-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NtD9LLPzbTt2hjutXfmlN67weXBhKA2E/WxGwrL4pdRTu9Vyu54y8I9OhYiu8R3y ULJdY0nMWoep/AuK7Wcn0Q== 0000765207-97-000009.txt : 19971115 0000765207-97-000009.hdr.sgml : 19971115 ACCESSION NUMBER: 0000765207-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST NATIONAL LINCOLN CORP /ME/ CENTRAL INDEX KEY: 0000765207 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 010404322 STATE OF INCORPORATION: ME FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 002-96573 FILM NUMBER: 97717431 BUSINESS ADDRESS: STREET 1: P.O. BOX 940 STREET 2: MAIN STREET CITY: DAMARISCOTTA STATE: ME ZIP: 04543 BUSINESS PHONE: 2075633195 MAIL ADDRESS: STREET 1: P.O. BOX 940 CITY: DAMARISCOTTA STATE: ME ZIP: 04543 10-Q 1 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. 2-96573 September 30, 1997 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 September 30, 1997 Common Stock, Par One Cent 618,289 FIRST NATIONAL LINCOLN CORPORATION INDEX PART 1 Financial Information Page No. Item 1: Financial Statements Consolidated Balance Sheets - 1 - 2 Sept. 30, 1997, Sept. 30, 1996, and December 31, 1996. Consolidated Statements of Income - 3 - 4 Nine months ended Sept. 30, 1997 and Sept. 30, 1996. Consolidated Statements of Income - 5 - 6 Quarter ended Sept. 30, 1997 and Sept. 30, 1996. Consolidated Statements of Cash Flows - 7 - 8 Nine months ended Sept. 30, 1997 and Sept. 30, 1996. Footnotes to Financial Statements - 9 Nine months ended Sept. 30, 1997 and Sept. 30, 1996. Item 2: Management's discussion and analysis of 10 - 13 financial condition and results of operations. PART II Other Information Item 1: Legal Proceedings 14 Item 2: Changes in Securities 15 Item 3: Defaults Upon Senior Securities 16 Item 4: Submission of Matters to a Vote of Security Holders 17 Item 5: Other Information 18 Item 6: Exhibits and reports on Form 8-K. 19 Signatures 20 FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (000 OMITTED) 9/30/97 9/30/96 12/31/96 (Unaudited) (Unaudited) (Unaudited) Assets Cash and due from banks $5,476 $5,974 $6,023 Interest bearing deposits in other banks 1,300 0 975 Investments: Available for sale 16,078 25,261 18,492 Held to maturity (market values $54,835 at 9/30/97, $36,189 at 9/30/96 and $41,873 at 12/31/96) 54,692 36,750 42,072 Loans held for sale (market value $302 at 12/31/96) 0 0 302 Loans 173,130 153,891 156,970 Less allowance for loan losses 1,818 1,867 1,906 Net loans 171,312 152,024 155,064 Accrued interest receivable 1,815 1,739 1,702 Bank premises and equipment 4,062 3,842 4,172 Other real estate owned 395 870 814 Other assets 1,923 1,180 1,152 Total Assets $257,053 $227,640 $230,768 Liabilities & Stockholders' Equity Demand deposits $13,856 $14,104 $14,786 NOW deposits 28,352 27,339 26,349 Money market deposits 4,213 6,725 6,314 Savings deposits 35,221 35,518 34,688 Certificates of deposit 64,453 59,088 61,476 Certificates $100M and over 15,620 12,032 12,061 Total deposits $161,715 $154,806 $155,674 Page1 BALANCE SHEETS CONT. 9/30/97 9/30/96 12/31/96 (Unaudited) (Unaudited) (Unaudited) Borrowed funds 68,489 49,615 51,148 Other liabilities 1,716 1,599 1,469 Total Liabilities 231,920 206,020 208,291 Shareholders' Equity: Common stock 6 6 6 Additional paid-in capital 4,584 4,346 4,486 Retained earnings 20,485 17,276 17,971 Net unrealized gains (losses) on available- for-sale securities 58 (8) 14 Treasury stock 0 0 0 Total Stockholders' Equity 25,133 21,620 22,477 Total Liabilities & Stockholders' Equity $257,053 $227,640 $230,768 Page 2 FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (000 OMITTED) For the nine months ended Sept. 30, 1997 1996 (Unaudited) (Unaudited) Interest Income: Interest and fees on loans $11,099 $9,768 Interest on deposits with other banks 34 15 Interest and dividends on investments 3,520 3,224 Total interest income 14,653 13,007 Interest expense: Interest on deposits 4,288 4,156 Interest on borrowed funds 2,672 1,953 Total interest expense 6,960 6,109 Net interest income 7,693 6,898 Provision for loan losses 20 0 Net interest income after provision