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 Nine Months Ended: September 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 Sept. 30, 1995
(Common Stock, No par) 608,831
<PAGE>
FIRST NATIONAL LINCOLN CORPORATION
INDEX
PART 1 Financial Information Page No.
Item 1: Financial Statements
Consolidated Balance Sheets - 1 & 2
September 30, 1995, September 30, 1994,
and December 31, 1994.
Consolidated Statements of Income - 3 & 4
Nine months ended September 30, 1995
and September 30, 1994.
Consolidated Statements of Income - 5 & 6
Quarter ended September 30, 1995
and September 30, 1994.
Consolidated Statements of Cash Flows - 7 & 8
Nine months ended September 30, 1995
and September 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)
9/30/95 9/30/94 12/31/94
(Unaudited) (Unaudited) (Unaudited)
Assets
Cash and due from banks $5,303 $5,679 $5,230
Investments:
Available for sale (market values $13,022
at 9/30/95, $18,138 at 9/30/94 and
$16,533 at 12/31/94) 13,022 18,138 16,533
Held to maturity (market values $49,761
at 9/30/95, $46,878 at 9/30/94 and
$46,759 at 12/31/94) 49,839 48,250 49,121
Loans 133,080 125,349 120,294
Allowance for loan losses (2,163) (2,505) (2,428)
Net loans 130,917 122,844 117,866
Accrued interest receivable 1,677 1,612 1,678
Bank premises and equipment 4,178 4,159 4,485
Other real estate owned 721 662 553
Other assets 1,316 1,848 1,065
Total Assets $206,973 $203,192 $196,531
Liabilities & Stockholders' Equity
Demand deposits $13,037 $13,047 $12,140
NOW deposits 26,821 29,278 27,764
Savings deposits 33,796 42,663 39,906
Money market deposits 7,155 9,294 8,886
Certificates of deposit 56,255 44,119 45,462
Certificates $100M and over 13,832 10,703 8,287
Total deposits $150,896 $149,104 $142,445
<PAGE>
BALANCE SHEETS CONT.
9/30/95 9/30/94 12/31/94
(Unaudited) (Unaudited) Unaudited)
Other liabilities 1,630 1,329 584
Borrowed funds 35,650 36,338 36,610
Total Liabilities 188,176 186,771 179,639
Stockholders' Equity:
Common stock 1,524 1,518 1,519
Additional paid-in capital 2,717 2,666 2,678
Retained earnings 14,544 12,308 12,829
Net unrealized gains (losses) on
available-for-sale securities 35 (71) (134)
Treasury stock (23) 0 0
Total Stockholders' Equity 18,797 16,421 16,892
Total Liabilities & Stockholders'
Equity $206,973 $203,192 $196,531
<PAGE>
FIRST NATIONAL LINCOLN CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(000 OMITTED)
For the nine months ended Sept. 30,
1995 1994
(Unaudited) (Unaudited)
Interest Income:
Interest and fees on loans $8,904 $7,017
Interest and dividends on investments 3,312 3,179
Total interest income 12,216 10,196
Interest expense:
Interest on deposits 3,833 3,250
Interest on borrowed funds 1,903 868
Total interest expense 5,736 4,118
Net interest income 6,480 6,078
Provision for loan losses 0 0
Net interest income after provision
for loan losses 6,480 6,078
Other operating income:
Trust department income 173 158
Service charges on deposit accounts 369 338
Net securities gains (losses) 19 9
Other operating income 143 192
Total other operating income 704 697
Other operating expenses:
Salaries and employee benefits 2,240 2,335
Occupancy expense 231 231
Premises and equipment expense 446 422
Other 1,365 1,564
Total other operating expenses 4,282 4,552
<PAGE>
STATEMENTS OF INCOME CONT.
1995 1994
(Unaudited) (Unaudited)
Income before income taxes 2,902 2,223
Applicable income taxes 919 656
NET INCOME $1,983 $1,567
Earnings per common share:
Net income $3.26 $2.58
Dividends declared $0.44 $0.41
<PAGE>
FIRST NATIONAL LINCOLN CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(000 OMITTED)
For the quarter ended Sept. 30,
1995 1994
(Unaudited) (Unaudited)
Interest Income:
Interest and fees on loans $3,132 $2,566
Interest and dividends on investments 1,092 1,064
Total interest income 4,224 3,630
Interest expense:
Interest on deposits 1,438 1,057
Interest on borrowed funds 598 431
Total interest expense 2,036 1,488
Net interest income 2,188 2,142
Provision for loan losses 0 0
Net interest income after provision
for loan losses 2,188 2,142
Other operating income:
Trust department income 68 53
Service charges on deposit accounts 135 106
Net securities gains (losses) 58 2
Other operating income 40 61
Total other operating income 301 222
Other operating expenses:
Salaries and employee benefits 751 803
Occupancy expense 75 78
Premises and equipment expense 146 143
Other 460 524
Total other operating expenses 1,432 1,548
<PAGE>
STATEMENTS OF INCOME CONT.
