FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Six Months Ended: June 30, 1995 Commission File No.
2-96573
FIRST NATIONAL LINCOLN CORPORATION
(Exact name of registrant as specified in its charter)
MAINE
01-0404322
(State or other jurisdiction of (I.R.S. Employer
Identification No)
incorporation or organization)
MAIN STREET, DAMARISCOTTA, MAINE
04543
(Address of principal executive offices) (Zip
Code)
Registrant's telephone number, including area code (207)
563 - 3195
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes XX No __
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the latest
practicable date.
Class Outstanding at June 30,
1995
(Common Stock, No par)
607,067
<PAGE>
FIRST NATIONAL LINCOLN CORPORATION
INDEX
PART 1 Financial Information
Page
Item 1: Financial Statements
Consolidated Balance Sheets -
1 & 2
June 30, 1995, June 30, 1994,
and December 31, 1994.
Consolidated Statements of Income -
3 & 4
Six months ended June 30, 1995
and June 30, 1994.
Consolidated Statements of Income -
5 & 6
Quarter ended June 30, 1995
and June 30, 1994.
Consolidated Statements of Cash Flows -
7 & 8
Six months ended June 30, 1995
and June 30, 1994.
Management's discussion and analysis of
9 - 12
financial condition and results of operations.
PART II Other Information
Item 6: Exhibits and reports on Form 8-K.
13
Signatures
14
<PAGE>
FIRST NATIONAL LINCOLN CORPORATION
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(000 OMITTED)
6/30/95 6/30/94
12/31/94
(Unaudited)
(Unaudited) (Unaudited)
Assets
Cash and due from banks $6,010
$4,244 $5,230
Investments:
Available for sale (market values $16,580
$16,580 at 6/30/95, $19,391 at 6/30/94
and $16,533 at 12/31/94) 16,580
19,391 16,533
Held to maturity (market values $48,845
at 6/30/95, $47,588 at 6/30/94 and
$46,759 at 12/31/94) 49,035
48,594 49,121
Loans 131,009
121,313 120,294
Allowance for loan losses (2,273)
(2,580) (2,428)
Net loans 128,736
118,733 117,866
Accrued interest receivable 1,800
1,737 1,678
Bank premises and equipment 4,282
4,015 4,485
Other real estate owned 650
639 553
Other assets 1,371
1,761 1,065
Total Assets $208,464
$199,114 $196,531
Liabilities & Stockholders' Equity
Demand deposits $11,089
$10,638 $12,140
NOW deposits 25,898
27,103 27,764
Savings deposits 33,844
42,289 39,906
Money market deposits 6,673
8,411 8,886
Certificates of deposit 50,699
44,723 45,462
Certificates 100M and over 13,867
13,188 8,287
Total deposits $142,070
$146,352 $142,445
<PAGE>
BALANCE SHEETS CONT.
6/30/95
6/30/94 12/31/94
(Unaudited)
(Unaudited) (Unaudited)
Other liabilities 1,592
1,099 584
Borrowed funds 46,659
35,737 36,610
Total Liabilities 190,321
183,188 179,639
Stockholders' Equity:
Common stock 1,522
1,516 1,519
Additional paid-in capital 2,706
2,650 2,678
Retained earnings 13,915
11,787 12,829
Net unrealized gains (losses) on availablefor-sale
securities 53
(27) (134)
Treasury stock (53)
0 0
Total Stockholders' Equity 18,143
15,926 16,892
Total Liabilities & Stockholders'
Equity $208,464
$199,114 $196,531
<PAGE>
FIRST NATIONAL LINCOLN CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(000 OMITTED)
For the six
months ended June 30,
1995 1994
(Unaudited) (Unaudited)
Interest Income:
Interest and fees on loans
$5,772 $4,451
Interest and dividends on investments
2,220 2,115
Total interest income
7,992 6,566
Interest expense:
Interest on deposits
2,395 2,193
Interest on borrowed funds
1,305 437
Total interest expense
3,700 2,630
Net interest income
4,292 3,936
Provision for loan losses
0 0
Net interest income after provision
for loan losses
4,292 3,936
Other operating income:
Trust department income
105 105
Service charges on deposit accounts
234 232
Net securities gains (losses)
(39) 7
Other operating income
103 131
Total other operating income
403 475
Other operating expenses:
Salaries and employee benefits
1,489 1,532
Occupancy expense
156 153
Premises and equipment expense
300 279
Other
905 1,040
Total other operating expenses
2,850 3,004
<PAGE>
STATEMENTS OF INCOME CONT.
