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, 2001
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, 2001
Common Stock, Par One Cent 2,387,181
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FIRST NATIONAL LINCOLN CORPORATION
INDEX
PART 1 Financial Information
Page No.
Item 1:
Accountants' Review Report ................................. 1
Financial Statements
Consolidated Balance Sheets -
June 30, 2001, June 30, 2000, and December 31, 2000 ...... 2 - 3
Consolidated Statements of Income and
Non-Owners' Changes in Equity - for the three and six months
ended June 30, 2001 and June 30, 2000 .................... 4 - 7
Consolidated Statements of Cash Flows - for the six months
ended June 30, 2001 and June 30, 2000 .................... 8 - 9
Footnotes to Financial Statements -
six months ended June 30, 2001 and June 30, 2000........... 10
Item 2: Management's discussion and analysis of
financial condition and results of operations ..........11 - 16
Item 3: Quantitative and qualitative disclosures
about market risk....................................... 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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ACCOUNTANTS' REVIEW 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, 2001 and 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 reviews 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 U.S. 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 U.S. generally accepted accounting principles.
Berry, Dunn, McNeil & Parker
Portland, Maine
August 13, 2001
Page 1
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FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
6/30/01 6/30/00 12/31/00
(000s OMITTED except per share data
and number of shares) (Unaudited) (Unaudited) (Unaudited)
Assets
Cash and cash equivalents $ 11,121 $ 10,342 $ 10,324
Investments:
Available for sale 60,834 46,216 62,917
Held to maturity (market values $49,838
at 6/30/01, $39,819 at 6/30/00 and
$41,617 at 12/31/00) 50,268 42,563 42,303
Loans held for sale (fair value
approximates cost) 50 60 0
Loans 282,429 252,391 264,929
Less allowance for loan losses 2,603 2,106 2,301
Net loans 279,826 250,285 262,628
Accrued interest receivable 3,416 2,970 3,105
Bank premises and equipment 6,050 5,323 5,352
Other real estate owned 697 355 356
Other assets 6,663 6,105 6,231
Total Assets $418,925 $364,219 $393,216
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BALANCE SHEETS CONT.
6/30/01 6/30/00 12/31/00
(Unaudited) (Unaudited) (Unaudited)
Liabilities
Demand deposits $ 19,921 $ 24,275 $ 22,488
NOW deposits 40,477 38,926 38,603
Money market deposits 10,554 11,082 9,941
Savings deposits 39,416 38,205 40,108
Certificates of deposit 88,281 68,537 74,489
Certificates $100M and over 82,721 40,532 68,937
Total deposits 281,370 221,557 254,566
Borrowed funds 99,353 109,957 102,919
Other liabilities 2,980 2,342 2,571
Total Liabilities 383,703 333,856 360,056
Shareholders' Equity:
Common stock (one cent par value) 25 25 25
Additional paid-in capital 4,687 4,687 4,687
Retained earnings 32,201 29,006 30,495
Accumulated Other Comprehensive income:
Net unrealized gains(losses) on
available-for-sale securities 535 (1,239) 203
Treasury stock (2,226) (2,116) (2,250)
Total Shareholders' Equity 35,222 30,363 33,160
Total Liabilities &
Shareholders' Equity $418,925 $364,219 $393,216
Number of shares authorized 6,000,000 6,000,000 6,000,000
Number of shares outstanding 2,387,181 2,387,451 2,378,613
Book value per share $14.75 $12.72 $13.94
See Accountants' Review Report. The accompanying notes are an integral part of
these consolidated financial statements.
