10-Q 1 form10q-081307.htm 081307

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)  

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
  quarterly period ended June 30, 2007

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period
from ___________ to _____________

Commission file number 000-28344

FIRST COMMUNITY CORPORATION
(Exact name of registrant as specified in its charter)

               South Carolina                                   57-1010751               
(State of Incorporation)     (I.R.S. Employer Identification No.)

5455 Sunset Boulevard, Lexington, South Carolina 29072
(Address of Principal Executive Offices)

(803) 951-2265
(Registrant's Telephone Number, Including Area Code)

N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was requited to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes        No   

Indicate by check mark whether the registrant is a large accelerated file, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
                                   Large accelerated filer                           Accelerated filer                      Non-accelerated filer   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.
  Yes        No   

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: On July 31, 2007, 3,241,308 shares of the issuer’s common stock, par value $1.00 per share, were issued and outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

   Item 1. Financial Statements
                 Consolidated Balance Sheets
                 Consolidated Statements of Income
                 Consolidated Statements of Shareholders’ Equity and Comprehensive Income (loss)
                 Consolidated Statements of Cash Flows
                 Notes to Consolidated Financial Statements

   Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Item 3. Quantitative and Qualitative Disclosures About Market Risk
   Item 4. Controls and Procedures

PART II – OTHER INFORMATION
   Item 1. Legal ProceedingsItem
   Item 1A. Risk Factors
   Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Item 3. Defaults Upon Senior Securities
   Item 4. Submission of Matters to a Vote of Security Holders
   Item 5. Other Information
   Item 6. Exhibits

INDEX TO EXHIBITS
SIGNATURES
EX-31.1 RULE 13A-14(A) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
EX-31.2 RULE 13A-14(A) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
EX-32 SECTION 1350 CERTIFICATIONS





2

PART I
FINANCIAL INFORMATION
Item 1. Financial Statements

FIRST COMMUNITY CORPORATION
CONSOLIDATED BALANCE SHEETS

June 30, 2007 December 31,
(Unaudited) 2006
         ASSETS            
Cash and due from banks     $ 14,208,624   $ 10,021,781  
Interest-bearing bank balances       72,616     47,786  
Federal funds sold and securities purchased under            
  agreements to resell       4,619,917     17,745,404  
Investment securities - available for sale       151,489,751     165,826,684  
Investment securities - held to maturity (market value of $6,294,367 and            
  $6,509,148 at June 30, 2007 and December 31, 2006, respectively)       6,328,244     6,488,796  
Investment securities, at fair value       3,029,610     -  
Other investments, at cost       4,706,795     4,207,794  
Loans       302,151,902     275,188,567  
Less, allowance for loan losses       3,425,089     3,214,624  
   Net loans       298,726,813     271,973,943  
Property, furniture and equipment - net       20,515,548     20,960,332  
Bank owned life insurance       9,805,252     9,606,657  
Goodwill       27,761,219     27,761,219  
Intangible assets       2,318,098     2,652,917  
Other assets       10,715,718     10,762,430  
    Total assets     $ 554,298,205   $ 548,055,743  
           LIABILITIES            
Deposits:            
  Non-interest bearing demand     $ 73,574,723   $ 73,676,415  
  NOW and money market accounts       96,068,306     114,842,382  
  Savings       25,949,666     26,134,834  
  Time deposits less than $100,000       123,660,954     119,082,462  
  Time deposits $100,000 and over       83,520,827     81,205,314  
     Total deposits       402,774,476     414,941,407  
Securities sold under agreements to repurchase       24,963,200     19,472,580  
Federal Home Loan Bank Advances       41,532,284     29,757,545  
Federal Home Loan Bank Advances, at fair value       1,500,960     -  
Junior subordinated debt       15,464,000     15,464,000  
Other borrowed money       167,892     148,886  
Other liabilities       4,923,733     5,063,674  
    Total liabilities       491,326,545     484,848,092  
          SHAREHOLDERS’ EQUITY            
Preferred stock, par value $1.00 per share; 10,000,000            
 shares authorized; none issued and outstanding            
Common stock, par value $1.00 per share;            
 10,000,000 shares authorized; issued and outstanding 3,241,308 and            
 3,264,608 at June 30, 2007 and December 31, 2006, respectively       3,241,308     3,264,608  
Additional paid in capital       49,065,744     49,695,346  
Retained earnings       12,670,629     12,033,065  
Accumulated other comprehensive income (loss)       (2,006,021 )   (1,785,368 )
    Total shareholders' equity       62,971,660     63,207,651  
    Total liabilities and shareholders' equity     $ 554,298,205   $ 548,055,743  


