-------------------------------------------------------------------------------
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 15, 2003
FIRST NATIONAL LINCOLN CORPORATION
(Exact name of Registrant as specified in charter)
MAINE
(State or other jurisdiction of incorporation)
0-26589 01-0404322
(Commission file number) (IRS employer identification no.)
Main Street, Damariscotta, Maine 04853
(Address of principal executive offices) (Zip Code)
(207) 563-3195
(Registrant's telephone number, including area code)
-------------------------------------------------------------------------------
Item 5. Other Events
This information is being provided under Item 12 of Form 8-K.
The Company today issued the following press release:
------------------------------------------------------------------------------
First National Lincoln Corporation Reports Record
Third-Quarter Earnings, Up 19.1% Over 2002
DAMARISCOTTA, ME., October 15 - First National Lincoln Corporation (Nasdaq NM:
FNLC), today announced earnings per share of $0.81 on a fully diluted basis for
the quarter ended September 30, 2003, an increase of $0.13 or 19.1% over the
$0.68 reported for the same period in 2002. Net income for the third quarter
was $2,012,000, an increase of $323,000 or 19.1% over the $1,689,000 posted in
the third quarter of 2002. Both earnings per share and net income reported by
the Company for the third quarter of 2003 set new single-quarter records.
The Company also announced earnings per share of $2.18 on a fully diluted basis
for the nine months ended September 30, 2003, an increase of $0.23 or 11.8%
over the $1.95 reported for the same period in 2002. Net income for the first
nine months of 2003 was $5,420,000, an increase of $612,000 or 12.7% over the
$4,808,000 posted for the same period in 2002. Both earnings per share and net
income reported by the Company for 2003 set new records for the first nine
months of the year.
Year-to-date increases on the balance sheet showed total assets at $551.8
million on September 30, 2003 - an increase of 11.7% over December 31, 2002.
Loans totaled $383.0 million, up 15.3% over December 31, 2002, while
investments increased by 14.0% to $139.2 million. Deposits of $371.0 million
were up 11.0% since year-end 2002.
"The third quarter of 2003 was by far the most successful quarter in the
history of First National Lincoln Corporation," commented the Company's
President and Chief Executive Officer, Daniel R. Daigneault. "We posted
earnings which were 19.1% above the third quarter of 2002, and this was also
the first time our quarterly earnings exceeded the $2.0 million mark, eclipsing
the previous single-quarter record set in the second quarter of this year by
$283,000.
"Balance sheet growth continues to be a primary factor in our performance this
year," President Daigneault continued. "The majority of this growth has come
from the loan portfolio, and has been fairly evenly distributed between
commercial, mortgage and home equity loans. At the same time, we have funded
this increase in earning assets with deposits, which have also seen excellent
growth.
"It is worth noting that this month marks the sixth anniversary of the opening
of our first Knox County office in Rockport," President Daigneault said. "All
three of our Knox County offices contributed to the Company's profitability and
each office is well ahead of our original expectations. In addition, asset
quality on a Company-wide basis remains very strong, with loan delinquencies
well below the average we have seen over the past five years.
"While balance sheet growth has been excellent in 2003," President Daigneault
went on, "it has also been a year of balancing current and future performance.
The effect of this is seen in net interest income and non-interest income. For
the nine months ended September 30, 2003, the Company's net interest income is
virtually even with the same period in 2002, and while we have seen some margin
compression in 2003, this was offset by asset growth. In the third quarter, the
margin compression reversed, however, and the positive impact of repricing more
than $60 million in liabilities at mid-year can be seen in net interest income
for the period, which was $422,000 or 10.1% higher than net interest income
posted for the second quarter of 2003. At the same time, it has been important
to manage interest rate risk, which is the reason we have opted to sell the
majority of our residential mortgage production in the current low interest
rate environment. This, in turn, resulted in a boost to non-interest income,
attributable to the net gain recognized on the sale of these loans.
"Managing our operating expenses has certainly paid off for us as well in
2003," President Daigneault said. "Knowing that we would experience some margin
compression in the first half of the year, this is an area where we have held
the line, resulting in non-interest expense increasing only 2.6% for the first
nine months of 2003 compared to the same period in 2002. Our third-quarter
performance was even better, with non-interest expense for the three months
ended September 30, 2003, up only 1.2% over the same period in 2002. The effect
of this can be seen in our efficiency ratio, a widely used measure of how much
a company spends to generate one dollar in income, which stands at 0.49 for the
nine months ended September 30, 2003, compared to 0.50 for the same period in
2002. The same was true for the quarter, with an efficiency ratio of 0.48 for
the three months ended September 30, 2003, compared to 0.51 for the same period
in 2002."
