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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: SEPTEMBER 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-25972
FIRST COMMUNITY CORPORATION
(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 SEPTEMBER 30, 2000)
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
YES [ ] NO [X]
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FIRST COMMUNITY CORPORATION
INDEX
NUMBER PAGE
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS 3
SEPTEMBER 30, 2000 (UNAUDITED) AND DECEMBER 31, 1999
CONSOLIDATED STATEMENTS OF INCOME 4-5
NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED) AND
THREE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
CONSOLIDATED STATEMENTS OF CASH FLOWS 6
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED)
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)
September 30, 2000
($ amounts in thousands )
September 30, December 31, Amount %
ASSETS 2000 1999 Change Change
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Cash and due from banks $ 3,954 7,517 (3,563) -47.4%
Federal funds sold 0 1,100 (1,100) -100.0%
Securities available-for-sale, at fair value 9,458 8,847 611 6.9%
Loans 98,013 93,311 4,702 5.0%
Allowance for loan losses (980) (938) (42) 4.5%
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LOANS, NET 97,033 92,373 4,660 5.0%
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Premises and equipment 4,044 4,212 (168) -4.0%
Accrued income receivable 1,419 1,291 128 9.9%
Deferred income taxes, net 200 120 80 66.7%
Other assets 1,558 1,018 540 53.0%
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$ 117,666 116,478 1,188 1.0%
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LIABILITIES AND SHAREHOLDERS' EQUITY
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LIABILITIES:
DEPOSITS:
Noninterest-bearing $ 10,673 10,664 9 0.1%
Interest-bearing 76,622 76,013 609 0.8%
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TOTAL DEPOSITS 87,295 86,677 618 0.7%
Securities sold under agreements to repurchase 2,795 3,372 (577) -17.1%
Advances from FHLB 15,600 15,100 500 3.3%
Note payable 683 593 90 0.0%
Other liabilities 1,345 1,232 113 9.2%
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TOTAL LIABILITIES 107,718 106,975 743 0.7%
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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 (69) (63) (6) 9.5%
Retained earnings 2,349 1,893 456 24.1%
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TOTAL SHAREHOLDERS' EQUITY 9,948 9,503 445 4.7%
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$ 117,666 116,478 1,188 1.0%
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FIRST COMMUNITY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
September 30, 2000
($ amounts in thousands except earnings per share)
Nine Months Ended September 30, 2000
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Amount %
2000 1999 Change Change
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INTEREST INCOME:
Loans, including fees $ 6,760 6,029 731 12.1%
Securities:
Taxable 374 135 239 177.0%
Tax exempt 34 26 8 30.8%
Deposits in financial institutions 19 0 19 100.0%
Federal funds sold 57 169 (112) -66.3%
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TOTAL INTEREST INCOME 7,244 6,359 885 13.9%
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INTEREST EXPENSE:
Deposits 2,835 2,272 563 24.8%
Other borrowings 792 450 342 76.0%
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TOTAL INTEREST EXPENSE 3,627 2,722 905 33.2%
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NET INTEREST INCOME 3,617 3,637 (20) -0.6%
PROVISION FOR LOAN LOSSES 127 197 (70) -35.5%
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,491 3,440 51 1.5%
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OTHER INCOME:
Service charges on deposit accounts 470 460 10 2.2%
Asset Gains 75 0 75 100.0%
Other service charges, commissions and fees 305 252 53 20.8%
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TOTAL OTHER INCOME 849 712 137 19.3%
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OTHER EXPENSES:
Salaries, Directors' fees and employee benefits 1,469 1,382 87 6.3%
Occupancy expense 510 435 75 17.2%
Other operating expenses 980 927 53 5.7%
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TOTAL OTHER EXPENSES 2,960 2,744 216 7.9%
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INCOME BEFORE INCOME TAXES 1,380 1,408 (28) -2.0%
INCOME TAXES 500 524 (24) -4.6%
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NET INCOME $ 880 884 (4) -0.4%
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EARNINGS PER SHARE $ 0.44 0.43 0.01 1.3%
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WEIGHTED AVERAGE SHARES OUTSTANDING 2,021,253 2,046,423 (25,170) -1.2%
=======================================================================================================
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FIRST COMMUNITY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
September 30, 2000
($ amounts in thousands except earnings per share)
Three Months Ended September 30, 2000
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Amount %
2000 1999 Change Change
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Interest income:
Loans, including fees $ 2,296 2,086 210 10.1%
Securities:
Taxable 124 55 69 125.5%
Tax exempt 11 12 (1) -8.3%
Deposits in financial institutions (0) 0 (0) 100.0%
Federal funds sold 14 37 (23) -62.2%
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Total interest income 2,446 2,190 256 11.7%
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Interest expense:
Deposits 974 754 220 29.2%
Other borrowings 290 200 90 45.0%
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Total interest expense 1,263 954 309 32.4%
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Net interest income 1,182 1,237 (55) -4.5%
Provision for loan losses 55 71 (16) -22.5%
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Net interest income after provision
for loan losses 1,128 1,166 (38) -3.3%
