CAC - Earnings call transcript Q1 2022 | Camden National Corporation

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Operator

Good day and welcome to the Camden National Corporation's First Quarter 2022 Earnings Conference Call. My name is Jason and I will be the operator for today's call. All participants will be on listen-only during today's presentation.

Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] Please note that this presentation contains forward-looking statements which involve significant risks and uncertainties that may cause actual results to vary materially from those projected in the forward-looking statements.

the that in actual described other such company's press factors materially to in filings concerning report earnings those annual from forward-looking release, with information the could XX-K, results cause differ the on SEC. Additionally, Form XXXX and company's statements are any that company the occur The update forward-looking not reflect to statements any undertake statements does made. after circumstances to are obligation forward-looking or events are presentation today's provide to non-GAAP with are press measures the to and in financial meaningful intended release. insights references reconciled in GAAP Any Today's Executive presenters Officer. Executive and and are David [ph] Financial Dufour, Vice Officer; President Chief Chief Archer, and Mike President Please note that event this recorded. being is would At I like this Dufour. turn to the time, conference Greg over to sir. ahead go Please

Greg Dufour

net XXXX XXXX fourth Great. reported and basis. today, Jason. Thank and diluted of compared a moments, basis when more to on factors X% earnings in welcome I from you, the in start quarter light afternoon a the call. this a quarter first to earnings we Good first will conditions. Mike of solid comment quarter first to provide million is up want is income and quarter share but to a XXXX or we few XXXX. $XX.X year believe This detail on of $X.XX lower that several the Earlier National's XX% Camden

certainly dramatically First, as and we ago. they year than different are just interest the were few economy environment all ago a know, rate a months and

Second, as activity in those declines a being loans as like and related in banks, most PPP-related we've as well seen forgiven. income decline mortgage revenues residential are

loans see come a benefits asset during strong our as we the that from of period. out occurring of were releases provision have modified of to continue COVID number reflective and Finally, quality,

internal coming needed. we reserves details, As saying the market there potential expected. From the modified we've perspective, additional I at which release provide expect are Mike further by those established as would provision we'd as time what to ourselves we more releases meet previously metrics summarize for in is quarters loans for will some a conditions

seen national by decline lack mortgage markets. a residential have throughout activity a are caused also rates, near significant but mortgage our of what all We increased in of XX% tracking inventory numbers

were but end hot. read out residential one in of that As market homes are instances is but Commercial there national grew where for last to quarter solid year, buffer lending activity to by property to on small the more all very buyers will million bids. I lending or strong business somewhat real commercial bidding activity, XX% mortgage the and commercial have seeing and from We've commercial sold large $XX are provides the awards payoff muted cash as offer. the we still while winning decline for from the those for ranging we and seen more of the large CRE originations This a competition point a estate.

in which situations. very are seeing understanding and we're to we'll pressure coming see now the in position, months. a on long-term our in From both structure, feel base, strong over situations pick to Mike. weeks a perspective, to good We pleasure spots our as we deposit discussion the as in my results although, turn deal us It's well those rates opting some including competitive

Mike Archer

first return just equity quarter. and share Through favorable quarter last for $XX.X of strategies, for tangible on representing and over deployed recent was an earnings X% this we net everyone. off income got the you capital that quarter increase in first the management million year repurchase Thank and we earnings diluted opportunistic share of pleased periods, report our including reported good over a Greg, afternoon of with and continued to $X.XX, start dividends, to per I'm XX%. each solid average

net XXXX, loan decrease as income of loan fourth in of loan interest income X% SBA take PPP related quarter by $X.X For driven $XXX,XXX as pace, borrowers an continue offered. the of a to forgiveness advantage balances or decreased of quarter the at run off accelerated million, XXXX compared first to

an million PPP lower As just throughout SBA over to positions increase over anticipate loan NIM and rise, as of will on five fees loan basis Strong of sheet March the predicated come funding quarter us balances growth believe have franchise to expansion a balance of year higher ability period. margin growth. we adjusted manage this on last for beneficial, composition non-GAAP basis will expansion and well be current XXXX, fare and rates yield quarter book offset points stood points believe new XX, was said, unrecognized as to our XXXX With our at NIM to should manage, drive continues enter the that income Net year. as and will as largely the interest interest we strong remaining see asset and able cycle. costs. was which our amount at further we quarters loans course last this of and it investments increased the reprice over continue and the impact two on $X.X first deposit We yields, core of $XXX,XXX. the prudently we over the We prove by a five into origination basis also we were of to PPP X.XX%,

