<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended September 30, 2000
[ ] Transition report under Section 13 or 15(d) of the Exchange Act for the
transition period from _______________________ to _______________________
Commission File No. 33-86258
FIRST COMMUNITY CORPORATION
---------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
South Carolina 57-1010751
-------------- ----------
(State of Incorporation) (I.R.S. Employer Identification)
5455 Sunset Boulevard, Lexington, South Carolina 29072
------------------------------------------------------
(Address of Principal Executive Offices)
(803) 951-2265
--------------
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
1,207,177 shares of common stock, par value $1.00 per share, were
issued and outstanding as of October 31, 2000.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The financial statements of First Community Corporation (the company)
are set forth in the following pages.
<PAGE> 3
FIRST COMMUNITY CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
2000 December 31,
(Unaudited) 1999
------------- -------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 4,055,002 $ 3,397,667
Federal funds sold and securities purchased under
agreements to resell 6,324,654 2,795,877
Investment securities - available for sale 26,443,869 27,685,091
Investment securities - held-to-maturity (market value of
$2,955,635 and $2,904,200 at September 30, 2000 and
December 31, 1999, respectively) 3,030,416 3,036,993
Loans 64,136,989 52,297,124
Less, allowance for loan losses 836,738 703,993
------------- -------------
Net loans 63,300,251 51,593,131
Property, furniture and equipment - net 5,826,790 5,362,994
Other assets 1,124,211 1,017,146
------------- -------------
Total assets $ 110,105,193 $ 94,888,899
============= =============
LIABILITIES
Deposits:
Non-interest bearing demand $ 15,356,996 $ 12,231,819
NOW and money market accounts 25,283,844 24,273,370
Savings 6,890,901 8,029,741
Time deposits less than $100,000 19,324,601 15,084,459
Time deposits $100,000 and over 22,783,397 17,351,835
------------- -------------
Total deposits 89,639,739 76,971,224
Securities sold under agreements to repurchase 3,252,600 1,657,500
Other borrowed money 1,605,844 1,771,956
Other liabilities 716,639 447,497
------------- -------------
Total liabilities 95,214,822 80,848,177
------------- -------------
SHAREHOLDERS' EQUITY
Preferred stock, par value $1.00 per share; 10,000,000
shares authorized; none issued and outstanding
Common stock, par value $1.00 per share;
10,000,000 shares authorized; issued and outstanding
1,207,177 at September 30, 2000 and December 31, 1999 1,207,177 1,207,177
Additional paid in capital 12,248,087 12,248,087
Retained earnings 1,633,939 932,192
Unrealized gain on securities available-for-sale (198,832) (346,734)
------------- -------------
Total shareholders' equity 14,890,371 14,040,722
------------- -------------
Total liabilities and shareholders' equity $ 110,105,193 $ 94,888,899
============= =============
</TABLE>
<PAGE> 4
FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Nine Nine
Months Ended Months Ended
September 30, September 30,
2000 1999
(Unaudited) (Unaudited)
------------- -------------
<S> <C> <C>
Interest income:
Loans, including fees $ 4,005,801 $ 2,958,041
Investment securities 1,304,787 1,199,500
Federal funds sold and securities purchased
under resale agreements 288,311 339,902
------------- -------------
Total interest income 5,598,899 4,497,443
------------- -------------
Interest expense:
Deposits 2,228,124 1,750,468
Federal funds sold and securities sold under agreement
to repurchase 126,996 88,818
Other borrowed money 43,186 3,046
------------- -------------
Total interest expense 2,398,306 1,842,332
------------- -------------
Net interest income 3,200,593 2,655,111
Provision for loan losses 124,500 180,000
------------- -------------
Net interest income after provision for loan losses 3,076,093 2,475,111
------------- -------------
Non-interest income:
Deposit service charges 243,547 164,046
Mortgage origination fees 58,152 73,438
Other 125,980 129,275
------------- -------------
Total non-interest income 427,679 366,759
------------- -------------
Non-interest expense:
Salaries and employee benefits 1,234,206 999,121
Occupancy 177,427 120,174
Equipment 288,974 166,470
Marketing and public relations 181,055 146,126
