CAMDEN NATIONAL CORP

AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

The discussions set forth below and in the documents we incorporate by reference herein contain certain statements that may be considered forward-looking statements under the Private Securities Litigation Reform Act of 1995, as amended, including certain plans, exceptions, goals, projections, and statements, which are subject to numerous risks, assumptions, and uncertainties. Forward-looking statements can be identified by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “plan,” “target,” “potential” or “goal” or future or conditional verbs such as “will,” “may,” “might,” “should,” “could” and other expressions which predict or indicate future events or trends and which do not relate to historical matters. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult for the Company to predict. The actual results, performance or achievements of the Company may differ materially from what is reflected in such forward-looking statements.

Forward-looking statements should not be relied on, because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of the Company. These risks, uncertainties and other factors may cause the actual results, performance or achievements of the Company to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.

The following factors, among others, could cause the Company’s financial performance to differ materially from the Company’s goals, plans, objectives, intentions, expectations and other forward-looking statements:

•weakness in the United States economy in general and the regional and local economies within the Northern New England region, which could result in a deterioration of credit quality, an increase in the allowance for credit losses or a reduced demand for the Company’s credit or fee-based products and services;

•changes in trade, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System or the imposition of tariffs or retaliatory tariffs;

•inflation, interest rate, market, and monetary fluctuations;

•ongoing competition in the labor markets and increased employee turnover;

•the adequacy of succession planning for key executives or other personnel, and the Company’s ability to transition effectively to new members of the senior executive team;

•competitive pressures, including continued industry consolidation and the increased financial services provided by non-banks;

•deterioration in the value of the Company's investment securities;

•commercial real estate vacancies and their impact on the ability of borrowers to repay their loans;

•volatility in the securities markets that could adversely affect the value or credit quality of the Company’s assets, impairment of goodwill, or the availability and terms of funding necessary to meet the Company’s liquidity needs;

•changes in information technology and other operational risks, including cybersecurity, that require increased capital spending;

•changes in consumer spending and savings habits;

•changes in tax, banking, securities and insurance laws and regulations;

•the outcome of pending and future litigation and governmental proceedings, including tax-related examinations and other matters;

•changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Financial Accounting Standards Board ("FASB"), and other accounting standard setters;

•the effects of climate change on the Company and its customers, borrowers or service providers;

•the effects of civil unrest, international hostilities, including the war in Ukraine and conflict in the Middle East, or other geopolitical events;

•the effects of epidemics and pandemics;

•turmoil and volatility in the financial services industry, including failures or rumors of failures of other depository institutions, which could affect the ability of depository institutions, including Camden National Bank, to attract and retain depositors, and could affect the ability of financial services providers, including the Company, to borrow or raise capital;

•actions taken by governmental agencies to stabilize the financial system and the effectiveness of such actions;

•increases in deposit insurance assessments due to bank failures;

•changes to regulatory capital requirements in response to recent developments affecting the banking sector; and

•questions about the soundness of one or more financial institutions with which the Company does business.

In addition, statements regarding the potential effects of notable national and global current events on the Company’s business, financial condition, liquidity and results of operations may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond the Company's control.

Statements relating to the Company’s recent acquisition of Northway may also be forward-looking statements. Factors that could cause actual result to differ materially from the forward-looking statements include:

•the reaction to the transaction of the companies’ customers, employees and counterparties;

•customer disintermediation;

•expected synergies, cost savings and other financial benefits of the proposed transaction might not be realized within the expected timeframes or might be less than projected; and

•credit and interest rate risks associated with Camden's and Northway's respective businesses, customers, borrowings, repayment, investment and deposit practices.

You should carefully review all of these factors, and be aware that there may be other factors that could cause differences, including the risk factors listed in our Annual Report on Form 10-K for the year ended December 31, 2024, as updated by the Company's quarterly reports on Form 10-Q, including this report, and other filings with the Securities and Exchange Commission. Readers should carefully review the risk factors described therein and should not place undue reliance on our forward-looking statements.

These forward-looking statements were based on information, plans and estimates at the date of this report, and we undertake no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except to the extent required by applicable law or regulation.

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; return on average tangible equity and adjusted return on average tangible equity; the efficiency and tangible common equity ratios; net interest income and core net interest margin (both on a fully-taxable equivalent basis); tangible book value per share; core deposits and average core deposits. We utilize these non-GAAP financial measures for purposes of measuring performance against the Company's peer group and other financial institutions, as well as for analyzing its internal performance. The Company also believes these non-GAAP financial measures help investors better understand the Company's operating performance and trends and allows for better performance comparisons to other banks. In addition, these non-GAAP financial measures remove the impact of unusual items that may obscure trends in the Company’s underlying performance. These disclosures should not be viewed as a substitute for GAAP operating results, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other financial institutions.

Adjusted Net Income; Adjusted Diluted Earnings per Share; Adjusted Return on Average Assets; and Adjusted Return on Average Equity. The following table provides a reconciliation of net income, diluted EPS, return on average assets and return on average equity to adjusted net income, adjusted diluted EPS, adjusted return on average assets and adjusted return on average equity. Certain non-recurring transactions have been excluded to calculate adjusted net income, adjusted diluted EPS, adjusted return on average assets and adjusted return on average equity. We believe the following adjusted financial information and metrics assist users of our financial statements with their financial analysis period-over-period as it adjusts for certain non-recurring items.

(2) A one-time deferred tax valuation adjustment of $2.4 million resulted from a change in the apportionment of state income taxes due to the Northway merger.

Pre-Tax, Pre-Provision Income and adjusted pre-tax, pre-provision income. Pre-tax, pre-provision income is a supplemental measure of operating earnings and performance. Pre-tax, pre-provision income is calculated as net income before provision for credit losses and income tax (benefit) expense. This supplemental measure has become more widely used by financial institutions as a measure of financial performance for comparability across financial institutions. Adjusted pre-tax, pre-provision income is a supplemental measure with certain non-recurring expenses excluded. We believe the following adjusted financial information and metrics assist users of our financial statements with their financial analysis period-over-period as it adjusts for certain non-recurring items.

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 within the financial services industry 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.

