CAMDEN NATIONAL CORPCAC
CAMDEN NATIONAL CORP Income Taxes Disclosure
INCOME TAXES
The current and deferred components of income tax expense on the consolidated statements of income were as follows:
| For the Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 10,779 | $ | 11,047 | $ | 7,990 | ||||||||||||||
| State | 2,100 | 1,111 | 1,156 | |||||||||||||||||
| Total | 12,879 | 12,158 | 9,146 | |||||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | 3,346 | 291 | 1,277 | |||||||||||||||||
| State | (2,730) | 7 | 30 | |||||||||||||||||
| Total | 616 | 298 | 1,307 | |||||||||||||||||
| Income tax expense | $ | 13,495 | $ | 12,456 | $ | 10,453 | ||||||||||||||
Cash paid for income taxes (net of refunds) consisted of the following:
| For the Year Ended December 31, | ||||||||
| (In thousands) | 2025 | |||||||
| Federal | $ | 4,600 | ||||||
Maine | 950 | |||||||
New Hampshire | 303 | |||||||
Other states | 301 | |||||||
| Total | $ | 6,154 | ||||||
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income tax expense, after the prospective adoption of ASU 2023-09 is as follows:
For the Year Ended December 31, 2025 | ||||||||||||||
| (Dollars in thousands) | Amount | Rate | ||||||||||||
Income before income tax expense (domestic) | $ | 78,655 | ||||||||||||
Tax at U.S. statutory rate | $ | 16,518 | 21.0 | % | ||||||||||
State taxes, net of federal benefit(1)(2) | (498) | (0.1) | % | |||||||||||
Tax credit benefits | (668) | (0.8) | % | |||||||||||
Nontaxable and nondeductible items: | ||||||||||||||
Tax exempt income | (1,111) | (1.4) | % | |||||||||||
| Income from life insurance | (722) | (0.9) | % | |||||||||||
| Share-based awards | (44) | (0.1) | % | |||||||||||
Merger and acquisition costs | 28 | — | % | |||||||||||
| Other | (8) | — | % | |||||||||||
Income tax expense | $ | 13,495 | 17.2 | % | ||||||||||
(1) The states that contribute to the majority of the tax effect (greater than 50%) in this category include Maine and New Hampshire.
(2) Includes a $2.4 million deferred tax valuation adjustment, net of federal benefit, that resulted from a change in the apportionment of state income taxes due to the Northway acquisition.
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes for periods before the adoption of ASU 2023-09 is as follows:
| For the Year Ended December 31, | ||||||||||||||
| (Dollars in thousands) | 2024 | 2023 | ||||||||||||
| Computed tax expense | $ | 13,747 | $ | 11,306 | ||||||||||
| Increase (reduction) in income taxes resulting from: | ||||||||||||||
Tax credit benefits | (1,699) | (831) | ||||||||||||
| State taxes, net of federal benefit | 1,099 | 937 | ||||||||||||
| Income from life insurance | (589) | (493) | ||||||||||||
| Tax exempt income | (451) | (647) | ||||||||||||
Merger and acquisition costs | 232 | — | ||||||||||||
| Share-based awards | 98 | 69 | ||||||||||||
| Other | 19 | 112 | ||||||||||||
| Income tax expense | $ | 12,456 | $ | 10,453 | ||||||||||
| Income before income tax expense | $ | 65,460 | $ | 53,836 | ||||||||||
| Effective tax rate | 19.0 | % | 19.4 | % | ||||||||||
Temporary differences between the financial statements carrying amounts and the tax bases of assets and liabilities gave rise to the following deferred tax assets and liabilities as of the dates indicated:
| December 31, | ||||||||||||||||||||||||||
2025(1) | 2024(2) | |||||||||||||||||||||||||
| (In thousands) | Asset | Liability | Asset | Liability | ||||||||||||||||||||||
Purchase accounting | $ | 23,580 | $ | — | $ | — | $ | (1,135) | ||||||||||||||||||
| Net unrealized losses on AFS debt securities | 20,260 | — | 28,488 | — | ||||||||||||||||||||||
| Allowance for credit losses | 11,021 | — | 8,285 | — | ||||||||||||||||||||||
| Net operating loss and tax credit carryforward | 5,753 | — | 6,255 | — | ||||||||||||||||||||||
| Pension and other benefits | 5,344 | — | 4,319 | — | ||||||||||||||||||||||
| Deferred compensation and benefits | 1,351 | — | 1,161 | — | ||||||||||||||||||||||
CDI assets | — | (9,576) | 103 | |||||||||||||||||||||||
| Deferred loan origination fees | — | (3,346) | — | (3,152) | ||||||||||||||||||||||
| Depreciation | — | (3,092) | — | (2,352) | ||||||||||||||||||||||
Net unrealized gains on derivative instruments | — | (1,550) | — | (2,454) | ||||||||||||||||||||||
| Other | 1,334 | — | 519 | — | ||||||||||||||||||||||
| Gross deferred tax assets (liabilities) | $ | 68,643 | (17,564) | $ | 49,130 | (9,093) | ||||||||||||||||||||
| Valuation allowance on deferred tax assets | — | — | ||||||||||||||||||||||||
| Net deferred tax assets | $ | 51,079 | $ | 40,037 | ||||||||||||||||||||||
(1) At December 31, 2025, the Company’s deferred tax assets and liabilities were calculated using a 22.8% deferred tax rate.
(2) At December 31, 2024, the Company’s deferred tax assets and liabilities were calculated using a 21.5% deferred tax rate.
At December 31, 2025 and 2024, the Company had $25.1 million and $28.9 million, respectively, in unused federal net operating losses that were acquired in 2015. Due to Internal Revenue Code Section 382(g) limitations, the Company's use of the federal net operating losses acquired is limited to $3.9 million annually, which was determined using the applicable federal rate and the fair value of consideration paid for the acquisition at the acquisition date. The acquired federal net operating losses will expire between 2030 and 2034. The Company expects that it will be able to fully utilize the acquired allowable federal net operating losses prior to expiration, as the Company has a history of generating taxable income well in excess of the limitation.
The Company continuously monitors and assesses the need for a valuation allowance on its deferred tax assets and, at December 31, 2025 and 2024 determined that no valuation allowance was necessary.
As of December 31, 2025, the Company's federal and state income tax returns for the years ended December 31, 2024, 2023 and 2022 were open to audit by federal and state authorities.
Other Tax Matters
On July 4, 2025, the OBBBA was signed into law. The OBBBA contained numerous tax provisions, including making permanent many of the tax provisions that were set to expire at the end of 2025. The OBBBA did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2025 and we do not expect it to have a material impact in 2026.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 6, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
| 2023 | Mar 8, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2021 | Mar 11, 2022 | |
| 2020 | Mar 15, 2021 | |
| 2019 | Mar 11, 2020 | |
| 2018 | Mar 13, 2019 | |
| 2017 | Mar 9, 2018 | |
| 2016 | Mar 7, 2017 | |
| 2015 | Mar 11, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.