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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): January 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)
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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 Earnings for 2002,
Up 17.9% Over Prior Year
DAMARISCOTTA, ME., January 15 -- First National Lincoln Corporation (Nasdaq NM:
FNLC), today announced earnings per share of $2.64 on a fully diluted basis for
the year ended December 31, 2002, an increase of $0.40 or 17.9% over the $2.24
reported for 2001. Net income for the year ended December 31, 2002, was
$6,507,000, an increase of $1,014,000 or 18.5% over the $5,493,000 posted in
2001. Both earnings per share and net income reported by the Company for the
year set new records in 2002.
The Company also announced earnings per share of $0.69 on a fully diluted basis
for the quarter ended December 31, 2002, an increase of $0.12 or 21.1% over the
$0.57 reported for the same period in 2001. Net income for the fourth quarter
was $1,699,000, an increase of $290,000 or 20.6% over the $1,409,000 posted in
the fourth quarter of 2001. Both earnings per share and net income reported by
the Company for the fourth quarter set new single-quarter records.
Total assets were $494.1 million at December 31, 2002 -- an increase of 13.7%
over December 31, 2001. Loans totaled $332.1 million, up 10.2% over December
31, 2001, while investments increased by 12.8% to $122.1 million. Deposits of
$334.2 million were up 27.2% over the prior year. As of December 31, 2002,
First National Lincoln Corporation had total equity of $42.5 million, an
increase of 14.0% or $5.2 million over December 31, 2001.
"From every perspective, 2002 was a great year for First National Lincoln
Corporation," commented the Company's President and Chief Executive Officer,
Daniel R. Daigneault. "Our 17.9% increase in earnings per share was driven by
the asset growth posted in both the loan and investment portfolios, and I am
especially pleased with our 27.2% growth in deposits. We saw excellent loan and
deposit growth in all seven of our banking locations, including our new office
in Rockland, which has been open for only 15 months.
"Another important factor in our 2002 results was the successful management of
our net interest margin in an unfamiliar territory -- a record low interest
rate environment," President Daigneault continued. "When combined with our
asset growth, the result was net interest income increasing by nearly $2.1
million or 13.8% over 2001. Revenues were also boosted by a 27.0% or $1.1
million increase in non-interest income, driven by excellent growth in mortgage
origination income as well as a gain on the sale of our credit card portfolio
in the fourth quarter, which added $219,000 to net income after adjusting for
related expenses.
"The sale of the credit card portfolio was a strategic decision on our part,"
President Daigneault said, "and eliminated some of our credit risk. It was a
small portfolio -- $2.5 million or 0.75% of total loans -- and our cardholders
will have more features and services available to them as a result of the sale.
On the expense side, we maintained an excellent efficiency ratio -- 50.49% for
2002 -- which demonstrates our continued focus on controlling operating
expenses.
"With great earnings, we continued to grow our cash dividend by $0.01 per
quarter," President Daigneault noted, "and we have now increased our dividend
each quarter for more than seven years. Total dividends declared in 2002 were
$0.98 per share, which is an increase of 19.5% or $0.16 over 2001. In 2002, we
paid out 36.2% of our earnings in cash dividends, and with the current
quarterly dividend of $0.26 per share, our annual dividend yield is 3.30% based
on the December 31 closing price -- excellent in the current low interest rate
environment. I am pleased with the level to which we share our profits with our
shareholders in the form of cash dividends, and in my opinion, this certainly
makes our shares more attractive to investors."
"It was a good year for Maine stocks, and First National Lincoln's shares led
the way," noted F. Stephen Ward, the Company's Treasurer and Chief Financial
Officer. "Our shares traded up $9.38 or 42.4%, closing the year at $31.48, and
when combined with the $0.98 dividend, our total return was 47.5% for 2002. In
a January 5, 2003 article in the Maine Sunday Telegram, we were listed as the
top-performing stock of all companies headquartered in Maine at year end.
"Our stock also did well when compared to national benchmarks," CFO Ward
continued. "The S&P 500 had a total return of -22.1% in 2002, while the Nasdaq
Bank Index had a total return of 6.9% for the same period -- both well below
the 47.5% that First National Lincoln Corporation posted. Our shareholders have
also been well rewarded in the longer term, as noted in three-year, five-year
and ten-year comparisons, where First National Lincoln Corporation shares
significantly outperformed both of the previously mentioned indices. The most
significant results can be seen over the past ten years, during which time our
shares appreciated in value by 740% compared to 102% for the S&P 500 and 319%
for the Nasdaq Bank Index. Put another way, our stock outperformed the Nasdaq
Bank Index by a factor of 2.3 and the S&P 500 by a factor of 7.3 over this ten-
year period."
"The bottom line," President Daigneault concluded, "is that excellent net
interest income, strong non-interest income and controlled expenses combined to
produce great earnings in 2002 and a return on average equity of 16.34%. More
importantly, though, in our opinion First National Lincoln Corporation's shares
remain an excellent value -- even with the gains they have recently posted --
given the strong earnings track record we have produced over the past several
years and a year-end price-to-earnings ratio of 11.9."
