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What changed in CAMDEN NATIONAL CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CAMDEN NATIONAL CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+507 added−495 removedSource: 10-K (2024-03-08) vs 10-K (2023-03-10)

Top changes in CAMDEN NATIONAL CORP's 2023 10-K

507 paragraphs added · 495 removed · 342 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

61 edited+18 added−35 removed121 unchanged
Biggest changeConsumer Protection Regulation The Company and the Bank are subject to federal and state laws designed to protect consumers and prohibit unfair or deceptive business practices, including the Equal Credit Opportunity Act, the Fair Housing Act, the Home Ownership Protection Act, the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act of 2003 (“FACT Act”), the Gramm-Leach-Bliley Act of 1999 (“GLBA”), the Truth in Lending Act, the CRA, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act and various state law counterparts.
Biggest changeAnti-Tying Restrictions Generally, a bank is prohibited from extending credit, leasing or selling property, furnishing any service or fixing or varying the consideration for any of the foregoing on the condition that (i) the customer obtains additional credit, property or services from the bank’s parent holding company or any subsidiary of the holding company, or (ii) the customer will not obtain credit, property or services from a competitor of the bank or its affiliates (except to the extent the restriction is a reasonable condition imposed to assure the soundness of the credit extended). 12 Consumer Protection Regulation The Company and the Bank are subject to federal and state laws designed to protect consumers and prohibit unfair or deceptive business practices, including the Equal Credit Opportunity Act, the Fair Housing Act, the Home Ownership Protection Act, the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act of 2003 (“FACT Act”), the Gramm-Leach-Bliley Act of 1999 (“GLBA”), the Truth in Lending Act, the CRA, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act and various state law counterparts.
An insured depository institution is considered “well capitalized” if it (i) has a total risk-based capital ratio of 10.0% or greater; (ii) has a Tier 1 risk-based capital ratio of 8.0% or greater; (iii) has a CET1 ratio of at least 6.5% or greater; (iv) has a leverage capital ratio of 5.0% 10 or greater; and (v) is not subject to any written agreement, order, capital directive, or prompt corrective action directive to meet and maintain a specific capital level for any capital measure.
An insured depository institution is considered “well capitalized” if it (i) has a total risk-based capital ratio of 10.0% or greater; (ii) has a Tier 1 risk-based capital ratio of 8.0% or greater; (iii) has a CET1 ratio of at least 6.5% or greater; (iv) has a leverage capital ratio of 5.0% or greater; and (v) is not subject to any written agreement, order, capital directive, or prompt corrective action directive to meet and maintain a specific capital level for any capital measure.
Banking institutions with a ratio of CET1 capital to RWA above the minimum requirement but below the capital conservation buffer face restrictions on the ability to pay dividends, pay discretionary bonuses, and to 9 engage in share repurchases based on the amount of the shortfall and the institution’s “eligible retained income” (the greater of (i) net income for the preceding four quarters, net of distributions and associated tax effects not reflected in net income and (ii) average net income over the preceding four quarters).
Banking institutions with a ratio of CET1 capital to RWA above the minimum requirement but below the capital conservation buffer face restrictions on the ability to pay dividends, pay discretionary bonuses, and to engage in share repurchases based on the amount of the shortfall and the institution’s “eligible retained income” (the greater of (i) net income for the preceding four quarters, net of distributions and associated tax effects not reflected in net income and (ii) average net income over the preceding four quarters).
We are guided and inspired by our Core Values : • Honesty and integrity – above all else • Trust – built on fairness • Service – second to none • Responsibility – to use our resources for the greater good • Excellence – through hard work and lifelong learning • Diversity – realized through inclusion and respect Our culture and values are strengths that support our strategic goal to generate consistent, sustainable long-term value for all our constituents.
We are guided and inspired by our Core Values : • Honesty and integrity – above all else • Trust – built on fairness • Service – second to none • Responsibility – to use our resources for the greater good • Excellence – through hard work and lifelong learning • Diversity – realized through inclusion and respect Our culture and values are strengths that support our strategic goal to generate consistent, sustainable long-term value for all of our constituents.
See “—Prompt Corrective Action” above. If an institution fails to comply with such an order, the agency may seek to enforce such order in judicial proceedings and to impose civil money penalties. Dividend and Share Repurchase Restrictions The Company is a legal entity separate and distinct from its subsidiaries.
See “—Prompt Corrective Action” above. If an institution 11 fails to comply with such an order, the agency may seek to enforce such order in judicial proceedings and to impose civil money penalties. Dividend and Share Repurchase Restrictions The Company is a legal entity separate and distinct from its subsidiaries.
However, a bank holding company may engage in and may own shares of companies engaged in activities that the FRB has determined, by order or regulation, to be so closely related to banking as to be a proper incident thereto. 7 Limitations on Acquisitions of Company Common Stock.
However, a bank holding company may engage in and may own shares of companies engaged in activities that the FRB has determined, by order or regulation, to be so closely related to banking as to be a proper incident thereto. Limitations on Acquisitions of Company Common Stock.
Also, the terms of such extensions of credit may not involve more than the normal risk of repayment or present other unfavorable features and may not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are 8 based, in part, on the amount of the bank’s capital.
Also, the terms of such extensions of credit may not involve more than the normal risk of repayment or present other unfavorable features and may not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the bank’s capital.
In general, the Bank 12 must provide its customers with an initial and annual disclosure that explains its policies and procedures regarding the disclosure of such nonpublic personal information, and, except as otherwise required or permitted by law, the Bank is prohibited from disclosing such information except as provided in such policies and procedures.
In general, the Bank must provide its customers with an initial and annual disclosure that explains its policies and procedures regarding the disclosure of such nonpublic personal information, and, except as otherwise required or permitted by law, the Bank is prohibited from disclosing such information except as provided in such policies and procedures.
Through our commitment to fostering a fair, safe, and welcoming workplace environment 4 for all, we aim to maintain a culture that enables our employees to be their best in serving our customers and communities, while achieving business success.
Through our commitment to fostering a fair, safe, and welcoming workplace environment for all, we aim to maintain a culture that enables our employees to be their best in serving our customers and communities, while achieving business success.
The Company cannot guarantee, however, that it or the Bank will continue to meet the conditions to be eligible to apply the Community Bank Leverage Ratio, nor can the Company predict at this time whether it or the Bank will choose to apply the Community Bank Leverage Ratio in the future.
The Company cannot guarantee, however, that it or the Bank will continue to meet 10 the conditions to be eligible to apply the Community Bank Leverage Ratio, nor can the Company predict at this time whether it or the Bank will choose to apply the Community Bank Leverage Ratio in the future.
Net interest income is the interest earned on our lending activities, investment securities and other interest-earning assets, less the interest paid on interest-bearing deposits and borrowings ( i.e. our primary business activities). We have achieved a five-year compounded annual asset growth rate of 7%, resulting in $5.7 billion in total assets at December 31, 2022.
Net interest income is the interest earned on our lending activities, investment securities and other interest-earning assets, less the interest paid on interest-bearing deposits and borrowings ( i.e. our primary business activities). We have achieved a five-year compounded annual asset growth rate of 5%, resulting in $5.7 billion in total assets at December 31, 2023.
Item 1. Business Overview . Camden National Corporation (hereafter referred to as “we,” “our,” “us,” or the “Company”) is a publicly-held bank holding company, with $5.7 billion in assets at December 31, 2022, incorporated under the laws of the State of Maine and headquartered in Camden, Maine.
Item 1. Business Overview . Camden National Corporation (hereafter referred to as “we,” “our,” “us,” or the “Company”) is a publicly-held bank holding company, with $5.7 billion in assets at December 31, 2023, incorporated under the laws of the State of Maine and headquartered in Camden, Maine.
Under Maine law, a corporation’s Board of Directors may declare, and the corporation may pay, dividends on its outstanding shares, in cash or other property, generally only out of the corporation’s unreserved and unrestricted earned surplus, or out of the unreserved and unrestricted net earnings of the current fiscal year and the next preceding fiscal year taken as a single period, except under certain circumstances, including when the corporation is insolvent, or when the payment of the dividend would render the corporation insolvent or when the declaration would be contrary to the corporation’s charter. 11 Restrictions on Bank Dividends .
Under Maine law, a corporation’s Board of Directors may declare, and the corporation may pay, dividends on its outstanding shares, in cash or other property, generally only out of the corporation’s unreserved and unrestricted earned surplus, or out of the unreserved and unrestricted net earnings of the current fiscal year and the next preceding fiscal year taken as a single period, except under certain circumstances, including when the corporation is insolvent, or when the payment of the dividend would render the corporation insolvent or when the declaration would be contrary to the corporation’s charter.
The proposed rule is intended, among other things, to adapt to changes in the banking industry, including the expanded role of mobile and online banking, and to tailor performance standards to account for differences in bank size and business models.
The final rule is intended, among other things, to adapt to changes in the banking industry, including the expanded role of mobile and online banking, and to tailor performance standards to account for differences in bank size and business models.
Community is at the core of what we do and why we do it, and as we’ve grown over the years, our commitment to socially-minded growth and giving back have deepened. Our Commitment to Corporate Responsibility.
Community is at the core of what we do and why we do it, and as we’ve grown over the years, our commitment to socially-minded growth and giving back has deepened. Our Commitment to Corporate Responsibility.
Mirabile brings more than 28 years of experience in senior wealth management, private banking and relationship management from her previous roles at People's United Bank Wealth Management and Key Private Bank. Ms. Mirabile currently serves as a member of several nonprofit committees and serves on the board of directors for the Penobscot Bay YMCA. Timothy P.
Mirabile brings more than 28 years of experience in senior wealth management, private banking and relationship management from her previous roles at People's United Bank Wealth Management and Key Private Bank. Ms. Mirabile currently serves as a member of several nonprofit committees and serves on the board of directors for the Penobscot Bay YMCA. Patricia A.
Anti-Money Laundering The Bank Secrecy Act. Under the Bank Secrecy Act (“BSA”), a financial institution is required to have systems in place to detect certain transactions, based on the size and nature of the transaction, and to monitor and report suspicious activity to appropriate law enforcement or regulatory authorities.
Under the Bank Secrecy Act (“BSA”), a financial institution is required to have systems in place to detect certain transactions, based on the size and nature of the transaction, and to monitor and report suspicious activity to appropriate law enforcement or regulatory authorities.
Smyth joined the Company as Chief Marketing Officer upon completion of the merger of Camden National Corporation and SBM Financial, the parent company of The Bank of Maine, on October 16, 2015. She was promoted to EVP, Chief Experience and Marketing Officer in May 2017. Previously, Ms.
Smyth joined the Company as SVP, Chief Marketing Officer upon completion of the merger of Camden National Corporation and SBM Financial, Inc., the parent company of The Bank of Maine, on October 16, 2015. She was promoted to EVP, Chief Experience and Marketing Officer in May 2017. Ms.
The increased assessment rate is intended to improve the likelihood that the Deposit Insurance Fund reserve ratio would reach the required minimum of 1.35 percent by the statutory deadline of September 30, 2028. Under the FDIC’s final rule, assessments for established small banks range from 2.5 to 32 basis points, after adjustments.
The increased assessment rate is intended to improve the likelihood that the DIF reserve ratio would reach the required minimum of 1.35 percent by the statutory deadline of September 30, 2028. Under the FDIC’s final rule, assessments for established small banks range from 2.5 to 32 basis points, after adjustments.
Operations Technology for Santander U.S. in Boston, leading the Operations and Information Technology Service Management transformations for the US. Previously, Mr. Martel was a Senior Vice President at TD Bank and served in several senior management positions in the US and Canada. Mr.
Martel served as Head of U.S. Operations Technology for Santander U.S. in Boston, leading the Operations and Information Technology Service Management transformations for the US. Previously, Mr. Martel was a Senior Vice President at TD Bank and served in several senior management positions in the US and Canada. Mr.
Our commitment to continual environmental, social, and governance (“ESG) progress is an integral part of our company culture as we work to create a thriving, sustainable, inclusive future for all of our constituents. Our Core Values.
Our commitment to environmental, social, and governance (“ESG”) progress is an integral part of our company culture as we work to create a thriving, sustainable, and inclusive future for all of our constituents. Our Core Values.
In addition, most of these services are widely available to our customers by telephone, online and mobile channels through firms located outside our market area. Investor Relations. The Company’s Investor Relations information can be obtained through our internet address, w ww.CamdenNational.bank .
In addition, most of these services are widely available to our customers by telephone, online and mobile channels through firms located outside our market area. Investor Relations. The Company’s Investor Relations information can be obtained through our internet address, w ww.CamdenNational.bank or www.CamdenNationalCorporation.com .
For the years ended December 31, 2022, 2021 and 2020, net interest income was our primary revenue source, representing 78%, 73%, and 73%, of our total revenues 1 , respectively.
For the years ended December 31, 2023, 2022 and 2021, net interest income was our primary revenue source, representing 81%, 78%, and 73%, of our total revenues 1 , respectively.
As of December 31, 2022, the Bank had 57 branches in 13 of Maine's 16 counties, two locations in New Hampshire, including a branch in Portsmouth and a commercial loan production office in Manchester, a mortgage loan production office in Braintree, Massachusetts, and 65 ATMs.
As of December 31, 2023, the Bank had 56 branches in 13 of Maine's 16 counties, two locations in New Hampshire, including a branch in Portsmouth and a commercial loan production office in Manchester, a mortgage loan production office in Braintree, Massachusetts, and 65 ATMs.
We are powered by an extraordinary team of over 630 employees, as of December 31, 2022, who work together to provide expert banking solutions to help people achieve their financial potential. We believe we have the experience and responsibility to take a proactive approach to engage and support a broad range of employees.
We are powered by an extraordinary team of 600 employees, as of December 31, 2023, who work together to provide expert banking solutions to help people achieve their financial potential. We believe we have the experience and responsibility to take a proactive approach to engage and support a broad range of employees.
This commitment is reflected in the benefits we offer our employees, including: market-competitive compensation; healthcare; paid time off, including parental/family leave; retirement benefits; short-term and long-term disability; an employee hardship fund, which provides employees dealing with a financial hardship access to funds that the employee is not required to repay; and a fitness reimbursement program.
This commitment is reflected in the benefits we offer our employees, including: market-competitive compensation; healthcare; paid time off, including parental/family leave; retirement benefits; short-term and long-term disability; an employee hardship fund, which provides employees dealing with a financial hardship access to funds that the employee is not required to repay; an emotional well-being support program and a wellness reimbursement program.
Rose came to the Company from Citizens Bank where she served for two years as Head of Strategic Onboarding & Orientation, and, prior to that, Director level roles in Retail Network Sales & Strategy at Santander Bank for six years. Ms.
Rose joined the Company in September 2017 as EVP, Retail and Mortgage Banking. Ms. Rose came to the Company from Citizens Bank where she served for two years as Head of Strategic Onboarding & Orientation, and, prior to that, Director level roles in Retail Network Sales and Strategy at Santander Bank for six years. Ms.
The wealth management services provided by Camden National Wealth Management complement the services provided by the Bank, offering high net worth individuals and families, businesses and not-for profit customers investment management, financial planning and trustee services. • Camden Financial Consultants is in the business of helping clients meet all of their financial needs.
The wealth management services provided by Camden National Wealth Management complement the services provided by the Bank, offering high net worth individuals and families, businesses and not-for profit customers investment management, financial planning and trustee services. • Camden Financial Consultants is in the business of helping clients work toward their financial goals.
Under the final rule, a bank holding company, such as the Company, and a national bank, such as the Bank, are required to notify the FRB or OCC, respectively, within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or pose a threat to the financial stability of the United States (“U.S.”).
Under these regulations, a bank holding company, such as the Company, and a national bank, such as the Bank, are required to notify the FRB or OCC, respectively, within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or pose a threat to the financial stability of the United States (“U.S.”). 13 Anti-Money Laundering The Bank Secrecy Act.
