First Community Corporation Announces Second Quarter Results and Cash Dividend
July 16, 2014
LEXINGTON, S.C., July 16, 2014 –
Highlights
- Core net income (excluding securities gains/losses, merger expenses, and loss on early extinguishment of debt) estimated to be $1,206,000 as compared to $1,166,000in the prior quarter
- Post-merger regulatory capital ratios remain strong at 10.10% (Tier 1 Leverage) and 16.61% (Total Capital) along with Tangible Common Equity / Tangible Assets (TCE/TA) ratio of 8.39%
- Non-performing assets (NPAs) stable at 1.41%
- Cash dividend of $0.06 per common share, which is the 50th consecutive quarter of cash dividends paid to common shareholders
- Announced Purchase and Assumption Agreement of approximately $43 million in deposits and $9 million in loans in downtown Columbia
Today, First Community Corporation (Nasdaq: FCCO), the holding company for First Community Bank, reported net income for the second quarter of 2014. Net income for the second quarter of 2014 was $1.201 million as compared to $1.203 million in the second quarter of 2013. Diluted earnings per common share were $0.18 for the second quarter of 2014 as compared to $0.23 for the second quarter of 2013.
Year-to-date 2014 net income was $2.063 million compared to $2.241 million during the first six months of 2013. Diluted earnings per share for the first half of 2014 were $0.32, compared to $0.42 during the same time period in 2013. The six month results for 2014 include merger and acquisition related expenses of $435 thousand.
As previously announced on June 9, 2014, the company opened an office in downtownColumbia located at 1213 Lady Street, near Main Street. In addition to the banking office on the first floor, the bank’s financial planning team, First Community Financial Consultants, has relocated to the second floor of this building.
Additionally, on June 23, 2014, the company announced the signing of a Purchase and Assumption Agreement to acquire approximately $43 million in deposits and $9 million in loans from First South Bank. This represents all of the deposits and a portion of the loans at First South’s Columbia banking office located at 1333 Main Street. The company is paying a premium of $800,000; which may be adjusted based on actual account balances at closing date.
Mike Crapps, First Community President and CEO, commented, “The acquired deposits and loans will be serviced in our new downtown Columbia location, which will be extremely convenient for our new customers. Additionally, this accelerates profitability for our new office from the typical two to three year period of time to being profitable immediately upon closing. We look forward to completing this transaction in the late third quarter.”
Cash Dividend and Capital
The Board of Directors has approved a cash dividend for the second 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 August 8, 2014 to shareholders of record as of July 28, 2014. Mr. Crapps commented, “Our entire board is pleased that our performance enables the company to continue its cash dividend for the 50th 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. AtJune 30, 2014, the company’s regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) were 10.10%, 15.79%, and 16.61%, respectively. This compares to the same ratios as of June 30, 2013, of 10.61%, 17.51%, and 18.68%, respectively. Additionally, the regulatory capital ratios for the company’s wholly owned subsidiary, First Community Bank, were 9.56%, 14.97%, and 15.79% respectively as of June 30, 2014. Further, the company’s ratio of tangible common equity to tangible assets was 8.39% as ofJune 30, 2014.
Asset Quality
The non-performing assets ratio remained relatively stable at 1.41% of total assets, as compared to the prior quarter ratio of 1.40%. The nominal level of non-performing assets decreased slightly to $11.109 million from $11.137 million at the end of the prior quarter.
Trouble debt restructurings, that are still accruing interest, declined slightly during the quarter to $560 thousand from $568 thousand. Loans past due 30-89 days were $2.3 million (0.53% of loans) this quarter.
Net loan charge-offs for the quarter were $495 thousand (0.44% annualized ratio) as compared to the 2014 first quarter total of $208 thousand (0.20% annualized ratio). The increase in net loan charge-offs is due to the write down of a $2.3 million loan placed on non-accrual in the first quarter of this year. This write down was in the amount of $502 thousand and was based on an updated appraisal received during the second quarter. Mr. Crapps commented, “While we continue to receive payments, this is appropriate recognition of the current status of this particular loan. Absent this one event, we would have experienced a net recovery this quarter.”
The ratio of classified loans plus OREO now stands at 24.33% of total regulatory risk-based capital as of June 30, 2014.
