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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): July 21, 2004
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)
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Item 5. Other Events
The Company today issued the following press release:
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First National Lincoln Corporation Reports Record Second Quarter Earnings Per
Share, Up 21.7% Over Prior Year
DAMARISCOTTA, ME., July 21 -- First National Lincoln Corporation (Nasdaq NM:
FNLC), today announced earnings per share of $0.28 on a fully diluted basis for
the quarter ended June 30, 2004, an increase of $0.05 or 21.7% over the $0.23
reported for the same period in 2003. Net income for the second quarter was
$2,056,000, an increase of $327,000 or 18.9% over the $1,729,000 posted in the
second quarter of 2003. Both earnings per share and net income reported by the
Company for 2004 set new single-quarter records. All prior period results in
this release have been adjusted to reflect the three-for-one stock split in
2004.
The Company also announced earnings per share of $0.53 on a fully diluted basis
for the six months ended June 30, 2004, an increase of $0.07 or 15.2% over the
$0.46 reported for the same period in 2003. Net income for the first six months
of 2004 was $3,981,000, an increase of $573,000 or 16.8% over the $3,408,000
posted in 2003. Both earnings per share and net income reported by the Company
for 2004 set new records for the first six months of the year.
Year-to-date changes on the balance sheet showed total assets at $614.0 million
on June 30, 2004 -- an increase of 7.9% over December 31, 2003. Loans totaled
$443.4 million, up 11.2% over December 31, 2003, while investments increased by
3.4% to $141.3 million. Deposits of $386.6 million were up 7.7% over year end.
As of June 30, 2004, First National Lincoln Corporation had total equity of
$49.5 million, an increase of 3.8% or $1.8 million over December 31, 2003.
"Our second quarter results are exceptional," commented Daniel R. Daigneault,
First National Lincoln Corporation's President and Chief Executive Officer, "as
are our results for the first six months of 2004. These was led by net interest
income, which in the second quarter was up $1.1 million or 25.7% over the
second quarter of 2003, and for the first six months was up $1.9 million or
23.2% over the same period in 2003.
"Growth in earning assets was the dominant factor in this increase," President
Daigneault went on, "with total loans increasing $44.5 million or 11.2% over
December 31, 2003. We experienced this growth in all loan categories, with
commercial loans growing by $12.4 million and mortgage loans increasing by
$20.9 million. At the same time, credit quality remains excellent, with
continued low levels of loan losses and the lowest level of loan delinquencies
we have seen in many years.
"As I noted last quarter, record-low interest rates have presented an operating
challenge for all banks," President Daigneault observed. "Fortunately, we
manage our balance sheet so that we have a reasonable level of interest rate
risk, and I am comfortable with the structure of our balance sheet should the
Federal Reserve continue to increase interest rates.
"At the end of the second quarter," President Daigneault continued, "we
launched a new program to attract new checking account customers to the Bank.
We have redesigned our product offerings, making them easier to choose from and
more customer-friendly. This will be combined with direct mail and in-bank
promotions, and I am optimistic that we will see an increase in both net
interest income and non-interest income in the future as a result of this
program."
"One of the things I continue to be proud of is our excellent efficiency
ratio," President Daigneault noted, "which was 48.6% for the second quarter and
48.9% for the first six months of 2004. This important measure of how much we
spend to generate a dollar in revenue continues to be well below that of our
peers, and even though our non-interest income is down from last year's levels
due to lower mortgage origination activity, we have more than made up for this
in net interest income and our level of increase in operating expenses.
"Our excellent earnings performance translates into very strong performance
statistics," commented F. Stephen Ward, the Company's Treasurer & Chief
Financial Officer. "Our return on average equity was 16.58% in the second
quarter of 2004 compared to 15.60% for the second quarter of 2003, and year-to-
date stands at 16.37% in 2004 compared to 15.68% in 2003. Based on return on
average equity, The First continues to be a top-performing bank, ranking in the
91st percentile of all banks in the United States as of March 31, 2004,
according to a recent BancIntelligence report.
"We continue to share our profits with our Shareholders in the form of cash
dividends," Mr. Ward continued. "In the second quarter, we increased our
dividend, once again, to $0.11 per share per quarter, which results in an
annualized dividend of $0.44 per share and a dividend yield of 2.26% based upon
the June 30, 2004 closing price of our shares. The Company has now raised its
dividend for 35 consecutive quarters, and we continue to view that sharing our
profitability in the form of cash dividends is very important to our
shareholders."
"The three-for-one stock split announced at the Company's Annual Meeting in
April was very well received," President Daigneault concluded. "The market
price of First National Lincoln Corporation stock ended the quarter at $19.50
per share, which is an increase of $2.87 or 17.2% over the $16.63 closing price
of our shares on December 31, 2003. Our stock traded at a high of $24.52 per
share during the quarter, and at quarter-end we had a very strong trailing-
twelve-month price/earnings ratio of 18.1. Because of the consistent
performance we have posted over many years, I continue to see First National
Lincoln Corporation as an excellent investment opportunity."
