2014

First Community Corporation Announces Third Quarter Results and Cash Dividend

LEXINGTON, S.C., Oct. 16, 2013 /PRNewswire/ --

Highlights

  • Fourth consecutive quarter of net income in excess of $1 million
  • Cash dividend of $0.06 per common share, which is the 47th consecutive quarter of cash dividends paid to common shareholders
  • Regulatory capital ratios of 10.64% (Tier 1 Leverage) and 18.40% (Total Capital) along with Tangible Common Equity / Tangible Assets (TCE/TA) ratio of 8.23%
  • Non-performing assets (NPAs) better than peer with ratio of 1.37%
  • Loan portfolio growth in four consecutive quarters results in 6.7% increase during the trailing twelve months
  • The cost of total deposits declined an additional 4 basis points from 37 basis points in the second quarter to 33 basis points in the third quarter
  • Diversified revenue model shows continued strength as net-interest income and net-interest margin increased to reduce the impact of slowing revenue from the mortgage line of business
  • Previous announcement of a merger agreement with Savannah River Financial Corporation
  • Previous announcement of expansion with opening of a banking office in downtown Columbia

(Logo: http://photos.prnewswire.com/prnh/20030508/FCCOLOGO )

 Today, First Community Corporation (Nasdaq:  FCCO), the holding company for First Community Bank, reported net income available to common shareholders for the third quarter of 2013.  Net income available to common shareholders for the third quarter of 2013 was $1.046 million as compared to $881 thousand in the third quarter of 2012.  Diluted earnings per common share were $0.20 for the third quarter of 2013 as compared to $0.19 for the third quarter of 2012. 

Year-to-date 2013 net income available to common shareholders was $3.29 million compared to $2.27 million during the first nine months of 2012.  Diluted earnings per share for year-to-date 2013 were $0.62, as compared to $0.60 from the same time period in 2012.  The increase in the number of shares of common stock outstanding after the capital raise completed in the third quarter of 2012 should be noted in making these comparisons. 

Earlier in the third quarter, the company announced the signing of a definitive merger agreement under which First Community has agreed to acquire Savannah River Financial Corporation in a cash and stock transaction with a total current value of approximately $33.6 million or approximately $11.00 per share.  Upon completion of the transaction, the combined company will have approximately $775 million in total assets, $635 million in total deposits, and $450 million in total loans.  The transaction will create a 13-office banking company.  The merger agreement has been unanimously approved by the Board of Directors of each company.  Closing of the transaction, which is expected to occur early in the first quarter of 2014, is subject to customary conditions, including regulatory approval and approval by the shareholders of both companies. 

"This is a comfortable extension of our company into a contiguous county, and beyond into Augusta.  The Central Savannah River Area (CSRA) and the midlands of South Carolina have many economic similarities, and both are experiencing nice momentum in business growth," said First Community President and CEO Michael C. "Mike" Crapps.  "More importantly, we are excited to partner with the Savannah River Banking Company team.  The Board of Directors, CEO Randy Potter, President Jeff Spears, and the entire team have created a successful banking organization, with a commitment to quality that permeates all aspects of their business.  This includes the talent of the staff, their approach to serving their clients, and is evident in the quality of their balance sheet."

Additionally, on October 2, 2013, the company announced plans to expand its footprint with a banking office in downtown Columbia.  The new location at 1213 Lady Street, near Main Street, is expected to open in the spring of 2014 giving the company a highly visible presence in the heart of the city.  The bank's financial planning team, First Community Financial Consultants, will relocate from their Lincoln Street office to the second floor of the new downtown location.  "The downtown area will be a great addition to the First Community family. It's experiencing tremendous growth and the timing was right to bring our unique style of banking to the businesses and residents that call Main Street home," said Mr. Crapps. "We look forward to working with downtown businesses and professionals to meet their financial goals."