"Our strong earnings performance continues to be reflected in the price of our
stock," observed F. Stephen Ward, the Company's Treasurer and Chief Financial
Officer. "First National Lincoln Corporation's shares reached a new all-time
high in the third quarter, and ended the quarter at that same price - $43.00
per share. Since December 31, 2002, our stock has increased 36.6% or $11.52 per
share, which is well above the performance of other Maine-based bank holding
companies listed on a national exchange. This also compares very favorably to
the overall market, where the S&P 500 is up 13.2% year-to-date, as well as to
our industry, with the Nasdaq Bank Index up 16.2% in 2003.
"When considering cash dividends, this was an excellent quarter for our
shareholders," Mr. Ward concluded. "Following the pattern established for the
past eight years, our cash dividend increased again by another $0.01 to $0.29
per share per quarter. This results in an annualized dividend of $1.16 per
share and in turn produces an annual dividend yield of 2.7% based on the
September 30, 2003 closing price of $43.00. In our opinion, the combination of
all the factors presented here - asset growth, strong earnings, very good
credit quality, as well as our stock price and dividend yield - reinforces the
attractiveness of FNLC as an investment."
First National Lincoln Corporation, headquartered in Damariscotta, Maine, is
the holding company for The First National Bank of Damariscotta and Pemaquid
Advisors. The First is an independent community bank serving Mid-Coast Maine
with seven offices in Lincoln and Knox Counties that provide consumer and
commercial banking products and services. Pemaquid Advisors provides investment
advisory, private banking and trust services from offices in Damariscotta,
Boothbay Harbor, and Portland, Maine.
Forward-looking and cautionary statements: except for the historical
information and discussions contained herein, statements contained in this
release may constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements involve a
number of risks, uncertainties and other factors that could cause actual
results to differ materially, as discussed in the Company's filings with the
Securities and Exchange Commission.
For more information, please contact F. Stephen Ward, Treasurer & Chief
Financial Officer, at 207.563.3195 ext. 5001
First National Lincoln Corporation
Consolidated Balance Sheets (Unaudited)
-----------------------------------------------------------------------------
September 30, September 30, December 31,
In thousands of dollars 2003 2002 2002
-----------------------------------------------------------------------------
Assets
Cash and due from banks $ 13,758 $ 19,904 $ 14,181
Overnight Funds Sold 0 6,400 9,325
Investments:
Available for sale 62,815 57,115 56,410
Held to maturity (market values $78,174
at 9/30/03, $68,556 at 9/30/02 and
$67,421 at 12/31/02) 76,381 66,989 65,663
Loans held for sale (fair value
approximates cost) 1,884 1,983 2,613
Loans 383,032 331,142 332,074
Less: allowance for loan losses 4,177 3,628 3,700
------- ------- -------
Net loans 378,855 327,514 328,374
------- ------- -------
Accrued interest receivable 2,814 2,852 2,642
Bank premises and equipment 7,466 7,851 7,833
Other real estate owned 51 192 255
Other assets 7,794 6,448 6,772
------- ------- -------
Total Assets $ 551,818 $ 497,248 $ 494,068
======= ======= =======
Liabilities & Stockholders' Equity
Demand deposits $ 33,425 $ 29,885 $ 25,484
NOW deposits 55,593 49,078 46,989
Money market deposits 86,366 76,632 80,805
Savings deposits 65,093 58,986 59,521
Certificates of deposit 69,522 72,096 71,169
Certificates $100,000 and over 60,953 50,123 50,256
------- ------- -------
Total deposits 370,952 336,800 334,224
------- ------- -------
Borrowed funds 129,583 113,975 113,365
Other liabilities 4,550 4,359 3,784
------- ------- -------
Total Liabilities 505,085 455,134 451,373
------- ------- -------
Shareholders' Equity:
Common stock 25 25 25
Additional paid-in capital 4,687 4,687 4,687
Retained earnings 41,707 37,103 38,322
Net unrealized gains on
available-for-sale securities 2,558 2,356 2,170
Treasury stock (2,244) (2,057) (2,509)
------- ------- -------
Total Stockholders' Equity 46,733 42,114 42,695
------- ------- -------
Total Liabilities &
Stockholders' Equity $ 551,818 $ 497,248 $ 494,068
