-----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, TroJA56PK+CmS82aS1eLMa3i0sZzQQrZPcknew3nJhpD/S0TLMofMzLJ7nm3nb9K 7w5Rq1UNk1nUcN2If0fzdw== 0000765207-98-000004.txt : 19980515 0000765207-98-000004.hdr.sgml : 19980515 ACCESSION NUMBER: 0000765207-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 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: 98621600 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 March 31, 1998 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 March 31, 1998 Common Stock, Par One Cent 2,478,917 FIRST NATIONAL LINCOLN CORPORATION INDEX PART 1 Financial Information Page No. Item 1: Financial Statements Consolidated Balance Sheets - 1 - 2 March 31, 1998, March 31, 1997, and December 31, 1997. Consolidated Statements of Income and Non-owner Changes in Equity - 3 - 4 Three months ended March 31, 1998 and March 31, 1997. Consolidated Statements of Cash Flows - 5 - 6 Three months ended March 31, 1998 and March 31, 1997. Footnotes to Financial Statements - 7 Three months ended March 31, 1998 and March 31, 1997. Item 2: Management's discussion and analysis of 8 - 11 financial condition and results of operations. PART II Other Information Item 1: Legal Proceedings 12 Item 2: Changes in Securities 13 Item 3: Defaults Upon Senior Securities 14 Item 4: Submission of Matters to a Vote of Security Holders 15 Item 5: Other Information 16 Item 6: Exhibits and reports on Form 8-K. 17 Signatures 18 FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (000 OMITTED) 3/31/98 3/31/97 12/31/97 (Unaudited) (Unaudited) (Unaudited) Assets Cash and due from banks $4,652 $5,981 $5,683 Interest bearing deposits in other banks 0 1 0 Investments: Available for sale 13,583 16,168 16,463 Held to maturity (market values $50,932 at 3/31/98, $54,589 at 3/31/97 and $52,610 at 12/31/97) 50,832 55,059 52,282 Loans held for sale (market value $100 at 12/31/97) 0 0 100 Loans 192,186 161,432 181,510 Less allowance for loan losses 1,772 1,852 1,800 Net loans 190,414 159,580 179,710 Accrued interest receivable 2,048 1,830 1,961 Bank premises and equipment 4,797 4,164 4,871 Other real estate owned 241 674 184 Other assets 5,042 1,174 5,025 Total Assets $271,609 $244,631 $266,279 Liabilities & Stockholders' Equity Demand deposits $13,030 $12,625 $14,109 NOW deposits 29,326 24,858 29,213 Money market deposits 6,970 5,073 6,238 Savings deposits 34,111 34,004 34,104 Certificates of deposit 67,899 63,796 68,970 Certificates $100M and over 18,045 13,520 17,246 Total deposits $169,381 $153,876 $169,880 Page 1 BALANCE SHEETS CONT. 3/31/98 3/31/97 12/31/97 (Unaudited) (Unaudited) (Unaudited) Borrowed funds 73,539 65,694 69,037 Other liabilities 1,917 1,807 1,477 Total Liabilities 244,837 221,377 240,394 Shareholders' Equity: Common stock 25 24 25 Additional paid-in capital 4,655 4,468 4,595 Retained earnings 21,990 18,754 21,172 Net unrealized gains (losses) on available-for-sale securities 122 10 93 Treasury stock (20) (2) 0 Total Stockholders' Equity 26,772 23,254 25,885 Total Liabilities & Stockholders' Equity $271,609 $244,631 $266,279 Page 2 FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME AND NON-OWNER CHANGES IN EQUITY (000 OMITTED) For the three months ended March 31, 1998 1997 (Unaudited) (Unaudited) Interest Income: Interest and fees on loans $4,099 $3,513 Interest on deposits with other banks 5 13 Interest and dividends on investments 1,100 1,087 Total interest income 5,204 4,613 Interest expense: Interest on deposits 1,575 1,378 Interest on borrowed funds 963 780 Total interest expense 2,538 2,158 Net interest income 2,666 2,455 Provision for loan losses 45 0 Net interest income after provision for loan losses 2,621 2,455 Other operating income: Trust department income 91 81 Service charges on deposit accounts 147 130 Net securities gains (losses) (25) 0 Other operating income 202 105 Total other operating income 415 316 Other operating expenses: Salaries and employee benefits 893 809 Occupancy expense 104 87 Furniture and equipment expense 155 141 Other 464 403 Total other operating expenses 1,616 1,440 Page 3 STATEMENTS OF INCOME AND NON-OWNER CHANGES IN EQUITY CONT. 1998 1997 (Unaudited) (Unaudited) Income before income taxes 1,420 1,331 Applicable income taxes 428 418 NET INCOME $992 $913 Non-owner changes in equity, net of tax: Unrealized gains (losses) arising during period 29 (4) Less: reclassification adjustment for accumulated gains (losses) included in net-income (16) 0 Total non-owner changes in equity, net of tax 