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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The discussion below focuses on the factors affecting our consolidated results of operations and financial condition at and for the year ended December 31, 2023, and where appropriate, factors that may affect our future financial performance, unless stated otherwise. This discussion should be read in conjunction with the consolidated financial statements, notes to the consolidated financial statements and selected consolidated financial data.

Refer to the Company’s 2022 annual report on Form 10-K filed with the SEC on March 10, 2023 for the discussion of results of operations and financial condition at and for the year ended December 31, 2022.

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ACRONYMS AND ABBREVIATIONS

The acronyms and abbreviations identified below are used throughout Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations.” The following is provided to aid the reader and provide a reference page when reviewing this section of the Form 10-K:

Acronym Description Acronym Description

ALCO: Asset/Liability Committee GDP: Gross domestic product

ACL: Allowance for credit losses HTM: Held-to-maturity

AOCI: Accumulated other comprehensive income (loss) LGD: Loss given default

ASC: Accounting Standards Codification LIBOR: London Interbank Offered Rate

ASU: Accounting Standards Update LTIP: Long-Term Performance Share Plan

BOLI: Bank-owned life insurance MBS: Mortgage-backed security

CD: Certificate of deposits OCC: Office of the Comptroller of the Currency

CECL: Current Expected Credit Losses OCI: Other comprehensive income (loss)

Company: Camden National Corporation OREO: Other real estate owned

CMO: Collateralized mortgage obligation PD: Probability of default

FHLBB: Federal Home Loan Bank of Boston TDR: Troubled-debt restructured loan

FRB: Federal Reserve System Board of Governors U.S.: United States of America

FRBB: Federal Reserve Bank of Boston

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NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP

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 and adjusted pre-tax, pre-provision; income; the efficiency ratio; return on average tangible equity and adjusted return on average tangible equity; tangible book value per share and tangible common equity ratio; net interest income (fully-taxable equivalent); and core deposits and average core deposits. We utilize these non-GAAP financial measures for purposes of measuring our performance against our peer group and other financial institutions and analyzing our internal performance. We also believe these non-GAAP financial measures help investors better understand the Company’s operating performance and trends and allow 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.

Adjusted Net Income; Adjusted Diluted Earnings per Share; Adjusted Return on Average Assets; and Adjusted Return on Average Equity. Adjusted net income, adjusted diluted earnings per share, adjusted return on average assets and adjusted return on average equity are each supplemental measures that exclude certain transactions as outlined and calculated in the table below. Each item reconciles to reported net income, diluted earnings per share, return on average assets and return on average equity. The Company believes these adjusted financial metrics assist users of its financial statements with their financial analysis period-over-period as they are adjusted for certain non-recurring items.

For the Year EndedDecember 31,

Adjusted Net Income:

Adjustment for net loss on sale of securities 10,310 912 —

Adjustment for Signature Bank bond write-off 1,838 — —

Tax impact of above adjustments(1) (2,551) (192) —

Adjusted Diluted Earnings per Share:

Diluted earnings per share, as presented $ 2.97 $ 4.17 $ 4.60

Adjustment for net loss on sale of securities 0.71 0.06 —

Adjustment for Signature Bank bond write-off 0.13 — —

Tax impact of above adjustments(1) (0.18) (0.01) —

Adjusted diluted earnings per share $ 3.63 $ 4.22 $ 4.60

Adjusted Return on Average Assets:

Return on average assets, as presented 0.76 % 1.12 % 1.31 %

Adjustment for net loss on sale of securities 0.18 % 0.02 % —

Adjustment for Signature Bank bond write-off 0.03 % — —

Tax impact of above adjustments(1) (0.04) % — —

Adjusted return on average assets 0.93 % 1.14 % 1.31 %

Adjusted Return on Average Equity:

Return on average equity, as presented 9.30 % 13.15 % 12.72 %

Adjustment for net loss on sale of securities 2.21 % 0.20 % —

Adjustment for Signature Bank bond write-off 0.39 % — —

Tax impact of above adjustments(1) (0.55) % (0.04) % —

(1) Assumed a 21% income tax rate.

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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 adjustment for provision (credit) for credit losses and adjustment for income tax expense, and adjusted pre-tax, pre-provision income is calculated as net income before adjustment for net loss on sale of securities and adjustment for SBA PPP loan income. These supplemental measures became more widely used by financial institutions as a measure of financial performance for comparability across financial institutions due to the provision for credit losses, as well as the SBA PPP loan income that was received on SBA loans originated, in response to the COVID-19 pandemic that were not a recurring and sustainable source of revenues for financial institutions.

For the Year EndedDecember 31,

Adjustment for provision (credit) for credit losses 2,100 4,500 (3,190)

Adjustment for net loss on sale of securities 10,310 912 —

Adjustment for SBA PPP loan income (14) (1,254) (8,170)

Efficiency Ratio. The efficiency ratio represents an approximate measure of the cost required for the Company to generate a dollar of revenue. This is a common measure used by financial institutions and is a key ratio for evaluating Company performance. The efficiency ratio is calculated as the ratio of (i) total non-interest expense, adjusted for certain operating expenses, as necessary to (ii) net interest income on a tax equivalent basis plus total non-interest income, adjusted for certain other income items, as necessary.

For the Year EndedDecember 31,

Adjustment for prepayment fees on borrowings — — (514)

Adjustment for the effect of tax-exempt income(1) 901 937 988

Adjustment for net loss on sale of securities 10,310 912 —

Ratio of non-interest expense to total revenues(2) 65.75 % 56.72 % 55.41 %

(1) Reported on a tax-equivalent basis using a 21% income tax rate.

(2) Revenue is the sum of net interest income and non-interest income.

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Return on Average Tangible Equity and Adjusted Return on Average Tangible Equity. Return on average tangible equity is the ratio of (i) net income, adjusted for tax effected amortization of core deposit intangible assets and other adjustments, as necessary, to (ii) average shareholders' equity, adjusted for average goodwill and core deposit intangible assets. This adjusted financial ratio reflects a shareholders' return on tangible capital deployed in our business and is a common performance measure within the financial services industry. Adjusted return on average tangible equity is calculated the same as return on average tangible equity but uses adjusted net income which excludes certain transactions as shown in the table above. The Company believes this adjusted metric assists users of its financial statements with their period-over-period financial analysis as it is adjusted for certain non-recurring items.

For the Year EndedDecember 31,

Return on Average Tangible Equity:

Adjustment for amortization of core deposit intangible assets 592 625 655

Tax impact of above adjustment(1) (124) (131) (138)

Adjusted Return on Average Tangible Equity:

Adjustment for amortization of core deposit intangible assets 592 625 655

Tax impact of above adjustment(1) (124) (131) (138)

Adjusted return on average tangible equity 14.42 % 16.90 % 15.61 %

(1) Assumed a 21% income tax rate.

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Tangible Book Value per Share and Tangible Common Equity Ratio. Tangible book value per share is the ratio of (i) shareholders’ equity less goodwill, and core deposit intangible assets to (ii) total common shares outstanding at period end. Tangible book value per share is a common measure within our industry when assessing the value of a company as it removes goodwill and other intangible assets generated within purchase accounting upon a business combination.

Tangible common equity is the ratio of (i) shareholders’ equity less goodwill and core deposit intangible assets to (ii) total assets less goodwill and core deposit intangible assets. This ratio is a measure used within our industry to assess whether or not a company is highly leveraged.

(In thousands, except number of shares and per share data) December 31,

Tangible Book Value Per Share:

Adjustment for goodwill and core deposit intangible assets (95,668) (96,260)

Tangible book value per share $ 27.42 $ 24.37

Tangible Common Equity Ratio:

Adjustment for goodwill and core deposit intangible assets (95,668) (96,260)

Common equity ratio 8.66 % 7.96 %

Tangible common equity ratio 7.11 % 6.37 %

Net Interest Income (Fully-Taxable Equivalent). Net interest income on a fully-taxable equivalent basis is net interest income plus the taxes that would have been paid had tax-exempt securities been taxable. This number attempts to enhance the comparability of the performance of assets that have different tax liabilities. This is a common measure with the financial services industry and is used within the calculation of net interest margin on a fully-taxable equivalent basis.

For the Year EndedDecember 31,

Adjustment for the effect of tax-exempt income(1) 901 937 987

(1) Reported on a tax-equivalent basis using a 21% income tax rate.

Core Deposits. Core deposits are used by management to measure the portion of the Company's total deposits that management believes to be more stable and lower cost. The Company calculates core deposits as total deposits less CDs and brokered deposits.Management believes core deposits is a useful measure to assess the Company's deposit base, including its potential volatility.

December 31,

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Average Core Deposits. Average core deposits are used by management to measure the portion of the Company's total deposits that management believes to be more stable and at a lower interest rate cost. The Company calculates average core deposits as total deposits less CDs. Management believes core deposits is a useful measure to assess the Company's deposit base, including its potential volatility.

For the Year EndedDecember 31,

(1) Brokered deposits are excluded from total average deposits, as presented on the Average Balance, Interest and Yield/Rate analysis table.

CRITICAL ACCOUNTING POLICIES

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 materially differ 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.

Refer to Note 1 of the consolidated financial statements for additional details of the Company's accounting policies, including new accounting standards recently adopted.

Allowance for Credit Losses (“ACL”). The ACL is calculated using the current expected credit loss accounting model, often referred to as “CECL.” Under CECL, the ACL at each reporting period serves as our best estimate of projected credit losses over the contractual life of certain assets, adjusted for expected prepayments, given an expectation of economic conditions and forecasts as of the valuation date.

The recorded ACL on loans and HTM debt investments is determined based on the amortized cost basis of the assets and may be determined at various levels, including homogeneous loan pools, individual credits with unique risk factors, and CUSIP. We use a discounted cash flow approach to calculate the ACL for each loan segment. Within the discounted cash flow model, a probability of default (“PD”) and loss given default (“LGD”) assumption is applied to calculate the expected loss for each loan segment. PD is the probability the asset will default within a given timeframe and LGD is the percentage of the assets not expected to be collected due to default. PD and LGD data may be derived using (1) internal historical default and loss experience, as well as from (2) external data if there are not statistically meaningful loss events or our own internal loss data does not span a full economic cycle for a given loan segment.

CECL may create more volatility in our ACL, particularly our ACL on loans and ACL on off-balance sheet credit exposures. Under CECL, our ACL may increase or decrease period-to-period based on many factors, including, but not limited to: (i) macroeconomic forecasts and conditions; (ii) a change in the forecast period; (iii) a change in the reversion speed; (iv) a change in the prepayment speed assumption; (v) an increase or decrease in loan balances, including changes to our loan portfolio mix; (vi) credit quality of the loan portfolio; and (vii) various qualitative factors outlined in ASU 2016-13.

Under CECL, the ACL on AFS securities is reviewed to determine the extent the fair value of a security designated as AFS is less than its amortized cost and we either (i) intend to sell the security or (ii) it is more-likely-than-not we will be required to sell the security before recovery of its amortized cost basis, then the investment is permanently impaired and the amortized cost basis is written down to fair value and a corresponding impairment charge is recorded within the consolidated statements of income. If neither of the above is true, but the fair value of the investment is below its amortized cost basis at the reporting date, then an allowance is established on the AFS investment for the portion of the impairment that is due to credit reasons (e.g. credit rating downgrades, past due receivables, and/or other macro- or micro-adverse trends). The allowance established on an AFS investment due to credit losses is limited to the amount the fair value of the investment is below its amortized cost basis as of the reporting date. If the fair value of the investment is below its amortized cost basis for non-credit-related reasons (e.g. interest rate environment), then the impairment continues to be recognized within shareholders' equity through AOCI.

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ACL on Loans. We consider the ACL on loans to be a critical accounting policy given the uncertainty in evaluating the allowance required to cover management’s estimate of all expected credit losses over the expected contractual life of the loans in its portfolio. Determining the appropriateness of the allowance is a key management function that requires significant judgment and estimate by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the current loan portfolio, in light of the factors then prevailing, may result in significant changes in the allowance in future periods. While our current evaluation indicates that the ACL on loans at December 31, 2023 and 2022 was appropriate, the allowance may need to be increased under adversely different conditions or assumptions.

