First Community Corporation Announces Third Quarter Results and Cash Dividend Third Quarter Highlights

LEXINGTON, S.C., Oct. 16, 2019 /PRNewswire/ --

Highlights

• Net income of $2.898 million.
• Diluted EPS of $0.39 per common share.
• Net loan growth of $8.4 million during the quarter, an annualized growth rate of 4.6%.
• Pure deposit growth, including customer cash management accounts, of $12.9 million during the quarter, a 6.3% annualized growth rate.
• Mortgage unit had a record quarter in production and revenue.
• Excellent key credit quality metrics with non-performing assets (NPAs) of 0.33% and a net loan recovery of $193 thousand.
• Cash dividend of $0.11 per common share, the 71^st consecutive quarter of cash dividends paid to common shareholders.

Today, First Community Corporation (Nasdaq: FCCO), the holding company for First Community Bank, reported net income for the third quarter of 2019 of $2.898 million as compared to $2.833 million in the third quarter of 2018. Diluted earnings per common share were $0.39 for the third quarter of 2019 compared to $0.37 in the third quarter of 2018. Year-to-date 2019 net income was $8.274 million, compared to $8.543 million earned in the first nine months of 2019. Year-to-date diluted earnings per share were $1.08 compared to $1.11 during the same time period in 2018.

Cash Dividend and Capital

The Board of Directors approved a cash dividend for the third 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 November 15, 2019 to shareholders of record as of October 31, 2019. First Community President and CEO Mike Crapps commented, "Our entire board is pleased that our performance enables the company to continue its cash dividend for the 71^st consecutive quarter."

During the third quarter, the Company completed the previously announced repurchase of 300,000 shares of the company's outstanding common stock at a cost of $5,637,257 with an average price per share of $18.79. The company also announced during the quarter the approval of a second share repurchase of up to 200,000 shares of the company's outstanding common stock. Crapps noted, "Our initial share repurchase was completed very quickly. This approved second share repurchase provides us with some flexibility in managing capital going forward."

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 September 30, 2019, the bank's regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) were 10.38%, 13.79%, and 14.58%, respectively. This compares to the same ratios as of September 30, 2018 of 9.84%, 13.85%, and 13.96%, respectively. As of September 30, 2019, the bank's Common Equity Tier One ratio was 13.79% compared to 13.18% at September 30, 2018. Further, the company's Tangible Common Equity to Tangible Assets ratio was 9.21% as of September 30, 2019 as compared to 8.51% as of September 30, 2018.

Asset Quality
The non-performing assets ratio for the third quarter of 2019 was 0.33% of total assets with a nominal level of non-performing assets of $3.720 million. Trouble debt restructurings, that are still accruing interest, were $1.423 million at the end of the third quarter of 2019.

There was a net loan recovery for the quarter of $193 thousand with a year-to-date net loan recovery of $214 thousand. The ratio of classified loans plus OREO now stands at 5.15% of total bank regulatory risk-based capital as of September 30, 2019.

Balance Sheet
(Numbers in millions)

Mr. Crapps commented, "We believe that the foundational value of a banking franchise resides in the following three components: deposits, asset quality and capital. Our results continue to show strength in all three. Our pure deposits (non-CD), including customer cash management accounts, continue to show nice growth with an annualized growth rate of 6.3%, while cost of deposits began to flatten, with a one basis point increase to 52 basis points."

Revenue
Net Interest Income/Net Interest Margin

Net interest income was $9.353 million for the third quarter of 2019, an increase of $237 thousand or 2.6% on a linked quarter basis and $470 thousand or 5.3% compared to the same period in 2018. Net interest margin, on a taxable equivalent basis, was 3.65%; however, this was positively impacted by a non-accrual interest recovery of $131 thousand related to one non-accrual loan that was paid off during the quarter. Net interest margin, on a tax equivalent basis, would have been 3.62% without this benefit, which is a decline of 5 basis points on a linked quarter basis. Crapps commented, "Margin and net interest income continue to be a point of focus given this rate environment and the competition for loans and deposits. While margin is a key measurement, we are also focused on increasing net interest income which translates directly to higher profitability."

Non-Interest Income
Non-interest income was $3.113 million for the third quarter. The mortgage line of business had another record quarter with production of $37.9 million and revenues of $1.251 million. These results represent year-over-year increases of 17.0% and 7.9% respectively. The investment advisory line of business revenue for the third quarter was $509 thousand, an increase of 20.3% year-over-year and 4.1% on a linked quarter basis. Deposit fees generated in the commercial and retail banking line of business increased 10.8% on a linked quarter basis. Mr. Crapps commented, "Our strategy of generating revenue streams from multiple lines of business continues to serve us well. We continue to work to leverage each of our lines of business."

Non-Interest Expense
on-interest expense increased $150 thousand during the quarter to $8.790 million. The increases were primarily in salaries including employee benefits and other non-interest expense. Salaries and benefits expense increased $255 thousand on a linked quarter basis primarily due to higher accruals in incentive compensation of approximately $175 thousand based on current estimated performance, along with additional mortgage compensation expense of $27 thousand. Other non-interest expense increased by $191 thousand in the third quarter, the majority of which is non-recurring and related to external consultant fees and other smaller miscellaneous expenses. These expense increases were partially offset by the temporary reduction in the FDIC insurance assessment which was lower by $71 thousand on a linked quarter basis and marketing and public relations which was $271 thousand lower in the third quarter due to a reduced media schedule in the summer months.

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 services, residential mortgage lending and financial planning/investment advisory services for businesses and consumers. First Community serves customers in the Midlands, Aiken, and Upstate, 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.

www.firstcommunitysc.com

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