13 (4) INCOME AND NON-OWNER CHANGES IN EQUITY 1,005 909 Basic earnings per share $0.40 $0.37 Diluted earnings per share $0.39 $0.36 Cash dividends declared per share $0.07 $0.05 Weighted average number of shares outstanding 2,479,828 2,488,535 Page 4 FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (000 OMITTED) For the three months ended March 31, 1998 1997 (Unaudited) (Unaudited) Cash flows from operating activities: Net income $992 $913 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 147 131 Provision for loan losses 45 0 Loans originated for resale (3,361) (402) Proceeds from sales and transfers of loans 3,124 704 Net (gain) loss on sale of investments 25 0 Provision for losses on other real estate 0 0 Losses related to other real estate owned 0 14 Net change in other assets (437) (150) Net change in other liabilities 563 455 Net amortization of premium on investments 26 47 Net cash provided by operating activities 1,124 1,712 Cash flows from investing activities: Proceeds from sales of investments 0 0 Proceeds from maturities of investments 15,323 5,819 Maturities of interest-bearing deposits 0 974 Proceeds from sales of other real estate 0 126 Additional investment in other real estate 0 0 Purchase of investments (10,728) (16,535) Net decrease (increase) in loans (10,424) (4,516) Capital expenditures (72) (122) Net cash used in investing activities (5,901) (14,254) Cash flows from financing activities: Net increase (decrease) in demand deposits, savings, money market and club accounts (227) (5,577) Net increase (decrease) in certificates of deposit (272) 3,779 Net increase (decrease) in other borrowings 4,502 14,546 Proceeds from sale of Treasury stock 0 45 Payment to repurchase common stock (20) (47) Net proceeds from stock issuance 60 0 Dividends paid (297) (246) Net cash provided by financing activities 3,746 12,500 Page 5 STATEMENTS OF CASH FLOWS CONT. 1998 1997 (Unaudited) (Unaudited) Net increase (decrease) in cash and cash equivalents (1,031) (42) Cash and cash equivalents at beginning of period 5,683 6,023 Cash and cash equivalents at end of period $4,652 $5,981 Interest paid $2,477 $2,056 Income taxes paid 462 25 Non-cash transactions: Loans transferred to other real estate owned (net) 56 0 Loans held for sale transferred to loan portfolio 100 0 Net change in unrealized gain (loss) on available for sale securities 29 (4) Page 6 FOOTNOTES TO FINANCIAL STATEMENTS 1. Prior period financial information has been restated to reflect the 300% stock dividend issued on December 1, 1997. 2. 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 7 Item 2 - MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION & RESULTS OF OPERATIONS EARNINGS SUMMARY Net income for the three months ended March 31, 1998 was $992,000, an increase of 8.7% over 1997's net income of $913,000. NET INTEREST INCOME Net interest income for the three months ended March 31, 1998 was $2,666,000, an 8.6% increase over 1997's net interest income of $2,455,000. Total interest income of $5,204,000 is a 12.8% increase over 1997's total interest income of $4,613,000. Total interest expense of $2,538,000 is a 17.6% increase over 1997's total interest expense of $2,158,000. PROVISION FOR LOAN LOSSES During the first three months of 1998, $45,000 was added to the allowance for loan losses. The allowance 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 totaled $400,000 at March 31, 1998. The portion of the allowance for loan losses allocated to impaired loans at March 31, 1998 was $161,000. NON-INTEREST INCOME Non-interest income of $415,000 for the three months ended March 31, 1998 was an increase of 31.3% from 1997's non-interest income of $316,000. Mortgage origination fees and income on other assets acquired in the fourth quarter of 1997 contributed to this increase. NON-INTEREST EXPENSE Non-interest expense was $1,616,000 for the first three months of 1998. This is an increase of 12.2% from 1997's non-interest expense of $1,440,000. This increase can be attributed to higher salaries and employee benefits in addition to occupancy expenses, a direct result of bringing the new Rockport office on-line in late 1997. INCOME TAXES Income taxes on operating earnings increased to $428,000 for the first three months of 1998, up from $418,000 for the same period a year ago. The level of income taxes has increased as a result of the Company's increased earnings. DEPOSITS AND BORROWED FUNDS Deposits as of March 31, 1998 increased by 10.1% or $15,505,000 from March 