The significant key assumptions used with the ACL on loans calculation at December 31, 2023 and 2022 using the CECL methodology, included:

•Macroeconomic factors (loss drivers): Macroeconomic factors are used within our discounted cash flow model to forecast the PD over the forecast period. As macroeconomic factor condition worsen, the PD increases, and the corresponding LGD increases, resulting in an increase in the ACL on loans. We monitor and assess Maine unemployment, changes in Maine GDP, changes in National GDP, and changes in Maine's Housing Price Index at least annually to determine if these macroeconomic factors continue to be the most predictive indicator of losses within our loan portfolio. Macroeconomic factors used in the calculation of the ACL on loans may change from time to time and in times of greater uncertainty, we may consider a range of possible forecasts and evaluate the probability of each scenario. We assessed our loss factors again in the fourth quarter of 2023 and there were no changes made to the ACL on loans calculation for reporting as of December 31, 2023.

•Forecast Period and Reversion speed: The company uses a reasonable and supportable forecast period in developing the ACL, which represents the time period that management believes it can reasonably forecast the identified loss drivers. Generally, the forecast period management believes to be reasonable and supportable is set annually and validated through an assessment of economic leading indicators. In periods of greater volatility and uncertainty, such as that seen across the global markets and economies, including the U.S., we are likely to use a shorter forecast period, whereas when markets, economies and various other factors are considered more stable and certain, we are likely to use a longer forecast period. Generally, we expect our forecast period to range from one to three years. Once the reasonable and supportable forecast period is determined, The company reverts its loss expectations to the long-run historical mean for the remainder of the contract life of the asset, adjusted for prepayments. In determining the length of time over which the reversion will take place (i.e. “reversion speed”), we consider such factors such as, but not limited to, historical loan loss experience over previous economic cycles, as well as where we believe we are within the current economic cycle.

At December 31, 2023, we used a two-year forecast period and a two-year reversion period for each loan segment to measure the ACL on loans. At December 31, 2022, we used a one-year forecast period and one-year reversion period for each loan segment to measure the ACL on loans. This change was to better align the economic forecasted data used to calculate the ACL with the Company’s internal views of the future economic state.

•Prepayment speeds: Prepayment speeds are determined for each loan segment utilizing our own historical loan data, as well as consideration of current environmental factors. The prepayment speed assumption is utilized with the discounted cash flow model (i.e. the CECL model) to forecast expected cash flows over the contractual life of the loan, adjusted for expected prepayments. A higher prepayment speed assumption will drive a lower ACL, and vice versa. In the fourth quarter of 2023 we decreased our prepayment speeds for our residential, commercial real estate non-owner-occupied and commercial real estate owner-occupied. These decreases were to better align the prepayment speeds in the model with the current portfolio in the current interest rate environment.

•Qualitative factors: Companies are required to consider various qualitative factors that may impact expected credit losses. We continue to consider qualitative factors in determining and arriving at our ACL on loans each reporting period. In 2023 the Company increased the qualitative factors used to address the increased risk in certain commercial real estate segments to ensure the Company has adequate reserves over these segments.

As of December 31, 2023 and 2022, the recorded ACL on loans was $36.9 million and represented our best estimate of expected credit losses within our loan portfolio as of each date. However, we may adjust our assumptions to account for differences between expected and actual losses each period. A future change of our assumptions will likely alter the level of allowance required and may have a material impact on future results of operations and financial condition. The ACL is reviewed periodically within a calendar quarter to assess trends in the aforementioned key assumptions, as well as asset quality within our loan portfolio, and we consider the impact of these trends on the ACL and the Company's financial condition, if any. The ACL on loans is reviewed and approved on a quarterly basis by the Company's Audit Committee, and later reviewed and ratified by the Bank's Board of Directors.

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Refer to “—Results of Operations—Provision for Credit Losses,” “—Financial Condition—Asset Quality,” and Note 3 of the consolidated financial statements for further discussion.

ACL on Off-Balance Sheet Credit Exposures. We consider the ACL on off-balance sheet credit exposures to be a critical accounting policy given the uncertainty in evaluating the level of the allowance required to cover management’s estimate of all expected credit losses on expected future loan fundings of, primarily, unfunded loan commitments for those that are not unconditionally cancellable by the Company. The expected credit loss factor calculated for each loan segment using the ACL on loans methodology described above, as well as within Note 1 of the consolidated financial statements, is used to calculate the ACL on off-balance sheet credit exposures for each applicable loan segment, and, thus, are subject to the same level of estimation risk and volatility previously described. In addition, one other key assumption is used to derive the allowance on off-balance sheet credit exposures and that is the expected funding rate. The expected funding rate is derived using historical loan-level data for credit line usage, and is applied to total off-balance sheet credit exposures at each reporting date, excluding any that are unconditionally cancellable by the Company, to determine the expected funding amount. As unfunded loan commitments are funded, the allowance migrates from that provided for off-balance sheet credit exposures to the ACL on loans. If the expected funding rate or any other key assumption used is not reasonable, then this could have an adverse impact on the total ACL upon funding.

As of December 31, 2023 and 2022, the recorded ACL on off-balance sheet credit exposures was $2.4 million and $3.3 million, respectively, and presented within accrued interest and other liabilities on the consolidated statements of condition. Increases (decreases) to the allowance are presented within provision (credit) for credit losses on the consolidated statements of income. The allowance at December 31, 2023 and 2022, represented our best estimate, however, we may adjust our assumptions to account for differences between expected and actual losses from period to period. A future change to our assumptions will likely alter the level of allowance required and may have a material impact on future results of operations and financial condition.

Refer to “—Results of Operations—Provision for Credit Losses,” “—Financial Condition—Asset Quality,” and Note 3 and 11 of the consolidated financial statements for further discussion.

ACL for HTM Debt Securities. The estimate of expected credit losses on our HTM investment portfolio is based on the expected cash flows of each individual CUSIP over its contractual life and considers historical credit loss information, current conditions and reasonable and supportable forecasts. Given the rarity of municipal defaults and losses, we utilize external third party loss forecast models as the sole source of municipal default and loss rates. Investment cash flows are modeled over a reasonable and supportable forecast period and then revert to the long-term average economic conditions on a straight line basis (similar to that of our ACL on loans policy). Management may exercise discretion to make adjustments based on various environmental factors.

At December 31, 2023 and 2022, the Company held securities in its HTM portfolio with an amortized cost basis of $545.0 million and $546.6 million, that primarily consisted of MBS and CMO debt securities issued or guaranteed by U.S. government-sponsored agencies. Under ASU 2016-13, we may exclude certain securities when the historical credit loss information, adjusted for current conditions and forecasts, resulting in zero risk of nonpayment of the amortized cost basis of the security. We have evaluated and determined there is zero risk of nonpayment on all securities guaranteed by the U.S government agencies. In 2023, the Company engaged a third party to calculate the necessary allowances required due on all other HTM securities. In the first quarter of 2023, we recorded provision expense of $1.8 million on one HTM debt security, which was driven by the full write-off of one Signature Bank corporate bond due to its failure in March 2023. This was the only exposure we had to failed banks in 2023. However, no allowance was carried given the immaterial amount that was calculated based on the nature of such securities as of December 31, 2023 or 2022. Should our HTM portfolio continue grow in size, change its mix and/or experience credit deterioration, an allowance may be recorded at that time.

Refer to “—Financial Condition—Investments” and Note 2 of the consolidated financial statements for further discussion.

ACL on AFS Debt Securities. We consider the ACL on AFS debt securities to be a critical accounting policy given the size of the investment portfolio and level of estimation used to determine the allowance, as appropriate. As of December 31, 2023 and 2022, the Company's AFS portfolio is entirely made up of assets that are fair valued using level 2 valuation techniques in accordance with ASC 820, Fair Value Measurement. We engage a third party pricing agency to assist with the valuation of such debt securities and the assets are carried at fair value at each reporting period. An allowance is recorded on an AFS debt security to the extent an event has occurred that suggests receipt of full contractual payments are at risk. When such an event has been identified, a discounted cash flow model is used to determine the expected losses due to credit risk, and an allowance

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is recorded to reduce the carrying value of the debt security by the calculated expected loss amount, limited to the amount by which the fair value of the debt security is below its amortized cost basis.

As further described within “—Financial Condition—Investments,” the Company's AFS portfolio, as of December 31, 2023 and 2022, was primarily consisted of MBS and CMO debt securities issued or guaranteed by U.S. government-sponsored agencies, and, thus, presenting little to no credit risk. As of December 31, 2023 and 2022, the Company had not identified indications of credit risk and did not carry any allowance for credit losses on its AFS portfolio and did not record any permanent impairments during the remainder of 2023, 2022, 2021.

Refer to “—Financial Condition—Investments” and Note 2 of the consolidated financial statements for further discussion.

Purchase Price Allocation and Impairment of Goodwill and Identifiable Intangible Assets. We record all acquired assets and liabilities at fair value, which is an estimate determined by the use of internal valuation techniques. We also may engage external valuation services to assist with the valuation of material assets and liabilities acquired, including, but not limited to, loans, core deposit intangibles and/or other intangible assets, real estate and time deposits. As part of purchase accounting, we typically acquire goodwill and other intangible assets as part of the purchase price. These assets are subject to ongoing periodic impairment tests under differing accounting models. We did not acquire any other company or assets during 2023 or 2022.

Goodwill impairment evaluations are required to be performed at least annually, but may be required more frequently if certain conditions indicate a potential impairment may exist. Our policy is to perform the goodwill impairment analysis annually as of November 30th, or more frequently as warranted. The goodwill impairment evaluation is required to be performed at the reporting unit level. Goodwill impairment is measured by the amount the book value of the reporting unit exceeds its fair value, and an impairment charge is recorded for the lesser of this amount or the amount to write-down goodwill to zero.

We elected to use the quantitative analysis to perform the annual goodwill impairment assessment as of November 30, 2023 and 2022 and concluded that goodwill was not impaired. We may use a qualitative analysis to evaluate goodwill for impairment when it is believed that it is not more-likely-than-not that the fair value of the reporting unit is below its book value, or if a quantitative analysis was recently used to estimate the fair value of the reporting unit, and there are not any indications of events that would suggest such conclusions for impairment have changed. The Company did not recognize any impairment of goodwill in 2023, 2022 or 2021.

The Company's core deposit intangible assets have a finite life and are amortized over their estimated useful lives. Core deposit intangible assets are subject to impairment tests if events or circumstances indicate a possible inability to realize the carrying amount. Core deposit intangible assets are measured for impairment utilizing a cost recovery model. We did not identify any events or circumstances that occurred in 2023, 2022 or 2021 that would indicate that our core deposit intangible assets may be impaired and should be evaluated for such.

Refer to “—Financial Condition—Goodwill and Core Deposit Intangible Assets” and Note 4 of the consolidated financial statements for further discussion.

Income Taxes. We account for income taxes by deferring income taxes based on the estimated future tax effects of differences between the book and tax bases of assets and liabilities, considering the provisions of enacted tax laws. These differences result in deferred tax assets and liabilities, which are included in the consolidated statements of condition.

We must also assess the likelihood that any deferred tax assets will be recovered from future taxable income and establish a valuation allowance for those assets determined not likely to be recoverable. At December 31, 2023 and 2022, the Company carried deferred tax assets totaling $42.2 million and $50.2 million, respectively, and did not record any valuation allowance on these deferred tax assets. Although we determined a valuation allowance was not required for our deferred tax assets as of December 31, 2023 and 2022, there is no guarantee that these assets will be realized. To the extent a valuation allowance on the Company's deferred tax assets is recorded in future periods, a material charge to the Company's consolidated statements of income may result and reduce net income. Judgment is required in determining the amount and timing of recognition of the resulting deferred tax assets and liabilities, including projections of future taxable income.

As of December 31, 2023, our federal and state income tax returns for 2022, 2021 and 2020 were open to audit by federal and various state authorities. If, as a result of an audit, we were to be assessed interest and penalties, the amounts would be recorded through other non-interest expense on the consolidated statements of income.

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Refer to “—Results of Operations—Income Tax Expense” and Note 19 of the consolidated financial statements for further discussion.

Defined Benefit and Postretirement Plans. We use a December 31stmeasurement date to determine the expenses for the Company's defined benefit and postretirement plans and related financial disclosure information. Postretirement plan expense is sensitive to changes in the number of eligible employees, changes in the discount rate, mortality rate, and other expected

rates, such as medical cost trends rates and salary scale assumptions. There are no new entrants to the Company's defined benefit and postretirement plans.

Refer to Note 18 of the consolidated financial statements for further discussion.

