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First Community Corporation Announces Second Quarter Results and Cash Dividend

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

First Community Corporation logo. (PRNewsFoto/First Community Corporation)

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 70th consecutive quarter of cash dividends paid to common shareholders.
  • Opening of banking office in Evans, Georgia.
  • Share repurchase plan implemented.

Today, First Community Corporation (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 70th 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)                                                                                                 


Quarter
Ended

6/30/19

Quarter
Ended

3/31/19

Quarter
Ended

12/31/18

Year
To Date

$ Variance

Year
To Date

% Variance

Assets






     Investments

$252.3

$248.9

$256.0

($3.7)

(1.4%)

     Loans

726.7

718.4

718.5

8.2

1.1%







Liabilities






     Total Pure Deposits

$791.6

$770.1

$777.2

$14.4

1.9%

     Certificates of Deposit

145.8

149.7

148.4

(2.6)

(1.8%)

Total Deposits

$937.4

$919.8

$925.6

11.8

1.3%







Customer Cash Management

$33.9

$32.0

$28.0

$5.9

21.1%

FHLB Advances

0.2

2.2

0.2

0

0.0%







Total Funding

$971.5

$954.0

$953.8

$17.7

1.9%

Cost of Funds

     (including demand deposits)

0.61%

0.57%

0.49%


12bps

Cost of Deposits

0.51%

0.45%

0.39%


12bps

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.

FIRST COMMUNITY CORPORATION





BALANCE SHEET DATA







(Dollars in thousands, except per share data)








June 30,

December 31,

June 30,





2019

2018

2018









  Total Assets



$ 1,115,968

$    1,091,595

$  1,092,149


  Other short-term investments (1)



24,898

17,940

28,798


  Investment Securities



252,302

256,022

273,730


  Loans held for sale



8,730

3,223

6,969


  Loans



726,707

718,462

684,333


  Allowance for Loan Losses



6,362

6,263

6,087


  Goodwill



14,637

14,637

14,562


  Other Intangibles



1,742

2,006

2,284


  Total Deposits



937,391

925,523

933,368


  Securities Sold Under Agreements to Repurchase

33,889

28,022

28,203


  Federal Home Loan Bank Advances


221

231

241


  Junior Subordinated Debt



14,964

14,964

14,964


  Shareholders' equity



117,489

112,497

106,997









  Book Value Per Common Share



$       15.64

$          14.74

$         14.07


  Tangible Book Value Per Common Share 


$       13.46

$          12.56

$         11.85


  Equity to Assets



10.53%

10.31%

9.80%


  Tangible common equity to tangible assets


9.20%

8.92%

8.38%


  Loan to Deposit Ratio (excludes held for sale)


77.52%

77.98%

73.32%


  Allowance for Loan Losses/Loans



0.88%

0.87%

0.89%


Regulatory Ratios (Bank)







   Leverage Ratios:



10.19%

9.98%

9.77%


   Tier 1 Capital Ratio



13.47%

13.19%

13.17%


   Total Capital Ratio



14.24%

13.96%

13.95%


   Common Equity Tier 1 ratio



13.47%

13.19%

13.17%


   Tier 1 Regulatory Capital



$    110,697

$       107,806

$     103,508


   Total Regulatory Capital



$    117,059

$       114,069

$     109,595


   Common Equity Capital



$    110,697

$       107,806

$     103,508


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


Average Balances:


Three months ended


Six months ended



June 30,


June 30,



2019

2018


2019

2018








  Average Total Assets


$1,103,346

$ 1,073,299


$  1,096,371

$  1,063,954

  Average Loans


728,709

677,524


726,398

667,929

  Average Earning Assets


1,005,401

977,993


999,463

968,031

  Average Deposits


924,199

921,187


916,512

906,317

  Average Other Borrowings


50,012

38,510


53,290

44,267

  Average Shareholders' Equity


117,255

106,032


115,529

105,813








Asset Quality:



June 30,

March 31,

December 31,





2019

2019

2018


Loan Risk Rating by Category (End of Period)






       Special Mention



$       5,704

$          5,871

$         7,230


       Substandard



5,307

5,322

4,326


       Doubtful



-

-

-


       Pass



715,696

707,227

706,906





$    726,707

$       718,420

$     718,462










June 30,

March 31,

December 31,





2019

2019

2018









  Nonperforming Assets:







       Non-accrual loans



$       2,691

$          2,641

$         2,546


       Other real estate owned



1,412

1,460

1,460


       Accruing loans past due 90 days or more


-

22

31


            Total nonperforming assets



$       4,103

$          4,123

$         4,037


 Accruing trouble debt restructurings



$       1,953

$          1,991

$         1,835


















 Three months ended 


 Six months ended 



June 30,


June 30,



2019

2018


2019

2018

  Loans charged-off


$           13

$             1


$             23

$               9

  Overdrafts charged-off


30

37


53

77

  Loan recoveries


(32)

(99)


(44)

(127)

  Overdraft recoveries


(10)

(11)


(17)

(18)

     Net Charge-offs (recoveries)


$             1

$           (72)


$             15

$            (59)

  Net charge-offs to average loans


 N/A 

 N/A 


 N/A 

 N/A 








 

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,




2019

2018


2019

2018


2019

2018













  Interest Income


$    10,606

$      9,819


$    10,374

$      9,331


$   20,980

$   19,150


  Interest Expense


1,490

880


1,354

797


2,844

1,677


  Net Interest Income


9,116

8,939


9,020

8,534


18,136

17,473


  Provision for Loan Losses


9

29


105

202


114

231


  Net Interest Income After Provision


9,107

8,910


8,915

8,332


18,022

17,242


  Non-interest Income:











    Deposit service charges


380

423


411

463


791

886


    Mortgage banking income


1,238

1,016


844

951


2,082

1,967


    Investment advisory fees and non-deposit commissions

489

401


438

383


927

784


    Gain (loss) on sale of securities


164

94


(29)

(104)


135

(10)


    Gain (loss) on sale of other assets


(3)

22


-

15


(3)

37


    Other


918

955


845

923


1,763

1,878


  Total non-interest income


3,186

2,911


2,509

2,631


5,695

5,542


  Non-interest Expense:











    Salaries and employee benefits


5,210

4,881


5,170

4,577


10,380

9,458


    Occupancy


647

583


655

614


1,302

1,197


    Equipment


389

398


386

381


775

779


    Marketing and public relations


430

194


175

89


605

283


    FDIC assessment 


71

83


74

81


145

164


    Other real estate expenses


18

31


29

18


47

49


    Amortization of intangibles


132

143


132

142


264

285


    Other


1,743

1,912


1,702

1,692


3,445

3,604


  Total non-interest expense


8,640

8,225


8,323

7,594


16,963

15,819


  Income before taxes


3,653

3,596


3,101

3,369


6,754

6,965


  Income tax expense


772

595


606

660


1,378

1,255


  Net Income


$     2,881

$      3,001


$      2,495

$      2,709


$     5,376

$     5,710













  Per share data:











     Net income, basic 


$       0.38

$        0.40


$       0.33

$       0.36


$      0.70

$      0.75


     Net income, diluted 


$       0.37

$        0.39


$       0.32

$       0.35


$      0.70

$      0.74













  Average number of shares outstanding - basic

7,626,559

7,573,252


7,633,908

7,569,038


7,628,868

7,575,656


  Average number of shares outstanding - diluted

7,704,221

7,726,479


7,724,780

7,712,534


7,708,267

7,725,535


  Shares outstanding period end


7,511,164

7,605,053


7,664,967

7,600,690


7,511,164

7,605,053




-

-





-

-


  Return on average assets


1.05%

1.12%


0.93%

1.04%


0.99%

1.08%


  Return on average common equity


9.86%

11.35%


8.89%

10.40%


9.38%

10.88%


  Return on average common tangible equity

11.46%

13.51%


10.41%

12.41%


10.95%

12.97%


  Net Interest Margin 


3.64%

3.67%


3.68%

3.61%


3.66%

3.64%


  Net Interest Margin (taxable equivalent)


3.67%

3.71%


3.73%

3.66%


3.70%

3.69%


  Efficiency ratio


71.18%

69.96%


72.01%

67.39%


71.59%

68.70%


 

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates 

  on Average Interest-Bearing Liabilities









Three months ended June 30, 2019

Three months ended June 30, 2018


Average

Interest 

Yield/

Average

Interest 

Yield/


Balance

Earned/Paid

Rate

Balance

Earned/Paid

Rate

Assets







Earning assets







  Loans

$        728,709

$        8,792

4.84%

$        677,524

$      8,080

4.78%

  Securities:

250,316

1,659

2.66%

275,714

1,629

2.37%

  Federal funds sold and securities purchased

26,376

155

2.36%

24,803

110

1.78%

        Total earning assets

1,005,401

10,606

4.23%

978,041

9,819

4.03%

Cash and due from banks

13,998



13,336



Premises and equipment

35,765



34,784



Intangibles

16,442



16,941



Other assets

38,095



36,241



Allowance for loan losses

(6,355)



