2014

First Community Corporation Announces Increased Cash Dividend, Annual and Fourth Quarter Results

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

Highlights

  • $3,292,000 in 2012 net income available to common shareholders; or $0.79 diluted per share
  • $1,021,000 in fourth quarter net income available to common shareholders; or $0.19 diluted per share
  • Increased cash dividend to $0.05 per common share
  • Regulatory capital ratios of 10.63% (Tier 1 Leverage) and 18.64% (Total Capital); along with Tangible Common Equity/Tangible Assets (TCE/TA) ratio of 8.88%
  • Non-Performing Assets (NPAs) decreased by 31.4% in 2012 to $8.8 million (1.46% of Total Assets)
  • Organic pure deposit growth of 11.4% ($32.7 million) in 2012
  • Diversified revenue model shows strength as core non-interest income represents 32% of core revenue

Today, First Community Corporation (Nasdaq:   FCCO), the holding company for First Community Bank, reported for the year of 2012 net income available to common shareholders was $3.29 million compared to $2.65 million during 2011, an increase of 24.0%.  Diluted earnings per share for 2012 were $0.79.  With the successful equity offering completed in the third quarter of 2012, and the increased shares outstanding, diluted earnings per share decreased by 2.50% from the prior year level of $0.81 per share.

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

Net income available to common shareholders for the fourth quarter of 2012 was $1.02 million, which is a 13.1% increase, as compared to $903 thousand in the fourth quarter of 2011.  Diluted earnings per common share were $0.19 for the fourth quarter of 2012 as compared to $0.27 for the fourth quarter of 2011.

Mike Crapps, President and CEO of First Community commented, "The strength of our diversified revenue model was evident this year.  As our bank, and most of the industry, faced the headwind of net interest margin compression, we were still able to grow revenue during the year.  Customer driven sources of non-interest income accounted for 32% of our revenue and was led by our mortgage banking line of business, which had $142 million in total loan production, and $4.2 million in revenue for the year. 

Cash Dividend and Capital

As a result of the success of the year and the Company's strong capital position, the Board of Directors is pleased to announce its approval of an increase in its cash dividend for the fourth quarter of 2012.    The company will pay a $0.05 per share dividend to holders of the company's common stock.  This dividend is payable February 15, 2013, to shareholders of record as of February 1, 2013. 

As previously announced, on July 27, 2012, the Company closed on its public offering of common stock.  This offering resulted in the issuance of a total of 1,875,000 shares of common stock at $8.00 per share, resulting in gross proceeds of $15.0 million.  The proceeds of this offering were used to repurchase preferred stock issued to the U.S. Treasury in the TARP-CPP program ($11.3 million), redeem the related warrant issued to the U.S. Treasury ($292,500), and to repurchase subordinated notes ($2.5 million). 

Mr. Crapps commented, "The year of 2012 has been active for us and we enter 2013 with a high quality capital structure at robust levels.  We are particularly pleased to announce the increase in our cash dividend.  We recognize the importance of this to our shareholders." 

Each of these regulatory capital ratios (Leverage, Tier I Risk Based, and Total Risk Based) exceed the well capitalized minimum levels currently required by regulatory statute.  At December 31, 2012, the company's regulatory capital ratios (Leverage, Tier I Risk Based, and Total Risk Based) were 10.63%, 17.39% and 18.64%, respectively.  This compares to the same ratios as of December 31, 2011, of 9.40%, 15.33% and 17.25%, respectively.  Additionally, the regulatory capital ratios for the company's wholly owned subsidiary, First Community Bank, were 10.34%, 16.94% and 18.19%, respectively, as of December 31, 2012.  The strength of these capital ratios is a result of the company's continued earnings, its success in executing its previously announced strategy of controlling the overall size of its balance sheet, and the residual capital retained from the events noted above.      

Further, the company's ratio of tangible common equity to tangible assets showed growth increasing to 8.88% as of December 31, 2012; as compared to 6.07% as of December 31, 2011.  Tangible book value is $10.23 per share as of December 31, 2012; as compared to $10.89 as of December 31, 2011.

Asset Quality

Non-performing assets (NPAs) decreased by 31.4% in 2012 to $8.8 million, which is a ratio of 1.46% of Total Assets.  This compares to NPAs of $12.8 million or 2.16% as of December 31, 2011.  It is noteworthy that the Company had Other Real Estate Owned (OREO) sales of $5.7 million during the year, with only a modest loss on these sales of $89 thousand

Trouble debt restructurings (TDRs), that are still accruing interest, decreased during the year to $1.0 million from $4.0 million.  Based on a recent review of all loans classified as TDR, it has been determined that one loan, in the amount of $3.1 million, did not merit TDR status.   Loans past due 30-89 days decreased to $2.6 million (0.78% of loans).   

