<PAGE> 1
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-25972
---------
FIRST COMMUNITY CORPORATION
---------------------------
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
TENNESSEE 62-1562541
- ------------------------------------ -------------------------------------
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
809 WEST MAIN STREET
ROGERSVILLE, TENNESSEE 37857
- ---------------------------------------- ------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(423) 272-5800
---------------------------------------------------------
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NONE
-----------------------------------------------------------------------
(FORMER NAME, ADDRESS AND FISCAL YEAR, IF CHANGED SINCE LAST REPORT)
INDICATE BY CHECK MARK WHETHER THE ISSUER: (1) HAS FILED ALL REPORTS REQUIRED TO
BE FILED BY SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES [X] NO [ ]
2,021,180
-----------------------------
(OUTSTANDING SHARES OF THE ISSUER'S COMMON STOCK AS OF MARCH 31, 2000)
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
YES [ ] NO [X]
<PAGE> 2
FIRST COMMUNITY CORPORATION
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
NUMBER PAGE
- ------ ----
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS 3
MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999
CONSOLIDATED STATEMENTS OF INCOME 4
THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 7
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 9
ITEM 2. CHANGES IN SECURITIES 9
ITEM 3. DEFAULT UPON SENIOR SECURITIES 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 9
ITEM 5. OTHER INFORMATION 9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9
</TABLE>
2
<PAGE> 3
FIRST COMMUNITY CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
March 31, 2000
<TABLE>
<CAPTION>
($ amounts in thousands)
MARCH 31, December 31, Amount %
ASSETS 2000 1999 Change Change
==========================================================================================================================
<S> <C> <C> <C> <C>
Cash and due from banks $ 5,277 7,517 (2,240) -29.8%
Federal funds sold 2,800 1,100 1,700 154.5%
Securities available-for-sale, at fair value 9,369 8,847 522 5.9%
Loans 93,868 93,311 557 0.6%
Allowance for loan losses (943) (938) (5) 0.5%
- --------------------------------------------------------------------------------------------------------------------------
LOANS, NET 92,924 92,373 551 0.6%
- --------------------------------------------------------------------------------------------------------------------------
Premises and equipment 4,207 4,212 (5) -0.1%
Accrued income receivable 1,225 1,291 (66) -5.1%
Deferred income taxes, net 171 120 51 42.5%
Other assets 1,433 1,018 415 40.8%
- --------------------------------------------------------------------------------------------------------------------------
$ 117,406 116,478 928 0.8%
==========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
==========================================================================================================================
LIABILITIES:
DEPOSITS:
Noninterest-bearing $ 11,468 10,664 804 7.5%
Interest-bearing 78,521 76,013 2,508 3.3%
- --------------------------------------------------------------------------------------------------------------------------
TOTAL DEPOSITS 89,989 86,677 3,312 3.8%
Securities sold under agreements to repurchase 1,954 3,372 (1,418) -42.1%
Advances from FHLB 14,100 15,100 (1,000) -6.6%
Note payable 593 593 -- --
Other liabilities 1,184 1,232 (48) -3.9%
- --------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 107,821 106,975 846 0.8%
- --------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY:
Common stock, no par value. Authorized 10,000,000
shares; issued and outstanding 2,021,180 in 2000
and 2,040,270 in 1999 7,668 7,673 (5) -0.1%
Unrealized gain (loss) on securities-AFS (108) (63) (45) 71.4%
Retained earnings 2,025 1,893 132 7.0%
- --------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 9,585 9,503 82 0.9%
- --------------------------------------------------------------------------------------------------------------------------
$ 117,406 116,478 928 0.8%
==========================================================================================================================
</TABLE>
3
<PAGE> 4
FIRST COMMUNITY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
March 31, 2000
<TABLE>
<CAPTION>
($ amounts in thousands except earnings per share)
THREE MONTHS ENDED MARCH 31,
------------------------------------------------------------
Amount %
INTEREST INCOME: 2000 1999 Change Change
------------------------------------------------------------
<S> <C> <C> <C> <C>
Loans, including fees $ 2,206 1,876 330 17.6%
Securities:
Taxable 124 36 88 245.8%
Tax exempt 11 6 5 89.2%
Federal funds sold 40 90 (50) -55.3%
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 2,382 2,008 374 18.6%
- ------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Deposits 946 790 156 19.7%
Other borrowings 233 117 116 99.1%
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 1,179 907 272 30.0%
- ------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 1,203 1,101 102 9.3%
