First Community Corporation Announces Financial Results and Cash Dividend
April 23, 2009
Highlights – Net Income of $744,000 or $0.23 EPS for the first quarter
- Continues payment of $.08 per share cash dividend to holders of FCCO common stock
- Annualized core deposit growth of 12.8%
LEXINGTON, SC – April 22, 2009 – Today, First Community Corporation, the holding company for First Community Bank, reported financial results for the first quarter of 2009. The Company reported first quarter net income available to common shareholders of $744,000 or $.23 per diluted share. This represents an improvement over the linked quarter (fourth quarter 2008), in which the Corporation reported a loss of $559,000 or ($0.17) per diluted share.
Mike Crapps, president and chief executive officer of First Community commented, We are pleased to report improvement in earnings, even as we continue to face the challenges in the economy. As a local community bank, we reflect the impact this recession is having on our customers.
Non-interest income was highlighted by strong activity in our mortgage banking unit, as well as substantial revenue growth in the newly formed financial planning and investment advisory division (First Community Financial Consultants). Unfortunately, these were partially offset by a decline in deposit service charge income. Also, the Company experienced an other than temporary impairment (OTTI) charge of $312,000 on two private label mortgage backed securities and one equity investment. Joe Sawyer, chief financial officer commented, These write-downs are a reflection of the stressed financial markets and were in accordance with the recent guidance on mark-to-market accounting and OTTI charges. The Company also experienced gains on the sale of securities in the amount of $354,000. The proceeds from these sales were primarily reinvested in other agency mortgage backed securities (GNMA securities) with lower regulatory risk weightings and slightly longer maturities.
Non-interest expense declined in the first quarter compared to fourth quarter 2008, with decreases in expenditures for marketing and various discretionary items. The impact of this decrease was partially negated by an increase in FDIC insurance premium costs, which more than doubled, along with significant increases in credit-related expenses, as well as legal and professional fees associated with increased regulatory and corporate governance requirements. Mr. Crapps commented, While we have always been disciplined in the control of our overhead, as evidenced by our favorable ratios of non-interest expense to total assets, we have commenced several new initiatives to identify additional measures of expense controls and expense reductions. We have teams that have already identified various savings ideas and they are continuing to work on other initiatives that we believe will identify more efficient ways of doing business and will assist us in controlling non-interest expenses throughout 2009 and beyond.
Additionally, the provision for loan losses in the quarter was $451,000, as compared to $1.4 million in the prior quarter. This results in a loan loss reserve of $4.0 million, which as a ratio to total loans is 1.22%. As discussed in a previous release, the Company had one specific A&D loan in its portfolio of significant concern. During the first quarter of 2009, this loan was moved into non-performing asset status and a significant portion of the charge-offs experienced in the quarter can be attributed to this one loan. Mr. Crapps commented, While the substantial increase in non-performing assets and charge-offs was not surprising, it is important to realize that we are not immune to the effects of a slowing economy. We continue to compare favorably to the industry with our non-performing assets at 133 basis points and the industry at nearly 200 basis points. Two loan relationships are responsible for nearly fifty percent (50%) of our non-performing assets. We are committed to working diligently and quickly to resolve these matters and take very seriously the maintenance of the high quality standards that we have always enjoyed.
The overall size of the balance sheet remained relatively flat as compared to December 31, 2008. Both the loan and investment portfolios decreased slightly as the Company built additional liquidity in its balance sheet. Mr. Crapps noted, While we are disappointed in the lack of growth in our loan portfolio, we continued to have success in loan production with $12.4 million in new loans during the first quarter of 2009 compared to $14.8 million produced in the fourth quarter of 2008. Core deposits increased by $10.4 million during the quarter for an annualized rate of increase of 12.8%. Mr. Crapps commented, The quarter was highlighted by considerable core deposit growth, which is a significant priority of the Company. Success in this area is not only reflected in the growth of the deposit balances, as reported, but also in the net gain in the number of core deposit accounts. The focus on core deposits is pervasive throughout our organization and, indeed, to be successful in this initiative requires the constant attention of every employee.
The Company’s regulatory capital ratios continue to meet and exceed the regulatory definitions of well-capitalized. As of March 31, 2009, the tier I capital ratio, total capital and leverage capital ratios were approximately 12.6% 13.7% and 8.0% respectively. This compares to the regulatory guideline of 6%, 10% and 5% respectively to be considered well-capitalized. The tangible equity to tangible assets ratio at March 31, 2009, was 6.2%, with the tangible common equity to tangible assets ratio being 4.4%. As previously announced, the Company received $11.4 million under the terms of the Capital Purchase Program (CPP) through the issuance of cumulative preferred stock to the United States Treasury in the fourth quarter of 2008. Mr. Crapps commented, Our intent continues to be to redeem these shares as soon as prudent based on our ongoing evaluation of the relevant external economic conditions and ongoing analysis of our internal capital plan.
