First National Lincoln Corporation Reports Record Earnings Per Share for 2007, Up 7.2%
DAMARISCOTTA, ME, January 23 – First National Lincoln Corporation (Nasdaq: FNLC), today announced unaudited results for the year ended December 31, 2007, with record earnings per share on a fully diluted basis of $1.34, up $0.09 or 7.2% from the $1.25 reported for the year ended December 31, 2006. Net income for 2007 was $13,101,000, an increase of $806,000 or 6.6% from the $12,295,000 posted in 2006.
The Company also announced unaudited results for the quarter ended December 31, 2007. Earnings per share on a fully diluted basis were $0.36, up $0.06 or 20.0% from the $0.30 reported for the quarter ended December 31, 2006. Net income for the quarter ended December 31, 2007, was $3,488,000, an increase of $518,000 or 17.4% from the $2,970,000 posted for the quarter ended December 31, 2006. This was a record quarter for the Company, with earnings per share up 2.9% and net income up 2.2% compared to the previous records set in third quarter of 2007.
“Greatly improved is how I would characterize our 2007 operating results,” observed Daniel R. Daigneault, the Company’s President & Chief Executive Officer. “The driving force for our increase in earnings was net interest income, which was up $1.2 million or 4.0% for the year compared to 2006. A primary factor for this was the $124.6 million or 12.2% growth in earning assets we saw in 2007, with total loans increasing $82.0 million or 9.8% and investments increasing $41.3 million or 22.9%. At the same time, the lowering of rates by the Federal Open Market Committee was positive for FNLC, resulting in lower funding costs from a restructuring of a significant portion of our wholesale funding and improved net interest margins in the third and fourth quarters.
“As in previous years, expense control continued to be a major factor in our performance in 2007,” President Daigneault noted. “Non-interest expense for 2007 was $22.2 million, $256,000 or 1.1% lower than in 2006, with reductions in several areas. The impact of higher net interest income and lower operating costs can be seen in our efficiency ratio, a key operating statistic which measures how much a company spends to generate one dollar in revenue. FNLC’s efficiency ratio for 2007 was 50.16%, a significant improvement from the 52.12% posted for 2006.
“We are even more pleased with the improvement we have seen in our efficiency ratio during the past three years,” President Daigneault continued. “Our efficiency ratio rose significantly after our acquisition of FNB Bankshares at the beginning of 2005, and it is now almost back to the pre-acquisition level of 2004. We feel that continuing to improve our efficiency ratio will be a vital factor in FNLC’s ongoing financial performance, and this is an area that all of our employees are focused on.”
“The other financial measure we closely monitor is return on average tangible equity,” observed F. Stephen Ward, FNLC’s Treasurer and Chief Financial Officer. “For 2007, our return on average tangible equity was 15.89%, up from the 15.75% posted in 2006, and well above the 15.00% threshold defining high-performance banks. For the fourth quarter, our return on tangible equity was 16.39%, up from the 14.80% posted for the fourth quarter of 2006. Based upon September 30, 2007 data, this places the Bank’s return on average tangible equity in the top quartile of all banks in its peer group.
“Although the U.S. economy is showing weakness, our asset quality continues to remain strong,” Mr. Ward continued. “The ratio of non-performing assets to total assets, at 0.23%, is significantly improved compared to 0.32% a year ago and is up slightly from the 0.15% reported as of the end of the third quarter. We maintain high standards in our loan underwriting – despite an increasingly competitive landscape – and do not compromise quality in order to produce short-term growth at the expense of long-term earnings. It is also worth noting that FNLC has not been involved in making sub-prime mortgage loans and does not hold securities in its investment portfolio which are tied to subprime loans.
“During the fourth quarter, the Company again raised its cash dividend from $0.175 to $0.180 per share,” Mr. Ward said. “We have now raised our regular cash dividend for 15 consecutive years and for 49 consecutive quarters, and at an annual rate of $0.72 per share, this results in a very attractive dividend yield of 4.92% based on our year-end closing price of $14.64 per share. We continue to increase our quarterly dividend because of the importance of this to the majority of our shareholders, and our payout ratio was 50.0% for the fourth quarter.”
“The one disappointment in 2007 was the price of our stock,” President Daigneault stated, “although the performance of our shares continues to compare well to our industry. The KBW Regional Bank Index had a total return of -21.85% while FNLC’s total return was -8.69% for the same period. We also compare well to the Nasdaq Bank Index, which had a total return of
-19.81% for 2007. Bank stocks significantly underperformed the overall market in 2007, and although the S&P 500 posted a total return of 5.46% in 2007, we feel that the significant
outperformance of our stock compared to our peers and our industry is reflective of our performance in relation to our industry.
