First Community Corporation Announces Second Quarter Results and Cash Dividend

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LEXINGTON, S.C., July 22, 2020 /PRNewswire/ --

Highlights for Second Quarter of 2020

  • Net income of $2.217 million.
  • Pre-tax pre-provision earnings of $3.999 million, up 9.2% year-over year and 20.9% linked quarter.
  • Diluted EPS of $0.30 per common share for the quarter and $0.54 year-to-date through June 30, 2020
  • Total loans increased during the second quarter by $67.843 million, an annualized growth rate of 36.4%. Excluding Paycheck Protection Program or PPP loans, loan growth was $19.978 million, a 10.7% annualized growth rate.
  • Facilitated PPP loans (combined direct and external channels) for 896 customers totaling $80.7 million as of July 17, 2020.
  • Pure deposit growth, including customer cash management, of $133.5 million, an annualized growth rate of 59.9%.
  • Record quarter for mortgage line of business with revenue growth of 27.0% year-over-year.
  • Net interest margin on a tax equivalent basis of 3.38%, including PPP loans and 3.40% excluding PPP loans.
  • Strong credit quality metrics with non-performing assets (NPAs) of 0.25%, past due ratio of 0.04% and net loan charge-offs excluding overdrafts of $4.7 thousand, with a year-to-date through June 30, 2020 net recovery of $3.6 thousand.
  • Cash dividend of $0.12 per common share, which is the 74th consecutive quarter of cash dividends paid to common shareholders.

 

Today, First Community Corporation (Nasdaq:  FCCO), the holding company for First Community Bank, reported net income for the second quarter of 2020 of $2.217 million as compared to $2.881 million in the second quarter of 2019.  Diluted earnings per common share were $0.30 for the second quarter of 2020 as compared to $0.37 for the second quarter of 2019. On a linked quarter basis, net income increased 23.6% from $1.794 million in the first quarter of 2020 and diluted earnings per common share increased 25.0% from $0.24.  Pre-tax pre-provision earnings or PTPPE in the second quarter of 2020 were $3.999 million compared to second quarter of 2019 PTPPE of $3.662 million and first quarter 2020 PTPPE of $3.307 million, an increase of 9.2% and 20.9% respectively.     

Year-to-date through June 30, 2020 net income was $4.011 million compared to $5.376 million during the first six months of 2019.  Diluted earnings per share for the first half of 2020 were $0.54, compared to $0.70 during the same time period in 2019.   Year-to-date through June 30, 2020 PTPPE were $7.306 million compared to $6.868 million during the first half of 2019, an increase of 6.4%.  Mike Crapps, First Community President and CEO, commented, "We are pleased with growth in our core earnings even during these unprecedented times.  Our ability to quickly launch a platform to process PPP loans along with the revenue diversification with our three lines of business helped to support our performance in the second quarter.  While our credit metrics remain strong, again this quarter we increased the provision for loan losses in anticipation of potential future impact from the COVID-19 pandemic."

Cash Dividend and Capital

The Board of Directors approved a cash dividend for the second quarter of 2020.  The company will pay a $0.12 per share dividend to holders of the company's common stock.  This dividend is payable August 17, 2020 to shareholders of record as of August 3, 2020.  Mr. Crapps commented, "Our entire board is pleased that our performance enables the company to continue its cash dividend for the 74th consecutive quarter." 

During the second quarter, no share repurchases have been made under our existing share repurchase plan approved during the third quarter of 2019.  Our existing repurchase plan provides the company with some flexibility in managing capital going forward. 

In 2018, the Federal Reserve increased the asset size to qualify as a small bank holding company.  As a result of this change, the company is generally not subject to the Federal Reserve capital requirements unless advised otherwise.  The bank remains subject to capital requirements including a minimum leverage ratio and a minimum ratio of "qualifying capital" to risk weighted assets.  These requirements are essentially the same as those that applied to the company prior to the change in the definition of a small bank holding company.  Each of the regulatory capital ratios for the bank exceed the well capitalized minimum levels currently required by regulatory statute.  At June 30, 2020, the bank's regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) were 9.31%, 13.02%, and 14.03%, respectively.  This compares to the same ratios as of June 30, 2019 of 10.20%, 13.47%, and 14.25%, respectively. As of June 30, 2020, the bank's Common Equity Tier I ratio was 13.02% compared to 13.47% at June 30, 2019.  