Return on Average Tangible Equity: Return on average tangible equity is the ratio of (i) net income, adjusted for (a) amortization of core deposit intangible assets and the tax impact of the adjustment and (b) goodwill impairment, as necessary, to (ii) average shareholders' equity, adjusted for average goodwill and core deposit intangible assets. This adjusted financial ratio reflects a shareholder's return on tangible capital deployed in our business and is a common measure within the financial services industry.

Adjusted Return on Average Tangible Equity: Adjusted return on average tangible equity is the ratio of (i) core net income (as defined in the table above) adjusted for (a) amortization of core deposit intangible assets and the tax impact of the adjustment and (b) goodwill impairment, as necessary, to (ii) average shareholders' equity, adjusted for average goodwill and core deposit intangible assets.

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

Tangible Common Equity Ratio. Tangible common equity is the ratio of (i) shareholders’ equity less goodwill and other intangible assets to (ii) total assets less goodwill and other intangible assets. This ratio is a measure used within the financial services industry to assess a company's capital adequacy.

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 at a lower interest rate cost. The Company calculates core deposits as total deposits (as reported on the consolidated statements of condition) less certificates of deposit and brokered deposits. Management believes core deposits is a useful measure to assess the Company's deposit base, including its potential volatility.

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 average deposits (excluding average brokered deposits, as disclosed on the Average Balance, Interest and Yield/Rate Analysis tables) less average certificates of deposit. Management believes core deposits is a useful measure to assess the Company's deposit base, including its potential volatility.

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

Core Net Interest Margin (fully-taxable equivalent). The following table provides a reconciliation of net interest margin (fully-taxable equivalent) to core net interest margin (fully-taxable equivalent). Certain non-recurring transactions have been excluded to calculate core net interest margin (fully-taxable equivalent). We believe the following adjusted financial information and metrics assist users of our financial statements with their financial analysis period-over-period as it adjusts for certain non-recurring items.

(1) Impact from loan fair value mark accretion of $4.3 million.

(2) Impact from investment fair value accretion of $831,000.

(3) Impact from time deposits and borrowings amortization of $131,000.

CRITICAL ACCOUNTING ESTIMATES

Critical accounting estimates are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. In preparing the Company’s consolidated financial statements, management is required to make significant estimates and assumptions that affect assets, liabilities, revenues, and expenses reported. Actual results could differ materially from our current estimates as a result of changing conditions and future events. Estimates particularly critical and susceptible to significant near-term change, include (i) the ACL on loans and (ii) accounting for acquisitions and the subsequent review of goodwill and intangible assets generated in an acquisition for impairment.

There have been no material changes to the Company's critical accounting policies from those disclosed within its Annual Report on Form 10-K for the year ended December 31, 2024. Refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2024, for discussion of the Company's critical accounting policies.

Refer to Note 2 of the consolidated financial statements for discussion of accounting pronouncements issued but yet to be adopted and implemented.

GENERAL OVERVIEW

Camden National Corporation (hereafter referred to as “we,” “our,” “us,” or the “Company”) is a publicly-held bank holding company, with $7.0 billion in assets as of March 31, 2025, incorporated under the laws of the State of Maine and headquartered in Camden, Maine. Camden National Bank (the "Bank"), a wholly-owned subsidiary of the Company, was founded in 1875. The Company was founded in 1984, went public in 1997 and is registered with NASDAQ Global Market (“NASDAQ”) under the ticker symbol "CAC."

The primary business of the Company and the Bank is to attract deposits from, and to extend loans to, consumer, institutional, municipal, non-profit and commercial customers. The Company, through the Bank, provides a broad array of banking and other financial services, including wealth management and trust services, brokerage, investment advisory and insurance services, to consumer, business, non-profit and municipal customers.

The Company operates throughout Maine, with its primary markets and presence being throughout coastal and central Maine and New Hampshire. The Company and the Bank generally have effectively competed with other financial institutions by emphasizing customer service, highlighted by local decision-making, establishing long-term customer relationships, building customer loyalty and providing products and services designed to meet the needs of customers.

EXECUTIVE OVERVIEW

On January 2, 2025, the Company completed its acquisition of Northway Financial, Inc. (“Northway”), the bank holding company of Northway Bank. In mid-March 2025, we successfully completed full information systems and branch integration of the two franchises into Camden National Bank. With the completion of the acquisition, we increased our presence in New Hampshire significantly with the addition of 17 branches and over 100 new employees. As of March 31, 2025, the Company has 73 branches across Maine and New Hampshire and more than 700 employees. Our total assets also increased to $7.0 billion as of March 31, 2025.

The strategic merger of these two long-standing franchises in Northern New England provides significant benefit to our customers through expanded technology, infrastructure, products and services, and lending limits. For our shareholders, the merger provides for an increased presence in higher growth markets, greater access to future merger and acquisition opportunities through an expanded geography, increased scale through cost synergies, and the opportunity for future revenue synergies through product and service offerings.

For the majority of the first quarter of 2025 as we worked to integrate systems and branches, we operated Camden national Bank as two franchises that required separate information systems and technologies, employees, and branding. After the full information systems and branch integration was completed in mid-March, we began to execute on the achievement of cost synergies. Because of this, we anticipate cost synergies will begin to materialize in the second quarter of 2025. As previously disclosed, we anticipate to achieve 35% cost savings of Northway’s legacy franchise, of which we anticipate realizing 75% of those savings during 2025 and 100% thereafter.

Net income and diluted EPS for the three months ended March 31, 2025 was $7.3 million and $0.43, respectively, decreases of 50% and 57%, respectively, compared to the same period in 2024. Our operating results for the first three months of 2025 were materially impacted by the acquisition of Northway as we (1) combined the financial results of the two companies, (2) incurred acquisition-related costs of $7.5 million (pre-tax), (3) revalued the Company’s legacy deferred tax assets to account for our new deferred tax rate as a combined entity that resulted in a one-time tax benefit of $2.4 million to net income, and (4) recorded a one-time provision expense of $6.5 million associated with the accounting for acquired non-PCD loans. Adjusting for certain one-time transactions associated with the acquisition, on a non-GAAP basis, we reported adjusted net income of $16.0 million and adjusted diluted EPS of $0.95, an increase of 28% and 10%, respectively, over the first quarter of 2024. Additional details on the acquisition and our accounting for the acquisition can be found in Note 3 of the consolidated financial statements.

