Today, First Community Corporation, the holding company for First Community Bank, reported net income available to common shareholders for the fourth quarter of 2014 of $1.51 million, an increase of 77.18% as compared to $850 thousand in the fourth quarter of 2013.  Diluted earnings per common share were $0.22 for the fourth quarter of 2014 as compared to $0.16 for the fourth quarter of 2013.  For the year ended December 31, 2014 net income available to common shareholders was $5.12 million compared to $4.14 million during year ended December 31, 2013.  Diluted earnings per share for each year were $0.78.  During 2014, the company's assets increased 28.27% to $812.36 million.  First Community President and CEO Michael Crapps commented, "We are pleased with our company's financial results during 2014 and will continue to leverage the benefit from recent and planned growth."  

As previously announced, the company plans to expand its footprint with a banking office in Blythewood, South Carolina.  Construction is underway at the site located at 201 Main Street, in the town of Blythewood.  The office is expected to open in the Spring of 2015.  In talking about First Community's latest expansion, Mr. Crapps commented, "Blythewood is a vibrant and growing community.  We look forward to working with the businesses and members of this community to help them meet their financial goals."  Crapps continued, "This new office is the latest in a series of growth for our company over the last year which included the acquisition of Savannah River Financial Corporation in Augusta, Georgia, the opening of a new banking office in downtown Columbia, and the purchase and assumption of deposits and certain loans from First South Bank's Columbia banking office."  

Cash Dividend and Capital 

The Board of Directors has approved an increase in the cash dividend for the fourth quarter of 2014 to $0.07.  This dividend is payable on February 13, 2015 to shareholders of record of the company's common stock as of February 2, 2015.  Mr. Crapps commented, "Our entire board is pleased that our company's strong financial performance enables us to increase the cash dividend.  We are also proud that dividend payments have continued uninterrupted for 52 consecutive quarters."  

Each of the regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) exceeds the well capitalized minimum levels currently required by regulatory statute.  At December 31, 2014, the company's regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) were 10.02%, 16.09%, and 16.91%, respectively.  This compares to the same ratios as of December 31, 2013 of 10.77%, 17.60%, and 18.68%, respectively.  Additionally, the regulatory capital ratios for the company's wholly owned subsidiary, First Community Bank, were 9.56%, 15.38%, and 16.20% respectively as of December 31, 2014.  Further, the company's ratio of tangible common equity to tangible assets indicates a high quality of capital with a ratio of 8.48% as of December 31, 2014.  

Asset Quality 

On a linked quarter basis, non-performing assets decreased by 3.80% to $9.53 million (1.18% of total assets) at the end of the quarter.  The company believes this ratio compares very favorably with the bank's peer group average.  Trouble debt restructurings (TDRs) that are still accruing interest increased during the quarter to $2.2 million primarily due to one large non-accrual loan that was upgraded and therefore put back on accrual status.  Total non-accrual loans declined 3.08% on a linked quarter basis to $6.59 million at the end of the fourth quarter, although two large loan relationships totaling $1.17 million were moved into non-accrual status.  Loans past due 30-89 days declined slightly this quarter decreasing the past due ratio from .44% to .40% on a linked quarter basis.  For the year of 2014, net charge-offs were $967 thousand (0.28%).  Net loan charge-offs for the quarter were $202 thousand (0.18% annualized ratio).  The company believes that these levels compare very favorably to its peer group average.  The ratio of classified loans plus OREO now stands at 20.28% of total bank regulatory risk-based capital as of December 31, 2014.  

Mr. Crapps commented, "Through the previously mentioned acquisitions and organic growth, momentum in pure deposit growth has continued.  During 2014, pure deposits grew by $141.3 million, an increase of 38.9%.  Organic growth represented $27.8 million, or 19.67% of this growth.  This has positioned us to drive down our cost of deposits to 0.26 basis points at year end.  Loan growth continues to be a challenge.  While loans increased $96.2 million or 27.7% during 2014, this increase came primarily through the acquisitions completed during the year and on an organic basis, loans decreased by $19.0 million during the year.  Loan production during the year was 33.32% higher than in 2013 with total loan production of almost $80.0 million; however, this increase was not enough to overcome the headwinds of loan payoffs and loan demand that has not rebounded to pre-recessionary levels.  During the second half of 2014, loan production was 16.10% higher than in the first half of the year and we are encouraged by this positive trend.  Loan growth has been and will continue to be an area of intense focus for our company.  In addition to sales and marketing initiatives, we are looking at additional activities and adjustments to support increased loan volume.  We believe that these results will materialize in 2015.  With our current level of liquidity, we have the funding available to support significant loan growth in the year ahead." 

