CAMDEN NATIONAL CORP
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
CAC$58.02+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0000750686-24-000186
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000750686-24-000238
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 204 previous paragraphs and 210 current paragraphs.
114 unchanged; 78 reworded; 16 added; 10 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 31 previous and 33 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
(1) Assumed a 21% tax rate.
Current report
(1) Assumed a 21% tax rate.
Current report
Throughout the first half of the year, the Company's earnings continue to be affected by the interest rate environment, having now operated in an inverted yield curve environment for approximately two years. On an annual basis, net interest income accounts for approximately 75% of the Company’s total revenues, which, in part, is driven by net interest margin. For the first half of 2024, the Company’s net interest margin was 2.32%, compared to 2.47% for the same period of 2023. The decrease speaks to the interest rate environment and the impact of the inverted yield curve as the increase in deposit and borrowing costs has outpaced the benefit from higher interest on our interest-earning asset yield. We continue to take steps to optimize our net interest margin, and in the second quarter of 2024 the Company's net interest margin increased 6 basis points from the first quarter of 2024 to 2.36%. During the first half of 2024, we took several actions to optimize our net interest margin, including, but not limited to: (1) continued with our strategy to redeploy investment cash flows to fund new loan originations at current market interest rates; (2) we maintained disciplined new loan origination pricing; (3) we introduced a new high-yield savings deposit account focused on driving on new relationships and expanding existing relationships; (4) we repriced and drove outflow of certain high-cost, non-core deposit customer relationships and replaced with more cost-effective funding; and (5) $100.0 million balance sheet derivative matured in June 2024, which contributed to the yield increase in the commercial real estate loan portfolio.
Current report
While we have seen pressures on net interest income between periods, during the first half of 2024 we are seeing positive momentum building within non-interest income as evidenced by growth of 5% over the first half of 2023. Our wealth and brokerage business lines grew revenues 12% as assets under administration reached $2.1 billion as of June 30, 2024, and represented 12% growth over the past twelve months.
Current report
•Interest expense increased $6.6 million between periods primarily due to a 54 basis point increase in our average cost of funds to 2.35% for the second quarter of 2024. Our deposit and borrowing costs increased throughout the past year due to the current interest rate.
Current report
The Company’s average loan yield was 5.14% for the three months ended June 30, 2024, an increase of 41 basis points over the same period in 2023. In mid-June 2024, a $100.0 million balance sheet interest rate swap on the commercial real estate portfolio matured and contributed to the yield expansion between periods. We continue to redeploy loan and investment cash flows primarily to fund new loan originations at current market interest rates and further support our loan yield expansion.
Current report
Net Interest Income (Fully-Taxable Equivalent). For the six months ended June 30, 2024, the Company's net interest income on a fully-taxable equivalent basis was $63.8 million, a decrease of $3.7 million, or 5%, compared to the same period in 2023. Between periods, the Company’s net interest margin on a fully-taxable equivalent basis decreased 15 basis points to 2.32% for the six months ended June 30, 2024.
Current report
•Interest expense increased $17.1 million between periods primarily due to a 68 basis point increase in our average cost of funds to 2.31% for the six months ended June 30, 2024, which included an increase in average deposit costs of 66 basis points between periods to 2.01% for the six months ended June 30, 2024.
Current report
•Interest income on a fully-taxable equivalent basis increased $13.4 million between periods primarily driven by interest-earning assets yield expansion of 49 basis points to 4.51% for the six months ended June 30, 2024. This increase in yields more than offset the decrease in average interest-earning assets of $12.5 million. Between periods, our average loan yield expanded 46 basis points to 5.07% for six months ended June 30, 2024. For the first six months of 2024, our investment yield expanded to 2.62%, an increase of 42 basis points over the same period in 2023. These increased yields reflect the increase in interest rates between periods and the maturity of lower yielding assets.
Current report
Year-to-Date Average Balance, Interest and Yield/Rate Analysis
Current report
Provision (Credit) for Credit Losses
Current report
(2) Income from fiduciary services: The increase for the three and six months ended June 30, 2024 over the same periods in 2023, was driven by the increase in assets under management of 3% and 5% respectively, to $1.2 billion as of June 30, 2024.
Current report
(3)Brokerage and insurance commissions: The increase for the three and six months of 2024 over the same periods in 2023, was driven by the increasing new business from existing customers along with the increase in assets under administration of 2% and 7%, respectively, to $855.8 million as of June 30, 2024.
Current report
(3)Consulting and professional fees: The decreases in the three and six months ended June 30, 2024, compared to 2023, were driven by increased fees for 2023 for legal, consulting and director-related costs for the succession planning with no corresponding amounts recorded in 2024.
Current report
(4) Other expenses: The decrease for the three and six months ended June 30, 2024 was driven by the decreased advertising costs for specific deposit campaigns in 2023 that were not needed in 2024, along with the decrease in external hiring costs due to CEO transition costs incurred in the second quarter of 2023.