31, 1997. Demand deposits increased 3.2% or $405,000, NOW deposits increased 18.0% or $4,468,000, savings deposits increased 0.3% or $107,000, money market deposits increased by 37.4% or $1,897,000 and certificates of deposit increased by 11.2% or $8,628,000. Page 8 MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION & RESULTS OF OPERATIONS CONT. Deposits were supplemented by borrowings from the Federal Home Loan Bank and repurchase agreements. Total borrowed funds increased by 11.9% or $7,845,000 from the same period a year ago. STOCKHOLDERS' INVESTMENT AND CAPITAL RESOURCES Stockholders' investment as of March 31, 1998 was $26,772,000 compared to $23,254,000 for the same period in 1997. The reason for this increase was the strong earnings performance in the year 1997 and the first three months of 1998. During 1997, the Company increased its dividend one cent each quarter to end the year at a dividend rate of 6 cents per share. In addition, a special cash dividend of 6 cents per share was declared in the fourth quarter of 1997. In the first quarter of 1998, dividends were increased one cent again to 7 cents per share. (Dividend information for prior periods has been restated to reflect the 300% stock dividend issued on December 1, 1997.) Leverage capital ratios for the Company were 9.86% and 9.51%, respectively, at March 31, 1998 and March 31, 1997. The Bank had a tier one risk-based capital ratio of 14.50% and tier two risk-based capital ratio of 15.51% at March 31, 1998, compared to 15.21% and 16.46%, respectively, at March 31, 1997. These were comfortably above the standards to be rated "well-capitalized" by the regulatory authorities. LIQUIDITY MANAGEMENT As of March 31, 1998 the Bank had primary sources of liquidity of $34,080,000, or 12.6% 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. 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. Page 9 MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION & RESULTS OF OPERATIONS CONT. 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 March 31, 1998 and 1997, loans on a non-accrual status totaled $448,000 and $439,000, respectively. In addition to loans on a non-accrual status, loans past due greater than 90 days totaled $271,000 and $221,000 for the same periods, respectively. The Company continues to accrue interest on these loans because it believes collection of the interest is reasonably assured. INVESTMENTS As of March 31, 1998 stockholders' equity was increased by $122,000 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 10 MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION & RESULTS OF OPERATIONS CONT. 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. 130, "Reporting Comprehensive Income", was adopted on January 1, 1998. This standard requires that financial statements report comprehensive income in addition to net income. Comprehensive income is all changes in equity except investments by owners and distributions by owners. For the Company, this includes unrealized appreciation or depreciation on securities available for sale. Page 11 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 12 ITEM 2. CHANGES IN SECURITIES None Page 13 ITEM 3. DEFAULT UPON SENIOR SECURITIES None. Page 14 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None Page 15 ITEM 5: Other Information In the first quarter of 1998, the Bank entered into an agreement to lease a former bank branch in Camden, Maine, that had been vacated by its previous tenant. The Bank has filed and received approval from its principal regulator, the Office of the Comptroller of the Currency, to establish a branch office in this location. After modest renovation, Management expects the facility to open in the second quarter of 1998. No loans or deposits were acquired from the previous tenant. Page 16 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 three months ended March 31, 1998 the registrant was not required to and did not file any reports on Form 8-K. Page 17 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 May 14, 1998 Daniel R. Daigneault Date Daniel R. Daigneault President and CEO May 14, 1998 F. Stephen Ward Date F. Stephen Ward Treasurer Page 18 EX-27 2
9 1000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 4652 0 0 0 13583 50832 50932 192186 1772 271609 169381 59272 1917 14267 25 0 0 26747 271609 4099 1100 5 5204 1575 2538 2666 45 25 1616 1420 1420 0 0 992 0.40 0.39 4.16 448 271 0 0 1800 85 12 1772 1772 0 0
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