Other 549,749 496,669
------------- -------------
Total non-interest expense 2,431,411 1,928,560
------------- -------------
Income before taxes 1,072,361 913,310
Income taxes 370,614 319,829
------------- -------------
Net income $ 701,747 $ 593,481
============= =============
Basic earnings per common share $ 0.58 $ 0.49
============= =============
Diluted earnings per common share $ 0.57 $ 0.48
============= =============
</TABLE>
<PAGE> 5
FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Three
Months Ended Months Ended
September 30, September 30,
2000 1999
(Unaudited) (Unaudited)
------------- -------------
<S> <C> <C>
Interest income:
Loans, including fees $ 1,461,580 $ 1,078,405
Investment securities 449,138 410,878
Federal funds sold and securities purchased
under resale agreements 112,105 126,914
------------- -------------
Total interest income 2,022,823 1,616,197
------------- -------------
Interest expense:
Deposits 821,712 647,740
Federal funds sold and securities sold under agreement
to repurchase 60,694 27,262
Other borrowed money 27,030 1,025
------------- -------------
Total interest expense 909,436 676,027
------------- -------------
Net interest income 1,113,387 940,170
Provision for loan losses 36,000 54,000
------------- -------------
Net interest income after provision for loan losses 1,077,387 886,170
------------- -------------
Non-interest income:
Deposit service charges 93,238 61,902
Mortgage origination fees 23,003 18,134
Other 32,588 49,171
------------- -------------
Total non-interest income 148,829 129,207
------------- -------------
Non-interest expense:
Salaries and employee benefits 417,974 352,828
Occupancy 57,680 40,915
Equipment 118,544 59,643
Marketing and public relations 42,421 49,087
Other 165,437 169,747
------------- -------------
Total non-interest expense 802,056 672,220
------------- -------------
Income before tax 424,160 343,157
Income tax 147,422 120,968
------------- -------------
Net income $ 276,738 $ 222,189
============= =============
Basic earnings per common share $ 0.23 $ 0.18
============= =============
Diluted earnings per common share $ 0.22 $ 0.18
============= =============
</TABLE>
<PAGE> 6
FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
---------------------------- ----------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income $ 701,747 $ 593,481 $ 276,738 $ 222,189
Other comprehensive income, net of tax:
Unrealized gains (losses) arising
during the period, net of tax
effect of ($87,406), $139,834 and
($92,107), $29,780 for the nine
and three months ended September
30, 2000 and 1999, respectively 147,902 (259,672) 171,056 (43,444)
--------- --------- --------- ---------
Comprehensive income $ 849,649 $ 333,809 $ 447,794 $ 178,745
========= ========= ========= =========
</TABLE>
<PAGE> 7
FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid-in Retained Comprehensive
Stock Capital Earnings Income (Loss) Total
----------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1999 $ 1,207,177 $12,248,087 $ 932,192 $ (346,734) $14,040,722
Net income 701,747 701,747
Unrealized gain (loss) on
securities available-for-sale 147,902 147,902
----------- ----------- ----------- ----------- -----------
Balance September 30, 2000 $ 1,207,177 $12,248,087 $ 1,633,939 $ (198,832) $14,890,371
=========== =========== =========== =========== ===========
</TABLE>
<PAGE> 8
FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine months ended September 30,
--------------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 701,747 $ 593,481
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation 268,411 153,919
Premium amortization (Discount accretion) (120,325) (149,828)
Provision for loan losses 124,500 180,000
(Increase) decrease in other assets (194,471) 28,044
Increase (decrease) in accounts payable 269,142 (271,133)
------------- -------------
Net cash used in operating activities 1,049,004 534,483
------------- -------------
Cash flows form investing activities:
Purchase of investment securities available-for-sale (7,445,833) (25,702,104)
Maturity of investment securities available-for-sale 9,049,265 16,491,627
Maturity of investment securities held-to-maturity -- 143,673
Increase in loans (11,831,620) (8,492,369)
Purchase of property and equipment (732,207) (1,325,568)
------------- -------------
Net cash used in investing activities (10,960,395) (18,884,741)
