8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

October 28, 2004

CAMDEN NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

MAINE	01-28190	01-0413282
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Two Elm Street, Camden, Maine	04843
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code

(207) 236-8821

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 - Results of Operations and Financial Condition

On October 28, 2004, Camden National Corporation released its quarterly shareholder letter and financial summary for the third quarter of 2004.

Item 9.01 – Financial Statements and Exhibits

(c) Exhibits.

99.1     Third quarter 2004 shareholder letter and financial summary

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be filed on its behalf by the undersigned thereunto duly authorized.

CAMDEN NATIONAL CORPORATION
By:	/s/ Gregory A. Dufour	Date: October 28, 2004
	Gregory A. Dufour
	Chief Banking Officer and Principal
	Financial & Accounting Officer

EX-99.1

Exhibit 99.1

Dear Shareholders:

I am pleased to report that your Company continued the positive trend of steady financial results during the third quarter of 2004. For the quarter ended September 30, 2004, earnings per diluted share increased 13.33% to $0.68, compared to $0.60 per diluted share during the third quarter of 2003. Net income for the recently completed quarter was $5.3 million, which compared favorably to $4.7 million for the same period a year earlier.

Through the first nine months of 2004, earnings per diluted share of $1.90 represented an increase of 11.76% compared to $1.70 for the same three quarters in 2003. Net income of $14.7 million for the nine-month period ending September 30, 2004 was up 8.53% over the $13.6 million reported at the end of the third quarter in 2003. These results translated into a return on average equity of 16.23% and a return on average assets of 1.43% at September 30, 2004, which compared favorably to 15.11% and equally to 1.43%, respectively, at the same time a year ago.

As I have noted to you in my previous shareholder letters, your Company has been able to withstand the challenges of a protracted period of historically low interest rates by staying the course established early to weather this unprecedented assault on the net interest margin. In part, our strategy focused on quality growth within the balance sheet, enhanced asset quality management practices, increased non-interest income generation and diligence in controlling non-interest expense.

At September 30, 2004, record total assets of $1.4 billion were up 11.30% over the same period a year ago. Total loans of $1.0 billion and investments of $290.4 million, representing the two largest asset categories, increased 9.42% and 24.60%, respectively, year-on-year. Total deposits of $993.6 million increased 10.07% from levels reported at September 30, 2003.

During the third quarter, a review of both affiliate bank loan portfolios by an independent third party confirmed management’s assessment that the UnitedKingfield Bank portfolio had stabilized and the allowance for loan and lease losses (ALLL) should be adjusted downward by $1.25 million. Camden National Bank’s loan portfolio was also reviewed by the same third party, and following a downgrade of several loan relationships impacted by weather-related construction delays and a slower than expected tourist season, its ALLL was increased $400,000. Year-to-date, the quality of the Company’s loan portfolio continues to be stable as evidenced by the level of non-performing loans to total loans, which at 0.76%, is up nominally from 0.70% at December 31, 2003. In addition, total net recoveries through the first nine months of the year were $201,600, a level well ahead of peer and industry averages.

In September, a jury trial took place wherein Camden National Bank was a defendant in a lawsuit brought by a former commercial customer. While 20 of the original 21 counts were dismissed, the jury did return a verdict against Camden National Bank on the one remaining count and awarded damages of $1.5 million. Management of Camden

National Bank and the Company has reviewed this matter with counsel and the Company’s outside auditors. Management continues to believe that the allegations are unfounded and that it is probable that this judgment will be reversed upon appeal. A motion has been filed asking the judge to reverse the jury verdict and accompanying award of damages. Accordingly, no reserve for potential settlement expenditure has been recorded as of September 30, 2004. A more detailed discussion will be available in the Company’s September 30, 2004 Form 10-Q to be filed with the Securities and Exchange Commission.

Following-up on its June increase of the Federal Funds rate, the first in well over three years, the Federal Reserve effected two additional 25 basis point increases in August and September, respectively, triggering an upward adjustment to the banking industry’s major pricing index, the Wall Street Journal Prime Rate. The latter is expected to have a beneficial effect on the Company’s net interest margin, which at September 30, 2004 had fallen to 3.76% or 29 basis points lower than a year ago. Mitigating this previous narrowing of the net interest margin has been a $1.1 million, or 14.32%, improvement in non-interest income year-to-date compared to 2003. The latter has been fueled, in part, by the continued expansion of revenues at Acadia Trust, N.A., the Company’s wealth management affiliate. Management at Acadia Trust, N.A. embarked on a four-point plan earlier this year that has resulted, not only in increased revenues, but also greater efficiency of operations.

The third quarter was a busy one in terms of significant events taking place at the Company and its affiliates. Robin Sawyer was welcomed as a new member of the Company’s Board of Directors. Robin’s extensive background in the field of finance, including her current role as the controller of a public company, will serve the Board well in the future. In July, your management presented at its first-ever investor conference in an effort to increase the visibility of your Company among the investment community. Camden National Bank received the designation of Express Lender by the U.S. Small Business Administration enabling it to be more responsive to the financing needs of small businesses, historically a major contributor to our balance sheet growth. Reflecting its commitment to remaining the premier community bank in Maine, Camden National Bank introduced a new marketing campaign, Roots You Can Bank On^SM, which embodies the Bank’s history and dedication to the markets it has served for well over a century.

