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First Community Corporation Announces Third Quarter Results and Cash Dividend

LEXINGTON, S.C., Oct. 17, 2018 /PRNewswire/ --

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

Third Quarter Highlights

  • Net income of $2.833 million.
  • Diluted EPS of $.37 per common share.
  • Net loan growth of $12.2 million during the quarter and $49.7 million year-to-date, an annualized growth rate of 10.2%.
  • Pure deposit growth, including customer cash management of $5.4 million during the quarter and $58.0 million year-to-date, a 10.3% annualized growth rate.
  • Excellent key credit quality metrics with non-performing assets (NPAs) of 0.45%, past dues of 0.39% and a year-to-date net loan recovery of $236 thousand.
  • Cash dividend of $0.10 per common share, the 67th 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 2018 of $2.833 million as compared to $1.893 million in the third quarter of 2017, a 49.7% increase.  Diluted earnings per common share were $0.37 for the third quarter of 2018 compared to $0.28 in the third quarter of 2017, an increase of 32.1%. Year-to-date 2018 net income is $8.543 million, a 60.8% increase over the $5.313 million earned in the first nine months of 2017.   Year-to-date diluted earnings per share are $1.11 compared to $0.78 during the same time period in 2017, a 42.3% increase.  First Community President and CEO Mike Crapps commented, "Earnings continue to be strong and we are pleased with the annualized growth rates for both loans and deposits.  Credit quality continues to be excellent with low NPAs and past dues and another quarter of net loan recovery." 

Cash Dividend and Capital

The Board of Directors approved a cash dividend for the third quarter of 2018.  The company will pay a $0.10 per share dividend to holders of the company's common stock.  This dividend is payable November 13, 2018 to shareholders of record as of October 30, 2018.  Mr. Crapps commented, "Our entire board is pleased that our performance enables the company to continue its cash dividend for the 67th 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 September 30, 2018, the company's regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) were 10.32%, 13.76%, and 14.54 %, respectively.  This compares to the same ratios as of September 30, 2017, of 10.55%, 14.73%, and 15.60 %, respectively.  Additionally, the regulatory capital ratios for the company's wholly owned subsidiary, First Community Bank, were 9.84%, 13.85%, and 13.96% respectively as of September 30, 2018.  Further, the company's ratio of tangible common equity to tangible assets was 8.51% as of September 30, 2018.  Also, as of September 30, 2018, the Common Equity Tier One ratio for the company and the bank were 11.91% and 13.18%, respectively.

Asset Quality

The non-performing assets ratio for the third quarter of 2018 was 0.45% of total assets with a nominal level of non-performing assets of $4.854 million.  Trouble debt restructurings, that are still accruing interest, were $1.256 million at the end of the third quarter of 2018.    

There was a net loan recovery for the quarter of $118 thousand with a year-to-date net loan recovery of $236 thousand.  The ratio of classified loans plus OREO now stands at 6.91% of total bank regulatory risk-based capital as of September 30, 2018. 

Balance Sheet

(Numbers in millions)


Quarter

Ended

9/30/18

Quarter

Ended

6/30/18

Quarter

Ended

12/31/17

Year

To Date

$ Variance

Year

To Date

% Variance

Assets






     Investments

$270.0

$273.7

$284.4

($14.4)

(5.1%)

     Loans

696.5

684.3

646.8

49.7

7.7%







Liabilities






     Total Pure Deposits

$773.6

$773.2

$729.5

$44.1

6.0%

     Certificates of Deposit

148.2

160.2

158.8

(10.6)

(6.7%)

Total Deposits

$921.8

$933.4

$888.3

$33.5

3.8%







Customer Cash Management

$33.2

$28.2

$19.3

$13.9

72.0%

FHLB Advances

4.2

0.2

14.3

(10.1)

(70.6%)







Total Funding

$959.1

$961.8

$921.9

$37.2

4.0%

Cost of Funds

     (including demand deposits)

