A $48 million merger announced Thursday between the First National Bank of Damariscotta and the First National Bank of Bar Harbor, if approved by federal regulators, would create the fourth-largest Maine-headquartered bank.

The deal would merge Bar Harbor-based FNB Bankshares into the First National Lincoln Corporation, based in Damariscotta. FNB is the parent of the First National Bank of Bar Harbor, with six branches between Blue Hill and Calais. FNLC is the parent of the First National Bank of Damariscotta, with seven branches in Lincoln and Knox counties.

The deal would create a coastal institute with more than $840 million in assets and 220 employees. Dan Daigneault, president and CEO of FNLC, will maintain his titles, overseeing the combined company.

A Rockport resident who will turn 52 years old Saturday, Daigneault said no branches will be closed, and he anticipates no jobs will be lost in the union of the two firms.

“One of the focal points of the consolidation is to preserve all our employees’ jobs,” he said.

Areas targeted for improvement include money spent by the smaller FNB to outsource check-processing and information-technology functions. The Damariscotta bank handles such operations in-house and has sufficient excess capacity.

“So we can easily absorb the volume they are doing into our system and eliminate the need for a third party,” Daigneault said.

The combined company can also cut costs by consolidating contracts for services such as auditing and accounting, as well as charter dues and fees paid to the U.S. Office of the Comptroller of the Currency.

Tony McKim, president and CEO of FNB Bankshares, will hold those titles at First National Bank of Bar Harbor following the merger. McKim’s title under the expanded FNLC will be executive vice president and chief operating officer.

Daigneault said both banks have identified opportunities in the forecast climate of continuing increases in interest rates, and both operations have seen improving margins through the first portion of the year.

The First National Bank of Damariscotta was chartered in 1864, the First National of Bar Harbor in 1888. FNLC began trading on Nasdaq in 1999. FNB began trading as an over-the-counter stock in 1998.

“Even though we’re publicly traded, I would say at least 85 percent of our shareholders are Maine-based shareholders,” Daigneault said. “At First National of Bar Harbor, it’s probably 90 percent plus.”

Company officials expect the transaction to close early in 2005, pending approval from federal regulators and each company’s board of directors. The final value of the deal will depend on the per share price of FNLC common stock prior to closing.