First Bancorp, Inc /ME/ - Quarter Report: 2005 March (Form 10-Q)

Investments

The Company's investment portfolio increased by $29.4 million or 23.1% to $156.2 million between December 31, 2004, and March 31, 2005. At March 31, 2005, the Company's available-for-sale portfolio had an unrealized gain, net of taxes, of $1.3 million. Between March 31, 2004 and March 31, 2005, the Company's investment portfolio increased by $18.1 million or 13.2%. This growth was the result of the FNB acquisition.

On a pro-forma basis, the Company's investment portfolio increased by $2.1 million or 1.4% during the first quarter of 2005. Year-over-year, the investment portfolio declined by $15.8 million or 9.2% on a pro-forma basis, the result of a decline in investments on the FNB balance sheet to fund loan growth.

Loans

Loans grew by $204.3 million or 42.7% during the first three months of 2005. The growth in commercial loans was $133.7 million or 9.9% and municipal loans increased $8.3 million or 92.1%. The residential mortgage portfolio increased by $30.1 million or 17.3%, and home equity lines of credit grew $10.4 million or 19.9% year-to-date. The majority of this growth was due to the FNB acquisition. Between March 31, 2004 and March 31, 2005, the loan portfolio increased $267.2 million or 64.3%, as a result of strong customer demand and the FNB acquisition

On a pro-forma basis, the loan portfolio increased by $18.2 million or 2.7% during the first quarter of 2005. In Management's view, this is strong growth since the first quarter is traditionally not a strong period for loan growth. Year-over-year, the loan portfolio increased by $98.1 million or 16.8% on a pro-forma basis, the result of strong loan growth seen by the Company in both the Mid-Coast and Down East Maine regions.

Allowance for Loan Losses

The allowance for loan losses represents the amount available for credit losses inherent in the Company's loan portfolio. Loans are charged off when they are deemed uncollectible, after giving consideration to factors such as the customer's financial condition, underlying collateral and guarantees, as well as general and industry economic conditions.

Adequacy of the allowance for loan losses is determined using a consistent, systematic methodology, which analyzes the risk inherent in the loan portfolio. In addition to evaluating the collectibility of specific loans when determining the adequacy of the allowance for loan losses, Management also takes into consideration other factors such as changes in the mix and size of the loan portfolio, historic loss experience, the amount of delinquencies and loans adversely classified, and economic trends. The adequacy of the allowance for loan losses is assessed by an allocation process whereby specific loss allocations are made against certain adversely classified loans, and general loss allocations are made against segments of the loan portfolio which have similar attributes. The Company’s historical loss experience, industry trends, and the impact of the local and regional economy on the Company’s borrowers, were considered by Management in determining the adequacy of the allowance for loan losses.

The allowance for loan losses is increased by provisions charged against current earnings. Loan losses are charged against the allowance when management believes that the collectibility of the loan principal is unlikely. Recoveries on loans previously charged off are credited to the allowance. While Management uses available information to assess possible losses on loans, future additions to the allowance may be necessary based on increases in non-performing loans, changes in economic conditions, growth in loan portfolios, or for other reasons. Any future additions to the allowance would be recognized in the period in which they were determined to be necessary. In addition, various regulatory agencies periodically review the Company’s allowance for loan losses as an integral part of their examination process. Such agencies may require the Company to record additions to the allowance based on judgments different from those of Management.

Credit quality of the commercial portfolios is quantified by a corporate credit rating system designed to parallel regulatory criteria and categories of loan risk. Individual loan officers monitor their loans to ensure appropriate rating assignments are made on a timely basis. Risk ratings and quality of the commercial loan portfolio are also assessed on a regular basis by an independent loan review consulting firm. An ongoing portfolio trend analyses and individual credit reviews to evaluate loan risk and compliance with corporate lending policies are also performed. The level of allowance allocable to each group of risk-rated loans is then determined by applying a loss factor that estimates the amount of probable loss in each category. The assigned loss factor for each risk rating is based upon Management’s assessment of historical loss data, portfolio characteristics, economic trends, overall market conditions and past experience.

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Consumer loans, which include residential mortgages, home equity loans/lines, and direct/indirect loans, are generally evaluated as a group based on product type and on the basis of delinquency data and other credit data available due to the large number of such loans and the relatively small size of individual credits. Allocations for these loan categories are principally determined by applying loss factors that represent Management’s estimate of inherent losses. In each category, inherent losses are estimated based upon Management’s assessment of historical loss data, portfolio characteristics, economic trends, overall market conditions and past experience. In addition, certain loans in these categories may be individually risk-rated if considered necessary by Management.