0.45%

0.37%

0.30%


15bps

Cost of Deposits

0.35%

0.28%

0.22%


13bps

Mr. Crapps commented, "Strong commercial loan production continued this quarter with $34.9 million in new production bringing our total for the year to $105.8 million.  This resulted in growth in the loan portfolio of $12.2 million in the quarter, which is an annualized growth rate of 10.2%.  In addition, our deposit franchise remains strong, although we are seeing pressure on the cost of deposits in this rising interest rate environment. "

Revenue

Net Interest Income/Net Interest Margin

Net interest income was $8.883 million for the third quarter of 2018, relatively flat on a linked quarter basis.  Net interest margin, on a taxable equivalent basis, was 3.60%, down 11 basis points on a linked quarter basis.  This decline in net interest margin is primarily attributable to rising costs of funds.  Crapps commented, "Given our strong liquidity, we have been able to limit the impact of rising interest rates on our overall cost of funds.  This quarter reflects some pricing adjustments needed in order to remain competitive and defend our core banking relationships.  Also impacting the net interest margin was pressure on the loan portfolio yield driven primarily by the flat yield curve, decreased interest income accretion from non-accrual loan payoffs, and the mix of new loans produced during the quarter.  The securities portfolio yield was negatively impacted by elevated prepayments of certain floating rate SBA pool securities which accelerated the premium amortization.  It should be noted that since the third quarter of 2016, our total cost of deposits have increased by just 10 basis points from 25 basis points to 35 basis points while average earning asset yields have increased by 44 basis points during that same period of time."

Non-Interest Income

Non-interest income was $2.842 million for the third quarter.  Revenues in the mortgage line of business were $1.159 million in the third quarter of 2018 up 12.3% year-over-year.  This increase was driven by a similar percentage of increase in mortgage loan production. The investment advisory line of business revenue for the third quarter was $423 thousand, an increase of 25.9% year-over-year and 5.5% on a linked quarter basis.  Notably, assets under management in this line of business are now $306.8 million, which is a 20.9% increase in the last twelve months.  Deposit fees generated in the commercial and retail banking line of business increased 14.5% year-over-year and 2.6% 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

Non-interest expense was $8.134 million for the quarter a slight decrease of 1.1% over the second quarter non-interest expense of 8.225 million.  Other non-interest expense decreased by $306 thousand, primarily attributable to non-recurring expenses related to the purchase of a South Carolina Rehabilitation Tax Credit during the second quarter and the reimbursement during the third quarter of previously paid costs associated with a renegotiated contract within the financial planning line of business.  This decrease was partially offset by higher salaries and benefit expenses of $198 thousand in the third quarter, the majority of this increase being higher mortgage expenses.

Other

During the third quarter, the Company began renovations on a downtown banking office in Greenville, South Carolina and began construction on a new banking office facility in Evans, Georgia.  These new banking offices are scheduled to open in early and mid 2019, respectively. 

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.

 

FIRST COMMUNITY CORPORATION












BALANCE SHEET DATA







(Dollars in thousands, except per share data)








At September 30,


December 31,




2018

2017


2017








  Total Assets



$ 1,091,142

$  914,228


$  1,050,731

  Other short-term investments (1)


22,709

15,393


15,788

  Investment Securities



269,963

248,672


284,395

  Loans held for sale



5,528

6,018


5,093

  Loans



696,515

568,488


646,805

  Allowance for Loan Losses



6,212

5,656


5,797

  Goodwill



14,637

5,078


14,589

  Other Intangibles



2,142

878


2,569

  Total Deposits



921,722

770,082


888,323

  Securities Sold Under Agreements to Repurchase

33,226

17,469


19,270

  Federal Home Loan Bank Advances


4,236

17,255


14,250

  Junior Subordinated Debt



14,964

14,964


14,964

  Shareholders' Equity



108,186

86,595


105,663








  Book Value Per  Common Share 


$       14.18

$      12.91


$         13.93

  Tangible Book Value Per Common Share 


$       11.98

$      12.02


$         11.66

  Equity to Assets



9.91%

9.47%


10.06%

  Tangible common equity to tangible assets


8.51%

8.88%


8.56%

  Loan to Deposit Ratio



75.57%

73.82%


73.38%

  Allowance for Loan Losses/Loans


0.89%

0.99%


0.89%

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









  Regulatory Ratios:







   Leverage Ratio



10.32%

10.55%


10.11%

   Tier 1 Capital Ratio



13.76%

14.72%


14.01%

   Total Capital Ratio



14.54%

15.59%


14.79%

   Common Equity Tier 1



11.91%

12.48%


12.07%

   Tier 1 Regulatory Capital



$    110,461

$    95,470


$     103,754

   Total Regulatory Capital



$    116,674

$  101,126


$     109,551

   Common Equity Tier 1



$      96,003

$    80,970


$       89,364

Average Balances:









Three months ended


Nine months ended



September 30,


September 30, 



2018

2017


2018

2017








  Average Total Assets


$       1,087,153

$    911,217


$    1,071,772

$     911,042

  Average Loans


696,157

569,461


677,441

561,844

  Average Earning Assets


992,644

838,579


976,326

837,010

  Average Deposits


923,708

765,399


912,178

764,830

  Average Other Borrowings


47,018

52,139


45,194

54,461

  Average Shareholders' Equity


107,892

86,224


106,514

84,725








Asset Quality:









 September 30, 

June 30,

March 31,

December 31,




2018

2018

2018

2017


Loan Risk Rating by Category (End of Period)






       Special Mention


$              6,716

$       7,212

$      9,348

$         10,121


       Substandard


5,811

5,923

7,033

7,380


       Doubtful


-

-

-

-


       Pass


683,988

671,198

652,202

629,304




$          696,515

$    684,333

$  668,583

$       646,805











 September 30, 

June 30,

March 31,

December 31,




2018

2018

2018

2017


  Nonperforming Assets:







   Non-accrual loans


$              2,904

$       2,958

3,127

$          3,380


   Other real estate owned


1,921

1,824

1,907

1,934


   Accruing loans past due 90 days or more

29

959

34

-


            Total nonperforming assets

$              4,854

$       5,741

$      5,068

$          5,314


Accruing trouble debt restructurings

$              1,829

$       1,926

$      1,794

$          1,770











 Three months ended 


 Nine months ended 



 September   

 September   


 September   

 September   



30, 2018

30, 2017


30, 2018

30, 2017

Loans charged-off


$                   -

$            12


$                 9

$             44

Overdrafts charged-off


23

40


100

76

Loan recoveries


(119)

(47)


(246)

(189)

Overdraft recoveries


(9)

(5)


(27)

(13)

  Net Charge-offs (recoveries)


$               (105)

$            -


$            (164)

$            (82)

  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


Three months ended


Nine months ended




September 30,


June 30,


March 31,


September 30,




2018

2017


2018

2017


2018

2017


2018

2017


  Interest Income


$     9,985

$     7,921


$     9,819

$      7,724


$      9,331

$      7,773


$    29,135

$   23,416


  Interest Expense


1,102

694


880

675


797

712


2,779

2,080


  Net Interest Income


8,883

7,227


8,939

7,049


8,534

7,061


26,356

21,336


  Provision for Loan Losses


21

166


29

78


202

116


252

360


  Net Interest Income After Provision


8,862

7,061


8,910

6,971


8,332

6,945


26,104

20,976


  Non-interest Income:














    Deposit service charges


434

379


423

348


463

320


1,320

1,047


    Mortgage banking income


1,159

1,032


1,016

1,248


951

670


3,126

2,950


    Investment advisory fees and non-deposit commissions

423

336


401

314


383

258


1,207

908


    Gain on sale of securities


-

124


94

172


(104)

54


(10)

350


    Gain (loss) on sale of other assets


(29)

40


22

68


15

20


8

128


    Loss on early extinguishment of debt


-

(165)


-

(223)


-

(58)


-

(446)


    Other


855

676


955

717


923

714


2,733

2,108


  Total non-interest income


2,842

2,422


2,911

2,644


2,631

1,978


8,384

7,045


  Non-interest Expense:














    Salaries and employee benefits


5,079

4,122


4,881

4,261


4,577

4,086


14,537

12,469


    Occupancy


611

532


583

539


614

527


1,808

1,598


    Equipment


388

396


398

506


381

446


1,167

1,348


    Marketing and public relations


177

96


194

298


89

221


460

615


    FDIC assessment


94

78


83

78


81

78


258

234


    Other real estate expense


37

19


31

29


18

27


86

75


    Amortization of intangibles


142

74


143

74


142

75


427

223


    Merger expenses


-

228


-

98


-

-


-

326


    Other


1,606

1,349


1,912

1,487


1,692

1,260


5,210

4,096


  Total non-interest expense


8,134

6,894


8,225

7,370


7,594

6,720


23,953

20,984


  Income before taxes


3,570

2,589


3,596

2,245


3,369

2,203


10,535

7,037


  Income tax expense


737

696


595

581


660

447


1,992

1,724


  Net Income 


$     2,833

$     1,893


$     3,001

$      1,664


$      2,709

$      1,756


$      8,543

$     5,313
















  Per share data:














     Net income, basic 


$       0.37

$       0.28


$       0.40

$        0.25


$       0.36

$       0.27


$       1.13

$       0.80


     Net income, diluted 


$       0.37

$       0.28


$       0.39

$        0.24


$       0.35

$       0.26


$       1.11

$       0.78
















  Average number of shares outstanding - basic

7,592,140

6,666,168


7,573,252

6,634,462


7,569,038

6,687,942


7,581,292

6,666,497


  Average number of shares outstanding - diluted

7,724,410

6,807,936


7,726,479

6,803,370


7,712,534

6,813,460


7,719,663

6,807,990


  Shares outstanding period end


7,629,638

6,706,408


7,605,053

6,701,642


7,600,690

6,697,130


7,629,638

6,706,408


  Return on average assets


1.03%

0.83%


1.12%

0.73%


1.04%

0.78%


1.07%

0.78%


  Return on average common equity


10.42%

8.71%


11.35%

7.87%


10.40%

8.63%


10.72%

8.38%


  Return on average common tangible equity

12.36%

9.46%


13.51%

8.48%


12.41%

9.32%


12.75%

9.03%


  Net Interest Margin (non taxable equivalent)

3.55%

3.42%


3.67%

3.39%


3.61%

3.42%


3.61%

3.37%


  Net Interest Margin (taxable equivalent)


3.60%

3.52%


3.71%

3.49%


3.66%

3.52%


3.66%

3.46%


  Efficiency Ratio (1)


69.37%

69.64%


69.96%

75.64%


67.39%

72.56%


68.93%

72.06%


   '(1) Calculated by dividing non-interest expense by net interest income and non interest income, net of securities gains or losses and loss on extinguishment of debt.




 

 

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates 

  on Average Interest-Bearing Liabilities










Three months ended September 30, 2018


Three months ended September 30, 2017


Average

Interest 

Yield/


Average

Interest 

Yield/


Balance

Earned/Paid

Rate


Balance

Earned/Paid

Rate

Assets








Earning assets








  Loans

$       696,157

$            8,277

4.72%


$       569,461

$            6,438

4.49%

  Securities:

271,348

1,583

2.31%


254,401

1,442

2.25%

  Federal funds sold and securities purchased

25,139

125

1.97%


14,717

41

1.11%

        Total earning assets

992,644

9,985

3.99%


838,579

7,921

3.75%

Cash and due from banks

13,192




10,229



Premises and equipment

34,576




30,684



Other assets

52,895




37,272



Allowance for loan losses

(6,154)




(5,547)



