30, 2025, up 28 basis points sequentially.
Nonperforming loans: Nonperforming loans stood at 37 basis points of total loans as of June 30, 2025, while past due loans represented 8 basis points.
Net charge-offs: Net charge-offs measured 2 basis points of average loans.
Mobile and digital initiatives: The recent rollout of a roundup savings feature and a digital financial literacy tool (Zogo) led to over 140,000 roundup transactions and 13,000 educational engagements within the first sixty days.
Summary
The call detailedCamden National Corporation(CAC 1.28%)'s first full quarter following its Northway Financial acquisition, highlighting integration progress and cost synergies beginning to reflect in results. The company reported sequential improvements in revenue and margin metrics, pointing to solid earnings power as a larger organization. Management guided toward further efficiency gains and stable credit, aside from a single large C&I credit impairment. Digital investments and product innovation continued, with management emphasizing relationship-driven expansion in both legacy and new markets.
The CFO said, "We anticipate strong capital generation in the second half of the year driven by the full realization of synergies and sustained revenue growth."
The CEO described commercial pipeline activity as "very, very positive" and signaled continued momentum in Southern New Hampshire and Maine.
Home equity lending was characterized as a meaningful differentiator in newly acquired markets, aligning with deposit gathering strategies.
Near-term noninterest income guidance was set at $12 million to $13 million, with management noting mortgage and BOLI valuation impacts as variables.
Seasonal and accounting items, such as annual equity grants and mortgage pipeline fair value, contributed to expense lumpiness and are expected to normalize in coming periods.
Regulatory capital ratios remain "well in excess of requirements," with rebuilding efforts progressing according to post-acquisition plans.
Industry glossary
BOLI (Bank-Owned Life Insurance): Insurance policies purchased by banks on employees, used as an asset to generate tax-advantaged income and manage employee benefits liabilities.
Core net interest margin: Net interest margin excluding the impact of purchase accounting adjustments and certain nonrecurring items, reflecting the underlying profitability of lending and deposit activities.
Nonaccrual loan: A loan on which interest income is no longer accrued due to borrower payment delinquency or doubt about full repayment.
Tangible book value: Book value of a company excluding intangible assets and goodwill, divided by shares outstanding.
Tangible common equity ratio (TCE ratio): The ratio of tangible common equity to tangible assets, used as a measure of balance sheet strength and capital adequacy.
Full Conference Call Transcript
Simon Griffiths: Afternoon, everyone, and thank you, Renée. We appreciate taking the time to join us today. I am pleased to report on our strong performance in our first full quarter as a unified organization following the acquisition of Northway Financial earlier this year, which bolstered our presence in the New Hampshire market. This quarter marked the beginning of unlocking the financial potential of our combined franchise with pretax pre-provision income excluding one-time merger-related expenses rising 13% from the prior quarter. Earlier this morning, we reported strong quarterly earnings of $14.1 million, resulting in diluted earnings per share of $0.83. On a non-GAAP basis, adjusted earnings were $15.2 million or $0.89 per share.
Our strong quarterly earnings accretion continues to rebuild our capital levels following the completion of the Northway acquisition and to enhance shareholder value. This is evidenced by the expansion of a tangible common equity ratio to 6.77% at June 30, a 3% increase in tangible book value during the second quarter reaching $26.9 per share. These outstanding results reflect early success in realizing cost synergies from the Northway acquisition and the ability to drive solid revenue growth, underscoring the strategic value of the acquisition for all our constituents: customers, employees, communities, and shareholders. Several of our key performance indicators continue to trend positively.
Net interest margin expanded by an additional two basis points, and our non-GAAP efficiency ratio improved to 55.5%. We believe these outcomes demonstrate that we are well-positioned to sustain interest margin expansion and earnings growth through 2025. As reported, one commercial borrower filed for bankruptcy during the second quarter, resulting in the need for additional provisioning on this loan. We are actively engaged with a small group of other lenders involved in this loan and anticipate resolution later this year. In a few minutes, Mike will provide more details on our provision and loan loss reserve levels for the second quarter.