Current report
•Customer repurchase agreements totaling $204.5 million, an increase of $3.8 million, since December 31, 2023.
Removed paragraphs (10)
Previous report
(1) Brokered deposits are excluded from total average deposits, as presented on the Average Balance, Interest and Yield/Rate analysis table.
Previous report
Like many others across the banking industry, the Company's earnings continue to be affected by the inverted yield curve. Through the first quarter of 2024, our funding costs continued to rise at a faster pace than our earning asset yields, which resulted in further net interest margin compression period-over-period. The Company's net interest margin for the first quarter of 2024 was 2.30%, compared to 2.54% for the same period of 2023.
Previous report
Net Interest Income. Net interest income on a fully-taxable equivalent basis for the quarter ended March 31, 2024 was $31.4 million, a decrease of $3.1 million, or 9%, compared to the first quarter of 2023. The decrease consisted of a $10.5 million increase in interest expense, partially offset by an increase in interest income on a fully-taxable equivalent basis of $7.4 million between periods.
Previous report
•The increase in interest expense between periods was primarily the result of an 82 basis point increase in our average cost of funds to 2.27% for the first quarter of 2024. Our deposit and borrowing costs increased throughout the past year and in the first quarter of 2024 as the Federal Funds Rate target range was 5.25% - 5.50% in the first quarter of 2024, compared to 4.75% - 5.00% as of March 31, 2023. The increase in short-term interest rates between periods has resulted in rising funding costs between periods and we remain in a higher interest rate environment.
Previous report
The Company’s average loan yield was 5.00% for the first three months of 2024, an increase of 50 basis points over the first three months of 2023. We continue to reinvest loan and investment cash flows primarily back into loans at current market rates to support yield expansion.
Previous report
Provision for Credit Losses
Previous report
(3)Other expense: The decrease between periods was driven by the decrease in external hiring costs of $237,000 due to CEO transition costs incurred in the first quarter of 2023 and the decrease in donations of $118,000.
Previous report
Portfolio Concentrations
Previous report
Related Party Transactions
Previous report
•Customer repurchase agreements totaling $201.5 million, an increase of $842,000, since December 31, 2023.
Reworded paragraphs (78)
Previous wording
•changes to regulatory capital requirements in response to recent development affecting the banking sector; and
Current wording
•changes to regulatory capital requirements in response to recent developments affecting the banking sector; and
Previous wording
In addition to evaluating the Company’s results of operations in accordance with GAAP, management supplements this evaluation with an analysis of certain non-GAAP financial measures such as: adjusted net income; adjusted diluted earnings per share; adjusted return on average assets; adjusted return on average equity; pre-tax, pre-provision income; adjusted pre-tax, pre-provision income; return on average tangible equity and adjusted return on average tangible equity; the efficiency and tangible common equity ratios; net interest income (fully-taxable equivalent); tangible book value per share; core deposits and average core deposits. We utilize these non-GAAP financial measures for purposes of measuring performance against the Company's peer group and other financial institutions, as well as for analyzing its internal performance. The Company also believes these non-GAAP financial measures help investors better understand the Company's operating performance and trends and allows for better performance comparisons to other banks. In addition, these non-GAAP financial measures remove the impact of unusual items that may obscure trends in the Company’s underlying performance. These disclosures should not be viewed as a substitute for GAAP operating results, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other financial institutions.
Current wording
In addition to evaluating the Company’s results of operations in accordance with GAAP, management supplements this evaluation with an analysis of certain non-GAAP financial measures such as: adjusted net income; adjusted diluted earnings per share; adjusted return on average assets; adjusted return on average equity; pre-tax, pre-provision income; return on average tangible equity and adjusted return on average tangible equity; the efficiency and tangible common equity ratios; net interest income (fully-taxable equivalent); tangible book value per share; core deposits and average core deposits. We utilize these non-GAAP financial measures for purposes of measuring performance against the Company's peer group and other financial institutions, as well as for analyzing its internal performance. The Company also believes these non-GAAP financial measures help investors better understand the Company's operating performance and trends and allows for better performance comparisons to other banks. In addition, these non-GAAP financial measures remove the impact of unusual items that may obscure trends in the Company’s underlying performance. These disclosures should not be viewed as a substitute for GAAP operating results, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other financial institutions.
Previous wording
Pre-Tax, Pre-Provision Income and Adjusted Pre-Tax, Pre-Provision Income. Pre-tax, pre-provision income and adjusted pre-tax, pre-provision income are each a supplemental measure of operating earnings and performance. Pre-tax, pre-provision income is calculated as net income before provision for credit losses and income tax expense, and adjusted pre-tax, pre-provision income is calculated as net income before provision for credit losses, income tax expense, and adjusted for certain other items, as applicable. These supplemental measures became more widely used by financial institutions as a measure of financial performance for comparability across financial institutions.