We continue to anticipate additional acquisition-related costs will be incurred over the coming quarters. In total, we have incurred $10.8 million of acquisition-related costs through March 31, 2025, including those incurred by Northway prior to closing of the acquisition and we estimate we will remain at or under the total estimated spend we initially reported of $13.5 million.

The following table outlines key financial metrics for the periods indicated:

RESULTS OF OPERATIONS

Net Interest Income and Net Interest Margin

Net interest income is the interest earned on loans, securities, and other interest-earning assets, adjusted for net loan fees, origination costs, and accretion or amortization of fair value marks on loans, investments, time deposits and/or borrowings created in purchase accounting, less the interest paid on interest-bearing deposits and borrowings. Net interest income is our largest source of revenue ("revenue" is defined as the sum of net interest income and non-interest income). For the quarter ended March 31, 2025, net interest income was 81% of total revenues, compared to 75% for the same period in 2024. Net interest income is affected by factors including, but not limited to, changes in interest rates, loan and deposit pricing strategies and competitive conditions, loan prepayment speeds, the volume and mix of interest-earning assets and interest-bearing liabilities, and the level of non-performing assets.

Net Interest Income (Fully-Taxable Equivalent). Net interest income on a fully-taxable equivalent basis for the quarter ended March 31, 2025 was $49.2 million, an increase of $17.8 million, or 57%, compared to the first quarter of 2024. The increase between periods consisted of an increase in interest income on a fully-taxable equivalent basis of $18.4 million, or 30%, which was partially offset by an by a slight increase of a $627,000, or 2%, in interest expense.

•Average interest-earning assets totaled $6.4 billion for the first quarter of 2025, which was an increase of $1.0 billion, or 19%, compared to the first quarter of 2024. The increase between periods was largely due to the acquisition of Northway on January 2, 2025. Through the acquisition, we acquired (i) total loans, net of purchase accounting adjustments, of $772.6 million, (ii) total investments, net of purchase accounting adjustments of $230.0 million, and (iii) total cash of $48.3 million. Refer to Note 3 of the consolidated financial statements for further details. In the first quarter of 2025, we recognized net fair value mark accretion from our purchase accounting associated with the acquisition of Northway totaling $5.1 million within interest income, which was made up of $4.3 million of fair value mark accretion on loans and $831,000 of fair value mark accretion on investments. Additionally, between periods the Company’s interest-earning asset yield continued to improve organically and contributed to the increased net interest income as we continued to reinvest cash flows from lower yielding interest-earning assets into new loan originations and investments at higher interest rates.

•Average funding liabilities totaled $6.2 billion for the first quarter of 2025, which was an increase of $1.0 billion, or 20%, compared to the first quarter of 2024. The increase between periods was largely due to the acquisition of Northway on January 2, 2025. Through the acquisition, we acquired (i) total deposits, net of purchase accounting adjustments, of $971.7 million and (ii) assumed borrowings, net of purchase accounting adjustments, of $127.6 million. Despite the significant increase in average funding liabilities between periods, interest expense for the first quarter of 2025 increased just $627,000, or 2%, due to the decrease in our average cost of funds of 33 basis points to 1.94% for the first quarter of 2025. The decrease in our average cost of funds between periods reflects the change in the interest rate environment. The Federal Funds Effective Rate for the first quarter of 2025 was 4.33%, which was 100 basis points lower than the same period of 2025. The other driver for the decrease in our average cost of funds between periods was the acquisition of Northway and the strength of its low-cost deposit franchise.

Net Interest Margin (Fully-Taxable Equivalent). Net interest margin is calculated as net interest income on a fully-taxable equivalent basis as a percentage of average interest-earning assets. Our net interest margin on a fully-taxable equivalent basis increased 74 basis points over the first quarter of 2024 to 3.04% for the first quarter of 2025. Refer to the discussion above for the drivers for the change between periods. Adjusting for the impact of purchase accounting, which contributed $5.0 million to net interest income for the first quarter of 2025, the Company reported non-GAAP, core net interest margin of 2.68%, an increase of 38 basis points over the first quarter of 2024.

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:

Quarterly Average Balance, Interest and Yield/Rate Analysis

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

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

(3) This is a non-GAAP measure. Please see "Non-GAAP Financial Measures and Reconciliation to GAAP” for additional information.

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 period's rate), (b) changes in rates (change in rate multiplied prior period'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.

Net interest income on a fully-taxable equivalent basis included the following for the periods indicated:

Provision (Credit) for Credit Losses

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

(1)Provision (credit) for loan losses: The Company recorded provision expense of $8.9 million for the first quarter of 2025, primarily driven by the Northway acquisition. Upon completing the acquisition on January 2, 2025, we designated 88% of the acquired loan portfolio as non-PCD and recorded an ACL on loans totaling $6.3 million for acquired non-PCD loans. As required for non-PCD loans, the establishment of the ACL on loans as of the acquisition date was charged to the provision for credit losses on the consolidated statements of income. Additionally, for the first quarter of 2025, we recorded additional provision expense of $2.6 million to account for the macroeconomic uncertainty and the heightened risk of a recession as of March 31, 2025.

The negative provision expense (i.e., credit for credit losses) of $1.2 million recorded for the first quarter of 2024 was driven by strong asset quality and an improved macroeconomic forecast.

(2)Provision (credit) for credit losses on off-balance sheet credit exposures: At March 31, 2025, the ACL on off-balance sheet credit exposures was $3.4 million, as compared to $2.3 million as of March 31, 2024. The increase was driven by the Northway acquisition on January 2, 2025, and an overall increase in our loss reserve levels given the macroeconomic uncertainty and heightened risk of a recession as of March 31, 2025. Unfunded commitments increased $195.2 million between periods.

(3)(Credit) for HTM debt securities: In the first quarter of 2024, the Company sold its Signature Bank corporate bond that it had previously written off for $1.8 million and recovered proceeds of $910,000.

