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

Jan 20, 2010, 14:22 ET from First Community Corporation

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.

FIRST COMMUNITY CORPORATION

BALANCE SHEET DATA 

(Dollars in thousand, except per share data)

At December 31,

2009

2008

 Total Assets

$        605,827   

$        650,233   

 Investment Securities

195,844   

235,075   

 Loans

344,187   

332,964   

 Allowance for Loan Losses

4,854   

4,581   

 Total Deposits

449,576   

423,798   

 Securities Sold Under Agreements to Repurchase

20,676   

28,151   

 Federal Home Loan Bank Advances

73,326   

92,689   

 Junior Subordinated Debt

15,464   

15,464   

 Shareholders' Equity

41,440   

68,156   

 Book Value Per  Common Share

$              9.38   

$            17.76   

 Tangible Book Value Per Common Share

$              8.92   

$              8.50   

 Equity to Assets

6.84%

10.48%

 Tangible common equity to tangible assets

4.80%

4.42%

 Loan to Deposit Ratio

76.56%

78.57%

 Allowance for Loan Losses/Loans

1.41%

1.38%

 Regulatory Ratios:

  Leverage Ratio

8.32%

8.28%

  Tier 1 Capital Ratio

12.09%

12.58%

  Total Capital Ratio

13.23%

13.73%

Average Balances:

Three months ended

Year ended

December 31,

December 31,

2009

2008

2009

2008

 Average Total Assets

$      629,233   

$        641,696   

$     647,637   

$          619,984   

 Average Loans

345,911   

327,559   

337,743   

318,954   

 Average Earning Assets

581,469   

563,336   

576,821   

543,678   

 Average Deposits

449,605   

427,688   

438,658   

422,736   

 Average Other Borrowings

131,515   

146,531   

141,047   

129,225   

 Average Shareholders' Equity

42,285   

62,428   

61,699   

62,364   

Asset Quality

 Nonperforming Assets:

  Non-accrual loans

$          4,136   

$            1,757   

$         4,136   

$              1,757   

  Other real estate owned

3,181   

748   

3,181   

748   

  Accruing loans past due 90 days or more

1,022   

59   

1,022   

59   

           Total nonperforming assets

$          8,339   

$            2,564   

$         8,339   

$              2,564   

Loans charged-off

$             775   

$               491   

$         2,917   

$              1,140   

Overdrafts charged-off

15   

41   

67   

110   

Loan recoveries

(34)  

(14)  

(123)  

(114)  

Overdraft recoveries

(6)  

(28)  

(31)  

(58)  

 Net Charge-offs

$             750   

$               490   

$         2,830   

$              1,078   

Net charge-offs to average loans

0.22%

0.15%

0.84%

0.34%

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,

2009

2008

2009

2008

2009

2008

2009

2008

2009

2008

 Interest Income

$     7,686   

$     8,242   

$     7,714   

$     8,427   

$     7,662   

$      8,484   

$     7,919   

$     7,854   

$   30,981   

$  33,008   

 Interest Expense

2,922   

3,955   

3,233   

3,990   

3,340   

3,997   

3,609   

3,866   

13,104   

15,810   

 Net Interest Income

4,764   

4,287   

4,481   

4,437   

4,322   

4,487   

4,310   

3,988   

17,877   

17,198   

 Provision for Loan Losses

1,046   

1,407   

665   

359   

941   

209   

451   

155   

3,103   

2,129   

 Net Interest Income After Provision

3,718   

2,880   

3,816   

4,078   

3,381   

4,278   

3,859   

3,833   

14,774   

15,069   

 Non-interest Income:

   Deposit service charges

581   

612   

599   

750   

576   

657   

556   

664   

2,312   

2,682   

   Mortgage origination fees

131   

119   

159   

130   

246   

145   

217   

186   

753   

579   

   Investment advisory fees and non-deposit commissions

158   

91   

85   

85   

103   

70   

149   

88   

495   

334   

   Gain (loss) on sale of securities

835   

-   

291   

(28)  

9   

-   

354   

(29)  

1,489   

(28)  

   Fair value gain (loss) adjustment

(8)  

(788)  

(185)  

(8)  

230   

24   

21   

-   

58   

(623)  

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

(80)  

(169)  

(179)  

(8,163)  

(85)  

(6,162)  

(657)  

149   

(1,001)  

(14,494)  

   Loss on early extinguishment of debt

(658)  

-   

-   

-   

-   

-   

-   

-   

(658)  

-   

   Other

363   

367   

390   

396   

423   

365   

408   

364   

1,584   

1,466   

 Total non-interest income

1,322   

232   

1,160   

(6,838)  

