Camden National Corp – ‘10-K’ for 12/31/97

As of:  Tuesday, 3/31/98   ·   For:  12/31/97   ·   Accession #:  750686-98-3   ·   File #:  1-13227

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Annual Report   —   Form 10-K
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Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         80±   324K 
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10-K   —   Annual Report
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UNITED STATES   
SECURITIES AND EXCHANGE COMMISSION    
Washington, D.C. 20549    

FORM 10-K   

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)OF THE      
            SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended December 31, 1997   
Commission File No.             0-28190   

CAMDEN NATIONAL CORPORATION   
(Exact name of registrant as specified in its charter)      

MAINE                             01-0413282
(State or other jurisdiction                (I.R.S. Employer          
incorporation or organization)               Identification No.)      

2 ELM STREET, CAMDEN, ME                      04843           
(Address of principal executive offices)        (Zip Code)            

Registrant's telephone number, including area code:  (207) 236-8821             

Securities registered pursuant to Section 12(g) of the Act    

 Common Stock, without par value
(Title of class)

 Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act     
of 1934 during the preceding 12 months (or for such shorter periods that the    
registrant was required to file such reports), and (2) has been subject to      
such filing requirements for the past 90 days.        Yes [X]         No [ ]    

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (229.405 of this chapter) is not contained herein,        
and will not be contained, to the best of registrant's knowledge, in            
definitive proxy or information statements incorporated by reference in         
Part III of this Form 10-K or any amendment to this Form 10-K.  (  )            

  The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 27, 1998 is:  Common stock - $102,216,816            

 The number of shares outstanding of each of the registrant's classes of
common stock, as of December 31, 1997 is:  Common stock - 2,270,210             

  Listed hereunder are documents incorporated by reference and the Part of
the form 10-K into which the document is incorporated:                          

(1)  Portions of the Annual Report to Stockholders for the year ended 
December 31, 1997 are incorporated by reference into Part II,                   
Items 5, 6, 7 and 8.                                                            

(2)  The definitive Proxy Statement for the 1998 Annual Meeting of    
Shareholders to be filed with the commission prior to April 30, 1998            
pursuant to Regulation 14A of the General Rules and Regulations of The          
Commission is incorporated into Part III of the Form 10-K.                      

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Index                                                                           

Item #    Description                                             Page          
------    -----------                                             ----          
1       Business                                                1-6         

2       Properties                                              6-7         

3       Pending Legal Proceeding                                 7          

4       Submission of Matters to a Vote of Security Holders      7          

5       Market for Registrant's Common Equity and Related                   
Stockholders Matters                                     7  

6       Selected Financial Data                                  7          

7       Management's Discussion and Analysis of Financial                   
Condition and Results of Operation                    7-18  

7A      Quantitative and Qualitative Disclosures about                      
Market Risks                                            19  

8       Financial Statements and Supplementary Data             19          

9       Changes in and Disagreements With Accountants on                    
Accounting and Financial Disclosure                     19  

10       Directors and Executive Officers of the Registrant      19           

11       Executive Compensation                                  19           

12       Security Ownership of Certain Beneficial Owners                      
and Management                                          20  

13       Certain Relationships and Related Transactions          20           

14       Exhibits, Financial Statement Schedules, and Reports                 
on Form 8-K                                          20-21  

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PART I

Item 1.  Business                                                               

    Camden National Corporation, ("the Company") is a multi-bank and financial
services holding company headquartered in Camden, Maine.  The Company was       
founded on January 2, 1985 as a result of a corporate reorganization, in which  
the shareholders of Camden National Bank, which was founded in 1875, exchanged  
their stock for shares of the Company, and Camden National Bank became a wholly-
owned subsidiary of the Company.  As of December 29, 1995 the Company acquired  
100% of the outstanding stock of United Bank and 51% of the outstanding stock of
Trust Company of Maine, Inc. by merging with their then parent company,         
UNITEDCORP, Bangor, Maine.  As of December 31, 1997, the Company's securities   
consisted of one class of common stock, no par value, of which there were       
2,270,210 shares outstanding held of record by approximately 825 shareholders.  

    The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries,Camden National Bank and United   
Bank, and its majority-owned subsidiary, Trust Company of Maine, Inc.  Trust    
Company of Maine, Inc's amounts include its wholly-owned subsidiary -- Fiduciary
Services, Inc.  All intercompany accounts and transactions have been eliminated 
in consolidation.                                                               

 The Company's wholly-owned bank subsidiaries are independent commercial
banks with branches serving both mid-coast and central Maine.  The banks are    
full-service financial institutions that focus primarily on attracting deposits 
from the general public through their branches and using such deposits to       
originate residential mortgage loans, commercial business loans, commercial real
estate loans, and a variety of consumer loans.  Camden National Bank is a       
national banking organization based in Camden, Maine, and offers services in the
communities of Camden, Union, Rockland, Thomaston and Belfast.  Camden National 
Bank is the largest independent commercial bank in Maine.  United Bank is a     
banking organization chartered under the laws of the State of Maine based in    
Bangor, Maine, and offers services in the communities of Bangor, Corinth,       
Hampden, Hermon and Jackman, Maine.                                             

 The Company's majority-owned trust company subsidiary, Trust Company of
Maine, Inc., offers a broad range of trust and trust investment services, in    
addition to retirement and pension plan management services.  The financial     
services provided by the Trust Company of Maine, Inc., complement the services  
provided by the Company's bank subsidiaries by offering customers investment    
management services.                                                            

 The Company competes principally in mid-coast Maine through its largest
subsidiary, Camden National Bank.  Camden National Bank considers its primary   
market areas to be in the two counties in which it has banking facilities, Knox 
and Waldo counties.  These two counties have a combined population of           
approximately 76,000 people.  The economy of the these counties is based        
primarily on tourism, and is also supported by a substantial population of      
retirees.  Major competitors in these markets include local branches of large   
regional bank affiliates, as well as local independent banks, thrift            
institutions and credit unions.  Other competitors for deposits and loans with- 

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in Camden National Bank's market include insurance companies, money market      
funds, consumer finance companies and financing affiliates of consumer durable  
goods manufacturers.                                                            

    The Company, through United Bank, also competes in the central Maine area.
United Bank has approximately a 5% share of the market in its service area and  
competes principally on the basis of service.  The greater Bangor area has a    
population of approximately 100,000 people.  Major competitors in these markets 
include local branches of large regional bank affiliates, as well as local      
independent banks, thrift institutions and credit unions.  Other competitors for
deposits and loans within United Bank's market include insurance companies,     
money market funds, consumer finance companies and financing affiliates of      
consumer durable goods manufacturers.                                           

   The Company is committed to the philosophy of serving the financial needs
of customers in local communities.  The Company, through Camden National Bank   
and United Bank has branches that are located in small towns within the         
Company's geographic market areas.  The Company believes that the local needs,  
and its comprehensive retail and small business products, together with rapid   
decision-making at the branch level, enable its banks to compete effectively.   
No single person or group of persons provides a material portion of the         
Company's deposits, the loss of any one or more of which would have a materially
adverse effect on the business of the Company, nor is a material portion of the 
Company's loans concentrated within a single industry or group of related       
industries.                                                                     

    The Company had consolidated asset growth of 12.5% or $63.8 million during
1997.  The primary contributing factor to this growth was the increase in       
lending activity at both bank subsidiaries.  As the business continued to grow  
during this past year, each subsidiary focused on customer service.  Supporting 
this concept, the Company implemented a new performance-based compensation      
program.  This program is designed to create an environment where employees take
a more personal interest in the performance of the company and are rewarded for 
balancing profit with growth and quality with productivity.  In addition, the   
Company's subsidiary, Camden National Bank, entered into an agreement during    
October 1997 to purchase four branches in four new markets - Bucksport,         
Damariscotta, Vinalhaven and Waldoboro.  The closing date was March 16, 1998.   
This acquisition creates a growth opportunity for Camden National Bank, in      
addition, to allowing the bank to better service its many customers already in  
these markets.                                                                  

The Company employs approximately 171 people on a full-time equivalent
basis.  Management believes that employee relations are good, and there are no  
known disputes between management and employees.  Employees who are at least 21 
years of age and who have worked for the Company for at least one year are      
eligible for participation in the Company's Retirement Savings 401(k) Plan and  
Defined Benefit Retirement Plan.  Certain eligible employees of the Company also
receive group insurance benefits.  Certain Executive Officers of the Company may
also participate in the 1993 Stock Option Plan and the Supplemental Executive   
Retirement Plan.                                                                

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    As a registered bank holding company under the Bank Holding Company Act of
1956 (the "BHC Act"), the Company is subject to the regulations and supervision 
of the Federal Reserve Bank (FRB).  The BHC Act requires the Company to file    
reports with the FRB and provide additional information requested by the FRB.   
The Company must receive the approval of the FRB before it may acquire all or   
substantially all of the assets of any bank, or ownership or control of the     
voting shares of any bank if, after giving effect to such acquisition of shares,
the Company would own or control more than 5 percent of the voting shares of    
such bank.                                                                      

    The Company and its subsidiaries, including any it may acquire or organize
in the future, will be deemed to be affiliates of Camden National Bank and      
United Bank under the Federal Reserve Act.  That Act establishes certain        
restrictions which limit bank transactions with affiliates.  The Company will   
also be subject to restrictions on the underwriting and the public sale and     
distribution of securities.  It is prohibited from engaging in certain tie-in   
arrangements in connection with any extension of credit, sale or lease of       
property, or furnishing of services.                                            

 The Company will be prohibited from engaging in, or acquiring direct or
indirect ownership or control of more than 5 percent of the voting shares of any
company engaged in non-banking activities, unless the FRB by order or regulation
has found such activities to be so closely related to banking or managing or    
controlling banks as to be a proper incident thereto.                           

Federal Reserve Regulation "Y" (12 C.F.R. Part 225) sets forth those  
activities which are regarded as closely related to banking or managing or      
controlling banks and, thus, are permissible activities that may be engaged in  
by bank holding companies, subject to approval in individual cases by the FRB.  
Litigation has challenged the validity of certain activities authorized by the  
FRB for the bank holding companies, and the FRB has various regulations and     
applications in this regard still under consideration.                          

Under Maine law, dividends and other distributions by the Company with
respect to its stock are subject to declaration by the Board of Directors at its
discretion out of net assets.  Dividends cannot be declared and paid when such  
payment would make the Company insolvent or unable to pay its debts as they come
due.                                                                            

     FRB policy prohibits a bank holding company from declaring or paying a cash
dividend which would impose undue pressure on the capital of subsidiary banks or
would be funded only through borrowings or other arrangements that might        
adversely affect the holding company's financial position.  The policy further  
declares that a bank holding company should not continue its existing rate of   
cash dividends on its common stock unless its net income is sufficient to fully 
fund each dividend and its prospective rate of earnings retention appears       
consistent with its capital needs, asset quality and overall financial          
condition.  Other FRB policies forbid the payment by bank subsidiaries to their 

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parent companies of management fees which are unreasonable in amount or exceed a
fair market value of the services rendered (or, if no market exists, actual     
costs plus a reasonable profit).                                                

     In addition, the FRB has authority to prohibit banks that it regulates from
engaging in practices which in the opinion of the FRB are unsafe or unsound.    
Such practices may include the payment of dividends under some circumstances.   
Moreover, the payment of dividends may be inconsistent with capital adequacy    
guidelines.  The Company may be subject, under State and/or Federal law, to     
assessment to restore the capital of the Bank should it become impaired.        

    The Company is subject to the minimum capital requirements of the FRB.  As
a result of these requirements, the growth in assets of the Company is limited  
by the amount of its capital accounts as defined by the FRB.  Capital           
requirements may have an effect on profitability and the payment of             
distributions by the Company.  If the Company is unable to increase its assets  
without violating the minimum capital requirements, or is forced to reduce      
assets, its ability to generate earnings would be reduced.                      

  The FRB has adopted guidelines utilizing a risk-based capital structure.
These guidelines apply to the Company on a consolidated basis.                  

The risk-based guidelines require the Company to maintain a level of  
capital based primarily on the risk of its assets and off-balance sheet items.  
Assets and off-balance sheet items are placed in one of four risk categories.   
Assets in the first category, such as cash, have no risk and, therefore, carry a
zero percent risk-weight and require no capital support.  Capital support is    
required for assets in the remaining three risk categories--those categories    
having a risk-weight of 20 percent, 50 percent and 100 percent, respectively.   

     A banking organization's risk-based capital ratio is calculated by dividing
its qualifying total capital base by its risk-weighted assets.  Qualifying      
capital is divided into two tiers.  Core capital (Tier 1) consists of common    
shareholders' equity capital, noncumulative perpetual preferred stock and       
minority interests in equity capital accounts of consolidated subsidiaries, less
goodwill and other intangible assets.  Supplementary capital (Tier 2) consists  
of, among other items, allowance for possible loan and lease losses, cumulative 
and limited-life preferred stock, mandatory convertible securities and          
subordinated debt.  Tier 2 capital will qualify as a part of the Bank's total   
capital up to a maximum of 100 percent of the Bank's Tier 1 capital.  Amounts in
excess of these limits may be issued but are not included in the calculation of 
the risk-based capital ratio.                                                   

    Under current guidelines, banking organizations must maintain a risk-based
capital ratio of 8 percent, of which at least 4 percent must be in the form of  
core capital.  The Company is and expects to remain in compliance with these    
guidelines.                                                                     

    The purposes of the new risk-based capital guidelines are twofold--to make
capital requirements more sensitive to differences in risk profiled among       
banking organizations, and to aid in making the definition of bank capital      

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uniform internationally.  To achieve these purposes, the guidelines recognize   
the riskiness of assets by lowering capital requirements for some assets that   
clearly have less risk that others, and they recognize that there are risks     
inherent in off-balance sheet activities.  The guidelines require that banking  
organizations hold capital to support such activities.  In addition, the        
guidelines establish a definition of capital and minimum risk-based capital     
standards which are consistent on an international basis and that place a       
greater emphasis on equity capital.                                             

The FRB has also adopted a minimum leverage ratio which is intended to
supplement the risk-based capital requirements and to insure that all financial 
institutions continue to maintain a minimum level of capital.  As with the      
risk-based capital guidelines, the leverage capital guidelines apply to the     
Company on a consolidated basis.                                                

The leverage-based capital requirement stipulates that banking        
organizations maintain a minimum level of Tier 1 capital to total assets.  The  
most highly rated banks in terms of safe and sound operation that are not       
experiencing or anticipating significant growth are required to have Tier 1     
capital equal to at least 3 percent of total assets.  All other banks are       
expected to maintain a minimum leverage capital ratio (i.e., Tier 1 capital     
divided by total assets) in excess of the 3 percent minimum level.  The FDIC    
regulations require a financial institution to maintain a minimum ratio of 4    
percent to 5 percent, depending on the condition of the institution.            

    The Company's leverage ratio is and its management expects it to remain in
excess of regulatory requirements.                                              

 Camden National Bank is a national bank organized under the laws of the
United States.  Camden National Bank is a member of the Federal Reserve System  
and its deposits are insured by the FDIC.  Camden National Bank is subject to   
regulation, supervision and regular examination by the Office of the Comptroller
of the Currency (the "OCC").  The ability of Camden National Bank to pay        
dividends is subject to the banking laws of the United States and to the powers 
of the OCC and the FDIC.  Under federal banking law, dividends can only be paid 
out of the retained earnings of Camden National Bank's current and two preceding
fiscal years, or with the prior approval of the OCC.  Under federal banking     
regulation, a bank is prohibited from declaring a dividend or from making any   
other capital distribution if the payment or distribution would cause the bank  
to fail to meet minimum capital requirements.                                   

     United Bank is a banking organization chartered under the laws of the State
of Maine.  United Bank is subject to regulation, supervision and regular        
examination by the Federal Deposit Insurance Corporation (the "FDIC") and the   
Maine State Bureau of Banking.  Under Maine law, dividends are subject to       
declaration by the Board of Directors at its discretion.  Dividends cannot be   
declared and paid when such payment would make the bank insolvent or unable to  
pay its debts as they come due.                                                 

    The principal sources of funds essential to the business of banks and bank
holding companies are deposits, stockholders' equity, and borrowed funds.  The  
availability of these various sources of funds and other potential sources, such
as preferred stock or commercial paper, and the extent to which they are        

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utilized, depends on many factors, the most important of which are the FRB's    
monetary policies and the relative costs of different types of funds.  An       
important function of the FRB is to regulate the national supply of bank credit 
in order to combat recession and curb inflationary pressure.  Among the         
instruments of monetary policy used by the FRB to implement these objectives are
open market operations in United States Government securities, changes in the   
discount rate on bank borrowings, and changes in reserve requirement against    
bank deposits.  The monetary policies of the FRB have had a significant effect  
on the operating results of commercial banks in the past and are expected to    
continue to do so in the future.  In view of the recent changes in regulations  
affecting commercial banks and other actions and proposed actions by the federal
government and its monetary and fiscal authorities, including proposed changes  
in the structure of banking in the United States, no predication can be made as 
to future changes in interest rates, credit availability, deposit levels, the   
overall performance of banks generally or of the Company.                       

     The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 was
enacted by Congress in September of 1994.  Under the Act, beginning on September
29, 1995, bank holding companies may acquire banks in any state, notwithstanding
contrary state law, and all banks commonly owned by a bank holding company may  
act as agents for one another.  An agent bank may receive deposits, renew time  
deposits, accept payments, and close and service loans for its principal bank,  
but will not be considered a branch of that principal bank.                     

A bank may also merge with a bank in another state and operate either 
office as a branch, notwithstanding pre-existing contrary state law.  This      
interstate merger provision becomes automatically effective in all states on    
June 1, 1997, unless 1) the law becomes effective in a given state at any       
earlier date selected by legislation in that state; or 2) the law does not      
become effective at all in a given state because by legislation enacted before  
June 1, 1997 that state opts out of coverage by the interstate merger provision.
Upon consummation of an interstate merger, the resulting bank may acquire or    
establish branches on the same basis that any participant in the Merger could   
have if the Merger had not taken place.                                         

     Banks may also merge with branches of banks in other states without merging
with the banks themselves, or may establish de novo branches in other states, if
the laws of the other states expressly permit such mergers or such interstate de
novo branching.                                                                 

Item 2.  Properties                                                             

The Company operates in thirteen facilities.  The Main Office of the  
Company and Camden National Bank is at Two Elm Street, Camden, Maine, and is    
owned by Camden National Bank.  The building has 15,500 square feet of space on 
three levels.  Camden National Bank also owns three of its branches and the     
facility in which the operations departments of the Company are located.  None  
of the owned facilities is subject to a mortgage.  Camden National Bank also    

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leases two branches under long-term leases,which expire in January of 2020      
and December of 2077.                                                           

  The Main Office of United Bank is at 145 Exchange Street, Bangor, Maine,
and is owned by United Bank.  The building has 25,600 square feet of space on   
two levels.  United Bank occupies 16,975 square feet of space on both floors.   
The Trust Company of Maine, Inc., a non-depository trust company and a          
subsidiary of the Company leases 2,100 square feet of office space on the second
floor of the facility and its wholly owned subsidiary, Fiduciary Services, Inc.,
leases 2,042 square feet on the first floor of the facility.  Other occupants of
the facility include the Law Firm of Russell, Lingley & Silver, P.A., 2,533     
square feet on the second floor and L&H Investors, a property management firm   
and Cullen Williams, CPA, who have a joint lease on 1,920 square feet on the    
second floor.  United Bank also owns three of its other facilities, none of     
which is subject to a mortgage.  United Bank also leases one branch under a     
five-year lease, which expires in September of 2002.                            

Item 3.  Pending Legal Proceedings                                              

The Company is not involved in any material pending legal proceedings,
other than ordinary, routine litigation incidental to the business of the       
Company and its subsidiaries.                                                   

Item 4.  Submission of Matters to a Vote of Security Holders                    

    There were no items submitted to a vote of security holders of the company
during the fourth quarter of 1997.                                              

 PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholders         
Matters                                                                         

  The information required is contained on page 13 of the Company's Annual
Report to Shareholders for the year ended December 31, 1997 and is incorporated 
herein by reference.                                                            

Item 6.  Selected Financial Data                                                

Selected year-end financial information for the past five years is    
contained on page 15 of the Company's Annual Report to Shareholders for the year
ended December 31, 1997 and is incorporated herein by reference.                

Item 7.  Management's Discussion and Analysis of Financial Condition and        
Results of Operations                                                           

     The information contained in the section captioned "Management's Discussion
and Analysis of Financial Condition and Results of Operations" on pages 8       

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through 13 of the Company's Annual Report to Shareholders for the year ended    
December 31, 1997 should be read in conjunction with the following text and     
tables, and is incorporated herein by reference.                                