Cash Dividend and Capital

As a result of the strong earnings performance and quality of its balance sheet, the company has previously announced this year two increases in its cash dividend.  The Board of Directors has approved a cash dividend at this new elevated level for the third quarter of 2013.  The company will pay a $0.06 per share dividend to holders of the company's common stock.  This dividend is payable November 15, 2013 to shareholders of record as of October 31, 2013.  Mr. Crapps commented, "Our entire board is pleased that our performance enables the company to continue its cash dividend for the 47th consecutive quarter.  This quarter's payout ratio of 30% is within our targeted payout range that we believe is appropriate for our company at this time."

Each of the regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) exceed the well capitalized minimum levels currently required by regulatory statute.  At September 30, 2013, the company's regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) were 10.64%, 17.29%, and 18.40%, respectively.  This compares to the same ratios as of September 30, 2012 of 10.56%, 17.94%, and 19.88%, respectively.  Additionally, the regulatory capital ratios for the company's wholly owned subsidiary, First Community Bank, were 10.21%, 16.62%, and 17.74% respectively as of September 30, 2013.  Further, the company's ratio of tangible common equity to tangible assets indicates a high quality of capital with a ratio of 8.23% as of September 30, 2013. 

On a year over year comparison basis, tangible book value per share decreased $0.23 from $10.10 to $9.87.  This decline results from the decrease in market value of our available-for-sale investment portfolio (AFS portfolio) solely as a result of the increase in interest rates during the period.  It should be noted that excluding this Accumulated Other Comprehensive Income (AOCI), the tangible book value increased $0.53 during this same time period from $9.66 to $10.19.  The company believes its balance sheet as a whole is currently positioned for a rising rate environment.  The change in market value of the AFS portfolio is the only segment of the balance sheet that is reflected in the equity section and as such can result in some volatility in the calculated tangible book value per share as interest rates fluctuate.  The company attempts to manage this volatility by balancing the overall AFS portfolio duration.

Asset Quality

Non-performing assets remained relatively stable, decreasing by $89 thousand to $8.7 million (1.37% of total assets) at the end of the quarter.  This ratio compares favorably with the bank's peer group non-performing assets ratio which the company believes to be in excess of 3.00%. 

Trouble debt restructurings, that are still accruing interest, declined during the quarter to $584 thousand from $593 thousand.  Loans past due 30-89 days decreased to $2.3 million (0.65% of loans) this quarter.   

Net loan charge-offs for the quarter were $245 thousand (0.28% annualized ratio) as compared to the 2012 third quarter total of $161 thousand (0.20% annualized ratio).  The company believes that these levels compare very favorably to its peer group average. 

It is also noteworthy that classified loans decreased significantly in the quarter to $10.8 million from $13.6 million.  The ratio of classified loans plus OREO now stands at 20.92% of total regulatory risk-based capital as of September 30, 2013. 

Balance Sheet

                             

(Numbers in millions)

















12 Month


12 Month


9/30/12


12/31/12


9/30/13


$ Variance


% Variance

Assets










Investments  

$215.3


$206.0


$230.7


$15.4


7.2%

Loans    

323.5


332.1


345.1


21.6


6.7%











Liabilities










Total Pure Deposits     

$312.9


$319.5


$371.1


$58.2


18.6%

Certificates of Deposit     

161.6


155.4


137.5


(24.2)


(15.0%)

Total Deposits  

$474.5


$474.9


$508.6


$34.1


7.2%











Customer Cash Management  

15.7


15.9


17.1


1.4


8.9%

FHLB Advances   

38.5


36.3


34.3


(4.2)


(10.9%)











Total Funding  

$528.7


$527.1


560.0


31.3


5.9%

Cost of Funds*    

0.97%


0.87%


0.63%




(34 bps)

    (*including demand deposits)










Cost of Deposits   

0.62%


0.55%


0.33%




(29 bps)

 

Mr. Crapps commented, "Our success in serving our target market of local business and professional clients is demonstrated in the growth in pure deposits and our loan portfolio.  The momentum in pure deposit growth has continued and during the past twelve months we have increased pure deposits by $58.2 million, which is an increase of 18.6%.  This has positioned us to drive down our cost of deposits by 29 basis points to 0.33% during this same time period.  We are especially pleased to report that we are experiencing a rebound in credit demand and that during the past twelve months the loan portfolio has grown by 6.7% or $21.6 million.  We have now experienced four consecutive quarters of growth in our loan portfolio."