EXECUTIVE OVERVIEW

2023 Overview. Throughout 2023, the U.S. economy and the financial services industry experienced significant and unexpected stress due to several key factors, including: (1) effects of material increases in short-term interest rates driven by aggressive increases in the Federal Funds Rate, which has resulted in a historically prolonged inversion of the interest rate yield curve; (2) liquidity issues resulting in part from three major bank failures that occurred in the first half of 2023 and which contributed to deposit outflows at certain banks; and (3) increased concerns regarding asset quality, particularly within the commercial real estate office space. The combination of these factors has placed great emphasis on deposit gathering across the industry, and coupled with rising short-term interest rates has resulted in rapidly rising deposit costs that have compressed net interest margins across the banking industry.

In response to the macro-environment and the factors outlined above, we shifted our priorities in 2023 to: (1) maintain our deposit base and liquidity strength; (2) optimize our net interest margin; and (3) maintain our strong asset quality. We continue to be focused on driving long-term shareholder value by working to maintain the financial strength and resiliency of the Company’s balance sheet. As of December 31, 2023, we are well-positioned not only to withstand current market turbulence but also to capitalize on opportunities that may arise within the markets in which the Company does business.

During 2023, through the combination of cash dividends and share repurchases, the Company returned $26.5 million of capital to shareholders, which included the repurchase of 65,692 shares of its common stock at a weighted average price of $30.44 and cash dividends to shareholders of $1.68 per share, a 4% increase over 2022. In January 2024, we announced a new share repurchase program approved by the Company’s Board of Directors for up to 750,000 shares, or approximately 5% of total shares outstanding at December 31, 2023, and the termination of our share repurchase program that was opened in 2023.

Operating Results. For 2023, the Company reported net income of $43.4 million and diluted earnings per share of $2.97, which were each 29% lower compared to 2022. Our 2023 financial results were impacted both by the macroeconomic conditions as described above, and by certain actions we took in response to these conditions as we focused on maintaining the long-term strength of our franchise, through maintaining and growing deposit relationships, maintaining our excellent asset quality, and maintaining capital levels. During 2023, the strength of our capital position enabled us to take certain actions to improve the Company’s future earnings capacity and improve profitability through by selling certain investments and redeploying the proceeds into higher yielding assets at current market rates. In doing so, the Company recorded pre-tax investment losses totaling $10.3 million (or $8.9 million in after-tax losses) in 2023, which contributed to the decrease in net income and diluted earnings per share compared to 2022. Adjusting for the investment losses, as well as a write-off of a $1.8 million (or $1.4 million after taxes) Signature Bank corporate bond due to its failure in the first quarter of 2023, adjusted net income (non-GAAP) and adjusted diluted earnings per share in 2023 decreased 15% and 14%, respectively, compared to 2022.

The Company, and the broader financial services industry, operated in an inverted yield curve environment for the entirety of 2023. The impact of the inverted yield curve has compressed the Company’s, and many other banks, net interest margin, which has driven a decrease in revenues and net income, as well as a reduction in profitability metrics, for 2023 compared to 2022. The Company’s net interest margin for 2023 was 2.46%, compared to 2.86% for 2022. We took several steps to stabilize net interest margin and reposition the Company’s balance sheet with a focus on improving our interest rate sensitivity to short- and long-term yield curve inversion for a longer time period, and positioning the Company for profitable growth as the economy and market conditions show signs of normalizing. In addition to the sales of investment securities described above, we took the following actions during 2023:

•We executed $500.0 million of interest rate swaps designed to improve our interest rate risk position to rising and “higher for longer” short-term interest rates and generated $4.9 million of net interest income.

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•We leveraged the Bank Term Funding Program (i.e., a funding program created in early-2023 in response to bank failures to make additional funding available to depository institutions and to help stabilize market confidence) as it provided lower-cost alternative funding and provided us, and other banks, with the option to prepay borrowings under the program without penalty. To improve our liquidity position, we borrowed $135.0 million from the program at a rate of 4.70% for a period of one year.

•We managed deposit costs actively through customer-level interactions and conversations, leveraging the strong relationships we build through our branch network and various channels. Since the beginning of the rising short-term interest rate cycle (i.e., January 1, 2022), our cumulative deposit beta (excluding brokered deposits), which measures the change in the Company’s average deposit rate to the average change in the Effective Federal Funds Rate, through December 31, 2023 was 33%.

•We tempered loan growth to 2% for 2023 through disciplined new loan origination pricing. For 2023, our weighted-average new loan origination yield across our entire loan portfolio was 7.21%.

Financial Highlights. Our financial highlights for 2023 include:

Strong Liquidity Position – At December 31, 2023, total uninsured and uncollateralized1 deposits were 15% of our total deposits, and we maintained access to available funding of two times our total uninsured and uncollateralized deposits.

Strong Capital Position – At December 31, 2023, all of our regulatory capital ratios were well in excess of regulatory capital requirements. Our capital and loan reserve levels, along with our strong credit quality position us for continued success in light of current market conditions that are both dynamic and volatile.

Strong Asset Quality – Key credit quality metrics in both commercial and consumer portfolios remain resilient, despite the macroeconomic pressures created by rapidly rising interest rates and continued risk of a recession in the near-term. Asset quality continues to be a source of strength for the Company, with non-performing assets of 0.13% of total assets and past due loans of 0.12% of total loans at December 31, 2023.

Shareholder Returns – We increased our cash dividend paid per share by 4% over the last year to $1.68 for 2023. Over the past five years, the Company's annual cash dividend has increased 8% on a compounded basis. The increase reflects our ability to generate long-term, sustainable earnings and our commitment to deliver meaningful returns to our shareholders. At December 31, 2023, our annualized dividend yield reached 4.46%, based on our closing stock price of $37.63, on December 29, 2023 (the last business day of the year).

We deployed $2.0 million of capital through the repurchase of 65,692 shares of the Company's common stock.

1 Uncollateralized deposits are customer deposit balances for which the Company has not pledged any of its assets, including investment securities, or provided any other type of guarantee.

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Financial Highlights As of or For The Year endedDecember 31,

(In thousands, except per share data and ratios) 2023 2022 Change

Earnings and Profitability

Adjusted diluted EPS (non-GAAP) $ 3.63 $ 4.22 (14) %

Return on average assets 0.76 % 1.12 % (0.36) %

Adjusted return on average assets (non-GAAP) 0.93 % 1.14 % (0.21) %

Adjusted return on average equity (non-GAAP) 11.35 % 13.31 % (1.96) %

Return on average tangible equity (non-GAAP) 11.83 % 16.71 % (4.88) %

Adjusted return on average tangible equity (non-GAAP) 14.42 % 16.90 % (2.48) %

Balance Sheet and Liquidity

Cash dividends declared per share $ 1.68 $ 1.62 4 %

Credit Quality and Capital

Non-performing assets to total assets 0.13 % 0.09 % 0.04 %

Allowance for credit losses on loans to total loans 0.90 % 0.92 % (0.02) %

Tangible common equity ratio (non-GAAP) 7.11 % 6.37 % 0.74 %

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RESULTS OF OPERATIONS

Net Interest Income and Net Interest Margin

Net interest income is the interest earned on our lending activities, investment securities and other interest-earning assets, less the interest paid on interest-bearing deposits and borrowings (i.e. our primary business activities). Net interest income, which is our largest source of revenue, accounted for 81%, 78% and 73% of total revenues for the years ended 2023, 2022 and 2021, respectively. 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.

Net Interest Income. Net interest income on a fully-taxable equivalent basis for the year ended December 31, 2023 was $133.2 million, a decrease of $15.5 million, or 10%, over 2022. The decrease consisted of a $68.9 million, or 275%, increase in interest expense, which was partially offset by an increase in interest income on a fully-taxable equivalent basis of $53.5 million, or 31%, between periods.

•The Company’s average cost of funds for the year ended December 31, 2023 was 1.83%, compared to 0.51% for the year ended December 31, 2022, and was the driver for the increase in interest expense year-over-year. Our deposit and borrowing costs increased sharply during 2023 as the Federal Funds Rate reached a target range of 5.25% to 5.50% in 2023, and the average Effective Federal Funds Rate for 2023 was 5.03%, compared to an average of 1.68% for 2022.

The Company’s average deposit costs for the year ended December 31, 2023 were 1.56%, compared to 0.42% for the year ended December 31, 2022. Deposits costs were pressured throughout 2023 due to the increase in short-term rates. Other drivers of deposit costs included strong deposit competition within our markets, and more broadly across depository institutions, including in response to bank failures that occurred during the first half of 2023, as well as changes in the deposit remix as depositors moved deposits to higher interest-earning deposit accounts. During 2023, the pace at which deposit customers began deploying their excess cash into higher interest-earning deposit accounts accelerated, and this change in deposit remix drove an increase in money market and CD balances and a decrease in low-cost deposits accounts (e.g., non-interest-bearing checking and savings accounts).

The Company’s average cost of borrowings for the year ended December 31, 2023 was 3.58%, compared to 1.35% for the year ended December 31, 2022. The increase was driven by the sharp increase in short-term interest between years, but also was due to the increased average borrowings of $196.1 million, or 42%, needed to help support average interest-earning asset growth of $211.2 million, or 4%, between years.

•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 year ended December 31, 2023, the Company’s yield on average interest-earning assets was 4.19%, compared to 3.34% for the year ended December 31, 2022. The average 10-year U.S. Treasury Rate for 2023 was 3.96%, compared to 2.95% for 2022.

The Company’s average loan yield was 4.80% for the year ended December 31, 2023, an increase of 90 basis points over 2022. Throughout 2023, we reinvested loan and investment cash flows received primarily back into loans at current market rates supporting yield expansion. During 2023, average loan balances increased 10% compared to 2022 contributing interest income growth year-over-year.

The Company’s average investment yield was 2.28% for the year ended December 31, 2023, an increase of 31 basis points over 2022. The increase in investment yield was driven by reinvesting the cash flows from the Company’s lower yielding investments and the proceeds of the sale of $126.8 million of lower yielding investments at a pre-tax investment loss of $10.3 million into higher interest-earnings assets. 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 10% between years.

Net Interest Margin. 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 for the years ended December 31, 2023 and 2022 was 2.46% and 2.86%, respectively.

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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Average Balance, Interest and Yield/Rate Analysis

For the Year Ended December 31,

ASSETS

Interest-earning assets:

Loans(3):

LIABILITIES & SHAREHOLDERS’ EQUITY

Deposits:

Borrowings:

Less: fully-taxable equivalent adjustment (901) (937) (988)

Net interest rate spread (fully-taxable equivalent) 2.36 % 2.83 % 2.83 %

Net interest margin (fully-taxable equivalent) 2.46 % 2.86 % 2.84 %

(1) Reported average balances are calculated on a daily basis.

(2) Reported on a tax-equivalent basis calculated using a 21% tax rate, including certain commercial loans.

(3) Non-accrual loans and loans held for sale are included in total average loans.

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The following table presents certain information on a fully-taxable equivalent basis regarding changes in interest income and interest expense for the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes attributable to rate and volume. The (a) changes in volume (change in volume multiplied by prior year's rate), (b) changes in rates (change in rate multiplied by current year's volume), and (c) changes in rate/volume (change in rate multiplied by the change in volume), which is allocated to the change due to rate column.

(In thousands) Volume Rate Volume Rate

Interest-earning assets:

Interest-bearing liabilities:

Net interest income included the following for the periods indicated:

Income Statement Location For the Year EndedDecember 31,

Recoveries on previously charged-off acquired loans Interest income 88 217 226

(1) For the years ended December 31, 2023, 2022 and 2021, the Company recognized $10,000, $1.2 million and $6.9 million of fees associated with SBA PPP loan originations.

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The Company's consolidated financial statements and the notes to the consolidated financial statements presented within have been prepared in accordance with GAAP, which requires the measurement of the financial position and operating results in terms of historical dollars and, in some cases, current fair values without considering changes in the relative purchasing power of money over time due to inflation. Unlike many industrial companies, substantially all of our assets and virtually all of our liabilities are monetary in nature. As a result, interest rates have a more significant impact on our performance than the general level of inflation. Over short periods of time, interest rates and the yield curve may not necessarily move in the same direction or in the same magnitude as inflation.