“On August 16, 2007, the Company announced a new buyback program to repurchase up to 300,000 shares of the Company’s common stock or approximately 3.1% of the outstanding shares,” President Daigneault said. “As of December 31, 2007, the Company had repurchased 86,711 shares under the new repurchase program at an average price of $15.14 per share and at a total cost of $1.3 million. Repurchasing our shares continues to be in the best interest of our shareholders, and our Board of Directors sees stock repurchases as an appropriate use of capital, especially given the recent decline in stock prices for the banking industry.
“In my opinion, 2007 was a good year for FNLC,” President Daigneault concluded. “We saw good growth in earning assets and higher net interest margins in the second half of the year which in turn led to increased net interest income. Our efficiency ratio has improved over last year, and we continue to share our profits with our shareholders in the form of increased cash dividends. I view First National Lincoln Corporation as a good investment opportunity, especially for those interested in Maine-based companies or high-performing community banks.”
First National Lincoln Corporation, headquartered in Damariscotta, Maine, is the holding company for The First, N.A. Founded in 1864, The First is an independent community bank serving Mid-Coast and Down East Maine with 14 offices in Lincoln, Knox, Hancock and Washington Counties. The Bank provides a full range of consumer and commercial banking products and services. First Advisors, a division of The First, provides investment advisory, private banking and trust services from two offices in Lincoln and Hancock Counties.
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 and events to differ materially, as discussed in the Company’s filings with the Securities and Exchange Commission.
For more information, please contact F. Stephen Ward, First National Lincoln Corporation’s Treasurer & Chief Financial Officer, at 207.563.3195 ext. 5001.
First National Lincoln Corporation |
Consolidated Balance Sheets (Unaudited) |
| | |
| December 31, | December 31, |
In thousands of dollars | 2007 | 2006 |
Assets | | |
Cash and due from banks | $17,254 | $24,188 |
Overnight funds sold | - | - |
Securities available for sale | 40,461 | 44,815 |
Securities to be held to maturity (fair value $181,132 at December 31, 2007 and $134,649 at December 31, 2006) | 181,354 | 135,734 |
Loans held for sale (fair value approximates cost) | 1,817 | 460 |
Loans | 920,164 | 838,145 |
Less: allowance for loan losses | 6,800 | 6,364 |
Net loans | 913,364 | 831,781 |
Accrued interest receivable | 6,585 | 6,140 |
Premises and equipment | 16,481 | 15,845 |
Other real estate owned | 827 | 1,144 |
Goodwill | 27,684 | 27,684 |
Other assets | 17,423 | 17,078 |
Total Assets | $1,223,250 | $1,104,869 |
Liabilities | | |
Demand deposits | $60,637 | $62,157 |
NOW deposits | 101,680 | 99,612 |
Money market deposits | 124,033 | 137,163 |
Savings deposits | 86,611 | 98,131 |
Certificates of deposit | 301,364 | 164,770 |
Certificates $100,000 and over | 106,955 | 243,402 |
Total deposits | 781,280 | 805,235 |
Borrowed funds | 316,719 | 179,862 |
Other liabilities | 12,583 | 12,445 |
Total Liabilities | 1,110,582 | 997,542 |
Shareholders' Equity | | |
Common stock | 97 | 98 |
Additional paid-in capital | 44,762 | 45,587 |
Retained earnings | 67,647 | 61,298 |
Net unrealized gains on securities available-for-sale | 436 | 696 |
Net unrealized loss on postretirement benefit costs | (274) | (352) |
Total Shareholders' Equity | 112,668 | 107,327 |
Total Liabilities & Shareholders' Equity | $1,223,250 | $1,104,869 |
| | |
Common Stock | | |
Number of shares authorized | 18,000,000 | 18,000,000 |
Number of shares issued and outstanding | 9,732,493 | 9,770,792 |
Book value per share | $11.58 | $10.98 |
Tangible book value per share | $8.73 | $8.15 |
First National Lincoln Corporation |
Consolidated Statements of Income (Unaudited) |
| | | | |
| For the years ended | For the quarters ended |
| December 31, | December 31, |
