10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2015
o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ____ to _____

Commission File No. 000-28344

 

FIRST COMMUNITY CORPORATION
(Exact name of registrant as specified in its charter)
South Carolina	57-1010751
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

5455 Sunset Boulevard, Lexington, South Carolina 29072

(Address of principal executive offices)       (Zip Code)

(803) 951-2265

(Registrant’s telephone number, including area code)

(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 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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).       Yes  x      No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨     Accelerated filer ¨      Non-accelerated filer ¨     Smaller reporting company x

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: On May 13, 2015, 6,652,189 shares of the issuer’s common stock, par value $1.00 per share, were issued and outstanding.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	3
Item 1.  Financial Statements	3
Consolidated Balance Sheets	4
Consolidated Statements of Income	5
Consolidated Statements of Comprehensive Income	6
Consolidated Statements of Changes in Shareholders’ Equity	7
Consolidated Statements of Cash Flows	8
Notes to Consolidated Financial Statements	9
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.  Controls and Procedures	52
PART II – OTHER INFORMATION	53
Item 1.  Legal Proceedings	53
Item 1A. Risk Factors	53
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3.  Defaults Upon Senior Securities	53
Item 4.  Mine Safety Disclosures	53
Item 5.  Other Information	53
Item 6.  Exhibits	53
SIGNATURES	54
INDEX TO EXHIBITS	55
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

3

FIRST COMMUNITY CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)	March 31, 2015			December 31, 2014
	(Unaudited)
ASSETS
Cash and due from banks	$	11,537		$	12,480
Interest-bearing bank balances		31,796			9,454
Federal funds sold and securities purchased under agreements to resell		878			598
Investment securities held-to-maturity		12,756			10,647
Investment securities available-for-sale		259,369			270,164
Other investments, at cost		1,969			2,003
Loans held for sale		5,446			4,124
Loans		454,301			443,844
Less,  allowance for loan losses		4,252			4,132
Net loans		450,049			439,712
Property, furniture and equipment - net		29,383			28,510
Land held for sale		1,200			1,200
Bank owned life insurance		14,744			14,642
Other real estate owned		2,748			2,943
Intangible assets		1,704			1,806
Goodwill		5,078			5,078
Other assets		7,162			9,002
Total assets	$	835,819		$	812,363
LIABILITIES
Deposits:
Non-interest bearing demand	$	140,689		$	133,004
NOW and money market accounts		305,851			287,982
Savings		56,467			53,583
Time deposits less than $100,000		105,262			108,048
Time deposits $100,000 and over		86,304			86,966
Total deposits		694,573			669,583
Securities sold under agreements to repurchase		16,684			17,383
Federal Home Loan Bank advances		27,552			28,807
Junior subordinated debt		15,464			15,464
Other liabilities		4,998			6,598
Total liabilities		759,271			737,835
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 6,683,960 at March 31, 2015 6,664,391 at December 31, 2014		6,684			6,664
Common stock warrants issued		46			48
Nonvested restricted stock		(694	)		(673	)
Additional paid in capital		75,687			75,504
Accumulated deficit		(7,339	)		(8,286	)
Accumulated other comprehensive income		2,164			1,271
Total shareholders’ equity		76,548			74,528
Total liabilities and shareholders’ equity	$	835,819		$	812,363

See Notes to Consolidated Financial Statements

4

FIRST COMMUNITY CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts)	Three Months ended March 31,
	2015			2014
		(Unaudited)			(Unaudited)
Interest and dividend income:
Loans, including fees	$	5,874		$	5,080
Taxable securities		1,002			983
Non-taxable securities		380			317
Federal funds sold and securities purchased under resale agreements		6			10
Other		21			13
Total interest income		7,283			6,403
Interest expense:
Deposits		426			429
Federal funds sold and securities sold under agreement to repurchase		8			10
Other borrowed money		401			468
Total interest expense		835			907
Net interest income		6,448			5,496
Provision for loan losses		406			150
Net interest income after provision for loan losses		6,042			5,346
Non-interest income:
Deposit service charges		347			366
Mortgage banking income		735			619
Investment advisory and non-deposit commissions		296			257
Gain on sale of securities		104			8
Gain on sale of other assets		4			12
Loss on early extinguishment of debt		(103	)		—
Other		598			613
Total non-interest income		1,981			1,875
Non-interest expense:
Salaries and employee benefits		3,565			3,424
Occupancy		485			413
Equipment		402			339
Marketing and public relations		226			161
FDIC Assessment		138			124
Other real estate expense		154			138
Amortization of intangibles		103			42
Merger expenses		—			420
Other		1,027			965
Total non-interest expense		6,100			6,026
Net income before tax		1,923			1,195
Income tax expense		519			333
Net income	$	1,404		$	862
Basic earnings per common share	$	0.22		$	0.14
Diluted earnings per common share	$	0.21		$	0.14

See Notes to Consolidated Financial Statements

5

FIRST COMMUNITY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)
	Three months ended March 31,
	2015			2014
Net income	$	1,404		$	862
Other comprehensive income:
Unrealized gain during the period on available-for-sale securities, net of tax of $495 and $876, respectively		962			1,696
Less: Reclassification adjustment for gain on available-for-sale securities included in net income, net of tax expense of $35 and $2, respectively		(69	)		(6	)
Other comprehensive income		893			1,690
Comprehensive income	$	2,297		$	2,552

See Notes to Consolidated Financial Statements

6

FIRST COMMUNITY CORPORATION

Consolidated Statements of Changes in Shareholders’ Equity

Three Months ended March 31, 2015 and March 31, 2014

(Unaudited)

																Accumulated
	Common				Common			Additional		Nonvested						Other
(Dollars in thousands)	Shares		Common		Stock			Paid-in		Restricted			Accumulated			Comprehensive
	Issued		Stock		Warrants			Capital		Stock			Deficit			Income (Loss)			Total
Balance December 31, 2013		5,303	$	5,303	$	48		$	62,214	$	(444	)	$	(11,923	)	$	(2,527	)	$	52,671
Net income														862						862
Other comprehensive loss net of tax of $873																	1,690			1,690
Issuance of restricted stock		71		71					697		(768	)								—
Amortization of compensation on restricted stock											100									100
Issuance of common stock		1,274		1,274					12,436											13,710
Dividends: Common  ($0.06 per share)														(313	)					(313	)
Dividend reinvestment plan		4		4					41											45
Balance March 31, 2014		6,652	$	6,652	$	48		$	75,388	$	(1,112	)	$	(11,374	)	$	(837	)	$	68,765
Balance December 31, 2014		6,664	$	6,664	$	48		$	75,504	$	(673	)	$	(8,286	)	$	1,271		$	74,528
Net income														1,404						1,404
Other comprehensive income net of tax of $460																	893			893
Issuance of restricted stock		13		13					137		(150	)								—
Amortization of compensation on restricted stock											129									129
Exercise of stock warrants		2		2		(2	)													—
Dividends: Common ($0.07 per share)														(457	)					(457	)
Dividend reinvestment plan		5		5					46											51
Balance March 31, 2015		6,684	$	6,684	$	46		$	75,687	$	(694	)	$	(7,339	)	$	2,164		$	76,548

See Notes to Consolidated Financial Statements

7

FIRST COMMUNITY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three months ended March 31,
(Dollars in thousands)	2015			2014
Cash flows from operating activities:
Net income	$	1,404		$	862
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation		297			248
Premium amortization		936			774
Provision for loan losses		406			150
Write-down of other real estate owned		90			82
Gain on sale of other real estate owned		(4	)		(12	)
Origination of  loans held-for-sale		(23,701	)		(18,191	)
Sale of loans held-for-sale		22,379			18,144
Amortization of intangibles		103			42
Accretion on acquired loans		(509	)		(114	)
Gain on sale of securities		(104	)		(8	)
Loss on extinguishment of debt		103			—
Decrease in other assets		1,461			1,088
Decrease in other liabilities		(1,711	)		(1,094	)
Net cash provided from operating activities		1,150			1,971
Cash flows from investing activities:
Purchase of investment securities available-for-sale		(5,436	)		(34,235	)
Purchase of investment securities held-to-maturity		(2,142	)		—
Maturity/call of investment securities available-for-sale		9,643			9,875
Proceeds from sale of securities available-for-sale		6,955			20,916
Proceeds from sale of other securities		304			—
(Increase) decrease in loans		(10,382	)		9,571
Net cash disbursed in business combination		—			(11,353	)
Proceeds from sale of other real estate owned		185			712
Purchase of property and equipment		(1,170	)		(607	)
Net cash used in investing activities		(2,043	)		(5,121	)
Cash flows from financing activities:
Increase in deposit accounts		25,035			43,232
Increase (decrease) in securities sold under agreements to repurchase		(699	)		858
Advances from the Federal Home Loan Bank		8,500			20,000
Repayment of advances from FHLB		(9,858	)		(37,710	)
Dividends paid:  Common Stock		(457	)		(313	)
Dividend reinvestment plan		51			45
Net cash provided from financing activities		22,572			26,112
Net increase in cash and cash equivalents		21,679			22,962
Cash and cash equivalents at beginning of period		22,532			14,166
Cash and cash equivalents at end of period	$	44,211		$	37,128
Supplemental disclosure:
Cash paid during the period for:
Interest	$	865		$	791
Income taxes	$	935		$	—
Non-cash investing and financing activities:
Unrealized gain on securities	$	893		$	1,690
Transfer of loans to foreclosed property	$	75		$	559
Schedule of Noncash Investing Transactions:
Acquisitions:
Fair value of tangible assets acquired	$	—		$	151,024
Other intangible assets acquired	$	—		$	1,182
Liabilities assumed	$	—		$	123,198
Net identifiable assets acquired over liabilities assumed	$	—		$	29,008
Common stock issued in acquisition	$	—		$	13,710

See Notes to Consolidated Financial Statements

8

Notes to Consolidated Financial Statements (Unaudited)

Note 1 – Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated balance sheets, and the consolidated statements of income, comprehensive income, changes in shareholders’ equity, and the cash flows of First Community Corporation (the “Company”), present fairly in all material respects the Company’s financial position at March 31, 2015 and December 31, 2014, and the Company’s results of operations and cash flows for the three months ended March 31, 2015 and 2014. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

In the opinion of management, all adjustments necessary to fairly present the consolidated financial position and consolidated results of operations have been made. All such adjustments are of a normal, recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements and notes thereto are presented in accordance with the instructions for Form 10-Q. The information included in the Company’s 2014 Annual Report on Form 10-K should be referred to in connection with these unaudited interim financial statements.   

9

Note 2 – Earnings Per Common Share

The following reconciles the numerator and denominator of the basic and diluted earnings per common share computation:

(In thousands except average market price)

	Three months ended
	March 31,
	2015		2014
Numerator (Net income available to common shareholders)	$	1,404	$	862
Denominator
Weighted average common shares outstanding for:
Basic earnings per share		6,522		6,169
Dilutive securities:
Deferred compensation		20		17
Warrants/Restricted stock -Treasury stock method		123		43
Diluted earnings per share		6,665		6,229
The average market price used in calculating assumed number of shares	$	11.42	$	10.86

At March 31, 2015, there were 8,903 outstanding options at an average exercise price of $14.21. None of these options has an exercise price below the average market price of $11.42 for the three-month period ended March 31, 2015, and, therefore they are not deemed to be dilutive. At March 31, 2014, there were 70,903 outstanding options at an average exercise price of $19.48. None of these options had an exercise price below the average market price of $10.86 for the three-month period ended March 31, 2014, and, therefore they were not deemed to be dilutive. In the fourth quarter of 2011, we issued $2.5 million in 8.75% subordinated notes maturing December 16, 2019. On November 15, 2012, the subordinated notes were redeemed in full at par. Warrants for 107,500 shares of common stock at $5.90 per share were issued in connection with the issuance of the subordinated debt. At March 31, 2015 there were 97,180 warrants outstanding. These warrants expire December 16, 2019 and are included in dilutive securities in the table above. The Company has issued a total of 157 thousand restricted shares under the terms of its compensation plans and employment agreements. These shares cliff vest over a three year period. The unrecognized compensation cost at March 31, 2015 for non-vested shares amounts to $694 thousand.

10

Note 3 – Investment Securities

The amortized cost and estimated fair values of investment securities are summarized below:

AVAILABLE-FOR-SALE:

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2015:
Government sponsored enterprises	$	3,406	$	97	$	—	$	3,503
Mortgage-backed securities		147,054		1,846		347		148,553
Small Business Administration pools		59,452		447		344		59,555
State and local government		44,948		1,590		91		46,447
Corporate and other securities		1,349		—		38		1,311
	$	256,209	$	3,980	$	820	$	259,369
December 31, 2014:
Government sponsored enterprises	$	3,403	$	45	$	14	$	3,434
Mortgage-backed securities		159,861		1,211		719		160,353
Small Business Administration pools		58,643		385		483		58,545
State and local government		45,102		1,523		109		46,516
Corporate and other securities		1,349		—		33		1,316
	$	268,358	$	3,164	$	1,358	$	270,164

HELD-TO-MATURITY:

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2015:
State and local government	$	12,756	$	72	$	81	$	12,747
	$	12,756	$	72	$	81	$	12,747
December 31, 2014:
State and local government	$	10,647	$	6	$	68	$	10,585
	$	10,647	$	6	$	68	$	10,585

During the three months ended March 31, 2015 and March 31, 2014, the Company received proceeds of $7.0 million and $20.9 million, respectively, from the sale of investment securities available-for-sale, amounting to gross gains of $104.1 thousand and $8.3 thousand in earnings for each respective period. There were no gross losses from the sale of investments for the three months ended March 31, 2015. There were no gross losses from the sale of investment securities for the three months ended March 31, 2014.

At March 31, 2015, corporate and other securities available-for-sale included the following at fair value: mutual funds at $834.1 thousand, foreign debt of $60.3 thousand, and corporate preferred stock in the amount of $416.8 thousand. At December 31, 2014, corporate and other securities available-for-sale included the following at fair value: mutual funds at $839.2 thousand, foreign debt of $60.3 thousand, and corporate preferred stock in the amount of $416.8 thousand.

Other investments, at cost, include Federal Home Loan Bank (“FHLB”) stock in the amount of $2.0 million and $2.0 million at March 31, 2015 and December 31, 2014 respectively.

11

Note 3 – Investment Securities (continued)

The following tables show gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous loss position, at March 31, 2015 and December 31, 2014.

	Less than 12 months				12 months or more				Total
March 31, 2015 (Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available-for-sale securities:
Government Sponsored Enterprises	$	—	$	—	$	—	$	—	$	—	$	—
Government Sponsored Enterprise mortgage-backed securities		15,585		116		19,334		224		34,919		340
Small Business Administration pools		10,929		77		22,815		267		33,744		344
Non-agency mortgage-backed securities		348		7		—		—		348		7
State and local government		—		—		3,306		91		3,306		91
Corporate bonds and other		—		—		884		38		884		38
Total	$	26,862	$	200	$	46,339	$	620	$	73,201	$	820

	Less than 12 months				12 months or more				Total
December 31, 2014 (Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available-for-sale securities:
Government Sponsored Enterprises	$	—	$	—	$	1,486	$	14	$	1,486	$	14
Government Sponsored Enterprise mortgage-backed securities		38,341		283		26,232		429		64,573		712
Small Business Administration pools		12,313		89		20,896		394		33,209		483
Non-agency mortgage-backed securities		576		6		18		1		594		7
State and local government		—		—		5,270		109		5,270		109
Corporate bonds and other		—		—		889		33		889		33
Total	$	51,230	$	378	$	54,791	$	980	$	106,021	$	1,358

	Less than 12 months				12 months or more				Total
March 31, 2015 (Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Held-to-maturity securities:
State and local government	$	7,727	$	81	$	—	$	—	$	7,727	$	81
Total	$	7,727	$	81	$	—	$	—	$	7,727	$	81

	Less than 12 months				12 months or more				Total
December 31, 2014 (Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Held-to-maturity securities:
State and local government	$	8,655	$	68	$	—	$	—	$	8,655	$	68
Total	$	8,655	$	68	$	—	$	—	$	8,655	$	68

12

Note 3 – Investment Securities (continued)

Government Sponsored Enterprise, Mortgage-Backed Securities: At March 31, 2015, the Company owned mortgage-backed securities (“MBSs”), including collateralized mortgage obligations (“CMOs”), with an amortized cost of $146.4 million and approximate fair value of $147.9 million issued by government sponsored enterprises (“GSEs”). At December 31, 2014, the Company owned MBSs, including CMOs with an amortized cost of $159.1 million and approximate fair value of $159.7 million issued by GSEs. As of March 31, 2015 and December 31, 2014, all of the MBSs issued by GSEs were classified as “Available for Sale.” Unrealized losses on certain of these investments are not considered to be “other than temporary,” and we have the intent and ability to hold these until they mature or recover the current book value. The contractual cash flows of the investments are guaranteed by the GSE. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment. Because the Company does not intend to sell these securities and it is more likely than not that the Company will not be required sell these securities before a recovery of its amortized cost, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at March 31, 2015.

Non-agency Mortgage-Backed Securities: The Company also held private label mortgage-backed securities (“PLMBSs”), including CMOs, at March 31, 2015 with an amortized cost of $696.6 thousand and approximate fair value of $696.2 thousand. The Company held PLMBSs, including CMOs, at December 31, 2014 with an amortized cost of $736.6 thousand and approximate fair value of $734.4 thousand. Management monitors each of these securities on a quarterly basis to identify any deterioration in the credit quality, collateral values and credit support underlying the investments. There were no PLMBSs rated below investment grade as of March 31, 2015.

Corporate Bonds: Corporate bonds held by the Company are reviewed on a quarterly basis to identify downgrades by rating agencies as well as deterioration of the underlying collateral or the issuer’s ability to service the debt obligation. As of March 31, 2015 and December 31, 2014 the Company did not own any corporate bonds.

State and Local Governments and Other: Management monitors these securities on a quarterly basis to identify any deterioration in the credit quality. Included in the monitoring is a review of the credit rating, a financial analysis and certain demographic data on the underlying issuer. The Company does not consider these securities to be OTTI at March 31, 2015.

The following sets forth the amortized cost and fair value of investment securities at March 31, 2015 by contractual maturity. Expected maturities differ from contractual maturities because borrowers may have the right to call or prepay the obligations with or without prepayment penalties. MBSs are based on average life at estimated prepayment speeds.

	Available-for-sale				Held-to-maturity
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	6,668	$	6,727	$	—	$	—
Due after one year through five years		126,652		127,963		494		497
Due after five years through ten years		108,647		110,567		11,715		11,720
Due after ten years		14,242		14,112		547		530
	$	256,209	$	259,369	$	12,756	$	12,747

13

Note 4 – Loans

Loans summarized by category as of March 31, 2015, December 31, 2014 and March 31, 2014 are as follows:

	March 31,		December 31,		March 31,
(Dollars in thousands)	2015		2014		2014
Commercial, financial and agricultural	$	32,569	$	33,403	$	34,860
Real estate:
Construction		36,080		27,545		29,112
Mortgage-residential		49,838		48,510		46,810
Mortgage-commercial		294,108		293,186		292,995
Consumer:
Home equity		33,511		33,000		31,378
Other		8,195		8,200		8,713
Total	$	454,301	$	443,844	$	443,868

14

Note 4 – Loans (continued)

The detailed activity in the allowance for loan losses and the recorded investment in loans receivable as of and for the three months ended March 31, 2015 and March 31, 2014 and for the year ended December 31, 2014 is as follows:

(Dollars in thousands)
						Real estate		Real estate
				Real estate		Mortgage		Mortgage			Consumer			Consumer
	Commercial			Construction		Residential		Commercial			Home equity			Other			Unallocated			Total
March 31, 2015
Allowance for loan losses:
Beginning balance December 31, 2014	$	67		$	45	$	179	$	1,572		$	134		$	44		$	2,091		$	4,132
Charge-offs		(56	)		—		—		(291	)		—			(11	)		—			(358	)
Recoveries		2			—		1		4			1			64			—			72
Provisions		197			89		63		295			(14	)		(39	)		(185	)		406
Ending balance March 31, 2015	$	210		$	134	$	243	$	1,580		$	121		$	58		$	1,906		$	4,252
Ending balances:
Individually evaluated for impairment	$	—		$	—	$	4	$	3		$	—		$	—		$	—		$	7
Collectively evaluated for impairment		210			134		239		1,577			121			58			1,906			4,245
Loans receivable:
Ending balance-total	$	32,569		$	36,080	$	49,838	$	294,108		$	33,511		$	8,195		$	—		$	454,301
Ending balances:
Individually evaluated for impairment		—			—		1,066		6,740			91			—			—			7,897
Collectively evaluated for impairment	$	32,569		$	36,080	$	48,772	$	287,368		$	33,420		$	8,195		$	—		$	446,404

15

Note 4 – Loans (continued)

(Dollars in thousands)
						Real estate			Real estate
				Real estate		Mortgage			Mortgage			Consumer		Consumer
	Commercial			Construction		Residential			Commercial			Home equity		Other			Unallocated			Total
March 31, 2014
Allowance for loan losses:
Beginning balance December 31, 2013	$	233		$	26	$	291		$	1,117		$	112	$	80		$	2,360		$	4,219
Charge-offs		—			—		(35	)		(187	)		—		(8	)		—			(230	)
Recoveries		17			—		1			—			—		4			—			22
Provisions		(7	)		137		(1	)		94			2		(13	)		(62	)		150
Ending balance March 31, 2014	$	243		$	163	$	256		$	1,024		$	114	$	63		$	2,298		$	4,161
Ending balances:
Individually evaluated for impairment	$	—		$	—	$	4		$	—		$	—	$	—		$	—		$	4
Collectively evaluated for impairment		243			163		252			1,024			114		63			2,298			4,157
Loans receivable:
Ending balance-total	$	34,860		$	29,112	$	46,810		$	292,995		$	31,378	$	8,713		$	—		$	443,868
Ending balances:
Individually evaluated for impairment		65			—		956			7,332			71		9			—			8,433
Collectively evaluated for impairment	$	34,795		$	29,112	$	45,854		$	285,663		$	31,307	$	8,704		$	—		$	435,435

16

Note 4 – Loans (continued)

(Dollars in thousands)
						Real estate			Real estate
				Real estate		Mortgage			Mortgage			Consumer			Consumer
	Commercial			Construction		Residential			Commercial			Home equity			Other			Unallocated			Total
December 31, 2014
Allowance for loan losses:
Beginning balance	$	233		$	26	$	291		$	1,117		$	112		$	80		$	2,360		$	4,219
Charge-offs		(54	)		—		(52	)		(879	)		(17	)		(109	)		—			(1,111	)
Recoveries		110			—		10			—			6			17			—			143
Provisions		(222	)		19		(70	)		1,334			33			56			(269	)		881
Ending balance	$	67		$	45	$	179		$	1,572		$	134		$	44		$	2,091		$	4,132
Ending balances:
Individually evaluated for impairment	$	—		$	—	$	4		$	57		$	—		$	—		$	—		$	61
Collectively evaluated for impairment		67			45		175			1,515			134			44			2,091			4,071
Loans receivable:
Ending balance-total	$	33,403		$	27,545	$	48,510		$	293,186		$	33,000		$	8,200		$	—		$	443,844
Ending balances:
Individually evaluated for impairment		55			—		1,078			7,334			92			—			—			8,559
Collectively evaluated for impairment	$	33,348		$	27,545	$	47,432		$	285,852		$	32,908		$	8,200		$	—		$	435,285

Loans outstanding and available lines of credit to bank directors, executive officers and their related business interests amounted to $9.5 million and $11.1 million at March 31, 2015 and March 31, 2014, respectively. Repayments on these loans during the three months ended March 31, 2015 were $961.5 thousand and loans made amounted to $871.7 thousand. Repayments on these loans during the three months ended March 31, 2014 were $517.3 thousand and loans made amounted to $977.0 thousand. Related party loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and generally do not involve more than the normal risk of collectability.

17

Note 4 – Loans (continued)

The following table presents at March 31, 2015 and December 31, 2014 loans individually evaluated and considered impaired under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310 “Accounting by Creditors for Impairment of a Loan.” Impairment includes performing troubled debt restructurings (“TDRs”).

(Dollars in thousands)	March 31,		December 31,
	2015		2014
Total loans considered impaired	$	7,897	$	8,559
Loans considered impaired for which there is a related allowance for loan loss:
Outstanding loan balance		300		1,959
Related allowance		7		61
Loans considered impaired and previously written down to fair value		7,597		6,600
Average impaired loans		10,249		10,900

The following tables are by loan category and present at March 31, 2015, December 31, 2014 and March 31, 2014 loans individually evaluated and considered impaired under FASB ASC 310 “Accounting by Creditors for Impairment of a Loan.” Impairment includes performing TDRs.