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,
2001 2000
(000s OMITTED except per share data
and number of shares) (Unaudited) (Unaudited)
Interest Income:
Interest and fees on loans $11,497 $10,294
Interest on deposits with other banks 50 15
Interest and dividends on investments 3,623 3,020
Total interest income 15,170 13,329
Interest expense:
Interest on deposits 5,316 3,815
Interest on borrowed funds 2,832 3,222
Total interest expense 8,148 7,037
Net interest income 7,022 6,292
Provision for loan losses 475 300
Net interest income after provision
for loan losses 6,547 5,992
Other operating income:
Fiduciary income 345 336
Service charges on deposit accounts 446 433
Other operating income 890 560
Total other operating income 1,681 1,329
Other operating expenses:
Salaries and employee benefits 2,294 2,136
Occupancy expense 270 256
Furniture and equipment expense 475 347
Other 1,468 1,356
Total other operating expenses 4,507 4,095
Income before income taxes 3,721 3,226
Applicable income taxes 1,084 941
NET INCOME $ 2,637 $ 2,285
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STATEMENTS OF INCOME CONT.
For the six months ended June 30,
2001 2000
(Unaudited) (Unaudited)
Non-owner changes in equity, net of tax:
Unrealized gains
arising during period 332 80
Total other comprehensive income, net of
taxes of $171 in 2001 and $41 in 2000 332 80
INCOME AND NON-OWNER CHANGES IN EQUITY $2,969 $2,365
Earnings per common share:
Basic earnings per share $1.11 $0.96
Diluted earnings per share $1.08 $0.93
Cash dividends declared per share $0.39 $0.31
Weighted average number of shares
outstanding 2,382,630 2,386,261
Incremental Shares 65,673 80,508
See Accountants' Review Report. The accompanying notes are an integral part of
these consolidated financial statements.
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,
2001 2000
(000s OMITTED except per share data
and number of shares) (Unaudited) (Unaudited)
Interest Income:
Interest and fees on loans $ 5,759 $ 5,279
Interest on deposits with other banks 26 14
Interest and dividends on investments 1,850 1,542
Total interest income 7,635 6,835
Interest expense:
Interest on deposits 2,554 1,994
Interest on borrowed funds 1,421 1,654
Total interest expense 3,975 3,648
Net interest income 3,660 3,187
Provision for loan losses 280 150
Net interest income after provision
for loan losses 3,380 3,037
Other operating income:
Fiduciary income 163 169
Service charges on deposit accounts 236 234
Other operating income 542 297
Total other operating income 941 700
Other operating expenses:
Salaries and employee benefits 1,156 1,068
Occupancy expense 127 124
Furniture and equipment expense 241 172
Other 771 714
Total other operating expenses 2,295 2,078
Income before income taxes 2,026 1,659
Applicable income taxes 595 486
NET INCOME $ 1,431 $ 1,173
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STATEMENTS OF INCOME CONT.
For the quarters ended June 30,
2001 2000
(Unaudited) (Unaudited)
Non-owner changes in equity, net of tax:
Unrealized gains (losses)
arising during period (339) 5
Total other comprehensive income (loss), net of
taxes of $(175) in 2001 and $ 2 in 2000 (339) 5
INCOME AND NON-OWNER CHANGES IN EQUITY $1,092 $1,178
Earnings per common share:
Basic earnings per share $0.60 $0.49
Diluted earnings per share $0.58 $0.47
Cash dividends declared per share $0.20 $0.16
Weighted average number of shares
outstanding 2,388,033 2,390,237
Incremental Shares 65,673 80,508
See Accountants' Review Report. The accompanying notes are an integral part of
these consolidated financial statements.
Page 7
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FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30,
(000 omitted) 2001 2000
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 2,637 $ 2,285
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 358 271
Provision for loan losses 475 300
Loans originated for resale (8,301) (1,171)
Proceeds from sales and transfers of loans 8,251 1,238
Losses related to other real estate owned 0 5
Net gain on call of securities available for sale (73) 0
Net change in other assets and accrued interest (743) (480)
Net change in other liabilities 238 130
Net accretion of discounts on investments (73) (63)
Net cash provided by operating activities 2,769 2,515
Cash flows from investing activities:
Proceeds from maturities, payments and calls of
securities available for sale 6,755 1,433
Proceeds from maturities, payments and calls of
securities to be held to maturity 4,199 2,508
Proceeds from sales of other real estate owned 97 36
Purchases of securities available for sale (4,058) (4,412)
Purchases of securities to be held to maturity (12,129) (125)
Net increase in loans (18,111) (20,154)
Purchases of Premises and Equipment (1,056) (76)
Net cash used in investing activities (24,303) (20,790)
Cash flows from financing activities:
Net increase deposits 26,804 16,099
Advances on long-term borrowings 35,500 0
Repayments on long-term borrowings (7,114) (108)
Net increase(decrease) in short-term borrowings (31,952) 5,017
Payment to repurchase common stock (131) (156)
Proceeds from sale of Treasury stock 155 234
Dividends paid (931) (690)
Net cash provided by financing activities 22,331 20,396
Page 8
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STATEMENTS OF CASH FLOWS CONT.