Non-Interest Income

The following table presents the components of non-interest income for the periods indicated:

(1)Debit card income: The increase between periods of $367,000, or 13%, was driven by the acquisition of Northway on January 2, 2025. Through the acquisition, the Company added approximately 28,000 new debit card customers.

(2)Service charges on deposit accounts: The increase between periods of $291,000, or 14%, was driven by the acquisition of Northway on January 2, 2025. Through the acquisition, the Company added approximately 50,000 customer accounts.

(3)Brokerage and insurance commissions: The increase between periods of $458,000, or 37%, was driven by the increase in assets under management to $999.3 million, an increase of $168.8 million, or 16%.

(4)Mortgage banking income, net: The decrease between periods was driven by the negative change in fair value on loans held for sale and residential mortgage loan pipelines. During the first quarter of 2025, the Company sold $41.8 million, or 55%, of its residential mortgage production for the first quarter of 2025, compared to $41.4 million, or 51%, for the same period of 2025. The Company continues to sell the majority of its residential mortgage production in the secondary market,

Non-Interest Expense

The following table presents the components of non-interest expense for the periods indicated:

(1)The increase between periods across these various expense categories was primarily the result of the acquisition of Northway on January 2, 2025. For the majority of the first quarter of 2025, we operated Camden National Bank as two separate and distinct franchises. In mid-March 2025, we completed the information systems and branch integrations, which allows us to begin to optimize the combined organization and obtain our previously communicated cost synergies, primarily through a reduced number of employees, elimination of redundant information systems, technologies and services, and the anticipated consolidation of certain locations. We anticipate these cost savings to begin to materialize in the second quarter of 2025, and we continue to target the realization of 75% of our estimated annual cost take-out of 35% of Northway’s historical annual costs for calendar year 2025.

(2)Amortization of core deposit intangible assets: The increase between periods was the result of the acquisition of Northway on January 2, 2025. While not final, our provisional estimate for CDI assets created as part of the acquisition of Northway totaled $48.1 million, of which we estimate the useful life of the definite-lived intangible asset to be ten years. Refer to Note 3 and Note 6 of the consolidated financial statements for additional information.

(3)Merger and acquisition costs: In the first quarter of 2025, the Company incurred $7.5 million of one-time, acquisition-related costs associated with the acquisition of Northway that closed on January 2, 2025. Through March 31, 2025, the Company has incurred total acquisition-related costs, including those incurred by Northway prior to the closing on January 2, 2025, of $10.8 million. We continue to be on track to meet our target of $13.5 million in total acquisition-related costs, as we anticipate additional one-time, acquisition-related costs to be incurred over the coming quarters.

The acquisition-related costs incurred during the first quarter of 2025 include:

Income Tax (Benefit) Expense

The Company recorded an income tax benefit of $1.2 million for the first quarter of 2025, compared to income tax expense of $3.1 million for the first quarter of 2024. In conjunction with the Company’s acquisition of Northway on January 2, 2025, we reassessed the Company’s estimated normalized effective tax rate given the change in the apportionment of income across the states in which the Company primarily operates. We currently estimate the Company’s annualized effective tax rate is 20.6%. However, also upon completion of the Northway acquisition, the Company’s estimated deferred tax rate also changed, increasing from 21.5% to 22.8%, which resulted in a one-time revaluation of the Company’s legacy deferred tax assets and the recognition of a one-time tax benefit of $2.4 million in the first quarter of 2025. Refer to Note 3 of the consolidated financial statements for further discussion.

FINANCIAL CONDITION

Cash and Cash Equivalents

Total cash and cash equivalents as of March 31, 2025, were $219.4 million, compared to $214.9 million at December 31, 2024. As part of the Company’s acquisition of Northway, it acquired $48.3 million of cash as of January 2, 2025. Shortly thereafter, the Company prepaid all of the FHLBB borrowings assumed from Northway totaling $45.0 million, which largely offset the cash and cash equivalents obtained through the acquisition. The Company continues to actively manage its cash balances. Refer to Note 3 of the consolidated financial statements for further details on acquired assets and liabilities from Northway.

Included within the Company’s cash and cash equivalents balances at March 31, 2025 and December 31, 2024, was cash held in escrow by the FHLBB as collateral posted by the counterparties for our derivatives in a net asset position at each reporting date totaling $16.6 million and $13.2 million, respectively. We and the counterparty manage these cash accounts daily. Refer to Notes 10 and 11 of the consolidated financial statements for additional detail on the Company’s derivatives and collateral.

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. As of March 31, 2025 and December 31, 2024, our investment portfolio consisted of MBS, CMO, municipal and subordinated corporate debt securities; FHLBB, FRB and other correspondent bank relationship common stock; and mutual funds held in a rabbi trust for the executive and director nonqualified retirement plans.

As of March 31, 2025, the reported value of the Company's total investments portfolio was $1.4 billion, an increase of $244.7 million, or 21%, since December 31, 2024. The change between periods was driven by the following:

•Acquisition of Northway’s investments totaling $230.0 million, net of purchase accounting adjustments, which included (i) investment debt securities of $227.4 million, net of purchase accounting adjustments, all of which we designated as AFS and (ii) FHLBB and other corresponding banking relationship common stock of $2.5 million.

•Sale of $56.4 million of acquired Northway debt securities shortly after acquisition date to restructure the combined investment portfolio. These debt securities were sold at fair value, and, thus, no gain or loss was recognized upon sale.

•Purchase of $75.6 million of debt securities that we designated as AFS, and the purchase of $5.0 million of subordinated corporate debt securities of another regional financial institution that we designated as HTM.

•Pay downs, calls, and maturities of $9.5 million.

•The increase in fair value of the Company’s AFS debt securities of $17.2 million due to the decrease in interest rates between periods.

AFS and HTM Debt Securities. We designate our debt securities as AFS or HTM based on our intent and investment strategy and they are carried at fair value and amortized cost, respectively.

