First Community Corporation Announces Second Quarter Results and Cash Dividend

Jul 11, 2012, 09:00 ET from First Community Corporation

LEXINGTON, S.C., July 11, 2012 /PRNewswire/ -- 

Highlights

  • 36% increase in net income available to common shareholders to $760,000 or $0.23 per share
  • Continued payment of cash dividend
  • Capital ratios of 9.94% (Tier 1 Leverage), 16.64% (Tier 1 Risk Based) and 18.59% (Total Capital)
  • Loan portfolio quality better than peers, with NPA ratio decreasing to 1.60%
  • OCC exam completed during the 2nd quarter results in lifting of regulatory agreement

Today, First Community Corporation (Nasdaq:   FCCO), the holding company for First Community Bank, reported net income available to common shareholders for the second quarter of 2012.  Net income available to common shareholders for the second quarter of 2012 was $760 thousand as compared to $558 thousand in the second quarter of 2011, an increase of 36.2%.  Diluted earnings per common share were $0.23 for the second quarter of 2012 as compared to $0.17 for the second quarter of 2011, an increase of 35.3%.

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

Year-to-date 2012 net income available to common shareholders was $1.39 million compared to $961 thousand during the first six months of 2011, an increase of 44.6%.  Diluted earnings per share for the first half of 2012 were $0.42, an increase of 44.8% over the same period in 2011, which produced diluted earnings per share of $0.29

Cash Dividend and Capital

The company announced that the Board of Directors has approved a cash dividend for the second quarter of 2012.  The company will pay a $.04 per share dividend to holders of the company's common stock.  This dividend is payable August 3, 2012, to shareholders of record as of July 20, 2012. 

During the second 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) exceeds the well capitalized minimum level currently required by regulatory statute.  At June 30, 2012, the company's regulatory capital ratios (Leverage, Tier I Risk Based, and Total Risk Based) were 9.94%, 16.64% and 18.59%, respectively.  This compares to the same ratios as of June 30, 2011, of 8.98%, 14.57% and 15.87%, respectively.  Additionally, it should be noted that the regulatory capital ratios for the company's wholly owned subsidiary, First Community Bank, N.A., were 9.93%, 16.62% and 17.88%, respectively, as of June 30, 2012, compared to 8.75%, 14.21% and 15.49%, respectively, as of June 30, 2011.  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 6.24% as of June 30, 2012, as compared to 5.33% as of June 30, 2011.  Tangible book value is $11.14 per share as of June 30, 2012, as compared to $9.85 as of June 30, 2011.

Asset Quality

Loan Portfolio

Non-performing assets declined by $1,250,000 (11.6%) to $9.5 million (1.60% of total assets) at the end of the quarter, as compared to $10.8 million (1.80%) as of March 31, 2012.  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% (based on information obtained from SNL Financial, LC). 

Troubled debt restructurings that are still accruing interest increased during the quarter to $4.1 million from $3.7 million at March 31, 2012.  Loans past due 30-89 days decreased from $3.3 million (0.99% of loans) to $2.4 million (0.74% of loans) on a linked quarter basis.   

Net loan charge-offs for the quarter were $75 thousand (0.09% annualized ratio) as compared to the same period in the prior year total of $329 thousand (0.40% annualized ratio).  The company believes that this compares very favorably to its peer group average. 

Classified loans decreased slightly in the quarter to $16.6 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 34.07% of total regulatory risk-based capital as of June 30, 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."

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. 

(Numbers in millions)







          12/31/10

12/31/11

6/30/12

$ Variance

% Variance







Total Pure Deposits        

$259.8

$286.8

$307.9

$21.1

7.4%







CDs <$100K                

$122.3

$107.4

$100.2

($7.2)

(6.7%)

CDs>$100K                      

73.2

70.4

65.9

(4.5)

(6.4%)

Brokered CDs                   

0.0

0.0

0.0

0.0

0.0%

Total CDs                        

$195.5

$177.8

$166.1

($11.7)

(6.6%)







Total Deposits                 

$455.3

$464.6

$474.0

$ 9.4

2.0%







Customer Cash Management    

12.7

13.6

12.8

(0.8)

( 5.9%)

FHLB Advances                   

68.1

43.9

38.5

(5.4)

(12.3%)







Total Funding                           

$536.2

$522.1

525.3

3.2

0.6%

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 35.0% of the total deposits.  As a result of this success, the cost of funds, including non-interest bearing demand deposits, has declined to 1.03% from 1.33% in the second quarter of 2011."  Mr. Crapps continued, "While we have achieved much success on the liability side of our balance sheet, we are frustrated by continuing weak demand in our efforts to grow our loan portfolio.  Nevertheless, our team will continue, with renewed effort, to identify, underwrite, and appropriately price sound loan opportunities." 