------------- -------------
Cash flows from financing activities:
Increase in deposit accounts 12,668,515 22,952,439
Increase (decrease) in securities sold under agreements to repurchase 1,595,100 (387,300)
Increase (decrease) in other borrowings (166,112) 94,931
------------- -------------
Net cash provided from financing activities 14,097,503 22,660,070
------------- -------------
Net increase in cash and cash equivalents 4,186,112 4,309,812
Cash and cash equivalents at beginning
of period 6,193,544 5,606,772
------------- -------------
Cash and cash equivalents at end of period $ 10,379,656 $ 9,916,584
============= =============
Supplemental disclosure:
Cash paid during the period for:
Interest $ 2,292,679 $ 1,869,501
Taxes $ 271,065 $ 550,010
Non-cash investing and financing activities:
Unrealized gain on securities available-for-sale $ 194,468 $ 97,760
</TABLE>
<PAGE> 9
FIRST COMMUNITY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
Note 1 - Basis of Presentation
The consolidated financial statements include the accounts of First
Community Corporation and its wholly owned subsidiary First Community
Bank, N.A. All material intercompany transactions are eliminated in
consolidation. In the opinion of management, the unaudited financial
statements reflect all adjustments necessary for a fair presentation of
the balance sheet and results of operations for the periods presented.
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
First Community Corporation (the company) is a one bank holding
company, which was incorporated in South Carolina on November 2, 1994. First
Community Bank N.A. (the bank), the company's only subsidiary, began operations
on August 17, 1995 from its first office located in Lexington, South Carolina.
On September 14, 1995 the company opened its second office located in Forest
Acres, South Carolina. The company experienced its first quarterly profit in the
fourth quarter of 1996 and has been profitable each subsequent quarter through
the six months ended June 30, 2000.
During 1999 the bank opened its third and fourth banking offices in
Irmo, and Cayce/West Columbia South Carolina, respectively. During the first
quarter of 2000 the bank opened its fifth banking office in Gilbert, South
Carolina. The bank raised $6.6 million in net proceeds from a secondary stock
offering in July 1998. The proceeds of the offering were to be used to fund the
bank's continued growth through its existing offices and to open the three
additional branches.
The following discussion contains forward-looking statements that
involve risks and uncertainties. The company's actual results may differ
materially from the results discussed in the forward-looking statements, and the
company's operating performance each quarter is subject to various risks and
uncertainties that are discussed in detail in the company's filings with the
Securities and Exchange Commission, including the "Risk Factors" section in the
company's Registration Statement on Form S-2 (Registration Number 33-86258) as
filed with and declared effective by the Securities and Exchange Commission.
Comparison of Results of Operations for Nine Months Ended September 30,
2000 to the Nine Months Ended September 30, 1999:
Net Income
The company's net income was $702,000 or $.57 diluted earnings per share for the
nine months ended September 30, 1999 as compared to net income of $593,000 or
$.48 per share for the nine months ended September 30, 1999. This improvement in
earnings reflects the continued growth in the level of earning assets. The level
of average earning assets was $93.0 million for the nine months ended September
30, 2000 as compared to $83.4 million for the nine months ended September 30,
1999. This reflects an 11.6% increase in the level average earning assets for
the two periods. Net interest margin was 4.60% for the nine months ended
September 30, 2000 as compared to 4.26% for the nine months ended September 30,
1999. This increase in margin is primarily a result of a change in the mix of
earning assets in which loans represented 62.0% of earning assets for the nine
months ended September 30, 2000 as compared to 53.5% of earning assets for the
nine months ended September 30, 1999. As loans typically yield higher returns
than alternative investments management will continue to grow the loan portfolio
as a percentage of total earning assets.
