CAC

Good day, welcome to Camden National Corporation's first quarter 2026 earnings conference call. My name is Lucas, I will be your operator for today's call. All participants will be in a listen-only mode during today's presentation. Following the presentation, we will conduct a question and answer session. If you require operator assistance at any time during the call, please press star then zero. I will now turn the call over to Renee Smyth, Executive Vice President, Chief Experience and Marketing Officer. Go ahead, Renee.

Welcome to Camden National Corporation's first quarter 2026 conference call. Joining us this afternoon are members of Camden National Corporation's executive team, Simon Griffiths, President and CEO, and Michael Archer, Executive Vice President and CFO. Please note that today's presentation contains forward-looking statements. Actual results could differ materially from what is discussed on today's call. Cautionary language regarding these forward-looking statements is included in our first quarter 2026 earnings release issued this morning and in other reports we file with the SEC. All of these materials and public filings are available on our investor relations website at camdennational.bank. Camden National Corporation trades on NASDAQ under the symbol CAC. In addition, today's presentations include a discussion of non-GAAP financial measures.

Any references to non-GAAP financial measures are intended to provide meaningful insights and are reconciled with GAAP in our earnings release, which is also available on our investor relations website. I am pleased to introduce our host, President and Chief Executive Officer, Simon Griffiths.

Good afternoon, everyone, and thank you, Renee. 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 the first quarter of 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's end. Our disciplined credit approach continues to deliver strong asset quality, with past due loans and non-performing 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're 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 as a primary banking partner for a full suite of lending and treasury management solutions. Our deposit base reached $5.6 billion at March 31st, 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, not simply pursue rate-driven volume. At the same time, we remain disciplined towards stewards of our capital, and with strong capital levels, we are focused on balancing reinvestment in the franchise with 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, Camden 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 Prep IQ, which delivers a real-time integrated view of customer information across platforms, enabling more informed and productive conversations.

Loan IQ, another internally developed tool, further enhances efficiency by streamlining access to loan policy and supporting faster, more consistent decision making. We're 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'll hand over to Mike to provide additional financial details for the quarter.

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 18.17%, 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 five basis points from the previous quarter. The decrease on a linked quarter basis was driven by lower fair value mark-to-accretion income of $956,000.

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 two to five 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. Non-interest 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 31st.

We continue to be focused on growing our wealth channels, and 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 non-interest income to rebound to approximately $13 million. On the expense front, non-interest 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 bond 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 non-interest expense of approximately $37.5 million for the second quarter. Our credit quality across our loan portfolio continued to be very strong at March 31st.

Non-performing 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 $506,000 or four basis points of average loans annualized, and were the driver of our first quarter provision expense of $553,000. Our allowance for credit losses on March 31st 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 4.2 times coverage ratio of non-performing 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 the first quarter of 2026, our Tangible Book Value Per Share grew 3% to $30.58 at March 31st, which included the repurchase of just over 33,000 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'll now open up the call for questions.

Thank you. We will now begin the question and answer session to ask a question press star then one on your touch-tone phone keypad. I f you use a speaker phone please pick up your handset before pressing the keys. To withdraw your question please press star then one again. At this time we'll pause momentarily to assemble our roster. Your first question comes from the line of Damon DelMonte from KBW. Damon, please go ahead.

Good afternoon, guys. I hope everybody's doing well today. First question, Michael Archer, just wanted to talk a little bit about the margin. Got your comments there about, you know, two to five basis points of core expansion. Can you just talk about some of the dynamics behind that? Is that more on the liability side or is that kind of going to be driven by the expected rebound in loan growth as we progress through the year?

Hey, Damon. Yeah, good question. Yeah, primarily on the liability side. You know, as we get into some of the seasonal months, we anticipate some continued benefit there just from, you know, normal deposit flows, if you will. You know, we also, as CDs continue to reprice, there'll be some benefits there as that continues to roll. Then I would just say on the derivative front as well, you know, as we get into the back half, you know, we'll start to see some benefit there. Some of our derivatives start to roll off. We do on the asset side, I'd say I'll be at a slower pace. You know, new loan volume certainly is an opportunity for us to continue to squeak out some basis points, if you will, just on the earning asset yield.