Current wording
Pre-Tax, Pre-Provision Income. Pre-tax, pre-provision income is a supplemental measure of operating earnings and performance. Pre-tax, pre-provision income is calculated as net income before provision for credit losses and income tax expense. This supplemental measure has become more widely used by financial institutions as a measure of financial performance for comparability across financial institutions.
Previous wording
Camden National Corporation (hereafter referred to as “we,” “our,” “us,” or the “Company”) is a publicly-held bank holding company, with approximately $5.8 billion in assets at March 31, 2024, incorporated under the laws of the State of Maine and headquartered in Camden, Maine. Camden National Bank (the "Bank"), a wholly-owned subsidiary of the Company, was founded in 1875. The Company was founded in 1984, went public in 1997 and is registered with NASDAQ Global Market (“NASDAQ”) under the ticker symbol "CAC."
Current wording
Camden National Corporation (hereafter referred to as “we,” “our,” “us,” or the “Company”) is a publicly-held bank holding company, with approximately $5.7 billion in assets as of June 30, 2024, incorporated under the laws of the State of Maine and headquartered in Camden, Maine. Camden National Bank (the "Bank"), a wholly-owned subsidiary of the Company, was founded in 1875. The Company was founded in 1984, went public in 1997 and is registered with NASDAQ Global Market (“NASDAQ”) under the ticker symbol "CAC."
Previous wording
The Company operates throughout Maine, with its primary markets and presence being throughout coastal and central Maine, and select areas of New Hampshire and Massachusetts. The Company and the Bank generally have effectively competed with other financial institutions by emphasizing customer service, highlighted by local decision-making, establishing long-term customer relationships, building customer loyalty and providing products and services designed to meet the needs of customers.
Current wording
The Company operates throughout Maine, with its primary markets and presence being throughout coastal and central Maine, and select areas of New Hampshire. The Company and the Bank generally have effectively competed with other financial institutions by emphasizing customer service, highlighted by local decision-making, establishing long-term customer relationships, building customer loyalty and providing products and services designed to meet the needs of customers.
Previous wording
Net income for the first quarter of 2024 was $13.3 million, an increase of $545,000, or 4%, compared to the first quarter of 2023, and diluted EPS increased $0.04 or 5%, to $0.91 for the first quarter of 2024 compared to the same period last year. The Company's operating results for the first quarter of 2024 included a $910,000 partial recovery from the sale of a Signature Bank corporate bond that we had written off in the first quarter of 2023 upon notice of Signature Bank failing. Excluding the sale of the corporate bond, adjusted net income (non-GAAP) for the first quarter of 2024 was $12.6 million and adjusted EPS was $0.86, each a decrease of 11% from the first quarter of 2023.
Current wording
Net income for the first half of 2024 was $25.3 million, an increase of $149,000, or 1%, compared to the same period in 2023, and diluted EPS was $1.72 for each of the six months ended June 30, 2024 and 2023. The Company's operating results for the first six months of 2024 included a $910,000 partial recovery from the sale of a Signature Bank corporate bond that we wrote-off in the first half of 2023, upon announcement of Signature Bank’s failure in March 2023. Excluding the sale of the corporate bond, net of tax, adjusted net income (non-GAAP) for the six months ended June 30, 2024 was $24.5 million and adjusted diluted EPS was $1.67, decreases of 10% and 8%, respectively, from the same period in 2023.
Previous wording
Our asset quality continues to be a strength of the Company, and we continue to monitor the portfolio actively for potential risks. In light of the current macroeconomic environment and developments in the banking industry, we have and continue to monitor our commercial real estate portfolio. Through these reviews, there have been no significant signs of distress within the portfolios, which speaks to our disciplined and consistent underwriting of loans in all economic environments and cycles. On March 31, 2024, loans 30-89 days past due to total loans decreased to 0.05% of total loans, from 0.12% at December 31, 2023, and annualized net charge-offs continue to be very strong at 0.02% of average loans for the first quarter of 2024, compared to 0.03% for the fourth quarter of 2023. Due to these strong credit quality metrics, combined with a more favorable macroeconomic forecast between periods, the Company’s allowance for credit losses ("ACL") on loans decreased to 0.86% as of March 31, 2024, compared to 0.90% at December 31, 2023.
