FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: Commission File No. 0-26589
June 30, 2000
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
incorporation or organization) Identification No)
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, 2000
Common Stock, Par One Cent 2,387,451
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FIRST NATIONAL LINCOLN CORPORATION
INDEX
PART 1 Financial Information
Page No.
Item 1:
Independent Accountants' Report ............................ 1
Financial Statements
Consolidated Balance Sheets -
June 30, 2000, June 30, 1999, and December 31, 1999 .... 2 - 3
Consolidated Statements of Income and
Non-Owners' Changes in Equity - for the three and six months
ended June 30, 2000 and June 30, 1999 .................. 4 - 7
Consolidated Statements of Cash Flows - for the six months
ended June 30, 2000 and June 30, 1999 .................. 8 - 9
Footnotes to Financial Statements -
six months ended June 30, 2000 and June 30, 1999......... 10
Item 2: Management's discussion and analysis of
financial condition and results of operations ........... 11 - 16
PART II Other Information
Item 1: Legal Proceedings ...................................... 17
Item 2: Changes in Securities .................................. 18
Item 3: Defaults Upon Senior Securities ........................ 19
Item 4: Submission of Matters to a Vote of Security Holders ....20 - 22
Item 5: Other Information ...................................... 23
Item 6: Exhibits and reports on Form 8-K ....................... 24
Signatures .......................................................... 25
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INDEPENDENT ACCOUNTANTS' REPORT
The Board of Directors and Shareholders
First National Lincoln Corporation
We have reviewed the accompanying interim consolidated financial information of
First National Lincoln Corporation and Subsidiary as of June 30, 2000, and for
the three-month and six-month periods then ended. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which
is to express an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
Berry, Dunn, McNeil & Parker
Portland, Maine
August 11, 2000
Page 1
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FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
6/30/00 6/30/99 12/31/99
(000 OMITTED) (Unaudited) (Unaudited) (Unaudited)
Assets
Cash and due from banks $ 10,342 $ 6,548 $ 8,221
Investments:
Available for sale 46,216 35,864 42,091
Held to maturity (market values $39,819
at 6/30/00, $46,773 at 6/30/99 and
$43,581 at 12/31/99) 42,563 48,061 45,908
Loans held for sale (fair value
approximates cost) 60 0 127
Loans 252,391 225,699 232,526
Less allowance for loan losses 2,106 2,043 2,035
Net loans 250,285 223,656 230,491
Accrued interest receivable 2,970 2,557 2,335
Bank premises and equipment 5,323 5,650 5,518
Other real estate owned 355 231 336
Other assets 6,105 5,586 6,260
Total Assets $364,219 $328,153 $341,287
Page 2
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BALANCE SHEETS CONT.
6/30/00 6/30/99 12/31/99
(Unaudited) (Unaudited) (Unaudited)
Liabilities & Shareholders' Equity
Demand deposits $ 24,275 $ 16,353 $ 17,746
NOW deposits 38,926 32,921 36,714
Money market deposits 11,082 7,996 16,607
Savings deposits 38,205 39,570 41,349
Certificates of deposit 68,537 77,182 70,859
Certificates $100M and over 40,532 27,764 22,183
Total deposits 221,557 201,786 205,458
Borrowed funds 109,957 96,520 105,048
Other liabilities 2,342 1,535 2,119
Total Liabilities 333,856 299,841 312,625
Shareholders' Equity:
Common stock 25 25 25
Additional paid-in capital 4,687 4,686 4,687
Retained earnings 29,006 25,791 27,463
Net unrealized losses on
available-for-sale securities (1,239) (667) (1,319)
Treasury stock (2,116) (1,523) (2,194)
Total Shareholders' Equity 30,363 28,312 28,662
Total Liabilities &
Shareholders' Equity $364,219 $328,153 $341,287
Number of shares authorized 6,000,000 6,000,000 6,000,000
Number of shares issued and outstanding 2,387,451 2,406,786 2,370,047
Book value per share $12.72 $11.76 $12.09
Page 3
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FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
AND NON-OWNER CHANGES IN EQUITY
For the six months ended June 30,
2000 1999
(000 OMITTED)
(Unaudited) (Unaudited)
Interest Income:
Interest and fees on loans $10,294 8,909
Interest on deposits with other banks 15 11
Interest and dividends on investments 3,020 2,282
Total interest income 13,329 11,202
Interest expense:
Interest on deposits 3,815 3,570
Interest on borrowed funds 3,222 1,930
Total interest expense 7,037 5,500
Net interest income 6,292 5,702
Provision for loan losses 300 375
Net interest income after provision
for loan losses 5,992 5,327
Other operating income:
Fiduciary income 336 270
Service charges on deposit accounts 433 327
Net securities gains (losses) 0 0
Other operating income 560 722
Total other operating income 1,329 1,319
Other operating expenses:
Salaries and employee benefits 2,136 1,912
Occupancy expense 256 231
Furniture and equipment expense 347 348
Other 1,356 1,117
Total other operating expenses 4,095 3,608
Income before income taxes 3,226 3,038
Applicable income taxes 941 904
NET INCOME $2,285 $2,134
Page 4
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STATEMENTS OF INCOME CONT.
