First Community Corporation Announces Second Quarter Results and Cash Dividend

LEXINGTON, S.C., July 17, 2019 /PRNewswire/ --

Highlights for Second Quarter of 2019

• Net income of $2.881 million.
• Diluted EPS of $0.37 per common share.
• Loan growth of $8.3 million, a 4.61% annualized growth rate.
• Pure deposit growth, including customer cash management, of $23.4 million, an 11.7% annualized growth rate.
• Net interest margin on a tax equivalent basis of 3.67%
• Excellent credit quality with non-performing assets (NPAs) of 0.37%, past dues of 0.16% and a year-to-date net recovery of $21,754
• Cash dividend of $0.11 per common share, which is the 70^th consecutive quarter of cash dividends paid to common shareholders.
• Opening of banking office in Evans, Georgia.
• Share repurchase plan implemented.

Today, First Community Corporation (Nasdaq: FCCO), the holding company for First Community Bank, reported net income for the second quarter of 2019 of $2.881 million as compared to $3.001 million in the second quarter of 2018.  Diluted earnings per common share were $0.37 for the second quarter of 2019 as compared to $0.39 for the second quarter of 2018. On a linked quarter basis, net income increased 15.2% from $2.500 million in the first quarter of 2019 and diluted earnings per common share increased 15.6% from $0.32. 

Year-to-date 2019 net income was $5.376 million compared to $5.710 million during the first six months of 2018.  Diluted earnings per share for the first half of 2019 were $0.70, compared to $0.74 during the same time period in 2018.    Mike Crapps, First Community President and CEO, commented, "We are pleased with growth in pure deposits during quarter while loan growth continues to be impacted by high loan payoffs and paydowns.   We continue to benefit from excellent credit quality." 

Cash Dividend and Capital

The Board of Directors approved a cash dividend for the second quarter of 2019.  The company will pay an $0.11 per share dividend to holders of the company's common stock.  This dividend is payable August 12, 2019 to shareholders of record as of July 29, 2019.  Mr. Crapps commented, "Our entire board is pleased that our performance enables the company to continue its cash dividend for the 70^th consecutive quarter." 

During the second quarter, the company announced the intention to repurchase up to 300,000 shares of company's outstanding common stock.  As of June 30, 2019, a total of 185,361 shares had been repurchased at a cost of $3,412,773 with an average price per share of $18.41.  Crapps noted, "Given the current stock price, our Board felt that a share repurchase would be a good use of our excess capital to enhance shareholder value and we are pleased with how quickly we have been able to execute this strategy."

In 2018, the Federal Reserve increased the asset size to qualify as a small bank holding company.  As a result of this change, the company is generally not subject to the Federal Reserve capital requirements unless advised otherwise.  The bank remains subject to capital requirements including a minimum leverage ratio and a minimum ratio of "qualifying capital" to risk weighted assets.  These requirements are essentially the same as those that applied to the company prior to the change in the definition of a small bank holding company.  Each of the regulatory capital ratios for the bank exceed the well capitalized minimum levels currently required by regulatory statute.  At June 30, 2019, the bank's regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) were 10.19%, 13.47%, and 14.24%, respectively.  This compares to the same ratios as of June 30, 2018 of 9.77%, 13.17%, and 13.95%, respectively. As of June 30, 2019, the bank's Common Equity Tier One ratio was 13.47% compared to 13.17% at June 30, 2018.  

Asset Quality 

Asset quality remained strong.  Non-performing assets were 0.37% of total assets and total past dues were 0.16%.  There was a net loan recovery for the quarter of $19,546 and the year-to-date net recovery is $21,754.  The ratio of classified loans plus OREO now stands at 5.63% of total bank regulatory risk-based capital as of June 30, 2019.  Additionally, as a result of continued excellent credit quality and ongoing year-to-date net recoveries, expense related to the provision for loan losses was only $9 thousand for the quarter.

Balance Sheet
(Numbers in millions)                                                                                                 

Mr. Crapps commented, "Commercial loan production was improved in the second quarter, up significantly from the first quarter, but loan payoffs and paydowns again negatively impacted the net growth in the portfolio.  After a slow start in the first quarter, momentum in pure deposit growth was strong going into the second quarter which saw growth in pure deposits, including customer cash management accounts, of $23.4 million, an 11.7% annualized growth rate."  