<PAGE> 11
ITEM 2. CONTINUED PAGE 2
Non-interest income increased 16.6% to $428,000 for the nine months
ended September 30, 2000 as compared to $367,000 for the nine months ended
September 30, 1999. During these same periods non-interest expense increased
26.1% to $2.4 million for the nine months ended September 30, 2000 as compared
to $1.9 million for the nine months ended September 30, 1999. Income tax expense
for the nine months ended September 30, 2000 was $371,000 or 34.6% of income
before tax and $320,000 or 35.0% of income before tax during the same period in
1999.
Net Interest Income
The table on page 17 shows yield and rate data for interest-bearing
balance sheet components during the nine month periods ended September 30, 2000
and 1999, along with average balances and the related interest income and
interest expense amounts.
Net interest income was $3.2 million during the nine months ended September 30,
2000 as compared to $2.7 million for the nine months ended September 30, 1999.
This improvement of net interest income is a result of the increase on the level
of earning assets. The net interest margin was 4.60% for the nine months ended
September 30, 2000 as compared to 4.26% for the nine months ended September 30,
1999. The increase in margin is primarily a result of a change in the mix of
earning assets in which loans represented 62.0% of earning assets for the nine
months ended September 30, 2000 as compared to 53.5% of earning assets for the
nine months ended September 30, 1999. Loans typically provide a higher yield
then the bank's alternative uses of these funds such as securities and
short-term overnight investments.
Interest income during the nine months ended September 30, 2000 was
$5.6 million as compared to $4.5 million for the nine months ended September 30,
1999. The average yield on earning assets during the first nine months of 2000
was 8.05% as compared to 7.21% during the same period of 1999. The largest
component of interest income for the nine months ended September 30, 2000 was
interest on loans and amounted to $4.0 million as compared to $3.0 million for
the comparable prior year period. The overall yield on loans was 9.25% for the
nine months ended September 30, 2000 as compared to 8.87% for the nine months
ended September 30, 1999. The increase in loan yields was primarily a result of
four increases in the prime rate during the first six months of 2000. The
investment portfolio income increased $105,000, or 8.6%, to $1.3 for the nine
months ended September 30, 1999 as compared to $1.2 million for the nine months
ended September 30, 1999. The increase in investment portfolio income is a
result of rising market interest rates during the nine months ended September
30, 2000. The yield on the investment portfolio for the nine months ended
September 30, 2000 was 6.01% as compared to 5.45% for the comparable period in
1999. Interest on overnight federal funds sold and securities purchased under
agreements to resell decreased $52,000 or 15.3%, to $288,000 for the
<PAGE> 12
ITEM 2. CONTINUED PAGE 3
nine month period ended September 30, 2000 as compared to $340,000 for the nine
month period ended September 30, 1999. The balance of federal funds sold and
securities purchased under agreements to resell averaged $6.1 million for the
nine months ended September 30, 2000 as compared to $9.3 million during the same
period of 1999. The higher balances in 1999 were partly a result of desiring to
maintain higher levels of liquidity in 1999 due to some temporary deposits held
during this period as well as preparation for Y2K.
Interest expense during the nine months ended September 30, 2000 was $2.4
million with an average rate paid on interest-bearing liabilities of 4.36% as
compared to $1.8 million and 3.79% during the nine months ended September 30,
1999. In addition to the higher rates paid on interest-bearing liabilities the
reason for the increase in interest expense was that average interest-bearing
liabilities were $8.6 million greater for the nine months ended September 30,
2000 as compared to the nine months ended September 30, 1999.
Provision and Allowance for Loan Losses
The provision for loan losses was $125,000 and $180,000 for nine months
ended September 30, 2000 and 1999, respectively, and reflects management's
estimate of the amount necessary to maintain the allowance for loan losses at a
level believed to be adequate in relation to the current size, mix and quality
of the portfolio. The Company's allowance for loan losses as a percentage of its
period-end loans was 1.31% at September 30, 2000. The company had no
nonperforming loans at September 30, 2000. Net charge-offs (recoveries) during
nine months ended September 30, 2000, amounted to approximately ($8,000) as
compared to $26,000 for the same period in the prior year. There were two loans
past due greater than 30 days amounting to $311,000 and there were no loans
greater than 60 days past due at September 30, 2000.
