Exhibit 99.1

Dear Shareholders

While reflecting on the events surrounding our most recent reporting quarter and the first half of 2007, I couldn’t help but recall an expression heard long ago and invoked on several occasions since, “When life gives you lemons, make lemonade!”

Since my last correspondence to you, the interest rate yield curve has graduated from inverted to flat, but the results remain the same – a compression of profit margin resulting from the combination of sluggish growth and fierce competition. It is a business cycle that seems protracted, even for a grizzled industry veteran like me. The temptation is to stretch the limits of reasonableness in order to effect some measure of balance sheet and, correspondingly, bottom-line growth. The reality is, however, that prudent practice dictates hunkering down, even if it means shrinking the balance sheet.

You will see from the results outlined herein that we have not quite reached the aforementioned state of condition, but the composition of our balance sheet is beginning to change, and our finely honed ability to adapt is being put to the test as we strive to maintain our ‘top-performer’ status according to US Banker magazine’s annual ranking.

For the first six months of this year, net income per diluted share increased 4.3% to $1.47, compared to $1.41 per diluted share earned during the first half of 2006. These per share results reflect the effect of the Company’s repurchase of nearly 11.7% of its outstanding shares in 2006, and the funding of that purchase through the issuance of trust preferred securities. Net income for the six-month period ended June 30, 2007 was $9.7 million, a decrease of 4.6% from the same period a year ago. For the six months ended June 30, 2007, return on average equity was 17.97% and return on average assets was 1.12%, compared to 17.19% and 1.20%, respectively, for the same six-month period in 2006.

For the three-month period ended June 30, 2007, net income per diluted share of $0.75 was equal to the $0.75 recorded during the second quarter of 2006. Net income for the recently completed quarter was $4.9 million, down from $5.3 million for the quarter ended June 30, 2006. This decline in net income is hardly unique to the Maine banking industry as less than a quarter of our Maine counterparts were able to post improved year-on-year earnings in the first quarter of 2007. This is not to suggest that misery loves company; rather it is a reflection of the difficult operating environment in which our industry currently finds itself.

At June 30, 2007, total assets of $1.8 billion were flat compared to where the Company ended the second quarter of 2006. Total loans of $1.2 billion at June 30, 2007 declined $54.5 million from June 30, 2006. This largely reflects a pullback in our construction and commercial real estate lending activity as, in my opinion, too many lenders are chasing too little growth resulting in an erosion of underwriting standards and pricing that belies the embedded risk in these transactions.

Year-to-date, the quality of the loan portfolio continues to demonstrate soundness and stability, as evidenced by the level of non-performing loans to total loans, which at 0.56% is down from 0.74% at June 30, 2006. In addition, net charge-offs to total average loans

through June 30, 2007 is 0.09%. The allowance for loan and lease losses to total loans stands at 1.17%, more than double the outstanding balances of our non-performing loans at June 30, 2007. By any of these measures of performance, your Company is considered better than average among its peers.

Total deposits of $1.1 billion at June 30, 2007 were down $104.0 million from a year earlier, reflecting the maturing of $133.2 million of brokered CDs, which were partially offset by an increase in wholesale borrowings which have had more favorable pricing. In addition, core deposits (total deposits excluding brokered certificates of deposit) of $1.0 billion at June 30, 2007 grew $29.2 million over the balance at June 30, 2006, with $21.4 million of that increase occurring in our DDA and NOW account deposit categories. This represents an 8.3% year-on-year improvement in the Company’s least expensive funding source. Contributing to this success is our new bundled deposit solution, the Customer Care Package, which features free worldwide ATM use, free checking with direct deposit, and free bill payment service with eStatements. We anticipate this trend continuing given the enhancements to our corporate services product line, which includes cash management and remote deposit capture. Both are featured in the side panels of this report.

While the trend of the yield curve continued to squeeze the net interest margin during the first six months of 2007, positive momentum was in evidence in the non-interest income sector, which at $6.3 million improved 9.5% over the same period a year ago. Primary contributors to this success were fiduciary services, brokerage and insurance sales, and debit card activities, with year-on-year revenue increases of 12.9%, 78.7% and 16.0%, respectively, for the six months ended June 30, 2007.

Meanwhile, non-interest expenses of $17.1 million at mid-year were down 2.4% from June 30, 2006, reflecting the on-going attention paid by all Company Stakeholders to controlling every aspect of overhead. The efficiency ratio of 55.00%, up from 52.28% reported at the same time last year, reflects the impact of the tighter net interest margin.

Remaining vigilant on expenses has been a hallmark of your Company throughout its 132-year history. In tandem with a strong credit culture, our ‘low-cost producer’ mind-set has allowed your Company to withstand previous adverse economic cycles and to emerge from these cycles stronger than our peers, thus better able to capitalize on the growth opportunities that inevitably surface during these times.

Maintaining a strong capital position is critical to effecting such an outcome, which is why I am pleased to report that at June 30, 2007, Camden National Corporation reported a total risk-based capital ratio of 13.00% and a tier 1 ratio of 11.80% compared to the 10.00% and 6.00% minimums, respectively, required by the Federal Reserve for a bank holding company to be considered “well capitalized.”

