CAMDEN NATIONAL CORP
For the period ended Mar 31, 2025. Filed May 8, 2025.
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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.
Mar 31, 2025 · Filed May 8, 2025
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 2024-09-30; filed 2024-11-07.
0000750686-24-000262
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0000750686-25-000214
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 230 previous paragraphs and 229 current paragraphs.
109 unchanged; 60 reworded; 57 added; 56 removed; 5 previous and 3 current paragraphs rearranged.
Tables are not compared: 33 previous and 36 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 (57)
Current report
Statements relating to the Company’s recent acquisition of Northway may also be forward-looking statements. Factors that could cause actual result to differ materially from the forward-looking statements include:
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•the reaction to the transaction of the companies’ customers, employees and counterparties;
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•customer disintermediation;
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•expected synergies, cost savings and other financial benefits of the proposed transaction might not be realized within the expected timeframes or might be less than projected; and
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•credit and interest rate risks associated with Camden's and Northway's respective businesses, customers, borrowings, repayment, investment and deposit practices.
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(2) A one-time deferred tax valuation adjustment of $2.4 million resulted from a change in the apportionment of state income taxes due to the Northway merger.
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Core Net Interest Margin (fully-taxable equivalent). The following table provides a reconciliation of net interest margin (fully-taxable equivalent) to core net interest margin (fully-taxable equivalent). Certain non-recurring transactions have been excluded to calculate core net interest margin (fully-taxable equivalent). We believe the following adjusted financial information and metrics assist users of our financial statements with their financial analysis period-over-period as it adjusts for certain non-recurring items.
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(1) Impact from loan fair value mark accretion of $4.3 million.
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(2) Impact from investment fair value accretion of $831,000.
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(3) Impact from time deposits and borrowings amortization of $131,000.
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CRITICAL ACCOUNTING ESTIMATES
Current report
On January 2, 2025, the Company completed its acquisition of Northway Financial, Inc. (“Northway”), the bank holding company of Northway Bank. In mid-March 2025, we successfully completed full information systems and branch integration of the two franchises into Camden National Bank. With the completion of the acquisition, we increased our presence in New Hampshire significantly with the addition of 17 branches and over 100 new employees. As of March 31, 2025, the Company has 73 branches across Maine and New Hampshire and more than 700 employees. Our total assets also increased to $7.0 billion as of March 31, 2025.
Current report
The strategic merger of these two long-standing franchises in Northern New England provides significant benefit to our customers through expanded technology, infrastructure, products and services, and lending limits. For our shareholders, the merger provides for an increased presence in higher growth markets, greater access to future merger and acquisition opportunities through an expanded geography, increased scale through cost synergies, and the opportunity for future revenue synergies through product and service offerings.
Current report
For the majority of the first quarter of 2025 as we worked to integrate systems and branches, we operated Camden national Bank as two franchises that required separate information systems and technologies, employees, and branding. After the full information systems and branch integration was completed in mid-March, we began to execute on the achievement of cost synergies. Because of this, we anticipate cost synergies will begin to materialize in the second quarter of 2025. As previously disclosed, we anticipate to achieve 35% cost savings of Northway’s legacy franchise, of which we anticipate realizing 75% of those savings during 2025 and 100% thereafter.
Current report
Net income and diluted EPS for the three months ended March 31, 2025 was $7.3 million and $0.43, respectively, decreases of 50% and 57%, respectively, compared to the same period in 2024. Our operating results for the first three months of 2025 were materially impacted by the acquisition of Northway as we (1) combined the financial results of the two companies, (2) incurred acquisition-related costs of $7.5 million (pre-tax), (3) revalued the Company’s legacy deferred tax assets to account for our new deferred tax rate as a combined entity that resulted in a one-time tax benefit of $2.4 million to net income, and (4) recorded a one-time provision expense of $6.5 million associated with the accounting for acquired non-PCD loans. Adjusting for certain one-time transactions associated with the acquisition, on a non-GAAP basis, we reported adjusted net income of $16.0 million and adjusted diluted EPS of $0.95, an increase of 28% and 10%, respectively, over the first quarter of 2024. Additional details on the acquisition and our accounting for the acquisition can be found in Note 3 of the consolidated financial statements.
Current report
We continue to anticipate additional acquisition-related costs will be incurred over the coming quarters. In total, we have incurred $10.8 million of acquisition-related costs through March 31, 2025, including those incurred by Northway prior to closing of the acquisition and we estimate we will remain at or under the total estimated spend we initially reported of $13.5 million.
Current report
Net Interest Income (Fully-Taxable Equivalent). Net interest income on a fully-taxable equivalent basis for the quarter ended March 31, 2025 was $49.2 million, an increase of $17.8 million, or 57%, compared to the first quarter of 2024. The increase between periods consisted of an increase in interest income on a fully-taxable equivalent basis of $18.4 million, or 30%, which was partially offset by an by a slight increase of a $627,000, or 2%, in interest expense.
Current report
•Average interest-earning assets totaled $6.4 billion for the first quarter of 2025, which was an increase of $1.0 billion, or 19%, compared to the first quarter of 2024. The increase between periods was largely due to the acquisition of Northway on January 2, 2025. Through the acquisition, we acquired (i) total loans, net of purchase accounting adjustments, of $772.6 million, (ii) total investments, net of purchase accounting adjustments of $230.0 million, and (iii) total cash of $48.3 million. Refer to Note 3 of the consolidated financial statements for further details. In the first quarter of 2025, we recognized net fair value mark accretion from our purchase accounting associated with the acquisition of Northway totaling $5.1 million within interest income, which was made up of $4.3 million of fair value mark accretion on loans and $831,000 of fair value mark accretion on investments. Additionally, between periods the Company’s interest-earning asset yield continued to improve organically and contributed to the increased net interest income as we continued to reinvest cash flows from lower yielding interest-earning assets into new loan originations and investments at higher interest rates.