I would just lastly add there too, Damon, that, you know, I think, you know, strategically one of the things that we're focused on is just redeploying our investment cash flow, where we can. One, to optimize certainly, funding, but ideally two, to just fund loan growth on a go-forward basis. Lots of pieces there, but, I think that kind of summarizes it.

Got it. Okay. That's helpful. Then from the fair value accretion standpoint, I think it was what? Like $4.5 million or so this quarter? Is that right? It's still like-

Yeah

kind of, what's your outlook or going forward? Thanks.

Yeah, yeah, no, good question. Overall, I think we're about $4.3 million for the quarter. I would still say four and a half, maybe a little bit north of that is still a pretty good run rate estimate for us for now.

Okay, great. With regards to the loan growth and the outlook there, Simon heard the, you know, the call out 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 kind of what, you know, what are some of the key factors behind that, driving that outlook?

Yeah, thanks, Damon DelMonte. You know, I think overall we see continued to see strength across our business. You know, obviously there's a lot of macroeconomic uncertainty out there, but I think the underlying continues to be positive. We certainly see on the commercial side, we see some nice momentum, and certainly see businesses wanting to get out and invest. Obviously as we start to get into the spring, summer's month, that obviously kind of comes into focus as they're getting investments, making investments ready for the summer. We see nice momentum around the resi business as well. We talked about home equity, which I think is strong and continue to see nice momentum on that business as well.

You know, I think overall it's a positive outlook. You know, we talked a little bit about in our script around some of the additions we're making, some of the strengthening of the team that we've made in the New Hampshire market, that also is strong. I was out with them a couple of weeks ago. I'm really excited by the opportunities we're starting to see in the Southern New Hampshire market and the strength of the team there. I think all these pieces together definitely, you know, lead to a positive outlook.

Would you kind of expect to get sort of like low to mid-single digit on a full year basis? Is that a reasonable assumption?

Yeah, that feels reasonable. Obviously this year lots going on, but I think where we sit right now, I think low sort of single-digit low, you know, mid-single-digit seems a good range.

Great. That's all that I had for now. Thanks so much for taking my questions.

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

Good afternoon guys. Maybe just following up on the new hires in New Hampshire. Just kind of curious, you know, the type of talent you're seeing and the opportunity you guys are seeing to hire and, you know, any thoughts on maybe the potential expenses beyond the second quarter if there's maybe more incremental adds.

Hey, Steve. Thanks for the question. We've, you know, we continue to be extremely disciplined as we've talked about in previous calls with you. You know, our focus is really on self-funding, reinvesting, providing, you know, finding efficiencies across our business. We don't see a material impact to the expense side. You know, some of those hires are certainly replacing existing positions. We see opportunities obviously with some of the southern end markets. There's been a lot of disruption, some M&A, we're picking up some great hires from some of those pieces. I think honestly they're very attracted to the Camden story. I think they see the opportunity here. We've, you know, got a lot of ambition to continue to grow.

We've obviously got the Northway acquisition, which I think has provided a great platform and we're continuing to invest. You know, we're seeing that opportunity and I think continue at a steady measured pace, continue to make those investments throughout this year and into next.

Okay. Appreciate that color. Then just maybe in terms of, you know, I hear your comments on the home equity and resi stuff. Kind of curious on the commercial loan pipelines, where are you guys seeing pricing these days and, you know, what you are expecting there?

Hey, Steve, it's Mike. Yeah, I mean, I would say overall what we're seeing is, you know, I would say on average, you know, deals kind of net six to low sixs on average. Certainly, you know, the there's certainly a premium, if you will, for just credit quality these days and certainly aggressive and, you know, just markets. You know, we, as we think about loan growth, we certainly want to maintain our discipline there. That's kind of who we are and who we've been and continue to be. Overall, yeah, I would say just on a weighted basis it's probably closer to six at this point or a little bit higher.