For the six months ended June 30,
2000 1999
(Unaudited) (Unaudited)
Non-owner changes in equity, net of tax:
Unrealized gains (losses)
arising during period 80 (730)
Total other comprehensive income (loss), net of
taxes of $41 in 2000 and $(376) in 1999 80 (730)
INCOME AND NON-OWNER CHANGES IN EQUITY $2,365 $1,404
Earnings per common share:
Basic earnings per share $0.96 $0.87
Diluted earnings per share $0.93 $0.83
Cash dividends declared per share $0.31 $0.23
Weighted average number of shares
outstanding 2,386,261 2,462,502
Incremental Shares 80,508 98,459
Page 5
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FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
AND NON-OWNER CHANGES IN EQUITY
For the quarters ended June 30,
2000 1999
(000 OMITTED)
(Unaudited) (Unaudited)
Interest Income:
Interest and fees on loans $ 5,279 4,530
Interest on deposits with other banks 14 6
Interest and dividends on investments 1,542 1,256
Total interest income 6,835 5,792
Interest expense:
Interest on deposits 1,994 1,795
Interest on borrowed funds 1,654 1,081
Total interest expense 3,648 2,876
Net interest income 3,187 2,916
Provision for loan losses 150 285
Net interest income after provision
for loan losses 3,037 2,631
Other operating income:
Fiduciary income 169 132
Service charges on deposit accounts 234 179
Other operating income 297 469
Total other operating income 700 780
Other operating expenses:
Salaries and employee benefits 1,068 953
Occupancy expense 124 112
Furniture and equipment expense 172 182
Other 714 593
Total other operating expenses 2,078 1,840
Income before income taxes 1,659 1,571
Applicable income taxes 486 465
NET INCOME $1,173 $1,106
Page 6
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STATEMENTS OF INCOME CONT.
For the quarters ended June 30,
2000 1999
(Unaudited) (Unaudited)
Non-owner changes in equity, net of tax:
Unrealized gains (losses)
arising during period 5 (576)
Total other comprehensive income (loss), net
Of taxes of $2 in 2000 and $(297) in 1999 5 (576)
INCOME AND NON-OWNER CHANGES IN EQUITY $1,178 $530
Earnings per common share:
Basic earnings per share $0.49 $0.45
Diluted earnings per share $0.47 $0.44
Cash dividends declared per share $0.16 $0.12
Weighted average number of shares
outstanding 2,390,237 2,434,821
Incremental Shares 80,508 98,459
Page 7
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FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30,
2000 1999
(000 OMITTED) (Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $2,285 2,134
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 271 262
Provision for loan losses 300 375
Loans originated for resale (1,171) (7,267)
Proceeds from sales and transfers of loans 1,238 7,476
Losses related to other real estate owned 5 6
Net change in other assets and accrued interest (480) (797)
Net change in other liabilities 130 226
Net amortization of premium (accretion of
discounts) on investments (63) 11
Net cash provided by operating activities 2,515 2,426
Cash flows from investing activities:
Proceeds from sales, maturities and calls of
securities available for sale 1,433 2,307
Proceeds from sales, maturities and calls of
securities to be held to maturity 2,508 10,400
Proceeds from sales of other real estate owned 36 212
Purchases of securities available for sale (4,412) (20,408)
Purchases of securities to be held to maturity (125) (18,000)
Net increase in loans (20,154) (16,775)
Capital expenditures (76) (46)
Net cash used in investing activities (20,790) (42,310)
Cash flows from financing activities:
Net increase (decrease) in demand deposits,
savings, money market and club accounts 72 (3,538)
Net increase in certificates of deposit 16,027 3,521
Net increase in other borrowings 4,909 42,060
Payment to repurchase common stock (156) (1,396)
Proceeds from sale of Treasury stock 234 89
Dividends paid (690) (642)
Net cash provided by financing activities 20,396 40,094
Page 8
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STATEMENTS OF CASH FLOWS CONT.
