Attached files
| file | filename |
|---|---|
| 8-K - FIRST COMMUNITY CORP /SC/ | e17462_fcco-8k.htm |
| News Release | |
| For Release October 18, 2017 | |
| 9:00 AM | |
| Contact: (803) 951- 2265 | |
| Joseph G. Sawyer, EVP & Chief Financial Officer or | |
| Robin D. Brown, EVP & Chief Marketing Officer |
First Community Corporation Announces Record Earnings, Third Quarter Results and Cash Dividend
Third Quarter Highlights
| · | Record earnings with net income of $1.893 million. |
| · | Diluted EPS of $.28 per common share. |
| · | Net loan growth of $15.1 million, an annualized growth rate of 10.9%. |
| · | Excellent key credit quality metrics with non-performing assets (NPAs) of 0.41% and a year-to-date net loan recovery of $145 thousand. |
| · | Fifth consecutive quarter of net interest margin expansion. |
| · | Cornerstone National Bank acquisition approved and pending closing. |
| · | Merger expenses of $228 thousand. |
| · | Cash dividend of $0.09 per common share, the 63rd consecutive quarter of cash dividends paid to common shareholders. |
Lexington, SC – October 18, 2017 Today, First Community Corporation (Nasdaq: FCCO), the holding company for First Community Bank, reported net income for the third quarter of 2017 of $1.893 million as compared to $1.677 million in the third quarter of 2016, a 12.9% increase. Diluted earnings per common share were $0.28 for the third quarter of 2017 compared to $0.25 in the third quarter of 2016. Year-to-date 2017 net income was $5.313 million, an 8.7% increase over the $4.890 million earned in the first nine months of 2016. Year-to-date diluted earnings per share were $0.78 compared to $0.72 during the same time period in 2016. During the quarter, the company recognized $228 thousand in non-recurring expenses related to the acquisition of Cornerstone National Bank. First Community President and CEO Mike Crapps commented, “We are extremely pleased to report record earnings even as we invest significant resources in the future growth of our company.”
Cash Dividend and Capital
The Board of Directors approved a cash dividend for the third quarter of 2017. The company will pay a $0.09 per share dividend to holders of the company’s common stock. This dividend is payable November 15, 2017 to shareholders of record as of November 1, 2017. Mr. Crapps commented, “Our entire board is pleased that our performance enables the company to continue its cash dividend for the 63rd 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, 2017, the company’s regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) were 10.55%, 14.73%, and 15.60 %, respectively. This compares to the same ratios as of September 30, 2016, of 10.17%, 15.09%, and 15.93%, respectively. Additionally, the regulatory capital ratios for the company’s wholly owned subsidiary, First Community Bank, were 10.06%, 14.06%, and 14.93% respectively as of September 30, 2017. Further, the company’s ratio of tangible common equity to tangible assets was 8.88% as of September 30, 2016. Also, as of September 30, 2017, the Common Equity Tier One ratio for the company and the bank were 12.49% and 14.06%, respectively.
Asset Quality
The non-performing assets ratio for the third quarter of 2017 was 0.41% of total assets with a nominal level of non-performing assets of $3.749 million. Trouble debt restructurings, that are still accruing interest, were $1.179 million at the end of the third quarter of 2017.
There was a net loan recovery for the quarter of $35 thousand and for the first nine months of 2017 a net recovery of $145 thousand. The ratio of classified loans plus OREO now stands at 7.47% of total bank regulatory risk-based capital as of September 30, 2017.
