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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-25972
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FIRST COMMUNITY CORPORATION
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(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
TENNESSEE 62-1562541
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(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
809 WEST MAIN STREET
ROGERSVILLE, TENNESSEE 37857
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(423) 272-5800
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(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NONE
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(FORMER NAME, ADDRESS AND FISCAL YEAR, IF CHANGED SINCE LAST REPORT)
INDICATE BY CHECK MARK WHETHER THE ISSUER: (1) HAS FILED ALL REPORTS REQUIRED TO
BE FILED BY SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 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
2,021,180
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(OUTSTANDING SHARES OF THE ISSUER'S COMMON STOCK AS OF JUNE 30, 2000)
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
YES [ ] NO [X]
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FIRST COMMUNITY CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
NUMBER PAGE
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ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 (UNAUDITED) AND DECEMBER 31, 1999 3
CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED) AND
THREE MONTHS ENDED JUNE 30, 2000 (UNAUDITED) 4-5
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED) 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 8
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 10
ITEM 2. CHANGES IN SECURITIES 10
ITEM 3. DEFAULT UPON SENIOR SECURITIES 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 10
ITEM 5. OTHER INFORMATION 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
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FIRST COMMUNITY CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, 2000
($ amounts in thousands)
JUNE 30, December 31, Amount %
ASSETS 2000 1999 Change Change
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Cash and due from banks $ 3,565 7,517 (3,952) (52.6%)
Federal funds sold 1,600 1,100 500 45.5%
Securities available-for-sale, at fair value 9,409 8,847 562 6.4%
Fixed Assets 55 0 55
Loans 95,382 93,311 2,071 2.2%
Allowance for loan losses (953) (938) (15) 1.6%
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LOANS, NET 94,429 92,373 2,056 2.2%
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Premises and equipment 4,134 4,212 (78) (1.9%)
Accrued income receivable 1,291 1,291 0 0.0%
Deferred income taxes, net 224 120 104 86.7%
Other assets 1,620 1,018 602 59.1%
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$ 116,327 116,478 (151) (0.1%)
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LIABILITIES AND SHAREHOLDERS' EQUITY
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LIABILITIES:
DEPOSITS:
Noninterest-bearing $ 12,520 10,664 1,856 17.4%
Interest-bearing 75,106 76,013 (907) (1.2%)
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TOTAL DEPOSITS 87,626 86,677 949 1.1%
Securities sold under agreements to repurchase 1,206 3,372 (2,166) (64.2%)
Advances from FHLB 15,600 15,100 500 3.3%
Note payable 793 593 200 0.0%
Other liabilities 1,382 1,232 150 12.2%
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TOTAL LIABILITIES 106,607 106,975 (368) (0.3%)
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SHAREHOLDERS' EQUITY:
Common stock, no par value. Authorized 10,000,000
shares; issued and outstanding 2,021,180 in 2000
and 2,020,755 in 1999 7,668 7,673 (5) (0.1%)
Unrealized gain (loss) on securities-AFS (104) (63) (41) 65.1%
Retained earnings 2,156 1,893 263 13.9%
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TOTAL SHAREHOLDERS' EQUITY 9,720 9,503 217 2.3%
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$ 116,327 116,478 (151) (0.1%)
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FIRST COMMUNITY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
June 30, 2000
($ amounts in thousands except earnings per share)
SIX MONTHS ENDED JUNE 30, 2000
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Amount %
2000 1999 Change Change
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INTEREST INCOME:
Loans, including fees $ 4,464 3,943 521 13.2%
Securities:
Taxable 250 80 170 212.2%
Tax exempt 23 14 9 62.1%
Deposits in financial institutions 19 0 19 100.0%
Federal funds sold 43 132 (89) (67.2%)
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TOTAL INTEREST INCOME 4,798 4,169 629 15.1%
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INTEREST EXPENSE:
Deposits 1,861 1,518 343 22.6%
Other borrowings 502 250 252 100.9%
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TOTAL INTEREST EXPENSE 2,364 1,768 596 33.7%
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NET INTEREST INCOME 2,435 2,400 35 1.4%
PROVISION FOR LOAN LOSSES 72 126 (54) (42.6%)
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,363 2,274 89 3.9%
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OTHER INCOME:
Service charges on deposit accounts 323 290 33 11.5%
Asset Gains 75 0 75 100.0%
Other service charges, commissions and fees 156 181 (25) (13.6%)
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TOTAL OTHER INCOME 554 471 83 17.7%
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OTHER EXPENSES:
Salaries, Directors' fees and employee benefits 995 913 82 9.0%
Occupancy expense 318 278 40 14.3%
