Management's discussion and analysis, which follows, focuses on the factors affecting our consolidated results of operations for the years ended December 31, 2008, 2007 and 2006 and financial condition at December 31, 2008 and 2007, and where appropriate, factors that may affect future financial performance. This discussion should be read in conjunction with the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Selected Consolidated Financial Data.

Executive Overview

Net income for 2008 of $15.3 million was less than the net income of $20.3 million reported in 2007. Net income per diluted share was $2.00, a 35.3% decrease from the $3.09 reported for 2007. The following were significant factors related to the results of fiscal year 2008 compared to fiscal year 2007:

• We completed the acquisition of Union Bankshares Company effective January 3, 2008, thus the financial results from that date reflect the combined entity.

• Net interest income for 2008 increased 40.8% to $70.2 million due to the acquisition of Union Bankshares Company and an improvement in the net interest margin.

• The provision for loan losses of $4.4 million increased $4.3 million in 2008 over 2007 as a result of an increase in net charge-offs and non-performing assets.

• Net charge-offs to average loans were 0.31% for 2008 compared to 0.12% for 2007 and non-performing assets as a percentage of total assets amounted to 0.71% and 0.64% at December 31, 2008 and 2007, respectively.

• Non-interest income before investment securities losses for 2008 was $17.3 million, a 36.6% increase over 2007. The increase was driven by increases in service charges on deposit accounts, income from fiduciary services at AT, and brokerage commission income at AFC resulting primarily from the customer relationships gained in the acquisition of Union Trust.

• We recorded net losses on our investment securities portfolio totaling $15.6 million in 2008 primarily due to the $15.0 million write-down of securities collateralized by Freddie Mac preferred stock.

• Non-interest expense for 2008 was $46.8 million, an increase of $13.1 million, or 39.0%, over the prior year, which was primarily due to the expansion of our banking franchise with the Union Trust acquisition.

• Total loans at December 31, 2008 were $1.5 billion, an increase of $355.3 million compared to December 31, 2007. Excluding the $366.6 million of loans acquired from Union Trust, our loan balance declined $11.3 million primarily in the commercial and commercial real estate portfolios, in part offset by an increase in the consumer loan portfolio reflecting continued demand for home equity loans.

• Investment securities increased $186.4 million in 2008, which includes $129.4 million from the Union Trust acquisition, and net purchases during the year of $57.0 million.

• Total liabilities at December 31, 2008 of $2.2 billion increased $578.5 million, or 36.2%, as deposits increased $371.5 million primarily reflecting the assumption of $331.5 million of deposits from the Union Trust acquisition, with the remaining net deposit growth primarily in retail certificate of deposit accounts. Borrowings increased $201.7 million, primarily in Federal Home Loan Bank ("FHLB") borrowings, due to the assumption of borrowings from Union Trust.

• Shareholders' equity increased 38.4% due to the issuance of $43.5 million of common stock related to the Union Trust acquisition and current year earnings, in part offset by other comprehensive loss, share buybacks and dividends declared.

Critical Accounting Policies

In preparing the Consolidated Financial Statements, management is required to make significant estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from our current estimates, as a result of changing conditions and future events. Several estimates are particularly critical and are susceptible to significant near-term change, including the ALL, accounting for acquisitions and review of goodwill and other identifiable intangible assets for impairment, valuation of other real estate owned, other-than-temporary impairment of investments, accounting for postretirement plans and income taxes. Our significant accounting policies and critical estimates are summarized in Note 1 of the Consolidated Financial Statements.

Allowance for Loan Losses. In preparing the Consolidated Financial Statements, the ALL requires the most significant amount of management estimates and assumptions. The ALL, which is established through a charge to the provision for loan losses, is based on our evaluation of the level of the allowance required in relation to the estimated loss exposure in the loan portfolio. We regularly evaluate the ALL for adequacy by taking into consideration, among other factors, local industry trends, management's ongoing review of individual loans, trends in levels of watched or criticized assets, an evaluation of results of examinations by regulatory authorities and other third parties, analyses of historical trends in charge-offs and delinquencies, the character and size of the loan portfolio, business and economic conditions and our estimation of probable losses.

