<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 June 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 July 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>
June 30,
2000 December 31,
(Unaudited) 1999
------------- ------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 4,608,730 $ 3,397,667
Federal funds sold and securities purchased under
agreements to resell 1,265,222 2,795,877
Investment securities - available for sale 26,419,869 27,685,091
Investment securities - held to maturity (market value of
$2,911,747 and $2,904,200 at June 30, 2000 and
December 31, 1999, respectively) 3,032,624 3,036,993
Loans 60,227,251 52,297,124
Less, allowance for loan losses 805,929 703,993
------------- ------------
Net loans 59,421,322 51,593,131
Property, furniture and equipment - net 5,870,886 5,362,994
Other assets 1,081,610 1,017,146
------------- ------------
Total assets $ 101,700,263 $ 94,888,899
============= ============
LIABILITIES
Deposits:
Non-interest bearing demand $ 15,705,984 $ 12,231,819
NOW and money market accounts 22,990,433 24,273,370
Savings 7,120,430 8,029,741
Time deposits less than $100,000 17,885,995 15,084,459
Time deposits $100,000 and over 19,779,560 17,351,835
------------- ------------
Total deposits 83,482,402 76,971,224
Securities sold under agreements to repurchase 2,594,500 1,657,500
Other borrowed money 589,791 1,771,956
Other liabilities 590,993 447,497
------------- ------------
Total liabilities 87,257,686 80,848,177
------------- ------------
SHAREHOLDERS' EQUITY
Common stock, par value $1.00 per share;
10,000,000 shares authorized; issued and outstanding
1,207,177 at June 30, 2000 and December 31, 1999,
respectively 1,207,177 1,207,177
Additional paid in capital 12,248,087 12,248,087
Retained earnings 1,357,201 932,192
Accumulated other comprehensive income (369,888) (346,734)
------------- ------------
Total shareholders' equity 14,442,577 14,040,722
------------- ------------
Total liabilities and shareholders' equity $ 101,700,263 $ 94,888,899
============= ============
</TABLE>
<PAGE> 4
FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Six Six
Months Ended Months Ended
June 30, June 30,
2000 1999
(Unaudited) (Unaudited)
------------ -------------
<S> <C> <C>
Interest income:
Loans, including fees $2,544,221 $1,879,636
Investment securities 855,649 788,622
Federal funds sold and securities purchased
under resale agreements 176,206 212,988
---------- ----------
Total interest income 3,576,076 2,881,246
---------- ----------
Interest expense:
Deposits 1,406,412 1,102,728
Federal funds sold and securities sold under agreement
to repurchase 79,217 61,556
Other borrowed money 3,241 2,021
---------- ----------
Total interest expense 1,488,870 1,166,305
---------- ----------
Net interest income 2,087,206 1,714,941
Provision for loan losses 88,500 126,000
---------- ----------
Net interest income after provision for loan losses 1,998,706 1,588,941
---------- ----------
Non-interest income:
Deposit service charges 150,309 102,144
Mortgage origination fees 35,149 55,304
Other 93,392 80,104
---------- ----------
Total non-interest income 278,850 237,552
---------- ----------
Non-interest expense:
Salaries and employee benefits 816,232 646,293
Occupancy 119,747 79,259
Equipment 170,430 106,827
Marketing and public relations 138,634 97,039
Other 384,312 326,922
---------- ----------
Total non-interest expense 1,629,355 1,256,340
---------- ----------
Net income before tax 648,201 570,153
Income taxes 223,192 198,861
---------- ----------
Net income $ 425,009 $ 371,292
========== ==========
Basic earnings per common share $ 0.35 $ 0.31
========== ==========
Diluted earnings per common share $ 0.34 $ 0.30
========== ==========
</TABLE>
<PAGE> 5
FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Six Six
Months Ended Months Ended
June 30, June 30,
2000 1999
(Unaudited) (Unaudited)
------------ -------------
<S> <C> <C>
Interest income:
Loans, including fees $1,334,816 $ 979,195
Investment securities 441,410 418,366
Federal funds sold and securities purchased
under resale agreements 89,720 138,494
---------- ----------
Total interest income 1,865,946 1,536,055
---------- ----------
Interest expense:
Deposits 743,360 613,931
Federal funds sold and securities sold under agreement
to repurchase 39,938 32,403
Other borrowed money 1,736 1,244
---------- ----------
Total interest expense 785,034 647,578
---------- ----------
Net interest income 1,080,912 888,477
Provision for loan losses 39,500 63,500
---------- ----------
Net interest income after provision for loan losses 1,041,412 824,977
---------- ----------
Non-interest income:
Deposit service charges 82,979 55,440