2000 1999
(Unaudited) (Unaudited)
Net increase in cash and cash equivalents 2,121 210
Cash and cash equivalents at beginning
of period 8,221 6,338
Cash and cash equivalents at end of
period $10,342 $6,548
Interest paid $7,036 $5,499
Income taxes paid 947 871
Non-cash transactions:
Loans transferred to other real estate
owned (net) 60 146
Net change in unrealized gain (loss) on
available for sale securities 80 (730)
Page 9
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FOOTNOTES TO FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements of First National
Lincoln Corporation and its subsidiary for the six-month periods ended June 30,
2000 and 1999 are unaudited. In the opinion of Management, all adjustments
consisting of normal, recurring accruals necessary for a fair representation
have been reflected therein.
Certain financial information which is normally included in financial
statements prepared in accordance with generally accepted accounting
principles, but which is not required for interim reporting purposes, has been
omitted. The accompanying consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's annual report on Form 10-K for the fiscal year ended December 31,
1999.
Page 10
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
EARNINGS SUMMARY
Net income for the six months ended June 30, 2000 was $2,285,000, an
increase of 7.1% over 1999's net income of $2,134,000. Revenue growth was the
primary factor in the Company's increased earnings for the first six months of
2000 compared to the same period in 1999. This was a direct result of asset
growth, which produced higher levels of net interest income. During the period,
the loan and investment portfolios increased by a combined $20.5 million, which
Management views as excellent for the first half of the year.
Earnings per share for the first quarter of 2000 were $0.96, a 10.3%
increase over the $0.87 reported in 1999.
Net income for the three months ended June 30, 2000 was $1,173,000, an
increase of 6.1% over 1999's net income of $1,106,000. As with the Company's
year-to-date performance, revenue growth was the primary factor in the
increased earnings posted for the second quarter of 2000 compared to the same
period in 1999.
Earnings per share for the second quarter of 2000 were $0.49, a 8.9%
increase over the $0.45 reported in 1999.
NET INTEREST INCOME
Net interest income for the six months ended June 30, 2000 was $6,292,000,
a 10.3% increase over 1999's net interest income of $5,702,000. Total interest
income of $13,329,000 is a 19.0% increase over 1999's total interest income of
$11,202,000. Total interest expense of $7,037,000 is a 27.9% increase over
1999's total interest expense of $5,500,000. The increases in both interest
income and interest expense were due to a combination of significantly higher
balances and higher interest rates.
Net interest income for the three months ended June 30, 2000 was
$3,187,000, a 9.3% increase over 1999's net interest income of $2,916,000.
Total interest income of $6,835,000 is an 18.0% increase over 1999's total
interest income of $5,792,000. Total interest expense of $3,648,000 is a 26.8%
increase over 1999's total interest expense of $2,876,000. The increases in
both interest income and interest expense were due to a combination of
significantly higher balances and higher interest rates
PROVISION FOR LOAN LOSSES
A $300,000 provision to the allowance for loan losses was made during the
first six months of 2000. This is a $75,000 decrease from the $375,000
provision made for the same period of 1999. The allowance for loan losses is
deemed adequate as calculated in accordance with Banking Circular #201 and with
respect to Statement of Financial Accounting Standards (SFAS) 114/118. Loans
considered to be impaired according to SFAS 114/118 totalled $490,637 at June
30, 2000. The portion of the allowance for loan losses allocated to impaired
loans at June 30, 2000 was $150,527.
Page 11
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MANAGEMENT'S DISCUSSION CONT.
NON-INTEREST INCOME
Non-interest income was $1,329,000 for the six months ended June 30, 2000,
an increase of $10,000 from 1999's non-interest income of $1,319,000. However,
1999's non-interest income included a one-time gain of $189,000 due to adoption
of SFAS 125 which governs the account treatment for mortgage servicing rights.
Without the 1999 item, the increase would have been $199,000 or 17.6% for the
six-month period.
The increase in fee income was due to increased service charge income on
deposit accounts connected with the increase in the Bank's core deposits, as
well as increases in merchant credit card income and fiduciary income. These
increases were offset by decreased mortgage origination and servicing income.
