10-Q 1 0001.txt 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 September 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 September 30, 2000 Common Stock, Par One Cent 2,382,939 FIRST NATIONAL LINCOLN CORPORATION INDEX PART 1 Financial Information Page No. Item 1: Independent Accountants' Report ............................ 1 Financial Statements Consolidated Balance Sheets - September 30, 2000, September 30, 1999, and December 31, 1999 2 - 3 Consolidated Statements of Income and Non-Owners' Changes in Equity - for the three and nine months ended September 30, 2000 and September 30, 1999 .............. 4 - 7 Consolidated Statements of Cash Flows - for the nine months ended September 30, 2000 and September 30, 1999 ........... 8 - 9 Footnotes to Financial Statements - nine months ended September 30, 2000 and September 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 Item 5: Other Information ...................................... 21 Item 6: Exhibits and reports on Form 8-K ....................... 22 Signatures .......................................................... 23 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 September 30, 2000, and for the three-month and nine-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 November 9, 2000 Page 1 FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS 9/30/00 9/30/99 12/31/99 (000 OMITTED) (Unaudited) (Unaudited) (Unaudited) Assets Cash and due from banks $ 8,620 $ 6,379 $ 8,221 Investments: Available for sale 53,844 35,325 42,091 Held to maturity (market values $40,663 at 9/30/00, $45,032 at 9/30/99 and $43,581 at 12/31/99) 42,737 46,885 45,908 Loans held for sale (fair value approximates cost) 0 0 127 Loans 258,522 229,057 232,526 Less allowance for loan losses 2,229 2,054 2,035 Net loans 256,293 227,003 230,491 Accrued interest receivable 2,779 2,301 2,335 Bank premises and equipment 5,457 5,524 5,518 Other real estate owned 356 191 336 Other assets 6,144 5,575 6,260 Total Assets $376,230 $329,183 $341,287 Page 2 BALANCE SHEETS CONT. 9/30/00 9/30/99 12/31/99 (Unaudited) (Unaudited) (Unaudited) Liabilities & Shareholders' Equity Demand deposits $ 23,228 $ 19,775 $ 17,746 NOW deposits 41,846 37,320 36,714 Money market deposits 11,137 10,740 16,607 Savings deposits 42,843 42,320 41,349 Certificates of deposit 68,115 75,002 70,859 Certificates $100M and over 60,021 25,792 22,183 Total deposits 247,190 210,949 205,458 Borrowed funds 95,309 87,597 105,048 Other liabilities 2,232 1,695 2,119 Total Liabilities 344,731 300,241 312,625 Shareholders' Equity: Common stock 25 25 25 Additional paid-in capital 4,687 4,686 4,687 Retained earnings 29,691 26,650 27,463 Net unrealized losses on available-for-sale securities (719) (874) (1,319) Treasury stock (2,185) (1,545) (2,194) Total Shareholders' Equity 31,499 28,942 28,662 Total Liabilities & Shareholders' Equity $376,230 $329,183 $341,287 Number of shares authorized 6,000,000 6,000,000 6,000,000 Number of shares issued 2,382,929 2,405,840 2,370,047 Book value per share $13.22 $12.03 $12.09 Page 3 FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME AND NON-OWNER CHANGES IN EQUITY For the nine months ended September 30, 2000 1999 (000 OMITTED) (Unaudited) (Unaudited) Interest Income: Interest and fees on loans $15,844 13,642 Interest on deposits with other banks 22 17 Interest and dividends on investments 4,591 3,628 Total interest income 20,457 17,287 Interest expense: Interest on deposits 6,065 5,388 Interest on borrowed funds 4,890 3,121 Total interest expense 10,955 8,509 Net interest income 9,502 8,778 Provision for loan losses 510 495 Net interest income after provision for loan losses 8,992 8,283 Other operating income: Fiduciary income 502 400 Service charges on deposit accounts 638 500 Other operating income 1,097 1,232 Total other operating income 2,237 2,132 Other operating expenses: Salaries and employee benefits 3,264 2,917 Occupancy expense 377 348 Furniture and equipment expense 540 526 Other 2,287 1,925 Total other operating expenses 6,468 5,716 Income before income taxes 4,761 4,699 Applicable income taxes 1,387 1,393 NET INCOME $3,374 $3,306 Page 4 STATEMENTS OF INCOME CONT. For the nine months ended September 30, 2000 1999 (Unaudited) (Unaudited) Non-owner changes in equity, net of tax: Unrealized gains (losses)on investments arising during period 600 (937) Total other comprehensive income (loss), net of taxes of $309 in 2000 and $(483) in 1999 600 (937) NET INCOME AND NON-OWNER CHANGES IN EQUITY $3,974 $2,369 Earnings per common share: Basic earnings per share $1.41 $1.35 Diluted earnings per share $1.37 $1.30 Cash