The other method used to allocate the allowance for loan losses entails the assignment of reserve amounts to individual loans on the basis of loan impairment. Certain loans are evaluated individually and are judged to be impaired when Management believes it is probable that the Company will not collect all of the contractual interest and principal payments as scheduled in the loan agreement. Under this method, loans are selected for evaluation based on internal risk ratings or non-accrual status. A specific reserve is allocated to an individual loan when that loan has been deemed impaired and when the amount of a probable loss is estimable on the basis of its collateral value, the present value of anticipated future cash flows, or its net realizable value. At December 31, 2004, impaired loans with specific reserves totaled $0.7 million (all of these loans were on non-accrual status) and the amount of such reserves were $0.2 million.

All of these analyses are reviewed and discussed by the Directors' Loan Committee, and recommendations from these processes provide Management and the Board of Directors with independent information on loan portfolio condition. As a result of these analyses, the Company has concluded that the level of the allowance for loan losses was adequate as of March 31, 2005. As of that date, the balance of $6,577,000 was 0.96% of total loans, compared to 0.99% at December 31, 2004 and 1.06% at March 31, 2004. Loans considered to be impaired according to SFAS 114/118 totaled $2,562,000 at March 31, 2005, compared to $1,601,000 at December 31, 2004. The portion of the allowance for loan losses allocated to impaired loans at March 31, 2005, was $282,000 compared to $204,000 at December 31, 2004.

On a pro-forma basis, the allowance for loan losses decreased by $142,000 or 2.1% in the first three months of 2005. This was the result of no additional provision to the allowance due to credit quality in the loan portfolio and the level of loan chargeoffs during the period.

 

Deposits

 

During the first three months of 2005, deposits increased by $236.3 million or 63.9% over December 31, 2004. Core deposits (demand, NOW, savings and money market accounts) increased by $147.0 million or 62.03% in the first three months of 2005 compared to the same period in 2004. During the same period, certificates of deposit increased $89.3 million. Between March 31, 2004, and March 31, 2005, deposits grew by 57.8%, or $221.9 million. Demand deposits grew $27.9 million, NOW accounts $53.3 million, savings $47.4 million, and money market accounts $33.4 million, while certificates of deposit increased $59.9 million. The majority of the growth, both year-to-date and year-over-year, was due to the FNB acquisition.

On a pro-forma basis, deposits grew by $46.7 million or 8.3% during the first three months of 2005. This growth was in money market deposits, which increased as a result of the FNB acquisition, and CDs, primarily from wholesale and brokered sources.

 

Borrowed Funds

 

The Company's funding includes borrowings from the Federal Home Loan Bank of Boston, the Federal Reserve System, and repurchase agreements, enabling it to grow its balance sheet and, in turn, grow its revenues. They may also be used to carry out interest rate risk management stategies, and are increased to replace or supplement other sources of funding, including core deposits and certificates of deposit. During the three months ended March 31, 2005, borrowed funds decreased by $4.4 million or 2.1% from December 31, 2004. Between March 31, 2004 and March 31, 2005, borrowed funds increased $63.3 million or 45.4%. These enabled the Company to meeting its funding needs for asset growth at a reasonable cost.

On a pro-forma basis, borrowed funds decreased by $25.4 million or 11.1% during the first quarter of 2005. This was the result of strong growth in deposits, as noted above. Year-over-year, borrowed funds increased $49.3 million or 32.1% on a pro-forma basis in order to fund asset growth, as noted above.

 

 

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Shareholders' Equity

 

Shareholders' equity as of March 31, 2005 was $99.7 million, compared to $52.8 million as of December 31, 2004. The Company's strong earnings performance in the first three months of 2005, net of dividends paid, added to shareholders' equity, in addition to the significant increase from the FNB acquisition. The net unrealized gain on available-for-sale securities, presented in accordance with SFAS 115, decreased by $0.6 million from December 31, 2004, as a result of a recent rise in interest rates.

On April 27, 2004, the Company's Board of Directors declared a three-for-one split of the Company's common stock payable in the form of a 200% stock dividend to shareholders of record on May 12, 2004, with a payment date of June 1, 2004. All share and per share data included in the consolidated financial statements and elsewhere in this report have been restated to reflect the stock split.