1995 1994
(Unaudited) (Unaudited)
Income before income taxes 1,057 816
Applicable income taxes 336 210
NET INCOME $721 $606
Earnings per common share:
Net income $1.18 $1.00
Dividends declared $0.15 $0.14
<PAGE>
FIRST NATIONAL LINCOLN CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended Sept. 30,
1995 1994
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $1,983 $1,567
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 383 328
Provision for loan losses 0 0
Net (gain) loss on sale of investments 39 (9)
Write down of Other Real Estate Owned 15 98
Losses related to Other Real Estate Owned 7 (23)
Net change in other assets (132) (334)
Net change in other liabilities 680 515
Net amortization of premium on investments 18 (36)
Net cash provided by operating activities 2,993 2,106
Cash flows from investing activities:
Proceeds from sales of investments 2,968 5,500
Proceeds from maturities of investments 6,952 9,650
Proceeds from sales of Other Real Estate Owned 118 339
Additional investment in Other Real Estate Owned (7) 0
Purchase of investments (6,764) (15,677)
Net decrease (increase) in loans (13,354) (21,004)
Capital expenditures (77) (74)
Net cash used in investing activities (10,164) (21,266)
Cash flows from financing activities:
Net increase (decrease) in demand deposits,
savings, money market and club accounts (7,887) 2,018
Net increase (decrease) in certif. of deposit 16,338 (9,624)
Net increase (decrease) in other borrowings (960) 27,940
Payment to repurchase common stock (net) (23) 0
Net proceeds from stock issuance 44 43
Dividends paid (268) (248)
Net cash provided by financing activities 7,244 20,129
<PAGE>
STATEMENTS OF CASH FLOWS CONT.
1995 1994
(Unaudited) (Unaudited)
Net increase (decrease) in cash and
cash equivalents 73 969
Cash and cash equivalents at beginning
of period 5,230 4,710
Cash and cash equivalents at end of
period $5,303 $5,679
Interest paid $5,620 $4,153
Income taxes paid $594 $369
Non-cash transactions:
Loans transferred to Other Real Estate $303 $0
Owned (Net)
<PAGE>
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
EARNINGS SUMMARY
Net income for the nine months ended September 30, 1995 was $1,983,000,
an increase of 26.5% over 1994's net income of $1,567,000.
Net income for the quarter ended September 30, 1995 was $721,000,
compared to $606,000 in 1994, an increase of 19.0%.
NET INTEREST INCOME
Net interest income for the nine months ended September 30, 1995 was
$6,480,000, a 6.6% increase over 1994's net interest income of $6,078,000.
Total interest income of $12,216,000 is a 19.8% increase over 1994's total
interest income of $10,196,000. Total interest expense of $5,736,000 is a
39.3% increase over 1994's total interest expense of $4,118,000.
Net interest income for the quarter ended September 30, 1995 was
$2,188,000, a 2.1% increase over 1994's net interest income of $2,142,000.
Total interest income of $4,224,000 is a 16.4% increase over 1994's total
interest income of $3,630,000. Total interest expense of $2,036,000 is a
36.8% increase over 1994's total interest expense of $1,488,000.
PROVISION FOR LOAN LOSSES
No provision to the allowance for loan losses was made during the first
nine months of 1995. The allowance for loan losses is deemed adequate as
calculated in accordance with Banking Circular #201 and with respect to FAS
114/118.
NON-INTEREST INCOME
Non-interest income of $704,000 for the nine months ended September 30,
1995 was an increase of 1.0% from 1994's non-interest income of $697,000.
Non-interest income for the quarter ended September 30, 1995 was
$301,000, a 35.6% increase from the same period a year ago.
NON-INTEREST EXPENSE
Non-interest expense of $4,282,000 for the nine months ended September
30, 1995 is a decrease of 5.9% from 1994's non-interest expense of $4,552,000.
Non-interest expense for the quarter ended September 30, 1995 was
$1,432,000, a 7.5% decrease from 1994's non-interest expense of $1,548,000.
INCOME TAXES
Income taxes on operating earnings increased to $919,000 for the first
nine months in 1995 from $656,000 for the same period a year ago. The level
of income taxes has increased as a result of the Company's increased earnings.
