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

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

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

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 71st consecutive quarter of cash dividends paid to common shareholders.

Today, First Community Corporation (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 71st 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)


Quarter
Ended

9/30/19

Quarter
Ended

6/30/19

Quarter
Ended

12/31/18

Year

To Date

$ Variance

Year

To Date

% Variance

Assets






Investments

$267.1

$252.3

$256.0

$11.1

4.3%

Loans

735.1

726.7

718.5

16.6

2.3%







Liabilities






Total Pure Deposits

$804.1

$791.6

$777.2

$26.9

3.5%

Certificates of Deposit

144.7

145.8

148.4

(3.7)

(2.5%)

Total Deposits

$948.8

$937.4

925.6

$23.2

2.5%







Customer Cash Management

$34.3

$33.9

$28.0

$6.3

22.5%

FHLB Advances

0.2

0.2

0.2

0.0

0.0%







Total Funding

$983.3

$971.5

$953.8

$29.5

3.1%

Cost of Funds

0.61%

0.61%

0.49%


12bps

(including demand deposits)

Cost of Deposits

0.52%

0.51%

0.39%


13bps

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

FIRST COMMUNITY CORPORATION












BALANCE SHEET DATA







(Dollars in thousands, except per share data)








At September 30,


December 31,




2019

2018


2018








Total Assets



$1,129,990

$1,091,142


$ 1,091,595

Other short-term investments (1)


13,156

22,709


17,940

Investment Securities



267,060

269,963


256,022

Loans held for sale



10,775

5,528


3,223

Loans



735,074

696,515


718,462

Allowance for Loan Losses



6,560

6,212


6,263

Goodwill



14,637

14,637


14,637

Other Intangibles



1,609

2,142


2,006

Total Deposits



948,827

921,722


925,523

Securities Sold Under Agreements to Repurchase

34,321

33,226


28,022

Federal Home Loan Bank Advances


216

4,236


231

Junior Subordinated Debt



14,964

14,964


14,964

Shareholders' Equity



118,780

108,186


112,497








Book Value Per Common Share


$ 16.03

$ 14.18


$ 14.74

Tangible Book Value Per Common Share


$ 13.84

$ 11.98


$ 12.56

Equity to Assets



10.51%

9.91%


10.31%

Tangible common equity to tangible assets


9.21%

8.51%


8.92%

Loan to Deposit Ratio



77.47%

75.57%


77.98%

Allowance for Loan Losses/Loans


0.89%

0.89%


0.87%

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









Regulatory Ratios:(Bank)







Leverage Ratio



10.38%

9.84%


9.98%

Tier 1 Capital Ratio



13.79%

13.27%


13.19%

Total Capital Ratio



14.58%

14.05%


13.96%

Common Equity Tier 1



13.79%

13.27%


13.19%

Tier 1 Regulatory Capital



$ 114,171

$ 105,738


$ 107,806

Total Regulatory Capital



$ 120,731

$ 111,950


$ 114,069

Common Equity Tier 1



$ 114,171

$ 105,738


$ 107,806

Average Balances:









Three months ended


Nine months ended



September 30,


September 30,



2019

2018


2019

2018








Average Total Assets


$ 1,120,024

$ 1,087,153


$ 1,104,342

$ 1,071,772

Average Loans


740,152

696,157


731,033

677,441

Average Earning Assets


1,022,202

992,644


1,007,126

976,326

Average Deposits


938,600

923,708


923,956

912,178

Average Other Borrowings


52,020

47,018


52,861

45,194

Average Shareholders' Equity


117,230

107,892


116,102

106,514








Asset Quality:









September 30,

June 30,

March 31,

December 31,




2019

2019

2019

2018


Loan Risk Rating by Category (End of Period)






Special Mention


$ 5,322

$ 5,704

$ 5,871

$ 7,230


Substandard


4,658

5,307

5,322

4,326


Doubtful


-

-

-

-


Pass


725,094

715,696

707,227

706,906




$ 735,074

$ 726,707

$ 718,420

$ 718,462











September 30,

June 30,

March 31

December




2019

2019

2019

31, 2018


Nonperforming Assets:







Non-accrual loans


$ 2,275

$ 2,691

2,641

$ 2,546


Other real estate owned


1,412

1,412

1,460

1,460


Accruing loans past due 90 days or more

33

-

22

31


Total nonperforming assets

$ 3,720

$ 4,103

$ 4,123

$ 4,037


Accruing trouble debt restructurings

$ 1,880

$ 1,953

$ 1,991

$ 1,835











Three months ended


Nine months ended



September

September


September

September



30, 2019

30, 2018


30, 2019

30, 2018

Loans charged-off


$ 9

$ -


$ 32

$ 9

Overdrafts charged-off


27

23


80

100

Loan recoveries


(202)

