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, 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 September 30, 2001
       Common Stock, Par One Cent                       2,388,054



















<page>

FIRST NATIONAL LINCOLN CORPORATION

INDEX


PART 1          Financial Information
                                                                    Page No.

     Item 1:
         Accountants' Review Report .................................      1

         Financial Statements

         Consolidated Balance Sheets -
           September 30, 2001, September 30, 2000,
           and December 31, 2000    .................................  2 - 3

         Consolidated Statements of Income and
           Non-Owners' Changes in Equity - for the three and nine
           months ended September 30, 2001 and September 30, 2000 ...  4 - 7

         Consolidated Statements of Cash Flows - for the nine
         months ended September 30, 2001 and September 30, 2000 .....  8 - 9

         Footnotes to Financial Statements -
           nine months ended September 30, 2001
           and September 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

     Item 5: Other Information ......................................     21

     Item 6: Exhibits and reports on Form 8-K .......................     22

Signatures ..........................................................     23










<page>



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 September 30, 2001 and
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 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 reviews, 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
November 13, 2001


























Page 1
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FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS



                                           9/30/01     9/30/00    12/31/00
(000s OMITTED except per share data
   and number of shares)                (Unaudited) (Unaudited) (Unaudited)

Assets

Cash and cash equivalents                 $ 13,447    $  8,620    $ 10,324

Investments:

 Available for sale                         58,812      53,844      62,917

 Held to maturity (market values $47,574
   at 9/30/01, $40,663 at 9/30/00 and
   $41,617 at 12/31/00)                     46,979      42,737      42,303

Loans held for sale (fair value
   approximates cost)                          458           0           0

Loans                                      287,799     258,522     264,929
Less allowance for loan losses               2,742       2,229       2,301

     Net loans                             285,057     256,293     262,628

Accrued interest receivable                  2,785       2,779       3,105
Bank premises and equipment                  6,189       5,457       5,352
Other real estate owned                        429         356         356
Other assets                                 7,548       6,144       6,231

        Total Assets                      $421,704    $376,230    $393,216























Page 2
<page>
BALANCE SHEETS CONT.


                                           9/30/01     9/30/00    12/31/00
                                        (Unaudited) (Unaudited) (Unaudited)

Liabilities

Demand deposits                           $ 23,590    $ 23,228    $ 22,488
NOW deposits                                43,274      41,846      38,603
Money market deposits                       13,199      11,137       9,941
Savings deposits                            44,856      42,843      40,108
Certificates of deposit                     84,277      68,115      74,489
Certificates $100M and over                 68,537      60,021      68,937

     Total deposits                        277,733     247,190     254,566



Borrowed funds                             102,696      95,309     102,919
Other liabilities                            4,297       2,232       2,571

     Total Liabilities                     384,726     344,731     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                           33,146      29,691      30,495
Accumulated Other Comprehensive income:
   Net unrealized gains(losses) on
    available-for-sale securities            1,329        (719)        203
Treasury stock                              (2,209)     (2,185)     (2,250)

    Total Shareholders' Equity              36,978      31,499      33,160

       Total Liabilities &
           Shareholders' Equity           $421,704    $376,230    $393,216


Number of shares authorized              6,000,000   6,000,000   6,000,000
Number of shares outstanding             2,388,054   2,382,939   2,378,613
Book value per share                        $15.48      $13.22      $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 nine months ended September 30,
                                                   2001            2000
(000s OMITTED except per share data
   and number of shares)                     (Unaudited)     (Unaudited)

Interest Income:
     Interest and fees on loans                 $17,261         $15,844
     Interest on deposits with other banks           70              22
     Interest and dividends on investments        5,380           4,591

     Total interest income                       22,711          20,457

Interest expense:
     Interest on deposits                         7,893           6,065
     Interest on borrowed funds                   3,918           4,890

     Total interest expense                      11,811          10,955

Net interest income                              10,900           9,502

Provision for loan losses                           690             510

     Net interest income after provision
        for loan losses                          10,210           8,992

Other operating income:
     Fiduciary income                               521             502
     Service charges on deposit accounts            671             638
     Other operating income                       1,643           1,097

     Total other operating income                 2,835           2,237


Other operating expenses:
     Salaries and employee benefits               3,611           3,264
     Occupancy expense                              426             377
     Furniture and equipment expense                742             540
     Other                                        2,505           2,287

     Total other operating expenses               7,284           6,468

Income before income taxes                        5,761           4,761
Applicable income taxes                           1,678           1,387

NET INCOME                                      $ 4,083         $ 3,374








Page 4
<page>
STATEMENTS OF INCOME CONT.