Asset Quality / Allowance for Loan and Lease Losses 

Asset quality metrics remained strong as of June 30, 2020.  The non-performing assets ratio for the second quarter was 0.25% of total assets and total past dues (ratio) was 0.04%.  Net loan charge-offs excluding overdrafts for the quarter were $4.7 thousand and the year-to-date through June 30, 2020 net recovery is $3.6 thousand.  The ratio of classified loans plus OREO now stands at 5.41% of total bank regulatory risk-based capital as of June 30, 2020. 

Mr. Crapps indicated, "As a way to serve our many local businesses and individuals during the past few challenging months, we proactively offered payment deferrals for up to 90 days to our loan customers."  The company reported that at its peak, there were payment deferments on loans totaling approximately $206.9 million (26.9% of the non-PPP loan portfolio).  Loans in which payments have been deferred decreased to $175.0 million (22.7% of the non-PPP loan portfolio) at June 30, 2020 and $110.6 million (14.4% of the non-PPP loan portfolio) at July 16, 2020.  This is primarily the result of payments being restarted at the conclusion of their payment deferral period.  It is also noteworthy that the percentage of loans, in certain identified industries deemed to be "high risk" due to the pandemic, is largely unchanged from prior disclosures. 

Even with strong credit quality metrics, due to the uncertainty of future credit losses related to the COVID-19 pandemic and its effect on local businesses, the bank funded $1.250 million to the provision for loan losses in the second quarter compared to $9 thousand in the second quarter of 2019.  Year-to-date through June 30, 2020, the bank has funded $2.325 million in provision for loan losses compared to $114 thousand during the first six months of 2019.  During the first six months of 2020, the ratio of the Allowance for Loan Loss to total loans has increased from 0.90% as of December 31, 2019 to 1.09% as of June 30, 2020.  Mr. Crapps commented, "Our credit metrics continue to indicate the current strong quality of our loan portfolio.  This combined with the significant reduction in loans with payments deferred is good news for our company.  At the same time, there is much unknown about the economic impact of the pandemic; therefore, we continue to prepare our balance sheet and our resources for an uncertain future."

Balance Sheet                   

Total loans increased during the second quarter by $67.843 million, which is an annualized growth rate of 36.4%.  Total loans, excluding PPP loans, increased during the second quarter by $19.978 million which is an annualized growth rate of 10.7%.  Non-PPP loan growth during the quarter was the result of increased production and lower payoffs/paydowns on a linked quarter.  Commercial loan production was $39.3 million during the second quarter compared to $33.5 million in the first quarter of 2020.  Early payoffs were less impactful, as evidenced by the ratio of loan portfolio growth to loan production at 50.8% compared to 37.3% on the linked quarter and the average of 31.8% in 2018 and 2019. 

In addition to the strong non-PPP loan growth during the quarter, through July 17, 2020 the bank has helped facilitate $80.7 million in PPP loans to 896 customers through a combination of direct loans and referrals to an SBA partner.  As of June 30, 2020, the bank had $47.9 million in PPP loans on the balance sheet.  As of July 17, 2020, PPP loans on the balance sheet had increased to $49.7 million.  Crapps noted, "As a community bank committed to the success of local businesses, we are pleased to be able to support our customers with access to the PPP funding." 

Total deposits were $1.119 billion at June 30, 2020 compared to $986.6 million at March 31, 2020.  Pure deposits, which are defined as total deposits less certificates of deposits, increased $133.8 million or 15.7% to $983.8 million at June 30, 2020 from $850.0 million at March 31, 2020.  This increase in deposits was partially due to the proceeds of PPP loans that were made during the quarter and stimulus funds.   The bank had no brokered deposits and no listing services deposits at June 30, 2020.  Securities sold under agreements to repurchase, which are related to customer cash management accounts or business sweep accounts, were relatively flat at $45.7 million at June 30, 2020 compared to 46.0 million at March 31, 2020.  Costs of deposits decreased on a linked quarter basis to 0.28% in the second quarter of 2020 from 0.42 in the first quarter of the year.  Cost of funds also decreased on a linked quarter basis to 0.33% in the second quarter of 2020 from 0.50 in the first quarter of the year. 

Mr. Crapps commented, "Our low cost deposits; our ability to borrow against approved lines of credit (federal funds purchased) from correspondent banks; and our ability to obtain advances secured by certain securities and loans from the Federal Home Loan Bank provide ample liquidity as we continue to meet the needs of our customers and to manage through the COVID-19 pandemic."   