Okay. Appreciate the color there. Maybe just one last one, you know, on M&A here, you know, you've in-integrated the Northway deal, Simon and, you know, done a good job with it. Maybe just, you know, updated thoughts on, you know, costs and, and what you're thinking on the deal front here these days?

Yeah, I think on the, in fact you just broke up a little bit there, Steve, but I think you said costs-

Oh

... update on the costs, is that correct?

No. On M&A activity and just the thoughts around, you know, deal activity post, you know, now that you've integrated Northway, been doing well here with the transactions, just kind of curious where M&A discussions are and just updated thoughts there?

Overall MRA. You know, I mean, just to, you know, continue to recap, I mean, I think, you know, Northway Financial obviously went very, very well. We're very proud of the work there. I was out in New Hampshire last, you know, last week or so, and just seeing just a lot of energy from our clients, from our customers. Just really proud of the New Hampshire teams and the way we're really sort of getting some traction in the market and excitement to be part of the Camden franchise. I think on a look forward, Steve Moss, you know, we continue to look for. You know, we've said publicly, you know, we're certainly interested in opportunities, but it has to be the right opportunities for Camden.

We feel like we've got tremendous opportunities on the organic growth front. We're seeing great capital rebuild. We're seeing, you know, this has been highly accretive from an income perspective and lots of opportunities there. We don't feel pressured to make a deal, but, you know, we're certainly looking. We've talked about contiguous markets as, you know, sticking to our DNA as an organization and really organizations with a similar sort of footprint and feel and look to Camden National Bank and a culture that really would assimilate well. We're certainly, you know, open to those opportunities, but not feeling pressured and certainly not gonna overreach at the same time.

It's a balanced approach, a thoughtful approach, and one where we're gonna continue to obviously really focus on the core business and driving the performance and continuing that path towards top quartile returns.

Great. I appreciate all the color there, Simon and Mike, and I'll step back in the queue. Thank you very much.

Thanks, Steve. Appreciate it.

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

Hey, good afternoon.

Hey, Matt.

Michael, wanted to drill into your comment on margin expansion being driven by the liability size. Could you just provide a little bit more color on the, you know, the areas where you see the most potential for improvement? You know, one thing I was just focusing on was the cost of CDs at $3.17 seems like a pretty low starting point to begin with. Where else do you see the opportunities?

Yeah. I mean, I think, you know, Matt, as you know, certainly as we think about second quarter and beyond, I mean, part of the opportunity for us is just the remix of our deposit you know, deposit base as we get into the spring, summer season. You know, generally speaking, I would say, you know, call it late May into June, we start to really see some of the seasonal deposits come in. You know, we fully anticipate that to be the case again this year. No reason to believe that wouldn't be the case. We certainly see opportunity there. We also have, you know, as I mentioned, we have some derivatives, I don't know the number off the top of my head here, that are, you know, rolling off.

Some of those have served us really well over the last few years, just given the, you know, the Fed position today, are a little bit underwater. As we think about opportunity there continues to be some opportunity. You know, I think overall, you know, as you think about the funding base, you know, we do think that, you know, there's probably that two to five basis points is where we can see some margin expansion here in the second quarter.

I think we feel pretty good that as we continue even with the Federal Reserve holding as they are, that, you know, as we get to the back half of the year, there could be an opportunity where we start approaching, you know, 3% on a margin, core margin basis. We do see core margin expansion, you know, here over the next few quarters.

Great. You know, for loan growth this quarter, how much of what we saw or a bit of the sluggishness on the loan growth front, how much of that was seasonality? How much of that do you think, was competition? We've heard a lot about prepays and prepayment. What gives you the confidence, you know, maybe some color on the pipeline that we'll get back into that low to mid-single digit range for the remainder of the year?