Net Interest Income/Net Interest Margin

Net interest income was $4.5 million for the second quarter of 2012, which represents a decrease as compared to $4.6 million in the second quarter of 2011.  The net interest margin, on a tax equivalent basis, was 3.30% for the second quarter of 2012, which represents a decrease from 3.37% during the same period in 2011.  These decreases are driven primarily by declining yields in the investment portfolio as the company sold non-agency mortgage backed securities (MBS) and replaced those investments with lower risk weighted investments earning lower yields.  The company has now substantially reduced its non-agency MBS portfolio, with only $1.7 million remaining that are rated below investment grade by the rating agencies.    

Non-Interest Income

Non-interest income increased significantly by 52.3% to $1,855,000 as compared to $1,218,000 in the second quarter of 2011.  This increase was led by the success in mortgage origination revenue increasing from $263,000 to $877,000 this quarter.  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.  It is also noteworthy that in this quarter, core non-interest income (non-interest income derived from customer activities) represented 30.7% of total revenues.  This diversification of revenue positions us to be successful even in a low net interest margin environment."

Non-Interest Expense

Non-interest expense increased by $481 thousand (10.9%) to $4.9 million for the second quarter.  This was driven primarily by increased salary and benefit costs in the mortgage unit and increased OREO expenses.

Regulatory Matters

The OCC completed its safety and soundness examination of the bank during the quarter.  As previously announced, upon conclusion of the exam, the OCC lifted its formal agreement with the bank.  This agreement was entered into on April 6, 2010 based on the findings of the OCC during its 2009 examination of the bank.  As reflected in the formal agreement, the OCC's primary concern with the bank was driven by rating agency downgrades of non-agency MBSs in the bank's investment portfolio.  These securities, purchased in 2004 through 2008, were all rated AAA by the rating agencies at the time of purchase; however, they were impacted by the economic recession and the stress on the residential housing sector and were subsequently downgraded, many to below investment grade.  As noted above, the bank has reduced the non-agency MBSs in its investment portfolio that are rated below investment grade to $1.7 million

First Community Corporation stock trades on the NASDAQ Capital Market under the symbol "FCCO" and is the holding company for First Community Bank, N.A., a local community bank based in the midlands of South Carolina.  First Community Bank, N.A. 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









INCOME STATEMENT DATA









(Dollars in thousands, except per share data)










Three months ended


Three months ended


Six months ended


June 30,


March 31,


June 30,


2012

2011


2012

2011


2012

2011










  Interest Income

$     5,840

$     6,466


$     6,044

$     6,440


$   11,884

$   12,906

  Interest Expense

1,389

1,847


1,535

1,986


2,924

3,833

  Net Interest Income

4,451

4,619


4,509

4,454


8,960

9,073

  Provision for Loan Losses

71

390


230

360


301

750

  Net Interest Income After Provision

4,380

4,229


4,279

4,094


8,659

8,323

  Non-interest Income:









    Deposit service charges

375

478


389

458


764

936

    Mortgage origination fees

877

263


723

191


1,600

454

    Investment advisory fees and non-deposit commissions

162

138


147

175


309

313

    Gain (loss) on sale of securities

(38)

7


11

134


(27)

141

    Gain (loss) on sale of other assets

(36)

(44)


50

(47)


14

(91)

    Fair value gain (loss) adjustment

(4)

(129)


(33)

4


(37)

(125)

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

-

-


(200)

(4)


(200)

(4)

    Loss on early extinguishment of debt

-



(121)

-


(121)


    Other

519

505


497

516


1,016

974

  Total non-interest income

1,855

1,218


1,463

1,427


3,318

2,598

  Non-interest Expense:









    Salaries and employee benefits

2,747

2,196


2,558

2,313


5,305

4,509

    Occupancy

335

308


345

309


680

617

    Equipment

283

290


287

281


570

571

    Marketing and public relations

108

126


186

171


294

297

    FDIC assessment 

196

250


184

255


380

505

    Other real estate expenses

267

158


119

346


386

504

    Amortization of intangibles

51

155


51

155


102

310

    Other

921

944


882

893


1,803

1,790

  Total non-interest expense

4,908

4,427


4,612

4,723


9,520

9,103

  Income before taxes

1,327

1,020


1,130

798


2,457

1,818

  Income tax expense

399

294


331

228


730

522

  Net Income

928

726


$       799

$       570


$     1,727

$     1,296

  Preferred stock dividends

168

168


169

167


337

335

  Net income available to common shareholders

$       760

$       558


$       630

$       403


$     1,390

$       961










  Per share data:









     Net income, basic 

$      0.23

$      0.17


$      0.19

$      0.12


$      0.42

$      0.29

     Net income, diluted 

$      0.23

$      0.17


$      0.19

$      0.12


$      0.42

$      0.29










  Average number of shares outstanding - basic

3,295,804

3,275,515


3,308,677

3,271,758


3,302,236

3,273,647

  Average number of shares outstanding - diluted

3,356,785

3,275,515


3,329,175

3,271,758


3,343,040

3,273,647


-






-


  Return on average assets

0.51%

0.39%


0.43%

0.27%


0.47%

0.32%

  Return on average common equity:

8.02%

7.31%


6.86%

5.31%


7.46%

6.15%

  Return on average common tangible equity:

8.22%

7.46%


7.09%

5.45%


7.64%

6.30%

  Net Interest Margin (non taxable equivalent)

3.25%

3.37%


3.34%

3.30%


3.32%

3.33%

  Net Interest Margin (taxable equivalent)

3.30%

3.37%


3.36%

3.30%


3.35%

3.34%










 








FIRST COMMUNITY CORPORATION







BALANCE SHEET DATA







(Dollars in thousand, except per share data)










At June 30, 


December 31,




2012

2011


2011








  Total Assets



$     598,014

$       605,179


$       593,887

  Other short-term investments (1)



18,205

13,467


5,893

  Investment Securities



201,381

210,742


206,669

  Loans held for sale



4,356

625


3,725

  Loans



324,913

325,671


324,311

  Allowance for Loan Losses



4,742

4,716


4,699

  Total Deposits



474,019

470,917


464,585

  Securities Sold Under Agreements to Repurchase



12,817

15,551


13,616

  Federal Home Loan Bank Advances



38,496

54,228


43,862

  Junior Subordinated Debt



17,916

15,464


17,913

  Shareholders' equity



49,296

43,926


47,896








  Book Value Per Common Share



$         11.39

$          10.02


$          11.11

  Tangible Book Value Per Common Share 



$         11.14

$            9.85


$          10.83

  Equity to Assets



8.24%

7.26%


8.06%

  Tangible common equity to tangible assets



6.24%

5.33%


6.04%

  Loan to Deposit Ratio



69.46%

69.29%


70.61%

  Allowance for Loan Losses/Loans



1.46%

1.45%


1.45%

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

  Regulatory Ratios:



At June 30, 


December 31,




2012

2011


2011








   Leverage Ratio



9.94%

8.98%


9.40%

   Tier 1 Capital Ratio



16.64%

14.57%


15.33%

   Total Capital Ratio



18.59%

15.87%


17.25%

   Tier 1 Regulatory Capital



$       58,822

$         53,884


$         56,207

   Total Regulatory Capital



$       68,706

$         58,678


$         60,801








Average Balances:


Three months ended


Six months ended



June 30,


June 30,



2012

2011


2012

2011








  Average Total Assets


$598,124

$     603,209


$596,048

$       602,899

  Average Loans


332,081

330,939


330,342

332,301

  Average Earning Assets


550,899

550,347


547,022

549,192

  Average Deposits


471,955

466,985


469,270

464,022

  Average Other Borrowings


71,746

88,727


72,838

91,813

  Average Shareholders' Equity


49,207

43,340


48,650

42,554








Asset Quality:


June 30,

March 31

December 31,





2012

2012

2011



Loan Risk Rating by Category (End of Period)







       Special Mention


$    9,917

$         8,632

$          8,856



       Substandard


16,612

16,807

17,814



       Doubtful


-

-

-



       Pass


302,740

309,514

301,366





$329,269

$     334,953

$       328,036










June 30,

March 31,

December 31,




2012

2012

2011










  Nonperforming Assets:







       Non-accrual loans


$    4,640

$         5,416

$          5,403



       Other real estate owned


4,909

5,383

7,351



       Accruing loans past due 90 days or more


-

-

25



            Total nonperforming assets


$    9,549

$       10,799

$         12,779



 Accruing trouble debt restructurings


$    4,081

$         3,651

$          3,950



















 Three months ended 


 Six months ended 



June 30,


June 30,



2012

2011


2012

2011

  Loans charged-off


$        88

$            334


$      292

$             965

  Overdrafts charged-off


7

8


15

15

  Loan recoveries


(18)

