Safe and Sound

First Community Bank

Lexington, SC
4
Star Rating
First Community Bank is an FDIC-insured bank founded in 1995 and currently based in Lexington, SC. The bank has equity of $115.5 million on assets of $1.05 billion, according to December 31, 2017, regulatory filings.

With 224 full-time employees in 19 offices in multiple states, the bank currently holds loans and leases worth $646.1 million, including real estate loans of $589.9 million. U.S. bank customers currently have $893.2 million in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, First Community Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three important criteria Bankrate used to evaluate American banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for depositors during periods of economic trouble for the bank. It follows then that when it comes to measuring an a bank's financial strength, capital is valuable. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure capital adequacy, First Community Bank received a score of 10 out of a possible 30 points, failing to reach the national average of 13.13.

One widely used measure of this buffer is a bank's Tier 1 capital ratio. First Community Bank's Tier 1 capital ratio was 13.40 percent, higher than the 6 percent level regulators consider adequate, but less than the national average of 25.65 percent. A higher capital ratio means the bank will be better able to weather financial challenges.

Overall, First Community Bank held equity amounting to 11.00 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's loan loss reserves and overall capitalization could be affected by troubled assets, such as unpaid loans.

Having lots of these kinds of assets could eventually require a bank to use capital to cover losses, reducing its buffer of equity. Many of those assets are also likely to be in non-accrual status and no longer earning money, decreasing earnings and increasing the risk of a failure in the future.

On Bankrate's asset quality test, First Community Bank scored 40 out of a possible 40 points, exceeding the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a helpful indicator of asset quality.As of December 31, 2017, 0.52 percent of First Community Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." The size of that reserve can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of at-risk loans. Unfortunately, the FDIC did not provide information on First Community Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or use them to address problematic loans, potentially making the bank more resilient in times of trouble. Losses, on the other hand, diminish a bank's ability to do those things.

First Community Bank scored 12 out of a possible 30 on Bankrate's earnings test, less than the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. First Community Bank's most recent annualized quarterly return on equity was 6.43 percent, below the national average of 8.10 percent.

The bank reported net income of $6.3 million on total equity of $115.5 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.67 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.