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, expectations, 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 and related litigation;

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

•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 and artificial intelligence, that require increased capital spending and introduce additional risk;

•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;

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

•the effects of civil unrest, international hostilities, including the continuation of conflict in the Middle East;

•the effects of epidemics and pandemics;

•turmoil and volatility in the financial services industry;

•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; and

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

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, 2025, 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 and adjusted 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 margin 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.

(1) Calculated using an estimated combined marginal income tax rate of 23%.

(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 acquisition.

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 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.

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

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 (a) amortization of CDI assets and the tax impact of the adjustment and (b) goodwill impairment, as necessary, to (ii) average shareholders' equity, adjusted for average goodwill and CDI 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 is the ratio of (i) adjusted net income (as defined in the table above) adjusted for (a) amortization of CDI assets and the tax impact of the adjustment and (b) goodwill impairment, as necessary, to (ii) average shareholders' equity, adjusted for average goodwill and CDI assets.

(1) Calculated using an estimated combined marginal income tax rate of 23%.

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) Recognized $3.3 million and $6.9 million of net accretion income on loans from purchase accounting for the three and six months ended June 30, 2026, respectively, and $4.3 million and $8.6 million for the three and six months ended June 30, 2025, respectively.

(2) Recognized $818,000 and $1.6 million of net accretion income on investments from purchase accounting for the three and six months ended June 30, 2026, respectively, and $863,000 and $1.7 million for the three and six months ended June 30, 2025, respectively.

(3) Recognized $75,000 and $150,000 of amortization expense on borrowings from purchase accounting for the three and six months ended June 30, 2026, respectively and $131,000 and $262,000 of amortization expense on time deposits and borrowings from purchase accounting for the three and six months ended June 30, 2025, respectively.

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 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 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.

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, (ii) fair value of loans acquired in business combinations, and (iii) goodwill.

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, 2025. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, 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 June 30, 2026, 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 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

The Company delivered record quarterly earnings for the second quarter of 2026, generating net income of $23.0 million and diluted EPS of $1.35. Compared to the second quarter of 2025, net income grew 63%, and on a non-GAAP basis, adjusted net income grew 52%. Net income growth between periods was driven by an increase in total revenue of 8% and continued strong expense management. Net interest margin expanded 20 basis points between periods to 3.26% for the second quarter of 2026 and drove net interest income growth of 8%, and non-interest income grew 11% between periods driven by broad performance across all business lines. Contributing to net income growth between periods was a decrease in provision for credit losses of $6.2 million, driven by lower net charge-offs in the second quarter of 2026, compared to the second quarter of 2025.

For the six months ended June 30, 2026, the Company reported net income of $44.9 million and diluted EPS of $2.64, compared to $21.4 million and $1.26, respectively, for the same period a year ago. On a non-GAAP basis, adjusted net income and adjusted diluted EPS each grew 45% between periods.

The Company's financial condition remained strong at June 30, 2026. Total loans increased approximately 1% from December 31, 2025, reflecting growth across multiple product categories, including an 11% increase in home equity balances. On the funding side, the continued success of the Company's high-yield savings offering contributed to an 11% increase in savings balances during the first six months of 2026. In addition, reductions in higher-cost brokered deposits, certificates of deposit and wholesale borrowings contributed to improved funding costs and net interest margin expansion. The Company believes its strong liquidity position and stable funding base position it well to support future loan growth and customer needs.

Asset quality remained strong during the second quarter of 2026, supported by annualized net charge-offs of only 0.04% of average loans, reflecting the continued strength of the Company's loan portfolio. Loans 30 to 89 days past due represented 0.15% of total loans and non-performing loans totaled 0.24% of total loans at June 30, 2026. The allowance for credit losses remained solid at 0.91% of total loans, and the Company believes the allowance provides appropriate coverage for credit risks inherent in the portfolio.

The Company's capital position remained well above regulatory requirements at June 30, 2026, supporting strategic growth initiatives and shareholder returns. Management remains focused on disciplined capital deployment while maintaining financial flexibility to support long-term growth and shareholder value creation.

RESULTS OF OPERATIONS

Net Interest Income and Net Interest Margin

Net interest income represents the interest earned on loans, securities, and other interest‑earning assets, adjusted for net loan fees, origination costs, and the accretion or amortization of fair value marks on loans, investments, time deposits and/or borrowings recorded in purchase accounting, less interest paid on interest‑bearing deposits and borrowings. Net interest income is the Company’s largest source of revenue, with revenue defined as the sum of net interest income and non‑interest income.