dividends declared per share $0.48 $0.36 Weighted average number of shares outstanding 2,385,734 2,451,199 Incremental Shares for diluted earnings per share 80,072 95,272 Page 5 FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME AND NON-OWNER CHANGES IN EQUITY For the quarters ended September 30, 2000 1999 (000 OMITTED) (Unaudited) (Unaudited) Interest Income: Interest and fees on loans $ 5,550 4,734 Interest on deposits with other banks 7 6 Interest and dividends on investments 1,571 1,347 Total interest income 7,128 6,087 Interest expense: Interest on deposits 2,251 1,818 Interest on borrowed funds 1,668 1,191 Total interest expense 3,919 3,009 Net interest income 3,209 3,078 Provision for loan losses 210 120 Net interest income after provision for loan losses 2,999 2,958 Other operating income: Fiduciary income 166 130 Service charges on deposit accounts 205 172 Other operating income 538 510 Total other operating income 909 812 Other operating expenses: Salaries and employee benefits 1,128 1,005 Occupancy expense 121 118 Furniture and equipment expense 193 177 Other 930 808 Total other operating expenses 2,372 2,108 Income before income taxes 1,536 1,662 Applicable income taxes 445 490 NET INCOME $1,091 $1,172 Page 6 STATEMENTS OF INCOME CONT. For the quarters ended September 30, 2000 1999 (Unaudited) (Unaudited) Non-owner changes in equity, net of tax: Unrealized gains (losses) on investments arising during period 520 (207) Total other comprehensive income (loss), net Of taxes of $268 in 2000 and $(107) in 1999 520 (207) NET INCOME AND NON-OWNER CHANGES IN EQUITY $1,611 $965 Earnings per common share: Basic earnings per share $0.46 $0.49 Diluted earnings per share $0.44 $0.47 Cash dividends declared per share $0.17 $0.13 Weighted average number of shares outstanding 2,384,692 2,405,080 Incremental Shares for diluted earnings per share 80,072 95,272 Page 7 FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the nine months ended September 30, 2000 1999 (000 OMITTED) (Unaudited) (Unaudited) Cash flows from operating activities: Net income $3,374 3,306 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 413 402 Provision for loan losses 510 495 Provision for losses on other real estate owned 0 10 Loans originated for resale (2,055) (7,463) Proceeds from sales and transfers of loans 2,182 7,672 Losses related to other real estate owned 5 10 Net change in other assets and accrued interest (328) (530) Net change in other liabilities (270) 469 Net accretion of discounts on investments (103) (5) Net cash provided by operating activities 3,728 4,366 Cash flows from investing activities: Proceeds from sales, maturities and calls of securities available for sale 804 2,596 Proceeds from maturities and calls of securities to be held to maturity 4,099 11,579 Proceeds from sales of other real estate owned 35 239 Purchases of securities available for sale (11,605) (20,458) Purchases of securities to be held to maturity (868) (18,000) Net increase in loans (26,372) (20,243) Capital expenditures (352) (60) Net cash used in investing activities (34,259) (44,347) Cash flows from financing activities: Net increase in demand deposits, savings, money market and club accounts 6,638 9,777 Net increase (decrease)in certificates of deposit 35,094 (631) Net increase (decrease)in other borrowings (9,739) 33,137 Payment to repurchase common stock (238) (1,444) Proceeds from sale of Treasury stock 247 115 Dividends paid (1,072) (932) Net cash provided by financing activities 30,930 40,022 Page 8 STATEMENTS OF CASH FLOWS CONT. 2000 1999 (Unaudited) (Unaudited) Net increase in cash and cash equivalents 399 41 Cash and cash equivalents at beginning of period 8,221 6,338 Cash and cash equivalents at end of period $8,620 $6,379 Interest paid $10,955 $8,509 Income taxes paid 1,492 1,450 Non-cash transactions: Loans transferred to other real estate owned (net) 60 147 Change in unrealized gain (loss) on available for sale securities 909 (1,420) Page 9 FOOTNOTES TO FINANCIAL STATEMENTS 1. The accompanying consolidated financial statements of First National Lincoln Corporation (the Company) and its subsidiary, The First National Bank of Damariscotta (the Bank), for the nine-month periods ended September 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 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EARNINGS SUMMARY Net income for the nine months ended September 30, 2000 was $3,374,000, an increase of 2.1% over net income of $3,306,000 for the comparable period in 1999. Revenue growth was the primary factor in the Company's increased earnings for the first nine 