Revenue

Net Interest Income/Net Interest Margin

Net interest income increased $326 thousand or 3.5% to $9.743 million for the second quarter of 2020 compared to first quarter net interest income of $9.417 million.  Year-over-year, net interest income increased $627 thousand or 6.9% from $9.116 million in the second quarter of 2019.  Second quarter net interest margin, on a tax equivalent basis, was 3.38% compared to net interest margin of 3.55% in the first quarter.  Second quarter net interest margin, excluding PPP loans, was 3.40%.   The net interest margin has declined as a result of multiple factors, including the Federal Reserve reducing the target range for federal funds to near zero with two rate reductions in March of this year totaling 150 basis points; the modest yield earned on the PPP loans; and the excess liquidity on the bank's  balance sheet. 

Non-Interest Income

Non-interest income increased 15.7% on a linked quarter basis to $3.387 million in the second quarter of 2020, an increase from $2.928 million in the first quarter of this year.  Year-over-year, non-interest income, adjusted for securities gains and losses, increased 12.1% from $3.022 million in the second quarter of 2019.  Revenues in the mortgage line of business increased 27.0% year-over-year to $1.572 million compared to $1.238 million in the second quarter of 2019.  On a linked quarter basis, mortgage revenue increased 60.1% from $982 thousand in the first quarter.  Mortgage loan production increased 46.1% year-over-year from $36.89 million in the second quarter of 2019 to $53.89 million in the second quarter of 2020.  Revenue in the investment advisory line of business increased 5.8% on a linked quarter basis to $671 thousand in the second quarter of 2020 from $634 thousand in the first quarter and year-over-year increased 37.2% from $489 thousand in the second quarter of 2019.  It is noteworthy that the assets under management (AUM), which was $369.7 million at December 31, 2019, declined to $319.7 million at March 31, 2020, bounced back to $390.7 million at June 30, 2020.  Mr. Crapps commented, "Our strategy of multiple revenue streams continues to serve us well as we focus our efforts to accelerate growth in these lines of business.  Our mortgage line of business had a record quarter and revenues in our investment advisory line of business continue to grow.  We are pleased with the activity and momentum in each of our business units." 

Non-Interest Expense

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Non-interest expense was $9.131 million in the second quarter of 2020, compared to $9.038 million in the first quarter of 2020.  Salaries and benefits expense increased $187 thousand which was mainly related to increased commissions paid on higher production in the mortgage line of business and temporary help and overtime pay in the mortgage support areas.

About First Community Corporation

First Community Corporation stock trades on the NASDAQ Capital Market under the symbol "FCCO" and is the holding company for First Community Bank, a local community bank based in the Midlands of South Carolina.  First Community Bank is a full-service commercial bank offering deposit and loan products and series, residential mortgage lending and financial planning/investment advisory services for businesses and consumers.  First Community serves customers in the Midlands, Aiken, and Greenville, South Carolina markets as well as Augusta, Georgia.  For more information, visit www.firstcommunitysc.com.

FORWARD-LOOKING STATEMENTS

This news release and certain statements by our management may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans, goals, projections and expectations, and are thus prospective. Forward looking statements can be identified by words such as "anticipated', "expects", "intends", "believes", "may", "likely", "will" or other statements that indicate future periods.  Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.  Such risks, uncertainties and other factors, include, among others, the following: (1) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (2) the strength of the United States economy in general and the strength of the local economies in which we conduct operations may be different than expected including, but not limited to, due to the negative impacts and disruptions resulting from the recent outbreak of the novel coronavirus, or COVID-19, on the economies and communities we serve, which may have an adverse impact on our business, operations, and performance, and could have a negative impact on our credit portfolio, share price, borrowers, and on the economy as a whole both domestically and globally; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for loan loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (4) changes in legislation, regulation, policies or administrative practices, whether by judicial, governmental, or legislative action, including, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act, or the "CARES Act"; (5) adverse conditions in the stock market, the public debt markets and other capital markets (including changes in interest rate conditions) could have a negative impact on the company; (6) technology and cybersecurity risks, including potential business disruptions, reputational risks, and financial losses, associated with potential attacks on or failures by our computer systems and computer systems of our vendors and other third parties; and (7) risks, uncertainties and other factors disclosed in our most recent Annual Report on Form 10-K filed with the SEC, or in any of our Quarterly Reports on Form 10-Q or Current Reports on Form 8-K filed with the SEC since the end of the fiscal year covered by our most recently filed Annual Report on Form 10-K, which are available at the SEC's Internet site (http://www.sec.gov).

Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. We can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by our company or any person that the future events, plans, or expectations contemplated by our company will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

 

FIRST COMMUNITY CORPORATION




BALANCE SHEET DATA


(Dollars in thousands, except per share data)






As of





June 30,

December 31,

June 30,





2020

2019

2019









  Total Assets



$1,324,800

$  1,170,279

$  1,115,968


  Other Short-term Investments1


77,666

32,741

24,898


  Investment Securities


297,972

288,792

252,302


  Loans Held for Sale


33,496

11,155

8,730


  Loans







     Paycheck Protection Program (PPP) Loans

47,865

-

-


     Non-PPP Loans



769,507

737,028

726,707


  Total Loans



817,372

737,028

726,707


  Allowance for Loan Losses

8,936

6,627

6,362


  Goodwill



14,637

14,637

14,637


  Other Intangibles



1,283

1,483

1,742


  Total Deposits



1,118,872

988,201

937,391


  Securities Sold Under Agreements to Repurchase

45,651

33,296

33,889


  Federal Home Loan Bank Advances

-

211

221


  Junior Subordinated Debt

14,964

14,964

14,964


  Shareholders' Equity



130,801

120,194

117,489









  Book Value Per Common Share

$       17.47

$         16.16

$         15.64


  Tangible Book Value Per Common Share 

$       15.35

$         13.99

$         13.46


  Equity to Assets



9.87%

10.27%

10.53%


  Tangible Common Equity to Tangible Assets

8.78%

9.02%

9.20%


  Loan to Deposit Ratio (Includes Loans Held for Sale)

76.05%

75.71%

78.46%


  Allowance for Loan Losses/Loans

1.09%

0.90%

0.88%









Regulatory Capital Ratios (Bank):





  Leverage Ratio

9.31%

9.97%

10.20%


  Tier 1 Capital Ratio


13.02%

13.47%

13.47%


  Total Capital Ratio


14.03%

14.26%

14.25%


  Common Equity Tier 1 Capital Ratio

13.02%

13.47%

13.47%


  Tier 1 Regulatory Capital

$   115,788

$     112,754

$     110,756


  Total Regulatory Capital

$   124,724

$     119,381

$     117,118


  Common Equity Tier 1 Capital

$   115,788

$     112,754

$     110,756









1 Includes federal funds sold, securities sold under agreement to resell and interest-bearing deposits









Average Balances:


Three months ended


Six months ended



June 30,


June 30,



2020

2019


2020

2019








  Average Total Assets

$1,269,244

$1,103,347


$  1,222,797

$   1,096,371

  Average Loans (Includes Loans Held for Sale)

824,842

728,711


789,250

726,398

  Average Earning Assets

1,171,183

1,005,402


1,124,213

999,464

  Average Deposits

1,060,087

924,200


1,014,732

916,513

  Average Other Borrowings

68,913

50,012


69,623

53,290

  Average Shareholders' Equity

126,916

117,255


125,190

115,529








Asset Quality:



 As of  





June 30,

March 31,

December 31,





2020

2020

2019


Loan Risk Rating by Category (End of Period)





  Special Mention



$       2,849

$         3,950

$         4,936


  Substandard



5,300

4,467

4,691


  Doubtful



-

-

-


  Pass



809,223

741,112

727,401





$   817,372

$     749,529

$     737,028


Nonperforming Assets






  Non-accrual Loans


$       1,806

$         1,739

$         2,329


  Other Real Estate Owned and Repossessed Assets

1,449

1,481

1,410


  Accruing Loans Past Due 90 Days or More

-

168

-


Total Nonperforming Assets

$       3,255

$         3,388

$         3,739


Accruing Trouble Debt Restructurings

$       1,613

$         1,635

$         1,669











 Three months ended 


 Six months ended 



June 30,


June 30,



2020

2019


2020

2019

  Loans Charged-off

$            16

$           13


$             17

$              23

  Overdrafts Charged-off

9

30


31

53

  Loan Recoveries

(11)

(32)


(20)

(44)

  Overdraft Recoveries

(6)

(10)


(12)

(17)

     Net Charge-offs (Recoveries)