The FDIC has the power to make further adjustments to deposit insurance assessment rates at any time, and the Company is not able to predict the amount or timing of any such adjustment. Activities and Investments of National Banking Associations.
The FDIC has the power to make further adjustments to deposit insurance assessment rates at any time, and the Company is not able to predict the amount or timing of any such adjustment.
Asset growth over the past five years of $1.6 billion has been all organic, including further growth and 1 Revenue is the sum of net interest income and non-interest income. 2 expansion into Southern Maine, and pockets of New Hampshire and Massachusetts.
Asset growth over the past five years of $1.3 billion has been all organic, including further growth and 1 Revenue is the sum of net interest income and non-interest income. 3 expansion into Southern Maine, and select markets in New Hampshire and Massachusetts.
Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on “U.S. persons” engaging in financial or other transactions relating to a sanctioned country or with certain designated persons and entities; (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons); and (iii) restrictions on transactions with or involving certain persons or entities. 13 Blocked assets (for example, property and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC.
Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on “U.S. persons” engaging in financial or other transactions relating to a sanctioned country or with certain designated persons and entities; (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons); and (iii) restrictions on transactions with or involving certain persons or entities.
The Bank currently has an “Outstanding” CRA rating resulting from its 2021 CRA performance evaluation. In May 2022, the OCC, together with the FRB and FDIC, issued a joint notice of proposed rule-making to modernize the CRA regulatory framework.
The Bank currently has an “Outstanding” CRA rating resulting from its 2021 CRA performance evaluation. In October 2023, the OCC, together with the FRB and FDIC, issued a joint final rule to modernize the CRA regulatory framework.
Information about our Executive Officers The following table sets forth certain information regarding the executive officers of the Company, as defined by Rule 3b-7 of the Securities and Exchange Act of 1934, as amended. Executive Officer Position Age Gregory A. Dufour President and Chief Executive Officer 62 Michael R. Archer, CPA Executive Vice President, Chief Financial Officer 39 Joanne T.
Information about our Executive Officers The following table sets forth certain information regarding the executive officers of the Company, as defined by Rule 3b-7 of the Securities and Exchange Act of 1934, as amended. Executive Officer Position Age Simon R. Griffiths President and Chief Executive Officer 50 Michael R. Archer, CPA Executive Vice President, Chief Financial Officer 40 David J.
As of December 31, 2022, approximately 67% of our employees self-identified as women, and approximately 49% of our vice presidents, 37% of our senior vice presidents and 50% of our executive vice presidents self-identified as women.
As of December 31, 2023, approximately 67% of our employees self-identified as women, and approximately 45% of our vice presidents, 37% of our senior vice presidents and 33% of our executive vice presidents self-identified as women.
Martel began his banking career as a senior branch manager for People’s Heritage Bank, a predecessor to BankNorth Group. Jennifer L. Mirabile joined the Company in 2017 as the Managing Director of Camden National Wealth Management. A licensed CFP since 1998, Ms.
Martel began his banking career as a senior branch manager for People’s Heritage Bank, a predecessor to BankNorth Group. He is a founding member, past president and the current Treasurer of Amagara Marungi, a Maine based non-profit. Jennifer L. Mirabile joined the Company in 2017 as the Managing Director of Camden National Wealth Management. A licensed CFP since 1998, Ms.
Smyth served as Senior Vice President, Head of Marketing for The Bank of Maine, since 2010. All of the executive officers hold office at the discretion of the Company’s Board of Directors. There are no arrangements or understandings between any of the directors, officers or any other persons pursuant to which any of the officers have been selected as officers.
All of the executive officers hold office at the discretion of the Company’s Board of Directors. There are no arrangements or understandings between any of the directors, officers or any other persons pursuant to which any of the officers have been selected as officers.
Within Maine, we operate in 13 of the state's 16 counties, with our primary markets and presence being throughout coastal and central Maine. Many of these markets are characterized as rural areas.
Competition . We compete throughout Maine, and select areas of New Hampshire and Massachusetts. Our primary markets historically have been and continue to be within Maine. Within Maine, we operate in 13 of the state's 16 counties, with our primary markets and presence being throughout coastal and central Maine. Many of these markets are characterized as rural areas.
Smith led the southern Maine commercial banking line of business and the treasury management line of business through 2015, when he became Director of Commercial Banking for central and midcoast Maine. In 2019, he was promoted to Senior Vice President, Director of Credit Administration. In September 2020, he became EVP of Commercial Banking. Originally from Maine, Mr.
Smith led the southern Maine commercial banking line of business and the treasury management line of business from 2012 through 2015, when he then became Director of Commercial Banking for central and midcoast Maine from 2015 through 2019. In 2019, he was promoted to SVP, Director of Credit Administration. Renée D.
Archer is a licensed Certified Public Accountant (“CPA”), and a recent graduate of the American Bankers Association Stonier Graduate School of Banking where he also completed the Wharton Leadership Program. Mr.
Prior to joining the Company, Mr. Archer spent seven years at PricewaterhouseCoopers, LLP. Mr. Archer is a licensed Certified Public Accountant, and a graduate of the American Bankers Association Stonier Graduate School of Banking where he also completed the Wharton Leadership Program. Mr.
Rose began her career in banking at Fleet Bank and Sovereign Bank where she held a variety of leadership roles and served as Market President of Retail Banking in Eastern Massachusetts and New Hampshire. 6 Ryan A. Smith joined the Company in 2012 and became EVP, Commercial Banking in 2020. Prior to becoming EVP, Mr.
Rose began her career in banking at Fleet Bank and Sovereign Bank where she held a variety of leadership roles and served as Market President of Retail Banking in Eastern Massachusetts and New Hampshire. Ryan A.
The Company was founded in 1984, went public in 1997 and is now registered with NASDAQ Global Market (“NASDAQ”) under the ticker symbol “CAC.” Our consolidated financial statements accompanying this Form 10-K include the accounts of the Company, the Bank and the Bank’s subsidiaries and divisions. All inter-company accounts and transactions have been eliminated in consolidation. Who We Are .
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.” Our consolidated financial statements accompanying this Form 10-K include the accounts of the Company, the Bank and the Bank’s subsidiaries and divisions.
We are an award-winning, full-service community bank supporting individuals, families, and businesses at every stage of their financial journey. With offices across Northern New England, we offer competitive financial products and services, delivered by a talented team and complemented by the latest in digital banking to empower our customers to bank the way they want.
With offices across Northern New England, we offer competitive financial products and services, delivered by a talented team and complemented by the latest in digital banking to empower our customers to bank the way they want.
We 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 me e t the needs of customers.
Other competitors for deposits and loans within our primary market area include insurance companies, money market funds, consumer finance companies and financing affiliates of consumer durable goods manufacturers. 4 We 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 me e t the needs of customers.
Regulation of the Company As a bank holding company, the Company is subject to regulation, supervision and examination by the FRB, which has the authority, among other things, to order bank holding companies to cease and desist from unsafe or unsound banking practices; to assess civil money penalties; and to order termination of non-banking activities or termination of ownership and control of a non-banking subsidiary by a bank holding company.
Changes in applicable laws or regulations, and in their interpretation and application by regulatory agencies and other governmental authorities, cannot be predicted, but may have a material effect on our business, financial condition or results of operations. 7 Regulation of the Company As a bank holding company, the Company is subject to regulation, supervision and examination by the FRB, which has the authority, among other things, to order bank holding companies to cease and desist from unsafe or unsound banking practices; to assess civil money penalties; and to order termination of non-banking activities or termination of ownership and control of a non-banking subsidiary by a bank holding company.
Archer currently serves as a member of local non-profit organizations, including as the Treasurer and a board member of Jobs for Maine's Graduates, Inc., board member for the local little league, and as a committee member for the local town recreational department. Joanne T. Campbell joined the Company in 1996 as Vice President, Manager of Residential Real Estate.
Archer currently serves as a member of local non-profit organizations, including as the Treasurer and a board member of Jobs for Maine's Graduates, Inc., board member for the local little league, and as a committee member for the local town recreational department. David J. Ackley joined the Company in 2011 and became EVP, Chief Risk Officer in July 2023.
We continue to evaluate the possibility of expansion into new markets through both de novo expansion and acquisitions. In addition, we are focused on maximizing growth across our current markets, and particularly those markets that we see as growth markets because we currently have less of a presence and market share than in our current markets.
We continue to evaluate the possibility of expansion into new markets through both de novo expansion and acquisitions. Regardless of merger and acquisition opportunities that may be present, we are always focused on maximizing growth within our current markets, and particularly those that we see as growth markets.
These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Camden Financial Consultants or the Bank. Securities and insurance offered through LPL or its affiliates are not insured by the Federal Deposit Insurance Corporation (“FDIC”) or any other government agency, not bank deposits or obligations and may lose value.
These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Camden Financial Consultants or the Bank.
Originally founded in 1875, the Bank became a direct, wholly-owned subsidiary of the Company as a result of a corporate reorganization in 1984. The Bank provides a broad array of banking and other financial services to consumer, institutional, municipal, non-profit and commercial customers.
The Bank provides a broad array of banking and other financial services to consumer, institutional, municipal, non-profit and commercial customers.
In October 2022, the FDIC finalized a rule to increase the initial base deposit insurance assessment rate schedules for all insured depository institutions by 2 basis points, beginning with the first quarterly assessment period of 2023.
This method takes into account various measures, including an institution’s leverage ratio, brokered deposit ratio, one year asset growth, the ratio of net income before taxes to total assets and considerations related to asset quality. 8 In October 2022, the FDIC finalized a rule to increase the initial base deposit insurance assessment rate schedules for all insured depository institutions by 2 basis points, beginning with the first quarterly assessment period of 2023.
In November 2021, the U.S. federal bank regulatory agencies adopted a final rule regarding notification requirements for banking organizations related to significant computer security incidents.
The U.S. federal bank regulatory agencies impose notification requirements on banking organizations with respect to significant computer security incidents.
Customers may also access the Bank’s products and services using other channels, including on-line at www . CamdenNational.bank or download our mobile phone application (or “app”). Healthcare Professional Funding Corporation.
Securities and insurance offered through LPL or its affiliates are not insured by the Federal Deposit Insurance Corporation (“FDIC”) or any other government agency, are not bank deposits or obligations and may lose value. Customers may also access the Bank’s products and services using other channels, including on-line at www . CamdenNational.bank or download our mobile phone application (or “app”).
The DEI Council is self-governed by employees and represents the diversity of our employee population, including employees who identify as racially diverse and LGBTQ+. The DEI Council's purpose is to provide a channel for open communication and feedback, and provide valued advice on all matters pertaining to diversity, equity and inclusion across our organization.
The DEI Council is self-governed by employees and represents the diversity of our employee population, including employees who identify as racially diverse and LGBTQ+.
Refer to related risk factors in Item 1A. Risk Factors below for additional information. Human Capital We recognize the importance of our relationships with our employees, customers, and the communities we serve. Our employees—known as “Stakeholders” at Camden National Bank—are the key to our success.
Information on our website is not incorporated by reference into this document and should not be considered part of this report. Human Capital We recognize the importance of our relationships with our employees, customers, and the communities we serve. Our employees—known as “Stakeholders” at Camden National Bank—are the key to our success.
Campbell Executive Vice President, Enterprise Risk Management and Chief Risk Officer 60 William H. Martel Executive Vice President, Technology and Support Services, Chief Technology Officer 53 Jennifer L. Mirabile Executive Vice President, Managing Director, Camden National Wealth Management 63 Timothy P. Nightingale Executive Vice President, Chief Credit Officer 65 Heather D.
Ackley Executive Vice President, Chief Risk Officer 48 William H. Martel Executive Vice President, Technology and Support Services, Chief Technology Officer 54 Jennifer L. Mirabile Executive Vice President, Managing Director, Camden National Wealth Management 64 Patricia A. Rose Executive Vice President, Retail and Mortgage Banking Officer 60 Ryan A. Smith Executive Vice President, Chief Credit Officer 51 Renée D.
Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to the Company or Bank. The impact of these standards on the Company and the Bank will depend on the manner in which they are implemented by the U.S. federal bank regulators. Prompt Corrective Action .
Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to the Company or Bank. In July 2023, the federal banking regulators proposed revisions to the Basel III Capital Rules to implement the Basel Committee’s 2017 standards and make other changes to the Basel III Capital Rules.
Further details of our financial information can be found within the consolidated financial statements within Item 8. Financial Statements and Supplementary Data of this report. Camden National Bank . The Bank is a national banking association chartered under the laws of the United States and headquartered in Camden, Maine.
Financial Statements and Supplementary Data of this report. Camden National Bank . The Bank is a national banking association chartered under the laws of the United States and headquartered in Camden, Maine. Originally founded in 1875, the Bank became a direct, wholly-owned subsidiary of the Company as a result of a corporate reorganization in 1984.
Campbell currently serves as a member and co-Chair of the ABA Risk and Compliance Conference Advisory Board. William H. Martel joined the Company in March 2020 as EVP, Technology and Support Services. Prior to joining the Company Mr. Martel served as Head of U.S.
He is a founding member of the Boston Federal Reserve’s Cyber Threat Sharing Forum and currently serves on the American Bankers Association’s Risk and Compliance Conference Planning Committee. 6 William H. Martel joined the Company in March 2020 as EVP, Technology and Support Services and currently holds the title of EVP, Chief Technology Officer. Prior to joining the Company Mr.
The excess compensation would be based on the amount the executive officer would have received had the incentive-based compensation been determined using the restated financial statements. The final rule requires the exchanges to propose conforming listing standards by February 26, 2023 and requires the standards to become effective no later than November 23, 2023.
The excess compensation would be based on the amount the executive officer would have received had the incentive-based compensation been determined using the restated financial statements. NASDAQ’s 14 listing standards required by the SEC’s rule became effective in October 2023. The Company has adopted a clawback policy in accordance with these standards. 15
Dufour is also a member of the executive committee of the Board of Directors of the Maine Bankers Association. Michael R. Arche r joined the company in October 2013 and became Executive Vice President (“EVP”), Chief Financial Officer (“CFO”) of the Company on January 3, 2022. Prior to becoming EVP, CFO, Mr.
Griffiths started his banking career at Washington Mutual Bank in 2002. Michael R. Arche r joined the Company in October 2013 and became EVP, Chief Financial Officer (“CFO”) of the Company on January 3, 2022. Prior to becoming EVP, CFO, Mr. Archer served as the Company’s Senior Vice President (“SVP”) and Corporate Controller from June 2016 until January 2022.
The effects of the proposed CRA rules on the Bank will depend on the final form of any rule-making. Capital Adequacy and Safety and Soundness Regulatory Capital Requirements.
Most provisions of the final rule will become effective on January 1, 2026, and the data reporting requirements will become effective on January 1, 2027. 9 Capital Adequacy and Safety and Soundness Regulatory Capital Requirements.
Removed
Camden National Bank (the “Bank”), a wholly-owned subsidiary of the Company, was founded in 1875.
Added
All inter-company accounts and transactions have been eliminated in consolidation. Who We Are . We are an award-winning, full-service community bank supporting individuals, families, and businesses at every stage of their financial journey.
Removed
Healthcare Professional Funding Corporation (“HPFC”) is a wholly-owned subsidiary of the Bank that was acquired in connection with the acquisition of SBM Financial, Inc., the parent company of The Bank of Maine, on October 16, 2015. HPFC provided specialized lending across the U.S. to dentists, optometrists and veterinarians.
Added
We consider our growth markets to be those that that have accelerated growth opportunities in comparison to our other markets, based on current and forecasted demographic information, and where we currently have less of a presence and market share. Further details of our financial information can be found within the consolidated financial statements within Item 8.
Removed
Effective February 19, 2016, HPFC's continued lending operations ceased and no further loans have been originated since that date. HPFC's website address is www.CamdenNational.bank/healthprofunding . 3 Competition . We compete throughout Maine, and select areas of New Hampshire and Massachusetts. Our primary markets historically have been and continue to be within Maine.
