Exhibit 99.1
Financial Results
Third Quarter 2004
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FNLC
First National Lincoln Corporation
October 29, 2004
Dear First National Lincoln Corporation Shareholder:
I am pleased to report the cash dividend for the third quarter of 2004 is
$0.115 per share. This dividend is an increase over the $0.110 per share
declared in the second quarter of 2004 and represents the 36th consecutive
quarter of dividend increases for First National Lincoln Corporation
shareholders. On an annualized basis, the quarterly dividend of $0.115 per
share translates to $0.46 per share.
Our operating results for the first nine months of 2004 were exceptional. The
Company posted record earnings of $6,197,000 for the nine months ended
September 30, 2004, an increase of $777,000 or 14.3% over the $5,420,000 earned
in the first nine months of 2003. Earnings per share were $0.83 on a fully
diluted basis for the nine months ended September 30, 2004, an increase of
13.7% over the $0.73 reported for the first nine months of 2003.
Growth in earning assets was the primary reason for the continued strong
increase in earnings. Total loans were up $62.6 million or 15.7% over December
31, 2003, as shown in the chart at right. We also posted a $2.9 million or
22.9% increase in net interest income generated by a combination of loan growth
and higher interest rates due to recent interest rate increases by the Federal
Reserve.
On August 26, 2004, we announced the signing of a definitive agreement for the
merger of FNB Bankshares of Bar Harbor, Maine, with First National Lincoln
Corporation. At closing, the combined company will have 14 banking offices and
four investment management offices serving coastal Maine communities from
Brunswick to Calais. We will also become one of the four largest banks
headquartered in Maine.
The shareholders of both companies must approve the transaction, and you will
be receiving a mailing later this year for this purpose. We urge investors to
read these documents because they contain important information about the
merger. Investors should read the prospectus/proxy statement and other
documents to be filed with the SEC carefully before making a decision
concerning the merger.
I continue to be excited by the opportunities that will be created as a result
of combining our companies, and am optimistic the merger will be completed in
the first quarter of 2005 once all regulatory and shareholder approvals are
received. You can log on to our website at any time, www.fnlc.com, which
provides access to all of our press releases, regulatory filings and financial
data that may be of interest to you as a shareholder.
On behalf of our board of directors and employees and we thank you, our
shareholders, for your confidence and support of First National Lincoln
Corporation.
Very Truly Yours,
/s/ Daniel R. Daigneault
Daniel R. Daigneault
President & Chief Executive Officer
[graphic]
Chart showing loan portfolio growth from $398 million to $461 million between
December 31, 2003 and September 30, 2004
Consolidated Balance Sheets (unaudited)
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Dollars in thousands Sept 30, 2004 Sept 30, 2003 Dec 31, 2003
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Assets
- ----------------------------------------
Cash and due from banks $16,659 $13,758 $17,087
Overnight funds sold 0 0 0
Investments:
Available for sale 52,900 62,815 57,445
Held to maturity (market values $85,316
at 9/30/04, $78,174 at 9/30/03, and
$80,820 at 12/31/03) 84,310 76,381 79,244
Loans held for sale (fair value
approximates cost) 0 1,884 982
Loans 461,504 383,032 398,895
Less: allowance for loan losses 4,727 4,177 4,200
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Net loans 456,777 378,855 394,695
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Accrued interest receivable 3,026 2,814 2,743
Bank premises and equipment 9,149 7,466 9,007
Other real estate owned 0 51 51
Other assets 7,381 7,794 7,558
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Total Assets $630,202 $551,818 $568,812
========== ========== ==========
Liabilities & Stockholders' Equity
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Demand deposits $33,734 $33,425 $28,874
NOW deposits 60,088 55,593 52,161
Money market deposits 85,651 86,366 80,586
Savings deposits 67,182 65,093 63,356
Certificates of deposit 75,423 69,522 69,880
Certificates $100,000 and over 79,401 60,953 64,220
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Total deposits 401,479 370,952 359,077
Borrowed funds 172,442 129,583 157,822