1995 1994
Unaudited) (Unaudited)
Income before income taxes
1,845 1,407
Applicable income taxes
583 446
NET INCOME
$1,262 $961
Earnings per common share:
Net income
$2.08 $1.58
Dividends declared
$0.29 $0.27
<PAGE>
FIRST NATIONAL LINCOLN CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(000 OMITTED)
For the
quarter ended June 30,
1995 1994
(Unaudited) (Unaudited)
Interest Income:
Interest and fees on loans
$2,953 $2,330
Interest and dividends on investments
1,114 1,069
Total interest income
4,067 3,399
Interest expense:
Interest on deposits
1,274 1,114
Interest on borrowed funds
689 304
Total interest expense
1,963 1,418
Net interest income
2,104 1,981
Provision for loan losses
0 0
Net interest income after provision
for loan losses
2,104 1,981
Other operating income:
Trust department income
52 52
Service charges on deposit accounts
120 117
Net securities gains (losses)
19 12
Other operating income
53 73
Total other operating income
244 254
Other operating expenses:
Salaries and employee benefits
721 762
Occupancy expense
75 71
Premises and equipment expense
150 138
Other
470 478
Total other operating expenses
1,416 1,449
<PAGE>
STATEMENTS OF INCOME CONT.
1995 1994
(Unaudited) (Unaudited)
Income before income taxes
932 786
Applicable income taxes
293 241
NET INCOME
$639 $545
Earnings per common share:
Net income
$1.05 $0.89
Dividends declared
$0.15 $0.14
<PAGE>
FIRST NATIONAL LINCOLN CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six
months ended June 30,
1995 1994
Unaudited) (Unaudited)
Cash flows from operating activities:
Net income
$1,262 $961
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation
253 221
Provision for loan losses
0 0
Net (gain) loss on sale of investments
39 (7)
Write down of other real estate owned
0 98
Losses related to other real estate owned (2)
6
Net change in other assets
(428) (372)
Net change in other liabilities
1,008 285
Net amortization of premium on investments 11
(17)
Net cash provided by operating activities
2,143 1,175
Cash flows from investing activities:
Proceeds from sales of investments
3,000 5,500
Proceeds from maturities of investments
2,021 5,797
Proceeds from sales of other real estate owned
10 239
Purchase of investments
(4,855) (13,677)
Net decrease (increase) in loans
(11,084) (16,290)
Capital expenditures
(51) (53)
Net cash used in investing activities
(10,959) (18,484)
Cash flows from financing activities:
Net increase (decrease) in demand deposits,
savings, money market and club accounts
(11,071) (3,823)
Net increase (decrease) in certificates of deposit
10,816 (6,535)
Net increase (decrease) in other borrowings
10,049 27,339
Payment to repurchase common stock
(53) 0
Net proceeds from stock issuance
31 25
Dividends paid
(176) (163)
Net cash provided by financing activities
9,596 16,843
<PAGE>
STATEMENTS OF CASH FLOWS CONT.
1995 1994
(Unaudited) (Unaudited)
Net increase (decrease) in cash and
cash equivalents
780 (466)
Cash and cash equivalents at beginning
of period
5,230 4,710
Cash and cash equivalents at end of
period
$6,010 $4,244
Interest paid
$3,639 $2,662
Income taxes paid
$319 $266
Non-cash transactions:
Loans transferred to Other Real Estate
Owned (Net)
$109 $0
<PAGE>
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
EARNINGS SUMMARY
Net income for the six months ended June 30, 1995 was
$1,262,000, an increase of 31.3% over 1994's net income of
$961,000.
Net income for the quarter ended June 30, 1995 was
$639,000, compared to $545,000 in 1994, an increase of
17.2%.
NET INTEREST INCOME
Net interest income for the six months ended June 30,
1995 was $4,292,000,a 9.0% increase over 1994's net interest
income of $3,936,000. Total interest income of $7,992,000
is a 21.7% increase over 1994's total interest income of
$6,566,000. Total interest expense of $3,700,000 is a 40.7%
increase over 1994's total interest expense of $2,630,000.