Provision for Credit Losses

For the years ended 2023, 2022 and 2021, the Company has accounted for its provision for credit losses in accordance with ASU 2016-13, commonly referred to as the “CECL” standard. Refer to “—Critical Accounting Policies” and Note 1 of the consolidated financial statements for the Company's accounting and policies for the ACL.

The provision for credit losses was made up of the following components for the periods indicated:

For the Year EndedDecember 31, Change from2023 to 2022

Provision for credit losses - HTM debt securities 1,838 — — 1,838 N.M.

Provision (credit) for loan losses. For the year ended December 31, 2023, the provision for loan losses of $1.2 million was driven by loan growth of 2% and net charge-offs of 0.03% of average loans for the year.

For the year ended December 31, 2022, the provision for loan losses was $4.4 million and was driven by loan growth of 17% and net charge-offs of 0.02% of average loans, partially offset by a release of $5.0 million of additional reserves provided for certain commercial real estate loans at the onset of the COVID-19 pandemic due to the heightened credit risk at that time.

The Company’s asset quality remained strong at December 31, 2023 and 2022. Refer to “—Financial Condition—Asset Quality” for further details.

Provision for credit losses on off-balance credit exposures. At December 31, 2023, the ACL on off-balance sheet credit exposures was $2.4 million, as compared to $3.3 million as of December 31, 2022. The decrease was driven by the decrease in unfunded credit lines of $79.2 million and decrease in the residential and commercial pipelines of $31.9 million between periods.

Provision for HTM debt securities: In the first quarter of 2023, the Company fully wrote-off of one Signature Bank corporate bond as Signature Bank failed. There was no additional provision expense recorded for 2023, and there was no provision expense recorded for the Company’s HTM portfolio for 2022.

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Non-Interest Income

The following table sets forth information regarding non-interest income for the periods indicated:

For the Year EndedDecember 31, Change from2023 to 2022

Non-interest income as a percentage of total revenues(1) 19 % 22 % 27 %

(1) Revenue is the sum of net interest income and non-interest income.

Debit card income represents theinterchange fees earned from debit card transactions of our business and consumer checking account customers, and the annual incentive bonus received from our network provider. The decrease between periods was driven by the decrease in average earning rate between periods. Additionally customer spend increased 2%, which was lower than the 2022 increase of 4% that resulted in a lower annual incentive bonus from Visa of $400,000.

Service charges on deposit accounts represents the fees earned from providing various services to deposit customers, including overdraft, normal fees for servicing deposit accounts, and cash management fees for business customers. In 2022, the Company stopped charging its depositors non-sufficient fund fees. Overdraft fee income for the year ended 2023 was $5.4 million, and overdraft fee income and non-sufficient fund fees for the year ended 2022 was $5.3 million.

Income from fiduciary services represents the fees earned for investment advisory and trust services provided by Camden National Wealth Management. The fees earned are primarily a percentage of our clients' assets under management. Assets under management were $1.1 billion as of December 31, 2023, representing an increase of 10% over 2022.

Mortgage banking income, net is generated through the sale of residential mortgage loans to secondary market investors and also includes income recognized upon the sale of residential mortgages in which we maintain the servicing rights creating a mortgage servicing asset, net of related amortization of the capitalized mortgage servicing asset. Our practice has been to sell the servicing rights for residential mortgages originated, except for certain third party relationships that require the Company to service the loan.

The decrease in mortgage banking income, net for the year ended 2023 compared to 2022, was driven by a 49% decrease in residential mortgage production between years as purchase and refinance activity began to slow in the second half of 2022 and continued throughout 2023 as interest rates increased. In response to the interest rate environment, we shifted our loan pricing strategy in 2023 to slow our on-books loan production given the focus on deposits, net interest margin and asset quality, this included selling more of our residential mortgage production. For the year ended 2023, we sold 49% of our residential mortgage production, compared to 20% in 2022.

Brokerage and insurance commissions represent the fees earned for brokerage services, investment advisory and insurance services provided by the Bank, doing business as Camden Financial Consultants. The increase for the year ended December 31, 2023 over 2022 was driven by a 17% increase in assets under administration to $796.7 million as of December 31, 2023.

Bank-owned life insurance represents the change in cash surrender value of the Company's various BOLI policies in place for certain current and former officers of the Company and Bank. The change in cash surrender value reflects the performance of the underlying investments of the policies. In 2022 there was a decrease of $387,000 due to the underlying investments in one of the Company's BOLI contracts dropping below its stable value wrapper. There were no decreases in the market value of these underlying investments in 2023.

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Net loss on sale of securities represents the realized (loss) gain upon sale of our debt investments. In 2023, we

executed investment sales that resulted in pre-tax losses of $10.3 million. The trades were completed to reposition a portion of our balance sheet and are expected to improve future earnings and profitability through the reinvestment of $126.8 million of cash proceeds through balance sheet optimization.

In 2022, we executed investment sales that resulted in pre-tax losses of $912,000. The trades were completed to reposition a portion of our balance and are expected to improve future earnings and profitability through the reinvestment of $37.3 million of cash proceeds through balance sheet optimization.

Refer to “—Financial Condition—Investments,” and Note 2 of the consolidated financial statements for further discussion.

Other Income includes third party merchant and credit card commissions, customer loan swap fees and other miscellaneous fees and net gains on equity securities.

Non-Interest Expense

The following table sets forth information regarding non-interest expense for the periods indicated:

For the Year EndedDecember 31, Change from2023 to 2022

Amortization of core deposit intangible assets 592 625 655 (33) (5) %

OREO and collection costs (recoveries), net 42 29 (101) 13 45 %

Ratio of non-interest expense to total revenues 65.75 % 56.72 % 55.41 %

Salaries and employee benefits includes employee wages, commissions, incentives, equity compensation, employer-related taxes, insurance benefits, and other certain employee-related costs, net of direct employee-related costs incurred for loan originations. The decrease for the year ended December 31, 2023 compared to 2022 was primarily driven by: (1) a modest decrease in salary costs of $100,000 driven by a decrease in average full-time equivalent employees of 5% that fully offset normal annual merit and transition-related costs for our President and Chief Executive Officer (“CEO”) of $303,000, (2) a decrease in bonuses and incentives of $1.7 million based on annual financial performance and a decrease in average full-time equivalent employees along with a decrease in insurance costs of 13% driven by a change in insurance carriers in 2023 along with the decrease in average full-time equivalent employees.

Furniture, equipment and data processing includes depreciation expense of capitalized furniture, equipment and data-related costs, and ongoing system and other data processing costs, including outsourced solutions. The increase for the year ended 2023 over 2022 was driven by the Company’s 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.

Net occupancy costs include building and property costs associated with the operation of our branches, loan production offices and service centers, including, but not limited to, rent, depreciation, maintenance and related taxes, net of rental income earned from the lease of office space.

Consulting and professional fees include third party consulting services and other professional fees, such as audit and tax services, legal services, and Company and Bank director fees. The increase in fees for 2023 were driven by legal, consulting and director-related costs for the succession and transition of our President and CEO of $372,000.

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Debit card expense is the cost incurred for the generation of debit card income, including third party switch network provider fees and related data transmission costs, and plastic card costs for the generation of debit cards for checking account customers. The increase for the year ended 2023 over 2022 was driven by rising vendor costs, including fraud detection and prevention costs. Many of the costs associated with debit card expense are fixed per unit regardless of the activity that generates income, and, thus, an increase or decrease in debit card income may not necessarily directly correlate with the change in debit card expense year-over-year.

Regulatory assessments are the costs incurred and paid to various regulatory agencies, including the FDIC and OCC. Regulatory assessment fees are based on a number of factors, including but not limited to, asset growth, regulator risk assessment and positive or negative trends specific to the financial institution. The increase for the year ended December 31, 2023 over 2022 was primarily driven by the increase in FDIC assessment fees of 2 basis points for all insured banks, effective January 1, 2023.

OREO and collection costs, net include the costs associated with OREO, collection and foreclosure efforts for the Company's loans. Should asset quality metrics deteriorate in 2024, the costs associated with OREO, collection and foreclosure efforts likely would increase.

Amortization of core deposit intangible assets represents the amortization expense on core deposit intangible assets. Refer to “—Financial Condition—Goodwill and Core Deposit Intangible Assets,” and Note 4 of the consolidated financial statements for further details.

Other expenses include employee-related costs, such as certain SERP and other postretirement benefits expenses; hiring, training, education, meeting and business travel costs; donations and marketing costs; postage, freight and courier costs; and other expenses.

Income Tax Expense

Income tax expense for the years ended December 31, 2023 and 2022 was $10.5 million and $15.6 million, respectively, which resulted in an effective income tax rate of 19.4% for 2023 and 20.3% for 2022, respectively. The Company's effective income tax rate for the year ended December 31, 2023 of 19.4% was lower than our marginal tax rate of 22.8%, which includes our 21.0% federal income tax rate and a 1.8% blended state income tax rate, net of federal tax benefit. The decrease in the effective tax rate for the year ended December 31, 2023 over 2022 was primarily due to the decrease in income before income tax expense of $23.2 million, or 30%, compared to 2022, while our non-taxable interest income from municipal bonds and certain qualifying loans, non-taxable BOLI, and tax credits received on qualifying investments mix remained comparable to 2022.

The Company's deferred tax assets were $42.2 million and $50.2 million at December 31, 2023 and 2022, respectively. The decrease in deferred tax assets during 2023 was driven by the decrease in unrealized losses on the AFS investments portfolio, including the remaining losses from the investments transferred from AFS to HTM in June 2022. While not anticipated as of December 31, 2023, should the Company realize a loss on these investments, the loss would be characterized as an ordinary loss for income tax purposes and not as a capital loss, and thus would not carry restrictions on use of any such loss. We continuously monitor and assess the need for a valuation allowance on our deferred tax assets, and we determined that no valuation allowance was necessary as of December 31, 2023 or December 31, 2022.

Refer to “—Financial Condition—Investments,” and Note 2 of the consolidated financial statements for further discussion of investments.

Refer to Note 19 of the consolidated financial statements for further discussion of income taxes and related deferred tax assets and liabilities.

2022 Operating Results as Compared to 2021 Operating Results

Results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 can be found in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s 2022 annual report on Form 10-K filed with the SEC on March 10, 2023.

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FINANCIAL CONDITION

Cash and Cash Equivalents

Total cash and cash equivalents at December 31, 2023 were $99.8 million, compared to $75.4 million at December 31, 2022. Included within the Company’s cash and cash equivalents balances at December 31, 2023 and 2022, 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 $15.4 million and $5.4 million, respectively. We actively, and the counterparty, manage these cash accounts daily. Refer to Notes 12 and 13 of the consolidated financial statements for additional detail on the Company’s derivatives and collateral.

Investments

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 December 31, 2023 and 2022, the Company’s investment portfolio generally consisted of MBS, CMO, municipal and corporate debt securities, FHLBB and FRB common stock, and mutual funds held in a rabbi trust for purposes of Company 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 or amortized cost, respectively. Our FHLBB and FRB common stock is carried at cost, and our mutual fund investments are carried at fair value. At December 31, 2023 and 2022, total investments were 21% and 22%, respectively, of total assets.

During 2023, we sold low yielding investments, that were designated as AFS, with a total book value of $137.1 million at a pre-tax loss of $10.3 million to adjust the Company's balance sheet in response to the sharp increase in interest rates during 2022 and 2023. Total proceeds from the sale of $126.8 million were used to optimize the balance sheet, which included reinvesting a portion of the proceeds to purchase new investments at current market rates, and is expected to generate future earnings and improve profitability.

In the second quarter of 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 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 on these securities was 8.5 years. At December 31, 2022, the net unrealized losses on the transferred securities reported within AOCI were $52.2 million, net of a deferred tax asset of $14.3 million and the weighted-average of these securities were 8.8 years.

At December 31, 2023 and 2022, the Company's investments portfolio totaled $1.2 billion and $1.3 billion, respectively, representing a decrease of $68.4 million, or 5%, for the year ended December 31, 2023. Given the interest rate environment, our primary strategy throughout 2023 was to redeploy normal cash flows from paydowns, calls and maturities to fund our loan growth of 2%. The primary components for the change in total investments for the year ended 2023 were:

•Paydowns, calls and maturities of $98.4 million;

•Sale of $137.1 million of AFS debt securities;

•Purchases of $126.8 million of debt securities during 2023 as described in more detail above;

•The change in the fair value of the Company's AFS debt securities of $13.6 million.