Current wording
Along with optimizing net interest margin, asset quality has remained a top priority for the Company throughout this most recent economic cycle. We continue to actively monitor the loan portfolio for potential risks, including thorough reviews and stress analysis on our commercial real estate loan portfolio, particularly those sub-segments of this portfolio that have been in the news. Through our reviews and analyses, we have not identified any systemic signs of distress within our loan portfolios, which speaks to our continued disciplined and consistent underwriting of loans in all economic environments and cycles. As of June 30, 2024, loans 30-89 days past due to total loans was 0.05%, which was 7 basis points lower than December 31, 2023 and consistent with that reported as of March 31, 2024. Annualized net charge-offs for the six months ended June 30, 2024 and 2023 were 0.03% of average loans for each period. Due to these strong credit quality metrics, combined with a more favorable macroeconomic forecast between periods, the Company’s allowance for credit losses ("ACL") on loans decreased to 0.86% as of June 30, 2024, compared to 0.90% at December 31, 2023 and consistent with that reported as of March 31, 2024.
Previous wording
Net interest income is the interest earned on loans, securities, and other interest-earning assets, adjusted for net loan fees, origination costs, and accretion or amortization of fair value marks on loans and/or CDs created in purchase accounting, less the interest paid on interest-bearing deposits and borrowings. Net interest income is our largest source of revenue ("revenue" is defined as the sum of net interest income and non-interest income). For the quarter ended March 31, 2024, net interest income was 75% of total revenues, compared to 78% for the quarter ended March 31, 2023. Net interest income is affected by factors including, but not limited to, changes in interest rates, loan and deposit pricing strategies and competitive conditions, loan prepayment speeds, the volume and mix of interest-earning assets and interest-bearing liabilities, and the level of non-performing assets.
Current wording
Net interest income is the interest earned on loans, securities, and other interest-earning assets, adjusted for net loan fees, origination costs, and accretion or amortization of fair value marks on loans and/or CDs created in purchase accounting, less the interest paid on interest-bearing deposits and borrowings. Net interest income is our largest source of revenue ("revenue" is defined as the sum of net interest income and non-interest income). For the quarter ended June 30, 2024, net interest income was 75% of total revenues, compared to 76% for the quarter ended June 30, 2023. For the six months ended June 30, 2024, net interest income was 75% of total revenues, compared to 77% for the same period of 2023. Net interest income is affected by factors including, but not limited to, changes in interest rates, loan and deposit pricing strategies and competitive conditions, loan prepayment speeds, the volume and mix of interest-earning assets and interest-bearing liabilities, and the level of non-performing assets.
Previous wording
Net Interest Margin. Net interest margin on a fully-taxable equivalent basis for the three months ended March 31, 2024 and 2023 was 2.30% and 2.54%, respectively.
Current wording
Net Interest Income (Fully-Taxable Equivalent). Net interest income on a fully-taxable equivalent basis for the quarter ended June 30, 2024 was $32.3 million, a decrease of $582,000, or 2%, compared to the second quarter of 2023. Between periods the Company’s net interest margin on a fully-taxable equivalent basis decreased 4 basis points to 2.36% for the second quarter of 2024.
Previous wording
The Company’s average deposit costs for the quarter ended March 31, 2024 were 1.97%, compared to 1.22% for the same period in 2023. Deposit costs have continued to be pressured throughout the first quarter of 2024 due to the higher short-term rates. Other drivers of deposit costs included strong deposit competition within our markets, and more broadly across depository institutions, including changes in the deposit mix as depositors moved deposits into higher interest-earning deposit accounts. Customers continued to deploy excess cash into higher interest-earning deposit accounts to obtain the best rates, and this change in deposit mix drove a significant increase in money market and CD balances over the past year and a significant decrease in low-cost savings and checking accounts.
Current wording
The Company’s average deposit costs for the quarter ended June 30, 2024 were 2.05%, compared to 1.48% for the same period in 2023. Deposit costs have continued to be inflated throughout the first half of 2024 due to prolonged higher short-term rates. Increased deposit costs were also the result of strong deposit competition within our markets, and more broadly across depository institutions, as well as changes in the deposit mix as depositors move cash into higher interest-earning deposit accounts to obtain the best rates. These changes in deposit mix also drove significant increases within our money market and CD balances over the past year and significant decreases in lower cost checking and savings account balances.
Previous wording
The Company’s average cost of borrowings for the three months ended March 31, 2024 increased to 3.96%, up from 3.13% for the three months ended March 31, 2023. The increase was driven by the continued increase in short-term interest between years, but also was due to the increase in average borrowings of $139.0 million, or 22%, which were used to offset the decreases in deposits of $149.7 million, or 3%, over the past year.
Current wording
The Company’s average cost of borrowings for the three months ended June 30, 2024, was 4.00%, compared to 3.77% for the three months ended June 30, 2023. The increase was driven by the continued higher short-term interest rates between years, and the increase in average borrowings of $35.4 million, or 5%.
Previous wording
•The increase in interest income on a fully-taxable equivalent basis was also primarily driven by the higher interest rate environment between years. For the first quarter of 2024, the Company’s yield on average interest-earning assets was 4.44%, compared to 3.92% for the same period in 2023.