| Balance Sheet | ||||||||||||||||||||
| (Numbers in millions) | ||||||||||||||||||||
| Quarter | Quarter | Quarter | ||||||||||||||||||
| Ended | Ended | Ended | 3 Month | 3 Month | ||||||||||||||||
| 9/30/17 | 6/30/17 | 12/31/16 | $ Variance | % Variance | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Investments | $ | 248.7 | $ | 259.1 | $ | 272.4 | $ | (10.4 | ) | (4.0 | %) | |||||||||
| Loans | 568.5 | 553.4 | 546.7 | 15.1 | 2.7 | % | ||||||||||||||
| Liabilities | ||||||||||||||||||||
| Total Pure Deposits | $ | 630.8 | $ | 630.3 | $ | 611.9 | $ | 0.5 | 0.1 | % | ||||||||||
| Certificates of Deposit | 139.3 | 142.8 | 154.7 | (3.5 | ) | (2.5 | %) | |||||||||||||
| Total Deposits | $ | 770.1 | $ | 773.1 | $ | 766.6 | $ | (3.0 | ) | (0.4 | %) | |||||||||
| Customer Cash Management | $ | 17.5 | $ | 17.3 | $ | 19.5 | $ | 0.2 | 1.2 | % | ||||||||||
| FHLB Advances | 17.3 | 18.0 | 24.0 | (0.7 | ) | (3.9 | %) | |||||||||||||
| Total Funding | $ | 804.9 | $ | 808.4 | $ | 810.1 | $ | (3.5 | ) | (0.4 | %) | |||||||||
| Cost of Funds | 0.34 | % | 0.33 | % | 0.35 | % | (1 bp | ) | ||||||||||||
| Cost of Deposits* | 0.24 | % | 0.23 | % | 0.24 | % | 1 bps | |||||||||||||
| (*including demand deposits) | ||||||||||||||||||||
Mr. Crapps commented, “Commercial loan production was a real highlight in the quarter at $48.6 million as compared to $34.7 million in the prior quarter. This resulted in growth in the loan portfolio of $15.1 million in the quarter, which is an annualized growth rate of 10.9%. In addition, our deposit franchise remains strong with a low cost of deposits which has remained relatively steady in 2017. ”
Revenue
Net Interest Income/Net Interest Margin
Net interest income was $7.227 million for the third quarter of 2017, an increase of 8.7% year-over-year and 2.5% on a linked quarter basis. Net interest margin, on a taxable equivalent basis, was 3.52% for the third quarter compared to 3.49% in the second quarter of 2017. This is the fifth consecutive quarter of net interest margin expansion, after adjusting the net interest margin for the first quarter of 2017 as previously discussed.
Non-Interest Income
Non-interest income, adjusted for securities gains and losses on the early extinguishment of debt was $2.463 million for the third quarter. Federal Home Loan Bank advances of approximately $5 million were paid down during the quarter with the prepayment expense partially offset by gains on the sale of securities. Revenues in the mortgage line of business were $1.032 million in the third quarter of 2017 up 10.1% year-over-year. The investment advisory line of business revenue for the third quarter was $336 thousand, an increase of 18.7% year-over-year. Deposit fees generated in the commercial and retail banking line of business increased $31 thousand (8.9%) during the quarter. 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 decreased by $476 thousand (6.5%) on a linked quarter basis. This is primarily attributable to the previously discussed non-recurring expenses related to the conversion to a new bank operating system in the second quarter and a planned decrease in marketing media expenses in the third quarter. In addition, merger expenses of $228 thousand related to the acquisition of Cornerstone National Bank were recognized during the third quarter.
Other
The company expects to close on the acquisition of Cornerstone National Bank on Friday, October 20, 2017. Upon completion of the acquisition, the company will have more than $1.0 billion in assets, $914 million in deposits and customer cash management accounts and $628 million in loans with 18 full service banking offices in the Midlands and Upstate regions of South Carolina and the Central Savannah River Area region of South Carolina and Georgia.
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 series, residential mortgage lending and financial planning/investment advisory services for businesses and consumers. First Community serves customers in the Midlands, Aiken, and Greenville, South Carolina markets as well as Augusta, Georgia. For more information, visit www.firstcommunitysc.com.
FORWARD-LOOKING STATEMENTS
This communication includes statements made in respect of the proposed merger involving First Community Corporation (the “Company”) and Cornerstone Bancorp (“Cornerstone”). 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) the businesses of First Community and Cornerstone may not be integrated successfully or such integration may take longer to accomplish than expected; (2) the expected cost savings and any revenue synergies from the merger may not be fully realized within the expected timeframes or at all; (3) disruption from the merger may make it more difficult to maintain relationships with clients, associates, or suppliers; (4) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (5) 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; (6) 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; (7) changes in the U.S. legal and regulatory framework; (8) 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; (9) 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 (10) 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.
ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
This material is not a solicitation of any vote or approval of Cornerstone’s shareholders and is not a substitute for the proxy statement/prospectus or any other documents which the Company and Cornerstone may send to their respective shareholders in connection with the proposed merger. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of any such jurisdiction.