(Dollars in thousands)							Three months ended
			Unpaid				Average		Interest
March 31, 2015	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no allowance recorded:
Commercial	$	—	$	—	$	—	$	—	$	—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		1,014		1,157		—		1,266		1
Mortgage-commercial		6,492		7,995		3		8,584		30
Consumer:
Home Equity		91		97		—		97		—
Other		—		—		—		—		—
With an allowance recorded:
Commercial		—		—		—		—		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		52		52		4		52		—
Mortgage-commercial		248		248		3		250		—
Consumer:
Home Equity		—		—		—		—		—
Other		—		—		—		—		—
Total:
Commercial		—		—		—		—		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		1,066		1,209		4		1,318		1
Mortgage-commercial		6,740		8,243		3		8,834		30
Consumer:
Home Equity		91		97		—		97		—
Other		—		—		—		—		—
	$	7,897	$	9,549	$	7	$	10,249	$	31

18

Note 4 – Loans (continued)

(Dollars in thousands)							Three months ended
			Unpaid				Average		Interest
March 31, 2014	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no allowance recorded:
Commercial	$	65	$	69	$	—	$	135	$	—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		901		1,002		—		1,112		1
Mortgage-commercial		7,332		7,948		—		9,468		9
Consumer:
Home Equity		71		71		—		75		—
Other		9		11		—		21		—
With an allowance recorded:
Commercial		—		—		—		—		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		55		55		4		55		—
Mortgage-commercial		—		—		—		—		—
Consumer:
Home Equity		—		—		—		—		—
Other		—		—		—		—		—
Total:
Commercial		65		69		—		135		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		956		1,057		4		1,167		1
Mortgage-commercial		7,332		7,948		—		9,468		9
Consumer:
Home Equity		71		71		—		75		—
Other		9		11		—		21		—
	$	8,433	$	9,156	$	4	$	10,866	$	10

19

Note 4 – Loans (continued)

(Dollars in thousands)
December 31, 2014			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no allowance recorded:
Commercial	$	55	$	112	$	—	$	132	$	3
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		1,025		1,167		—		1,071		8
Mortgage-commercial		5,428		6,469		—		7,634		64
Consumer:
Home Equity		92		97		—		83		—
Other		—		—		—		—		—
With an allowance recorded:
Commercial		—		—		—		—		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		53		53		4		54		3
Mortgage-commercial		1,906		2,134		57		1,926		85
Consumer:
Home Equity		—		—		—		—		—
Other		—		—		—		—		—
Total:
Commercial		55		112		—		132		3
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		1,078		1,220		4		1,125		11
Mortgage-commercial		7,334		8,603		57		9,560		149
Consumer:
Home Equity		92		97		—		83		—
Other		—		—		—		—		—
	$	8,559	$	10,032	$	61	$	10,900	$	163

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a monthly basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered as pass rated loans. As of March 31, 2015 and December 31, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is shown in the table below. As of March 31, 2015 and December 31, 2014, no loans were classified as doubtful.

20

Note 4 – Loans (continued)

(Dollars in thousands)
March 31, 2015			Special
	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial & agricultural	$	32,189	$	366	$	14	$	—	$	32,569
Real estate:
Construction		35,359		721		—		—		36,080
Mortgage – residential		47,241		1,361		1,236		—		49,838
Mortgage – commercial		273,674		9,594		10,840		—		294,108
Consumer:
Home Equity		33,003		269		239		—		33,511
Other		8,166		2		27		—		8,195
Total	$	429,632	$	12,313	$	12,356	$	—	$	454,301

(Dollars in thousands)
December 31, 2014			Special
	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial & agricultural	$	32,579	$	754	$	70	$	—	$	33,403
Real estate:
Construction		26,824		721		—		—		27,545
Mortgage – residential		46,090		1,054		1,366		—		48,510
Mortgage – commercial		270,986		10,437		11,763		—		293,186
Consumer:
Home Equity		32,008		751		241		—		33,000
Other		8,041		100		59		—		8,200
Total	$	416,528	$	13,817	$	13,499	$	—	$	443,844

At March 31, 2015 and December 31, 2014, non-accrual loans totaled $5.9 million and $6.6 million, respectively.

TDRs that are still accruing and included in impaired loans at March 31, 2015 and December 31, 2014 amounted to $2.0 million and $2.2 million, respectively. TDRs in non-accrual status at March 31, 2015 and December 31, 2014 amounted to $2.3 million and $2.6 million, respectively.

There were no loans greater than 90 days delinquent and still accruing interest as of March 31, 2015 and December 31, 2014.

21

Note 4 – Loans (continued)

We account for acquisitions under FASB ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. No allowance for loan losses related to the acquired loans is recorded on the acquisition date because the fair value of the loans acquired incorporates assumptions regarding credit risk.

Acquired credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality, found in FASB ASC Topic 310-30, Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality, and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loans. Loans acquired in business combinations with evidence of credit deterioration are considered impaired. Loans acquired through business combinations that do not meet the specific criteria of FASB ASC Topic 310-30, but for which a discount is attributable, at least in part to credit quality, are also accounted for under this guidance. Certain acquired loans, including performing loans and revolving lines of credit (consumer and commercial), are accounted for in accordance with FASB ASC Topic 310-20, where the discount is accreted through earnings based on estimated cash flows over the estimated life of the loan.

Purchase credit impaired (“PCI”) loans acquired totaled $4.2 million at estimated fair value, and acquired performing loans totaling $102.3 million at estimated fair value were not credit impaired. The gross contractual amount receivable for PCI loans and acquired performing loans was approximately $5.7 million and $116.0 million, respectively, as of the acquisition date. For the acquired performing loans, the best estimate at acquisition date of contractual cash flows not expected to be collected is $825 thousand. Determining the fair value of PCI loans at acquisition required the Company to estimate cash flows expected to result from those loans and to discount those cash flows at appropriate rates of interest. For such loans, the excess of cash flows expected to be collected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans and is called the accretable yield. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and is called the nonaccretable difference. In accordance with GAAP, there was no carry-over of previously established allowance for credit losses from the acquired company.

In conjunction with the acquisition of Savannah River (as defined below) on February 1, 2014, the acquired PCI loan portfolio was accounted for at fair value as follows: 

(Dollars in thousands)	February 1, 2014
Contractual principal and interest at acquisition	$	5,717
Nonaccretable difference		(1,205	)
Expected cash flows at acquisition		4,512
Accretable yield		(272	)
Basis in PCI loans at acquisition – estimated fair value	$	4,240

22

Note 4 – Loans (continued)

A summary of changes in the accretable yield for PCI loans for the three months ended March 31, 2015 and March 31, 2014 follows (in thousands): 

(Dollars in thousands)	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
Accretable yield, beginning of period	$	75		$	—
Additions		—			272
Accretion		(437	)		(33	)
Reclassification of nonaccretable difference due to improvement in expected cash flows		390			—
Other changes, net		—			—
Accretable yield, end of period	$	28		$	239

The following tables are by loan category and present loans past due and on non-accrual status as of March 31, 2015 and December 31, 2014:

(Dollars in thousands)   March 31, 2015	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Accruing		Nonaccrual		Total Past Due		Current		Total Loans
Commercial	$	19	$	18	$	—	$	—	$	37	$	32,532	$	32,569
Real estate:
Construction		—		—		—		—		—		36,080		36,080
Mortgage-residential		77		—		—		1,014		1,091		48,747		49,838
Mortgage-commercial		2,130		290		—		4,838		7,258		286,850		294,108
Consumer:
Home equity		44		46		—		91		181		33,330		33,511
Other		4		2		—		—		6		8,189		8,195
Total	$	2,274	$	356	$	—	$	5,943	$	8,573	$	445,728	$	454,301

(Dollars in thousands)   December 31, 2014	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Accruing		Nonaccrual		Total Past Due		Current		Total Loans
Commercial	$	—	$	—	$	—	$	55	$	147	$	33,256	$	33,403
Real estate:
Construction		—		2		—		—		2		27,543		27,545
Mortgage-residential		131		5		—		1,025		1,161		47,349		48,510
Mortgage-commercial		1,443		4		—		5,413		6,860		286,326		293,186
Consumer:
Home equity		19		—		—		92		111		32,899		33,000
Other		63		6		—		—		69		8,131		8,200
Total	$	1,748	$	17	$	—	$	6,585	$	8,350	$	435,494	$	443,844

23

Note 4 – Loans (continued)

As a result of adopting the amendments in Accounting Standards Update (“ASU”) 2011-02 (Receivables-Topic 310), the Company reassessed all restructurings that occurred on or after the beginning of the fiscal year of adoption (January 1, 2011) to determine whether they are considered TDRs under the amended guidance. The Company identified as TDRs certain loans for which the allowance for loan losses had previously been measured under a general allowance methodology. Upon identifying those loans as TDRs, the Company identified them as impaired under the guidance in ASC 310-10-35. The amendments in ASU 2011-02 require prospective application of the impairment measurement guidance in ASC 310-10-35 for those loans newly identified as impaired.

There were no loans determined to be TDRs that were restructured during the three-month periods ended March 31, 2015 and March 31, 2014.

The following table, by loan category, presents loans determined to be TDRs in the twelve month period preceding March 31, 2015 that subsequently defaulted during the three month period ended March 31, 2015. During the three month period ended March 31, 2014, there were no loans determined to be TDRs in the previous twelve months that had payment defaults. Defaulted loans are those loans that are greater than 89 days past due.

Troubled Debt Restructurings that subsequently defaulted this period (Dollars in thousands)	For the three months ended March 31, 2015
	Number of Contracts		Recorded Investment
Mortgage-Commercial		1	$	1,391
Mortgage-Consumer		1		180
Total TDRs		2	$	1,571

In the determination of the allowance for loan losses, all TDRs are reviewed to ensure that one of the three proper valuation methods (fair market value of the collateral, present value of cash flows, or observable market price) is adhered to. All non-accrual loans are written down to their corresponding collateral value. All troubled TDR accruing loans that have a loan balance that exceeds the present value of cash flows will have a specific allocation. All nonaccrual loans are considered impaired. Under ASC 310-10, a loan is impaired when it is probable that the Company will be unable to collect all amounts due including both principal and interest according to the contractual terms of the loan agreement.

24

Note 5 – Recently Issued Accounting Pronouncements

The following is a summary of recent authoritative pronouncements:

In January 2014, the FASB amended the Equity Method and Joint Ventures topic of the Accounting Standards Codification. The amendments provide criteria that must be met in order to apply a proportional amortization method to Low-Income Housing Tax Credit investments and provide guidance on the method used to amortize the investment, the impairment approach, and the eligibility criteria for entities that have other arrangements (e.g., loans) with the limited liability entity. The amendments are effective for the Company for any new investments in qualified affordable housing projects for interim and annual periods beginning after December 15, 2014. The Company intends to continue using the effective yield method for existing investments in qualified affordable housing projects. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2014, the FASB amended Receivables topic of the Accounting Standards Codification. The amendments are intended to resolve diversity in practice with respect to when a creditor should reclassify a collateralized consumer mortgage loan to other real estate owned (OREO). In addition, the amendments require a creditor reclassify a collateralized consumer mortgage loan to OREO upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The amendments are effective for the Company for annual periods, and interim periods beginning after December 15, 2014, with early implementation of the guidance permitted. In implementing this guidance, assets that are reclassified from real estate to loans are measured at the carrying value of the real estate at the date of adoption. Assets reclassified from loans to real estate are measured at the lower of the net amount of the loan receivable or the fair value of the real estate less costs to sell at the date of adoption. The Company will apply the amendments prospectively. The Company does not expect these amendments to have a material effect on its financial statements.

In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a modified retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements.

In June 2014, the FASB issued guidance which clarifies that performance targets associated with stock compensation should be treated as a performance condition and should not be reflected in the grant date fair value of the stock award. The amendments will be effective for the Company for fiscal years that begin after December 15, 2015. The Company will apply the guidance to all stock awards granted or modified after the amendments are effective. The Company does not expect these amendments to have a material effect on its financial statements.

In November 2014, the FASB issued guidance for determining whether embedded features need to be accounted for separately from their host shares. The new guidance requires companies to consider all terms and features, including the embedded feature(s) being evaluated for separate recognition, when determining whether a host contract is more akin to debt or equity; no single term or feature should be considered determinative regarding the nature of the host contract. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption, including adoption in an interim period, permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2015, the FASB issued guidance to eliminate from U.S. GAAP the concept of an extraordinary item, which is an event or transaction that is both (1) unusual in nature and (2) infrequently occurring. Under the new guidance, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; or (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company will apply the guidance prospectively to all prior periods presented in the financial statements. The Company does not expect these amendments to have a material effect on its financial statements.

25

Note 5 – Recently Issued Accounting Pronouncements (continued)

In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted (including during an interim period), provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

26

Note 6 – Fair Value of Financial Instruments

The Company adopted FASB ASC Fair Value Measurement Topic 820, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level l	Quoted prices in active markets for identical assets or liabilities.
Level 2	Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

FASB ASC 825-10-50 “Disclosure about Fair Value of Financial Instruments”, requires the Company to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions are set forth below.

Cash and Short Term Investments - The carrying amount of these financial instruments (cash and due from banks, interest-bearing bank balances, federal funds sold and securities purchased under agreements to resell) approximates fair value. All mature within 90 days and do not present unanticipated credit concerns and are classified as Level 1.

Investment Securities - Measurement is on a recurring basis based upon quoted market prices, if available. If quoted market prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for prepayment assumptions, projected credit losses, and liquidity. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, or by dealers or brokers in active over-the-counter markets. Level 2 securities include MBSs issued both by government sponsored enterprises and PLMBSs. Generally these fair values are priced from established pricing models. Level 3 securities include corporate debt obligations and asset–backed securities that are less liquid or for which there is an inactive market.

Loans Held for Sale - The Company originates fixed rate residential loans on a servicing released basis in the secondary market. Loans closed but not yet settled with an investor, are carried in the Company’s loans held for sale portfolio. These loans are fixed rate residential loans that have been originated in the Company’s name and have closed. Virtually all of these loans have commitments to be purchased by investors at a locked in price with the investors on the same day that the loan was locked in with the company’s customers. Therefore, these loans present very little market risk for the Company and are classified as Level 2. The carrying amount of these loans approximates fair value.

Loans - The fair value of loans are estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities and are classified as Level 2. As discount rates are based on current loan rates as well as management estimates, the fair values presented may not be indicative of the value negotiated in an actual sale. Loans which are deemed to be impaired are primarily valued on a nonrecurring basis at the fair value of the underlying real estate collateral. Such

fair values are obtained using independent appraisals, which the Company considers to be Level 3 inputs.

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Note 6 – Fair Value of Financial Instruments (continued)

Other Real Estate Owned (OREO) - OREO is carried at the lower of carrying value or fair value on a non-recurring basis. Fair value is based upon independent appraisals or management’s estimation of the collateral and is considered a Level 3 measurement.

Accrued Interest Receivable - The fair value approximates the carrying value and is classified as Level 1.

Interest Rate Swap -The fair value approximates the carrying value and is classified as Level 3.

Deposits - The fair value of demand deposits, savings accounts, and money market accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposits is estimated by discounting the future cash flows using rates currently offered for deposits of similar remaining maturities. Deposits are classified as Level 2.

Federal Home Loan Bank Advances - Fair value is estimated based on discounted cash flows using current market rates for borrowings with similar terms and are classified as Level 2.

Short Term Borrowings - The carrying value of short term borrowings (securities sold under agreements to repurchase and demand notes to the Treasury) approximates fair value. These are classified as Level 2.

Junior Subordinated Debentures - The fair values of junior subordinated debentures is estimated by using discounted cash flow analyses based on incremental borrowing rates for similar types of instruments. These are classified as Level 2.

Accrued Interest Payable -The fair value approximates the carrying value and is classified as Level 1.

Commitments to Extend Credit - The fair value of these commitments is immaterial because their underlying interest rates approximate market.

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Note 6 – Fair Value of Financial Instruments (continued)

The carrying amount and estimated fair value by classification level of the Company’s financial instruments as of March 31, 2015 and December 31, 2014 are as follows:

	March 31, 2015
			Fair Value
(Dollars in thousands)	Carrying Amount		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and short term investments	$	44,211	$	44,211	$	44,211	$	—	$	—
Held-to-maturity securities		12,756		12,747		—		12,747		—
Available-for-sale securities		259,369		259,369		834		258,118		417
Other investments, at cost		1,969		1,969		—		—		1,969
Loans held for sale		5,446		5,446		—		5,446		—
Net loans receivable		450,049		451,219		—		443,329		7,890
Accrued interest		2,485		2,485		2,485		—		—
Financial liabilities:
Non-interest bearing demand	$	140,689	$	140,689	$	—	$	140,689	$	—
NOW and money market accounts		305,851		305,851		—		305,851		—
Savings		56,467		56,467		—		56,467		—
Time deposits		191,566		192,161		—		192,161		—
Total deposits		694,573		695,168		—		695,168		—
Federal Home Loan Bank Advances		27,552		29,373		—		29,373		—
Short term borrowings		16,684		16,684		—		16,684		—
Junior subordinated debentures		15,464		15,464		—		15,464		—
Accrued interest payable		695		695		695		—		—

	December 31, 2014
			Fair Value
(Dollars in thousands)	Carrying Amount		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and short term investments	$	22,532	$	22,532	$	22,532	$	—	$	—
Held-to-maturity securities		10,647		10,585		—		10,585		—
Available-for-sale securities		270,164		270,164		839		268,908		417
Other investments, at cost		2,003		2,003		—		—		2,003
Loans held for sale		4,124		4,124		—		4,124		—
Net loans receivable		439,712		441,944		—		433,446		8,498
Accrued interest		2,712		2,712		2,712		—		—
Financial liabilities:
Non-interest bearing demand	$	133,004	$	133,004	$	—	$	133,004	$	—
NOW and money market accounts		287,982		287,982		—		287,982		—
Savings		53,583		53,583		—		53,583		—
Time deposits		195,014		195,721		—		195,721		—
Total deposits		669,583		670,290		—		670,290		—
Federal Home Loan Bank Advances		28,807		30,745		—		30,745		—
Short term borrowings		17,383		17,383		—		17,383		—
Junior subordinated debentures		15,464		15,464		—		15,464		—
Accrued interest payable		725		725		725		—		—

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Note 6 – Fair Value of Financial Instruments (continued)

The following tables summarize quantitative disclosures about the fair value for each category of assets carried at fair value as of March 31, 2015 and December 31, 2014 that are measured on a recurring basis. There were no liabilities carried at fair value as of March 31, 2015 or December 31, 2014 that are measured on a recurring basis.

(Dollars in thousands)

Description	March 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities
Government sponsored enterprises	$	3,503	$	—	$	3,503	$	—
Mortgage-backed securities		148,553		—		148,553		—
Small Business Administration securities		59.555		—		59,555		—
State and local government		46,447		—		46,447		—
Corporate and other securities		1,311		834		60		417
Total	$	259,369	$	834	$	258,118	$	417

(Dollars in thousands)

Description	December 31, 2014		Quoted Prices in Active Markets for   Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable   Inputs (Level 3)
Available for sale securities
Government sponsored enterprises	$	3,434	$	—	$	3,434	$	—
Mortgage-backed securities		160,353		—		160,353		—
Small Business Administration securities		58,545		—		58,545		—
State and local government		46,516		—		46,516		—
Corporate and other securities		1,316		839		60		417
Total	$	270,164	$	839	$	268,908	$	417

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Note 6 – Fair Value of Financial Instruments (continued)

The following table reconciles the changes in Level 3 financial instruments for the three months ended March 31, 2015 and March 31, 2014 that are measured on a recurring basis.

	March 31,
	2015		2014
(Dollars in thousands)	Corporate Preferred Stock		Corporate Preferred Stock
Beginning Balance	$	417	$	417
Total gains or losses (realized/unrealized) Included in earnings		—		—
Included in other comprehensive income		—		—
Purchases, issuances, and settlements		—		—
Transfers in and/or out of Level 3		—		—
Ending Balance	$	417	$	417

The following tables summarize quantitative disclosures about the fair value for each category of assets carried at fair value as of March 31, 2015 and December 31, 2014 that are measured on a non-recurring basis.

(Dollars in thousands)
Description	March 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial & Industrial	$	—	$	—	$	—	$	—
Real estate:
Mortgage-residential		1,062		—		—		1,062
Mortgage-commercial		6,737		—		—		6,737
Consumer:
Home equity		91		—		—		91
Other		—		—		—		—
Total impaired		7,890		—		—		7,890
Other real estate owned:
Construction		276		—		—		276
Mortgage-residential		219		—		—		219
Mortgage-commercial		2,253		—		—		2,253
Total other real estate owned		2,748		—		—		2,748
Total	$	10,638	$	—	$	—	$	10,638

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Note 6 – Fair Value of Financial Instruments (continued)

(Dollars in thousands)
Description	December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial & Industrial	$	55	$	—	$	—	$	55
Real estate:
Mortgage-residential		1,074		—		—		1,074
Mortgage-commercial		7,277		—		—		7,277
Consumer:
Home equity		92		—		—		92
Other		—		—		—		—
Total impaired		8,498		—		—		8,498
Other real estate owned:
Construction.		424		—		—		424
Mortgage-residential		232		—		—		232
Mortgage-commercial		2,287		—		—		2,287
Total other real estate owned		2,943		—		—		2,943
Total	$	11,441	$	—	$	—	$	11,441

The Company has a large percentage of loans with real estate serving as collateral. Loans which are deemed to be impaired are primarily valued on a nonrecurring basis at the fair value of the underlying real estate collateral. Such fair values are obtained using independent appraisals, which the Company considers to be Level 3 inputs. Third party appraisals are generally obtained when a loan is identified as being impaired or at the time it is transferred to OREO. This internal process consists of evaluating the underlying collateral to independently obtained comparable properties. With respect to less complex or smaller credits, an internal evaluation may be performed. Generally the independent and internal evaluations are updated annually. Factors considered in determining the fair value include geographic sales trends, the value of comparable surrounding properties as well as the condition of the property. The aggregate amount of impaired loans was $7.9 million and $8.5 million as of March 31, 2015 and December 31, 2014, respectively.

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Note 6 – Fair Value of Financial Instruments (continued)

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2015 and December 31, 2014, the significant unobservable inputs used in the fair value measurements were as follows:

(Dollars in thousands)	Fair Value as of March 31, 2015	Valuation Technique	Significant Observable Inputs	Significant Unobservable Inputs
Preferred stock	$417	Estimation based on comparable non-listed securities	Comparable transactions	n/a
OREO	$2,748	Appraisal Value/Comparison Sales/Other estimates	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost
Impaired loans	$7,890	Appraisal Value	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost

(Dollars in thousands)	Fair Value as of December 31, 2014	Valuation Technique	Significant Observable Inputs	Significant Unobservable Inputs
Preferred stock	$417	Estimation based on comparable non-listed securities	Comparable transactions	n/a
OREO	$2,943	Appraisal Value/Comparison Sales/Other estimates	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost
Impaired loans	$8,498	Appraisal Value	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost

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Note 7 – Mergers and Acquisitions – Savannah River Financial Corporation

On February 1, 2014, the Company acquired all of the outstanding common stock of Savannah River Financial Corporation (“Savannah River”), of Augusta, Georgia, the bank holding company for Savannah River Banking Company (“SRBC”), in a cash and stock transaction. The total purchase price was approximately $33.5 million, consisting of $19.8 million in cash and 1,274,200 shares of our common stock valued at $13.7 million based on a provision in the merger agreement that 60% of the outstanding shares of Savannah River common stock be exchanged for cash and 40% of the outstanding shares of Savannah River common stock be exchanged for shares of the Company’s common stock. The value of the Company’s common stock issued was determined based on the closing price of the common stock on January 31, 2014 as reported by NASDAQ, which was $10.76. Savannah River common shareholders received 1.0618 shares of the Company’s common stock in exchange for each share of Savannah River common stock, or $11.00 per share, subject to the limitations discussed above. The Company issued 1,274,200 shares of its common stock in connection with the merger.

The Savannah River transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the acquisition date. Fair values are subject to refinement for up to a year.