The loan portfolio is periodically reviewed to evaluate the outstanding
loans and to measure both the performance of the portfolio and the adequacy of
the allowance for loan losses. This analysis includes a review of delinquency
trends, actual losses, and internal credit ratings. Management's judgment as to
the adequacy of the allowance is based upon a number of assumptions about future
events, which it believes to be reasonable, but which may or may not be
reasonable. However, because of the inherent uncertainty of assumptions made
during the evaluation process, there can be no assurance that loan losses in
future periods will not exceed the allowance for loan losses or that additional
allocations to the allowance will not be required.
Noninterest Income and Expense
Noninterest income during the nine months ended September 30, 2000 was $428,000
as compared to $367,000 for the nine months ended September 30, 1999. This was a
result of increased income on deposit service charges of $79,000 offset by a
decrease in mortgage loan fee originations of $15,000. The company originates
mortgage loans, which are closed in the name
<PAGE> 13
ITEM 2. CONTINUED PAGE 4
of a third party, for which the company receives a fee. These fees decreased
primarily as a result of rising rates during the nine months ended September 30,
2000 as compared to the same period in 1999.
Noninterest expense amounted to $2.4 million as compared to $1.9
million during the nine months ended September 30, 2000 and 1999, respectively.
This increase includes increases in all categories of non-interest expense
during 2000 as compared to 1999. Salary and employee benefits increased $235,000
or 23.5 % in the nine months ended September 30, 2000 as compared to the
comparable period in 1999. This increase is primarily a result of having
approximately six full time equivalent employees more during the first nine
months of 2000 as compared to the first nine months of 1999. These employees
were hired in the fourth quarter of 1999 and the first quarter of 2000 to staff
the two new branches opened during these periods. In addition, five positions
were hired to staff a new branch office that opened in April 1999 and thus these
salaries were not reflected during the entire first nine months of 1999.
Occupancy expense increased by $57,000 in the first nine months of 2000 as
compared to the same period in 1999. This is primarily related to additional
expenses related to the new branch office located in Cayce/West Columbia, South
Carolina, which opened in November 1999, and the Gilbert office which opened in
April 2000. Equipment expense increased from $166,000 for the nine months ended
September 30, 1999 to $289,000 for the nine months ended September 30, 2000.
This is a result of increased depreciation expense related to equipment in the
new branch offices as well as additional data processing equipment placed in
service during June 2000 as a result of the bank converting from an outsourcing
environment to an in-house core processing environment at that time. Marketing
and public relations expense increased by $35,000 or 24.0% in the nine months
ended September 30, 2000 as compared to the comparable period in the prior year.
This increase is a result of planned increases in advertising and marketing
during 2000 as compared to 1999. Other non-interest expense increased $53,000 or
10.7 % in the nine months ended September 30, 2000 compared to the same period
in the prior year. These included increases of $17,000 in telephone, $6,000 in
postage, $6,000 in courier, $5,000 in dues $5,000 in meeting and professional
development, $6,000 in supplies and $4,000 in correspondent charges. All of
these increases are a result of increased volumes due to the growth in the bank
and the additional cost of operating the new branches opened in late 1999 and
2000.
Comparison of Results of Operations for Three Months Ended September 30, 2000 to
the Three Months Ended September 30, 1999:
Net income for the third quarter of 2000 was $277,000, as compared to
$222,000 during the comparable period in 1999. This increase, is primarily due
to the increased level of earning asset and the improvement in the net interest
margin during the two periods. Average earning assets were $98.2 million during
the third quarter of 2000 as compared to $88.5 million during the third quarter
of 1999. The table on page 18 shows yield and rate data for interest-bearing
balance sheet components during the three month periods ended September 30, 2000
and 1999
<PAGE> 14
ITEM 2. CONTINUED PAGE 5
along with average balances and the related interest income and interest expense
amounts. The yield on average earning assets increased from 7.24% in the third
quarter of 1999 to 8.26% in the third quarter of 2000. As previously explained
in the analysis of nine months results, there were four increases in prime rate
during the fourth quarter of 1999 and first six months of 2000 that had an
impact on overall impact on overall market rates. The cost of interest bearing
liabilities was 4.72% in the third quarter of 2000 as compared to 3.84% during
the third quarter of 1999. This increase was also a result of increasing market
rates during the fourth quarter of 1999 and first half of 2000.