In 2005, a cash dividend of 12.5 cents per share was declared in the first quarter compared to 10.3 cents in the first quarter of 2004. The dividend payout ratio was 39.06% in the first quarter of 2005 compared to 39.24% in the first quarter of 2004.

In determining future dividend payout levels, the Board of Directors carefully analyzes capital requirements and earnings retention, as set forth in the Company's Dividend Policy. The ability of the Company to pay cash dividends to its shareholders depends on receipt of dividends from its subsidiary, the Bank. The subsidiary may pay dividends to its parent out of so much of its net profits as the Bank's directors deem appropriate, subject to the limitation that the total of all dividends declared by the Bank in any calendar year may not exceed the total of its net profits of that year combined with its retained net profits of the preceding two years. The amount available for dividends in 2005 is this year's net income plus $9.7 million.

Regulatory leverage capital ratios for the Company were 8.70% and 8.03% at March 31, 2005 and December 31, 2004, respectively. The Company had a tier one risk-based capital ratio of 11.02% and tier two risk-based capital ratio of 12.05% at March 31, 2005, compared to 11.62% and 12.71%, respectively, at December 31, 2004. These are comfortably above the standards to be rated "well-capitalized" by regulatory authorities -- qualifying the Company for lower deposit-insurance premiums.

On January 20, 2005, the Company announced that its Board of Directors has authorized the repurchase of up to 250,000 shares of the Company's common stock or approximately 2.5% of the outstanding shares. The Company expects such repurchases to be effected from time to time, in the open market, in private transactions or otherwise, during a period of up to 24 months. The amount and timing of shares to be purchased will be subject to market conditions and will be based on several factors, including the price of the Company's stock and the level of stock issuances under the Company's employee stock plans. No assurance can be given as to the specific timing of the share repurchases or as to whether and to what extent the share repurchase will be consummated.

As of March 31, 2005, the Company had repurchased 38,413 shares under the new repurchase plan at an average price of $17.37.

 

Non-Performing Assets

 

At March 31, 2005, loans on non-accrual status totaled $2.5 million, which compares to non-accrual loans of $1.6 million as of December 31, 2004. In addition to loans on non-accrual status at March 31, 2005, loans past due 90 days or more and accruing (calculated on a constant 30-day month basis) totaled $1.0 million, which compares to $281,000 as of December 31, 2004. The Company continues to accrue interest on these loans because it believes collection of the interest is reasonably assured. The majority of the increase in non-performing assets in the first quarter of 2005 was the result of the balance sheet combination from the FNB acquisition.

 

Off-Balance Sheet Financial Instruments

 

No material off-balance sheet risk exists that requires a separate liability presentation.

 

Sale of Loans

 

No recourse obligations have been incurred in connection with the sale of loans.

 

 

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Contractual Obligations

 

The following table sets forth the contractual obligations of the Company as of March 31, 2005:

 

In thousands of dollars	Total	Less than 1 year	1-3 years	3-5 years	More than 5 years
Borrowed funds	$202,856	$159,145	$14,000	$29,500	$211
Operating leases	878	202	384	191	101
Certificates of deposit	222,310	165,113	40,082	17,115	-
Total	$426,044	$324,460	$54,466	$46,806	$312
Commitments to extend credit and unused lines of credit	$123,427	$123,427	$-	$-	$-

 

Liquidity Management

 

As of March 31, 2005 the Bank had primary sources of liquidity of $43.8 million and an additional $173.7 million of secondary sources. It is Management's opinion this is adequate. In its Asset/Liability policy, the Bank has guidelines for liquidity. The Company is not aware of any recommendations by the regulatory authorities which, if they were to be implemented, would have a material effect on the Company's liquidity, capital resources or results of operations.

 

New Accounting Standards

 

In March 2005, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. (FIN) 47 - Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143, which clarifies the term “conditional asset retirement obligation” as used in Statement of Financial Accounting Standards (SFAS) No. 143 – Accounting for Asset Retirement Obligations. Specifically, FIN 47 provides that an asset retirement obligation is conditional when either the timing and (or) method of settling the obligation is conditioned on a future event. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement if the fair value of the liability can be reasonably estimated. Uncertainty about the timing and (or) method of settlement of a conditional asset retirement obligation should be factored into the measurement of the liability when sufficient information exists. The interpretation also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective for fiscal years ending after December 15, 2005. Management expects the adoption of FIN 47 will not have a material effect on the Company’s consolidated financial statements.