for loan losses 7,673 6,898 Other operating income: Trust department income 248 238 Service charges on deposit accounts 414 366 Net securities gains (losses) 0 2 Other operating income 478 410 Total other operating income 1,140 1,016 Other operating expenses: Salaries and employee benefits 2,434 2,246 Occupancy expense 253 246 Furniture and equipment expense 467 430 Other 1,388 1,329 Total other operating expenses 4,542 4,251 Page 3 STATEMENTS OF INCOME CONT. 1997 1996 (Unaudited) (Unaudited) Income before income taxes 4,271 3,663 Applicable income taxes 1,349 1,180 NET INCOME $2,922 $2,483 Earnings per common share: Net income $4.73 $4.05 Dividends declared $0.66 $0.54 Page 4 FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (000 OMITTED) For the quarter ended Sept. 30, 1997 1996 (Unaudited) (Unaudited) Interest Income: Interest and fees on loans $3,872 $3,380 Interest on deposits with other banks 10 9 Interest and dividends on investments 1,229 1,070 Total interest income 5,111 4,459 Interest expense: Interest on deposits 1,470 1,364 Interest on borrowed funds 961 697 Total interest expense 2,431 2,061 Net interest income 2,680 2,398 Provision for loan losses 20 0 Net interest income after provision for loan losses 2,660 2,398 Other operating income: Trust department income 78 81 Service charges on deposit accounts 139 117 Net securities gains (losses) 0 0 Other operating income 232 202 Total other operating income 449 400 Other operating expenses: Salaries and employee benefits 833 765 Occupancy expense 84 79 Furniture and equipment expense 175 141 Other 528 495 Total other operating expenses 1,620 1,480 Page 5 STATEMENTS OF INCOME CONT. 1997 1996 (Unaudited) (Unaudited) Income before income taxes 1,489 1,318 Applicable income taxes 473 425 NET INCOME $1,016 $893 Earnings per common share: Net income $1.64 $1.46 Dividends declared $0.23 $0.19 Page 6 FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the nine months ended Sept. 30, 1997 1996 (Unaudited) (Unaudited) Cash flows from operating activities: Net income $2,922 $2,483 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 437 395 Provision for loan losses 20 0 Loans originated for resale (1,657) 0 Proceeds from sales and transfers of loans 1,959 0 Net (gain) loss on sale of investments 0 (2) Provision for losses on other real estate 0 15 Losses related to other real estate 26 9 Net change in other assets (906) (478) Net change in other liabilities 350 575 Net amortization of premium on investments 85 105 Net cash provided by operating activities 3,236 3,102 Cash flows from investing activities: Proceeds from sales of investments 0 4,479 Proceeds from maturities of investments 11,975 11,861 Proceeds from maturities of interest-bearing deposits 0 2,700 Purchase of interest-bearing deposits (325) 0 Proceeds from sales of other real estate 444 364 Additional investment in other real estate (1) (7) Purchase of investments (22,199) (16,973) Net decrease (increase) in loans (16,523) (17,375) Capital expenditures (123) (91) Net cash used in investing activities (26,752) (15,042) Cash flows from financing activities: Net increase (decrease) in demand deposits, savings, money market and club accounts (495) 3,511 Net increase (decrease) in certificates of deposit 6,536 827 Net increase (decrease) in other borrowings 17,341 8,390 Proceeds from sale of Treasury stock 48 29 Payment to repurchase common stock (48) (26) Net proceeds from stock issuance 98 109 Dividends paid (511) (330) Net cash provided by financing activities 22,969 12,510 Page 7 STATEMENTS OF CASH FLOWS CONT. 1997 1996 (Unaudited) (Unaudited) Net increase (decrease) in cash and cash equivalents (547) 570 Cash and cash equivalents at beginning of period 6,023 5,404 Cash and cash equivalents at end of period $5,476 $5,974 Interest paid $6,852 $6,012 Income taxes paid 1,307 1,096 Non-cash transactions: Loans transferred to other real estate owned (net) 50 603 Loans held for sale transferred to loan portfolio 0 4,066 Net change in unrealized gain (loss) on available for sale securities 44 (210) Page 