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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 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
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,
Up 8.7% Year-to-Date
DAMARISCOTTA, ME., July 15 - First National Lincoln Corporation (Nasdaq NM:
FNLC), today announced earnings per share of $1.37 on a fully diluted basis for
the six months ended June 30, 2003, an increase of $0.11 or 8.7% over the $1.26
reported for the same period in 2002. Net income for the first six months of
2003 was $3,408,000, an increase of $289,000 or 9.3% over the $3,119,000 posted
in 2002. Both earnings per share and net income reported by the Company for
2003 set new records for the first six months of the year.
The Company also announced earnings per share of $0.70 on a fully diluted basis
for the quarter ended June 30, 2003, an increase of $0.04 or 6.1% over the
$0.66 reported for the same period in 2002. Net income for the second quarter
was $1,729,000, an increase of $83,000 or 5.0% over the $1,646,000 posted in
the second quarter of 2002. Both earnings per share and net income reported by
the Company for 2003 set new single-quarter records.
Year-to-date change on the balance sheet showed total assets at $531.1 million
on June 30, 2003 - an increase of 7.5% over December 31, 2002. Loans totaled
$367.9 million, up 10.8% over December 31, 2002, while investments increased by
5.1% to $128.3 million. Deposits of $359.0 million were up 7.4% over year end.
As of June 30, 2003, First National Lincoln Corporation had total equity of
$45.6 million, an increase of 6.8% or $2.9 million over December 31, 2002.
"I am happy to report another record quarter as well as record earnings for
the first six months," commented the Company's President and Chief Executive
Officer, Daniel R. Daigneault. "Our second-quarter income of $1,729,000
eclipses the previous single-quarter record of $1,699,000 set in the fourth
quarter of 2002. Balance sheet growth has been the key driver of this
performance - not only in the loan portfolio, but also with investments and
deposits. At the same time, asset quality remains excellent, with past-due
loans at the lowest levels we have seen in many years and the percentage of
non-performing assets to total assets down slightly from year end.
"For many other banks, generating quality loan growth has been challenging in
2003," President Daigneault continued, "however, that has not been the case for
us. Portfolio loans have increased $35.8 million or 10.8% since December 31,
2002, and the majority of this growth has been in commercial loans - up $17.4
million - as well as home equity loans - up $12.0 million. The current record-
low interest rate environment has resulted in exceptionally high levels of
mortgage origination due to refinancing of existing mortgages, and in the first
six months of 2003 we originated nearly the same volume of mortgages that we
did for the entire year in 2002. A large portion of the mortgage production was
sold, and secondary market loans posted a net increase of $11.9 million or
16.4% since December 31, 2002. In addition, our portfolio mortgage loans saw a
net increase of $6.0 million or 4.2% during the same period."
"Although we experienced a decline in net interest income during the first six
months of 2003 compared to the first six months of 2002, this was more than
made up for in non-interest income," noted F. Stephen Ward, the Company's
Treasurer and Chief Financial Officer. "While balance sheet growth is very
important to us, our primary focus in managing the Company is long-term, not
short-term. Since we have had excellent growth in both commercial and home
equity loans this year, we opted to sell the majority of our fixed-rate
mortgage production to the secondary market, allowing us to effectively manage
interest rate risk. As a result, we were able to replace the shortfall in net
interest income with non-interest income arising from the sale of these
mortgage loans.
"Similar to many other banks, margin compression has been the other factor
impacting net interest income in 2003," Mr. Ward continued. "This compression
was anticipated, and assuming that interest rates remain at record low levels,
we expect our margins will begin to widen as we reprice a significant volume of
liabilities downward."
"This was also a good quarter for our shareholders," President Daigneault
concluded. "Following the pattern established for more than seven years, our
cash dividend increased again by another $0.01 to $0.28 per share per quarter.