Current report
•Average funding liabilities totaled $6.2 billion for the first quarter of 2025, which was an increase of $1.0 billion, or 20%, compared to the first quarter of 2024. The increase between periods was largely due to the acquisition of Northway on January 2, 2025. Through the acquisition, we acquired (i) total deposits, net of purchase accounting adjustments, of $971.7 million and (ii) assumed borrowings, net of purchase accounting adjustments, of $127.6 million. Despite the significant increase in average funding liabilities between periods, interest expense for the first quarter of 2025 increased just $627,000, or 2%, due to the decrease in our average cost of funds of 33 basis points to 1.94% for the first quarter of 2025. The decrease in our average cost of funds between periods reflects the change in the interest rate environment. The Federal Funds Effective Rate for the first quarter of 2025 was 4.33%, which was 100 basis points lower than the same period of 2025. The other driver for the decrease in our average cost of funds between periods was the acquisition of Northway and the strength of its low-cost deposit franchise.
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The following table presents, for the periods noted, average balances, interest income, interest expense, and the corresponding average yields earned and rates paid, as well as net interest income, net interest rate spread and net interest margin:
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(1)Provision (credit) for loan losses: The Company recorded provision expense of $8.9 million for the first quarter of 2025, primarily driven by the Northway acquisition. Upon completing the acquisition on January 2, 2025, we designated 88% of the acquired loan portfolio as non-PCD and recorded an ACL on loans totaling $6.3 million for acquired non-PCD loans. As required for non-PCD loans, the establishment of the ACL on loans as of the acquisition date was charged to the provision for credit losses on the consolidated statements of income. Additionally, for the first quarter of 2025, we recorded additional provision expense of $2.6 million to account for the macroeconomic uncertainty and the heightened risk of a recession as of March 31, 2025.
Current report
(2)Provision (credit) for credit losses on off-balance sheet credit exposures: At March 31, 2025, the ACL on off-balance sheet credit exposures was $3.4 million, as compared to $2.3 million as of March 31, 2024. The increase was driven by the Northway acquisition on January 2, 2025, and an overall increase in our loss reserve levels given the macroeconomic uncertainty and heightened risk of a recession as of March 31, 2025. Unfunded commitments increased $195.2 million between periods.
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(1)Debit card income: The increase between periods of $367,000, or 13%, was driven by the acquisition of Northway on January 2, 2025. Through the acquisition, the Company added approximately 28,000 new debit card customers.
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(2)Service charges on deposit accounts: The increase between periods of $291,000, or 14%, was driven by the acquisition of Northway on January 2, 2025. Through the acquisition, the Company added approximately 50,000 customer accounts.
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(3)Brokerage and insurance commissions: The increase between periods of $458,000, or 37%, was driven by the increase in assets under management to $999.3 million, an increase of $168.8 million, or 16%.
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(4)Mortgage banking income, net: The decrease between periods was driven by the negative change in fair value on loans held for sale and residential mortgage loan pipelines. During the first quarter of 2025, the Company sold $41.8 million, or 55%, of its residential mortgage production for the first quarter of 2025, compared to $41.4 million, or 51%, for the same period of 2025. The Company continues to sell the majority of its residential mortgage production in the secondary market,
Current report
(1)The increase between periods across these various expense categories was primarily the result of the acquisition of Northway on January 2, 2025. For the majority of the first quarter of 2025, we operated Camden National Bank as two separate and distinct franchises. In mid-March 2025, we completed the information systems and branch integrations, which allows us to begin to optimize the combined organization and obtain our previously communicated cost synergies, primarily through a reduced number of employees, elimination of redundant information systems, technologies and services, and the anticipated consolidation of certain locations. We anticipate these cost savings to begin to materialize in the second quarter of 2025, and we continue to target the realization of 75% of our estimated annual cost take-out of 35% of Northway’s historical annual costs for calendar year 2025.
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(2)Amortization of core deposit intangible assets: The increase between periods was the result of the acquisition of Northway on January 2, 2025. While not final, our provisional estimate for CDI assets created as part of the acquisition of Northway totaled $48.1 million, of which we estimate the useful life of the definite-lived intangible asset to be ten years. Refer to Note 3 and Note 6 of the consolidated financial statements for additional information.
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(3)Merger and acquisition costs: In the first quarter of 2025, the Company incurred $7.5 million of one-time, acquisition-related costs associated with the acquisition of Northway that closed on January 2, 2025. Through March 31, 2025, the Company has incurred total acquisition-related costs, including those incurred by Northway prior to the closing on January 2, 2025, of $10.8 million. We continue to be on track to meet our target of $13.5 million in total acquisition-related costs, as we anticipate additional one-time, acquisition-related costs to be incurred over the coming quarters.
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The acquisition-related costs incurred during the first quarter of 2025 include:
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Income Tax (Benefit) Expense
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The Company recorded an income tax benefit of $1.2 million for the first quarter of 2025, compared to income tax expense of $3.1 million for the first quarter of 2024. In conjunction with the Company’s acquisition of Northway on January 2, 2025, we reassessed the Company’s estimated normalized effective tax rate given the change in the apportionment of income across the states in which the Company primarily operates. We currently estimate the Company’s annualized effective tax rate is 20.6%. However, also upon completion of the Northway acquisition, the Company’s estimated deferred tax rate also changed, increasing from 21.5% to 22.8%, which resulted in a one-time revaluation of the Company’s legacy deferred tax assets and the recognition of a one-time tax benefit of $2.4 million in the first quarter of 2025. Refer to Note 3 of the consolidated financial statements for further discussion.
Current report
Total cash and cash equivalents as of March 31, 2025, were $219.4 million, compared to $214.9 million at December 31, 2024. As part of the Company’s acquisition of Northway, it acquired $48.3 million of cash as of January 2, 2025. Shortly thereafter, the Company prepaid all of the FHLBB borrowings assumed from Northway totaling $45.0 million, which largely offset the cash and cash equivalents obtained through the acquisition. The Company continues to actively manage its cash balances. Refer to Note 3 of the consolidated financial statements for further details on acquired assets and liabilities from Northway.
Current report
Included within the Company’s cash and cash equivalents balances at March 31, 2025 and December 31, 2024, was cash held in escrow by the FHLBB as collateral posted by the counterparties for our derivatives in a net asset position at each reporting date totaling $16.6 million and $13.2 million, respectively. We and the counterparty manage these cash accounts daily. Refer to Notes 10 and 11 of the consolidated financial statements for additional detail on the Company’s derivatives and collateral.