Added
The DEI Council's purpose is to provide a channel for open communication and feedback, and provide valued advice on all matters pertaining to diversity, equity and inclusion across our organization. 5 To strengthen our DEI commitment, during 2023 we identified a DEI officer to lead the organization’s DEI efforts and expand its diverse talent pipelines to shape an environment where diverse voices and backgrounds continue to be welcomed and heard.
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Other competitors for deposits and loans within our primary market area include insurance companies, money market funds, consumer finance companies and financing affiliates of consumer durable goods manufacturers.
Added
In 2023, we completed a full-scope review of our recruiting process with an external consultant to determine whether employment applicants included diverse pools of candidates; the review had no major improvement suggestion.
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Information on our website is not incorporated by reference into this document and should not be considered part of this report. Information Security. Data privacy, cybersecurity and third-party oversight are a top priority for the Company in protecting its customers’ personal and financial information.
Added
In addition, we expanded our partnerships with organizations to support us in building a diverse recruiting pipeline and saw a 6% increase in the number of diverse applicants ( i.e., non-white, veteran status and/or people with a disability) over the last year.
Removed
Over the past several years, highly publicized events have highlighted the importance of cybersecurity, including cyberattacks against financial institutions, government agencies and other organizations that resulted in the compromise of personal and/or confidential information, the theft or destruction of corporate information, and demands for ransom payments to release corporate information encrypted by so-called “ransomware.” A successful cyberattack could harm the Company’s reputation and/or impair its ability to provide services to its customers.
Added
We were recognized in 2023 by the Employer Support of the Guard and Reserve State Committee as we were presented with the Above and Beyond Award in recognition of the support we provide to our National Guard and Reserve employees. Health and Wellness . We are also deeply committed to the health and well-being of our employees.
Removed
The Company has developed policies and continues to invest in education and technology designed to protect our own and our customers’ information from cyberattacks or loss, allow for the continuity of our business in the event of disruptions to the Company’s or its vendors’ critical systems and comply with regulatory requirements related to the protection of customer data, but cannot assure that it will be able to anticipate, detect, or implement effective preventative measures against all potential threats.
Added
Smyth Executive Vice President, Chief Experience and Marketing Officer 53 Simon R. Griffiths joined the Company in November 2023 as Executive Vice President (“EVP”) and Chief Operating Officer until he became President and Chief Executive Officer (“CEO”), and a member of the board of directors of the Company and the Bank on January 1, 2024.
Removed
In 2022, the DEI Council worked closely to create a new, board-approved Core Value to ensure that diversity is embedded in our culture with the same importance as our existing core values.
Added
Prior to joining the Company, Mr. Griffiths most recently served as EVP - Head of Core Banking at Citizens Bank, managing the retail, business banking, contact center, deposit and core banking delivery channels. Mr. Griffiths joined Citizens Bank in 2015 from Santander Bank, where he served as EVP, Managing Director of the retail network. Mr.
Removed
Additionally, to help illustrate all that we accomplish each day at Camden National Bank in support of DEI efforts, the DEI Council introduced a diversity statement that is celebratory and aspirational at the same time. Health and Wellness . We are also deeply committed to the health and well-being of our employees.
Added
Prior to becoming EVP, Chief Risk Officer, Mr. Ackley served as SVP and Director of Information Security & Enterprise Risk Management for the Company from 2016 through July 2023 and prior to that served as Vice President and Senior Information Security Officer of the Company. Mr.
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Robinson, CPA Executive Vice President, Chief Human Resources Officer 48 Patricia A. Rose Executive Vice President, Retail and Mortgage Banking Officer 59 Ryan A. Smith Executive Vice President, Commercial Banking 50 Renée D. Smyth Executive Vice President, Chief Experience and Marketing Officer 52 Gregory A. Dufour has served as President and CEO of the Company since January 2009. Mr.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFurther increases in interest rates could have a negative impact on our results of operations by decreasing net interest income, therefore, decreasing revenue and net income, slowing residential and commercial loan production, and/or reducing the ability of borrowers to repay their current loan obligations, which could not only result in increased loan defaults, foreclosures and write-offs, but also necessitate further increases to our allowance for credit losses.
Biggest changeThese increased interest rates negatively affected our results of operations during 2022 and 2023 by decreasing net interest income, and therefore decreasing revenue and net income, The increased interest rates also contributed in 2022 and 2023 to losses in our investment portfolio, including realized 16 and unrealized losses in the AFS portfolio and unrealized losses in the HTM portfolio, a $1.8 million charge-off of a Signature Bank corporate bond in 2023, slowing residential and commercial loan production, and may negatively impact our borrowers’ ability to repay their current loan obligations, though we have not yet seen any material degradation in our credit quality.
Climate changes presents several risks, including (i) operational risk from the physical effects of climate events on our facilities and other assets, on our vendors’ facilities and on our customers’ assets, including real estate pledged as collateral for our loans; and (ii) transitional risks, including new or more stringent regulatory requirements and potential effects on our reputation and/or changes in our business as a result of our climate change practices, our carbon footprint and our business relationships with customers who operate in carbon-intensive industries.
Climate change presents several risks, including (i) operational risk from the physical effects of climate events on our facilities and other assets, on our vendors’ facilities and on our customers’ assets, including real estate pledged as collateral for our loans; and (ii) transitional risks, including new or more stringent regulatory requirements and potential effects on our reputation and/or changes in our business as a result of our climate change practices, our carbon footprint and our business relationships with customers who operate in carbon-intensive industries.
In addition, we expect that we will remain subject to extensive regulation and supervision, and that the level of regulatory scrutiny may fluctuate over time, based on numerous factors, including changes in the U.S. presidential administration or one or both houses of Congress and public sentiment regarding financial institutions (which can be influenced by scandals and other incidents that involve participants in the industry).
We expect that we will remain subject to extensive regulation and supervision, and that the level of regulatory scrutiny may fluctuate over time, based on numerous factors, including changes in the U.S. presidential administration or one or both houses of Congress and public sentiment regarding financial institutions (which can be influenced by scandals and other incidents that involve participants in the industry).
If the Company provides inadequate succession planning, or is unable to continue to retain and attract qualified employees, this could result in a material adverse effect on the Company’s performance, including its competitive position. COVID-19 has had significant effects on labor and employment, including heightened pressures on employers to increase compensation and provide work-from-home and other flexible working arrangements.
If the Company provides inadequate succession planning, or is unable to continue to retain and attract qualified employees, this could result in a material adverse effect on the Company’s performance, including its competitive position. COVID-19 had significant effects on labor and employment, including heightened pressures on employers to increase compensation and provide work-from-home and other flexible working arrangements.
Any of these events could affect us directly (for example, by interrupting our systems, causing significant damage to our facilities or otherwise preventing us from conducting our ordinary business) or indirectly as a result of effects on our borrowers and other customers or third-party vendors (for example, by damaging property pledged as collateral for our loans).
Any of these events could affect us directly (for example, by interrupting our systems, causing significant damage to our facilities or otherwise preventing us from conducting our ordinary business) or indirectly as a result of effects on our borrowers and other customers 28 or third-party vendors (for example, by damaging property pledged as collateral for our loans).
Government action and legislation may also impact us and the value of our common stock. We cannot predict what impact, if any, volatility will have on our business or share price and for these and other reasons our shares of common stock may trade at a price lower than that at which they were purchased.
Government action and legislation may also impact us and the value of our common stock. We cannot predict what impact, if any, future volatility will have on our business or share price and for these and other reasons our shares of common stock may trade at a price lower than that at which they were purchased.
The COVID-19 pandemic has caused, and any future pandemics, terrorist activities, civil unrest or international hostilities, may cause, an increase in delinquencies, bankruptcies or defaults that could result in the Company experiencing higher levels of nonperforming assets, net charge-offs and provisions for credit losses.
The COVID-19 pandemic caused, and any future pandemics, terrorist activities, civil unrest or international hostilities, may cause, an increase in delinquencies, bankruptcies or defaults that could result in the Company experiencing higher levels of nonperforming assets, net charge-offs and provisions for credit losses.
If we experience losses in a series of consecutive quarters, we may be required to inform and consult with the FRB supervisory staff prior to declaring or paying any dividends. In this event, there can be no assurance that the FRB will approve 20 the payment of such dividends.
If we experience losses in a series of consecutive quarters, we may be required to inform and consult with the FRB supervisory staff prior to declaring or paying any dividends. In this event, there can be no assurance that the FRB will approve the payment of such dividends.
If additional amounts are provided to the allowance for credit losses, our earnings could decrease. 18 Prepayments of loans may negatively impact our business. Generally, our customers may prepay the principal amount of their outstanding loans at any time, frequently without financial penalty to the borrower.
If additional amounts are provided to the allowance for credit losses, our earnings could decrease. Prepayments of loans may negatively impact our business. Generally, our customers may prepay the principal amount of their outstanding loans at any time, frequently without financial penalty to the borrower.
See “Supervision and Regulation—Capital Adequacy and Safety and Soundness—Prompt Corrective Action” and “Supervision and Regulations—Regulation of the Bank—Brokered Deposits” for additional information on the prompt corrective action framework and the regulation of brokered deposits. Wholesale funding sources may prove insufficient to replace deposits and support our operations and future growth.
See “Supervision and Regulation—Capital Adequacy and Safety and Soundness—Prompt Corrective Action” and “Supervision and Regulations—Regulation of the Bank—Brokered Deposits” for additional information on the prompt corrective action framework and the regulation of brokered deposits. 21 Wholesale funding sources may prove insufficient to replace deposits and support our operations and future growth.
See Item 1., “Business—Supervision and Regulation.” We may become involved in lawsuits and legal proceedings that may lead to adverse consequences. As a participant in the financial services industry, many aspects of the Company’s business involve substantial risk of legal liability.
See Item 1., “Business—Supervision and Regulation.” 23 We may become involved in lawsuits and legal proceedings that may lead to adverse consequences. As a participant in the financial services industry, many aspects of the Company’s business involve substantial risk of legal liability.
In the event one or more of the events described above occurs, this could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of our or our customers’ confidential, proprietary and other information, the theft of customer assets through fraudulent transactions or disruption of our or our customers’ or other third parties’ business operations, which could result in legal or regulatory action, significant losses, increased compliance costs or reputational damage, any of which could adversely affect our business, financial condition or results of operations.
If one or more of the events described above occurs, this could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of our or our customers’ confidential, proprietary and other information, the theft of customer assets through fraudulent transactions or disruption of our or our customers’ or other third parties’ business operations, which could result in legal or regulatory action, significant losses, increased compliance costs or reputational damage, any of which could adversely affect our business, financial condition or results of operations.
“Business—Supervision and Regulation—Dividend Restrictions” and “Business—Supervision and Regulation—Regulatory Capital Requirements.” Regulatory and Legal Risk Our banking business is highly regulated, and we may be adversely affected by changes in law and regulation.
“Business—Supervision and Regulation—Dividend Restrictions” and “Business—Supervision and Regulation—Regulatory Capital Requirements.” 22 Regulatory and Legal Risk Our banking business is highly regulated, and we may be adversely affected by changes in law and regulation.
In recent years, there have been several well-publicized attacks on various companies, including in the financial services industry, and personal, proprietary, and public e-mail systems in which the perpetrators gained unauthorized access to confidential information and customer data, often through the introduction of computer viruses or malware, cyberattacks, phishing, or other means.
In recent years, there have been several well-publicized attacks on various companies, including in the financial services industry, and personal, proprietary, and public e-mail systems in which the perpetrators gained unauthorized access to confidential information and customer data, often through the introduction of computer viruses or malware, cyberattacks, phishing, social engineering or other means.
In particular, the activity of marketplace lenders and other financial technology companies (“fintechs”) has grown significantly over recent years and is expected to continue to grow. Fintechs have offered and may continue to offer bank or bank-like products. For example, a number of fintechs have applied for, and in some cases received, bank or industrial loan charters.
In particular, the activity of non-bank lenders and other financial technology companies (“fintechs”) has grown significantly over recent years and is expected to continue to grow. Fintechs have offered and may continue to offer bank or bank-like products. For example, a number of fintechs have applied for, and in some cases received, bank or industrial loan charters.
Funding costs may increase if we lose deposits and are forced to replace them with more expensive sources of funding, if clients shift their deposits into higher cost products or if we need to raise interest rates to avoid losing deposits. Higher funding costs reduce our net interest margin, net interest income and net income.
Funding costs may increase further if we lose deposits and are forced to replace them with more expensive sources of funding, if clients shift their deposits into higher cost products or if we need to continue to raise interest rates to avoid losing deposits. Higher funding costs reduce our net interest margin, net interest income and net income.
During the COVID-19 pandemic, employees have shifted their focus to expectations that extend beyond compensation, including better work-life balance, improved advancement opportunities and improved training, and many businesses, including us, have experienced higher rates of turnover as a result of such changes.
Since the COVID-19 pandemic, employees have shifted their focus to expectations that extend beyond compensation, including better work-life balance, improved advancement opportunities and improved training, and many businesses, including us, have experienced higher rates of turnover as a result of such changes.
We recently completed our goodwill impairment analysis as of November 30, 2022 and concluded goodwill was not impaired. We conduct a review of our other intangible assets for impairment should events or circumstances warrant such review. There were no triggers for such review for impairment for other intangible assets for the year ended December 31, 2022.
We recently completed our goodwill impairment analysis as of November 30, 2023 and concluded goodwill was not impaired. We conduct a review of our other intangible assets for impairment should events or circumstances warrant such review. There were no triggers for such review for impairment for other intangible assets for the year ended December 31, 2023.
Any impairment charge would have a negative effect on our shareholders’ equity and financial results and may cause a decline in our stock price. 27 Changes in accounting standards can be difficult to predict and can materially impact how we record and report our financial condition and results of operations.
Any impairment charge would have a negative effect on our shareholders’ equity and financial results and may cause a decline in our stock price. 29 Changes in accounting standards can be difficult to predict and can materially impact how we record and report our financial condition and results of operations.
At December 31, 2022, our commercial real estate and commercial loan portfolios comprised 51% of our total loan balances. Commercial loans generally carry larger loan balances and involve a higher risk of nonpayment or late payment than residential mortgage loans. Commercial loans may lack standardized terms and may include a balloon payment feature.
At December 31, 2023, our commercial real estate and commercial loan portfolios comprised 51% of our total loan balances. Commercial loans generally carry larger loan balances and involve a higher risk of nonpayment or late payment than residential mortgage loans. Commercial loans may lack standardized terms and may include a balloon payment feature.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our systems or to investigate and remediate vulnerabilities. System enhancements and updates 24 may also create risks associated with implementing and integrating new systems.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our systems or to investigate and remediate vulnerabilities. System enhancements and updates may also create risks associated with implementing and integrating new 26 systems.
Any of these occurrences could impact our 25 ability to operate our business, or cause financial loss, potential liability to clients, reputational damage or regulatory consequences, any of which could have a material adverse effect on our financial condition or results of operations.
Any of these occurrences could impact our 27 ability to operate our business, or cause financial loss, potential liability to clients, reputational damage or regulatory consequences, any of which could have a material adverse effect on our financial condition or results of operations.
Our business performance and the trading price of shares of our common stock may be affected by many factors affecting financial institutions, including volatility in the credit, mortgage and housing markets, fluctuations in interest rates (including in response to inflation), the markets for securities relating to mortgages or housing, and the value of debt and mortgage-backed and other securities that we hold in our investment portfolio.
Our business performance and the trading price of shares of our common stock have in the past, and may in the future be, affected by many factors affecting financial institutions, including volatility in the credit, mortgage and housing markets, fluctuations in interest rates (including in response to inflation), the markets for securities relating to mortgages or housing, and the value of debt and mortgage-backed and other securities that we hold in our investment portfolio.