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Note 7 – Mergers and Acquisitions – Savannah River Financial Corporation (continued)

The following table presents the assets acquired and liabilities assumed as of February 1, 2014 as recorded by the Company on the acquisition date and initial fair value adjustments.

	As Recorded by		Fair Value			As Recorded
(Dollars in thousands, except per share data)	Savannah River		Adjustments			by the Company
Assets
Cash and cash equivalents	$	8,451	$	—		$	8,451
Investment securities		23,014		126	(a)		23,140
Loans		109,532		(3,016	)(b)		106,516
Premises and equipment		7,695		473	(c)		8,168
Intangible assets		—		1,182	(d)		1,182
Bank owned life insurance		3,158		—			3,158
Other assets		1,839		(248	)(e)		1,591
Total assets	$	153,689	$	(1,483	)	$	152,206
Liabilities
Deposits:
Noninterest-bearing	$	11,045	$	—		$	11,045
Interest-bearing		102,891		211	(f)		103,102
Total deposits		113,936		211			114,147
FHLB advances		8,684		22	(g)		8,706
Other liabilities		345		—			345
Total liabilities		122,965		233			123,198
Net identifiable assets acquired over (under) liabilities assumed		30,724		(1,716	)		29,008
Goodwill		—		4,507			4,507
Net assets acquired over liabilities assumed	$	30,724	$	2,791		$	33,515
Consideration:
First Community Corporation common shares issued		1,274,200
Purchase price per share of the Company’s common stock	$	10.76
	$	13,710
Cash exchanged for stock and fractional shares		19,805
Fair value of total consideration transferred	$	33,515

Explanation of fair value adjustments

(a)—Adjustment reflects marking the securities portfolio to fair value as of the acquisition date.

(b)—Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired loan portfolio. and excludes the allowance for loan losses recorded by Savannah River.

(c)—Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired premises and equipment.

(d)—Adjustment reflects the recording of the core deposit intangible on the acquired deposit accounts.

(e)—Adjustment reflects the deferred tax adjustment related to fair value adjustments at 34%.

(f)—Adjustment reflects the fair value adjustment on interest-bearing deposits.

(g)—Adjustment reflects the fair value adjustment on FHLB Advances which was equal to the prepayment fee paid to pay-off the FHLB Advances upon consummation of the merger.

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Note 7 – Mergers and Acquisitions – Savannah River Financial Corporation (continued)

The operating results of the Company for the period ended March 31, 2014 include the operating results of the acquired assets and assumed liabilities for the 59 days subsequent to the acquisition date of February 1, 2014. Merger-related charges of $420 thousand are recorded in the consolidated statement of income and include incremental costs related to closing the acquisition, including legal, accounting and auditing, investment banker, travel, printing, supplies and other costs.

The following table discloses the impact of the merger with Savannah River (excluding the impact of merger-related expenses) since the acquisition on February 1, 2014 through March 31, 2014. The table also presents certain pro forma information as if Savannah River had been acquired on January 1, 2014. The results combine the historical results of Savannah River in the Company’s consolidated statement of income and, while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place on January 1, 2014.The results for the three month period ended March 31, 2015 do not have any merger related expenses and include the impact of the Savannah River acquisition for the entire period, and therefore, no pro-forma information is presented for such period.

	Actual since
	Acquisition		Pro Forma
	(February 1, 2014		Three Months
(Dollars in thousands)	through March 31, 2014)		Ended March 31, 2014
Total revenues (net interest income plus noninterest income)	$	7,371	$	7,850
Net income	$	862	$	1,302

On September 26, 2014, the Bank completed its acquisition of approximately $40 million in deposits and $8.7 million in loans from First South Bank (“First South”). This represented all of the deposits and a portion of the loans at First South’s Columbia, South Carolina banking office located at 1333 Main Street. The Bank paid a premium of $714 thousand for the deposits and loans acquired. The deposits and loans from First South have been consolidated into the Bank’s branch located at 1213 Lady Street, Columbia, South Carolina. The premium paid of $714 thousand plus fair value adjustments recorded on loans and deposits acquired resulted in a core deposit intangible of $365.9 thousand and other identifiable intangible assets in the amount of $538.6 thousand being recorded related to this transaction and is reflected on the consolidated balance sheet at December 31, 2014. The transaction is being accounted for as an asset acquisition and liability assumption. The core deposit intangible and other identifiable intangible are being amortized over seven years on an accelerated basis.

Note 8 – Subsequent Events

Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements.  Nonrecognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date.  Management has reviewed events occurring through the date the financial statements were available to be issued and no subsequent events occurred requiring accrual or disclosure.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This report contains statements which constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may relate to, among other matters, the financial condition, results of operations, plans, objectives, future performance, and business of our Company. Forward-looking statements are based on many assumptions and estimates and are not guarantees of future performance. Our actual results may differ materially from those anticipated in any forward-looking statements, as they will depend on many factors about which we are unsure, including many factors which are beyond our control. The words “may,” “would,” “could,” “should,” “will,” “expect,” “anticipate,” “predict,” “project,” “potential,” “continue,” “assume,” “believe,” “intend,” “plan,” “forecast,” “goal,” and “estimate,” as well as similar expressions, are meant to identify such forward-looking statements. Potential risks and uncertainties that could cause our actual results to differ materially from those anticipated in our forward-looking statements include, without limitation, those described under the heading “Risk Factors” in our 2014 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (the “SEC”) and the following:

· credit losses as a result of, among other potential factors, declining real estate values, increasing interest rates, increasing unemployment, changes in customer payment behavior or other factors;

· the amount of our loan portfolio collateralized by real estate and weaknesses in the real estate market;

· restrictions or conditions imposed by our regulators on our operations;

· the adequacy of the level of our allowance for loan losses and the amount of loan loss provisions required in future periods;

· expected revenue synergies and cost savings from acquisitions may not be fully realized;

· examinations by our regulatory authorities, including the possibility that the regulatory authorities may, among other things, require us to increase our allowance for loan losses or write-down assets;

· reduced earnings due to higher other-than-temporary impairment charges resulting from additional decline in the value of our securities portfolio, specifically as a result of increasing default rates, and loss severities on the underlying real estate collateral;

· increases in competitive pressure in the banking and financial services industries;

· changes in the interest rate environment which could reduce anticipated or actual margins;

· changes in political conditions or the legislative or regulatory environment, including governmental initiatives affecting the financial services industry;

· general economic conditions resulting in, among other things, a deterioration in credit quality;

· changes occurring in business conditions and inflation;

· changes in access to funding or increased regulatory requirements with regard to funding;

· increased cybersecurity risk, including potential business disruptions or financial losses;

· changes in deposit flows;

· changes in technology;

· our current and future products, services, applications and functionality and plans to promote them;

37

· changes in monetary and tax policies;

· changes in accounting policies and practices;

· the rate of delinquencies and amounts of loans charged-off;

· the rate of loan growth in recent years and the lack of seasoning of a portion of our loan portfolio;

· our ability to maintain appropriate levels of capital, including levels of capital required under the capital rules implementing Basel III;

· our ability to comply with the terms of the consent order between our bank subsidiary, First Community Bank (the “Bank”), and the FDIC within the timeframes specified;

· our ability to attract and retain key personnel;

· our ability to retain our existing clients, including our deposit relationships;

· adverse changes in asset quality and resulting credit risk-related losses and expenses;

· loss of consumer confidence and economic disruptions resulting from terrorist activities; and

· other risks and uncertainties detailed from time to time in our filings with the SEC.

Because of these and other risks and uncertainties, our actual future results may be materially different from the results indicated by any forward-looking statements. For additional information with respect to factors that could cause actual results to differ from the expectations stated in the forward-looking statements, see “Risk Factors” under Part I, Item 1A of our 2014 Annual Report on Form 10-K as filed with the SEC. In addition, our past results of operations do not necessarily indicate our future results. Therefore, we caution you not to place undue reliance on our forward-looking information and statements.

All forward-looking statements in this report are based on information available to us as of the date of this report. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee you that these expectations will be achieved. We undertake no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Overview

The following discussion describes our results of operations for the three months ended March 31, 2015 as compared to the three month period ended March 31, 2014 and also analyzes our financial condition as of March 31, 2015 as compared to December 31, 2014. Like most community banks, we derive most of our income from interest we receive on our loans and investments. Our primary source of funds for making these loans and investments is our deposits, on which we pay interest. Consequently, one of the key measures of our success is our amount of net interest income, or the difference between the income on our interest-earning assets, such as loans and investments, and the expense on our interest-bearing liabilities, such as deposits. Another key measure is the spread between the yield we earn on these interest-earning assets and the rate we pay on our interest-bearing liabilities.

There are risks inherent in all loans, so we maintain an allowance for loan losses to absorb probable losses on existing loans that may become uncollectible. We establish and maintain this allowance by charging a provision for loan losses against our operating earnings. In the following section we have included a discussion of this process, as well as several tables describing our allowance for loan losses and the allocation of this allowance among our various categories of loans.

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In addition to earning interest on our loans and investments, we earn income through fees and other expenses we charge to our customers. We describe the various components of this non-interest income, as well as our non-interest expense, in the following discussion.

The following discussion and analysis identifies significant factors that have affected our financial position and operating results during the periods included in the accompanying financial statements. We encourage you to read this discussion and analysis in conjunction with the financial statements and the related notes and the other statistical information also included in this report.

Recent Developments

On February 18, 2015, the Bank entered into the Stipulation and Consent to the Issuance of a Consent Order with the FDIC consenting to the issuance by the FDIC of a Consent Order (the “Consent Order”). The Consent Order requires the Bank to take certain actions with respect to the Bank Secrecy Act and anti-money laundering laws and regulations (collectively referred to as the “BSA”), including, among other things, enhancing its annual BSA risk assessment processes; revising certain internal controls related to BSA; and further developing and implementing certain BSA-related training programs. While the Bank recognizes that certain technical aspects of its BSA compliance activities were affected by a temporary period of significant turnover in the Bank’s BSA staff, the Bank believes that it has recognized and addressed substantially all of the BSA compliance issues noted by the FDIC and that, as of the date of this report, it is in compliance with substantially all of the requirements set forth in the Consent Order. Nevertheless, there can be no assurance that the FDIC will ultimately determine that the Bank has met all of the requirements of the Consent Order to its satisfaction. If the FDIC determines that the Bank has not made sufficient progress in complying with the Consent Order, the FDIC could seek to impose additional regulatory requirements, operational restrictions, enhanced supervision and/or civil money penalties. If any of these measures is imposed in the future, it could have a material adverse effect on our financial condition and results of operations and on our ability to raise additional capital on acceptable terms.

On September 26, 2014, the Bank completed its acquisition of approximately $40 million in deposits and $8.7 million in loans from First South Bank (“First South”). This represented all of the deposits and a portion of the loans at First South’s Columbia, South Carolina banking office located at 1333 Main Street. The Bank paid a premium of $714 thousand for the deposits and loans acquired. The deposits and loans from First South have been consolidated into the Bank’s branch located at 1213 Lady Street, Columbia, South Carolina. The premium paid of $714 thousand plus fair value adjustments recorded on loans and deposits acquired resulted in a core deposit intangible of $365.9 thousand and other identifiable intangible assets in the amount of $538.6 thousand.

Critical Accounting Policies

We have adopted various accounting policies that govern the application of accounting principles generally accepted in the United States and with general practices within the banking industry in the preparation of our financial statements. Our significant accounting policies are described in the footnotes to our unaudited consolidated financial statements as of March 31, 2015 and our notes included in the consolidated financial statements in our 2014 Annual Report on Form 10-K as filed with the SEC.

Certain accounting policies involve significant judgments and assumptions by us that have a material impact on the carrying value of certain assets and liabilities. We consider these accounting policies to be critical accounting policies. The judgment and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances. Because of the nature of the judgment and assumptions we make, actual results could differ from these judgments and estimates that could have a material impact on the carrying values of our assets and liabilities and our results of operations.

Allowance for Loan Losses

We believe the allowance for loan losses is the critical accounting policy that requires the most significant judgment and estimates used in preparation of our consolidated financial statements. Some of the more critical judgments supporting the amount of our allowance for loan losses include judgments about the credit worthiness of borrowers, the estimated value of the underlying collateral, the assumptions about cash flow, determination of loss factors for estimating credit losses, the impact of current events, and conditions, and other factors impacting the level of probable inherent losses. Under different conditions or using different assumptions, the actual amount of credit losses incurred by us may be different from management’s estimates provided in our consolidated financial statements. Refer to the portion of this discussion that addresses our allowance for loan losses for a more complete discussion of our processes and methodology for determining our allowance for loan losses.

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Goodwill and Other Intangibles

Goodwill represents the excess of the purchase price over the sum of the estimated fair values of the tangible and identifiable intangible assets acquired less the estimated fair value of the liabilities assumed. Goodwill has an indefinite useful life and is evaluated for impairment annually or more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. Qualitative factors are assessed to first determine if it is more likely than not (more than 50%) that the carrying value of goodwill is less than fair value. These qualitative factors include but are not limited to overall deterioration in general economic conditions, industry and market conditions, and overall financial performance. If determined that it is more likely than not that there has been a deterioration in the fair value of the carrying value than the first of a two-step process would be performed. The first step, used to identify potential impairment, involves comparing each reporting unit’s estimated fair value to its carrying value, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered not to be impaired. If the carrying value exceeds estimated fair value, there is an indication of potential impairment and the second step is performed to measure the amount of impairment.

If required, the second step involves calculating an implied fair value of goodwill for each reporting unit for which the first step indicated impairment. The implied fair value of goodwill is determined in a manner similar to the amount of goodwill calculated in a business combination, by measuring the excess of the estimated fair value of the reporting unit, as determined in the first step, over the aggregate estimated fair values of the individual assets, liabilities and identifiable intangibles as if the reporting unit was being acquired in a business combination. If the implied fair value of goodwill exceeds the carrying value of goodwill assigned to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess. An impairment loss cannot exceed the carrying value of goodwill assigned to a reporting unit, and the loss establishes a new basis in the goodwill. Subsequent reversal of goodwill impairment losses is not permitted. Management has determined that the Company has one reporting unit.

Core deposit intangibles consist of costs that resulted from the acquisition of deposits from Savannah River and First South. Core deposit intangibles represent the estimated value of long-term deposit relationships acquired in this transaction. These costs are amortized over the estimated useful lives of the deposit accounts acquired on a method that we believe reasonably approximates the anticipated benefit stream from the accounts. The estimated useful lives are periodically reviewed for reasonableness.

Income Taxes and Deferred Tax Assets and Liabilities

Income taxes are provided for the tax effects of the transactions reported in our consolidated financial statements and consist of taxes currently due plus deferred taxes related to differences between the tax basis and accounting basis of certain assets and liabilities, including available-for-sale securities, allowance for loan losses, write downs of OREO properties, accumulated depreciation, net operating loss carry forwards, accretion income, deferred compensation, intangible assets, and pension plan and post-retirement benefits. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. A valuation allowance is recorded when it is “more likely than not” that a deferred tax asset will not be realized. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. We file a consolidated federal income tax return for the Bank. At March 31, 2015 and December 31, 2014, we were in a net deferred tax asset position.

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Other-Than-Temporary Impairment

We evaluate securities for other-than-temporary impairment at least on a quarterly basis. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) the outlook for receiving the contractual cash flows of the investments, (4) the anticipated outlook for changes in the general level of interest rates, and (5) our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or for a debt security whether it is more-likely-than-not that the Company will be required to sell the debt security prior to recovering its fair value (See Note 3 to the Consolidated Financial Statements).

Business Combinations, Method of Accounting for Loans Acquired

We account for acquisitions under FASB ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. No allowance for loan losses related to the acquired loans is recorded on the acquisition date because the fair value of the loans acquired incorporates assumptions regarding credit risk.

Acquired credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality, found in FASB ASC Topic 310-30, Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality. and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loans. Loans acquired in business combinations with evidence of credit deterioration are considered impaired. Loans acquired through business combinations that do not meet the specific criteria of FASB ASC Topic 310-30, but for which a discount is attributable, at least in part to credit quality, are also accounted for under this guidance. Certain acquired loans, including performing loans and revolving lines of credit (consumer and commercial), are accounted for in accordance with FASB ASC Topic 310-20, where the discount is accreted through earnings based on estimated cash flows over the estimated life of the loan.

Comparison of Results of Operations for Three Months Ended March 31, 2015 to the Three Months Ended March 31, 2014

Net Income

Our net income for the three months ended March 31, 2015 was $1.4 million, or $0.21 diluted earnings per common share, as compared to $862 thousand, or $0.14 diluted earnings per common share, for the three months ended March 31, 2014. Our acquisition of Savannah River Financial Corporation (“Savannah River”) was closed on February 1, 2014. Therefore, the results for the three months ended March 31, 2014 include the impact of this acquisition from February 1, 2014 through March 31, 2014. The increase in net income between the two periods is primarily due to the increase in average earning assets resulting from the Savannah River acquisition, reflected for the entire quarter in 2015, as compared to only a portion of the quarter in 2014. In addition, during the first quarter of 2014, we incurred Savannah River merger related expenses of $420 thousand. There were no merger related expenses incurred in the first quarter of 2015. Net interest income increased $952 thousand for the quarter ended March 31, 2015 as compared to the same period 2014. This increase is primarily the result of the impact of the Savannah River acquisition. Average earning assets increased by $72.5 million in the first quarter of 2015 as compared to the same period in 2014. Average earning assets were $744.0 million during the three months ended March 31, 2015 as compared to $671.6 million during the three months ended March 31, 2014. The net interest margin on a tax equivalent basis increased to 3.62% during the first quarter of 2015 as compared to 3.40% during the first quarter of 2014. The net interest margin was positively impacted in the first quarter of 2015 by two purchased impaired loan payoffs that were acquired in the Savannah River acquisition, and as a result, the credit mark established at the acquisition date was recovered.

Net Interest Income

Please refer to the table at the end of this Item 2 for the yield and rate data for interest-bearing balance sheet components during the three-month periods ended March 31, 2015 and 2014, along with average balances and the related interest income and interest expense amounts.

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Net interest income was $6.4 million and $5.5 million for the three months ended March 31, 2015 and 2014, respectively. Interest rates over the last several years have remained at historically low levels, and this trend continued in the first quarter of 2015. Our tax equivalent net interest margin increased by 22 basis points from 3.40% at March 31, 2014 to 3.62% at March 31, 2015. As previously stated, the net interest margin was positively impacted during the first quarter of 2015 as a result of two pay-offs on purchased credit impaired loans. These two payoffs accounted for approximately 22 basis points in our taxable equivalent net-interest margin. Excluding the impact of these payoffs, our taxable equivalent net interest margin would have been approximately 3.40%, substantially unchanged from the same period in 2014. The yield on earning assets for the three months ended March 31, 2015 and 2014 was 3.97% and 3.87%, respectively. The cost of interest-bearing liabilities during the first three months of 2015 was 0.57% as compared to 0.68% in the same period of 2014. For the three months ended March 31, 2015, loans averaged 60.6% of average earning assets as compared to 61.9% in the same period of 2014. The yield on loans increased 32 basis points in the first quarter of 2015 as compared to the same period in 2014. This was offset by an increase on the yield on securities of 22 basis points in comparing the same two periods. The decrease in the yield on securities was partially a result of an increase in prepayment rates in the MBS portfolio. As a result, the related amortization of the premiums on these securities is accelerated. The continued focus and resulting shift in our deposit funding mix has allowed us to lower our overall cost of funds. In addition the overall cost of time deposits decreased to 0.58% in the first quarter of 2015 as compared to 0.72% in the same period of 2014. During the first quarter of 2015, deposit account funding, excluding time deposits, represented 71.1% of total average deposits. For the first quarter of 2014, funding from these lower cost deposit sources represented 70.2% of total deposits on average.

Provision and Allowance for Loan Losses

At March 31, 2015 and December 31, 2014, the allowance for loan losses was $4.2 million, or 0.94%, and $4.1 million, or 0.93%, of total loans (excluding loans held for sale), respectively. No allowance for loan losses related to the Savannah River acquired loans was recorded on the acquisition date because the fair value of the loans acquired incorporates assumptions regarding credit risk. Loans acquired were recorded at the acquisition date fair value, which was based on expected cash flows and included an estimation of expected future loan losses for the purchased credit-impaired loans, including principal and interest. There have been no material adjustments to our original fair value assumptions since the acquisition date. At March 31, 2015 and 2014, the allowance for loan losses plus the remaining fair value adjustment related to credit as a percentage of total loans (excluding loans held for sale) was 1.22% and 1.36%, respectively. Our provision for loan losses was $406 thousand and $150 thousand for the three months ended March 31, 2015 and 2014, respectively. The increase in the provision is a result of the increase in the size of the loan portfolio during the first three months of 2015 as well as our overall assessment of general loan loss risk and asset quality. The allowance for loan losses represents an amount which we believe will be adequate to absorb probable losses on existing loans that may become uncollectible. Our judgment as to the adequacy of the allowance for loan losses is based on a number of assumptions about future events, which we believe to be reasonable, but which may or may not prove to be accurate. Our determination of the allowance for loan losses is based on evaluations of the collectability of loans, including consideration of factors such as the balance of impaired loans, the quality, mix, and size of our overall loan portfolio, the experience ability and depth of lending personnel, economic conditions (local and national) that may affect the borrower’s ability to repay, the amount and quality of collateral securing the loans, our historical loan loss experience, and a review of specific problem loans. We also consider subjective issues such as changes in the lending policies and procedures, changes in the local/national economy, changes in volume or type of credits, changes in volume/severity of problem loans, quality of loan review and board of director oversight, and concentrations of credit. Periodically, we adjust the amount of the allowance based on changing circumstances. We charge recognized losses to the allowance and add subsequent recoveries back to the allowance for loan losses.

We perform an analysis quarterly to assess the risk within the loan portfolio. The portfolio is segregated into similar risk components for which historical loss ratios are calculated and adjusted for identified changes in current portfolio characteristics. Historical loss ratios are calculated by product type and by regulatory credit risk classification (See Note 4 – Loans). The annualized weighted average loss ratios over the last 36 months for loans classified substandard, special mention and pass have been approximately 5.61%, 3.71% and 0.12%, respectively. The allowance consists of an allocated and unallocated allowance. The allocated portion is determined by types and ratings of loans within the portfolio. The unallocated portion of the allowance is established for losses that exist in the remainder of the portfolio and compensates for uncertainty in estimating the loan losses. The allocated portion of the allowance is based on historical loss experience as well as certain qualitative factors as explained above. The qualitative factors have been established based on certain assumptions made as a result of the current economic conditions and are adjusted as conditions change to be directionally consistent with these changes. The unallocated portion of the allowance is composed of factors based on management’s evaluation of various conditions that are not directly measured in the estimation of probable losses through the experience formula or specific allowances. The unallocated allowance of the portfolio is primarily identified through discussions with senior credit management and through consideration of various portfolio specifics and other uncertainties outside of our markets that could impact the risk inherent in the portfolio. These include factors such as uncertainty as to a sustainable economic recovery, ongoing global economic conditions and sustained levels of high national unemployment. Given these uncertainties in economic conditions and particularly real estate valuations, we do not believe it would be prudent to reduce substantially the overall level of our allowance at this time. As economic conditions show sustainable improvement, we believe the unallocated portion of the allowance should decrease as a percentage of the total allowance.

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Our loan portfolio consists of a large percentage of real estate secured loans. Real estate values continue to be adversely impacted as a result of the economic downturn over the last several years. Impaired values of the underlying real estate collateral as well as continued slowdown in both residential and commercial real estate sales impacts our ability to sell collateral upon foreclosure, and there is a risk that this trend will continue.  The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended.  If real estate values decline, it is also more likely that we would be required to increase our allowance for loan losses.  If during a period of reduced real estate values we are required to liquidate the property collateralizing a loan to satisfy the debt or to increase the allowance for loan losses, it could materially reduce our profitability and adversely affect our financial condition.  

Non-performing assets were $8.7 million (1.04% of total assets) at March 31, 2015 as compared to $9.5 million (1.17% of total assets) at December 31, 2014. While we believe the non-performing assets to total assets ratios are favorable in comparison to current industry results (both nationally and locally), we continue to be concerned about the impact of this economic environment on our customer base of local businesses and professionals. There were 44 loans, totaling $5.9 million, included in non-performing status (non-accrual loans and loans past due 90 days and still accruing) at March 31, 2015. The largest non-performing loan is a $1.4 million loan secured by a first mortgage on developed lots to be sold for residential use. The average balance of the remaining 43 loans is approximately $105 thousand and the majority of these loans are secured by first mortgage liens. At the time the loans are placed in non-accrual status, we typically obtain an updated appraisal and, if the loan balance exceeds fair value, write the balance down to the fair value. At March 31, 2015, we had loans totaling $2.6 million that were delinquent 30 days to 89 days representing 0.58% of total loans.