For the nine months ended September 30,
                                                   2001            2000
                                             (Unaudited)     (Unaudited)


Non-owner changes in equity, net of tax:

  Unrealized gains on available for sale
      securities arising during period            1,126             600
Total other comprehensive income, net of
      taxes of $580 in 2001 and $309 in 2000      1,126             600


INCOME AND NON-OWNER CHANGES IN EQUITY           $5,209          $3,974


Earnings per common share:

Basic earnings per share                          $1.71           $1.41
Diluted earnings per share                        $1.66           $1.37
Cash dividends declared per share                 $0.60           $0.48
Weighted average number of shares
   outstanding                                2,384,402       2,385,734
Incremental Shares                               71,161          80,072
























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 September 30,
                                                   2001            2000
(000s OMITTED except per share data
   and number of shares)                     (Unaudited)     (Unaudited)

Interest Income:
     Interest and fees on loans                 $ 5,764         $ 5,550
     Interest on deposits with other banks           20               7
     Interest and dividends on investments        1,757           1,571

     Total interest income                        7,541           7,128

Interest expense:
     Interest on deposits                         2,577           2,251
     Interest on borrowed funds                   1,086           1,668

     Total interest expense                       3,663           3,919

Net interest income                               3,878           3,209

Provision for loan losses                           215             210
     Net interest income after provision
        for loan losses                           3,663           2,999

Other operating income:
     Fiduciary income                               176             166
     Service charges on deposit accounts            225             205
     Other operating income                         752             538

     Total other operating income                 1,153             909

Other operating expenses:

     Salaries and employee benefits               1,318           1,128
     Occupancy expense                              155             121
     Furniture and equipment expense                267             193
     Other                                        1,036             930

     Total other operating expenses			  2,776           2,372

Income before income taxes                        2,040           1,536
Applicable income taxes                             594             445

NET INCOME                                      $ 1,446         $ 1,091










Page 6
<page>
STATEMENTS OF INCOME CONT.



                                         For the quarters ended September 30,
                                                   2001            2000
                                             (Unaudited)     (Unaudited)


Non-owner changes in equity, net of tax:

  Unrealized gains on available for sale
      securities arising during period             794             520
Total other comprehensive income, net of
      taxes of $409 in 2001 and $ 268 in 2000      794             520

INCOME AND NON-OWNER CHANGES IN EQUITY          $2,240          $1,611


Earnings per common share:

Basic earnings per share                          $0.61           $0.46
Diluted earnings per share                        $0.59           $0.44
Cash dividends declared per share                 $0.21           $0.17
Weighted average number of shares
   outstanding                                2,387,889       2,384,692
Incremental Shares                               71,161          80,072



























See Accountants' Review Report. The accompanying notes are an integral part of
these consolidated financial statements.



Page 7
<page>
FIRST NATIONAL LINCOLN CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

                                             For the nine months ended
September 30,
(000 omitted)                                             2001          2000
                                                     (Unaudited)   (Unaudited)
Cash flows from operating activities:
  Net income                                           $ 4,083       $ 3,374
  Adjustments to reconcile net income to
    net cash provided by operating activities:
      Depreciation                                         561           413
      Provision for loan losses                            690           510
      Loans originated for resale                      (16,017)       (2,055)
      Proceeds from sales and transfers of loans        15,559         2,182
      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     (997)         (328)
      Net change in other liabilities                    1,146          (270)
      Net accretion of discounts on investments           (148)         (103)

        Net cash provided by operating activities        4,804         3,728

Cash flows from investing activities:
     Proceeds from maturities, payments and calls of
       securities available for sale                    10,528           804
     Proceeds from maturities, payments and calls of
       securities to be held to maturity                14,904         4,099
     Proceeds from sales of other real estate owned        365            35
     Purchases of securities available for sale         (4,585)      (11,605)
     Purchases of securities to be held to maturity    (19,491)         (868)
     Net increase in loans                             (23,557)      (26,372)
     Purchases of premises and equipment                (1,398)         (352)

          Net cash used in investing activities        (23,234)      (34,259)

Cash flows from financing activities:
     Net increase in deposits                           23,167        41,732
     Advances on long-term borrowings                   51,500             0
     Repayments on long-term borrowings                 (7,114)         (108)
     Net decrease in short-term borrowings             (44,609)       (9,631)
     Payment to repurchase common stock                   (146)         (238)
     Proceeds from sale of Treasury stock                  187           247
     Dividends paid                                     (1,432)       (1,072)

          Net cash provided by financing activities     21,553        30,930












Page 8
<page>
STATEMENTS OF CASH FLOWS CONT.