Mortgage origination fees 11,641 32,818
Other 57,931 31,459
---------- ----------
Total non-interest income 152,551 119,717
---------- ----------
Non-interest expense:
Salaries and employee benefits 419,259 333,851
Occupancy 66,574 49,486
Equipment 99,806 58,292
Marketing and public relations 55,070 42,743
Other 190,014 171,806
---------- ----------
Total non-interest expense 830,723 656,178
---------- ----------
Net income before tax 363,240 288,516
Income taxes 127,446 99,879
---------- ----------
Net income $ 235,794 $ 188,637
========== ==========
Basic earnings per common share $ 0.20 $ 0.16
========== ==========
Diluted earnings per common share $ 0.19 $ 0.15
========== ==========
</TABLE>
<PAGE> 6
FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Six months ended June 30, Three months ended June 30,
--------------------------------- ---------------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income $ 425,009 $ 371,292 $ 235,794 $ 188,636
Other comprehensive income, net
of tax:
Unrealized gains (losses) arising
during the period, net of tax
effect of $4,701, $116,429 and
$675, $88,236 for the six months
and three months ended June
30, 2000 and 1999, respectively (23,154) (216,228) (1,248) (164,262)
---------- ---------- ---------- ----------
Comprehensive income $ 401,855 $ 155,064 $ 234,546 $ 24,374
========== ========== ========== ==========
</TABLE>
<PAGE> 7
FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2000
<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 425,009 425,009
Unrealized loss on securities
available-for-sale (23,154) (23,154)
----------- ----------- ----------- ----------- -----------
Balance June 30, 2000 $ 1,207,177 $12,248,087 $ 1,357,201 $ (369,888) $14,442,577
=========== =========== =========== =========== ===========
</TABLE>
<PAGE> 8
FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six months ended June 30,
---------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 425,009 $ 371,292
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation 164,227 97,262
Premium amortization (Discount accretion) (76,954) (84,848)
Provision for loan losses 88,500 126,000
(Increase) decrease in other assets (63,148) 9,712
Increase (decrease) in accounts payable 143,496 (328,486)
------------ ------------
Net cash provided in operating activities 681,130 190,932
------------ ------------
Cash flows form investing activities:
Purchase of investment securities available-for-sale (6,039,042) (21,949,961)
Maturity of investment securities available-for-sale 7,361,117 13,206,788
Maturity of investment securities held-to-maturity -- 143,673
Increase in loans (7,916,691) (6,349,371)
Purchase of property and equipment (672,119) (998,074)
------------ ------------
Net cash used in investing activities (7,266,735) (15,946,945)
------------ ------------
Cash flows from financing activities:
Increase in deposit accounts 6,511,178 23,666,191
Increase (decrease) in securities sold under agreements to repurchase 937,000 (724,000)
Increase (Decrease) in other borrowings (1,182,165) 99,381
------------ ------------
Net cash provided from financing activities 6,266,013 23,041,572
------------ ------------
Net increase (decrease) in cash and cash equivalents (319,592) 7,285,559
Cash and cash equivalents at beginning of period 6,193,544 5,606,772
------------ ------------
Cash and cash equivalents at end of period $ 5,873,952 $ 12,892,331
============ ============
Supplemental disclosure:
Cash paid during the period for:
Interest $ 1,418,087 $ 1,172,462
Income taxes $ 138,015 $ 406,010
Non-cash investing and financing activities:
Unrealized gain (loss) on securities available-for-sale $ (24,470) $ (332,659)
</TABLE>
<PAGE> 9
FIRST COMMUNITY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 inter-company 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 it's first office located in Lexington, South Carolina. On
September 14, 1995 the company opened it's 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 it's third and fourth banking offices in
Irmo, and Cayce/West Columbia South Carolina, respectively. During the first
quarter of 2000 the bank opened it's 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 it's 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 Six Months Ended June 30, 2000
to the Six Months Ended June 30, 1999:
Net Income
The Company's net income was $425,000 or $.34 diluted earnings per
share for the six months ended June 30, 2000 as compared to net income of
$371,000 or $.30 per share for the six months ended June 30, 1999. This
improvement in earnings reflect the continued growth in the level of earning
assets as well as an increase in the net interest margin during the two periods.