2001 2000
(Unaudited) (Unaudited)
Net increase in cash and cash equivalents 797 2,121
Cash and cash equivalents at beginning
of period 10,324 8,221
Cash and cash equivalents at end of
period $11,121 $10,342
Interest paid $8,148 $7,036
Income taxes paid 1,153 947
Non-cash transactions:
Loans transferred to other real estate
owned (net) 438 60
Net change in unrealized gain on
available for sale securities 332 80
See Accountants' Review Report. The accompanying notes are an integral part of
these consolidated financial statements.
Page 9
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FOOTNOTES TO FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements of First National
Lincoln Corporation and its subsidiary as of and for the three-month and six-
month periods ended June 30, 2001 and 2000 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,
2000.
2. On June 30, 2001 the Bank entered into a transaction by which it acquired
the assets and assumed the liabilities of White Pine Asset Management, a
Portland, Maine-based investment management firm. The transaction resulted in
the recording of goodwill in the amount of $125,000.
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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, 2001 was $2,637,000, an
increase of 15.4% over 2000's net income of $2,285,000. Revenue growth was the
primary factor in the Company's increased earnings for the first six months of
2001 compared to the same period in 2000. 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 $52.4 million, which
Management views as excellent for the first half of the year.
Fully diluted earnings per share for the first half of 2001 were $1.08, a
16.1% increase over the $0.93 reported in 2000.
Net income for the three months ended June 30, 2001 was $1,431,000, an
increase of 22.0% over 2000's net income of $1,173,000. 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 2001 compared to the same
period in 2000.
Fully diluted earnings per share for the second quarter of 2001 were
$0.58, a 23.4% increase over the $0.47 reported in 2000.
NET INTEREST INCOME
Total interest income of $15,170,000 for the six months ended June 30,
2001 is a 13.8% increase over 2000's total interest income of $13,329,000.
Total interest expense of $8,148,000 is a 15.8% increase over 2000's total
interest expense of $7,037,000. Net interest income was $7,022,000, an 11.6%
increase over 2000's net interest income of $6,292,000. The increases in both
interest income and interest expense were due to a combination of significantly
higher balances and movements in interest rates. In first half of 2001, there
was an increase in the Bank's margins due to recent easing of interest rates by
the Federal Reserve Board.
Total interest income of $7,635,000 for the three months ended June 30,
2001 is an 11.7% increase over 2000's total interest income of $6,835,000.
Total interest expense of $3,975,000 is a 9.0% increase over 2000's total
interest expense of $3,648,000. Net interest income was $3,660,000, a 14.8%
increase over 2000's net interest income of $3,187,000. The increases in both
interest income and interest expense were due to a combination of significantly
higher balances and movements in interest rates.
PROVISION FOR LOAN LOSSES
A $475,000 provision to the allowance for loan losses was made during the
first six months of 2001. This is a $175,000 increase from the $300,000
provision made for the same period of 2000. The increase was due to growth in
the commercial loan portfolio and the higher risk these loans carry. 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 $893,883 at June 30, 2001. The portion of the allowance for
loan losses allocated to impaired loans at June 30, 2001 was $223,335.
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MANAGEMENT'S DISCUSSION CONT.