Revenue

Net Interest Income/Net Interest Margin

Net interest income was $4.570 million for the third quarter of 2013 which represents a 3.30% increase over the second quarter of 2013.  The net interest margin, on a tax equivalent basis, was 3.18% for the third quarter of 2013, which represents an increase from 3.11% during the second quarter of 2013.  Mr. Crapps commented, "The increase in our net interest margin is primarily the result of an increased rate environment in the middle to long end of the yield curve.  The benefit to us is a higher interest rate as we re-invest our cash flows and the slowing of prepayments on the mortgage backed securities held in our investment portfolio."

Non-Interest Income

As anticipated, non-interest income decreased during the third quarter, as production in the mortgage banking line of business decreased to $25.4 million in the third quarter of 2013 from $36.6 million in the prior quarter.  This decrease of 30.6% in production combined with a slight decrease in yield (from 3.23% to 3.03%) resulted in a decrease in mortgage fee revenue from $1.183 million to $770 thousand.  Purchase transactions remained relatively stable on a linked quarter basis at $17.5 million (68.9% of total production) with the decline in refinance transactions accounting for the total decrease.  Mr. Crapps commented, "This decrease is not surprising due to the increase in interest rates.  We continue to see good activity in purchase transactions and this line of business remains an important piece of our company."

It is significant to note that the financial planning / investment advisory line of business continues to grow in revenue and in assets under management.  Year-to-date in 2013 revenue is $695 thousand as compared to the 2012 figure of $492 thousand for the comparable year-to-date period.  Assets under management have increased 23.6 % in 2013, from $108 million as of December 31, 2012 to $ 133.5 million as of September 30, 2013.

Mr. Crapps commented further on the revenue model, "We believe that now, more than ever, the strength of our diversified revenue model is evident.  The scenario discussed last quarter is becoming a reality.  The increase in rates slowed total mortgage loan production; and therefore, the contribution to net income from that line of business decreased.  The offset to that was the increase in yields in our investment portfolio as prepayments on mortgage back securities slowed; as well as, the re-investment of cash flows at higher yields in both the loan and investment portfolios.  This served to enhance our net-interest margin and our net-interest income." 

Non-Interest Expense

Non-interest expense was relatively unchanged on a linked quarter basis at $4.957 million.  The company did record $33 thousand in one-time merger expenses related to the above referenced acquisition of Savannah River Financial Corporation.  As previously announced, the merger is anticipated to close in the first quarter of 2014.  The more significant remaining one-time merger expenses will be experienced in the fourth quarter of 2013 and the first quarter of 2014. 

First Community Corporation stock trades on the NASDAQ Capital Market under the symbol "FCCO" and is the holding company for First Community Bank, a local community bank based in the midlands of South Carolina.  First Community Bank operates eleven banking offices located in Lexington, Richland, Newberry and Kershaw counties in addition to First Community Financial Consultants, a financial planning/investment advisory division and Palmetto South Mortgage, a separate mortgage division. 

Certain statements in this news release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective.  Such forward-looking statements are subject to risks, uncertainties, and other factors, such as a downturn in the economy, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.

Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate.  Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized.  The inclusion of this forward-looking information should not be construed as a representation by our company or any person that the future events, plans, or expectations contemplated by our company will be achieved.  We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

FIRST COMMUNITY CORPORATION












BALANCE SHEET DATA




(Dollars in thousands, except per share data)







At September 30,


December 31,




2013

2012


2012








  Total Assets



$    635,927

$606,339


$     602,925

  Other short-term investments (1)

9,958

9,894


7,191

  Investment Securities

230,712

215,274


205,972

  Loans held for sale

2,529

8,685


9,658

  Loans

345,064

323,534


332,111

  Allowance for Loan Losses

4,323

4,695


4,621

  Total Deposits

508,592

474,465


474,977

  Securities Sold Under Agreements to Repurchase

17,076

15,651


15,900

  Federal Home Loan Bank Advances

34,330

38,491


36,344

  Junior Subordinated Debt

15,464

17,917


15,464

  Shareholders' Equity

52,862

54,278


54,183








  Book Value Per  Common Share 

$         9.98

$    10.25


$         10.37

  Tangible Book Value Per Common Share 

$         9.87

$    10.10


$         10.23

  Tangible Book Value Per Common Share (Excluding AOCI)

$       10.19

$     9.66


$          9.77

  Equity to Assets

8.31%

8.95%


8.99%

  Tangible common equity to tangible assets

8.23%

8.71%


8.88%

  Loan to Deposit Ratio

68.34%

70.02%


71.95%

  Allowance for Loan Losses/Loans

1.25%

1.45%


1.39%

(1) Includes federal funds sold, securities sold under agreements to resell and interest-bearing deposits








  Regulatory Ratios:





   Leverage Ratio

10.64%

10.56%


10.63%

   Tier 1 Capital Ratio

17.29%

17.94%


17.33%

   Total Capital Ratio

18.40%

19.88%


18.58%

   Tier 1 Regulatory Capital

$     67,192

$  63,860


$       63,381

   Total Regulatory Capital

$     71,515

$  70,751


$       67,963

Average Balances:








Three months ended


Nine months ended



September 30,


September 30, 



2013

2012


2013

2012








  Average Total Assets

$          631,158

$    610,020


$       621,952

$     600,739

  Average Loans

344,544

330,106


342,183

330,262

  Average Earning Assets

585,419

563,190


576,917

552,163

  Average Deposits

505,935

473,388


493,890

470,653

  Average Other Borrowings

67,484

72,460


68,798

72,710

  Average Shareholders' Equity

52,353

58,448


54,004

51,940








Asset Quality:









 September 30, 

June 30,

March 31,

December 31,




2013

2013

2013

2012


Loan Risk Rating by Category (End of Period)






       Special Mention

$              9,822

$       8,512

$    9,097

$          7,681


       Substandard

10,779

13,614

13,870

17,612


       Doubtful

-

-

-

-


       Pass

326,992

324,752

314,991

316,476




$          347,593

$    346,878

$337,958

$       341,769











 September 30,

June 30,

March 31

December 31,




2013

2013

2013

2012


  Nonperforming Assets:






   Non-accrual loans

$              5,052

$       5,978

5,388

$          4,715


   Other real estate owned

3,607

2,824

3,335

3,987


   Accruing loans past due 90 days or more

54

-

325

55


            Total nonperforming assets

$              8,713

$       8,802

$    9,048

$          8,757


Accruing trouble debt restructurings

$                584

$          592

$      907

$          1,509











 Three months ended 


 Nine months ended 



 September   

 September   


 September   

 September   



30, 2013

30, 2012


30, 2013

30, 2012

Loans charged-off

$                271

$          180


$             776

$           472

Overdrafts charged-off

14

9


32

24

Loan recoveries

(36)

(25)


(122)

(66)

Overdraft recoveries

(4)

(3)


(9)

(10)

  Net Charge-offs

$                245

$          161


$             677

$           420

  Net Charge-offs to Average Loans

0.07%

0.05%


0.20%

0.13%








 

FIRST COMMUNITY CORPORATION










INCOME STATEMENT DATA










(Dollars in thousands, except per share data)