Other operating expenses 747 583 164 28.1%
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TOTAL OTHER EXPENSES 2,059 1,774 285 16.1%
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INCOME BEFORE INCOME TAXES 858 972 (114) (11.7%)
INCOME TAXES 312 363 (51) (14.0%)
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NET INCOME $ 546 609 (63) (10.3%)
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EARNINGS PER SHARE $ 0.27 0.30 (0.03) (10.0%)
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WEIGHTED AVERAGE SHARES OUTSTANDING 2,021,290 2,043,451 (22,161) (1.1%)
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FIRST COMMUNITY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
June 30, 2000
($ amounts in thousands except earnings per share)
THREE MONTHS ENDED JUNE 30, 2000
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Amount %
2000 1999 Change Change
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INTEREST INCOME:
Loans, including fees $ 2,258 2,067 191 9.2%
Securities:
Taxable 126 44 82 185.8%
Tax exempt 12 8 4 46.3%
Deposits in financial institutions 19 0 19 100.0%
Federal funds sold 3 42 (39) (92.2%)
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TOTAL INTEREST INCOME 2,416 2,161 255 11.8%
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INTEREST EXPENSE:
Deposits 915 728 187 25.7%
Other borrowings 269 133 135 101.0%
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TOTAL INTEREST EXPENSE 1,185 861 323 37.4%
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NET INTEREST INCOME 1,232 1,299 (67) (5.2%)
PROVISION FOR LOAN LOSSES 46 86 (40) (46.2%)
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,186 1,213 (27) (2.2%)
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OTHER INCOME:
Service charges on deposit accounts 155 161 (6) (3.6%)
Asset Gains 75 0 75 100.0%
Other service charges, commissions and fees 86 98 (12) (11.9%)
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TOTAL OTHER INCOME 317 259 58 22.5%
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OTHER EXPENSES:
Salaries, Directors' fees and employee benefits 478 469 18 3.9%
Occupancy expense 167 141 26 15.4%
Other operating expenses 434 295 140 47.6%
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TOTAL OTHER EXPENSES 1,074 905 179 20.1%
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INCOME BEFORE INCOME TAXES 429 568 (149) (25.7%)
Income taxes 155 213 (62) (28.4%)
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NET INCOME $ 274 355 (87) (24.1%)
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EARNINGS PER SHARE $ 0.14 0.17 (0.01) (10.0%)
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WEIGHTED AVERAGE SHARES OUTSTANDING 2,028,802 2,047,655 (18,853) (0.9%)
==============================================================================================================
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FIRST COMMUNITY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
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SIX MONTHS ENDED
JUNE 30,
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INCREASE (DECREASE) IN CASH AND DUE FROM BANKS 2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 546 609
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 231 157
Provision for loan losses 72 126
Gain on sale of premises (75) 0
Increase/Decrease in accrued income receivable 150 60
Other, net (512) (530)
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NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 412 422
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CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in federal funds sold (500) 11,123
Maturities and redemptions of securities
available for sale (562) 923
Purchases of securities available-for-sale FCB 0 (3,000)
Investment in subsidiary (55)
Proceeds from sale of land 90 0
Net increase in loans (2,128) (6,707)
Purchases of premises and equipment (404) (87)
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NET CASH USED BY INVESTING ACTIVITIES (3,559) 2,252
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid (283) (631)
Purchase and retirement of common stock (5)
Proceeds of sale of common stock 0 82
Proceeds of note payable 200
Increase in borrowings from FHLB 500 3,000
Increase/(Decrease) in securities sold under agreements
to repurchase (2,166) 77
Increase(Decrease) in deposits 949 (4,963)
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NET CASH PROVIDED BY FINANCING ACTIVITIES (805) 2,435
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NET INCREASE (DECREASE) IN CASH (3,952) 239
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CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD 7,517 3,570
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CASH AND DUE FROM BANKS AT END OF PERIOD $ 3,565 3,809
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CASH PAYMENTS FOR INTEREST $ 2,364 1,768
CASH PAYMENTS FOR INCOME TAXES $ 312 363
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FIRST COMMUNITY CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the six month period ended June 30, 2000 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2000.
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ITEM NO. 2 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL CONDITION
First Community Bank of East Tennessee (the "Bank") represents virtually all of
the assets of First Community Corporation (the "Company"). The Bank, which was
opened in April of 1993, has grown in total assets to $116 million at June 30,
2000.