Our management continuously monitors non-performing, classified and past due loans to identify deterioration regarding the condition of these loans. We have identified 1 loan relationship in the aggregate amount of $1.1 million that is current as to principal and interest and not included in non-performing assets that could represent a potential problem loans. This loan is secured by a first lien on commercial real estate property. This balance is included as a substandard loan in Note 4 of the financial statements.

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The following table summarizes the activity related to our allowance for loan losses:

Allowance for Loan Losses

(Dollars in thousands)	Three Months Ended March 31,
	2015			2014
Average loans outstanding (including loans held for sale)	$	450,988		$	415,785
Loans outstanding at period end	$	454,301		$	443,868
Non-performing assets:
Nonaccrual loans	$	5,943		$	7,865
Loans 90 days past due still accruing		—			126
Foreclosed real estate		2,748			3,147
Repossessed-other		—			—
Total non-performing assets	$	8,691		$	11,138
Beginning balance of allowance	$	4,132		$	4,219
Loans charged-off:
Construction and development		—			—
1-4 family residential mortgage		56			35
Non-residential real estate		291			187
Home equity		—			—
Commercial		—			—
Installment & credit card		11			8
Total loans charged-off		358			230
Recoveries:
1-4 family residential mortgage		1			1
Non-residential real estate		4			—
Home equity		1			—
Commercial		2			17
Installment & credit card		64			4
Total recoveries		72			22
Net loan charge offs (recoveries)		286			208
Provision for loan losses		406			150
Balance at period end	$	4,252		$	4,161
Net charge -offs to average loans		.06	%		.05	%
Allowance as percent of total loans		0.94	%		0.94	%
Non-performing assets as % of total assets		1.04	%		1.40	%
Allowance as % of non-performing loans		71.5	%		52.1	%

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The following allocation of the allowance to specific components is not necessarily indicative of future losses or future allocations. The entire allowance is available to absorb losses in the portfolio.

Composition of the Allowance for Loan Losses

(Dollars in thousands)	March 31,  2015					December 31, 2014
			% of loans in					% of loans in
	Amount		Category			Amount		Category
Commercial, Financial and Agricultural	$	210		7.2	%	$	67		7.5	%
Real Estate – Construction		134		7.9	%		45		6.2	%
Real Estate Mortgage:
Commercial		1,580		64.7	%		1,572		66.1	%
Residential		243		11.0	%		179		10.9	%
Consumer:
Home Equity		121		7.4	%		134		7.4	%
Other		58		1.8	%		44		1.9	%
Unallocated		1,906		N/A			2,091		N/A
Total	$	4,252		100.0	%	$	4,132		100.0	%

Accrual of interest is discontinued on loans when management believes, after considering economic and business conditions and collection efforts that a borrower’s financial condition is such that the collection of interest is doubtful. A delinquent loan is generally placed in nonaccrual status when it becomes 90 days or more past due. At the time a loan is placed in nonaccrual status, all interest, which has been accrued on the loan but remains unpaid is reversed and deducted from earnings as a reduction of reported interest income. No additional interest is accrued on the loan balance until the collection of both principal and interest becomes reasonably certain.

Non-interest Income and Non-interest Expense

Non-interest income during the first quarter of 2015 was $2.0 million as compared to $1.9 million during the same period in 2014. Mortgage banking income increased $116 thousand. This increase was a result of a continued focus on this source of revenue. In late 2013 and continuing into early 2014, an increase in mortgage loan interest rates significantly impacted refinancing activity. In 2011, the Bank expanded its residential mortgage business unit with the acquisition of the assets of Palmetto South Mortgage Corporation (“Palmetto South”), and in 2014, we consolidated the Palmetto South mortgage division into our legacy mortgage operation, First Community Mortgage, a division of the Bank. We hired several new mortgage originators and focused on increasing the level of purchase money activity. We believe these initiatives began to reflect the anticipated benefits in the second half of 2014 and continuing into 2015. Investment advisory and commissions on sale of non-deposit investment products increased by $39 thousand in the first quarter of 2015 as compared to the same period in 2014. Management continues to focus on increasing this recurring source of revenue by increasing total assets under management. During the first quarter of 2015, we sold $7.0 million in mortgage –backed securities that resulted in a gain of $104 thousand. This gain was substantially offset by a $103 thousand loss on the early payoff of $2.7 million in FHLB advances.

Total non-interest expense remained relatively unchanged in first quarter of 2015 as compared to the same quarter in 2014 at $6.1 million and $6.0 million, respectively. Salary and benefit expense increased $141 thousand from $3.4 million in the first quarter of 2014 to $3.6 million in the first quarter of 2015. This increase is primarily a result of the addition of the Savannah River employees reflected for the entire first quarter of 2015 compared to only two months in the first quarter of 2014. At March 31, 2015 and 2014, we had 185 full time equivalent employees. Occupancy expense and equipment expense increased $72 thousand and $63 thousand, respectively, in the first quarter of 2015 as compared to the first quarter of 2014. Both increases are a result of the Savannah River merger reflected in the results for the entire first quarter of 2015 as well as the addition of the Lady Street Branch in downtown Columbia in the third quarter of 2014. Marketing and public relations expense increased to $226 thousand in the first quarter of 2015 from $161 thousand in the first quarter of 2014. The timing of a media campaign in the first quarter of 2015 resulted in increased marketing cost as compared to the same period of 2014. Amortization of intangibles expense increased $61 thousand in the first quarter of 2015 as compared to the same period in 2014. This reflects additional amortization of intangibles acquired in the Savannah River transaction as well as from the purchase and assumption of certain loans and deposits from First South in the third quarter of 2014. During the first quarter of 2014, we incurred merger-related expenses in conjunction with the Savannah River merger of $420 thousand. We did not incur any merger related expenses in the first quarter of 2015.

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The following is a summary of the components of other non-interest expense:

(In thousands)	Three months ended
	March 31,
	2015		2014
Data processing	$	139	$	116
Supplies		25		30
Telephone		85		87
Courier		21		19
Correspondent services		57		45
Insurance		68		66
Postage		49		45
Professional fees		151		159
Loss on limited partnership interest		41		46
Director fees		109		101
Shareholder expense		39		49
Other		243		202
	$	1,027	$	965

Income Tax Expense

Our effective tax rate was 27.0% and 27.9% in the first quarter of 2015 and 2014, respectively. As a result of our current level of tax exempt securities in our investment portfolio, our effective tax rate is expected to remain between 27.0% to 29.0% throughout the remainder of 2015.

Financial Position

Assets totaled $835.8 million at March 31, 2015 as compared to $812.4 million at December 31, 2014, an increase of $23.5 million. Loans increased by approximately $10.5 million during the quarter ended March 31, 2015. Loans (excluding loans held for sale) at March 31, 2015 were $454.3 million as compared to $443.8 million at December 31, 2014. Total loan production was $26.5 million during the first quarter of 2015. At March 31, 2015 and December 31, 2014, loans (excluding loans held for sale) accounted for 59.2% and 59.9% of earning assets, respectively. The loan-to-deposit ratio at March 31, 2015 was 66.1% as compared to 66.9% at December 31, 2014. Investment securities decreased to $274.1 million at March 31, 2015 from $282.8 million at December 31, 2014. Deposits increased $25.0 million at March 31, 2015 as compared to December 31, 2014. Approximately $12.0 million in this increase were funds that came in on the last day of the quarter and were transferred out within a few days after the end of the quarter. Pure deposits (deposits less time deposits) represented 72.4% of total deposits as of March 31, 2015 as compared to 70.9% at December 31, 2014. We continue to focus on growing our pure deposits as a percentage of total deposits in order to better manage our overall cost of funds. Deposits were $694.6 million at March 31, 2015 as compared to $669.6 million at December 31, 2014. One of our goals as a community bank has been, and continues to be, to grow our assets through quality loan growth by providing credit to small and mid-size businesses and individuals within the markets we serve. Loan production and portfolio growth rates continue to be impacted by the current economic cycle as borrowers are less inclined to leverage their corporate and personal balance sheets. However, we remain committed to meeting the credit needs of our local markets. A continuation of the slow recovery from recessionary national and local economic conditions as well as deterioration of asset quality within our Company could significantly impact our ability to grow our loan portfolio.

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The following table shows the composition of the loan portfolio by category:

(In thousands)	March 31,						December 31,
	2015						2014
	Amount			Percent			Amount			Percent
Commercial, financial & agricultural	$	32,569			7.2	%	$	33,403			7.5	%
Real estate:											6.2	%
Construction		36,080			7.9	%		27,545
Mortgage – residential		49,838			11.0	%		48,510			66.1	%
Mortgage – commercial		294,108			64.7	%		293,186			10.9	%
Consumer:
Home Equity		33,511			7.4	%		33,000			7.4	%
Other		8,195			1.8	%		8,200			1.9	%
Total gross loans		454,301			100.0	%		443,844			100.0	%
Allowance for loan losses		(4,252	)					(4,132	)
Total net loans	$	450,049					$	439,712

In the context of this discussion, a real estate mortgage loan is defined as any loan, other than loans for construction purposes and advances on home equity lines of credit, secured by real estate, regardless of the purpose of the loan. Advances on home equity lines of credit are included in consumer loans. We follow the common practice of financial institutions in our market areas of obtaining a security interest in real estate whenever possible, in addition to any other available collateral. This collateral is taken to reinforce the likelihood of the ultimate repayment of the loan and tends to increase the magnitude of the real estate loan components. Generally we limit the loan-to-value ratio to 80%.

Market Risk Management

The effective management of market risk is essential to achieving our strategic financial objectives. Our most significant market risk is interest rate risk. We have established an Asset/Liability Management Committee (“ALCO”) to monitor and manage interest rate risk. The ALCO monitors and manages the pricing and maturity of assets and liabilities in order to diminish the potential adverse impact that changes in interest rates could have on net interest income. The ALCO has established policy guidelines and strategies with respect to interest rate risk exposure and liquidity.

A monitoring technique employed by the ALCO is the measurement of interest sensitivity “gap,” which is the positive or negative dollar difference between assets and liabilities that are subject to interest rate repricing within a given period of time. Simulation modeling is performed to assess the impact varying interest rates and balance sheet mix assumptions will have on net interest income. We model the impact on net interest income for several different changes, to include a flattening, steepening and parallel shift in the yield curve. For each of these scenarios, we model the impact on net interest income in an increasing and decreasing rate environment of 100 and 200 basis points. Policies have been established in an effort to maintain the maximum anticipated negative impact of these modeled changes in net interest income at no more than 10% and 15% respectively, in a 100 and 200 basis point change in interest rates over a twelve month period. Interest rate sensitivity can be managed by repricing assets or liabilities, selling securities available-for-sale, replacing an asset or liability at maturity or by adjusting the interest rate during the life of an asset or liability. Managing the amount of assets and liabilities repricing in the same time interval helps to hedge the risk and minimize the impact on net interest income of rising or falling interest rates.

We are currently asset sensitive within one year. However, neither the “gap” analysis nor asset/liability simulation modeling is a precise indicator of our interest sensitivity position due to the many factors that affect net interest income, including changes in the volume and mix of earning assets and interest-bearing liabilities.

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Based on the many factors and assumptions used in simulating the effect of changes in interest rates, the following table estimates the percentage change in net interest income at March 31, 2015 and December 31, 2014 over twelve months.

Net Interest Income Sensitivity

Change in short term interest rates		Hypothetical percentage change in net interest income
		March 31, 2015			December 31, 2014
	+200bp		4.92	%		3.53	%
	+100bp		2.32	%		1.88	%
	Flat		—			—
	-100bp		-5.14	%		-5.04	%
	-200bp		-9.83	%		-11.81	%

The significant decrease in net interest income in a down 200 basis point environment primarily results from the current level of interest rates being paid on our interest bearing transaction accounts as well as money market accounts. The interest rates on these accounts are at a level where they cannot be repriced in proportion to the change in interest rates. At the current historically low interest rate levels, we believe that a downward shift of 200 basis points across the entire yield curve is unlikely.

We also perform a valuation analysis projecting future cash flows from assets and liabilities to determine the Present Value of Equity (“PVE”) over a range of changes in market interest rates. The sensitivity of PVE to changes in interest rates is a measure of the sensitivity of earnings over a longer time horizon. At March 31, 2015, the PVE exposure in a plus 200 basis point increase in market interest rates was estimated to be 3.28% as compared to 0.69% at December 31, 2014.

Liquidity and Capital Resources

We believe our liquidity remains adequate to meet operating and loan funding requirements. Interest-bearing bank balances, federal funds sold, and investment securities available-for-sale represent 34.9% of total assets at March 31, 2015. We believe that our existing stable base of core deposits along with continued growth in this deposit base will enable us to meet our long-term and short-term liquidity needs successfully. These needs include the ability to respond to short-term demand for funds caused by the withdrawal of deposits, maturity of repurchase agreements, extensions of credit and the payment of operating expenses. Other sources of liquidity, in addition to deposit gathering activities, include maturing loans and investments, purchase of federal funds from other financial institutions and selling securities under agreements to repurchase. We monitor closely the level of large certificates of deposits in amounts of $100 thousand or more as they tend to be more sensitive to interest rate changes and, thus, less reliable sources of funding for liquidity purposes. At March 31, 2015, the amount of certificates of deposits of $100 thousand or more represented 12.4% of total deposits and the amount of certificates of deposits of $250 thousand or more represented 3.2% of deposits. The majority of these deposits are issued to local customers many of whom have other product relationships with the Bank.

Through the operations of our Bank, we have made contractual commitments to extend credit in the ordinary course of our business activities. These commitments are legally binding agreements to lend money to our customers at predetermined interest rates for a specified period of time. At March 31, 2015, we had issued commitments to extend credit of $79.3 million, including $30.6 million in unused home equity lines of credit, through various types of lending arrangements. We evaluate each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by us upon extension of credit, is based on our credit evaluation of the borrower. Collateral varies but may include accounts receivable, inventory, property, plant and equipment, commercial and residential real estate. We manage the credit risk on these commitments by subjecting them to normal underwriting and risk management processes.

Other than as described elsewhere in this report, we are not aware of any trends, events or uncertainties that we expect to result in a significant adverse effect on our liquidity position. However, no assurances can be given in this regard, as rapid growth, deterioration in loan quality, and poor earnings, or a combination of these factors, could change the liquidity position in a relatively short period of time.

48

The Company has generally maintained a high level of liquidity and adequate capital, which along with continued retained earnings, we believe will be sufficient to fund the operations of the Bank for at least the next 12 months. Shareholders’ equity was 9.2% of total assets at March 31, 2015 and December 31, 2014. The Bank maintains federal funds purchased lines in the total amount of $20.0 million with two financial institutions, although these were not utilized in the first quarter of 2015. In addition, the Bank has a repo line in the amount of $10.0 million with another financial institution. Specific investment securities would be pledged if and when we were to utilize the line. The FHLB of Atlanta has approved a line of credit of up to 25% of the Bank’s assets, which when utilized is collateralized by a pledge against specific investment securities and/or eligible loans. We regularly review the liquidity position of the Company and have implemented internal policies establishing guidelines for sources of asset based liquidity and evaluate and monitor the total amount of purchased funds used to support the balance sheet and funding from noncore sources. We believe that our existing stable base of core deposits along with continued growth in this deposit base will enable us to meet our long term liquidity needs successfully.

The Federal Reserve Board and bank regulatory agencies require bank holding companies and financial institutions to maintain capital at adequate levels based on a percentage of assets and off-balance sheet exposures, adjusted for risk weights ranging from 0% to 100%. As disclosed in our 2014 Annual Report on Form 10-K as filed with the SEC, in July 2013, the federal bank regulatory agencies issued a final rule that has revised their risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with certain standards that were developed by the Basel Committee on Banking Supervision (“Basel III”) and certain provisions of the Dodd-Frank Act. The final rule applies to, among other institutions, all depository institutions, and certain top-tier bank holding companies, which we refer to as “covered” banking organizations, including the Company and the Bank. Effective March 31, 2015, the Company and Bank were required to implement the new Basel III capital standards (subject to the phase in for certain parts of the new rules).

Under the Basel III rules, accumulated other comprehensive income (“AOCI”) is presumptively included in Common Equity Tier 1 capital and can operate to reduce this category of capital. The final rule provided a one-time opportunity at the end of the first quarter of 2015 for covered banking organizations to opt out of much of this treatment of AOCI, which election the Bank and the Company have made. As a result, the Company and the Bank will retain the pre-existing treatment for AOCI.

In order to avoid restrictions on capital distributions or discretionary bonus payments to executives, a covered banking organization will also be required to maintain a “capital conservation buffer” in addition to its minimum risk-based capital requirements. This buffer will be required to consist solely of Common Equity Tier 1 (CET1), but the buffer will apply to all three risk-based measurements (CET1, Tier 1 capital and total capital). The capital conservation buffer will be phased in incrementally over time, beginning January 1, 2016 and becoming fully effective on January 1, 2019, and will ultimately consist of an additional amount of Tier 1 Common Equity equal to 2.5% of risk-weighted assets.

At March 31, 2015, the Company and the Bank met or exceeded all of the required ratios on a fully phased in basis. These guidelines require an institution to maintain a certain level of Common Equity Tier 1 (CET1), Tier 1 and Tier 2 capital to risk-weighted assets. Tier 1 capital consists of common shareholders’ equity, grandfathered trust preferred securities and excludes the unrealized gain or loss on securities available for sale, minus certain intangible assets. CET1 capital excludes the trust preferred securities. In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet assets, are multiplied by a risk-weight factor generally of 0% to 100% based on the risks believed to be inherent in the type of asset. Tier 2 capital consists of Tier 1 capital plus the general reserve for loan losses, subject to certain limitations. We are also required to maintain capital at a minimum level based on total average assets, which is known as the Tier 1 leverage ratio.

At both the holding company and bank level, we are subject to various regulatory capital requirements administered by the federal banking agencies. To be considered “well capitalized,” we must maintain total risk-based capital of at least 10%, Tier 1 capital of at least 6%, and a leverage ratio of at least 5%. Generally, to be considered adequately capitalized, the FDIC and Federal Reserve regulatory capital guidelines for Tier 1 capital, total capital and leverage capital ratios are 4.0%, 8.0% and 4.0%, respectively.

49

The Bank’s risk-based capital ratios of leverage ratio, Tier 1, and total capital were 9.8%, 15.3%, and 16.1%, respectively, at March 31, 2015 as compared to 9.6%, 15.4%, and 16.2%, respectively, at December 31, 2014. The Bank’s CET1 ratio at March 31, 2015 was 15.3%. Prior to March 31, 2015, the Bank was not required to maintain a CET1 ratio. The Company’s risk-based capital ratios of leverage ratio, Tier 1, and total capital were 10.1%, 15.9%, and 16.8%, respectively at March 31, 2015 as compared to 10.0%, 16.1% and 16.9%, respectively at December 31, 2014. The Company’s CET1 ratio at March 31, 2015 was 13.1%. Prior to March 31, 2015, the Company was not required to maintain a CET1 ratio. Our management anticipates that the Bank and the Company will remain a well-capitalized institution for at least the next 12 months.

Since the Company is a bank holding company, its ability to declare and pay dividends is dependent on certain federal and state regulatory considerations, including the guidelines of the Federal Reserve Board. The Federal Reserve Board has issued a policy statement regarding the payment of dividends by bank holding companies. In general, the Federal Reserve Board’s policies provide that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the bank holding company appears consistent with the organization’s capital needs, asset quality and overall financial condition. The Federal Reserve Board’s policies also require that a bank holding company serve as a source of financial strength to its subsidiary banks by standing ready to use available resources to provide adequate capital funds to those banks during periods of financial stress or adversity and by maintaining the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks where necessary. In addition, under the prompt corrective action regulations, the ability of a bank holding company to pay dividends may be restricted if a subsidiary bank becomes undercapitalized. These regulatory policies could affect the ability of the Company to pay dividends or otherwise engage in capital distributions.

In addition, since the Company is a legal entity separate and distinct from the Bank and does not conduct stand-alone operations, its ability to pay dividends depends on the ability of the Bank to pay dividends to it, which is also subject to regulatory restrictions. As a South Carolina chartered bank, the Bank is subject to limitations on the amount of dividends that it is permitted to pay. Unless otherwise instructed by the South Carolina Board of Financial Institutions, the Bank is generally permitted under South Carolina State banking regulations to pay cash dividends of up to 100% of net income in any calendar year without obtaining the prior approval of the South Carolina Board of Financial Institutions. The FDIC also has the authority under federal law to enjoin a bank from engaging in what in its opinion constitutes an unsafe or unsound practice in conducting its business, including the payment of a dividend under certain circumstances.

50

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates on Average Interest-Bearing Liabilities

	Three months ended March 31, 2015								Three months ended March 31, 2014
	Average			Interest		Yield/			Average			Interest		Yield/
	Balance			Earned/Paid		Rate			Balance			Earned/Paid		Rate
Assets
Earning assets
Loans	$	450,988		$	5,874		5.28	%	$	415,785		$	5,080		4.96	%
Securities		277,308			1,382		2.02	%		234,966			1,300		2.24	%
Other short-term investments		15,733			27		0.70	%		20,832			23		0.45	%
Total earning assets		744,029			7,283		3.97	%		671,583			6,403		3.87	%
Cash and due from banks		11,396								9,915
Premises and equipment		29,076								24,946
Intangibles		6,381								4,291
Other assets		26,587								26,228
Allowance for loan losses		(4,240	)							(4,236	)
Total assets	$	813,229							$	732,727
Interest-bearing liabilities
Interest-bearing transaction accounts		132,997			39		0.12	%		124,029			38		0.12	%
Money market accounts		152,797			96		0.25	%		116,326			66		0.23	%
Savings deposits		55,137			16		0.12	%		50,191			14		0.11	%
Time deposits		193,308			275		0.58	%		174,384			311		0.72	%
Other borrowings		62,977			409		2.63	%		77,435			478		2.50	%
Total interest-bearing liabilities		597,216			835		0.57	%		542,365			907		0.68	%
Demand deposits		134,596								121,060
Other liabilities		5,865								5,677
Shareholders’ equity		75,552								63,625
Total liabilities and shareholders’ equity	$	813,229							$	732,727
Cost of funds including demand deposits							0.46	%							0.55	%
Net interest spread							3.40	%							3.19	%
Net interest income/margin				$	6,448		3.51	%				$	5,496		3.32	%
Net interest income/margin (taxable equivalent)				$	6,635		3.62	%				$	5,637		3.40	%

51

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in our quantitative and qualitative disclosures about market risk as of March 31, 2015 from that presented in our 2014 Annual Report on Form 10-K. See the “Market Risk Management” subsection in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for quantitative and qualitative disclosures about market risk, which information is incorporated herein by reference.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is (i) recorded, processed, summarized and reported as and when required and (ii) accumulated and communicated to our management, including our Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the three months ended March 31, 2015 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

52

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We are a party to claims and lawsuits arising in the course of normal business activities. Management is not aware of any material pending legal proceedings against the Company which, if determined adversely, the Company believes would have a material adverse impact on the Company’s financial position, results of operations or cash flows.

Item 1A. Risk Factors.

Not Applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not Applicable.

Item 3. Defaults Upon Senior Securities.

Not Applicable.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit	Description
31.1	Rule 13a-14(a) Certification of the Principal Executive Officer.
31.2	Rule 13a-14(a) Certification of the Principal Financial Officer.
32	Section 1350 Certifications
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in eXtensible Business Reporting Language (XBRL); (i) Consolidated Balance Sheets at March 31, 2015 and December 31, 2014, (ii) Consolidated Statements of Income for the three months ended March 31, 2015 and 2014, (iii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2015 and 2014 (iv) Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2015 and 2014, (v) Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014, and (vi) Notes to Consolidated Financial Statements.

53

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FIRST COMMUNITY CORPORATION

      (REGISTRANT)

Date: May 13, 2015	By:	/s/ Michael C. Crapps
		Michael C. Crapps
		President and Chief Executive Officer
Date: May 13, 2015	By:	/s/ Joseph G. Sawyer
		Joseph G. Sawyer
		Senior Vice President, Principal Financial Officer

54

INDEX TO EXHIBITS

Exhibit
Number	Description
31.1	Rule 13a-14(a) Certification of the Principal Executive Officer.
31.2	Rule 13a-14(a) Certification of the Principal Financial Officer.
32	Section 1350 Certifications.
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in eXtensible Business Reporting Language (XBRL); (i) Consolidated Balance Sheets at March 31, 2015 and December 31, 2014, (ii) Consolidated Statements of Income for the three months ended March 31, 2015 and 2014, (iii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2015 and 2014 (iv) Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2015 and 2014, (v) Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014, and (vi) Notes to Consolidated Financial Statements.