NON-INTEREST INCOME
Non-interest income was $1,681,000 for the six months ended June 30, 2001,
an increase of 26.5% from 2000's non-interest income of $1,329,000. Included in
2001's other operating income is a gain of $73,000 recorded on a security
purchased at a deep discount which was called before maturity. The remainder of
the increase was due primarily to increases in merchant credit card income and
mortgage origination and servicing income. There were also increases in
fiduciary income, as well as service charge income on deposit accounts. Demand
for residential mortgages was strong in the first half of 2001 and the Bank
sold $8.3 million of loans in the first six months of 2001 compared to $1.2
million in the first six months of 2000. This resulted in increased gains on
sales of loans.
Non-interest income was $941,000 for the three months ended June 30, 2001,
an increase of 34.4% from 2000's non-interest income of $700,000. The increase
was due to increases in merchant credit card income, mortgage origination and
servicing income, as well as the gain on the called security.
NON-INTEREST EXPENSE
Non-interest expense of $4,507,000 for the six months ended June 30, 2001,
is an increase of 10.1% from 2000's non-interest expense of $4,095,000. 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, there were increases in merchant credit
card costs which were offset by an increase in merchant credit card income.
Non-interest expense of $2,295,000 for the three months ended June 30,
2001, is an increase of 10.4% from 2000's non-interest expense of $2,078,000
for the reasons stated above.
INCOME TAXES
Income taxes on operating earnings increased to $1,084,000 for the first
six months of 2001 from $941,000 for the same period a year ago. The increase
is in line with the increase in pre-tax income.
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MANAGEMENT'S DISCUSSION CONT.
INVESTMENTS
The Company's investment portfolio increased by $22.3 million or 25.1%
between June 30, 2000 and June 30, 2001, a direct result of an investment
climate which enabled the Company to add to its portfolio at very attractive
levels. During the first six months of 2001, the investment portfolio increased
by $5.9 million or 5.6%. At June 30, 2001, the Company's available-for-sale
portfolio had an unrealized gain, net of taxes, of $0.5 million, which is in
line with recent changes in interest rates.
LOANS
Loans grew by $30.0 million or 11.9% between June 30, 2000 and June 30,
2001. Most of this growth came in commercial loans, which increased $15.1
million, and mortgage loans, which increased $12.7 million. During the first
six months of 2001, total loans increased by $17.5 million or 6.6%.
DEPOSITS
As of June 30, 2001, deposits grew year-over year by 27.0% or $59.8
million. Virtually all of the increase came in certificates of deposit. The
Bank's core deposit base was down $2.2 million, or 1.9%, after growth of $15.6
million, or 16.2%, from June 30, 1999 to June 30, 2000.
Core deposits in the first half of 2001 have decreased by $0.7 million,
which is a normal seasonal variance, and certificates of deposit declined $27.5
million. The fluctuation in certificate of deposit balances is the result of
pricing strategies undertaken by the Company.
BORROWED FUNDS
The Company's funding also includes borrowings from the Federal Home Loan
Bank and repurchase agreements. Between June 30, 2000 and June 30, 2001,
borrowed funds decreased by $10.6 million or 9.6%. 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 2001, borrowed funds decreased by $3.6 million or 3.5%.
SHAREHOLDERS' INVESTMENT AND CAPITAL RESOURCES
Shareholders' investment as of June 30, 2001 was $35,222,000 compared to
$30,363,000 for the same period in 2000. The Company's strong earnings
performance in the preceeding 12 months was supplemented by the recognition of
a net unrealized gain on available-for-sale securities, as required under SFAS
115.
During 2000, the Company increased its dividend each quarter to end the
year at a quarterly dividend rate of 18 cents per share. In 2001, a cash
dividend of 19 cents per share was declared in the first quarter compared to 15
cents in the first quarter of 2000 and a cash dividend of 20 cents per share
was declared in the second quarter compared to 16 cents in the second quarter
of 2000.
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MANAGEMENT'S DISCUSSION CONT.