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•Acquisition of Northway’s investments totaling $230.0 million, net of purchase accounting adjustments, which included (i) investment debt securities of $227.4 million, net of purchase accounting adjustments, all of which we designated as AFS and (ii) FHLBB and other corresponding banking relationship common stock of $2.5 million.
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•Sale of $56.4 million of acquired Northway debt securities shortly after acquisition date to restructure the combined investment portfolio. These debt securities were sold at fair value, and, thus, no gain or loss was recognized upon sale.
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•Purchase of $75.6 million of debt securities that we designated as AFS, and the purchase of $5.0 million of subordinated corporate debt securities of another regional financial institution that we designated as HTM.
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On January 2, 2025, the Company completed its acquisition of Northway, which included $775.7 million of loans held for investment, net of purchase accounting adjustments. Excluding the acquired loans, loan balances for the first quarter of 2025 decreased $5.8 million, or less than 1%. The following table details the Company’s change in organic loan balances for the first quarter of 2025:
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(1) Net of purchase accounting adjustments.
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Refer to Note 3 of the consolidated financial statements for further discussion of the Company’s accounting for the acquisition of Northway.
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Removed paragraphs (56)
Previous report
•risks relating to the pending merger with NFI, including the following:
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◦risk that the cost savings and other anticipated benefits from the merger may not be fully realized or may take longer than anticipated to be realized;
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◦disruption to the Company’s or NFI’s business as a result of the announcement and pendency of the merger;
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◦risk that the integration of NFI’s business and operations into the Company’s will be delayed or will be more costly or difficult than expected, or that the Company is unable to integrate NFI’s business into the Company’s successfully, including because of factors or events that may be beyond the Company’s control;
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◦the possibility that required regulatory approvals are not received on a timely basis, or at all, or are received subject to conditions that could adversely affect the Company or the expected benefits of the merger;
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◦the possibility that NFI shareholder approval is not received;
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◦the failure of closing conditions to the merger to be satisfied, or any unexpected delay in completing the merger or the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement between the Company and NFI;
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◦the dilution caused by the issuance of additional shares of the Company’s common stock in connection with the merger;
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◦the possibility that the merger may be more expensive to complete than anticipated, including because of factors or events that may be beyond the Company’s control;
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◦risks related to management and oversight of the Company’s expanded business and operations following the merger due to increased size and geographical scope;
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◦the risk that expectations regarding the timing, completion and accounting and tax treatments of the merger are not met;
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◦the risk that any announcements relating to the merger could have adverse effects on the market price of the Company’s common stock;
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◦the diversion of management’s attention from ongoing business operations and other opportunities;
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◦the risk that revenues following the merger may be lower than expected and/or the risk that certain expenses of NFI or the combined company may be greater than expected;
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◦the Company’s success in managing the foregoing risks;
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◦effects of the announcement, pendency or completion of the merger on the Company’s or NFI’s ability to retain customers and key employees; and
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◦other factors that may affect the Company’s or NFI’s future results;
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CRITICAL ACCOUNTING POLICIES
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On September 10, 2024, we announced the acquisition of Northway Financial, Inc. (“NFI”) with an expected closing date in the first quarter of 2025, subject to Northway shareholder approval, receiving required regulatory approvals and other customary closing conditions. NFI is the parent company of Northway Bank, a New Hampshire state-chartered bank, with 16 branches in New Hampshire. The merger will allow the Company to build upon its presence in New England and is forecasted to improve its future financial profile.
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The Company’s financial results for the nine months ended September 30, 2024 continued to be impacted by the change in the interest rate environment between periods, which directly affected net interest income. Net interest income for the nine months ended September 30, 2024, decreased 3% compared to the same period of 2023, and was primarily driven by net interest margin compression of seven basis points between periods to 2.37% for the nine months ended September 30, 2024. Our net interest margin bottomed-out in the first quarter of 2024 at 2.30%, and we have seen steady improvements since that time as highlighted by a reported net interest margin of 2.46% for the third quarter of 2024. We have taken actions to optimize our net interest margin throughout 2023 and 2024, including, but not limited to: (1) redeploying investment cash flows to fund new loan originations at current market interest rates; (2) maintaining disciplined new loan origination pricing; (3) introducing a new high-yield savings deposit account focused on driving new and expanding existing relationships; (4) repricing and driving the outflow of certain high-cost, non-core deposit customer relationships and replacing funding with more cost-effective alternatives; and (5) leveraging interest rate swap derivatives. We continue to be liability sensitive as of September 30, 2024 (refer to “Risk Management — interest Rate Risk”) and anticipate the recent 50 basis point cut of the Federal Funds Rate that occurred in mid-September 2024, and future Federal Funds Rate cuts, to prove beneficial to our net interest margin in future periods.
Previous report
Asset quality continues to be a top focus in the current economic cycle. We continue to actively monitor our loan portfolio, including those segments and industries that have been identified as having higher credit risk in the current economic cycle (such as nonowner occupied commercial real estate office loans), through reviews and stress analyses. Through these reviews and analyses, we have not identified any increased risks or signs of systemic distress within any segments in our loan portfolios as of September 30, 2024. We continue to maintain our lending discipline and did not have any credit concentrations exceeding internal or regulatory limits as of September 30, 2024. For the nine months ended September 30, 2024, we continued to track favorably across our key credit quality indicator metrics, highlighted by past due loans of 0.03% of total loans, non-performing assets of 0.12% of total assets, and annualized net charge-offs of 0.03%. When combining these strong credit quality metrics, with a more favorable macroeconomic forecast since December 31, 2023, the allowance for credit losses ("ACL") on loans decreased to 0.86% as of September 30, 2024, compared to 0.90% at December 31, 2023.
Previous report
We continue to maintain a strong capital position with all regulatory capital ratios exceeding regulatory levels and growing over the nine months ended September 30, 2024. Additionally, the change in the interest rate environment since December 31, 2023, has provided relief with regard to the valuation of the Company’s investment portfolio and has resulted in elevated levels of shareholders’ equity and tangible capital. The Company’s common equity ratio increased 56 basis points since December 31, 2023 to 9.22% at September 30, 2024, and its tangible common equity ratio increased 58 basis points over the same period to 7.69% at September 30, 2024.