Net charge-offs for the quarter were $154 thousand (0.18% annualized ratio), which is a decrease as compared to the fourth quarter of 2011 total of $319 thousand (0.40% annualized ratio).  For the year of 2012, net loan charge offs were $574 thousand (0.17% annualized ratio) which is a decrease from the prior year amount of $1.6 million (0.50% annualized ratio).  The company believes that its charge-off ratios for these periods compares very favorably to its peer group.  Provision expense in 2012 in the amount of $496 thousand also showed a significant decline from the 2011 amount of $1.4 million.     

It is also noteworthy that classified loans ended the year at $17.6 million.  This compares to the December 31, 2011 amount of $17.8 million.  The ratio of classified loans plus OREO continues to decrease and is at 32.68% of total bank regulatory risk-based capital as of December 31, 2012. 

Mr. Crapps commented, "Our credit quality continues to be a strength of this organization.  Net charge-offs were relatively benign during this year at 17 basis points and thus allowed us to fund less into the allowance for loan losses than in the prior year.  The decrease in NPAs positions us well for 2013 as we endeavor to minimize our overall credit costs."

Balance Sheet

The company continued to move forward with its previously announced strategy of controlling the overall size of its balance sheet while improving the mix of both assets and liabilities.  As seen below, the company reported continued success in growing pure deposits (deposits other than certificates of deposit), while reducing the balances of certificates of deposit and Federal Home Loan Bank advances; thereby achieving an even lower cost of funding.  Additionally, the Company achieved growth in the loan portfolio, with an increase of $7.8 million (2.4%) during 2012.

(Numbers in millions)













            12/31/10   

     12/31/11      

          12/31/12   

   $ Variance      

     % Variance







Total Pure Deposits     

$259.8

$286.8

$319.5

$32.7

11.4%







CDs <$100K             

$122.3

$107.4

$92.0

($15.4)

(14.3%)

CDs>$100K               

73.2

70.4

63.4

(7.0)

(9.9%)

Brokered CDs             

0.0

0.0

0.0

0.0

0.0%

Total CDs             

$195.5

$177.8

$155.4

($22.4)

(12.6%)







Total Deposits             

$455.3

$464.6

$474.9

$10.3

2.2%







Customer Cash Management    

12.7

13.6

15.9

$2.3

16.9%

FHLB Advances            

68.1

43.9

36.3

(7.6)

(17.3%)







Total Funding           

$536.1

$522.1

$527.1

$5.0

1.0%







Cost of Funds     






(including demand deposits)   

1.67%

1.30%

1.00%

-

-







Mr. Crapps commented, "Our success in serving our target market of local businesses and professionals is evidenced by the tremendous momentum we have built in the growth of pure deposits.  This success has enabled us to continue to reduce our cost of funds and control our balance sheet size by reducing certificates of deposit and Federal Home Loan Bank advances.  Certificates of deposit now represent only 32.7% of the total deposits.  As a result of this success, the cost of funds, including non-interest bearing demand deposits, has declined to .86% in the fourth quarter of 2012."  Mr. Crapps continued, "We were particularly pleased to see growth in the loan portfolio this year driven primarily by success in the fourth quarter." 

Net Interest Income/Net Interest Margin

Net interest income decreased by 4.1% in 2012 as compared to 2011.  On a linked quarter basis, the Company experienced a slight decrease of 1.0%  The net interest margin declined from 3.33% in 2011 to 3.22% in 2012.  This is primarily due to a decline in loan and investment portfolio yields of more than the reduction in the cost of funds, noted above.  On a linked quarter basis the net interest margin was unchanged at 3.12%

Non-Interest Income

Non-interest income increased significantly by 26.6% to $7.96 million in 2012 as compared to $6.29 million in 2011.  This increase was led by the success in the mortgage banking line of business with revenue increasing from $1.97 million in 2011 to $4.24 million this year.  Mr. Crapps commented, "The acquisition of Palmetto South Mortgage Corporation in July of 2011 continues to be beneficial and, in combination with the legacy mortgage unit, is a real story of success.  The combined units had total loan production of $142 million during the year. 