$             8

$             1


$             16

$              15

Net Charge-offs to Average Loans2

0.00%

0.00%


0.00%

0.00%

2 Annualized







 

FIRST COMMUNITY CORPORATION







INCOME STATEMENT DATA







(Dollars in thousands, except per share data)









Three months ended


Three months ended


Six months ended




June 30,


March 31,


June 30,




2020

2019


2020

2019


2020

2019













  Interest income


$   10,666

$   10,606


$   10,710

$   10,374


$   21,376

$   20,980


  Interest expense


923

1,490


1,293

1,354


2,216

2,844


  Net interest income


9,743

9,116


9,417

9,020


19,160

18,136


  Provision for loan losses


1,250

9


1,075

105


2,325

114


  Net interest income after provision


8,493

9,107


8,342

8,915


16,835

18,022


  Non-interest income











    Deposit service charges


210

380


399

411


609

791


    Mortgage banking income


1,572

1,238


982

844


2,554

2,082


    Investment advisory fees and non-deposit commissions

671

489


634

438


1,305

927


    Gain (loss) on sale of securities


-

164


-

(29)


-

135


    Gain (loss) on sale of other assets


-

(3)


6

-


6

(3)


    Other


934

918


907

845


1,841

1,763


  Total non-interest income


3,387

3,186


2,928

2,509


6,315

5,695


  Non-interest expense











    Salaries and employee benefits


5,840

5,210


5,653

5,170


11,493

10,380


    Occupancy


679

647


643

655


1,322

1,302


    Equipment


298

389


318

386


616

775


    Marketing and public relations


247

430


354

175


601

605


    FDIC assessment 


88

71


42

74


130

145


    Other real estate expenses


40

18


35

29


75

47


    Amortization of intangibles


95

132


105

132


200

264


    Other


1,844

1,743


1,888

1,702


3,732

3,445


  Total non-interest expense


9,131

8,640


9,038

8,323


18,169

16,963


  Income before taxes


2,749

3,653


2,232

3,101


4,981

6,754


  Income tax expense


532

772


438

606


970

1,378


  Net income


$     2,217

$     2,881


$     1,794

$     2,495


$     4,011

$     5,376













  Per share data











     Net income, basic 


$       0.30

$       0.38


$       0.24

$       0.33


$       0.54

$       0.70


     Net income, diluted 


$       0.30

$       0.37


$       0.24

$       0.32


$       0.54

$       0.70













  Average number of shares outstanding - basic

7,435,933

7,626,559


7,427,257

7,633,908


7,431,595

7,628,868


  Average number of shares outstanding - diluted

7,465,212

7,704,221


7,472,956

7,724,780


7,467,755

7,708,267


  Shares outstanding period end


7,486,151

7,511,164


7,462,247

7,664,967


7,486,151

7,511,164













  Return on average assets


0.70%

1.05%


0.61%

0.93%


0.66%

0.99%


  Return on average common equity


7.03%

9.86%


5.84%

8.89%


6.44%

9.38%


  Return on average common tangible equity

8.04%

11.46%


6.72%

10.41%


7.39%

10.95%


  Net interest margin (non taxable equivalent) 

3.35%

3.64%


3.52%

3.68%


3.43%

3.66%


  Net interest margin (taxable equivalent)


3.38%

3.67%


3.55%

3.73%


3.46%

3.70%


  Efficiency ratio1


69.00%

70.62%


72.79%

71.31%


70.83%

70.95%


1 Calculated by dividing non-interest expense by net interest income on tax equivalent basis and non interest income, excluding gains (losses) on sales of securities and other assets.

 

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates 

  on Average Interest-Bearing Liabilities









Three months ended June 30, 2020

Three months ended June 30, 2019


Average

Interest 

Yield/

Average

Interest 

Yield/


Balance

Earned/Paid

Rate

Balance

Earned/Paid

Rate

Assets







Earning assets







  Loans







     PPP loans

$     31,816

$        217

2.74%

$            -

$           -

NA

     Non-PPP loans

793,026

8,801

4.46%

728,711

8,792

4.84%

  Total loans

824,842

9,018

4.40%

728,711

8,792

4.84%

  Securities

294,915

1,611

2.20%

250,316

1,658

2.66%

  Other short-term investments

51,426

37

0.29%

26,375

156

2.37%

Total earning assets

1,171,183

10,666

3.66%

1,005,402

10,606

4.23%

Cash and due from banks

14,820



13,998



Premises and equipment

34,837



35,765



Goodwill and other intangibles

15,967



16,443



Other assets

40,489



38,094



Allowance for loan losses

(8,052)