Total non-interest income increased by $20,000 during the third quarter
of 2000 as compared to the comparable period in 1999. Deposit service charges
accounted for $31,000 of the increase in non-interest income due to the
increased numbers of accounts in third quarter of 2000 as compared to the third
quarter 1999. This was offset by a decrease in fees from the sale of non-deposit
investment products of $19,000 in the third quarter of 2000 as compared to the
third quarter 1999.
Total non-interest expense increased by $130,000 in the third quarter
of 2000 as compared to the same quarter of 1999. This increase is primarily a
result of a $65,000 increase in salary and benefits expense and a $59,000
increase in equipment expense. The increase in salary and benefits is primarily
a result of the increased staff included during the three months ended September
30, 2000 as compared to the same period in 1999. As previously mentioned a new
branch was opened in November 1999 in Cayce/West Columbia, South Carolina and
another in April 2000 in Gilbert, South Carolina. The increase in equipment
expense relates to the depreciation on equipment in these two branch locations
as well as equipment expense related to the conversion to in-house data
processing mentioned previously.
Financial Position
Assets totaled $110.1 million at September 30, 2000 as compared to
$94.9 million at December 31, 1999 an increase of $15.2 million. Loans grew by
$11.8 million during the nine months ended September 30, 2000, from $52.3
million to $64.1 million. This loan growth was funded by growth in deposits of
$12.6 million from $77.0 million at December 31, 1999 to $89.6 million at
September 30, 2000. Overnight funds grew by $3.5 million as of September 30,
2000 as compared to December 31, 1999. This was funded by the increase in
deposits as well as increased short-term borrowings.
Liquidity and Capital Resources
The company's liquidity remains adequate to meet operating and loan funding
<PAGE> 15
ITEM 2. CONTINUED PAGE 6
requirements. Federal funds sold and investment securities available-for sale
represent 29.8% of total assets September 30, 2000. Management believes that its
existing stable base of core deposits along with continued growth in this
deposit base will enable the company to meet its long term and short term
liquidity needs successfully. These needs include the ability to respond to
short-term demand for funds caused by the withdrawal of deposits, maturity of
repurchase agreements, extensions of credit and for the payment of operating
expenses. Sources of liquidity in addition to deposit gathering activities
include maturing loans and investments, purchase of federal funds from other
financial institutions and selling securities under agreements to repurchase.
The company monitors closely the level of large certificates of deposits in
amounts of $100,000 or more as they tend to be extremely sensitive to interest
rate levels, and thus less reliable sources of funding for liquidity purposes.
At September 30, 2000 the amount of certificates of deposits of $100,000 or more
represented 25.4% of total deposits. These deposits are issued to local
customers many of whom have other product relationships with the bank and none
are brokered deposits. Management is not aware of any trends, events or
uncertainties that may result in a significant adverse effect on the company's
liquidity position. However, no assurances can be given in this regard, as rapid
growth, deterioration in loan quality, and poor earnings, or a combination of
these factors, could change the company's liquidity position in a relatively
short period of time.
The capital needs of the company have been primarily met to date
through the initial common stock offering which raised approximately $6.8
million and in July 1998 the company raised an additional $6.6 million in net
proceeds through a secondary offering.. This capital along with expected
continued retained earnings is sufficient to fund the operations of the bank as
well as fund the operating losses incurred by the three new branches until such
time as there earning assets produce revenue that exceeds their fixed cost. The
company management anticipates that the bank will remain a "well capitalized"
institution. Shareholders' equity was 13.5% of total assets at September 30,
2000 as compared to 14.8% at December 31, 1999. The bank"s risked-based capital
ratios of Tier 1, total capital and leverage ratio were 15.5%, 16.6% and 11.1%,
respectively at September 30, 2000. This compares to required OCC regulatory
capital guidelines for Tier 1 capital, total capital and leverage capital ratios
of 4.0%, 8.0% and 3.0%, respectively. The company will be required by the
Federal Reserve to meet the same guidelines once its consolidated total assets
exceed $150 million.