We remain confident in the overall health of our loan portfolio, and that this is not a broader trend across our well-diversified loan portfolio as evidenced by our continued strong asset quality metrics. Our second quarter performance reflects the continued benefits of our strategic investments, both digital and talent-focused, across the organization along with the disciplined execution of proactive deposit gathering and management. While average deposits were down 1% on a linked quarter basis due to seasonal trends, we have seen encouraging growth more recently as the summer months are upon us. While average loans remained stable during the quarter, we grew ending loan balances in both the consumer and commercial businesses.
Our commercial team remains highly engaged, leveraging strong, long-standing relationships and increased visibility in the high-growth markets of Southern New Hampshire and Maine. We're seeing consistent pipeline activity across our markets, signaling strong demand and sustained momentum. At the same time, we remain firmly committed to our underwriting discipline. During the quarter, we achieved robust growth in home equity loan balances in our high-yield savings account, which requires a consumer checking account, helping us expand and deepen relationships. We also achieved significant success in growing and diversifying our fee revenue. Our fiduciary and brokerage fee income organically grew 16% year over year.
Our growing wealth management team is realizing substantial operational efficiencies from its new platform, which was implemented last year. We continue to see strong opportunities to expand our services within our existing customer base, particularly as we prioritize advice-driven conversations and extend our treasury management services into the New Hampshire market. We continue to advance our innovation agenda with strategic investments to modernize our mobile app, aimed at attracting and retaining a digitally savvy customer base. This quarter, we successfully launched both our roundup feature and Zogo, a digital financial literacy program. The response has been strong.
Within the first sixty days, customers completed over 140,000 roundup transactions, automatically directing spare change into savings and charitable giving accounts, and engaging in more than 13,000 learning activities through our financial education tool. We are proud of our second quarter financial performance, which reflects the dedication of our 700-plus United teammates and their unwavering focus on serving our customers and executing our strategy. Their efforts have fueled strong results and built momentum we expect to carry through 2025 and beyond. We are well-positioned to continue delivering exceptional outcomes and unlocking meaningful, long-term value for shareholders. With that, I'll hand over to Mike to provide some additional financial highlights regarding the quarter.
Mike Archer: Thank you, Simon, and good afternoon, everyone. Our second quarter operating results gave us a first look at our earnings power as a larger organization, having completed the acquisition of Northway Financial and much of our integration in the first quarter of this year. As we enter the second half of the year, I'm pleased to report that we remain on track to deliver the financial targets outlined as part of the acquisition, including achieving our targeted cost reductions. For the second quarter, we reported GAAP net income of $14.1 million and diluted earnings per share of $0.83, representing increases of 92% and 93%, respectively, over the previous quarter.
On a non-GAAP basis, pretax pre-provision net income excluding M&A-related costs totaled $26.1 million for the second quarter, and increased 13% over the previous quarter. This increase highlights the improvement in our efficiency ratio during the second quarter, which reached 55.5%, our lowest level since 2022. Total revenues for the second quarter grew 4% over the last quarter to $62.3 million, driven by both net interest income and noninterest income growth. Net interest margin and non-GAAP core net interest margin each expanded two basis points during the second quarter to 3.06% and 2.7%, respectively.
We continue to focus on driving core net interest margin expansion and anticipate further expansion in the third quarter, as we'll benefit from seasonal deposit flows and continued steady expansion of our earning asset yield. Noninterest income reached $13.1 million for the second quarter, which beat our guidance provided last quarter. We're currently estimating a range for noninterest income for the third quarter of $12 million to $13 million. Reported noninterest expense for the second quarter was $37.6 million, which was 15% lower than the first quarter. Noninterest expense, excluding M&A costs for the second quarter, was $36.2 million, a 2% decrease compared to the prior quarter.