======== ======== ========
-----------------------------------------------------------------------------
First National Lincoln Corporation
Consolidated Statements of Income (Unaudited)
-----------------------------------------------------------------------------
For the nine months For the quarters
Ended September 30, Ended September 30,
In thousands of dollars 2003 2002 2003 2002
-----------------------------------------------------------------------------
Interest income
Interest and fees on loans $ 15,949 $ 16,652 $ 5,358 $ 5,623
Interest on deposits with
other banks 52 26 4 21
Interest and dividends
on investments 4,486 5,392 1,453 1,869
------ ------ ------ ------
Total interest income 20,487 22,070 6,815 7,513
------ ------ ------ ------
Interest expense
Interest on deposits 4,600 5,809 1,318 2,034
Interest on borrowed funds 3,037 3,433 911 1,140
------ ------ ------ ------
Total interest expense 7,637 9,242 2,229 3,174
------ ------ ------ ------
Net interest income 12,850 12,828 4,586 4,339
Provision for loan losses 675 945 225 255
------ ------ ------ ------
Net interest income after
provision for loan losses 12,175 11,883 4,361 4,084
------ ------ ------ ------
Other operating income
Fiduciary income 577 555 203 172
Service charges on
deposit accounts 833 719 268 249
Other operating income 2,566 2,030 1,072 947
------ ------ ------ ------
Total other operating income 3,976 3,304 1,543 1,368
------ ------ ------ ------
Other operating expenses
Salaries and employee benefits 4,377 4,113 1,546 1,451
Occupancy expense 569 532 176 174
Furniture and equipment expense 1,039 958 338 334
Other 2,606 2,767 1,016 1,082
------ ------ ------ ------
Total other operating expenses 8,591 8,370 3,076 3,041
------ ------ ------ ------
Income before income taxes 7,560 6,817 2,828 2,411
Applicable income taxes 2,140 2,009 816 722
------ ------ ------ ------
NET INCOME $ 5,420 $ 4,808 $ 2,012 $ 1,689
====== ====== ====== ======
-----------------------------------------------------------------------------
First National Lincoln Corporation
Selected Financial Data (Unaudited)
-----------------------------------------------------------------------------
For the nine months For the quarters
Dollars in thousands, Ended September 30, Ended September 30,
except for per share amounts 2003 2002 2003 2002
-----------------------------------------------------------------------------
Summary of Operations
Operating Income $24,463 $25,374 $8,358 $8,881
Operating Expense 16,903 18,557 5,530 6,470
Net Interest Income 12,850 12,828 4,586 4,339
Provision for Loan Losses 675 945 225 255
Net Income 5,420 4,808 2,012 1,689
----------------------------------------------------------------------------
Per Common Share Data
Basic Earnings per Share $2.24 $2.00 $0.83 $0.70
Diluted Earnings per Share 2.18 1.95 0.81 0.68
Cash Dividends Declared 0.84 0.72 0.29 0.25
Book Value 19.26 17.42 19.26 17.42
Market Value 43.00 28.80 43.00 28.80
----------------------------------------------------------------------------
Financial Ratios
Return on Average Equity (a) 16.23% 16.49% 17.24% 16.56%
Return on Average Assets (a) 1.40% 1.40% 1.49% 1.38%
Average Equity to Average
Assets 8.63% 8.47% 8.64% 8.35%
Net Interest Margin
Tax-Equivalent (a) 3.69% 4.08% 3.78% 3.92%
Dividend Payout Ratio 37.50% 35.96% 34.94% 35.78%
Allowance for Loan
Losses/Total Loans 1.09% 1.10% 1.09% 1.10%
Non-Performing Loans
to Total Loans 0.32% 0.52% 0.32% 0.52%
Non-Performing Assets
to Total Assets 0.23% 0.39% 0.23% 0.39%
Efficiency Ratio 48.66% 50.06% 47.95% 51.45%
----------------------------------------------------------------------------
At Period End
Total Assets 551,818 497,248 551,818 497,248
Total Loans 383,032 331,142 383,032 331,142
Total Investment Securities 139,196 124,104 139,196 124,104
Total Deposits 370,952 336,800 370,952 336,800
Total Shareholders' Equity 46,733 42,114 46,733 42,114
----------------------------------------------------------------------------
(a) Annualized using a 365-day basis
----------------------------------------------------------------------------
------------------------------------------------------------------------------
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.
FIRST NATIONAL LINCOLN CORPORATION
By: /s/ F. Stephen Ward
F. Stephen Ward
Treasurer & Chief Financial Officer
October 15, 2003