These events could have an adverse effect on our financial condition and results of operations. 23 Systems failures, interruptions or breaches of security concerning our information base, including the information we maintain relating to our customers, could have an adverse effect on our financial condition and results of operations.
These events could have an adverse effect on our financial condition and results of operations. 25 Systems failures, interruptions or breaches of security concerning our information base, including the information we maintain relating to our customers, could have an adverse effect on our financial condition and results of operations.
See Item 1. “Business-Supervision and Regulation-Regulatory Capital Requirements” for additional information on capital requirements applicable to us and the Bank. 22 Operational and Business Risk Damage to our reputation could significantly harm our business.
See Item 1. “Business-Supervision and Regulation-Regulatory Capital Requirements” for additional information on capital requirements applicable to us and the Bank. 24 Operational and Business Risk Damage to our reputation could significantly harm our business.
These sources include brokered deposits, borrowings through the Federal Home Loan Bank and correspondent banks, proceeds from the sale of investments and loans, and liquidity resources at the holding company.
These sources include brokered deposits, borrowings through the Federal Home Loan Bank of Boston (“FHLBB”) and correspondent banks, proceeds from the sale of investments and loans, and liquidity resources at the holding company.
The Company has suffered, and could in the future suffer, adverse consequences to the extent that pandemics, including the COVID-19 pandemic, terrorist activities, civil unrest, international hostilities, including Russia’s invasion of Ukraine, or other external events affect the financial markets or the economy in general or in any region in which the Company, or third parties on which the Company relies, operate.
The Company has suffered, and could in the future suffer, adverse consequences to the extent that pandemics, such as the COVID-19 pandemic, terrorist activities, civil unrest, international hostilities, including Russia’s invasion of Ukraine and conflict in the Middle East, or other external events affect the financial markets or the economy in general or in any region in which the Company, or third parties on which the Company relies, operate.
Depending on the impact of the pandemic and Russia’s invasion of Ukraine on general economic and market conditions, there is a risk that adverse conditions could occur or worsen, including supply chain disruptions; higher inflation; decreased demand for the Company’s products and services or those of its borrowers, which could increase credit risk; challenges related to maintaining sufficient qualified personnel due to labor shortages, talent attrition, employee illness, or willingness to return to work; and disruptions to business operations at the Company and at counterparties, vendors and other service providers.
Depending on the impact of current international hostilities on general economic and market conditions, there is a risk that adverse conditions could occur or worsen, including supply chain disruptions; higher inflation; decreased demand for the Company’s products and services or those of its borrowers, which could increase credit risk; challenges related to maintaining sufficient qualified personnel due to labor shortages, talent attrition, employee illness, or willingness to return to work; and disruptions to business operations at the Company and at counterparties, vendors and other service providers.
Other recent regulation has reduced the regulatory burden of large bank holding companies, and raised the asset thresholds at which more onerous requirements apply, which could cause certain large bank holding companies with less than $250 billion in total consolidated assets, which were previously subject to more stringent enhanced prudential standards, to become more competitive or to pursue expansion more aggressively.
Other regulation has raised the asset thresholds at which more onerous regulatory requirements apply, which could cause certain large bank holding companies with less than $250 billion in total consolidated assets, which were previously subject to more stringent enhanced prudential standards, to become more competitive or to pursue expansion more aggressively.
Our ability to manage liquidity will be severely constrained if we are unable to maintain access to funding or if adequate financing is not available to accommodate future growth at acceptable costs, or if there are unforeseen outflows of cash or collateral, such as that seen by certain financial institutions during 2020 when corporate customers drew on revolving credit facilities at a historic pace in response to COVID-19.
Our ability to manage liquidity will be severely constrained if we are unable to maintain access to funding or if adequate financing is not available to accommodate future growth at acceptable costs, or if there are unforeseen outflows of cash or collateral, such as that seen by certain financial institutions during 2020 when corporate customers drew on revolving credit facilities at a historic pace in response to COVID-19 or by certain banks that experienced large and sudden outflows of deposits in 2023.
Information security risks have generally increased in recent years, and continue to increase, in part because of the proliferation of new technologies, the implementation of work-from-home arrangements, the use of the Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists, activists, and other external parties, some of which may be linked to terrorist organizations or hostile foreign governments.
Information security risks continue to increase, in part because of the proliferation of new technologies, ongoing work-from-home arrangements, the use of the Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists, activists, and other external parties, some of which may be linked to terrorist organizations or hostile foreign governments.
We primarily serve individuals and businesses located in the state of Maine, with 70% of our loan portfolio concentrated among borrowers in Maine as of December 31, 2022, with higher concentrations of exposure in Cumberland, Kennebec, Knox and York counties.
We primarily serve individuals and businesses located in the state of Maine, with 68% of our loan portfolio concentrated among borrowers in Maine as of December 31, 2023, with higher concentrations of exposure in Cumberland, Kennebec, Knox and York counties.
The escalation or continuation of the war between Russia and Ukraine or other hostilities could result in, among other things, further increased risk of cyberattacks, supply chain disruptions, higher inflation, lower consumer demand and increased volatility in commodity, currency and other financial markets.
In addition, the escalation or continuation of international hostilities, including the war between Russia and Ukraine and conflict in the Middle East, could result in, among other things, further increased risk of cyberattacks, supply chain disruptions, higher inflation, lower consumer demand and increased volatility in commodity, currency and other financial markets.
For example, higher inflation could reduce demand for our products, adversely affect the creditworthiness of our borrowers or result in lower values for our interest-earning assets and investment securities. Higher inflation could also lead to higher interest rates, which could negatively affect our performance. See “Fluctuations in market interest rates may adversely affect our performance” below.
For example, higher inflation could reduce demand for our products, adversely affect the creditworthiness of our borrowers or result in lower values for our interest-earning assets and investment securities. Higher inflation could also lead to higher interest rates, which could negatively affect our performance.
These conditions include short-term and long-term interest rates, inflation, money supply, political issues, legislative and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, unemployment and investor confidence, all of which are beyond our control.
These conditions include short-term and long-term interest rates, inflation, money supply, political issues, legislative and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, unemployment, investor confidence and customer deposit behavior, all of which are beyond our control. These conditions can change suddenly and negatively.
The excess of the purchase price over the fair value of the net identifiable tangible and intangible assets acquired determines the amount of the purchase price that is allocated to goodwill. At December 31, 2022, our goodwill and other identifiable intangible assets totaled $96.3 million.
The excess of the purchase price over the fair value of the net identifiable tangible and intangible assets acquired determines the amount of the purchase price that is allocated to goodwill. At December 31, 2023, our goodwill and other identifiable intangible assets totaled $95.7 million.
Information security risks for financial institutions such as the Company and the Bank have increased significantly in recent years due to the use of online, telephone and mobile banking channels by customers and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties.
Information security risks for financial institutions such as the Company and the Bank are significant due to the use of online, telephone and mobile banking channels by customers and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties.
Changes in domestic and foreign economic conditions, volatility in financial markets, and general trends in business and finance, all of which are beyond our control, could adversely impact the market value of these assets and the fee revenues derived from the management of these assets.
Changes in domestic and foreign economic conditions, volatility in financial markets, and general trends in business and finance, all of which are beyond our control, could adversely impact the market value of these assets and the fee revenues derived from the management of these assets. 17 Continued market volatility has impacted, and may in the future impact, our business and the value of our common stock.
Our ability to attract and retain wealth management clients is dependent upon our ability to compete with competitors’ investment products, level of investment performance, client services, and marketing and distribution capabilities. If we are not successful, our results of operations and financial condition may be negatively affected. 19 The Company faces competition in pursuing acquisition opportunities.
Our ability to attract and retain wealth management clients is dependent upon our ability to compete with competitors’ investment products, level of investment performance, client services, and marketing and distribution capabilities. If we are not successful, our results of operations and financial condition may be negatively affected.
Risks associated with climate change are continuing to evolve rapidly, making it difficult to assess the effects of climate change on our business, and we expect that climate change-related risks will continue to evolve and increase over time. Acts of terrorism, pandemics and other external events could harm our business.
Risks associated with climate change are continuing to evolve rapidly, making it difficult to assess the effects of climate change on our business, and we expect that climate change-related risks will continue to evolve and increase over time.
If we are unable to attract and retain customers, we may be unable to achieve growth in the loan and core deposit portfolios, and our results of operations and financial condition may be negatively affected. Market changes may adversely affect demand for our services and impact results of operations.
If we are unable to attract and retain customers, we may be unable to achieve growth in the loan and core deposit portfolios, and our results of operations and financial condition may be negatively affected.
We may incur fines, penalties and other negative consequences from regulatory violations, possibly even inadvertent or unintentional violations. 21 The financial services industry is subject to intense scrutiny from bank supervisors in the examination process and aggressive enforcement of federal and state regulations, particularly with respect to mortgage-related practices and other consumer compliance matters, and compliance with AML, BSA and OFAC regulations, and economic sanctions against certain foreign countries and nationals.
The financial services industry is subject to intense scrutiny from bank supervisors in the examination process and aggressive enforcement of federal and state regulations, particularly with respect to mortgage-related practices and other consumer compliance matters, and compliance with AML, BSA and OFAC regulations, and economic sanctions against certain foreign countries and nationals.
We are a legal entity separate and distinct from our direct and indirect subsidiaries. Our revenue (on a parent-only basis) is derived primarily from interest and dividends paid to us by the Bank.
Our revenue (on a parent-only basis) is derived primarily from interest and dividends paid to us by the Bank.
As of December 31, 2022, brokered deposits made up 4% of our total deposits. We have and will continue to utilize brokered deposits when it is a more cost effective source of funding compared to alternative funding sources.
We have utilized and will continue to utilize brokered deposits when it is a more cost effective source of funding compared to alternative funding sources.
Our profitability depends to a large extent upon our net interest income, which is the difference between interest income earned from loans and investments and the interest expense paid on deposits and borrowings.
Fluctuations in market interest rates have in the past adversely affected, and may in the future adversely affect, our performance. Our profitability depends to a large extent upon our net interest income, which is the difference between interest income earned from loans and investments and the interest expense paid on deposits and borrowings.
If customers prepay the principal amount of their loans, and we are unable to lend those funds to other borrowers or invest the funds at the same or higher interest rates, interest income will be reduced. A significant reduction in interest income could have a negative impact on our results of operations and financial condition.
If customers prepay the principal amount of their loans, and we are unable to lend those funds to other borrowers or invest the funds at the same or higher interest rates, interest income will be reduced.
Competition is strong as there are numerous well-established and successful investment management and wealth advisory firms including commercial banks and trust companies, investment advisory firms, mutual fund companies, stock brokerage firms, and other financial companies.
Due to strong competition, Camden National Wealth Management may not be able to attract and retain clients at current levels. Competition is strong as there are numerous well-established and successful investment management and wealth advisory firms including commercial banks and trust companies, investment advisory firms, mutual fund companies, stock brokerage firms, and other financial companies.
A substantial portion of income from fiduciary services is dependent on the market value of wealth management assets under management, which are primarily marketable securities.
Camden National Wealth Management may be negatively affected by changes in economic and market conditions. A substantial portion of income from fiduciary services is dependent on the market value of wealth management assets under management, which are primarily marketable securities.
“Management’s Discussion and Analysis—Risk Management Policies—Interest Rate Risk” for additional information regarding the Company’s asset and liability management policies and practices, as well as its interest rate risk position, including assumptions used in determining such, as of December 31, 2022.
“Management’s Discussion and Analysis—Risk Management Policies—Interest Rate Risk” for additional information regarding the Company’s asset and liability management policies and practices, as well as its interest rate risk position, including assumptions used in determining such, as of December 31, 2023. There is risk that any change in interest rates could negatively affect our results of operations or financial condition.
As a result, a judgment against us in any such litigation and/or legal costs incurred in defending us against such litigation could have a material adverse effect on our financial condition and results of operation.
As a result, a judgment against us in any such litigation and/or legal costs incurred in defending us against such litigation could have a material adverse effect on our financial condition and results of operation. We may incur fines, penalties and other negative consequences from regulatory violations, possibly even inadvertent or unintentional violations.
The ability of a borrower to make or refinance a balloon payment may be affected by a number of factors, including the financial condition of the borrower, prevailing economic conditions and prevailing interest rates. Repayment of these loans is generally more dependent on the economy and the successful operation of a business.
The ability of a borrower to make or refinance a balloon payment may be affected by a number of factors, including the financial condition of the borrower, prevailing economic conditions and prevailing interest rates, and rising interest rates may make it more difficult or impossible for borrowers to refinance maturing loans.
Furthermore, our credit risk may be exacerbated when the collateral held by us cannot be liquidated or is liquidated at prices not sufficient to recover the full amount of the financial instrument exposure due to us. Any such losses could materially and adversely affect our results of operations.
Many of these transactions expose us to credit risk in the event of default of our counterparty or client. Furthermore, our credit risk may be exacerbated when the collateral held by us cannot be liquidated or is liquidated at prices not sufficient to recover the full amount of the financial instrument exposure due to us.
Because of the risks associated with commercial loans, we may experience higher rates of default than if the portfolio were more heavily weighted toward residential mortgage loans. Higher rates of default could have an adverse effect on our financial condition and results of operations.
Because of the risks associated with commercial loans, we may experience higher rates of default, and other risks described above may be more pronounced, than if the portfolio were more heavily weighted toward residential mortgage loans.
Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs.
Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs, and failure to comply with any new laws or regulations could result in legal or regulatory sanctions and harm to our reputation.
As a result, defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, could lead to market-wide liquidity problems and losses or defaults by us or by other institutions and organizations. Many of these transactions expose us to credit risk in the event of default of our counterparty or client.
As a result, defaults by, or even rumors or questions about, the soundness, strength or stability of one or more financial services institutions, or the financial services industry generally, could lead to losses or defaults by us or by other institutions and organizations.
The ability to generate internal growth is affected by the competitive factors described herein as well as by the primarily rural characteristics and related demographic features of the markets we serve.
In addition, return on shareholders’ equity and other measures of profitability, which affect the market price of our common stock, depend in part on continued growth and expansion. The ability to generate internal growth is affected by the competitive factors described herein as well as by the primarily rural characteristics and related demographic features of the markets we serve.
For example, the COVID-19 pandemic has created economic and financial disruptions that have adversely affected, and may in the future adversely affect, the Company’s business, financial condition, capital and results of operations.
For example, the COVID-19 pandemic created economic and financial disruptions that have adversely affected, and may in the future adversely affect, the Company’s business, financial condition, capital and results of operations. During the COVID-19 pandemic, the Company experienced significant disruptions to its normal operations, including the temporary closing of branches and a sudden increase in the volume of work-from-home arrangements.
Competitive and Strategic Risk We experience strong competition within our industry and markets, which may impact our profitability. Competition in the banking and financial services industry is strong.
A significant reduction in interest income could have a negative impact on our results of operations and financial condition. 19 Competitive and Strategic Risk We experience strong competition within our industry and markets, which may impact our profitability and adversely affect the price of our common stock. Competition in the banking and financial services industry is strong.
Although the U.S. economy had recovered over the past decade prior to the COVID-19 pandemic, economic concerns have been heightened as a result of the pandemic, and deterioration in any of these conditions, including as a result of the COVID-19 pandemic or other future events that we are unable to predict, could result in increases in loan delinquencies and non-performing assets, decreases in loan collateral values, the value of our investment portfolio and demand for our products and services.
Other future changes in any of these conditions, including as a result of the COVID-19 pandemic, the war in Ukraine, conflict in the Middle East, the threat or occurrence of a U.S. sovereign default or government shutdown, a downgrade, or perceived future downgrade, in the U.S. sovereign credit rating or outlook, disruptions in the financial services industry or other future events that we are unable to predict, could result in increases in loan delinquencies and non-performing assets, decreases in loan collateral values, the value of our investment portfolio and demand for our products and services or otherwise adversely affect our financial condition or results of operations.