Loans have increased $2.1 million or 2.2% during the first six months of 2000.
The increased loans were funded through an effort to increase core deposits
during the first two quarters of 2000.
NONPERFORMING ASSETS AND RISK ELEMENTS. Nonperforming assets consist of (1)
nonaccrual loans where the recognition of interest was discontinued, (2) loans
which have been restructured to provide for a reduction or deferral of interest
or principal because the borrower's financial condition deteriorated, and (3)
foreclosed and repossessed assets. Nonperforming assets at June 30, 2000
amounted to $74,000 or .08% of total loans, an increase from $ 40,000 or .04 %
of total loans at December 31, 1999. Diversification within the loan portfolio
is an important means of reducing inherent lending risks. At June 30, 2000, the
Bank had no concentrations of ten percent or more of total loans in any single
industry nor in any geographical area outside the immediate market area of the
Bank.
The Bank discontinues the accrual of interest on loans which become ninety days
past due (principal and/or interest), unless the loans are adequately secured
and in the process of collection. Other real estate owned is carried at fair
value, determined by an appraisal. A loan is classified as a restructured loan
when the interest rate is materially reduced or the term is extended beyond the
original maturity date because of the inability of the borrower to service the
debt under the original terms. The Bank has $ 259,000 of other real estate owned
as of June 30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is adequate with cash and due from banks of $3.6 million and fed funds
sold of $ 1.6 million as of June 30, 2000. In addition, loans and investment
securities repricing or maturing within one year or less exceed $ 33.6 million
at June 30, 2000. The Bank has approximately $ 6.7 million in loan commitments
that are expected to be funded within the next six months and other commitments,
primarily standby letters of credit, of approximately $103,000 at June 30, 2000.
In addition to the Federal Home Loan Bank membership, the Bank has established
federal funds lines of credit with three correspondent banks totaling $ 14.0
million to meet unexpected liquidity demands. With the exception of unfunded
loan commitments, there are no known trends or any known commitments or
uncertainties that will result in the Bank's liquidity increasing or decreasing
in a material way. In addition, the Company is not aware of any recommendations
by any regulatory authorities which would have a material effect on the
Company's liquidity, capital resources or results of operations.
Total equity capital at June 30, 2000, is $10.415 million or approximately 9.0 %
of total assets. The Bank's capital position is adequate to meet the minimum
capital requirements for all regulatory agencies. The Bank's capital ratios as
of June 30, 2000, are as follows:
Tier 1 leverage 9.00%
Tier 1 risk-based 9.82%
Total risk-based 12.94%
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RESULTS OF OPERATIONS
The Company had net income of $546,000 for the six months ending June 30, 2000,
compared with $609,000 for the same period last year, resulting in a decrease of
10.3 %.
Interest income and interest expense both increased from 1999 to 2000 resulting
from the increase in earning assets and as a result of increases in the prime
rate. Consequently, net interest income increased $35,000 for the three months
ending June 30,2000, or an increase of 1.4 %. Earning assets through June 30,
2000 increased $3.1 million while interest-bearing liabilities decreased $ 2.4
million compared to December 31, 1999, reflecting an increase of 2.9% and a
decrease of 2.56%, respectively.
Noninterest income for the six months ending June 30, 2000 was $554,000 compared
to $471,000 for the same period in 1999 reflecting an increase of $83,000 or
17.7%. Noninterest income consists mainly of service charges on deposit
accounts, credit life insurance commissions, and secondary mortgage processing
fees. Service charges on deposit accounts for the six months ending June 30,
2000 was $323,000 compared with $290,000 for the same period in 1999 reflecting
an increase of 11.5%.
The provision for loan losses was $72,000 during the six months ending June 30,
2000 compared with $126,000 for the same period in 1999. The allowance for loan
losses of $953,000 at June 30, 2000 (approximately 1.00% of loans) is considered
by management to be adequate to cover losses inherent in the loan portfolio.
Management evaluates the adequacy of the allowance for loan losses monthly and
makes provisions for loan losses based on this evaluation.
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PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) 27 Financial Data Schedule (for SEC use only)
b) The Company did file a report on Form 8-K during the quarter ended
June 30, 2000. The report was filed on May 4, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registration has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST COMMUNITY CORPORATION
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(Registrant)
August 14, 2000 /s/ Mark A. Gamble
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(Date) Mark A. Gamble, President
August 14, 2000 /s/ Elizabeth O. Lollar
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(Date) Elizabeth O. Lollar
Chief Financial Officer
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