Previous report
Net Interest Income (Fully-Taxable Equivalent). Net interest income on a fully-taxable equivalent basis for the quarter ended September 30, 2024 was $33.8 million, an increase of $931,000, or 3%, compared to the third quarter of 2023. Between periods the Company’s net interest margin on a fully-taxable equivalent basis increased 7 basis points to 2.46% for the third quarter of 2024.
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•Interest income on a fully-taxable equivalent basis increased $6.1 million, or 10%, between periods primarily driven by the higher interest rate environment between years. For the third quarter of 2024, the Company’s yield on average interest-earning assets was 4.69%, compared to 4.23% for the same period in 2023.
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The Company’s average loan yield was 5.29% for the three months ended September 30, 2024, an increase of 44 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 loan portfolio matured, and the third quarter of 2024 marked the first complete quarter in which the benefit of this maturity was realized, contributing to improved expansion between periods. Throughout 2024, we redeployed loan and investment cash flows primarily to fund new loan originations at current market interest rates and further support our loan yield expansion.
Previous report
The Company’s average investment yield was 2.59% for the third quarter of 2024, an increase of 32 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.
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•Interest expense increased $5.0 million between periods primarily due to a 42 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 higher interest rate environment.
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The Company’s average deposit costs for the quarter ended September 30, 2024 were 2.09%, compared to 1.67% for the same period in 2023. Deposit costs continued to be inflated throughout the first nine months 2024 due to prolonged higher short-term interest rates. Increases in deposit costs over the past year 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 have been more conscious to move excess cash into higher interest-earning deposit accounts.
Previous report
The Company’s average cost of borrowings for the three months ended September 30, 2024, was 3.90%, compared to 3.70% for the three months ended September 30, 2023. The increase was driven by the continued higher short-term interest rates between years and the change in mix of borrowings.
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Net Interest Income (Fully-Taxable Equivalent). For the nine months ended September 30, 2024, the Company's net interest income on a fully-taxable equivalent basis was $97.5 million, a decrease of $2.7 million, or 3%, compared to the same period in 2023. Between periods, the Company’s net interest margin on a fully-taxable equivalent basis decreased 7 basis points to 2.37% for the nine months ended September 30, 2024.
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•Interest expense increased $22.1 million between periods primarily due to a 58 basis point increase in our average cost of funds to 2.32% for the nine months ended September 30, 2024, which included an increase in average deposit costs of 58 basis points between periods to 2.04% for the nine months ended September 30, 2024.
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•Interest income on a fully-taxable equivalent basis increased $19.6 million between periods primarily driven by interest-earning assets yield expansion of 48 basis points to 4.57% for the nine months ended September 30, 2024. This increase in yields more than offset the decrease in average interest-earning assets of $10.5 million. Between periods, our average loan yield expanded 46 basis points to 5.15% for nine months ended September 30, 2024. For the first nine months of 2024, our investment yield expanded to 2.61%, an increase of 39 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.
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Year-to-Date Average Balance, Interest and Yield/Rate Analysis
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(2)(Credit) provision for credit losses on off-balance sheet credit exposures: As of September 30, 2024 and 2023, the ACL on off-balance sheet credit exposures was $2.7 million. The credit for credit losses recorded for the third quarter of 2024 was primarily due to the decrease in the commercial and residential loan pipelines of $24 million from the second quarter of 2024. The provision for credit losses recorded for the nine months ended September 30, 2024, was driven by a $76.9 million increase in unfunded commitments during the period.
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(1)Service charges on deposit accounts: The increase for the three and nine months ended September 30, 2024, over the same periods in 2023, was driven by the increase in deposit customers’ overdraft utilization and cash management fees earned on corporate and municipal clients.
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(2)Income from fiduciary services: The increase for the three and nine months ended September 30, 2024 over the same periods in 2023, was driven by the increase in assets under management of 6% and 12% respectively, to $1.2 billion as of September 30, 2024.
Previous report
(3)Brokerage and insurance commissions: The increase for the three and nine months ended September 30, 2024 over the same periods in 2023, was driven by the increase in assets under administration of 6% and 14%, respectively, to $904.4 million as of September 30, 2024.
Previous report
(4)Mortgage banking income, net: The increase for the three and nine months ended September 30, 2024, compared to the same periods of 2023, was due to the increase in net gains recognized on residential mortgage loan sales. For the three months ended September 30, 2024, the Company sold $62.4 million, or 63%, of its residential mortgages at an average net gain of 1.10%, compared to $66.2 million, or 59%, at an average net gain of 0.65% for the three months ended September 30, 2023. For the nine months ended September 30, 2024, the Company sold $157.3 million, or 57%, of its residential mortgages at an average net gain of 0.98%, compared to $137.3 million, or 47%, at an average net gain of 0.87% for the nine months ended September 30, 2023.
Previous report
(5)Net loss on sale of securities: Represents the realized loss upon sale of debt investments in 2023, as we executed investment sales that resulted in pre-tax losses of $5.3 million. The trades were completed to reposition a portion of our balance sheet with an expectation of improved future earnings and profitability as we reinvested the cash proceeds for balance sheet optimization.
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(6)Other income: The decrease for the nine months ended September 30, 2024, was driven by a decrease in customer loan swap fees of $273,000 between periods.