The level of average earning assets was $90.4 million for the six months ended
June 30, 2000 as compared to $80.7 million for the six months ended June 30,
1999. This reflects a 12.0% increase in the level average earning assets for the
two periods. Net interest margin was from 4.6% for the six months ended June 30,
1999 as compared to 4.3% for the six months ended June 30, 1999. This
improvement is primarily a result of the change in the mix of earning assets.
For the six months ended June 30, 2000 loans represented 61.8% of earning
assets as compared to 53.1% for the six months ended June 30, 1999. Loans
typically yield higher returns than alternative investments.
<PAGE> 11
ITEM 2. CONTINUED PAGE 2
Non-interest income increased 17.4% to $279,000 for the six months ended June
30, 2000 as compared to $238,000 for the six months ended June 30, 1999. During
these same periods non-interest expense increased 29.7% to $1.6 million for the
six months ended June 30, 2000 as compared to $1.3 million for the six months
ended June 30, 1999.
Net Interest Income
The table on page 16 shows yield and rate data for interest-bearing
balance sheet components during the six month periods ended June 30, 2000 and
1999, along with average balances and the related interest income and interest
expense amounts.
Net interest income was $2.1 million during the six months ended June 30, 2000
as compared to $1.7 million for the six months ended June 30, 1999. This
improvement of net interest income is a result of an increase in the level of
earning assets and improvement in the net interest margin during the two
periods. The net interest margin was 4.6% for the six months ended June 30, 2000
as compared to 4.3% for the six months ended June 30, 1999. The increase in
margin is primarily a result of a change in the mix of earning assets in which
loans represented 61.8% of earning assets for the six months ended June 30, 2000
as compared to 53.1% of earning assets for the six months ended June 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 six months ended June 30, 2000 was $3.6
million as compared to $2.9 million for the six months ended June 30, 1999. The
average yield on earning assets during the first six months of 2000 was 7.9% as
compared to 7.2% during the same period of 1999. The largest component of
interest income for the six months ended June 30, 2000 was interest on loans and
amounted to $2.5 million as compared to $1.9 million for the comparable prior
year period. The overall yield on loans was 9.2% for the six months ended June
30, 2000 as compared to 8.9% for the six months ended June 30, 1999. The
increase in loan yields was primarily a result of four increases in the prime
rate during the six months of 2000. The investment portfolio income increased
$67,000 or 8.5%, to $856,000 for the six months ended June 30, 2000 as compared
to $789,000 for the six months ended June 30, 1999. The increase in investment
portfolio income is a result of the overall yield on the portfolio increasing to
6.0% for the six months ended June 30, 2000 as compared to 5.5% during the same
period in the prior year. This increase in yield resulted from rising market
rates in the first six months of 2000. Interest on overnight federal funds sold
and securities purchased under agreements to resell decreased $37,000 or 17.4%,
to $176,000 for the six month period ended June 30, 2000 as compared to $213,000
for the six month period ended June 30, 1999. Interest expense during the six
months ended June 30, 2000 was $1.5 million with an average rate paid on
interest-bearing liabilities of 4.2% as compared to $1.2 million and 3.8% during
the six months ended June 30, 1999. Along with the overall increase in rate paid
on funds the increase in interest expense
<PAGE> 12
ITEM 2. CONTINUED PAGE 3
resulted from an increase in the level of average interest-bearing liabilities
of $9.2 million for the six months ended June 30, 2000 as compared to the six
months ended June 30, 1999.