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Balance Sheet |
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(Numbers in millions) |
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Quarter ending |
Quarter ending |
Quarter ending |
3 Month |
3 Month |
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6/30/14 |
3/31/14 |
12/31/13 |
$ Variance |
% Variance |
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Assets |
|||||
|
Investments |
$250.8 |
$255.5 |
$227.0 |
($4.7) |
(1.8%) |
|
Loans |
444.7 |
443.9 |
347.6 |
0.8 |
0.2% |
|
Liabilities |
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Total Pure Deposits |
$496.2 |
$505.7 |
$363.2 |
($9.5) |
(1.9%) |
|
Certificates of Deposit |
143.9 |
148.8 |
133.9 |
(4.9) |
(3.3%) |
|
Total Deposits |
$640.1 |
$654.5 |
$497.1 |
($14.4) |
(2.2%) |
|
Customer Cash Management |
$16.4 |
$19.5 |
$18.6 |
($3.1) |
(15.9%) |
|
FHLB Advances |
37.9 |
34.3 |
43.3 |
3.6 |
10.5% |
|
Total Funding |
$694.4 |
$708.3 |
$559.0 |
($13.9) |
(2.0%) |
|
Cost of Funds* |
0.51% |
0.55% |
0.60% |
(4 bps) |
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(*including demand deposits) |
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Cost of Deposits |
0.28% |
0.30% |
0.31% |
(2 bps) |
Mr. Crapps commented, “We experienced some anticipated decrease in our pure deposit base, as our customers utilized their cash to fund certain projects. We were pleased with the continued reduction in our cost of deposits to 0.28% for this quarter. The loan portfolio was relatively flat. Actual loan production was higher than the first quarter, but not sufficient to overcome the loan payments and loan payoff headwind.”
Revenue
Net Interest Income/Net Interest Margin
The net interest margin, on a non-tax equivalent basis, was unchanged from the prior quarter at 3.32%. Due to certain portfolio adjustments, the tax equivalent net interest margin declined 2 basis points to 3.38% in the second quarter. Net interest income increased significantly on a linked quarter basis due to the effect of the full quarter impact of the merger with Savannah River Financial Corporation, which closed on February 1, 2014.
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 improved slightly with production of$21.0 million, as compared to $19.3 million in the prior quarter. This increase in production along with higher yields (3.34% in the second quarter as compared to 3.21% in the first quarter) resulted in revenues increasing by 13.4% on a linked quarter basis to $702 thousand. Mr. Crapps commented, “We are focused on even greater success in this important line of business. Under the leadership of our new Director of Mortgage Banking,Jan Hadder-Jones, we are consolidating our two mortgage banking units into one brand, First Community Bank Mortgage. As we move to accomplish this on September 1, 2014, we are making all of the decisions based on the goals of being customer centric, continuing the appropriate risk management and compliance practices, and optimizing the efficiency of our processes. We are now positioned to build out this line of business with experienced and highly productive mortgage bankers. In fact, recently an additional mortgage banker joined our team in the Augusta market.”
Non-Interest Expense
Non-interest expense decreased by $241 thousand on a linked quarter basis to $5.785 million. This decrease is primarily the result of a decrease in merger expenses, partially offset by miscellaneous expenses impacted by the effect of the full quarter impact of the merger with Savannah River Financial Corporation, which closed on February 1, 2014.
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 fourteen 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.