(6,044)




$     1,103,346



$     1,073,299



Liabilities







Interest-bearing liabilities







  Interest-bearing transaction accounts

$        202,095

$           134

0.27%

$        194,514

$           72

0.15%

  Money market accounts

177,039

481

1.09%

185,922

194

0.42%

  Savings deposits

107,638

36

0.13%

106,523

34

0.13%

  Time deposits

176,715

530

1.20%

193,635

338

0.70%

  Other borrowings

50,012

309

2.48%

38,510

242

2.52%

     Total interest-bearing liabilities

713,499

1,490

0.84%

719,104

880

0.49%

Demand deposits

260,712



240,594



Other liabilities

11,880



7,569



Shareholders' equity

117,255



106,032



   Total liabilities and shareholders' equity

$     1,103,346



$     1,073,299










Cost of funds including demand deposits



0.61%



0.37%

Net interest spread 



3.39%



3.54%

Net interest income/margin


$        9,116

3.64%


$      8,939

3.67%

Net interest income/margin FTE basis


$        9,211

3.67%


$      9,052

3.71%

 

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates 

  on Average Interest-Bearing Liabilities









Six months ended June 30, 2019

Six months ended June 30, 2018


Average

Interest 

Yield/

Average

Interest 

Yield/


Balance

Earned/Paid

Rate

Balance

Earned/Paid

Rate

Assets







Earning assets







  Loans

$          726,398

$            17,401

4.83%

$        667,929

$            15,697

4.74%

  Securities:

251,114

3,315

2.66%

277,182

3,272

2.38%

  Federal funds sold and securities purchased







    under agreements to resell

21,951

264

2.43%

22,921

181

1.59%

        Total earning assets

999,463

20,980

4.23%

968,032

19,150

3.99%

Cash and due from banks

13,680



13,503



Premises and equipment

35,645



35,173



Intangibles

16,511



17,011



Other assets

37,406



36,192



Allowance for loan losses

(6,334)



(5,957)



       Total assets

$       1,096,371



$     1,063,954



Liabilities







Interest-bearing liabilities







  Interest-bearing transaction accounts

$          198,270

283

0.29%

$        190,302

139

0.15%

  Money market accounts

178,201

822

0.93%

181,830

338

0.37%

  Savings deposits

107,778

72

0.13%

106,532

73

0.14%

  Time deposits

178,424

1,005

1.14%

193,429

634

0.66%

  Other borrowings

53,290

662

2.51%

44,267

493

2.25%

     Total interest-bearing liabilities

715,963

2,844

0.80%

716,360

1,677

0.47%

Demand deposits

253,839



234,225



Other liabilities

11,040



7,556



Shareholders' equity

115,529



105,813



   Total liabilities and shareholders' equity

$       1,096,371



$     1,063,954










Cost of funds, including demand deposits



0.59%



0.36%

Net interest spread 



3.43%



3.52%

Net interest income/margin


$            18,136

3.66%


$            17,473

3.64%

Net interest income/margin FTE basis


$            18,344

3.70%


$            17,704

3.69%

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




June 30,



December
31,



June 30,


Tangible book value per common share



2019



2018



2018


Tangible common equity per common share (non‑GAAP)


$

13.46


$

12.56


$

11.85


Effect to adjust for intangible assets



2.18



2.18



2.22


Book value per common share (GAAP)


$

15.64


$

14.74


$

14.07


Tangible common shareholders' equity to tangible 
     assets











Tangible common equity to tangible assets (non‑GAAP)



9.20

%


8.92

%


8.38

%

Effect to adjust for intangible assets



1.33

%


1.39

%


1.42

%

Common equity to assets (GAAP)



10.53

%


10.31

%


9.80

%

 

Return on average
tangible common equity

Three months ended
June 30,

Three months ended
March 31,

Six months ended
June 30,


2019

2018

2019

2018

2019

2018

Return on average common
tangible equity (non-
GAAP)

11.46

%

13.51

%

10.41

%

12.41

%

10.95

%

12.97

%

Effect to adjust for
intangible assets

(1.60)

%

(2.16)

%

(1.52)

%

(2.01)

%

(1.57)

%

(2.09)

%

Return on average common
equity (GAAP)

9.86

%

11.35

%

8.89

%

10.40

%

9.38

%

10.88

%

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.

 

Cision

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