In connection with the proposed merger with Cornerstone, the Company filed with the SEC a Registration Statement on Form S-4 that includes a proxy statement/prospectus for the shareholders of Cornerstone. BEFORE MAKING ANY INVESTMENT DECISION, CORNERSTONE INVESTORS ARE URGED TO READ THE PROXY STATEMENT/ PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS CAREFULLY IN THEIR ENTIRETY. The proxy statement/prospectus, as well as other filings containing information about the Company, are or will be available, without charge, at the SEC’s website (http://www.sec.gov). Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/ prospectus can also be obtained, without charge, by directing a request to First Community Corporation, 5455 Sunset Blvd., Lexington, SC 29072, Attention: Michael Crapps.
###
FIRST COMMUNITY CORPORATION
BALANCE SHEET DATA
(Dollars in thousands, except per share data)
| At September 30, | December 31, | |||||||||||
| 2017 | 2016 | 2016 | ||||||||||
| Total Assets | $ | 914,228 | $ | 915,251 | $ | 914,793 | ||||||
| Other short-term investments (1) | 15,393 | 24,944 | 10,074 | |||||||||
| Investment Securities | 248,672 | 288,174 | 272,396 | |||||||||
| Loans held for sale | 6,018 | 4,250 | 5,707 | |||||||||
| Loans | 568,488 | 523,441 | 546,709 | |||||||||
| Allowance for Loan Losses | 5,656 | 5,047 | 5,214 | |||||||||
| Goodwill | 5,078 | 5,078 | 5,078 | |||||||||
| Other Intangibles | 878 | 1,177 | 1,102 | |||||||||
| Total Deposits | 770,082 | 765,923 | 766,622 | |||||||||
| Securities Sold Under Agreements to Repurchase | 17,469 | 22,232 | 19,527 | |||||||||
| Federal Home Loan Bank Advances | 17,255 | 21,022 | 24,035 | |||||||||
| Junior Subordinated Debt | 14,964 | 14,964 | 14,964 | |||||||||
| Shareholders’ Equity | 86,595 | 84,208 | 81,861 | |||||||||
| Book Value Per Common Share | $ | 12.91 | $ | 12.56 | $ | 12.20 | ||||||
| Tangible Book Value Per Common Share | $ | 12.02 | $ | 11.63 | $ | 11.28 | ||||||
| Equity to Assets | 9.47 | % | 9.20 | % | 8.95 | % | ||||||
| Tangible common equity to tangible assets | 8.88 | % | 8.58 | % | 8.33 | % | ||||||
| Loan to Deposit Ratio | 73.82 | % | 68.90 | % | 71.31 | % | ||||||
| Allowance for Loan Losses/Loans | 0.99 | % | 0.96 | % | 0.95 | % | ||||||
| (1) Includes federal funds sold, securities sold under agreements to resell and interest-bearing deposits | ||||||||||||
| Regulatory Ratios: | ||||||||||||
| Leverage Ratio | 10.55 | % | 10.19 | % | 10.23 | % | ||||||
| Tier 1 Capital Ratio | 14.73 | % | 15.11 | % | 14.47 | % | ||||||
| Total Capital Ratio | 15.60 | % | 15.95 | % | 15.29 | % | ||||||
| Common Equity Tier 1 | 12.49 | % | 12.69 | % | 12.19 | % | ||||||
| Tier 1 Regulatory Capital | $ | 95,470 | $ | 90,505 | $ | 91,966 | ||||||
| Total Regulatory Capital | $ | 101,126 | $ | 95,552 | $ | 97,180 | ||||||
| Common Equity Tier 1 | $ | 80,970 | $ | 76,005 | $ | 79,473 | ||||||
| Average Balances: | ||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Average Total Assets | $ | 911,217 | $ | 900,893 | $ | 911,042 | $ | 882,318 | ||||||||
| Average Loans | 569,461 | 520,130 | 561,844 | 507,326 | ||||||||||||
| Average Earning Assets | 838,579 | 829,761 | 837,010 | 810,380 | ||||||||||||
