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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: MARCH 31, 2001
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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 [ ]
1,961,406
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(OUTSTANDING SHARES OF THE ISSUER'S COMMON STOCK AS OF MARCH 31, 2001)
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 3
MARCH 31, 2001 (UNAUDITED) AND DECEMBER 31, 2000
CONSOLIDATED STATEMENTS OF INCOME 4
THREE MONTHS ENDED MARCH 31, 2001 (UNAUDITED)
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 7
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 9
ITEM 2. CHANGES IN SECURITIES 9
ITEM 3. DEFAULT UPON SENIOR SECURITIES 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 9
ITEM 5. OTHER INFORMATION 9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9
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FIRST COMMUNITY CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Unaudited)
March 31, 2001
($ amounts in thousands)
March 31, December 31, Amount %
ASSETS 2001 2000 Change Change
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Cash and due from banks $ 3,495 3,425 70 2.0%
Federal funds sold 3,120 2,460 660 26.8%
Securities available-for-sale, at fair value 8,292 8,310 (18) -0.2%
Loans 100,074 101,257 (1,183) -1.2%
Allowance for loan losses (1,092) (1,012) (80) 7.9%
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Loans, Net 98,982 100,245 (1,263) -1.3%
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Premises and equipment 3,864 3,954 (90) -2.3%
Accrued income receivable 1,483 1,606 (123) -7.7%
Federal Home Loan Bank Stock 1,312 1,289 23 1.8%
Cash surrender value of life insurance 600 603 (3) -0.5%
Computer Software, net of amortization 558 585 (27) -4.6%
Other assets 642 499 143 28.7%
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$122,349 122,976 (627) -0.5%
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Liabilities:
Deposits:
Noninterest-bearing $ 11,430 12,029 (599) -5.0%
Interest-bearing 82,324 83,625 (1,301) -1.6%
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Total deposits 93,754 95,654 (1,900) -2.0%
Securities sold under agreements to repurchase 2,113 2,257 (144) -6.4%
Advances from FHLB 13,700 12,500 1,200 9.6%
Note payable 1,823 1,823 - 0.0%
Accrued Interest Payable 886 1,019 (133) 0.0%
Dividend Payable 137 137 - 0.0%
Other liabilities 634 421 213 50.6%
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Total liabilities 113,047 113,811 (764) -0.7%
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Shareholders' equity:
Common stock, no par value. Authorized 10,000,000
shares; issued and outstanding 1,961,406 in 2001
and 1,961,706 in 2000 7,381 7,386 (5) -0.1%
Accumulated other comprehensive income, net 77 17 60 352.9%
Retained earnings 1,843 1,761 82 4.7%
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Total shareholders' equity 9,301 9,165 136 1.5%
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$122,349 122,976 (627) -0.5%
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FIRST COMMUNITY CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
March 31, 2001
($ amounts in thousands except earnings per share)
Three Months Ended March 31, 2001
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Amount %
2001 2000 Change Change
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Interest income:
Loans, including fees $ 2,398 2,206 192 8.7%
Securities:
Taxable 124 124 0 0.0%
Tax exempt 11 11 0 0.0%
Deposits in financial institutions 0 0 0 0.0%
Federal funds sold 30 40 (10) -25.0%
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Total interest income 2,563 2,382 181 7.6%
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Interest expense:
Deposits 1,066 946 120 12.7%
Other borrowings 236 233 3 1.3%
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Total interest expense 1,302 1,179 123 10.4%
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Net interest income 1,261 1,203 58 4.8%
Provision for loan losses 158 26 132 507.7%
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Net interest income after provision
for loan losses 1,104 1,177 (73) -6.2%
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Other income:
Service charges on deposit accounts 149 168 (19) -11.3%
Asset Gains 0 0 0 0.0%
Other service charges, commissions and fees 117 70 47 67.1%
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Total other income 266 237 29 12.2%
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Other expenses:
Salaries, Directors' fees and employee benefits 536 517 19 3.7%
Occupancy expense 164 151 13 8.6%
Other operating expenses 332 313 19 6.1%
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Total other expenses 1,032 985 47 4.8%
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Income before income taxes 338 429 (91) -21.2%
Income taxes 120 157 (37) -23.6%
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Net income $ 219 272 (53) -19.5%
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Earnings per share $ 0.11 0.13 -0.02 -14.1%
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Weighted average shares outstanding 1,961,416 2,021,400 (59,984) -3.0%
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FIRST COMMUNITY CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
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Three Months Ended
March 31,
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Increase (decrease) in cash and due from banks 2001 2000