For the quarter ended June 30, 2026, net interest income totaled $52.9 million, representing approximately 79% of total revenues, compared to $49.2 million, or 79% of total revenues, for the same period in 2025. 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) for the Three Months Ended June 30, 2026 and 2025. On a fully-taxable equivalent basis, net interest income for the three months ended June 30, 2026 was $53.2 million, an increase of $3.6 million, or 7%, compared to the same period in 2025. The increase between periods was driven primarily by a decrease in interest expense of $4.1 million, or 13%, partially offset by a decrease in interest income, on a fully-taxable equivalent basis, of $415,000, or 1%.

Average funding liabilities totaled $6.1 billion for the second quarter of 2026, a decrease of $16.3 million, or less than 1%, compared to the second quarter of 2025. Interest expense for the second quarter of 2026 decreased $4.1 million, primarily due to a reduction in the average cost of funds of 26 basis points to 1.70%. The decrease in the average cost of funds reflects changes in the interest rate environment, as well as a reduction in average higher‑cost brokered deposits of $93.6 million between periods. The Federal Funds Effective Rate for the second quarter of 2026 was 3.63%, which was 70 basis points lower than the same period of 2025.

Average interest‑earning assets totaled $6.5 billion for the second quarter of 2026, an increase of $51.3 million, or 1%, compared to the second quarter of 2025. The decrease in interest income between periods of $415,000 was primarily attributable to a reduction in the recognition of net fair value mark accretion from purchase accounting, which declined by $956,000 between periods to $4.0 million in the second quarter of 2026. Fair value mark accretion recognized during the quarter consisted of $3.3 million related to loans and $818,000 related to investments, decreases of $967,000 and $45,000, respectively, between periods.

Net Interest Margin (Fully-Taxable Equivalent) for the Three Months Ended June 30, 2026 and 2025. Net interest margin, on a fully-taxable equivalent basis, for the three months ended June 30, 2026 was 3.26%, an increase of 20 basis points over the three months ended June 30, 2025. Refer to the discussion above for a description of the factors contributing to the change between periods. Adjusting for the impact of net fair value mark accretion income from purchase accounting, which contributed $4.0 million and $4.9 million to net interest income on a fully-taxable equivalent basis for the second quarter of 2026 and 2025, respectively, the Company reported non-GAAP, core net interest margin of 2.97% for the three months ended June 30, 2026, an increase of 27 basis points over the same period of 2025.

Net Interest Income (Fully-Taxable Equivalent) for the Six Months Ended June 30, 2026 and 2025. For the six months ended June 30, 2026, the Company's net interest income on a fully-taxable equivalent basis was $105.8 million, an increase of $7.0 million, or 7%, compared to the same period in 2025.

Average funding liabilities totaled $6.1 billion for the first six months of 2026, a decrease of $25.6 million, or less than 1%, compared to the same period in 2025. For the first six months of 2026, interest expense totaled $52.1 million, a decrease of 13% between periods, primarily attributable to a reduction in the average cost of funds of 24 basis points to 1.71%. The decrease in our average cost of funds was driven by changes in the interest rate environment, as well as an improvement in our overall funding mix between periods, as average total deposits increased to $5.4 billion, or 2%, and average borrowings (including brokered deposits) decreased to $737.7 million, or 15%.

Average interest‑earning assets totaled $6.5 billion for the first six months of 2026, an increase of $41.2 million, or 1%, compared to the same period in 2025. For the first six months of 2026, interest income on a fully-taxable equivalent basis totaled $157.8 million, a decrease of less than 1% between periods primarily attributable to a reduction in the recognition of net fair value mark accretion income from purchase accounting, which totaled $8.4 million for the six months ended June 30, 2026, a decrease of $1.6 million compared to the same period of 2025.

Net Interest Margin (Fully-Taxable Equivalent) for the Six Months Ended June 30, 2026 and 2025. Our net interest margin on a fully-taxable equivalent basis increased 20 basis points to 3.25% for the six months ended June 30, 2026, compared to the same period in 2025. Refer to the discussion above for the drivers of the change between periods. Adjusting for the impact of purchase accounting, which contributed $8.4 million to net interest income on a fully-taxable equivalent basis for the first half of 2026, the Company reported non-GAAP, core net interest margin of 2.94%, an increase of 25 basis points compared to the first half of 2025.