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Previous wording
•weakness in the United States economy in general and the regional and local economies within the New England region and Maine, which could result in a deterioration of credit quality, an increase in the allowance for credit losses or a reduced demand for the Company’s credit or fee-based products and services;
Current wording
•weakness in the United States economy in general and the regional and local economies within the Northern New England region, which could result in a deterioration of credit quality, an increase in the allowance for credit losses or a reduced demand for the Company’s credit or fee-based products and services;
Previous wording
•changes in trade, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System;
Current wording
•changes in trade, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System or the imposition of tariffs or retaliatory tariffs;
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: core net income; core diluted earnings per share; core return on average assets; core return on average equity; pre-tax, pre-provision income; return on average tangible equity and core 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 and core net interest margin (both on a fully-taxable equivalent basis); 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
Core Net Income; Core Diluted Earnings per Share; Core Return on Average Assets; and Core Return on Average Equity. The following table provides a reconciliation of net income, diluted EPS, return on average assets and return on average equity to core net income, core diluted EPS, core return on average assets and core return on average equity. Certain transactions have been excluded to calculate core net income, core diluted EPS, core return on average assets and core return on average equity. We believe the following adjusted financial metrics assist users of our financial statements with their financial analysis period-over-period as it adjusts for certain non-recurring items.
Current wording
Adjusted Net Income; Adjusted Diluted Earnings per Share; Adjusted Return on Average Assets; and Adjusted Return on Average Equity. The following table provides a reconciliation of net income, diluted EPS, return on average assets and return on average equity to adjusted net income, adjusted diluted EPS, adjusted return on average assets and adjusted return on average equity. Certain non-recurring transactions have been excluded to calculate adjusted net income, adjusted diluted EPS, adjusted return on average assets and adjusted return on average equity. We believe the following adjusted financial information and metrics assist users of our financial statements with their financial analysis period-over-period as it adjusts for certain non-recurring items.
Previous 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.
Current wording
Pre-Tax, Pre-Provision Income and adjusted 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 (benefit) expense. This supplemental measure has become more widely used by financial institutions as a measure of financial performance for comparability across financial institutions. Adjusted pre-tax, pre-provision income is a supplemental measure with certain non-recurring expenses excluded. We believe the following adjusted financial information and metrics assist users of our financial statements with their financial analysis period-over-period as it adjusts for certain non-recurring items.
Previous wording
Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. In preparing the Company’s consolidated financial statements, management is required to make significant estimates and assumptions that affect assets, liabilities, revenues, and expenses reported. Actual results could differ materially from our current estimates as a result of changing conditions and future events. Several estimates are particularly critical and are susceptible to significant near-term change, including (i) the ACL, including the ACL on loans, off-balance sheet credit exposures and investments; (ii) accounting for acquisitions and the subsequent review of goodwill and intangible assets generated in an acquisition for impairment; (iii) income taxes; and (iv) accounting for defined benefit and postretirement plans.
Current wording
Critical accounting estimates are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. In preparing the Company’s consolidated financial statements, management is required to make significant estimates and assumptions that affect assets, liabilities, revenues, and expenses reported. Actual results could differ materially from our current estimates as a result of changing conditions and future events. Estimates particularly critical and susceptible to significant near-term change, include (i) the ACL on loans and (ii) accounting for acquisitions and the subsequent review of goodwill and intangible assets generated in an acquisition for impairment.
Previous wording
Camden National Corporation (hereafter referred to as “we,” “our,” “us,” or the “Company”) is a publicly-held bank holding company, with approximately $5.7 billion in assets as of September 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."
Current wording
Camden National Corporation (hereafter referred to as “we,” “our,” “us,” or the “Company”) is a publicly-held bank holding company, with $7.0 billion in assets as of March 31, 2025, 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. 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 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
The following table outlines other key financial metrics for the periods indicated:
Current wording
The following table outlines key financial metrics for the periods indicated:
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 September 30, 2024, net interest income was 75% of total revenues, compared to 87% for the same period in 2023. For the nine months ended September 30, 2024, net interest income was 75% of total revenues, compared to 80% for the first nine months 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.
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, investments, time deposits and/or borrowings 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, 2025, net interest income was 81% of total revenues, compared to 75% for the same period in 2024. 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 is calculated as net interest income on a fully-taxable equivalent basis (non-GAAP) as a percentage of average interest-earning assets.
Current wording
Net Interest Margin (Fully-Taxable Equivalent). Net interest margin is calculated as net interest income on a fully-taxable equivalent basis as a percentage of average interest-earning assets. Our net interest margin on a fully-taxable equivalent basis increased 74 basis points over the first quarter of 2024 to 3.04% for the first quarter of 2025. Refer to the discussion above for the drivers for the change between periods. Adjusting for the impact of purchase accounting, which contributed $5.0 million to net interest income for the first quarter of 2025, the Company reported non-GAAP, core net interest margin of 2.68%, an increase of 38 basis points over the first quarter of 2024.
Previous wording
Net income and diluted EPS for the nine months ended September 30, 2024 was $38.3 million and $2.62, respectively, each an increase of 10% over the same period in 2023. Our operating results for the nine months ended September 30, 2024 and 2023, included certain non-recurring events, which included merger-related costs of $727,000 for the nine months ended September 30, 2024 (refer to "Non-GAAP Financial Measures and Reconciliation to GAAP" for additional details). On a non-GAAP basis, core net income for the nine months ended September 30, 2024, was $38.2 million and core diluted EPS was $2.61, each a decrease of 6% compared to the same period in 2023.
Current wording
(3) This is a non-GAAP measure. Please see "Non-GAAP Financial Measures and Reconciliation to GAAP” for additional information.
Previous wording
(1)Provision (credit) for loan losses: The Company recorded provision expense of $283,000 driven by increasing reserves on loans more adversely rated. The release of $456,000 in provision for the three months ended September 30, 2023 was primarily driven by the economic forecast improving from in the quarter and continued strong asset quality. For the nine months ended September 30, 2024, negative provision expense (i.e., credit for credit losses) of $693,000 was recorded and was primarily driven by the continued strong asset quality and the continued improvement of the macroeconomic forecast seen in 2024. The provision of $288,000 for the nine months ended September 30, 2023 was driven by 1% loan growth along with the economic forecast worsening slightly in the first nine months of 2023.
Current wording
The negative provision expense (i.e., credit for credit losses) of $1.2 million recorded for the first quarter of 2024 was driven by strong asset quality and an improved macroeconomic forecast.
Previous wording
(3)(Credit) provision for HTM debt securities: In the first quarter of 2023, the Company fully wrote-off its Signature Bank corporate bond totaling $1.8 million, upon the announcement of Signature Bank’s failure. In the first quarter of 2024, the Company sold its Signature Bank corporate bond and recovered proceeds of $910,000.