(10)


(41)

(27)

  Overdraft recoveries


(2)

(3)


(7)

(8)

     Net Charge-offs


$        75

$            329


$      259

$             945

  Net charge-offs to average loans


0.02%

0.10%


0.08%

0.28%












  










FIRST COMMUNITY CORPORATION





Yields on Average Earning Assets and Rates 





  on Average Interest-Bearing Liabilities















Three months ended June 30, 2012

Three months ended June 30, 2011




Average

Interest 

Yield/

Average

Interest 

Yield/




Balance

Earned/Paid

Rate

Balance

Earned/Paid

Rate



Assets









Earning assets









  Loans

$ 332,081

$      4,629

5.59%

$ 330,939

$      4,821

5.84%



  Securities:

200,308

1,189

2.39%

203,158

1,625

3.21%



  Federal funds sold and securities purchased

18,510

22

0.48%

16,250

20

0.49%



        Total earning assets

550,899

5,840

4.26%

550,347

6,466

4.71%



Cash and due from banks

8,408



7,078





Premises and equipment

17,416



17,805





Other assets

26,148



32,743





Allowance for loan losses

(4,747)



(4,764)





       Total assets

$ 598,124



$ 603,209














Liabilities









Interest-bearing liabilities









  Interest-bearing transaction accounts

$   89,647

$           41

0.18%

$   81,150

$           75

0.37%



  Money market accounts

52,309

42

0.32%

49,534

58

0.47%



  Savings deposits

38,752

12

0.12%

31,957

13

0.16%



  Time deposits

201,079

713

1.43%

221,800

1,039

1.88%



  Other borrowings

71,746

581

3.26%

88,727

662

2.99%



     Total interest-bearing liabilities

453,533

1,389

1.23%

473,168

1,847

1.57%



Demand deposits

90,168



82,544





Other liabilities

5,216



4,157





Shareholders' equity

49,207



43,340





   Total liabilities and shareholders' equity

$ 598,124



$ 603,209














Cost of funds, including demand deposits



1.03%



1.33%



Net interest spread 



3.03%



3.15%



Net interest income/margin


$      4,451

3.25%


$      4,619

3.37%



Net interest income/margin FTE basis

$          65

$      4,516

3.30%

$            5

$      4,624

3.37%













  








FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates 

  on Average Interest-Bearing Liabilities









Six months ended June 30, 2012

Six months ended June 30, 2011


Average

Interest 

Yield/

Average

Interest 

Yield/


Balance

Earned/Paid

Rate

Balance

Earned/Paid

Rate

Assets







Earning assets







  Loans

$ 330,342

$      9,321

5.67%

$ 332,301

$      9,629

5.84%

  Securities:

201,908

2,590

2.58%

199,775

3,236

3.27%

  Federal funds sold and securities purchased







    under agreements to resell

14,772

38

0.52%

17,116

41

0.48%

        Total earning assets

547,022

11,949

4.39%

549,192

12,906

4.74%

Cash and due from banks

8,520



7,542



Premises and equipment

17,430



17,887



Other assets

27,815



33,123



Allowance for loan losses

(4,739)



(4,845)



       Total assets

$ 596,048



$ 602,899



Liabilities







Interest-bearing liabilities







  Interest-bearing transaction accounts

$   87,318

83

0.19%

$   79,774

148

0.37%

  Money market accounts

51,226

84

0.33%

47,999

111

0.47%

  Savings deposits

37,598

24

0.13%

31,168

26

0.17%

  Time deposits

204,822

1,544

1.52%

223,198

2,158

1.95%

  Other borrowings

72,838

1,189

3.28%

91,813

1,390

3.05%

     Total interest-bearing liabilities

453,802

2,924

1.30%

473,952

3,833

1.63%

Demand deposits

88,306



81,883



Other liabilities

5,290



4,510



Shareholders' equity

48,650



42,554



   Total liabilities and shareholders' equity

$ 596,048



$ 602,899










Cost of funds, including demand deposits



1.08%



1.39%

Net interest spread 



3.10%



3.11%

Net interest income/margin


$      9,025

3.32%


$      9,073

3.33%

Net interest income/margin FTE basis

$          96

$      9,121

3.35%

$          13

$      9,086

3.34%








 

SOURCE First Community Corporation