The following tables present, 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:

(1) Reported on tax-equivalent basis calculated using the federal corporate income tax rate of 21%, 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.

(1) Reported on tax-equivalent basis calculated using the federal corporate income tax rate of 21%, 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 for Credit Losses

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

(1)Provision for loan losses: The Company recorded provision expense of $468,000 for the second quarter of 2026, primarily attributable to loan growth during the quarter and the maintenance of reserves to reflect the uncertain economic outlook. Credit quality remained strong during the second quarter of 2026, as further discussed in “—Financial Condition—Asset Quality”. The decrease in provision expense from the prior-year quarter was primarily due to the absence of the $6.0 million reserve the Company established in the second quarter of 2025 related to its participation in a syndicated loan to a borrower that filed bankruptcy during the same period.

For the six months ended June 30, 2026, the decrease in provision for loan losses of $14.2 million compared to the same period in 2025 was primarily the result of: (i) the Northway acquisition on January 2, 2025, for which we recorded provision for credit losses of $6.3 million and established a corresponding ACL on loans, and (ii) the additional reserve required for the aforementioned commercial borrower that entered bankruptcy during the second quarter of 2025.

Non-Interest Income

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

(1)Income from fiduciary services: The increase for the three and six months ended June 30, 2026, compared to the same periods in 2025, was driven by an increase in assets under management of $119.8 million, or 10%, to $1.4 billion at June 30, 2026.

(2)Brokerage and insurance commissions: The increase for the three and six months ended June 30, 2026, compared to the same periods in 2025, was driven by an increase in assets under administration of $182.2 million, or 17%, to $1.2 billion as of June 30, 2026.

(3)Bank-owned life insurance (“BOLI”): The increase for the three and six months ended June 30, 2026, compared to the same periods in 2025, was primarily driven by favorable performance of the underlying equity investments and death benefit proceeds received from two BOLI policies during 2026, including one benefit recognized in each quarter. The death benefits recognized within BOLI income for the three months and six months ended June 30, 2026 was $34,000 and $209,000, respectively. The Company did not recognize any death benefits during these same periods in 2025.

(4)Mortgage banking income, net: The increase for the three and six months ended June 30, 2026 compared to the same periods in 2025, was driven by higher gains on the sale of residential mortgage loans. During the three and six months ended June 30, 2026, the Company sold $68.7 million and $129.0 million, or 47% and 48%, respectively, of its residential mortgage production, compared to $48.4 million and $90.3 million, or 39% and 45%, respectively, for the same periods in 2025.

(5)Other income: The increase for the three and six months ended June 30, 2026, compared to the same periods in 2025, was primarily attributable to increased commercial back-to-back loan swap derivative activity. For the three and six months ended June 30, 2026, the Company recognized derivative income on its commercial back-to-back loan swap program of $303,000 and $366,000, respectively, compared to $61,000 and $70,000 for the same periods of 2025, respectively.

Non-Interest Expense

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

(1)Furniture, equipment and data processing: The increase for the three and six months ended June 30, 2026, compared to the same periods in 2025, was driven by our continued investment in customer‑facing digital technology platforms during 2026.

(2)Consulting and professional fees: The decrease for the six months ended June 30, 2026, compared to the same period in 2025, was driven by the discontinuance of a number of legacy Northway consulting arrangements that were no longer necessary following the acquisition of Northway on January 2, 2025, and the completion of integration activities in mid-March 2025, as we realized our expected merger synergies.

(3)Merger and acquisition costs: The merger and acquisition costs incurred for the three and six months ended June 30, 2025, were related to the Northway acquisition, which closed on January 2, 2025 . The Company did not incur similar costs during the same periods in 2026.

(4)Other expenses: The increases for the three and six month periods ended June 30, 2026, compared to the same periods in 2025, were primarily driven by higher marketing expenses of $283,000 and $376,000, respectively, and increased customer‑related costs, including fraud-related losses, of $83,000 and $145,000, respectively.