Revenue

Net Interest Income/Net Interest Margin

Net interest income was $9.1 million for the second quarter of 2019 compared to first quarter net interest income of $9.0 million.  Second quarter net interest margin, on a tax equivalent basis, was 3.67% compared to net interest margin of 3.73% in the first quarter.  Mr. Crapps noted, "Given the current rate environment and competition for loans and deposits, margin continues to be a point of focus.  Prior to this quarter, we had experienced margin expansion in 10 of the past 11 quarters."

Non-Interest Income

Non-interest income, adjusted for securities gains and losses increased 19.1% on a linked quarter basis to $3.0 million in the second quarter of 2019, up from $2.5 million in the first quarter of this year.  Revenues in the mortgage line of business increased 21.9% year-over-year to $1.2 million compared to $1.0 million in the second quarter of 2018.  On a linked quarter basis, mortgage revenue increased 46.7% from $844 thousand in the first quarter.  Mortgage loan production increased 9.4% year-over-year from $33.71 million in the second quarter of 2018 to $36.89 million in the second quarter of 2019.  Revenue in the investment advisory line of business increased 11.6% on a linked quarter basis to $489 thousand in the second quarter of 2019 up from $438 thousand in the first quarter and year-over-year increased 21.9% from $401 thousand in the second quarter of 2018.  Mr. Crapps commented, "Our strategy of multiple revenue streams continues to serve us well as we focus our efforts to accelerate growth in these lines of business.  We are pleased with the activity and momentum in each of our business units." 

Non-Interest Expense

Non-interest expense was $8.6 million in the second quarter of 2019, compared to $8.3 million in the first quarter of 2019.  Higher expenses in planned marketing and public relations activities to support the bank's new downtown Greenville banking office accounted for the majority of the increase. 

Other

In June, the bank opened its newest full-service banking office with a location in Evans, Georgia. This follows the opening of a new office in downtown Greenville during the first quarter of 2019 and the opening of a downtown Augusta office in the first quarter of 2018.  Crapps noted, "We have opened three new banking offices within the past 15 months, which demonstrates our commitment to building out our business franchise in the Augusta, Georgia and Upstate, South Carolina markets.  We are excited about our expansion in these two markets and the opportunity to serve the businesses and professionals in these areas.  While this expansion will have a negative impact on earnings in the short term, we see this as an investment in the future growth of our company and are excited about the long-term business potential."

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 is a full-service commercial bank offering deposit and loan products and series, residential mortgage lending and financial planning/investment advisory services for businesses and consumers.  First Community serves customers in the Midlands, Aiken, and Greenville, South Carolina markets as well as Augusta, Georgia.  For more information, visit www.firstcommunitysc.com.

FORWARD-LOOKING STATEMENTS

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, goals, projections and expectations, and are thus prospective. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.  Such risks, uncertainties and other factors, include, among others, the following: (1) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (2) the strength of the United States economy in general and the strength of the local economies in which we conduct operations may be different than expected resulting in, among other things, a deterioration in the credit quality or a reduced demand for credit, including the resultant effect on the company's loan portfolio and allowance for loan losses; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for loan loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (4) changes in the U.S. legal and regulatory framework; (5) adverse conditions in the stock market, the public debt markets and other capital markets (including changes in interest rate conditions) could have a negative impact on the company; (6) technology and cybersecurity risks, including potential business disruptions, reputational risks, and financial losses, associated with potential attacks on or failures by our computer systems and computer systems of our vendors and other third parties; and (7) risks, uncertainties and other factors disclosed in our most recent Annual Report on Form 10-K filed with the SEC, or in any of our Quarterly Reports on Form 10-Q or Current Reports on Form 8-K filed with the SEC since the end of the fiscal year covered by our most recently filed Annual Report on Form 10-K, which are available at the SEC's Internet site (http://www.sec.gov).

Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. 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.

The tables below provide a reconciliation of non‑GAAP measures to GAAP for the periods indicated:

Certain financial information presented above is determined by methods other than in accordance with generally accepted accounting principles ("GAAP"). These non-GAAP financial measures include "tangible book value at period end," "return on average tangible common equity" and "tangible common shareholders' equity to tangible assets." "Tangible book value at period end" is defined as total equity reduced by recorded intangible assets divided by total common shares outstanding. "Tangible common shareholders' equity to tangible assets" is defined as total common equity reduced by recorded intangible assets divided by total assets reduced by recorded intangible assets. Our management believes that these non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare our operating results from period-to-period in a meaningful manner. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results as reported under GAAP.

SOURCE First Community Corporation