First Community Corporation Announces First Quarter Results and Cash Dividend

PR Newswire

LEXINGTON, S.C., April 16, 2014 /PRNewswire/ --

Highlights

  • Completed merger with Savannah River Financial Corporation on February 1, 2014
  • Post merger regulatory capital ratios remain strong at 10.67% (Tier 1 Leverage) and 16.51% (Total Capital) along with Tangible Common Equity / Tangible Assets (TCE/TA) ratio of 7.90%
  • Non-performing assets (NPAs) stable at 1.40%
  • Diversified revenue model shows continued strength, with net-interest margin improved significantly even as mortgage fees were weak
  • Core net income (excluding securities gains / losses and merger expenses) estimated to be $1,166,000 or $0.19 per common share
  • Cash dividend of $0.06 per common share, which is the 49th 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 first quarter of 2014.  Net income for the first quarter of 2014 was $862 thousand as compared to $1.038 million in the first quarter of 2013, and as compared to $850 thousand in the fourth quarter of 2013.  Diluted earnings per common share were $0.14 for the first quarter of 2014 as compared to $0.20 for the first quarter of 2013; and also, as compared to $0.16 per common share in the fourth quarter of 2013.

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First Community Corporation logo.

During the first quarter of 2014, the company incurred $420 thousand in expenses related to the merger with Savannah River Financial Corporation.  Excluding this expense and a small gain on the sales of securities, the company estimates that reported net income would have been $1,166,000 or $0.19 per common share.

First Community President and CEO, Mike Crapps, commented, "We are excited to have successfully completed the merger with Savannah River Financial Corporation.  There has been a lot of positive economic news in the Central Savannah River Area (CSRA) and we look forward to great success in the markets of Augusta, Georgia and Aiken, South Carolina."

As previously announced, the company plans to expand its footprint with a banking office in downtown Columbia.  Renovations are underway at the site located at 1213 Lady Street, near Main Street.  The office is expected to open in May of 2014 giving the company a highly visible presence in the heart of the city.  The bank's financial planning team, First Community Financial Consultants, will relocate from their Lincoln Street office to the second floor of the new downtown location.  "The downtown area will be a great addition to the First Community family. It's experiencing tremendous growth and the timing was right to bring our unique style of banking to the businesses and residents that call Main Street home," said Mr. Crapps. "We look forward to working with downtown businesses and professionals to meet their financial goals."

Cash Dividend and Capital

The Board of Directors has approved a cash dividend for the first quarter of 2014.  The company will pay a $0.06 per share dividend to holders of the company's common stock.  This dividend is payable May 12, 2014 to shareholders of record as of April 30, 2014.  Mr. Crapps commented, "Our entire board is pleased that our performance enables the company to continue its cash dividend for the 49th consecutive quarter." 

Each of the regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) exceed the well capitalized minimum levels currently required by regulatory statute.  At March 31, 2014, the company's regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) were 10.67%, 15.67%, and 16.51%, respectively.  This compares to the same ratios as of March 31, 2013, of 10.78%, 17.59%, and 18.82%, respectively.  Additionally, the regulatory capital ratios for the company's wholly owned subsidiary, First Community Bank, were 10.08%, 14.83%, and 15.68% respectively as of March 31, 2014.  Further, the company's ratio of tangible common equity to tangible assets was 7.90% as of March 31, 2014.  Each of these capital ratios compare favorably to the pro-forma ratios projected at the announcement of the merger.

Asset Quality

The non-performing assets ratio remained relatively stable at 1.40% of total assets, as compared to the prior quarter ratio of 1.39%.  The nominal level of non-performing assets increased by $2.4 million largely due to one loan (in the legacy bank portfolio) in the current amount of $2.3 million that was placed on non-accrual during the quarter. 

Trouble debt restructurings, that are still accruing interest, declined slightly during the quarter to $568 thousand from $576 thousand.  Loans past due 30-89 days were $2.6 million (0.59% of loans) this quarter.   

Net loan charge-offs for the quarter were $208 thousand (0.20% annualized ratio) as compared to the 2013 first quarter total of $237 thousand (0.28% annualized ratio).  The company believes that these levels compare very favorably to its peer group average. 

The ratio of classified loans plus OREO now stands at 23.92% of total regulatory risk-based capital as of March 31, 2014. 