Three months ended


Three months ended


Three months ended


Nine months ended




September 30,


June 30,


March 31,


September 30,




2013

2012


2013

2012


2013

2012


2013

2012


  Interest Income

$     5,474

$     5,650


$     5,370

$      5,840


$      5,283

$      6,044


$    16,127

$   17,534


  Interest Expense

904

1,321


947

1,389


1,004

1,535


2,855

4,245


  Net Interest Income

4,570

4,329


4,423

4,451


4,279

4,509


13,272

13,289


  Provision for Loan Losses

129

115


100

71


150

230


379

416


  Net Interest Income After Provision

4,441

4,214


4,323

4,380


4,129

4,279


12,893

12,873


  Non-interest Income:













    Deposit service charges

387

395


367

375


361

389


1,115

1,159


    Mortgage origination fees

770

1,393


1,183

877


1,015

723


2,968

2,993


    Investment advisory fees and non-deposit commissions

279

183


218

162


198

147


695

492


    Gain (loss) on sale of securities

4

(35)


133

(38)


15

11


152

(62)


    Gain (loss) on sale of other assets

(23)

(22)


32

(36)


(2)

50


7

(8)


    Fair value gain (loss) adjustment

-

(20)


(2)

(4)


-

(33)


(2)

(57)


    Other-than-temporary-impairment write-down on securities

-

-


-

-


-

(200)


-

(200)


    Loss on early extinguishment of debt

-

-


(141)

-


-

(121)


(141)

(121)


    Other

524

508


505

519


496

497


1,525

1,524


  Total non-interest income

1,941

2,402


2,295

1,855


2,083

1,463


6,319

5,720


  Non-interest Expense:













    Salaries and employee benefits

2,948

2,874


2,994

2,747


2,992

2,558


8,934

8,179


    Occupancy

343

352


334

335


346

345


1,023

1,032


    Equipment

310

307


314

283


283

287


907

877


    Marketing and public relations

106

73


112

108


93

186


311

367


    FDIC assessment

108

117


102

196


99

184


309

497


    Other real estate expense

189

173


115

267


112

119


395

559


    Amortization of intangibles

32

51


45

51


51

51


128

153


    Merger expenses

33

-


-

-


-

-


33



    Other

888

876


939

921


831

882


2,679

2,679


  Total non-interest expense

4,957

4,823


4,955

4,908


4,807

4,612


14,719

14,343


  Income before taxes

1,425

1,793


1,663

1,327


1,405

1,130


4,493

4,250


  Income tax expense (benefit)

379

573


460

399


367

331


1,206

1,303


  Net Income 

1,046

1,220


1,203

928


$      1,038

$        799


$      3,287

$     2,947


  Preferred stock dividends

-

339


-

168


-

169


-

676


  Net income available to common shareholders

$     1,046

$        881


$     1,203

$         760


$      1,038

$        630


$      3,287

$     2,271
















  Per share data:













     Net income, basic 

$       0.20

$       0.19


$       0.23

$        0.23


$       0.20

$       0.19


$       0.62

$       0.60


     Net income, diluted 

$       0.20

$       0.19


$       0.23

$        0.23


$       0.20

$       0.19


$       0.62

$       0.60
















  Average number of shares outstanding - basic

5,294,736

4,693,344


5,292,828

3,295,804


5,255,525

3,308,677


5,280,840

3,780,236


  Average number of shares outstanding - diluted

5,308,546

4,726,206


5,311,194

3,356,785


5,292,000

3,329,175


5,321,577

3,806,837


  Shares outstanding period end

5,296,288

5,224,282


5,293,116

3,346,365


5,290,452

3,310,572


5,296,288

5,224,282


  Return on average assets

0.66%

0.57%


0.77%

0.51%


0.69%

0.43%


0.71%

0.50%


  Return on average common equity

7.93%

7.18%


8.75%

8.02%


7.72%

6.86%


8.14%

7.35%


  Return on average common tangible equity

8.02%

7.30%


8.88%

8.22%


7.82%

7.09%


8.24%

7.50%


  Net Interest Margin (non taxable equivalent)

3.10%

3.06%


3.03%

3.25%


3.09%

3.34%


3.08%

3.21%


  Net Interest Margin (taxable equivalent)

3.18%

3.12%


3.11%

3.30%


3.15%

3.36%


3.15%

3.26%






























 