(119)


(246)

(246)

Overdraft recoveries


(7)

(9)


(24)

(27)

Net Charge-offs (recoveries)


$ (173)

$ (105)


$ (158)

$ (164)

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,




2019

2018


2019

2018


2019

2018


2019

2018


Interest Income


$ 10,864

$ 9,985


$ 10,606

$ 9,819


$ 10,374

$ 9,331


$ 31,844

$ 29,135


Interest Expense


1,511

1,102


1,490

880


1,354

797


4,355

2,779


Net Interest Income


9,353

8,883


9,116

8,939


9,020

8,534


27,489

26,356


Provision for Loan Losses


25

21


9

29


105

202


139

252


Net Interest Income After Provision


9,328

8,862


9,107

8,910


8,915

8,332


27,350

26,104


Non-interest Income:














Deposit service charges


421

434


380

423


411

463


1,212

1,320


Mortgage banking income


1,251

1,159


1,238

1,016


844

951


3,333

3,126


Investment advisory fees and non-deposit commissions

509

423


489

401


438

383


1,436

1,207


Gain (loss) on sale of securities


-

-


164

94


(29)

(104)


135

(10)


Gain (loss) on sale of other assets


-

(29)


(3)

22


-

15


(3)

8


Other


932

855


918

955


845

923


2,695

2,733


Total non-interest income


3,113

2,842


3,186

2,911


2,509

2,631


8,808

8,384


Non-interest Expense:














Salaries and employee benefits


5,465

5,079


5,210

4,881


5,170

4,577


15,845

14,537


Occupancy


703

611


647

583


655

614


2,005

1,808


Equipment


365

388


389

398


386

381


1,140

1,167


Marketing and public relations


159

177


430

194


175

89


764

460


FDIC assessment


-

94


71

83


74

81


135

258


Other real estate expense


31

37


18

31


29

18


78

86


Amortization of intangibles


133

142


132

143


132

142


397

427


Other


1,934

1,606


1,743

1,912


1,702

1,692


5,389

5,210


Total non-interest expense


8,790

8,134


8,640

8,225


8,323

7,594


25,753

23,953


Income before taxes


3,651

3,570


3,653

3,596


3,101

3,369


10,405

10,535


Income tax expense


753

737


772

595


606

660


2,131

1,992


Net Income


$ 2,898

$ 2,833


$ 2,881

$ 3,001


$ 2,495

$ 2,709


$ 8,274

$ 8,543
















Per share data:














Net income, basic


$ 0.39

$ 0.37


$ 0.38

$ 0.40


$ 0.33

$ 0.36


$ 1.10

$ 1.13


Net income, diluted


$ 0.39

$ 0.37


$ 0.37

$ 0.39


$ 0.33

$ 0.35


$ 1.08

$ 1.11
















Average number of shares outstanding - basic

7,386,437

7,592,140


7,626,559

7,573,252


7,633,908

7,569,038


7,548,166

7,581,292


Average number of shares outstanding - diluted

7,463,258

7,724,410


7,704,221

7,726,479


7,724,780

7,712,534


7,629,339

7,719,663


Shares outstanding period end


7,408,879

7,629,638


7,511,164

7,605,053


7,664,967

7,600,690


7,408,879

7,629,638


Return on average assets


1.03%

1.03%


1.05%

1.12%


0.93%

1.04%


1.00%

1.07%


Return on average common equity


9.84%

10.42%


9.86%

11.35%


8.89%

10.40%


9.53%

10.72%


Return on average common tangible equity

11.39%

12.36%


11.46%

13.51%


10.41%

12.41%


11.10%

12.75%


Net Interest Margin (non taxable equivalent)

3.62%

3.55%


3.64%

3.67%


3.68%

3.61%


3.65%

3.61%


Net Interest Margin (taxable equivalent)


3.65%

3.60%


3.67%

3.71%


3.73%

3.66%


3.69%

3.66%


Efficiency Ratio (1)


70.51%

69.37%


71.18%

69.96%


72.01%

67.39%


71.22%

68.93%


'(1) Calculated by dividing non-interest expense by net interest income on tax equivalent basis 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, 2019


Three months ended September 30, 2018


Average

Interest

Yield/


Average

Interest

Yield/


Balance

Earned/Paid

Rate


Balance

Earned/Paid

Rate

Assets








Earning assets








Loans

$ 740,152

$ 9,092

4.87%


$ 696,157

$ 8,277

4.72%

Securities:

254,802

1,593

2.48%


271,348

1,583

2.31%

Federal funds sold and securities purchased

27,248

163

2.37%


25,139

125

1.97%

Total earning assets

1,022,202

10,848

4.21%


992,644

9,985

3.99%

Cash and due from banks

14,578




13,192



Premises and equipment

36,197




34,576



Other assets

53,494




52,895



Allowance for loan losses

(6,447)




(6,154)



Total assets

$1,120,024




$1,087,153











Liabilities








Interest-bearing liabilities








Interest-bearing transaction accounts

$ 216,163

$ 159

0.29%


$ 193,941

$ 154

0.32%

Money market accounts

180,758

461

1.01%


185,928

240

0.51%

Savings deposits

99,693

32

0.13%


106,677

35

0.13%

Time deposits

175,431

567

1.28%


185,857

387

0.83%

Other borrowings

52,020

292

2.23%


47,018

286

2.41%

Total interest-bearing liabilities

724,065

1,511

0.83%


719,421

1,102

0.61%

Demand deposits

266,555




251,305



Other liabilities

12,174




8,535



Shareholders' equity

117,230




107,892



Total liabilities and shareholders' equity

$1,120,024




$1,087,153











Cost of funds, including demand deposits



0.61%




0.45%

Net interest spread



3.38%




3.38%

Net interest income/margin


$ 9,337

3.62%



$ 8,883

3.55%

Net interest income/margin FTE basis


$ 9,412

3.65%



$ 8,998

3.60%

  

  

FIRST COMMUNITY CORPORATION


Yields on Average Earning Assets and Rates


on Average Interest-Bearing Liabilities












Nine months ended September 30, 2019


Nine months ended September 30, 2018



Average

Interest

Yield/


Average

Interest

Yield/



Balance

Earned/Paid

Rate


Balance

Earned/Paid

Rate


Assets









Earning assets









Loans

$ 731,033

$ 26,492

4.85%


$ 677,441

$ 23,974

4.73%


Securities:

252,357

4,924

2.61%


275,216

4,855

2.36%


Federal funds sold and securities purchased









under agreements to resell

23,736

428

2.41%


23,669

306

1.73%


Total earning assets

1,007,126

31,844

4.23%


976,326

29,135

3.99%


Cash and due from banks

13,983




13,398




Premises and equipment

35,832




34,972




Other assets

53,773




53,099




Allowance for loan losses

(6,372)




(6,023)




Total assets

$ 1,104,342




$ 1,071,772




Liabilities









Interest-bearing liabilities









Interest-bearing transaction accounts

$ 204,300

$ 442

0.29%


$ 191,528

$ 292

0.20%


Money market accounts

179,063

1,283

0.96%


183,211

578

0.42%


Savings deposits

105,054

104

0.13%


106,581

109

0.14%


Time deposits

177,415

1,572

1.18%


190,877

1,022

0.72%


Other borrowings

52,861

954

2.41%


45,194

778

2.30%


Total interest-bearing liabilities

718,693

4,355

0.81%


717,391

2,779

0.52%


Demand deposits

258,124




239,981




Other liabilities

11,423




7,886




Shareholders' equity

116,102




106,514




Total liabilities and shareholders' equity

$ 1,104,342




$ 1,071,772













Cost of funds, including demand deposits



0.60%




0.39%


Net interest spread



3.42%




3.47%


Net interest income/margin


$ 27,489

3.65%



$ 26,356

3.61%


Net interest income/margin FTE basis


$ 27,772

3.69%



$ 26,702

3.66%











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



2019



2018



2018


Tangible common equity per common share (non‑GAAP)


$

13.84


$

12.56


$

11.98


Effect to adjust for intangible assets



2.19



2.18



2.76


Book value per common share (GAAP)


$

16.03


$

14.74


$

14.74


Tangible common shareholders' equity to tangible











assets











Tangible common equity to tangible assets (non‑GAAP)



9.21

%


8.92

%


8.51

%

Effect to adjust for intangible assets



1.30

%


1.39

%


1.40

%

Common equity to assets (GAAP)



10.51

%


10.31

%


9.91

%

  

  

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,


2019

2018

2019

2018

2019

2018


2019

2018

Return on average common tangible equity (non-
GAAP)

11.39

%

12.36

%

11.46

%

13.51

%

10.41

%

12.41

%

11.10 %

12.75 %

Effect to adjust for
intangible assets

(1.55)

%

(1.94)

%

(1.60)

%

(2.16)

%

(1.52)

%

(2.01)

%

(1.57) %

(2.03) %

Return on average common |
equity (GAAP

9.84

%

10.42

%

9.86

%

11.35

%

8.89

%

10.40

%

9.53 %

10.72 %


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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