In determining the appropriate level of ALL, we use a methodology to systematically measure the amount of estimated loan loss exposure inherent in the loan portfolio. The methodology includes four elements: (1) identification of loss allocations for certain specific loans, (2) loss allocation factors for certain loan types based on credit grade and loss experience, (3) general loss allocations for other environmental factors, and (4) unallocated allowance. The specific component relates to loans that are classified as doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The methodology is in accordance with US generally accepted accounting principles ("GAAP"), specifically, Statement of Financial Accounting Standards ("SFAS") No. 114, Accounting by Creditors for Impairment of a Loan - an amendment of FASB Statements No. 5 and 15. We use a risk rating system to determine the credit quality of our loans and apply the related loss allocation factors. In assessing the risk rating of a particular loan, we consider, among other factors, the obligor's debt capacity, financial condition and flexibility, the level of the obligor's earnings, the amount and sources of repayment, the performance with respect to loan terms, the adequacy of collateral, the level and nature of contingencies, management strength, and the industry in which the obligor operates. These factors are based on an evaluation of historical information, as well as subjective assessment and interpretation of current conditions. Emphasizing one factor over another, or considering additional factors that may be relevant in determining the risk rating of a particular loan but which are not currently an explicit part of our methodology, could impact the risk rating assigned to that loan. We periodically reassess and revise the loss allocation factors used in the assignment of loss exposure to appropriately reflect our analysis of loss experience. Portfolios of more homogenous populations of loans including residential mortgages and consumer loans are analyzed as groups taking into account delinquency rates and other economic conditions which may affect the ability of borrowers to meet debt service requirements, including interest rates and energy costs. We also consider the results of regulatory examinations, historical loss ranges, portfolio composition, and other changes in the portfolio. An additional allocation is determined based on a judgmental process whereby management considers qualitative and quantitative assessments of other environmental factors. For example, a significant portion of our loan portfolio is concentrated among borrowers in southern Maine and a substantial portion of the portfolio is collateralized by real estate in this area. Another portion of the commercial and commercial real estate loans are to borrowers in the hospitality, tourism and recreation industries. Finally, an unallocated portion of the total allowance is maintained to allow for shifts in portfolio composition.

Since the methodology is based upon historical experience and trends as well as management's judgment, factors may arise that result in different estimations. Significant factors that could give rise to changes in these estimates may include, but are not limited to, changes in economic conditions in our market area, concentration of risk, declines in local property values, and results of regulatory examinations. While management's

evaluation of the ALL as of December 31, 2008 determined the allowance to be appropriate, under adversely different conditions or assumptions, we may need to increase the allowance. The Corporate Risk Management group reviews the ALL with the CNB Board of Directors on a monthly basis. A more in-depth review of the ALL, including the methodology for calculating and allocating the ALL, is reviewed with the Company's Board of Directors, as well as the CNB Board of Directors, on a quarterly basis.

Accounting for Acquisitions and Review of Goodwill and Identifiable Intangible Assets for Impairment. We are required to record assets acquired and liabilities assumed at their fair value, which is an estimate determined by the use of internal or other valuation techniques. These valuation estimates result in goodwill and other intangible assets and are subject to ongoing periodic impairment tests and are evaluated using various fair value techniques. Impairment evaluations are required to be performed annually and may be required more frequently if certain conditions indicating potential impairment exist. If we were to determine that our goodwill was impaired, the recognition of an impairment charge could have an adverse impact on our results of operations in the period that the impairment occurred or on our financial position. Goodwill is evaluated for impairment using several standard valuation techniques including discounted cash flow analyses, as well as an estimation of the impact of business conditions. The use of different estimates or assumptions could produce different estimates of carrying value.

Valuation of Other Real Estate Owned (OREO). Periodically, we acquire property in connection with foreclosures or in satisfaction of debt previously contracted. The valuation of this property is accounted for individually at the lower of the "book value of the loan satisfied" or its net realizable value on the date of acquisition. At the acquisition date, if the net realizable value of the property is less than the book value of the loan, a charge or reduction in the ALL is recorded. If the value of the property becomes permanently impaired, as determined by an appraisal or an evaluation in accordance with our appraisal policy, we will record the decline by charging against current earnings. Upon acquisition of a property, a current appraisal or broker's opinion must substantiate market value for the property.

Other-Than-Temporary Impairment of Investments. We record an investment impairment charge at the point we believe an investment has experienced a decline in value that is other than temporary. In determining whether an other-than-temporary impairment has occurred, we review information about the underlying investment that is publicly available, analysts' reports, applicable industry data and other pertinent information, and assess our ability to hold the securities for the foreseeable future. The investment is written down to its current market value at the time the impairment is deemed to have occurred. Future adverse changes in market conditions, continued poor operating results of underlying investments or other factors could result in further losses that may not be reflected in an investment's current carrying value, possibly requiring an additional impairment charge in the future.

Accounting for Postretirement Plans. We use a December 31 measurement date to determine the expenses for our postretirement plans and related financial disclosure information. Postretirement plan expense is sensitive to changes in eligible employees (and their related demographics) and to changes in the discount rate and other expected rates, such as medical cost trends rates. As with the computations on plan expense, cash contribution requirements are also sensitive to such changes.