                                                          2001          2000
                                                    (Unaudited)   (Unaudited)


Net increase in cash and cash equivalents                3,123           399
Cash and cash equivalents at beginning
   of period                                            10,324         8,221

 Cash and cash equivalents at end of
    period                                             $13,447        $8,620



Interest paid                                          $11,811       $10,955
Income taxes paid                                        1,177         1,492

Non-cash transactions:
    Loans transferred to other real estate
        owned (net)                                        438            60
    Net change in unrealized gain on
        available for sale securities                    1,706 	       909



























See Accountants' Review Report. The accompanying notes are an integral part of
these consolidated financial statements.





Page 9
<page>
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 nine-
month periods ended September 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.


































See accountants' review report



Page 10
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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, 2001 was $4,083,000, an
increase of 21.0% over 2000's net income of $3,374,000. Revenue growth was the
primary factor in the Company's increased earnings for the first nine 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, as well as
increased margins due to declining interest rates. During the period, the loan
and investment portfolios increased by a combined $23.4 million and increased
$38.5 million since September 30,2000.
     Fully diluted earnings per share for the first nine months of 2001 were
$1.66, a 21.2% increase over the $1.37 reported in 2000.
     Net income for the three months ended September 30, 2001 was $1,446,000,
an increase of 32.5% over 2000's net income of $1,091,000. As with the
Company's year-to-date performance, revenue growth and lower interest rates
were the primary factors in the increased earnings posted for the third quarter
of 2001 compared to the same period in 2000.
     Fully diluted earnings per share for the third quarter of 2001 were $0.59,
a 34.1% increase over the $0.44 reported in 2000.

NET INTEREST INCOME

     Total interest income of $22,711,000 for the nine months ended September
30, 2001 is an 11.0% increase over 2000's total interest income of $20,457,000.
Total interest expense of $11,811,000 is a 7.8% increase over 2000's total
interest expense of $10,955,000. Net interest income was $10,900,000, a 14.7%
increase over 2000's net interest income of $9,502,000. 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 nine months 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 $7,541,000 for the three months ended September
30, 2001 is a 5.8% increase over 2000's total interest income of $7,128,000.
Total interest expense of $3,663,000 is a 6.5% decrease from 2000's total
interest expense of $3,919,000. Net interest income was $3,878,000, a 20.8%
increase over 2000's net interest income of $3,209,000. The increase in
interest income and the decrease in interest expense were both due to a
combination of significantly higher balances and movements in interest rates.

PROVISION FOR LOAN LOSSES

     A $690,000 provision to the allowance for loan losses was made during the
first nine months of 2001. This is a $180,000 increase from the $510,000
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 $1,024,076 at September 30, 2001. The portion of the allowance
for loan losses allocated to impaired loans at September 30, 2001 was $373,101.





Page 11
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MANAGEMENT'S DISCUSSION CONT.


NON-INTEREST INCOME

     Non-interest income was $2,835,000 for the nine months ended September 30,
2001, an increase of 26.7% from 2000's non-interest income of $2,237,000.
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 nine months
of 2001. The Bank sold $15.6 million of loans during the period compared to
$20.2 million in the first nine months of 2000.  This resulted in increased
gains on sales of loans.

     Non-interest income was $1,153,000 for the three months ended September
30, 2001, an increase of 26.8% from 2000's non-interest income of $909,000. The
increase was due to increases in merchant credit card income and mortgage
origination and servicing income.

NON-INTEREST EXPENSE

     Non-interest expense of $7,284,000 for the nine months ended September 30,
2001, is an increase of 12.6% from 2000's non-interest expense of $6,468,000.
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 $2,776,000 for the three months ended September
30, 2001, is an increase of 17.0% from 2000's non-interest expense of
$2,372,000 for the reasons stated above.

INCOME TAXES

     Income taxes on operating earnings increased to $1,678,000 for the first
nine months of 2001 from $1,387,000 for the same period a year ago. The
increase is in line with the increase in pre-tax income.



















Page 12
<page>
MANAGEMENT'S DISCUSSION CONT.