 

Forward-Looking Statements

 

Certain disclosures in Management's Discussion and Analysis of Financial Condition and Results of Operations contain certain forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). In preparing these disclosures, Management must make assumptions, including, but not limited to, the level of future interest rates, prepayments on loans and investment securities, required levels of capital, needs for liquidity, and the adequacy of the allowance for loan losses. These forward-looking statements may be subject to significant known and unknown risks uncertainties, and other factors, including, but not limited to, those matters referred to in the preceding sentence.

Although First National Lincoln Corporation believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from the results discussed in these forward-looking statements. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date hereof. The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures made by the Company which attempt to advise interested parties of the facts which affect the Company's business.

 

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Item 3 – Quantitative and Qualitative Disclosures About Market Risk

 

Market-Risk Management

 

Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates. First National Lincoln Corporation's market risk is composed primarily of interest rate risk. The Bank's Asset/Liability Committee (ALCO) is responsible for reviewing the interest rate sensitivity position of the Company and establishing policies to monitor and limit exposure to interest rate risk. All guidelines and policies established by ALCO have been approved by the Board of Directors.

 

Asset/Liability Management

 

The primary goal of asset/liability management is to maximize net interest income within the interest rate risk limits set by ALCO. Interest rate risk is monitored through the use of two complementary measures: static gap analysis and earnings simulation modeling. While each measurement has limitations, taken together they represent a reasonably comprehensive view of the magnitude of interest rate risk in the Company, the level of risk through time, and the amount of exposure to changes in certain interest rate relationships.

Static gap analysis measures the amount of repricing risk embedded in the balance sheet at a point in time. It does so by comparing the differences in the repricing characteristics of assets and liabilities. A gap is defined as the difference between the principal amount of assets and liabilities which reprice within a specified time period. The Bank's cumulative one-year gap, at March 31, 2005, was -2.15% of total assets. ALCO's policy limit for the one-year gap is plus or minus 20% of total assets. Core deposits with non-contractual maturities are presented based upon historical patterns of balance attrition and pricing behavior which are reviewed at least annually.

The gap repricing distributions include principal cash flows from residential mortgage loans and mortgage-backed securities in the time frames in which they are expected to be received. Mortgage prepayments are estimated by applying industry median projections of prepayment speeds to portfolio segments based on coupon range and loan age.

A summary of the Bank's static gap, as of March 31, 2005 is presented in the following table:

 

	0-90	90-365	1-5	5+
	Days	Days	Years	Years
Investment securities at amortized cost	$18,940	$11,605	$85,763	$40,607
Loans held for sale	-	-	-	-
Loans	282,249	110,635	229,413	60,604
Other interest-earning assets	-	-	-	7,975
Non-rate-sensitive assets	-	-	-	32,908
Total assets	301,189	122,240	315,176	142,094
Interest-bearing deposits	205,220	77,537	56,457	215,058
Borrowed funds	151,194	3,633	16,000	27,711
Non-rate-sensitive liabilities and equity	1,200	3,600	19,200	103,889
Total liabilities and equity	357,614	84,770	91,657	346,658
Period gap	$(56,425)	$37,470	$223,519	$(204,564)
Percent of total assets	-6.41%	4.25%	25.38%	-23.23%
Cumulative gap (current)	(56,425)	(18,955)	204,564	0
Percent of total assets	-6.41%	-2.15%	23.23%	0.00%

 

The earnings simulation model forecasts capture the impact of changing interest rates on one-year and two-year net interest income. The modeling process calculates changes in interest income received and interest expense paid on all interest-earning assets and interest-bearing liabilities reflected on the Company's balance sheet. None of the assets used in the simulation are held for trading purposes. The modeling is done for a variety of scenarios that incorporate changes in the absolute level of interest rates as well as basis risk, as represented by changes in the shape of the yield curve and changes in interest rate relationships. Management evaluates the effects on income of alternative interest rate scenarios

 

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against earnings in a stable interest rate environment. This analysis is also most useful in determining the short-run earnings exposures to changes in customer behavior involving loan payments and deposit additions and withdrawals.

