10-Q 1 form10q-111006.htm 111006

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 September 30, 2006

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 October 31, 2006, 3,263,061 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. Management’s 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 Proceedings
   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





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PART I
FINANCIAL INFORMATION

Item 1.   Financial Statements

FIRST COMMUNITY CORPORATION
CONSOLIDATED BALANCE SHEETS

September 30,
2006 December 31,
(Unaudited)       2005      
                               ASSETS            
Cash and due from banks     $ 10,456,915   $ 11,701,764  
Interest-bearing bank balances       35,552     83,178  
Federal funds sold and securities purchased under        
  agreements to resell       2,857,972     1,079,204  
Investment securities - available for sale       173,308,668     170,657,770  
Investment securities - held to maturity (market value of            
  $6,523,790 and $5,746,448 at September 30, 2006 and        
  December 31, 2005, respectively)       6,495,045     5,713,830  
Loans       269,772,683     221,667,632  
Less, allowance for loan losses       3,251,633     2,700,647  
   Net loans       266,521,050     218,966,985  
Property, furniture and equipment - net       21,141,391     15,982,029  
Goodwill       28,140,309     24,256,020  
Intangible assets       2,820,326     2,767,074  
Other assets       20,272,205     16,247,239  
    Total assets     $ 532,049,433   $ 467,455,093  
                             LIABILITIES            
Deposits:            
  Non-interest bearing demand     $ 66,158,363   $ 57,326,637  
  NOW and money market accounts       104,816,968     106,337,887  
  Savings       28,238,694     29,818,705  
  Time deposits less than $100,000       117,906,661     100,612,256  
  Time deposits $100,000 and over       82,073,718     55,508,666  
     Total deposits       399,194,404     349,604,151  
Securities sold under agreements to repurchase       21,322,226     13,806,400  
Federal Home Loan Bank Advances       29,870,509     34,524,409  
Long term debt       15,464,000     15,464,000  
Other borrowed money       115,546     169,233  
Other liabilities       4,388,926     3,120,115  
    Total liabilities       470,355,611     416,688,308  
            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            
    3,263,061 and 2,848,627 at September 30, 2006 and December 31,        
    2005, respectively       3,263,061     2,848,627  
Additional paid in capital       49,498,914     42,352,205  
Retained earnings       11,368,019     9,240,088  
Accumulated other comprehensive income (loss)       (2,436,172 )   (3,674,135 )
    Total shareholders' equity       61,693,822     50,766,785  
    Total liabilities and shareholders' equity     $ 532,049,433   $ 467,455,093  

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FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

Nine Nine
Months Ended Months Ended
September 30, September 30,
2006 2005
(Unaudited) (Unaudited)
Interest and dividend income:            
  Loans, including fees     $ 13,360,784   $ 9,787,455  
  Investment securities       5,822,688     5,583,709  
  Federal funds sold and securities purchased            
    under resale agreements       523,768     139,371  
  Other       56,107     32,401  
       Total interest and dividend income       19,763,347     15,542,936  
           
Interest expense:        
  Deposits       6,991,422     3,959,893  
  Federal funds purchased and securities sold            
   under agreement to repurchase       528,804     165,237  
  Other borrowed money       1,695,081     1,782,072  
      Total interest expense       9,215,307     5,907,202  
Net interest income       10,548,040     9,635,734  
Provision for loan losses       388,724     217,000  
Net interest income after provision for loan losses       10,159,316     9,418,734  
           
Non-interest income:            
  Deposit service charges       1,774,796     922,194  
  Mortgage origination fees       379,497     284,337  
  Commission on sale of non deposit investment products       260,800     157,142  
  Gain (loss) on sale of securities       (69,040 )   188,418  
  Gain on early extinguishment of debt       159,416     --  
  Other       848,811     599,472  
      Total non-interest income       3,354,280     2,151,563  
           
Non-interest expense:            
  Salaries and employee benefits       5,145,212     4,663,773  
  Occupancy       688,936     567,745  
  Equipment       895,502     936,710  
  Marketing and public relations       248,688     255,800  
  Amortization of intangibles       469,121     446,056  
  Other       2,311,469     1,697,311  
      Total non-interest expense       9,758,928     8,567,395  
           
Net income before tax       3,754,668     3,002,902  
Income taxes       1,114,155     764,155  
Net income     $ 2,640,513   $ 2,238,747  
           
Basic earnings per common share     $ 0.87   $ 0.79  
Diluted earnings per common share     $ 0.84   $ 0.76  

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FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

Three Three
Months Ended Months Ended
September 30, September 30,
2006 2005
(Unaudited) (Unaudited)
Interest and dividend income:            
  Loans, including fees     $ 5,011,246   $ 3,494,563  
  Investment securities       2,129,814     1,897,386  
  Federal funds sold and securities purchased            
    under resale agreements       127,693     32,801  
  Other       19,709     9,386  
       Total interest and dividend income       7,288,462     5,434,136  
Interest expense:            
  Deposits       2,700,583     1,507,203  
  Federal funds purchased and securities sold            
   under agreement to repurchase       236,882     81,600  
  Other borrowed money       600,375     638,939  
      Total interest expense       3,537,840     2,227,742  
Net interest income       3,750,622     3,206,394  
Provision for loan losses       140,395     79,000  
Net interest income after provision for loan losses       3,610,227     3,127,394  
           
Non-interest income:            
  Deposit service charges       652,230     335,735  
  Mortgage origination fees       132,916     113,552  
  Commission on sale of non deposit investment products       54,170     93,634  
  Gain on sale of securities       342     -  
  Other       236,074     238,667  
      Total non-interest income       1,075,732     781,588  
           
Non-interest expense:            
  Salaries and employee benefits       1,764,918     1,633,433  
  Occupancy       276,534     195,369