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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 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
This information is being provided under Item 12 of Form 8-K.
The Company today issued the following press release:
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First National Lincoln Corporation Reports
Record Earnings for 2003, Up 13.3% Over Prior Year
DAMARISCOTTA, ME., January 21 -- First National Lincoln Corporation (Nasdaq NM:
FNLC), today announced earnings per share of $2.99 on a fully diluted basis for
the year ended December 31, 2003, an increase of $0.35 or 13.3% over the $2.64
reported for 2002. Net income for the year ended December 31, 2003, was
$7,427,000, an increase of $920,000 or 14.1% over the $6,507,000 posted in
2002. Both earnings per share and net income reported by the Company for the
year set new records in 2003.
The Company also announced earnings per share of $0.80 on a fully diluted
basis for the quarter ended December 31, 2003, an increase of $0.11 or 15.9%
over the $0.69 reported for the same period in 2002. Net income for the fourth
quarter was $2,007,000, an increase of $308,000 or 18.1% over the $1,699,000
posted in the fourth quarter of 2002.
Total assets were $568.8 million at December 31, 2003 -- an increase of
15.1% over December 31, 2002. Loans totaled $398.9 million, up 20.1% or $66.8
million over December 31, 2002, while investments increased by 12.0% to $136.7
million. Deposits of $359.1 million were up 7.4% over the prior year. As of
December 31, 2003, First National Lincoln Corporation had total equity of $47.7
million, an increase of 11.8% or $5.0 million over December 31, 2002.
"I am very pleased to report that 2003 was another great year for First
National Lincoln Corporation," commented the Company's President and Chief
Executive Officer, Daniel R. Daigneault. "Loan growth was definitely the key
component in our 2003 results, with total loans increasing $66.8 million or
20.1% over December 31, 2002's volumes. We experienced excellent growth in most
loan categories, including commercial loans, home equity loans, and residential
mortgage loans, and at the same time our credit quality remains excellent with
historically low loan losses and delinquencies.
"Record-low interest rates in 2003 spurred many homeowners to refinance
their mortgages," President Daigneault continued, "and this led to higher non-
interest income from the sale of mortgage loans to the secondary market. During
2003, we originated and sold $55.5 million in mortgage loans, and at year-end,
the volume of residential mortgage loans that we have sold and continue to
service had increased over year-end 2002 by $17.8 million to $87.9 million. At
the same time we saw excellent growth in other areas of non-interest income,
including asset management fees from Pemaquid Advisors as well as service
charges and fees.
"While revenue growth was certainly very good in 2003," President
Daigneault said, "controlling our operating expenses also made a significant
contribution to our increased profits. Salaries and benefits, which account for
more than half of our operating expenses, increased only a modest 4.4%, while
we saw lower expenses in a number of other areas when compared to 2002. The net
result is that operating expenses in 2003 were only $55,000 or 0.5% higher than
in 2002. This is reflected in our excellent efficiency ratio -- a measure of
how much is spent to generate one dollar in income -- which at 0.48 for 2003 is
the best we have ever achieved.
"All of these accomplishments in 2003 are consistent with our
profitability strategy which was outlined in the Company's 2002 Annual Report,"
President Daigneault went on. "Since we operate on narrower net interest
margins than our peers, asset growth and operating efficiency are critical if
we are to produce financial results that are consistently well-above those of
our peers. Fortunately, our net interest margin for the year remained at a
reasonable level as a result of planned repricing of a large block of wholesale
funding at mid-year."
"First National Lincoln Corporation's shares closed the year at $49.90,
close to the all-time high of $51.05 set earlier in December," observed F.
Stephen Ward, the Company's Treasurer and Chief Financial Officer. "Our
shareholders were certainly well-rewarded in 2003 for their investment in the
Company, with our price per share increasing $18.42 or 58.5% over the $31.48
closing price on December 31, 2002. When combined with dividends declared of
$1.14 per share that were reinvested in our stock, the total return on FNLC
shares was 63.3%. Based upon our December 31, 2003 closing price of $49.90, our
trailing-twelve-month price-to-earnings ratio was 16.7, and our dividend yield
was 2.4%.
"For the second year in a row," Mr. Ward continued, "First National Lincoln
Corporation was the top-performing stock of all Maine-based banks listed on a
major exchange. When compared to the broader market, FNLC's total return of
63.3% is significantly higher than 2003's total return of 28.7% for the S&P 500
and 33.0% for the Nasdaq Bank Index. These results assume that all dividends
were reinvested in the index."