While demand for residential mortgages has been strong, the Bank chose to
retain most of the production in portfolio, resulting in decreased gains on
sales of loans -- only $1,238,000 were sold in the first six months of 2000
compared to $7,476,000 for the same period in 1999. In addition, the Company's
adoption of SFAS 125, which produced the one-time gain in the second quarter of
1999 relating to mortgage servicing rights, results in a reduction of the
subsequent recognition of servicing income on those loans.
Non-interest income was $700,000 for the three months ended June 30, 2000,
an increase of 18.4% from 1999's non-interest income after adjusting for the
one-time second quarter gain mentioned above. The increase was due to increased
service charge income on deposit accounts connected with the increase in the
Bank's core deposits, as well as increases in merchant credit card income and
fiduciary income. These increases were offset by decreased mortgage origination
and servicing income.
NON-INTEREST EXPENSE
Non-interest expense of $4,095,000 for the six months ended June 30, 2000,
is an increase of 13.5% from 1999's non-interest expense of $3,608,000. This
increase has been primarily due to increases in staffing and software costs
connected with the Company's goal to provide more comprehensive and competitive
services to its customers. In addition, increases in merchant credit card costs
which were offset by an increase in merchant credit card income.
Non-interest expense of $2,078,000 for the three months ended June 30,
2000, is an increase of 12.9% from 1999's non-interest expense of $1,840,000
for the reasons stated above
INCOME TAXES
Income taxes on operating earnings increased to $941,000 for the first six
months of 1999 from $904,000 for the same period a year ago. Due to the
Company's increased holdings of tax-exempt securities, the increase in income
taxes was very small.
Page 12
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MANAGEMENT'S DISCUSSION CONT.
INVESTMENTS
The Company's investment portfolio increased by $4.9 million or 5.8%
between June 30, 1999 and June 30, 2000, a direct result of an attractive
investment climate which resulted from a steepening of the yield curve. During
the first six months of 2000, the investment portfolio increased by $0.8
million or 0.9%. At June 30, 2000, the Company's available-for-sale portfolio
had an unrealized loss, net of taxes, of $1.2 million, which is in line with
the interest rates increases seen in the second half of 1999 and the first half
of 2000.
LOANS
Loans grew by $26.6 million or 11.9% between June 30, 1999 and June 30,
2000. The majority of this growth came in commercial loans, the Company's
highest earning assets, along with very strong growth in mortgage loans. During
the first six months of 2000, loans increased by $19.8 million or 8.6%.
DEPOSITS
As of June 30, 2000, deposits grew year-over year by 9.8% or $19.8
million. The majority of this increase came in core deposits (checking, savings
and money market accounts) which are the Company's lower cost sources of
funding. For the same period, certificates of deposit increased by $4.1
million. During the first six months of 2000, deposits increased by $16.1
million or 7.8%. The growth was in certificates of deposit.
BORROWED FUNDS
The Company's funding also includes borrowings from the Federal Home Loan
Bank and repurchase agreements. Between June 30, 1999 and June 30, 2000,
borrowed funds increased by $13.4 million or 13.9%. The Company utilizes
borrowings as an additional source of funding for both loans and investments
which allows it to grow its balance sheet and revenues. During the first six
months of 2000, borrowed funds increased by $4.9 million or 4.7%.
SHAREHOLDERS' INVESTMENT AND CAPITAL RESOURCES
Shareholders' investment as of June 30, 2000 was $30,363,000 compared to
$28,312,000 for the same period in 1999. While the Company's strong earnings
performance in the preceeding 12 months has added significantly to retained
earnings, this was offset by an increase in the net unrealized after-tax loss
on available-for-sale securities, as required under SFAS 115, and by the net
buyback of $593,000 of treasury stock.
During 1999, the Company increased its dividend each quarter to end the
year at a quarterly dividend rate of 14 cents per share. In 2000, a cash
dividend of 15 cents per share was declared in the first quarter compared to 11
cents in the first quarter of 1999 and a cash dividend of 16 cents per share
was declared in the second quarter compared to 12 cents in the second quarter
of 1999.
Page 13
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MANAGEMENT'S DISCUSSION CONT.
Regulatory leverage capital ratios for the Company were 8.84% and 9.14%,
respectively, at June 30, 2000 and June 30, 1999. The decrease was due to asset
growth and repurchase of the Company's shares. The Company had a tier one risk-
based capital ratio of 13.77% and tier two risk-based capital ratio of 14.68%
at June 30, 2000, compared to 14.15% and 15.15%, respectively, at June 30,
1999. These are comfortably above the standards to be rated "well-capitalized"
by regulatory authorities -- qualifying the Company for lower deposit-insurance
premiums.