<PAGE> 16
FIRST COMMUNITY CORPORATION
YIELDS ON AVERAGE EARNING ASSETS AND RATES
ON AVERAGE INTEREST-BEARING LIABILITIES
<TABLE>
<CAPTION>
Three months ended September 30, 2000 Three months ended September 30, 1999
------------------------------------------ -------------------------------------
Average Interest Yield/ Average Interest Yield/
Balance Earned/Paid Rate Balance Earned/Paid Rate
------------ ------------ ------ ------- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets
Loans $ 61,893,230 $1,461,580 9.47% $ 48,037,284 $ 1,078,405 8.91%
Securities: 29,480,193 449,138 6.11% 30,525,460 410,878 5.34%
Federal funds sold and securities purchased
under agreements to resell 6,813,199 112,105 6.60% 9,977,531 126,914 5.05%
----------------------------------------- ------------------------------------
Total earning assets 98,186,622 2,022,823 8.26% 88,540,275 1,616,197 7.24%
------------------------ ---------------------
Cash and due from banks 3,279,424 2,893,243
Premises and equipment 5,863,124 4,679,498
Other assets 1,026,837 820,070
Allowance for loan losses (817,132) (652,423)
------------ ------------
Total assets $107,538,875 $ 96,280,663
============ ============
LIABILITIES
Interest-bearing liabilities
Interest-bearing transaction accounts $ 10,094,066 18,853 0.75% $ 10,206,034 19,071 0.74%
Money market accounts 13,417,971 162,277 4.85% 10,815,667 111,894 4.10%
Savings deposits 7,368,214 61,641 3.36% 8,704,491 75,168 3.43%
Time deposits 40,454,827 578,941 5.74% 37,464,244 441,607 4.68%
Other short term borrowings 6,004,578 87,724 5.86% 2,675,298 28,287 4.19%
----------------------------------------- ------------------------------------
Total interest-bearing liabilities 77,339,656 909,436 4.72% 69,865,734 676,027 3.84%
----------------------- ---------------------
Demand deposits 14,810,612 12,086,788
Other liabilities 719,619 450,967
Shareholders' equity 14,668,988 13,877,174
------------ ------------
Total liabilities and shareholders'
equity $107,538,875 $ 96,280,663
============ ============
Net interest spread 3.55% 3.40%
Net interest income/margin $1,113,387 4.55% $ 940,170 4.21%
========== ===========
</TABLE>
<PAGE> 17
FIRST COMMUNITY CORPORATION
YIELDS ON AVERAGE EARNING ASSETS AND RATES
ON AVERAGE INTEREST-BEARING LIABILITIES
<TABLE>
<CAPTION>
Nine months ended September 30, 2000 Nine months ended September 30, 1999
-------------------------------------- -------------------------------------
Average Interest Yield/ Average Interest Yield/
Balance Earned/Paid Rate Balance Earned/Paid Rate
------- ----------- ------ ------- ----------- ----
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets
Loans $ 57,869,772 $4,005,801 9.25% $44,593,429 $2,958,041 8.87%
Securities: 29,041,795 1,304,787 6.01% 29,433,709 1,199,500 5.45%
Federal funds sold and securities purchased
under agreements to resell 6,109,714 288,311 6.31% 9,345,742 339,902 4.86%
-------------------------------------- --------------------------------------
Total earning assets 93,021,281 5,598,899 8.05% 83,372,880 4,497,443 7.21%
-------------------- ---------------------
Cash and due from banks 3,331,194 2,731,857
Premises and equipment 5,715,327 4,295,577
Other assets 1,005,360 878,685
Allowance for loan losses (771,742) (603,121)
------------ -----------
Total assets $102,301,420 $90,675,878
============ ===========
LIABILITIES
Interest-bearing liabilities
Interest-bearing transaction accounts $ 10,381,606 57,896 0.75% $10,459,375 63,731 0.81%
Money market accounts 13,631,415 459,898 4.51% 9,441,475 288,202 4.08%
Savings deposits 7,981,103 200,369 3.36% 8,680,618 225,235 3.47%
Time deposits 37,481,890 1,509,961 5.39% 33,295,184 1,173,300 4.71%
Other short term borrowings 4,115,074 170,182 5.53% 3,101,633 91,864 3.96%
-------------------------------------- --------------------------------------
Total interest-bearing liabilities 73,591,088 2,398,306 4.36% 64,978,285 1,842,332 3.79%
--------------------- ---------------------
Demand deposits 13,714,267 11,357,785
Other liabilities 619,126 539,702
Shareholders' equity 14,376,939 13,800,106
------------ -----------
Total liabilities and shareholders'
equity $102,301,420 $90,675,878
============ ===========
Net interest spread 3.69% 3.42%
Net interest income/margin $3,200,593 4.60% $2,655,111 4.26%
========== ==========
</TABLE>
<PAGE> 18
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no material pending legal proceedings to which the company or
any of its subsidiaries is a party or of which any of their property is the
subject.
