Camden National (CAC) 8-K Results of Operations and Financial Condition

Exhibit 99.1

Dear Shareholders:

I am pleased to report to you that your company achieved solid financial results during the quarter ended March 31, 2005. Net income per diluted share increased 8.6% to $0.63, compared to $0.58 per diluted share in the first quarter of 2004. Net income after taxes for the first quarter of 2005 was $4.8 million, an increase of 7.1% from the same three-month period a year ago. These results translated into a return on average equity of 15.80% and a return on average assets of 1.30% for the first quarter of 2005, which compares to 14.98% and 1.33%, respectively, for the period ended March 31, 2004.

Total assets of the Company increased $188.4 million, or 13.9%, from March 31, 2004 to a Company record $1.5 billion on March 31, 2005. Growth occurred in both the loan and investment portfolios, which at $1.1 billion and $360.4 million were up 11.9% and 22.7%, respectively, from levels reported at the end of the first quarter in 2004.

Fueling loan growth were consumer loans, residential mortgages and commercial real estate loans with balances, at March 31, 2005, that increased 23.4%, 12.0% and 10.7%, respectively, from the same period a year ago. These double-digit increases are a reflection of vibrant economies within our primary market areas and the positive effect of targeted advertising coupled with concerted business development campaigns at each of our affiliate banks.

The expansion noted in the Company’s investment portfolio resulted from the improvement in the bond market, which created opportunities to once again acquire securities at acceptable yields.

Helping to fund this robust expansion in assets was deposit growth of $99.0 million, or 10.6%, from March 31, 2004, to $1.0 billion through the first quarter of 2005. Particularly encouraging has been the increase of $20.4 million, or 18.7%, in low-cost demand deposit balances. These results can be directly attributed to strategic initiatives at both affiliate banks that are focused on expanding market share within the small business sector.

In addition to deposit growth, we have increased our borrowings from the Federal Home Loan Bank of Boston by $92.7 million, or 40.6%, from March 31, 2004 to $321.1 million at March 31, 2005, thus providing a means of laddering funding maturities and locking-in future funding costs during this current period of rising interest rates.

The positive momentum in financial performance and business activity noted above can be traced to several strategic steps taken, and reported on, during the past 18 months. These include a restructuring of our executive management team, recruitment of highly qualified personnel to fill critical positions, streamlining of our various operating entities, and the effective deployment of capital, including better utilization of existing human and technological resources.

While we have invested considerably to maintain our competitiveness, we continue with our tradition of being a low-cost producer as evidenced by an efficiency ratio of 51.27% at March 31, 2005, down from 53.86% for the same reporting period a year ago. This speaks to the dedication of our workforce and their commitment to innovation, which is creating a fulfilling professional environment for each Stakeholder and a remarkable banking experience for each customer.

We continue to maintain a strong capital position, which will position your Company to seize on future growth and expansion opportunities as they might present themselves. At March 31, 2005, Camden National Corporation reported a total risk-based capital ratio of 12.27% and a tier 1 ratio of 11.01% compared to the 10.0% and 6.0% minimums, respectively, required by the Federal Reserve for a bank holding company to be considered “well capitalized.”

Finally, the Board of Directors of the Company approved a dividend of $0.20 per share, payable on April 30, 2005 to shareholders of record on April 15, 2005. Additionally, the stock price of Camden National Corporation (AMEX: CAC) ended the first quarter of 2005 at $35.35 per share, an increase of $3.40 or 10.6% above the closing price at March 31, 2004.

As we march forward in this 130^th year of service, I am encouraged by the enthusiasm within the workforce for our stated goal of becoming a national model for sustainable community banking. I believe my colleagues’ commitment to that end is reflected in the positive results reported herein.