55

EX-31.1

Exhibit 31.1      Rule 13a-14(a) Certification of the Principal Executive Officer.

Exhibit 31.1

Rule 13a-14(a) Certification of the Principal Executive Officer.

I, Michael C. Crapps, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Community Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 13, 2015

  /s/ Michael C. Crapps

Michael C. Crapps,
President and Chief Executive Officer

 (Principal Executive Officer)

EX-31.2

Exhibit 31.2      Rule 13a-14(a) Certification of the Principal Financial Officer.

Exhibit 31.2

Rule 13a-14(a) Certification of the Principal Financial Officer.

I, Joseph G. Sawyer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Community Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 13, 2015

 /s/ Joseph G. Sawyer

Joseph G. Sawyer, Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32

Exhibit 32      Section 1350 Certifications.

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, the Chief Executive Officer and the Chief Financial Officer of First Community Corporation (the “Company”), each certify that, to his knowledge on the date of this certification:

1. The quarterly report of the Company for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on this date (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael C. Crapps

Michael C. Crapps

Chief Executive Officer

May 13, 2015

/s/ Joseph G. Sawyer

Joseph G. Sawyer

Chief Financial Officer

May 13, 2015

XML

Fair Value of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Financial Assets:
Held-to-maturity securities	$ 12,747	$ 10,585
Investment securities available-for-sale	259,369	270,164
Other investments, at cost	1,969	2,003
Financial liabilities:
Non-interest bearing demand	140,689	133,004
NOW and money market accounts	305,851	287,982
Savings	56,467	53,583
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Financial Assets:
Cash and short term investments	44,211	22,532
Held-to-maturity securities	12,756	10,647
Investment securities available-for-sale	259,369	270,164
Other investments, at cost	1,969	2,003
Loans held for sale	5,446	4,124
Net loans receivable	450,049	439,712
Accrued interest	2,485	2,712
Financial liabilities:
Non-interest bearing demand	140,689	133,004
NOW and money market accounts	305,851	287,982
Savings	56,467	53,583
Time deposits	191,566	195,014
Total deposits	694,573	669,583
Federal Home Loan Bank Advances	27,552	28,807
Short term borrowings	16,684	17,383
Junior subordinated debentures	15,464	15,464
Accrued interest payable	695	725
Estimate of Fair Value, Fair Value Disclosure [Member]
Financial Assets:
Cash and short term investments	44,211	22,532
Held-to-maturity securities	12,747	10,585
Investment securities available-for-sale	259,369	270,164
Other investments, at cost	1,969	2,003
Loans held for sale	5,446	4,124
Net loans receivable	451,219	441,944
Accrued interest	2,485	2,712
Financial liabilities:
Non-interest bearing demand	140,689	133,004
NOW and money market accounts	305,851	287,982
Savings	56,467	53,583
Time deposits	192,161	195,721
Total deposits	695,168	670,290
Federal Home Loan Bank Advances	29,373	30,745
Short term borrowings	16,684	17,383
Junior subordinated debentures	15,464	15,464
Accrued interest payable	695	725
Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Cash and short term investments	44,211	22,532
Held-to-maturity securities
Investment securities available-for-sale	834	839
Other investments, at cost
Loans held for sale
Net loans receivable
Accrued interest	2,485	2,712
Financial liabilities:
Non-interest bearing demand
NOW and money market accounts
Savings
Time deposits
Total deposits
Federal Home Loan Bank Advances
Short term borrowings
Junior subordinated debentures
Accrued interest payable	695	725
Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Cash and short term investments
Held-to-maturity securities	12,747	10,585
Investment securities available-for-sale	258,118	268,908
Other investments, at cost
Loans held for sale	5,446	4,124
Net loans receivable	443,329	433,446
Accrued interest
Financial liabilities:
Non-interest bearing demand	140,689	133,004
NOW and money market accounts	305,851	287,982
Savings	56,467	53,583
Time deposits	192,161	195,721
Total deposits	695,168	670,290
Federal Home Loan Bank Advances	29,373	30,745
Short term borrowings	16,684	17,383
Junior subordinated debentures	15,464	15,464
Accrued interest payable
Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Cash and short term investments
Held-to-maturity securities
Investment securities available-for-sale	417	417
Other investments, at cost	1,969	2,003
Loans held for sale
Net loans receivable	7,890	8,498
Accrued interest
Financial liabilities:
Non-interest bearing demand
NOW and money market accounts
Savings
Time deposits
Total deposits
Federal Home Loan Bank Advances
Short term borrowings
Junior subordinated debentures
Accrued interest payable

XML

Mergers and Acquisitions - Savannah River Financial Corporation (Details Narrative) (First South Bank [Member], USD $) In Thousands, unless otherwise specified	0 Months Ended
	Sep. 26, 2014	Dec. 31, 2014
Business Acquisition [Line Items]
Deposits	$ 40,000
Loans	8,700
Premium paid	714
Core Deposits [Member]
Business Acquisition [Line Items]
Acquired finite lived intangible assets		365,900
Other Intangible Assets [Member]
Business Acquisition [Line Items]
Acquired finite lived intangible assets		$ 538,600

XML

Loans (Details 5) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014
Loans	$ 454,301	$ 443,844	$ 443,868
Commercial Financial and Agricultural Loans [Member]
Loans	32,569	33,403	34,860
Real Estate Construction Loans [Member]
Loans	36,080	27,545	29,112
Real estate Mortgage-residential [Member]
Loans	49,838	48,510	46,810
Real estate Mortgage-commercial [Member]
Loans	294,108	293,186	292,995
Consumer Home Equity Line of Credit [Member]
Loans	33,511	33,000	31,378
Consumer Other Financing Receivable [Member]
Loans	8,195	8,200	8,713
Pass [Member]
Loans	429,632	416,528
Pass [Member] | Commercial Financial and Agricultural Loans [Member]
Loans	32,189	32,579
Pass [Member] | Real Estate Construction Loans [Member]
Loans	35,359	26,824
Pass [Member] | Real estate Mortgage-residential [Member]
Loans	47,241	46,090
Pass [Member] | Real estate Mortgage-commercial [Member]
Loans	273,674	270,986
Pass [Member] | Consumer Home Equity Line of Credit [Member]
Loans	33,003	32,008
Pass [Member] | Consumer Other Financing Receivable [Member]
Loans	8,166	8,041
Special Mention [Member]
Loans	12,313	13,817
Special Mention [Member] | Commercial Financial and Agricultural Loans [Member]
Loans	366	754
Special Mention [Member] | Real Estate Construction Loans [Member]
Loans	721	721
Special Mention [Member] | Real estate Mortgage-residential [Member]
Loans	1,361	1,054
Special Mention [Member] | Real estate Mortgage-commercial [Member]
Loans	9,594	10,437
Special Mention [Member] | Consumer Home Equity Line of Credit [Member]
Loans	269	751
Special Mention [Member] | Consumer Other Financing Receivable [Member]
Loans	2	100
Substandard [Member]
Loans	12,356	13,499
Substandard [Member] | Commercial Financial and Agricultural Loans [Member]
Loans	14	70
Substandard [Member] | Real Estate Construction Loans [Member]
Loans
Substandard [Member] | Real estate Mortgage-residential [Member]
Loans	1,236	1,366
Substandard [Member] | Real estate Mortgage-commercial [Member]
Loans	10,840	11,763
Substandard [Member] | Consumer Home Equity Line of Credit [Member]
Loans	239	241
Substandard [Member] | Consumer Other Financing Receivable [Member]
Loans	27	59
Doubtful [Member]
Loans
Doubtful [Member] | Commercial Financial and Agricultural Loans [Member]
Loans
Doubtful [Member] | Real Estate Construction Loans [Member]
Loans
Doubtful [Member] | Real estate Mortgage-residential [Member]
Loans
Doubtful [Member] | Real estate Mortgage-commercial [Member]
Loans
Doubtful [Member] | Consumer Home Equity Line of Credit [Member]
Loans
Doubtful [Member] | Consumer Other Financing Receivable [Member]
Loans

XML

Investment Securities (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Schedule of Trading Securities and Other Trading Assets [Line Items]
Amortized Cost	$ 12,756	$ 10,647
Gross Unrealized Gains	72	6
Gross Unrealized Losses	81	68
Fair Value	12,747	10,585
State and local government [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Amortized Cost	12,756	10,647
Gross Unrealized Gains	72	6
Gross Unrealized Losses	81	68
Fair Value	$ 12,747	$ 10,585

XML

Fair Value of Financial Instruments (Details 4) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	$ 7,897	$ 8,559	$ 8,433
Total other real estate owned	2,748	2,943
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	7,890	8,498
Total other real estate owned	2,748	2,943
Total	10,638	11,441
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	7,890	8,498
Total other real estate owned	2,748	2,943
Total	10,638	11,441
Commercial and Industrial Loans Receivable [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans		55
Commercial and Industrial Loans Receivable [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans		55
Real Estate Construction Loans [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total other real estate owned	276	424
Real Estate Construction Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total other real estate owned	276	424
Real estate Mortgage-residential [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	1,062	1,074
Total other real estate owned	219	232
Real estate Mortgage-residential [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	1,062	1,074
Total other real estate owned	219	232
Real estate Mortgage-commercial [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	6,737	7,277
Total other real estate owned	2,253	2,287
Real estate Mortgage-commercial [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	6,737	7,277
Total other real estate owned	2,253	2,287
Consumer Home Equity Line of Credit [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	91	92
Consumer Home Equity Line of Credit [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	91	92
Consumer Other Financing Receivable [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans
Consumer Other Financing Receivable [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans

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Loans (Details 9) (Nonaccrual Status [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015 N
Troubled Debt Restructurings that subsequently defaulted
Number of Contracts	2
Recorded Investment	$ 1,571
Real estate Mortgage-commercial [Member]
Troubled Debt Restructurings that subsequently defaulted
Number of Contracts	1
Recorded Investment	1,391
Real estate Mortgage-Consumer [Member]
Troubled Debt Restructurings that subsequently defaulted
Number of Contracts	1
Recorded Investment	$ 180

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Note 1 – Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated balance sheets, and the consolidated statements of income, comprehensive income, changes in shareholders’ equity, and the cash flows of First Community Corporation (the “Company”), present fairly in all material respects the Company’s financial position at March 31, 2015 and December 31, 2014, and the Company’s results of operations and cash flows for the three months ended March 31, 2015 and 2014. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

In the opinion of management, all adjustments necessary to fairly present the consolidated financial position and consolidated results of operations have been made. All such adjustments are of a normal, recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements and notes thereto are presented in accordance with the instructions for Form 10-Q. The information included in the Company’s 2014 Annual Report on Form 10-K should be referred to in connection with these unaudited interim financial statements.   

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Fair Value of Financial Instruments (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014
Fair Value Inputs, Assets, Quantitative Information [Line Items]
OREO	2,748	2,943
Total impaired loans	7,897	8,559	8,433
Other Real Estate Owned [Member] | Fair Value, Inputs, Level 3 [Member] | Appraisal Value Comparison Sales Other Estimates Valuation Technique [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
OREO	2,748	2,943
Other Real Estate Owned [Member] | Fair Value, Inputs, Level 3 [Member] | Minimum [Member] | Appraisal Value Comparison Sales Other Estimates Valuation Technique [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Rate (as a percent)	6.00%	6.00%
Other Real Estate Owned [Member] | Fair Value, Inputs, Level 3 [Member] | Maximum [Member] | Appraisal Value Comparison Sales Other Estimates Valuation Technique [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Rate (as a percent)	16.00%	16.00%
Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Appraisal Value Discounted Cash Flows Valuation Technique [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Total impaired loans	7,890	8,498
Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Minimum [Member] | Appraisal Value Discounted Cash Flows Valuation Technique [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Rate (as a percent)	6.00%	6.00%
Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member] | Maximum [Member] | Appraisal Value Discounted Cash Flows Valuation Technique [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Rate (as a percent)	16.00%	16.00%
Preferred Stock [Member] | Fair Value, Inputs, Level 3 [Member] | Estimation Based on Comparable Non Listed Securities Valuation Technique [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Preferred stock	417	417

XML

Loans (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 454,301	$ 443,844	$ 443,868
Commercial Financial and Agricultural Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	32,569	33,403	34,860
Real Estate Construction Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	36,080	27,545	29,112
Real estate Mortgage-residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	49,838	48,510	46,810
Real estate Mortgage-commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	294,108	293,186	292,995
Consumer Home Equity Line of Credit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	33,511	33,000	31,378
Consumer Other Financing Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 8,195	$ 8,200	$ 8,713

XML

Investment Securities (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Amortized Cost	$ 256,209,000		$ 268,358,000
Fair Value	259,369,000		270,164,000
FHLB Stock	2,000,000		2,000,000
Proceeds from sale of investment securities available-for-sale	6,955,000	20,916,000
Gross realized gains	104,100	8,300
Gross realized losses
Government Sponsored Enterprise mortgage-backed securities [Member]
Amortized Cost	146,400,000		159,100,000
Fair Value	147,900,000		159,700,000
Mutual Funds [Member]
Fair Value	834,100		839,200
Foreign Corporate Debt Securities [Member]
Fair Value	60,300		60,300
Corporate Preferred Stock [Member]
Fair Value	416,800		416,800
Non-agency mortgage-backed securities [Member]
Amortized Cost	696,600		736,600
Fair Value	$ 696,200		$ 734,400

XML

Mergers and Acquisitions - Savannah River Financial Corporation (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended
	Feb. 01, 2014		Mar. 31, 2015	Dec. 31, 2014
ASSETS
Cash and due from banks			$ 11,537	$ 12,480
Investment securities available-for-sale			259,369	270,164
Loans			450,049	439,712
Premises and equipment			29,383	28,510
Intangible assets			1,704	1,806
Bank owned life insurance			14,744	14,642
Other assets			7,162	9,002
Total assets			835,819	812,363
Deposits:
Noninterest-bearing			140,689	133,004
Total deposits			694,573	669,583
FHLB advances			27,552	28,807
Other liabilities			4,998	6,598
Total liabilities			759,271	737,835
Goodwill			5,078	5,078
First Community Corporation common shares issued	1,274,200
Purchase price per share of the Company's common stock	$ 10.76
Equity Interests Issued or Issuable	13,710
Cash exchanged for stock and fractional shares	19,805
Fair value of total consideration transferred	33,515
As initially Reported [Member]
ASSETS
Cash and due from banks	8,451
Investment securities available-for-sale	23,014
Loans	109,532
Premises and equipment	7,695
Intangible assets
Bank owned life insurance	3,158
Other assets	1,839
Total assets	153,689
Deposits:
Noninterest-bearing	11,045
Interest-bearing	102,891
Total deposits	113,936
FHLB advances	8,684
Other liabilities	345
Total liabilities	122,965
Net identifiable assets acquired over (under) liabilities assumed	30,724
Net assets acquired over liabilities assumed	30,724
Fair Value Adjustments [Member]
ASSETS
Investment securities available-for-sale	126	[1]
Loans	(3,016)	[2]
Premises and equipment	473	[3]
Intangible assets	1,182	[4]
Other assets	248	[5]
Total assets	(1,483)
Deposits:
Interest-bearing	211	[6]
Total deposits	211
FHLB advances	22	[7]
Total liabilities	233
Net identifiable assets acquired over (under) liabilities assumed	(1,716)
Goodwill	4,507
Net assets acquired over liabilities assumed	2,791
As adjusted [Member]
ASSETS
Cash and due from banks	8,451
Investment securities available-for-sale	23,140
Loans	106,516
Premises and equipment	8,168
Intangible assets	1,182
Bank owned life insurance	3,158
Other assets	1,591
Total assets	152,206
Deposits:
Noninterest-bearing	11,045
Interest-bearing	103,102
Total deposits	114,147
FHLB advances	8,706
Other liabilities	345
Total liabilities	123,198
Net identifiable assets acquired over (under) liabilities assumed	29,696
Goodwill	4,507
Net assets acquired over liabilities assumed	$ 33,515

[1] Adjustment reflects marking the securities portfolio to fair value as of the acquisition date.

[2] Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired loan portfolio. and excludes the allowance for loan losses recorded by Savannah River.

[3] Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired premises and equipment.

[4] Adjustment reflects the recording of the core deposit intangible on the acquired deposit accounts.

[5] Adjustment reflects the deferred tax adjustment related to fair value adjustments at 34%.

[6] Adjustment reflects the fair value adjustment on interest-bearing deposits.

[7] Adjustment reflects the fair value adjustment on FHLB Advances which was equal to the prepayment fee paid to pay-off the FHLB Advances upon consummation of the merger.

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Loans (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Activity in the allowance for loan losses
Balance at the beginning of the period	$ 4,132	$ 4,219	$ 4,219
Charge-offs	(358)	(230)	(1,111)
Recoveries	72	22	143
Provisions	406	150	881
Balance at end of the period	4,252	4,161	4,132
Allowance for loan losses
Individually evaluated for impairment	7	4	61
Collectively evaluated for impairment	4,245	4,157	4,071
Loans receivable:
Ending balance-total	454,301	443,868	443,844
Individually evaluated for impairment	7,897	8,433	8,559
Collectively evaluated for impairment	446,404	435,435	435,285
Commercial Loan [Member]
Activity in the allowance for loan losses
Balance at the beginning of the period	67	233	233
Charge-offs	(56)		(54)
Recoveries	2	17	110
Provisions	197	(7)	(222)
Balance at end of the period	210	243	67
Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment	210	243	67
Loans receivable:
Ending balance-total	32,569	34,860	33,403
Individually evaluated for impairment		65	55
Collectively evaluated for impairment	32,569	34,795	33,348
Real Estate Construction Loans [Member]
Activity in the allowance for loan losses
Balance at the beginning of the period	45	26	26
Charge-offs
Recoveries
Provisions	89	137	19
Balance at end of the period	134	163	45
Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment	134	163	45
Loans receivable:
Ending balance-total	36,080	29,112	27,545
Individually evaluated for impairment
Collectively evaluated for impairment	36,080	29,112	27,545
Real estate Mortgage-residential [Member]
Activity in the allowance for loan losses
Balance at the beginning of the period	179	291	291
Charge-offs		(35)	(52)
Recoveries	1	1	10
Provisions	63	(1)	(70)
Balance at end of the period	243	256	179
Allowance for loan losses
Individually evaluated for impairment	4	4	4
Collectively evaluated for impairment	239	252	175
Loans receivable:
Ending balance-total	49,838	46,810	48,510
Individually evaluated for impairment	1,066	956	1,078
Collectively evaluated for impairment	48,772	45,854	47,432
Real estate Mortgage-commercial [Member]
Activity in the allowance for loan losses
Balance at the beginning of the period	1,572	1,117	1,117
Charge-offs	(291)	(187)	(879)
Recoveries	4
Provisions	295	94	1,334
Balance at end of the period	1,580	1,024	1,572
Allowance for loan losses
Individually evaluated for impairment	3		57
Collectively evaluated for impairment	1,577	1,024	1,515
Loans receivable:
Ending balance-total	294,108	292,995	293,186
Individually evaluated for impairment	6,740	7,332	7,334
Collectively evaluated for impairment	287,368	285,663	285,852
Consumer Home Equity Line of Credit [Member]
Activity in the allowance for loan losses
Balance at the beginning of the period	134	112	112
Charge-offs			(17)
Recoveries	1		6
Provisions	(14)	2	33
Balance at end of the period	121	114	134
Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment	121	114	134
Loans receivable:
Ending balance-total	33,511	31,378	33,000
Individually evaluated for impairment	91	71	92
Collectively evaluated for impairment	33,420	31,307	32,908
Consumer Other Financing Receivable [Member]
Activity in the allowance for loan losses
Balance at the beginning of the period	44	80	80
Charge-offs	(11)	(8)	(109)
Recoveries	64	4	17
Provisions	(39)	(13)	56
Balance at end of the period	58	63	44
Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment	58	63	44
Loans receivable:
Ending balance-total	8,195	8,713	8,200
Individually evaluated for impairment		9
Collectively evaluated for impairment	8,195	8,704	8,200
Unallocated Financing Receivables [Member]
Activity in the allowance for loan losses
Balance at the beginning of the period	2,091	2,360	2,360
Charge-offs
Recoveries
Provisions	(185)	(62)	(269)
Balance at end of the period	1,906	2,298	2,091
Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment	1,906	2,298	2,091
Loans receivable:
Ending balance-total
Individually evaluated for impairment
Collectively evaluated for impairment

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Loans (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Loans Details 3
Total loans considered impaired at year end	$ 7,897	$ 8,433	$ 8,559
Loans considered impaired for which there is a related allowance for loan loss:
Outstanding loan balance	300		1,959
Related allowance	7	4	61
Loans considered impaired and previously written down to fair value	7,597		6,600
Average impaired loans	$ 10,249	$ 10,866	$ 10,900

XML

Consolidated Statements of Cash Flows (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Cash flows from operating activities:
Net income	$ 1,404,000	$ 862,000
Adjustments to reconcile net income to net cash provided in operating activities:
Depreciation	297,000	248,000
Premium amortization	936,000	774,000
Provision for loan losses	406,000	150,000	881,000
Writedowns of other real estate owned	90,000	82,000
Gain on sale of other real estate owned	(4,000)	(12,000)
Origination of loans held-for-sale	(23,701,000)	(18,191,000)
Sale of loans held-for-sale	22,379,000	18,144,000
Amortization of intangibles	103,000	42,000
Accretion on acquired loans	(509,000)	(114,000)
Gain on sale of securities	(104,000)	(8,000)
Loss on early extinguishment of debt	103,000
Decrease in other assets	1,461,000	1,088,000
Increase in accounts payable	(1,711,000)	(1,094,000)
Net cash provided in operating activities	1,150,000	1,971,000
Cash flows from investing activities:
Purchase of investment securities available-for-sale	(5,436,000)	(34,235,000)
Purchase of investment securities held-to-maturity	(2,142,000)
Maturity/call of investment securities available-for-sale	9,643,000	9,875,000
Proceeds from sale of securities available-for-sale	6,955,000	20,916,000
Proceeds from sale of other investments	304,000
(Increase) decrease in loans	(10,382,000)	9,571,000
Net cash disbursed in business combination		(11,353,000)
Proceeds from sale of other real estate owned	185,000	712,000
Purchase of property and equipment	(1,170,000)	(607,000)
Net cash used in investing activities	(2,043,000)	(5,121,000)
Cash flows from financing activities:
Increase in deposit accounts	25,035,000	43,232,000
Increase (decrease) in securities sold under agreements to repurchase	(699,000)	858,000
Advances from the Federal Home Loan Bank	8,500,000	20,000,000
Repayment of advances from the Federal Home Loan Bank	(9,858,000)	(37,710,000)
Dividends paid: Common Stock	(457,000)	(313,000)
Dividend reinvestment plan	51,000	45,000
Net cash provided from financing activities	22,572,000	26,112,000
Net increase (decrease) in cash and cash equivalents	21,679,000	22,962,000
Cash and cash equivalents at beginning of year	22,532,000	14,166,000	14,166,000
Cash and cash equivalents at end of year	44,211,000	37,128,000	22,532,000
Cash paid during the period for:
Interest	865,000	791,000
Income Taxes	935,000
Non-cash investing and financing activities:
Unrealized gain on securities	893,000	1,690,000
Transfer of loans to foreclosed property	75,000	559,000
Acquisitions
Fair value of tangible assets acquired		151,024,000
Other intangible assets acquired		1,182,000
Liabilities assumed		123,198,000
Net identifiable assets acquired over liabilities assumed		29,008,000
Common stock issued in acquisition		$ 13,710,000