At the same time, the CFPB launched an initiative to reduce the amounts and types of fees financial institutions may charge. Such changes could affect our ability or willingness to provide certain products or services, necessitate changes to our business practices or reduce our revenues.
Such changes could affect our ability or willingness to provide certain products or services, necessitate changes to our business practices or reduce our revenues.
We could be adversely affected by the actions and commercial soundness of other financial institutions. Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty and other relationships.
In addition, our ability to engage in routine funding and settlement transactions could be adversely affected by any of these events or by other events that affect the commercial soundness of other financial institutions.
Turbulence in the capital and credit markets may adversely affect our liquidity and financial condition and the willingness of certain counterparties and customers to do business with us. We are a holding company and dependent upon our subsidiary for dividends, distributions and other payments to meet our liquidity needs.
Turbulence in the capital and credit markets may adversely affect our liquidity and financial condition and the willingness of certain counterparties and customers to do business with us. We could lose access to sources of liquidity if we were to experience financial or regulatory issues.
Deposits are a low cost, stable source of funding. We compete with banks, other financial institutions and fintechs for deposits. Recent increases in short-term interest rates have resulted in and are expected to continue to result in more intense competition in deposit pricing.
Recent increases in short-term interest rates have resulted in and are expected to continue to result in more intense competition in deposit pricing. Competition and increasing interest rates have caused us to increase the interest rates we pay on deposits.
Given the significant judgments involved, there is risk that material provisions may be recorded to establish an allowance for credit losses resulting in realized losses. We did not recognize any provisions for credit losses on our investment securities portfolio in 2022. Camden National Wealth Management may be negatively affected by changes in economic and market conditions.
Given the significant judgments involved, there is risk that material provisions may be recorded to establish an allowance for credit losses resulting in realized losses. In 2023, we fully wrote-off a $1.8 million Signature Bank corporate bond, as Signature Bank failed in March 2023, and we recognized the charge-off through provisions for credit losses on our investment securities portfolio.
In pursuing acquisition opportunities, we may be in competition with other companies having similar growth strategies. As a result, we may not be able to identify or acquire promising acquisition candidates on acceptable terms. Competition for these acquisitions could result in increased acquisition prices and a diminished pool of acquisition opportunities.
These and other economic factors or competition for these acquisitions could result in increased acquisition prices and a lack of attractive acquisition opportunities. As a result, we may not be able to identify or acquire acquisition candidates. In addition, we generally must receive federal regulatory approval before we can acquire a bank or bank holding company.
At December 31, 2022, there were no other industry concentrations within our loan portfolio that exceeded 10% of total loans. If our allowance for credit losses for loans is not adequate to cover actual loan losses, our earnings could decrease.
Risks of higher credit losses and other risks described above that could result from adverse economic or other events affecting any industry within our commercial loan portfolio may be exacerbated by industry concentrations within the commercial loan portfolio. If our allowance for credit losses for loans is not adequate to cover actual loan losses, our earnings could decrease.
Any of these effects, or others that we are not able to predict, could adversely affect our financial condition or results of operations. A downgrade or potential downgrade of the U.S. Government's sovereign credit rating by one or more credit ratings agencies could adversely affect our business.
See “Fluctuations in market interest rates have in the past adversely affected, and may in the future adversely affect, our performance” below. Any of these effects, or others that we are not able to predict, could adversely affect our financial condition or results of operations.
However, there is risk that any change in interest rates could negatively affect our results of operations or financial condition. Because market interest rates may change by differing magnitudes and at different times, significant changes in interest rates over an extended period of time could reduce overall net interest income.
Because market interest rates may change by differing magnitudes and at different times, significant changes in interest rates over an extended period of time could reduce overall net interest income. In response to inflation, the Federal Reserve raised targeted Effective Federal Funds Rate significantly during 2022 and through July 2023 to a target range of 5.25% – 5.5%.
An inability to find suitable acquisition candidates at reasonable prices could slow our growth rate and have a negative effect on the market price of our common stock. Liquidity Risk Our cost of funds has increased and may in the future increase further as a result of loss of deposits, a change in deposit mix or changes in interest rates.
Liquidity Risk Our cost of funds has increased and may in the future increase further as a result of loss of deposits, a change in deposit mix or changes in interest rates. Deposits are a low cost, stable source of funding. We compete with banks, other financial institutions and fintechs for deposits.
During the COVID-19 pandemic, the Company experienced significant disruptions to its normal operations, including the temporary 26 closing of branches and a sudden increase in the volume of work-from-home arrangements. In addition, the Company has been indirectly negatively affected by the pandemic’s effects on the Company’s borrowers and other customers, and by its effects on global financial markets.
In addition, the Company was indirectly negatively affected by the pandemic’s effects on the Company’s borrowers and other customers, and by its effects on global financial markets.
Formal rules or guidance to implement such restrictions have not been proposed, but the implementation of any such restrictions could adversely affect our non-interest income and results of operations. In addition, the Biden Administration recently called on all regulatory agencies to reduce or eliminate certain fees relating to a number of services, including banking services.
Although the proposed rule would not apply to the Bank, the CFPB has indicated that it may consider changes to regulations applicable to smaller institutions such as the Bank. Formal rules or guidance to implement such restrictions have not been proposed, but the implementation of any such restrictions could adversely affect our non-interest income and results of operations.
The Company is also subject to the risk that its customers, counterparties and third-party vendors are not operationally ready to transition away from LIBOR, and the failure of such third parties to upgrade their operations to transition away from LIBOR on a timely basis could materially disrupt the Company’s operations. 17 Credit Risk and Lending Business Risk Our loans are concentrated in certain areas of Maine and adverse conditions in those markets could adversely affect our operations.
Credit Risk and Lending Business Risk Our loans are concentrated in certain areas of Maine and adverse conditions in those markets could adversely affect our operations.
The sharp rise in short-term interest rates throughout 2022 resulted in an inverted yield curve for much of 2022, whereby short-term interest rates exceed long-term interest rates, and it continued to be inverted as of December 31, 2022.
The sharp increase in interest rates has resulted in a prolonged inverted yield curve, where short-term interest rates exceed long-term interest rates.
Removed
Higher credit or collateral related losses, or decreases in the value of our investment portfolio or demand for our products and services, could negatively impact our financial condition or results of operations.
Added
For example, economic concerns were heightened during the COVID-19 pandemic from early 2020 through 2022. In addition, bank failures in March and April of 2023 prompted by sudden and significant withdrawals of deposits at the failing banks resulted in significant volatility in the stock prices of certain financial services institutions.
Removed
Future uncertainty over U.S. fiscal policy could result in a downgrade or a reduction in the outlook of the U.S. long-term sovereign credit rating by one or more credit ratings agencies.
Added
Volatility due to failures of other banks or general uncertainty regarding the health of banks may affect customer deposit behavior and cause deposit withdrawals.
Removed
Any downgrade, or perceived future downgrade, in the U.S. sovereign credit rating or outlook could adversely affect global financial markets and economic conditions and may result in, among other things, increased volatility and illiquidity in the capital markets, declines in consumer confidence, increased unemployment levels and declines in the value of U.S.
Added
These conditions may continue or worsen if the Federal Reserve continues to hold interest rates at the current level or raise interest rates in response to inflationary pressures or other economic conditions. Volatility in interest rates can also result in customer deposits flowing away from financial institutions into direct investments.
Removed
Treasury securities and securities guaranteed by the U.S. government. As a result, our business, liquidity, results of operations and financial conditions may be adversely affected. Additionally, the economic conditions resulting from any such downgrade or perceived future downgrade may significantly exacerbate the other risks we face. Fluctuations in market interest rates may adversely affect our performance.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest change(2) Includes space leased to third parties. 28 For additional information regarding the Company's premises and equipment and lease obligations see Notes 5 and 6 of the consolidated financial statements within Item 8. Financial Statements and Supplementary Data.
Biggest changeNone of the properties owned by the Company are subject to a mortgage or other encumbrance. All facilities are fully utilized and considered suitable and adequate for the purposes intended. For additional information regarding the Company's premises and equipment and lease obligations see Notes 5 and 6 of the consolidated financial statements within Item 8. Financial Statements and Supplementary Data.
The Company owns 42 of its facilities, none of which are subject to a mortgage, and the remaining branches and loan offices are leased by the Company. The Company has 56 branches located throughout Maine, a branch in Portsmouth, New Hampshire, a commercial loan production office in Manchester, New Hampshire, and a mortgage loan production office in Braintree, Massachusetts.
The Company also owns and operates a service center in Rockport, Maine, and owns or leases, and operates, 56 branches located throughout Maine, a branch in Portsmouth, New Hampshire, a commercial loan production office in Manchester, New Hampshire, and a mortgage loan production office in Braintree, Massachusetts.
Removed
Item 2. Properties At December 31, 2022, the Company owned or leased a total of 64 facilities, excluding any properties designated as other real estate owned. All facilities are fully utilized and considered suitable and adequate for the purposes intended.
Added
Item 2. Properties The Company owns its principal executive offices, located at 2 Elm Street, Camden, Maine, and the Company leases additional executive offices at 3 Canal Plaza, Portland, Maine.
Removed
The following table presents the Company's materially important locations and properties as of December 31, 2022: Facility Name Location General Character of the Physical Property Primary Business Segment Property Status Property Square Feet (1) Main Office Camden, Maine 3 story building Branch and principal executive office Owned 15,500 3 Canal Plaza Portland, Maine 1 floor Executive office Leased 3,850 2 Canal Plaza Portland, Maine 2 floors Branch and service center Leased 17,710 Hanley Center Rockport, Maine 2 story building Service center Owned 32,360 Gardiner Gardiner, Maine 3 story building Branch and service center Owned 17,497 Kennebunk Kennebunk, Maine 2 story building Branch and service center Owned 9,982 Auburn Auburn, Maine 3 story building Branch Owned 13,000 Bangor Bangor, Maine 1 floor Branch Leased 17,432 Ellsworth Ellsworth, Maine 3 story building Branch Owned 44,000 (2) Rockland Rockland, Maine 3 story building Branch Owned 21,600 (1) Total square footage for leased locations represents the amount of space the Company occupies.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs of December 31, 2022 and 2021, the Company did not maintain material reserves against legal claims. Item 4. Mine Safety Disclosures Not applicable. 29 PART II
Biggest changeAs of December 31, 2023 and 2022, the Company did not maintain material reserves against legal claims. Item 4. Mine Safety Disclosures Not applicable. 32 PART II
Item 3. Legal Proceedings The Company is currently involved, and from time to time in the future may become involved, in various legal claims that arise in the normal course of the Company’s business.
Item 3. Legal Proceedings The Company is currently involved, and from time to time in the future may become involved, in various legal claims that 31 arise in the normal course of the Company’s business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe high and low closing sales prices (as quoted by NASDAQ for 2022 and 2021) and cash dividends declared per share of the Company’s common stock, by calendar quarter for the past two years, were as follows: 2022 2021 Market Price Dividends Declared per Share Market Price Dividends Declared per Share High Low High Low First Quarter $ 51.63 $ 46.72 $ 0.40 $ 49.19 $ 35.96 $ 0.36 Second Quarter 47.94 41.93 0.40 49.20 46.02 0.36 Third Quarter 49.01 42.60 0.40 49.09 44.00 0.36 Fourth Quarter 44.07 40.38 0.42 50.83 44.27 0.40 As of February 28, 2023, there were 14,568,439 shares of the Company’s common stock outstanding by approximately 1,000 shareholders, as obtained through our transfer agent.
Biggest changeThe high and low closing sales prices (as quoted by NASDAQ for 2023 and 2022) and cash dividends declared per share of the Company’s common stock, by calendar quarter for the past two years, were as follows: 2023 2022 Market Price Dividends Declared per Share Market Price Dividends Declared per Share High Low High Low First Quarter $ 42.35 $ 35.43 $ 0.42 $ 51.63 $ 46.72 $ 0.40 Second Quarter 35.73 28.98 0.42 47.94 41.93 0.40 Third Quarter 36.75 28.20 0.42 49.01 42.60 0.40 Fourth Quarter 38.89 26.82 0.42 44.07 40.38 0.42 As of February 28, 2024, there were 14,566,850 shares of the Company’s common stock outstanding, and there were approximately 1,000 holders of record of the Company’s common stock.
For further information on dividend restrictions, refer to Item 1. “Business—Supervision and Regulation” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources.” The following graph illustrates the annual percentage change in the cumulative total shareholder return of the Company’s common stock for the period December 31, 2017 through December 31, 2022.
For further information on dividend restrictions, refer to Item 1. “Business—Supervision and Regulation” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Resources.” The following graph illustrates the annual percentage change in the cumulative total shareholder return of the Company’s common stock for the period December 31, 2018 through December 31, 2023.
Issuer's Purchases of Equity Securities Period Total number of shares (or units) purchased Average price paid per share (or unit) Total number of shares (or units) purchased as part of publicly announced plans or programs Maximum number (or appropriate dollar value) of shares (or units) that may yet be purchased under the plans or programs October 1-31, 2022 — $ — 225,245 524,755 November 1-30, 2022 — — 225,245 524.755 December 1-31, 2022 — — 225,245 524,755 Total — $ — 225,245 524,755 In January 2023, the Board of Directors authorized a common stock repurchase program authorizing management to repurchase up to 750,000 shares, or approximately 5%, of the Company's outstanding common stock.
Issuer's Purchases of Equity Securities Period Total number of shares (or units) purchased Average price paid per share (or unit) Total number of shares (or units) purchased as part of publicly announced plans or programs Maximum number (or appropriate dollar value) of shares (or units) that may yet be purchased under the plans or programs October 1-31, 2023 — $ — — 684,308 November 1-30, 2023 — — — 684,308 December 1-31, 2023 — — — 684,308 Total — $ — — 684,308 In January 2024, the Board of Directors authorized a common stock repurchase program authorizing management to repurchase up to 750,000 shares, or approximately 5%, of the Company's outstanding common stock.
Stock Performance Graph In January 2022, the Board of Directors authorized a common stock repurchase program, authorizing management to repurchase up to 750,000 shares, or approximately 5%, of the Company's outstanding common stock, that had an expiration date of the earlier of (i) reaching the authorized share repurchase amount, (ii) vote by the Board of Directors to terminate the 30 plan, or (iii) one year.
The comparisons in the graph are based on historical data and are not indicative of, nor intended to forecast, future performance of the Company’s common stock. 33 Stock Performance Graph In January 2023, the Board of Directors approved a common stock repurchase program, authorizing management to repurchase up to 750,000 shares, or approximately 5%, of the Company's outstanding common stock, that had an expiration date of the earlier of (i) reaching the authorized share repurchase amount, (ii) vote by the Board of Directors to terminate the plan, or (iii) one year.
This program replaces the 2022 repurchase program and will terminate upon the earlier of (i) reaching the authorized share repurchase amount, (ii) vote by the Board of Directors to terminate the plan, or (iii) January 3, 2024. Other information required by this item is incorporated by reference to Item 12.
This program replaces the 2023 repurchase program and will terminate upon the earlier of (i) reaching the authorized share repurchase amount, (ii) vote by the Board of Directors to terminate the plan, or (iii) January 5, 2024. 34 Item 6. [Reserved] Not applicable.
For purposes of comparison, the graph illustrates comparable shareholder returns of the S&P U.S. SmallCAP Banks Index and the Russell 2000 Stock Index. The graph assumes a $100 investment on December 31, 2017 in each case and measures the amount by which the market value, assuming reinvestment of dividends, has changed as of December 31, 2022.
For purposes of comparison, the graph illustrates comparable shareholder returns of the S&P U.S. SmallCAP Banks Index and the Russell 2000 Stock Index. The graph assumes a $100 investment on December 31, 2018 in the Company’s common stock and each of the foregoing indices and assumes the reinvestment of all dividends.
As of December 31, 2022, the Company repurchased 225,245 shares at an average price of $45.46. This repurchase program subsequently terminated in January 2023.