   The Analysis of Change in Net Interest Margin on Earnings Assets, Average
Daily Balance Sheets, and the Analysis of Volume and Rate Changes on Net        
Interest Income and Expenses are provided to enable the reader to understand the
components and past trends of the Company's interest income and expenses.  The  
first of these tables provides an analysis of changes in net interest margin;   
reflecting interest income earned and interest expense paid and average rates   
earned and paid.  Nonaccrual loans are included in total average loans.         
Interest income on loans includes fee on loans of $975 in 1997, $968 in 1996,   
and $823 in 1995.  In addition, net interest income of $(11) in 1997, $111 in   
1996 and $(2) in 1995, from interest rate swaps was also included in loan       
interest income.                                                                

                                                                [Download Table]
Years ended                                                                    
December 31                     1997               1996               1995     
                         -----------------  -----------------  ----------------
Dollars in thousands       Amount  Average   Amount  Average    Amount  Average
                               of   Yield/       of   Yield/        of   Yield/
                         interest    Rate  interest     Rate  interest     Rate
                         --------  ------- --------  -------  --------  -------
                                                                               
Interest-earning assets:                                                       
Securities - taxable     $12,549    6.76%  $ 9,793    6.35%   $ 9,297    6.40% 
Securities - nontaxable      311    6.80%      472    6.48%       647    6.27% 
Federal funds sold            42    5.08%      177    5.25%       121    5.56% 
Loans                     33,053    9.84%   29,737    9.96%    27,718    9.88% 
                         -------    -----  -------    -----   -------    ----- 
Total earning assets      45,955    8.72%   40,179    8.67%    37,783    8.62% 

Interest-bearing liabilities:                                                  
NOW accounts                 535    1.30%      531    1.34%       675    1.70% 
Savings accounts           2,158    3.36%    2,130    3.35%     2,183    3.46% 
Money Market accounts        772    3.20%      809    3.19%     1,025    3.27% 
Certificates of deposit    9,977    5.45%   10,260    5.61%     9,459    5.61% 
Short-term borrowings      7,343    5.54%    3,980    5.45%     3,728    6.01% 
Broker certificates           23    6.50%      255    6.52%       401    6.62% 
                         -------    -----  -------    -----   -------    ----- 
Total interest-bearing                                                         
  liabilities             20,808    4.67%   17,965    4.62%    17,471    4.71% 

Net interest income      $25,147           $22,214            $20,312          
                         =======           =======            =======          
Net interest rate spread            4.05%             4.05%              3.91% 
                                    =====             =====              ===== 
Net interest margin                 4.77%             4.79%              4.63% 
                                    =====             =====              ===== 

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                                                                [Download Table]

The following table shows the Company's daily average balance sheets for years
ended December 31, 1997, 1996 and 1995.                                       


Dollars in thousands                                                          
Years ended December 31,                  1997          1996          1995    
                                          ----          ----          ----    
                                                                              
Interest-earning assets:                                                      
 Securities - taxable                 $185,580      $154,102      $145,303    
 Securities - nontaxable                 4,566         7,279        10,326    
 Federal funds sold                        826         3,369         2,175    
 Loans                                 336,030       298,596       280,566    
                                      --------      --------      --------    
Total earning assets                   527,002       463,346       438,370    

Cash and due from banks                 13,869        13,250        12,790    
Other assets                            22,850        20,076        19,651    
Less allowance for loan losses          (4,874)       (4,290)       (3,978)   
                                      --------      --------      --------    
Total assets                          $558,847      $492,382      $466,833    
                                      ========      ========      ========    

Interest-bearing liabilities:                                                 
 NOW accounts                         $ 41,152      $ 39,745      $ 39,771    
 Savings accounts                       64,269        63,536        63,071    
 Money market accounts                  24,147        25,340        31,368    
 Certificates of deposits              183,134       182,926       168,564    
 Short-term borrowings                 132,298        73,069        62,044    
 Broker certificates                       356         3,910         6,058    
                                      --------      --------      --------    
Total interest-bearing liabilities     445,356       388,526       370,876    

Demand deposits                         48,190        41,569        40,335    
Other liabilities                        5,112         3,116         5,114    
Shareholders' equity                    60,189        59,171        50,508    
                                      --------      --------      --------    
Total liabilities and                                                         
 stockholders' equity                 $558,847      $492,382      $466,833    
                                      ========      ========      ========    

     The following tables present the changes in interest income and the changes
in interest expense attributable to the change in interest rates and the change 
in volume for the periods indicated.  Tax-exempt income has been calculated on a
tax-equivalent basis, 34% being the tax rate used.                              

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                                                                [Download Table]
                                     1997 Over 1996        
                                     --------------        
                           Change       Change             
                           Due to       Due to      Total  
In thousands               Volume       Rate        Change 
                           -------      -------     -------
                                                           
Interest-earning assets:                                   
  Securities--taxable       2,000         756        2,756 
  Securities--nontaxable     (176)         15         (161)
  Federal funds sold         (134)         (1)        (135)
  Loans                     3,728        (412)       3,316 
                           -------     -------      -------
Total interest income       5,418         358        5,776 

Interest-bearing liabilities:                              
  NOW accounts                 19         (15)           4 
  Savings accounts             25           3           28 
  Money market accounts       (38)          1          (37)
  Certificates of deposit      12        (295)        (283)
  Short-term borrowings     3,226         121        3,347 
  Broker deposits            (232)         16         (216)
                           -------     -------      -------
Total interest expense      3,012        (169)       2,843 

Net interest income         2,406         527        2,933 
                           =======     =======      =======

                                     1996 Over 1995        
                                     --------------        
                           Change       Change             
                           Due to       Due to      Total  
In thousands               Volume       Rate        Change 
                           -------      -------     -------
Interest-earning assets:                                   
  Securities--taxable         563         (67)         496 
  Securities--nontaxable     (191)         16         (175)
  Federal funds sold           66         (10)          56 
  Loans                     1,781         238        2,019 
                           -------     -------      -------
Total interest income       2,219         177        2,396 

Interest-bearing liabilities:                              
  NOW accounts                  0        (144)        (144)
  Savings accounts             16         (69)         (53)
  Money market accounts      (197)        (19)        (216)
  Certificates of deposit     806          (5)         801 
  Short-term borrowings       662        (410)         252 
  Broker deposits            (142)         (4)        (146)
                           -------     -------      -------
Total interest expense      1,145        (651)         494 
                           -------     -------      -------
Net interest income         1,074         828        1,902 
                           =======     =======      =======

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   The following table set forth the Company's investment securities at book
carrying amount as of December 31, 1997, 1996, and 1995.                        

                                                                [Download Table]
Dollars in thousands                       1997        1996        1995
                                           ----        ----        ----
                                                                       
Securities available for sale:                                         
  U.S. Treasury and agency             $  4,312    $ 12,616    $ 19,836
  Mortgage-backed securities                -0-         -0-         -0-
  State and political subdivisions          -0-          31           1
                                       --------    --------    --------
                                          4,312      12,647      19,837
                                       --------    --------    --------
Securities held to maturity:                                           
  U.S. Treasury and agency               48,566      58,433      67,512
  Mortgage-backed securities            109,373      79,259      59,722
  State and political subdivisions        2,955       5,524       7,897
  Other securities                          -0-         -0-         -0-
                                       --------    --------    --------
                                        160,894     143,216     135,136
                                       --------    --------    --------
                                       $165,206    $155,863    $154,973
                                       ========    ========    ========

To enhance the Company's ability to manage liquidity, the investment  
portfolio is divided into two parts:  Investments available for sale and        
investments held to maturity.  The ability to use securities as collateral for  
Federal Home Loan Bank loans enables the Company to hold the largest portion of 
the portfolio to maturity.  The following table summarizes the investment       
portfolio maturities and yields at December 31, 1997.                           

                                                                [Download Table]
                             Available for sale        Held to maturity  
                             ------------------        ----------------  
                             Book      Yield to      Amortized   Yield to
                             Value     maturity         Cost     maturity
                             -------   --------      ---------   --------
Dollars in thousands                                                     
                                                                         
U.S. Treasury and Agency:                                                
  Due in 1 year or less      $   304      6.57%       $ 12,382      5.18%
  Due in 1 to 5 years          2,008      5.93%         19,783      6.77%
  Due in 5 to 10 years           -0-      0.00%            -0-      0.00%
  Due after 10 years             -0-      0.00%            -0-      0.00%
                             -------   --------       --------   --------
                               2,312      6.01%         32,165      6.16%
                             -------   --------       --------   --------
Structured notes:                                                        
  Due in 1 year or less        2,000      5.61%         16,101      3.45%
  Due in 1 to 5 years            -0-      0.00%            -0-      0.00%
  Due in 5 to 10 years           -0-      0.00%            300      4.42%
  Due after 10 years             -0-      0.00%            -0-      0.00%
                             -------   --------       --------   --------
                               2,000      5.61%         16,401      3.47%
                             -------   --------       --------   --------
Mortgage-backed securities:                                              
  Due in 1 year or less          -0-      0.00%          2,567      5.22%
  Due in 1 to 5 years            -0-      0.00%          6,102      6.75%
  Due in 5 to 10 years           -0-      0.00%          7,802      7.68%
  Due after 10 years             -0-      0.00%         92,902      7.68%
                             -------   --------       --------   --------
                                 -0-      0.00%        109,373      7.57%
                             -------   --------       --------   --------
State and political subdivisions:                                        
  Due in 1 year or less          -0-      0.00%          1,606      6.50%
  Due in 1 to 5 years            -0-      0.00%            977      6.42%
  Due in 5 to 10 years           -0-      0.00%            272      6.78%
  Due after 10 years             -0-      0.00%            100      9.10%
                             -------   --------       --------   --------
                                 -0-      0.00%          2,955      6.59%
                             -------   --------       --------   --------
                             $ 4,312      5.83%       $160,894      6.85%
                             =======   ========       ========   ========

   Total loans increased by $51.9 million, or 16.7%, in 1997.  The following
table provides a summary of the loan portfolio for the past five years.         
Management does not foresee any significant changes occurring in the loan mix   
during the coming year.                                                         

                                                                [Download Table]

Dollars in thousands                                                     

As of December 31,           1997      1996      1995      1994      1993
                             ----      ----      ----      ----      ----
                                                                         

Commercial, other        $121,093  $ 99,694  $ 82,622  $ 77,126  $ 69,692
Commercial, real estate    69,558    55,104    56,397    53,766    42,264
Real estate construction    3,731     2,706     2,123     3,445     3,911
Residential real estate   121,363   116,520   107,412    96,456    80,534
Consumer                   47,404    37,222    36,548    34,683    32,508
                         --------  --------  --------  --------  --------
                         $363,149  $311,246  $285,102  $265,476  $228,909
                         ========  ========  ========  ========  ========


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     Loan demand also affects the Company's liquidity position.  However, of the
loans maturing over one year, approximately 65% are variable rate loans.  The   
following table presents the maturities of loans at December 31, 1997.          

                                                                [Download Table]

Dollars in thousands                            Through   More Than            
                                     <1 Year    5 Years    5 Years        Total
                                     -------    -------   ---------       -----
                                                                               

Maturity Distribution:                                                         
 Fixed Rate:                                                                   
  Commercial, other                $ 7,204    $13,455    $11,237       $31,896 
  Commercial, real estate            1,758     12,057      4,240        18,055 
  Real estate construction           3,731          0          0         3,731 
  Residential real estate            3,841        418     34,980        39,239 
  Consumer                           6,356     15,742      4,527        26,625 

 Variable Rate:                                                                
  Commercial, other                 30,996     19,088     28,789        78,873 
  Commercial, real estate            2,452      8,078     40,974        51,504 
  Real estate construction               0          0          0             0 
  Residential real estate                9        484     81,846        82,339 
  Consumer                               0     20,562          0        20,562 

 State and municipal                 6,919      1,573      1,833        10,325 

                                   -------    -------    --------     -------- 
                                   $63,266    $91,457   $208,426      $363,149 
                                   =======    =======   ========      ======== 


Management considers both the adequacy of the collateral and the other
resources of the borrower in determining the steps to be taken to collect non-  
accrual and charged-off loans.  Alternatives that are considered are            
foreclosure, collecting on guarantees, restructuring the loan, or collection    
lawsuits.                                                                       

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   The following table sets forth the amount of the Company's non-performing
assets as of the dates indicated:                                               

                                                                [Download Table]
Dollars in thousands                                                     

As of December 31,           1997      1996      1995      1994      1993
                             ----      ----      ----      ----      ----
                                                                         
Nonperforming loans:                                                     
  Non-accrual loans        $1,215    $1,674    $2,631    $1,660    $1,553
  Accruing loans past due                                                
    90 days or more         1,004       599       353     1,217       428
  Restructured loans (in                                                 
    compliance with                                                      
    modified terms)           -0-       -0-       -0-       -0-       -0-
                           ------    ------    ------    ------    ------
Total nonperforming loans   2,219     2,273     2,984     2,877     1,981

Other real estate owned     1,373     1,264     1,086     1,606     1,667
                           ------    ------    ------    ------    ------
Total Nonperforming assets $3,592    $3,537    $4,070    $4,483    $3,648
                           ======    ======    ======    ======    ======
Ratios:                                                                  
Nonperforming loans to                                                   
  total loans               0.61%     0.73%     1.05%     1.08%     0.87%
Allowance for loan losses                                                
  to nonperforming loans  254.17%   196.74%   136.73%   130.38%   204.44%
Nonperforming assets to                                                  
  total assets              0.63%     0.69%     0.85%     0.98%     0.88%
Allowance for loan losses                                                
  to nonperforming assets 157.02%   126.43%   100.25%    83.67%   111.02%


It is the Company's policy to discontinue accrual of interest on loans
when, in the opinion of management, there is an indication that the borrower    
may be unable to meet payments as they become due.  Upon such discontinuance    
all accrued but unpaid interest is reversed.                                    

Interest foregone on non-accrual loans was approximately $147,000,    
$178,000, $207,000, $98,000 and $117,000 for 1997, 1996, 1995, 1994 and 1993,   
respectively.  Interest income recognized on non-accrual loans during 1997 was  
$64,000.                                                                        

Management believes that the level of the allowance for loan losses at
December 31, 1997 of $5.6 million, or 1.55% of total loans outstanding was      
appropriate given the current economic conditions in the Company's service area 
and the overall condition of the loan portfolio.  When determining the amount of
provision for loan losses annually management relies on its review of the loan  
portfolio both to ascertain whether there are probable losses to be written off,
projected loan mix and loan volumes, historical net loan loss experience, and to
assess the loan portfolio in the aggregate.                                     

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The following table summarizes the activity in the allowance for loan 
losses for the years ended December 31, 1997, 1996, 1995, 1994 and 1993.        

                                                                [Download Table]
Dollars in thousands                                                     

As of December 31,           1997      1996      1995      1994      1993
                             ----      ----      ----      ----      ----
                                                                         
Balance beginning                                                        
  of period                $4,472    $4,080    $3,751    $4,050    $3,749
Provisions for loan losses  1,677       838       899       216       683
Charge-offs:                                                             
  Commercial                  628       222       413       392       235
  Residential real estate     135       191       248       188       155
  Consumer                    328       243       198       106       274
                           ------    ------    ------    ------    ------
Total Charge-offs           1,091       656       859       686       664

Recoveries:                                                              
  Commercial                  424        55       174        62       143
  Residential real estate      36        27         4         3        32
  Consumer                    122       128       111       106       107

                           ------    ------    ------    ------    ------
Total Recoveries              582       210       289       171       282

Net Charge-offs               509       446       570       515       382
                           ------    ------    ------    ------    ------
Balance end of period      $5,640    $4,472    $4,080    $3,751    $4,050
                           ======    ======    ======    ======    ======
Average loans                                                            
  outstanding            $336,029  $298,596  $282,094  $253,439  $219,840

Net charge-offs as a                                                     
 percentage of average                                                   
 loans                      0.15%     0.15%     0.20%     0.20%     0.17%

Provision for loan losses                                                
 to average loans           0.50%     0.28%     0.32%     0.09%     0.31%

Ending allowance for loan                                                
 losses to:                                                              
  Total loans at end                                                     
    of period               1.55%     1.44%     1.43%     1.41%     1.77%
  Net charge-offs during                                                 
    period               1108.06%  1002.69%   715.79%   728.35%  1060.21%
  Nonperforming loans at                                                 
    end of period         254.17%   196.74%   136.73%   130.38%   204.44%


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 The following table summarizes the allocation of the allowance for loan
losses among the Company's loan categories for the years ended December 31,     
1997, 1996, 1995, 1994 and 1993.                                                

                                                                [Download Table]
Dollars in thousands                                                           

As of December 31,     1997       1996        1995        1994        1993     
                       ----       ----        ----        ----        ----     
Balance at                                                                     
 end of period                                                                 
 applicable to:     Amount   %  Amount   %  Amount   %  Amount   %  Amount   % 
                    ------   -  ------   -  ------   -  ------   -  ------   - 
                                                                               
Commercial, other   $2,323  33% $1,711  32% $1,510  29% $1,500  29% $1,388  30%
Commercial,                                                                    
  real estate        1,261  19%  1,100  18%    753  20%    658  20%    526  18%

Residential                                                                    
  real estate          601  34%    551  38%    347  37%    451  37%    406  37%
Consumer               582  13%    492  11%    447  13%    443  13%    423  14%
Guaranteed loans        95   1%     69   1%     26   1%     16   1%     12   1%
Unfunded commitments   366   NA    252   NA    211   NA    221   NA    234   NA
Unallocated            412   NA    297   NA    786   NA    462   NA  1,061   NA
                    ------ ---- ------ ---- ------ ---- ------ ---- ------ ----
Total               $5,640 100% $4,472 100% $4,080 100% $3,751 100% $4,050 100%
                    ====== ==== ====== ==== ====== ==== ====== ==== ====== ====


 The maturity of certificates of deposit in denominations of $100,000 or
more is set forth in the following table.  These deposits are generally         
considered to be more rate sensitive than other deposits and, therefore, more   
likely to be withdrawn to obtain higher yields elsewhere if available.          

                                                                [Download Table]
Dollars in thousands                       

December 31,                          1997 
                                      ---- 

                                           
Time remaining until maturity:             
   Less than 3 months               $ 9,295
   3 months through 12 months        18,143
   Over 12 months                     4,656
                                    -------
                                    $32,094
                                    =======

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     The dividend payout ratio was 33.34%, 27.59%, 18.67%, 12.78%, and 9.51% for
1997, 1996, 1995, 1994 and 1993 respectively.  The average equity to average    
assets ratio was 10.86%, 11.32%, 10.92%, 10.24%, and 9.39% for 1997, 1996, 1995,
1994 and 1993 respectively.                                                     

  The borrowings utilized by the Company primarily have been advances from
the FHLB of Boston.  In addition, the Company utilizes fed funds, treasury, tax 
and loan deposits, and repurchase agreements, secured by the United States      
Government or Agency securities.  The major portion of all borrowings matures or
reprices within the next six months.  The following table sets forth certain    
information regarding borrowed funds for the years ended December 31, 1997,     
1996, and 1995.                                                                 

                                                                [Download Table]
Dollars in thousands                                                      

Total borrowings:                                                         
At or For the year ended                                                  
  December 31,                          1997           1996          1995 
                                        ----           ----          ---- 
                                                                          
Average balance outstanding          $132,297        $73,069       $47,248
Maximum amount outstanding at                                             
  any month-end during the year       163,884         93,760        43,125
Balance outstanding at end of year    132,478         93,760        43,125
Weighted average interest rate                                            
  during the year                      5.53%          5.45%         6.18% 
Weighted average interest rate                                            
  at end of year                       5.49%          5.35%         5.79% 


   Interest rate sensitivity or "Gap" management involves the maintenance of
an appropriate balance between interest sensitive assets and interest sensitive 
liabilities to reduce interest rate risk exposure while also providing liquidity
to satisfy the cash flow requirements of operations and to meet customers'      
fluctuating demands for funds, either in terms of loan requests or deposit      
withdrawals.  Major fluctuations in net interest income and net earnings could  
occur due to imbalances between the amounts of interest-earning assets and      
interest-bearing liabilities, as well as different repricing characteristics.   
Gap management seeks to protect earnings by maintaining an appropriate balance  
between interest-earning assets and interest-bearing liabilities in order to    
minimize fluctuations in the net interest margin and net earnings in periods of 
volatile interest rates.                                                        

 The following table set forth the amount of interest-earning assets and
interest-bearing liabilities outstanding, at December 31, 1997 which are        
anticipated by the Company, based upon certain assumptions, to reprice or mature
in each of the future time periods shown.                                       

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                                                                [Download Table]

Dollars in thousands                       Through   More Than            
                                <1 Year    5 Years    5 Years        Total
                                -------    -------   ---------       -----
Interest-earning assets:                                                  
                                                                          
Loans                                                                     
 Fixed                         $ 29,809    $43,245    $ 56,817    $129,871
 Variable                       233,278        -0-         -0-     233,278
Investment securities                                                     
 Available for sale               2,301      2,002         -0-       4,303
 Held to maturity                32,626     26,862     101,376     160,894
                               --------    -------    --------    --------
Total interest-earning assets   298,014     72,109     158,193     528,346
                               --------    -------    --------    --------
Interest-bearing liabilities:                                             
Savings accounts                 15,000        -0-      51,723      66,723
NOW accounts                        -0-        -0-      42,796      42,796

Money market accounts            23,452        -0-         -0-      23,452
Certificate accounts            148,324     40,368         324     189,016
Borrowings                      132,197        278         -0-     132,475
                               --------    -------    --------    --------
Total interest-bearing                                                    
  liabilities                   318,973     40,646      94,843     454,462
                               --------    -------    --------    --------
Effect of interest rate swap      5,000                                   
                               --------                                   
Interest sensitivity gap                                                  
  per period                   $(25,959)   $31,463    $ 63,350            
                               ========    =======    ========            
Cumulative interest                                                       
  sensitivity gap              $(25,959)   $ 5,504    $ 68,854            
                               ========    =======    ========            
Cumulative interest                                                       
  sensitivity gap as a                                                    
  percentage of total assets        (5%)        1%         12%            

Cumulative interest-earning                                               
  assets as a percentage of                                               
  interest-sensitive liabilities    93%       103%        116%            

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Item 7A.  Quantitative and Qualitative Disclosures about Market Risks.          

Included in the Company's 1997 Annual Report to Shareholders on pages 12-13     
and is incorporated herein by reference.                                        

Item 8.  Financial Statements and Supplementary Data                            

The following financial statements and report of independent accountant,        
included in the Company's 1997 Annual Report to Shareholders, are incorporated  
herein by reference.  Page references are to pages of the Company's 1997        
Annual Report to Shareholders.                                                  

                                                  PAGE

Report of Independent Public Accountant                          39             
Consolidated Statements of Financial Condition                                  
December 31, 1997 and 1996                                  16        
Consolidated Statements of Earnings for the years ended                         
December 31, 1997, 1996 and 1995                            17        
Consolidated Statements of Changes in the Stockholders' Equity                  
for the years ended December 31, 1997, 1996 and 1995        18        
Consolidated Statements of Cash Flows for the years ended                       
December 31, 1997, 1996 and 1995                            19        
Notes to Consolidated Financial Statements                     20-37            

Item 9.  Changes in and Disagreements With Accountants on Accounting and        
Financial Disclosure                                                            

   During the past two years the Company has not made changes in and has not
had disagreements with its independent accountant.                              