The Bank's most recent simulation model projects net interest income would increase by approximately 0.77% of stable-rate net interest income if short-term rates affected by Federal Open Market Committee actions fall gradually by one percentage point over the next year, and decrease by approximately 3.33% if rates rise gradually by two percentage points. Both scenarios are well within ALCO's policy limit of a decrease in net interest income of no more than 10.0% given a 2.0% move in interest rates, up or down. Management believes this reflects a reasonable interest rate risk position. In year two, and assuming no additional movement in rates, the model forecasts that net interest income would be higher than that earned in a stable rate environment by 2.68% in a falling-rate scenario and decrease by 1.83% in a rising rate scenario when compared to the year-one base scenario.

A summary of the Bank's interest rate risk simulation modeling, as of March 31, 2005 is presented in the following table:

 

Changes in Net Interest Income

2005

Year 1

Projected change if rates decrease by 1.0%	+0.77%
Projected change if rates increase by 2.0%		-3.33%

Year 2

Projected change if rates decrease by 1.0%	+2.68%
Projected change if rates increase by 2.0%		-1.83%

 

This dynamic simulation model includes assumptions about how the balance sheet is likely to evolve through time and in different interest rate environments. Loans and deposits are projected to maintain stable balances. All maturities, calls and prepayments in the securities portfolio are assumed to be reinvested in similar assets. Mortgage loan prepayment assumptions are developed from industry median estimates of prepayment speeds for portfolios with similar coupon ranges and seasoning. Non-contractual deposit volatility and pricing are assumed to follow historical patterns. The sensitivities of key assumptions are analyzed annually and reviewed by ALCO.

The information for static gap and changes in net interest income presented in this section pertains to the Bank only and does not include a small volume of assets and liabilities owned by the Company and included in its consolidated financial statements as of March 31, 2005. Modeling was done using data from March 29, 2005. In Management's opinion, the Bank-only information as of March 31, 2005 would not be materially different than that for the Company's consolidated balances on March 31, 2005. This sensitivity analysis does not represent a Company forecast and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions including, among others, the nature and timing of interest rate levels, yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, and reinvestment/ replacement of asset and liability cash flows. While assumptions are developed based upon current economic and local market conditions, the Company cannot make any assurances as to the predictive nature of these assumptions, including how customer preferences or competitor influences might change.

 

Interest Rate Risk Management

 

A variety of financial instruments can be used to manage interest rate sensitivity. These may include investment securities, interest rate swaps, and interest rate caps and floors. Frequently called interest rate derivatives, interest rate swaps, caps and floors have characteristics similar to securities but possess the advantages of customization of the risk-reward profile of the instrument, minimization of balance sheet leverage and improvement of liquidity. As of March 31, 2005, the Company was not using any derivative instruments for interest rate risk management.

The Company engages an independent consultant to periodically review its interest rate risk position, as well as the effectiveness of simulation modeling and reasonableness of assumptions used. As of March 31, 2005, there were no significant differences between the views of the independent consultant and Management regarding the Company's interest rate risk exposure. Management expects interest rates will continue to rise in 2005 and believes that the current level of interest rate risk is acceptable.

 

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Item 4: Controls and Procedures

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of March 31, 2005, the end of the quarter covered by this report, the Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. In designing and evaluating the Company’s disclosure controls and procedures, the Company and its management recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and the Company’s management necessarily was required to apply its judgment in evaluating and implementing possible controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. There was no change in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2005 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company reviews its disclosure controls and procedures, which may include its internal controls over financial reporting on an ongoing basis, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that the Company’s systems evolve with its business.

 

 

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Part II – Other Information

 

Item 1 – Legal Proceedings

 

The Company was not involved in any legal proceedings requiring disclosure under Item 103 of Regulation S-K during the reporting period.

 

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds  

 

The Company issues shares to the Bank's 401k Investment and Savings Plan pursuant to an exemption from registration under the Securities Act of 1933, as amended (the "Securities Act"), contained in Section 3(a)(11) thereof and Rule 147 promulgated thereunder. During the first three months of 2005, 8,162 shares were issued pursuant to this Plan, as presented in the following table:

 

Month	Shares
January	6,088
February	1,514
March	560
	8,162

 

Item 3 – Default Upon Senior Securities

 

None.