Income Tax Expense

Income tax expense increased to $6.3 million and $12.5 million for the three and six months ended June 30, 2026, respectively, from $3.7 million and $2.5 million for the same periods in 2025. The increase for the three months ended June 30, 2026, was primarily due to higher pre-tax income. The increase for the six months ended June 30, 2026 was also driven by higher pre-tax income, reflecting the absence of $8.9 million of merger and acquisition expenses recognized in the first half of 2025, as well as a $2.6 million deferred tax asset remeasurement benefit recognized during the same period, in connection with the Northway acquisition.

The Company’s estimated effective tax rate for 2026, excluding discrete items, is 22.1%, compared to the reported effective tax rate of 17.2% for 2025. The increase in the Company’s estimated effective tax rate is primarily attributable to the deferred tax asset remeasurement benefit recognized in connection with the Northway acquisition during the first quarter of 2025, as well as lower forecasted tax-exempt income from municipal securities, lower income tax credits and lower BOLI income as a percentage of pre-tax income.

FINANCIAL CONDITION

Cash and Cash Equivalents

Total cash and cash equivalents as of June 30, 2026, were $99.9 million, compared to $97.5 million at December 31, 2025. The Company continues to actively manage its cash balances.

Included within the Company’s cash and cash equivalents’ balances at June 30, 2026 and December 31, 2025, was cash held in escrow by the FHLBB as collateral posted by the counterparties for our derivatives in a net asset position totaling $13.5 million and $7.2 million, respectively. We and the counterparty manage these cash accounts daily. Refer to Notes 8 and 9 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 June 30, 2026 and December 31, 2025, 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 June 30, 2026, the reported value of the Company's total investment portfolio was $1.4 billion, a decrease of $64.1 million, or 4%, from December 31, 2025. The net change between periods was primarily driven by the following:

•Decrease due to paydowns, calls, and maturities of $88.9 million

•Increase from purchases of available-for-sale debt securities of $27.4 million

•Increase from amortization and accretion of $3.9 million

•Decrease in FHLBB stock and other investments of $3.1 million

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 64% of our investment portfolio as of both June 30, 2026 and December 31, 2025, was carried at fair value on our consolidated statements of financial condition using Level 2 valuation techniques. Refer to Note 14 of the consolidated financial statements for further details on the Company's fair value techniques.

Our HTM debt securities are carried at amortized cost on our consolidated statements of financial condition and comprised 33% and 34% of our investment portfolio as of June 30, 2026 and December 31, 2025, respectively.

The book value of our debt securities was $1.4 billion as of both June 30, 2026 and December 31, 2025. 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 June 30, 2026 and December 31, 2025, the book value of U.S. government and government‑sponsored agencies represented 93% of our debt securities portfolio.

The following table details the composition of the Company's investment portfolio, based on the carrying value of each security type as a percentage of total carrying value of the Company's debt securities, as of the dates indicated:

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 June 30, 2026, compared to December 31, 2025, remains consistent and is believed to be well-positioned to provide a stable source of cash flow. As of June 30, 2026 and December 31, 2025, the duration of our debt investment securities portfolio, adjusting for calls when appropriate and consensus prepayment speeds, was 4.8 years and 4.9 years, respectively, and the weighted average life was 6.4 years and 6.7 years, respectively.

The following table presents the fair value and book value of the Company's subordinated corporate bonds and municipal securities, as of the dates indicated:

At June 30, 2026 and December 31, 2025, municipal bonds represented 4% of the book value of the total bond portfolio, and all of our municipal bonds carried an investment‑grade credit rating.

At June 30, 2026 and December 31, 2025, subordinated corporate bonds represented 3% of the book value of the total bond portfolio, of which $23.0 million, or 65%, carried an investment‑grade credit rating, and $12.2 million, or 35%, consisted of non‑rated subordinated corporate bonds of community banks within our markets. As of June 30, 2026, the subordinated corporate bond portfolio was made up of 14 different companies, which included 12 different banks. The banks in the portfolio range from the largest U.S. banks to community banks, with 37% of our exposure as of June 30, 2026, 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 June 30, 2026, 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 June 30, 2026 and December 31, 2025, our investment in FHLBB common stock totaled $14.7 million and $17.7 million, respectively, while our investment in FRB common stock totaled $8.7 million at both dates.