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 from December 31, 1999 to September 30, 2000, the loan and investment portfolios increased by a combined $34.5 million, which Management views as an excellent rate of growth. Earnings per share for the first nine months of 2000 were $1.41, a 4.4% increase over the $1.35 reported for the nine months ended September 30, 1999. Net income for the three months ended September 30, 2000 was $1,091,000, a decrease of 6.9% from 1999's net income of $1,172,000. Earnings per share for the third quarter of 2000 were $0.46, a 6.1% decrease from the $0.49 reported in 1999. NET INTEREST INCOME Net interest income for the nine months ended September 30, 2000 was $9,502,000, an 8.2% increase over net interest income of $8,778,000 reported for the first nine months of 1999. While interest income was 18.3% higher than for the same period in 1999, the Company experienced tighter margins with interest expense increasing by 28.7% over the first nine months of 1999. 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 September 30, 2000 was $3,209,000, a 4.3% increase over net interest income of $3,078,000 for the same period in 1999. Similar to the Company's year-to-date results, interest income for the third quarter of 2000 was 17.1% higher than for the same period in 1999, while interest expense was 30.2% higher in 2000 than for the same period in 1999. These increases again resulted in margin compression and were due to a combination of significantly higher balances and higher interest rates PROVISION FOR LOAN LOSSES A $510,000 provision to the allowance for loan losses was made during the first nine months of 2000. This is a $15,000 increase over the $495,000 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 $730,267 at September 30, 2000. The portion of the allowance for loan losses allocated to impaired loans at September 30, 2000 was $191,593. Page 11 MANAGEMENT'S DISCUSSION CONT. NON-INTEREST INCOME Non-interest income was $2,237,000 for the nine months ended September 30, 2000, an increase of $105,000 over non-interest income of $2,132,000 for the same period in 1999. However, 1999's non-interest income included a gain of $189,000 due to adoption of SFAS 125 which governs the accounting treatment for mortgage servicing rights. Without the 1999 item, the increase would have been $294,000 or 15.1% for the nine-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. Demand for residential mortgages has been modest and the Bank chose to retain most of the production in portfolio, resulting in decreased gains on sales of loans -- only $2,182,000 were sold in the first nine months of 2000 compared to $7,672,000 for the same period in 1999. In addition, the Company's adoption of SFAS 125, which produced the gain of $189,000 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 $909,000 for the three months ended September 30, 2000, an increase of 11.9% from 1999's third quarter non-interest income. This was due to increased service charge income on deposit accounts connected with higher levels of core deposits, as well as increases in merchant credit card income and fiduciary income. These were offset by decreased mortgage origination and servicing income. NON-INTEREST EXPENSE Non-interest expense of $6,468,000 for the nine months ended September 30, 2000 is an increase of 13.2% from non-interest expense of $5,716,000 for the same period in 1999. This 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 $2,372,000 for the three months ended September 30, 2000, is an increase of 12.5% from 1999's third quarter non-interest expense of $2,108,000 for the reasons stated above INCOME TAXES Income taxes on operating earnings decreased slightly to $1,387,000 for the first nine months of 1999 compared to $1,393,000 for the same period a year ago, even though pre-tax earnings increased. The Company has increased its holdings of tax-exempt securities, which accounts for the decrease in tax expense. Page 12 MANAGEMENT'S DISCUSSION CONT. INVESTMENTS The Company's investment portfolio increased by $14.4 million or 17.5% between September 30, 1999 and September 30, 2000, a direct result of an attractive investment climate. During the first nine months of 2000, the investment portfolio increased by $8.6 million or 9.8%. At September 30, 2000, the Company's available-for-sale portfolio had an unrealized loss, net of taxes, of $0.7 million, which is in line with the interest rate changes seen in the second half of 1999 and the first nine months of 2000. LOANS Loans grew by $29.5 million or 12.9% between September 30, 1999 and September 