Provision and Allowance for Loan Losses
The provision for loan losses was $89,000 and $126,000 for six months
ended June 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 1.3% at June 30, 2000. The Company had no nonperforming
loans at June 30, 2000. Net recoveries during six months ended June 30, 2000,
amounted to approximately $13,000 as compared to net charge-offs of $24,000 for
the same period in the prior year. Loans past due greater than 30 days amounted
to $81,000 and there were no loans greater than 60 days past due at June 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 six months ended June 30, 2000 was
$279,000 as compared to $238,000 for the six months ended June 30, 1999. This
was primarily a result of increased income from deposit service charges of
$48,000 (47.2%). This was partially offset by a decrease in mortgage origination
fees of $20,000 during the first six months of 2000 as compared to 1999. This
decrease in mortgage origination fees is attributable to rising rates which
result in fewer refinancings. The company originates mortgage loans, which are
closed in the name of a third party, for which the company receives a fee. In
addition fee income, included in other non-interest income on the Statements of
Income, from the sale of non deposit products increased by $5,000 for the six
months ended June 30, 2000 as compared to the same period in 1999.
<PAGE> 13
ITEM 2. CONTINUED PAGE 4
Noninterest expense amounted to $1.6 million as compared to $1.3
million during the six months ended June 30, 2000 and 1999, respectively. Salary
and employee benefits increased $170,000 or 26.3% in the six months ended June
30, 2000 as compared to the comparable period in 1999. This increase is
primarily a result of having approximately eight full time equivalent employees
more during the first six months of 2000 as compared to the first six 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
six months of 1999. Occupancy expense increased by $40,000 (51.1%) in the first
six months of 2000 as compared to the same period in 1999. This is primarily
related to additional expenses related to the three new branch offices opened
between April 1999 and March 2000. Equipment expense increased from $107,000 for
the six months ended June 30, 1999 to $170,000 for the six months ended June 30,
2000. This is a result of increased depreciation expense and maintenance expense
related to furniture and equipment in the new branch offices. Marketing and
public relations expense increased by $42,000 or 42.9% in the six months ended
June 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. During the last quarter of 1999 and first half of 2000
the company introduced its first television advertising which is more expensive
then other forms of media advertising. Other non-interest expense increased
$57,000 or 17.6% in the six months ended June 30, 2000 compared to the same
period in the prior year. An increase in computer service bureau expense,
telephone, postage and courier expense of $22,000, $10,000 $3,000 and $4,000
account for a majority of the increase in other non-interest expense. These
expense categories are primarily impacted by the numbers of accounts and the
volume of activity, and have increased due to the growth of the bank for the six
months ended June 30, 2000 as compared to the same period in the prior year.