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 14 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:

Portfolio Concentrations. Our primary geographical markets are Maine, New Hampshire and Massachusetts, making up 57%, 24%, and 13%, respectively, of the loan portfolio as of June 30, 2026, compared to 57%, 25% and 16%, respectively, as of December 31, 2025. As of June 30, 2026, our distribution channels included 56 branches in Maine and 16 branches in New Hampshire, and an online residential mortgage and small business digital loan platform.

As of June 30, 2026, the (i) non-residential building operators’ industry (operators of commercial and industrial buildings, retail establishments, theaters, banks and insurance buildings) and (ii) lessors of residential buildings industry (lessors of buildings used as residences, such as single-family homes, apartments and town houses) concentrations were 28% and 27%, respectively, of our total commercial real estate portfolio and were both 12% of total loans. As of June 30, 2026, 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 52% in Maine, 31% in New Hampshire, and 15% in Massachusetts as of June 30, 2026, compared to 50%, 37%, and 11%, respectively, as of December 31, 2025.

(b) Office loans are primarily located in non-urban locations, including 48% in Maine, 37% in New Hampshire, and 15% in Massachusetts as of June 30, 2026, compared to 46%, 39%, and 15%, respectively, as of December 31, 2025.

(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 4 of the consolidated financial statements provides information on related party lending transactions. We have not entered into significant related party transactions.

Asset Quality

Asset quality is of the utmost 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 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, along with the Credit Risk team, oversees 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.

•The adequacy of the ACL is overseen by the Management Provision Committee, which is an internal management committee. 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 June 30, 2026 and December 31, 2025, loans classified as potential problem loans totaled $776,000 and $4.6 million, 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. There were no significant changes in our modeling methodology to determine the ACL on loans during the three or six months ended June 30, 2026. The significant key assumptions used with the ACL on loans calculation as of June 30, 2026 and December 31, 2025, included: (i) Company-specific key loss drivers (i.e., macroeconomic factors), (ii) our forecast period and reversion speed, (iii) prepayment speeds, and (iv) various qualitative factors.

As of June 30, 2026 and December 31, 2025, the recorded ACL on loans was $45.6 million, or 0.91% to total loans, and $45.3 million, or 0.91% of total loans, respectively, and represented our best estimate. Our ACL on loans estimate as of each date incorporated the ongoing risk of a recession over the next 12 to 24 months using multiple scenarios and probability weighting each scenario. The ACL on loans as of June 30, 2026 and December 31, 2025, incorporated a similar weighting for the probability of a recession over the next 12 to 24 months based on our forecasted macroeconomic outlook as of each date. Refer to “—Provision for Credit Losses” and Note 4 of the consolidated financial statements for other factors impacting the change in ACL on loans during the six months ended June 30, 2026.

We may adjust our assumptions to account for differences between expected and actual losses from period to period. A future change of our assumptions likely will alter the level of allowance required and may have a material impact on future results of operations and financial condition. The ACL on loans is reviewed periodically within a calendar quarter to assess trends in CECL (“Current Expected Credit Losses”) key assumptions and asset quality, and their effects on the Company's financial condition.

ACL on Off-Balance Sheet Credit Exposures. The ACL on off-balance sheet credit exposures as of June 30, 2026 and December 31, 2025, was $3.1 million for both periods. During the six months ended June 30, 2026, there were no significant changes in our model methodology to determine the ACL on off-balance sheet credit exposures 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 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 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 June 30, 2026 and December 31, 2025, we evaluated our HTM debt securities for any credit concerns and none were identified. As of June 30, 2026 and December 31, 2025, we did not carry an ACL recorded on the Company’s HTM investments. Refer to “—Investments” and Note 3 of the consolidated financial statements for further discussion.

Liabilities

Deposits. Deposits totaled $5.6 billion and $5.5 billion at June 30, 2026 and December 31, 2025, respectively. The 1% increase during the first half of 2026 was driven by an increase in core deposits of $103.1 million, or 2%, to $4.8 billion at June 30, 2026. Savings and interest checking deposit balances grew 12% and 3%, respectively, during the first half of 2026, offsetting the decrease in non-interest checking, money market, CDs, and brokered deposits of 3%, 5%, 7% and 30%, respectively, during the same period.

The Company's loan-to-deposit ratio was 90% at June 30, 2026 and December 31, 2025.

As of June 30, 2026, 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 $1.3 billion, or 24% of total deposits, as of June 30, 2026, and $1.3 billion, or 23% of total deposits, as of December 31, 2025.