Current wording
(3)(Credit) for HTM debt securities: In the first quarter of 2024, the Company sold its Signature Bank corporate bond that it had previously written off for $1.8 million and recovered proceeds of $910,000.
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. As of September 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.
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 March 31, 2025 and December 31, 2024, our investment portfolio consisted of MBS, CMO, municipal and subordinated corporate debt securities; FHLBB, FRB and other correspondent bank relationship common stock; and mutual funds held in a rabbi trust for the executive and director nonqualified retirement plans.
Previous wording
As of September 30, 2024, the reported value of the Company's total investments portfolio was $1.2 billion, a decrease of $33.7 million, or 2.8%, since December 31, 2023. This was driven by changes within our debt securities portfolio, including:
Current wording
As of March 31, 2025, the reported value of the Company's total investments portfolio was $1.4 billion, an increase of $244.7 million, or 21%, since December 31, 2024. The change between periods was driven by the following:
Previous wording
•Pay downs, calls, and maturities of $85.4 million.
Current wording
•Pay downs, calls, and maturities of $9.5 million.
Previous wording
•The change in fair value of the Company’s AFS debt securities of $22.6 million due to the decrease in interest rates between periods.
Current wording
•The increase in fair value of the Company’s AFS debt securities of $17.2 million due to the decrease in interest rates between periods.
Previous wording
Our AFS debt securities portfolio, which comprised 52% and 53% of our investment portfolio as of September 30, 2024 and December 31, 2023, respectively, was carried at fair value using Level 2 valuation techniques. Refer to Note 16 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 45% and 46% of our investment portfolio as of September 30, 2024 and December 31, 2023, respectively.
Current wording
Our AFS debt securities portfolio, which comprised 60% and 52% of our investment portfolio as of March 31, 2025 and December 31, 2024, respectively, was carried at fair value using Level 2 valuation techniques. Refer to Note 17 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 37% and 45% of our investment portfolio as of March 31, 2025 and December 31, 2024, respectively.
Previous wording
The book value of our debt securities as of September 30, 2024 and December 31, 2023, was $1.2 billion at each date. 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 September 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:
Current wording
The book value of our debt securities as of March 31, 2025 was $1.4 billion compared to $1.2 billion as of December 31, 2024. 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 subordinated corporate and municipal bonds by nationally recognized rating agencies. At March 31, 2025 and December 31, 2025, the book value of U.S. government and government-sponsored agencies represented approximately 92% and 91%, respectively, of our debt securities portfolio.
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 as of September 30, 2024, compared to December 31, 2023, remains consistent and is believed to be well-positioned to provide a stable source of cash flow. As of September 30, 2024 and December 31, 2023, the duration of our debt investment securities portfolio, adjusting for calls when appropriate and consensus prepayment speeds, was
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 March 31, 2025, compared to December 31, 2024, remains consistent and is believed to be well-positioned to provide a stable source of cash flow. As of March 31, 2025 and December 31, 2024, the duration of our debt investment securities portfolio, adjusting for calls when appropriate and consensus prepayment speeds, was 5.3 years and 5.2 years, respectively.
Previous wording
As of September 30, 2024 and December 31, 2023, all of our municipal bonds carried an investment-grade credit rating.
Current wording
At March 31, 2025 and December 31, 2024, municipal bonds were 4% and 5% of the book value of the total bond portfolio at each date and all municipal bonds carried an investment-grade credit rating.
Previous wording
As of September 30, 2024 and December 31, 2023, 69% of our corporate bonds carried an investment-grade credit rating. The remaining corporate bonds were non-rated corporate bonds of community banks within our markets. As of September 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 September 30, 2024 being to global systemically important banks, or "G-SIBs".
Current wording
At March 31, 2025 and December 31, 2024, subordinated corporate bonds were 3% of the book value of the total bond portfolio for both periods. At March 31, 2025 and December 31, 2024, subordinated corporate bonds had a book values of $25.9 million at each period, or 62% and 70%, respectively, of the subordinated corporate bond portfolio and carried an investment-grade credit rating. The remaining $16.2 million and $11.2 million, respectively, of book value, or 38% and 30%, respectively, of the subordinated corporate bond portfolio, were non-rated subordinated corporate bonds of community banks within our markets. As of March 31, 2025, the subordinated corporate bond portfolio was made up of 17 different companies, which included 15 different banks. The banks in the portfolio range from the largest U.S. banks to community banks, with 31% of our exposure as of March 31, 2025, being to global systemically important banks, or "G-SIBs." We continue to monitor and analyze the performance of our subordinated corporate bond portfolio.
Previous wording
We completed a review of our HTM and AFS investment portfolio as of September 30, 2024, and concluded that no ACL was warranted on any of the remaining bonds at this time. The fair value and book value of the Company's corporate bonds and municipal securities as of September 30, 2024 and December 31, 2023 was as follows:
Current wording
We completed a review of our HTM and AFS investment portfolio as of March 31, 2025, and concluded that no ACL was warranted on any of our bonds at this time.
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 September 30, 2024 and December 31, 2023, our investment in FHLBB stock totaled $17.1 million and $10.0 million, respectively, and our investment in FRB stock was $5.4 million at each date.
Current wording
Other Investments. Our other investments on the consolidated statements of condition is primarily made up 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, 2025 and December 31, 2024, our investment in FHLBB stock totaled $17.5 million and $17.1 million, respectively, and our investment in FRB stock was $8.7 million and $5.4 million, respectively.
Previous wording
Our investments in mutual funds are designated as trading securities and carried at fair value. These investments are held within a rabbi trust and will be used for future payments associated with the Company’s Executive and Director Deferred Compensation Plan. These investments are carried at fair value using Level 1 valuation techniques. Refer to Note 16 of the consolidated financial statements for further details on fair value.
Current wording
Trading Securities. Our investments in mutual funds are designated as trading securities and carried at fair value. These investments are held within a rabbi trust and will be used for future payments associated with the Company’s Executive and Director Deferred Compensation Plan. These investments are carried at fair value using Level 1 valuation techniques. Refer to Note 17 of the consolidated financial statements for further details on fair value.