The Board of Directors of the Company approved a dividend of $0.20 per share, payable on October 29, 2004 to shareholders of record on October 15, 2004. This represents an increase of 5.26% over the dividend paid for the same period a year ago. The stock price of Camden National Corporation (AMEX: CAC) ended the third quarter of 2004 at $34.51, an increase of $5.00, or 16.94% above the closing price at September 30, 2003.

Management and the Board of Directors make every effort possible to ensure that all shareholders are informed of business activities and events that may affect the financial condition of the Company. This includes news releases, shareholder letters and the Company’s quarterly and annual reports. In addition, each shareholder is encouraged to review the Company’s filings with the Securities and Exchange Commission, which are available by contacting management or online at www.sec.gov, www.camdennational.com and www.unitedkingfield.com.

In closing, I would like to mention that at our annual Leadership Conference, held on September 30, 2004, management introduced a long-term vision that restated our core values, confirmed our core purpose and enlightened leaders at all levels of the Company as to what it will take to advance our goal of being a national model for sustainable community banking. I look forward to sharing that vision with you in 2005 as we embark on the 130^th year of our being.

Sincerely,

Robert W. Daigle

President and Chief Executive Officer

Consolidated Statements of Condition (unaudited)

	September 30,				December 31,
(In thousands, except number of shares & per share data)	2004		2003		2003
Assets
Cash and due from banks	$	32,626	$	32,018	$	37,164
Federal funds sold		—		3,820		—
Securities available for sale, at market value		290,389		232,252		302,951
Securities held to maturity		—		799		798
Residential mortgages held for sale		706		10,769		—
Loans, less allowance for loan and lease losses of $13,651, $14,491 and $14,135 at September 30, 2004 and 2003 and December 31, 2003, respectively		1,028,937		928,232		952,720
Premises and equipment, net		16,350		15,998		15,739
Goodwill		3,991		3,518		3,518
Other assets		57,709		58,068		57,473
Total assets	$	1,430,708	$	1,285,474	$	1,370,363
Liabilities
Deposits:
Demand	$	137,504	$	125,398	$	119,216
NOW		115,474		121,321		112,116
Money market		222,828		186,538		184,766
Savings		113,304		108,909		108,508
Certificates of deposit		404,487		360,526		376,390
Total deposits		993,597		902,692		900,996
Borrowings from Federal Home Loan Bank		236,628		200,600		277,043
Other borrowed funds		65,210		53,457		61,365
Accrued interest and other liabilities		10,723		11,910		11,253
Total liabilities		1,306,158		1,168,659		1,250,657
Shareholders’ Equity
Common stock, no par value; authorized 20,000,000 shares, issued 7,634,975 on September 30, 2004 and 8,609,898 shares on September 30, 2003 and December 31, 2003, respectively		2,450		2,450		2,450
Surplus		4,460		5,387		5,353
Retained earnings		115,477		123,384		127,460
Accumulated other comprehensive income
Net unrealized gains on securities available for sale, net of tax		1,973		2,978		2,864
Net unrealized gains on derivative instruments marked to market, net of tax		190		765		536
Total accumulated other comprehensive income		2,163		3,743		3,400
Less cost of 831,456 and 851,248 shares of treasury stock on September 30, 2003 and December 31, 2003, respectively		—		18,149		18,957
Total shareholders’ equity		124,550		116,815		119,706
Total liabilities and shareholders’ equity	$	1,430,708	$	1,285,474	$	1,370,363

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

Consolidated Statements of Income (unaudited)

	Nine Months Ended September 30,					Three Months Ended September 30,
(In thousands, except number of shares & per share data)	2004			2003		2004			2003
Interest Income
Interest and fees on loans	$	43,097		$	42,039	$	14,621		$	14,216
Interest on securities		9,450			11,052		2,938			3,079
Other interest income		350			449		141			152
Total interest income		52,897			53,540		17,700			17,447
Interest Expense
Interest on deposits		10,930			10,760		3,765			3,476
Interest on borrowings		5,779			7,086		1,936			2,281
Total interest expense		16,709			17,846		5,701			5,757
Net interest income		36,188			35,694		11,999			11,690
Provision for Loan and Lease Losses		(685	)		1,050		(850	)		185
Net interest income after provision for loan and lease losses		36,873			34,644		12,849			11,505
Other Income
Service charges on deposit accounts		2,804			2,810		939			928
Trust and investment management income		2,363			1,595		788			502
Life insurance earnings		696			547		232			179
Other income		2,767			2,597		770			922
Total other income		8,630			7,549		2,729			2,531
Operating Expenses
Salaries and employee benefits		13,051			11,909		4,388			3,707
Premises and fixed assets		3,239			3,255		1,039			1,058
Amortization of core deposit intangible		678			706		223			235
Other expenses		6,579			6,168		2,134			1,938
Total operating expenses		23,547			22,038		7,784			6,938
Income before income taxes		21,956			20,155		7,794			7,098
Income Taxes		7,230			6,587		2,538			2,350
Net Income	$	14,726		$	13,568	$	5,256		$	4,748
Per Share Data
Basic earnings per share	$	1.91		$	1.70	$	0.68		$	0.60
Diluted earnings per share		1.90			1.70	$	0.68		$	0.60
Cash dividends per share	$	0.60		$	0.53		0.20			0.19
Weighted average number of shares outstanding		7,701,805			7,966,384		7,656,939			7,894,807

A complete set of financial statements for Camden National Corporation may be obtained upon written request to Gregory A. Dufour, Chief Banking Officer, Camden National Corporation, P.O. Box 310, Camden, Maine 04843.