| Average Deposits | 765,399 | 751,504 | 764,830 | 732,253 | ||||||||||||
| Average Other Borrowings | 52,139 | 58,254 | 54,461 | 61,201 | ||||||||||||
| Average Shareholders’ Equity | 86,224 | 84,449 | 84,725 | 82,359 | ||||||||||||
| Asset Quality: | ||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | |||||||||||||
| 2017 | 2017 | 2017 | 2016 | |||||||||||||
| Loan Risk Rating by Category (End of Period) | ||||||||||||||||
| Special Mention | $ | 9,620 | $ | 6,743 | $ | 6,783 | $ | 6,799 | ||||||||
| Substandard | 6,482 | 6,592 | 7,113 | 7,930 | ||||||||||||
| Doubtful | — | — | — | — | ||||||||||||
| Pass | 552,392 | 546,675 | 545,593 | 537,687 | ||||||||||||
| $ | 568,494 | $ | 560,010 | $ | 559,489 | $ | 552,416 | |||||||||
| September 30, | June 30, | March 31, | December 31, | |||||||||||||
| 2017 | 2017 | 2017 | 2016 | |||||||||||||
| Nonperforming Assets: | ||||||||||||||||
| Non-accrual loans | $ | 2,914 | $ | 3,030 | 3,465 | $ | 4,049 | |||||||||
| Other real estate owned | 733 | 838 | 1,156 | 1,146 | ||||||||||||
| Accruing loans past due 90 days or more | 102 | — | 108 | 53 | ||||||||||||
| Total nonperforming assets | $ | 3,749 | $ | 3,868 | $ | 4,729 | $ | 5,248 | ||||||||
| Accruing trouble debt restructurings | $ | 1,715 | $ | 1,733 | $ | 1,762 | $ | 1,770 | ||||||||
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Loans charged-off | $ | 12 | $ | 40 | $ | 44 | $ | 111 | ||||||||
| Overdrafts charged-off | 40 | 17 | 76 | 46 | ||||||||||||
| Loan recoveries | (47 | ) | (33 | ) | (189 | ) | (63 | ) | ||||||||
| Overdraft recoveries | (5 | ) | (14 | ) | (13 | ) | (19 | ) | ||||||||
| Net Charge-offs (recoveries) | $ | — | $ | 10 | $ | (82 | ) | $ | 75 | |||||||
| Net Charge-offs to Average Loans | 0.00 | % | 0.00 | % | N/A | 0.01 | % | |||||||||
| 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, | |||||||||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||
| Interest Income | $ | 7,921 | $ | 7,400 | $ | 7,724 | $ | 7,459 | $ | 7,773 | $ | 7,137 | $ | 23,416 | $ | 21,996 | ||||||||||||||||
| Interest Expense | 694 | 749 | 675 | 782 | 712 | 800 | 2,080 | 2,331 | ||||||||||||||||||||||||
| Net Interest Income | 7,227 | 6,651 | 7,049 | 6,677 | 7,061 | 6,337 | 21,336 | 19,665 | ||||||||||||||||||||||||
| Provision for Loan Losses | 166 | 179 | 78 | 217 | 116 | 140 | 360 | 536 | ||||||||||||||||||||||||
| Net Interest Income After Provision | 7,061 | 6,472 | 6,971 | 6,460 | 6,945 | 6,197 | 20,976 | 19,129 | ||||||||||||||||||||||||
| Non-interest Income: | ||||||||||||||||||||||||||||||||
| Deposit service charges | 379 | 377 | 348 | 340 | 320 | 347 | 1,047 | 1,064 | ||||||||||||||||||||||||
| Mortgage banking income | 1,032 | 937 | 1,248 | 913 | 670 | 665 | 2,950 | 2,515 | ||||||||||||||||||||||||
| Investment advisory fees and non-deposit commissions | 336 | 283 | 314 | 297 | 258 | 291 | 908 | 871 | ||||||||||||||||||||||||
| Gain on sale of securities | 124 | 478 | 172 | 64 | 54 | 59 | 350 | 601 | ||||||||||||||||||||||||
| Gain (loss) on sale of other assets | 40 | 45 | 68 | (84 | ) | 20 | 3 | 128 | (36 | ) | ||||||||||||||||||||||
