Consolidated Statements of Changes in Shareholders’ Equity Rangeley Phillips Consolidated Statements of Cash Flows Kennebunk Net Unrealized Net  Gains (Losses) Unrealized Bank on Securities Gains on Recognition Total (In thousands, except number Common Retained Available Derivative and Retention Treasury ShareholdersGLYPH<213> of shares and per share data) Stock Surplus Earnings for Sale Instruments Plan Stock Equity Balance at December 31, 1999 $2,450 $5,990  $ 83,583 $(5,782) $ — $(20) $ (8,598) $ 77,623 Net income for 2000 — — 13,859 — — — — 13,859 Change in unrealized gains on securities available  for sale, net of deferred taxes of $2,600 — — — 4,970 — — — 4,970 Total comprehensive income — — 13,859 4,970 — — — 18,829 Purchase of treasury stock (24,950 shares) — — — — — — (394) (394) Exercise and repurchase of stock options (8,680 shares), net of tax benefit of $6 — (62) — — — — 40 (22) Exercise of stock options (2,933 shares),  net of tax benefit of $11 — (19) — — — — 50 31 Bank recognition and retention plan — — — — — 6 — 6 Cash dividends declared ($0.63 / share) — — (5,150) — — — — (5,150) Balance at December 31, 2000 $2,450 $5,909 $ 92,292 $ (812)$— $(14)$ (8,902)$90,923 Net income for 2001 — — 15,418 — — — — 15,418 Cumulative effect to record unrealized appreciation on securities held to maturity transferred to  securities available for sale, net of taxes of $1,021 — — — 1,982 — — — 1,982 Change in unrealized gains on securities available for sale, net of deferred taxes of $1,700 — — — 3,344 — — — 3,344 Total comprehensive income — — 15,418 5,326 — — — 20,744 Purchase of treasury stock (87,560 shares) — — — — — — (1,444) (1,444) Exercise and repurchase of stock options (19,926 shares), net of tax benefit of $41 — (114) — — — — 34 (80) Bank recognition and retention plan — — — — — 5 — 5 Acquisition of minority interest — — 146 — — — — 146 Cash dividends declared ($0.64 / share) — — (5,226) — — — — (5,226) Balance at December 31, 2001 $2,450 $5,795 $102,630 $ 4,514 $ — $ (9)$ (10,312)$ 105,068 Net income for 2002 — — 17,051 — — — — 17,051 Change in unrealized gains on derivative  instruments, net of deferred taxes of $492  — — — — 914 — — 914 Change in unrealized gains on securities available for sale, net of deferred taxes of $1,200 — — —  2,286 — — — 2,286 Total comprehensive income — — 17,051 2,286 914 — — 20,251 Purchase of treasury stock (37,950 shares) — — — — — — (919) (919) Exercise and repurchase of stock options (15,680 shares), net of tax benefit of $58 — (20) — — — — (94) (114) Exercise of stock options (7,543 shares),  net of deferred taxes of $35 — (56) — — — — 142 86 Bank recognition and retention plan — — — — — 6 — 6 Cash dividends declared ($0.68 / share) — — (5,550) — — — — (5,550) Balance at December 31, 2002 $2,450 $5,719 $114,131 $ 6,800 $ 914 $ (3) $(11,183) $118,828 The accompanying notes are an integral part of these Consolidated Financial Statements.  42 Camden National Corporation and Subsidiaries (In thousands) YEAR ENDED DECEMBER 31, 2002 2001 2000 Operating Activities Net Income $ 17,051 $ 15,418 $ 13,859 Adjustments to reconcile net income to net cash  provided by operating activities:  Provision for loan losses 3,080 3,681 2,930 Depreciation and amortization 3,129 3,497 2,356 Decrease in obligation under ESOP and BRRP 6 5 6 (Decrease) increase in interest receivable (724) 1,905 (1,117) (Decrease) increase in other assets  (1,900) (2,611) 1,759 Increase (decrease) in other liabilities 613 2,474 (5,343) Decrease (increase) in residential mortgage loans held for sale — 12,838 (5,932) (Decrease) increase in minority position — (176) 61 Goodwill impairment loss 690 — — Gain on sale of securities (156) (336) — Net cash provided by operating activities 21,789 36,695 8,579 Investing Activities Proceeds from sales and maturities of securities held to maturity 1,550 — 10,587 Proceeds from sales and maturities of securities available for sale 83,748 39,805 8,509 Purchase of securities held to maturity (1,588) (944) — Purchase of securities available for sale (131,401) (77,217) (12,456) Purchase of Federal Home Loan Bank Stock — — (174) Net increase in loans (86,192) (36,508) (61,493) Net (increase) decrease in other real estate owned (295) 185 1,025 Purchase of premises and equipment (1,036) (3,503) (5,506)  Net decrease in federal funds sold — — 415 Purchase of bank-owned life insurance — — (10,000)  Cash paid in connection with acquisitions — (4,563) — Cash received through acquisitions — 567 — Net cash used by investing activities (135,214) (82,178) (69,093) Financing Activities  Net increase in deposits 86,566 19,208 76,640 Proceeds from Federal Home Loan Bank borrowings 2,656,280 3,698,976 5,299,675 Repayments on Federal Home Loan Bank borrowings (2,633,211) (3,662,492) (5,296,193) Net increase (decrease) in other borrowed funds 4,949 5,919 (8,966) Purchase of treasury stock (919) (1,444) (394) Proceeds from stock issuance under option plan 86 — 31 Exercise and repurchase of stock options (114) (80) (22) Acquisition of minority interest — 146 — Cash dividends paid (5,550) (5,226) (5,150) Net cash provided by financing activities 108,087 55,007 65,621 Net (decrease) increase in cash and cash equivalents (5,338) 9,524 5,107 Cash and cash equivalents at beginning of year 38,861 29,337 24,230 Cash and cash equivalents at end of year $ 33,523 $ 38,861 $ 29,337 Supplemental disclosures of cash flow information Cash paid during the year for: Interest $ 27,683 $ 36,594 $  39,516  Income tax 8,424 7,878 6,320 Non-Cash transactions: Transfer from loans to other real estate owned 492 371 302 Securitization of mortgage loans 16,699 57,000 — Transfer from securities held to maturity to available for sale — 57,695 — Transfer from premises and equipment to other real estate owned 337 — — See Note 2, GLYPH<210>Acquisitions,GLYPH<211> of the Notes to Consolidated Financial Statements, on page 47, for acquisition disclosure. The accompanying notes are an integral part of these Consolidated Financial Statements. Camden National Corporation and Subsidiaries 43