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Other income:
Service charges on deposit accounts 147 170 (23) -13.5%
Asset Gains (0) 0 (0) 100.0%
Other service charges, commissions and fees 149 71 78 109.2%
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Total other income 295 241 54 22.5%
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Other expenses:
Salaries, Directors' fees and employee benefits 474 469 5 1.1%
Occupancy expense 192 157 35 18.2%
Other operating expenses 233 344 (111) -32.3%
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Total other expenses 901 970 (69) -7.1%
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Income before income taxes 522 936 (414) -44.2%
Income taxes 188 161 27 16.8%
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Net income $ 334 275 59 21.5%
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Earnings per share $ 0.17 0.13 0.04 27.1%
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Weighted average shares outstanding 2,021,180 2,052,270 (31,090) -1.5%
==========================================================================================================
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FIRST COMMUNITY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
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NINE MONTHS ENDED
SEPTEMBER 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 $ 880 884
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 357 253
Provision for loan losses 127 197
Gain on sale of premises (75) 0
Increase/Decrease in accrued income receivable (128) (392)
Other, net (293) (452)
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NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 868 490
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CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in federal funds sold 1,100 8,823
Maturities and redemptions of securities
available for sale (611) 1,537
Purchases of securities available-for-sale FCB 0 4,000
Investment in subsidiary 0
Proceeds from sale of land 90
Net increase in loans (4,787) (11,323)
Purchases of premises and equipment (425) (93)
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NET CASH USED BY INVESTING ACTIVITIES (4,633) (5,056)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid (424) (754)
Purchase and retirement of common stock (5)
Proceeds of sale of common stock 0 12
Proceeds of note payable 90
Increase in borrowings from FHLB 500 7,100
Increase/(Decrease) in securities sold under agreements
to repurchase (577) 594
Increase(Decrease) in deposits 618 (2,103)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 202 4,849
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NET INCREASE (DECREASE) IN CASH (3,563) 283
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 $ 3,954 3,853
====================================================================================
CASH PAYMENTS FOR INTEREST $ 3,627 2,722
CASH PAYMENTS FOR INCOME TAXES $ 471 524
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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 nine month period ended September 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 $118 million at September
30, 2000.
Loans have increased $4.7 million or 5.0% during the first nine months of 2000.
The increased loans were funded through an effort to increase core deposits
during the first three 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 September 30, 2000
amounted to $50,000 or .05% 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 September 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 $123,000 of other real estate owned
as of September 30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is adequate with cash and due from banks of $4.0 million. In addition,
loans and investment securities repricing or maturing within one year or less
exceed $34.9 million at September 30, 2000. The Bank has approximately $6.4
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 $102,000 at September 30, 2000. In addition to the Federal Home
Loan Bank membership from which the Bank has unused borrowing capacity of $9.7
million, 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 September 30, 2000, is $10.570 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 September 30, 2000, are as follows:
Tier 1 leverage 9.08%
Tier 1 risk-based 9.92%
Total risk-based 11.68%
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RESULTS OF OPERATIONS
The Company had net income of $880,000 for the nine months ending September 30,
2000, compared with $884,000 for the same period last year, resulting in a
decrease of .4%.
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 decreased $55,000 for the three months
ending September 30, 2000, or an decrease of 4.5%. Earning assets through
September 30, 2000 increased $5.3 million while interest-bearing liabilities
increased $.6 million compared to December 31, 1999, reflecting an increase of
4.9% and .6%, respectively.
Noninterest income for the nine months ending September 30, 2000 was $849,000
compared to $712,000 for the same period in 1999 reflecting an increase of
$137,000 or 19.3%. 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 nine months ending
September 30, 2000 was $470,000 compared with $460,000 for the same period in
1999 reflecting a increase of 2.2%.
The provision for loan losses was $127,000 during the nine months ending
September 30, 2000 compared with $197,000 for the same period in 1999. The
allowance for loan losses of $980,000 at September 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 not file any reports on Form 8-K during the
quarter ended September 30, 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
(Registrant)
November 13, 2000 /s/ Mark A. Gamble
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(Date) Mark A. Gamble, President
November 13, 2000 /s/ Elizabeth O. Lollar
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(Date) Elizabeth O. Lollar
Chief Financial Officer
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