"Looking back over the past ten years, FNLC's shareholders have been
rewarded with stock performance that has significantly outperformed both
indices," President Daigneault concluded. "If you had invested $100.00 in First
National Lincoln Corporation on December 31, 1993, ten years later it would
have been worth $1,262.82 on December 31, 2003. This compares to $285.49 for
the S&P 500 and $473.98 for the Nasdaq Bank Index for the same period. In my
view, this performance has been driven by the consistent results we have
produced each year, as evidenced in our return on average equity, which has
averaged 15.5% for the past ten years and has been above the important 15.0%
threshold in eight of those ten years. It is because of this consistent
performance that 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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December 31, December 31,
In thousands of dollars 2003 2002
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Assets
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Cash and due from banks $ 17,087 $ 14,181
Overnight Funds Sold 0 9,325
Investments:
Available for sale 57,445 56,410
Held to maturity (market values $80,820 at 12/31/03
and $67,421 at 12/31/02) 79,244 65,663
Loans held for sale (fair value approximates cost) 982 2,613
Loans 398,895 332,074
Less: allowance for loan losses 4,200 3,700
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Net loans 394,695 328,374
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Accrued interest receivable 2,743 2,642
Bank premises and equipment 9,007 7,833
Other real estate owned 51 255
Other assets 7,558 6,772
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Total Assets $568,812 $494,068
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Liabilities & Stockholders' Equity
Demand deposits $ 28,874 $ 25,484
NOW deposits 52,161 46,989
Money market deposits 80,586 80,805
Savings deposits 63,356 59,521
Certificates of deposit 69,880 71,169
Certificates $100,000 and over 64,220 50,256
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Total deposits 359,077 334,224
Borrowed funds 157,822 113,365
Other liabilities 4,195 3,784
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Total Liabilities 521,094 451,373
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Shareholders' Equity:
Common stock 25 25
Additional paid-in capital 4,687 4,687
Retained earnings 42,988 38,322
Net unrealized gains on available-for-sale securities 2,497 2,170
Treasury stock (2,479) (2,509)
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Total Stockholders' Equity 47,718 42,695
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Total Liabilities & Stockholders' Equity $568,812 $494,068
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First National Lincoln Corporation
Consolidated Statements of Income (Unaudited)
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For the twelve months For the quarters
Ended December 31, Ended December 31,
In thousands of dollars 2003 2002 2003 2002
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Interest Income:
Interest and fees on loans $ 21,374 $ 22,154 $ 5,425 $ 5,502
Interest on deposits
with other banks 52 62 0 37
Interest and dividends
on investments 6,114 7,091 1,628 1,699
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Total interest income 27,540 29,307 7,053 7,238
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Interest expense:
Interest on deposits 5,820 7,702 1,220 1,893
Interest on borrowed funds 3,976 4,502 939 1,069
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Total interest expense 9,796 12,204 2,159 2,962
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Net interest income 17,744 17,103 4,894 4,276
Provision for loan losses 907 1,323 232 379
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Net interest income after
provision for loan
losses 16,837 15,780 4,662 3,897
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Other operating income:
Fiduciary income 773 728 197 173
Service charges on
deposit accounts 1,110 985 277 266
Mortgage origination
and servicing income 930 685 136 308
Other operating income 2,335 2,553 563 900
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Total other operating income 5,148 4,951 1,173 1,647
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Other operating expenses:
Salaries and employee
benefits 6,017 5,766 1,640 1,653
Occupancy expense 772 738 204 206
Furniture and equipment
expense 1,339 1,286 300 328
Other 3,472 3,755 866 988
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Total other operating
expenses 11,600 11,545 3,010 3,175
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Income before income taxes 10,385 9,186 2,825 2,369
Applicable income taxes 2,958 2,679 818 670
------- ------- ------- -------
NET INCOME $ 7,427 $ 6,507 $ 2,007 $ 1,699
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First National Lincoln Corporation
Selected Financial Data (Unaudited)
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For the twelve months For the quarters
Dollars in thousands, Ended December 31, Ended December 31,
except for per share amounts 2003 2002 2003 2002
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Summary of Operations
Operating Income $32,688 $34,258 $8,226 $8,885
Operating Expense 22,303 25,072 5,401 6,516
Net Interest Income 17,744 17,103 4,894 4,276
Provision for Loan Losses 907 1,323 232 379
Net Income 7,427 6,507 2,007 1,699
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Per Common Share Data
Basic Earnings per Share $3.07 $2.71 $0.83 $0.70
Diluted Earnings per Share 2.99 2.64 0.80 0.69
Cash Dividends Declared 1.14 0.98 0.30 0.26
Book Value 19.71 17.68 19.71 17.68
Market Value 49.90 31.48 49.90 31.48
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Financial Ratios
Return on Average Equity (a) 16.39% 16.34% 15.99% 15.93%
Return on Average Assets (a) 1.41% 1.39% 1.35% 1.36%
Average Equity to Average Assets 8.58% 8.49% 8.47% 8.56%
Net Interest Margin Tax-
Equivalent (a) 3.73% 4.00% 3.67% 3.77%
Dividend Payout Ratio 37.13% 36.16% 36.14% 37.14%
Allowance for Loan Losses/
Total Loans 1.05% 1.11% 1.05% 1.11%
Non-Performing Loans to
Total Loans 0.39% 0.32% 0.39% 0.32%
Non-Performing Assets to
Total Assets 0.29% 0.27% 0.29% 0.27%
Efficiency Ratio 48.32% 50.49% 46.82% 51.63%
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At Period End
Total Assets 568,812 494,068 568,812 494,068
Total Loans 398,895 332,074 398,895 332,074
Total Investment Securities 136,689 122,073 136,689 122,073
Total Deposits 359,077 334,224 359,077 334,224
Total Shareholders' Equity 47,718 42,695 47,718 42,695
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(a) Annualized using a 365-day basis
-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
January 21, 2004