Current wording
•Interest income on a fully-taxable equivalent basis increased $6.0 million between periods primarily driven by the higher interest rate environment between years. For the second quarter of 2024, the Company’s yield on average interest-earning assets was 4.58%, compared to 4.12% for the same period in 2023.
Previous wording
The Company’s average investment yield was 2.59% for the first quarter of 2024, an increase of 40 basis points over the same period in 2023. The increase between periods is the result of the continued cash flow from lower-yielding investments combined with the sale of investments in the second half of 2023 to reposition the Company's balance sheet. The increase in our investment yield was able to drive an increase in interest income on investments year-over-year and fully offset the impact of a decrease in average investment balances of 7% between periods.
Current wording
The Company’s average investment yield was 2.64% for the second quarter of 2024, an increase of 46 basis points over the same period in 2023. The increase between periods is the result of the continued cash flow from lower-yielding investments combined with the sale of investments in the second half of 2023 to reposition the Company's balance sheet. The increase in our investment yield drove an increase in interest income on investments year-over-year and fully offset the impact of a decrease in average investment balances of 7% between periods.
Previous wording
The provision for credit losses was made up of the following components for the periods indicated:
Current wording
The provision (credit) for credit losses was made up of the following components for the periods indicated:
Previous wording
(1) (Credit) provision for loan losses: Negative provision expense (i.e., credit for credit losses) of $1.2 million was recorded for the first quarter of 2024 and was driven by strong asset quality and an improved macroeconomic forecast between periods.
Current wording
(1) Provision (credit) for loan losses: The Company recorded provision expense of $188,000 driven by modest loan growth while maintaining strong asset quality within the loan portfolios. For the six months ended June 30, 2024, negative provision expense (i.e., credit for credit losses) of $976,000 was recorded and was driven by the continued strong asset quality and an improved macroeconomic forecast seen in 2024.
Previous wording
(2) Credit for credit losses on off-balance sheet credit exposures: At March 31, 2024, the ACL on off-balance sheet credit exposures was $2.3 million, as compared to $3.0 million as of March 31, 2023. The decrease was driven by the decrease in unfunded commitments of $76.1 million between periods and the improvement of the macroeconomic forecast between periods.
Current wording
(2) Provision (credit) for credit losses on off-balance sheet credit exposures: As of June 30, 2024 and 2023, the ACL on off-balance sheet credit exposures was $2.8 million. The provision recorded in the second quarter of 2024 was driven by the increase in unfunded commitments of $71.5 million between periods and drove the increase for the first six months of 2024 as well.
Previous wording
(3) Provision for HTM debt securities: In the first quarter of 2024, the Company sold a Signature Bank corporate bond and recovered proceeds of $910,000. In the first quarter of 2023, the Company had written-off the Signature Bank corporate bond upon receiving notice of its failure.
Current wording
(3) (Credit) provision for HTM debt securities: During the first six months of 2024, the Company sold its Signature Bank corporate bond that it had previously written-off in full in March 2023, for $1.8 million and recovered proceeds of $910,000.
Previous wording
(1)Service charges on deposit accounts: The increase was driven by the increase in overdraft income of $199,000 between periods.
Current wording
(1)Service charges on deposit accounts: The increase for the three and six months ended June 30, 2024, was driven by the increase in overdraft utilization by customers that increased income of $129,000 and $328,000, respectively. Additionally, the Company saw an increase due to increased cash management fees of $104,000 and $206,000 between periods.
Previous wording
(2)Other income: The decrease was driven by a decrease in customer loan swap fees of $238,000 between periods.
Current wording
(4)Other income: The decrease for the six months ended June 30, 2024, was driven by a decrease in customer loan swap fees of $250,000 between periods.
Previous wording
(1)Salaries and employee benefits: The increase between periods was primarily driven by higher incentive accruals due to better company performance in the first quarter 2024 compared to the same period of 2023.
Current wording
(1)Salaries and employee benefits: The increase in the three and six months ended June 30, 2024, compared to 2023, was primarily driven by increases in one-time expenses for executive transition related items and higher incentive accruals due to better company performance in the first half 2024.
Previous wording
(2)Furniture, equipment and data processing: The increase between periods reflects the continued investments in customer-facing technology platforms, internal systems and production platforms to drive increased productivity and efficiencies, and updates to various information security and resiliency-related systems and enhancements.
Current wording
(2)Furniture, equipment and data processing: The increase for the three and six months ended June 30, 2024, reflects the continued investment in customer-facing technology platforms, internal systems and production platforms to drive increased productivity and efficiencies, and updates to various information security and resiliency-related systems and enhancements.
Previous wording
Total cash and cash equivalents at March 31, 2024, was $176.7 million, compared to $99.8 million at December 31, 2023. The increase in cash of $76.9 million, or 77%, between periods was driven by the increase in timing of loan and deposit cash flows. Subsequent to quarter end cash levels have decreased to our historical normal levels and management continually monitors our cash levels as part of our liquidity risk management practices. Refer to the "—Liquidity" section for additional details.