30, 2000. Approximately half of the increase came in commercial loans, the Company's highest-earning assets, and half with strong growth in mortgage loans. During the first nine months of 2000, loans increased by $26.0 million or 11.2%. DEPOSITS As of September 30, 2000, deposits grew year-over year by 17.2% or $36.2 million. A substantial portion of this increase came in core deposits (checking, NOWs, savings and money market accounts) which are the Company's lower cost sources of funding. For the same period, certificates of deposit increased by $27.3 million. During the first nine months of 2000 total deposits increased by $41.7 million or 20.3%. $35.1 million of 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 September 30, 1999 and September 30, 2000, borrowed funds increased by $7.7 million or 8.8%. 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 nine months of 2000, borrowed funds decreased by $9.7 million or 9.3%. Those borrowings were primarily replaced by brokered certificates of deposit with all-in costs favorable to the Bank. SHAREHOLDERS' EQUITY AND CAPITAL RESOURCES Shareholders' equity as of September 30, 2000 was $31,499,000 compared to $28,942,000 at September 30, 1999. The Company's strong earnings performance in the preceeding 12 months added significantly to retained earnings along with a decrease in the net unrealized after-tax loss on available-for-sale securities, as required under SFAS 115. These were offset by a net buyback of $640,000 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, cash dividends of 15 cents, 16 cents and 17 cents per share were declared in the first, second and third quarters, compared to 11 cents, 12 cents and 13 cents in the same respective quarters of 1999. The 2000 year-to-date dividend of 48 cents is an increase of 33% over 1999's dividend for the same period. Page 13 MANAGEMENT'S DISCUSSION CONT. Regulatory leverage capital ratios for the Company were 8.77% and 9.04%, respectively, at September 30, 2000 and September 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 13.43% and a tier two risk-based capital ratio of 14.36% at September 30, 2000, compared to 14.65% and 15.66%, respectively, at September 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 September 30, 2000 the Bank had primary sources of liquidity of $43.1 million, or 11.5% of its assets. It is Management's opinion that this is adequate. Through its Asset/Liability policy, the Bank has clear 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 Company'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 September 30, 2000 and 1999, loans on non-accrual status totaled $2,360,000 and $1,196,000, 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 September 30, 2000 and 1999, loans past due greater than 90 days and still accruing totaled $336,000 and $592,000 respectively. The Company continues to accrue interest on these loans because it believes collection of the interest is reasonably assured. Page 14 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 MANAGEMENT'S DISCUSSION CONT. ACCOUNTING PRONOUNCEMENTS During 2000, the financial Accounting Standards Board issued the following: SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities - an amendment of SFAS No. 133" SFAS No. 139, "Rescission of FASB Statement No. 53 and amendments to FASB Statements No. 63, 89 and 121" SFAF No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities - a replacement of FASB Statement No. 125." The Company expects to adopt SFAS No. 139 and 140 when required and management believes adoption will not have a material effect on the financial condition and results of operation of the Company. SFAS No. 137 and SFAS No. 138 amended SFAS No. 133, which established accounting reporting standards for derivative instruments and for hedging activity. SFAS No. 137 defers the elective date of SFAS No. 133 to all fiscal quarters of all fiscal years beginning after June 15, 2000. While the Bank does not hold any derivative instruments at the present time, SFAS Nos. 133, 137 and 138 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 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 ITEM 2. CHANGES IN SECURITIES None Page 18 ITEM 3. DEFAULT UPON SENIOR SECURITIES None. Page 19 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. Page 20 ITEM 5: Other Information None. Page 21 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 22 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 14, 2000 Daniel R. Daigneault Date Daniel R. Daigneault President and CEO November 14, 2000 F. Stephen Ward Date F. Stephen Ward Treasurer Page 23