Comparison of Results of Operations for Three Months Ended June 30, 2000 to the
Three Months Ended June 30, 1999:
Net income for the second quarter of 2000 was $236,000, as compared to
$189,000 during the comparable period in 1999. This improvement is due to the
increase in the level of earning assets during these two periods and improvement
in the net interest margin to 4.7% in the second quarter of 2000 as compared to
4.1% in the second quarter of 1999. Average earning assets were $92.8 million
during the second quarter of 2000 as compared to $87.0 million during the second
quarter of 1999. The table on page 17 shows yield and rate data for
interest-bearing balance sheet components during the three month periods ended
June 30, 2000 and 1999, along with average balances and the related interest
income and interest expense amounts. The yield
<PAGE> 14
ITEM 2. CONTINUED PAGE 5
on average earning assets increased from 7.1% in the second quarter of 1999 to
8.1% in the second quarter of 2000. This increase is primarily a result of loans
comprising 62.6% of earning assets during the second quarter of 2000 as compared
to 51.2% percent during the second quarter of 1999. In addition, as previously
explained in the analysis of six month results, there were four increases in
prime rate during the last quarter of 1999 and first six months of 2000 that had
an impact on overall market rates. The cost of interest bearing liabilities was
3.8% in second quarter of 1999 as compared to 4.3% in the second quarter of
2000. 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 $33,000 during the second
quarter of 2000 as compared to the same period in 1999. Deposit service charges
increased by $28,000 and investment fees increased by $23,000 in the three
months ended June 30, 2000 as compared to the same period in 1999. These
increases were offset by a decrease of $21,000 in mortgage origination fees
during the same periods.
Total non-interest expense increased by $175,000 in the second quarter
of 2000 as compared to the same quarter of 1999. This increase is primarily a
result of a $85,000 increase in salary and benefits expense, a $17,000 increase
in occupancy expense and a $42,000 increase in equipment expense. These expense
increases were primarily a result of the opening of two new branches one in the
fourth quarter of 1999 located in West Columbia and the second in Gilbert S.C.
during the first quarter of 2000. As stated in the analysis of the six month
results, increases in computer service bureau expense, telephone and courier
expense accounted for the balance of the increase as a result in the growth of
the bank during these periods. During the second quarter of 2000 the bank
converted its core data processing from a service bureau to an in-house system.
This was done in order to try and control the rising cost for data processing
which were being incurred by the bank.
Financial Position
Assets totaled $101.7 million at June 30, 2000 as compared to $94.9
million at December 31, 1999 an increase of $6.8 million. Loans grew by $7.9
million during the six months ended June 30, 2000, from $52.3 million to $60.2
million. This loan growth was funded primarily by the growth in deposits of $6.5
million from $77.0 million at December 31, 1999 to $83.5 million at June 30,
2000. The balance of the loan growth was funded by a decrease in investment
securities of $1.2 million during the six months ended June 30, 2000. The loan
to deposit ratio at June 30, 2000 was 72.1% as compared to 67.9% at December 31,
1999.
<PAGE> 15
ITEM 2. CONTINUED PAGE 6
Liquidity and Capital Resources
The company's liquidity remains adequate to meet operating and loan
funding requirements. Federal funds sold and investment securities available-for
sale represent 27.2% of total assets June 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 June 30, 2000 the amount of certificates of deposits of $100,000 or more
represented 23.7% of total deposits. These deposits are issued to local
customers many of which 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 14.2% of total assets at June 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 16.2%, 17.4% and 11.4%,
respectively at June 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>
Six months ended June 30, 2000 Six months ended June 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 $55,835,743 2,544,221 9.16% $42,842,962 1,879,636 8.85%