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)
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June 30, June 30, December 31,
In thousands of dollars 2004 2003 2003
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Assets
Cash and due from banks $ 13,777 $ 12,973 $ 17,087
Overnight Funds Sold 0 6,100 0
Investments:
Available for sale 53,642 64,339 57,445
Held to maturity (market values $87,248
at 6/30/04, $66,204 at 6/30/03, and
$80,820 at 12/31/03) 87,659 63,952 79,244
Loans held for sale (fair value
approximates cost) 0 1,162 982
Loans 443,433 367,915 398,895
Less: allowance for loan losses 4,580 3,987 4,200
-------- -------- --------
Net loans 438,853 363,928 394,695
-------- -------- --------
Accrued interest receivable 3,055 2,922 2,743
Bank premises and equipment 8,843 7,659 9,007
Other real estate owned 44 75 51
Other assets 8,099 8,017 7,558
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Total Assets $ 613,972 $ 531,127 $ 568,812
========= ========= =========
Liabilities & Stockholders' Equity
Demand deposits $ 27,504 $ 27,035 $ 28,874
NOW deposits 55,938 49,985 52,161
Money market deposits 78,233 86,566 80,586
Savings deposits 65,336 64,735 63,356
Certificates of deposit 76,170 69,867 69,880
Certificates $100,000 and over 83,392 60,822 64,220
-------- -------- ---------
Total deposits 386,573 359,010 359,077
Borrowed funds 173,661 121,933 157,822
Other liabilities 4,223 4,582 4,195
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Total Liabilities 564,457 485,525 521,094
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Shareholders' Equity:
Common stock 74 74 74
Additional paid-in capital 3,721 4,638 4,650
Retained earnings 44,006 40,399 42,988
Net unrealized gains on available-for-
sale securities 1,714 2,919 2,497
Treasury stock 0 (2,428) (2,491)
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Total Stockholders' Equity 49,515 45,602 47,718
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Total Liabilities
& Stockholders' Equity $ 613,972 $ 531,127 $ 568,812
========= ========= =========
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Prior periods have been adjusted to reflect the three-for-one stock split in
2004
First National Lincoln Corporation
Consolidated Statements of Income (Unaudited)
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For the six months ended For the quarters ended
June 30, June 30,
In thousands of dollars 2004 2003 2004 2003
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Interest Income:
Interest and fees on loans $ 11,298 $ 10,591 $ 5,745 $ 5,326
Interest on deposits with
other banks 3 48 0 5
Interest and dividends on
investments 3,237 3,033 1,672 1,473
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Total interest income 14,538 13,672 7,417 6,804
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Interest expense:
Interest on deposits 2,526 3,282 1,265 1,578
Interest on borrowed funds 1,827 2,126 919 1,062
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Total interest expense 4,353 5,408 2,184 2,640
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Net interest income 10,185 8,264 5,233 4,164
Provision for loan losses 480 450 240 225
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Net interest income after
provision for loan losses 9,705 7,814 4,993 3,939
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Other operating income:
Fiduciary income 430 374 216 185
Service charges on deposit
accounts 580 565 310 298
Mortgage origination and
servicing income 250 490 85 198
Other operating income 962 1,004 509 529
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Total other operating income 2,222 2,433 1,120 1,210
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Other operating expenses:
Salaries and employee
benefits 3,303 2,831 1,640 1,419
Occupancy expense 428 393 216 201
Furniture and equipment
expense 754 701 389 343
Other 1,872 1,590 991 794
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Total other operating expenses 6,357 5,515 3,236 2,757
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Income before income taxes 5,570 4,732 2,877 2,392
Applicable income taxes 1,589 1,324 821 663
------- ------- ------- -------
NET INCOME $ 3,981 $ 3,408 $ 2,056 $ 1,729
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Prior periods have been adjusted to reflect the three-for-one stock split in
2004
First National Lincoln Corporation
Selected Financial Data (Unaudited)
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For the six months ended For the quarters ended
Dollars in thousands, June 30, June 30,
except for per share amounts 2004 2003 2004 2003
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Summary of Operations
Operating Income $ 16,760 $ 16,105 $ 8,537 $ 8,014
Operating Expense 11,190 11,373 5,660 5,622
Net Interest Income 10,185 8,264 5,233 4,164
Provision for Loan Losses 480 450 240 225
Net Income 3,981 3,408 2,056 1,729
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Per Common Share Data
Basic Earnings per Share $ 0.54 $ 0.47 $ 0.28 $ 0.24
Diluted Earnings per Share 0.53 0.46 0.28 0.23
Cash Dividends Declared 0.21 0.18 0.11 0.09
Book Value 6.74 6.28 6.74 6.28
Market Value 19.50 13.06 19.50 13.06
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Financial Ratios
Return on Average Equity (a) 16.37% 15.68% 16.58% 15.60%
Return on Average Assets (a) 1.39% 1.35% 1.41% 1.35%
Average Equity to Average Assets 8.47% 8.63% 8.51% 8.67%
Net Interest Margin Tax-Equivalent (a) 3.92% 3.65% 3.97% 3.63%
Dividend Payout Ratio 39.51% 39.01% 39.29% 39.44%
Allowance for Loan Losses/Total Loans 1.03% 1.08% 1.03% 1.08%
Non-Performing Loans to Total Loans 0.35% 0.30% 0.35% 0.30%
Non-Performing Assets to Total Assets 0.27% 0.23% 0.27% 0.23%
Efficiency Ratio 48.91% 49.06% 48.60% 48.70%
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At Period End
Total Assets 613,972 531,127 613,972 531,127
Total Loans 443,433 367,915 443,433 367,915
Total Investment Securities 141,301 128,291 141,301 128,291
Total Deposits 386,573 359,010 386,573 359,010
Total Shareholders' Equity 49,515 45,602 49,515 45,602
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(a) Annualized using a 365-day basis
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Prior periods have been adjusted to reflect the three-for-one stock split in
2004
-30-
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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
July 21, 2004