Sincerely,

Robert W. Daigle

President & Chief Executive Officer

Consolidated Statements of Condition (unaudited)

	March 31,					December 31, 2004
(In thousands, except number of shares & per share data)	2005			2004
Assets
Cash and due from banks	$	27,645		$	27,629	$	31,573
Securities available for sale, at market value		347,383			293,295		321,881
Securities held to maturity		13,018			399		2,117
Loans, less allowance for loan and lease losses of $13,670, $14,502, and $13,641 at March 31, 2005 and 2004 and December 31, 2004, respectively		1,075,769			959,010		1,055,653
Premises and equipment, net		16,520			15,477		16,392
Goodwill		3,991			3,518		3,991
Other assets		60,728			57,333		58,258
Total assets	$	1,545,054		$	1,356,661	$	1,489,865
Liabilities
Deposits:
Demand	$	129,703		$	109,283	$	131,998
NOW		116,226			109,991		120,203
Money market		219,056			196,854		211,060
Savings		110,824			107,982		112,010
Certificates of deposit		457,979			410,632		439,330
Total deposits		1,033,788			934,742		1,014,601
Borrowings from Federal Home Loan Bank		321,127			228,398		277,690
Other borrowed funds		53,258			57,466		59,130
Accrued interest and other liabilities		13,285			12,218		12,039
Total liabilities		1,421,458			1,232,824		1,363,460
Shareholders’ Equity
Common stock, no par value; authorized 20,000,000 shares, issued and outstanding 7,638,664 and 7,634,975 shares on March 31, 2005 and December 31, 2004, respectively, and issued 8,609,898 shares on March 31, 2004		2,450			2,450		2,450
Surplus		4,264			5,328		4,440
Retained earnings		118,435			130,424		118,764
Accumulated other comprehensive (loss) income
Net unrealized (losses) gains on securities available for sale, net of tax		(1,553	)		4,768		751
Net unrealized gains on derivative instruments marked to market, net of tax		—			536		—
Total accumulated other comprehensive (loss) income		(1,553	)		5,304		751
Less cost of 871,323 shares of treasury stock on March 31, 2004		—			19,669		—
Total shareholders’ equity		123,596			123,837		126,405
Total liabilities and shareholders’ equity	$	1,545,054		$	1,356,661	$	1,489,865

Camden National Corporation stock is listed on the American Stock Exchange under the ticker symbol “CAC.” Stock prices shown in chart are as of close of trading on the last business day of the month.

Consolidated Statements of Income(unaudited)

	Three Months Ended March 31,
(In thousands, except number of shares & per share data)	2005		2004
Interest Income
Interest and fees on loans	$	16,271	$	14,125
Interest on securities		3,525		3,422
Interest on interest rate swap agreements		173		518
Other interest income		184		100
Total interest income		20,153		18,165
Interest Expense
Interest on deposits		4,362		3,491
Interest on other borrowings		2,689		1,994
Interest on interest rate swap agreements		142		308
Total interest expense		7,193		5,793
Net interest income		12,960		12,372
Provision for Loan and Lease Losses		230		165
Net interest income after provision for loan and lease losses		12,730		12,207
Non-interest Income
Service charges on deposit accounts		818		896
Other service charges and fees		271		234
Income from fiduciary services		947		988
Life insurance earnings		161		232
Other income		229		192
Total non-interest income		2,426		2,542
Non-interest Expenses
Salaries and employee benefits		4,224		4,443
Premises and fixed assets		1,097		1,108
Amortization of core deposit intangible		222		231
Other expenses		2,345		2,251
Total non-interest expenses		7,888		8,033
Income before income taxes		7,268		6,716
Income Taxes		2,427		2,196
Net Income	$	4,841	$	4,520
Per Share Data
Basic earnings per share	$	0.63	$	0.58
Diluted earnings per share		0.63		0.58
Cash dividends per share	$	0.70	$	0.20
Weighted average number of shares outstanding		7,636,549		7,749,446

A complete set of financial statements for Camden National Corporation may be obtained upon written request to Sean G. Daly, Chief Financial Officer, Camden National Corporation, P.O. Box 310, Camden, Maine 04843.