We believe that this diversification of revenue demonstrates a real strength of our model, in that, in a year of decreasing net-interest income and margin compression, we were still able to increase overall revenues.  The additional strength of our model is that if mortgage refinance production slows due to rising interest rates, we believe that this will be the result of a stronger economy driving increased purchase activity in the mortgage banking line of business and expanding margins in the commercial and retail line of business."

Non-Interest Expense

Non-interest expense increased during the year by 5.70%.  This increase is attributed to salary and benefit costs associated with the increased mortgage production and the full year impact of Palmetto South, as compared to only five months in 2011.  Additionally, increased accruals for incentive compensation plans contributed to the increase.  Partially offsetting these increases was reduced FDIC insurance costs and reduced amortization of intangibles expense.

Summary

Mr. Crapps summarized the year with the following, "It is an understatement to say that this was a significant year for our company, our shareholders, and our employees.  First Community is now well positioned to play offense from a position of strength with strong capital, no TARP-CPP funds, excellent credit quality, a diversified revenue model that is working to produce revenue growth and core earnings, and the proven ability to execute a strategic and disciplined growth strategy.  We look forward to a bright future. 

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 December 31,






2012

2011










  Total Assets



$       602,925

$   593,887



  Other short-term investments (1)


7,021

5,893



  Investment Securities



205,972

206,669



  Loans held for sale



9,658

3,725



  Loans



332,111

324,311



  Allowance for Loan Losses



4,621

4,699



  Total Deposits



474,977

464,585



  Securities Sold Under Agreements to Repurchase

15,900

13,616



  Federal Home Loan Bank Advances


36,344

43,862



  Junior Subordinated Debt



15,464

17,913



  Shareholders' Equity



54,183

47,896










  Book Value Per Common Share 


$          10.37

$       11.11



  Tangible Book Value Per Common Share 


$          10.23

$       10.89



  Equity to Assets



8.99%

8.06%



  Tangible common equity to tangible assets


8.88%

6.07%



  Loan to Deposit Ratio



71.95%

70.61%



  Allowance for Loan Losses/Loans


1.39%

1.45%










  Regulatory Ratios:







   Leverage Ratio



10.63%

9.40%



   Tier 1 Capital Ratio



17.39%

15.33%



   Total Capital Ratio



18.64%

17.25%



 Tier 1 Regulatory Capital



$        63,381

$     56,207



 Total Regulatory Capital



$        67,794

$     60,801










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








Average Balances:









Three months ended


Year ended



December 31,


December 31, 



2012

2011


2012

2011








  Average Total Assets


$       602,933

$       603,290


$ 601,300

$     603,915

  Average Loans 


335,010

328,615


331,564

329,534

  Average Earning

  Assets


556,804

551,477


553,724

550,456

  Average Deposits


473,857

469,968


471,458

466,829

  Average Other

  Borrowings


69,590

80,078


71,926

87,460

  Average

  Shareholders'

  Equity


53,954

47,167


52,447

44,340















Asset Quality:


 December 31, 

 September 30, 

June 30,

March 31,

December 31,



2012

2012

2012

2012

2011

Loan Risk Rating by Category (End of Period)






       Special Mention


$          8,696

$          8,539

$       9,917

$    8,632

$         8,508

       Substandard


17,612

17,160

16,612

16,807

17,813

       Doubtful


-

-

-

-

-

       Pass (includes held for

       sale)

315,461

306,520

302,740

309,514

301,715



$       341,769

$       332,219

$   329,269

$ 334,953

$     328,036








  Nonperforming

   Assets:







   Non-accrual loans


$          4,715

$          4,923

$       4,640

$    5,416

$         5,403

   Other real estate

   owned


3,987

5,570

4,909

5,383

7,351

   Accruing loans past due 90

   days or more

55

-

-


25

            Total nonperforming

            assets

$          8,757

$        10,493

$       9,549

$   10,799

$       12,779

Accruing trouble debt restructurings

$             960

$          4,065

$       4,081

$    3,651

$         3,950










Three months ended


Year ended



December 31,


December 31, 



2012

2011


2012

2011

Loans charged-off:


$             236

$             317


$       708

$         1,659

Overdrafts charged-off


10

11


34

37

Loan recoveries


(89)

(8)


(155)

(51)

Overdraft recoveries


(3)

(1)


(13)

(13)

  Net Charge-offs


$             154

$             319


$       574

$         1,632








Net charge-offs to average loans


0.05%

0.10%


0.17%

0.50%

 

