Camden Expands Margin as Funding Costs Ease
Core net interest margin widened 5 bps sequentially to 2.97% as cheaper funding lifted spread income.
Camden National (CAC), the community-banking and wealth-management franchise, expanded its net interest margin as lower funding costs outweighed softer loan yields in the second quarter. Net interest income rose 1% QoQ and 8% YoY to $52.9 million, while NIM widened 2 bps QoQ and 20 bps YoY to 3.26%. Core NIM increased 5 bps sequentially and 27 bps from a year earlier to 2.97%.
Management attributed the linked-quarter margin improvement to lower funding costs. The rate on funding liabilities declined 2 bps QoQ and 26 bps YoY to 1.70%, helped by cheaper borrowings, while total loan yields slipped 1 bp sequentially and 10 bps from a year earlier to 5.38%.
Average loans rose 1.4% YoY and 0.3% QoQ to $4.98 billion, with 5.3% growth in commercial real estate and 21.9% growth in home equity offsetting declines in commercial loans and residential mortgages. Average deposits increased 3.5% YoY and 1.2% QoQ to $5.43 billion, though average non-interest checking fell in both periods.
Fee businesses broadened the revenue gain. Non-interest income climbed 21% QoQ and 11% YoY to $14.5 million as every category improved sequentially, including deposit-service charges, brokerage and insurance commissions, fiduciary income, debit-card fees and mortgage banking. Wealth and brokerage assets under administration reached $2.6 billion, up 13% YoY.
Higher compensation-related costs pushed non-interest expense up 5% QoQ to $37.4 million, reflecting annual salary increases, director equity awards and sales-team recognition. Expense still declined 1% YoY as prior-year merger costs rolled off, and the GAAP efficiency ratio improved 8 bps QoQ and 495 bps YoY to 55.42%.
Capital strengthened during the quarter. CET1 reached 12.19%, while the Tier 1 leverage ratio rose 23 bps QoQ to 9.66% and total risk-based capital increased 16 bps to 14.43%. Camden repurchased 52,000 shares at an average $47.64, up from 33,131 shares in the first quarter.
Credit costs remained contained even as several indicators softened. The provision increased to $710,000 from $553,000 QoQ but remained well below $6.92 million a year earlier, while the annualized net charge-off rate held at 0.04%. Nonperforming loans rose 2 bps QoQ to 0.24% of loans, and 30-to-89-day past dues increased 9 bps to 0.15%.
Period-end loans rose 1% QoQ and YoY to $5.00 billion, led sequentially by home-equity and commercial lending. The committed loan pipeline jumped 45% QoQ to $185.7 million, providing a forward indicator for balance-sheet growth as funding costs continued to shape the margin outlook.