(6,355)



Total Assets

$1,269,244



$1,103,347










Liabilities







Interest-bearing liabilities







  Interest-bearing transaction accounts

$   232,611

$          59

0.10%

$   202,096

$        135

0.27%

  Money market accounts

203,641

179

0.35%

177,039

481

1.09%

  Savings deposits

108,608

17

0.06%

107,638

36

0.13%

  Time deposits

165,995

481

1.17%

176,715

528

1.20%

  Other borrowings

68,913

187

1.09%

50,012

310

2.49%

Total interest-bearing liabilities

779,768

923

0.48%

713,500

1,490

0.84%

Demand deposits

349,232



260,712



Other liabilities

13,328



11,880



Shareholders' equity

126,916



117,255



Total liabilities and shareholders' equity

$1,269,244



$1,103,347










Cost of deposits, including demand deposits



0.28%



0.51%

Cost of funds, including demand deposits



0.33%



0.61%

Net interest spread 



3.18%



3.39%

Net interest income margin - excluding PPP loans


$      9,526

3.36%


$      9,116

3.64%

Net interest income/margin - including PPP loans


$      9,743

3.35%


$      9,116

3.64%

Net interest income/margin (tax equivalent) - excl. PPP loans

$      9,629

3.40%


$      9,210

3.67%

Net interest income/margin (tax equivalent) - incl. PPP loans

$      9,846

3.38%


$      9,210

3.67%

 

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates 

  on Average Interest-Bearing Liabilities









Six months ended June 30, 2020

Six months ended June 30, 2019


Average

Interest 

Yield/

Average

Interest 

Yield/


Balance

Earned/Paid

Rate

Balance

Earned/Paid

Rate

Assets







Earning assets







  Loans







     PPP loans

$     15,908

$        217

2.74%

$            -

$           -

NA

     Non-PPP loans

773,342

17,628

4.58%

726,398

17,401

4.83%

  Total loans

789,250

17,845

4.55%

726,398

17,401

4.83%

  Securities

290,624

3,337

2.31%

251,114

3,315

2.66%

  Other short-term investments

44,339

194

0.88%

21,952

264

2.43%

Total earning assets

1,124,213

21,376

3.82%

999,464

20,980

4.23%

Cash and due from banks

14,926



13,680



Premises and equipment

34,920



35,645



Goodwill and other intangibles

16,015



16,509



Other assets

40,089



37,407



Allowance for loan losses

(7,366)



(6,334)



Total assets

$1,222,797



$1,096,371










Liabilities







Interest-bearing liabilities







  Interest-bearing transaction accounts

$   224,405

162

0.15%

$   198,270

284

0.29%

  Money market accounts

200,967

528

0.53%

178,201

822

0.93%

  Savings deposits

106,191

46

0.09%

107,779

71

0.13%

  Time deposits

167,696

1,019

1.22%

178,424

1,005

1.14%

  Other borrowings

69,623

461

1.33%

53,290

662

2.51%

Total interest-bearing liabilities

768,882

2,216

0.58%

715,964

2,844

0.80%

Demand deposits

315,473



253,839



Other liabilities

13,252



11,039



Shareholders' equity

125,190



115,529



Total liabilities and shareholders' equity

$1,222,797



$1,096,371










Cost of deposits, including demand deposits



0.35%



0.48%

Cost of funds, including demand deposits



0.41%



0.59%

Net interest spread 



3.24%



3.43%

Net interest income margin - excluding PPP loans

$    18,943

3.44%


$    18,136

3.66%

Net interest income/margin - including PPP loans

19,160

3.43%


18,136

3.66%

Net interest income/margin (tax equivalent) - excl. PPP loans

$    19,124

3.47%


$    18,344

3.70%

Net interest income/margin (tax equivalent) - incl. PPP loans

$    19,341

3.46%


$    18,344

3.70%

 

The tables below provide a reconciliation of non–GAAP measures to GAAP for the periods indicated:




June 30,



December 31,



June 30,


Tangible book value per common share



2020



2019



2019


Tangible common equity per common share (non–GAAP)


$

15.35


$

13.99


$

13.46


Effect to adjust for intangible assets



2.12



2.17



2.18


Book value per common share (GAAP)