Finally, the Board of Directors of the Company approved a dividend of $0.24 per share, payable on July 31, 2007 to shareholders of record on July 16, 2007. This represents a $0.02, or 9.1%, increase over the dividend paid for the same period a year ago. The Directors also renewed the Company’s Stock Repurchase program, which allows the buyback of common shares at times when we feel the market may not value our stock appropriately. During the second quarter, your Company repurchased 113,950 shares at an average share price of $39.12.

I hope you’ll agree with me that, indeed, we are ‘making lemonade’ during these times of considerable challenge for our industry. This success can be traced to a universal commitment to innovation among our workforce; a belief that only through the delivery of remarkable experiences can we take the commodity out of our business model so as to ensure that Camden National Corporation remains truly different and better.

Sincerely,

Robert W. Daigle

President & CEO

Consolidated Statements of Condition (unaudited)

	June 30,						December 31,
(In thousands, except number of shares & per share data)	2007			2006			2006
Assets
Cash and due from banks	$	31,629		$	33,838		$	33,358
Federal funds sold		300			—			—
Securities available for sale, at market value		424,858			371,486			409,926
Securities held to maturity		33,723			34,124			34,167
Loans, less allowance for loan losses of $13,927 $15,256 and $14,933 at June 30, 2007 and 2006 and December 31, 2006, respectively		1,176,175			1,229,358			1,203,196
Premises and equipment, net		19,774			16,062			17,595
Other real estate owned		—			—			125
Goodwill		3,991			3,991			3,991
Other assets		70,653			66,815			67,528
Total assets	$	1,761,103		$	1,755,674		$	1,769,886
Liabilities
Deposits:
Demand	$	150,485		$	142,943		$	146,458
NOW		130,695			116,797			125,809
Money market		278,098			272,512			261,585
Savings		87,573			96,254			96,661
Certificates of deposit		486,127			608,482			555,288
Total deposits		1,132,978			1,236,988			1,185,801
Borrowings from Federal Home Loan Bank		376,687			312,088			340,499
Other borrowed funds		92,534			60,595			60,782
Junior subordinated debentures		36,083			36,083			36,083
Due to broker		—			—			24,354
Accrued interest and other liabilities		15,312			13,709			15,315
Total liabilities		1,653,594			1,659,463			1,662,834
Shareholders’ Equity
Common stock, no par value; authorized 20,000,000 shares, issued and outstanding 6,512,980, 6,608,505 and 6,616,780 shares on June 30, 2007 and 2006 and December 31, 2006, respectively		2,530			2,450			2,450
Surplus		2,481			2,392			2,584
Retained earnings		108,430			98,544			105,959
Accumulated other comprehensive loss
Net unrealized losses on securities available for sale, net of tax		(4,936	)		(6,958	)		(2,985	)
Net unrealized losses on derivative instruments marked to market, net of tax		(218	)		(217	)		(198	)
Adjustment for unfunded post-retirement plans, net of tax		(778	)		—			(758	)
Total accumulated other comprehensive loss		(5,932	)		(7,175	)		(3,941	)
Total shareholders’ equity		107,509			96,211			107,052
Total liabilities and shareholders’ equity	$	1,761,103		$	1,755,674		$	1,769,886

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)

	Six Months Ended June 30,				Three Months Ended June 30,
(In thousands, except number of shares & per share data)	2007		2006		2007		2006
Interest Income
Interest and fees on loans	$	43,057	$	42,354	$	21,558	$	21,671
Interest on securities		10,295		9,176		5,132		4,754
Other interest income		818		565		491		274
Total interest income		54,170		52,095		27,181		26,699
Interest Expense
Interest on deposits		18,652		16,303		9,182		8,811
Interest on other borrowings		9,563		7,636		5,073		3,934
Interest on junior subordinated debentures		1,181		437		594		437
Total interest expense		29,396		24,376		14,849		13,182
Net interest income		24,774		27,719		12,332		13,517
Provision for Loan and Lease Losses		100		1,104		—		552
Net interest income after provision for loan and lease losses		24,674		26,615		12,332		12,965
Non-interest Income
Service charges on deposit accounts		1,744		1,678		899		883
Other service charges and fees		878		855		451		381
Income from fiduciary services		2,428		2,151		1,229		1,074
Life insurance earnings		385		400		197		200
Other income		816		623		431		390
Total non-interest income		6,251		5,707		3,207		2,928
Non-interest Expenses
Salaries and employee benefits		9,285		9,208		4,639		4,472
Premises and fixed assets		2,495		2,346		1,263		1,158
Amortization of core deposit intangible		428		437		214		216
Other expenses		4,856		5,485		2,383		2,418
Total non-interest expenses		17,064		17,476		8,499		8,264
Income before income taxes		13,861		14,846		7,040		7,629
Income Taxes		4,136		4,650		2,097		2,370
Net Income	$	9,725	$	10,196	$	4,943	$	5,259
Per Share Data
Basic earnings per share	$	1.47	$	1.41	$	0.75	$	0.75
Diluted earnings per share		1.47		1.41		0.75		0.75
Cash dividends per share	$	0.48	$	0.44	$	0.24	$	0.22
Weighted average number of shares outstanding		6,601,741		7,229,407		6,582,291		6,938,024
Tangible book value per share	$	15.78	$	13.71

A complete set of financial statements for Camden National Corporation may be obtained upon written request to Suzanne Brightbill, Public Relations Officer, Camden National Corporation, P.O. Box 310, Camden, Maine 04843.