PART III

Item 10.  Directors and Executive Officers of the Registrant                    

    The Company responds to this item by incorporating herein by reference the
material responsive to such item in the Company's definitive Proxy Statement for
the 1998 Annual Meeting of Shareholders to be filed with the Commission prior to
April 30, 1998.                                                                 

Item 11. Executive Compensation                                                 

   The Company responds to this item by incorporating herein by reference to
the material responsive to such item in the Company's definitive Proxy Statement
for the 1998 Annual Meeting of Shareholders to be filed with the Commission     
prior to April 30, 1998.                                                        

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Item 12.  Security Ownership of Certain Beneficial Owners and Management        

   The Company responds to this item by incorporating herein by reference to
the material responsive to such item in the Company's definitive Proxy Statement
for the 1998 Annual Meeting of Shareholders to be filed with the Commission     
prior to April 30, 1998.                                                        

Item 13.  Certain Relationships and Related Transactions                        

   The Company responds to this item by incorporating herein by reference to
the material responsive to such item in the Company's definitive Proxy Statement
for the 1998 Annual Meeting of Shareholders to be filed with the Commission     
prior to April 30, 1998.                                                        

 PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K       

(a)   1.   Index to Financial Statements:                             

  A list of the consolidated financial statements of the Company and
report of independent public accountant incorporated herein is included in Item 
8 of this Report.                                                               

2.   Financial Statement Schedules:                         

Schedules have been omitted because they are not applicable or are
not required under the instructions contained in Regulation S-X or because the  
information required to be set forth therein is included in the consolidated    
financial statements or notes thereto.                                          

3.   Exhibits filed herewith:                               

(3.i)  The Articles of Incorporation of Camden National Corporation, as   
        amended to date, Exhibit 3.i to the Company's Registration statement
         Form S-4 filed with the Commission on September 25, 1995, file number
33-97340, are incorporated herein by reference.             

(3.i)  The Bylaws of Camden National Corporation, as amended to date,     
    Exhibit 3.ii to the Company's Registration Statement on Form S-4
    filed with the Commission on September 25, 1995, file number 33-
97340, are incorporated herein by reference.                

 (10.1) Lease Agreement for the facility occupied by the Thomaston Branch of
   Camden National Bank, between Knox Hotel Associates(Lessor) and
         Camden National Bank (Lessee)filed with Form 10-K, December 31, 1995,
and is incorporated herein by reference.                    

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  (10.2) Lease Agreement for the facility occupied by the Camden Square Branch
         of Camden National Bank, between Milliken, Tomlinson Company (Lessor)
        and Camden National Bank (Lessee) filed with Form 10-K, December 31,
1995, and is incorporated herein by reference.              

(10.3) Lease Agreement for the facility occupied by the Hampden Branch of 
   United Bank, Parway Realty Development Corporation (Lessor) and
     United Bank (Lessee) filed with Form 10-K, December 31, 1995, and
is incorporated herein by reference.                        

(10.4) Camden National Corporation 1993 Stock Option Plan, filed with Form
     10-K, December 31, 1995, and is incorporated herein by reference.

(10.5) UNITEDCORP Stock Option Plan, filed with Form 10-K, December 31,   
1995, and is incorporated herein by reference.              

(13)   Camden National Corporation's 1997 Annual Report to Shareholders.* 

(21)   Subsidiaries of the Company                                        

(27)   Financial Data Schedule                                            

*Deemed filed only with respect to those portions thereof incorporated herein by
reference                                                                       

(b) Reports on Form 8-K. None filed.                                            

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SIGNATURES                                                                      
Pursuant to the requirement of Section 13 or 15(d) of the Securities    
Exchange Act of 1934, the Registrant has duly caused this report to be signed   
on its behalf by the undersigned, thereunto duly authorized.                    

CAMDEN NATIONAL CORPORATION (Registrant)                                        

---------------------------------------------------------                       
Keith C. Patten                                  Date                           
President and Chief Executive Officer                                           

 Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the persons on behalf of the Registrant and     
in the capacities and on the dates indicated.                                   

Keith C. Patten (signature)     3/30/98  Susan M. Westfall (signature)  3/30/98 
---------------------------------------  -------------------------------------  
Keith C. Patten                  Date    Susan M. Westfall                Date  
President and Director                   Treasurer and                          
Chief Executive Officer                  Chief Financial Officer                

David H. Montgomery (signature) 3/30/98  Rendle A. Jones (signature)   3/30/98  
---------------------------------------  -------------------------------------  
David H. Montgomery              Date    Rendle A. Jones                   Date 
Chairman and Director                                                           

John S McCormick, Jr.(signature)3/30/98  Royce M. Cross (signature)    3/30/98  
---------------------------------------  -------------------------------------  
John S. McCormick, Jr., Director  Date   Royce M. Cross, Director          Date 

Peter T. Allen (signature)      3/30/98  Richard N. Simoneau(signature)3/30/98  
---------------------------------------  -------------------------------------  
Peter T. Allen, Director         Date    Richard N. Simoneau, Director     Date 

Ann W. Bresnahan (signature)    3/30/98  Arthur E. Strout (signature)   3/30/98 
---------------------------------------  -------------------------------------- 
Ann W. Bresnahan, Director       Date    Arthur E. Strout, Director        Date 

Robert J. Gagnon (signature)    3/30/98  Robert W. Daigle (signature)   3/30/98 
---------------------------------------  -------------------------------------- 
Robert J. Gagnon, Director       Date    Robert W. Daigle, Director        Date 

John W. Holmes (signature)      3/30/98                                         
---------------------------------------                                         
John W. Holmes, Director         Date                                           

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Exhibit #21 Subsidiaries of the Company                                         

Camden National Bank                                                            

United Bank                                                                     

Trust Company of Maine, Inc.                                                    

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[COVER OF THE ANNUAL REPORT]

A History of Community Banking Since 1875                                       

Photograph of Downtown Camden in the Fall.  Camden National Bank in             
the center of the photograph.                                                   

Corporate Logo   Camden National Corporation                                    
1997 Annual Report                            

[First Page of the Annual Report]                                               

When Camden National first opened its doors in 1875, Maine was a                
very different place.                                                           

Photograph.  Photograph taken around 1923 of the interior of the                
Main Office and an employee.                          

Caption under photo - Camden National is rich in history and                    
       tradition, as seen in this interior view of
the Maine Office, circa 1923.       

[Page 1 - Annual Report]                                                        

Although the world has experienced considerable change over the                 
past 122 years, Camden National has stayed true to its original                 
mission and remains a vital community resource.                                 

Photograph.     Photograph taken in 1997 of the interior of the                 
Main Office in Camden.                          

Caption under photo - Camden National's rich history of community               
    service continues today, enhanced by the
        complete array of financial services offered
    at all locations including its corporate
        headquarters in Camden (shown here in 1997).

[Page 2 & 3 - President's Letter]                                               

Dear Shareholders,                                                              

Camden National Corporation's (the "Company") 1997 financial          
performance reflects many new records.  Net income rose by 12.7% to             
$9.1 million, earnings per share increased by $.54 to $4.02, assets             
grew by 12.5% to $573.9 million and loans increased by 16.7% or                 
$51.9 million.  Deposits, which had experienced a modest decline in             
1996, increased by $20.1 million to $373.4 million this past year,              
which was a new high.  Both banks were major contributors to the                
profit improvement and asset growth.                                            

The Trust Company of Maine, Inc. (TCOM), a majority-owned             
subsidiary which was established April 1994, continued its growth,              
adding $53.8 million in assets under management and is approaching              
the $200 million mark.  This subsidiary operated at a near break-               
even level while still adding value to your Company, as its                     
services make it possible for our bank subsidiaries to offer a more             
complete financial package to their customers.                                  

I am pleased with our first year's results under our                  
"Stakeholders" program, which is a performance-based employee                   
incentive compensation program designed to maximize shareholder                 
value and help ensure the long-term viability of the Company.  Both             
bank presidents are committed to this program which balances profit             
with growth and quality with productivity.  The "Stakeholders"                  
program is creating an environment where all of the employees take              
a more personal interest in the performance of their respective                 
banks and are thinking and working as owners.                                   

By the time you receive this report, Camden National                  
Corporation's subsidiary, Camden National Bank, is expected to have             
completed its acquisition of the four KeyBank branches-Bucksport,               
Damariscotta, Vinalhaven and Waldoboro.  The purchase of these                  
branches is expected to add over $50 million in deposits and                    
approximately $7 million in loans.  This acquisition not only                   
creates an excellent growth opportunity for Camden National, but                
also allows the bank to better serve its many customers already in              
these prospective markets.                                                      

Your Company and its subsidiaries continue to search-out              
growth opportunities, but only where the directors and management               
feel confident that the growth will add strength and value to your              
stock.  Growth just for the sake of growth is never a                           
consideration.                                                                  

Your Company continues to undergo transition with changes in          
directors, management structure and markets served.  Kenneth C.                 
Dickey, Vice Chairman of both the Camden National Bank and Camden               
National Corporation Boards of Directors reached the mandatory                  
retirement age at the end of 1997.  Ken served the bank and the                 
Company  very well since 1970.  His knowledge of the Company and                
its history was a real asset in planning for our future.                        

It is with considerable sadness that we note E. Maynard               
"Sandy" Graffam's passing on May 29, 1997.  Sandy was an active                 
member of the Camden National Bank and Camden National Corporation              
Boards.  This Annual Report is being dedicated to his memory.                   

Both Ken and Sandy were able, contributing members on the             
boards they served, and they will be difficult to replace.  We will             
find the best qualified individuals to fill these vacancies, with               
consideration given to candidates from the areas served by our                  
newly acquired branches.  This approach is in line with our                     
philosophy that promotes board representation from within markets               
served by the Company.                                                          

With the retirement of Robert E. Worthing, Vice President,            
Cashier and Investment Officer of the Camden National Bank and Vice             
President and Clerk of the holding company, your directors promoted             
Susan M. Westfall to assume those duties.  In addition, Susan, as               
CFO, will retain responsibility for the accounting function,                    
providing oversight and supervision.                                            

The Camden National Corporation was listed on the American            
Stock Exchange (AMEX-CAC) at $42.00 per share on October 7, 1997.               
The stock has appreciated significantly since its initial listing.              
It is our hope and expectation that you are pleased with the                    
listing, as your stock now reflects a true market price.  The AMEX              
listing has also improved the liquidity of your stock and has made              
it much easier for you to follow the value of your investment.  As              
with any investment, past performance regarding Camden National                 
Corporation's stock price is not an indication of  future results.              

Prior to our listing on the AMEX, your Company had repurchased        
76,440 shares of stock under its stock buy-back program with an                 
initial goal of 117,400 shares.  With the free market expediting                
sales and with the increase in the market price of the stock, this              
activity has ceased.  Your directors continue to believe that a                 
repurchase program benefits shareholders; therefore, other methods              
of stock repurchase are being explored and you will be advised                  
accordingly.                                                                    

In closing, I am pleased to say that despite the many                 
challenges inherent in our industry, your Company continues to                  
operate as a high performing multi-bank holding company, exceeding              
the results achieved by its peer group.  This success could not                 
have happened without the cooperative spirit and guidance of the                
directors, management and staff of the Company and its                          
subsidiaries.  We all thank you, our shareholders, for your support             
and for the opportunity to provide for you an attractive return on              
your investment.                                                                

Sincerely,                                                                      

Keith C. Patten (signature)                                                     

Keith C. Patten                                                                 
President & Chief Executive Officer                                             
Camden National Corporation                                                     

Photograph on page 2.   Photograph of Keith C. Patten, President                
           & CEO of CNC shaking hands with Robert W.
          Daigle, President of CNB at the American
Stock Exchange.               

Caption to right of photo - Keith Patten and Bob Daigle are all                 
             smiles as Camden National Corporation
            made its debut on the American Stock
            Exchange, October 7, 1997, under the
listing CAC.            

Photograph on page 3.   Photograph of Keith C. Patten, President                
           & CEO of CNC smiling and working at a desk.

[Page 4 - Camden National Bank President's Letter]                              

Photograph.   Headshot of Robert W. Daigle, President of Camden                 
National Bank with the CNB Main Office in the back- 
ground.                                             

Comment to right of photo - Throughout the years, Camden National               
       Bank has helped individuals and
      families realize their dreams.
Dear Shareholders,                                                              

As I reflect on the events and developments of this past year,        
I see considerable familiarity interspersed with a good deal of                 
originality-combined, they give us much to be pleased with and                  
optimistic about.                                                               

Earnings of $8,192,495 were up 8.9% compared to the previous          
year, with a return on assets of 1.69% and return on equity of                  
15.40%, both well above our Bank's national peer group average.                 
Contributing significantly to this success were quality loan growth             
and a healthy increase in core deposits, each the result of a                   
heightened business development effort.                                         

Training and professional development took on added emphasis          
in 1997 as we endeavored to build on the quality of our staff and               
their effectiveness in serving the customer.  In addition to                    
technical skills development, specialized training such as "needs-              
based selling" was incorporated into our curriculum.                            

For convenience and benefit to our customers, a number of           
technology and product innovations materialized in 1997,                        
highlighted by the installation of the E-Z Teller System at our                 
branch offices and the debut of several new deposit initiatives,                
including Penny"s Piggy Bank Savings Club, designed to foster                   
frugality among our next generation of customers.                               

One of the more exciting events this past year was the                
announcement of our successful bid to acquire KeyBank branches in               
four new markets-Bucksport, Damariscotta, Vinalhaven and Waldoboro.             
Scheduled to close in March 1998, the acquisition represents a                  
natural geographic expansion opportunity that will allow for the                
managed growth of our banking franchise.                                        

Finally, it is important to note that the success of our              
Company in 1997 would not have been possible without the support                
and commitment of our employees.  Their endorsement of our new                  
performance-based incentive program has sharpened each                          
"stakeholder's" awareness of what epitomizes a high performing                  
organization and fosters a spirit of teamwork that bodes well for               
our respective futures.                                                         

On behalf of the Directors, management and staff of Camden            
National Bank, thank you for your ongoing support and                           
encouragement.                                                                  

Sincerely,                                                                      

Robert W. Daigle (signature)                                                    

Robert W. Daigle                                                                
President & Chief Executive Officer                                             
Camden National Bank                                                            

Photograph to the right of President's letter.   Photo of                       
Petrea Allen, Mortgage Loan Consultant and Dr. Christine                
Garrison looking at a home.                                             

Caption under photo - Petrea Allen (right), Mortgage Loan                       
Consultant helped Dr. Christine Garrison make her dream                 
home in Rockport become a reality in 1997.                              

[Page 5 - United Bank President's Letter]                                       
Comment on top of page.   United Bank carries on the tradition of               
of providing local expertise and decision making to area          
businesses.                                                       

Photograph at top right corner.   Headshot of Bruce D. Bartlett                 
President & CEO of United Bank with United Bank in the          
background                                                      

Dear Shareholders:                                                              

With much pride in the performance of United Bank's staff             
during the past year, I am pleased to report continuing progress                
toward our objective of becoming a high performance subsidiary of               
Camden National Corporation.  The 1997 return on average assets of              
1.31% and return on average equity of 16.49% each reflect                       
significant improvement over prior years.  With a net interest                  
margin at the high end of our peer group, continuing reduction in               
operating costs has enabled significant improvement in the                      
efficiency and competitive posture of United Bank, providing a                  
solid foundation for an even greater contribution to the operating              
results of Camden National Corporation in the year ahead.                       

The addition of Paul R. Flynn to our management team in April         
1997 has provided needed management depth and has brought us new                
expertise in the branch administration and marketing areas.  Paul               
has already made great strides through enhancement of marketing                 
efficiency of our branch system.  Also, Nathan R. Williams, an                  
accomplished commercial lender, joined United Bank in May 1997 as               
Assistant Vice President and Commercial Loan Officer.  Nate began               
immediately to develop new account relationships and has taken on               
the responsibility for the restructuring of our credit function as              
well.                                                                           

Early in 1997 we initiated the "Stakeholders" incentive               
compensation program.  Under this new effort, all staff members are             
recognized as "Stakeholders" in the success of our Company.  This               
formalizes what had always been the case, that employees have a                 
vested interest in the success of their organization and should                 
participate in the opportunities and rewards offered by the growth              
and earnings of the Company.  This program has enhanced the                     
effectiveness of communication among our staff regarding goal                   
setting, meeting and even exceeding our growth and earnings                     
objectives.  The "Stakeholders" program has been tremendously                   
successful during 1997, as evidenced by the progress of the                     
Company, and it forms the basis for renewed confidence in our                   
ability to achieve our objectives in 1998 and beyond.                           

Sincerely,                                                                      

Bruce D. Bartlett (signature)                                                   

Bruce D. Bartlett                                                               
President & Chief Executive Officer                                             
United Bank                                                                     

Photograph to left of President's letter.  Photograph of Jim                    
Kimball, Vice President & Senior Loan Officer and Charlie             
Wolverton, business owner.                                            

Caption under photo - Jim Kimball (right), Vice President &                     
Senior Loan Officer of United Bank, confers with Charlie              
Wolverton, owner of Quality Tire & Service Center, Inc.               
Brewer.                                                               

[Page 6 - Trust Company of Maine, Inc. Chairman's Letter]                       

Photograph top left of page.   Photo of Andrew P. Averill, Chairman             
& CEO, Trust Company of Maine sitting at desk smiling.          

Comment at top of page - Trust Company of Maine augments our array              
of financial services with trust and investment opportunities       

Dear Shareholders,                                                              

The efforts of our staff to integrate the Trust Company into          
the overall operation of Camden National Corporation, combined                  
with the support of the management and staff of its banking                     
subsidiaries, produced positive results in 1997 and, more                       
importantly, positions us to achieve quality future growth.                     

The highlights of our year included: completion of the                
transfer of the Camden National Trust relationships to the Trust                
Company, the Trust Company's growth in assets under management to               
nearly $200 million, and our hosting, with Camden National Bank,                
a successful seminar featuring Jay A. Schlott, founder of our                   
investment advisor Weston Asset Management, as the guest speaker.               
The seminar was very well received and plans are being made to                  
make this an annual event.                                                      

In addition Fiduciary Services, our employee benefit plan           
administration subsidiary, continued its investment in technology               
which resulted in more timely reporting to our clients.  Employee               
benefit customer services will be further enhanced in 1998 with                 
the installation of a Voice Response Unit that will provide                     
401(k) plan participants access to their individual accounts at                 
any time.                                                                       

Lastly, I would like to point out that our accomplishments            
in 1997 would not have been possible without our staff, whose                   
dedication, knowledge and experience made the year a success.                   

Sincerely,                                                                      

Andrew P. Averill (signature)                                                   

Andrew P. Averill                                                               
Chairman & Chief Executive Officer                                              
Trust Company of Maine, Inc.                                                    

Photograph at right of Chairman's letter.   Lynn Bowden, Vice                   
President & Trust Officer, advises new client Betty Kaynor.           

Caption under photo - Trust Company of Maine's Lynn Bowden, Vice                
President & Trust Officer, advises her new client, Elizabeth        
"Betty" Kaynor about her investment portfolio.                      

Photograph in bottom right corner.  Jana Hanscom with Fiduciary                 
Services, Inc. consults with Duncan Brown the President of            
Cedar Works, Inc.                                                     

Caption under photo - To understand every aspect of her client's                
business, Jana Hanscom, Retirement Plan Administrator for             
Fiduciary Services, Inc. consults with Duncan Brown, President        
of Cedar Works, Inc.                                                    

[Page 7 - Photographs]                                                          

Today, Camden National's commitment to the community extends beyond             
the business day.  Our employees are involved with local                        
organizations...donating time and financial resources to make their             
communities a better place to live and work.                                    

Photograph 1.  Photograph of 3 employees wrapping and sorting                   
Christmas presents for the Community Spirit of    
Christmas project.                                

Caption under photo - Heidi Vanorse, Tim Pratt, and Jane Pierce                 
(left to right) sort gifts that they and their follow                 
employees contributed to Camden National Bank's annual                
Community Spirit of Christmas project, which benefitted               
65 local families.                                                    

Photograph 2.  Photograph of Brent Folster, Vice President &                    
Branch Manager of United Bank's Bangor Office with
Directors and children from the Ronald McDonald   
House in Bangor.                                  

Caption under photo - Serving as Vice President of the Board of                 
the Ronald McDonald House in Bangor, Brent Folster (right),         
Vice President & Branch Manager of United Bank's Bangor             
Office, joins Pat Beckwith (left), Executive Director of the        
House, and residents Chuck and Vicki Matthews, with children        
Brent and Shannon from Machias.                                     

Photograph 3.  Photograph of 4 Trust Company of Maine employees                 
volunteering at a shelter after a food drive.     

Caption under photo - After conducting a successful food drive,                 
Trust Company of Maine employees, (left to right) Jennifer          
Neale, Kathy Pelletier, Paul Pasquine, and Leander Macvane,         
volunteer at the Bangor Area Shelter.                               

[Pages 8 - 13 Management's Discussion]                                          

Management's Discussion and Analysis of Financial Condition               
and Results of Operations         

In addition to the historical information contained herein,           
this Annual Report contains certain forward-looking statements. The             
reader of this Annual Report should understand that all such                    
forward-looking statements are subject to various uncertainties and             
risks that could affect their outcome. The Company s actual results             
could differ materially from those suggested by such forward-looking            
statements. Factors that could cause or contribute to such                      
differences include, but are not limited to, variances in the                   
actual versus projected growth in assets, return on assets, loan losses,        
expenses, rates charged on loans and earned on securities                       
investments, rates paid on deposits, competition effects, fee and               
other noninterest income earned, as well as other factors. This                 
entire Annual Report should be read to put such forward-looking                 
statements in context and to gain a more complete understanding of              
the uncertainties and risks involved in the Company s business.                 