In addition to releasing first quarter financial results, the Company also announced that the Board of Directors had approved a cash dividend for the first quarter of 2009. The Company again declared an $.08 per share dividend, payable May 15, 2009, to shareholders of record as of May 4, 2009. Mr. Crapps commented, We are pleased to announce the continuation of a quarterly dividend at the same level as in recent quarters.
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 eleven banking offices located in Lexington, Forest Acres, Irmo, Gilbert, Cayce – West Columbia, Chapin, Northeast Columbia, Newberry, Prosperity, Red Bank and Camden.
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 and expectations, and are thus prospective. Such forward-looking statements are subject to risks, uncertainties, and other factors, such as a downturn in the economy, 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-loo
king statements, whether as a result of new information, future events, or otherwise.
FIRST COMMUNITY CORPORATION
QUARTERLY INCOME STATEMENT DATA
(Dollars in thousands, except per share data)
Three months ended
——————
March 31, December 31, March 31,
2009 2008 2008
—- —- —-
Interest income $7,919 $8,242 $7,854
Interest expense 3,609 3,955 3,866
—– —– —–
Net interest income 4,310 4,287 3,988
Provision for loan losses 451 1,407 155
— —– —
Net interest income after
provision 3,859 2,880 3,833
—– —– —–
Non Interest Income
Deposit service charges 556 612 664
Mortgage origination fees 217 119 186
Commissions on sale of non-
deposit products 149 91 88
Gain (loss) on sale of securities 354 – (29)
Other-than-temporary-impairment
write-down on securities (312) (169) –
Fair value adjustment gain (loss) 21 (788) 149
Other 399 367 364
— — —
1,384 232 1,422
—– — —–
Non Interest Expense
Salaries and employee benefits 2,013 2,070 1,901
Occupancy 300 296 279
Equipment 319 333 325
Marketing and public relations 107 167 203
Amortization of intangibles 155 &
nbsp; 123 138
Other 1,130 1,250 802
—– —– —
4,024 4,239 3,648
—– —– —–
Income before taxes 1,219 (1,127) 1,607
Income tax expense 311 (639) 484
— —- —
Net income (loss) $908 $(488) $1,123
—- —– ——
Preferred stock dividend 164 71 –
— — —
Net income (loss) available to
common shareholders $744 $(559) $1,123
—- —– ——
Primary earnings (loss) per
common share $0.23 $(0.17) $0.35
Diluted earnings (loss) per
common share $0.23 $(0.17) $0.35
Return on Average Assets 0.56% -0.30% 0.79%
Return on Average Common Equity 5.21% -3.38% 7.03%
Return on Average Common Tangible
Equity 10.72% -7.04% 13.04%
Net Interest Margin 3.05% 3.02% 3.21%
Net Interest Margin (Tax
Equivalent) 3.08% 3.05% 3.30%
FIRST COMMUNITY CORPORATION
——————
BALANCE SHEET DATA
(Dollars in thousand, except per share data)
As of
—–
March 31, December 31, March 31,
2009 2008 2008
—- —- —-
Total Assets $654,424 $650,233 $590,310
Investment Securities 221,543 235,075 180,485
Loans &n
bsp; 330,208 332,964 314,178
Allowance for Loan Losses 4,024 4,581 3,680
Total Deposits 433,316 423,798 414,267
Securities Sold Under Agreements
to Repurchase 28,326 28,151 28,907
Federal Home Loan Bank Advances 103,148 108,536 62,257
Junior Subordinated Debt 15,464 15,464 15,464
Shareholders’ equity 68,344 68,156 63,893
Book Value Per Common Share $17.76 $17.76 $19.99
Tangible Book Value Per Common
Share $8.57 $8.50 $10.73
Equity to Assets 10.44% 10.48% 10.82%
Loan to Deposit Ratio 76.20% 75.45% 75.84%
Allowance for Loan Losses/Loans 1.22% 1.38% 1.17%
—————————
Quarterly Average Balances:
Three months ended
——————
March 31, December 31, March 31,
2009 2008 2008
—- —- —-
Average Total Assets $654,670 $641,696 $575,733
Average Loans 332,404 327,559 310,798
Average Earning Assets 572,943 563,336 498,892
Average Deposits 431,322 427,688 403,478
Average Other Borrowings 148,149 146,531 101,711
Average Shareholders’ Equity 68,800 62,428 64,305
Asset Quality
Nonperforming Assets:
Non-accrual loans $6,950 $1,757 $642
Other real estate owned 1,315 748 62
Accruing loans past due 90 days
or more 457 59 158
— — —
Total nonperforming assets $8,722 $2,564 $862
====== ====== ====
Loans charged-off $1,027 $491 $52
Overdrafts charged-off 21 41 31
Loan recoveries (25) (14) (66)
Overdraft recoveries (15) (28) (12)
 
; — — —
Net Charge-offs $1,008 $490 $5
====== ==== ==
Net charge-offs to average loans 0.30% 0.15% N/A