LIQUIDITY MANAGEMENT
As of June 30, 2000 the Bank had primary sources of liquidity of $29.1
million, or 8.0% of its assets. It is Management's opinion that this is
adequate. In its Asset/Liability policy, the Bank has adopted guidelines for
liquidity. The Company is 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
properties without mortgage insurance and up to 95% of the appraised value of
properties with mortgage insurance. No further appraisals are done 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 75% of the appraised value and, once
the loan is closed, the decision to re-appraise a property is subjective and
depends on a variety of factors, such as: the payment status of the loan, the
risk rating of the loan, the amount of time that has passed since the last
appraisal, changes in the real estate market, availability of financing,
inventory of competing properties, and changes in condition of the property
i.e. zoning changes, environmental contamination, etc. A certified or licensed
appraiser is used for all appraisals.
At June 30, 2000 and 1999, loans on a non-accrual status totaled
$1,859,000 and $1,247,000, respectively. In Management's opinion, this increase
is not reflective of the overall quality of the Company's loan portfolio but
is, instead, the result of an unexpected and isolated decline in three credits.
In addition to loans on a non-accrual status at June 30, 2000 and 1999, loans
past due greater than 90 days and still accruing totaled $184,000 and $255,000
respectively. The Company continues to accrue interest on these loans because
it believes collection of the interest is reasonably assured.
Page 14
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MANAGEMENT'S DISCUSSION CONT.
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 classified commercial loans
greater than $100,000, and semi-annually on all criticized loans greater than
$100,000.
C. Delinquent loans are reviewed weekly by the Bank's Collections Officer and
Senior Credit Officer.
D. A tickler system is utilized to insure timely receipt of current information
(such as financial statements, appraisals 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 Collections Officer, with backup
by the Senior Credit 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.
Page 15
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MANAGEMENT'S DISCUSSION CONT.
ACCOUNTING PRONOUNCEMENTS
During 1999, the Financial Accounting Standards Board (FASB) issued SFAS
137, "Accounting for Derivative Instruments and Hedging Activities - Deferral
of the Effective Date of SFAS 133." SFAS 133, which established accounting
reporting standards for derivative instruments and for hedging activity, was
amended by SFAS 137. SFAS 137 defers the effective date of SFAS 133 to fiscal
years beginning after June 15, 2000. While the Bank does not hold any
derivative instruments at the present time, SFAS 137 will be followed when
effective should the Bank enter into derivative transactions.
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.
Page 16
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PART II
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.
Page 17
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ITEM 2. CHANGES IN SECURITIES
None
Page 18
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ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
Page 19
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Three proposals were submitted to a vote of security holders at the
Company's Annual Meeting of Shareholders, held on Tuesday, April 25, 2000, at
11:00 a.m. Eastern Daylight Time. Only shareholders of record as of the close
of business on March 6, 2000 (the "Voting Record Date") were entitled to vote
at the Annual Meeting. On the Voting Record Date, there were 2,387,600 shares
of Common Stock of the Company, one cent par value, issued and outstanding, and
the Company had no other class of equity securities outstanding. Each share of
Common Stock was entitled to one vote at the Annual Meeting on all matters
properly presented thereat.
PROPOSAL 1: To ratify the Board of Directors' vote to fix the number of
Directors at ten.
The Articles of Incorporation of the Company provide that the Board of
Directors shall consist of not fewer than five nor more than twenty-five
persons as determined by the Board prior to each Annual Meeting, with Directors
serving for "staggered terms" of three years. A resolution of the Board of
Directors adopted pursuant to the Company's Articles of Incorporation has
established the number of Directors at ten.
The results of the shareholder voting had 2,079,306 shares in favor, 5,800
shares against, 560 shares withheld voting, and 301,934 shares not voting.
PROPOSAL 2: Election of Directors
The following were nominees for three-year terms as Director:
Daniel R. Daigneault has served as President and Chief Executive Officer
and as a member of the Board of Directors of both the Company and it wholly
owned subsidiary, The First National Bank of Damariscotta (the "Bank") since
1994. Prior to being employed by the Bank, Mr. Daigneault was Vice President,
Senior Commercial Loan Officer at Camden National Bank, Camden, Maine. Mr.
Daigneault is President of the Boothbay Region YMCA Board of Trustees and
Second Vice President of the Maine Bankers Association.