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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Dollars in Thousands 12/31/2002 12/31/2001
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Assets
Cash and due from banks $14,181 $10,894
Overnight funds sold 9,325 -
Investments:
Available for sale 56,410 50,914
Held to maturity (market values $67,421 at
12/31/02 and $56,921 at 12/31/01) 65,663 57,272
Loans held for sale (fair value approximates cost) 2,613 466
Loans 332,074 301,304
Less allowance for loan losses 3,700 3,000
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Net loans 328,374 298,304
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Accrued interest receivable 2,642 2,635
Bank premises and equipment 7,833 7,563
Other real estate owned 255 202
Other assets 6,757 6,216
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Total Assets $494,053 $434,466
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Liabilities & Stockholders' Equity
Demand deposits $25,484 $22,496
NOW deposits 46,989 43,644
Money market deposits 80,805 15,878
Savings deposits 59,521 46,855
Certificates of deposit 71,169 79,907
Certificates $100,000 and over 50,256 53,909
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Total deposits 334,224 262,689
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Borrowed funds 113,365 131,357
Other liabilities 3,917 3,086
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Total Liabilities 451,506 397,132
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Shareholders' Equity:
Common stock 25 25
Additional paid-in capital 4,687 4,687
Retained earnings 38,174 34,030
Net unrealized gains on available-for-sale securities 2,170 784
Treasury stock (2,509) (2,192)
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Total Stockholders' Equity 42,547 37,334
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Total Liabilities & Stockholders' Equity $494,053 $434,466
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First National Lincoln Corporation
Consolidated Statements of Income (Unaudited)
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For the For the
years ended quarters ended
December 31, December 31,
Dollars in Thousands 2002 2001 2002 2001
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Interest income:
Interest and fees on loans $22,154 $22,953 $5,502 $5,692
Interest on deposits
with other banks 62 77 37 6
Interest and dividends on investments 7,091 7,032 1,699 1,652
------- ------- ------ ------
Total interest income 29,307 30,062 7,238 7,350
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Interest expense:
Interest on deposits 7,702 10,006 1,893 2,114
Interest on borrowed funds 4,502 5,025 1,069 1,106
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Total interest expense 12,204 15,031 2,962 3,220
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Net interest income 17,103 15,031 4,276 4,130
Provision for loan losses 1,323 1,230 379 540
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Net interest income after
provision for loan losses 15,780 13,801 3,897 3,590
------- ------- ------ ------
Other operating income:
Fiduciary income 728 698 173 178
Service charges on deposit accounts 985 901 266 230
Net securities gains - 73 - -
Other operating income 3,238 2,226 1,208 655
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Total other operating income 4,951 3,898 1,647 1,063
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Other operating expenses:
Salaries and employee benefits 5,766 4,903 1,653 1,292
Occupancy expense 738 573 206 148
Furniture and equipment expense 1,286 1,023 328 281
Other 3,755 3,479 988 973
------- ------- ------ ------
Total other operating expenses 11,545 9,978 3,175 2,694
------- ------- ------ ------
Income before income taxes 9,186 7,721 2,369 1,959
Applicable income taxes 2,679 2,228 670 550
------- ------- ------ ------
NET INCOME $ 6,507 $ 5,493 $1,699 $1,409
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First National Lincoln Corporation
Selected Financial Data (Unaudited)
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For the For the
years ended quarters ended
December 31, December 31,
Dollars in Thousands 2002 2001 2002 2001
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Summary of Operations
Operating Income $34,258 $33,960 $8,885 $8,414
Operating Expense 25,072 26,239 6,516 6,455
Net Interest Income 17,103 15,031 4,276 4,131
Provision for Loan Losses 1,323 1,230 379 540
Net Income 6,507 5,493 1,699 1,409
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Per Common Share Data
Basic Earnings per Share $2.71 $2.30 $0.70 $0.59
Diluted Earnings per Share 2.64 2.24 0.69 0.57
Cash Dividends Declared 0.98 0.82 0.26 0.22
Book Value 17.62 15.61 17.62 15.61
Market Value 31.48 22.10 31.48 22.10
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Financial Ratios
Return on Average Equity (a) 16.34% 15.51% 15.93% 14.91%
Return on Average Assets (a) 1.39% 1.33% 1.36% 1.31%
Average Equity to Average Assets 8.49% 8.55% 8.56% 8.80%
Net Interest Margin Tax-Equivalent (a) 4.00% 3.98% 3.77% 4.15%
Dividend Payout Ratio 36.16% 35.65% 37.14% 37.29%
Allowance for Loan Losses/Total Loans 1.11% 1.00% 1.11% 1.00%
Non-Performing Loans to Total Loans 0.32% 0.22% 0.32% 0.22%
Non-Performing Assets to Total Assets 0.27% 0.20% 0.27% 0.20%
Efficiency Ratio 50.49% 50.60% 51.63% 49.95%
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At Period End
Total Assets $494,053 $434,466 $494,053 $434,466
Total Loans 332,074 301,304 332,074 301,304
Total Investment Securities 122,073 108,186 122,073 108,186
Total Deposits 334,224 262,689 334,224 262,689
Total Shareholders' Equity 42,547 37,334 42,547 37,334
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(a) Quarterly data annualized using a 365-day basis
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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
January 15, 2003