Yeah, no, I think, I mean, we're seeing pipelines build, Matt. I mean, I think that gives us confidence. I think, you know, just on a year-over-year basis, we're seeing it. I think as, you know, Simon had mentioned in his comments, we really added some strong talent just across the New Hampshire franchise and really being able to, you know, really just activate that this year. You know, there's incredible opportunity for the organization. At the same time, we've made some nice adds just to our Maine franchise and some of our, you know, markets that we've been in for quite some time, and we see some upside there. Certainly on the retail franchise, we've, you know, we've had a nice strategy that we're executing on.

We continue to add, you know, bankers in that space as well, that are out, you know, selling residential mortgages, home equities. It's been really strong for us, and small business. I think as we, you know, think about our opportunity for low to mid-single digit growth here on the loan front, I think the reality is, yes, is the first quarter is normally sluggish for us. I think we're starting to see the pipelines build. You know, generally speaking, the back half of the year is kind of where we start to see it, you know, typically play out, if you will. Again, all signs point to that at this point. We still feel like that's a pretty good range estimate.

Got it. Okay. Two others from me. One, just focusing on the resi loan category. What's the current breakdown between loans being sold into the secondary market versus held for balance sheet at this point? When do we start to see that portfolio? You know, is that a growth category for you or more one that we should think about as stable?

Yeah, I would say overall, Matthew, we're generally ±50/50 in that neighborhood. Certainly quarter to quarter it will, you know, could move a little bit, but generally speaking, that's kind of how we're thinking about it. I think overall for the resi portfolio, I would say we're definitely on, you know, thinking about probably slower growth and more relationship-based growth is what I would say. Less, you know, less just transactional, just in thinking about how we want to position our loan portfolio and balance sheet over time. Certainly I wouldn't say our expectation is it's flat. Certainly I don't think it's also, you know, growing at the mid-single-digit level isn't the expectation.

Okay. Last one for me is just, you know, historically, I don't know if I remember Camden being much of a prolific, you know, repurchaser of your own stock. You talked a little bit about that in your opening comments. To what extent might that fit in on a go-forward basis? How much in the way of share repurchases should we be thinking about?

Yeah, it's a good question. I would say that, you know, I mean, we, you know, we kind of talk internally about one of our, you know, challenges kind of jokingly is where we generate lots of capital, and we have to put it to work, Matt. I think, you know, just in terms of organic growth that we're focused on positioning our capital level so we can be opportunistic, as, you know, as that occurs, as well as deploying it in terms of share repurchase and dividends. I think it's gonna play into the mix. I would say on the share repurchase front, again, you know, I don't think I could sit here and quote a number of what we're targeting. It will continue to be opportunistic.

The shares that we did buy over this past quarter, I would say we saw a dip in our share price. For us, you know, given the valuation of that made sense. I would envision that we continue to play that out, a little bit over the coming quarters. Again, I think it'll depend in large part on our share price.

All right. I appreciate all that. I'll leave it there. Thank you.

Your next question comes from the line of Daniel Cardenas from Brean Capital. Daniel, go ahead.

Hey, good afternoon, guys. Maybe if you could give me a little bit of color on competitive factors, both on the loan side and the deposit side, whether they've become more intense or less intense and if competition is rational?

Yeah. Thank you, Daniel. Appreciate the question. Yeah, I would say overall, you know, we definitely felt a pickup in competition over the last three, six months. Having said all that, I think there's still plenty of room out there when, you know, we can demonstrate the tremendous value we can bring around our products, around our value of our people, conversations, advice, treasury, and other capabilities. I think it's certainly opportunities are to be had, but there's definitely a feeling that there's been a pickup in pressure and focus on assets over the last, let's say, you know, six months or so. That certainly showed up in a little bit of the pricing pressure that we've talked about.