Our AFS debt securities portfolio, which comprised 60% and 52% of our investment portfolio as of March 31, 2025 and December 31, 2024, respectively, was carried at fair value using Level 2 valuation techniques. Refer to Note 17 of the consolidated financial statements for further details on the Company's fair value techniques. Our HTM debt securities are carried at amortized cost and comprised 37% and 45% of our investment portfolio as of March 31, 2025 and December 31, 2024, respectively.

The book value of our debt securities as of March 31, 2025 was $1.4 billion compared to $1.2 billion as of December 31, 2024. Our debt securities portfolio has limited credit risk due to its composition, which includes securities backed by the U.S. government and government-sponsored agencies, and highly rated subordinated corporate and municipal bonds by nationally recognized rating agencies. At March 31, 2025 and December 31, 2025, the book value of U.S. government and government-sponsored agencies represented approximately 92% and 91%, respectively, of our debt securities portfolio.

The following table provides the make-up of the Company's investment portfolio as of March 31, 2025 and December 31, 2024, based on the book value of each security type as a percentage of total book value of the Company's debt securities:

We continually monitor and evaluate our investment portfolio to identify and assess risks within our portfolio, including but not limited to, the impact of the current interest rate environment and the related prepayment risk, and the review of credit ratings. The overall mix of debt securities as of March 31, 2025, compared to December 31, 2024, remains consistent and is believed to be well-positioned to provide a stable source of cash flow. As of March 31, 2025 and December 31, 2024, the duration of our debt investment securities portfolio, adjusting for calls when appropriate and consensus prepayment speeds, was 5.3 years and 5.2 years, respectively.

The fair value and book value of the Company's subordinated corporate bonds and municipal securities as of March 31, 2025 and December 31, 2024 was as follows:

At March 31, 2025 and December 31, 2024, municipal bonds were 4% and 5% of the book value of the total bond portfolio at each date and all municipal bonds carried an investment-grade credit rating.

At March 31, 2025 and December 31, 2024, subordinated corporate bonds were 3% of the book value of the total bond portfolio for both periods. At March 31, 2025 and December 31, 2024, subordinated corporate bonds had a book values of $25.9 million at each period, or 62% and 70%, respectively, of the subordinated corporate bond portfolio and carried an investment-grade credit rating. The remaining $16.2 million and $11.2 million, respectively, of book value, or 38% and 30%, respectively, of the subordinated corporate bond portfolio, were non-rated subordinated corporate bonds of community banks within our markets. As of March 31, 2025, the subordinated corporate bond portfolio was made up of 17 different companies, which included 15 different banks. The banks in the portfolio range from the largest U.S. banks to community banks, with 31% of our exposure as of March 31, 2025, being to global systemically important banks, or "G-SIBs." We continue to monitor and analyze the performance of our subordinated corporate bond portfolio.

We completed a review of our HTM and AFS investment portfolio as of March 31, 2025, and concluded that no ACL was warranted on any of our bonds at this time.

Other Investments. Our other investments on the consolidated statements of condition is primarily made up of FHLBB and FRB common stock. These investments are carried at cost. We are required to maintain a certain level of investment in FHLBB stock based on our level of FHLBB advances, and maintain a certain level of investment in FRB common stock based on the Bank's capital levels. As of March 31, 2025 and December 31, 2024, our investment in FHLBB stock totaled $17.5 million and $17.1 million, respectively, and our investment in FRB stock was $8.7 million and $5.4 million, respectively.

Trading Securities. Our investments in mutual funds are designated as trading securities and carried at fair value. These investments are held within a rabbi trust and will be used for future payments associated with the Company’s Executive and Director Deferred Compensation Plan. These investments are carried at fair value using Level 1 valuation techniques. Refer to Note 17 of the consolidated financial statements for further details on fair value.

Loans

The following table sets forth the composition of our loan portfolio as of the dates indicated:

On January 2, 2025, the Company completed its acquisition of Northway, which included $775.7 million of loans held for investment, net of purchase accounting adjustments. Excluding the acquired loans, loan balances for the first quarter of 2025 decreased $5.8 million, or less than 1%. The following table details the Company’s change in organic loan balances for the first quarter of 2025:

(1) Net of purchase accounting adjustments.

Refer to Note 3 of the consolidated financial statements for further discussion of the Company’s accounting for the acquisition of Northway.

Portfolio Concentrations. Our primary geographical markets are Maine, New Hampshire and Massachusetts, making up 57%, 25%, and 13%, respectively, of the loan portfolio as of March 31, 2025, compared to 68%, 16%, and 10%, respectively, as of December 31, 2024. The increases between periods in our loan exposure to New Hampshire and Massachusetts was driven by the Northway acquisition. As of March 31, 2025, our distribution channels, including branches acquired in the Northway merger, included 55 branches in Maine, 18 branches and one loan production office in in New Hampshire, and an online residential mortgage and small business digital loan platform.

As of March 31, 2025 and December 31, 2024, lessors of residential buildings industry (lessors of buildings used as residences, such as single-family homes, apartments and town houses) and the non-residential building operators' industry (operators of commercial and industrial buildings, retail establishments, theaters, banks and insurance buildings) concentrations were 32% and 31%, respectively, of our total commercial real estate portfolio and both were 13% of total loans. As of March 31, 2025, there were no other industry concentrations within our loan portfolio that exceeded 10% of total loans.

The table below summarizes the significant industries within the Company’s commercial loan portfolio at the dates indicated:

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

(a) Multi-family (5+ units) loans are primarily located in non-urban locations, including 56% in Maine, 33% in New Hampshire, and 9% in Massachusetts as of March 31, 2025, compared to 68%, 23%, and 7%, respectively, as of December 31, 2024.

(b) Office loans are primarily located in non-urban locations, including 43% in Maine, 36% in New Hampshire, and 21% in Massachusetts as of March 31, 2025, compared to 52%, 26%, and 23%, respectively, as of December 31, 2024.

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

(d) Includes multiple property types that individually are less than 5% of the real estate investment portfolio and individually are 1% or less of the total loan portfolio.

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 5 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

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 continually 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 and Special Assets teams and the Credit Risk Policy Committee, which is an internal management committee comprised of the Company’s president and chief executive officer and other various executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Credit Risk 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 ratings system.