quarter or was which million basis Our a Loan or grew loans. X% $XX which loan $XX or residential quarter PPP adjusting non-GAAP mortgage grew and for the was first million portfolio XX%. X% centered X%, C&I within our on growth the our for SBA portfolio, for growth

through as production This that quarter and than mortgages our anticipated deploy higher loan within quarter hold holding more XX% in our competitors the our we in residential anticipated we production environment, recent and first so seeing quarter, last portfolio more first to competitive excess competitively had than mortgage are to discussed in their held of Within pricing its would look extremely these making slightly for seen though the As liquidity we true we portfolio. way our of portfolio. the doing with are markets quarters. an

result, market a More call production. shift foresee volumes. what the was for do saleable we lower going loan market forward been than higher and secondary and otherwise volume have As a rates of more have recently, pressuring seen market saleable percentage as rates

for over the However, will held majority production within quarters. anticipate to we the the our reasons, these be residential mortgage of portfolio continue coming

we the was on income the quarter quarter, was and basis, linked-quarter team. ramp-up the due banking of Lastly first small reported with debit for half Mortgage our of first our mentioned, compared our are last This C&I last to On residential our which momentum it in of $X.X quarter. Also, quarter recognition positive lower annual volume a million. $X last the what quarter million mortgage seasonal the of quarter. income growth million, We volume. in to as business timing reflects front, Visa fourth as card of periods. totaled loan was bonus pleased was lower during XX% the sold Greg down XX% of $XXX,XXX non-interest between was income and $X.X year

for $XX.X was Noninterest a million fourth quarter. for ratio from XXXX X.XX% of Our the annualized respectively for the XXXX. efficiency was X% the assets last expense quarter decrease and our while X.XX% ratio average to compared noninterest of of quarter XX.XX%, to was expense XX.X% quarter first non-GAAP first

quarter As operating the portfolio totaling of loans to XX basis $XX the the year by nonperforming XX loan of December million closer across loans discussed effect. points XXXX highlighted to points remainder and quarter, compared our increases be take XXXX, XX the annual basis run last expenses favorable full rate to continues of quarterly be of as as expect of impact to the we quality merit for total ago. of Credit basis year first at points a XX, end

first to reserves during of within hospitality quarter. these XXXX Included certain were otherwise that the X-basis-point credit on growth The the XX allowance XX, loans meet for $X.X risk these our was to their credit pandemic related continue cover resulted also XX, release necessary profile. loans. elevated past of the ratio subject were of from quarters have internal XXXX the loans allowance $X.X was basis and to quarter loans of At March COVID-modified as million of during XXXX for to loans the should the our March balance release This and loan December X representing of negative given provisions solid hospitality total of first losses over million in requirements. only coming million XXXX We XX that than year-end points delinquencies. by decrease allowance of were March provision a to million. XXXX XX, total offset reserves the established the X.X% in decrease to is driven loans a more preestablished At release days XX, due $XX.X $X.X the first low during quarter another

reserve is our the or modified the economic potential within as loan remaining previously shift by expect there such growth loans in care outlook CECL a other offset may this While factors be to our future model. for we as releases

have to continues the total pre-pandemic to pandemic allowance above our ratio to loans level CECL. we our seen it be since under the of While, – peak steadily loan down come

of December per March the too shareholders' March allowance X.XX% during end X.XX% appropriate we bond As what many year. equity yield saw at in because decreased decrease of in value the X.X last the sharp On other quarter times at ratio coverage. the share XX, to of due our to to and value was March our be XX, $XX.XX AFS Like nonperforming our curve. in portfolio XXXX the decrease XX, of Intangible $XX.XX compared we providing XXXX. sufficient institutions, of book compared XXXX market at increase first was believe XX to loans financial the TCE to a XXXX

current environment. to driven the While, an bank, as are rising decrease, rates did bonds see confident under interest equity interest investment up generation see generally temporary portfolio water balances understand Also, likely thing are it we naturally into in balance higher runoff. our and we the amortizing and never asset-sensitive thus and primarily change will certainly our like why a are is good made Being and rate we earnings will shareholders' sheet. and capital by currently that translate from of

of are well regulatory in you. seen for quarter ratios as volatility longer results. be our now risk. ability price the consider on core equity on may designation do and This to strong future capital and requirements which our leverage we present supporting first We'll excess HTM concludes open within Thank capital of the continues be questions. or Lastly, held-to-maturity all can are well to The our regulatory the have comments quarter to investments company capitalized greater end. that that dated call up our so

Operator

Thank you.

proceed. begin question We is the will Damon now with Instructions] Please [Operator first Our question-and-answer KBW. from DelMonte session.