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 $885.3 million, or 16% of total deposits, as of June 30, 2026, and $828.3 million, or 15% of total deposits, as of December 31, 2025.

Borrowings. As of June 30, 2026, total borrowings were $571.1 million, a decrease of $73.2 million, or 11%, since December 31, 2025. The decrease in borrowings during the first half of 2026 was driven by a $64.8 million, or 20%, decrease in FHLBB advances as the Company was able to replace its funding with lower cost core deposit growth.

Shareholders' Equity

Shareholders' equity as of June 30, 2026, totaled $725.9 million, an increase of $29.4 million, or 4%, since December 31, 2025.

On June 30, 2026, the Company announced a quarterly cash dividend to shareholders of $0.42 per share totaling $7.1 million, payable on July 31, 2026 to shareholders of record as of July 15, 2026. As of June 30, 2026, the Company's annualized dividend yield was 3.10% based on Camden National's closing share price of $54.22, as reported by NASDAQ on June 30, 2026.

In January 2026, the Company’s Board of Directors authorized the repurchase of up to 850,000 shares of the Company’s common stock, representing approximately 5% of the Company’s issued and outstanding shares of common stock as of December 31, 2025. During the six months ended June 30, 2026, the Company repurchased 85,131 shares of its common stock at a weighted average price of $46.55 per share totaling $4.0 million.

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

Refer to “—Capital Resources” and Note 10 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 June 30, 2026, 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 June 30, 2026, the minimum reserve requirement remains at zero.

Total available primary liquidity of $1.6 billion was 1.8 times uninsured and uncollateralized deposits as of June 30, 2026. Refer to "—Financial Condition—Liabilities—Uninsured and Uncollateralized Deposits" for further details.

In addition to the available primary liquidity noted above, as of June 30, 2026, we may access an additional $1.3 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 June 30, 2026 and December 31, 2025, total deposits, including brokered deposits, were $5.6 billion and $5.5 billion, respectively. Refer to“—Financial Condition—Liabilities—Deposits” for further discussion on deposits.

The following is a summary of the scheduled maturities of CDs as of June 30, 2026:

Borrowings. Borrowings are used to supplement deposits as a source of liquidity. Our primary sources of borrowings are the FHLBB, FRB, other federal funds and customer repurchase agreements. As of June 30, 2026, total borrowings were $571.1 million, compared to $644.3 million as of December 31, 2025. 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 June 30, 2026, the Company had $886.3 million in borrowing capacity from the FHLBB.

Customer repurchase agreements are secured by MBS and government-sponsored enterprises investment securities. Through the Bank, as of June 30, 2026, we have available lines of credit of $9.9 million with the FHLBB, $85.0 million with two correspondent banks, and $140.2 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 June 30, 2026:

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 June 30, 2026, qualifying residential mortgage loans with a book value of $1.9 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 2026, which has continued to result in slowing cash flows. As of June 30, 2026 and December 31, 2025, the Company’s MBS and CMO debt securities portfolio totaled 93% and 92%, respectively, of its total 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 $201.3 million as of June 30, 2026.

The following is a summary of the scheduled cash flows from our debt securities portfolio, including investments designated as AFS and HTM, as of June 30, 2026:

(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 six months ended June 30, 2026, the Company reported net income of $44.9 million and paid cash dividends of $14.2 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 June 30, 2026, 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 7 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 8 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 $725.9 million as of June 30, 2026 and $696.6 million as of December 31, 2025, which amounted to 10% of total assets. Refer to "—Financial Condition—Shareholders' Equity" for further discussion on shareholders’ equity for the six months ended June 30, 2026.

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 $14.3 million and $14.2 million for the six months ended June 30, 2026 and 2025, 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 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 six months ended June 30, 2026 and 2025, the Bank declared dividends payable to the Company in the amount of $22.5 million and $3.8 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.

Please refer to Note 10 of the consolidated financial statements for discussion and details of the Company and Bank’s regulatory capital requirements. As of June 30, 2026 and December 31, 2025, 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, 2025. Please refer to Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 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 June 30, 2026 and 2025, 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 rate environment at rates above current portfolio averages and funding costs increase to a lesser extent, 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 June 30, 2026 and December 31, 2025.

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 8 of the consolidated financial statements for further discussion of these derivative instruments.