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Loans (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
With no allowance recorded:
Recorded Investment	$ 7,597		$ 6,600
With an allowance recorded:
Recorded Investment	300		1,959
Related allowance	7	4	61
Total:
Recorded Investment	7,897	8,433	8,559
Unpaid Principal Balance	9,549	9,156	10,032
Average Recorded Investment	10,249	10,866	10,900
Interest Income Recognized	31	10	163
Commercial Loan [Member]
With no allowance recorded:
Recorded Investment		65	55
Unpaid Principal Balance		69	112
Average Recorded Investment		135	132
Interest Income Recognized			3
With an allowance recorded:
Recorded Investment
Unpaid Principal Balance
Related allowance
Average Recorded Investment
Interest Income Recognized
Total:
Recorded Investment		65	55
Unpaid Principal Balance		69	112
Average Recorded Investment		135	132
Interest Income Recognized			3
Real Estate Construction Loans [Member]
With no allowance recorded:
Recorded Investment
Unpaid Principal Balance
Average Recorded Investment
Interest Income Recognized
With an allowance recorded:
Recorded Investment
Unpaid Principal Balance
Related allowance
Average Recorded Investment
Interest Income Recognized
Total:
Recorded Investment
Unpaid Principal Balance
Average Recorded Investment
Interest Income Recognized
Real estate Mortgage-residential [Member]
With no allowance recorded:
Recorded Investment	1,014	901	1,025
Unpaid Principal Balance	1,157	1,002	1,167
Average Recorded Investment	1,266	1,112	1,071
Interest Income Recognized	1	1	8
With an allowance recorded:
Recorded Investment	52	55	53
Unpaid Principal Balance	52	55	53
Related allowance	4	4	4
Average Recorded Investment	52	55	54
Interest Income Recognized			3
Total:
Recorded Investment	1,066	956	1,078
Unpaid Principal Balance	1,209	1,057	1,220
Average Recorded Investment	1,318	1,167	1,125
Interest Income Recognized	1	1	11
Real estate Mortgage-commercial [Member]
With no allowance recorded:
Recorded Investment	6,492	7,332	5,428
Unpaid Principal Balance	7,995	7,948	6,469
Average Recorded Investment	8,584	9,468	7,634
Interest Income Recognized	30	9	64
With an allowance recorded:
Recorded Investment	248		1,906
Unpaid Principal Balance	248		2,134
Related allowance	3		57
Average Recorded Investment	250		1,926
Interest Income Recognized			85
Total:
Recorded Investment	6,740	7,332	7,334
Unpaid Principal Balance	8,243	7,948	8,603
Average Recorded Investment	8,834	9,468	9,560
Interest Income Recognized	30	9	149
Consumer Home Equity Line of Credit [Member]
With no allowance recorded:
Recorded Investment	91	71	92
Unpaid Principal Balance	97	71	97
Average Recorded Investment	97	75	83
Interest Income Recognized
With an allowance recorded:
Recorded Investment
Unpaid Principal Balance
Related allowance
Average Recorded Investment
Interest Income Recognized
Total:
Recorded Investment	91	71	92
Unpaid Principal Balance	97	71	97
Average Recorded Investment	97	75	83
Interest Income Recognized
Consumer Other Financing Receivable [Member]
With no allowance recorded:
Recorded Investment		9
Unpaid Principal Balance		11
Average Recorded Investment		21
Interest Income Recognized
With an allowance recorded:
Recorded Investment
Unpaid Principal Balance
Related allowance
Average Recorded Investment
Interest Income Recognized
Total:
Recorded Investment		9
Unpaid Principal Balance		11
Average Recorded Investment		21
Interest Income Recognized

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Fair Value of Financial Instruments (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	$ 259,369	$ 270,164
Government sponsored enterprises [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	3,503	3,434
Small Business Administration pools [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	59,555	58,545
State and local government [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	46,447	46,516
Corporate and other securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	1,311	1,316
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	259,369	270,164
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Measurements, Recurring [Member] | Government sponsored enterprises [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	3,503	3,434
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	148,553	160,353
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Measurements, Recurring [Member] | Small Business Administration pools [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	59,555	58,545
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Measurements, Recurring [Member] | State and local government [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	46,447	46,516
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Measurements, Recurring [Member] | Corporate and other securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	1,311	1,316
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	834	839
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Corporate and other securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	834	839
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	258,118	268,908
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Government sponsored enterprises [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	3,503	3,434
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	148,553	160,353
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Small Business Administration pools [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	59,555	58,545
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | State and local government [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	46,447	46,516
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Corporate and other securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	60	60
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	417	417
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Corporate and other securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	$ 417	$ 417

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
ASSETS
Cash and due from banks	$ 11,537	$ 12,480
Interest-bearing bank balances	31,796	9,454
Federal funds sold and securities purchased under agreements to resell	878	598
Investment securities held-to-maturity	12,756	10,647
Investment securities available-for-sale	259,369	270,164
Other investments, at cost	1,969	2,003
Loans held for sale	5,446	4,124
Loans	454,301	443,844
Less, allowance for loan losses	4,252	4,132
Net loans	450,049	439,712
Property, furniture and equipment - net	29,383	28,510
Land held for sale	1,200	1,200
Bank owned life insurance	14,744	14,642
Other real estate owned	2,748	2,943
Intangible assets	1,704	1,806
Goodwill	5,078	5,078
Other assets	7,162	9,002
Total assets	835,819	812,363
Deposits:
Non-interest bearing demand	140,689	133,004
NOW and money market accounts	305,851	287,982
Savings	56,467	53,583
Time deposits less than $100,000	105,262	108,048
Time deposits $100,000 and over	86,304	86,966
Total deposits	694,573	669,583
Securities sold under agreements to repurchase	16,684	17,383
Federal Home Loan Bank advances	27,552	28,807
Junior subordinated debt	15,464	15,464
Other liabilities	4,998	6,598
Total liabilities	759,271	737,835
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 6,683,960 at March 31, 2015 6,664,391 at December 31, 2014	6,684	6,664
Common stock warrants issued	46	48
Nonvested restricted stock	(694)	(673)
Additional paid in capital	75,687	75,504
Accumulated Deficit	(7,339)	(8,286)
Accumulated other comprehensive income (loss)	2,164	1,271
Total shareholders' equity	76,548	74,528
Total liabilities and shareholders' equity	$ 835,819	$ 812,363

XML

Mergers and Acquisitions - Savannah River Financial Corporation (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		26 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2014
Mergers And Acquisitions - Savannah River Financial Corporation Detail 2
Total revenues (net interest income plus noninterest income)		$ 7,850	$ 7,371
Net income		1,302	862
Merger Related Cost		$ 420

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Consolidated Statements Of Comprehensive Income Parenthetical
Unrealized gain (loss) during the period on available-for-sale securities, taxes	$ 495	$ 876
Reclassification adjustment for (gain) loss included in net income, taxes	$ 35	$ 2

XML

Loans (Details 7) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Loans Details 6
Accretable yield, beginning of period	$ 75
Additions		272
Accretion	(437)	(33)
Reclassification of nonaccretable difference due to improvement in expected cash flows	390
Other changes, net
Accretable yield, end of period	$ 28	$ 239

XML

Earnings Per Common Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share [Abstract]
Numerator (Net income available to common shareholders)	$ 1,404	$ 862
Basic earnings per share	6,522	6,169
Dilutive securities:
Deferred compensation (in shares)	20	17
Warrants/Restricted stock -Treasury stock method (in shares)	123	43
Diluted earnings per share (in shares)	6,665	6,229
The average market price used in calculating assumed number of shares (in dollars per share)	$ 11.42	$ 10.86

XML

Loans (Details 8) (USD $)	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	$ 2,274,000	$ 1,748,000
60-89 Days Past Due	356,000	17,000
Nonaccrual	5,943,000	6,585,000
Total Past Due	8,573,000	8,350,000
Current	445,728,000	435,494,000
Total Loans	454,301,000	443,844,000	443,868,000
Commercial Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	19,000	92,000
60-89 Days Past Due	18,000
Greater than 90 Days and Accruing
Nonaccrual		55,000
Total Past Due	37,000	147,000
Current	32,532,000	33,256,000
Total Loans	32,569,000	33,403,000	34,860,000
Real Estate Construction Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due
60-89 Days Past Due		2,000
Greater than 90 Days and Accruing
Nonaccrual
Total Past Due		2,000
Current	36,080,000	27,543,000
Total Loans	36,080,000	27,545,000	29,112,000
Real estate Mortgage-residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	77,000	131,000
60-89 Days Past Due		5,000
Greater than 90 Days and Accruing
Nonaccrual	1,014,000	1,025,000
Total Past Due	1,091,000	1,161,000
Current	48,747,000	47,349,000
Total Loans	49,838,000	48,510,000	46,810,000
Real estate Mortgage-commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	2,130,000	1,443,000
60-89 Days Past Due	290,000	4,000
Greater than 90 Days and Accruing
Nonaccrual	4,838,000	5,413,000
Total Past Due	7,258,000	6,860,000
Current	286,850,000	286,326,000
Total Loans	294,108,000	293,186,000	292,995,000
Consumer Home Equity Line of Credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	44,000	19,000
60-89 Days Past Due	46,000
Greater than 90 Days and Accruing
Nonaccrual	91,000	92,000
Total Past Due	181,000	111,000
Current	33,330,000	32,889,000
Total Loans	33,511,000	33,000,000	31,378,000
Consumer Other Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	4,000	63,000
60-89 Days Past Due	2,000	6,000
Greater than 90 Days and Accruing
Nonaccrual
Total Past Due	6,000	69,000
Current	8,189,000	8,131,000
Total Loans	$ 8,195,000	$ 8,200,000	$ 8,713,000

XML

Investment Securities (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 256,209	$ 268,358
Gross Unrealized Gains	3,980	3,164
Gross Unrealized Losses	820	1,358
Fair Value	259,369	270,164
Government sponsored enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	3,406	3,403
Gross Unrealized Gains	97	45
Gross Unrealized Losses		14
Fair Value	3,503	3,434
Government Sponsored Enterprise mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	147,054	159,861
Gross Unrealized Gains	1,846	1,211
Gross Unrealized Losses	347	719
Fair Value	148,553	160,353
Small Business Administration pools [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	59,452	58,643
Gross Unrealized Gains	447	385
Gross Unrealized Losses	344	483
Fair Value	59,555	58,545
State and local government [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	44,948	45,102
Gross Unrealized Gains	1,590	1,523
Gross Unrealized Losses	91	109
Fair Value	46,447	46,516
Corporate and other securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,349	1,349
Gross Unrealized Gains
Gross Unrealized Losses	38	33
Fair Value	$ 1,311	$ 1,316

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (USD $) In Thousands, except Share data	Common Stock [Member]	Warrant [Member]	Additional Paid-In Capital [Member]	Restricted Stock [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Beginning Balance at Dec. 31, 2013	$ 5,303	$ 48	$ 62,214	$ (444)	$ (11,923)	$ (2,527)	$ 52,671
Beginning Balance, in shares at Dec. 31, 2013	5,303
Net income					862		862
Other comprehensive income net of tax						1,690	1,690
Issuance of restricted stock	71		697	(768)
Issuance of restricted stock, in shares	71			100			100
Issuance of common stock	1,274		12,436				13,710
Issuance of common stock, in shares	1,274
Dividends: Common					(313)		(313)
Dividend reinvestment plan	4		41				45
Dividend reinvestment plan, in shares	4
Ending Balance at Mar. 31, 2014	6,652	48	75,388	(1,112)	(11,374)	(837)	68,765
Ending Balance, in shares at Mar. 31, 2014	6,652
Beginning Balance at Dec. 31, 2014	6,664	48	75,504	(673)	(8,286)	1,271	74,528
Beginning Balance, in shares at Dec. 31, 2014	6,664
Net income					1,404		1,404
Other comprehensive income net of tax						893	893
Issuance of restricted stock	13		137	(150)
Issuance of restricted stock, in shares	13
Amortization of compensation on restricted stock				129			129
Exercise of stock warrants	2	(2)
Exercise of stock warrants, in shares	2
Dividends: Common					(457)		(457)
Dividend reinvestment plan	5		46				51
Dividend reinvestment plan, in shares	5
Ending Balance at Mar. 31, 2015	$ 6,684	$ 46	$ 75,687	$ (694)	$ (7,339)	$ 2,164	$ 76,548
Ending Balance, in shares at Mar. 31, 2015	6,684

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Consolidated Balance Sheets Parenthetical
Preferred stock, par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 1.00	$ 1.00
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	6,683,960	6,664,391
Common stock, shares outstanding	6,683,960	6,664,391

XML

Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Schedule of reconciliation of the numerator and denominator of the basic and diluted earnings per common share computation

The following reconciles the numerator and denominator of the basic and diluted earnings per common share computation:

(In thousands except average market price)

	Three months ended
	March 31,
	2015		2014
Numerator (Net income available to common shareholders)	$	1,404	$	862
Denominator
Weighted average common shares outstanding for:
Basic earnings per share		6,522		6,169
Dilutive securities:
Deferred compensation		20		17
Warrants/Restricted stock -Treasury stock method		123		43
Diluted earnings per share		6,665		6,229
The average market price used in calculating assumed number of shares	$	11.42	$	10.86

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2015	May 13, 2015
Document and Entity Information
Entity Registrant Name	FIRST COMMUNITY CORP /SC/
Entity Central Index Key	0000932781
Document Type	10-Q
Trading Symbol	fcco
Document Period End Date	Mar. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		6,652,189
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1

XML

Investment Securities (Tables)

3 Months Ended

Mar. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Schedule of amortized cost and estimated fair values of available-for-sale

The amortized cost and estimated fair values of investment securities are summarized below:

AVAILABLE-FOR-SALE:

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2015:
Government sponsored enterprises	$	3,406	$	97	$	—	$	3,503
Mortgage-backed securities		147,054		1,846		347		148,553
Small Business Administration pools		59,452		447		344		59,555
State and local government		44,948		1,590		91		46,447
Corporate and other securities		1,349		—		38		1,311
	$	256,209	$	3,980	$	820	$	259,369
December 31, 2014:
Government sponsored enterprises	$	3,403	$	45	$	14	$	3,434
Mortgage-backed securities		159,861		1,211		719		160,353
Small Business Administration pools		58,643		385		483		58,545
State and local government		45,102		1,523		109		46,516
Corporate and other securities		1,349		—		33		1,316
	$	268,358	$	3,164	$	1,358	$	270,164

Schedule of amortized cost and estimated fair values of held-to-maturity securities

HELD-TO-MATURITY:

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2015:
State and local government	$	12,756	$	72	$	81	$	12,747
	$	12,756	$	72	$	81	$	12,747
December 31, 2014:
State and local government	$	10,647	$	6	$	68	$	10,585
	$	10,647	$	6	$	68	$	10,585

Schedule of gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous loss position

The following tables show gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous loss position, at March 31, 2015 and December 31, 2014.

	Less than 12 months				12 months or more				Total
March 31, 2015 (Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available-for-sale securities:
Government Sponsored Enterprises	$	—	$	—	$	—	$	—	$	—	$	—
Government Sponsored Enterprise mortgage-backed securities		15,585		116		19,334		224		34,919		340
Small Business Administration pools		10,929		77		22,815		267		33,744		344
Non-agency mortgage-backed securities		348		7		—		—		348		7
State and local government		—		—		3,306		91		3,306		91
Corporate bonds and other		—		—		884		38		884		38
Total	$	26,862	$	200	$	46,339	$	620	$	73,201	$	820

	Less than 12 months				12 months or more				Total
December 31, 2014 (Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available-for-sale securities:
Government Sponsored Enterprises	$	—	$	—	$	1,486	$	14	$	1,486	$	14
Government Sponsored Enterprise mortgage-backed securities		38,341		283		26,232		429		64,573		712
Small Business Administration pools		12,313		89		20,896		394		33,209		483
Non-agency mortgage-backed securities		576		6		18		1		594		7
State and local government		—		—		5,270		109		5,270		109
Corporate bonds and other		—		—		889		33		889		33
Total	$	51,230	$	378	$	54,791	$	980	$	106,021	$	1,358

	Less than 12 months				12 months or more				Total
March 31, 2015 (Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Held-to-maturity securities:
State and local government	$	7,727	$	81	$	—	$	—	$	7,727	$	81
Total	$	7,727	$	81	$	—	$	—	$	7,727	$	81

	Less than 12 months				12 months or more				Total
December 31, 2014 (Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Held-to-maturity securities:
State and local government	$	8,655	$	68	$	—	$	—	$	8,655	$	68
Total	$	8,655	$	68	$	—	$	—	$	8,655	$	68

Schedule of the amortized cost and fair value of investment securities by expected maturity

The following sets forth the amortized cost and fair value of investment securities at March 31, 2015 by contractual maturity. Expected maturities differ from contractual maturities because borrowers may have the right to call or prepay the obligations with or without prepayment penalties. MBSs are based on average life at estimated prepayment speeds.

	Available-for-sale				Held-to-maturity
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	6,668	$	6,727	$	—	$	—
Due after one year through five years		126,652		127,963		494		497
Due after five years through ten years		108,647		110,567		11,715		11,720
Due after ten years		14,242		14,112		547		530
	$	256,209	$	259,369	$	12,756	$	12,747

XML

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Interest income:
Loans, including fees	$ 5,874	$ 5,080
Taxable securities	1,002	983
Non-taxable securities	380	317
Federal funds sold and securities purchased under resale agreements	6	10
Other	21	13
Total interest income	7,283	6,403
Interest expense:
Deposits	426	429
Federal funds sold and securities sold under agreement to repurchase	8	10
Other borrowed money	401	468
Total interest expense	835	907
Net interest income	6,448	5,496
Provision for loan losses	406	150
Net interest income after provision for loan losses	6,042	5,346
Non-interest income:
Deposit service charges	347	366
Mortgage banking income	735	619
Investment advisory and non-deposit commissions	296	257
Gain on sale of securities	104	8
Gain on sale of other assets	4	12
Loss on early extinguishment of debt	(103)
Other	598	613
Total non-interest income	1,981	1,875
Non-interest expense:
Salaries and employee benefits	3,565	3,424
Occupancy	485	413
Equipment	402	339
Marketing and public relations	226	161
FDIC insurance assessments	138	124
Other real estate expense	154	138
Amortization of intangibles	103	42
Merger expenses		420
Other	1,027	965
Total non-interest expense	6,100	6,026
Net income before tax	1,923	1,195
Income tax expense	519	333
Net income	$ 1,404	$ 862
Basic earnings per common share (in dollars per share)	$ 0.22	$ 0.14
Diluted earnings per common share (in dollars per share)	$ 0.21	$ 0.14

XML

Loans

3 Months Ended

Mar. 31, 2015

Receivables [Abstract]

Loans

Note 4 – Loans

Loans summarized by category as of March 31, 2015, December 31, 2014 and March 31, 2014 are as follows:

	March 31,		December 31,		March 31,
(Dollars in thousands)	2015		2014		2014
Commercial, financial and agricultural	$	32,569	$	33,403	$	34,860
Real estate:
Construction		36,080		27,545		29,112
Mortgage-residential		49,838		48,510		46,810
Mortgage-commercial		294,108		293,186		292,995
Consumer:
Home equity		33,511		33,000		31,378
Other		8,195		8,200		8,713
Total	$	454,301	$	443,844	$	443,868

The detailed activity in the allowance for loan losses and the recorded investment in loans receivable as of and for the three months ended March 31, 2015 and March 31, 2014 and for the year ended December 31, 2014 is as follows:

(Dollars in thousands)
						Real estate		Real estate
				Real estate		Mortgage		Mortgage			Consumer			Consumer
	Commercial			Construction		Residential		Commercial			Home equity			Other			Unallocated			Total
March 31, 2015
Allowance for loan losses:
Beginning balance December 31, 2014	$	67		$	45	$	179	$	1,572		$	134		$	44		$	2,091		$	4,132
Charge-offs		(56	)		—		—		(291	)		—			(11	)		—			(358	)
Recoveries		2			—		1		4			1			64			—			72
Provisions		197			89		63		295			(14	)		(39	)		(185	)		406
Ending balance March 31, 2015	$	210		$	134	$	243	$	1,580		$	121		$	58		$	1,906		$	4,252
Ending balances:
Individually evaluated for impairment	$	—		$	—	$	4	$	3		$	—		$	—		$	—		$	7
Collectively evaluated for impairment		210			134		239		1,577			121			58			1,906			4,245
Loans receivable:
Ending balance-total	$	32,569		$	36,080	$	49,838	$	294,108		$	33,511		$	8,195		$	—		$	454,301
Ending balances:
Individually evaluated for impairment		—			—		1,066		6,740			91			—			—			7,897
Collectively evaluated for impairment	$	32,569		$	36,080	$	48,772	$	287,368		$	33,420		$	8,195		$	—		$	446,404

(Dollars in thousands)
						Real estate			Real estate
				Real estate		Mortgage			Mortgage			Consumer		Consumer
	Commercial			Construction		Residential			Commercial			Home equity		Other			Unallocated			Total
March 31, 2014
Allowance for loan losses:
Beginning balance December 31, 2013	$	233		$	26	$	291		$	1,117		$	112	$	80		$	2,360		$	4,219
Charge-offs		—			—		(35	)		(187	)		—		(8	)		—			(230	)
Recoveries		17			—		1			—			—		4			—			22
Provisions		(7	)		137		(1	)		94			2		(13	)		(62	)		150
Ending balance March 31, 2014	$	243		$	163	$	256		$	1,024		$	114	$	63		$	2,298		$	4,161
Ending balances:
Individually evaluated for impairment	$	—		$	—	$	4		$	—		$	—	$	—		$	—		$	4
Collectively evaluated for impairment		243			163		252			1,024			114		63			2,298			4,157
Loans receivable:
Ending balance-total	$	34,860		$	29,112	$	46,810		$	292,995		$	31,378	$	8,713		$	—		$	443,868
Ending balances:
Individually evaluated for impairment		65			—		956			7,332			71		9			—			8,433
Collectively evaluated for impairment	$	34,795		$	29,112	$	45,854		$	285,663		$	31,307	$	8,704		$	—		$	435,435

(Dollars in thousands)
						Real estate			Real estate
				Real estate		Mortgage			Mortgage			Consumer			Consumer
	Commercial			Construction		Residential			Commercial			Home equity			Other			Unallocated			Total
December 31, 2014
Allowance for loan losses:
Beginning balance	$	233		$	26	$	291		$	1,117		$	112		$	80		$	2,360		$	4,219
Charge-offs		(54	)		—		(52	)		(879	)		(17	)		(109	)		—			(1,111	)
Recoveries		110			—		10			—			6			17			—			143
Provisions		(222	)		19		(70	)		1,334			33			56			(269	)		881
Ending balance	$	67		$	45	$	179		$	1,572		$	134		$	44		$	2,091		$	4,132
Ending balances:
Individually evaluated for impairment	$	—		$	—	$	4		$	57		$	—		$	—		$	—		$	61
Collectively evaluated for impairment		67			45		175			1,515			134			44			2,091			4,071
Loans receivable:
Ending balance-total	$	33,403		$	27,545	$	48,510		$	293,186		$	33,000		$	8,200		$	—		$	443,844
Ending balances:
Individually evaluated for impairment		55			—		1,078			7,334			92			—			—			8,559
Collectively evaluated for impairment	$	33,348		$	27,545	$	47,432		$	285,852		$	32,908		$	8,200		$	—		$	435,285

Loans outstanding and available lines of credit to bank directors, executive officers and their related business interests amounted to $9.5 million and $11.1 million at March 31, 2015 and March 31, 2014, respectively. Repayments on these loans during the three months ended March 31, 2015 were $961.5 thousand and loans made amounted to $871.7 thousand. Repayments on these loans during the three months ended March 31, 2014 were $517.3 thousand and loans made amounted to $977.0 thousand. Related party loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and generally do not involve more than the normal risk of collectability.

The following table presents at March 31, 2015 and December 31, 2014 loans individually evaluated and considered impaired under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310 “Accounting by Creditors for Impairment of a Loan.” Impairment includes performing troubled debt restructurings (“TDRs”).

(Dollars in thousands)	March 31,		December 31,
	2015		2014
Total loans considered impaired	$	7,897	$	8,559
Loans considered impaired for which there is a related allowance for loan loss:
Outstanding loan balance		300		1,959
Related allowance		7		61
Loans considered impaired and previously written down to fair value		7,597		6,600
Average impaired loans		10,249		10,900

The following tables are by loan category and present at March 31, 2015, December 31, 2014 and March 31, 2014 loans individually evaluated and considered impaired under FASB ASC 310 “Accounting by Creditors for Impairment of a Loan.” Impairment includes performing TDRs.