As of December 31, 2023, the Company repurchased 65,692 shares at an average price of $30.44, none of which were repurchased during the fourth quarter of 2023. This repurchase program expired after one year in January 2024.
Removed
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . 31 Item 6. Selected Financial Data Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

197 edited+105 added−89 removed107 unchanged
Biggest change(2) Additional information related to (credit) provision for loan losses and net (charge-offs) recoveries is presented in the following table for the periods indicated: 58 For the Year Ended December 31, (Dollars in thousands) Total Charge-offs Total Recoveries Net Charge-Offs (Recoveries) Average Loans Ratio of Net Charge-Offs (Recoveries) to Average Loans 2022 Commercial real estate $ — $ 5 $ (5) $ 1,532,225 — % Commercial 1,042 379 663 415,305 0.16 % SBA PPP — — — 6,999 — % Residential real estate 66 — 66 1,511,985 — % Consumer and home equity 134 94 40 243,901 0.02 % Total $ 1,242 $ 478 $ 764 $ 3,710,415 0.02 % 2021: Commercial real estate $ — $ 9 $ (9) $ 1,412,884 — % Commercial 799 220 579 361,256 0.16 % SBA PPP — — — 118,414 — % Residential real estate 92 107 (15) 1,156,698 — % Consumer and home equity 273 36 237 250,061 0.09 % Total $ 1,164 $ 372 $ 792 $ 3,299,313 0.02 % 2020: Commercial real estate $ 103 $ 120 $ (17) $ 1,310,160 — % Commercial 1,130 572 558 417,160 0.13 % SBA PPP — — — 146,918 — % Residential real estate 121 292 (171) 1,085,064 (0.02) % Consumer and home equity 484 100 384 312,076 0.12 % Total $ 1,838 $ 1,084 $ 754 $ 3,271,378 0.02 % The following table sets forth information concerning the allocation of the ACL on loans by loan categories at the dates indicated: December 31, 2022 2021 (Dollars in thousands) ACL on Loans Percent of Loans in Each Category to Total Loans ACL on Loans Percent of Loans in Each Category to Total Loans Commercial real estate - non-owner-occupied $ 17,296 32 % $ 18,834 34 % Commercial real estate - owner-occupied 2,362 8 % 2,539 9 % Commercial 5,445 11 % 4,183 11 % SBA PPP 1 — % 19 1 % Residential real estate 9,089 42 % 6,133 38 % Consumer and home equity 2,729 6 % 1,548 7 % Total $ 36,922 100 % $ 33,256 100 % There was no ACL on AFS or HTM debt securities as of December 31, 2022 or 2021.
Biggest changeThe following table sets forth information concerning the components of our ACL for the periods indicated: At or For the Year Ended December 31, (Dollars in thousands) 2023 2022 2021 ACL on loans, beginning of period $ 36,922 $ 33,256 $ 37,865 Provision (credit) for loan losses 1,174 4,430 (3,817) Net charge-offs (recoveries) (1) : Commercial real estate 39 (5) (9) Commercial 1,089 663 579 Residential real estate (26) 66 (15) Consumer and home equity 59 40 237 Total net charge-offs 1,161 764 792 ACL on loans, end of the period $ 36,935 $ 36,922 $ 33,256 Components of ACL: ACL on loans $ 36,935 $ 36,922 $ 33,256 ACL on off-balance sheet credit exposures 2,353 3,265 3,195 ACL, end of period $ 39,288 $ 40,187 $ 36,451 Total loans, excluding loans held for sale $ 4,098,094 $ 4,010,353 $ 3,431,474 Average loans $ 4,076,681 $ 3,710,415 $ 3,299,313 Net charge-offs to average loans 0.03 % 0.02 % 0.02 % Provision (credit) for loan losses to average loans 0.03 % 0.12 % (0.12) % ACL on loans to total loans 0.90 % 0.92 % 0.97 % (1) Additional information related to (credit) provision for loan losses and net (charge-offs) recoveries is presented in the following table for the periods indicated: For the Year Ended December 31, (Dollars in thousands) Total Charge-offs Total Recoveries Net Charge-Offs (Recoveries) Average Loans Ratio of Net Charge-Offs (Recoveries) to Average Loans 2023: Commercial real estate $ 58 $ 19 $ 39 $ 1,659,078 — % Commercial 1,560 471 1,089 415,650 0.26 % Residential real estate 18 44 44 (26) 1,748,076 — % Consumer and home equity 91 32 59 253,877 0.02 % Total $ 1,727 $ 566 $ 1,161 $ 4,076,681 0.03 % 2022: Commercial real estate $ — $ 5 $ (5) $ 1,532,225 — % Commercial 1,042 379 663 422,304 0.16 % Residential real estate 66 — 66 1,511,985 — % Consumer and home equity 134 94 40 243,901 0.02 % Total $ 1,242 $ 478 $ 764 $ 3,710,415 0.02 % 2021: Commercial real estate $ — $ 9 $ (9) $ 1,412,884 — % Commercial 799 220 579 479,670 0.12 % Residential real estate 92 107 (15) 1,156,698 — % Consumer and home equity 273 36 237 250,061 0.09 % Total $ 1,164 $ 372 $ 792 $ 3,299,313 0.02 % 63 The following table sets forth information concerning the allocation of the ACL on loans by loan categories at the dates indicated: December 31, 2023 2022 (Dollars in thousands) ACL on Loans Percent of Loans in Each Category to Total Loans ACL on Loans Percent of Loans in Each Category to Total Loans Commercial real estate - non-owner-occupied $ 16,581 33 % $ 17,296 32 % Commercial real estate - owner-occupied 2,290 7 % 2,362 8 % Commercial 4,869 10 % 5,446 11 % Residential real estate 10,254 43 % 9,089 42 % Consumer and home equity 2,941 6 % 2,729 6 % Total $ 36,935 100 % $ 36,922 100 % Refer to “—Critical Accounting Policies” and Note 1 of the consolidated financial statements for further details of our CECL model macroeconomic factors ( i.e. loss drivers), and refer to Note 3 of the consolidated financial statements for discussion of the risk characteristics for each portfolio segment considered when evaluating the ACL, as well as factors driving the change in the ACL on loans at December 31, 2023 compared to December 31, 2022.
The risk categories include: credit; liquidity; market; interest rate; capital; operational and technology, including cybersecurity; vendor and third party; people and compensation; compliance and legal; and strategic alignment and reputation. The Board of Directors has approved an Enterprise Risk Management (“ERM”) Policy that addresses each category of risk.
The risk categories include: credit; liquidity; market; interest rate; capital; operational; technology, including cybersecurity; vendor and third party; people and compensation; compliance and legal; and strategic alignment and reputation. The Board of Directors has approved an Enterprise Risk Management (“ERM”) Policy that addresses each category of risk.
Strategic alignment risk is the current and prospective impact on earnings or capital arising from adverse business decisions, improper implementation of decisions, or lack of responsiveness to industry changes.
Strategic Alignment Risk. Strategic alignment risk is the current and prospective impact on earnings or capital arising from adverse business decisions, improper implementation of decisions, or lack of responsiveness to industry changes.
The ACL on loans is reviewed and approved on a quarterly basis by the Company's Audit Committee, and later reviewed and ratified by the Bank's Board of Directors. Refer to “—Results of Operations—Provision for Credit Losses,” “—Financial Condition—Asset Quality,” and Note 3 of the consolidated financial statements for further discussion. ACL on Off-Balance Sheet Credit Exposures.
The ACL on loans is reviewed and approved on a quarterly basis by the Company's Audit Committee, and later reviewed and ratified by the Bank's Board of Directors. 42 Refer to “—Results of Operations—Provision for Credit Losses,” “—Financial Condition—Asset Quality,” and Note 3 of the consolidated financial statements for further discussion. ACL on Off-Balance Sheet Credit Exposures.
When such an event has been identified, a discounted cash flow model is used to determine the expected losses due to credit risk, and an allowance is recorded to reduce the carrying value of the debt security by the calculated expected loss amount, limited to the amount by which the fair value of the debt security is below its amortized cost basis.
When such an event has been identified, a discounted cash flow model is used to determine the expected losses due to credit risk, and an allowance 43 is recorded to reduce the carrying value of the debt security by the calculated expected loss amount, limited to the amount by which the fair value of the debt security is below its amortized cost basis.
Board ALCO and Management ALCO utilize the results of a 67 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.
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.
We also may engage 40 external valuation services to assist with the valuation of material assets and liabilities acquired, including, but not limited to, loans, core deposit intangibles and/or other intangible assets, real estate and time deposits. As part of purchase accounting, we typically acquire goodwill and other intangible assets as part of the purchase price.
We also may engage external valuation services to assist with the valuation of material assets and liabilities acquired, including, but not limited to, loans, core deposit intangibles and/or other intangible assets, real estate and time deposits. As part of purchase accounting, we typically acquire goodwill and other intangible assets as part of the purchase price.
Although our policy specifies a downward shift of 200 basis points, this would have resulted in negative rates as of December 31, 2021 and 2020 as many deposit and funding rates were below 2.00%. In this case, a downward shift of 100 basis points was the only down scenario performed.
Although our policy specifies a downward shift of 200 basis points, this would have resulted in negative rates as of December 31, 2021 as many deposit and funding rates were below 2.00%. In this case, a downward shift of 100 basis points was the only down scenario performed.
A parallel and pro rata shift in rates over a 12-month period is assumed. Using this approach, we are able to produce simulation results that illustrate the effect that both a gradual change of rates and a “rate shock” have on earnings expectations.
A parallel and pro rata shift in rates over a 12-month period is assumed. Using this approach, we are able to produce simulation 73 results that illustrate the effect that both a gradual change of rates and a “rate shock” have on earnings expectations.
MBS and CMO debt security cash flow will vary depending on the interest rate environment because borrowers may have the right to call or prepay obligations with or without prepayment penalties. The rise in interest rates during 2022 resulted in slowing cash flows.
MBS and CMO debt security cash flow will vary depending on the interest rate environment because borrowers may have the right to call or prepay obligations with or without prepayment penalties. The rise in interest rates during 2023 and 2022 resulted in slowing cash flows.
If the fair value of the investment is below its amortized cost basis for non-credit-related reasons (e.g. interest rate environment), then the impairment continues to be recognized within shareholders' equity through AOCI. ACL on Loans.
If the fair value of the investment is below its amortized cost basis for non-credit-related reasons (e.g. interest rate environment), then the impairment continues to be recognized within shareholders' equity through AOCI. 41 ACL on Loans.
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: 55 • The Credit Risk team, Collection and Special Assets team and the Credit Risk Policy Committee, which is an internal management committee comprised of various executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Collections and Special Assets, Risk, and Commercial and Retail Banking, oversee the Company's systems and procedures to monitor the credit quality of its loan portfolio, conduct a loan review program, and maintain the integrity of the loan rating system. • The adequacy of the ACL is overseen by the Management Provision Committee, which is an internal management committee comprised of various Company executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Collections and Special Assets, Compliance, and Commercial and Retail Banking.
The Company continues to dedicate significant resources to monitor and manage credit risk throughout our loan portfolio and includes management and board-level oversight as follows: • The Credit Risk team, Collection and Special Assets team and the Credit Risk Policy Committee, which is an internal management committee comprised of various executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Collections and Special Assets, Risk, and Commercial and Retail Banking, oversee the Company's systems and procedures to monitor the credit quality of its loan portfolio, conduct a loan review program, and maintain the integrity of the loan rating system. 60 • The adequacy of the ACL is overseen by the Management Provision Committee, which is an internal management committee comprised of various Company executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Collections and Special Assets, Compliance, and Commercial and Retail Banking.
The Company has many service partners and an 69 increasing reliance on outsourced services, which places greater risk on the Company through these many partners. These relationships are controlled by contracts and service level agreements, but represent increasing risk to the Company.
The Company has many service partners and an increasing reliance on outsourced services, which places greater risk on the Company through these many partners. These relationships are controlled by contracts and service level agreements, but represent increasing risk to the Company.
In addition, one other key assumption is used to derive the allowance on off- 39 balance sheet credit exposures and that is the expected funding rate.
In addition, one other key assumption is used to derive the allowance on off-balance sheet credit exposures and that is the expected funding rate.
We elected to use the quantitative analysis to perform the annual goodwill impairment assessment as of November 30, 2022 and concluded that goodwill was not impaired.
We elected to use the quantitative analysis to perform the annual goodwill impairment assessment as of November 30, 2023 and 2022 and concluded that goodwill was not impaired.
Due to the potential for unexpected fluctuations in both deposits and loans, active management of liquidity is necessary. We maintain various sources of funding and levels of liquid assets and monitor liquidity in accordance with internal guidelines and all applicable regulatory requirements. At December 31, 2022 and 2021, the Company's liquidity level exceeded its target.
Due to the potential for unexpected fluctuations in both deposits and loans, active management of liquidity is necessary. We maintain various sources of funding and levels of liquid assets and monitor liquidity in accordance with internal guidelines and all applicable regulatory requirements. At December 31, 2023 and 2022, the Company's liquidity level exceeded its target.
The allowance at December 31, 2022 and 2021, represented our best estimate, however, we may adjust our assumptions to account for differences between expected and actual losses from period to period. A future change to our assumptions will likely alter the level of allowance required and may have a material impact on future results of operations and financial condition.
The allowance at December 31, 2023 and 2022, represented our best estimate, however, we may adjust our assumptions to account for differences between expected and actual losses from period to period. A future change to our assumptions will likely alter the level of allowance required and may have a material impact on future results of operations and financial condition.
These assets are subject to ongoing periodic impairment tests under differing accounting models. We did not acquire any other company or assets during 2022 or 2021. Goodwill impairment evaluations are required to be performed at least annually, but may be required more frequently if certain conditions indicate a potential impairment may exist.
These assets are subject to ongoing periodic impairment tests under differing accounting models. We did not acquire any other company or assets during 2023 or 2022. Goodwill impairment evaluations are required to be performed at least annually, but may be required more frequently if certain conditions indicate a potential impairment may exist.
At December 31, 2022 and 2021, goodwill totaled $94.7 million. Through our annual impairment analysis performed as of November 30, 2022, we determined goodwill was not impaired. Refer to “—Critical Accounting Policies” and Note 4 of the consolidated financial statements for further details of the testing performed.
At December 31, 2023 and 2022, goodwill totaled $94.7 million. Through our annual impairment analysis performed as of November 30, 2023, we determined goodwill was not impaired. Refer to “—Critical Accounting Policies” and Note 4 of the consolidated financial statements for further details of the testing performed.
As further described within “—Financial Condition—Investments,” the Company's AFS portfolio, as of December 31, 2022 and 2021, was primarily consisted of MBS and CMO debt securities issued or guaranteed by U.S. government-sponsored agencies, and, thus, presenting little to no credit risk.
As further described within “—Financial Condition—Investments,” the Company's AFS portfolio, as of December 31, 2023 and 2022, was primarily consisted of MBS and CMO debt securities issued or guaranteed by U.S. government-sponsored agencies, and, thus, presenting little to no credit risk.
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.
These hypothetical estimates are based upon numerous assumptions including, among others, the nature and timing of interest rate levels, yield curve shape, prepayments on loans and securities, decay rates, pricing decisions on loans and deposits, including loan and deposit betas, and reinvestment/replacement of asset and liability cash flows.
At December 31, 2022 and 2021, the Company’s investment portfolio generally consisted of MBS, CMO, municipal and corporate debt securities, FHLBB and FRB common stock, and mutual funds held in a rabbi trust for purposes of Company executive and director nonqualified retirement plans.
At December 31, 2023 and 2022, the Company’s investment portfolio generally consisted of MBS, CMO, municipal and corporate debt securities, FHLBB and FRB common stock, and mutual funds held in a rabbi trust for purposes of Company executive and director nonqualified retirement plans.
Refer to Note 19 of the consolidated financial statements for further discussion of income taxes and related deferred tax assets and liabilities. 2021 Operating Results as Compared to 2020 Operating Results Results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020 can be found in Item 7.
