CAMDEN NATIONAL CORP

CAMDEN NATIONAL CORP Annual Report Summary (Year Ended December 31, 2025)

Camden National Corp delivered a year of strategic growth and solid financial performance, marked by a significant acquisition and continued expansion across its core operations. This summary offers retail investors a clear overview of the Company's financial results, strategic direction, and future outlook for the year ended December 31, 2025.

1. Business Overview

Camden National Corp (the "Company") operates as a community bank, primarily serving customers in Maine and New Hampshire. Its core business involves attracting deposits and originating loans, complemented by wealth management and other financial services.

The Company offers a full spectrum of commercial and retail banking products and services, including:

• Checking and savings accounts
• Money market accounts
• Certificates of deposit
• Commercial and industrial loans
• Commercial real estate loans
• Residential mortgage loans
• Consumer loans

Through its wealth management division, the Company also provides trust and investment management services. The past year saw significant strategic expansion, notably through a key acquisition, alongside continued organic growth in its core banking operations. The Company aims to enhance shareholder value through disciplined growth, efficient operations, and a strong capital position, while maintaining a focus on customer relationships and community engagement.

2. Financial Performance Highlights (Year Ended December 31, 2025)

• Net Income & Profitability: The Company reported Net Income of $55.0 million for the year, demonstrating solid operational performance. This translated to a Return on Average Assets (ROAA) of 0.80% and a Return on Average Equity (ROAE) of 10.2%, showcasing efficient use of assets and equity to generate profits.
• Net Interest Margin (NIM): Net Interest Margin reached 3.50%, indicating the profitability of the Company's lending activities relative to its funding costs.
• Efficiency Ratio: The Efficiency Ratio, which measures the cost to generate revenue, was 62.0%. While competitive, the Company actively pursues operational efficiencies.
• Loan Portfolio Growth: Total loans grew by a robust 6%, or $286 million, reaching $5.078 billion. This growth spanned various loan types, with residential loans increasing 9.5% to $1.411 billion and commercial real estate loans also rising.
• Deposit Growth: Core customer deposits expanded by 2%, adding $100 million to reach $5.0 billion. This growth in stable, low-cost funding supports lending activities.
• Shareholder Equity: Total shareholder equity increased by 3.8%, or $20 million, to $540 million, reinforcing the Company's financial foundation. Retained earnings, the portion of profit reinvested in the business, grew by $10 million to $450 million.
• Fee Income: Non-interest income from services like debit cards, deposit accounts, and fiduciary/trust services remained stable, each contributing approximately $10 million.
• Investment Portfolio Management: The "available-for-sale" securities portfolio decreased by $145 million to $1.472 billion. The Company strategically reduced this portfolio, primarily mortgage-backed securities, to manage interest rate risk and optimize its balance sheet in response to market conditions.

3. Risk Factors

Investors should consider the following risks, which could materially affect the Company's business, financial condition, and results of operations:

• Credit Risk: A deterioration in economic conditions, particularly in the Company's primary operating markets, could lead to higher loan defaults, increased non-performing assets, and higher provisions for credit losses, impacting profitability. The slight increase in "substandard" and "special mention" loans warrants continued attention and active management.
• Interest Rate Risk: As a financial institution, the Company's profitability is highly sensitive to changes in interest rates. Significant or rapid shifts in market interest rates could compress Net Interest Margin, reduce the value of investment securities, or negatively impact loan demand.
• Regulatory and Compliance Risk: The banking industry is highly regulated. Changes in laws, regulations, or regulatory policies, or failure to comply with existing ones, could result in penalties, increased operational costs, restrictions on business activities, or reputational damage.
• Competition: The Company faces intense competition from other banks, credit unions, non-bank financial institutions, and fintech companies for loans, deposits, and other financial services. This competition could pressure loan and deposit pricing, reduce market share, and impact profitability.
• Economic Conditions: Local, regional, and national economic downturns, including periods of inflation, recession, or unemployment, could negatively impact loan demand, asset quality, customer spending, and overall financial performance.
• Operational and Cybersecurity Risk: The Company relies heavily on technology and information systems. System failures, data breaches, cyberattacks, or other operational disruptions could disrupt operations, compromise customer data, harm customer trust, and incur significant costs for remediation and regulatory fines.
• Liquidity Risk: While currently strong, a sudden and significant outflow of deposits or inability to access other funding sources could impair the Company's ability to meet its financial obligations.
• Reputational Risk: Negative publicity or events, whether true or not, could harm the Company's reputation, leading to loss of customers, reduced business, and difficulty attracting and retaining employees.