Other liabilities 4,749 4,550 4,195
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Total Liabilities 578,670 505,085 521,094
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Shareholders' Equity:
Common stock 74 74 74
Additional paid-in capital 3,851 4,638 4,650
Retained earnings 45,378 41,707 42,988
Net unrealized gains on available-for-
sale securities 2,229 2,558 2,497
Treasury stock 0 (2,244) (2,491)
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Total Stockholders' Equity 51,532 46,733 47,718
---------- ---------- ----------
Total Liabilities & Stockholders' Equity $630,202 $551,818 $568,812
========== ========== ==========
Number of shares authorized 18,000,000 18,000,000 18,000,000
Number of shares issued and outstanding 7,350,040 7,279,725 7,264,140
Book value per share 7.01 6.42 6.57
Allowance for loan losses/total loans 1.02% 1.09% 1.05%
Non-performing assets to total assets 0.28% 0.23% 0.29%
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Consolidated Statements of Income (unaudited)
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For nine months For the quarters
ended Sept. 30, ended Sept. 30,
Dollars in thousands ---------------- ---------------
except per share amounts 2004 2003 2004 2003
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Interest Income
Interest and fees on loans $17,470 $15,949 $6,172 $5,358
Interest on deposits with other banks 4 52 1 4
Interest and dividends on investments 4,940 4,486 1,702 1,453
---------------- ---------------
Total interest income 22,414 20,487 7,875 6,815
---------------- ---------------
Interest expense
Interest on deposits 3,868 4,600 1,342 1,318
Interest on borrowed funds 2,748 3,037 921 911
---------------- ---------------
Total interest expense 6,616 7,637 2,263 2,229
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Net interest income 15,798 12,850 5,612 4,586
Provision for loan losses 720 675 240 225
---------------- ---------------
Net interest income after provision
for loan losses 15,078 12,175 5,372 4,361
---------------- ---------------
Other operating income
Fiduciary income 644 577 214 203
Service charges on deposit
accounts 881 833 301 268
Net securities gains 0 0 0 0
Mortgage origination and
servicing income 310 794 59 304
Other operating income 1,688 1,772 726 768
---------------- ---------------
Total other operating income 3,523 3,976 1,300 1,543
---------------- ---------------
Other operating expenses
Salaries and employee benefits 5,138 4,377 1,835 1,546
Occupancy expense 655 569 227 176
Furniture and equipment expense 1,094 1,039 340 338
Other 3,047 2,606 1,174 1,016
---------------- ---------------
Total other operating expenses 9,934 8,591 3,576 3,076
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Income before income taxes 8,667 7,560 3,096 2,828
Applicable income taxes 2,470 2,140 880 816
---------------- ---------------
NET INCOME $6,197 $5,420 $2,216 $2,012
================ ===============
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Earnings per common share
Basic earnings per share $ 0.85 $ 0.75 $ 0.30 $ 0.28
Diluted earnings per share 0.83 0.73 0.30 0.27
Cash dividends declared 0.328 0.280 0.115 0.097
Closing market price per share 19.25 14.33 19.25 14.33
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Financial ratios
Return on average equity 1 16.85% 16.23% 17.78% 17.24%
Return on average assets 1 1.40% 1.40% 1.44% 1.49%
Net interest margin tax-equivalent 1 3.93% 3.69% 4.04% 3.78%
Average equity to average assets 8.29% 8.63% 8.12% 8.64%
Dividend payout ratio 38.59% 37.50% 38.33% 34.94%
Efficiency ratio 49.07% 48.66% 49.18% 47.95%
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1 Quarterly results have been annualized using a 365-day basis
"We posted a $2.9 million or 22.9% increase in net interest income generated by
a combination of loan growth and higher interest rates due to recent interest
rate increases by the Federal Reserve."
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FNLC
First National Lincoln Corporation
Board of Directors
Robert B. Gregory
Chairman of the Board
Malcolm E. Blanchard
Katherine M. Boyd
Daniel R. Daigneault
Dana L. Dow
Randy A. Nelson
Carl S. Poole, Jr.
Stuart G. Smith
David B. Soule, Jr.
Bruce B. Tindal
Executive Officers
Daniel R. Daigneault
President & Chief Executive Officer
F. Stephen Ward
Treasurer & Chief Financial Officer
Charles A. Wootton
Clerk
Independent Auditors
Berry, Dunn, McNeil & Parker
Portland, Maine
First National Lincoln Corporation
P.O. Box 940, Damariscotta, Maine 04543
207.563.3195
www.fnlc.com
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FNLC
NASDAQ LISTED