Refer to Note 19 of the consolidated financial statements for further discussion of income taxes and related deferred tax assets and liabilities. 2022 Operating Results as Compared to 2021 Operating Results Results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 can be found in Item 7.
We proactively monitor our borrowings through Management and Board ALCO as part of prudent balance sheet, earnings, and 60 liquidity management.
We proactively monitor our borrowings through Management and Board ALCO as part of prudent balance sheet, earnings, and liquidity management.
Refer to Note 12 of the consolidated financial statements for further discussion of our derivatives and hedge instruments. 65 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.
Refer to Note 12 of the consolidated financial statements for further discussion of our derivatives and hedge instruments. 71 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.
In connection with the formation of CCTA and UBCT, and the issuance and sale of trust preferred securities to the public, we received and had outstanding at December 31, 2022 and 2021, junior subordinated debentures totaling $44.3 million. FHLBB Collateral.
In connection with the formation of CCTA and UBCT, and the issuance and sale of trust preferred securities to the public, we received and had outstanding at December 31, 2023 and 2022, junior subordinated debentures totaling $44.3 million. FHLBB Collateral.
We designate our debt securities as AFS or HTM based on our intent and investment strategy and they are carried at fair value or amortized cost, respectively. Our FHLBB and FRB common stock is carried at cost; and our mutual fund investments are designated as trading securities and are carried at fair value.
We designate our debt securities as AFS or HTM based on our intent and investment strategy and they are carried at fair value or amortized cost, respectively. Our FHLBB and FRB common stock is carried at cost, and our mutual fund investments are carried at fair value.
As part of our liquidity management, we use internal designations of “short-term” and “long-term” borrowings, and manage our borrowings within each designation: • Short-term borrowings include, but are not limited to, FHLBB and correspondent bank overnight borrowings, FHLBB advances with maturity within one year of origination, and customer repurchase agreements. • Long-term borrowings may include, but are not limited to, FHLBB advances with maturity greater than one year, wholesale repurchase agreements, and subordinated debentures.
As part of our liquidity management, we use internal designations of “short-term” and “long-term” borrowings, and manage our borrowings within each designation: • Short-term borrowings include, but are not limited to, FHLBB and correspondent bank overnight borrowings, FHLBB advances with maturity within one year of origination, the BTFP, and customer repurchase agreements; and • Long-term borrowings may include, but are not limited to, FHLBB advances with maturity greater than one year, wholesale repurchase agreements, and junior subordinated debentures.
As of December 31, 2022 and 2021, the Company's AFS portfolio is entirely made up of assets that are fair valued using level 2 valuation techniques in accordance with ASC 820, Fair Value Measurement .
As of December 31, 2023 and 2022, the Company's AFS portfolio is entirely made up of assets that are fair valued using level 2 valuation techniques in accordance with ASC 820, Fair Value Measurement .
At December 31, 2022, the net unrealized losses on the transferred securities reported within AOCI were $52.2 million, net of a deferred tax asset of $14.3 million and the weighted-average life on these securities was 8.8 years.
At December 31, 2022, the net unrealized losses on the transferred securities reported within AOCI were $52.2 million, net of a deferred tax asset of $14.3 million and the weighted-average of these securities were 8.8 years.
As of December 31, 2022, 2021 and 2020, our net interest income sensitivity analysis reflected the following changes to net interest income assuming no balance sheet growth or change in composition, and a parallel shift in interest rates.
As of December 31, 2023, 2022 and 2021, our net interest income sensitivity analysis reflected the following changes to net interest income assuming no balance sheet growth or change in composition, and a parallel shift in interest rates.
Although we determined a valuation allowance was not required for our deferred tax assets as of December 31, 2022 and 2021, there is no guarantee that these assets will be realized.
Although we determined a valuation allowance was not required for our deferred tax assets as of December 31, 2023 and 2022, there is no guarantee that these assets will be realized.
As of and for the years ended December 31, 2022, 2021 and 2020, we did not record any allowances or write-down any of our AFS debt securities in an unrealized loss position.
As of and for the years ended December 31, 2023, 2022 and 2021, we did not record any allowances or write-down any of our AFS debt securities in an unrealized loss position.
The (a) changes in volume (change in volume multiplied by prior year's rate), (b) changes in rates (change in rate multiplied by current year's volume), and (c) changes in rate/volume (change in rate multiplied by the change in volume), which is allocated to the change due to rate column. For the Year Ended December 31, 2022 vs.
The (a) changes in volume (change in volume multiplied by prior year's rate), (b) changes in rates (change in rate multiplied by current year's volume), and (c) changes in rate/volume (change in rate multiplied by the change in volume), which is allocated to the change due to rate column. For the Year Ended December 31, 2023 vs.
In January 2023, the Company's Board of Directors authorized the repurchase of up to 750,000 shares of the Company's common stock, representing approximately 5.0% of the Company's issued and outstanding shares of common stock as of December 31, 2022.
In January 2024, the Company's Board of Directors authorized the repurchase of up to 750,000 shares of the Company's common stock, representing approximately 5.0% of the Company's issued and outstanding shares of common stock as of December 31, 2023.
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.
In addition to managing our interest rate risk position and earnings through the sale of these loans, we also manage our liquidity position through timely sales of residential mortgage loans to the secondary market.
As of December 31, 2022 and 2021, the recorded ACL on off-balance sheet credit exposures was $3.3 million and $3.2 million, respectively, and presented within accrued interest and other liabilities on the consolidated statements of condition. Increases (decreases) to the allowance are presented within provision (credit) for credit losses on the consolidated statements of income.
As of December 31, 2023 and 2022, the recorded ACL on off-balance sheet credit exposures was $2.4 million and $3.3 million, respectively, and presented within accrued interest and other liabilities on the consolidated statements of condition. Increases (decreases) to the allowance are presented within provision (credit) for credit losses on the consolidated statements of income.
We continuously monitor and assess the need for a valuation allowance on our deferred tax assets, and we determined that no valuation allowance was necessary as of December 31, 2022 and 2021. Refer to “—Financial Condition—Investments,” and Note 2 of the consolidated financial statements for further discussion of investments.
We continuously monitor and assess the need for a valuation allowance on our deferred tax assets, and we determined that no valuation allowance was necessary as of December 31, 2023 or December 31, 2022. Refer to “—Financial Condition—Investments,” and Note 2 of the consolidated financial statements for further discussion of investments.
Note 3 and Note 8 of the consolidated financial statements provide information on related party lending and deposit transactions, respectively. We have not entered into significant related party transactions. Asset Quality Asset quality is of the upmost importance to the Company, and continues to be of great focus given current and forecasted markets conditions.
Note 3 and Note 8 of the consolidated financial statements provide information on related party lending and deposit transactions, respectively. We have not entered into significant related party transactions. Asset Quality Asset quality is of the upmost importance to the Company, and continues to be of great focus given current market conditions.
The Company's residential mortgage loan portfolio is also a significant source of contingent liquidity for the Company that could be accessed in a reasonable time period through the sale of loans on the secondary market, as needed. As of December 31, 2022, qualifying loans with a book value of $1.6 billion were pledged as collateral.
The Company's residential mortgage loan portfolio is also a significant source of contingent liquidity for the Company that could be accessed in a reasonable time period through the sale of loans on the secondary market, as needed. As of December 31, 2023, qualifying loans with a book value of $1.9 billion were pledged as collateral.
In January 2023, we announced a new share repurchase program was approved by the Company’s Board of Directors for up to 750,000 shares, or approximately 5% of total shares outstanding as of December 31, 2022, and the termination of our share repurchase program that was opened in 2022. Operating Results.
In January 2024, we announced a new share repurchase program approved by the Company’s Board of Directors for up to 750,000 shares, or approximately 5% of total shares outstanding at December 31, 2023, and the termination of our share repurchase program that was opened in 2023. Operating Results.
At December 31, 2022 and 2021, the Company and Bank met all regulatory capital requirements and the Bank continues to be classified as “well capitalized” under prompt corrective action provisions. 66 RISK MANAGEMENT The Company’s Board of Directors and management have identified significant risk categories which affect the Company.
At December 31, 2023 and 2022, the Company and Bank met all regulatory capital requirements and the Bank continues to be classified as “well capitalized” under prompt corrective action provisions. 72 RISK MANAGEMENT The Company’s Board of Directors and management have identified significant risk categories which affect the Company.
As of December 31, 2022, our distribution channels include 57 branches within Maine, two locations in New Hampshire, including a branch in Portsmouth and a commercial loan production office in Manchester, a mortgage loan production office in Braintree, Massachusetts, and an online residential mortgage and small business digital loan platform.
As of December 31, 2023, our distribution channels include 56 branches within Maine, two locations in New Hampshire, including a branch in Portsmouth and a commercial loan production office in Manchester, a mortgage loan production office in Braintree, Massachusetts, and an online residential mortgage and small business digital loan platform.
As of December 31, 2022 and 2021, the Company's MBS and CMO debt securities portfolio totaled 87% and 90%, respectively, of the Company's investment portfolio. The investment portfolio is also a significant source of contingent liquidity for the Company that could be accessed in a reasonable time period through the sale of investments on the secondary market, if needed.
As of December 31, 2023 and 2022, the Company's MBS and CMO debt securities portfolio totaled 91% and 87%, respectively, of the Company's 70 investment portfolio. The investment portfolio is also a significant source of contingent liquidity for the Company that could be accessed in a reasonable time period through the sale of investments on the secondary market, if needed.
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. Return on Average Tangible Equity.
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.
“Management's Discussion and Analysis of Financial Condition and Results of Operations .” The following is provided to aid the reader and provide a reference page when reviewing this section of the Form 10-K: Acronym Description Acronym Description AFS: Available-for-sale GAAP: Generally accepted accounting principles in the United States ALCO: Asset/Liability Committee GDP: Gross domestic product ACL: Allowance for credit losses HPFC: Healthcare Professional Funding Corporation, a wholly-owned subsidiary of Camden National Bank AOCI: Accumulated other comprehensive income (loss) HTM: Held-to-maturity ASC: Accounting Standards Codification IRS: Internal Revenue Service ASU: Accounting Standards Update LGD: Loss given default Bank: Camden National Bank, a wholly-owned subsidiary of Camden National Corporation LIBOR: London Interbank Offered Rate BOLI: Bank-owned life insurance LTIP: Long-Term Performance Share Plan Board ALCO: Board of Directors' Asset/Liability Committee Management ALCO: Management Asset/Liability Committee CCTA: Camden Capital Trust A, an unconsolidated entity formed by Camden National Corporation MBS: Mortgage-backed security CD: Certificate of deposits MSPP: Management Stock Purchase Plan CECL: Current Expected Credit Losses N/A: Not applicable Company: Camden National Corporation N.M.: Not meaningful CMO: Collateralized mortgage obligation OCC: Office of the Comptroller of the Currency CUSIP: Committee on Uniform Securities Identification Procedures OCI: Other comprehensive income (loss) DCRP: Defined Contribution Retirement Plan OREO: Other real estate owned EPS: Earnings per share PD: Probability of default FASB: Financial Accounting Standards Board ROU: Right-of-use FDIC: Federal Deposit Insurance Corporation SBA: U.S.
“Management's Discussion and Analysis of Financial Condition and Results of Operations .” The following is provided to aid the reader and provide a reference page when reviewing this section of the Form 10-K: Acronym Description Acronym Description AFS: Available-for-sale GAAP: Generally accepted accounting principles in the United States ALCO: Asset/Liability Committee GDP: Gross domestic product ACL: Allowance for credit losses HTM: Held-to-maturity AOCI: Accumulated other comprehensive income (loss) LGD: Loss given default ASC: Accounting Standards Codification LIBOR: London Interbank Offered Rate ASU: Accounting Standards Update LTIP: Long-Term Performance Share Plan Bank: Camden National Bank, a wholly-owned subsidiary of Camden National Corporation Management ALCO: Management Asset/Liability Committee BOLI: Bank-owned life insurance MBS: Mortgage-backed security Board ALCO: Board of Directors' Asset/Liability Committee MSPP: Management Stock Purchase Plan BTFP: Bank Term Funding Program, introduced by the Federal Reserve Bank in March 2023 N/A: Not applicable CCTA: Camden Capital Trust A, an unconsolidated entity formed by Camden National Corporation N.M.: Not meaningful CD: Certificate of deposits OCC: Office of the Comptroller of the Currency CECL: Current Expected Credit Losses OCI: Other comprehensive income (loss) Company: Camden National Corporation OREO: Other real estate owned CMO: Collateralized mortgage obligation PD: Probability of default CUSIP: Committee on Uniform Securities Identification Procedures ROU: Right-of-use DCRP: Defined Contribution Retirement Plan SBA: U.S.
The increase for the year ended 2022 over 2021 was driven by continued investments in customer-facing technology platforms, internal systems and production platforms to drive increased productivity and efficiencies, and various information security and resiliency-related systems and enhancements.
The increase for the year ended 2023 over 2022 was driven by the Company’s continued investments in customer-facing technology platforms, internal systems and production platforms to drive increased productivity and efficiencies, and updates to various information security and resiliency-related systems and enhancements.
As of December 31, 2022 and 2021, the recorded ACL on loans was $36.9 million and $33.3 million, respectively, and represented our best estimate of expected credit losses within our loan portfolio as of each date. However, we may adjust our assumptions to account for differences between expected and actual losses each period.
As of December 31, 2023 and 2022, the recorded ACL on loans was $36.9 million and represented our best estimate of expected credit losses within our loan portfolio as of each date. However, we may adjust our assumptions to account for differences between expected and actual losses each period.
At December 31, 2022, client assets under management by Camden National Wealth Management were $1.0 billion. It is estimated that a 1% increase or decrease in client assets under management would have resulted in an annualized increase or decrease in reported 2022 income from fiduciary services of $63,000. Interest Rate Risk.
At December 31, 2023, client assets under management by Camden National Wealth Management were $1.1 billion. It is estimated that a 1% increase or decrease in client assets under management would have resulted in an annualized increase or decrease in reported 2023 income from fiduciary services of $65,000. Interest Rate Risk.
To the extent the fair value of a security designated as AFS is less than its amortized cost and we either (i) intend to sell the security or (ii) it is more-likely-than-not we will be required to sell the security before recovery of its amortized cost basis, then the investment is permanently impaired and the amortized cost basis is written down to fair value and a corresponding impairment charge is recorded within the consolidated statements of income.
Under CECL, the ACL on AFS securities is reviewed to determine the extent the fair value of a security designated as AFS is less than its amortized cost and we either (i) intend to sell the security or (ii) it is more-likely-than-not we will be required to sell the security before recovery of its amortized cost basis, then the investment is permanently impaired and the amortized cost basis is written down to fair value and a corresponding impairment charge is recorded within the consolidated statements of income.
As of December 31, 2022 and 2021, the Company had not identified indications of credit risk and did not carry any allowance for credit losses on its AFS portfolio, nor did it record any permanent impairments during 2022, 2021 or 2020. Refer to “—Financial Condition—Investments” and Note 2 of the consolidated financial statements for further discussion.
As of December 31, 2023 and 2022, the Company had not identified indications of credit risk and did not carry any allowance for credit losses on its AFS portfolio and did not record any permanent impairments during the remainder of 2023, 2022, 2021. Refer to “—Financial Condition—Investments” and Note 2 of the consolidated financial statements for further discussion.
RECENT ACCOUNTING PRONOUNCEMENTS See “—Critical Accounting Policies” and Note 1 of the consolidated financial statements for details of recently issued accounting pronouncements and their expected impact on the consolidated financial statements.
RECENT ACCOUNTING PRONOUNCEMENTS See Note 1 of the consolidated financial statements for details of recently issued accounting pronouncements and their expected impact on the consolidated financial statements.