| Loss on early extinguishment of debt | (165 | ) | (459 | ) | (223 | ) | — | (58 | ) | — | (446 | ) | (459 | ) | ||||||||||||||||||
| Other | 676 | 726 | 717 | 734 | 714 | 724 | 2,108 | 2,184 | ||||||||||||||||||||||||
| Total non-interest income | 2,422 | 2,387 | 2,644 | 2,264 | 1,978 | 2,089 | 7,045 | 6,740 | ||||||||||||||||||||||||
| Non-interest Expense: | ||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 4,122 | 3,888 | 4,261 | 3,833 | 4,086 | 3,751 | 12,469 | 11,472 | ||||||||||||||||||||||||
| Occupancy | 532 | 531 | 539 | 511 | 527 | 559 | 1,598 | 1,601 | ||||||||||||||||||||||||
| Equipment | 396 | 442 | 506 | 437 | 446 | 429 | 1,348 | 1,308 | ||||||||||||||||||||||||
| Marketing and public relations | 96 | 240 | 298 | 195 | 221 | 94 | 615 | 529 | ||||||||||||||||||||||||
| FDIC assessment | 78 | 60 | 78 | 138 | 78 | 138 | 234 | 336 | ||||||||||||||||||||||||
| Other real estate expense | 19 | 115 | 29 | 21 | 27 | 51 | 75 | 187 | ||||||||||||||||||||||||
| Amortization of intangibles | 74 | 80 | 74 | 80 | 75 | 83 | 223 | 243 | ||||||||||||||||||||||||
| Merger expenses | 228 | — | 98 | — | — | — | 326 | — | ||||||||||||||||||||||||
| Other | 1,349 | 1,227 | 1,487 | 1,118 | 1,260 | 1,237 | 4,096 | 3,582 | ||||||||||||||||||||||||
| Total non-interest expense | 6,894 | 6,583 | 7,370 | 6,333 | 6,720 | 6,342 | 20,984 | 19,258 | ||||||||||||||||||||||||
| Income before taxes | 2,589 | 2,276 | 2,245 | 2,391 | 2,203 | 1,944 | 7,037 | 6,611 | ||||||||||||||||||||||||
| Income tax expense | 696 | 599 | 581 | 646 | 447 | 476 | 1,724 | 1,721 | ||||||||||||||||||||||||
| Net Income | $ | 1,893 | $ | 1,677 | $ | 1,664 | $ | 1,745 | $ | 1,756 | $ | 1,468 | $ | 5,313 | $ | 4,890 | ||||||||||||||||
| Per share data: | ||||||||||||||||||||||||||||||||
| Net income, basic | $ | 0.28 | $ | 0.26 | $ | 0.25 | $ | 0.27 | $ | 0.27 | $ | 0.22 | $ | 0.80 | $ | 0.74 | ||||||||||||||||
| Net income, diluted | $ | 0.28 | $ | 0.25 | $ | 0.24 | $ | 0.26 | $ | 0.26 | $ | 0.22 | $ | 0.78 | $ | 0.72 | ||||||||||||||||
| Average number of shares outstanding - basic | 6,666,168 | 6,572,614 | 6,634,462 | 6,553,752 | 6,687,942 | 6,572,969 | 6,666,497 | 6,584,074 | ||||||||||||||||||||||||
| Average number of shares outstanding - diluted | 6,807,936 | 6,762,074 | 6,803,370 | 6,732,574 | 6,813,460 | 6,751,074 | 6,807,990 | 6,775,071 | ||||||||||||||||||||||||
| Shares outstanding period end | 6,706,408 | 6,703,317 | 6,701,642 | 6,699,030 | 6,697,130 | 6,893,042 | 6,706,408 | 6,703,317 | ||||||||||||||||||||||||
| Return on average assets | 0.83 | % | 0.74 | % | 0.73 | % | 0.80 | % | 0.78 | % | 0.68 | % | 0.78 | % | 0.74 | % | ||||||||||||||||
| Return on average common equity | 8.71 | % | 7.90 | % | 7.87 | % | 8.53 | % | 8.63 | % | 7.35 | % | 8.38 | % | 7.93 | % | ||||||||||||||||
| Return on average common tangible equity | 9.46 | % | 8.54 | % | 8.48 | % | 9.24 | % | 9.32 | % | 7.99 | % | 9.03 | % | 8.60 | % | ||||||||||||||||
| Net Interest Margin (non taxable equivalent) | 3.42 | % | 3.19 | % | 3.39 | % | 3.32 | % | 3.42 | % | 3.22 | % | 3.37 | % | 3.24 | % | ||||||||||||||||
| Net Interest Margin (taxable equivalent) | 3.52 | % | 3.29 | % | 3.49 | % | 3.43 | % | 3.52 | % | 3.33 | % | 3.46 | % | 3.35 | % | ||||||||||||||||