Damon DelMonte

Hope guys. afternoon everybody is good today. doing Hey, well

Greg Dufour

Damon. are We

Damon DelMonte

Good Great. to Greg. hear

Just XX margin internally you the that And do seems margin wanted up to going the XX you your off as or I project and thoughts just with is basis to like point asset May for wondering the a sensitive. forward. start basis a are guys moving know increase in it stance? even market point here coming guys towards what

Mike Archer

first interest end quarter items good a guess, plus or higher pretty at plus on indicator there right the are may saying a it XXX a Damon, like year-end. maybe are what of the I'd does from is five where our for basis our at that looking upside we're internally where little -- at a higher it probably are say few we in items. models a quarter that more now call is we think On There's look first I points. margin now perspective, basis where than margin income. XXX Fed from there's up, by right Within nonrecurring the we

potential So because that too. think we we'll some here have cover we upside that, from of also but

Damon DelMonte

it. Got

Okay.

-- like where you quarter core what this the to margin closer would at So put XXX?

Greg Dufour

points three core That's reported from XXX the to from down we XXX, Yeah, there. run what basis probably basis.

Damon DelMonte

it. got Okay,

for, little came or trending but great. trending? They just projects then any expense of, in internal and lighter can talk other little wondering and were you how them we inflation with base going forward? how you Okay, kind wage than a what have a see your about expenses bit looking going you see bit on, And you initiatives outlook for the

Mike Archer

Yeah.

be think year of I we like on said, XX. rest to average the we to rate the run expected mean, I the for closer our

bit We This little quarter the quarter, a lower. second agree I well. do as certainly in

pushes that our have We come little as well. grants equity bit director annual through that up a

So quarter there be the is for could out we my roughly second But year. be expectation above we'll slightly for the from at level XX and XX.

Damon DelMonte

portfolio that helped start then loan I quarter's to to Thanks. you look part do expect of part, in obviously mortgages? how lastly, extrapolate really residential And coming and a guess just second the to part, Great. over then continue And off growth you by strong first resi this the mortgages. result do quarters? at portfolio

Mike Archer

Yeah.

So too on comments XX% on and the residential I is, to side, certainly really side. a resi mentioned XX% it's the in mortgage mortgage portfolio held the my quarter. in as our sold We first market hot for Greg

pipeline be XX% in our likely, up, somewhere and the on will the quarter that XX% that's it current based shaping to will think again, I the for second hold. way

it, XX of I believe the right getting from start the that's our itself the the I now, that well sold? pricing what there loan it would of for But to market. that the as mark for what that that like? is think to kind competition XX-XX correct think we like internally -- real bit. see going question seeing hope big But as that We're a terms it's what is does point What well be call there, us thinking this think just certainly see mix. that we'll next portfolio to little a challenge the it about to, do and does. XX, market below we're closer year we're that We over of We to balance days look and a year. in on secondary personally around remainder

Greg Dufour

that's from I to business, reflective within on off typically, more of processing strong growth. I know, well side that our both a and doing, say commercial And Damon, efforts as we side. can we're larger as commercial that it build-out add maybe start. people, small business on and And of just the to mid-single-digit the including loan small streamlined obviously, make then

you from out the that's higher our probably end if think, we annualized growth, have. on what I

especially, pleased back digit, seeing. to my we're I change competitive the a forward. spots old long-term It's competitive it's pick on flexibility quality mentioned about competitive. we're as But comments, to I to will you the higher coming bit and probably with rate mid-single best think than going of for If We're -- up. because asset to go that growth, thing always if side. be on side want cycle little our you maintain there's that my in what potential just And in the the structure a

Damon DelMonte

Thank great. That’s it. much. Got you very

Greg Dufour

welcome. You’re

Mike Archer

you. Thank

Operator

your for you Thank question.