GENERAL                                                                         

Overview of Company.                                                            

Camden National Corporation (the  Company ) is a multi-bank and       
financial services holding company headquartered in Camden, Maine.              
The Company s bank subsidiaries, both of which are wholly owned, are            
Camden National Bank, a national banking organization, based in                 
Camden, Maine, and United Bank, a banking organization chartered                
under the laws of the State of Maine, based in Bangor, Maine. The               
Company also has one non-bank subsidiary, Trust Company of Maine,               
Inc., which provides trust and retirement management services                   
throughout central and mid-coast Maine.                                         

1995 Merger of UnitedCorp.                                                      

On December 31, 1995, UnitedCorp, a one-bank holding company          
with two principal subsidiaries, United Bank and Trust Company of               
Maine, Inc., was merged into Camden National Corporation.  The                  
merger was accounted for under the pooling-of-interests method and,             
accordingly, the 1995 consolidated financial statements of the                  
Company have been restated to reflect the acquisition as though it              
occurred at the beginning of the year.                                          

Business.                                                                       

The Company s wholly-owned bank subsidiaries are independent          
commercial banks with branches serving both mid-coast and central               
Maine. The banks are full-service financial institutions that focus             
primarily on attracting deposits from the general public through                
their branches and using such deposits to originate residential                 
mortgage loans, commercial business loans, commercial real estate               
loans and a variety of consumer loans. Camden National Corporation              
takes pride in supporting the communities it serves by having local             
community banks that not only offer their customers a wide variety              
of deposit accounts and services as well as competitive rates, but              
also make lending decisions locally. In addition, the Company also              
invests in mortgage-backed securities and securities issued by the              
United States Government and agencies thereof.                                  
The Company s majority-owned trust company subsidiary, Trust          
Company of Maine, Inc., offers a broad range of trust and trust                 
investment services, in addition to retirement and pension plan                 
management services. The financial services provided by Trust                   
Company of Maine, Inc. complement the services provided by the                  
Company s bank subsidiaries by offering customers investment                    
management services.                                                            
The Company s goal is to balance profit with growth and quality       
with productivity. Therefore, emphasis is placed on increasing loan             
and deposit market share in the communities its bank subsidiaries               
serve by offering quality financial products and services. In                   
addition, the Company closely manages yields on earning assets and              
rates on interest-bearing liabilities and looks for ways to increase            
noninterest income and control growth of noninterest expenses. It is            
also part of the business strategy of the Company to supplement                 
internal growth with acquisitions of other banks or banking offices             
in communities similar to the communities its bank subsidiaries                 
currently serve. During 1997 the Company s subsidiary, Camden                   
National Bank, entered into a definitive agreement with KeyBank to              
purchase four branches in mid-coast Maine. These branches are                   
located in the communities of Bucksport, Damariscotta, Vinalhaven               
and Waldoboro. The Company considers the acquisition of these                   
branches a logical move in expanding its current service area. The              
acquisition is expected to be completed during the first quarter of             
1998.                                                                           

REVIEW OF FINANCIAL STATEMENTS                                                  

The discussion and analysis which follows focuses on the              
factors affecting the Company s financial condition at December 31,             
1997 and 1996, and financial results of operations during 1997,                 
1996, and 1995. The Consolidated Financial Statements and related               
Notes beginning on page 16 of this report should be read in                     
conjunction with this review.                                                   

FINANCIAL CONDITION                                                             

Overview.                                                                       

At December 31, 1997, the Company had consolidated assets of          
$573.9 million, an increase of $63.8 million or 12.5%, from December            
31, 1996. The change in assets consisted primarily of a $51.9                   
million increase in loans, an increase of $15.9 million in                      
investment securities and a decrease in cash and due from banks of              
$3.8 million. The asset growth was supported by a change in                     
liabilities and shareholders  equity consisting of a $20.1 million              
increase in deposits, a $38.7 million increase in total borrowings              
and a $4.7 million increase in total shareholders  equity.                      

Investment Securities.                                                          

With increased loan demand during 1996 and 1997, additions to         
the investment portfolio have been minimal. In addition, the Company            
did not want to aggressively purchase new securities during a time              
of relatively low interest rates. Most new investments purchases                
replaced investments that matured during 1997.                                  
Total investment securities increased by $15.9 million or 9.7%        
to $179 million at December 31, 1997. The major portion of the                  
Company s investment portfolio is classified as held to maturity,               
meaning that the Company has both the intent and ability to hold the            
securities until maturity. The ability to use these securities as               
collateral for Federal Home Loan Bank loans enhances the Company s              
ability to hold the securities to maturity. The Company does,                   
however, classify a small portion of the investment portfolio as                
available for sale. The largest increase during 1997 was in the                 
held to maturity category, which increased by $17.7 million or                  
12.3%. In the first quarter of 1997, to better position the balance             
sheet for a potential downward interest rate shift, the Company                 
purchased longer-term investments funded by shorter-term borrowings             
primarily through the Federal Home Loan Bank of Boston (FHLB).                  
Additional FHLB stock was purchased to support the Company s                    
increased borrowing activity. This increase is reflected in the                 
other securities  category, which increased by $4.6 million. The                
available for sale portion of the securities decreased by $8.3                  
million due to maturities. During 1996 the majority of purchases in             
the investment portfolio were classified as held to maturity. This              
resulted in an increase in the securities held to maturity of $8.0              
million or 6.0% during 1996. The available for sale portion of the              
portfolio decreased by $7.2 million or 36.2% in the same year due to            
maturities. Other securities increased by $1.1 million in 1996 due              
to the purchase of FHLB stock.                                                  

Loans.                                                                          

During 1997, the loan portfolio experienced growth in every             
category. Loans and loans held for sale in the portfolio totalled               
$363.1 million at December 31, 1997, a 16.7% increase from total                
loans of $311.2 million at December 31, 1996. This growth results in            
a continuation of the loan growth experienced by the Company for the            
past several years.                                                             
Residential real estate mortgage loans increased by $1.9              
million or 2.0% in 1997. Residential real estate loans consist of               
loans secured by one-to-four family residences. The Company                     
generally retains adjustable rate mortgages in its portfolio but                
will, from time to time, retain fixed-rate mortgages. The Company               
also originates fixed rate residential loans for sale to investors              
in the secondary market. All of the mortgage loans in the Company s             
loan portfolio are secured by properties located in Maine.                      
Commercial loans increased by $30.5 million or 20.3% during           
1997. Commercial business loans consist of loans secured by various             
corporate assets, as well as loans to provide working capital in the            
form of lines of credit, which may be secured or unsecured.                     
Thecommercial category also includes commercial real estate loans               
secured by income producing commercial real estate, service                     
industry real estate, and retail trade real estate. In addition, the            
Company makes loans for the acquisition, development and                        
construction of commercial real estate. The Company focuses on                  
lending to sound small and medium sized business customers within               
its geographic marketplace.                                                     
Consumer loans increased by $9.1 million or 24.5% in 1997.            
Consumer loans are provided for a wide variety of purposes to meet              
our customers needs. Consumer loans are originated directly by the              
Company and include credit card, overdraft protection, automobile,              
boat, recreation vehicles, mobile homes, home equity, and secured               
and unsecured personal loans.                                                   
Non-performing loans, defined as non-accrual loans plus               
accruing loans 90 days or more past due, totaled $3.6 million or                
.63% of total loans at December 31, 1997, compared to $2.2 million            
or .73% of total loans at December 31, 1996. It is the Company s                
policy to discontinue accrual of interest on loans when, in the                 
opinion of management, there is an indication that the borrower may             
be unable to meet payments as they become due. Upon such                        
discontinuance, all accrued but unpaid interest is reversed.                    
Delinquent real estate loans are not reclassified as Other Real       
Estate Owned (OREO) until the Company takes title to the property,              
either through foreclosure or upon receipt of a deed in lieu of                 
foreclosure. In such situations, the secured loan is reclassified on            
the balance sheet as OREO at the lesser of the fair value of the                
underlying collateral less estimated selling costs, or the recorded             
amount of the loan. The balance of OREO was $1.4 million and $1.3               
million, as of December 31, 1997 and 1996, respectively. As a                   
percentage of total loans OREO represented .39% and .42% as of                  
December 31, 1997 and 1996, respectively. Losses arising from the               
acquisition of such properties are charged against the Allowance for            
Loan Losses (ALLL). Operating expenses and any subsequent provisions            
to reduce the carrying value are charged to operations. Gains and               
losses upon disposition are reflected in earnings as other                      
noninterest income when realized.                                               

Allowance for Loan Losses / Provision for Loan Losses.                          

In determining the adequacy of the ALLL, management relies            
primarily on its review of the loan portfolio both to ascertain                 
whether there are probable losses to be charged off, and to assess              
the loan portfolio in the aggregate. Non-performing loans are                   
examined on an individual basis to determine estimated probable                 
loss. In addition, management considers current and projected loan              
mix and loan volumes, historical net loan loss experience for each              
loan category, and current and anticipated economic conditions                  
affecting each loan category. No assurance can be given, however,               
that adverse economic conditions or other circumstances will not                
result in increased losses in the portfolio. The Company continues              
to monitor and modify its ALLL as conditions dictate.                           
SFAS No. 114,  Accounting by Creditors for Impairment of a            
Loan,  was adopted January 1, 1995. This statement applies to all               
troubled debt restructurings involving a modification of terms. The             
adoption of this standard had an immaterial impact on the Company s             
net income and retained earnings during 1997 and 1996.                          
During 1997 the Company provided $1.7 million for possible loan       
losses, compared to $838,000 and $899,000 in 1996 and 1995,                     
respectively. During 1997, the increase in the provision was due to             
the increase in loan volume and was not due to a deterioration of               
loan quality. Determining an appropriate level of ALLL involves a               
high degree of judgment. Management believes that the allowance at              
December 31, 1997 of $5.6 million or 1.55% of total loans                       
outstanding was appropriate given the current economic conditions in            
the Company s service area and the overall condition of the loan                
portfolio. The ALLL as a percentage of total loans outstanding was              
1.44% and 1.43%, in 1996 and 1995, respectively.                                

LIQUIDITY                                                                       

The primary objective of liquidity management is to maintain a        
balance between sources and uses of funds to meet the cash flow                 
needs of the Company in the most economical and expedient manner.               
The liquidity needs of the Company s bank subsidiaries require the              
availability of cash to meet the withdrawal demands of depositors               
and the credit commitments to borrowers. Due to the potential for               
unexpected fluctuations in both these areas deposits and loans                  
active management of the Company s liquidity is critical. The                   
Company seeks to maintain various sources of funding and prudent                
levels of liquid assets in order to satisfy its varied liquidity                
demands. In order to respond to the various circumstances, the                  
Company has both on- and off-balance sheet funding in place.                    
Each of the Company s banking subsidiaries monitors its               
liquidity in accordance with guidelines established by the Company              
and applicable regulatory requirements. As of December 31, 1997 and             
1996, the Company s level of liquidity exceeded its target level.               
Management believes that the Company s banking subsidiaries                     
currently have adequate liquidity available to respond to both                  
expected and unexpected liquidity demands. Sources of funds utilized            
by the Company s banking subsidiaries consist of deposits,                      
borrowings from the FHLB of Boston and other sources, cash flows                
from operations, prepayments and maturities of outstanding loans,               
investments and mortgage-backed securities, and the sale of mortgage            
loans. Deposits still represent the Company s primary source of                 
funds. In 1997 total deposits increased by $20.1 million or 5.7%                
over 1996. This increase in deposits was the result of aggressive               
marketing of the Company s deposit products. For the same period,               
transaction accounts (DDA and NOW) increased by $4.8 million or                 
5.3%, savings accounts increased by  $3.1 million or 4.9%, and                  
certificates of deposit increased by $12.9 million or 7.3%. In 1996             
total deposits decreased by $16.6 million or 4.5% from 1995. This               
decrease was primarily in the certificates of deposit accounts,                 
which included broker certificates that decreased by $7.8 million or            
85.9%. During 1995, management decided to add approximately $10                 
million in broker certificates to the deposit base, due to a slowing            
of deposit growth. Broker certificates totaled $9.1 million at                  
December 31, 1995. However, during 1996 the Company replaced                    
maturing broker certificates with other sources of funding that were            
more reasonably priced. Other certificates of deposit categories                
also decreased by $7.1 million or 3.9% during 1996. The Company s               
remaining deposit categories remained relatively level during 1996.             
Borrowings provide liquidity in the form of federal funds             
purchased, securities sold under agreements to repurchase, treasury             
tax and loan accounts, and borrowings from the FHLB. Total                      
borrowings were $132.4 million at December 31, 1997, compared to                
$93.8 million at December 31, 1996, an increase of $38.6 million or             
41.1%. The increase was necessary to meet funding needs not met by              
deposits because loans increased by more than deposits did during               
1997. The majority of the increase was in borrowings from the                   
Federal Home Loan Bank of Boston. FHLB advances remain the largest              
nondeposit-related interest-bearing funding source for the Company              
in 1997. These borrowings are secured by qualified residential real             
estate loans, certain investment securities and certain other assets            
available to be pledged. The Company views borrowed funds as an                 
alternative funding source that should be utilized.                             

CAPITAL RESOURCES                                                               

Under Federal Reserve Board (FRB) guidelines, bank holding            
companies such as the Company are required to maintain capital based            
on  risk-adjusted  assets. These guidelines apply to the Company                
on a consolidated basis.  Under the current guidelines, banking                 
organizations must maintain a risk-based capital ratio of 8.0%, of              
which at least 4.0% must be in the form of core capital. The                    
Company s, and its bank subsidiaries , ratios at December 31, 1997              
and December 31, 1996 exceeded regulatory guidelines. For actual                
ratios see Note 19 to the Consolidated Financial Statements. In                 
addition to risk-based capital requirements, the FRB requires bank              
holding companies to maintain a minimum leverage capital ratio of               
core capital to total assets of 4.0%. Total assets for this purpose             
do not include goodwill and any other intangible assets and                     
investments that the FRB determines should be deducted. The                     
Company s leverage ratios at December 31, 1997 and 1996 were                    
10.9% and 11.3%, respectively.                                                  
As part of the Company s goal to operate a safe, sound, and           
profitable financial organization, the Company strives to maintain a            
strong capital base. The Company s shareholders  equity totaled                 
$62.6 million and $57.8 million or 10.9% and 11.3% of total assets              
at December 31, 1997 and 1996, respectively. The $4.7 million or                
8.2% increase in shareholders  equity was primarily attributable                
to net income of $9.1 million, less net share repurchases of $1.3               
million and $3.1 million in cash dividends.                                     
The principal cash requirement of the Company is dividends on         
common stock when declared. Dividends paid on the Company s common              
stock in 1997 represented a 36.2% increase over 1996. The Company is            
primarily dependent upon the payment of cash dividends by Camden                
National Bank to service its commitments. The Company, as the sole              
shareholder of Camden National Bank and United Bank, is entitled to             
the dividend when and as declared by each Bank s Board of Directors,            
out of funds legally available; therefore, the Company s ability to             
pay dividends is subject to the powers of the State of Maine and                
Federal regulators. Camden National Bank declared dividends in                  
the aggregate amount of $4,356,000 and $3,951,000 in 1997 and 1996,             
respectively. United Bank declared no dividends in 1996 and 1997.  As           
of December 31, 1997, and subject to the limitations and                        
restrictions under applicable law, Camden National Bank and United              
Bank had funds available for dividends to the Company sufficient to             
meet its cash requirements, although there is no assurance that                 
dividends will be paid at any time in any amount.                               

RESULTS OF OPERATIONS                                                           

Overview.                                                                       

The Company reported net income of $9.1 million in 1997, $8.1         
million in 1996 and $7.4 million in 1995. Basic earnings per share              
were $4.02 in 1997, $3.48 in 1996 and $3.16 in 1995. Return on                  
average assets was 1.65% in 1997 compared with 1.65% in 1996, and               
1.59% in 1995. Return on average equity was 15.20% in 1997 compared             
to 14.56% and 14.53% in 1996 and 1995, respectively. The Company                
experienced an increase in earnings for 1997 of $1.0 million or                 
12.7%. The improved results were attributable to increases in net               
interest income.                                                                
The operating results of the Company depend greatly on its net        
interest income, which is the difference between interest and                   
dividend income on loans and securities, and interest expense on                
deposits and borrowings. The Company s results of operations also               
are affected by the provision for loan losses, resulting from the               
Company s assessment of the adequacy of the allowance for loans                 
losses, and other noninterest income and expenses. Each of these                
principal components of the Company s operating results is discussed            
below.                                                                          

Net Interest Income.                                                            

The Company s primary source of operating income is net               
interest income.  Net interest income, on a fully-taxable equivalent            
basis was $25.1 million, $22.2 million, and $20.3 million in 1997,              
1996 and 1995, respectively. Changes in net interest income are the             
results of interest rate movements, changes in the amounts and the              
mix of earning assets and interest-bearing liabilities, and changes             
in the level of non-earning assets and non-interest-bearing                     
liabilities.                                                                    
Net interest income increased by $2.9 million or 13.2%, on a          
fully-taxable equivalent basis in 1997 compared to 1996. This                   
increase was due to the increase in loan and investment volumes                 
combined with a slight decrease in loan yields. During 1996 net                 
interest income increased by $1.9 million or 9.4% on a fully-taxable            
equivalent basis compared to 1995. This increase was primarily due              
to the increase in loan volume. During 1995 net interest income                 
decreased by $343,000 or 1.7%, on a fully-taxable equivalent basis              
compared to 1994. This decrease in net interest income was                      
attributable to the fact that the Company s cost of funds (interest             
on deposits and borrowings), increased faster than the yield on                 
earning assets (loans and securities), because of the Company s                 
decision to pay higher interest rates on deposits during 1995 to                
meet funding needs. Net interest income, expressed as a percentage              
of average earning assets, was 4.77% in 1997, 4.79% in 1996, and                
4.63% in 1995.                                                                  
The average amount of loans outstanding increased by $37.4            
million or 12.5% in 1997 over 1996 and by $18.0 million or 6.4% in              
1996 over 1995 which has contributed to the increase in interest                
income. Interest income on loans increased by $3.4 million in 1997              
compared to 1996 and by $2.0 million in 1996 compared to 1995. The              
weighted average yield on loans increased from 9.88% in 1995 to                 
9.96% in 1996 and then decreased to 9.84% in 1997.                              
The average amount of non-accrual loans can also affect the           
average yield earned on all outstanding loans. The average amount of            
non-accrual loans for 1997, 1996 and 1995 were minimal, and                     
therefore, had an insignificant effect on average loan yield.                   
Interest and dividends on investment securities increased by          
$2.5 million, on a fully-taxable equivalent basis, in 1997 compared             
with 1996. This was the result of increases in both volume of                   
securities and rates earned. In 1996, interest and dividends on                 
investment securities increased by $377,000, on a fully-taxable                 
equivalent basis, compared with 1995. The primary reason for                    
the increase was the increased volume.  The average balance of                  
investments outstanding increased from $157.8 million in 1995 to                
$164.7 million in 1996 and then to $191.0 million in 1997. The                  
weighted average yield on investment securities, however, decreased             
from 6.38% in 1995 to 6.34% in 1996 and then increased to 6.67% in              
1997. During 1997 the Company recovered $107,312 of principal and               
interest on several municipal investments that had previously                   
defaulted and for which a permanent decline had been recognized.  The           
Company also recovered $54,000 and $417,000 of principal and                    
interest on those same investments for 1996 and 1995, respectively.             
Interest expense on deposits and borrowings increased by $2.8         
million or 15.8% in 1997 compared with 1996. This increase was                  
primarily attributable to the increased volume of borrowed funds.               
Interest expense on deposits and borrowings increased by $494,000 or            
2.8% in 1996 compared with 1995. The increase was due to increases              
in both borrowings and certificates of deposit, and to the increased            
interest rates paid on these borrowings and certificates of deposit.            
During 1995 interest rates in general experienced increases that                
contributed to the increase of $4.7 million or 37.2% in interest                
expense over 1994. Again, deposit growth was in higher yielding                 
certificates of deposit. This type of growth results in a narrowing             
of the net interest margin that must be offset by increased yields              
on earning assets or by a reduction of overhead expenses. The                   
weighted average rate on interest bearing deposits and borrowings               
decreased from 4.71% in 1995 to 4.62% in 1996 and then increased to             
4.67% in 1997.                                                                  
The Company utilizes off-balance sheet instruments such as            
interest rate swap agreements that have an effect on net interest               
income. The net result was an offset to gains in net interest income            
of $11,000 in 1997, an increase of $111,000 in 1996, and an offset              
to gains in net interest income of $2,000 in 1995. Entering into                
interest rate swap agreements involves not only the risk of dealing             
with counterparties and their ability to meet the terms of the                  
contracts, but also the interest rate risk associated with unmatched            
positions. Notional principal amounts are used to express the volume            
of these transactions, but the amounts potentially subject to credit            
risk are much smaller. During 1997, 1996 and 1995, the Company was a            
party in several agreements to assume variable market-indexed                   
interest payments in exchange for fixed-rate interest payments                  
(interest-rate swaps). The notional principal amount of                         
interest-rate swaps outstanding was $5 million at December 31, 1997             
and $20 million at December 31, 1996 and 1995. During 1997 two swap             
agreements with notional principal amounts totaling $15 million                 
matured resulting in only one swap with a notional principal of $5              
million remaining. The variable rate being paid by the Company on               
the remaining swap was higher than the rate being paid to the                   
Company, therefore, resulting in a decrease of income. The variable             
rates being paid by the Company on the swaps decreased during 1996              
resulting in an increase in the spread between what the Company was             
paying (variable rate) and receiving (fixed rate) on these                      
agreements. During 1995 an increase in the variable rates being paid            
by the Company on the swaps resulted in a narrowing of spread                   
between what the Company was paying and receiving.                              