•The adequacy of the ACL is overseen by the Management Provision Committee, which is an internal management committee As of January 1, 2025, the Management Provision Committee is comprised of the Company’s chief executive officer, chief financial officer, chief credit officer and certain members of senior management within Accounting, Credit Risk, and Collections and Special Assets. The Management Provision Committee supports the oversight efforts of the Audit Committee of the Board of Directors.

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

Potential Problem Loans. Potential problem loans consist of classified accruing commercial and commercial real estate loans that were 30-89 days past due. Such loans are characterized by weaknesses in the financial condition of borrowers or collateral deficiencies. Based on historical experience, the credit quality of some of these loans may improve due to changes in collateral values or the financial condition of the borrowers, while the credit quality of other loans may deteriorate, resulting in a loss. These loans are not included in the above analysis of non-accrual loans. As of March 31, 2025 and December 31, 2024, loans classified as potential problem loans totaled $83,000 and $96,000, respectively.

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 as of the dates indicated:

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

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

ACL on Loans. As part of the acquisition of Northway, we designated those acquired loans with a more-than-insignificant deterioration in credit quality since origination as PCD. In total, we designated acquired loans with an unpaid principal balance of $103.0 million, or 12% of the acquired loans, as PCD. We established an ACL on these acquired loans of $3.1 million at acquisition date. All remaining acquired loans that were not designated as PCD were designated as non-PCD loans, and we established an ACL of $6.3 million on these loans at acquisition date with a corresponding charge to provision for credit losses on the consolidated statements of income.

During the first quarter of 2025, the Company completed its assessment of significant model inputs and assumptions within its discounted cash flow analysis used for estimating its ACL on loans and determined there were no material changes to the methodology. The significant key assumptions used with the ACL on loans calculation as of March 31, 2025 and December 31, 2024, included: (i) Company-specific macroeconomic factors (i.e., loss drivers), (ii) our forecast period and reversion speed, (iii) prepayment speeds, and (iv) various qualitative factors. In the first quarter the Company updated the company-specific macroeconomic factors, see Note 5 Loans for more detail on the changes.

As of March 31, 2025, the ACL on loans totaled $46.7 million, or 0.96% to total loans, compared to $35.7 million, or 0.87% of total loan as of December 31, 2024. Our ACL on loans estimate as of each date incorporated multiple forecasted economic scenarios and probability weighting of each scenario. Included within our ACL on loans as of March 31, 2025 and December 31, 2024, was consideration for qualitative factors that may not be, or may not be completely, represented within the Company’s accounting model used to determine its ACL on loans. Each quarter, in conjunction with our quarterly close and financial reporting, we evaluate the need for these qualitative factors and make adjustments as appropriate, including consideration of macro- and micro-level changes. The ACL on loans as of March 31, 2025, incorporated a higher probability weighting for the forecasted likelihood of recession over the next 12 to 24 months, as compared to December 31, 2024. This resulted in an increase in our ACL on loans between periods of $2.6 million, or an increase of approximately 5 basis points to ACL on loans. The overall global and national markets continue to be volatile and carry a high degree of uncertainty, and any changes to our forecast or qualitative factors subject our ACL estimate to a higher risk of fluctuation between periods.

ACL on Off-Balance Sheet Credit Exposures. There were no significant changes in our modeling methodology to determine the ACL on off-balance sheet credit exposures during the first quarter of 2025. The model uses the credit loss factors for each segment calculated within the ACL on loans model described above. The ACL on off-balance sheet credit exposures as of March 31, 2025 and December 31, 2024, was $3.4 million and $2.8 million, respectively. The increase between periods reflects the acquisition of Northway on January 2, 2025.

The ACL on off-balance sheet credit exposures was presented within accrued interest and other liabilities on the consolidated statements of condition. Increases (decreases) to the ACL on off-balance sheet credit exposures were presented within (credit) provision for credit losses on the consolidated statements of income.

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.

ACL on HTM Securities. As of March 31, 2025, we have evaluated our HTM debt securities, and we have not identified any credit concerns. As of March 31, 2025 and December 31, 2024, there was no ACL recorded on HTM investments. Refer to"—Investments" and Note 4 of the consolidated financial statements for further discussion.

Goodwill and CDI Assets

On January 2, the Company completed its acquisition of Northway, and, after applying provisional purchase accounting entries, the Company generated $59.1 million of goodwill. At March 31, 2025, goodwill totaled $153.8 million, compared to $94.7 million as of December 31, 2024. We review goodwill for impairment at least annually as of November 30 th, or more frequently as determined by management.

Through the acquisition of Northway, the Company created CDI assets of $48.1 million, or 6% of core deposits acquired. At March 31, 2025, CDI assets totaled $47.0 million compared to $415,000 as of December 31, 2024, and related amortization was $1.5 million and $139,000 for the three months ended March 31, 2025 and March 31, 2024, respectively. We review CDI assets for impairment when a triggering event suggests such is necessary. During the first quarter of 2025, there were no indications of potential material risk of impairment of core deposit intangible assets for any of the aforementioned years.

Refer to Notes 3 and 6 of the consolidated financial statements for additional information.

Investment in BOLI

At March 31, 2025 and December 31, 2024, BOLI was $109.3 million and $104.3 million, respectively. The increase in the first quarter of 2025 was driven by the acquisition of Northway on January 2, 2025. As part of the acquisition, the Company acquired BOLI of $4.4 million. The underlying investments within the acquired BOLI are marketable equity securities that are subject to market fluctuations for which the related BOLI value may increase or decrease with the change in valuation being accounted for within non-interest income.

Refer to Note 3 of the consolidated financial statements for additional information.

Deferred Tax Assets

At March 31, 2025 and December 31, 2024, the Company's deferred tax assets were $55.7 million and $40.0 million, respectively. The increase in deferred tax assets during the first quarter of 2025 was driven by the Northway acquisition. Upon completing the acquisition, the Company’s deferred tax rate increased from 21.5% to 22.8% due to its increased presence and income apportionment to New Hampshire and Massachusetts. As a result of the deferred tax rate increase, we revalued the Company’s legacy deferred tax assets. Furthermore, the Company reported the deferred tax assets acquired from Northway and those created through purchase accounting adjustments at the Company’s increased deferred tax rate of 22.8%. The Company did not carry any valuation allowances on its deferred tax assets at March 31, 2025 or December 31, 2024.