Having said all that, as I say, I do see, you know, lots of positives for the particularly New Hampshire and the Maine markets. You're seeing customers wanting to get out and invest, see great opportunities, we're having lots of active conversations, and seeing that kind of sharpen our pipelines, which is certainly, you know, in a good position, I think, heading into the second quarter. Overall, you know, we feel well-positioned. I think the talent we're bringing in as well gives us an added, you know, kind of a little bit of a tailwind there, and I think gives us momentum. Looking forward to the second quarter and the rest of the year.

Okay. What are your customers telling you in terms of, you know, the current economic environment? Are they becoming perhaps a little bit more cautious, or is it more business as usual?

I'd say it's a mixed picture. You know, I would say definitely consumer spend remains, you know, steady. You know, have a stable outlook in terms of the consumer, which obviously impacts a lot of U.S. businesses. You know, I'd say business investment is certainly measured, you know, at a positive pace. I was at a business in the Mid-Coast recently, they're looking to expand, not slowing expansion, certainly on the front foot. I think we're seeing that across clients. You know, I think there's certainly some pockets of particular strength, Daniel. Certainly areas like a couple of other areas, just given demographics and other kind of pieces that we see, you know, certainly some momentum there. We don't see AI spend showing up with our customers.

It's really on core capabilities, core infrastructure, capital spend that really is, you know, where the focus is. You know, it's a tight labor market, so that's certainly still a factor that plays in the Maine market, New Hampshire market. I think overall it's a, you know, mixed picture. Certainly when we talk to some of our tourism-related, hotel-related kind of areas, you know, they see a certainly decent start, good start to the year in terms of bookings and their outlook for the summer months. You know, how that plays out obviously with fuel costs and other factors is gonna be an interesting play. Certainly Maine, you know, does well. You know, it's a steady when there's these macroeconomic pressures or other factors, Maine is always steady down the middle of the fairway.

We don't see the highs of the highs, and we don't see the lows of the lows. We see that sort of solid kind of middle ground and stability, and I think that's gonna show up well this year, particularly given obviously some of those macroeconomic concerns that are out there right now. Overall, bit of a mixed picture, but generally I think quite favorable and I think looks sets us up for a good year.

Excellent. All right. What are line utilization rates looking like right now on your commercial portfolio? How does that compare to, say, six months or so ago?

Sorry, Daniel. Did you say the commercial utilization?

Yes.

Yeah, I think, we're kind of in that 35%-40% neighborhood in generally speaking. I know you didn't ask, but same on the home equity front as well.

Okay. All right. Last question from me, just, as I think about fee income growth in 2026, I know Q1 can be a little seasonally soft. You know, is a mid-single digit type of growth on a year-over-year basis, an achievable objective on the fee income side?

Yeah, yeah. I think that's, I think that's fair, Daniel.

Okay.

Yeah. I would just add, Daniel, if I could. Sorry, go on, Daniel.

Thank you. Go ahead.

I was just gonna add that, you know, we have a, I think, strong wealth strategy. Obviously, there's a lot of moving parts in the fee income, and, you know, there's obviously the consumer fee income is a key part of that. Just generally, you know, we're investing in that business, both in the CFC business and the wealth business. We, you know, we added a couple of key hires last year, and that's certainly building out some important markets for us. We're seeing some nice growth. You know, we see, particularly on the CFC side, our brokerage business, we saw some very nice growth last year, and that momentum I think will continue this year.

The wealth business as well, seeing some, you know, high single-digit growth there certainly in the first quarter and some good momentum. I think overall it's a business, you know, that, you know, is going to add. Of course, we have the resi business as well, which is a real core strength of Camden. Those pieces. We see some nice fees coming out of the commercial business as well on the swap front. I think overall, you know, it was a little bit of a soft start to the year. You know, certainly as we get into the second, third, fourth quarter, I think we can see some momentum from there moving forward.

Okay, great. Thank you. That's all I have for right now.

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.

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

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