Current wording
Total cash and cash equivalents as of June 30, 2024, were $105.6 million, compared to $99.8 million at December 31, 2023. We continually monitor our cash levels as part of our liquidity risk management practices. Refer to the "—Liquidity" section for additional details.
Previous wording
The Company utilizes the investment portfolio to manage liquidity, interest rate risk, and regulatory capital, as well as to take advantage of market conditions to generate returns without undue risk. At March 31, 2024 and December 31, 2023, our investment portfolio consisted of MBS, CMO, municipal and corporate debt securities, FHLBB and FRB common stock, and mutual funds held in a rabbi trust for the executive and director nonqualified retirement plans. We designate our debt securities as AFS or HTM based on our intent and investment strategy and they are carried at fair value and amortized cost, respectively. Our FHLBB and FRB common stock is carried at cost, and our mutual funds are designated as trading securities and are carried at fair value.
Current wording
The Company utilizes the investment portfolio to manage liquidity, interest rate risk, and regulatory capital, as well as to take advantage of market conditions to generate returns without undue risk. As of June 30, 2024 and December 31, 2023, our investment portfolio consisted of MBS, CMO, municipal and corporate debt securities, FHLBB and FRB common stock, and mutual funds held in a rabbi trust for the executive and director nonqualified retirement plans. We designate our debt securities as AFS or HTM based on our intent and investment strategy and they are carried at fair value and amortized cost, respectively. Our FHLBB and FRB common stock is carried at cost, and our mutual funds are designated as trading securities and are carried at fair value.
Previous wording
In 2022, we transferred securities from AFS to HTM to help manage our capital position in a rising interest rate environment. The securities were reclassified at fair value at the time of the transfer, which was a non-cash transaction. At March 31, 2024, the net unrealized losses on the transferred securities reported within AOCI were $45.7 million, net of a deferred tax asset of $12.5 million, and the weighted-average life on these securities was 8.4 years. At December 31, 2023, the net unrealized losses on the transferred securities reported within AOCI were $46.9 million, net of a deferred tax asset of $12.8 million and the weighted-average life of these securities was 8.5 years.
Current wording
In 2022, we transferred securities from AFS to HTM to help manage our capital position in a rising interest rate environment. The securities were reclassified at fair value at the time of the transfer, which was a non-cash transaction. As of June 30, 2024, the net unrealized losses on the transferred securities reported within AOCI were $44.4 million, net of a deferred tax asset of $12.2 million, and the weighted-average life on these securities was 8.3 years. At December 31, 2023, the net unrealized losses on the transferred securities reported within AOCI were $46.9 million, net of a deferred tax asset of $12.8 million and the weighted-average life of these securities was 8.5 years.
Previous wording
At March 31, 2024, the reported value of the Company's total investments portfolio was $1.2 billion, a decrease of $27.6 million, or 2.3%, since December 31, 2023. This was driven by changes within our debt securities portfolio, including:
Current wording
As of June 30, 2024, the reported value of the Company's total investments portfolio was $1.1 billion, a decrease of $55.6 million, or 5%, since December 31, 2023. This was driven by changes within our debt securities portfolio, including:
Previous wording
•Paydowns, calls and maturities of $23.3 million.
Current wording
•Paydowns, calls and maturities of $53 million.
Previous wording
•A net decrease in the fair value of the AFS debt securities portfolio of $6.6 million due to interest rate movements during the quarter.
Current wording
•A net decrease in the fair value of the AFS debt securities portfolio of $6.8 million due to interest rate movement during the quarter.
Previous wording
Our AFS debt securities portfolio, which comprised 52% and 53% of our investment portfolio at March 31, 2024 and December 31, 2023, respectively, was carried at fair value using Level 2 valuation techniques. Refer to Note 15 of the consolidated financial statements for further details on the Company's fair value techniques. Our HTM debt securities portfolio comprised 46% of our investment portfolio at both March 31, 2024 and December 31, 2023.
Current wording
Our AFS debt securities portfolio, which comprised 51% and 53% of our investment portfolio as of June 30, 2024 and December 31, 2023, respectively, was carried at fair value using Level 2 valuation techniques. Refer to Note 15 of the consolidated financial statements for further details on the Company's fair value techniques. Our HTM debt securities are carried at amortized cost and comprised 47% and 46% of our investment portfolio as of June 30, 2024 and December 31, 2023, respectively.