PROVISION FOR LOAN LOSSES 26 40 (14) -35.0%
- ------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,177 1,061 116 10.9%
- ------------------------------------------------------------------------------------------------------------------------
OTHER INCOME:
Service charges on deposit accounts 168 129 39 30.0%
Other service charges, commissions and fees 70 83 (13) -16.3%
- ------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER INCOME 237 212 25 11.9%
- ------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES:
Salaries, Directors' fees and employee benefits 517 453 64 14.1%
Occupancy expense 151 137 14 10.5%
Other operating expenses 313 289 24 8.2%
- ------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER EXPENSES 985 879 106 12.0%
- ------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 429 394 35 9.0%
INCOME TAXES 157 146 11 7.5%
- ------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 272 248 24 9.9%
========================================================================================================================
EARNINGS PER SHARE $ 0.13 0.12 0.01 12.3%
========================================================================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING 2,021,400 2,039,201 (17,801) -0.9%
========================================================================================================================
</TABLE>
4
<PAGE> 5
FIRST COMMUNITY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
-------------------------------
THREE MONTHS ENDED
MARCH 31,
-------------------------------
INCREASE (DECREASE) IN CASH AND DUE FROM BANKS 2000 1999
========================================================================================================
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 272 248 24 10%
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 107 95 12 13%
Provision for loan losses 26 40 (14) -35%
Increase/Decrease in accrued income receivable 66 120 (54) -45%
Other, net (579) (192) (387) 202%
- -------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (108) 311 (419) -135%
- -------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in federal funds sold (1,700) 5,919 (7,619) -129%
Maturities and redemptions of securities
available for sale -- 670 (670) -100%
Purchases of securities available-for-sale (522) -- (522) 100%
Proceeds of sales of securities available-for-sale -- (2,000) 2,000 -100%
Net increase in loans (557) (2,598) 2,041 -79%
Purchases of premises and equipment (102) (12) (90) 750%
- -------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (2,881) 1,979 (4,860) -246%
- -------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid (141) (509) 368 -72%
Purchase and retirement of common stock (5) (5) 100%
Proceeds of sale of common stock -- 18 (18) -100%
Repayments of FHLB advances (3,000) (3,000) 100%
Increase in borrowings from FHLB 2,000 2,000 100%
Increase/(Decrease) in securities sold under agreements
to repurchase (1,418) 383 (1,801) -470%
Increase(Decrease) in deposits 3,313 (1,810) 5,123 -283%
- -------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 749 (1,918) 2,667 -139%
- -------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH (2,240) 372 (2,612) -702%
CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD 7,517 3,570 3,947 111%
- -------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 5,277 3,942 1,335 34%
=======================================================================================================
CASH PAYMENTS FOR INTEREST $ 1,179 1,046
CASH PAYMENTS FOR INCOME TAXES $ 49 56
=======================================================================================================
</TABLE>
5
<PAGE> 6
FIRST COMMUNITY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A --- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2000.
6
<PAGE> 7
ITEM NO. 2 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL CONDITION
First Community Bank of East Tennessee (the "Bank") represents virtually all of
the assets of First Community Corporation (the "Company"). The Bank, which was
opened in April of 1993, has grown in total assets to $117 million at March 31,
2000 reflecting an increase from December 31, 1999 of .8%.
Loans have increased $.5 million or .6% during the first three months of 2000.
The increased loans were funded through an effort to increase core deposits
during the first quarter 2000.
NONPERFORMING ASSETS AND RISK ELEMENTS. Nonperforming assets consist of (1)
nonaccrual loans where the recognition of interest was discontinued, (2) loans
which have been restructured to provide for a reduction or deferral of interest
or principal because the borrower's financial condition deteriorated, and (3)
foreclosed and repossessed assets. Nonperforming assets at March 31, 2000
amounted to $263,000, or .28% of total loans, an increase from $40,000 or .04%
of total loans at December 31, 1999. Diversification within the loan portfolio
is an important means of reducing inherent lending risks. At March 31, 2000, the
Bank had no concentrations of ten percent or more of total loans in any single
industry nor in any geographical area outside the immediate market area of the
Bank.