Regulatory leverage capital ratios for the Company were 8.30% and 8.84%,
respectively, at June 30, 2001 and June 30, 2000. 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 12.65% and tier two risk-based capital ratio of 13.61%
at June 30, 2001, compared to 13.77% and 14.68%, respectively, at June 30,
2000. 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, 2001 the Bank had primary sources of liquidity of $59.5
million, or 14.3% 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, 2001 and 2000, loans on a non-accrual status totaled
$1,671,000 and $1,859,000, respectively. In addition to loans on a non-accrual
status at June 30, 2001 and 2000, loans past due greater than 90 days and still
accruing totaled $510,000 and $184,000 respectively. The Company continues to
accrue interest on these loans because it believes collection of the interest
is reasonably assured.
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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.
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MANAGEMENT'S DISCUSSION CONT.
ACCOUNTING PRONOUNCEMENTS
During 2001 the Financial Accounting Standards Board (FASB) issued SFAS
No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other
Intangible Assets". SFAS No. 141 requires that the purchase method be used to
account for business combinations initiated after June 30, 2001.
SFAS No. 142 requires that goodwill no longer be amortized to earnings,
but instead be reviewed for impairment. The amortization of goodwill ceases
upon adoption of the Statement on January 1, 2002. These statements are
expected to have no material impact to the Company's consolidated financial
condition and results of operations.
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.
Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the market risks reported in the
Company's Annual Report at December 31, 2000.
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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.
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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 24, 2001, at
11:00 a.m. Eastern Daylight Time. Only shareholders of record as of the close
of business on March 5, 2001 (the "Voting Record Date") were entitled to vote
at the Annual Meeting. On the Voting Record Date, there were 2,376,613 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 2,105,010 shares in favor, 6,902
shares against, 712 shares withheld voting, and 263,989 shares not voting.
PROPOSAL 2: Election of Directors
The following are nominees for three-year terms as Director Expiring in 2004:
Bruce A. Bartlett has served as a Director of the Company since its
organization in 1985 and as a Director of The First National Bank of
Damariscotta (the "Bank"), the Company's wholly owned subsidiary, since 1981.
Mr. Bartlett served as President and Chief Executive Officer of the Company and
the Bank until his retirement in 1994.
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.
Stuart G. Smith has served as a Director of the Company and the Bank since
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 also on the board and part owner of the Mid Coast Skating
and Tennis Center. He also serves on the board of the Five Town CSD School
Board and the SAD 28 Camden/Rockport School Board.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR EACH OF THE NOMINEES FOR DIRECTOR.
Directors Continuing in Office:
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 as trustee of the YMCA, and was
previously chairperson of the YMCA Annual Fund Drive.
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VOTE OF SECURITY HOLDERS, Cont
Carl S. Poole, Jr. 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 1989. Mr. Soule has been practicing law in Wiscasset since 1971. He
served two terms in the Maine House of Representatives, 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
1999. Mr. Tindal formed and is owner of Tindal & Callahan Real Estate in
Boothbay Harbor, which has been in operation since 1985. Mr. Tindal is a
Trustee of 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.
The following Directors' terms will expire in 2003:
Daniel R. Daigneault has served as President, Chief Executive Officer and
as a member of the Board of Directors of both the Company 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 Vice Chairman of the Maine Bankers Association and past President of the
Boothbay Region YMCA Board of Trustees.
Dana L. Dow has served as a Director of the Company and the Bank since
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 a Director of the Company and the Bank
since 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.
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 2,097,132 shares in favor, 9,000
shares against, 6,492 withheld voting, and 263,898 shares not voting.
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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, 2000. In the opinion of the Board of Directors, the reputation,
qualifications and experience of the firm make its reappointment appropriate
for 2001. 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 2,111,864 shares in favor, 60
shares against, 700 withheld voting, and 263,989 not voting.
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ITEM 5: Other Information
None.
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ITEM 6: Exhibits, Financial Statement Schedules, and reports on Form 8-K
A. EXHIBITS
None.
B. REPORTS ON FORM 8-K
None.
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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 14, 2001 Daniel R. Daigneault
Date Daniel R. Daigneault
President and CEO
August 14, 2001 F. Stephen Ward
Date F. Stephen Ward
Treasurer
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