Noninterest Income.                                                             

Noninterest income was $3.7 million, $3.4 million and $3.5            
million for the years ended December 31, 1997, 1996 and 1995,                   
respectively. There was an increase of $339,000 or 9.9% in total                
noninterest income during 1997. Service charges on deposit accounts             
increased $36,000 or 4.2% over 1996. Other service charges and fees             
increased by $222,000 or 15.9% over the same period. The largest                
contributing factor to this increase was the fee income generated by            
merchant bankcard assessments. Other income also increased over 1996            
by $81,000 or 7.0%. The major contributing factor for this increase             
was trust fees.                                                                 
Total noninterest income decreased by $133,000 in 1996 compared       
to 1995. Service charges on deposit accounts declined by $43,000 or             
4.7% in 1996 compared to 1995. However, other service charges and               
fees increased $104,000 or 8.1% in 1996 compared to 1995. The                   
largest contributing factor was credit card assessment fees that                
increased by $76,000 over 1995. Other income decreased by $194,000.             
The major contributing factor to this decline was an unusually large            
investment recovery of $417,000 in 1995 compared to only $54,000 in             
1996. However, within the other income category during 1996, trust              
fees increased $146,000.                                                        

Noninterest Expenses.                                                           

Noninterest expense was $13.3 million, $12.3 million and $11.7        
million for the years ended December 31, 1997, 1996 and 1995,                   
respectively. There was an increase of $956,000 or 7.7% in total                
noninterest expense during 1997. The largest increase was in                    
salaries and employee benefits which increased $689,000 or 10.9%                
from $6.3 million in 1996. This increase was the result of normal               
annual increases, additions to staff and higher pension benefit                 
costs. In addition, a new performance compensation program was                  
introduced to all employees during 1997 which resulted in additional            
compensation paid over 1996. Salary and employee benefits expense               
increased by $796,000 or 14.4% in 1996 over 1995. This reflects                 
added staff and normal increases in salary and benefit costs.                   
During 1996 a number of positions were added due to the merger with             
UnitedCorp. In addition, United Bank employees were added to the                
defined benefit pension plan.                                                   
In 1997 and 1996 other operating expenses remained relatively         
level, with no unusual increases or decreases in any category.                  
During 1995 other operating expenses increased $755,000 or 16.3%.               
These increased costs were related in part to higher consulting                 
fees, depreciation of equipment, and expenses on or writedowns of               
OREO properties.                                                                

Impact of Inflation and Changing Prices.                                        

The Consolidated Financial Statements and related Notes thereto       
presented elsewhere herein have been prepared in accordance with                
generally accepted accounting principles which require the                      
measurement of financial position and operating results in terms of             
historical dollars without considering changes in the relative                  
purchasing power of money over time due to inflation.                           
Unlike many industrial companies, substantially all of the            
assets and virtually all of the liabilities of the Company are                  
monetary in nature. As a result, interest rates have a more                     
significant impact on the Company s performance than the general                
level of inflation. Over short periods of time, interest rates may              
not necessarily move in the same direction or in the same magnitude             
as inflation.                                                                   

Year 2000 Risk Assessment and Action Plan                                       

It is anticipated that many computer applications will not            
operate as intended past the year 1999 without modifications. This              
potential problem results from the practice of storing data in                  
two-digit format (97) instead of four-digit format (1997). On                   
January 1, 2000, it is possible that some systems with time                     
sensitive software programs will recognize the year as  00  and may             
incorrectly interpret the year as  1900 .                                       
The Company has adopted a plan of action to minimize the risk         
of the year 2000 event. The plan includes the formation of a                    
Technology Steering Committee to assess, monitor and review vendor              
compliance and certification and to clearly identify all systems and            
equipment utilized in the day-to-day operations of the Company.                 
Management believes that the Company is adequately addressing the               
year 2000 issue and that preparation, coordination and testing is               
being conducted throughout the organization, thereby minimizing any             
associated risks to its customers. Management currently believes                
that the costs related to addressing all year 2000 issues will not              
have a material impact on future results of operation.                          

Market Risk                                                                     

Market risk is the risk of loss in a financial instrument             
arising from adverse changes in market rates/prices such as interest            
rates, foreign currency exchange rates, commodity prices and equity             
prices. The Company s primary market risk exposure is interest rate             
risk. The ongoing monitoring and management of this risk is an                  
important component of the Company s asset/liability management                 
process which is governed by policies established by the bank                   
subsidiaries  Boards of Directors that are reviewed and approved                
annually. Each Bank s Board of Directors delegates responsibility               
for carrying out the asset/liability management policies to the                 
banks Asset/Liability Committee (ALCO). In this capacity ALCO                   
develops guidelines and strategies impacting the Company s                      
asset/liability management related activities based upon estimated              
market risk sensitivity, policy limits and overall market interest              
rate levels/trends.                                                             
Interest Rate Risk. Interest rate risk represents the                 
sensitivity of earnings to changes in market interest rates. As                 
interest rates change the interest income and expense streams                   
associated with the Company s financial instruments also change                 
thereby impacting net interest income (NII), the primary component              
of the Company s earnings. ALCO utilizes the results of a detailed              
and dynamic simulation model to quantify the estimated exposure of              
NII to sustained interest rate changes. While ALCO routinely                    
monitors simulated NII sensitivity over a rolling two-year horizon,             
it also utilizes additional tools to monitor potential longer-term              
interest rate risk.                                                             
The simulation model captures the impact of changing interest         
rates on the interest income received and interest expense paid on              
all interest earning assets and liabilities reflected on the                    
Company s balance sheet as well as for off-balance sheet derivative             
financial instruments. None of the assets used in the simulation                
were held for trading purposes. This sensitivity analysis is                    
compared to ALCO policy limits which specify a maximum tolerance                
level for NII exposure over a one year horizon, assuming no balance             
sheet growth, given both a 200 basis point (bp) upward and downward             
shift in interest rates. A parallel and pro rata shift in rates over            
a 12-month period is assumed. The following reflects the Company s              
NII sensitivity analysis as measured periodically over the past                 
year.                                                                           

       Estimated
Rate Change                         Changes in NII                              
----------------------------------------------------------                      
      High      Low    Average
----------------------------------------------------------                      
+200bp                       1.16%   .37%      .43%                       
-200bp                       2.97%  (.12%)     .51%                       

The preceding sensitivity analysis does not represent a Company       
forecast and should not be relied upon as being indicative of                   
expected operating results. These hypothetical estimates are based              
upon numerous assumptions including: the nature and timing of                   
interest rate levels, including yield curve shape, prepayments on               
loans and securities, deposit decay rates, pricing decisions on                 
loans and deposits, reinvestment/replacement of asset and liability             
cashflows, and others. The assumptions differed in each of the four             
periods included in the sensitivity analysis above. While                       
assumptions are developed based upon current economic and local                 
market conditions, the Company cannot make any assurances as to the             
predictive nature of these assumptions including how customer                   
preferences or competitor influences might change.                              
When appropriate ALCO may utilize off-balance sheet instruments       
such as interest rate floors, caps and swaps to hedge its interest              
rate risk position. Board of Directors approved hedging policy                  
statements govern use of these instruments by our bank                          
subsidiaries.                                                                   
As of December 31, 1997 the Company had a notional principal of $5              
million in swaps and $20 million in floor contracts outstanding.  The           
estimated effects of these derivative financial instruments on the              
Company s earnings are included in the sensitivity analysis                     
presented above.                                                                
ALCO monitors the effectiveness of its derivative hedges              
relative to its expectation that a high correlation be maintained               
between the hedging instrument and the related hedged                           
assets/liabilities. All outstanding positions are estimated to                  
remain highly effective.                                                        
Interest rate floors, caps and swaps are accounted for using          
the accrual method with an income statement adjustment to interest              
income or interest expense depending on whether the hedged items                
are assets or liabilities. The unamortized premiums associated with             
purchased options contracts (i.e. caps and floors) are presented on             
the balance sheet along with other prepaid assets. Interest                     
receivable under the cap and floor contracts and interest receivable            
and payable amounts associated with swap contracts are reflected on             
the balance sheet along with other interest receivable and payable              
amounts. Unrealized gains or losses associated with these positions             
are not recognized in the financial statements.                                 
While it is not the Company s practice to unwind derivative           
hedges prior to their maturity, any recognized gains/losses would be            
deferred on the balance sheet and amortized to interest income or               
expense, as required, over the remaining period of the original                 
hedge. To the extent that a hedge were to be deemed ineffective due             
to a lack of correlation with the hedged items or if the hedged                 
items were to be settled/terminated prior to maturity of the hedging            
instrument, then unrecognized gains/losses associated with the                  
hedging instrument would be recognized in the income statement                  
with subsequent accruals and gains/losses also included in the                  
income statement in the period they occur.                                      

Recent Accounting Pronouncements.                                               

SFAS No. 125 and No. 127 relate to the accounting for transfers       
and servicing of financial assets and extinguishment of certain                 
liabilities and are effective for years beginning January 1, 1997.              
The adoption of these standards did not have a material effect on               
the financial statements.                                                       
The Financial Accounting Standards Board issued the following         
statements of accounting standards (SFAS) during 1997:                          
SFAS No. 128     Earnings Per Share                         
SFAS No. 129     Disclosure of Information about Capital    
Structure                 
SFAS No. 130     Reporting Comprehensive Income             
SFAS No. 131     Disclosures about Segments of an           
        Enterprise and Related Information

These four statements do not change the measurement or                
recognition methods used in the financial statements but rather deal            
with disclosure and presentation requirements.                                  
The financial statements for 1997 and all prior periods include       
the additional disclosure requirements relating to diluted earnings             
per share which are required under SFAS 128. Financial statement                
disclosures also comply with SFAS 129, which summarized but does not            
change the Company s requirements to disclose information about                 
capital structure.                                                              
SFAS No. 130 and No. 131 are effective for periods beginning          
after December 15, 1997. Management has not determined the impact of            
these two pronouncements on the financial statements.                           

Common Stock Information                                                        

The Common Stock of Camden National Corporation (ticker symbol        
CAC ) began trading on the American Stock Exchange (AMEX) October 7,            
1997. Prior to that date, the stock was not traded on any exchange              
as the Company had maintained an informal market in its stock. The              
Company elected to repurchase stock for its treasury during 1996 and            
again 1997 until the October listing on AMEX. Shortly after the                 
listing of the Company s stock on AMEX the price of per share                   
increased to a high of $60.75 per share. Since that date stock has              
traded in the range of $55.00 to $60.00 per share. In 1995 and 1996,            
the Company stock traded in the range of $35.00 to $40.00 per share.            
The Company has paid quarterly dividends since its inception in       
1985. The following table summarizes dividends declared for 1996 and            
1997:                                                                           
                 1996           1997      Increase
First Quarter                $  422,025   $  734,602     $312,577               
Second Quarter                  585,235      750,462      165,227               
Third Quarter                   608,640      771,835      163,195               
Fourth Quarter                  623,000      793,436      170,436               
               ---------   ----------     --------
Total                        $2,238,900   $3,050,335     $811,435               
              ==========   ==========     ========

As of December 31, 1997, there were 2,270,210 shares of Camden        
National Corporation Stock outstanding, held of record by                       
approximately 825 shareholders.                                                 

Camden National Corporation and Subsidiaries      

Summary of Financial Performance      

[This page contains six bar graphs showing 5 years of the information           
detailed below:]                                                                

Net income                                 Assets               
(in millions)                            (in millions)            

'97 XXXXXXXXXXXXXXXXXXXXX 9.148           '97 XXXXXXXXXXXXXXXXXXX 573.9         
'96 XXXXXXXXXXXXXXXXX 8.115               '96 XXXXXXXXXXXXXXXXX 510.1           
'95 XXXXXXXXXXXXXXX 7.403                 '95 XXXXXXXXXXXXXXX 480.6             
'94 XXXXXXXXXXXXXXXXXX 8.258              '94 XXXXXXXXXXXX  455.6               
'93 XXXXXXXXXXXXXX 7.135                  '93 XXXXXXXXXX 414.0                  

Deposits                                  Loans               
(in millions)                            (in millions)            

'97 XXXXXXXXXXXXXXXXXX 373.4              '97 XXXXXXXXXXXXXXXXXXX 363.1         
'96 XXXXXXXXXXXXXXXX 353.2                '96 XXXXXXXXXXXXXXXX 311.2            
'95 XXXXXXXXXXXXXXXXX 370.0               '95 XXXXXXXXXXXXXX  283.0             
'94 XXXXXXXXXXXXX 340.2                   '94 XXXXXXXXXXXX 263.6                
'93 XXXXXXXXXXXXXX 343.6                  '93 XXXXXXXXX 228.9                   

Earnings per share                        Book Value per share          
(in dollars)                               (in dollars)           

'97 XXXXXXXXXXXXXXXXXXXX 4.02             '97 XXXXXXXXXXXXXXXXXXXXX 27.56       
'96 XXXXXXXXXXXXXXXXX 3.48                '96 XXXXXXXXXXXXXXXXXXX 25.16         
'95 XXXXXXXXXXXXXXX 3.16                  '95 XXXXXXXXXXXXXXXXX 22.88           
'94 XXXXXXXXXXXXXXXXXX 3.52               '94 XXXXXXXXXXXXXX 20.57              
'93 XXXXXXXXXXXXX 3.05                    '93 XXXXXXXXXXX 17.41                 

Camden National Corporation and Subsidiaries            
Selected Five-Year Financial Data               

(In Thousands, except per share data)         December 31,                      
--------------------------------------------------------------------------      
Financial Condition Data      1997     1996     1995     1994      1993         
--------------------------------------------------------------------------      
Assets                    $573,892  $510,078  $480,685  $455,615  $414,044      
Loans                      363,149   311,246   285,102   265,476   228,909      
Allowance for Loan Losses    5,640     4,472     4,080     3,751     4,050      
Investments                179,290   163,379   161,332   158,434   160,253      
Deposits                   373,409   353,240   369,880   340,244   343,643      
Borrowings                 132,478    93,760    51,980    62,444    26,396      
Shareholders' Equity        62,556    57,822    53,680    48,258    40,724      

                        December 31,
--------------------------------------------------------------------------      
Operations  Data             1997      1996      1995      1994      1993       
--------------------------------------------------------------------------      
Interest Income           $ 46,051  $ 41,015  $ 38,661  $ 33,958  $ 31,529      
Interest Expense            21,229    19,105    18,853    13,766    13,185      
                    --------  --------  --------  --------  --------
Net Interest Income         24,822    21,910    19,808    20,192    18,344      
Provision for Loan Losses    1,677       838       899       216       683      
Net Interest Income after --------  --------  --------  --------  --------      
Provision for Loan Losses  23,145    21,072    18,909    19,976    17,661     
Non-interest Income          3,750     3,411     3,544     3,057     2,499      
Non-interest Expense        13,294    12,338    11,707    10,581     9,596      
Income before Provision   --------  --------  --------  --------  --------      
for Income Tax              13,601    12,145    10,746    12,452    10,564      
Income Tax Expense           4,453     4,030     3,343     3,964     3,429      
Accounting Change for                                                           
Postretirement Benefits         -         -         -       230         -     
                    --------  --------  --------  --------  --------
Net Income                $  9,148  $  8,115  $  7,403  $  8,258  $  7,135      
                    ========  ========  ========  ========  ========

                               At or For the Year Ended December 31,
---------------------------------------------------------------------------     
Other  Data                    1997      1996     1995       1994     1993      
---------------------------------------------------------------------------     
Return on Average Assets       1.65%     1.65%     1.59%    1.90%     1.79%     
Return on Average Equity      15.20%    14.56%    14.53%   18.56%    19.02%     
Net Income Per Share         $ 4.02    $ 3.48    $ 3.16   $ 3.52    $ 3.05      
Dividends Per Share          $ 1.34    $  .96    $  .59   $  .45    $  .29      
Book Value Per Share         $27.56    $25.16    $22.88   $20.57    $17.41      
Allowance for Loan Losses                                                       
to Total Loans            1.55%     1.44%     1.43%    1.42%     1.77%
Non-Performing Loans to                                                         
Total Loans                .63%      .73%     1.05%    1.08%     0.87%

Camden National Corporation and Subsidiaries    
Consolidated Statements of Condition    

---------------------------------------------------------------------------     
(In Thousands, except number of                             December 31,        
shares and per share data)                              1997        1996    
---------------------------------------------------------------------------     
Assets                                                                          
Cash and due from banks                                  $ 13,451  $ 17,233     
Federal funds sold                                          1,100     2,075     
Securities available for sale, at market                  4,312    12,647   
Securities held to maturity (market value $164,286 and                      
$143,220 at December 31,1997, and 1996, respectively    160,894   143,216   
Other securities                                           14,084     7,516     
Residential mortgages held for sale                         7,094     2,544     
Loans, less allowance for loan losses of $5,640 and                             
$4,472 at December 31, 1997, and 1996, respectively     350,415   304,230   
Bank premises and equipment                                 8,786     8,944     
Other real estate owned                                     1,373     1,264     
Interest receivable                                         3,924     3,920     
Other assets                                                8,459     6,489     
                                                    --------  --------
Total assets                                        $573,892  $510,078
Liabilities                                              ========  ========     
Deposits:                                                                       
Demand                                                 $ 51,422  $ 47,749   
NOW                                                      42,796    41,715   
Money market                                             23,452    24,076   
Savings                                                  66,723    63,597   
Certificates of deposit                                 189,016   176,103   
                                                    --------  --------
Total deposits                                       373,409   353,240
Borrowings from Federal Home Loan Bank                     98,514    67,051     
Other borrowed funds                                       33,964    26,709     
Accrued interest and other liabilities                      5,364     5,211     
Minority interest in subsidiary                                85        45     
                                                    --------  --------
Total liabilities                                    511,336   452,256
Commitments (Note 13 & 17)                               --------  --------     
Stockholders' Equity                                                            
Common stock, no par value; authorized                                          
5,000,000 shares, issued 2,376,080 shares                 2,436     2,436   
Surplus                                                     1,410     1,226     
Retained earnings                                          62,925    56,827     
Net unrealized appreciation on securities                                       
available for sale, net of income tax                         5        32   
                                                    --------  --------
                                                      66,776    60,521
Less cost of 105,870 and 77,448 shares of                                       
treasury stock on December 31, 1997 and 1996                4,220     2,699     

                                                    --------  --------
Total stockholders' equity                              62,556    57,822  
                                                    --------  --------
Total liabilities and stockholders' equity           $573,892  $510,078 
                                                    ========  ========

The accompanying notes are an integral part of these consolidated financial     
statements.                                                                     
Camden National Corporation and Subsidiaries  
Consolidated Statements of Income   

-----------------------------------------------------------------------------   
(In Thousands, except number                         Year Ended December 31,    
of shares and per share data)                      1997      1996      1995   
-----------------------------------------------------------------------------   
Interest Income                                                                 
Interest and fees on loans                        $32,845   $29,483   $27,439   
Interest on US Government and agency obligations   11,710     9,321     8,810   
Interest on state and political subdivisions          245       338       478   
Interest on interest rate swap agreements             410     1,251     1,380   
Interest on federal funds sold and other investments  841       622       554   
                                               -------   -------   -------
Total interest income                           46,051    41,015    38,661
                                               -------   -------   -------
Interest Expense                                                                
Interest on deposits                               13,484    13,982    13,743   
Interest on other borrowings                        7,324     3,983     3,728   
Interest on interest rate swap agreements             421     1,140     1,382   
                                               -------   -------   -------
Total interest expense                          21,229    19,105    18,853
                                               -------   -------   -------
Net interest income                             24,822    21,910    19,808

Provision for Loan Losses                           1,677       838       899   
Net interest income after provision            -------   -------   -------
 for loan losses                                23,145    21,072    18,909
                                               -------   -------   -------
Other Income                                                                    
Service charges on deposit accounts                   901       865       908   
Other service charges and fees                      1,614     1,392     1,288   
Merchant assessments                                1,113       871       795   
Other income                                          122       283       553   
                                               -------   -------   -------
Total other income                               3,750     3,411     3,544
                                               -------   -------   -------
                                                26,895    24,483    22,453
Operating Expenses                                -------   -------   -------   
Salaries and employee benefits                      6,992     6,303     5,507   
Net occupancy                                         856       736       815   
Furniture, equipment and data processing            1,294     1,254     1,215   
Other                                               4,152     4,045     4,170   
                                                -------   ------   -------
Total operating expenses                        13,294    12,338    11,707
Income before income taxes and cumulative      -------   -------   -------
   effect of accounting change                  13,601    12,145    10,746
Income Taxes                                        4,453     4,030     3,343   
                                               -------   -------   -------
Net Income                                         $9,148   $ 8,115   $ 7,403   
                                               =======   =======   =======
Per Share Data                                                                  
Basic earnings per share                           $ 4.02    $ 3.48    $ 3.16   
Diluted earnings per share                           3.93      3.43      3.10   
Weighted average number of shares outstanding   2,273,584 2,329,989 2,345,774   

The accompanying notes are an integral part of these consolidated financial     
statements.                                                                     

Camden National Corporation and Subsidiaries            
Consolidated Statements of Changes in Stockholders' Equity        
Years Ended December 31, 1997, 1996 and 1995            
-----------------------------------------------------------------------------   
(In Thousands, except number of shares and per share data)                      
-----------------------------------------------------------------------------   
                          Net Unrealized
                                          Appreciation on          Total
                                              Securities            Stock-
                        Common        Retained Available  Treasury  holders'
                       Stock Surplus Earnings  For Sale    Stock    Equity
Balance at                                                                      
January 1, 1995           $2,436 $1,208  $44,922     $137    $ (445)   $48,258  
Net income for 1995           -       -    7,403       -          -      7,403  
Change in unrealized gains (losses)                                             
on securities available for sale,                                             
net of tax benefit of $16    -       -        -      (33)        -        (33)
Purchase of treasury                                                            
stock (25,200 shares)        -       -        -        -      (937)      (937)
Sale of treasury                                                                
stock (20,629 shares)        -      25        -        -       338        363 
Retirement of treasury                                                          
stock (322 shares)           -      (7)       -        -         7          - 
Cash dividends ($.59/share)   -       -   (1,374)       -         -     (1,374) 
                        ------ ------  -------    -----    ------    -------
Balance at                                                                    
December 31, 1995        $2,436 $1,226  $50,951    $ 104   $(1,037)   $53,680 

Net income for 1996           -       -    8,115        -         -      8,115  
Change in unrealized gains (losses)                                             
on securities available for sale,                                             
net of tax benefit of $37    -       -        -      (72)        -        (72)
Purchase of treasury                                                            
stock (47,261 shares)        -       -        -        -    (1,712)    (1,712)
Sale of treasury                                                                
stock (1,334 shares)         -       -        -        -        50         50 
Cash dividends ($.96/share)   -       -   (2,239)       -         -     (2,239) 
                        ------ ------  -------    -----    ------    -------
Balance at                                                                      
December 31, 1996        $2,436 $1,226  $56,827    $  32   $(2,699)   $57,822 