In thousands of dollars | 2007 | 2006 | 2007 | 2006 |
Interest income | | | | |
Interest and fees on loans | $60,585 | $54,585 | $15,626 | $14,421 |
Interest on deposits with other banks | - | 64 | - | 3 |
Interest and dividends on investments | 11,136 | 9,555 | 3,107 | 2,304 |
Total interest income | 71,721 | 64,204 | 18,733 | 16,728 |
Interest expense | | | | |
Interest on deposits | 29,745 | 25,804 | 7,084 | 7,264 |
Interest on borrowed funds | 10,140 | 7,785 | 3,146 | 1,829 |
Total interest expense | 39,885 | 33,589 | 10,230 | 9,093 |
Net interest income | 31,836 | 30,615 | 8,503 | 7,635 |
Provision for loan losses | 1,432 | 1,325 | 582 | 425 |
Net interest income after provision for loan losses | 30,404 | 29,290 | 7,921 | 7,210 |
Non-interest income | | | | |
Investment management and fiduciary income | 1,737 | 1,951 | 393 | 504 |
Service charges on deposit accounts | 2,740 | 2,752 | 681 | 698 |
Net securities gains | - | 18 | - | 18 |
Mortgage origination and servicing income | 589 | 503 | 211 | 143 |
Other operating income | 5,079 | 5,082 | 1,259 | 1,265 |
Total non-interest income | 10,145 | 10,306 | 2,544 | 2,628 |
Non-interest expense | | | | |
Salaries and employee benefits | 11,037 | 10,826 | 2,884 | 2,620 |
Occupancy expense | 1,438 | 1,421 | 349 | 363 |
Furniture and equipment expense | 1,944 | 2,124 | 488 | 567 |
Amortization of identified intangibles | 283 | 283 | 71 | 71 |
Other operating expense | 7,481 | 7,785 | 1,791 | 2,068 |
Total non-interest expense | 22,183 | 22,439 | 5,583 | 5,689 |
Income before income taxes | 18,366 | 17,157 | 4,882 | 4,149 |
Applicable income taxes | 5,265 | 4,862 | 1,394 | 1,179 |
NET INCOME | $13,101 | $12,295 | $3,488 | $2,970 |
Earnings per common share: | | | | |
Basic earnings per share | $1.34 | $1.25 | $0.36 | $0.30 |
Diluted earnings per share | $1.34 | $1.25 | $0.36 | $0.30 |
Cash dividends declared per share | $0.69 | $0.61 | $0.18 | $0.16 |
First National Lincoln Corporation |
Selected Financial Data (Unaudited) |
|
| For the years ended | For the quarters ended |
Dollars in thousands, | December 31 | December 31 |
except for per share amounts | 2007 | 2006 | 2007 | 2006 |
| | | | |
Summary of Operations | | | | |
Interest Income | $71,721 | $64,204 | $18,733 | $16,728 |
Interest Expense | 39,885 | 33,589 | 10,230 | 9,093 |
Net Interest Income | 31,836 | 30,615 | 8,503 | 7,635 |
Provision for Loan Losses | 1,432 | 1,325 | 582 | 425 |
Non-Interest Income | 10,145 | 10,306 | 2,544 | 2,628 |
Non-Interest Expense | 22,183 | 22,439 | 5,583 | 5,689 |
Net Income | 13,101 | 12,295 | 3,488 | 2,970 |
Per Common Share Data | | | | |
Basic Earnings per Share | $1.34 | $1.25 | $0.36 | $0.30 |
Diluted Earnings per Share | 1.34 | 1.25 | 0.36 | 0.30 |
Cash Dividends Declared | 0.69 | 0.61 | 0.18 | 0.16 |
Book Value | 11.58 | 10.98 | 11.58 | 10.98 |
Tangible Book Value | 8.73 | 8.15 | 8.73 | 8.15 |
Market Value | 14.64 | 16.72 | 14.64 | 16.72 |
Financial Ratios | | | | |
Return on Average Equity (a) | 11.89% | 11.63% | 12.34% | 10.98% |
Return on Average Tangible Equity (a) | 15.89% | 15.75% | 16.39% | 14.80% |
Return on Average Assets (a) | 1.13% | 1.14% | 1.15% | 1.08% |
Average Equity to Average Assets | 9.53% | 9.81% | 9.33% | 9.84% |
Average Tangible Equity to Average Assets | 7.13% | 7.24% | 7.03% | 7.30% |
Net Interest Margin Tax-Equivalent (a) | 3.13% | 3.24% | 3.34% | 3.11% |
Dividend Payout Ratio | 51.49% | 48.80% | 50.00% | 53.33% |
Allowance for Loan Losses/Total Loans | 0.74% | 0.76% | 0.74% | 0.76% |
Non-Performing Loans to Total Loans | 0.31% | 0.42% | 0.31% | 0.42% |
Non-Performing Assets to Total Assets | 0.23% | 0.32% | 0.23% | 0.32% |
Efficiency Ratio | 50.16% | 52.12% | 45.88% | 52.44% |
At Period End | | | | |
Total Assets | $1,223,250 | $1,104,869 | $1,223,250 | $1,104,869 |
Total Loans | 920,164 | 838,145 | 920,164 | 838,145 |
Total Investment Securities | 221,815 | 180,549 | 221,815 | 180,549 |
Total Deposits | 781,280 | 805,235 | 781,280 | 805,235 |
Total Shareholders’ Equity | 112,668 | 107,327 | 112,668 | 107,327 |
(a) Annualized using a 365-day basis |