The Bank discontinues the accrual of interest on loans which become ninety days
past due (principal and/or interest), unless the loans are adequately secured
and in the process of collection. Other real estate owned is carried at fair
value, determined by an appraisal. A loan is classified as a restructured loan
when the interest rate is materially reduced or the term is extended beyond the
original maturity date because of the inability of the borrower to service the
debt under the original terms. The Bank had no restructured loans or other real
estate as of March 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is adequate with cash and due from banks of $5.3 million as of March
31, 2000. In addition, loans and investment securities repricing or maturing
within one year or less exceed $29.9 million at March 31, 2000. The Bank has
approximately $5.7 million in loan commitments that are expected to be funded
within the next six months and other commitments, primarily standby letters of
credit, of approximately $83,000 at March 31, 2000. In addition to the Federal
Home Loan Bank membership, the Bank has established federal funds lines of
credit with three correspondent banks totaling $14.0 million to meet unexpected
liquidity demands. With the exception of unfunded loan commitments, there are no
known trends or any known commitments or uncertainties that will result in the
Bank's liquidity increasing or decreasing in a material way. In addition, the
Company is not aware of any recommendations by any regulatory authorities which
would have a material effect on the Company's liquidity, capital resources or
results of operations.
Total equity capital at March 31, 2000, is $9.585 million or approximately 8.2%
of total assets. The Bank's capital position is adequate to meet the minimum
capital requirements for all regulatory agencies. The Bank's capital ratios as
of March 31, 2000, are as follows:
Tier 1 leverage 8.68%
Tier 1 risk-based 11.65%
Total risk-based 12.73%
7
<PAGE> 8
RESULTS OF OPERATIONS
The Company had net income of $272,000 for the three months ending March 31,
2000, compared with $248,000 for the same period last year, resulting in an
increase of 9.9%.
Interest income and interest expense both increased from 1999 to 2000 resulting
from the increase in earning assets and interest bearing liabilities.
Consequently, net interest income increased $102,000 for the three months ending
March 31, 2000, or an increase of 9.3%. Earning assets through March 31, 2000
increased $2.8 million and interest-bearing liabilities also increased $.90
million compared to December 31, 1999, reflecting increases of 2.7% and .09%,
respectively.
Noninterest income for the three months ending March 31, 2000 was $237,000
compared to $212,000 for the same period in 1999 reflecting an increase of
$25,000 or 11.9%. Noninterest income consists mainly of service charges on
deposit accounts, credit life insurance commissions, and secondary mortgage
processing fees. Service charges on deposit accounts for the three months ending
March 31, 2000 was $168,000 compared with $129,000 for the same period in 1999
reflecting an increase of 30.0%.
The provision for loan losses was $26,000 in the first three months of 2000
compared with $40,000 for the same period in 1999. The allowance for loan losses
of $943,000 at March 31, 2000 (approximately 1.01% of loans) is considered by
management to be adequate to cover losses inherent in the loan portfolio.
Management evaluates the adequacy of the allowance for loan losses monthly and
makes provisions for loan losses based on this evaluation.
8
<PAGE> 9
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) 27 Financial Data Schedule (for SEC use only)
b) The Company did not file any reports on Form 8-K during the quarter
ended March 31, 2000.
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registration has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST COMMUNITY CORPORATION
------------------------------------
(Registrant)
May 12, 2000 /s/ Mark A. Gamble
- --------------------- ----------------------------------------
(Date) Mark A. Gamble, President
May 12, 2000 /s/ Elizabeth O. Lollar
- --------------------- -----------------------------------------
(Date) Elizabeth O. Lollar
Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FIRST COMMUNITY BANK FOR THE THREE MONTHS ENDED MARCH
31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 5,277
<INT-BEARING-DEPOSITS> 78,521
<FED-FUNDS-SOLD> 2,800
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9,369
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 93,868
<ALLOWANCE> 943
<TOTAL-ASSETS> 117,406
<DEPOSITS> 89,989
<SHORT-TERM> 16,054
<LIABILITIES-OTHER> 1,777
<LONG-TERM> 0
0
0
<COMMON> 7,668
<OTHER-SE> 1,917
<TOTAL-LIABILITIES-AND-EQUITY> 117,406
<INTEREST-LOAN> 2,206
<INTEREST-INVEST> 135
<INTEREST-OTHER> 40
<INTEREST-TOTAL> 2,382
<INTEREST-DEPOSIT> 946
<INTEREST-EXPENSE> 1,179
<INTEREST-INCOME-NET> 1,203
<LOAN-LOSSES> 26
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 985
<INCOME-PRETAX> 429
<INCOME-PRE-EXTRAORDINARY> 429
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 272
<EPS-BASIC> .13
<EPS-DILUTED> .13
<YIELD-ACTUAL> 4.7
<LOANS-NON> 263
<LOANS-PAST> 149
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 938
<CHARGE-OFFS> 22
<RECOVERIES> 1
<ALLOWANCE-CLOSE> 943
<ALLOWANCE-DOMESTIC> 943
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
