First Community Corp (FCCO) SEC Filing 10-K Annual report for the fiscal year ending Wednesday, December 31, 2008

First Community Corp

CIK: 932781 Ticker: FCCO

Exhibit 99.1


News Release

For Release January 21, 2009

5:00 P.M.



Joseph G. Sawyer, Senior Vice President & Chief Financial Officer or


Robin D. Brown, Senior Vice President & Director of Marketing


(803) 951- 2265


First Community Corporation Announces Fourth Quarter, Year End Results and Cash Dividend


Lexington, S.C.  January 21, 2009 - Today First Community Corporation, the holding company for First Community Bank, reported financial results for the fourth quarter and year ended 2008.  Net income (loss) for the fourth quarter of 2008 was ($488) thousand and diluted earnings (loss) per common share were $(.17).  Operating earnings for the year of 2008 were $3.1 million or $.98 per common share as compared to $3.9 million or $1.20 per common share in 2007.  The primary reasons for this decrease are the same as the contributors to the fourth quarter loss as discussed below.  For the year, the company reported a net loss of $6.8 million.  As discussed in previous releases, the U.S. Treasury Department announced their decision to place the Federal Home Loan Corporation (commonly known as Freddie Mac) into conservatorship and to suspend cash dividends paid on its preferred stock.  Due to this action and as previously announced, the company experienced an “other than temporary impairment” (OTTI) charge during the year in a total pre-tax amount of $14.3 million, with the after tax impact being $9.5 million.  This action eliminated any remaining exposure to government sponsored enterprise (GSE) preferred securities.


Noteworthy in the fourth quarter were several items that contributed significantly to the loss.  The company experienced an OTTI charge in the amount of $169 thousand.  This charge was against a home equity mortgage backed security purchased in early 2005 and leaves the remaining value of the security in the portfolio at $536 thousand.  The company also experienced a negative fair value adjustment of $788 thousand during the quarter.  This reflects the adjustment in value of an interest rate swap executed early in the fourth quarter to reduce the company’s exposure to increasing interest rates.  During the quarter, interest rates declined, thereby resulting in the negative fair value adjustment.  As the swap approaches the expiration date in 2013, or earlier if rates increase, the company will recognize a full recovery of this fair value adjustment.


Additionally, the provision for loan losses in the quarter was $1.4 million as compared to $359 thousand in the prior quarter and $132 thousand in the fourth quarter of 2007.  This results in a loan loss reserve of $4.6 million, which as a ratio to total loans is 1.38%, an increase from the prior quarter’s ratio of 1.13%.  Mike Crapps, president and chief executive officer noted, “We are not immune to the effects of a slowing economy and see some deterioration of our loan portfolio in general as evidenced by the increase in non-performing assets (NPAs) from $1.2 million (22 basis points) at December 31, 2007 to $2.5 million (39 basis points) at December 31, 2008.  While these rates are favorable in comparison to current industry results, which we believe are in excess of 150 basis points, we are concerned about the impact of this economic environment on our customer base of local businesses and professionals.”  During this economic cycle acquisition and development (A&D) loans have been a major concern for financial institutions.  Currently, our company has $13.2 million of A&D loans in our portfolio which represents only 3.9% of our total loan portfolio.  Of these, we have identified a specific loan located within the Midlands of South Carolina in the amount of $3.2 million as a potential problem loan, although the loan was not yet 30 days delinquent at December 31, 2008.   While we continue to work with the borrower, if this loan goes into non-performing status we believe it is not unreasonable to assume that as much as twenty percent of the loan amount could be charged off.  Currently, the company does not anticipate any loss associated with the remaining A&D portfolio other than the specific loan referenced above.


Another significant factor in the quarter is continued compression of the net-interest margin (NIM).  The interest margin was 3.05% during the quarter which is twelve basis points less than the prior quarter and twenty three basis points less than the fourth quarter of 2007.  This contraction is driven by the rapid decline in interest rates quickly affecting asset yields while market rates on deposits have remained disproportionately high.



The following information was filed by First Community Corp (FCCO) on Monday, January 26, 2009 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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SEC Filing Tools
Ticker: FCCO
CIK: 932781
Form Type: 10-K Annual Report
Accession Number: 0001047469-09-003304
Submitted to the SEC: Fri Mar 27 2009 3:09:07 PM EST
Accepted by the SEC: Fri Mar 27 2009
Period: Wednesday, December 31, 2008
Industry: State Commercial Banks

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