(Dollars in thousands)							Three months ended
			Unpaid				Average		Interest
March 31, 2015	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no allowance recorded:
Commercial	$	—	$	—	$	—	$	—	$	—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		1,014		1,157		—		1,266		1
Mortgage-commercial		6,492		7,995		3		8,584		30
Consumer:
Home Equity		91		97		—		97		—
Other		—		—		—		—		—
With an allowance recorded:
Commercial		—		—		—		—		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		52		52		4		52		—
Mortgage-commercial		248		248		3		250		—
Consumer:
Home Equity		—		—		—		—		—
Other		—		—		—		—		—
Total:
Commercial		—		—		—		—		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		1,066		1,209		4		1,318		1
Mortgage-commercial		6,740		8,243		3		8,834		30
Consumer:
Home Equity		91		97		—		97		—
Other		—		—		—		—		—
	$	7,897	$	9,549	$	7	$	10,249	$	31

(Dollars in thousands)							Three months ended
			Unpaid				Average		Interest
March 31, 2014	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no allowance recorded:
Commercial	$	65	$	69	$	—	$	135	$	—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		901		1,002		—		1,112		1
Mortgage-commercial		7,332		7,948		—		9,468		9
Consumer:
Home Equity		71		71		—		75		—
Other		9		11		—		21		—
With an allowance recorded:
Commercial		—		—		—		—		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		55		55		4		55		—
Mortgage-commercial		—		—		—		—		—
Consumer:
Home Equity		—		—		—		—		—
Other		—		—		—		—		—
Total:
Commercial		65		69		—		135		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		956		1,057		4		1,167		1
Mortgage-commercial		7,332		7,948		—		9,468		9
Consumer:
Home Equity		71		71		—		75		—
Other		9		11		—		21		—
	$	8,433	$	9,156	$	4	$	10,866	$	10

(Dollars in thousands)
December 31, 2014			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no allowance recorded:
Commercial	$	55	$	112	$	—	$	132	$	3
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		1,025		1,167		—		1,071		8
Mortgage-commercial		5,428		6,469		—		7,634		64
Consumer:
Home Equity		92		97		—		83		—
Other		—		—		—		—		—
With an allowance recorded:
Commercial		—		—		—		—		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		53		53		4		54		3
Mortgage-commercial		1,906		2,134		57		1,926		85
Consumer:
Home Equity		—		—		—		—		—
Other		—		—		—		—		—
Total:
Commercial		55		112		—		132		3
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		1,078		1,220		4		1,125		11
Mortgage-commercial		7,334		8,603		57		9,560		149
Consumer:
Home Equity		92		97		—		83		—
Other		—		—		—		—		—
	$	8,559	$	10,032	$	61	$	10,900	$	163

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a monthly basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered as pass rated loans. As of March 31, 2015 and December 31, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is shown in the table below. As of March 31, 2015 and December 31, 2014, no loans were classified as doubtful.

(Dollars in thousands)
March 31, 2015			Special
	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial & agricultural	$	32,189	$	366	$	14	$	—	$	32,569
Real estate:
Construction		35,359		721		—		—		36,080
Mortgage – residential		47,241		1,361		1,236		—		49,838
Mortgage – commercial		273,674		9,594		10,840		—		294,108
Consumer:
Home Equity		33,003		269		239		—		33,511
Other		8,166		2		27		—		8,195
Total	$	429,632	$	12,313	$	12,356	$	—	$	454,301

(Dollars in thousands)
December 31, 2014			Special
	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial & agricultural	$	32,579	$	754	$	70	$	—	$	33,403
Real estate:
Construction		26,824		721		—		—		27,545
Mortgage – residential		46,090		1,054		1,366		—		48,510
Mortgage – commercial		270,986		10,437		11,763		—		293,186
Consumer:
Home Equity		32,008		751		241		—		33,000
Other		8,041		100		59		—		8,200
Total	$	416,528	$	13,817	$	13,499	$	—	$	443,844

At March 31, 2015 and December 31, 2014, non-accrual loans totaled $5.9 million and $6.6 million, respectively.

TDRs that are still accruing and included in impaired loans at March 31, 2015 and December 31, 2014 amounted to $2.0 million and $2.2 million, respectively. TDRs in non-accrual status at March 31, 2015 and December 31, 2014 amounted to $2.3 million and $2.6 million, respectively.

There were no loans greater than 90 days delinquent and still accruing interest as of March 31, 2015 and December 31, 2014.

We account for acquisitions under FASB ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. No allowance for loan losses related to the acquired loans is recorded on the acquisition date because the fair value of the loans acquired incorporates assumptions regarding credit risk.

Acquired credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality, found in FASB ASC Topic 310-30, Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality, and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loans. Loans acquired in business combinations with evidence of credit deterioration are considered impaired. Loans acquired through business combinations that do not meet the specific criteria of FASB ASC Topic 310-30, but for which a discount is attributable, at least in part to credit quality, are also accounted for under this guidance. Certain acquired loans, including performing loans and revolving lines of credit (consumer and commercial), are accounted for in accordance with FASB ASC Topic 310-20, where the discount is accreted through earnings based on estimated cash flows over the estimated life of the loan.

Purchase credit impaired (“PCI”) loans acquired totaled $4.2 million at estimated fair value, and acquired performing loans totaling $102.3 million at estimated fair value were not credit impaired. The gross contractual amount receivable for PCI loans and acquired performing loans was approximately $5.7 million and $116.0 million, respectively, as of the acquisition date. For the acquired performing loans, the best estimate at acquisition date of contractual cash flows not expected to be collected is $825 thousand. Determining the fair value of PCI loans at acquisition required the Company to estimate cash flows expected to result from those loans and to discount those cash flows at appropriate rates of interest. For such loans, the excess of cash flows expected to be collected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans and is called the accretable yield. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and is called the nonaccretable difference. In accordance with GAAP, there was no carry-over of previously established allowance for credit losses from the acquired company.

In conjunction with the acquisition of Savannah River (as defined below) on February 1, 2014, the acquired PCI loan portfolio was accounted for at fair value as follows: 

(Dollars in thousands)	February 1, 2014
Contractual principal and interest at acquisition	$	5,717
Nonaccretable difference		(1,205	)
Expected cash flows at acquisition		4,512
Accretable yield		(272	)
Basis in PCI loans at acquisition – estimated fair value	$	4,240

A summary of changes in the accretable yield for PCI loans for the three months ended March 31, 2015 and March 31, 2014 follows (in thousands): 

(Dollars in thousands)	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
Accretable yield, beginning of period	$	75		$	—
Additions		—			272
Accretion		(437	)		(33	)
Reclassification of nonaccretable difference due to improvement in expected cash flows		390			—
Other changes, net		—			—
Accretable yield, end of period	$	28		$	239

The following tables are by loan category and present loans past due and on non-accrual status as of March 31, 2015 and December 31, 2014:

(Dollars in thousands) March 31, 2015	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Accruing		Nonaccrual		Total Past Due		Current		Total Loans
Commercial	$	19	$	18	$	—	$	—	$	37	$	32,532	$	32,569
Real estate:
Construction		—		—		—		—		—		36,080		36,080
Mortgage-residential		77		—		—		1,014		1,091		48,747		49,838
Mortgage-commercial		2,130		290		—		4,838		7,258		286,850		294,108
Consumer:
Home equity		44		46		—		91		181		33,330		33,511
Other		4		2		—		—		6		8,189		8,195
Total	$	2,274	$	356	$	—	$	5,943	$	8,573	$	445,728	$	454,301

(Dollars in thousands) December 31, 2014	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Accruing		Nonaccrual		Total Past Due		Current		Total Loans
Commercial	$	—	$	—	$	—	$	55	$	147	$	33,256	$	33,403
Real estate:
Construction		—		2		—		—		2		27,543		27,545
Mortgage-residential		131		5		—		1,025		1,161		47,349		48,510
Mortgage-commercial		1,443		4		—		5,413		6,860		286,326		293,186
Consumer:
Home equity		19		—		—		92		111		32,899		33,000
Other		63		6		—		—		69		8,131		8,200
Total	$	1,748	$	17	$	—	$	6,585	$	8,350	$	435,494	$	443,844

As a result of adopting the amendments in Accounting Standards Update (“ASU”) 2011-02 (Receivables-Topic 310), the Company reassessed all restructurings that occurred on or after the beginning of the fiscal year of adoption (January 1, 2011) to determine whether they are considered TDRs under the amended guidance. The Company identified as TDRs certain loans for which the allowance for loan losses had previously been measured under a general allowance methodology. Upon identifying those loans as TDRs, the Company identified them as impaired under the guidance in ASC 310-10-35. The amendments in ASU 2011-02 require prospective application of the impairment measurement guidance in ASC 310-10-35 for those loans newly identified as impaired.

There were no loans determined to be TDRs that were restructured during the three-month periods ended March 31, 2015 and March 31, 2014.

The following table, by loan category, presents loans determined to be TDRs in the twelve month period preceding March 31, 2015 that subsequently defaulted during the three month period ended March 31, 2015. During the three month period ended March 31, 2014, there were no loans determined to be TDRs in the previous twelve months that had payment defaults. Defaulted loans are those loans that are greater than 89 days past due.

Troubled Debt Restructurings that subsequently defaulted this period (Dollars in thousands)	For the three months ended March 31, 2015
	Number of Contracts		Recorded Investment
Mortgage-Commercial		1	$	1,391
Mortgage-Consumer		1		180
Total TDRs		2	$	1,571

In the determination of the allowance for loan losses, all TDRs are reviewed to ensure that one of the three proper valuation methods (fair market value of the collateral, present value of cash flows, or observable market price) is adhered to. All non-accrual loans are written down to their corresponding collateral value. All troubled TDR accruing loans that have a loan balance that exceeds the present value of cash flows will have a specific allocation. All nonaccrual loans are considered impaired. Under ASC 310-10, a loan is impaired when it is probable that the Company will be unable to collect all amounts due including both principal and interest according to the contractual terms of the loan agreement.

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Investment Securities

3 Months Ended

Mar. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Note 3 – Investment Securities

The amortized cost and estimated fair values of investment securities are summarized below:

AVAILABLE-FOR-SALE:

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2015:
Government sponsored enterprises	$	3,406	$	97	$	—	$	3,503
Mortgage-backed securities		147,054		1,846		347		148,553
Small Business Administration pools		59,452		447		344		59,555
State and local government		44,948		1,590		91		46,447
Corporate and other securities		1,349		—		38		1,311
	$	256,209	$	3,980	$	820	$	259,369
December 31, 2014:
Government sponsored enterprises	$	3,403	$	45	$	14	$	3,434
Mortgage-backed securities		159,861		1,211		719		160,353
Small Business Administration pools		58,643		385		483		58,545
State and local government		45,102		1,523		109		46,516
Corporate and other securities		1,349		—		33		1,316
	$	268,358	$	3,164	$	1,358	$	270,164

HELD-TO-MATURITY:

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2015:
State and local government	$	12,756	$	72	$	81	$	12,747
	$	12,756	$	72	$	81	$	12,747
December 31, 2014:
State and local government	$	10,647	$	6	$	68	$	10,585
	$	10,647	$	6	$	68	$	10,585

During the three months ended March 31, 2015 and March 31, 2014, the Company received proceeds of $7.0 million and $20.9 million, respectively, from the sale of investment securities available-for-sale, amounting to gross gains of $104.1 thousand and $8.3 thousand in earnings for each respective period. There were no gross losses from the sale of investments for the three months ended March 31, 2015. There were no gross losses from the sale of investment securities for the three months ended March 31, 2014.

At March 31, 2015, corporate and other securities available-for-sale included the following at fair value: mutual funds at $834.1 thousand, foreign debt of $60.3 thousand, and corporate preferred stock in the amount of $416.8 thousand. At December 31, 2014, corporate and other securities available-for-sale included the following at fair value: mutual funds at $839.2 thousand, foreign debt of $60.3 thousand, and corporate preferred stock in the amount of $416.8 thousand.

Other investments, at cost, include Federal Home Loan Bank (“FHLB”) stock in the amount of $2.0 million and $2.0 million at March 31, 2015 and December 31, 2014 respectively.

The following tables show gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous loss position, at March 31, 2015 and December 31, 2014.

	Less than 12 months				12 months or more				Total
March 31, 2015 (Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available-for-sale securities:
Government Sponsored Enterprises	$	—	$	—	$	—	$	—	$	—	$	—
Government Sponsored Enterprise mortgage-backed securities		15,585		116		19,334		224		34,919		340
Small Business Administration pools		10,929		77		22,815		267		33,744		344
Non-agency mortgage-backed securities		348		7		—		—		348		7
State and local government		—		—		3,306		91		3,306		91
Corporate bonds and other		—		—		884		38		884		38
Total	$	26,862	$	200	$	46,339	$	620	$	73,201	$	820

	Less than 12 months				12 months or more				Total
December 31, 2014 (Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available-for-sale securities:
Government Sponsored Enterprises	$	—	$	—	$	1,486	$	14	$	1,486	$	14
Government Sponsored Enterprise mortgage-backed securities		38,341		283		26,232		429		64,573		712
Small Business Administration pools		12,313		89		20,896		394		33,209		483
Non-agency mortgage-backed securities		576		6		18		1		594		7
State and local government		—		—		5,270		109		5,270		109
Corporate bonds and other		—		—		889		33		889		33
Total	$	51,230	$	378	$	54,791	$	980	$	106,021	$	1,358

	Less than 12 months				12 months or more				Total
March 31, 2015 (Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Held-to-maturity securities:
State and local government	$	7,727	$	81	$	—	$	—	$	7,727	$	81
Total	$	7,727	$	81	$	—	$	—	$	7,727	$	81

	Less than 12 months				12 months or more				Total
December 31, 2014 (Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Held-to-maturity securities:
State and local government	$	8,655	$	68	$	—	$	—	$	8,655	$	68
Total	$	8,655	$	68	$	—	$	—	$	8,655	$	68

Government Sponsored Enterprise, Mortgage-Backed Securities: At March 31, 2015, the Company owned mortgage-backed securities (“MBSs”), including collateralized mortgage obligations (“CMOs”), with an amortized cost of $146.4 million and approximate fair value of $147.9 million issued by government sponsored enterprises (“GSEs”). At December 31, 2014, the Company owned MBSs, including CMOs with an amortized cost of $159.1 million and approximate fair value of $159.7 million issued by GSEs. As of March 31, 2015 and December 31, 2014, all of the MBSs issued by GSEs were classified as “Available for Sale.” Unrealized losses on certain of these investments are not considered to be “other than temporary,” and we have the intent and ability to hold these until they mature or recover the current book value. The contractual cash flows of the investments are guaranteed by the GSE. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment. Because the Company does not intend to sell these securities and it is more likely than not that the Company will not be required sell these securities before a recovery of its amortized cost, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at March 31, 2015.

Non-agency Mortgage-Backed Securities: The Company also held private label mortgage-backed securities (“PLMBSs”), including CMOs, at March 31, 2015 with an amortized cost of $696.6 thousand and approximate fair value of $696.2 thousand. The Company held PLMBSs, including CMOs, at December 31, 2014 with an amortized cost of $736.6 thousand and approximate fair value of $734.4 thousand. Management monitors each of these securities on a quarterly basis to identify any deterioration in the credit quality, collateral values and credit support underlying the investments. There were no PLMBSs rated below investment grade as of March 31, 2015.

Corporate Bonds: Corporate bonds held by the Company are reviewed on a quarterly basis to identify downgrades by rating agencies as well as deterioration of the underlying collateral or the issuer’s ability to service the debt obligation. As of March 31, 2015 and December 31, 2014 the Company did not own any corporate bonds.

State and Local Governments and Other: Management monitors these securities on a quarterly basis to identify any deterioration in the credit quality. Included in the monitoring is a review of the credit rating, a financial analysis and certain demographic data on the underlying issuer. The Company does not consider these securities to be OTTI at March 31, 2015.

The following sets forth the amortized cost and fair value of investment securities at March 31, 2015 by contractual maturity. Expected maturities differ from contractual maturities because borrowers may have the right to call or prepay the obligations with or without prepayment penalties. MBSs are based on average life at estimated prepayment speeds.

	Available-for-sale				Held-to-maturity
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	6,668	$	6,727	$	—	$	—
Due after one year through five years		126,652		127,963		494		497
Due after five years through ten years		108,647		110,567		11,715		11,720
Due after ten years		14,242		14,112		547		530
	$	256,209	$	259,369	$	12,756	$	12,747

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Earnings Per Common Share (Details Narrative) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		0 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 16, 2012	Dec. 31, 2014
Outstanding securities not deemed to be dilutive (in shares)	8,903	70,903
Exercise price of Option (per share)	$ 14.21	$ 19.48
Warrants outstanding (in shares)	97,180
Unrecognized Compensation Cost	$ 694			$ 673
Restricted Stock Units (RSUs) [Member]
Restricted shares issued (in shares)	157,000
Junior Subordinated Debt [Member]
Debt issued			$ 2,500
Warrant [Member]
Warrants outstanding (in shares)			107,500
Warrant issue price (per share)			$ 5.90

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Loans (Tables)

3 Months Ended

Mar. 31, 2015

Receivables [Abstract]

Summary of loans by category

Loans summarized by category as of March 31, 2015, December 31, 2014 and March 31, 2014 are as follows:

	March 31,		December 31,		March 31,
(Dollars in thousands)	2015		2014		2014
Commercial, financial and agricultural	$	32,569	$	33,403	$	34,860
Real estate:
Construction		36,080		27,545		29,112
Mortgage-residential		49,838		48,510		46,810
Mortgage-commercial		294,108		293,186		292,995
Consumer:
Home equity		33,511		33,000		31,378
Other		8,195		8,200		8,713
Total	$	454,301	$	443,844	$	443,868

Schedule of activity in the allowance for loan losses and the recorded investment in loans receivable

The detailed activity in the allowance for loan losses and the recorded investment in loans receivable as of and for the three months ended March 31, 2015 and March 31, 2014 and for the year ended December 31, 2014 is as follows:

(Dollars in thousands)
						Real estate		Real estate
				Real estate		Mortgage		Mortgage			Consumer			Consumer
	Commercial			Construction		Residential		Commercial			Home equity			Other			Unallocated			Total
March 31, 2015
Allowance for loan losses:
Beginning balance December 31, 2014	$	67		$	45	$	179	$	1,572		$	134		$	44		$	2,091		$	4,132
Charge-offs		(56	)		—		—		(291	)		—			(11	)		—			(358	)
Recoveries		2			—		1		4			1			64			—			72
Provisions		197			89		63		295			(14	)		(39	)		(185	)		406
Ending balance March 31, 2015	$	210		$	134	$	243	$	1,580		$	121		$	58		$	1,906		$	4,252
Ending balances:
Individually evaluated for impairment	$	—		$	—	$	4	$	3		$	—		$	—		$	—		$	7
Collectively evaluated for impairment		210			134		239		1,577			121			58			1,906			4,245
Loans receivable:
Ending balance-total	$	32,569		$	36,080	$	49,838	$	294,108		$	33,511		$	8,195		$	—		$	454,301
Ending balances:
Individually evaluated for impairment		—			—		1,066		6,740			91			—			—			7,897
Collectively evaluated for impairment	$	32,569		$	36,080	$	48,772	$	287,368		$	33,420		$	8,195		$	—		$	446,404

(Dollars in thousands)
						Real estate			Real estate
				Real estate		Mortgage			Mortgage			Consumer		Consumer
	Commercial			Construction		Residential			Commercial			Home equity		Other			Unallocated			Total
March 31, 2014
Allowance for loan losses:
Beginning balance December 31, 2013	$	233		$	26	$	291		$	1,117		$	112	$	80		$	2,360		$	4,219
Charge-offs		—			—		(35	)		(187	)		—		(8	)		—			(230	)
Recoveries		17			—		1			—			—		4			—			22
Provisions		(7	)		137		(1	)		94			2		(13	)		(62	)		150
Ending balance March 31, 2014	$	243		$	163	$	256		$	1,024		$	114	$	63		$	2,298		$	4,161
Ending balances:
Individually evaluated for impairment	$	—		$	—	$	4		$	—		$	—	$	—		$	—		$	4
Collectively evaluated for impairment		243			163		252			1,024			114		63			2,298			4,157
Loans receivable:
Ending balance-total	$	34,860		$	29,112	$	46,810		$	292,995		$	31,378	$	8,713		$	—		$	443,868
Ending balances:
Individually evaluated for impairment		65			—		956			7,332			71		9			—			8,433
Collectively evaluated for impairment	$	34,795		$	29,112	$	45,854		$	285,663		$	31,307	$	8,704		$	—		$	435,435

(Dollars in thousands)
						Real estate			Real estate
				Real estate		Mortgage			Mortgage			Consumer			Consumer
	Commercial			Construction		Residential			Commercial			Home equity			Other			Unallocated			Total
December 31, 2014
Allowance for loan losses:
Beginning balance	$	233		$	26	$	291		$	1,117		$	112		$	80		$	2,360		$	4,219
Charge-offs		(54	)		—		(52	)		(879	)		(17	)		(109	)		—			(1,111	)
Recoveries		110			—		10			—			6			17			—			143
Provisions		(222	)		19		(70	)		1,334			33			56			(269	)		881
Ending balance	$	67		$	45	$	179		$	1,572		$	134		$	44		$	2,091		$	4,132
Ending balances:
Individually evaluated for impairment	$	—		$	—	$	4		$	57		$	—		$	—		$	—		$	61
Collectively evaluated for impairment		67			45		175			1,515			134			44			2,091			4,071
Loans receivable:
Ending balance-total	$	33,403		$	27,545	$	48,510		$	293,186		$	33,000		$	8,200		$	—		$	443,844
Ending balances:
Individually evaluated for impairment		55			—		1,078			7,334			92			—			—			8,559
Collectively evaluated for impairment	$	33,348		$	27,545	$	47,432		$	285,852		$	32,908		$	8,200		$	—		$	435,285

Schedule of loans individually evaluated and considered impaired

The following table presents at March 31, 2015 and December 31, 2014 loans individually evaluated and considered impaired under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310 “Accounting by Creditors for Impairment of a Loan.” Impairment includes performing troubled debt restructurings (“TDRs”).

(Dollars in thousands)	March 31,		December 31,
	2015		2014
Total loans considered impaired	$	7,897	$	8,559
Loans considered impaired for which there is a related allowance for loan loss:
Outstanding loan balance		300		1,959
Related allowance		7		61
Loans considered impaired and previously written down to fair value		7,597		6,600
Average impaired loans		10,249		10,900

Schedule of loan category and loans individually evaluated and considered impaired

The following tables are by loan category and present at March 31, 2015, December 31, 2014 and March 31, 2014 loans individually evaluated and considered impaired under FASB ASC 310 “Accounting by Creditors for Impairment of a Loan.” Impairment includes performing TDRs.

(Dollars in thousands)							Three months ended
			Unpaid				Average		Interest
March 31, 2015	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no allowance recorded:
Commercial	$	—	$	—	$	—	$	—	$	—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		1,014		1,157		—		1,266		1
Mortgage-commercial		6,492		7,995		3		8,584		30
Consumer:
Home Equity		91		97		—		97		—
Other		—		—		—		—		—
With an allowance recorded:
Commercial		—		—		—		—		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		52		52		4		52		—
Mortgage-commercial		248		248		3		250		—
Consumer:
Home Equity		—		—		—		—		—
Other		—		—		—		—		—
Total:
Commercial		—		—		—		—		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		1,066		1,209		4		1,318		1
Mortgage-commercial		6,740		8,243		3		8,834		30
Consumer:
Home Equity		91		97		—		97		—
Other		—		—		—		—		—
	$	7,897	$	9,549	$	7	$	10,249	$	31

(Dollars in thousands)							Three months ended
			Unpaid				Average		Interest
March 31, 2014	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no allowance recorded:
Commercial	$	65	$	69	$	—	$	135	$	—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		901		1,002		—		1,112		1
Mortgage-commercial		7,332		7,948		—		9,468		9
Consumer:
Home Equity		71		71		—		75		—
Other		9		11		—		21		—
With an allowance recorded:
Commercial		—		—		—		—		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		55		55		4		55		—
Mortgage-commercial		—		—		—		—		—
Consumer:
Home Equity		—		—		—		—		—
Other		—		—		—		—		—
Total:
Commercial		65		69		—		135		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		956		1,057		4		1,167		1
Mortgage-commercial		7,332		7,948		—		9,468		9
Consumer:
Home Equity		71		71		—		75		—
Other		9		11		—		21		—
	$	8,433	$	9,156	$	4	$	10,866	$	10

(Dollars in thousands)
December 31, 2014			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no allowance recorded:
Commercial	$	55	$	112	$	—	$	132	$	3
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		1,025		1,167		—		1,071		8
Mortgage-commercial		5,428		6,469		—		7,634		64
Consumer:
Home Equity		92		97		—		83		—
Other		—		—		—		—		—
With an allowance recorded:
Commercial		—		—		—		—		—
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		53		53		4		54		3
Mortgage-commercial		1,906		2,134		57		1,926		85
Consumer:
Home Equity		—		—		—		—		—
Other		—		—		—		—		—
Total:
Commercial		55		112		—		132		3
Real estate:
Construction		—		—		—		—		—
Mortgage-residential		1,078		1,220		4		1,125		11
Mortgage-commercial		7,334		8,603		57		9,560		149
Consumer:
Home Equity		92		97		—		83		—
Other		—		—		—		—		—
	$	8,559	$	10,032	$	61	$	10,900	$	163

Schedule of loan category and loan by risk categories

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered as pass rated loans. As of March 31, 2015 and December 31, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is shown in the table below. As of March 31, 2015 and December 31, 2014, no loans were classified as doubtful.