FIRST COMMUNITY CORPORATION










INCOME STATEMENT DATA










(Dollars in thousands, except per share data)

 












Three months ended


Three months ended


Three months ended


Three months ended


Year ended



December 30,


September 30,


June 30,


March 31,


December 31,



2012

2011


2012

2011


2012

2011


2012

2011


2012

2011

















  Interest Income


$     5,468

$     6,238


$     5,650

$     6,382


$     5,840

$     6,466


$     6,044

$     6,440


$   23,002

$   25,526

  Interest Expense


1,183

1,622


1,321

1,754


1,389

1,847


1,535

1,986


5,428

7,209

  Net Interest Income


4,285

4,616


4,329

4,628


4,451

4,619


4,509

4,454


17,574

18,317

  Provision for Loan Losses


80

310


115

360


71

390


230

360


496

1,420

  Net Interest Income After Provision


4,205

4,306


4,214

4,268


4,380

4,229


4,279

4,094


17,078

16,897

  Non-interest Income:
















    Deposit service charges


403

434


395

440


375

478


389

458


1,562

1,810

    Mortgage origination fees


1,249

821


1,393

698


877

263


723

191


4,242

1,973

    Investment advisory fees and non-deposit commissions

159

236


183

218


162

138


147

175


651

767

    Gain (loss) on sale of securities


88

301


(35)

133


(38)

7


11

134


26

575

    Gain (loss) on sale other assets


(81)

(46)


(22)

(18)


(36)

(44)


50

(47)


(89)

(155)

    Fair value gain (loss) adjustment


(1)

19


(20)

(60)


(4)

(129)


(33)

4


(58)

(166)

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

-

(243)


-

(50)


-

-


(200)

(4)


(200)

(297)

    Loss on early extinguishment of debt


(96)

(114)


-

(74)


-

-


(121)

-


(217)

(188)

    Other


514

486


508

401


519

505


497

516


2,038

1,966

  Total non-interest income


2,235

1,894


2,402

1,688


1,855

1,218


1,463

1,427


7,955

6,285

  Non-interest Expense:
















    Salaries and employee benefits


2,973

2,518


2,874

2,493


2,747

2,196


2,558

2,313


11,152

9,520

    Occupancy


326

336


352

336


335

308


345

309


1,358

1,289

    Equipment


291

289


307

287


283

290


287

281


1,168

1,147

    Marketing and public relations


111

91


73

64


108

126


186

171


478

452

    FDIC assessment


100

208


117

176


196

250


184

255


597

889

    Other real estate expense


451

202


173

134


267

158


119

346


1,010

840

    Amortization of intangibles


51

51


51

156


51

155


51

155


204

517

    Other


799

940


876

912


921

944


882

893


3,478

3,747

  Total non-interest expense


5,102

4,635


4,823

4,558


4,908

4,427


4,612

4,723


19,445

18,401

  Income before taxes


1,338

1,565


1,793

1,398


1,327

1,020


1,130

798


5,588

4,781

  Income tax expense 


317

494


573

441


399

294


331

228


1,620

1,457

  Net Income 


1,021

1,071


1,220

957


928

726


$       799

$       570


$     3,968

$     3,324

  Preferred stock dividends, including discount accretion

-

168


339

167


168

168


169

167


676

670

  Net income available to common shareholders

$     1,021

$        903


$       881

$        790


$       760

$       558


$       630

$       403


$     3,292

$     2,654

















  Per share data:
















     Net income, basic 


$      0.20

$       0.27


$      0.19

$       0.24


$      0.23

$      0.17


$      0.19

$      0.12


$      0.79

$      0.81

     Net income, diluted 


$      0.19

$       0.27


$      0.19

$       0.24


$      0.23

$      0.17


$      0.19

$      0.12


$      0.79

$      0.81

















  Average number of shares outstanding - basic

5,225,824

3,305,569


4,693,344

3,293,798


3,295,804

3,275,515


3,308,677

3,271,758


4,143,609

3,286,772

  Average number of shares outstanding - diluted

5,261,714

3,305,569


4,726,206

3,293,798


3,356,785

3,275,515


3,329,175

3,271,758


4,171,630

3,286,772

  Shares outstanding period end


5,227,300

3,270,135


5,224,282

3,303,519


3,346,365

3,277,454


3,310,572

3,273,533


5,227,300

3,270,135

















  Return on average assets


0.67%

0.59%


0.57%

0.52%


0.51%

0.39%


0.43%

0.27%


0.55%

0.44%

  Return on average common equity


7.51%

9.94%


7.18%

9.35%


8.02%

7.31%


6.86%

5.31%


7.40%

7.98%

  Return on average common tangible equity

7.62%

10.15%


7.30%

9.56%


8.22%

7.46%


7.09%

5.45%


7.55%

8.16%

  Net Interest Margin (non taxable equivalent)