Previous wording
Portfolio Concentrations. Our primary market continues to be Maine, making up 68% of the loan portfolio as of September 30, 2024 and December 31, 2023. Massachusetts and New Hampshire are our second and third largest markets that we serve, making up 16% and 10% of our total loan portfolio, respectively, as of September 30, 2024 and December 31, 2023. As of September 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.
Current wording
Portfolio Concentrations. Our primary geographical markets are Maine, New Hampshire and Massachusetts, making up 57%, 25%, and 13%, respectively, of the loan portfolio as of March 31, 2025, compared to 68%, 16%, and 10%, respectively, as of December 31, 2024. The increases between periods in our loan exposure to New Hampshire and Massachusetts was driven by the Northway acquisition. As of March 31, 2025, our distribution channels, including branches acquired in the Northway merger, included 55 branches in Maine, 18 branches and one loan production office in in New Hampshire, and an online residential mortgage and small business digital loan platform.
Previous wording
As of September 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 31% and 30% 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 September 30, 2024, there were no other industry concentrations within our loan portfolio that exceeded 10% of total loans.
Current wording
As of March 31, 2025 and December 31, 2024, lessors of residential buildings industry (lessors of buildings used as residences, such as single-family homes, apartments and town houses) and the non-residential building operators' industry (operators of commercial and industrial buildings, retail establishments, theaters, banks and insurance buildings) concentrations were 32% and 31%, respectively, of our total commercial real estate portfolio and both were 13% of total loans. As of March 31, 2025, there were no other industry concentrations within our loan portfolio that exceeded 10% of total loans.
Previous wording
(a) Multi-family (5+ units) loans are primarily located in non-urban locations, including 80% in Maine, 11% in Massachusetts, 7% in New Hampshire, and 2% in other states as of September 30, 2024. As of December 31, 2023, there were 79% in Maine, 11% in Massachusetts, 8% in New Hampshire, and 2% in other states.
Current wording
(a) Multi-family (5+ units) loans are primarily located in non-urban locations, including 56% in Maine, 33% in New Hampshire, and 9% in Massachusetts as of March 31, 2025, compared to 68%, 23%, and 7%, respectively, as of December 31, 2024.
Previous wording
(c) Office loans are primarily located in non-urban locations, including 52% in Maine and 26% in New Hampshire as of September 30, 2024 and December 31, 2023, respectively. There were 23% and 22% in Massachusetts as of September 30, 2024 and December 31, 2023, respectively.
Current wording
(b) Office loans are primarily located in non-urban locations, including 43% in Maine, 36% in New Hampshire, and 21% in Massachusetts as of March 31, 2025, compared to 52%, 26%, and 23%, respectively, as of December 31, 2024.
Previous wording
(d) Other includes multiple property types that individually are less than 5% of the real estate investment portfolio and individually are 1% or less of the total loan portfolio.
Current wording
(d) Includes multiple property types that individually are less than 5% of the real estate investment portfolio and individually are 1% or less of the total loan portfolio.
Previous wording
•The adequacy of the ACL is overseen by the Management Provision Committee, which is an internal management committee comprised of the Company’s president and chief executive officer and other executives and senior managers across business lines, including Accounting and Finance; Credit Underwriting, Credit Risk and Special Assets; Risk and Compliance; Commercial Banking; and Retail Banking. The Management Provision Committee supports the oversight efforts of the Audit Committee of the Board of Directors.
Current wording
•The adequacy of the ACL is overseen by the Management Provision Committee, which is an internal management committee As of January 1, 2025, the Management Provision Committee is comprised of the Company’s chief executive officer, chief financial officer, chief credit officer and certain members of senior management within Accounting, Credit Risk, and Collections and Special Assets. The Management Provision Committee supports the oversight efforts of the Audit Committee of the Board of Directors.
Previous wording
Non-Performing Assets. Non-performing assets include non-accrual loans, accruing loans 90 days or more past due, accruing TDRs prior to the Company's adoption ASU 2022-02, and property acquired through foreclosure or repossession. The following table sets forth the composition and amounts of our non-performing loans as of the dates indicated:
Current wording
Non-Performing Assets. Non-performing assets include non-accrual loans, accruing loans 90 days or more past due, and property acquired through foreclosure or repossession. The following table sets forth the composition and amounts of our non-performing loans as of the dates indicated:
Previous wording
Potential Problem Loans. Potential problem loans consist of classified accruing commercial and commercial real estate loans that were 30-89 days past due. Such loans are characterized by weaknesses in the financial condition of borrowers or collateral deficiencies. Based on historical experience, the credit quality of some of these loans may improve due to changes in collateral values or the financial condition of the borrowers, while the credit quality of other loans may deteriorate, resulting in a loss. These loans are not included in the above analysis of non-accrual loans. As of September 30, 2024 and December 31, 2023, loans classified as potential problem loans totaled $137,000 and $1.2 million, respectively.
Current wording
Potential Problem Loans. Potential problem loans consist of classified accruing commercial and commercial real estate loans that were 30-89 days past due. Such loans are characterized by weaknesses in the financial condition of borrowers or collateral deficiencies. Based on historical experience, the credit quality of some of these loans may improve due to changes in collateral values or the financial condition of the borrowers, while the credit quality of other loans may deteriorate, resulting in a loss. These loans are not included in the above analysis of non-accrual loans. As of March 31, 2025 and December 31, 2024, loans classified as potential problem loans totaled $83,000 and $96,000, respectively.
Previous wording
ACL on Loans. There were no significant changes in our modeling methodology to determine the ACL on loans during the three months or nine ended September 30, 2024. The significant key assumptions used with the ACL on loans calculation as of September 30, 2024 and December 31, 2023, included: (i) Company-specific macroeconomic factors (i.e., loss drivers), (ii) our forecast period and reversion speed, (iii) prepayment speeds, and (iv) various qualitative factors.