8 FOOTNOTES TO FINANCIAL STATEMENTS 1. The quarterly financial statements in the opinion of Management fairly represent all adjustments made to reflect the current financial condition of the Company for this interim period just ended. All such adjustments were of a normal recurring nature. Page 9 Item 2 - MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION & RESULTS OF OPERATIONS EARNINGS SUMMARY Net income for the nine months ended September 30, 1997 was $2,922,000, an increase of 17.7% over 1996's net income of $2,483,000. Net income for the quarter ended September 30, 1997 was $1,016,000. This is a 13.8% increase over 1996's net income of $893,000. NET INTEREST INCOME Net interest income for the nine months ended September 30, 1997 was $7,693,000, an 11.5% increase over 1996's net interest income of $6,898,000. Total interest income of $14,653,000 is a 12.7% increase over 1996's total interest income of $13,007,000. Total interest expense of $6,960,000 is a 13.9% increase over 1996's total interest expense of $6,109,000. Net interest income for the quarter ended September 30, 1997 was $2,680,000. This is an 11.8% increase over 1996's net interest income of $2,398,000. Total interest income was $5,111,000, a 14.6% increase over 1996's total interest income of $4,459,000. Total interest expense of $2,431,000 is an, 18.0% increase over 1996's total interest expense of $2,061,000. PROVISION FOR LOAN LOSSES A provision of $20,000 was made to the allowance for loan losses during the first nine months of 1997. The allowance for loan losses is deemed adequate as calculated in accordance with Banking Circular #201 and with respect to SFAS 114/118. Loans considered to be impaired according to SFAS 114/118 totalled $478,000 and $162,000 at September 30, 1997 and 1996, respectively. The portion of the allowance for loan losses allocated to impaired loans at September 30, 1997 and 1996 was $152,000 and $12,000, respectively. NON-INTEREST INCOME Non-interest income was $1,140,000 for the nine months ended September 30, 1997. This is an increase of 12.2% from 1996's non-interest income of $1,016,000. Non-interest income for the quarter ended September 30, 1997 was $449,000, a 12.3% increase over the same period a year ago. NON-INTEREST EXPENSE Non-interest expense of $4,542,000 for the nine months ended September 30, 1997 is an increase of 6.8% from 1996's non-interest expense of $4,251,000. Non-interest expense for the quarter ended September 30, 1997 was $1,620,000, a 9.5% increase over the same period a year ago. INCOME TAXES Income taxes on operating earnings increased to $1,349,000 for the first nine months of 1997 from $1,180,000 for the same period a year ago. The level of income taxes has increased as a result of the Company's increased earnings. Page 10 MANAGEMENT'S DISCUSSION CONTINUED DEPOSITS AND BORROWED FUNDS Deposits as of September 30, 1997 increased by 4.5% or $6,909,000 from September 30, 1996. Demand deposits decreased by 1.8% or $248,000, NOW deposits increased by 3.7% or $1,013,000, savings deposits decreased by 0.8% or $297,000, money market deposits decreased by 37.4% or $2,512,000 and certificates of deposit increased by 12.6% or $8,953,000. Deposits were supplemented by borrowings from the Federal Home Loan Bank and repurchase agreements. Total borrowed funds increased by 38.0% or $18,874,000 from the same period a year ago. STOCKHOLDERS' INVESTMENT AND CAPITAL RESOURCES Stockholders' investment as of September 30, 1997 was $25,133,000 compared to $21,620,000 for the same period in 1996. The reason for this increase was the strong earnings performance in the year 1996 and the first nine months of 1997. During 1996, the Company increased its dividend one cent each quarter to end the year at a dividend rate of 20 cents per share. In addition, a special cash dividend of 20 cents per share was declared in the fourth quarter of 1996. Dividends were increased one cent in the first quarter of 1997 to 21 cents per share, again in the second quarter to 22 cents per share, and once again in the third quarter to 