| Efficiency Ratio (1) | 69.64 | % | 71.28 | % | 73.99 | % | 69.68 | % | 72.56 | % | 73.86 | % | 72.06 | % | 71.56 | % | ||||||||||||||||
(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, 2017 | Three months ended September 30, 2016 | |||||||||||||||||||||||
| Average | Interest | Yield/ | Average | Interest | Yield/ | |||||||||||||||||||
| Balance | Earned/Paid | Rate | Balance | Earned/Paid | Rate | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||
| Loans | $ | 569,461 | $ | 6,438 | 4.49 | % | $ | 520,130 | $ | 5,977 | 4.57 | % | ||||||||||||
| Securities: | 254,401 | 1,442 | 2.25 | % | 286,330 | 1,389 | 1.93 | % | ||||||||||||||||
| Federal funds sold and securities purchased | 14,717 | 41 | 1.11 | % | 23,301 | 34 | 0.58 | % | ||||||||||||||||
| Total earning assets | 838,579 | 7,921 | 3.75 | % | 829,761 | 7,400 | 3.55 | % | ||||||||||||||||
| Cash and due from banks | 10,229 | 10,927 | ||||||||||||||||||||||
| Premises and equipment | 30,684 | 30,088 | ||||||||||||||||||||||
| Other assets | 37,272 | 35,062 | ||||||||||||||||||||||
| Allowance for loan losses | (5,547 | ) | (4,945 | ) | ||||||||||||||||||||
| Total assets | $ | 911,217 | $ | 900,893 | ||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||||
| Interest-bearing transaction accounts | $ | 157,329 | $ | 58 | 0.15 | % | $ | 151,778 | $ | 43 | 0.11 | % | ||||||||||||
| Money market accounts | 168,380 | 109 | 0.26 | % | 165,290 | 105 | 0.25 | % | ||||||||||||||||
| Savings deposits | 75,392 | 21 | 0.11 | % | 74,986 | 23 | 0.12 | % | ||||||||||||||||
| Time deposits | 1,670,017 | 271 | 0.64 | % | 182,716 | 294 | 0.64 | % | ||||||||||||||||
| Other borrowings | 52,139 | 235 | 1.79 | % | 58,254 | 284 | 1.94 | % | ||||||||||||||||
| Total interest-bearing liabilities | 620,257 | 694 | 0.44 | % | 633,024 | 749 | 0.47 | % | ||||||||||||||||
| Demand deposits | 197,281 | 176,734 | ||||||||||||||||||||||
| Other liabilities | 7,455 | 6,686 | ||||||||||||||||||||||
| Shareholders’ equity | 86,224 | 84,449 | ||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 911,217 | $ | 900,893 | ||||||||||||||||||||
| Cost of funds, including demand deposits | 0.34 | % | 0.37 | % | ||||||||||||||||||||
| Net interest spread | 3.31 | % | 3.08 | % | ||||||||||||||||||||
| Net interest income/margin | $ | 7,227 | 3.42 | % | $ | 6,651 | 3.19 | % | ||||||||||||||||
| Net interest income/margin FTE basis | $ | 7,436 | 3.52 | % | $ | 6,867 | 3.29 | % | ||||||||||||||||
| FIRST COMMUNITY CORPORATION | ||||||||||||||||||||||||
| Yields on Average Earning Assets and Rates | ||||||||||||||||||||||||
| on Average Interest-Bearing Liabilities | ||||||||||||||||||||||||
| Nine months ended September 30, 2017 | Nine months ended September 30, 2016 | |||||||||||||||||||||||
| Average | Interest | Yield/ | Average | Interest | Yield/ | |||||||||||||||||||
| Balance | Earned/Paid | Rate | Balance | Earned/Paid | Rate | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||
| Loans | $ | 561,844 | $ | 19,003 | 4.52 | % | $ | 507,326 | $ | 17,582 | 4.63 | % | ||||||||||||
| Securities: | 261,728 | 4,319 | 2.21 | % | 284,241 | 4,331 | 2.04 | % | ||||||||||||||||