Net interest income for the quarter ended June 30, 1995
was $2,104,000, a 6.2% increase over 1994's net interest
income of $1,981,000. Total interest income of $4,067,000
is a 19.7% increase over 1994's total interest income of
$3,399,000. Total interest expense of $1,963,000 is a 38.4%
increase over 1994's total interest expense of $1,418,000.
PROVISION FOR LOAN LOSSES
No provision to the allowance for loan losses was made
during the first six months of 1995. The allowance for loan
losses is deemed adequate as calculated in accordance with
Banking Circular #201.
NON-INTEREST INCOME
Non-interest income of $403,000 for the six months
ended June 30, 1995 was a decrease of 15.2% from 1994's non
interest income of $475,000. This decrease is due primarily
to a net securities loss of $39,000 during the first six
months of 1995.
Non-interest income for the quarter ended June 30, 1995
was $244,000, a 3.9% decrease from the same period a year
ago.
NON-INTEREST EXPENSE
Non-interest expense of $2,850,000 for the six months
ended June 30, 1995 is a decrease of 5.1% from 1994's non
interest expense of $3,004,000.
Non-interest expense for the quarter ended June 30,
1995 was $1,416,000, a 2.3% decrease from 1994's noninterest
expense of $1,449,000.
<PAGE>
INCOME TAXES
Income taxes on operating earnings increased to
$583,000 for the first six months in 1995 from $446,000 for
the same period a year ago. The level of income taxes has
increased as a result of the Company's increased earnings.
Income taxes were $293,000 for the quarter ended June
30, 1995 compared to $241,000 in 1994.
DEPOSITS AND BORROWED FUNDS
Deposits as of June 30, 1995 decreased by 2.9% or
$4,282,000 from June 30, 1994. Demand deposits increased by
4.2% or $451,000, NOW deposits decreased by 4.4% or
$1,205,000, savings deposits decreased by 20.0% or
$8,445,000, money market deposits decreased by 20.7% or
$1,738,000 and certificates of deposit increased by 11.5% or
$6,655,000.
Deposits were supplemented by borrowings from the
Federal Home Loan Bank and repurchase agreements. Total
borrowed funds increased by 30.6% or $10,922,000 from the
same period a year ago.
STOCKHOLDERS' INVESTMENT AND CAPITAL RESOURCES
Stockholders' investment as of June 30, 1995 was
$18,143,000 compared to $15,926,000 for the same period in
1994. The reason for this increase was the improved
earnings performance in the year 1994 and the first six
months of 1995.
During 1994, the Company declared cash dividends of 13
cents per share for the first quarter and 14 cents per share
for the last three quarters. Dividends remained at 14 cents
per share for the first quarter in 1995 and then were
increased by one cent in the second quarter to the current
level of 15 cents per share.
Primary capital at June 30, 1995 was 9.38% versus
9.18% at June 30, 1994, both well above the 6.00% level
mandated by the regulatory authorities. Leverage capital
ratios were 8.45% and 8.00%, respectively, at June 30, 1995
and June 30, 1994.
At June 30, 1995 the Bank had a tier one risk-based
capital ratio of 13.00% and tier two risk-based capital
ratio of 14.25%, versus 11.74% and 12.99%, respectively, at
June 30, 1994. These were comfortably above the standards
to be rated "well-capitalized" by the regulatory
authorities.
LIQUIDITY MANAGEMENT
As of June 30, 1995 the Bank had primary sources of
liquidity of $20,734,000, or 10.02% of its assets. It is
Management's opinion that this is adequate. In its
Asset/Liability policy, the Bank has adopted guidelines for
liquidity.
<PAGE>
We are not aware of any current recommendations by the
regulatory authorities which, if they were to be
implemented, would have a material effect on the
Corporation's liquidity, capital resources or results of
operations.
LOAN POLICIES
Real estate values:
A. Residential properties We loan up to 80% of the
appraised value of the property and do no further appraisals
as long as the payment history remains
satisfactory. If a loan becomes delinquent, a review might
be done of the loan.
When a loan becomes 90 or more days past due, an in-depth
review is made of
the loan and a determination made as to whether or not a
reappraisal is required.
B. Land only properties We do not have many of these but
we do loan up to 65% of the appraised value of the property.
They are handled the same way as above from booking date on.