       Total assets

$    1,087,153




$       911,217











Liabilities








Interest-bearing liabilities








  Interest-bearing transaction accounts

$       193,941

$               154

0.32%


$       157,329

$                 58

0.15%

  Money market accounts

185,928

240

0.51%


168,380

109

0.26%

  Savings deposits

106,677

35

0.13%


75,392

21

0.11%

  Time deposits

185,857

387

0.83%


167,017

271

0.64%

  Other borrowings

47,018

286

2.41%


52,139

235

1.79%

     Total interest-bearing liabilities

719,421

1,102

0.61%


620,257

694

0.44%

Demand deposits

251,305




197,281



Other liabilities

8,535




7,455



Shareholders' equity

107,892




86,224



   Total liabilities and shareholders' equity

$    1,087,153




$       911,217











Cost of funds, including demand deposits



0.45%




0.34%

Net interest spread 



3.38%




3.31%

Net interest income/margin


$            8,883

3.55%



$            7,227

3.42%

Net interest income/margin FTE basis


$            8,998

3.60%



$            7,436

3.52%

 

 

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates 

  on Average Interest-Bearing Liabilities










Nine months ended September 30, 2018


Nine months ended September 30, 2017


Average

Interest 

Yield/


Average

Interest 

Yield/


Balance

Earned/Paid

Rate


Balance

Earned/Paid

Rate

Assets








Earning assets








  Loans

$      677,441

$        23,974

4.73%


$      561,844

$        19,003

4.52%

  Securities:

275,216

4,855

2.36%


261,728

4,319

2.21%

  Federal funds sold and securities purchased








    under agreements to resell

23,669

306

1.73%


13,438

94

0.94%

        Total earning assets

976,326

29,135

3.99%


837,010

23,416

3.74%

Cash and due from banks

13,398




11,253



Premises and equipment

34,972




30,512



Other assets

53,099




37,681



Allowance for loan losses

(6,023)




(5,414)



       Total assets

$   1,071,772




$      911,042



Liabilities








Interest-bearing liabilities








  Interest-bearing transaction accounts

$      191,528

$             292

0.20%


$      158,206

143

0.12%

  Money market accounts

183,211

578

0.42%


168,153

320

0.25%

  Savings deposits

106,581

109

0.14%


74,123

63

0.11%

  Time deposits

190,877

1,022

0.72%


172,418

815

0.63%

  Other borrowings

45,194

778

2.30%


54,461

739

1.81%

     Total interest-bearing liabilities

717,391

2,779

0.52%


627,361

2,080

0.44%

Demand deposits

239,981




191,930



Other liabilities

7,886




7,026



Shareholders' equity

106,514




84,725



   Total liabilities and shareholders' equity

$   1,071,772




$      911,042











Cost of funds, including demand deposits



0.39%




0.34%

Net interest spread 



3.47%




3.30%

Net interest income/margin


$        26,356

3.61%



$        21,336

3.41%

Net interest income/margin FTE basis


$        26,702

3.66%



$        21,978

3.51%


 

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















 

September
30,



December
31,



September
30,


Tangible book value per common share



2018



2017



2017


Tangible common equity per common share (non‑GAAP)


$

11.98


$

11.66


$

12.02


Effect to adjust for intangible assets



2.20



2.27



0.89


Book value per common share (GAAP)


$

14.18


$

13.93


$

12.91


Tangible common shareholders' equity to tangible 
     assets











Tangible common equity to tangible assets (non‑GAAP)



8.51

%


8.56

%


8.88

%

Effect to adjust for intangible assets



1.40

%


1.50

%


0.59

%

Common equity to assets (GAAP)



9.91

%


10.06

%


9.47

%


Return on average
tangible common equity

Three months ended
September 30,

Three months ended
June 30,

Three months ended
March 31,


Nine months ended
September 30,


2018

2017

2018

2017

2018

2017


2018

2017

Return on average common
tangible equity (non-
GAAP)

12.36

%

9..46

%

13.51

%

8.48

%

12.41

%

9.32

%

12.75 %

 

9.03 %

Effect to adjust for
intangible assets

(1.94)

%

(0.75)

%

(2.16)

%

(0.61)

%

(2.01)

%

(0.69)

%

(2.03) %

(0.65)%

Return on average common
equity (GAAP)

10.42

%

8.71

%

11.35

%

7.87

%

10.40

%

8.63

%

10.72 %

8.38 %

 

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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