CAMDEN NATIONAL CORP (CAC) stock intrinsic value fair value estimate & owner earnings analysis

Camden National Corporation is the holding company for Camden National Bank, a 150-year-old community bank headquartered in Camden, Maine, with roughly $7 billion of assets, $5.5 billion of deposits and about $5.0 billion of loans across 72 branches in Maine, New Hampshire and select Massachusetts markets. It is a plain deposit-and-lending franchise: net interest income was about 79% of 2025 revenue, with wealth management and service charges making up most of the rest. In January 2025 it bought Northway Financial of New Hampshire, adding about $1.2 billion of assets and 17 branches. How we measure earnings. For a bank, deposits are the raw material of the business, not borrowings, and the provision for loan losses is a real cost. We therefore use net income available to common shareholders per diluted share as the measure of what the owners earn, and value that stream directly with no debt subtracted. It ties to reported diluted EPS in every year: $2.57 (2016), $1.82 (2017, depressed by a $14.3 million write-down of deferred tax assets when the 2017 tax act cut the corporate rate), $3.39, $3.69, $3.95, $4.61 (2021), $4.18, $2.97 (2023, when deposit costs repriced faster than loan yields and the margin fell to 2.46%), $3.62 and $3.84 (2025). Share count rose from about 14.6 million to about 17.0 million on the Northway stock issuance. What earning power looks like today. The stored 2025 figure of $3.84 is not a clean run rate: it carries merger charges and a one-time provision on the acquired Northway loans, which the company itself sizes at about $9 million after tax (about $0.54 a share), taking it to roughly $4.38. The quarters since then run higher. The margin reached 3.29% in the fourth quarter of 2025, fourth-quarter return on assets was 1.28%, and first-half 2026 earnings were $2.64 a share ($1.29 and $1.35 in the two quarters), with a provision for loan losses of only $1.3 million in the half against $16.3 million a year earlier. We do not take that low provision as normal: charge-offs were 0.31% of loans in 2025 on two commercial credits, so we assume credit costs of about 0.25% of loans, roughly $12 million a year. On that basis three consecutive quarters point to about $4.8 to $5.0 a share. We use $4.70 as the starting level, between the clean 2025 figure and the recent run rate, because the margin gains have only just appeared in the numbers. A wasting item inside that level. About $20 million of pre-tax income in 2025 (about $0.90 a share after tax) came from purchase-accounting accretion on the Northway loans and securities ($17.0 million on loans, $3.5 million on investments). It is real cash today but it fades as acquired loans pay down. Excluding it, the margin was 2.82% for 2025 versus 2.46% in 2024, and 2.92% in the fourth quarter, so the underlying franchise did improve, as older fixed-rate loans and securities rolled into higher yields and deposit costs fell as the Federal Reserve cut rates by 75 basis points in the second half of 2025. We carry the fade in the growth path, not by lowering the starting level: we treat about $3.80 a share as underlying earnings and let the accretion run off to zero over six years ($0.75, $0.55, $0.35, $0.20, $0.10, then none). A smaller offsetting item, $5.9 million of annual core-deposit-intangible amortization, also runs off over time; we give no credit for that. Growth check. Per-share earnings grew 6% in 2025 ($3.62 to $3.84). For the first year of the base case we assume a slight decline (to $4.66, about 1% below the starting level), because the fading accretion outweighs underlying growth, so we are not assuming the recent pace continues. Base case: $79.39 per share. The bank is worth that per share; it has no borrowings that sit ahead of shareholders in this calculation (deposits are operating funding), so the whole amount belongs to the shares. Underlying earnings grow 3% a year, easing to 2%, which is below the roughly 4.6% a year the company has compounded since 2016 and is supported by a mechanism it has run for decades: about 55% of earnings are retained (dividends were about $1.68 a share in 2025) and lent out locally at returns well above its cost. We credit no further margin expansion, no new acquisitions, and no share gains. Owner earnings per share run $4.66, $4.58, $4.50, $4.48, $4.48, $4.49, then rise to $4.61, $4.70, $4.79 and $4.89 in year ten as the accretion is replaced by underlying growth. After year ten we hold earnings flat at about $4.89, a sustained deposit franchise with 72 branches and a 150-year record, with no growth credited. About $33.90 of the value is the first ten years and $45.49 the years beyond. Bear case: $52.86 per share. This case contains two named episodes, not one. First, a repeat of the 2023-2024 margin squeeze: the