 

Balance Sheet 









(Numbers in millions)










Quarter ending 


Quarter ending






3/31/14


12/31/13


$ Variance


% Variance









Assets








Investments 

$255.5


$227.0


$28.5


12.6%

Loans 

443.9


347.6


96.3


27.7%









Liabilities








Total Pure Deposits

$505.7


$363.2


$142.5


39.2%

Certificates of Deposit

148.8


133.9


14.9


11.1%

Total Deposits 

$654.4


$497.1


$157.3


31.6%









Customer Cash Management

19.5


18.6


0.9


4.8%

FHLB Advances 

34.3


43.3


(9.0)


(20.8%)









Total Funding 

$708.3


$559.0


$149.3


26.7%

Cost of Funds* 

0.55%


0.60%




(5 bps)

   (*including demand deposits)








Cost of Deposits

0.30%


0.31%




(1 bps)

 

Mr. Crapps commented, "It should be noted that this is the first quarter of results since the finalization of the merger with Savannah River Financial Corporation.  On an organic basis, the loan portfolio decreased by $7.2 million (2.1%).  While loan production was at a reasonable level, it was not sufficient to overcome the headwind of some anticipated, yet significant, loan payoffs.  The organic growth in pure deposits continued to be excellent at a rate of $32.2 million (8.2%) during the quarter.  This success is driven by the sales and service efforts of our bankers.  The result is an impressive deposit mix with non-interest bearing deposit balances representing 21% of total deposits and a low cost of total deposits at 0.30% for the quarter." 

Revenue

Net Interest Income/Net Interest Margin

The net interest margin, on a tax equivalent basis, increased during the quarter to 3.40% from 3.29% in the prior quarter.  This, combined with the increase in average earning assets, resulted in a significantly higher net interest income.  Mr. Crapps commented, "One of the benefits of the merger with Savannah River Financial Corporation was that their loan-to-deposit ratio was higher than our legacy bank, which also contributed to a higher net-interest margin."

Non-Interest Income

Non-interest income, adjusted for securities gains and losses, was relatively stable on a linked quarter basis.  The mortgage line of business experienced a weak quarter with production of $19.3 million, as compared to $23.1 million in the prior quarter.  Yields were in line at 3.21% which resulted in mortgage fee revenue of $619 thousand in the first quarter decreasing from $799 thousand in the fourth quarter.  Mr. Crapps noted, "Our mortgage line of business had a disappointingly weak quarter, impacted by anticipated seasonal factors, which were exacerbated by worse than normal weather conditions."

It is also worth noting that the revenue earned in the first quarter of this year in the financial planning and investment advisory line of business was $257 thousand, which is a 30.0% increase over the first quarter of 2013 level of $198 thousand.  Assets Under Management (AUM) have now reached $133.0 million in this line of business. 

Non-Interest Expense

Non-interest expense increased by $323 thousand on a linked quarter basis to $6.026 million.  The company had $420 thousand in merger expenses related to the above referenced acquisition of Savannah River Financial Corporation during the first quarter, as compared to $506 thousand in the fourth quarter.  The increase in non-interest expense is primarily attributable to salaries, employee benefits, and occupancy costs related to the new offices in Augusta and Aiken.  

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 thirteen banking offices located in the Midlands, Aiken, and Augusta, Georgia in addition to First Community Financial Consultants, a financial planning/investment advisory division and Palmetto South Mortgage, a separate mortgage division.

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. 

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 thousands, except per share data)







As of




March 31,

December 31,

March 31,




2014

2013

2013







  Total Assets



$    797,873

$      633,309

$       625,855

  Other Short-term Investments (1)


24,055

5,927

23,758

  Investment Securities



255,484

227,029

220,604

  Loans held for sale



3,837

3,790

4,238

  Loans



443,868

347,597

333,720

  Allowance for Loan Losses



4,161

4,219

4,534

  Total Deposits



654,438

497,071

497,024

  Securities Sold Under Agreements to Repurchase

19,492

18,634

17,216

  Federal Home Loan Bank Advances


34,321

43,325

36,339

  Junior Subordinated Debt



15,464

15,464

15,464

  Shareholders' equity



68,765

52,671

54,770







  Book Value Per Common Share


$       10.34

$           9.93

$          10.35

  Tangible Book Value Per Common Share 


$         9.40

$           9.83

$          10.22

  Tangible Book Value per common share (excluding  AOCI)

$         9.53

$         10.30

$            9.83

  Equity to Assets



8.62%

8.32%

8.75%

  Tangible common equity to tangible assets


7.90%

8.23%

8.65%

  Loan (Incl Held for Sale) to Deposit Ratio


68.41%

70.69%

68.00%

  Allowance for Loan Losses/Loans


0.94%

1.21%

1.36%

  Allowance for Loan Losses plus credit mark/Loans

1.36%

1.21%

1.36%

  Regulatory Ratios:






   Leverage Ratio



10.67%

10.77%

10.78%

   Tier 1 Capital Ratio



15.67%

17.60%

17.59%

   Total Capital Ratio



16.51%

18.68%

18.82%

  Tier 1 Regulatory Capital



$     77,691

$       68,756

$         64,654

  Total Regulatory Capital



$     81,851

$       72,975

$         69,191

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

Quarterly Average Balances:









Three months ended




March 31,

December 31,

March 31, 




2014

2013

2013







  Average Total Assets



$    732,727

$      637,139

$       606,095

  Average Loans (Incl Held for Sale)


415,785

349,830

337,923

  Average Earning Assets



671,583

591,362

562,097

  Average Deposits



585,990

508,292

476,695

  Average Other Borrowings



77,435

69,686

69,478

  Average Shareholders' Equity



63,625

53,339

54,525







Asset Quality;