Revenue

Net Interest Income/Net Interest Margin

Net interest income was $6.19 million for the fourth quarter of 2014 which represents a 29.60% increase over $4.78 million in the fourth quarter of 2013.  The net interest margin, on a tax equivalent basis, was 3.36% for the fourth quarter of 2014, which represents an increase from 3.29% during the fourth quarter of 2013.  On a linked quarter basis, net interest margin declined 12 basis points, from 3.48% primarily due to the deposits acquired through the purchase and assumption agreement with First South Bank which were placed into investments.   

Non-Interest Income 

Non-interest income, adjusted for securities gains and losses and loss on the early extinguishment of debt, increased by 20.09% year-over-year to $2.34 million in the fourth quarter of 2014.  During the quarter, the company repaid $3.50 million in Federal Home Loan Bank (FHLB) advances and experienced a $284 thousand loss on this early extinguishment of debt.  This prepayment of the FHLB advances will enable the bank to save the expense of these borrowings in future periods.  This loss was partially offset by a gain on the sale of securities of $80.0 thousand.   

Production in the mortgage line of business was $24.7 million in the quarter, an increase of 6.93% as compared to the same period in 2013.  This increased production resulted in mortgage fee revenue of $849 thousand, 6.19% higher than fourth quarter of 2013.   During the year of 2014, the mortgage line of business benefitted from an increase in yields which grew to 3.51% in 2014 up significantly from 3.15% in 2013.  Mr. Crapps noted, "Purchase transactions continue to represent the majority of the mortgage production, though that percentage trended down some during the fourth quarter."

It is also significant to note the revenue earned this year in the financial planning and investment advisory line of business.  Led by a strong fourth quarter with revenues of $546 thousand, this line of business generated revenues of $1.27 million for the year, an increase of 30.45% over 2013.  Mr. Crapps commented, "This line of business experienced good revenue growth in 2014.  While there were some large pieces of business that contributed to this success, we also continue to grow recurring income streams that will be a benefit during future periods."  

Non-Interest Expense

Non-interest expenses for the quarter were fairly stable increasing just 0.48% on a linked quarter basis.  Salaries and benefits, the largest of the expense categories, increased $43 thousand or 1.23% during the quarter.  The largest increases quarter to quarter were other real estate expense which increased $88 thousand or 83.81% related to taxes on two properties and the amortization of intangibles which increased $47 thousand or 73.44% due to the additional intangible assets acquired in the First South purchase and assumption transaction.       

Other Matters

During its most recent regulatory examination of the bank's compliance with the Bank Secrecy Act and anti-money laundering laws and regulations (collectively referred to as the "BSA"), the bank's primary federal regulator, the Federal Deposit Insurance Corporation (the "FDIC"), identified certain matters that it deemed to be weaknesses in the bank's compliance with the BSA.  As a result, the FDIC requested that the bank address certain BSA-related matters by entering into a proposed Consent Order (the "Proposed Order").  The Proposed Order would require the bank to enhance its BSA compliance program.  The bank is engaged in cooperative discussions with the FDIC regarding the terms of the Proposed Order, which, when finalized, will set forth the specific actions required to address the matters raised by the FDIC.  The final Consent Order will be filed by the company with the SEC once it has been finalized and entered into between the bank and the FDIC.

While the bank recognizes that certain technical aspects of its BSA compliance activities were affected by a temporary period of significant turnover in the bank's BSA staff, management believes that the bank recognized and addressed substantially all of these issues prior to the completion of the FDIC's regulatory examination.  The bank believes that it is in compliance with substantially all of the requirements that are expected to be addressed in the final Consent Order, and the bank has already expanded its BSA compliance staff in an effort to ensure future compliance with the BSA.  The bank does not anticipate any additional staffing needs beyond those already in place and does not anticipate any material additional expenses associated with the final Consent Order.  Mr. Crapps commented, "Since the inception of our bank, we have demonstrated a commitment to regulatory compliance and a sound BSA compliance program resulting in 19 years of sound BSA performance.  Compliance has been and continues to be a focus of our organization.  While there were some temporary technical issues and the BSA program did not operate at a level that met the expectations of our bank and our regulators, we are confident that the actions taken will demonstrate our commitment to operating a sound BSA compliance program and lead to timely resolution of this matter.  It is important to note that this issue will not affect the bank's day-to-day operations or our customers."

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 operates fourteen banking offices located in the Midlands of South Carolina as well as addition to First Community Financial Consultants, a financial planning/investment advisory division and Palmetto South Mortgage, a separate mortgage division.