INVESTMENTS

     The Company's investment portfolio increased by $9.2 million or 9.5%
between September 30, 2000 and September 30, 2001.  During the twelve-month
period there was an investment climate which enabled the Company to add to its
portfolio at very attractive levels. With recent drops in interest rates, much
of those added investments have been redeemed by the issuers. During the first
nine months of 2001, the investment portfolio increased by $0.6 million or
0.5%. At September 30, 2001, the Company's available-for-sale portfolio had an
unrealized gain, net of taxes, of $1.3 million, which is in line with recent
changes in interest rates.

LOANS

     Loans grew by $29.3 million or 11.3% between September 30, 2000 and
September 30, 2001. Most of this growth came in commercial loans, which
increased $16.2 million, and mortgage loans, which increased $11.6 million.
During the first nine months of 2001, total loans increased by $22.9 million or
8.6%.

DEPOSITS

     As of September 30, 2001, deposits grew year-over year by 12.4% or $30.5
million. Of the increase $24.7 million came in certificates of deposit and $5.8
million was in the Banks core deposit base.  The growth in core deposits is
seasonal and is expected to run off over the next three to six months.
     Core deposits in the first nine months of 2001 have increased by $13.8
million, which is a somewhat higher than the normal seasonal increase, and
certificates of deposit increased $9.4 million.  The increases in certificate
of deposit balances during both periods are 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 September 30, 2000 and September 30,
2001, borrowed funds increased by $7.4 million or 7.8%. 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 2001, borrowed funds decreased by $0.2 million or 0.2%.

SHAREHOLDERS' EQUITY AND CAPITAL RESOURCES

     Shareholders' Equity as of September 30, 2001 was $36,978,000 compared to
$31,499,000 for September 30, 2000. The Company's strong earnings performance
in the preceeding 12 months was supplemented by an increase in the 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 and a cash dividend of 21 cents per share was declared in the third
quarter compared to 17 cents in the third quarter 2000.

Page 13
<page>
MANAGEMENT'S DISCUSSION CONT.


     Regulatory leverage capital ratios for the Company were 8.46% and 8.77%,
respectively, at September 30, 2001 and September 30, 2000. The decrease was
due to asset growth. The Company had a tier one risk-based capital ratio of
12.90% and tier two risk-based capital ratio of 13.90% at September 30, 2001,
compared to 13.43% and 14.36%, respectively, at September 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 September 30, 2001 the Bank had primary sources of liquidity of
$61.0 million, or 14.5% 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. The Bank loans 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 loan's payment history remains satisfactory. If a loan becomes delinquent,
a review of the loan might be done. When a loan becomes 90 or more days past
due, an in-depth review of the loan is made and a determination made as to
whether or not a reappraisal is required.

B.  Land-only properties. The Bank has few loans secured by land only, but does
loan up to 65% of the appraised value of the property. Loans on these
properties are handled the same way as above from booking date on.

C.  Commercial properties. The Bank loans up to 75% of the appraised value of
commercial properties. Once the loan is closed, the decision to reappraise 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, changes in local
zoning ordinances and changes in the condition of the property, including
environmental contamination. A certified or licensed appraiser is used for all
appraisals.

     At September 30, 2001 and 2000, loans on a non-accrual status totaled
$1,800,000 and $2,360,000, respectively. In addition to loans on a non-accrual
status at September 30, 2001 and 2000, loans past due greater than 90 days and
still accruing totaled $510,000 and $336,000 respectively. The Company
continues to accrue interest on these loans because it believes collection of
the interest is reasonably assured.





Page 14
<page>
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
<page>
MANAGEMENT'S DISCUSSION CONT.

ACCOUNTING PRONOUNCEMENTS

     During 2001 the Financial Accounting Standards Board (FASB) issued SFAS
No. 141, "Business Combinations," SFAS No. 142, "Goodwill and Other Intangible
Assets", SFAS No. 143 "Accounting for Asset Retirement Obligations" and SFAS
No. 144 "Accounting for the Impairment or Disposal of Long-Lived 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.
SFAS Nos. 143 and 144 provide guidance concerning the recognition and
measurement of an impairment loss for certain types of long-lived assets and
obligations associated with the retirement of tangible long-lived assets.
Management does not expect these statements to have any material affect on 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.



















































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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



     None.






















































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ITEM 5:     Other Information


     None.























































Page 21
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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.



















































Page 22
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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



November 14, 2001                                Daniel R. Daigneault
Date                                             Daniel R. Daigneault
                                                 President and CEO



November 14, 2001                                F. Stephen Ward
Date                                             F. Stephen Ward
                                                 Treasurer




































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