Income Taxes. We account for income taxes by deferring income taxes based on estimated future tax effects of differences between the tax and book basis of assets and liabilities considering the provisions of enacted tax laws. These differences result in deferred tax assets and liabilities, which are included in the Consolidated Statement of Condition. We must also assess the likelihood that any deferred tax assets will be recovered from future taxable income and establish a valuation allowance for those assets determined not likely to be recoverable. Judgment is required in determining the amount and timing of recognition of the resulting deferred tax assets and liabilities, including projections of future taxable income. Although we have determined a valuation allowance is not required for all deferred tax assets, there is no guarantee that these assets will be recognizable. Although not currently under review, income tax returns for the years ended December 31, 2005 through 2007 are open to audit by federal and Maine authorities. If we, as a result of an audit, were assessed interest and penalties, the amounts would be recorded through other non-interest expense.

Results of Operations
Core Results

In 2008, certain non-core items are included in the computation of earnings in accordance with GAAP as described in the table below. In an effort to provide investors information regarding our core results, we have disclosed in the table below certain non-GAAP information which we believe provides useful information to the investor. This information should not be viewed as a substitute for operating results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP information which may be presented by other companies.

             Reconciliation Table - Non-GAAP Financial Information

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                                                    Year Ended December 31, 2008
(In Thousands, Except per Share Data)              Amount                Per Share
Net income, GAAP basis/Earnings per         $        15,335        $          2.00
diluted share, GAAP basis
Adjustment to eliminate investment                   15,574                   2.02
securities losses
Adjustment to eliminate tax effect of                (5,451 )                (0.71 )
investment securities losses
Core (non-GAAP) net income/Core             $        25,458        $          3.31
(non-GAAP) earnings per diluted share
Core (non-GAAP) efficiency ratio                      53.50 %
Core (non-GAAP) return on average                     14.96 %
shareholders' equity
Core (non-GAAP) return on average assets               1.10 %

Comparison of 2008 to 2007

We reported net income of $15.3 million, or $2.00 per diluted share, for 2008 compared to $20.3 million and $3.09 per diluted share in 2007. Return on average assets was 0.67% in 2008, compared to 1.16% in 2007, return on average shareholders' equity was 9.15% in 2008, compared to 18.34% in 2007, and return on average tangible shareholders' equity was 12.77% in 2008, compared to 19.35% in 2007.

Net Interest Income

Net interest income is our largest source of revenue and accounts for approximately 80% of total revenues. Net interest income reflects revenues generated through income from earning assets plus loan fees, less interest paid on interest-bearing deposits and borrowings. Net interest income is affected by changes in interest rates, by loan and deposit pricing strategies and competitive conditions, the volume and mix of interest-earning assets and interest-bearing liabilities, and the level of non-performing assets.

Net interest income was $72.0 million on a fully-taxable equivalent basis in 2008, compared to $51.3 million in 2007, an increase of $20.7 million or 40.4%. The increase in net interest income is largely due to the acquisition of Union Bankshares Company and an improvement in the net interest margin of 28 basis points to 3.37% for 2008. Average interest-earning assets increased by $475.6 million, or 28.7%, in 2008, primarily due to loans and investment securities acquired with Union Trust. The yield on total loans decreased 78 basis points in 2008, reflecting a decline in the interest rate environment whereas the yield on taxable securities increased 7 basis points in 2008 as investment purchases were added to the portfolio at slightly higher yields than maturing investments. In 2008, average interest-bearing liabilities increased by $451.0 million, or 30.6%, while cost of funds decreased 97 basis points. The increase in average-interest bearing liabilities was primarily due to deposits and borrowings acquired with Union Trust combined with growth in certificates of deposit. As short-term interest rates declined, we were successful in reducing retail deposit interest rates resulting in a 108 basis point decline in the cost of funds. Future growth in net interest income will depend upon consumer and commercial loan demand, growth in deposits and the general level of interest rates.

The following table presents, for the periods indicated, average balance sheets, interest income, interest expense, and the corresponding average yields earned and rates paid, as well as net interest income, net interest rate spread and net interest margin.

