First Community Corporation Announces Fourth Quarter and Year End Results and Cash Dividend

LEXINGTON, S.C., Jan. 20 /PRNewswire-FirstCall/ -- Today, First Community Corporation (Nasdaq: FCCO), the holding company for First Community Bank, reported net income available to common shareholders for the fourth quarter of 2009 and for year-to-date 2009.  Net income available to common shareholders for the fourth quarter was $705,000, as compared to a loss of $559,000 in the fourth quarter of 2008.  Diluted earnings per common share were $0.22 in the fourth quarter, as compared to a loss of $0.17 per share in the fourth quarter of 2008.

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For the year ended December 31, 2009, operating earnings available to the common shareholder was $1.9 million as compared to a loss in the year ended December 31, 2008 of $6.9 million.  Reported results for the year of 2009 also included the previously announced non-cash goodwill impairment charge of $27.8 million, which results in a reported loss of $25.9 million or $7.95 per common share for the year.  The above referenced goodwill impairment charge, taken in the third quarter of 2009, represented the complete write-off of the Company's goodwill intangibles.  As previously disclosed, given the non-cash nature of a goodwill charge, this non-interest expense item had no adverse impact upon the Company's capital, liquidity position, operating performance or the Company's prospects for future earnings.

Capital and Cash Dividend

During the fourth quarter of 2009, all of the Company's regulatory capital ratios continued to increase.  Each of these ratios (Leverage, Tier 1 Risk Based and Total Risk Based) substantially exceeds the well-capitalized minimum levels currently required by regulatory statute.  Mike Crapps, President and CEO of First Community commented, "In the current regulatory environment, there is a heightened emphasis for banks to have less leverage and higher levels of capital.  The topic of capital planning will continue to be a focus for our Company so that we are able to meet changing regulatory expectations."    

At the end of the fourth quarter, the Company's regulatory capital ratios (Leverage, Tier 1 Risk Based and Total Risk Based) were 8.32%, 12.09%, and 13.23% respectively.  This compares to the same ratios at the end of the third quarter of 8.24%, 11.90%, and 12.96% respectively.  The required minimums levels are 5%, 6%, and 10% respectively, to be deemed a "well capitalized" financial institution.  Further, the Company's ratio of tangible common equity to tangible assets improved from 4.69% at September 30, 2009 to 4.80% at December 31, 2009.

The Corporation also announced that the Board of Directors has approved a cash dividend for the fourth quarter of 2009.  The Company will pay a $0.04 per share dividend to holders of the Company's common stock.  This dividend is payable February 16, 2010 to shareholders of record as of February 1, 2010.

Asset Quality

Asset quality remained a real strength of the Company.  Non-performing assets increased $722,000 from the third quarter of 2009 to $8.3 million at December 31, 2009.  This represents 1.38% of total assets, which the Company believes continues to compare very favorably to its peer group.  Loan charge-offs for the year totaled $2.8 million or 84 basis points, which again the Company believes compares favorably to its peers.  The allowance for loan losses increased during the quarter from 1.32% of loans to 1.41% of loans with the provision expense of $1,046,000 exceeding the net charge-offs of $750,000.  

Balance Sheet

The company continued to execute its previously announced strategy to improve the mix of the overall balance sheet.  During the fourth quarter, the Company decreased its investment portfolio by $25.3 million, prepaid Federal Home Loan Bank advances of $28.7 million, and reduced brokered CDs by $8.1 million.  Core deposits grew by $11.8 million in the fourth quarter and during all of 2009 core deposits increased $32.9 million, an increase of 10.2%, with particular success in the third and fourth quarters of the year.  

During 2009, the loan portfolio grew 3.4%, which the Company feels is an acceptable increase during a recessionary economic environment.  In addition, the investment portfolio declined by 16.7% and as a percent of total assets decreased from 36% to 32%.  

Mr. Crapps noted, "We are well positioned to serve our targeted market of local businesses and professionals and continue to grow core deposits and our loan portfolio.  We are excited by our success in these areas in 2009 and see increasing opportunities in the marketplace in 2010.  The structure of our balance sheet provides the flexibility to grow core deposits and loans without substantially increasing our overall total assets.  This will result in an improved mix of assets and liabilities, as well as an improving net-interest margin."

Net Interest Income/Net Interest Margin

Net interest income increased by $283,000 (6.3%) on a linked quarter basis, driven primarily by continued asset and liability mix improvement.  The net interest margin improved for the third consecutive quarter with the fourth quarter taxable equivalent net interest margin of 3.27% compared to 3.11% in the third quarter.  Mr. Crapps commented, "The Company sees continued positive momentum in this important metric as we move into 2010."

Non-Interest Income

Non-interest income improved to $1,322,000 in the fourth quarter from $1,160,000 on a linked quarter basis.  Excluding gain (loss) on the sale of securities and the loss on early extinguishment of debt, non-interest income showed even more significant improvement, increasing by 31.8% from $869,000 in the third quarter of 2009 to $1,145,000 in the fourth quarter.  This improvement was primarily driven by an improvement late in the quarter in the value of an interest rate swap purchased in October of 2008 to protect the Company against the impact of rising interest rates.  Additionally, the Company experienced less Other Than Temporary Impairment (OTTI) in its investment portfolio, and benefited from increased fees from its financial planning / investment advisory unit.  

Non-Interest Expense

Non-interest expense, excluding the third quarter goodwill impairment, decreased on a linked quarter basis by $191,000 (4.6%) from $4,159,000 in the third quarter to $3,968,000 in the fourth quarter of 2009.  The largest component of the decrease was in salaries and benefits ($102,000) as a result of adjustments for incentive plan payouts.  

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, Forest Acres, Irmo, Gilbert, Cayce - West Columbia, Chapin, Northeast Columbia, Newberry, Prosperity, Red Bank and Camden.  

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.

SOURCE First Community Corporation