 

Item 4 – Submission of Matters to a Vote of Security Holders

 

A special meeting of shareholders was held at 10:00 a.m. on January 11, 2005 in Newcastle, Maine, for the following purposes:

•	to consider and vote upon a proposal to approve an agreement and plan of merger, dated as of August 25, 2004, between First National Lincoln Corporation and FNB Bankshares;
•	to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the merger agreement; and
•	to transact such other business as may properly come before the special meeting or any adjournment or postponement of the special meeting.

 

The results of the shareholder vote are presented in the following table:

 

				Item #1				Item #2
	Approve Merger					Adjourn to Later Date
FOR		5,379,886					5,310,682
AGAINST			295,028					329,300
ABSTAIN					6,930				41,862
Total Votes Cast		5,681,844					5,681,844

 

Item 5 – Other Information

 

A.

None.

 

B.

None.

 

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Item 6 – Exhibits

 

Exhibit 2.1 Agreement and Plan of Merger With FNB Bankshares Dated August 25, 2004, incorporated by reference to Exhibit 2.1 to the Registrant's Form 8-K dated August 25, 2004, filed under item 1.01 on August 27, 2004.

 

Exhibit 3.1 Conformed Copy of the Registrants Articles of Incorporation, incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed under item 5.03 on October 7, 2004.

 

Exhibit 3.2 Conformed Copy of the Registrant's Bylaws, incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed under item 5.03 on October 7, 2004.

 

Exhibit 10.1(a) FNB Bankshares' Stock Option Plan. incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed under item 5.03 on October 7, 2004.

 

Exhibit 10.1(b) Specimen FNB Bankshares Non-Qualified Stock Option Agreement entered into with Messrs. Rosborough, McKim, Wrobel, Dalrymple and Lay, whose FNB Bankshares options have been converted into options to purchase 5,287, 34,086, 15,275, 11,750 and 21,150 shares of the Registrant's stock, respectively, all at $3.80 per share, incorporated by reference to Exhibit 10.1(b) to the Company’s Form 8-K filed under item 1.01 on January 14, 2005.

 

Exhibit 10.2(a) Specimen Employment Continuity Agreement entered into with Messrs. McKim, Wroble, Dalrymple and Lay, incorporated by reference to Exhibit 10.2(a) to the Company’s Form 8-K filed under item 1.01 on January 14, 2005.

 

Exhibit 10.2(b) Specimen Amendment to Employment Continuity Agreement entered into with Messrs. McKim, Wrobel, Dalrymple and Lay, incorporated by reference to Exhibit 10.2(b) to the Company’s Form 8-K filed under item 1.01 on January 14, 2005.

 

Exhibit 10.3(a) Specimen Split Dollar Agreement entered into with Messrs. McKim, Wrobel, Dalrymple and Lay. For Mr. McKim, the amount of the death benefit is $250,000; for Messrs. Lay, Dalrymple and Wrobel, the death benefit is $150,000. Incorporated by reference to Exhibit 10.3(a) to the Company’s Form 8-K filed under item 1.01 on January 14, 2005.

 

Exhibit 10.3(b) Specimen Amendment to Split Dollar Agreement entered into with Messrs. McKim, Wrobel, Dalrymple and Lay, incorporated by reference to Exhibit 10.3(b) to the Company’s Form 8-K filed under item 1.01 on January 14, 2005.

 

Exhibit 31.1 Certification of Chief Executive Officer Persuant to Rule 13A-14(A) of The Securities Exchange Act of 1934

 

Exhibit 31.2 Certification of Chief Financial Officer Persuant to Rule 13A-14(A) of The Securities Exchange Act of 1934

 

Exhibit 32.1 Certification of Chief Executive Officer Persuant to 18 U.S.C. Section 1350, As Adopted Persuant to Section 906 of The Sarbanes-Oxley Act of 2002

 

Exhibit 32.2 Certification of Chief Financial Officer Persuant to 18 U.S.C. Section 1350, As Adopted Persuant to Section 906 of The Sarbanes-Oxley Act of 2002

 

 

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Signatures

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

FIRST NATIONAL LINCOLN CORPORATION

 

 

/s/ Daniel R. Daigneault

Daniel R. Daigneault

President & Chief Executive Officer

 

Date: May 9, 2005

 

 

/s/ F. Stephen Ward

F. Stephen Ward

Executive Vice President & Chief Financial Officer

 

Date: May 9, 2005

 

 

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