Our AFS debt securities portfolio, which comprised 53% and 55% of our investment portfolio at December 31, 2023 and 2022, respectively, was carried at fair value using level 2 valuation techniques. Refer to Notes 1 and 21 of the consolidated financial statements for further details on the Company's fair value techniques.

The AFS and HTM 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. At December 31, 2023 and 2022, the book value of U.S. government and government-sponsored agencies represented approximately 91% and 88%, respectively, of the AFS and HTM debt securities portfolio. The book value of corporate and municipal bonds carrying a credit rating of “AA” or higher at December 31, 2023 and 2022 was 4% and 7%, respectively, of the AFS and HTM debt securities.

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

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December 31, 2023 and 2022, our investment in FHLBB stock totaled $10.0 million and $7.3 million, respectively, and our investment in FRB stock was $5.4 million at each date.

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.

The following table sets forth the carrying value of AFS and HTM debt securities along with the percentage distribution as of the dates indicated:

December 31,

Trading Securities (carried at fair value):

Total trading securities 4,647 — % 3,990 — %

AFS Debt Investments (carried at fair value):

Obligations of U.S. government-sponsored enterprises — — % — — %

Obligations of states and political subdivisions 6,386 — % 49,226 4 %

HTM Debt Investments (carried at amortized cost):

Obligations of U.S. government-sponsored enterprises 7,593 1 % 7,457 1 %

Obligations of states and political subdivisions 56,262 5 % 55,978 4 %

Other Investments (carried at cost):

We continuously monitor and evaluate our investment securities portfolio to identify and assess risks within our portfolio, including, but not limited to, the impact of the current rate environment and the related prepayment risk, and credit ratings. The overall mix of debt securities at December 31, 2023 compared to December 31, 2022 remains relatively unchanged and well positioned to provide a stable source of cash flow. The duration of our debt investment securities portfolio at December 31, 2023 was 5.7 years, compared to 5.8 years at December 31, 2022. The weighted average life of our debt securities portfolio remained consistent at 7.8 years at December 31, 2023 and 2022.

The Company’s AFS debt securities that are in an unrealized loss position are assessed to determine if an allowance should be recorded or if a write-down is required in accordance with ASU 2016-13. As of and for the years ended December 31, 2023, 2022 and 2021, we did not record any allowances or write-down any of our AFS debt securities in an unrealized loss position. Refer to “—Critical Accounting Policies” and Note 1 of the consolidated financial statements for further discussion of our practices and policies, and refer to Note 2 of the consolidated financial statements for additional details of our assessment of the allowance for AFS investments as of and for the year ended December 31, 2023.

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We assess our HTM debt securities each reporting period to determine if an allowance should be recorded or if a write-down is required. In the first quarter of 2023, we wrote-off a $1.8 million corporate bond issued by Signature Bank due to Signature Bank's failure through provision expense on the consolidated statements of income. This corporate bond was designated as HTM and previously carried no ACL. In January 2024, we sold the Signature Bank securities and recovered $910,000 of the book value of the security. We completed a review of our HTM investment portfolio as of December 31, 2023, 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 December 31, 2023 and 2022 was as follows:

At December 31, 2023 and 2022, municipal bonds were 5% and 8% of the book value of the total bond portfolio, respectively. At December 31, 2023 and 2022, all municipal bonds carried an investment-grade credit rating.

At December 31, 2023 and 2022, corporate bonds were 3% and 4% of the book value of the total bond portfolio, respectively. At December 31, 2023 and 2022, corporate bonds with a book value of $31.2 million and $36.9 million, or 77% and 80% of the corporate bond portfolio, carried an investment-grade credit rating. The remaining $9.6 million and $9.4 million of book value, or 23% and 20% of the corporate bond portfolio, were non-rated corporate bonds of community banks within our markets. As of December 31, 2023, 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 December 31, 2023, being to global systemically important banks, or "G-SIBs." A limited number of our rated corporate bonds have been downgraded in 2023 as a result of stress in the banking system, although all remain investment-grade as of December 31, 2023. We continue to monitor and analyze the performance of our corporate bond portfolio.

As of and for the years ended December 31, 2023 and 2022, we did not record any allowances or write-down any of our HTM debt securities . Refer to “—Critical Accounting Policies” and Note 1 of the consolidated financial statements for further discussion of our practices and policies, and refer to Note 2 of the consolidated financial statements for additional details of our assessment of the allowance for HTM investments as of and for the year ended December 31, 2023 and 2022.

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The following table presents the book value and fully-taxable equivalent weighted-average yields of debt investments by contractual maturity and the carrying value of other investments, for the periods indicated. Actual maturities of debt investments may differ from contractual maturities because borrowers may have the right to call or prepay.

December 31,

Debt investments:

Other investments(2):

Mutual funds (fair value) $ 4,647 $ 3,990

(1) Weighted average is calculated by dividing the book value by the book value times tax yield.

(2) There is no scheduled maturity date.

Loans

The following table sets forth the composition of our loan portfolio at the dates indicated, as well as the change during 2023:

December 31,

Loan portfolio mix:

Refer to Note 3 of the consolidated financial statements for additional details on our loan segmentation and risks as of December 31, 2023.

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At December 31, 2023 and 2022, 35% and 34% of the consumer loan portfolio was unsecured, respectively. At December 31, 2023 and 2022, 53% and 47% of the home equity portfolio was secured by a junior lien position, respectively.

Portfolio Concentrations

The Company provides loans primarily to customers located within our geographic market area. Our primary markets continue to be in Maine, making up 68% and 70% of our loan portfolio as of December 31, 2023 and 2022, respectively. Massachusetts and New Hampshire are our second and third largest markets, making up 16% and 10%, respectively, of our total loan portfolio as of December 31, 2023, compared to 15% and 9%, respectively, as of December 31, 2022. As of December 31, 2023, our distribution channels include 56 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.

At December 31, 2023, 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 33% and 28% of our total commercial real estate portfolio and 13% and 11% of total loans, respectively. At December 31, 2022, the non-residential building operators’ industry and lessors of residential building industry concentrations were 34% and 28%, respectively, of total commercial real estate portfolio and 14% and 11% of total loans. At December 31, 2023, there were no other industry concentrations within our loan portfolio that exceeded 10% of total loans.

The table below summarizes the industry concentrations of the commercial loan portfolio at the dates indicated:

December 31,

Commercial loan portfolio mix:

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(1) The following table summarizes the real estate investment loan portfolio, by property type as of the dates indicated:

December 31,

(a) Multi-family (5+ units) loans are primarily located in non-urban locations, including 79% in Maine, 11% in Massachusetts, and 8% in New Hampshire at December 31, 2023.

(b) Office loans are located in non-urban locations, including 52% in Maine, 26% in New Hampshire, and 22% in Massachusetts at December 31, 2023.

(c) Represents multi-family (1-4 units) that are used for commercial purposes.

(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.

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.

Asset Quality

Asset quality is of the upmost importance to the Company, and continues to be of great focus given current market conditions. Our practice is to manage the Company's loan portfolio proactively so that we are able to effectively identify problem credits and trends early, assess and implement effective work-out strategies, and take charge-offs as promptly as practical. In addition, the Company continuously reassesses its underwriting standards in response to credit risk posed by changes in economic conditions. The Company continues to dedicate significant resources to monitor and manage credit risk throughout our loan portfolio and includes management and board-level oversight as follows:

•The Credit Risk team, Collection and Special Assets team and the Credit Risk Policy Committee, which is an internal management committee comprised of various executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Collections and Special Assets, Risk, and Commercial and Retail Banking, oversee the Company's systems and procedures to monitor the credit quality of its loan portfolio, conduct a loan review program, and maintain the integrity of the loan rating system.

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•The adequacy of the ACL is overseen by the Management Provision Committee, which is an internal management committee comprised of various Company executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Collections and Special Assets, Compliance, and Commercial and Retail Banking. The Management Provision Committee supports the oversight efforts of the Audit Committee of the Board of Directors.

•The Directors' Credit Committee of the Board of Directors reviews large credit exposures, monitors external loan review reports, reviews the lending authority for individual loan officers when required, and has approval authority and responsibility for all matters regarding the loan policy and other credit-related policies, including reviewing and monitoring asset quality trends, and concentration levels.

•The Audit Committee of the Board of Directors has approval authority and oversight responsibility for the ACL adequacy and methodology.

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 of ASU 2022-02, and property acquired through foreclosure or repossession. The following table sets forth the composition and amount of our non-performing loans as of the dates indicated:

December 31,

Non-accrual loans:

Commercial real estate - non-owner-occupied $ 262 $ 11

Commercial real estate - owner-occupied 124 46

Consumer and home equity 798 486

Accruing loans past due 90 days — —

Accruing TDRs prior to ASU 2022-02 adoption not included above 1,990 2,114

Other real estate owned — —

Total non-performing assets $ 7,438 $ 5,105

Non-accrual loans to total loans 0.13 % 0.07 %

Non-performing loans to total loans 0.18 % 0.13 %

Non-performing assets to total assets 0.13 % 0.09 %

Generally, a loan is classified as non-accrual when interest and/or principal payments are 90 days past due or when management believes collecting all principal and interest owed is in doubt. All previously accrued but unpaid interest on non-accrual loans is reversed from interest income in the current period. Interest payments received on non-accrual loans are applied as a reduction of principal. A loan remains on non-accrual status until all principal and interest amounts contractually due are brought current, all future principal and interest payments are reasonably assured, and a consistent repayment record, generally six consecutive payments, has been demonstrated. At that time, we may reclassify the loan to performing. For loans that were previously qualified as TDRs prior to ASU 2022-02, we will classify the interest collected as interest income once the aforementioned criteria for non-accrual loans is met and demonstrated. However, loans classified as TDRs prior to ASU 2022-02 remain classified as such for the life of the loan, except in limited circumstances, when it is determined that the borrower is performing under the modified terms and (i) the loan is subsequently restructured and re-written in a new agreement at an interest rate greater than or equal to an acceptable market rate for a comparable new loan at the time of the restructuring, and (ii) there has been no principal forgiveness.

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The following table highlights the interest income that would have been recognized if loans on non-accrual status had been current in accordance with their original terms (i.e., “foregone interest income”) and the interest income recognized on non-performing loans and performing TDRs for the periods indicated:

For the Year EndedDecember 31,

Interest income recognized on non-performing loans and performing TDRs 110 80 90

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 our borrowers or collateral deficiencies. Based on historical experience, the credit quality of some of these loans may improve due to the financial condition of the borrowers or changes in collateral values, while the credit quality of other loans may deteriorate, resulting in some amount of loss. These loans are not included in the above analysis of non-accrual loans. At December 31, 2023, potential problem loans totaled $1.2 million.

Past Due Loans. Past due loans consist of accruing loans that were 30-89 days past due. The following table presents the recorded investment of past due loans at the dates indicated:

December 31,

Loans 30-89 days past due:

Commercial real estate - non-owner-occupied $ 84 $ 267

Commercial real estate - owner-occupied 656 55

Consumer and home equity 922 391

Loans 30-89 days past due to total loans 0.12 % 0.06 %

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ACL. The following table sets forth information concerning the components of our ACL for the periods indicated:

At or For the Year EndedDecember 31,

Net charge-offs (recoveries)(1):

Commercial real estate 39 (5) (9)

Residential real estate (26) 66 (15)

Components of ACL:

Net charge-offs to average loans 0.03 % 0.02 % 0.02 %

Provision (credit) for loan losses to average loans 0.03 % 0.12 % (0.12) %

ACL on loans to total loans 0.90 % 0.92 % 0.97 %

(1) Additional information related to (credit) provision for loan losses and net (charge-offs) recoveries is presented in the following table for the periods indicated:

For the Year EndedDecember 31,

Commercial real estate $ — $ 5 $ (5) $ 1,532,225 — %

Commercial real estate $ — $ 9 $ (9) $ 1,412,884 — %

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The following table sets forth information concerning the allocation of the ACL on loans by loan categories at the dates indicated:

December 31,

Commercial real estate - non-owner-occupied $ 16,581 33 % $ 17,296 32 %

Commercial real estate - owner-occupied 2,290 7 % 2,362 8 %

Refer to “—Critical Accounting Policies” and Note 1 of the consolidated financial statements for further details of our CECL model macroeconomic factors (i.e. loss drivers), and refer to Note 3 of the consolidated financial statements for discussion of the risk characteristics for each portfolio segment considered when evaluating the ACL, as well as factors driving the change in the ACL on loans at December 31, 2023 compared to December 31, 2022.

