Camden National Corporation

Second quarter 2025 earnings conference call. My name is Elliot and I'll be your operator for today's call. All participants will be in listening mode during today's presentation. Following the presentation, we'll conduct a question and answer session. If you require operator assistance at any time during the call, please press star, then zero. I'll now turn the call over to Renee Smith, Executive Vice President, Chief Experience and Marketing Officer.

Thank you. Good afternoon and welcome to Camden National Corporation's conference call for the second quarter of 2025. Joining us this afternoon are members of Camden National Corporation's executive team, Simon Griffiths, President and Chief Executive Officer, and Mike Archer, Executive Vice President and Chief Financial Officer. Please note that today's presentation contains forward-looking statements and actual results could differ materially from what is discussed on today's call. Cautionary language regarding these forward-looking statements is contained in our second quarter 2025 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 the NASDAQ under the symbol CAC. In addition, today's presentation includes 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 CEO, Simon Griffiths.

Good afternoon, everyone, and thank you, Renee. We appreciate you taking the time to join us today. We're 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 pre-tax, 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 83 cents. 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 30th and a 3% increase in tangible book value during the second quarter reaching $26.90 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 the second half of 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. And at the same time, we remain firmly committed to our underwriting discipline. During the quarter, we achieved robust growth in home equity loan balances and on 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 60 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, 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 the second half of 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.

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 gap 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, pre-tax, pre-provision net income excluding M&A-related costs totaled $26.1 million over 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 the second quarter of 2022. Total revenues for the second quarter grew 4% over the last quarter to 62.3 million, driven by both net interest income and non-interest income growth. Net interest margin and non-GAAP core net interest margin each expanded two basis points during the second quarter to 306 and 270, 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. Non-interest income reached $13.1 million for the second quarter, which beat our guidance provided last quarter. We are currently estimating a range for non-interest income for the third quarter of $12 to $13 million. Reported non-interest expense for the second quarter was $37.6 million, which was 15% lower than the first quarter. Non-interest expense, including M&A costs for the second quarter, was $36.2 million, a 2% decrease compared to the prior quarter. For the third quarter, we'll currently anticipate non-interest expenses, excluding M&A costs and CDI 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, we're elevated provision expenses of $6.9 million. During the second quarter, a borrower under a syndicated loan in which Camden

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