underlying margin falls from 2.92% back to the 2.46% the bank actually earned in 2023 and 2024, costing about $29 million pre-tax on roughly $6.4 billion of earning assets, or about $1.35 a share. We hold it for three years, ease it to $0.70 for two more, and then it ends. Second, a full credit cycle modeled on the 2008-2010 downturn, scaled to this bank's New England collateral: net charge-offs of about 0.7% of loans a year for three years (about $100 million cumulative) plus a build of the loan loss reserve from 0.91% to about 1.5% of loans (about $30 million), roughly $97 million more pre-tax than normal credit costs, or about $1.50 a share a year after tax for three years in years three to five. Per-share earnings run $3.15, $2.95, $1.25, $1.75 and $1.65, then recover to $3.50 for the remaining years and forever, below today's underlying level because the bank is assumed to emerge with slower growth and no further gains. Capital holds: total risk-based capital of 13.95% versus a 10% well-capitalized threshold absorbs those losses without raising equity, but the dividend of about $1.68 would not be covered in the worst years and would likely be cut. The bear value of $52.86 is about 1.8 times year-end tangible book value of $29.69 a share; we think that holds because even after the downturn the bank still earns roughly $3.50 a share on that tangible equity, a return of about 12% on a funding base where only 15% of deposits are uninsured and uncollateralized, which is worth well more than its capital. No borrowings need refinancing in this case. Bull case: $89.14 per share. Underlying earnings grow 4.5% a year for five years, 4% for three and 3% for the last two, the pace at which the bank has compounded earnings and below the top of that range, and the accretion fades as in the base case. Per-share earnings run $4.72, $4.70, $4.69, $4.73, $4.84, $4.92, $5.12, $5.33, $5.49 and $5.65, held flat afterward. We leave out margin expansion beyond what is already in the fourth-quarter run rate and any new acquisition. What we left out and why. Northway cost savings beyond those already visible in the 2026 expense run rate (noninterest expense of $73.1 million in the first half of 2026 versus $82.0 million a year earlier) and further rate cuts are not credited, because neither is secured. The recent low provision is not carried forward. What could make this wrong. Northern New England real estate concentration is the main risk: a downturn in commercial property would hit the loan book directly. The bank is also inherently leveraged. If the acquired-loan accretion runs off faster than we assume, or if core margin gives back the recent improvement, the first years would come in near the bear path. We tested the load-bearing assumption, that the 2025 margin improvement is real and not just accretion, against the company's own breakdown and found it holds: the margin before accretion rose from 2.46% to 2.82% for the year. Previous figures from our earlier analysis of this company were prepared on a different basis and are not directly comparable. What has changed in the business since then: first-half 2026 results confirmed a higher earnings run rate, and credit costs remained low. Why the margin-of-safety price is $36.00. The earnings level is a medium-confidence figure: we are fairly sure of about $4.4 to $4.9 a share, because three quarters in a row are consistent and the margin improvement is visible before accretion, but only two to three quarters of evidence exist since the acquisition and the 2023 repricing shows how quickly a bank's margin can move. The worst plausible outcome is a commercial real estate downturn arriving on top of a second margin squeeze; the structure would survive it, since capital is above requirements, funding is mostly small retail deposits, and non-performing assets are only 0.10% of assets, but the dividend would be at risk and earnings could fall to about $1.25 to $1.75 a share for several years. If we are wrong about the three things most likely to be wrong, that accretion fades faster, that credit costs are higher than 0.25% of loans, and that the margin gives some back, earnings could settle nearer $3.50 to $3.80, the 2024 and 2025 reported levels. The price assumes a three-to-four-year holding period, during which the bank pays about $1.68 a share a year. At $36 the price is about 7.7 times our $4.70 level, about 1.2 times tangible book value, with a dividend yield near 4.7% and an earnings yield near 13%. If earnings stay around $4.5 and the shares reach 13 times earnings in three years, about $58.50, plus roughly $5 of dividends, that outcome implies the 20% annual return; from a higher price that same outcome implies less, and from that price a credit cycle that costs a year or two of earnings would still leave the bank worth more than $36 because tangible book would still be near $30.