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Articles 

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

November 08, 2010 | About:

First National Lincoln Corp. (NASDAQ:FNLC) filed Quarterly Report for the period ended 2010-09-30.

First National Lincoln Corp. has a market cap of $144.49 million; its shares were traded at around $14.8 with a P/E ratio of 13.96 and P/S ratio of 1.92. The dividend yield of First National Lincoln Corp. stocks is 5.27%. 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 nine months of 2010 was $9.0 million, down $1.3 million or 12.9% from the $10.4 million posted for the same period in 2009. Earnings per common share on a fully diluted basis were $0.82 for the nine-months ended September 30, 2010, down $0.16 or 16.3% from the $0.98 posted for the same period in 2009. For the quarter ended September 30, 2010, net income was $3.2 million, up $0.3 million or 10.6% from the $2.9 million posted for the same period in 2009. Earnings per common share on a fully diluted basis were $0.29 for the quarter ended September 30, 2010, up $0.03 or 11.5% from the $0.26 posted for the same period in 2009. The Company saw a $35,000 increase in earnings from the previous quarter, making net income posted for the quarter ended September 30, 2010, the highest posted in the past five quarters.

Net interest income on a tax-equivalent basis was down $602,000 in the third quarter of 2010 compared to the same period in 2009, with the variance coming from the net interest margin dropping from 3.59% to 3.36%. Year-to-date, net interest income is down $3.2 million from the same period in 2009, with the variance due primarily to our net interest margin declining from 3.65% to 3.39%. The margin decline year-to-date is the result of multiple factors: volume has been impacted by lower average earning assets in 2010 than in 2009 and rate compression is the result of some assets repricing downward and the extension of liabilities at a higher cost in order to reduce interest rate risk. For the third quarter, the decline in net interest margin was all attributable to rate compression.

The slump in the housing market is continuing and the national unemployment rate is at 9.6%. Fortunately, the unemployment rate in Maine, at 7.7%, 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 $6.3 million for loan losses in the first nine months of 2010, down $1.4 million from the $7.7 million provision made in the first nine months of 2009. As a result, the allowance for loan losses has increased $608,000 or 4.5% year-to-date and now stands at 1.55% of outstanding loans compared to 1.43% at December 31, 2009 and 1.31% at September 30, 2009.

Total assets have increased $43.2 million or 3.2% year-to-date. The loan portfolio is down $34.0 million or 3.6%, 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 $81.0 million or 28.2% year-to-date. On the liability side of the balance sheet, low-cost deposits have increased $28.0 million or 10% year-over-year, which is above our normal seasonal pattern. Local certificates of deposit are up $4.6 million or 2.0%.

Total interest income of $42.9 million for the nine months ended September 30, 2010 is a 10.8% decrease from total interest income of $48.1 million in the comparable period of 2009. Total interest expense of $12.7 million for the first nine months of 2010 is a 14.1% decrease from total interest expense of $14.8 million for the first nine months of 2009. As a result, net interest income decreased 9.3% or $3.1 million to $30.2 million for the nine months ended September 30, 2010, from the $33.3 million reported for the same period in 2009. The Company s net interest margin on a tax-equivalent basis decreased from 3.65% in the first nine months of 2009 to 3.39% for the nine months ended September 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 $3.2 million and $3.3 million for the nine months ended September 30, 2010 and 2009, respectively.

Total interest income of $14.6 million for the quarter ended September 30, 2010 is a 4.3% decrease from total interest income of $15.2 million in the same period in 2009. Total interest expense of $4.3 million for the quarter ended September 30, 2010 is a 2.1% decrease from total interest expense of $4.4 million in the comparable period of 2009. As a result, net interest income decreased 5.2% or $0.6 million to $10.2 million for the quarter ended September 30, 2010, from the $10.8 million reported for the same period in 2009. The Company s net interest margin on a tax-equivalent basis decreased from 3.59% for the quarter end September 30, 2009 to 3.36% for the quarter ended September 30, 2010. Tax-exempt interest income amounted to $1.1 million for the quarters ended September 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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