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FIRST COMMUNITY CORPORATION |
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BALANCE SHEET DATA |
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(Dollars in thousands, except per share data) |
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June 30 |
December 31, |
June 30 |
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|
2014 |
2013 |
2013 |
||||
|
Total Assets |
$ 786,687 |
$ 633,309 |
$ 633,185 |
|||
|
Other short-term investments (1) |
14,741 |
5,927 |
14,560 |
|||
|
Investment Securities |
250,775 |
227,029 |
225,915 |
|||
|
Loans held for sale |
2,990 |
3,790 |
5,789 |
|||
|
Loans |
444,670 |
347,597 |
341,089 |
|||
|
Allowance for Loan Losses |
4,066 |
4,219 |
4,439 |
|||
|
Goodwill |
4,390 |
571 |
571 |
|||
|
Other Intangibles |
1,077 |
– |
65 |
|||
|
Total Deposits |
640,057 |
497,071 |
509,619 |
|||
|
Securities Sold Under Agreements to Repurchase |
16,374 |
18,634 |
15,650 |
|||
|
Federal Home Loan Bank Advances |
37,916 |
43,325 |
34,335 |
|||
|
Junior Subordinated Debt |
15,464 |
15,464 |
15,464 |
|||
|
Shareholders’ equity |
70,992 |
52,671 |
52,828 |
|||
|
Book Value Per Common Share |
$ 10.67 |
$ 9.93 |
$ 9.98 |
|||
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Tangible Book Value Per Common Share |
$ 9.84 |
$ 9.83 |
$ 9.86 |
|||
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Tangible Book Value per common share (excluding AOCI) |
$ 9.79 |
$ 10.30 |
$ 10.03 |
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Equity to Assets |
9.02% |
8.32% |
8.34% |
|||
|
Tangible common equity to tangible assets |
8.39% |
8.23% |
8.25% |
|||
|
Loan to Deposit Ratio |
69.94% |
70.69% |
69.46% |
|||
|
Allowance for Loan Losses/Loans |
0.91% |
1.21% |
1.30% |
|||
|
Allowance for Loan Losses plus credit mark/Loans |
1.31% |
1.21% |
1.30% |
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(1) Includes federal funds sold, securities sold under agreements to resell and interest-bearing deposits |
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Regulatory Ratios: |
June 30, |
December 31, |
June 30, |
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2014 |
2013 |
2013 |
||||
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Leverage Ratio |
10.10% |
10.77% |
10.61% |
|||
|
Tier 1 Capital Ratio |
15.79% |
17.60% |
17.51% |
|||
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Total Capital Ratio |
16.61% |
18.68% |
18.68% |
|||
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Tier 1 Regulatory Capital |
$ 78,825 |
$ 68,756 |
$ 66,130 |
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Total Regulatory Capital |
$ 82,891 |
$ 72,975 |
$ 70,569 |
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Average Balances: |
Three months ended |
Six months ended |
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June 30, |
June 30, |
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|
2014 |
2013 |
2014 |
2013 |
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Average Total Assets |
$ 787,066 |
$ 628,330 |
$ 760,048 |
$ 617,273 |
||
|
Average Loans |
444,060 |
344,009 |
430,000 |
340,983 |
||
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Average Earning Assets |
719,104 |
585,174 |
695,472 |
573,615 |
||
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Average Deposits |
638,915 |
498,720 |
612,599 |
487,768 |
||
|
Average Other Borrowings |
72,770 |
69,455 |
75,090 |
69,466 |
||
|
Average Shareholders’ Equity |
70,035 |
55,162 |
66,847 |
54,844 |
||
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Asset Quality: |
June 30, |
March 31, |
December 31, |
|||
|
2014 |
2014 |
2013 |
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Loan Risk Rating by Category (End of Period) |
||||||
|
Special Mention |
$ 11,274 |
$ 13,891 |
$ 10,708 |
|||
|
Substandard |
15,795 |
15,358 |
10,609 |
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|
Doubtful |
– |
– |
– |
|||
|
Pass |
417,601 |
414,619 |
326,280 |
|||
|
$ 444,670 |
$ 443,868 |
$ 347,597 |
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|
June 30, |
March 31, |
December 31, |
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|
2014 |
2014 |
2013 |
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Nonperforming Assets: |
||||||
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Non-accrual loans |
$ 7,647 |
$ 7,865 |
$ 5,406 |
|||
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Other real estate owned |
3,302 |
3,147 |
3,370 |
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|
Accruing loans past due 90 days or more |
160 |
125 |
1 |
|||
|
Total nonperforming assets |
$ 11,109 |
$ 11,137 |
$ 8,777 |
|||
|
Accruing trouble debt restructurings |
$ 560 |
$ 568 |
$ 576 |
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Three months ended |
Six months ended |
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|
June 30, |
June 30, |
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|
2014 |
2013 |
2014 |
2013 |
|||
|
Loans charged-off |
$ 504 |
$ 200 |
$ 726 |
$ 505 |
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|
Overdrafts charged-off |
10 |
9 |
18 |
18 |
||
|
Loan recoveries |
(15) |
(12) |
(34) |
(86) |
||
|
Overdraft recoveries |
(4) |
(2) |
(7) |
(5) |
||
|
Net Charge-offs |
$ 495 |
$ 195 |
$ 703 |
$ 432 |
||
|
Net charge-offs to average loans |
0.11% |
0.05% |
0.16% |
0.13% |
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FIRST COMMUNITY CORPORATION |
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INCOME STATEMENT DATA |
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(Dollars in thousands, except per share data) |
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Three months ended |
Three months ended |
Six months ended |
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June 30, |
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