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Cash flows from operating activities:
Net income $ 219 272
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 121 107
Provision for loan losses 158 26
Gain on sale of premises - -
Decrease in accrued income receivable 123 66
Other, net (24) (579)
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Net cash provided (used) by operating activities 597 (108)
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Cash flows from investing activities:
Decrease (increase) in federal funds sold (660) (1,700)
Maturities and redemptions of securities
available for sale 4,105 0
Purchases of securities available-for FCB (4,087) (522)
Proceeds from sale of land - -
Net (Increase)/decrease in loans 1,105 (557)
Purchases of premises and equipment (4) (102)
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Net cash provided (used )by investing activities 459 (2,881)
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Cash flows from financing activities:
Cash dividends paid (137) (141)
Purchase and retirement of common stock (5) (5)
Proceeds of sale of common stock 0
Repayments of FHLB advances (7,800) (3,000)
Increase in borrowings from FHLB 9,000 2,000
Increase/(Decrease) in securities sold under agreements
to repurchase (144) (1,418)
Increase(Decrease) in deposits (1,900) 3,313
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Net cash provided (used) by financing activities (986) 749
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Net increase (decrease) in cash 70 (2,240)
Cash and due from banks at beginning of period 3,425 7,517
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Cash and due from banks at end of period $3,495 5,277
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Cash payments for interest $1,169 1,179
Cash payments for income taxes $ 33 49
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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 three month period ended March 31, 2001, are not necessarily
indicative of the results that may be expected for the year ended December 31,
2001.
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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 $122 million at March 31,
2001.
Loans have decreased $1.2 million or 1.2% during the first three months of 2001.
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 March 31, 2001
amounted to $42,000 or .04% of total loans, an decrease from $ 96,000 or .09 %
of total loans at December 31, 2000. Diversification within the loan portfolio
is an important means of reducing inherent lending risks. At March 31, 2001, 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 $ 186,000 of other real estate owned
as of March 31, 2001.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is adequate with cash and due from banks of $3.5 million. In addition,
loans and investment securities repricing or maturing within one year or less
exceed $40.8 million at March 31, 2001. The Bank has approximately $7.7
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 $138,000 at March 31, 2001. In addition to the Federal Home Loan
Bank membership from which the Bank has unused borrowing capacity of $5.6
million, the Bank has established federal funds lines of credit with three
correspondent banks totaling $13.5 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 of the bank at March 31, 2001, is $10.868 million or
approximately 8.9% 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 March 31, 2001, are as follows:
Tier 1 leverage 8.80%
Tier 1 risk-based 11.56%
Total risk-based 12.73%
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RESULTS OF OPERATIONS
The Company had net income of $219,000 for the three months ending March 31,
2001, compared with $272,000 for the same period last year, resulting in a
decrease of 19.5%.
Interest income and interest expense both increased from 2000 to 2001 resulting
from the change in interest rates and an increase in interest bearing deposits.
Consequently, net interest income increased $58,000 for the three months ending
March 31, 2001, or an increase of 4.8%. Earning assets through March 31, 2001
decreased $.5 million while interest-bearing liabilities decreased $1.44
million compared to December 31, 2000, reflecting an decrease of .40% and 1.71%,
respectively.
Noninterest income for the three months ending March 31, 2001 was $266,000
compared to $237,000 for the same period in 2000 reflecting an increase of
$29,000 or 12.2%. 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 three months ending
March 31, 2001 was $149,000 compared with $168,000 for the same period in 2000
reflecting a decrease of $19,000 or 11.3%.
The provision for loan losses was $158,000 during the three months ending March
31, 2001 compared with $26,000 for the same period in 2000. The allowance for
loan losses of $1,092,000 at March 31, 2001 (approximately 1.09% 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) The company did not file any reports on Form 8-K during the
quarter ended March 31, 2001.
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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)
May 11, 2001 Mark A. Gamble
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(Date) Mark A. Gamble, President & CEO
May 11, 2001 Elizabeth O. Lollar
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(Date) Elizabeth O. Lollar
Chief Financial Officer & EVP
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