As of




March 31,

December 31,

March 31,




2014

2013

2013







        Non-accrual loans



$       7,865

$         5,406

$          5,388

        Other real estate owned and repossessed assets

3,147

3,370

3,335

        Accruing loans past due 90 days or more

125

1

325

           Total nonperforming assets


$     11,137

$         8,777

$          9,048

Accruing trouble debt restructurings


$          568

$            576

$             907







Loan Risk Rating by Category (End of Period)





       Special Mention



$     13,891

$       10,708

$          9,097

       Substandard



15,358

10,609

13,870

       Doubtful



-

-

-

       Pass



414,619

326,280

314,991




$    443,868

$      347,597

$       337,958










Three months ended




March 31,

December 31,

March 31, 




2014

2013

2013

  Loans charged-off



$          222

$            271

$             305

  Overdrafts charged-off



8

10

9

  Loan recoveries



(19)

(24)

(74)

  Overdraft recoveries



(3)

(4)

(3)

     Net Charge-offs



$          208

$            253

$             237

  Net charge-offs to average loans


0.05%

0.07%

0.07%













 

FIRST COMMUNITY CORPORATION











QUARTERLY INCOME STATEMENT DATA




(Dollars in thousands, except per share data)




















Three months ended





March 31,

December 31,

March 31,





2014

2013

2013










  Interest income


$         6,403

$        5,656

$        5,283



  Interest expense


907

879

1,004



  Net interest income


5,496

4,777

4,279



  Provision for loan losses


150

149

150



  Net interest income after provision


5,346

4,628

4,129










  Non Interest Income







    Deposit service charges


366

392

361



    Mortgage origination fees


619

799

1,015



    Investment advisory fees and non-deposit commissions

257

277

198



    Gain on sale of securities


8

(79)

15



    Gain (loss) on sale of other assets


12

(8)

(2)



    Other


613

491

496





1,875

1,872

2,083



  Non Interest Expense







    Salaries and employee benefits


3,424

3,079

2,992



    Occupancy


413

361

346



    Equipment


339

299

283



    Marketing and public relations


161

230

93



    FDIC assessment


124

108

99



    Other real estate expense


138

113

112



    Amortization of intangibles


42

32

51



    Merger expenses


420

506

-



    Other


965

975

831





6,026

5,703

4,807



  Income before taxes


1,195

797

1,405



  Income tax expense


333

(53)

367



  Net income 


$           862

$           850

$        1,038










  Primary earnings per common share


$          0.14

$          0.16

$         0.20



  Diluted earnings per common share


$          0.14

$          0.16

$         0.20










Average number of shares outstanding basic

6,168,949

5,298,841

5,255,525



Average number shares outstanding diluted

6,228,512

5,354,373

5,292,000



Shares outstanding period end


6,652,189

5,302,674

5,290,452










  Return on Average Assets


0.48%

0.53%

0.69%



  Return on Average Common Equity


5.49%

6.32%

7.72%



  Return on Average Common Tangible Equity

5.89%

6.39%

7.82%



  Net Interest Margin


3.32%

3.20%

3.09%



  Net Interest Margin (Tax Equivalent)


3.40%

3.29%

3.15%

















 

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates 

on Average Interest-Bearing Liabilities










Three months ended March 31, 2014


Three months ended March 31, 2013


Average

Interest 

Yield/


Average

Interest 

Yield/


Balance

Earned/Paid

Rate


Balance

Earned/Paid

Rate

Assets








Earning assets








  Loans

$            415,785

$           5,080

4.96%


$            337,923

$           4,361

5.23%

  Securities:

234,966

1,300

2.24%


208,204

907

1.77%

  Other short-term investments

20,832

23

0.45%


15,970

15

0.38%

        Total earning assets

671,583

6,403

3.87%


562,097

5,283

3.81%

Cash and due from banks

9,915




8,572



Premises and equipment

24,946




17,222



Intangibles

4,291




706



Other assets

26,228




22,164



Allowance for loan losses

(4,236)




(4,666)



       Total assets

$            732,727




$            606,095



Interest-bearing liabilities








  Interest-bearing transaction accounts

124,029

38

0.12%


95,237

29

0.12%

  Money market accounts

116,326

66

0.23%


60,976

35

0.23%

  Savings deposits

50,191

14

0.11%


42,589

11

0.10%

  Time deposits

174,384

311

0.72%


182,116

438

0.98%

  Other borrowings

77,435

478

2.50%


69,478

491

2.87%

     Total interest-bearing liabilities

542,365

907

0.68%


450,396

1,004

0.90%

Demand deposits

121,060




95,777



Other liabilities

5,677




5,397



Shareholders' equity

63,625




54,525



   Total liabilities and shareholders' equity

$            732,727




$            606,095



















Cost of funds including demand deposits



0.55%




0.75%

Net interest spread 



3.19%




2.91%

Net interest income/margin


$           5,496

3.32%



$           4,279

3.09%

Net interest income/margin (taxable equivalent)


$           5,637

3.40%



$           4,372

3.15%









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