C. Commercial properties We loan up to 70% of the
appraised value, and once the loan is closed, the loan
policy requires the following:
Loan paying satisfactorily, a re-appraisal is required every
five years.
Loans running 90 or more days past due steadily and graded
OAEM are appraised every 18 months.
Loans graded substandard or lower (including O.R.E.O.
properties) are appraised as necessitated.
Note: A certified appraiser is used for all appraisals.
At June 30, 1995 and 1994, loans on a non-accrual
status totaled $1,511,000 and $2,647,000, respectively. In
addition to loans on a non-accrual status at June 30, 1995
and 1994, loans past due greater than 90 days totaled
$100,000 and $55,000 respectively. The Company continues to
accrue interest on these loans because it believes
collection of the interest is reasonably assured.
INVESTMENTS
In the first quarter of 1994, the Company adopted SFAS
No. 115, "Accounting for Certain Investments in Debt and
Equity Securities". SFAS No. 115 requires that all debt
securities be classified into one of three categories:
trading
<PAGE>
securities, securities available for sale and securities
held to maturity. As of June 30, 1995 stockholders' equity
was increased by $53,000 due to a net unrealized gain in the
available for sale portfolio.
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.
RISK ELEMENTS
Any loans classified for regulatory purposes as loss,
doubtful, substandard, or special mention that have not been
disclosed under Item III of Industry Guide 3 do not
represent or result from trends or uncertainties which
Management reasonably expects will materially impact future
operating results, liquidity or capital resources.
There are no known potential problem loans which are
not now disclosed pursuant to Item III. C. 1. of Industry
Guide 3. Item III. C. 2. is not applicable.
REGULATORY MATTERS
Procedures for monitoring Bank Loan Administration: A.
Loan reviews are done on a regular basis.
B. An action plan is prepared quarterly on all
criticized loans.
C. Delinquent loans are reviewed monthly by the
Problem Asset
Committee.
D. A tickler system has been prepared to follow for
current information
(such as financial statements, appraisals and/or
credit memos to the
credit file).
Note: Most of the above applies only to
commercial loans, but
retail loans
are reviewed periodically, usually around a
delinquency.
<PAGE>
Procedures for monitoring Bank Other Real Estate Owned:
The O.R.E.O. portfolio is handled by the Bank's
Collections Officer,
with backup by the Senior Loan Officer. Most
properties are listed
with real estate brokers for sale. All
properties are appraised
periodically for market value, and provision is
made to the
allowance for O.R.E.O. losses if the estimated
market value after
selling costs is lower than the carrying value
of the property.
OTHER
The quarterly financial statements in the opinion of
Management fairly represent all adjustments made to reflect
the current financial condition of the Bank for this interim
period just ended. All such adjustments were of a normal
recurring nature.
<PAGE>
PART II
ITEM 6: Exhibits, Financial Statement Schedules, and
reports on Form 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule.
B. Reports on Form 8-K
During the registrant's first six months
ended June 30, 1995 the
registrant was not required to and did not
file any reports on
Form 8-K.
<PAGE>
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
August 10, 1995 Daniel R.
Daigneault
Date Daniel R.
Daigneault
President
and CEO
August 10, 1995 F. Stephen
Ward
Date F. Stephen
Ward
Treasurer
<TABLE> <S> <C>
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<S> <C>
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<PERIOD-END> JUN-30-1995
<CASH> 6010
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 16580
<INVESTMENTS-CARRYING> 49035
<INVESTMENTS-MARKET> 48845
<LOANS> 131009
<ALLOWANCE> 2273
<TOTAL-ASSETS> 208464
<DEPOSITS> 142070
<SHORT-TERM> 46659
<LIABILITIES-OTHER> 1592
<LONG-TERM> 0
<COMMON> 1522
0
0
<OTHER-SE> 16621
<TOTAL-LIABILITIES-AND-EQUITY> 208464
<INTEREST-LOAN> 5772
<INTEREST-INVEST> 2220
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<INTEREST-TOTAL> 7992
<INTEREST-DEPOSIT> 2395
<INTEREST-EXPENSE> 3700
<INTEREST-INCOME-NET> 4292
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (39)
<EXPENSE-OTHER> 2850
<INCOME-PRETAX> 1845
<INCOME-PRE-EXTRAORDINARY> 1845
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<NET-INCOME> 1262
<EPS-PRIMARY> 2.08
<EPS-DILUTED> 2.08
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