56% increase in net income available to common shareholders to $630,000 or $0.19 per share
Continued payment of cash dividend
Capital ratios of 9.77% (Tier 1 Leverage) and 17.62% (Total Capital)
Loan portfolio quality better than peer with NPA ratio decreasing to 1.80%
Organic pure deposit growth of 24.4% (annualized)
Today, First Community Corporation (Nasdaq: FCCO), the holding company for First Community Bank, reported net income available to common shareholders for the first quarter of 2012. Net income available to common shareholders for the first quarter of 2012 was $630 thousand as compared to $403 thousand in the first quarter of 2011. Diluted earnings per common share were $0.19 for the first quarter of 2012 as compared to $0.12 for the first quarter of 2011.
The company announced that the Board of Directors has approved a cash dividend for the first quarter of 2012. The company will pay a $.04 per share dividend to holders of the company's common stock. This dividend is payable May 15, 2012, to shareholders of record as of May 1, 2012.
During the first quarter of 2012, all of the company's regulatory capital ratios continued to increase as compared to the prior year. Each of these ratios (Leverage, Tier I Risk Based, and Total Risk Based) exceed the well capitalized minimum levels currently required by regulatory statute and the previously communicated higher capital ratios expected by the bank's primary regulator, the Office of the Comptroller of the Currency. These new expectations are 8.00%, 10.00% and 12.00%, respectively. At March 31, 2012, the company's regulatory capital ratios (Leverage, Tier I Risk Based, and Total Risk Based) were 9.77%, 15.69% and 17.62%, respectively. This compares to the same ratios as of March 31, 2011, of 8.90%, 14.15% and 15.20%, respectively. Additionally, it should be noted that the regulatory capital ratios for the company's wholly owned subsidiary, First Community Bank, were 9.70%, 15.59% and 16.85%, respectively, as of March 31, 2012. The company has previously noted that capital planning will continue to be a focus for the company. The improvement in the capital ratios is a result of the company's continued earnings and its success in executing its previously announced strategy of controlling the overall size of its balance sheet.
Further, the company's ratio of tangible common equity to tangible assets showed growth increasing to 6.20% as of March 31, 2012; as compared to 5.07% as of March 31, 2011. Tangible book value also increased to $11.25 per share as of March 31, 2012; as compared to $9.39 as of March 31, 2011.
Non-performing assets declined by $1,980,000 (15.5%) to $10.8 million (1.80% of total assets) at the end of the quarter, as compared to $12.8 million (2.15%) as of December 31, 2011. This ratio compares favorably with the bank's peer group non-performing assets ratio which the company believes to be in excess of 4.00%. This decrease was driven by the sale of various properties held in Other Real Estate Owned (OREO), which was accomplished while realizing a net gain of $50,000 on the sale of these assets.
Trouble debt restructurings, that are still accruing interest, declined during the quarter to $3.7 million from $4.0 million. Loans past due 30-89 days remained relatively flat at $3.3 million (0.99% of loans) on a linked quarter basis.
Net loan charge-offs for the quarter were $184 thousand (0.22% annualized ratio) as compared to the same period in the prior year total of $616 thousand (0.76% annualized ratio). The company believes that this compares very favorably to its peer group average.
It is also noteworthy that classified loans decreased in the quarter to $16.8 million. This decrease is a continuation of a trend of declining balances of classified loans. The ratio of classified loans plus OREO now stands at 36.05% of total regulatory risk-based capital as of March 31, 2012.
Mike Crapps, First Community President and CEO, commented, "Nearly every metric for loan portfolio quality showed improvement during the quarter and it should be noted that we were already performing at better than peer levels. This is evidence of the credit culture of this organization and can be attributed to the men and women that implement this culture daily and to the high quality of our customers."
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 great 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.
(Numbers in millions)
Total Pure Deposits
Customer Cash Management
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 36.2% of the total deposits. As a result of this success, the cost of funds, including non-interest bearing demand deposits, has declined to 1.14% from 1.45% in the first quarter of 2011." Mr. Crapps continued, "In addition to this success on the liability side of the balance sheet, we are also extremely pleased to report growth in our loan portfolio. This growth in the amount of $6.8 million represents an annualized growth rate of 8.4% and is the result of the diligent efforts of our bankers to identify, underwrite, and appropriately price sound loan opportunities."
Net Interest Income/Net Interest Margin
Net interest income was $4.5 million for the first quarter of 2012 which represents a slight increase over the first quarter of 2011. The net interest margin, on a tax equivalent basis, was 3.36% for the first quarter of 2012, which represents an increase from 3.30% during the same period in 2011. This improvement is primarily due to the before mentioned reduction in cost of funding.
Non-interest income increased slightly by 2.6% to $1,463,000 during the first quarter of 2012, as compared to $1,426,000 in the first quarter of 2011. The highlight was the increase in mortgage origination revenue from $191,000 to $723,000. Mr. Crapps commented, "The acquisition of Palmetto South Mortgage Corporation continues to be beneficial, and in combination with the legacy mortgage unit is a real story of success." This revenue increase was partially offset by increased Other Than Temporary Impairment (OTTI) charges and the cost related to the early extinguishment of debt (Federal Home Loan Bank Advances); as well as reduced gain on sale of securities.
Non-interest expense decreased by $110,000 (2.3%) to $4.6 million for the first quarter. Increased salary and benefits costs driven by the mortgage unit's success were offset by reductions in OREO expense and the amortization of intangibles.
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
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FIRST COMMUNITY CORPORATION
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