| Federal funds sold and securities purchased under agreements to resell | 13,438 | 94 | 0.94 | % | 18,813 | 83 | 0.59 | % | ||||||||||||||||
| Total earning assets | 837,010 | 23,416 | 3.74 | % | 810,380 | 21,996 | 3.63 | % | ||||||||||||||||
| Cash and due from banks | 11,253 | 10,735 | ||||||||||||||||||||||
| Premises and equipment | 30,512 | 30,136 | ||||||||||||||||||||||
| Other assets | 37,681 | 35,854 | ||||||||||||||||||||||
| Allowance for loan losses | (5,414 | ) | (4,787 | ) | ||||||||||||||||||||
| Total assets | $ | 911,042 | $ | 882,318 | ||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||||
| Interest-bearing transaction accounts | $ | 158,206 | 143 | 0.12 | % | $ | 151,989 | 132 | 0.12 | % | ||||||||||||||
| Money market accounts | 168,153 | 320 | 0.25 | % | 165,240 | 323 | 0.26 | % | ||||||||||||||||
| Savings deposits | 74,123 | 63 | 0.11 | % | 67,050 | 59 | 0.12 | % | ||||||||||||||||
| Time deposits | 172,418 | 815 | 0.63 | % | 179,454 | 844 | 0.63 | % | ||||||||||||||||
| Other borrowings | 54,461 | 739 | 1.81 | % | 61,201 | 973 | 2.12 | % | ||||||||||||||||
| Total interest-bearing liabilities | 627,361 | 2,080 | 0.44 | % | 624,934 | 2,331 | 0.50 | % | ||||||||||||||||
| Demand deposits | 191,930 | 168,520 | ||||||||||||||||||||||
| Other liabilities | 7,026 | 6,505 | ||||||||||||||||||||||
| Shareholders’ equity | 84,725 | 82,359 | ||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 911,042 | $ | 882,318 | ||||||||||||||||||||
| Cost of funds, including demand deposits | 0.34 | % | 0.39 | % | ||||||||||||||||||||
| Net interest spread | 3.30 | % | 3.13 | % | ||||||||||||||||||||
| Net interest income/margin | $ | 21,336 | 3.41 | % | $ | 19,665 | 3.24 | % | ||||||||||||||||
| Net interest income/margin FTE basis | $ | 21,978 | 3.51 | % | $ | 20,313 | 3.35 | % | ||||||||||||||||
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 | 2017 | 2016 | 2016 | |||||||||
| Tangible common equity per common share (non-GAAP) | $ | 12.02 | $ | 11.28 | $ | 11.63 | ||||||
| Effect to adjust for intangible assets | 0.89 | 0.92 | 0.93 | |||||||||
| Book value per common share (GAAP) | $ | 12.91 | $ | 12.20 | $ | 12.56 | ||||||
| Tangible common shareholders’ equity to tangible assets | ||||||||||||
| Tangible common equity to tangible assets (non-GAAP) | 8.88 | % | 8.33 | % | 8.58 | % | ||||||
| Effect to adjust for intangible assets | 0.59 | % | 0.62 | % | 0.62 | % | ||||||
| Common equity to assets (GAAP) | 9.47 | % | 8.95 | % | 9.20 | % | ||||||
| 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, | ||||||||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||
| Return on average common tangible equity (non-GAAP) | 9.46 | % | 8.54 | % | 8.48 | % | 9.25 | % | 9.32 | % | 7.99 | % | 9.03 | % | 8.60 | % | ||||||||||||||||
| Effect to adjust for intangible assets | (0.75 | )% | 0.64 | % | (0.61 | )% | (0.72 | )% | (0.69 | )% | (0.64 | )% | (0.65 | )% | (0.67 | )% | ||||||||||||||||
| Return on average common equity (GAAP | 8.71 | % | 7.87 | % | 7.87 | % | 8.53 | % | 8.63 | % | 7.35 | % | 8.38 | % | 7.93 | % | ||||||||||||||||
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.