This results in an annual dividend of $1.12 per share and in turn produces an
annual dividend yield of 2.9% based on the June 30, 2003 closing price of
$39.18. At the same time, our stock increased in value by 24.5% or $7.70 from
the December 31, 2002 closing price of $31.48 per share. In our opinion, the
combination of all the factors presented here - strong earnings, asset growth,
excellent credit quality, as well as our stock price and dividend yield -
reinforce 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)
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June 30, June 30, December 31,
In thousands of dollars 2003 2002 2002
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Assets
Cash and due from banks $ 12,973 $ 9,573 $ 14,181
Overnight Funds Sold 6,100 -0- 9,325
Investments:
Available for sale 64,339 53,452 56,410
Held to maturity (market values $66,204
at 6/30/03, $75,583 at 6/30/02 and
$67,421 at 12/31/02) 63,952 74,898 65,663
Loans held for sale (fair value
approximates cost) 1,162 2,272 2,613
Loans 367,915 324,511 332,074
Less: allowance for loan losses 3,987 3,468 3,700
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Net loans 363,928 321,043 328,374
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Accrued interest receivable 2,922 3,129 2,642
Bank premises and equipment 7,659 7,783 7,833
Other real estate owned 75 195 255
Other assets 8,017 6,277 6,772
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Total Assets $ 531,127 $ 478,622 $ 494,068
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Liabilities & Stockholders' Equity
Demand deposits $ 27,035 $ 24,103 $ 25,484
NOW deposits 49,985 43,762 46,989
Money market deposits 86,566 61,986 80,805
Savings deposits 64,735 51,063 59,521
Certificates of deposit 69,867 75,151 71,169
Certificates $100,000 and over 60,822 52,229 50,256
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Total deposits 359,010 308,294 334,224
------- ------- -------
Borrowed funds 121,933 126,734 113,365
Other liabilities 4,582 3,691 3,784
------- ------- -------
Total Liabilities 485,525 438,719 451,373
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Shareholders' Equity:
Common stock 25 25 25
Additional paid-in capital 4,687 4,687 4,687
Retained earnings 40,399 36,019 38,322
Net unrealized gains on
available-for-sale securities 2,919 1,363 2,170
Treasury stock (2,428) (2,191) (2,509)
------- ------- -------
Total Stockholders' Equity 45,602 39,903 42,695
------- ------- -------
Total Liabilities
& Stockholders' Equity $ 531,127 $ 478,622 $ 494,068
======= ======= =======
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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 2003 2002 2003 2002
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Interest Income:
Interest and fees on loans $ 10,591 $ 11,028 $ 5,326 $ 5,555
Interest on deposits with
other banks 48 5 5 0
Interest and dividends on
investments 3,033 3,524 1,473 1,848
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Total interest income 13,672 14,557 6,804 7,403
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Interest expense:
Interest on deposits 3,282 3,775 1,578 1,875
Interest on borrowed funds 2,126 2,293 1,062 1,202
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Total interest expense 5,408 6,068 2,640 3,077
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Net interest income 8,264 8,489 4,164 4,326
Provision for loan losses 450 690 225 280
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Net interest income after
provision for loan losses 7,814 7,799 3,939 4,046
------ ------ ----- -----
Other operating income:
Fiduciary income 374 383 185 198
Service charges on deposit
accounts 565 469 298 250
Other operating income 1,494 1,083 727 569
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Total other operating income 2,433 1,935 1,210 1,017
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Other operating expenses:
Salaries and employee
benefits 2,831 2,661 1,419 1,304
Occupancy expense 393 358 201 172
Furniture and equipment
expense 701 624 343 314
Other 1,590 1,685 794 919
------ ------ ----- -----
Total other operating expenses 5,515 5,328 2,757 2,709
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Income before income taxes 4,732 4,406 2,392 2,354
Applicable income taxes 1,324 1,287 663 708
------ ------ ----- -----
NET INCOME $ 3,408 $ 3,119 $ 1,729 $ 1,646
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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 2003 2002 2003 2002
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Summary of Operations
Operating Income $ 16,105 $ 16,492 $ 8,014 $ 8,420
Operating Expense 11,373 12,086 5,622 6,066
Net Interest Income 8,264 8,489 4,164 4,326
Provision for Loan Losses 450 690 225 280
Net Income 3,408 3,119 1,729 1,646
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Per Common Share Data
Basic Earnings per Share $ 1.41 $ 1.30 $ 0.71 $ 0.69
Diluted Earnings per Share 1.37 1.26 0.70 0.66
Cash Dividends Declared 0.55 0.47 0.28 0.24
Book Value 18.83 16.64 18.83 16.64
Market Value 39.18 28.25 39.18 28.25
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Financial Ratios
Return on Average Equity (a) 15.68% 16.46% 15.60% 17.14%
Return on Average Assets (a) 1.35% 1.40% 1.35% 1.44%
Average Equity to Average Assets 8.63% 8.53% 8.67% 8.40%
Net Interest Margin Tax-Equivalent(a) 3.65% 4.20% 3.63% 4.16%
Dividend Payout Ratio 39.01% 36.06% 39.44% 34.89%
Allowance for Loan Losses/Total Loans 1.08% 1.07% 1.08% 1.07%
Non-Performing Loans to Total Loans 0.30% 0.51% 0.30% 0.51%
Non-Performing Assets to Total Assets 0.23% 0.42% 0.23% 0.42%
Efficiency Ratio 49.06% 49.30% 48.70% 48.92%
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At Period End
Total Assets 531,127 478,622 531,127 478,622
Total Loans 367,915 324,511 367,915 324,511
Total Investment Securities 128,291 128,350 128,291 128,350
Total Deposits 359,010 308,294 359,010 308,294
Total Shareholders' Equity 45,602 39,903 45,602 39,903
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(a) 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
July 15, 2003