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First Community Corp. Reports Operating Results (10-Q)

May 17, 2010 | About:

First Community Corp. (NASDAQ:FCCO) filed Quarterly Report for the period ended 2010-03-31.

First Community Corp. has a market cap of $21.04 million; its shares were traded at around $6.46 with a P/E ratio of 10.95 and P/S ratio of 0.58. The dividend yield of First Community Corp. stocks is 2.48%.

Highlight of Business Operations:

received over 100 unique applications to participate in the Legacy Securities PPIP and in July 2009 selected nine public-private investment fund managers. As of December 31, 2009, public-private investment funds have completed initial and subsequent closings on approximately $6.2 billion of private sector equity capital, which was matched 100% by Treasury, representing $12.4 billion of total equity capital. Treasury has also provided $12.4 billion of debt capital, representing $24.8 billion of total purchasing power. As of December 31, 2009, public-private investment funds have drawn-down approximately $4.3 billion of total capital which has been invested in certain non-agency residential mortgage backed securities and commercial mortgage backed securities and cash equivalents pending investment.

Our net income for the three months ended March 31, 2010 was $589,000, or $0.13 diluted earnings per share, as compared to $572,000 or $0.13 diluted earnings per share, for the three months ended March 31, 2009. The slight increase in net income between the two periods is primarily due to an increase of $397,000 in net interest income and a lower effective tax rate between the two periods. The effect of these positive changes were offset by an increase in the provision for loan losses of $99,000, a decrease in non-interest income of $226,000 and an increase in non-interest expense of $162,000 between the two periods. Average earning assets decreased by $18.3 million in the first quarter of 2010 as compared to the same period in 2009. Average earning assets were $572.9 million during the three months ended March 31, 2009 as compared to $554.7 million during the three months ended March 31, 2010. The decrease in average earning assets was a result of prepaying approximately $27.0 million in Federal Home Loan Bank advances late in the fourth quarter of 2009 as well as repaying $3.3 million in maturing advances in the first quarter of 2010. Despite the decrease in average earning assets, we realized an increase in net interest income of $397,000 in the first three months of 2010 as compared to the first three months of 2009 as a result of a 38 basis point increase in our net interest margin on a tax equivalent basis.

At March 31, 2010 and December 31, 2009, the allowance for loan losses was $4.9 million, or 1.42% and 1.41% of total loans, respectively. Our provision for loan losses was $550,000 for the three months ended March 31, 2010, as compared to $451,000 for the three months ended March 31, 2009. This provision is made based on our assessment of general loan loss risk and asset quality. The allowance for loan losses represents an amount which we believe will be adequate to absorb probable losses on existing loans that may become uncollectible. Our judgment as to the

The effects of the slowing economy have resulted in some deterioration of our loan portfolio in general as evidenced by the increase in non-performing assets from $8.3 million (1.37% of total assets) at December 31, 2009 to $9.1 million (1.47% of total assets) at March 31, 2010. While we believe these ratios are favorable in comparison to current industry results, we continue to be concerned about the impact of this economic environment on our customer base of local businesses and professionals. There are 33 loans included in non-performing status (non-accrual loans and loans past due 90 days and still accruing). The largest is for $828,000 and is secured by a first lien on a single family residential property. The average balance of the remaining 32 loans is approximately $101,000 and the majority of these loans are secured by first mortgage liens. At the time the loans are placed in non-accrual status, we typically obtain an updated evaluation and generally, if the loan balance exceeds fair value, write the balance down to the fair value. At March 31, 2010, we had $67,000 in loans delinquent more than 90 days and still accruing interest, and loans totaling $3.6 million that were delinquent 30 days to 89 days. We anticipate that all of the principal and interest will be collected on those loans greater than 90 days or more delinquent and still accruing interest.

Our management continuously monitors non-performing, classified and past due loans, to identify deterioration regarding the condition of these loans. We have identified 4 loan relationships in the amount of $3.8 million that are current as to principal and interest and not included in non-performing assets that could represent potential problem loans. Two of these relationships are in the amount of $1.5 million each. The first includes a first and second mortgage totaling $1.0 million on a single family residential property as well as mortgages on several investment properties totaling $500,000. Subsequent to the quarter ending March 31, 2010, the borrower indicated he would be

unable to make further payments on his personal residential loans. The loans totaling $1.0 million have subsequently been placed in non-accrual status and written down by approximately $135,000 based on a current appraisal. The additional investment properties secured by the $500,000 loan are occupied and it is not anticipated that we will incur any significant losses. The second relationship in the amount of $1.5 million is a mortgage on a developed parking complex in Columbia, whereby individual parking spaces are to be sold to individuals. We are in the process of obtaining a new appraisal but it is not anticipated that we will incur a material loss if we are required to foreclose on the property in the future. The other two relationships are in the amount of $349,000 and $448,000, and each relationship has previously been in delinquent status and brought current. These loans are on various investment properties and it is not anticipated that we would have a material loss in the event we should subsequently foreclose on the properties.

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Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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