4. Management Discussion and Analysis Highlights

Management's discussion highlights the Company's strategic execution and performance drivers for the year. The successful acquisition of Northway Financial Inc. on January 2, 2025, proved pivotal, significantly expanding the Company's footprint and asset base by $307 million. This strategic move is expected to enhance market share and diversify revenue streams. Management focuses on the efficient integration of Northway to realize anticipated synergies and optimize operations.

While the overall loan portfolio remains strong, management closely monitors asset quality trends. Management actively manages a slight increase in "Substandard" commercial real estate loans (up $1 million to $17 million) and "Special Mention" commercial real estate loans (up $1 million to $4 million). Total past-due loans also saw a minor rise, from $16 million to $18 million. Specific credits and broader economic factors contributed to these trends, and the Company maintains robust credit underwriting standards and proactive portfolio management to mitigate potential risks. Management also highlighted its strategic decision to reduce the "available-for-sale" securities portfolio to manage interest rate risk and optimize the balance sheet in response to evolving market conditions. The Company continues to focus on disciplined organic growth in both loans and deposits, supported by its strong capital position and commitment to operational efficiency.

5. Financial Health

The Company maintains a robust financial health profile, characterized by strong capital, ample liquidity, and a well-managed balance sheet.

• Strong Capital Position: The Company's capital ratios significantly exceed regulatory "well-capitalized" thresholds, providing a strong buffer against potential losses and supporting future growth initiatives. As of December 31, 2025, the Tier 1 Capital Ratio was 10.5% and the Total Capital Ratio was 13.5%.
• Liquidity: The growing base of core customer deposits, which expanded by 2% to $5.0 billion, provides a stable and diversified funding source. This enhances the Company's liquidity and reduces reliance on more volatile funding channels. The Company also maintains a diversified investment portfolio and access to wholesale funding markets (e.g., Federal Home Loan Bank advances, brokered deposits) to manage its liquidity position effectively. The Company manages specific cash and cash equivalents to meet daily operational needs and maintain regulatory requirements.
• Asset Quality and Collateralization: The loan portfolio is well-secured, with total collateral (predominantly real estate) matching the total loan amount of $5.078 billion, significantly reducing credit risk exposure. The Company maintains an allowance for credit losses that management believes is adequate to cover probable losses inherent in the loan portfolio.

6. Future Outlook

Camden National Corp is well-positioned for continued growth and value creation, leveraging its recent acquisition and strong capital base. Management's strategic priorities for the upcoming year include:

• Integration and Synergies: Successfully integrating Northway Financial Inc. to realize anticipated operational efficiencies and revenue synergies.
• Disciplined Growth: Continuing to pursue disciplined organic loan and deposit growth across its markets, focusing on high-quality relationships and profitable segments.
• Digital Enhancement: Investing in and enhancing digital banking capabilities to improve customer experience, operational efficiency, and competitive positioning.
• Risk Management: Maintaining prudent risk management practices across all areas of the business, with a particular focus on credit quality, interest rate sensitivity, and cybersecurity.
• Shareholder Value: Remaining committed to delivering sustainable value to shareholders through strategic execution, operational excellence, and a balanced approach to capital allocation, including dividends and potential share repurchases.

7. Competitive Position

Camden National Corp operates in a competitive financial services landscape within Maine and New Hampshire. The Company's competitive strengths include:

• Community Banking Model: A strong focus on community banking, fostering deep customer relationships, and providing personalized service that differentiates it from larger, national institutions.
• Market Presence: A well-established branch network and market share in key regions of Maine and expanding into New Hampshire through strategic acquisitions, providing convenient access for customers.
• Comprehensive Product Offerings: A full suite of commercial and retail banking products, coupled with robust wealth management services, allows the Company to serve diverse customer needs.
• Local Decision-Making: The ability to make local lending and operational decisions, which can lead to faster response times and more tailored solutions for businesses and individuals in its markets.
• Digital Capabilities: Ongoing investments in digital banking platforms to meet evolving customer expectations for convenience and accessibility, while maintaining its high-touch service model.
• Strong Capital and Asset Quality: A robust capital base and sound asset quality provide a foundation for stability and growth, enhancing trust among customers and investors.

The Company competes with national, regional, and local banks, credit unions, and non-bank financial service providers. Its ability to maintain and enhance its competitive position relies on its commitment to customer service, strategic growth, and efficient operations.