<PAGE>
MANAGEMENT'S DISCUSSION CONT.
Income taxes were $336,000 for the quarter ended September 30, 1995
compared to $210,000 in 1994.
DEPOSITS AND BORROWED FUNDS
Deposits as of September 30, 1995 increased by 1.2% or $1,792,000 from
September 30, 1994. Demand deposits decreased by .01% or $10,000, NOW
deposits decreased by 8.4% or $2,457,000, savings deposits decreased by 20.8%
or $8,867,000, money market deposits decreased by 23.0% or $2,139,000 and
certificates of deposit increased by 27.8% or $15,265,000.
Deposits were supplemented by borrowings from the Federal Home Loan Bank
and repurchase agreements. Total borrowed funds decreased by 1.9% or $688,000
from the same period a year ago.
STOCKHOLDERS' INVESTMENT AND CAPITAL RESOURCES
Stockholders' investment as of September 30, 1995 was $18,797,000
compared to $16,421,000 for the same period in 1994. The reason for this
increase was the strong earnings performance in the year 1994 and the first
nine 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 and third quarters to the
current level of 15 cents per share.
Leverage capital ratios were 9.08% and 8.08%, respectively, at September
30, 1995 and September 30, 1994. The Bank had a tier one risk-based capital
ratio of 13.33% and tier two risk-based capital ratio of 14.58% at September
30, 1995, compared to 11.78% and 13.03%, respectively, at September 30, 1994.
These were comfortably above the standards to be rated "well-capitalized" by
the regulatory authorities. Primary capital at September 30, 1995 was 10.02%
versus 9.20% at September 30, 1994, both well above the 6.00% level mandated
by the regulatory authorities.
LIQUIDITY MANAGEMENT
As of September 30, 1995 the Bank had primary sources of liquidity of
$24,184,000, or 11.8% of its assets. It is Management's opinion that this is
adequate. In its Asset/Liability policy, the Bank has adopted guidelines for
liquidity.
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
<PAGE>
MANAGEMENT'S DISCUSSION CONT.
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 or graded OAEM
are appraised every 18 months.
Loans graded substandard or lower (including O.R.E.O.
properties) are appraised as necessitated, and at a minimum,
annually.
Note: A certified or licensed appraiser is used for all
appraisals.
At September 30, 1995 and 1994, loans on a non-accrual status totaled
$1,231,000 and $2,056,000, respectively. In addition to loans on a non-
accrual status at September 30, 1995 and 1994, loans past due greater than 90
days totaled $117,000 and $267,000 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 FAS 115, "Accounting
for Certain Investments in Debt and Equity Securities". FAS 115 requires that
all debt securities be classified into one of three categories: trading
securities, securities available for sale and securities held to maturity. As
of September 30, 1995 stockholders' equity was increased by $35,000 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.
<PAGE>
MANAGEMENT'S DISCUSSION CONT.
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 is utilized to insure timely receipt of 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.
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 nine months ended September 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
November 8, 1995 Daniel R. Daigneault
Date Daniel R. Daigneault
President and CEO
November 8, 1995 F. Stephen Ward
Date F. Stephen Ward
Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 5,303
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,022
<INVESTMENTS-CARRYING> 49,839
<INVESTMENTS-MARKET> 49,761
<LOANS> 133,080
<ALLOWANCE> 2,163
<TOTAL-ASSETS> 206,973
<DEPOSITS> 150,896
<SHORT-TERM> 31,650
<LIABILITIES-OTHER> 1,630
<LONG-TERM> 4,000
<COMMON> 1,524
0
0
<OTHER-SE> 17,273
<TOTAL-LIABILITIES-AND-EQUITY> 206,973
<INTEREST-LOAN> 8,904
<INTEREST-INVEST> 3,312
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 12,216
<INTEREST-DEPOSIT> 3,833
<INTEREST-EXPENSE> 5,736
<INTEREST-INCOME-NET> 6,480
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 19
<EXPENSE-OTHER> 4,282
<INCOME-PRETAX> 2,902
<INCOME-PRE-EXTRAORDINARY> 2,902
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,983
<EPS-PRIMARY> 3.26
<EPS-DILUTED> 3.26
<YIELD-ACTUAL> 4.45
<LOANS-NON> 1,231
<LOANS-PAST> 117
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,428
<CHARGE-OFFS> 358
<RECOVERIES> 93
<ALLOWANCE-CLOSE> 2,163
<ALLOWANCE-DOMESTIC> 2,163
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