23 cents per share. Leverage capital ratios for the Company were 9.78% and 9.50%, respectively, at September 30, 1997 and September 30, 1996. The Bank had a tier one risk-based capital ratio of 15.62% and tier two risk-based capital ratio of 16.80% at September 30, 1997, compared to 14.46% and 15.71%, respectively, at September 30, 1996. These were comfortably above the standards to be rated "well-capitalized" by the regulatory authorities. LIQUIDITY MANAGEMENT As of September 30, 1997 the Bank had primary sources of liquidity of $40,903,000, or 15.9% 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 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. Page 11 MANAGEMENT'S DISCUSSION CONTINUED 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. Note: A certified or licensed appraiser is used for all appraisals. At September 30, 1997 and 1996, loans on a non-accrual status totaled $537,000 and $430,000, respectively. In addition to loans on a non-accrual status at September 30, 1997 and 1996, loans past due greater than 90 days totaled $674,000 and $161,000 respectively. The Company continues to accrue interest on these loans because it believes collection of the interest is reasonably assured. INVESTMENTS As of September 30, 1997 stockholders' equity was increased by $58,000 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. Page 12 MANAGEMENT'S DISCUSSION CONTINUED 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 commercial loans greater than $100,000. C. Delinquent loans are reviewed weekly by the Bank's Collections Officer and Senior Loan Officer. 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 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. ACCOUNTING PRONOUNCEMENTS SFAS No. 122, "Accounting for Mortgage Servicing Rights" was adopted in 1996. SFAS requires the recognition of rights to service mortgage loans for others as separate assets, regardless of whether the rights were originated or purchased, and subsequent, periodic evaluations of the capitalized rights for impairment. The adoption of this statement did not have a material effect on the financial statements. The Company adopted SFAS No. 123, "Accounting for Stock Based Compensation," and has elected the intrinsic value method. The financial statements are not affected. SFAS No. 125, as amended by SFAS No. 127, relates to the accounting for transfers and servicing of financial assets and extinguishments of certain liabilities and is effective for years beginning January 1, 1997. The adoption of this statement did not have an effect on the financial statements. SFAS No. 128, "Earnings per Share", and SFAS No. 129, "Disclosure of Information about Capital Structure", were issued in February 1997 and are effective for interim and annual periods ending after December 15, 1997. The effect of adopting these statements has not been determined. Page 13 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 14 ITEM 2. CHANGES IN SECURITIES None Page 15 ITEM 3. DEFAULT UPON SENIOR SECURITIES None. Page 16 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. Page 17 ITEM 5: Other Information On May 5, 1997, the Bank acquired, through purchase, a two story commercial building on Commercial Street in Rockport, Maine. The Bank received regulatory approval to open a branch in this location. The branch is scheduled to open for business during the month of October, 1997. Page 18 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, 1997 the registrant was not required to and did not file any reports on Form 8-K. Page 19 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 13, 1997 Daniel R. Daigneault Date Daniel R. Daigneault President and CEO November 13, 1997 F. Stephen Ward Date F. Stephen Ward Treasurer Page 20 EX-27 2
9 1000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 5476 1300 0 0 16078 54692 54835 173130 1818 257053 161715 67031 1747 1458 6 0 0 25127 257053 11099 3520 34 14653 4288 6960 7693 20 0 4542 4271 4271 0 0 2922 4.73 4.73 4.18 537 674 0 0 1906 205 97 1818 1818 0 0
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