               Average Balance, Interest and Yield/Rate Analysis

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                                                     December 31, 2008                                                   December 31, 2007                                                   December 31, 2006
(Dollars in Thousands)         Average Balance           Interest                Yield/            Average Balance           Interest                Yield/            Average Balance           Interest                Yield/
                                                                                  Rate                                                                Rate                                                                Rate
          ASSETS
Interest-earning assets:
Securities - taxable         $        547,276               27,706                  5.06 %       $        422,197      $        21,086                  4.99 %       $        384,132      $        18,378                  4.78 %
Securities - nontaxable(1)             70,177                4,138                  5.90 %                 42,050                2,537                  6.03 %                 37,281                2,249                  6.03 %
Federal funds sold                        335                   11                  3.28 %                  8,098                  373                  4.61 %                    837                   39                  4.66 %
Loans(1)(2):
Residential real estate               626,519               37,634                  6.01 %                411,552               24,389                  5.93 %                395,440               23,153                  5.86 %
Commercial real estate                413,744               28,828                  6.97 %                360,683               28,493                  7.90 %                420,691               33,314                  7.92 %
Commercial                            206,220               14,181                  6.88 %                188,245               15,365                  8.16 %                189,767               15,164                  7.99 %
Municipal                              22,752                1,131                  4.97 %                 26,989                1,678                  6.22 %                 22,248                1,345                  6.05 %
Consumer                              248,628               15,256                  6.14 %                200,158               15,208                  7.60 %                197,787               14,773                  7.47 %
Total loans                         1,517,863               97,030                  6.39 %              1,187,627               85,133                  7.17 %              1,225,933               87,749                  7.16 %
Total interest-earning              2,135,651              128,885                  6.03 %              1,659,972              109,129                  6.57 %              1,648,183              108,415                  6.58 %
assets
Cash and due from banks                37,351                                                              29,357                                                              31,081
Other assets                          147,623                                                              73,000                                                              69,473
Less: ALL                             (17,303 )                                                           (14,393 )                                                           (14,814 )
Total assets                 $      2,303,222                                                    $      1,747,936                                                    $      1,733,923
      LIABILITIES &
   SHAREHOLDERS' EQUITY
Interest-bearing
liabilities:
NOW accounts                 $        186,652                1,490                  0.80 %       $        106,920                  429                  0.40 %       $        110,387                  321                  0.29 %
Savings accounts                      133,128                  766                  0.58 %                 89,705                  336                  0.37 %                 96,132                  326                  0.34 %
Money market accounts                 345,834                7,542                  2.18 %                311,171               13,450                  4.32 %                265,691               11,021                  4.15 %
Certificates of deposit               531,539               19,008                  3.58 %                389,565               17,121                  4.39 %                375,800               15,051                  4.01 %
Total retail deposits               1,197,153               28,806                  2.41 %                897,361               31,336                  3.49 %                848,010               26,719                  3.15 %
Broker deposits                        71,513                2,894                  4.05 %                121,221                5,116                  4.22 %                216,394                8,298                  3.83 %
Junior subordinated                    43,356                2,949                  6.80 %                 36,083                2,381                  6.60 %                 24,813                1,637                  6.60 %
debentures
Borrowings                            612,532               22,250                  3.63 %                418,894               19,033                  4.54 %                377,377               16,394                  4.34 %
Total wholesale funding               727,401               28,093                  3.86 %                576,198               26,530                  4.60 %                618,584               26,329                  4.26 %
Total interest-bearing              1,924,554               56,899                  2.96 %              1,473,559               57,866                  3.93 %              1,466,594               53,048                  3.62 %
liabilities
Demand deposits                       186,924                                                             148,751                                                             143,431
Other liabilities                      24,275                                                              15,032                                                              13,694
Shareholders' equity                  167,569                                                             110,594                                                             110,204
Total liabilities and        $      2,303,322                                                    $      1,747,936                                                    $      1,733,923
shareholders' equity
Net interest income                                         71,986                                                              51,263                                                              55,367
(fully-taxable equivalent)
Less: fully-taxable                                         (1,765 )                                                            (1,393 )                                                            (1,177 )
equivalent adjustment
                                                   $        70,221                                                     $        49,870                                                     $        54,190
Net interest rate spread                                                            3.07 %                                                              2.64 %                                                              2.96 %
(fully-taxable equivalent)
Net interest margin                                                                 3.37 %                                                              3.09 %                                                              3.36 %
(fully-taxable equivalent)

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(1) Reported on tax-equivalent basis calculated using a rate of 35%.

(2) Non-accrual loans are included in total average loans.

The following table presents certain information on a fully-taxable equivalent basis regarding changes in interest income and interest expense for the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes attributable to rate and volume.

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                                              December 31, 2008 vs 2007                                            December 31, 2007 vs 2006
                                              Increase (Decrease) Due to                                           Increase (Decrease) Due to
(Dollars in Thousands)           Volume                  Rate                  Total                  Volume                  Rate                  Total
Interest-earning
assets:
. . .