Net income for 1997           -       -    9,148        -         -      9,148  
Change in unrealized gains (losses)                                             
on securities available for sale,                                               
net of tax benefit of $14    -       -        -      (27)        -        (27)
Purchase of treasury                                                            
stock (33,474 shares)        -       -        -        -    (1,337)    (1,337)
Sale of treasury                                                                
stock (5,052 shares)         -     184        -        -      (184)         - 
Cash dividends ($1.34/share)  -       -   (3,050)       -         -     (3,050) 
                        ------ ------  -------    -----    ------    -------
Balance at                                                                      
December 31, 1997        $2,436 $1,410  $62,925    $   5   $(4,220)   $62,556 
                        ====== ======  =======    =====   =======    =======

The accompanying notes are an integral part of these consolidated financial     
statements.                                                                     
Camden National Corporation and Subsidiaries
Consolidated Statements of Cash Flows 

                                                   Year Ended December 31,
------------------------------------------------------------------------------  
(In Thousands)                                       1997      1996      1995   
------------------------------------------------------------------------------  
Operating Activities                                                          
Net Income                                      $  9,148  $  8,115  $  7,403
Adjustments to reconcile net income to net                                  
cash provided by operating activities:                                  
  Provision for loan losses                        1,677       838       899
  Depreciation and amortization                      708     1,016       801
  Decrease (increase) in interest receivable          (4)      332       101
   Increase in other assets                        (1,844)      (55)   (1,596)
  Increase in other liabilities                      167       193       508
  Sale of residential mortgage loans held for sale 2,531     1,505     6,784
   Origination of mortgage loans held for sale     (7,081)   (1,966)   (6,976)
  Loss on disposal of assets                           -        82         -
   Other, net                                           -         5       (29)
                                                --------  --------  --------
  Net cash provided by operating activities        5,302    10,065     7,895
Investing Activities                             --------  --------  -------- 
Proceeds from sale and maturities of                                        
   securities held to maturity                    46,062    32,252    29,639
Proceeds from sale and maturities of                                        
   securities available for sale                   8,300     9,400       473
 Purchase of securities to be held to maturity    (63,620)  (40,332)  (28,104)
 Purchase of securities available for sale              -    (2,301)   (2,308)
 Purchased of Federal Home Loan Bank Stock         (6,568)   (1,157)   (2,181)
 Increase in loans                                (47,862)  (26,129)  (20,246)
Net (increase) decrease in other real estate        (109)     (178)      520
 Purchase of premises and equipment                  (802)   (1,572)   (1,988)
Proceeds from sale of premises and equipment           -         9         -
 Decrease (increase) in minority position              40       (44)      (28)
 Net sale (purchase) of federal funds                 975      (375)   (1,700)
                                                --------  --------  --------
   Net cash used by investing activities          (63,584)  (30,427)  (25,923)
Financing Activities                              --------  --------  --------  
Net increase (decrease) in demand deposits, NOW                             
     accounts, money markets and savings account    7,256    (1,658)   (9,851)
Net (decrease)increase in certificates of deposit 12,913   (14,982)   39,487
 Net increase (decrease) in short-term borrowings  38,718    41,780   (10,454)
 Reduction in long-term debt                            -         -        (9)
 Purchase of treasury stock                        (1,337)   (1,712)     (937)
Sale of treasury stock                                 -        50       363
 Cash dividends                                    (3,050)   (2,239)   (1,374)
                                                --------  --------  --------
  Net cash provided by financing activities       54,500    21,239    17,225
                                                 -------   -------   -------
  (Decrease) increase in cash and equivalents      (3,782)      877      (803)
Cash and cash equivalents at beginning of year      17,233    16,356    17,159  
                                                --------  --------  --------
  Cash and cash equivalents at end of year      $ 13,451  $ 17,233  $ 16,356
                                                ========  ========  ========

Supplemental disclosures of cash flow information:                              

Cash paid during the year for:                                                  
 Interest paid                                $ 20,919  $ 19,270  $ 17,615
 Income tax paid                                 4,907     3,599     3,369
Non-Cash transactions:                                                          
 Transfer from loans to real estate owned        1,035     1,333       974
Transfer of securities from held to maturity                            
   to available for sale                             -         -    11,175
Sale of Treasury stock from exercised                                   
   stock options                                   184         -         -

The accompanying notes are an integral part of these consolidated financial     
statements.                                                                     

[Pages 20 - 37 Notes to Financial Statements]                                   

Notes to Consolidated Financial Statements            
December 31, 1997, 1996 and 1995            

NATURE OF OPERATIONS.             

Camden National Corporation (the  Company ) is a multi-bank and                 
financial services holding company. The Company s bank                          
subsidiaries, both of which are wholly owned, are Camden                        
National Bank, a national banking organization, based in Camden,                
Maine, and United Bank, a banking organization chartered under the              
laws of the State of Maine, based in Bangor, Maine. The Company                 
also has one non-bank subsidiary, Trust Company of Maine, Inc.,                 
which provides trust and retirement management services throughout              
the central and mid-coast Maine area.                                           

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                 

The accounting and reporting policies conform to generally accepted             
accounting principles and to general practice within the banking                
industry. The following is a summary of the significant accounting              
and reporting policies.                                                         

Principles of Consolidation. The accompanying consolidated            
financial statements include the accounts of Camden National                    
Corporation, its wholly-owned subsidiaries, Camden National Bank                
and United Bank, and its majority-owned subsidiary, Trust Company               
of Maine, Inc. Trust Company of Maine, Inc. s financial statements              
include its wholly-owned subsidiary,Fiduciary Services, Inc. All                
intercompany accounts and transactions have been eliminated in                  
consolidation.                                                                  

Use of Estimates in the Preparation of Financial Statements.          
The preparation of the financial statements in conformity with                  
generally accepted accounting principles requires management to                 
make estimates and assumptions that affect the reported amounts of              
assets and liabilities and disclosure of contingent assets and                  
liabilities at the date of the financial statements and the                     
reported amounts of revenues and expenses during the reporting                  
period. Actual results may differ from those estimates. Material                
estimates that are particularly susceptible to significant change               
in the near term relate to the determination of the allowance for               
loan losses and the valuation of real estate acquired in connection             
with foreclosures or in satisfaction of loans. In connection with               
the determination of the allowance for loan losses and the carrying             
value of real estate owned, management obtains independent                      
appraisals for significant properties.                                          

Cash. The Company is required to comply with various laws and         
regulations of the Federal Reserve which requires that the Company              
maintain certain amounts of cash on deposit and is restricted from              
investing those amounts. The Company maintains those balances at                
the Federal Reserve Bank of Boston. In the normal course of                     
business, the Company has funds on deposit at other financial                   
institutions in amounts in excess of the $100,000 insured by the                
FDIC. For the statement of cash flows, cash equivalents include                 
interest bearing deposits in banks.                                             

Investment Securities. The Company has classified its                 
investment securities into investments available for sale and                   
investments to be held to maturity.                                             

Securities Available for Sale. Debt and other securities that         
are to be held for indefinite periods of time, are stated at market             
value. Changes in net unrealized gains or losses are recorded as an             
adjustment to stockholders  equity until realized.                              
Market values of securities are determined by prices obtained         
from independent market sources. Realized gains and losses on                   
securities sold are computed on the identified cost basis on the                
trade date.                                                                     

Securities to be Held to Maturity. Bonds, notes and debentures        
for which the Company has the positive intent and ability to hold               
to maturity are reported at cost, adjusted for amortization of                  
premiums and accretion of discounts which are recognized in                     
interest income using the interest method over the period to                    
maturity.                                                                       

Residential Mortgages Held for Sale. Residential mortgages            
held for sale are primarily one-to-four family real estate loans                
which are valued at the lower of cost or market on an individual                
basis, as determined by outstanding commitments from investors or               
current investor yield requirements. Gains and losses from sales of             
residential mortgages held for sale are recognized upon settlement              
with investors and recorded in noninterest income. These                        
activities, together with underwriting residential mortgage loans,              
comprise the Company s mortgage banking business.                               

Loan Servicing. SFAS 125, "Accounting for transfers and               
servicing of financial assets and extinguishments of liabilities,"              
was adopted at January 1, 1997. The impact of adopting SFAS 125 was             
immaterial to the financial statements. The cost of mortgage                    
servicing rights is amortized in proportion to, and over the period             
of, estimated net servicing revenues. Impairment of mortgage                    
servicing rights is assessed based on the fair value of those                   
rights. Fair values are estimated using discounted cash flows based             
on a current market interest rate. For purposes of measuring                    
impairment, the rights are stratified based on the following                    
predominant risk characteristics of the underlying loans: interest              
rate, fixed versus variable rate, and period of origination. The                
amount of impairment recognized is the amount by which the                      
capitalized mortgage servicing rights for a stratum exceed their                
fair value. The amortized cost approximates fair value at December              
31, 1997.                                                                       

Loans. Interest on loans is accrued and credited to income            
based on the principal amount outstanding. The accrual of interest              
on loans is discontinued when, in the opinion of management, there              
is an indication that the borrower may be unable to meet payments               
as they become due. Upon such discontinuance, all unpaid accrued                
interest is reversed.                                                           
Fees received and direct costs incurred for the origination of        
loans are deferred and recognized as an adjustment of loan yield.               
The allowance for loan losses is maintained at a level                
adequate to absorb future charge-offs of loans deemed                           
uncollectible. Management determines the adequacy of the allowance              
based upon reviews of individual credits, recent loss experience,               
current economic conditions, known and inherent risk                            
characteristics of the various categories of loans, adverse                     
situations that may affect the borrower s ability to repay,                     
estimated value of underlying collateral, and other pertinent                   
factors. The allowance is increased by provisions charged to                    
operating expense and by recoveries on loans previously charged                 
off. Credits deemed uncollectible are charged against the                       
allowance.                                                                      

SFAS No. 114  Accounting by Creditors for Impairment of a             
Loan,  as amended by SFAS No. 118, was adopted January 1, 1995.                 
This statement applies to all troubled debt restructurings                      
involving a modification of terms. The adoption of this standard                
had no impact on net income and retained earnings.                              
Under this standard, loans considered to be impaired are              
reduced to the present value of expected future cash flows or to                
the fair value of collateral, by allocating a portion of the                    
allowance for loan losses to such loans. If these allocations cause             
the allowance for loan losses to require an increase, such increase             
is reported as provision for loan losses.                                       
The carrying values of impaired loans are periodically                
adjusted to reflect cash payments, revised estimates of future cash             
flows, and increases in the present value of expected cash flows                
due to the passage of time. Cash payments representing interest                 
income are reported as such. Other cash payments are reported as                
reductions in carrying value, while increases or decreases due to               
changes in estimates of future payments and due to the passage of               
time are reported as provision for loan losses.                                 

Other Real Estate Owned. Other real estate owned represents           
real estate acquired through foreclosure and is recorded at the                 
lower of cost or fair market value, determined by an independent                
appraisal, with any difference at the time of acquisition treated               
as a loan loss. Subsequent reductions in fair market value below                
cost are charged directly to other operating expenses.                          

Premises and Equipment. Premises and equipment are stated at          
cost less accumulated depreciation and amortization. Depreciation               
and amortization are computed on the straight-line method over the              
estimated useful lives of the related assets.                                   

Intangible Assets. The value of core deposits premium is being        
amortized over a period of fifteen years using the straight-line                
method. Other intangible assets including goodwill and                          
recapitalization costs are being amortized over twenty to                       
twenty-five years using the straight-line method. Amortization of               
software is recognized using the straight-line method over the                  
estimated useful life of the various softwares.                                 

Other Borrowed Funds and Securities Sold Under Repurchase             
Agreements. Other borrowed funds consist of commercial and consumer             
repurchase agreements and treasury tax and loan deposits that                   
generally do not have fixed maturity dates. Securities sold under               
agreements to repurchase generally mature within thirty days.                   

Employee Pension and Postretirement Benefits. The Company has         
a defined benefit noncontributory pension plan covering                         
substantially all employees. Actuarially determined pension costs               
are charged to current operations. The funding policy is to pay at              
least the minimum amounts required by the Employee Retirement                   
Income Security Act of 1974. In addition, the Company has a                     
supplemental pension plan covering several executive officers. This             
plan was designed to keep the percentage level of pension benefits              
consistent for all employees.                                                   

The Company also provides a voluntary savings plan for the            
benefit of its employees which qualifies under 401(k) of the                    
Internal Revenue Code. Employees can contribute up to the maximum               
amount allowed by law. The Company matches a percentage of employee             
contributions. The Company s postretirement plans also provide                  
medical and life insurance to certain eligible retired employees.               

Income Taxes. Deferred tax assets and liabilities are                 
determined based on the differences between the financial statement             
and tax basis of assets and liabilities using enacted tax rates in              
effect for the year in which the differences are expected to                    
reverse. Principal timing differences include pension and other                 
postretirement benefits, depreciation, and provision for loan                   
losses.                                                                         

Earnings Per Share. Basic earnings per share data is computed         
based on the weighted average number of common shares outstanding               
during each year. Potential common stock is considered in the                   
calculation of weighted average shares outstanding for diluted                  
earnings per share.                                                             

Financial Instruments with Off-Balance Sheet Risk. The Company        
uses off-balance sheet financial instruments as part of its                     
asset/liability management activities. The Company does not intend              
to sell any of these instruments.                                               
Interest Rate Exchange Agreements (swaps) are accounted for           
using the accrual method. Net interest income (expense) resulting               
from the differential between exchanging floating and fixed-rate                
interest payments is recorded on a current basis.                               
Interest Rate Caps and Floors are contracts in which a ceiling        
or floor is established at a specified rate and for a specified                 
period of time. The premium paid for the contract is amortized over             
its life. Any cash payments received are recorded as an adjustment              
to net interest income.                                                         
In the ordinary course of business the Company has entered            
into off-balance sheet financial instruments consisting of                      
commitments to extend credit, commitments under credit card                     
arrangements, commercial letters of credit, and standby                         
letters of credit. Such financial instruments are recorded in the               
financial statements when they are funded.                                      

Fair Value Disclosures. The following methods and assumptions         
were used by the Company in estimating its fair value disclosures               
for financial instruments:                                                      

Cash and cash equivalents, including cash and due from banks          
and federal funds sold: The carrying amounts of cash and                        
equivalents approximates their fair value.                                      

Investment securities and securities available for sale: Fair       
values for investment securities are based on quoted market prices,             
where available. If quoted market prices are not available, fair                
values are based on quoted market prices of comparable instruments.             

Residential mortgages held for sale: Fair values are based on         
quoted market prices from the Federal Home Loan Mortgage                        
Corporation (Freddie Mac).                                                      

Loans receivable: For variable rate loans that reprice                
frequently and have no significant change in credit risk, fair                  
values are based on carrying values. The fair value of other loans              
is estimated by discounting the future cash flows using the current             
rates at which similar loans would be made to borrowers with                    
similar credit ratings and for the same remaining maturities.                   

Interest receivable: The carrying amount of interest                  
receivable approximates fair value.                                             

Off-balance sheet instruments: Fair values for interest rate          
swaps and floor and cap contracts are based on quoted market                    
prices. Fair value of commitments to extend credit has not been                 
presented as the future revenue derived from such commitments is                
not significant.                                                                

Deposits: The fair value of demand deposits, savings accounts,        
and certain money market deposits is the amount payable on demand.              
The fair value of fixed-maturity certificates of deposit is                     
estimated using the rates currently offered in the Company s market             
for deposits of similar remaining maturities.                                   

Short-term borrowings: The carrying amounts of borrowings from        
the Federal Home Loan Bank, under repurchase agreements and other               
short-term borrowings, approximates fair value.                                 

Effect of New Financial Accounting Standards. During 1997, the        
Company adopted SFAS No. 125 and No. 127, which relate to the                   
accounting for transfer and servicing of financial assets and                   
extinguishment of certain liabilities. The adoption of these                    
standards did not have a material effect of the financial                       
statements.                                                                     
The Financial Accounting Standards Board issued the following         
statements of accounting standards (SFAS) during 1997:                          
SFAS No. 128     Earnings per Share                         
SFAS No. 129     Disclosure of Information about Capital    
Structure                 
SFAS No. 130     Reporting Comprehensive Income             
SFAS No. 131     Disclosures about Segments of an           
        Enterprise and Related Information
These four statements do not change the measurement or                
recognition methods used in the financial statements but                        
rather deal with disclosure and presentation requirements.                      
The financial statements for 1997 and all prior periods               
include the additional disclosure requirements relating to diluted              
earnings per share which are required under SFAS No. 128. Financial             
statement disclosures also comply with SFAS No. 129, which                      
summarized but does not change the Company s requirements to                    
disclose information about capital structure.                                   
SFAS No. 130 and No. 131 are effective for periods beginning          
after December 15, 1997. Management has not determined the impact               
of these two pronouncements on the financial statements.                        

Reclassification. Certain items from the prior year were              
restated to conform with current year presentation.                             

2. MERGER                 

On December 31, 1995, UnitedCorp was merged into the Company.         
The merger was accounted for under the pooling-of-interests method.             
At December 31, 1995, UnitedCorp had total assets of $61,440,000                
and total shareholders  equity of $4,918,900. The Company exchanged             
approximately 162,000 shares of its common stock for approximately              
190,000 shares of UnitedCorp. Under the pooling-of-interest method,             
the recorded amounts of assets and liabilities of the Company and               
UnitedCorp have been carried forward at their previously recorded               
amounts. All prior period financial statements presented have been              
restated as if the merger took place at the beginning of such                   
periods.                                                                        

The following table sets forth the results of operations for          
the year ended December 31, 1995.                                               

Net Income                                                            
UnitedCorp                        $  540                          
Camden National Corporation        6,863                          
        ------

Combined                          $7,403                          
        ======
Earnings per share                                                    
UnitedCorp                         $2.83                          
Camden National Corporation         3.14                          
Combined                            3.16                          

Dividends per share                                                     
UnitedCorp                         $  .18                           
Camden National Corporation           .61                           
Combined                              .59                           

3. INVESTMENT SECURITIES                  

The following tables summarize the amortized costs and market         
values of securities available for sale and held to maturity:                   
                         December 31, 1997
-------------------------------------------------------------------             
             Amortized   Unrealized  Unrealized   Fair
                Cost       Gains       Losses    Value
-------------------------------------------------------------------             
Available for sale                                                              
U.S. Treasury securities                                                        
and obligations of U.S.                                                     
Government corporations                                                     
and agencies            $  4,304     $   15     $    (7)  $ 4,312           
             ========     ======     ========  =======

Held to maturity                                                                
U.S. Treasury securities                                                        
and obligations of U.S.                                                     
Government corporations                                                     
and agencies           $ 48,566     $  131       $(346)  $ 48,351           
Obligations of states and                                                       
political subdivisions    2,955         30          (1)     2,984           
Mortgage-backed                                                                 
securities              109,373      3,624         (46)   112,951           
            --------     ------       ------  --------
Total held to maturity   $160,894     $3,785       $(393)  $164,286             
            ========     ======       ======  ========

                       December 31, 1996
-------------------------------------------------------------------             
             Amortized   Unrealized  Unrealized   Fair
              Cost         Gains       Losses    Value
-------------------------------------------------------------------             
Available for sale                                                              
U.S. Treasury securities                                                        
and obligations of U.S.                                                     
Government corporations                                                     
and agencies           $  12,597    $    56    $   (37) $  12,616           
Obligations of states and                                                       
political subdivisions         _         31           _        31           
             --------    -------    -------- ---------
Total available for sale $  12,597    $    87    $   (37) $  12,647             
            =========    =======    ======== =========

Held to maturity                                                                
U.S. Treasury securities                                                        
and obligations of U.S.                                                     
Government corporations                                                     
and agencies          $  58,433    $   181    $   (862) $  57,752           
Obligations of states and                                                       
political subdivisions    5,524         44         (12)     5,556           
Mortgage-backed securities 79,259      1,301        (648)    79,912             
           ---------    -------    ---------  --------
Total held to maturity   $143,216     $1,526     $(1,522)  $143,220             
           =========     ======     ========  ========

The amortized cost and fair values of debt securities by              
contractual maturity at December 31, 1997, are shown below.                     
Expected maturities will differ from contractual maturities because             
borrowers may have the right to call or prepay obligations with or              
without call or prepayment penalties.                                           
                               Amortized          Fair
                                 Cost            Value
-------------------------------------------------------------------             
Available for sale                                                              
Due in one year or less                    $    2,302    $    2,304             
Due after one year through five years           2,002         2,008             
                              ----------     ---------
                              $    4,304    $    4,312
                              ==========    ==========

                               Amortized          Fair
                                 Cost            Value
-------------------------------------------------------------------             
Held to maturity                                                                
Due in one year or less                     $  32,657     $  32,343             
Due after one year through five years          26,862        27,004             
Due after five years through ten years          8,374         8,543             
Due after ten years                            93,001        96,396             
                               ---------     ---------
                                $160,894      $164,286
                               =========     =========

For purposes of the maturity table, mortgage-backed                   
securities, which are not due at a single maturity date, have been              
allocated to the due after ten years category.                                  

There were no sales in available for sale or held to maturity         
portfolios during 1997 and 1996. At December 31, 1997, securities               
with a book value of $36.5 million and a fair value of $37.2                    
million were pledged to secure public deposits and securities sold              
under agreements to repurchase and other purposes required or                   
permitted by law. Other securities include Federal Home Loan Bank               
and Federal Reserve Bank stock owned by the Company as part of                  
their relationship with these institutions.                                     

4. LOANS              

The composition of the Company s loan portfolio at December 31 was              
as follows:                                                                     
                              1997          1996
------------------------------------------------------------------              
Commercial loans                           $180,327       $149,838              
Residential real estate loans               118,603        116,682              
Consumer loans                               46,178         37,091              
Municipal loans                              10,324          5,578              
Other loans                                   1,226            130              
                             --------       --------
Total loans                              356,658        309,319           
Less deferred loan fees net of cost             603            617              
Less allowance for loan losses                5,640          4,472              
                             --------       --------
                             $350,415       $304,230
                             ========       ========

The Company s lending activities are conducted in mid-coast           
and central Maine. The Company grants single family and                         
multi-family residential loans, commercial real estate loans,                   
business and a variety of consumer loans. In addition, the Company              
grants loans for the construction of residential homes,                         
multi-family properties and commercial real estate properties. The              
ability and willingness of borrowers to honor their repayment                   
commitments is generally dependent on the level of overall economic             
activity within the geographic area and the general economy.                    