For the third quarter, we currently anticipate noninterest expenses excluding M&A costs and TDI amortization to land closer to $34 million as we realize a full quarter of cost synergy savings from the Northway acquisition. Laying on our reported financial results for the second quarter were elevated provision expenses of $6.9 million. During the second quarter, a borrower under a syndicated loan in which Camden's participation totaled $12 million entered bankruptcy, and we placed the loan on nonaccrual status. As of June 30, we carried an allowance on this credit of $6 million, which represents our best estimate of the potential loss as of the end of the second quarter.
This credit was a driver of the elevated provision expense and the increase in our allowance coverage ratio of 12 basis points during the second quarter to 1.08% at June 30. As noted in our earnings release earlier today, we currently anticipate that this credit will be fully resolved later this year. Overall, our credit trends across the broader loan portfolio remain very strong. Past due loans accounted for eight basis points of total loans at June 30, net charge-offs were two basis points of average loans for the second quarter, and non-performing loans were 37 basis points of total loans at June 30.
We experienced nice loan growth during the quarter of 1%, coming primarily from commercial and home equity loans. Our loan pipelines were robust at June 30 with a $150 million committed loan pipeline, representing a 40% increase over last quarter. Lastly, our capital position remains very strong, supported by growing ratios as we rebuild capital following the Northway acquisition earlier this year. Our TCE ratio grew to 6.77% at June 30, an increase of 28 basis points from the previous quarter. Our regulatory capital ratios continue to be well in excess of requirements and continue to build as well.
We anticipate strong capital generation in the second half of the year driven by the full realization of synergies and sustained revenue growth. This concludes our comments. We'll now open up the call for questions.
Operator: Thank you. When preparing to ask your question, please ensure your device is unmuted locally. The first question comes from Steve Moss with Raymond James. Your line is open. Please go ahead.
Steve Moss: Good afternoon, guys. Maybe just starting here on the credit front. Hey, Mike. Just starting on the credit front here. Just curious. What type of C&I loan was it? And did the placement on nonaccrual here this quarter also impact net interest income?
Mike Archer: Yeah. So that was one of our just C&I loans or what the syndication fee. Yeah. As mentioned in the comments, we're working with a small group of other vendors on that. And, certainly, you know, our credit team is working very closely and diligently trying to work through the resolution there and, as we mentioned, do anticipate that full resolution here a little bit later this year. It did impact net interest income for the quarter. Overall, it was about a basis point of net interest margin, core margin for the quarter.
Steve Moss: Okay. I'm sorry, maybe I should have been specific. Just curious as to like what kind of industry the borrower is active in.
Simon Griffiths: Steve, yeah, it's a, you know, I'd characterize it as a service company.
Steve Moss: Okay. Got it. Yeah. And then in terms of the loan pipeline here, just curious about the color around the drivers of the improvement in the pipeline. Kind of what's the coupon you're seeing on new originations?
Simon Griffiths: Yeah. I'll take that, Steve. And just to go back a click here. You know, I think, obviously, we've mentioned the one loan, but, you know, I think we still feel very confident around our credit position. And, you know, when you look at nonaccruals at 15 points absent that loan, it really is flat quarter over quarter, so we feel very good about that. As we push into this quarter, we are seeing a pickup, particularly on the commercial side, we're seeing a lot of activity. We're also seeing some great results in the home equity front. We grew $16.7 million in the second quarter in balances as compared to a million all of last year.
So that's, you know, very positive momentum there, which I think is really good to see. So we're seeing a nice balance across C&I, small loans, business loans. Mortgage is actually quite resilient as well. So it's a broad-based sort of pickup. And, you know, we certainly, as we say, we've got a very, very positive pipeline.
Steve Moss: Okay. Got you. And in terms of the margin expansion here, kind of thinking about the asset repricing, obviously, originations help here too. If you think about it as a couple basis points quarter, just kind of curious how you guys are thinking about that dynamic.
Simon Griffiths: I'll just say, Steve, I think, you know, we do see continued momentum back end of this year. Obviously, contingent, you know, in terms of the Fed, but we see, you know, plus-minus five, ten basis points for the next quarter, depending obviously on where the Fed goes.
Steve Moss: Okay. Great. Appreciate all the color. I'll step back in the queue.