Previous wording
The book value of our debt securities as of both March 31, 2024 and December 31, 2023, was $1.2 billion. Our debt securities portfolio has limited credit risk due to its composition, which includes securities backed by the U.S. government and government-sponsored agencies, and highly rated corporate and municipal bonds by nationally recognized rating agencies. The following table provides the make-up of the Company's investment portfolio as of March 31, 2024 and December 31, 2023, based on the book value of each security type as a percentage of total book value of the Company's debt securities:
Current wording
The book value of our debt securities as of June 30, 2024 and December 31, 2023, was $1.1 billion and $1.2 billion, respectively. Our debt securities portfolio has limited credit risk due to its composition, which includes securities backed by the U.S. government and government-sponsored agencies, and highly rated corporate and municipal bonds by nationally recognized rating agencies. The following table provides the make-up of the Company's investment portfolio as of June 30, 2024 and December 31, 2023, based on the book value of each security type as a percentage of total book value of the Company's debt securities:
Previous wording
We continually monitor and evaluate our investment portfolio to identify and assess risks within our portfolio, including but not limited to, the impact of the current interest rate environment and the related prepayment risk, and the review of credit ratings. The overall mix of debt securities at March 31, 2024, compared to December 31, 2023, remains relatively unchanged and the Company expects the portfolio will continue to be well positioned to provide a stable source of cash flow. At March 31, 2024 and December 31, 2023, the duration of our debt investment securities portfolio, adjusting for calls when appropriate and consensus prepayment speeds, was 5.5 years and 5.7 years, respectively.
Current wording
We continually monitor and evaluate our investment portfolio to identify and assess risks within our portfolio, including but not limited to, the impact of the current interest rate environment and the related prepayment risk, and the review of credit ratings. The overall mix of debt securities as of June 30, 2024, compared to December 31, 2023, remains consistent and the Company expects the portfolio will continue to be well positioned to provide a stable source of cash flow. As of June 30, 2024 and December 31, 2023, the duration of our debt investment securities portfolio, adjusting for calls when appropriate and consensus prepayment speeds, was 5.5 years and 5.7 years, respectively.
Previous wording
At March 31, 2024 and December 31, 2023, municipal bonds were 5% of the book value of the total bond portfolio and all carried an investment-grade credit rating.
Current wording
As of June 30, 2024 and December 31, 2023, municipal bonds were 5% of the book value of the total bond portfolio and all carried an investment-grade credit rating.
Previous wording
At March 31, 2024 and December 31, 2023, corporate bonds were 3% of the book value of the total bond portfolio and 77% of these corporate bonds carried an investment-grade credit rating. The remaining 23% of corporate bonds were non-rated corporate bonds of community banks within our markets. As of March 31, 2024, the corporate bond portfolio was made up of 18 different companies, which included 16 different banks. The banks in the portfolio range from the largest U.S. banks to community banks, with 32% of our exposure as of March 31, 2024, being to global systemically important banks, or "G-SIBs".
Current wording
As of June 30, 2024 and December 31, 2023, corporate bonds were 3% of the book value of the total bond portfolio and 69% of these corporate bonds carried an investment-grade credit rating. The remaining 31% of corporate bonds were non-rated corporate bonds of community banks within our markets. As of June 30, 2024, the corporate bond portfolio was made up of 18 different companies, which included 16 different banks. The banks in the portfolio range from the largest U.S. banks to community banks, with 32% of our exposure as of June 30, 2024, being to global systemically important banks, or "G-SIBs".
Previous wording
At March 31, 2024 and December 31, 2023, the Company did not carry an ACL on any of its corporate or municipal bonds.
Current wording
As of June 30, 2024 and December 31, 2023, the Company did not carry an ACL on any of its corporate or municipal bonds.
Previous wording
Our other investments on the consolidated statements of condition consist of FHLBB and FRB common stock. These investments are carried at cost. We are required to maintain a certain level of investment in FHLBB stock based on our level of FHLBB advances, and maintain a certain level of investment in FRB common stock based on the Bank's capital levels. As of March 31, 2024 and December 31, 2023, our investment in FHLBB stock totaled $11.0 million and $10.0 million, respectively, and our investment in FRB stock was $5.4 million at each date.
Current wording
Our other investments on the consolidated statements of condition consist of FHLBB and FRB common stock. These investments are carried at cost. We are required to maintain a certain level of investment in FHLBB stock based on our level of FHLBB advances, and maintain a certain level of investment in FRB common stock based on the Bank's capital levels. As of June 30, 2024 and December 31, 2023, our investment in FHLBB stock totaled $11.7 million and $10.0 million, respectively, and our investment in FRB stock was $5.4 million at each date.
Previous wording
Our primary market continues to be Maine, making up 68% of the loan portfolio as of both March 31, 2024 and December 31, 2023. Massachusetts and New Hampshire are our second and third largest markets that we serve, making up 15% and 10%, of our total loan portfolio as of March 31, 2024, respectively, and 16% and 10% as of December 31, 2023, respectively. As of March 31, 2024, our distribution channels included 55 branches within Maine, two locations in New Hampshire, including a branch in Portsmouth and a commercial loan production office in Manchester, a mortgage loan production office in Braintree, Massachusetts, and an online residential mortgage and small business digital loan platform.