As of December 31, 1997 and 1996, nonaccrual loans were                 
$1,215,000 and $1,674,000, respectively. Interest foregone                    
was approximately $147,000, $178,000 and $207,000 for 1997, 1996                
and 1995, respectively.                                                         

5. ALLOWANCE FOR LOAN LOSSES            

Changes in the allowance for loan losses were as follows:             
                        December 31,
-------------------------------------------------------------------             
                           1997        1996       1995
-------------------------------------------------------------------             
Beginning Balance                     $ 4,472     $ 4,080   $ 3,751             
Provision for loan losses               1,677         838       899             
Recoveries                                583         210       289             
Loans charged off                      (1,092)       (656)     (859)            
                         -------     -------   -------
Net charge offs                          (509)       (446)     (570)            
                         -------     -------   -------
Ending Balance                        $ 5,640     $ 4,472   $ 4,080             
                         =======     =======   =======

Information regarding impaired loans is as follows:                   
                        December 31,
-------------------------------------------------------------------             
                           1997        1996       1995
-------------------------------------------------------------------             
Average investment in impaired loans   $1,520      $1,864    $1,505             
Interest income recognized on impaired                                          
loans, all on cash basis                 64         220        36           
Balance of impaired loans               1,215       1,674     1,785             
Less portion for which no allowance                                             
for loan losses is allocated              _           _         _           
Portion of impaired loan balance for                                            
which an allowance for credit losses                                        
is allocated                          1,215       1,674     1,785           
Portion of allowance for loan losses                                            
allocated to the impaired loan                                              
balance                                 223         340       267           

6. MORTGAGE SERVICING                 

Residential real estate mortgages are originated by the               
Company for both portfolio and for sale into the secondary market.              
The sale of loans are to institutional investors such as the                    
Federal Home Loan Mortgage Corporation ( Freddie Mac ). Under loan              
sale and servicing agreements with the investor, the Company                    
generally continues to service the residential real estate                      
mortgages. The Company pays the investor an agreed-upon rate on the             
loan, which, including a guarantee fee paid to Freddie Mac, is less             
than the interest rate the Company receives from the borrower. The              
difference is retained by the Company as a fee for servicing the                
residential real estate mortgages. As required by SFAS No. 125, the             
Company capitalizes mortgage servicing rights at their fair value               
upon sale of the related loans. The Company s activity in the                   
secondary market was minimal during 1997. Therefore, capitalized                
servicing rights were not material.                                             

Mortgage loans serviced for others are not included in the            
accompanying consolidated statements of condition. The unpaid                   
principal balances of mortgage loans serviced for others was                    
$41,617,228, $45,913,503 and $52,006,411 at December 31, 1997, 1996             
and 1995, respectively.                                                         

Custodial escrow balances maintained in connection with the           
foregoing loan servicing, and included in demand deposits, were                 
$86,680 and $98,541 at December 31, 1997 and 1996, respectively.                

7. BANK PREMISES AND EQUIPMENT              

Details of premises and equipment, at cost, at December 31 were as              
follows:                                                                        
                                    1997          1996
-------------------------------------------------------------------             
Land and buildings                             $ 8,193      $ 7,485             
Furniture, fixtures and equipment                7,112        6,524             
Leasehold improvements                             401          401             
Construction in process                             30          531             
                                  -------       ------
                                   15,736       14,941
Less: Accumulated depreciation and amortization  6,950        5,997             
                                  -------       ------
                                  $ 8,786      $ 8,944
                                  =======      =======

Depreciation expense was $1.1 million, $1.0 million and $.9           
million for 1997, 1996 and 1995, respectively.                                  

8. OTHER REAL ESTATE OWNED          

The transactions in other real estate owned for the years             
ended December 31 were as follows:                                              
                                  1997          1996
------------------------------------------------------------------              
Beginning balance                              $1,264       $1,086              
Additions                                       1,035        1,333              
Properties sold                                   850          912              
Writedowns                                         76          243              
                                 ------       ------
Ending balance                                 $1,373       $1,264              
                                 ======       ======

9. DEPOSITS           

The aggregate amount of certificates of deposit, each with a          
minimum denomination of $100,000, was approximately $32,094,000               
and $24,514,000 in 1997 and 1996, respectively. Certificates of                 
deposit included brokered deposits in the amount of $131,000 and                
$1,282,000 at December 31, 1997 and 1996, respectively.                         

At December 31, 1997, the scheduled maturities of certificates        
of deposit are as follows:                                                      

1998       $148,324     
1999         27,868     
2000          7,174     
2001          2,739     
2002          2,587     
Thereafter            324           
      --------
      $189,016
      ========

10. BORROWINGS FROM FEDERAL HOME LOAN BANK          

A summary of the borrowings from the Federal Home Loan Bank           
(FHLB) of Boston is as follows:                                                 

December 31, 1997 
-------------------------------------------------------------------             
Principal Amounts   Interest Rates   Maturity Date  
-------------------------------------------------------------------             
$98,236            5.59% - 7.05%         1998   
 278                6.58%             1999
--------                                          
$98,514                                         
========                                          

December 31, 1996 
-------------------------------------------------------------------             
Principal Amounts   Interest Rates   Maturity Date  
-------------------------------------------------------------------             
$66,620            5.38% - 7.32%         1997   
 431                6.58%             1999
-------                                         
$67,051                                         
========                                          

Short and long-term borrowings from the FHLB consist of both          
fixed and adjustable rate borrowings and are collateralized by all              
stock in the FHLB and qualifying first mortgage loans up to the                 
amount of the advance outstanding. The Company, through its banking             
subsidiaries, has an available line of credit with FHLB of $10.2                
million and $9.2 million at December 31, 1997 and 1996,                         
respectively. The Company had $8.4 million and $.9 million                      
outstanding at December 31, 1997 and 1996, respectively.                        

11. EMPLOYEE RETIREMENT PLANS                     

The Company has a trusteed defined benefit noncontributory            
pension plan covering substantially all eligible employees                      
over 21 years of age with one year of employment. The benefits are              
based on years of service and salary earned during an employee s                
last five years of employment. The assets of the plans are                      
primarily invested in listed stocks.                                            

The Company also provides a supplemental pension plan for             
certain executive employees to restore pension benefits which have              
been reduced by income tax regulations. These plans are unfunded                
and nonqualified.                                                               

Net periodic pension cost for these plans includes the                
following components:                                                           

                            1997       1996       1995
-------------------------------------------------------------------             
Service Cost                                                                    
Qualified plan                      $  318      $  280    $   136           
Supplemental plan                       86          72         37           
Interest cost                                                                   
Qualified plan                         224         194        169           
Supplemental plan                       93          64         56           
Return on plan assets                   (188)       (153)      (152)            
Net amortization and deferral                                                   
Qualified plan                         (14)         (9)       (13)          
Supplemental plan                       52          39         31           
                         ------      ------     ------
Net periodic pension cost             $  571      $  487     $  264             
                         ======      ======     ======

The funded status of the plan and amounts recognized in the           
balance sheets at December 31 are as follows:                                   

QUALIFIED PLAN                                      1997       1996             
-------------------------------------------------------------------             
Actuarial present value of projected benefit obligation:                        
Vested                                        $  2,100   $  1,759           
Nonvested                                          100         93           
                                   --------   --------
Accumulated benefits obligation                    2,200      1,852             
Effect of future compensation                      1,300      1,164             
                                   --------   --------
Projected benefit obligation                       3,500      3,016             
Plan assets at fair value                         (2,750)    (2,272)            
                                   --------   --------
Unfunded excess of projected obligation                                         
over plan assets                                   750        744           
Unrecognized transition asset                        115        123             
Unrecognized net loss                               (232)      (322)            
Unrecognized net transition obligation                80         88             
                                   --------   --------
Pension liability included in accrued                                           
other liabilities                             $    713   $    633           
                                   ========   ========
The following assumptions were used:                                            
Discount rate                                      7.5%       7.5%          
Increase in compensation                           6.0%       6.0%          

The expected long-term rate of return on assets was 7.5% for 1997,              
1996 and 1995.                                                                  

SUPPLEMENTAL PLAN                                   1997      1996              
-------------------------------------------------------------------             
Actuarial present value of projected benefit obligation:                        
Vested                                        $    919   $    502           
Nonvested                                           40         52           
                                   --------   --------
Accumulated benefits obligation                      959        654             
Effect of future compensation                        468         38             
                                   --------   --------
Projected benefit obligation                       1,427        992             
Plan assets at fair value                              -          -             
                                   --------   --------
Unfunded excess of projected obligation                                         
over plan assets                                 1,427        992           
Unrecognized transition obligation                  (251)      (182)            
Unrecognized net loss                               (429)      (281)            
                                   --------   --------
Pension liability included in accrued                                           
other liabilities                             $    747   $    529           
                                   ========   ========
The following assumptions were used:                                            
Discount rate                                      7.5%       7.5%          
Increase in compensation                           6.0%       6.0%          

12. POSTRETIREMENT BENEFITS         

The Company's postretirement plans provide medical and life           
insurance to certain eligible retired employees. It is the                      
Company s policy to fund the cost of postretirement health care and             
life insurance plans as premiums are paid; therefore, there are no              
plan assets.                                                                    

Net periodic postretirement benefit cost includes the                 
following components:                                                           
                                  1997          1996
------------------------------------------------------------------              
Service cost of benefits earned                $  19         $  20              
Interest cost on accumulated postretirement                                     
benefit obligation                              23            22            
Amortization of prior service cost               (16)          (16)             
                                 -----         -----
Net periodic postretirement benefit cost       $  26         $  26              
                                 =====         =====

The amounts recognized in the Company s balance sheets at             
December 31, are:                                                               
                               1997             1996
------------------------------------------------------------------              
Accumulated Postretirement Benefit Obligation                                   
Retirees                                 $  97             $  74            
Fully eligible active plan participants     48                88            
Other active plan participants             211               153            
                              ----              ----
                               356               315
Unrecognized transition asset              142               158            
Unrecognized loss                          (12)                -            
                              ----              ----
Accrued post-retirement benefit cost                                            
included in other liabilities             $486              $473            
                              ====              ====

Benefit costs were generally estimated assuming retiree health        
care cost would initially increase at a 7.5% annual rate, decrease              
gradually to a 6% annual growth rate after 8 years, and remain at a             
6% annual growth rate thereafter. The discount rate used at                     
December 31, 1997 and 1996, to estimate the accumulated                         
postretirement benefit obligation was 7.5%. A 1% increase in the                
assumed health care cost trend rate would not have a material                   
impact on the accumulated postretirement benefit obligation due                 
to a built-in cap on annual benefits.                                           

13. BRANCH ACQUISITIONS       

Camden National Corporation s subsidiary, Camden National             
Bank, has entered into a definitive agreement to purchase four                  
branches in mid-coast Maine. The expected deposit premium to be                 
paid will approximate $5 million.                                               

14. STOCKHOLDERS  EQUITY        

Dividends paid by subsidiaries are the primary source of funds        
available to the Company for payment of dividends to its                        
shareholders. The Company s subsidiary banks are subject to certain             
requirements imposed by state and federal banking laws and                      
regulations. These requirements, among other things, establish                  
minimum levels of capital and restrict the amount of dividends that             
may be distributed by the subsidiary banks to the Company.                      

The Company has a fixed stock option plan accounted for under         
APB Opinion 25 and related interpretations. The plan allows the                 
Company to grant options to employees for up to 140,000 shares of               
common stock. The options are immediately vested when granted, and              
expire ten years from the date the option is granted. The exercise              
price of each option equals the market price of the Company s stock             
on the date of grant. Accordingly, no compensation cost has been                
recognized for the plan. Had compensation cost for the plan been                
determined based on the fair value of the options at the grant                  
dates consistent with the method of Statement of Financial                      
Accounting Standards No. 123,  Accounting for Stock-Based                       
Compensation,  the Company s 1996 net income and earnings per share             
would have been reduced to the pro forma amounts indicated on the               
next page. In 1997, no options were granted, thus pro forma amounts             
are the same as reported.                                                       

                                    Earnings per Share
                Net Income         Basic       Diluted
-------------------------------------------------------------------             
1997                                                                            
As reported                    $9,148           $4.02         $3.93             
Pro forma                       9,148            4.02          3.93             

1996                                                                            
As reported                    $8,115           $3.48         $3.43             
Pro forma                       7,949            3.41          3.36             

The fair value of each option grant is estimated on the date          
of grant using the Black-Scholes options-pricing model with the                 
following weighted-average assumptions used for all grants in 1996:             
dividend yield of 2.6%, expected volatility of 5%, risk-free                    
interest rate of 6.5%, and expected lives of 10 years.                          

A summary of the status of the company s fixed stock option           
plan as of December 31, 1997 and 1996, and changes during the years             
ending on those dates is presented below.                                       

1997                     1996 
--------------------------------------------------------------------------      
               Number   Weighted Average   Number   Weighted Average
            Of Shares   Exercise Price  Of Shares   Exercise Price
--------------------------------------------------------------------------      
Outstanding at beginning                                                        
of year          95,758         $22.96        68,508         $17.38         
Granted during                                                                  
the year              -              -        27,250          37.00         
Exercised during                                                                
the year          9,258          18.21             0              -         
        ------          -----        -------        ------
Outstanding and exercisable                                                     
at end of year   86,500          23.47        95,758          22.96         
        ======          =====        =======         =====
Weighted-average fair value of                                                  
options granted during                                                      
the year          N/A                         $9.25                         

The following information applies to options outstanding at           
December 31, 1997.                                                              

Number outstanding                               86,500                         
Range of exercise prices                     $17.50 - $37.00                    
Weighted-average exercise price                   $23.47                        
Weighted-average remaining contractual life     6.92 years                      

15. EARNINGS PER SHARE      

The following table sets forth the computation of basic and           
diluted earnings per share:                                                     
                       1997           1996            1995
----------------------------------------------------------------------          
Net income, as reported          $9,148         $8,115         $7,403           
Weighted-average shares       2,273,584      2,329,989      2,345,774           
Effect of dilutive securities:                                                  
Employee stock options         51,642         37,900         38,531         
Dilutive potential common shares                                                
Adjusted weighted-average shares                                            
and assumed conversion      2,325,226      2,329,989      2,384,305         
Basic earnings per share        $  4.02        $  3.48        $  3.16           
Diluted earnings per share      $  3.93        $  3.43        $  3.10           

16. INCOME TAXES                

The current and deferred components of income tax expense were        
as follows:                                                                     
                        1997           1996             1995
----------------------------------------------------------------------          
Current:                                                                        
Federal                        $4,948          $4,024         $3,336        
State                             181             121            112        
                       ------          ------          -----
                        5,129           4,145          3,448
Deferred:                                                                       
Federal                          (676)           (115)          (105)       
                      -------          ------         ------
                       $4,453          $4,030         $3,343
                       ======          ======         ======

The actual expense differs from the expected tax expense              
computed by applying the applicable U.S. Federal corporate income               
tax rate to earnings before income taxes, as follows:                           

                        1997            1996            1995
----------------------------------------------------------------------          
Computed tax expense             $4,625          $4,151         $3,654          
Increase (reduction) in income                                                  
taxes resulting from:                                                         
Tax exempt Income               (222)           (209)          (234)      
State taxes, net of                                                         
federal benefit                 120              79             74      
Compensation expense from stock                                                 
options exercised                 (20)              -           (134)       
Other                             (50)              9            (17)       
                       ------          ------         ------
                       $4,453          $4,030         $3,343
                       ======          ======         ======

Items which give rise to deferred income tax assets and               
liabilities and the tax effect of each are as follows:                          

                             1997                   1996
----------------------------------------------------------------------------    
                                Asset    Liability    Asset    Liability
----------------------------------------------------------------------------    
Allowance for possible                                                          
losses on loans                    $1,682  $    -       $1,206     $     -  
Allowance for investment losses          90       -          110           -    
Capitalized costs                         -      72            -          14    
Pension and other benefits              671       -          463           -    
Depreciation                              -     141            -         143    
Deferred loan origination fees            6       -            9           -    
Deferred compensation and benefits       83       -          140           -    
Unrealized appreciation of                                                      
investments available for sale          -       3            -          17  
Unrealized appreciation in loans                                                
held for sale                          22       -            -           5  
Valuation of other real estate owned     41       -           48           -    
Interest receivable                      37       -           40           -    
Other                                   136       -           61           -    
                                 ------  ------       ------       -----
                                 $2,768  $  216       $2,077       $ 179
                                 ======  ======       ======       =====

The related income taxes have been calculated using a rate of         
34%. No valuation allowance is deemed necessary for the deferred                
tax asset, which is included in other assets.                                   

17. RELATED PARTIES         

In the ordinary course of business, the Company has granted           
loans to certain officers and directors and the companies with                  
which they are associated. All such loans were made under terms                 
that are consistent with the Company s normal lending policies.                 
Changes in the composition of the board of directors or the group               
comprising executive officers result in additions to or deductions              
from loans outstanding to directors, executive officers, or                     
principal shareholders.                                                         

Loans to related parties which in aggregate exceed $60,000            
were as follows:                                                                
                       1997               1996
---------------------------------------------------------------                 
Balance, January 1,                 $  7,710           $  9,058                 
Loans made/advanced and additions      9,505              7,188                 
Repayments and reductions              2,961              8,536                 
                   --------            -------
Balance, December 31                $ 14,254            $ 7,710                 
                   ========            =======

In addition to the loans noted above, the Company had deposits        
at December 31, 1997 to the same individuals of $6.3 million                    
outstanding.                                                                    

18. FINANCIAL INSTRUMENTS         

In the normal course of business, the Company is a party to           
financial instruments with off-balance sheet risk, which are not                
reflected in the accompanying consolidated balance sheets. The                  
Company s significant off-balance sheet risks are lending                       
commitments, letters of credit, interest rate floors, caps, and                 
interest rate swap agreements. Those instruments involve varying                
degrees of credit and interest rate risk in excess of the amount                
recognized in the statement of condition.                                       
The Company follows the same credit policies in making                
commitments to extend credit and conditional obligations as it does             
for on-balance sheet instruments, including requiring similar                   
collateral or other security to support financial instruments with              
credit risk. The Company s exposure to credit loss in the event of              
nonperformance by the customer is represented by the contractual                
amount of those instruments. Since many of the commitments are                  
expected to expire without being drawn upon, the total amount does              
not necessarily represent future cash requirements.                             

The Company uses off-balance sheet derivative instruments as          
hedges against large fluctuations in interest rates. The Company                
uses interest rate swaps and floor instruments to hedge against                 
potentially lower yields on the variable prime rate loan category               
in a declining rate environment. If rates were to decline,                      
resulting in reduced income on the adjustable rate loans, there                 
would be an increased income flow from the interest rate swap and               
floor instruments. The Company also uses cap instruments to hedge               
against increases in short-term borrowing rates. If rates were to               
rise, resulting in an increased interest cost, there would be an                
increased income flow from the cap instruments.                                 

All off-balance sheet positions are reviewed as part of the           
asset/liability management process at least quarterly. The                      
instruments are factored into the Company s overall interest rate               
risk position. The Company regularly reviews the credit quality of              
the counterparties from which the instruments have been purchased.              
As of December 31, 1997, the Company had $5 million (notional                   
principal amount) in interest-rate swaps, and $20 million in floor              
contracts. The Company s interest-rate swap matures in 1998. The                
two floor contracts ($10 million each) have a strike rate of 5%,                
and both mature in 1999.                                                        

                              1997                1996
-------------------------------------------------------------------             
Commitments to extend credit             $80,043            $63,138             
Letters of credit                          1,911                924             
Swaps                                      5,000             20,000             
Floors                                    20,000             20,000             
Caps                                           0             15,000             

The estimated fair values of the Company s financial                  
instruments were as follows:                                                    

                December 31, 1997    December 31, 1996
-------------------------------------------------------------------             
                 Carrying    Fair     Carrying    Fair
                  Amount    Value      Amount    Value
-------------------------------------------------------------------             
Financial assets:                                                               
Cash and cash equivalents, including                                            
cash and due from banks and                                                 
federal funds sold          $ 14,551  $ 14,551  $ 19,308 $ 19,308           
Securities available for sale    4,312     4,312    12,647   12,647             
Securities held to maturity    160,894   164,286   143,216  143,220             
Other investments               14,084    14,084     7,516    7,516             
Loans held for sale              7,094     7,094     2,544    2,544             
Loans receivable               350,415   347,681   304,230  302,000             
Interest receivable              3,924     3,924     3,920    3,920             
Financial liabilities:                                                          
Deposits                       373,409   373,898   353,240  353,826             
Borrowings from Federal Home                                                    
Loan Bank                     98,514    98,502    67,051   67,074           
Other borrowed funds            33,964    33,964    26,709   26,709             

The estimated fair values of the Bank's off-balance sheet             
instruments were as follows:                                                    

 December 31, 1997
----------------------------------------------------------------------          
                                                Market Value
          Notional    Contract    Maturity     Including
         Principal      Date        Date        Accruals
----------------------------------------------------------------------          
Interest Rate Swaps   $  5,000     09-Feb-94   09-Feb-98      $ (57)            
         --------                                -----
          $  5,000                                $ (57)
         ========                                =====

Interest Rate Floors  $ 10,000     03-Jun-94   03-Jun-99      $   8             
           10,000     13-Sep-94   13-Sep-99         10
          -------                               ------
         $ 20,000                                $  18
          =======                               ======

   December 31, 1996
----------------------------------------------------------------------          
                                                Market Value
          Notional    Contract    Maturity     Including
         Principal      Date        Date        Accruals
----------------------------------------------------------------------          
Interest Rate Swaps    $10,000     24-Jan-92   24-Jan-97      $ (49)            
             5,000     09-Feb-94   09-Feb-98        (34)
             5,000     04-May-94   04-May-97        (18)
         --------                                -----
           $20,000                                $(101)
         ========                                =====

Interest Rate Floors   $10,000     03-Jun-94   03-Jun-99      $  28             
           10,000     13-Sep-94   13-Sep-99         23
          -------                                -----
          $20,000                                $  51
          =======                                =====

Interest Rate Caps     $10,000     30-May-95   30-May-97      $   0             
            5,000     06-Jun-95   06-Jun-97          0
          -------                                -----
          $15,000                                $   0
          =======                                =====

19. REGULATORY MATTERS      

The Company, and its bank subsidiaries, are subject to various        
regulatory capital requirements administered by the Comptroller of              
the Currency, the Federal Reserve Board, and the Federal Deposit                
Insurance Corporation. Failure to meet minimum capital requirements             
can initiate certain mandatory and possible additional                          
discretionary actions by regulations that, if undertaken, could                 
have direct material affect on the Bank s financial statements.                 
These capital requirements represent quantitative measures of the               
Company's assets, liabilities, and certain off-balance sheet items              
as calculated under regulatory accounting principles. The Company s             
capital classification is also subject to qualitative judgments by              
the regulators about components, risk weightings, and other                     
factors.                                                                        

Quantitative measures established by regulation to ensure             
capital adequacy require the Company to maintain minimum amounts                
and ratios (set forth in the table below) of total and Tier I                   
capital (as defined in the regulations) to risk-weighted assets (as             
defined), and of Tier I capital to average assets (as defined).                 
Management believes that, as of December 31, 1997, the Company                  
meets all capital requirements to which it is subject.                          