ITEM 2. CHANGES IN SECURITIES.
(a) Not applicable
(b) Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to shareholders to vote during the
quarter ended September 30, 2000.
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this report:
3.1 Amended and Restated Articles of Incorporation
(incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement No. 33-86258 on Form
S-1).
3.2 Bylaws (incorporated by reference to Exhibit 3.2 to
the Company's Registration Statement No. 33-86258 on
Form S-1).
4.1 Provisions in the Company's Articles of Incorporation
and Bylaws defining the rights of holders of the
Company's Common Stock (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement
No. 33-86258 on Form S-1).
10.1 Employment Agreement dated June 1, 1994, by and
between Michael C. Crapps and the Company
(incorporated by reference to Exhibit 10.1 to the
Company's Registration Statement no. 33-86258 on Form
S-1).*
<PAGE> 19
10.2 Employment Agreement dated June 1, 1994, by and
between James C. Leventis and the Company
(incorporated by reference to Exhibit 10.2 to the
Company's Registration Statement No. 33-86258 on Form
S-1).*
10.3 Construction agreement dated January 11, 1996 by and
between the Bank and Summerfield Associates, Inc. to
build permanent banking facility in Lexington, South
Carolina (incorporated by reference to Exhibit 10.3
to the Company's Annual Report for fiscal year ended
December 31, 1995 on Form 10-KSB).
10.4 Contract of sale of real estate dated August 1, 1994
between First Community Bank (In Organization) and
Three Seventy-Eight Company, Inc. (Incorporated by
reference to the Company's Registration Statement No.
33-86258 on Form S-1).
10.5 Contract of sale of real estate dated July 28, 1994,
between First Community Bank (In Organization) and
the Crescent Partnership (Incorporated by reference
to the Company's Registration Statement No. 33-86258
on Form S-1).
10.6 First Community Corporation 1996 Stock Option Plan
(Incorporated by reference to Exhibit 10.6 to the
Company's Annual Report for fiscal year ended
December 31, 1995 on Form 10-KSB).
10.7 Construction Agreement dated November 7, 1996 by and
between the Bank and Summerfield Associates, Inc. To
build a banking facility in Forest Acres, South
Carolina. (Incorporated by reference to the Company's
1996 Annual Report on Form 10 KSB)
10.8 First Community Corporation 1999 Stock Incentive Plan
(Incorporated by reference to the 1998 Annual Report
on form 10KSB)
27 Financial Data Schedule (for SEC use only).
*Denotes executive compensation contract or
arrangement.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed by the Company during
the quarter ended September 30, 2000.
<PAGE> 20
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRST COMMUNITY CORPORATION
---------------------------
(REGISTRANT)
Date: November 7, 2000 By: /s/ Michael C. Crapps
----------------- ----------------------------------------------
Michael C. Crapps
President and Chief Executive Officer
By: /s/ Joseph G. Sawyer
------------------------------------------
Joseph G. Sawyer
Senior Vice President, Principal Financial
Officer