(2) Revenue is the sum of net interest income and non-interest income. Net Interest Income (Fully-Taxable Equivalent) . Net interest income on a fully-taxable equivalent basis is net interest income plus the taxes that would have been paid had tax-exempt securities been taxable. This number attempts to enhance the comparability of the performance of assets that have different tax liabilities.
Net interest income on a fully-taxable equivalent basis is net interest income plus the taxes that would have been paid had tax-exempt securities been taxable. This number attempts to enhance the comparability of the performance of assets that have different tax liabilities.
Furthermore, while not anticipated as of December 31, 2022, should the Company realize a loss on these investments, as a financial institution the loss would be characterized as an ordinary loss for income tax purposes and not as a capital loss, and thus would not carry restrictions on use of any such loss.
While not anticipated as of December 31, 2023, should the Company realize a loss on these investments, the loss would be characterized as an ordinary loss for income tax purposes and not as a capital loss, and thus would not carry restrictions on use of any such loss.
The overall mix of debt securities at December 31, 2022 compared to December 31, 2021 remains relatively unchanged 52 and well positioned to provide a stable source of cash flow. The duration of our debt investment securities portfolio at December 31, 2022 was 5.8 years, compared to 4.8 years at December 31, 2021.
The overall mix of debt securities at December 31, 2023 compared to December 31, 2022 remains relatively unchanged and well positioned to provide a stable source of cash flow. The duration of our debt investment securities portfolio at December 31, 2023 was 5.7 years, compared to 5.8 years at December 31, 2022.
At December 31, 2022 and 2021, the Company carried deferred tax assets totaling $50.2 million and $19.2 million, respectively, and did not record any valuation allowance on these deferred tax assets.
At December 31, 2023 and 2022, the Company carried deferred tax assets totaling $42.2 million and $50.2 million, respectively, and did not record any valuation allowance on these deferred tax assets.
At December 31, 2022 and 2021, the non-residential building operators' industry (operators of commercial and industrial buildings, retail establishments, theaters, banks and insurance buildings) and lessors of residential buildings industry (lessors of buildings used as residences, such as single-family homes, apartments and town houses) concentrations were 34% and 28% of our total commercial real estate portfolio and 14% and 11% of total loans, respectively.
At December 31, 2023, the non-residential building operators' industry (operators of commercial and industrial buildings, retail establishments, theaters, banks and insurance buildings) and lessors of residential buildings industry (lessors of buildings used as residences, such as single-family homes, apartments and town houses) concentrations were 33% and 28% of our total commercial real estate portfolio and 13% and 11% of total loans, respectively.
The Company manages vendor and third party risk through its vendor management program, which includes robust due diligence and risk assessment prior to engaging a new vendor, annual review of certain vendors dependent on the services provided by the vendor and the risk the vendor may present to the Company through our reliance on its services. People and Compensation Risk.
The Company manages vendor and third party risk through its vendor management program, which includes robust due diligence and risk assessment prior to engaging a new vendor, annual review of certain vendors depending on the services provided by the vendor, and an evaluation of the risk the vendor may present to the Company through our reliance on its services.
We assessed our loss factors again in the fourth quarter of 2022 and there were no changes made to the ACL on loans calculation for reporting as of December 31, 2022. • Forecast Period and Reversion speed: ASU 2016-13 requires a company to use a reasonable and supportable forecast period in developing the ACL, which represents the time period that management believes it can reasonably forecast the identified loss drivers.
We assessed our loss factors again in the fourth quarter of 2023 and there were no changes made to the ACL on loans calculation for reporting as of December 31, 2023. • Forecast Period and Reversion speed: The company uses a reasonable and supportable forecast period in developing the ACL, which represents the time period that management believes it can reasonably forecast the identified loss drivers.
At December 31, 2022 and 2021, core deposit intangible assets totaled $1.6 million and $2.2 million, respectively, and related amortization was $625,000, $655,000, and $682,000 for the years ended 2022, 2021 and 2020, respectively. There were no indications of potential risk of impairment of core deposit intangible assets for any of the aforementioned years.
At December 31, 2023 and 2022, core deposit intangible assets totaled $971,000 and $1.6 million, respectively, and related amortization was $592,000, $625,000, and $655,000 for the years ended 2023, 2022 and 2021, respectively. There were no indications of potential risk of impairment of core deposit intangible assets for any of the aforementioned years.
This program replaces the 2022 program and will continue until the earlier of: (1) authorized number of shares are repurchased, (2) the Company's Board of Directors terminates the program or (3) January 3, 2024. (12 months from the announcement of the new program).
This program replaces the 2023 program and will continue until the earlier of: (1) the authorized number of shares are repurchased, (2) the Company's Board of Directors terminates the program or (3) January 4, 2025 (12 months from the announcement of the new program).
At December 31, 2022 and 2021, the fair value of U.S. government and government-sponsored agencies represented approximately 88% and 91%, respectively, of the AFS and HTM debt securities portfolio.
At December 31, 2023 and 2022, the book value of U.S. government and government-sponsored agencies represented approximately 91% and 88%, respectively, of the AFS and HTM debt securities portfolio.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The discussion below focuses on the factors affecting our consolidated results of operations for the years ended December 31, 2022, 2021 and 2020 and financial condition at December 31, 2022 and 2021 and, where appropriate, factors that may affect our future financial performance, unless stated otherwise.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The discussion below focuses on the factors affecting our consolidated results of operations and financial condition at and for the year ended December 31, 2023, and where appropriate, factors that may affect our future financial performance, unless stated otherwise.
Investment in BOLI BOLI is presented in the consolidated statements of condition at its cash surrender value. Increases in BOLI’s cash surrender value are reported as a component of non-interest income in the consolidated statements of income. BOLI was $99.1 million and $97.2 million at December 31, 2022 and 2021, respectively.
Investment in BOLI BOLI is presented in the consolidated statements of condition at its cash surrender value. Increases in BOLI’s cash surrender value are reported as a component of non-interest income in the consolidated statements of income. BOLI was $101.5 million and $99.1 million at December 31, 2023 and 2022, respectively.
The following table presents certain information regarding shareholders’ equity for the periods indicated: As of and For the Year Ended December 31, 2022 2021 2020 Financial Ratios Average equity to average assets 8.51 % 10.33 % 10.39 % Common equity ratio 7.96 % 9.84 % 10.81 % Tangible common equity ratio (non-GAAP) 6.37 % 8.22 % 8.99 % Dividend payout ratio 38.76 % 32.03 % 33.33 % Per Share Data Book value per share $ 30.98 $ 36.72 $ 35.50 Tangible book value per share (non-GAAP) $ 24.37 $ 30.15 $ 28.96 Dividends declared per share $ 1.62 $ 1.48 $ 1.32 LIQUIDITY Our liquidity needs require the availability of cash to meet the withdrawal demands of depositors and credit commitments to borrowers.
The following table presents certain information regarding shareholders’ equity for the periods indicated: As of and For the Year Ended December 31, 2023 2022 2021 Financial Ratios Average equity to average assets 8.18 % 8.51 % 10.33 % Common equity ratio 8.66 % 7.96 % 9.84 % Tangible common equity ratio (non-GAAP) 7.11 % 6.37 % 8.22 % Dividend payout ratio 56.38 % 38.76 % 32.03 % Per Share Data Book value per share $ 33.99 $ 30.98 $ 36.72 Tangible book value per share (non-GAAP) $ 27.42 $ 24.37 $ 30.15 Dividends declared per share $ 1.68 $ 1.62 $ 1.48 LIQUIDITY Our liquidity needs require the availability of cash to meet the withdrawal demands of depositors and credit commitments to borrowers.
We, as the sole shareholder of the Bank, are entitled to dividends, when and as declared by the Bank's Board of Directors from legally available funds. For the years ended 2022, 2021, and 2020, the Bank declared dividends payable to the Company in the amount of $31.7 million, $41.7 million, and $39.4 million, respectively.
We, as the sole shareholder of the Bank, are entitled to dividends, when and as declared by the Bank's Board of Directors from legally available funds. For the years ended December 31, 2023, 2022, and 2021, the Bank declared dividends payable to the Company in the amount of $22.5 million, $31.7 million, and $41.7 million, respectively.
The fair value 51 of corporate and municipal bonds carrying a credit rating of “AA” or higher at December 31, 2022 and 2021 was 6% and 6% , respectively, of the AFS and HTM debt securities Our other investments on the consolidated statements of condition consist of FHLBB and FRB common stock. These investments are carried at cost.
The book value of corporate and municipal bonds carrying a credit rating of “AA” or higher at December 31, 2023 and 2022 was 4% and 7%, respectively, of the AFS and HTM debt securities. Our other investments on the consolidated statements of condition consist of FHLBB and FRB common stock. These investments are carried at cost.
The Company is, and may become, subject to other risks. Refer to Item 1A. Risk Factors for further description of the Company's material risks. Credit Risk. Credit risk is the current and prospective risk to earnings or capital arising from an obligor's failure to meet the terms of any contract with the Company or otherwise to perform as agreed.
Risk Factors for further description of the Company's material risks. Credit Risk. Credit risk is the current and prospective risk to earnings or capital arising from an obligor's failure to meet the terms of any contract with the Company or otherwise to perform as agreed.
Capital risk is the risk that an investor may lose all or part of the principal amount invested. The Company faces this risk as it manages its balance sheet and has investments or loans that may lose all or part of the principal amount the Company has invested, which can have an impact on shareholders' equity.
The Company faces this risk as it manages its balance sheet and has investments or loans that may lose all or part of the principal amount the Company has invested, which can have an impact on shareholders' equity. The Company also faces capital risk in that the entity may lose value on components of its shareholders' equity.
At December 31, 2022 and 2021, the Company held securities in its HTM portfolio with an amortized cost basis of $546.6 million and $1.3 million, that primarily consisted of MBS and CMO debt securities issued, municipal bonds or guaranteed by U.S. government-sponsored agencies.
At December 31, 2023 and 2022, the Company held securities in its HTM portfolio with an amortized cost basis of $545.0 million and $546.6 million, that primarily consisted of MBS and CMO debt securities issued or guaranteed by U.S. government-sponsored agencies.
Shareholders’ equity totaled $451.3 million and $541.3 million at December 31, 2022 and December 31, 2021, respectively, which amounted to 8% and 10% of total assets, respectively. Refer to “—Financial Condition—Shareholders' Equity” for discussion regarding changes in shareholders' equity since December 31, 2021.
Shareholders’ equity totaled $495.1 million and $451.3 million at December 31, 2023 and December 31, 2022, respectively, which amounted to 9% and 8% of total assets, respectively. Refer to “—Financial Condition—Shareholders' Equity” for discussion regarding changes in shareholders' equity since December 31, 2022.
Massachusetts and New Hampshire are our second and third largest markets, making up 15% and 14%, respectively, of our total loan portfolio as of December 31, 2022, compared to 9% and 13%, respectively, as of December 31, 2021.
Massachusetts and New Hampshire are our second and third largest markets, making up 16% and 10%, respectively, of our total loan portfolio as of December 31, 2023, compared to 15% and 9%, respectively, as of December 31, 2022.
The Company's deferred tax assets were $50.2 million and $19.2 million at December 31, 2022 and 2021, respectively. The increase in deferred tax assets during 2022 was driven by an increase in unrealized losses on the AFS investments portfolio, including the investments transferred from AFS to HTM in June 2022.
The Company's deferred tax assets were $42.2 million and $50.2 million at December 31, 2023 and 2022, respectively. The decrease in deferred tax assets during 2023 was driven by the decrease in unrealized losses on the AFS investments portfolio, including the remaining losses from the investments transferred from AFS to HTM in June 2022.
Under ASU 2016-13 the Company has the ability to exclude certain securities when the historical credit loss information, adjusted for current conditions and forecasts, resulting in zero risk of nonpayment of the amortized cost basis of the security. Management has evaluated and determined zero risk of nonpayment on all securities guaranteed by the U.S government agencies.
Under ASU 2016-13, we may exclude certain securities when the historical credit loss information, adjusted for current conditions and forecasts, resulting in zero risk of nonpayment of the amortized cost basis of the security. We have evaluated and determined there is zero risk of nonpayment on all securities guaranteed by the U.S government agencies.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s 2021 annual report on Form 10-K filed with the SEC on March 11, 2022. 50 FINANCIAL CONDITION Cash and Cash Equivalents Total cash and cash equivalents at December 31, 2022 were $75.4 million, compared to $220.6 million at December 31, 2021.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s 2022 annual report on Form 10-K filed with the SEC on March 10, 2023. 54 FINANCIAL CONDITION Cash and Cash Equivalents Total cash and cash equivalents at December 31, 2023 were $99.8 million, compared to $75.4 million at December 31, 2022.
As of December 31, 2022 and 2021, our investment in FHLBB stock totaled $7.3 million and $4.9 million, respectively, and our investment in FRB stock was $5.4 million. Our investments in mutual funds are designated as trading securities and carried at fair value.
As of 55 December 31, 2023 and 2022, our investment in FHLBB stock totaled $10.0 million and $7.3 million, respectively, and our investment in FRB stock was $5.4 million at each date. Our investments in mutual funds are designated as trading securities and carried at fair value.
There were no changes to the Company or the Bank's capital that occurred subsequent to December 31, 2022 that would change the Company or Bank's regulatory capital categorization.
There were 67 no changes to the Company’s or the Bank's capital ratios that occurred subsequent to December 31, 2023 that would change the Company or Bank's regulatory capital categorization.
Small Business Administration Paycheck Protection Program FHLMC: Federal Home Loan Mortgage Corporation SERP: Supplemental executive retirement plans FNMA: Federal National Mortgage Association SOFR: Secured Overnight Financing Rate FOMC: Federal Open Market Committee TDR: Troubled-debt restructured loan FRB: Federal Reserve System Board of Governors UBCT: Union Bankshares Capital Trust I, an unconsolidated entity formed by Union Bankshares Company that was subsequently acquired by Camden National Corporation FRBB: Federal Reserve Bank of Boston U.S.: United States of America 33 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 return on average tangible equity; the efficiency ratio; net interest income (fully-taxable equivalent); earnings before income taxes and provision; earnings before income taxes, provision, and SBA PPP loan income; total loans, excluding SBA PPP loans; adjusted yield on interest-earning assets (fully-taxable equivalent) and adjusted net interest margin (fully-taxable equivalent); tangible book value per share; tangible common equity ratio; and core deposits and average core deposits.
Small Business Administration Paycheck Protection Program FASB: Financial Accounting Standards Board SERP: Supplemental executive retirement plans FDIC: Federal Deposit Insurance Corporation SOFR: Secured Overnight Financing Rate FHLBB: Federal Home Loan Bank of Boston TDR: Troubled-debt restructured loan FHLMC: Federal Home Loan Mortgage Corporation UBCT: Union Bankshares Capital Trust I, an unconsolidated entity formed by Union Bankshares Company that was subsequently acquired by Camden National Corporation FRB: Federal Reserve System Board of Governors U.S.: United States of America FRBB: Federal Reserve Bank of Boston 36 NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP In addition to evaluating the Company’s results of operations in accordance with GAAP, management supplements this evaluation with an analysis of certain non-GAAP financial measures, such as adjusted net income; adjusted diluted earnings per share; adjusted return on average assets; adjusted return on average equity; pre-tax, pre-provision income and adjusted pre-tax, pre-provision; income; the efficiency ratio; return on average tangible equity and adjusted return on average tangible equity; tangible book value per share and tangible common equity ratio; net interest income (fully-taxable equivalent); and core deposits and average core deposits.
Net interest income, which is our largest source of revenue, accounted for 78% of total revenues for the year ended 2022 and 73% of total revenues for each of the years ended 2021 and 2020.
Net interest income, which is our largest source of revenue, accounted for 81%, 78% and 73% of total revenues for the years ended 2023, 2022 and 2021, respectively.
December 31, 2021 For the Year Ended December 31, 2021 vs.
December 31, 2022 For the Year Ended December 31, 2022 vs.

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