Dana L. Dow has served as a Director of the Company and the Bank since
January 1999. Mr. Dow is President of Dow Furniture, Inc., located in
Waldoboro, Maine which he purchased from his father in 1977. Prior to
purchasing Dow Furniture, Mr. Dow taught chemistry and physics at Medomak
Valley High School.
Robert B. Gregory has served as Director of the Company and the Bank since
October 1987 and has served as Chairman of both the Company and the Bank since
September 1998. Mr. Gregory has been a practicing attorney since 1980, first in
Lewiston, Maine and since 1983 in Damariscotta, Maine.
The following Directors' terms will expire in 2001:
Bruce A. Bartlett has served as a Director of the Company since its
organization in 1985 and has served as a Director of the Bank since 1981. Mr.
Bartlett served as President and Chief Executive Officer of the Company and the
Bank until his retirement in 1994.
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VOTE OF SECURITY HOLDERS, Cont.
Malcolm E. Blanchard has served as a Director of the Company since its
organization in 1985, and has served as a Director of the Bank since 1976. Mr.
Blanchard has been actively involved either as sole proprietor or as a partner,
in real estate development since 1970 and is now retired.
Stuart G. Smith has served as a Director of the Company and the Bank since
July 1997. A resident of Camden, he and his wife own and operate Maine Sport
Outfitters in Rockport and Lord Camden Inn and Bayview Landing in Camden,
Maine. Mr. Smith is Chairman of the Five-Town CSD School Board.
The following Directors' terms will expire in 2002:
Katherine M. Boyd has served as a Director of the Company and the Bank
since 1993. A resident of Boothbay Harbor, she owns the Boothbay Region
Greenhouses with her husband. Ms. Boyd serves on the Boothbay Region YMCA Camp
Committee and is Secretary for the local chapter of American Field Service. Ms.
Boyd previously served as trustee of the YMCA, and past chairperson of the YMCA
Annual Fund Drive.
Carl S. Poole has served as a Director of the Company since its
organization in 1985 and has served as a Director of the Bank since 1984. Mr.
Poole is President, Secretary and Treasurer of Poole Brothers Lumber, a lumber
and building supply company with locations in Damariscotta, Pemaquid and
Boothbay Harbor, Maine.
David B. Soule, Jr. has served as a Director of the Company and the Bank
since June 1989. Mr. Soule has been practicing law in Wiscasset since 1971.
He spent two terms in the Maine House of Representatives and is a past
President of the Lincoln County Bar Association and is a former Public
Administrator, Lincoln County.
Bruce B. Tindal has served as a Director of the Company and the Bank since
January 1999. Mr. Tindal formed and is co-owner of Tindal & Callahan Real
Estate in Boothbay Harbor, which has been in operation since 1985. Mr. Tindal
is a Trustee at St. Andrews Hospital and serves on the Board of Directors of
the Boothbay Region Land Trust and the Boothbay Region Economic Development
Corp. Mr. Tindal is also a member of the National Association of REALTORS and
the Boothbay Harbor Rotary Club.
There are no family relationships among any of the Directors of the
Company, and there are no arrangements or understandings between any Director
and any other person pursuant to which that Director has been or is to be
elected. No Director of the Bank or the Company serves as a Director on the
board of any other corporation with a class of securities registered pursuant
to Section 12 of the Securities Exchange Act or subject to the reporting
requirements of Section 15(d) of the Securities Exchange Act or any company
registered as an investment company under the Investment Company Act of 1940,
as amended.
The results of the shareholder voting had 2,067,430 shares in favor, 2,000
shares against, 16,236 withheld voting, and 301,934 shares not voting.
Page 21
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VOTE OF SECURITY HOLDERS, Cont.
PROPOSAL 3: Appointment of Auditors
The Board of Directors appointed Berry, Dunn, McNeil & Parker as
independent auditors of the Company and its subsidiary for the year ended
December 31, 1999. In the opinion of the Board of Directors, the reputation,
qualifications and experience of the firm make its reappointment appropriate
for 2000. It was the desire of the Board of Directors that the selection of
Berry, Dunn, McNeil & Parker as independent auditors be ratified by
shareholders at the annual meeting.
The results of the shareholder voting had 2,080,246 shares in favor, 3,900
shares against, 1,520 withheld voting, and 301,934 not voting.
Page 22
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ITEM 5: Other Information
None.
Page 23
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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
None.
Page 24
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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
August 11, 2000 Daniel R. Daigneault
Date Daniel R. Daigneault
President and CEO
August 11, 2000 F. Stephen Ward
Date F. Stephen Ward
Treasurer
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