Refer to Note 3 of the consolidated financial statements for additional information.

Liabilities

Deposits. Total deposits increased $964.3 million, or 23%, during the first quarter of 2025 to $5.6 billion at March 31, 2025. The significant increase in deposit balances was driven by the Company’s acquisition of Northway on January 2, 2025. As part of the acquisition, the Company acquired $971.7 million of deposits, net of purchase accounting adjustments. Of the total deposits acquired, $799.1 million, or 82%, were low-cost, core deposits (non-GAAP). Excluding the acquired deposits, deposit balances for the first quarter of 2025 decreased $7.4 million, or less than 1%, which included the expected drawdown from one large customer relationship of $61.8 million.

The following table details the Company’s change in organic deposit balances for the first quarter of 2025:

(1) Net of purchase accounting adjustments.

The Company's loan-to-deposit ratio was 89% at both March 31, 2025 and December 31, 2024.

As of March 31 2025, the Company had no customer relationships that exceeded 10% of total deposits.

Uninsured and Uncollateralized Deposits. Total deposits that exceeded the FDIC deposit insurance limit of $250,000 were $1.2 billion, or 21% of total deposits, as of March 31, 2025, and $1.1 billion, or 23% of total deposits, as of December 31, 2024.

Total uninsured and uncollateralized deposits that exceeded the FDIC deposit insurance limit of $250,000 and were not secured by pledged assets or any other guarantee of the Company totaled $790.0 million, or 14% of total deposits, as of March 31, 2025, and $760.8 million, or 16% of total deposits, as of December 31, 2024.

The balance of CDs that exceeded the FDIC deposit insurance limit of $250,000 was $109.2 million, or 20% of CD balances, as of March 31, 2025, and $167.2 million, or 27% of CD balances, as of December 31, 2024. The total uninsured portion of these CDs was $56.9 million, or 8% and $109.2 million, or 21% as of March 31, 2024 and December 31, 2024, respectively.

Borrowings. As of March 31, 2025, total borrowings were $567.4 million, an increase of $66.8 million, or 13%, since December 31, 2024 and were comprised of:

•Customer repurchase agreements totaling $242.4 million, an increase of $66.8 million, since December 31, 2024. Through the acquisition of Northway the Company acquired $65.5 million of repurchase agreements as of the acquisition date.

•FHLBB advances totaled $325.0 million at March 31, 2025 and December 31, 2024, respectively. The Company assumed $45.0 million of FHLBB advances through the acquisition of Northway on January 2, 2025. Shortly after the acquisition date, we prepaid all of the acquired FHLBB advances as we looked to optimize our balance sheet and earnings profile. The Company carries interest rate swaps on all of its outstanding FHLBB advances to manage its interest rate risk position and as part of our effort to optimize net interest income and net interest margin.

•The Company assumed two new tranches of junior subordinated debentures through the acquisition of Northway. Refer to Note 7 of the consolidated financial statements for additional information regarding the junior subordinated debentures it assumed in the Northway acquisition. As of March 31, 2025, the balance of all junior subordinated debentures totaled $61.3 million, compared to $44.3 million as of December 31, 2024.

Shareholders' Equity

Shareholders' equity as of March 31, 2025, totaled $640.1 million, an increase of $108.8 million, or 20%, since December 31, 2024. The significant increase was driven by the issuance of $96.5 million shares of the Company’s common stock as consideration for the acquisition of Northway on January 2, 2025. Additionally, the decrease in the mid- and long-end of the yield curve between periods resulted in an increase in the fair value of the Company AFS investments and resulted in an increase in AOCI of $14.4 million in the first quarter of 2025.

On March 25, 2025, the Company announced a quarterly cash dividend to shareholders of $0.42 per share, payable on April 30, 2025 to shareholders of record as of April 15, 2025. As of March 31, 2025, the Company's annualized dividend yield was 4.15% based on Camden National's closing share price of $40.47, as reported by NASDAQ on March 31, 2025.

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

Refer to"—Capital Resources" and Note 12 of the consolidated financial statements for further discussion of the Company and Bank's capital resources and regulatory capital requirements.

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. 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.

As of March 31, 2025, our primary liquidity sources available were as follows:

(1) Excess cash represents cash held at the FRB that is above the minimum reserve requirement. As of March 31, 2025, the minimum reserve requirement remains at zero.

Total available primary liquidity of $1.8 billion was 2.3 times uninsured and uncollateralized deposits as of March 31, 2025. Refer to "—Financial Condition—Liabilities—Uninsured and Uncollateralized Deposits" for further details.

In addition to the available primarily liquidity noted above, as of March 31, 2025, we may access an additional $1.2 billion in funding through brokered deposits.

Although we believe that our level of liquidity is sufficient to meet current and future funding requirements, changes in current economic conditions, including consumer saving habits and the availability or access to the brokered deposit and wholesale repurchase markets, could significantly affect our liquidity position.

Deposits. Deposits continue to represent our primary source of funds. As of March 31, 2025 and December 31, 2024, total deposits, including brokered deposits, were $5.6 billion and $4.6 billion, respectively. Core deposits (which excludes CDs and brokered deposits) (non-GAAP) increased $755.2 million, or 19%, during the three months ended March 31, 2025 to $4.7 billion due to the strong core deposit base acquired from Northway. Additionally due to the Northway acquisition, CDs increased $171.4 million, or 32%, during the three months ended March 31, 2025 to $703.9 million, and brokered deposits increased $37.7 million, or 21%, during the three months ended March 31, 2025 to $217.7 million. Brokered deposits consisted of $75.0 million of brokered CDs and $142.7 million of brokered money market accounts. As of March 31, 2025, all brokered CDs were scheduled to mature within 12 months. Refer to“—Financial Condition—Liabilities—Deposits” for further discussion on deposits.