Current wording
Portfolio Concentrations. Our primary market continues to be Maine, making up 68% of the loan portfolio as of June 30, 2024 and December 31, 2023. Massachusetts and New Hampshire are our second and third largest markets that we serve, making up 15% and 10%, of our total loan portfolio as of June 30, 2024, respectively, and 16% and 10% as of December 31, 2023, respectively. As of June 30, 2024, our distribution channels included 55 branches within Maine, two locations in New Hampshire, including a branch in Portsmouth and a commercial loan production office in Manchester, and an online residential mortgage and small business digital loan platform.
Previous wording
At March 31, 2024, the non-residential building operators' industry (operators of commercial and industrial buildings, retail establishments, theaters, banks and insurance buildings) and lessors of residential buildings industry (lessors of buildings used as residences, such as single-family homes, apartments and town houses) concentrations were 32% and 28% of our total commercial real estate portfolio and 13% and 11% of total loans, respectively. At December 31, 2023, the non-residential building operators’ industry and lessors of residential building industry concentrations were 33% and 28%, respectively, of total commercial real estate portfolio and 14% and 11% of total loans. At March 31, 2024, there were no other industry concentrations within our loan portfolio that exceeded 10% of total loans.
Current wording
As of June 30, 2024, the non-residential building operators' industry (operators of commercial and industrial buildings, retail establishments, theaters, banks and insurance buildings) and lessors of residential buildings industry (lessors of buildings used as residences, such as single-family homes, apartments and town houses) concentrations were 32% and 28% of our total commercial real estate portfolio and 13% and 12% of total loans, respectively. As of December 31, 2023, the non-residential building operators’ industry and lessors of residential building industry concentrations were 33% and 28%, respectively, of total commercial real estate portfolio and 14% and 11% of total loans. As of June 30, 2024, there were no other industry concentrations within our loan portfolio that exceeded 10% of total loans.
Previous wording
The table below summarizes the industry concentrations of the commercial loan portfolio at the dates indicated:
Current wording
The table below summarizes the significant industries within the Company’s commercial loan portfolio at the dates indicated:
Previous wording
(a) Multi-family (5+ units) loans are primarily located in non-urban locations, including 79% in Maine, 11% in Massachusetts, 8% in New Hampshire, and 2% in other states at March 31, 2024 and December 31, 2023, respectively.
Current wording
(a) Multi-family (5+ units) loans are primarily located in non-urban locations, including 79% in Maine, 11% in Massachusetts, 8% in New Hampshire, and 2% in other states as of June 30, 2024 and December 31, 2023, respectively.
Previous wording
(b) Office loans are located in non-urban locations, including 52% in Maine, 26% in New Hampshire, and 22% in Massachusetts at March 31, 2024. and December 31, 2023, respectively.
Current wording
(c) Office loans are primarily located in non-urban locations, including 52% in Maine and 26% in New Hampshire as of June 30, 2024 and December 31, 2023, respectively. There were 23% and 22% in Massachusetts as of June 30, 2024 and December 31, 2023, respectively.
Previous wording
The Bank is permitted, in its normal course of business, to make loans to certain officers and directors of the Company and Bank under terms that are consistent with the Bank’s lending policies and regulatory requirements. In addition to extending loans to certain officers and directors of the Company and Bank on terms consistent with the Bank’s lending policies, federal banking regulations also require training, audit and examination of the adherence to this policy (also known as “Regulation O” requirements). Note 3 and Note 8 of the consolidated financial statements provide information on related party lending and deposit transactions, respectively. We have not entered into significant related party transactions.
Current wording
Related Party Transactions. The Bank is permitted, in its normal course of business, to make loans to certain officers and directors of the Company and Bank under terms that are consistent with the Bank’s lending policies and regulatory requirements. In addition to extending loans to certain officers and directors of the Company and Bank on terms consistent with the Bank’s lending policies, federal banking regulations also require training, audit and examination of the adherence to this policy (also known as “Regulation O” requirements). Note 3 and Note 8 of the consolidated financial statements provide information on related party lending and deposit transactions, respectively. We have not entered into significant related party transactions.
Showing the first 40 of 78 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
(1) Reported on tax-equivalent basis calculated using a 21% tax rate, including certain commercial loans.
Current report — wording carried from elsewhere
(2) Non-accrual loans and loans held for sale are included in total average loans.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
depending on the interest rate environment because borrowers may have the right to call or prepay obligations with or without
Previous report — wording carried elsewhere
prepayment penalties. The rise in interest rates during 2022 and 2023 resulted in slowing cash flows. As of March 31, 2024 and December 31, 2023, the Company's MBS and CMO debt securities portfolio totaled 91% of book value for both periods, respectively, of the Company's investment portfolio.