First Community Corporation Announces Record Earnings, Second Quarter Results and Cash Dividend

LEXINGTON, S.C., July 20, 2016 /PRNewswire/ --

Highlights

• Record earnings of $1.745 million in the second quarter of 2016, a 20.9% increase in net income year-over-year
• Diluted EPS of $.26 per common share in the second quarter of 2016, a 18.2% increase year-over-year
• Net loan growth of $17.3 million in the second quarter of 2016, a 14.0% annualized growth rate.
• Pure deposit growth (including customer cash management accounts) of $8.4 million in the second quarter of 2016, a 5.7% annualized growth rate
• Revenues from mortgage and financial planning business units increased by 37.3% and 2.0% respectively on a linked quarter basis
• Regulatory capital ratios remain strong at 10.24% (Tier 1 Leverage) and 16.14% (Total Capital) along with Tangible Common Equity / Tangible Assets (TCE/TA) ratio of 8.82%
• Strong credit quality with non-performing assets (NPAs) of only 0.66%
• Cash dividend of $0.08 per common share, which is the 58^th 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 second quarter of 2016.  Net income for the second quarter of 2016 was $1.745 million as compared to $1.443 million in the second quarter of 2015.  Diluted earnings per common share were $0.26 for the second quarter of 2015 as compared to $0.22 for the second quarter of 2015.

Year-to-date 2016 net income was $3.213 million compared to $2.847 million during the first six months of 2015.  Diluted earnings per share for the first half of 2016 were $0.47, compared to $0.43 during the same time period in 2015.  Mike Crapps, First Community President and CEO, commented, "We are pleased with our results in the second quarter, in particular the growth in earnings and strong growth in our loan portfolio.  We continue to work diligently to take advantage of the momentum in these areas." 

Cash Dividend and Capital

The Board of Directors has approved a cash dividend for the second quarter of 2016.  The company will pay a $0.08 per share dividend to holders of the company's common stock.  This dividend is payable August 12, 2016 to shareholders of record as of August 1, 2016.  Mr. Crapps commented, "Our entire board is pleased that our performance enables the company to continue its cash dividend for the 58^th consecutive quarter." 

At June 30, 2016, the company's regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) were 10.24%, 15.30%, and 16.14%, respectively.  This compares to the same ratios as of June 30, 2015, of 10.41%, 15.67%, and 16.56%, respectively.  Additionally, the regulatory capital ratios for the company's wholly owned subsidiary, First Community Bank, were 9.79%, 14.64%, and 15.48% respectively as of June 30, 2016.  The company's ratio of tangible common equity to tangible assets was 8.82% as of June 30, 2016.  Also, as of June 30, 2016, the Common Equity Tier One ratio for the company and the bank were 12.81% and 14.64%, respectively.

Asset Quality

The non-performing assets ratio declined to 0.66% of total assets, as compared to the prior quarter ratio of 0.87%.  The nominal level of non-performing assets decreased to $5.895 million from $7.530 million at the end of the prior quarter primarily attributed to the payout of one loan in this category.  Trouble debt restructurings, that are still accruing interest, declined during the quarter to $1.212 million from $1.634 million at the end of the first quarter of 2016.  The increase of $4.7 million in the Special Mention category was primarily attributable to one commercial credit that experienced a temporary deterioration in profitability which we fully believe will be rectified in the 2016 year end results.  The overall financial condition of the borrower remains strong. 

Net loan charge-offs for the first six months of 2016 were $51 thousand (0.02% annualized ratio).  Net charge-offs for the second quarter of 2016 were $18 thousand.  The ratio of classified loans plus OREO now stands at 11.03% of total bank regulatory risk-based capital as of June 30, 2016. 

Mr. Crapps commented, "We are extremely pleased with the growth in loans and pure deposits for the quarter and year-to-date. The tremendous loan growth, in excess of $22 million so far this year, is the result of continued focused efforts in this key area and momentum remains strong.  Pure deposit growth for the year has been solid with almost $18 million in growth in the first six months of the year."  Federal Home Loan Bank advances increased $8.0 million in the second quarter.  These are overnight advances that have subsequently been paid off from cash flow in the investment portfolio. 

Revenue

Net Interest Income/Net Interest Margin

Net interest income was $6.7 million for the second quarter of 2016 compared to first quarter net interest income of $6.3 million.  Second quarter net interest margin, on a tax equivalent basis, was 3.43% compared to net interest margin of 3.33% in the first quarter.  The increase in net interest margin was partially attributable to an investment that was called at par resulting in the remaining discount of approximately $83 thousand being included in interest income. 

Non-Interest Income

Non-interest income, adjusted for securities gains and losses and excluding any loss on the early extinguishment of debt, increased 8.4% on a linked quarter basis to $2.20 million in the second quarter of 2016, up from $2.03 million in the first quarter of this year.  Revenues in the mortgage line of business increased 37.3% on a linked quarter basis to $913 thousand in the second quarter of 2016, up from $665 thousand in the first quarter of 2016.  As expected due to seasonal impact, production increased during the second quarter to $27.6 million with yields slightly higher than expected due to a higher concentration of purchase money mortgages.  Revenue in the investment advisory line of business increased slightly on a linked quarter basis to $297 thousand in the second quarter of 2016 up from $291 thousand in the first quarter of 2016.  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." 

Non-Interest Expense

Non-interest expense was nearly unchanged on a linked quarter basis to $6.333 million in the second quarter of 2016, down from $6.342 million in the first quarter of 2016. 

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 fifteen banking offices located in the Midlands, Aiken, and Augusta, Georgia, and a loan production office in Greenville, in addition to two other lines of business, First Community Bank Mortgage and First Community Financial Consultants, a financial planning/investment advisory 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.  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 cybersercurity 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.

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SOURCE First Community Corporation