Goodwill and Core Deposit Intangible Assets

Upon completion of an acquisition the Company will likely generate goodwill and other intangible assets. Goodwill represents the price paid in excess of the fair value of acquired assets and liabilities. Through the acquisition of other financial institutions, core deposit intangible assets are recognized at the estimated fair value of the acquired non-maturity deposit customer relationships. Goodwill is reviewed for impairment as of November 30th annually, or more frequently as determined by management, and core deposit intangible assets are reviewed when a triggering event suggests such a review necessary.

At December 31, 2023 and 2022, goodwill totaled $94.7 million. Through our annual impairment analysis performed as of November 30, 2023, we determined goodwill was not impaired. Refer to “—Critical Accounting Policies” and Note 4 of the consolidated financial statements for further details of the testing performed.

At December 31, 2023 and 2022, core deposit intangible assets totaled $971,000 and $1.6 million, respectively, and related amortization was $592,000, $625,000, and $655,000 for the years ended 2023, 2022 and 2021, respectively. There were no indications of potential risk of impairment of core deposit intangible assets for any of the aforementioned years.

Investment in BOLI

BOLI is presented in the consolidated statements of condition at its cash surrender value. Increases in BOLI’s cash surrender value are reported as a component of non-interest income in the consolidated statements of income.

BOLI was $101.5 million and $99.1 million at December 31, 2023 and 2022, respectively. The increase year-over-year reflects the increase in the cash surrender value. BOLI provides a means to mitigate increasing employee benefit costs. We expect to benefit from the BOLI contracts as a result of the tax-free growth in cash surrender value and death benefits that are expected to be generated over time. The largest risk to the BOLI program is credit risk of the insurance carriers. At December 31, 2023, we had one stable value account (that is subject to a wrapper) and that totals 10% of the BOLI portfolio, while the remaining amounts of the BOLI portfolio are in general accounts. To mitigate risk, annual financial condition reviews are completed on all carriers and we impose internal policy limits so that no one carrier exceed 10% of Tier 1 capital plus the allowable ACL (as defined for regulatory purposes). BOLI is invested in the “general account” of quality insurance companies or in separate account products, 94% of our balances are with insurance carriers that had an A.M. Best rating of “B++” or better at December 31, 2023.

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Deposits

The Company receives checking, savings and time deposits primarily from customers located within our markets. Other forms of deposits include brokered deposits and deposits with the Certificate of Deposit Account Registry System (“CDARS”). The table below details the Company’s deposits, and change between periods, as of each date indicated:

December 31, Change

(1) Includes $61.5 million and $73.5 million of deposits from Camden National Wealth Management as of December 31, 2023 and 2022, respectively, which represent client funds. These deposits fluctuate with changes in the portfolios of the clients of Camden National Wealth Management.

(2) At December 31, 2023 and 2022, brokered deposits consisted of $70.9 million and $82.3 million, respectively, of brokered money market balances and $31.0 million and $98.9 million, respectively, of brokered certificates of deposit (“CD”) balances.

The deposit landscape was highly competitive through 2023, and continues to be, as depositors looked to deploy excess liquidity into higher yielding, interest-bearing deposit accounts, and to ensure that their deposits are properly safeguarded in response to well-publicized failures of three larger regional banks in the first and second quarter of 2023. We continue to manage our deposits closely with a focus on maintaining and enhancing existing depositor relationships and developing new ones, while balancing the Company's overall funding cost and liquidity position.

The sharp increase in short-term interest rates in 2022 and 2023, highlighted by the upper limit of Federal Funds Target Rate increasing from 0.25% at January 1, 2022 to 4.50% at December 31, 2022, and reaching 5.50% in July 2023 and remaining at that level through December 31, 2023, has resulted in our customers, and more broadly across the banking industry, moving excess deposits from lower interest-earning accounts, including checking and savings accounts, to higher yielding accounts, including money market and CD. Throughout 2023, our CD product offering remained relatively short in term to provide the opportunity for CDs to reprice faster and manage our interest rate risk position to falling interest rates. The weighted-average life to maturity of our CD portfolio at December 31, 2023 was 6 months.

Another factor impacting deposits throughout 2023 was the decrease in average consumer deposit balances, primarily checking and savings accounts, which, in part, was due to depositors redeploying excess liquidity given the current interest rate environment as described above, but also likely reflects the shift in the overall financial position of the average consumer as average checking and savings account deposit balances from the onset of the COVID-19 pandemic in 2020 through mid-year 2022 steadily increased before reaching its peak. As of December 31, 2023, the Company's average checking and savings account deposit balance had decreased 10% and 17% compared to December 31, 2022, respectively.

We will supplement the Company’s funding using brokered deposits to manage overall funding costs, liquidity and our interest rate risk position. The Company’s brokered CDs of $31.0 million matured in February 2024, and we simultaneously entered into a new tranche totaling $75.0 million that are scheduled to mature in twelve months.

At December 31, 2023, the Company had no customer relationships that exceeded 10% of total deposits.

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Uninsured and Uncollateralized Deposits. Total deposits that exceeded the FDIC deposit insurance limit of $250,000 were $1.1 billion, or 23% of total deposits, as of December 31, 2023, and $1.4 billion, or 29% of total deposits, as of December 31, 2022.

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 $669.5 million, or 15% of total deposits, as of December 31, 2023 and $745.9 million, or 16% of total deposits, as of December 31, 2022.

The balance of CDs that exceeded the FDIC deposit insurance limit of $250,000 was $167.2 million, or 27% of CD balances, as of December 31, 2023, and $84.5 million, or 28% of CD balances, as of December 31, 2022. The total uninsured portion of these CDs was $93.7 million, or 15% and $62.5 million or 21% as of December 31, 2023 and 2022, respectively.

Borrowings and Advances

We utilize a variety of funding sources to manage our borrowings, including, but not limited to, FHLBB and correspondent bank overnight borrowings, FHLBB advances, customer and wholesale repurchase agreements, the Bank Term Funding Program (“BTFP”), and junior subordinated debentures. We proactively monitor our borrowings through Management and Board ALCO as part of prudent balance sheet, earnings, and liquidity management. As part of our liquidity management, we use internal designations of “short-term” and “long-term” borrowings, and manage our borrowings within each designation:

•Short-term borrowings include, but are not limited to, FHLBB and correspondent bank overnight borrowings, FHLBB advances with maturity within one year of origination, the BTFP, and customer repurchase agreements; and

•Long-term borrowings may include, but are not limited to, FHLBB advances with maturity greater than one year, wholesale repurchase agreements, and junior subordinated debentures.

At December 31, 2023, short-term borrowings were $485.6 million, representing an increase of $220.4 million, or 83%, since December 31, 2022. The increase in short-term borrowings reflects the need for additional funding to support asset growth of 2% and a decrease in deposits of 5% during 2023. In May 2023, we leveraged the new facility, the BTFP, that was created by the FRB that was made available to depository institutions in response to the well-publicized bank failures during the first half of 2023. We utilized the BTFP for management of our overall funding cost and interest rate risk as it provided advantageous pricing and optionality features. The BTFP was not used because of concerns with the Company’s liquidity position. At December 31, 2023, we had borrowings from the BTFP of $135.0 million at an interest rate of 4.70% that were scheduled to mature in May 2024. In January 2024, we refinanced the existing BTFP borrowing of $135.0 million and borrowed an additional $90.0 million under the program all at an interest rate of 4.76%. The continued use of this facility was done, again, for purposes of managing our overall funding cost and interest rate risk position in 2024 and not because of concerns with the Company’s liquidity position.

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Short-Term Borrowings. The following table below provides certain information on our short-term borrowings at and for the period ended:

December 31,

FHLBB and correspondent bank overnight borrowings:

Balance outstanding at end of year $ 24,950 $ 18,725 $ —

Maximum balance outstanding at any month end 189,400 102,225 —

Weighted average interest rate for the year 4.82 % 2.43 % 0.40 %

Weighted average interest rate at end of year 5.56 % 4.38 % — %

FHLBB advances (less than one year):

Balance outstanding at end of year $ 125,000 $ 50,000 $ —

Maximum balance outstanding at any month end 140,000 50,000 —

Weighted average interest rate for the year 3.14 % 2.94 % — %

Weighted average interest rate at end of year 5.53 % 4.93 % — %

BTFP:

Balance outstanding at end of year $ 135,000 $ — $ —

Average daily balance outstanding 89,510 — —

Maximum balance outstanding at any month end 135,000 — —

Weighted average interest rate for the year 4.70 % — % — %

Weighted average interest rate at end of year 4.70 % — % — %

Customer repurchase agreements:

Weighted average interest rate for the year 1.49 % 0.51 % 0.31 %

Weighted average interest rate at end of year 1.56 % 1.00 % 0.25 %

Junior Subordinated Debentures. In connection with the formation of CCTA and UBCT, and the issuance and sale of trust preferred securities to the public, we received and had outstanding at December 31, 2023 and 2022, junior subordinated debentures totaling $44.3 million.

FHLBB Collateral. FHLBB short-term and long-term borrowings are collateralized by a blanket lien on qualified collateral consisting primarily of loans with first mortgages secured by one- to four-family properties, certain commercial real estate loans, certain pledged investment securities and other qualified assets. The carrying value of residential real estate and commercial loans pledged as collateral was $1.9 billion and $1.8 billion at December 31, 2023 and 2022, respectively. The carrying value of securities pledged as collateral at the FHLBB was $4.3 million and $22,000 at December 31, 2023 and 2022, respectively.

Shareholders’ Equity

Total shareholders’ equity at December 31, 2023 was $495.1 million, which was an increase of $43.8 million, or 10%, since December 31, 2022. The increase was primarily driven by the following: (1) an increase in AOCI of $24.4 million driven by an increase in the fair value of the Company's AFS debt securities of $13.6 million and the increase from reclassification of the recognized loss of $10.3 million on sale of investments, net of tax; and (2) an increase in retained earnings of $18.9 million driven by net income of $43.4 million, partially offset by dividends declared of $24.5 million for the year ended 2023.

At December 31, 2023 and 2022, the Company and the Bank exceeded all regulatory capital requirements, and the Bank met the capital ratios necessary to be considered “well capitalized” under the prompt corrective action framework. There were

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no changes to the Company’s or the Bank's capital ratios that occurred subsequent to December 31, 2023 that would change the Company or Bank's regulatory capital categorization.

In January 2024, the Company's Board of Directors authorized the repurchase of up to 750,000 shares of the Company's common stock, representing approximately 5.0% of the Company's issued and outstanding shares of common stock as of December 31, 2023. This program replaces the 2023 program and will continue until the earlier of: (1) the authorized number of shares are repurchased, (2) the Company's Board of Directors terminates the program or (3) January 4, 2025 (12 months from the announcement of the new program). Purchases under the new program may be made at the Company's discretion from time to time in the open market, through block trades or otherwise, and in privately negotiated transactions, subject to market conditions and other factors, and in accordance with applicable legal and regulatory requirements.

Refer to “—Capital Resources” and Note 14 of the consolidated financial statements for further discussion of the Company's capital position.

The following table presents certain information regarding shareholders’ equity for the periods indicated:

As of and For the Year EndedDecember 31,

Financial Ratios

Average equity to average assets 8.18 % 8.51 % 10.33 %

Tangible common equity ratio (non-GAAP) 7.11 % 6.37 % 8.22 %

Per Share Data

Tangible book value per share (non-GAAP) $ 27.42 $ 24.37 $ 30.15

Dividends declared per share $ 1.68 $ 1.62 $ 1.48

LIQUIDITY

Our liquidity needs require the availability of cash to meet the withdrawal demands of depositors and credit commitments to borrowers. Liquidity is defined as our ability to maintain availability of funds to meet customer needs, as well as to support our asset base. The primary objective of liquidity management is to maintain a balance between sources and uses of funds to meet our cash flow needs in the most economical and expedient manner. Due to the potential for unexpected fluctuations in both deposits and loans, active management of liquidity is necessary. We maintain various sources of funding and levels of liquid assets and monitor liquidity in accordance with internal guidelines and all applicable regulatory requirements. At December 31, 2023 and 2022, the Company's liquidity level exceeded its target. We believe that we currently have appropriate liquidity available to respond to demands. Sources of funds that we utilize consist of deposits; borrowings from the FHLBB and other sources; cash flows from loans and investments; and cash flows from operations, including other contractual obligations and commitments.