$

17.47


$

16.16


$

15.64


Tangible common shareholders' equity to tangible assets











Tangible common equity to tangible assets (non–GAAP)



8.78

%


9.02

%


9.20

%

Effect to adjust for intangible assets



1.09

%


1.25

%


1.33

%

Common equity to assets (GAAP)



9.87

%


10.27

%


10.53

%

 

Return on average tangible common equity

Three months ended
June 30,

Three months ended
March 31,


Six months ended
June 30,


2020

2019

2020

2019


2020

2019

Return on average common tangible equity (non-GAAP)

8.04

%

11.46

%

6.72

%

10.41

%

7.39 %

10.95 %

Effect to adjust for intangible assets

(1.01)

%

(1.60)

%

(0.88)

%

(1.52)

%

(0.95)%

(1.57)%

Return on average common equity (GAAP)

7.03

%

9.86

%

5.84

%

8.89

%

6.44 %

9.38 %

 


Three months ended

Six months ended



June 30,

March 31,


June 30,


June 30,

Pre-tax, pre-provision earnings


2020

2020


2019


2020

2019

Pre-tax, pre-provision earnings (non–GAAP)

$

3,999

3,307

$

3,662

$

7,306

6,686

Effect to adjust for pre-tax, pre-provision earnings


(1,782)

(1,513)


(781)


(3,295)

(1,310)

Net Income (GAAP)

$

2,217

1,794

$

2,881

$

4,011

5,376

 



 Three months ended


Six months ended


June 30,


    June 30,

Net interest margin excluding PPP Loans

2020


2019


2020

2019

Net interest margin excluding PPP loans (non-GAAP)

3.36%


3.64%


3.44%

3.66%

Effect to adjust for PPP loans

(0.01)


N/A


(0.01)

N/A

Net interest margin (GAAP)

3.35%


3.64%


3.43%

3.66%

 


Three months ended


Six months ended


June 30,


June 30,

Net Interest Margin on a tax-equivalent basis excluding PPP Loans

2020

2019


2020

2019

Net interest margin on a tax-equivalent basis excluding PPP loans (non-GAAP)

3.40%

3.67%


3.47%

3.70%

Effect to adjust for PPP loans

(0.02)

N/A


(0.01)

N/A

Net interest margin on a tax equivalent basis (GAAP)

3.38%

3.67%


3.46%

3.70%

 




June 30,



March 31,



Growth Rate


Annualized
Growth

Loans and loan growth



2020



2020



Dollars


Rate

Non-PPP Loans (non–GAAP)


$

769,507


$

749,529


$

19,978


10.7

%

PPP Loans



47,865



-



47,865


N/A

%

Total Loans (GAAP)


$

817,372


$

749,529


$

67,843


36.4

%

Certain financial information presented above is determined by methods other than in accordance with generally accepted accounting principles ("GAAP"). These non-GAAP financial measures include "tangible book value at period end," "tangible common shareholders' equity to tangible assets," "return on average tangible common equity," "Pre-tax, pre-provision earnings," "Net interest margin excluding PPP loans," "Net interest margin on a tax-equivalent basis excluding PPP loans.", and "Non-PPP Loans," "Tangible book value at period end" is defined as total equity reduced by recorded intangible assets divided by total common shares outstanding. "Tangible common shareholders' equity to tangible assets" is defined as total common equity reduced by recorded intangible assets divided by total assets reduced by recorded intangible assets. "Return on average tangible common equity is defined as net income on an annualized basis divided by average total equity reduced by average recorded intangible assets".  "Pre-tax, pre-provision earnings" is defined as net interest income plus non-interest income, reduced by non-interest expense. "Net interest margin excluding PPP loans" and "Net interest margin on a tax-equivalent basis excluding PPP loans" are calculated by determining the interest income divided by average earning assets less the average balance of PPP loans.  "Non-PPP Loan growth - dollars" is calculated by taking the difference between two time periods compared for Total Loans less PPP Loans.  "Non-PPP Loans – annualized growth rate" is calculated by (i) dividing "Non-PPP Loans Loan Growth - dollars" by the number of days between the two time periods compared (ii) times the number of days in the year (iii) divided by the prior time period.  Our management believes that these non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare our operating results from period-to-period in a meaningful manner. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the company's results as reported under GAAP.

SOURCE First Community Corporation

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