The following is a summary of the scheduled maturities of CDs (not including brokered CDs) as of March 31, 2025:

Borrowings. Borrowings are used to supplement deposits as a source of liquidity. Our primary sources of borrowings are the FHLBB, FRB and other federal funds and customer repurchase agreements. As of March 31, 2025, total borrowings were $567.4 million, compared to $500.6 million as of December 31, 2024. We secure borrowings from the FHLBB with qualified residential real estate loans, certain investment securities and certain other assets available to be pledged. As of March 31, 2025, the Company had $925 million in borrowing capacity from the FHLBB.

Customer repurchase agreements are secured by mortgage-backed securities and government-sponsored enterprises. Through the Bank, as of March 31, 2025, we have available lines of credit of $9.9 million with the FHLBB, $85.0 million with two correspondent banks, and $34.9 million with the FRB Discount Window. We also have access to the brokered deposit market and wholesale reverse repurchase transactions 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 March 31, 2025:

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 unpledged residential mortgage loan portfolio is also a source of contingent liquidity as it could be sold in a reasonable time period, at fair value, on the secondary market. As of March 31, 2025, qualifying residential mortgage loans with a book value of $1.8 billion were pledged as collateral to the FHLBB.

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

(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 include 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 are also able to manage our liquidity position through timely sales of residential mortgage loans to the secondary market.

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. Interest rates have remained elevated during the start of 2025, which has continued to result in slowing cash flows. As of March 31, 2025 and December 31, 2024, the Company's MBS and CMO debt securities portfolio totaled 92% and 91% of book value, respectively, of the Company's investment portfolio.

The Company's unpledged AFS investment portfolio is also a source of contingent liquidity, as it could be sold in a reasonable time period on the secondary market, at fair value, which was $378.1 million as of March 31, 2025.

The following is a summary of the scheduled cash flows from our debt securities portfolio, including investments designated as AFS and HTM, as of March 31, 2025:

(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 three months ended March 31, 2025, the Company reported net income of $7.3 million and paid cash dividends of $7.1 million to shareholders.

In addition, in the course of 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 materially differ from that estimated and disclosed within the table below. As of March 31, 2025, we had the following lease and other contractual obligations to make future payments under each of these contracts as follows:

The Company's estimated lease liability for its various operating and finance leases was reported within other liabilities on our consolidated statements of condition.

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 9 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 10 of the consolidated financial statements for further discussion of our derivatives and hedge instruments.

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 $640.1 million and $531.2 million as of March 31, 2025 and December 31, 2024, respectively, which amounted to 9% of total assets at both dates. Refer to "—Financial Condition—Shareholders' Equity" for further discussion on shareholders' equity for the three months ended March 31, 2025.

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 $7.1 million and $6.1 million for the three months ended March 31, 2025 and 2024, respectively. The increase in our declared cash dividend reflects the issuance of 2.3 million shares as consideration for the Northway acquisition that was completed on January 2, 2025. 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 state corporate law and regulatory requirements.

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 three months ended March 31, 2025 and 2024, the Bank declared dividends payable to the Company in the amount of $0 and $6.0 million, respectively. Under regulations prescribed by the OCC, the Bank may not declare dividends in excess of the Bank’s net income for the current year plus its retained net income for the prior two years without prior approval from the OCC. 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. The Bank did not declare a cash dividend to the Company during the first quarter of 2025 as the Company had sufficient cash levels after completion of the Northway acquisition. We anticipate regular cash dividends from the Bank to the Company to begin again in the second quarter of 2025.

Please refer to Note 12 of the consolidated financial statements for discussion and details of the Company and Bank's regulatory capital requirements. As of March 31, 2025 and December 31, 2024, the Company and Bank exceeded all regulatory capital requirements, and the Bank continues to meet the capital requirements to be classified as "well capitalized" under applicable prompt corrective action provisions.

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; 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.

There have been no material changes to the Company's risk categories and risk management policies as described in Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Please refer to Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2024 for further details regarding the Company's risk management.

Interest rate risk

Interest rate risk represents 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 ALCO policy limits, which specify a maximum tolerance level for net interest income exposure over a one- and two-year horizon, assuming a static balance sheet, given a 200 basis point upward and downward shift in interest rates. A parallel and pro rata shift in rates over a 12-month period is assumed. Using this approach, we are able to produce simulation results that illustrate the effect that both a gradual change of rates and a “rate shock” have on earnings expectations. In the down 200 basis points scenario, 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%.

The sensitivity analysis below 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, deposit decay rates, pricing decisions on loans and deposits 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.

As of March 31, 2025 and 2024, our net interest income sensitivity analysis reflected the following changes to net interest income, as compared to our modeled Year 1 Base net interest income, assuming no balance sheet growth 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.

If rates remain at or near current levels, net interest income is projected to increase in year two of the simulation. Asset cash flows reprice and replace into the current higher rate environment at rates above current portfolio averages and funding costs decline due to maturing CDs renewing into lower current market rates, causing balance sheet spread to expand. If deposit pricing increased from current levels without any changes to market rates or if unfavorable funding mix changes occurred, it would negatively impact net interest income projections.

If rates increase 200 basis points, net interest income is projected to decrease in the first year of the simulation as the funding base adjusts into the higher rate environment to a greater degree than asset yields increase. In the second year, net interest income is projected to increase as loan and investment yields continue to reprice/reset into higher yields and funding cost increases slow.

If rates decrease 200 basis points, net interest income is projected to improve in the first year of the simulation as reductions in funding costs are able to more than offset near-term asset yield deterioration. In the second year, net interest income is projected to further increase as asset yields are supported by fixed rates and floors while cost of funds reductions continue, albeit at a slower pace.

In addition to using our investments portfolio to manage liquidity risk, we also use it to manage our interest rate risk and provide a natural hedge to our interest risk exposure created by loans, deposits and borrowings. Refer to "—Financial Condition—Investments" for further details of the Company's investment portfolio, including the duration of the bond portfolio as of March 31, 2025 and December 31, 2024.

Periodically, if deemed appropriate, we use back-to-back loan swaps, 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. The Board and Management ALCO monitor derivative activities relative to their expectations and our hedging policies. Refer to Note 10 of the consolidated financial statements for further discussion of these derivative instruments.