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During the first half of 2023, the banking industry experienced three high-profile bank failures, which led to an industry-wide increase in concerns related to liquidity, deposit outflows and eroding customer confidence in the banking system. Despite these developments and related recent volatility in the banking industry, our liquidity position continued to exceed our target levels and we believe we currently have appropriate liquidity available to respond to demands.

As of December 31, 2023, our primary liquidity sources available were as follows:

(Dollars in thousands) Amount

Unpledged investment securities 441,998

Over collateralized securities pledging position 65,877

Fed Discount Window 39,397

Unsecured borrowing lines 94,872

Total available primary liquidity $ 1,350,185

(1) Effective March 11, 2024, the BTFP will no longer be an available borrowing facility.

Deposits. Deposits continue to represent our primary source of funds. As of December 31, 2023, total deposits were $4.6 billion, a decrease of 5% over December 31, 2022. Total deposit contraction during 2023 was driven by the decrease in core deposits (which exclude CDs and brokered deposits) (non-GAAP) of $459.3 million, or 11%. Time deposits are generally considered to be more interest rate sensitive than other deposits and, during 2023 the Company’s CD balance increased significantly due to interest rate changes in 2023. Refer to “—Financial Condition—Deposits” for additional discussion on the Company’s deposit mix and changes in deposit balances during 2023.

The following is a summary of the scheduled maturities of CDs as of December 31, 2023:

(In thousands) CDs

At December 31, 2023, the Company’s brokered deposits totaled $101.9 million and was comprised of $31.0 million of brokered CDs and $70.9 million of brokered money market accounts. The Company’s brokered CDs of $31.0 million at December 31, 2023 matured in January 2024, and we simultaneously entered into a new tranche totaling $75.0 million that are scheduled to mature in twelve months. The Company has established an internal policy limiting brokered deposit to 20% of the Bank’s assets and had approximately $1.0 billion of brokered capacity as of December 31, 2023. The brokered deposit limit falls within the Bank’s total borrowed funds limit that cannot exceed 50% of the Bank’s assets.

Borrowings. Borrowings are used to supplement deposits as a source of liquidity. Our primary sources of borrowings are with the FHLBB, federal funds and customer repurchase agreements, but may also include alternative sources such as various forms of subordinated debentures. For the year ended December 31, 2023, total borrowings increased $220.4 million, or 71%, to $529.9 million at December 31, 2023.

Our practice is to secure borrowings from the FHLBB with qualified commercial and residential real estate loans, home equity loans and certain investment securities. At December 31, 2023, our total borrowing capacity with FHLBB was $664.5 million.

In May 2023, the Company borrowed $135.0 million from the BTFP for a period of one year at a fixed rate of 4.70%. The BTFP, which is secured by the Company's investment securities at par, was scheduled to mature in May 2024. In January 2024, under the terms of the program, we exercised our prepayment option without penalty and refinanced the debt and added an additional $90.0 million. In total, the Company currently has $225.0 million of borrowings under the BTFP at a rate of 4.76% scheduled to mature in January 2025.

Customer repurchase agreements are secured by mortgage-backed securities and government-sponsored enterprises. Through the Bank, we also have available lines of credit with the FHLBB of $9.9 million, with a correspondent bank of $85.0

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million, and with the FRB Discount Window of $39.4 million as of December 31, 2023. We also believe that we have additional untapped access to the brokered deposit market and wholesale reverse repurchase transaction market. These sources are considered as liquidity alternatives in our contingent liquidity plan.

The following is a summary of the scheduled maturities of borrowings as of December 31, 2023:

Loans. Contractual loan repayments also affect our liquidity position. Actual speed and timing of repayment may differ materially from contract terms due to prepayments or nonpayment. The Company's residential mortgage loan portfolio is also a significant source of contingent liquidity for the Company that could be accessed in a reasonable time period through the sale of loans on the secondary market, as needed. As of December 31, 2023, qualifying loans with a book value of $1.9 billion were pledged as collateral.

The following table presents the contractual maturities of loans at the date indicated:

Maturity Distribution(1):

Fixed Rate:

Variable Rate:

(1) Scheduled repayments are reported in the maturity category in which payment is due. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported as due in one year or less.

(2) Commercial real estate loans includes non-owner-occupied and owner-occupied properties.

Additionally, we have active relationships with various secondary market investors that purchase residential mortgage loans we originate. In addition to managing our interest rate risk position and earnings through the sale of these loans, we also manage our liquidity position through timely sales of residential mortgage loans to the secondary market. For the year ended December 31, 2023, we sold 49%, or $184.9 million, of our residential mortgage loan originations to the secondary market, which increased from 21%, or $152.7 million, for 2022.

Investments. We generally invest in amortizing MBS and CMO debt securities that return cash flow at an accelerated rate in comparison to other types of debt securities that are of a bullet structure. MBS and CMO debt security cash flow will vary depending on the interest rate environment because borrowers may have the right to call or prepay obligations with or without prepayment penalties. The rise in interest rates during 2023 and 2022 resulted in slowing cash flows. As of December 31, 2023 and 2022, the Company's MBS and CMO debt securities portfolio totaled 91% and 87%, respectively, of the Company's

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investment portfolio. The investment portfolio is also a significant source of contingent liquidity for the Company that could be accessed in a reasonable time period through the sale of investments on the secondary market, if needed. As of December 31, 2023 and 2022, $337.6 million and $277.0 million, or 54% and 40%, respectively, were designated as AFS and not pledged as collateral. As of December 31, 2023 and 2022, $200.4 million and $210.0 million, or 37% and 38%, respectively, were designated as HTM and not pledged as collateral.

The following is a summary of the scheduled cash flows from our debt securities portfolio, including investments designated as AFS and HTM, as of December 31, 2023:

(In thousands) ContractualCash Flows(1)

(1) Expected contractual cash flows could differ as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Other Liquidity Requirements. The Company generates cash flows from earnings through its normal course of business from earnings and, although not contractual, the Company has a history of paying a quarterly cash dividend to its shareholders and repurchasing its shares of common stock. For the year ended December 31, 2023, the Company reported $43.4 million of net income, paid cash dividends of $24.5 million to shareholders and repurchased shares of its common stock for $2.0 million.

Also through its normal operations, the Company is party to several other contractual obligations not previously discussed, such as various lease agreements on a number of its branches. Renewal options within the various lease contracts, as applicable, were considered to determine the lease term and estimate the contractual obligation and commitment for the Company's operating and finance leases. Furthermore, certain lease contracts of the Company contain language that subject its rent payment to variability, such as those tied to an index or change in an index. As a result, the future contractual obligation and commitment may differ materially from that estimated and disclosed within the table below. At December 31, 2023, we had the following lease and other contractual obligations to make future payments under each of these contracts as follows:

Total Amount Committed Payments Due Per Period

(In thousands) 1 Year or Less > 1 Year

The Company's estimated lease liability for its various operating and finance leases was reported within other liabilities on our consolidated statements of condition. Please refer to Notes 1 and 6 of the consolidated financial statements for discussion and details of our leases.

In the normal course of business, we are a party to credit related financial instruments with off-balance sheet risk, which are not reflected in the consolidated statements of condition. These financial instruments include commitments to extend credit and standby letters of credit. Many of the commitments will expire without being drawn upon, and thus, the total amount does not necessarily represent future cash requirements. Refer to Note 11 of the consolidated financial statements for additional details.

We use derivative financial instruments for risk management purposes (primarily interest rate risk) and not for trading or speculative purposes. These contracts with our various counterparties may subject the Company to various cash flow requirements, which may include posting of cash as collateral (or other assets) for arrangements that the Company is in a liability position (i.e. “underwater”). Refer to Note 12 of the consolidated financial statements for further discussion of our derivatives and hedge instruments.

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CAPITAL RESOURCES

As part of our goal to operate a safe, sound and profitable financial organization, we are committed to maintaining a strong capital base. Shareholders’ equity totaled $495.1 million and $451.3 million at December 31, 2023 and December 31, 2022, respectively, which amounted to 9% and 8% of total assets, respectively. Refer to “—Financial Condition—Shareholders' Equity” for discussion regarding changes in shareholders' equity since December 31, 2022.

Our principal cash requirement is the payment of dividends on our common stock, as and when declared by the Company's Board of Directors. We declared dividends to shareholders in the aggregate amount of $24.5 million, or $1.68 per share, $23.7 million, or $1.62 per share, and $22.1 million, or $1.48 per share, for the years ended December 31, 2023, 2022 and 2021, respectively. The Company's Board of Directors approves cash dividends on a quarterly basis after careful analysis and consideration of various factors, including the following: (i) capital position relative to total assets, (ii) risk-based assets, (iii) total classified assets, (iv) economic conditions, (v) growth rates for total assets and total liabilities, (vi) earnings performance and projections and (vii) strategic initiatives and related capital requirements. All dividends declared and distributed by the Company will be in compliance with applicable regulatory requirements and state corporate law.

We are primarily dependent upon the payment of cash dividends by the Bank, our wholly-owned subsidiary, to service our commitments. We, as the sole shareholder of the Bank, are entitled to dividends, when and as declared by the Bank's Board of Directors from legally available funds. For the years ended December 31, 2023, 2022, and 2021, the Bank declared dividends payable to the Company in the amount of $22.5 million, $31.7 million, and $41.7 million, respectively. Under OCC regulations, the Bank generally may not declare a dividend in excess of the Bank’s undivided profits or, absent OCC approval, if the total amount of dividends declared by the Bank in any calendar year exceeds the total of the Bank's retained net income for the current year plus its retained net income for the prior two years. If we are required to use dividends from the Bank to service unforeseen commitments in the future, we may be required to reduce the dividends paid to our shareholders going forward.

Please refer to Note 14 of the consolidated financial statements for discussion and details of the Company and Bank's capital regulatory requirements. At December 31, 2023 and 2022, the Company and Bank met all regulatory capital requirements and the Bank continues to be classified as “well capitalized” under prompt corrective action provisions.

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RISK MANAGEMENT

The Company’s Board of Directors and management have identified significant risk categories which affect the Company. The risk categories include: credit; liquidity; market; interest rate; capital; operational; technology, including cybersecurity; vendor and third party; people and compensation; compliance and legal; and strategic alignment and reputation. The Board of Directors has approved an Enterprise Risk Management (“ERM”) Policy that addresses each category of risk. The direct oversight and responsibility for the Company's risk management program has been delegated to the Company's Executive Vice President, Chief Risk Officer, who is a member of the Executive Committee and reports directly to the Chief Executive Officer.

The Company is, and may become, subject to other risks. Refer to Item 1A. Risk Factors for further description of the Company's material risks.

Credit Risk. Credit risk is the current and prospective risk to earnings or capital arising from an obligor's failure to meet the terms of any contract with the Company or otherwise to perform as agreed. It is found in all activities in which success depends on counterparty, issuer or borrower performance. It arises any time funds are extended, committed, invested or otherwise exposed through actual or implied contractual agreements, whether reflected on or off the Company's balance sheet. The Company makes various assumptions and judgments about the collectability of its loan portfolio, including the creditworthiness of its borrowers and counterparties and the value of the real estate and other assets serving as collateral for the repayment of loans. For further discussion regarding credit risk and the credit quality of the Company’s loan portfolio, refer to “—Financial Condition—Asset Quality,” and Note 3 of the consolidated financial statements.

Liquidity Risk. Liquidity risk is the current and prospective risk to earnings or capital arising from the Company’s inability to meet its obligations when they come due, without incurring unacceptable losses. Liquidity risk includes the inability to manage unplanned decreases or changes in funding sources. Liquidity risk also arises from the failure to recognize or address changes in market conditions that affect the ability to liquidate assets quickly and with minimal loss in value. For further discussion regarding the Company's management of liquidity risk, refer to the “—Liquidity” section.

Market Risk. Market riskis the risk of loss in a financial instrument arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates, commodity prices and equity prices. Our primary market risk exposure is interest rate risk. The ongoing monitoring and management of this risk is an important component of our asset and liability management process, which is governed by policies established by the Bank’s Board of Directors that are reviewed and approved annually. The Board ALCO delegates responsibility for carrying out the asset/liability management policies to Management ALCO. In this capacity, Management ALCO develops guidelines and strategies impacting our asset/liability management-related activities based upon estimated market risk sensitivity, policy limits and overall market interest rate levels and trends. Board ALCO meets on a quarterly basis to review strategies, policies, economic conditions and various activities as part of the management of these risks.