Stephens. Our next question Please comes from Matthew Breese proceed. with

Matthew Breese

a was afternoon. couple could you hoping Good me questions. of -- I help

So incremental just are the first loan one And existing incremental the point crossover on the is book? we What yields. the blended yields yet? hit versus have

Mike Archer

have. We

pipeline high high now upper And from Xs a resi the we're low now, then commercial it get right So perspective. rate our we're to -- side, then seeing from the side. too. is the the Xs into -- end of X on Xs into And -- to starting the on Xs

pricing and to Matt. seeing So to up, certainly we're yields starting start tick

Matthew Breese

Got it.

your how does assumed compare year, cycle? last And are what to Okay. end behind betas? NIM deposit that through the your the forecast of then And

Mike Archer

Yes.

we any I it, that. I'll forecast, economic Within it beta. cycle over as we're we have don't assuming will that Again, case, better Yes, be be XX% will market. lag. certainly always the than hope the the been, -- think lag not we'll we're So assuming that call

outlook, a in lag. We it core there liquidity margin from no what But a -- of I deposit strong franchise. position, shared terms deposit have there's strong assumes

Matthew Breese

market you a it deposit you'll more And do lag, Okay. you or starting to able the competitive intensifying think to on get are thought see Like, you front? already? the be than more bit is

Mike Archer

a reality. will do anticipate this hear that we We think bit, prevalent. lag. it's a at little We but to starting that's point We're do -- it's not

first it's to points the realistically, from basis going there, certainly will and think then lag be I competitive. X,XXX

little all We'll things we'll of it big relationships within would One prudently. a side our be bit like not do what deposits the have competition a the those that, be choose banks, have we will just the and loan certainly markets higher. to our and factor might chase on position, pick to does

Matthew Breese

Okay.

or all-at-once course the event, I that kind we on type are one dispersing the of that was commercial throughout Is think other reserves release to The predicated an there. should the year? had of behaviors that evenly certain about

Mike Archer

the meet those have quarter. that, in actually how cautious growth internal the function next mean, in metrics release what macroeconomic through all time, know, volatile, they and of for out bulk some pretty reserves the of I of want terms a environment likely But It's pans certainly, that come we spoke same of. to is But as loan second to at I the quarter. extent we could the be that of means. just that we'll to the

my it's a there. guess, point Gap] [Audio isn't is outcome So being I likely reserve probably

to expect impacts comparable volatile and of have was this model macro to similar the just what mentioned top that growth some quarter. environment how We more probably and as I the On saw loan as we that, accounting well.

Matthew Breese

it. Got

Greg Dufour

as I just Mike if plays said, could wanted don't max growth. just communicate that that just But there, to out put out said we relief out we economy in what situation repeating is, to could Matt, the wanted Maybe loan expect Mike put come, potential obviously, would as your that it want be and and to I there on we in Yes. more we to models. add the that amount there. it whole up Again, but use just but

Matthew Breese

Understood.

just Obviously, to rates today. My and a the get was kind continue? Okay. to increased C&I much nice to And you of to that wanted and year-end is Do sense utilization? was growth-wise. a expect of at it organic due very for one customers quarter regards of utilization growth? that was portfolio last much just new specifically. I that in How how

Mike Archer

at we're a year-end, the seen point Matt. capital up but below pre-pandemic pick bit from still have levels working this We lines

Matthew Breese

That's had. all All I Okay. right.

Mike Archer

ahead. go sorry, Oh

Matthew Breese

go my finish. you and question. no That No, ahead last was

Mike Archer

Well, up, lot was we've some to the ramp the seen say pretty business it's a going small side, and team C&I think done I on there. I of has momentum solid

comments, and certainly our that we So about that alluded as to, where goes. in excited we're

Matthew Breese

it. Got

I for Okay. Thank appreciate my taking you it. questions.

Mike Archer

Yep. It's our pleasure.

Operator

question. you for your Thank

no further closing the questions, to this team pass question-and-answer As have I like our the we to session. conference remarks. over for management concludes now would

Greg Dufour

if are only X the that. on listening attendance at afternoon hosting some Really to thank forward have is virtually you. to of And for Shareholder you you Thank Annual and Great. your remarks in, look this Meeting. later our we'll all you o'clock, there, we closing

care. take So

Operator

now you Thank today's conference presentation. concluded. has attending for The

You lines. may now disconnect your

Camden National (CAC) 26 Apr 222022 Q1 Earnings call transcript