1,502   

(4,901)  

1,048   

1,422   

5,032   

(10,084)  

 Non-interest Expense:

   Salaries and employee benefits

2,010   

2,070   

2,112   

1,987   

2,127   

2,006   

2,013   

1,901   

8,262   

7,964   

   Occupancy

302   

296   

307   

298   

289   

281   

300   

279   

1,198   

1,155   

   Equipment

305   

333   

321   

314   

304   

317   

319   

325   

1,249   

1,289   

   Marketing and public relations

82   

167   

99   

94   

55   

98   

107   

203   

343   

563   

   FDIC assessment

203   

101   

215   

56   

566   

56   

121   

54   

1,105   

267   

   Amortization of intangibles

155   

123   

156   

123   

155   

123   

155   

138   

621   

507   

   Impairment of goodwill

-   

-   

27,761   

-   

-   

-   

-   

-   

27,761   

-   

   Other

911   

1,149   

949   

999   

933   

899   

1,009   

748   

3,802   

3,794   

 Total non-interest expense

3,968   

4,239   

31,920   

3,871   

4,429   

3,780   

4,024   

3,648   

44,341   

15,539   

 Income (loss) before taxes

1,072   

(1,127)  

(26,944)  

(6,631)  

454   

(4,403)  

883   

1,607   

(24,535)  

(10,554)  

 Income tax expense (benefit)

204   

(639)  

141   

(2,686)  

40   

(921)  

311   

484   

696   

(3,761)  

 Net Income (loss)

868   

$      (488)  

(27,085)  

$    (3,945)  

414   

$    (3,482)  

$        572   

$     1,123   

$  (25,231)  

$   (6,793)  

 Preferred stock dividends, including discount accretion

163   

71   

165   

-   

165   

-   

164   

-   

656   

71   

 Net income (loss) available to common shareholders

$        705   

$      (559)  

$  (27,250)  

$    (3,945)  

$        249   

$    (3,482)  

$        408   

$     1,123   

$  (25,887)  

$   (6,864)  

 Per share data:

    Net income (loss), basic

$       0.22   

$     (0.17)  

$      (8.35)  

$      (1.23)  

$       0.08   

$      (1.09)  

$       0.13   

$       0.35   

$      (7.95)  

$     (2.14)  

    Net income (loss), diluted

$       0.22   

$     (0.17)  

$      (8.35)  

$      (1.23)  

$       0.08   

$      (1.09)  

$       0.13   

$       0.35   

$      (7.95)  

$     (2.14)  

 Average number of shares outstanding - basic

3,269,761   

3,224,246   

3,261,631   

3,205,148   

3,239,863   

3,198,598   

3,231,411   

3,205,676   

3,257,021   

3,203,148   

 Average number of shares outstanding - diluted

3,269,761   

3,224,246   

3,261,631   

3,205,148   

3,239,863   

3,198,598   

3,231,411   

3,240,530   

3,257,021   

3,203,148   

 Net Interest Margin (non taxable equivalent)

3.25%

3.02%

3.08%

3.15%

3.02%

3.26%

3.05%

3.21%

3.10%

3.21%

 Net Interest Margin (taxable equivalent)

3.27%

3.05%

3.11%

3.18%

3.04%

3.33%

3.08%

3.30%

3.12%

3.27%

Reconciliation of GAAP Net Income available to common

    shareholders to operating earnings available to

    common shareholders: (1)

Net earnings (loss) available to common shareholders (GAAP)

705   

(559)  

(27,250)  

(3,945)  

249   

(3,482)  

408   

1,123   

(25,887)  

(6,864)  

    Goodwill impairment

-   

-   

27,761   

-   

-   

-   

-   

-   

27,761   

-   

 Operating earnings available to common shareholders

$        705   

$      (559)  

$        511   

$    (3,945)  

$        249   

$    (3,482)  

$        408   

$     1,123   

$     1,874   

$   (6,864)  

  Per share data:

  Net income (loss) diluted (GAAP)

$       0.22   

$     (0.17)  

$      (8.35)  

$      (1.23)  

$       0.08   

$      (1.09)  

$       0.13   

$       0.35   

$      (7.95)  

$     (1.97)  

    Goodwill impairment

-   

-   

8.51   

-   

-   

-   

-   

-   

8.53   

-   

  Operating earnings (loss) - diluted

$       0.22   

$     (0.17)  

$       0.16   

$      (1.23)  

$       0.08   

$      (1.09)  

$       0.13   

$       0.35   

$       0.58   

$     (1.97)  

  (1) Operating earnings equals GAAP net earnings (loss) available to common shareholders plus one time impairment of goodwill

SOURCE First Community Corporation