3

FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

Six Six
Months Ended Months Ended
June 30, June 30,
2007 2006
(Unaudited) (Unaudited)
Interest income:            
  Loans, including fees     $ 10,738,564   $ 8,349,538  
  Taxable securities       3,695,437     3,561,096  
  Non taxable securities       217,304     131,778  
  Federal funds sold and securities purchased            
    under resale agreements       170,389     396,075  
  Other       17,692     36,398  
       Total interest income       14,839,386     12,474,885  
Interest expense:            
  Deposits       5,683,534     4,290,839  
  Federal funds sold and securities sold            
   under agreement to repurchase       562,323     291,922  
  Other borrowed money       1,217,178     1,094,706  
      Total interest expense       7,463,035     5,677,467  
Net interest income       7,376,351     6,797,418  
Provision for loan losses       225,500     248,329  
Net interest income after provision for loan losses       7,150,851     6,549,089  
Non-interest income:            
  Deposit service charges       1,257,317     1,122,566  
  Mortgage origination fees       181,238     246,581  
  Commission on sale of non deposit investment products       143,433     206,630  
  Gain (loss) on sale of securities       73,694     (69,382 )
  Gain on early extinguishment of debt       -     159,416  
  Other       587,064     612,737  
      Total non-interest income       2,242,746     2,278,548  
Non-interest expense:            
  Salaries and employee benefits       3,609,506     3,380,294  
  Occupancy       571,332     412,402  
  Equipment       632,670     575,053  
  Marketing and public relations       278,826     146,955  
  Amortization of intangibles       334,819     301,723  
  Other       1,712,514     1,535,128  
      Total non-interest expense       7,139,667     6,351,555  
Net income before tax       2,253,930     2,476,082  
Income taxes       635,264     738,475  
Net income     $ 1,618,666   $ 1,737,607  
Basic earnings per common share     $ 0.50   $ 0.59  
Diluted earnings per common share     $ 0.49   $ 0.57  


4

FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

Three Three
Months Ended Months Ended
June 30, June 30,
2007 2006
(Unaudited) (Unaudited)
Interest income:            
  Loans, including fees     $ 5,514,993   $ 4,334,016  
  Taxable securities       1,839,976     1,849,173  
  Non taxable securities       108,283     73,976  
  Federal funds sold and securities purchased            
    under resale agreements       67,257     254,758  
  Other       10,511     25,945  
       Total interest income       7,541,020     6,537,868  
Interest expense:            
  Deposits       2,850,587     2,362,547  
  Federal funds sold and securities sold            
   under agreement to repurchase       295,027     164,911  
  Other borrowed money       627,752     540,431  
      Total interest expense       3,773,366     3,067,889  
Net interest income       3,767,654     3,469,979  
Provision for loan losses       112,000     128,629  
Net interest income after provision for loan losses       3,655,654     3,341,350  
Non-interest income:            
  Deposit service charges       644,782     578,029  
  Mortgage origination fees       77,081     132,238  
  Commission on sale of non deposit investment products       65,981     105,446  
  Gain on sale of securities       69,405     -  
  Other       276,707     311,976  
      Total non-interest income       1,133,956     1,127,689  
Non-interest expense:            
  Salaries and employee benefits       1,778,050     1,685,836  
  Occupancy       288,411     204,708  
  Equipment       321,453     289,890  
  Marketing and public relations       104,596     75,564  
  Amortization of intangibles       167,410     153,038  
  Other       854,083     773,707  
      Total non-interest expense       3,514,003     3,182,743  
Net income before tax       1,275,607     1,286,296  
Income taxes       382,620     384,975  
Net income     $ 892,987   $ 901,321  
Basic earnings per common share     $ 0.28   $ 0.30  
Diluted earnings per common share     $ 0.27   $ 0.29  


5

FIRST COMMUNITY CORPORATION
Consolidated Statements of Changes in Shareholder’s Equity and Comprehensive Income (loss)
Six Months ended June 30, 2007 and June 30, 2006

Accumulated
Additional Other
Shares Common Paid-in Retained Comprehensive
Issued
Stock
Capital
Earnings
Income (Loss)
Total
Balance, December 31, 2005       2,848,627   $ 2,848,627   $ 42,352,205   $ 9,240,088   $ (3,674,135 ) $ 50,766,785  
Comprehensive Income:                            
  Net income                   1,737,607         1,737,607  
  Accumulated other                            
   comprehensive income net of                            
   income tax of $18,200                       33,674      
   Less: reclassification adjustment                            
   for loss included in net income,