Securities: 28,820,186 855,649 5.97% 28,878,788 788,622 5.51%
Federal funds sold and securities purchased
under agreements to resell 5,754,105 176,206 6.16% 9,024,611 212,988 4.76%
----------- --------- ----- ----------- ---------- -----
Total earning assets 90,410,034 3,576,076 7.95% 80,746,361 2,881,246 7.20%
--------- ---- ---------- -----
Cash and due from banks 3,357,364 2,649,827
Premises and equipment 5,640,616 4,100,435
Other assets 994,504 908,478
Allowance for loan losses (748,798) (578,062)
----------- -----------
Total assets $99,653,720 $87,827,039
=========== ===========
LIABILITIES
Interest-bearing liabilities
Interest-bearing transaction accounts $10,526,956 39,043 0.75% $10,588,145 44,662 0.85%
Money market accounts 13,739,310 297,621 4.36% 8,742,990 176,308 4.07%
Savings deposits 8,290,944 138,728 3.36% 8,668,483 150,067 3.49%
Time deposits 35,979,058 931,020 5.20% 31,174,834 731,691 4.73%
Other short term borrowings 3,159,941 82,458 5.25% 3,318,335 63,577 3.86%
---------- --------- ---- ---------- ---------- -----
Total interest-bearing liabilities 71,696,209 1,488,870 4.18% 62,492,787 1,166,305 3.76%
--------- ---- ---------- -----
Demand deposits 13,159,877 10,989,110
Other liabilities 514,073 584,807
Shareholders' equity 14,283,561 13,760,335
----------- -----------
Total liabilities and shareholders' equity $99,653,720 $87,827,039
=========== ===========
Net interest spread 3.77% 3.44%
Net interest income/margin $2,087,206 4.64% $1,714,941 4.28%
========== ==========
</TABLE>
<PAGE> 17
FIRST COMMUNITY CORPORATION
YIELDS ON AVERAGE EARNING ASSETS AND RATES
ON AVERAGE INTEREST-BEARING LIABILITIES
<TABLE>
<CAPTION>
Three months ended June 30, 2000 Three months ended June 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 $ 58,074,222 1,334,816 9.24% $44,552,572 979,195 8.82%
Securities: 29,349,359 441,410 6.05% 30,727,075 418,366 5.46%
Federal funds sold and securities purchased
under agreements to resell 5,396,334 89,720 6.69% 11,761,037 138,494 4.72%
------------- ---------- ---- ----------- --------- ----
Total earning assets 92,819,915 1,865,946 8.09% 87,040,684 1,536,055 7.08%
---------- ---- --------- ----
Cash and due from banks 3,753,843 2,643,581
Premises and equipment 5,788,025 4,330,266
Other assets 1,003,558 882,454
Allowance for loan losses (775,104) (599,652)
------------- -----------
Total assets $ 102,590,237 $94,297,333
============= ===========
LIABILITIES
Interest-bearing liabilities
Interest-bearing transaction accounts $ 11,108,868 20,561 0.74% $10,376,955 19,267 0.74%
Money market accounts 13,063,585 147,040 4.53% 9,227,384 94,096 4.09%
Savings deposits 8,162,998 67,186 3.31% 8,415,355 71,845 3.42%
Time deposits 38,271,043 508,573 5.34% 36,940,267 428,723 4.66%
Other short term borrowings 3,107,574 41,674 5.39% 3,472,216 33,647 3.89%
------------- ---------- ---- ----------- --------- ----
Total interest-bearing liabilities 73,714,068 785,034 4.28% 68,432,177 647,578 3.80%
---------- ---- --------- ----
Demand deposits 13,868,819 11,592,289
Other liabilities 676,367 465,097
Shareholders' equity 14,330,983 13,807,770
------------- -----------
Total liabilities and shareholders' equity $ 102,590,237 $94,297,333
============= ===========
Net interest spread 3.81% 3.28%
Net interest income/margin $1,080,912 4.68% $ 888,477 4.09%
========== =========
</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.
The Annual Meeting of Shareholders was held on April 26, 2000.
The following five directors were elected at the meeting:
<TABLE>
<CAPTION>
VOTES
----------------------------
For Against/Withheld
------- ----------------
<S> <C> <C>
William L. Boyd III 959,282 1,000
Chimin J. Chao 959,282 1,000
William A. Jordan 959,282 1,000
James C. Leventis 959,282 1,000
Loretta R. Whitehead 959,032 1,250
</TABLE>
The following twelve Directors term of office continued after the meeting:
Thomas C. Brown Anita B. Easter
Richard K. Bogan O. A. Ethridge DMD
Robert G. Clawson George H. Fann, Jr. DMD
W. James Kitchens, Jr. Angelo Tsiantis
Michael C. Crapps Broadus Thompson
Hinton G. Davis Mitchell M. Willoughby
ITEM 5. OTHER INFORMATION.
None
<PAGE> 19
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).*
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 company's 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 during the quarter
ended June 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 August 11, 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