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates 

  on Average Interest-Bearing Liabilities










Three months ended September 30, 2013

Three months ended September 30, 2012


Average

Interest 

Yield/


Average

Interest 

Yield/


Balance

Earned/Paid

Rate


Balance

Earned/Paid

Rate

Assets








Earning assets








  Loans

$        344,544

$        4,379

5.04%


$        330,106

$        4,548

5.48%

  Securities:

225,922

1,078

1.89%


208,769

1,079

2.06%

  Federal funds sold and securities purchased

14,953

17

0.45%


24,315

23

0.38%

        Total earning assets

585,419

5,474

3.71%


563,190

5,650

3.99%

Cash and due from banks

8,781




8,698



Premises and equipment

17,193




17,394



Other assets

24,186




25,483



Allowance for loan losses

(4,421)




(4,745)



       Total assets

$        631,158




$        610,020











Liabilities








Interest-bearing liabilities








  Interest-bearing transaction accounts

$        104,146

$             27

0.10%


$          91,778

$             37

0.16%

  Money market accounts

80,839

48

0.24%


53,328

36

0.27%

  Savings deposits

48,490

14

0.11%


39,955

13

0.13%

  Time deposits

167,516

336

0.80%


195,230

652

1.33%

  Other borrowings

67,484

479

2.81%


72,460

583

3.20%

     Total interest-bearing liabilities

468,475

904

0.77%


452,751

1,321

1.16%

Demand deposits

104,944




93,098



Other liabilities

5,386




5,723



Shareholders' equity

52,353




58,448



   Total liabilities and shareholders' equity

$        631,158




$        610,020











Cost of funds, including demand deposits



0.63%




0.97%

Net interest spread 



2.94%




2.83%

Net interest income/margin


$        4,570

3.10%



$        4,329

3.06%

Net interest income/margin FTE basis

$               127

$        4,697

3.18%


$                 94

$        4,423

3.12%

 

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates 

  on Average Interest-Bearing Liabilities










Nine months ended September 30, 2013

Nine months ended September 30, 2012


Average

Interest 

Yield/


Average

Interest 

Yield/


Balance

Earned/Paid

Rate


Balance

Earned/Paid

Rate

Assets








Earning assets








  Loans

$          342,183

$    13,202

5.16%


$        330,263

$ 13,804

5.58%

  Securities:

220,712

2,876

1.74%


204,212

3,669

2.40%

  Federal funds sold and securities purchased








    under agreements to resell

14,022

49

0.47%


17,688

61

0.46%

        Total earning assets

576,917

16,127

3.74%


552,163

17,534

4.24%

Cash and due from banks

8,641




8,868



Premises and equipment

17,215




17,417



Other assets

23,716




27,032



Allowance for loan losses

(4,537)




(4,741)



       Total assets

$          621,952




$        600,739



Liabilities








Interest-bearing liabilities








  Interest-bearing transaction accounts

$          100,377

85

0.11%


$          88,815

120

0.18%

  Money market accounts

72,634

127

0.23%


51,932

120

0.31%

  Savings deposits

45,833

38

0.11%


38,390

37

0.13%

  Time deposits

174,450

1,145

0.88%


201,601

2,196

1.46%

  Other borrowings

68,798

1,460

2.84%


72,710

1,772

3.26%

     Total interest-bearing liabilities

462,092

2,855

0.83%


453,448

4,245

1.25%

Demand deposits

100,596




89,915



Other liabilities

5,260




5,436



Shareholders' equity

54,004




51,940



   Total liabilities and shareholders' equity

$          621,952




$        600,739











Cost of funds, including demand deposits



0.68%




1.04%

Net interest spread 



2.91%




2.99%

Net interest income/margin


$    13,272

3.08%



$ 13,289

3.21%

Net interest income/margin FTE basis

$                 329

$    13,601

3.15%


$               190

$ 13,479

3.26%

 

 

SOURCE First Community Corporation



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