Current wording
During the first quarter of 2025, the Company completed its assessment of significant model inputs and assumptions within its discounted cash flow analysis used for estimating its ACL on loans and determined there were no material changes to the methodology. The significant key assumptions used with the ACL on loans calculation as of March 31, 2025 and December 31, 2024, included: (i) Company-specific macroeconomic factors (i.e., loss drivers), (ii) our forecast period and reversion speed, (iii) prepayment speeds, and (iv) various qualitative factors. In the first quarter the Company updated the company-specific macroeconomic factors, see Note 5 Loans for more detail on the changes.
Previous wording
As of September 30, 2024 and December 31, 2023, the recorded ACL on loans was $35.4 million, or 0.86% to total loans, and $36.9 million, or 0.90% of total loans, respectively, and represented our best estimate. Our ACL on loans estimate as of each date incorporated multiple forecasted economic scenarios and probability weighting of each scenario. Included within our ACL on loans as of September 30, 2024 and December 31, 2023, was consideration for qualitative factors that may not be, or may not be completely, represented within the Company’s accounting model used to determine its ACL on loans. Each quarter, in conjunction with our quarterly close and financial reporting, we evaluate the need for these qualitative factors and make adjustments as appropriate, including consideration of macro- and micro-level changes. The ACL on loans as of September 30, 2024, incorporated a lower weighting for the probability of a forecasted recession scenario over the next 12 to 24 months based on management’s forecasted macroeconomic outlook as of that date, as compared to December 31, 2023, which was the primary driver for the reduction in the ACL on loans between periods.
Current wording
As of March 31, 2025, the ACL on loans totaled $46.7 million, or 0.96% to total loans, compared to $35.7 million, or 0.87% of total loan as of December 31, 2024. Our ACL on loans estimate as of each date incorporated multiple forecasted economic scenarios and probability weighting of each scenario. Included within our ACL on loans as of March 31, 2025 and December 31, 2024, was consideration for qualitative factors that may not be, or may not be completely, represented within the Company’s accounting model used to determine its ACL on loans. Each quarter, in conjunction with our quarterly close and financial reporting, we evaluate the need for these qualitative factors and make adjustments as appropriate, including consideration of macro- and micro-level changes. The ACL on loans as of March 31, 2025, incorporated a higher probability weighting for the forecasted likelihood of recession over the next 12 to 24 months, as compared to December 31, 2024. This resulted in an increase in our ACL on loans between periods of $2.6 million, or an increase of approximately 5 basis points to ACL on loans. The overall global and national markets continue to be volatile and carry a high degree of uncertainty, and any changes to our forecast or qualitative factors subject our ACL estimate to a higher risk of fluctuation between periods.
Previous wording
ACL on Off-Balance Sheet Credit Exposures. There were no significant changes in our modeling methodology to determine the ACL on off-balance sheet credit exposures during the nine months ended September 30, 2024. The model uses the credit loss factors for each segment calculated within the ACL on loans model described above. The ACL on off-balance sheet credit exposures as of September 30, 2024 and December 31, 2023, was $2.7 million and $2.4 million, respectively.
Current wording
ACL on Off-Balance Sheet Credit Exposures. There were no significant changes in our modeling methodology to determine the ACL on off-balance sheet credit exposures during the first quarter of 2025. The model uses the credit loss factors for each segment calculated within the ACL on loans model described above. The ACL on off-balance sheet credit exposures as of March 31, 2025 and December 31, 2024, was $3.4 million and $2.8 million, respectively. The increase between periods reflects the acquisition of Northway on January 2, 2025.
Previous wording
The Company's loan-to-deposit ratio was 90% as of September 30, 2024, compared to 89% at December 31, 2023.
Current wording
The Company's loan-to-deposit ratio was 89% at both March 31, 2025 and December 31, 2024.
Previous wording
Uninsured and Uncollateralized Deposits. Total deposits that exceeded the FDIC deposit insurance limit of $250,000 were $979.1 million, or 21% of total deposits, as of September 30, 2024, and $1.1 billion, or 23% of total deposits, as of December 31, 2023.
Current wording
Uninsured and Uncollateralized Deposits. Total deposits that exceeded the FDIC deposit insurance limit of $250,000 were $1.2 billion, or 21% of total deposits, as of March 31, 2025, and $1.1 billion, or 23% of total deposits, as of December 31, 2024.
Previous wording
Total uninsured and uncollateralized deposits that exceeded the FDIC deposit insurance limit of $250,000 and were not secured by pledged assets or any other guarantee of the Company totaled $698.4 million, or 15% of total deposits, as of September 30, 2024, and $669.5 million, or 15% of total deposits, as of December 31, 2023.
Current wording
Total uninsured and uncollateralized deposits that exceeded the FDIC deposit insurance limit of $250,000 and were not secured by pledged assets or any other guarantee of the Company totaled $790.0 million, or 14% of total deposits, as of March 31, 2025, and $760.8 million, or 16% of total deposits, as of December 31, 2024.
Showing the first 40 of 60 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
AFS and HTM Debt Securities. 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.
Current report — wording carried from elsewhere
The following table provides the make-up of the Company's investment portfolio as of March 31, 2025 and December 31, 2024, based on the book value of each security type as a percentage of total book value of the Company's debt securities:
Current report — wording carried from elsewhere
The fair value and book value of the Company's subordinated corporate bonds and municipal securities as of March 31, 2025 and December 31, 2024 was as follows:
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
(2) Revenue is the sum of net interest income and non-interest income.
Previous report — wording carried elsewhere
(1) Reported on tax-equivalent basis calculated using a 21% tax rate, including certain commercial loans.
Previous report — wording carried elsewhere
(2) Non-accrual loans and loans held for sale are included in total average loans.
Previous report — wording carried elsewhere
The overall global and national markets continue to be volatile and carry a high degree of uncertainty, and any changes to our forecast or qualitative factors subject our ACL estimate to a higher risk of fluctuation between periods.
Previous report — wording carried elsewhere
We may adjust our assumptions to account for differences between expected and actual losses from period to period. A future change of our assumptions likely will alter the level of allowance required and may have a material impact on future results of operations and financial condition. The ACL on loans is reviewed periodically within a calendar quarter to assess trends in CECL ("Current Expected Credit Losses") key assumptions and asset quality, and their effects on the Company's financial condition.