Renée Smyth: Thanks, Steve.
Operator: We now turn to Matthew Breese with Stephens. Your line is open. Please go ahead.
Matthew Breese: Good afternoon. Just on the C&I credit, a couple from me here. You know, you noted you're actively involved with other lenders on the note. Can you give us some sense for the ultimate size of this loan and what is your exposure, you know, overall with syndicated loans?
Simon Griffiths: So our total exposure, Matt, is $12 million at quarter end. You know, I can certainly say there are five or six other banks in this group and total exposure for the is around the $200 million mark.
Mike Archer: Just in terms of unfunded there, Matt, there's a small piece remaining exposure out there. I think it's about a million dollars or so. Maybe a little bit over. But in that neighborhood.
Matthew Breese: And the $200 million, are those, you know, how would you characterize those in terms of, you know, geography? Are they mostly local? Are they national? What kind of broadly speaking, what kind of businesses are they attached to?
Simon Griffiths: It's a mix, you know, from national to large regional.
Mike Archer: Local.
Matthew Breese: And there's no other signed deterioration in the broader book?
Simon Griffiths: No. We feel very good. I mean, again, just coming back to my earlier points, Matt, you know, nonaccruals of 15 basis points of, I mean, that's pretty much flat quarter over quarter. Delinquencies are eight basis points up one basis point from Q1. Charge-offs are two basis points annualized. We feel very good about the overall book. But, you know, inevitably, sometimes you have these, you know, one-off situations, and that's exactly what this is.
Matthew Breese: Understood. Got it. Okay. Mike, you've mentioned a couple of guidance items I was hoping to kick the tires on. The first one was just fee income of $12 million to $13 million next quarter. A little bit of a pullback. And I'm curious as to where we might see that pullback occur.
Mike Archer: Yeah. It's a couple good question, Matt. Couple things in there. One, just on the mortgage side. There is some fair value accounting that's, you know, giving a bit of a pop, if you will, on just the pipeline loans. You know, at quarter end. The other item is within the BOLI. You would have seen a pop there as well. And, you know, obviously, just with the acquisition, some different securities supporting one of the underlying BOLI policies that, you know, is more tied to the equity markets and just has more volatility as you can imagine in some of that. So that's a little bit of my caution out there.
That said, I think mortgage will be strong from a sales perspective this go around. I think we pegged that somewhere in the $750,000 to a million. So that could be, you know, pretty stable. My hope would be we'd be in the 12 and a half to 13, kinda more in that range. But there's a couple items out there that are a little less in our control, if you will, from a valuation perspective.
Matthew Breese: Got it. Okay. And then on expenses, I think you had said $34 million to $35 million for the rest of the year. At that point, at year-end, have you kind of done all you can from Northway, and should we expect a little bit of growth from the year-end figure, whether it's 34 or 35? Just trying to get some sense for the inflection point on expenses at year-end.
Mike Archer: Yeah. I mean, so we're targeting something closer to $34 million for the third quarter, Matt. You know, we anticipate that we'll, you know, have the maturity of the high majority of that majority of the cost synergies by that point. There could be some items that continue to fall out there, but certainly the, you know, the material significant items would have gained most of that benefit as we, you know, closed down third quarter possibly into the early fourth. But all things considered, I do think we'll see the most of that in the third quarter.
There is a little bit of lumpiness just in the second quarter that is in our numbers in terms of some of the expenses. We just have annual equity grants for board members, directors that, you know, flush through and it's a little bit higher than maybe you would have otherwise expected. But that again, that's just more of a seasonality factor. And something that we've always had.
Matthew Breese: Understood. Okay. Simon, just on the credit piece, the stock is down 11% today. It feels like it's mostly tied to the increase in nonaccruals. And a bit of a mismatch between your commentary today. So just curious if the stock kind of stays here, would you be interested in the buyback as soon as the window opens up? That's all I had. Thank you.
