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Articles 

First National Lincoln Corp. Reports Operating Results (10-Q)

August 05, 2010 | About:

First National Lincoln Corp. (NASDAQ:FNLC) filed Quarterly Report for the period ended 2010-06-30.

First National Lincoln Corp. has a market cap of $138.5 million; its shares were traded at around $14.21 with a P/E ratio of 13.8 and P/S ratio of 1.8. The dividend yield of First National Lincoln Corp. stocks is 5.5%. First National Lincoln Corp. had an annual average earning growth of 6% over the past 5 years.FNLC is in the portfolios of Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Net income for the first six months of 2010 was $5.8 million, down $1.6 million or 22.0% from the $7.5 million posted for the same period in 2009. Earnings per common share on a fully diluted basis were $0.53 for the six-months ended June 30, 2010, down $0.19 or 26.4% from the $0.72 posted for the same period in 2009. For the quarter ended June 30, 2010, net income was $3.2 million, down $0.6 million or 16.0% from the $3.8 million posted for the same period in 2009. Earnings per common share on a fully diluted basis were $0.29 for the quarter ended June 30, 2010, down $0.06 or 17.1% from the $0.35 posted for the same period in 2009. Although the quarterly and year-to-date earnings are below the comparable periods last year, the Company saw a $476,000 increase in earnings from the previous quarter, making net income posted for the quarter ended June 30, 2010, the highest since the second quarter of 2009.

Net interest income was down $1.5 million in the second quarter of 2010 compared to the same period in 2009, however it was down only slightly from the previous quarter. Year-to-date, net interest income is down $2.5 million from the same period in 2009. The variance for both the quarter and year-to-date when compared to 2009 was primarily due to multiple factors which resulted in a decline in our net interest margin. On the asset side of the balance sheet, interest income has been lower as loans and investments continue to reprice downward in this prolonged low-rate environment. Our earning assets in the loan portfolio have declined as mortgages which refinanced to very low fixed rates have been sold to the secondary market. On the liability side, we took advantage of historically low interest rates and extended the maturity of wholesale funding to reduce interest rate risk, resulting in higher interest expense.

The slump in the housing market is continuing and unemployment is at 9.5%. Fortunately, the unemployment rate in Maine, at 8.0%, is somewhat better than the national average. Unemployment numbers, however, do not reflect the number of people experiencing reduced incomes from wage cutbacks and loss of overtime. In Maine, many people who are self-employed are also experiencing a decline in business revenues impacting their individual incomes as well. We provisioned $4.5 million for loan losses in the first half of 2010, down $100,000 from the $4.6 million provision made in the first half of 2009. As a result, the allowance for loan losses has increased $528,000 or 3.9% year-to-date and now stands at 1.52% of outstanding loans compared to 1.43% at December 31, 2009 and 1.20% at June 30, 2009.

Total assets have decreased $5.1 million or 0.4% year-to-date. The loan portfolio is down $20.5 million or 2.2%, with a drop due to refinancing of mortgages to very low fixed rates that have been sold to the secondary market. The investment portfolio is up $6.8 million or 2.4% year-to-date. On the liability side of the balance sheet, low-cost deposits have increased $20.9 million or 8.4% year-over-year, which is above our normal seasonal pattern. Local certificates of deposit are up $9.6 million or 4.2%

Total interest income of $28.3 million for the six months ended June 30, 2010 is a 13.8% decrease from total interest income of $32.9 million in the comparable period of 2009. Total interest expense of $8.4 million for the first six months of 2010 is a 19.2% decrease from total interest expense of $10.4 million for the first six months of 2009. As a result, net interest income decreased 11.2% or $2.5 million to $20.0 million for the six months ended June 30, 2010, from the $22.5 million reported for the same period in 2009. The Company s net interest margin on a tax-equivalent basis decreased from 3.68% in the first six months of 2009 to 3.41% for the six months ended June 30, 2010. This decrease was due to lower interest income as loans and investments continue to reprice downward, the previously noted decline in the mortgage loan portfolio, and extended maturities in wholesale funding. Tax-exempt interest income amounted to $2.1 million and $2.2 million for the six months ended June 30, 2010 and 2009, respectively.

Total interest income of $14.2 million for the quarter ended June 30, 2010 is a 12.5% decrease from total interest income of $16.3 million in the same period in 2009. Total interest expense of $4.3 million for the quarter ended June 30, 2010 is a 11.5% decrease from total interest expense of $4.8 million in the comparable period of 2009. As a result, net interest income decreased 12.9% or $1.5 million to $10.0 million for the quarter ended June 30, 2010, from the $11.4 million reported for the same period in 2009. The Company s net interest margin on a tax-equivalent basis decreased from 3.69% for the quarter end June 30, 2009 to 3.35% for the quarter ended June 30, 2010. Tax-exempt interest income amounted to $1.1 million for the quarters ended June 30, 2010 and 2009.

Read the The complete Report

About the author:

10qk
Charlie Tian, Ph.D., is the founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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