Certain of the Company's revenues are asset-based and determined as a percentage of the value of a client's assets under management. Such values are affected by changes in financial markets, such as interest rate risk, equity prices, and foreign exchange rates, and, accordingly, declines in the financial market may negatively impact its revenue. At December 31, 2023, client assets under management by Camden National Wealth Management were $1.1 billion. It is estimated that a 1% increase or decrease in client assets under management would have resulted in an annualized increase or decrease in reported 2023 income from fiduciary services of $65,000.

Interest Rate Risk. Interest rate riskrepresents the sensitivity of earnings to changes in market interest rates. As interest rates change, the interest income and expense streams associated with our financial instruments also change, thereby impacting net interest income, the primary component of our earnings. Board ALCO and Management ALCO utilize the results of a detailed and dynamic simulation model to quantify the estimated exposure of net interest income to sustained interest rate changes. While Board ALCO and Management ALCO routinely monitor simulated net interest income sensitivity over a rolling two-year horizon, they also utilize additional tools to monitor potential longer-term interest rate risk.

The simulation model captures the impact of changing interest rates on the interest income received and interest expense paid on all interest-earning assets and interest-bearing liabilities reflected on our consolidated statements of condition, as well as for derivative financial instruments. This sensitivity analysis is compared to internal ALCO policy limits, which specify a maximum tolerance level for net interest income exposure over a one- and two-year horizon, assuming no balance sheet growth or change in composition, given a 200 basis point upward and downward shift in interest rates. Although our policy specifies a downward shift of 200 basis points, this would have resulted in negative rates as of December 31, 2021 as many deposit and funding rates were below 2.00%. In this case, a downward shift of 100 basis points was the only down scenario performed. A parallel and pro rata shift in rates over a 12-month period is assumed. Using this approach, we are able to produce simulation

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results that illustrate the effect that both a gradual change of rates and a “rate shock” have on earnings expectations. In the down 100 and 200 basis points scenarios, Federal Funds and Treasury yields are floored at 0.01% while Prime is floored at 3.00%. All other market rates are floored at the lesser of current levels or 0.25%.

As of December 31, 2023, 2022 and 2021, our net interest income sensitivity analysis reflected the following changes to net interest income assuming no balance sheet growth or change in composition, and a parallel shift in interest rates. All rate changes were “ramped” over the first 12-month period and then maintained at those levels over the remainder of the ALCO simulation horizon.

Estimated Changes inNet Interest Income

As of December 31,

Year 1

-100 basis points N/A N/A (1.3) %

-200 basis points — % 3.1 % N/A

Year 2

-100 basis points N/A N/A (10.5) %

The preceding sensitivity analysis does not represent a forecast and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions including, among others, the nature and timing of interest rate levels, yield curve shape, prepayments on loans and securities, decay rates, pricing decisions on loans and deposits, including loan and deposit betas, and reinvestment/replacement of asset and liability cash flows. While assumptions are developed based upon current economic and local market conditions, we cannot make any assurances as to the predictive nature of these assumptions, including how customer preferences or competitor influences might change.

Based upon the net interest income simulation models, in Year 1 of a rising interest rate environment the Company is slightly liability sensitive as our funding will reprice faster than assets as market rates rise over the first year and result in lower net interest income. Cash flows from investments and loans are redeployed into current market rates at higher yields than our existing portfolio, however funding cost pressures continue in the higher current rate environment and outpace asset yield expansion. In Year 2, funding cost pressures subside and asset yields continue to improve, resulting in improved net interest income compared to our Year 1 base scenario. In Year 1 of a falling interest rate environment, net interest income is expected to hold stable over the first year of the simulation as the decrease in funding costs is offset by a decrease in asset yields from accelerated loan and investment prepayments. In Year 2, the decrease in funding costs outpaces the decrease in asset yields, resulting in improved net interest income compared to our Year 1 base scenario.

Periodically, if deemed appropriate, we use interest rate swaps, floors and caps, which are common derivative financial instruments, to hedge our interest rate risk position. The Board of Directors has approved hedging policy statements governing the use of these instruments. As of December 31, 2023, we had interest rate swap agreements with a total notional of $43.0 million related to our junior subordinated debentures, $100.0 million of notional interest swap agreements on variable rate loans to mitigate exposure to falling interest rates, $50.0 million of notional interest rate swap agreements on variable rate deposits to mitigate exposure to rising rates, $125.0 million of notional interest rate swap agreements on short-term fixed-rate rolling funding to mitigate exposure to rising rates, and $375.0 million of notional interest rate swap agreements to hedge fixed-rate residential mortgages using the “portfolio layer” method, and $298.1 million of notional interest rate swap agreements related to commercial loan level derivative program with both our commercial customers and a corresponding swap dealer. The Board and Management ALCO monitor derivative activities relative to their expectations and our hedging policies. Refer to Note 12 of the consolidated financial statements for further discussion of our derivatives instruments.

Capital Risk. Capital risk is the risk that an investor may lose all or part of the principal amount invested. The Company faces this risk as it manages its balance sheet and has investments or loans that may lose all or part of the principal amount the Company has invested, which can have an impact on shareholders' equity. The Company also faces capital risk in that the entity may lose value on components of its shareholders' equity. The regulatory environment mandates the Company and Bank maintain certain levels of capital. These capital levels can change based upon regulatory changes, which can then impact what

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the Company is able to accomplish from a strategic perspective. For further discussion regarding capital risk and management of this risk, refer to “—Capital Resources,” and Note 14 of the consolidated financial statements.

Operational Risk. Operational riskis the current and prospective risk to earnings and capital arising from fraud, error and the inability to deliver products or services, maintain a competitive position and manage information. Risk is inherent in efforts to gain strategic advantage and in the failure to keep pace with changes in the financial services marketplace. Operational risk is evident in each product and service offered by the Company and encompasses product development and delivery, transaction processing, systems development, change management, complexity of products and services, human resource elements and the internal control environment. The risk that transactions may not be processed on time or correctly can have significant impact on the Bank’s reputation, which can result in compliance violations and fines, and/or other financial risks.

The Company manages operational risk through a series of internal programs, as well as through the assistance of third parties. These programs include various internal and external audit programs, internal committees to oversee compliance with programs and remedial actions, if necessary, and various documented policies, procedures and framework for addressing such risks.

Technology Risk, including Cybersecurity. Technology Risk is the risk offinancial loss, disruption or damage to the reputation of an organization resulting from the failure of its information technology systems, weak computing infrastructure, or a breach of information technology systems. Technology and cybersecurity risk could materialize in a variety of ways, such as unpatched or vulnerable computing systems, deliberate and unauthorized breaches of security to gain access to information systems, unintentional or accidental breaches of security, operational information technology risks due to factors such as poor system integrity, weak computing infrastructure and/or a weak Cybersecurity protection program.

Poorly managed technology and cybersecurity risk can leave an institution exposed to a variety of cyber crimes, with consequences ranging from data disruption to economic destitution. Reputation risk due to a technology and/or cybersecurity event can be significant to overcome depending on the severity of the event.

The Company manages technology and cybersecurity risks through its internal programs, as well as through the assistance of third parties. Refer to Item 1C. Cybersecurity for further information.

Vendor and Third Party Risk. Vendor and third party riskrepresents the risk related to outsourced activities and in certain situations includes reliance on vendors to deliver services on our behalf. The Company has many service partners and an increasing reliance on outsourced services, which places greater risk on the Company through these many partners. These relationships are controlled by contracts and service level agreements, but represent increasing risk to the Company.

The Company manages vendor and third party risk through its vendor management program, which includes robust due diligence and risk assessment prior to engaging a new vendor, annual review of certain vendors depending on the services provided by the vendor, and an evaluation of the risk the vendor may present to the Company through our reliance on its services.

People and Compensation Risk. People and compensation risk includes: (1) the risk of employee dishonesty, incompetence or error; (2) the risk of not having individuals with adequate training and experience to properly discharge their responsibilities; (3) the risk of not having sufficient depth of personnel to provide back up for critical functions; (4) the risk of lawsuit by employees alleging improper actions by or on behalf of the Company; (5) succession planning; and (6) compensation risk, which includes having compensation plans that effectively allow the Company to hire and keep the right talent, and properly designed compensation and incentive programs to promote ethical behavior and assure that excessive risk is not encouraged.

The Company manages people and compensation risk through annual risk assessments of various compensation and incentive plans, oversight by the Compensation Committee of the Board of Directors, the use of third party compensation consultants, and various insurance programs.

Compliance and Legal Risk. Compliance and legal riskis the current and prospective risk to earnings or capital arising from violations of, or nonconformance with, laws, rules, regulations, prescribed practices, internal policies and procedures, or ethical standards. This risk exposes the Company to fines, civil money penalties, payment of damages, and the voiding of contracts. Compliance risk can lead to diminished reputation, reduced franchise value, limited business opportunities, reduced expansion potential, and an inability to enforce contracts. Legal risk exists in generally all activity of the Company where there is any possibility that the Company will become subject to liability for improper actions.

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The Company manages compliance and legal risk through various internal and external audit programs, use of third parties for consulting and legal support, ongoing compliance risk assessments, the ERM Committee and various insurance programs.

Strategic Alignment Risk. Strategic alignment riskis the current and prospective impact on earnings or capital arising from adverse business decisions, improper implementation of decisions, or lack of responsiveness to industry changes. This risk is a function of the compatibility of the Company's strategic goals, the business strategies developed to achieve those goals, the resources deployed against these goals, and the quality of implementation.

Reputation Risk. Reputation risk is the current and prospective impact on earnings and capital arising from negative public opinion. The reputation of financial services companies can be based on brand and trust, and the loss of brand or trust can negatively impact the Company's operations and financial results. Reputation risk exposure is present throughout the organization and our interactions with our various stakeholders, including, but not limited to, our customers, communities and investors.

The Company manages its strategic alignment and reputation risk through various internal policies and programs, including, but not limited to, the Company's core values, code of ethics policy, financial code of ethics policy, Audit Committee complaint policy, employee handbook, and other policies and programs, as well as through strategic planning and oversight by the Board of Directors.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1 of the consolidated financial statements for details of recently issued accounting pronouncements and their expected impact on the consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Information required by this Item 7A is included in Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management” and is incorporated into this Item 7A by reference.

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Item 8. Financial Statements and Supplementary Data

CONSOLIDATED STATEMENTS OF CONDITION

December 31,

(In thousands, except number of shares) 2023 2022

ASSETS

Total cash, cash equivalents and restricted cash 99,804 75,427

Investments:

Less: allowance for credit losses on loans (36,935) (36,922)

Core deposit intangible assets 971 1,563

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities

Deposits:

Accrued interest and other liabilities 92,144 84,136

Commitments and contingencies (Note 11)

Shareholders’ Equity

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF INCOME

For the Year EndedDecember 31,

(In thousands, except number of shares and per share data) 2023 2022 2021

Interest Income

Interest Expense

Non-Interest Income

Net loss on sale of securities (10,310) (912) —

Non-Interest Expense

Amortization of core deposit intangible assets 592 625 655

Other real estate owned and collection costs (recoveries), net 42 29 (101)

Per Share Data

Diluted earnings per share $ 2.97 $ 4.17 $ 4.60

Cash dividends declared per share $ 1.68 $ 1.62 $ 1.48

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Year EndedDecember 31,

Other comprehensive income (loss):

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Other comprehensive loss, net of tax — — — (26,969) (26,969)

Stock-based compensation expense — 2,381 — — 2,381

Other comprehensive loss, net of tax — — — (119,726) (119,726)

Stock-based compensation expense — 2,553 — — 2,553

Other comprehensive income, net of tax — — — 24,403 24,403

Stock-based compensation expense — 2,793 — — 2,793

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Year Ended December 31,

Operating Activities

Investment securities amortization and accretion, net 2,312 3,831 6,722

Amortization of core deposit intangible assets 592 625 655

Purchase accounting accretion, net (145) (280) (699)

Net decrease in derivative collateral posted to counterparties — 30,690 26,760

Net gain on sale of premises and equipment — (204) —

Net loss on sale of investment securities 10,310 912 —

Increase (decrease) in other liabilities 5,531 (1,762) 43

Investing Activities

Proceeds from sales of available-for-sale debt securities 126,766 36,280 —