Simon Griffiths: Yeah. I mean, certainly, you know, I think in the context of the credit and the comments, you know, I think we're very well-positioned the second half of the year. You know, I think we see a lot of positives. We're starting to really see the traction which we hoped for with the New Hampshire franchise. We're picking up a lot of the momentum in the commercial volume in New Hampshire, which I think is really positive. You know, we have a buyback open, and there's an option for us if that makes sense. So, certainly, that optionality is there.
You know, we certainly feel very good about core kind of net interest margin as we've talked about, and I think the continued focus on the team with a trajectory to focusing on getting to 3%, I think, is certainly something the team is very committed to. So I think that's a real positive for us. We've got cost discipline in place and really landing the commitments we made around the integration. So you put all those pieces together. I think the back half of the year looks very positive.
You know, it looks and, you know, we're excited as a management team to continue to execute on the integration and opening up the markets in New Hampshire and obviously the organic growth we have in the main markets.
Matthew Breese: I'll leave it there. Appreciate taking all my questions. Thank you.
Operator: We now turn to Damon DelMonte with KBW. Your line is open. Please go ahead.
Matt Rank: Hey, everybody. This is Matt Rank filling in for Damon DelMonte. Hope everybody's doing okay today. Just as a follow-up on the fee income side of things, just kind of hoping to see how early wealth management conversations are going in New Hampshire and what do you think that business and franchise could maybe grow to over the next year?
Simon Griffiths: Yeah. I think it's, you know, we've added in the main footprint. We've added a couple of wealth folks. So we see, you know, that potential with some investing into our core market where we've got strong relationships and certainly continuing to build that out. And seeing some very nice growth both within our brokerage business but also with our wealth franchise. You know, we've certainly got starting to take a step into the New Hampshire market. We're certainly right now focused more on the lending side, the commercial, you know, as I said earlier, my earlier comments. Very positive results.
Home equity, of course, is, you know, as I talked about, we're seeing a lot of traction there, which is exciting. That wasn't a product that the Northway team had. So that's, I think, bringing a real asset to our customers. And with those loans, we're bringing in deposits as well and seeing a lot of traction on that side. So, you know, I think that helps the funding side, which is real positive.
I think the sort of the wealth picture for us is really probably more, you know, as we go into next year, but certainly can they continue to invest and, you know, have the potential, I think, some very attractive market there to continue to build out the wealth team. That's not a this year thing. I think that's a next year thing.
Matt Rank: Okay. Got it. And then just one follow-up. You mentioned a new wealth platform, new mobile app. I was just curious if you're in any other technologies that you think could drive, you know, efficiency or maybe revenue generation opportunities?
Simon Griffiths: Thanks. Yeah. We thanks for the question. And, certainly, that has gone well, and the team I think the wealth team feels very good about both the operational efficiencies and also the improved customer experience from the mobile app. So that's just sort of very real positive. As you from previous calls, we've talked about the Terrafina platform, the new online account opening platform. It's been very positive. We're seeing a lot of traction there. Just under 10% now of our accounts are coming in through that platform, which is really positive, and I think a great customer experience. We'll continue to leverage that platform and build that platform out. We've also had some great innovations recently.
We've rolled out some fabulous new innovations around Roundup, Roundup to save, Roundup to donate. We're seeing a lot of energy and traction as I referenced in my comments, and I think that's real possible as well as a learning platform and starting to see a lot of engagement from my younger customers around that. So I think it's a very digital forward strategy. We've got other pieces in the pipeline, which we're not ready to talk about. But I think, you know, when you start to put all these pieces together, I think it's driving engagement, driving account acquisition, which, of course, is going to be crucial to funding and just the overall health and growth of the bank.
I feel very good about the digital strategy and the momentum that we have.
Matt Rank: Great. Thank you. I'll step back.
Operator: We have no further questions, so I'll now hand back to Simon Griffiths for any final remarks.
Simon Griffiths: Thank you for your time today and your continued interest in Camden National Corporation. We appreciate your support and wish you a productive and restful summer. Thanks, everyone.
Operator: Ladies and gentlemen, today's call has now concluded. I'd like to thank you for your participation. You may now disconnect your lines.