3.06%

3.32%


3.06%

3.36%


3.25%

3.37%


3.34%

3.30%


3.17%

3.33%

  Net Interest Margin (taxable equivalent)


3.12%

3.32%


3.12%

3.37%


3.30%

3.37%


3.36%

3.30%


3.22%

3.33%

 

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates 

on Average Interest-Bearing Liabilities







































Three Months ended December 31, 2012


Three Months ended December 31, 2011



Average

Interest 

Yield/


Average

Interest 

Yield/



Balance

Earned/Paid

Rate


Balance

Earned/Paid

Rate

Assets









Earning assets









  Loans


$      335,010

$     4,557

5.41%


$     328,615

$       4,734

5.72%

  Securities:


206,768

888

1.71%


210,801

1,488

2.80%










  Other funds


15,026

23

0.61%


12,061

16

0.53%

        Total earning assets


556,804

5,468

3.90%


551,477

6,238

4.49%

Cash and due from banks


8,834




8,472



Premises and equipment


17,301




17,583



Intangible assets


756




766



Other assets


23,957




29,761



Allowance for loan losses


(4,719)




(4,769)



       Total assets


$      602,933




$     603,290












Liabilities









Interest-bearing liabilities









  Interest-bearing transaction accounts


92,466

31

0.13%


89,307

53

0.24%

  Money market accounts


54,493

33

0.24%


48,962

44

0.36%

  Savings deposits


40,898

12

0.12%


33,733

10

0.12%

  Time deposits


188,837

573

1.21%


213,719

909

1.69%

  Other borrowings


69,590

534

3.05%


80,078

606

3.00%

     Total interest-bearing liabilities


446,284

1,183

1.05%


465,799

1,622

1.38%

Demand deposits


97,163




84,247



Other liabilities


5,532




6,077



Shareholders' equity


53,954




47,167



   Total liabilities and shareholders' equity

$      602,933




$     603,290












Cost of funds including demand deposits



0.87%




1.17%

Net interest spread 




2.84%




3.11%

Net interest income/margin



$     4,285

3.06%



$       4,616

3.32%










Tax equivalent



$     4,370

3.12%



$       4,620

3.32%










FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates 

on Average Interest-Bearing Liabilities







































Year ended December 31, 2012


Year ended December 31, 2011



Average

Interest 

Yield/


Average

Interest 

Yield/



Balance

Earned/Paid

Rate


Balance

Earned/Paid

Rate

Assets









Earning assets









  Loans


$331,564

$     18,361

5.54%


$329,534

$     19,110

5.80%

  Securities:


204,926

4,557

2.22%


205,744

6,341

3.08%










  Other funds 


17,234

84

0.49%


15,178

74

0.49%

        Total earning assets


553,724

23,002

4.15%


550,456

25,525

4.64%

Cash and due from banks


8,643




7,992



Premises and equipment


17,388




17,759



Intangible assts


832




740



Other assets


25,556




31,791



Allowance for loan losses


(4,843)




(4,823)



       Total assets


$601,300




$603,915












Liabilities









Interest-bearing liabilities









  Interest-bearing transaction accounts


89,734

151

0.17%


83,625

270

0.32%

  Money market accounts


52,575

153

0.29%


48,802

209

0.43%

  Savings deposits


39,020

49

0.13%


32,093

48

0.15%

  Time deposits


198,392

2,769

1.40%


219,737

4,046

1.84%

  Other borrowings


71,926

2,306

3.21%


87,460

2,635

3.01%

     Total interest-bearing liabilities


451,647

5,428

1.20%


471,717

7,208

1.53%

Demand deposits


91,737




82,572



Other liabilities


5,469




5,286



Shareholders' equity


52,447




44,340



   Total liabilities and shareholders' equity

$601,300




$603,915












Cost of funds including demand deposits



1.00%




1.30%

Net interest spread 




2.95%




3.11%

Net interest income/margin



$     17,574

3.17%



$     18,317

3.33%










Tax Equivalent



$     17,833

3.22%



$     18,339

3.33%










SOURCE First Community Corporation




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