As of December 31, 1997, both bank subsidiaries were                  
categorized by their regulatory agencies as well capitalized.                   
To be categorized as well capitalized the banks must maintain                   
minimum total risk-based, Tier I risk-based, and Tier I leverage                
ratios as set forth in the table. There are no conditions or events             
that management believes have changed the banks  category.                      

The Company's actual capital amounts and ratios are also              
presented in the table.                                                         
                                                To Be Well Capitalized
                                For Capital    Under Prompt Corrective
                    Actual    Adequacy Purposes      Action Provisions
---------------------------------------------------------------------------     
                Amount  Ratio   Amount>  Ratio>   Amount>   Ratio>
---------------------------------------------------------------------------     
As of December 31, 1997                                                         
Total Capital (To Risk Weighted Assets):                                        
Consolidated          $66,606  19.5%   $27,354   8.0%     N/A                   
Camden National                                                                 
Bank                 57,799  20.2%    22,841   8.0%   $28,551    10.0%      
United Bank             6,820  12.1%     4,517   8.0%     5,646    10.0%        

Tier I Capital (To Risk Weighted Assets):                                       
Consolidated          $62,332  18.2%    $13,677   4.0%     N/A                  
Camden National                                                                 
Bank                 54,230  19.0%     11,420   4.0%   $17,130    6.0%      
United Bank             6,114  10.8%      2,258   4.0%     3,388    6.0%        

Tier I Capital (To Average Assets):                                             
Consolidated          $62,332  10.6%    $23,483   4.0%     N/A                  
Camden National                                                                 
Bank                 54,230  11.2%     19,401   4.0%   $24,251    5.0%      
United Bank             6,114   8.3%      2,953   4.0%     3,691    5.0%        

As of December 31, 1996                                                         
Total Capital (To Risk Weighted Assets):                                        
Consolidated          $61,320  20.4%    $23,996   8.0%     N/A                  
Camden National                                                                 
Bank                 55,277  22.0%     20,126   8.0%   $25,157    10.0%     
United Bank             5,723  11.8%      3,874   8.0%     4,843    10.0%       

Tier I Capital (To Risk Weighted Assets):                                       
Consolidated          $57,571  19.2%    $11,998   4.0%     N/A                  
Camden National                                                                 
Bank                 52,156  20.7%     10,063   4.0%   $15,094    6.0%      
United Bank             5,123  10.6%      1,937   4.0%     2,906    6.0%        

Tier I Capital (To Average Assets):                                             

Consolidated          $57,571  11.7%    $19,707   4.0%     N/A                  
Camden National                                                                 
Bank                 52,156  12.1%     17,184   4.0%   $21,480    5.0%      
United Bank             5,123   8.2%      2,511   4.0%     3,139    5.0%        

20. BANK HOLDING COMPANY              

Following are the condensed statements of condition, income           
statements, and statements of cash flow for Camden National                     
Corporation, a multi-bank and financial services holding company.               

Statements of Condition         
December 31         
                                   1997         1996
------------------------------------------------------------------              
Assets                                                                          
Cash                                          $   170      $    12              
Fixed assets                                    1,675            0              
Investment in subsidiaries:                                                     
Banking subsidiaries                         60,569       57,519            
Other subsidiaries                               89          102            
Amounts receivable from subsidiaries              46          130             
Goodwill                                          56           59             
Other assets                                     169            0             
                                -------      -------
Total assets                               $62,774      $57,822           
                                =======      =======
Liabilities & Stockholders  Equity                                              
Amounts due to subsidiaries                   $    40      $     0              
Accrued expenses                                  178            0              
Stockholders  equity                           62,556       57,822              
                                -------      -------
Total liabilities and stockholders equity     $62,774      $57,822              
                               ========      =======

Statements of  Income         
For Years Ended December 31         
                         1997        1996       1995
Operating Income                                                                
Dividend income from subsidiaries     $4,387      $3,951    $1,928              
Fees from subsidiaries                 2,956          77         -              
                        ------      ------    ------
Total operating income                 7,343       4,028     1,928              
                        ------      ------    ------

Operating Expenses                                                              
Salaries and employee benefits         1,625           -         -              
Net occupancy156++                                                              
Furniture, equipment,and data                                                   
processing                            612           -         -           
Other operating expenses                 607          77       195              
                        ------       -----     -----
Total operating expenses             3,000          77       195            
                        ------       -----     -----
Income before equity in undistributed                                           
earnings of subsidiaries            4,343       3,951     1,733           

Equity in undistributed earnings                                                
of subsidiaries                      4,761       4,164     5,483            
                        ------       -----     -----
Net income before tax               9,104       8,115     7,216           
Income tax benefit                        44           -       187              
                        ------       -----     -----
Net Income                            $9,148      $8,115    $7,403              
                        ======      ======    ======

Statements of Cash Flows        
For Years Ended December 31       

                      1997        1996        1995
-----------------------------------------------------------------               
Operating Activities                                                            
Net income                          $  9,148    $  8,115  $  7,403              
Adjustments to reconcile net earnings to net cash                               
provided by operating activities:                                               
Undistributed net income from                                                   
subsidiaries                        (4,761)     (4,164)   (5,483)           
Depreciation and amortization            197           0         0              
Amortization of goodwill                   3           4         5              
Decrease in amount receivable from                                              
subsidiaries                            84         (77)       26            
Increase in other assets                (169)          0         0              
(Decrease) increase in payables          232         (25)       22              
Other                                     11           0         0              
                        ------      ------     -----
Net cash provided by operating                                                  
activities                           4,745       3,853     1,973            
                        ------       -----     -----
Investing Activities                                                            
Investment in Trust Company                                                     
of Maine, Inc.                         (51)          0         0            

Purchase of premises and equipment      (149)          0         0              
                          -----       -----    -----
Net cash used in investing activities   (200)          0         0              
Financing Activities                                                            
Proceeds from sale of treasury stock       0          50       363              
Purchase of treasury stock            (1,337)     (1,712)     (937)             
Dividends paid                        (3,050)     (2,239)   (1,396)             
                        ------      ------    ------
Net cash used in financing activities (4,387)     (3,901)   (1,970)             
                        ------      ------    ------
Net (decrease) increase in cash                                                 
and cash equivalents                   158         (48)        3            
Cash and cash equivalents at                                                    
beginning of year                       12          60        57            
                          ----        -----    -----
Cash and cash equivalents at                                                    
end of year                       $   170    $     12    $   60           
                        ======      =======    =====

21. QUARTERLY RESULTS OF OPERATIONS (Unaudited)     

The following is a summary of the quarterly results of                
operations for the years ended December 31, 1997 and 1996:                    

                    THREE MONTHS ENDED
-------------------------------------------------------------------             
                   Mar 31   June 30   Sept 30   Dec 31
-------------------------------------------------------------------             
1997                                                                            
Interest income                $10,722   $11,329   $11,566  $12,434             
Interest expense                 4,934     5,473     5,467    5,355             
Net interest income              5,788     5,856     6,099    7,079             
Provision for loan losses          287       285       385      720             
Income before income taxes       3,145     3,525     3,481    3,450             
Applicable income taxes          1,056     1,195     1,166    1,036             
Net income                       2,089     2,330     2,315    2,414             
Per common share:                                                               
Primary                            .91      1.03      1.02     1.06             
Fully diluted                      .90      1.01      1.00     1.02             

                    THREE MONTHS ENDED
-------------------------------------------------------------------             
                   Mar 31   June 30   Sept 30   Dec 31
-------------------------------------------------------------------             
1996                                                                            
Interest income                 $9,721    $9,909   $10,391  $10,994             
Interest expense                 4,709     4,758     4,948    4,690             
Net interest income              5,012     5,151     5,443    6,304             
Provision for loan losses          217       107       251      263             
Income before income taxes       2,627     3,133     3,209    3,176             
Applicable income taxes            869     1,036     1,069    1,056             
Net income                       1,758     2,097     2,140    2,120             
Per common share:                                                               
Primary                            .75       .90       .91      .92             
Fully diluted                      .75       .89       .88      .91             

[Bottom of page 37 - Independent Auditor's Report]                              

Auditor's Logo on letterhead    Auditor's name & address                        
-------------------------------------------------------------------             

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS              

The Stockholders and Board of Directors                                         
Camden National Corporation                                                     

We have audited the accompanying consolidated statements of           
financial condition of Camden National Corporation and Subsidiaries             
as of December 31, 1997 and 1996, and the related consolidated                  
statements of income, changes in stockholders' equity, and cash                 
flows for each of the three years in the period ended December 31,              
1997.  These financial statements are the responsibility of the                 
Company's management.  Our responsibility is to express an opinion              
on these financial statements based on our audits.                              

We conducted our audits in accordance with generally accepted         
auditing standards.  Those standards require that we plan and                   
perform the audit to obtain reasonable assurance about whether the              
financial statements are free of material misstatement.  An audit               
includes examining on a test basis, evidence supporting the amounts             
and disclosures in the financial statements.  An audit also                     
includes assessing the accounting principles used and significant               
estimates made by management, as well as evaluating the overall                 
financial statement presentation.  We believe that our audits                   
provide a reasonable basis for our opinion.                                     

In our opinion, the financial statements referred to above            
present fairly, in all material respects, the consolidated                      
financial position of Camden National Corporation and Subsidiaries              
as of December 31, 1997 and 1996, and the consolidated results of               
their operations and their cash flows for each of the three years               
in the period ended December 31, 1997, in conformity with generally             
accepted accounting principles.                                                 

Berry, Dunn, McNeil & Parker (signature)                                        

Portland, Maine                                                                 
January 29, 1998                                                                

[Pages 38 - 39 List of Board of Directors & Bank Administration]                

Board of Directors and Bank Administrations                   

Photograph of E. Maynard "Sandy" Graffam                                        
Director who passed away during 1997                                        

This annual report is dedicated to the memory of E.Maynard            
"Sandy" Graffam.   Director 1979-1997  Camden National Corporation              
and Camden National Bank.                                                       

-------------------------------------------------------------------             

Directors of Camden National Corporation and Camden National Bank               

David H. Montgomery                                                             
Chairman, Camden National Corporation                                           
Past Chairman, Allen Agency                                                     

Kenneth C. Dickey                                                               
Vice Chairman, Camden National Corporation                                      
Haskell & Corthell Real Estate                                                  

Keith C. Patten                                                                 
President & CEO                                                                 
Camden National Corporation                                                     
Chairman, Camden National Bank                                                  

Peter T. Allen                                                                  
President, Cutting-Allen, Inc.                                                  

Bruce D. Bartlett                                                               
President & CEO, United Bank                                                    
Director of Camden National Corporation                                         

Ann W. Bresnahan                                                                
Civic Leader                                                                    

Robert W. Daigle                                                                
President & CEO, Camden National Bank                                           

Robert J. Gagnon                                                                
Store Manager, Rockland Shop 'n Save                                            

John W. Holmes                                                                  
President, Consumers Fuel Co.                                                   

Rendle A. Jones                                                                 
Attorney & Partner - Harmon, Jones & Sanford                                    

John S. McCormick, Jr.                                                          
Engineer & Developer                                                            
Consolidated Real Estate and Engineering                                        

Richard N. Simoneau, C.P.A.                                                     
Tax Partner, Simoneau & Norton, P.A.                                            

Arthur E. Strout                                                                
Attorney & Partner, Strout & Payson, P.A.                                       

-------------------------------------------------------------------             

Associate Directors of Camden National Bank                                     

C.R. deRochemont                                                                
Realtor, C.R. deRochemont Realtor                                               

Frederick G. "Ted" Hanley                                                       
Retired Executive Vice President                                                
Camden National Bank                                                            

Gilbert Harmon                                                                  
Retired Attorney & Partner                                                      
Harmon, Jones & Sanford                                                         

Lawrence N. Hopkins                                                             
Retired President, Camden National Bank                                         

-------------------------------------------------------------------             

Administration of Camden National Corporation                                   

Keith C. Patten                                                                 
President & CEO                                                                 

Susan M. Westfall                                                               
Vice President, Clerk, Treasurer                                                
& Chief Financial Officer                                                       

Jeffrey D. Smith                                                                
Vice President, Chief Operations Officer                                        

Steven D. Dailey                                                                
Vice President, Data Processing Officer                                         

June B. Parent                                                                  
Assistant Vice President, Personnel Manager                                     

Anna J. Jones                                                                   
Auditor                                                                         

Kathryn M. Ryder                                                                
Financial Officer                                                               
Manager, Accounting Department                                                  

Brenda B. Munroe                                                                
Manager, Electronic Banking Department                                          

Karen Shanahan                                                                  
Manager, Loan Servicing Department                                              

David B. Mitchell                                                               
Information Systems Officer                                                     

Timothy J. Pratt                                                                
Manager, Items Processing Department                                            

------------------------------------------------------------------            

Administration of Camden National Bank                                          

Keith C. Patten                                                                 
Chairman                                                                        

Robert W. Daigle                                                                
President & CEO                                                                 

John P. "Jack" Williams                                                         
Senior Vice President &                                                         
Commercial Loan & Business Development Officer                                  

Michael A. McAvoy                                                               
Vice President & Senior Loan Officer                                            

Susan M. Westfall                                                               
Vice President, Cashier &                                                       
Investment and Trust Officer                                                    

Charles A. Wootton                                                              
Vice President , Branch Administration Officer                                  
& Commercial Loan Officer                                                       

Joanne T. Campbell                                                              
Vice President &                                                                
Residential Real Estate Administration Officer                                  

Stephen C. Staples                                                              
Vice President &                                                                
Commercial Loan Officer                                                         

Barbara B. Hanson                                                               
Assistant Vice President &                                                      
Commercial Loan Officer                                                         

Richard E. Littlefield                                                          
Assistant Vice President &                                                      
Commercial Loan Officer                                                         

Craig Dahlberg                                                                  
Commercial Loan Officer                                                         

Kimberly J. Nason                                                               
Mortgage Loan Underwriter                                                       

Christopher A. Frohock                                                          
Commercial Loan Officer                                                         

Lee Ann Szelog                                                                  
Marketing Manager                                                               

John E. Davis                                                                   
Manager, Collections Department                                                 

Anne W. Gibbons                                                                 
Compliance/CRA Officer                                                          

Marie M. Charest                                                                
Training Officer                                                                

Diane D. Townsend                                                               
Credit Officer                                                                  

-------------------------------------------------------------------             

Branch Administration of Camden National Bank                                   

Peggy C. Chapman                                                                
Manager, Rockland Office                                                        

Dolores C. Hyssong                                                              
Manager, Camden Square Office                                                   

Susan L. O'Brien                                                                
Manager, Union Office                                                           

Vera E. Rand                                                                    
Manager, Belfast Office                                                         

Todd L. Savage                                                                  
Manager, Main Office, Camden                                                    

R. Todd Starbird                                                                
Branch Management, Thomaston Office                                             

-------------------------------------------------------------------             

Directors of United Bank                                                        

Royce M. Cross                                                                  
Chairman, United Bank                                                           
President, Woodrow W. Cross Agency                                              

Bruce D. Bartlett                                                               
President & CEO, United Bank                                                    

Kermit P. Allen                                                                 
Treasurer, G.M. Allen & Son, Inc.                                               

Edward R. Dysart                                                                
President, Dysart Transportation, Inc.                                          

William T. Gardner                                                              
President, William T. Gardner & Sons, Inc.                                      

Rendle A. Jones, Esq.                                                           
Attorney and Partner - Harmon, Jones & Sanford                                  

C. Charles Lumbert                                                              
President, Moose River Lumber Co., Inc.                                         

LaJune S. Means                                                                 
Private Investor, Director Emeritus                                             

William T. Meucci                                                               
President, Meucci Enterprises, Inc.                                             

David H. Montgomery                                                             
Chairman, Camden National Corporation                                           
Past Chairman, Allen Agency                                                     

Keith C. Patten                                                                 
President & CEO, Camden National Corporation                                    
Chairman, Camden National Bank                                                  

Carroll R. Pickard                                                              
President, Pleasant Hill Diversities                                            

-----------------------------------------------------------------               

Bank Administration of United Bank                                              

Bruce D. Bartlett                                                               
President, Treasurer & CEO                                                      

James M. Kimball                                                                
Vice President & Senior Loan Officer                                            

Paul R. Flynn                                                                   
Vice President & Branch Administrator                                           

Mark E. Russell                                                                 
Vice President & Mortgage Loan Manager                                          

Lori L. Martin                                                                  
Assistant Vice President & Administrative Officer                               

Nathan R. Williams                                                              
Assistant Vice President & Commercial Loan Officer                              

-------------------------------------------------------------------             

Branch Administration of United Bank                                            

Brent A. Folster                                                                
Vice President                                                                  
Manager, Bangor Office                                                          

Darcel S. Bryant                                                                
Manager, Hermon Office                                                          

Linda J. Colbath                                                                
Manger, East Corinth Office                                                     

Laura J. Hollis                                                                 
Manager, Hampden Office                                                         

Marilyn J. Chalker                                                              
Manager, Jackman Office                                                         

-------------------------------------------------------------------             

Directors of Trust Company of Maine, Inc.                                       

Andrew P. Averill                                                               
Chairman & CEO                                                                  
Trust Company of Maine, Inc.                                                    

R. Paul Pasquine                                                                
President, Trust Company of Maine, Inc.                                         

Bruce D. Bartlett                                                               
President & CEO, United Bank                                                    

Randall A. Bishop                                                               
Chief Financial Officer                                                         
William T. Gardner & Sons, Inc.                                                 

Robert W. Daigle                                                                
President & CEO, Camden National Bank                                           

Shirley B. Kile                                                                 
President, Fiduciary Services, Inc.                                             
Treasurer, Trust Company of Maine, Inc.                                         

-------------------------------------------------------------------             

Officers Trust Company of Maine, Inc.                                           

Andrew P. Averill                                                               
Chairman & CEO                                                                  

R. Paul Pasquine                                                                
President, COO & Senior Trust Officer                                           

Lynn M. Bowden                                                                  
Vice President & Trust Officer                                                  

Susan L. Kenney                                                                 
Assistant Vice President & Trust Officer                                        

Robert M. Parker                                                                
Assistant Vice President & Trust Officer                                        

Shirley B. Kile                                                                 
Treasurer                                                                       

Announcement for Annual Meeting in bottom right corner of page 39.              

Annual Meeting, Camden National Corporation   Tuesday, May 5, 1998              
3:30 p.m.                                                                       

The Company will provide, without charge, upon written request, a               
copy of Camden National Corporation's Annual Report to the                      
Securities and Exchange Commission, Form 10K for the 1997 fiscal                
year.  Please contact:  Susan M. Westfall, Camden National                      
Corporation, P.O. Box 310, Camden, ME 04843 (207) 236-8821                      

Diamond shape with phrase "On Your Corner. In Your Corner."  "Your              
Community Bank Member Independent Bankers Association of America.               

Corporate logo   Camden National Corporation                                    
Member FDIC                                   

[Page 40 - Photographs]                                                         

Camden National Bank, United Bank and the Trust Company of Maine                
offer a full array of financial services from money market accounts             
and IRAs, to home mortgages and trust management.  We also stand                
ready to help businesses grow with commercial banking services                  
designed to fit their needs.                                                    

Photograph 1.   Same photo as on page 4 with Petrea Allen and Dr.               
Christine Garrison looking at a home.           

Photograph 2.   Photo similar to photo on page 6, where Lynn Bowden             
advises her new client Betty Kaynor.            

Photograph 3.   Photo similar to photo on page 5, where Jim Kimball             
confers with Charlie Wolverton.                 

[Page 41 - Photographs]                                                         

Camden National has grown and changed through the years, but we                 
have remained committed to the same goals that guided us back in                
1875...to meet the needs of local families and businesses with the              
highest level of service.  Our subsidiaries, Camden National Bank,              
United Bank and the Trust Company of Maine, operate independently               
and understand the needs of the communities we serve.                           

Photograph 1.  Photograph of Heidi Vanorse, Tim Pratt and Jane                  
Pierce with presents during the Community Spirit  
of Christmas project.                             

Photograph 2.  Photograph of Brent Folster and members of the                   
Ronald McDonald house standing on the porch on a  
winter day.                                       

Photograph 3.  Photograph similar to photo on page 7 of the                     
 Trust Company of Maine, Inc. employees volunteering
at the Bangor Area Shelter.                       

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		1/1/00		25
		4/30/98		1		21
Filed on:		3/31/98							10-Q
		3/27/98		1
		3/16/98		4
		1/29/98		25
For Period End:		12/31/97		1		25			DEF 14A
		12/15/97		25
		10/7/97		25
		6/1/97		8
		5/29/97		25
		1/1/97		25
		12/31/96		11		25			10-K,  DEF 14A
		12/31/95		11		25
		12/29/95		3
		9/29/95		8
		9/25/95		21
		1/1/95		25
		12/31/94		16		17
		12/31/93		16		17
									List all Filings