(Dollars in thousands)
March 31, 2015			Special
	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial & agricultural	$	32,189	$	366	$	14	$	—	$	32,569
Real estate:
Construction		35,359		721		—		—		36,080
Mortgage – residential		47,241		1,361		1,236		—		49,838
Mortgage – commercial		273,674		9,594		10,840		—		294,108
Consumer:
Home Equity		33,003		269		239		—		33,511
Other		8,166		2		27		—		8,195
Total	$	429,632	$	12,313	$	12,356	$	—	$	454,301

(Dollars in thousands)
December 31, 2014			Special
	Pass		Mention		Substandard		Doubtful		Total
Commercial, financial & agricultural	$	32,579	$	754	$	70	$	—	$	33,403
Real estate:
Construction		26,824		721		—		—		27,545
Mortgage – residential		46,090		1,054		1,366		—		48,510
Mortgage – commercial		270,986		10,437		11,763		—		293,186
Consumer:
Home Equity		32,008		751		241		—		33,000
Other		8,041		100		59		—		8,200
Total	$	416,528	$	13,817	$	13,499	$	—	$	443,844

Schedule of PCI Loan portfolio at fair value

In conjunction with the acquisition of Savannah River (as defined below) on February 1, 2014, the acquired PCI loan portfolio was accounted for at fair value as follows: 

(Dollars in thousands)	February 1, 2014
Contractual principal and interest at acquisition	$	5,717
Nonaccretable difference		(1,205	)
Expected cash flows at acquisition		4,512
Accretable yield		(272	)
Basis in PCI loans at acquisition – estimated fair value	$	4,240

Schedule for changes in the accretable yield for PCI loans

A summary of changes in the accretable yield for PCI loans for the three months ended March 31, 2015 and March 31, 2014 follows (in thousands): 

(Dollars in thousands)	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
Accretable yield, beginning of period	$	75		$	—
Additions		—			272
Accretion		(437	)		(33	)
Reclassification of nonaccretable difference due to improvement in expected cash flows		390			—
Other changes, net		—			—
Accretable yield, end of period	$	28		$	239

Schedule of loan category and present loans past due and on non-accrual status

The following tables are by loan category and present loans past due and on non-accrual status as of March 31, 2015 and December 31, 2014:

(Dollars in thousands) March 31, 2015	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Accruing		Nonaccrual		Total Past Due		Current		Total Loans
Commercial	$	19	$	18	$	—	$	—	$	37	$	32,532	$	32,569
Real estate:
Construction		—		—		—		—		—		36,080		36,080
Mortgage-residential		77		—		—		1,014		1,091		48,747		49,838
Mortgage-commercial		2,130		290		—		4,838		7,258		286,850		294,108
Consumer:
Home equity		44		46		—		91		181		33,330		33,511
Other		4		2		—		—		6		8,189		8,195
Total	$	2,274	$	356	$	—	$	5,943	$	8,573	$	445,728	$	454,301

(Dollars in thousands) December 31, 2014	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and Accruing		Nonaccrual		Total Past Due		Current		Total Loans
Commercial	$	—	$	—	$	—	$	55	$	147	$	33,256	$	33,403
Real estate:
Construction		—		2		—		—		2		27,543		27,545
Mortgage-residential		131		5		—		1,025		1,161		47,349		48,510
Mortgage-commercial		1,443		4		—		5,413		6,860		286,326		293,186
Consumer:
Home equity		19		—		—		92		111		32,899		33,000
Other		63		6		—		—		69		8,131		8,200
Total	$	1,748	$	17	$	—	$	6,585	$	8,350	$	435,494	$	443,844

Schedule by loan category, present loans determined to be TDRs in the last twelve months that had payment defaults during the period

Troubled Debt Restructurings that subsequently defaulted this period (Dollars in thousands)	For the three months ended March 31, 2015
	Number of Contracts		Recorded Investment
Mortgage-Commercial		1	$	1,391
Mortgage-Consumer		1		180
Total TDRs		2	$	1,571

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Mergers and Acquisitions - Savannah River Financial Corporation

3 Months Ended

Mar. 31, 2015

Business Combinations [Abstract]

Mergers and Acquisitions - Savannah River Financial Corporation

Note 7 – Mergers and Acquisitions – Savannah River Financial Corporation

On February 1, 2014, the Company acquired all of the outstanding common stock of Savannah River Financial Corporation (“Savannah River”), of Augusta, Georgia, the bank holding company for Savannah River Banking Company (“SRBC”), in a cash and stock transaction. The total purchase price was approximately $33.5 million, consisting of $19.8 million in cash and 1,274,200 shares of our common stock valued at $13.7 million based on a provision in the merger agreement that 60% of the outstanding shares of Savannah River common stock be exchanged for cash and 40% of the outstanding shares of Savannah River common stock be exchanged for shares of the Company’s common stock. The value of the Company’s common stock issued was determined based on the closing price of the common stock on January 31, 2014 as reported by NASDAQ, which was $10.76. Savannah River common shareholders received 1.0618 shares of the Company’s common stock in exchange for each share of Savannah River common stock, or $11.00 per share, subject to the limitations discussed above. The Company issued 1,274,200 shares of its common stock in connection with the merger.

The Savannah River transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the acquisition date. Fair values are subject to refinement for up to a year.

The following table presents the assets acquired and liabilities assumed as of February 1, 2014 as recorded by the Company on the acquisition date and initial fair value adjustments.

	As Recorded by		Fair Value			As Recorded
(Dollars in thousands, except per share data)	Savannah River		Adjustments			by the Company
Assets
Cash and cash equivalents	$	8,451	$	—		$	8,451
Investment securities		23,014		126	(a)		23,140
Loans		109,532		(3,016	)(b)		106,516
Premises and equipment		7,695		473	(c)		8,168
Intangible assets		—		1,182	(d)		1,182
Bank owned life insurance		3,158		—			3,158
Other assets		1,839		(248	)(e)		1,591
Total assets	$	153,689	$	(1,483	)	$	152,206
Liabilities
Deposits:
Noninterest-bearing	$	11,045	$	—		$	11,045
Interest-bearing		102,891		211	(f)		103,102
Total deposits		113,936		211			114,147
FHLB advances		8,684		22	(g)		8,706
Other liabilities		345		—			345
Total liabilities		122,965		233			123,198
Net identifiable assets acquired over (under) liabilities assumed		30,724		(1,716	)		29,008
Goodwill		—		4,507			4,507
Net assets acquired over liabilities assumed	$	30,724	$	2,791		$	33,515
Consideration:
First Community Corporation common shares issued		1,274,200
Purchase price per share of the Company’s common stock	$	10.76
	$	13,710
Cash exchanged for stock and fractional shares		19,805
Fair value of total consideration transferred	$	33,515

Explanation of fair value adjustments

(a)—Adjustment reflects marking the securities portfolio to fair value as of the acquisition date.

(b)—Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired loan portfolio. and excludes the allowance for loan losses recorded by Savannah River.

(c)—Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired premises and equipment.

(d)—Adjustment reflects the recording of the core deposit intangible on the acquired deposit accounts.

(e)—Adjustment reflects the deferred tax adjustment related to fair value adjustments at 34%.

(f)—Adjustment reflects the fair value adjustment on interest-bearing deposits.

(g)—Adjustment reflects the fair value adjustment on FHLB Advances which was equal to the prepayment fee paid to pay-off the FHLB Advances upon consummation of the merger.

The operating results of the Company for the period ended March 31, 2014 include the operating results of the acquired assets and assumed liabilities for the 59 days subsequent to the acquisition date of February 1, 2014. Merger-related charges of $420 thousand are recorded in the consolidated statement of income and include incremental costs related to closing the acquisition, including legal, accounting and auditing, investment banker, travel, printing, supplies and other costs.

The following table discloses the impact of the merger with Savannah River (excluding the impact of merger-related expenses) since the acquisition on February 1, 2014 through March 31, 2014. The table also presents certain pro forma information as if Savannah River had been acquired on January 1, 2014. The results combine the historical results of Savannah River in the Company’s consolidated statement of income and, while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place on January 1, 2014.The results for the three month period ended March 31, 2015 do not have any merger related expenses and include the impact of the Savannah River acquisition for the entire period, and therefore, no pro-forma information is presented for such period.

	Actual since
	Acquisition		Pro Forma
	(February 1, 2014		Three Months
(Dollars in thousands)	through March 31, 2014)		Ended March 31, 2014
Total revenues (net interest income plus noninterest income)	$	7,371	$	7,850
Net income	$	862	$	1,302

On September 26, 2014, the Bank completed its acquisition of approximately $40 million in deposits and $8.7 million in loans from First South Bank (“First South”). This represented all of the deposits and a portion of the loans at First South’s Columbia, South Carolina banking office located at 1333 Main Street. The Bank paid a premium of $714 thousand for the deposits and loans acquired. The deposits and loans from First South have been consolidated into the Bank’s branch located at 1213 Lady Street, Columbia, South Carolina. The premium paid of $714 thousand plus fair value adjustments recorded on loans and deposits acquired resulted in a core deposit intangible of $365.9 thousand and other identifiable intangible assets in the amount of $538.6 thousand being recorded related to this transaction and is reflected on the consolidated balance sheet at December 31, 2014. The transaction is being accounted for as an asset acquisition and liability assumption. The core deposit intangible and other identifiable intangible are being amortized over seven years on an accelerated basis.

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Recently Issued Accounting Pronouncements

3 Months Ended

Mar. 31, 2015

Accounting Changes and Error Corrections [Abstract]

Recently Issued Accounting Pronouncements

Note 5 – Recently Issued Accounting Pronouncements

The following is a summary of recent authoritative pronouncements:

In January 2014, the FASB amended the Equity Method and Joint Ventures topic of the Accounting Standards Codification. The amendments provide criteria that must be met in order to apply a proportional amortization method to Low-Income Housing Tax Credit investments and provide guidance on the method used to amortize the investment, the impairment approach, and the eligibility criteria for entities that have other arrangements (e.g., loans) with the limited liability entity. The amendments are effective for the Company for any new investments in qualified affordable housing projects for interim and annual periods beginning after December 15, 2014. The Company intends to continue using the effective yield method for existing investments in qualified affordable housing projects. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2014, the FASB amended Receivables topic of the Accounting Standards Codification. The amendments are intended to resolve diversity in practice with respect to when a creditor should reclassify a collateralized consumer mortgage loan to other real estate owned (OREO). In addition, the amendments require a creditor reclassify a collateralized consumer mortgage loan to OREO upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The amendments are effective for the Company for annual periods, and interim periods beginning after December 15, 2014, with early implementation of the guidance permitted. In implementing this guidance, assets that are reclassified from real estate to loans are measured at the carrying value of the real estate at the date of adoption. Assets reclassified from loans to real estate are measured at the lower of the net amount of the loan receivable or the fair value of the real estate less costs to sell at the date of adoption. The Company will apply the amendments prospectively. The Company does not expect these amendments to have a material effect on its financial statements.

In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a modified retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements.

In June 2014, the FASB issued guidance which clarifies that performance targets associated with stock compensation should be treated as a performance condition and should not be reflected in the grant date fair value of the stock award. The amendments will be effective for the Company for fiscal years that begin after December 15, 2015. The Company will apply the guidance to all stock awards granted or modified after the amendments are effective. The Company does not expect these amendments to have a material effect on its financial statements.

In November 2014, the FASB issued guidance for determining whether embedded features need to be accounted for separately from their host shares. The new guidance requires companies to consider all terms and features, including the embedded feature(s) being evaluated for separate recognition, when determining whether a host contract is more akin to debt or equity; no single term or feature should be considered determinative regarding the nature of the host contract. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption, including adoption in an interim period, permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2015, the FASB issued guidance to eliminate from U.S. GAAP the concept of an extraordinary item, which is an event or transaction that is both (1) unusual in nature and (2) infrequently occurring. Under the new guidance, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; or (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company will apply the guidance prospectively to all prior periods presented in the financial statements. The Company does not expect these amendments to have a material effect on its financial statements.

In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted (including during an interim period), provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

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Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 6 – Fair Value of Financial Instruments

The Company adopted FASB ASC Fair Value Measurement Topic 820, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level l	Quoted prices in active markets for identical assets or liabilities.
Level 2	Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

FASB ASC 825-10-50 “Disclosure about Fair Value of Financial Instruments”, requires the Company to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions are set forth below.

Cash and Short Term Investments - The carrying amount of these financial instruments (cash and due from banks, interest-bearing bank balances, federal funds sold and securities purchased under agreements to resell) approximates fair value. All mature within 90 days and do not present unanticipated credit concerns and are classified as Level 1.

Investment Securities - Measurement is on a recurring basis based upon quoted market prices, if available. If quoted market prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for prepayment assumptions, projected credit losses, and liquidity. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, or by dealers or brokers in active over-the-counter markets. Level 2 securities include MBSs issued both by government sponsored enterprises and PLMBSs. Generally these fair values are priced from established pricing models. Level 3 securities include corporate debt obligations and asset–backed securities that are less liquid or for which there is an inactive market.

Loans Held for Sale - The Company originates fixed rate residential loans on a servicing released basis in the secondary market. Loans closed but not yet settled with an investor, are carried in the Company’s loans held for sale portfolio. These loans are fixed rate residential loans that have been originated in the Company’s name and have closed. Virtually all of these loans have commitments to be purchased by investors at a locked in price with the investors on the same day that the loan was locked in with the company’s customers. Therefore, these loans present very little market risk for the Company and are classified as Level 2. The carrying amount of these loans approximates fair value.

Loans - The fair value of loans are estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities and are classified as Level 2. As discount rates are based on current loan rates as well as management estimates, the fair values presented may not be indicative of the value negotiated in an actual sale. Loans which are deemed to be impaired are primarily valued on a nonrecurring basis at the fair value of the underlying real estate collateral. Such

fair values are obtained using independent appraisals, which the Company considers to be Level 3 inputs.

Other Real Estate Owned (OREO) - OREO is carried at the lower of carrying value or fair value on a non-recurring basis. Fair value is based upon independent appraisals or management’s estimation of the collateral and is considered a Level 3 measurement.

Accrued Interest Receivable - The fair value approximates the carrying value and is classified as Level 1.

Interest Rate Swap -The fair value approximates the carrying value and is classified as Level 3.

Deposits - The fair value of demand deposits, savings accounts, and money market accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposits is estimated by discounting the future cash flows using rates currently offered for deposits of similar remaining maturities. Deposits are classified as Level 2.

Federal Home Loan Bank Advances - Fair value is estimated based on discounted cash flows using current market rates for borrowings with similar terms and are classified as Level 2.

Short Term Borrowings - The carrying value of short term borrowings (securities sold under agreements to repurchase and demand notes to the Treasury) approximates fair value. These are classified as Level 2.

Junior Subordinated Debentures - The fair values of junior subordinated debentures is estimated by using discounted cash flow analyses based on incremental borrowing rates for similar types of instruments. These are classified as Level 2.

Accrued Interest Payable -The fair value approximates the carrying value and is classified as Level 1.

Commitments to Extend Credit - The fair value of these commitments is immaterial because their underlying interest rates approximate market.

The carrying amount and estimated fair value by classification level of the Company’s financial instruments as of March 31, 2015 and December 31, 2014 are as follows:

	March 31, 2015
			Fair Value
(Dollars in thousands)	Carrying Amount		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and short term investments	$	44,211	$	44,211	$	44,211	$	—	$	—
Held-to-maturity securities		12,756		12,747		—		12,747		—
Available-for-sale securities		259,369		259,369		834		258,118		417
Other investments, at cost		1,969		1,969		—		—		1,969
Loans held for sale		5,446		5,446		—		5,446		—
Net loans receivable		450,049		451,219		—		443,329		7,890
Accrued interest		2,485		2,485		2,485		—		—
Financial liabilities:
Non-interest bearing demand	$	140,689	$	140,689	$	—	$	140,689	$	—
NOW and money market accounts		305,851		305,851		—		305,851		—
Savings		56,467		56,467		—		56,467		—
Time deposits		191,566		192,161		—		192,161		—
Total deposits		694,573		695,168		—		695,168		—
Federal Home Loan Bank Advances		27,552		29,373		—		29,373		—
Short term borrowings		16,684		16,684		—		16,684		—
Junior subordinated debentures		15,464		15,464		—		15,464		—
Accrued interest payable		695		695		695		—		—

	December 31, 2014
			Fair Value
(Dollars in thousands)	Carrying Amount		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and short term investments	$	22,532	$	22,532	$	22,532	$	—	$	—
Held-to-maturity securities		10,647		10,585		—		10,585		—
Available-for-sale securities		270,164		270,164		839		268,908		417
Other investments, at cost		2,003		2,003		—		—		2,003
Loans held for sale		4,124		4,124		—		4,124		—
Net loans receivable		439,712		441,944		—		433,446		8,498
Accrued interest		2,712		2,712		2,712		—		—
Financial liabilities:
Non-interest bearing demand	$	133,004	$	133,004	$	—	$	133,004	$	—
NOW and money market accounts		287,982		287,982		—		287,982		—
Savings		53,583		53,583		—		53,583		—
Time deposits		195,014		195,721		—		195,721		—
Total deposits		669,583		670,290		—		670,290		—
Federal Home Loan Bank Advances		28,807		30,745		—		30,745		—
Short term borrowings		17,383		17,383		—		17,383		—
Junior subordinated debentures		15,464		15,464		—		15,464		—
Accrued interest payable		725		725		725		—		—

The following tables summarize quantitative disclosures about the fair value for each category of assets carried at fair value as of March 31, 2015 and December 31, 2014 that are measured on a recurring basis. There were no liabilities carried at fair value as of March 31, 2015 or December 31, 2014 that are measured on a recurring basis.

(Dollars in thousands)

Description	March 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities
Government sponsored enterprises	$	3,503	$	—	$	3,503	$	—
Mortgage-backed securities		148,553		—		148,553		—
Small Business Administration securities		59.555		—		59,555		—
State and local government		46,447		—		46,447		—
Corporate and other securities		1,311		834		60		417
Total	$	259,369	$	834	$	258,118	$	417

(Dollars in thousands)

Description	December 31, 2014		Quoted Prices in Active Markets for   Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable   Inputs (Level 3)
Available for sale securities
Government sponsored enterprises	$	3,434	$	—	$	3,434	$	—
Mortgage-backed securities		160,353		—		160,353		—
Small Business Administration securities		58,545		—		58,545		—
State and local government		46,516		—		46,516		—
Corporate and other securities		1,316		839		60		417
Total	$	270,164	$	839	$	268,908	$	417

The following table reconciles the changes in Level 3 financial instruments for the three months ended March 31, 2015 and March 31, 2014 that are measured on a recurring basis.

	March 31,
	2015		2014
(Dollars in thousands)	Corporate Preferred Stock		Corporate Preferred Stock
Beginning Balance	$	417	$	417
Total gains or losses (realized/unrealized) Included in earnings		—		—
Included in other comprehensive income		—		—
Purchases, issuances, and settlements		—		—
Transfers in and/or out of Level 3		—		—
Ending Balance	$	417	$	417

The following tables summarize quantitative disclosures about the fair value for each category of assets carried at fair value as of March 31, 2015 and December 31, 2014 that are measured on a non-recurring basis.

(Dollars in thousands)
Description	March 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial & Industrial	$	—	$	—	$	—	$	—
Real estate:
Mortgage-residential		1,062		—		—		1,062
Mortgage-commercial		6,737		—		—		6,737
Consumer:
Home equity		91		—		—		91
Other		—		—		—		—
Total impaired		7,890		—		—		7,890
Other real estate owned:
Construction		276		—		—		276
Mortgage-residential		219		—		—		219
Mortgage-commercial		2,253		—		—		2,253
Total other real estate owned		2,748		—		—		2,748
Total	$	10,638	$	—	$	—	$	10,638

(Dollars in thousands)
Description	December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial & Industrial	$	55	$	—	$	—	$	55
Real estate:
Mortgage-residential		1,074		—		—		1,074
Mortgage-commercial		7,277		—		—		7,277
Consumer:
Home equity		92		—		—		92
Other		—		—		—		—
Total impaired		8,498		—		—		8,498
Other real estate owned:
Construction.		424		—		—		424
Mortgage-residential		232		—		—		232
Mortgage-commercial		2,287		—		—		2,287
Total other real estate owned		2,943		—		—		2,943
Total	$	11,441	$	—	$	—	$	11,441

The Company has a large percentage of loans with real estate serving as collateral. Loans which are deemed to be impaired are primarily valued on a nonrecurring basis at the fair value of the underlying real estate collateral. Such fair values are obtained using independent appraisals, which the Company considers to be Level 3 inputs. Third party appraisals are generally obtained when a loan is identified as being impaired or at the time it is transferred to OREO. This internal process consists of evaluating the underlying collateral to independently obtained comparable properties. With respect to less complex or smaller credits, an internal evaluation may be performed. Generally the independent and internal evaluations are updated annually. Factors considered in determining the fair value include geographic sales trends, the value of comparable surrounding properties as well as the condition of the property. The aggregate amount of impaired loans was $7.9 million and $8.5 million as of March 31, 2015 and December 31, 2014, respectively.

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2015 and December 31, 2014, the significant unobservable inputs used in the fair value measurements were as follows:

(Dollars in thousands)	Fair Value as of March 31, 2015	Valuation Technique	Significant Observable Inputs	Significant Unobservable Inputs
Preferred stock	$417	Estimation based on comparable non-listed securities	Comparable transactions	n/a
OREO	$2,748	Appraisal Value/Comparison Sales/Other estimates	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost
Impaired loans	$7,890	Appraisal Value	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost

(Dollars in thousands)	Fair Value as of December 31, 2014	Valuation Technique	Significant Observable Inputs	Significant Unobservable Inputs
Preferred stock	$417	Estimation based on comparable non-listed securities	Comparable transactions	n/a
OREO	$2,943	Appraisal Value/Comparison Sales/Other estimates	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost
Impaired loans	$8,498	Appraisal Value	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost

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Subsequent Events

3 Months Ended

Mar. 31, 2015

Subsequent Events [Abstract]

Subsequent Events

Note 8 – Subsequent Events

Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements.  Nonrecognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date.  Management has reviewed events occurring through the date the financial statements were available to be issued and no subsequent events occurred requiring accrual or disclosure.

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Loans (Details 6) (USD $) In Thousands, unless otherwise specified	Feb. 01, 2014
Loans Details 6
Contractual principal and interest at acquisition	$ 5,717
Nonaccretable difference	(1,205)
Expected cash flows at acquisition	4,512
Accretable yield	(272)
Basis in PCI loans at acquisition - estimated fair value	$ 4,240

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Mergers and Acquisitions - Savannah River Financial Corporation (Tables)

3 Months Ended

Mar. 31, 2015

Mergers And Acquisitions - Savannah River Financial Corporation Tables

Schedule of Assets Acquired and Liabilities Assumed - Initial Fair Value Adjustment

The following table presents the assets acquired and liabilities assumed as of February 1, 2014 as recorded by the Company on the acquisition date and initial fair value adjustments.

	As Recorded by		Fair Value			As Recorded
(Dollars in thousands, except per share data)	Savannah River		Adjustments			by the Company
Assets
Cash and cash equivalents	$	8,451	$	—		$	8,451
Investment securities		23,014		126	(a)		23,140
Loans		109,532		(3,016	)(b)		106,516
Premises and equipment		7,695		473	(c)		8,168
Intangible assets		—		1,182	(d)		1,182
Bank owned life insurance		3,158		—			3,158
Other assets		1,839		(248	)(e)		1,591
Total assets	$	153,689	$	(1,483	)	$	152,206
Liabilities
Deposits:
Noninterest-bearing	$	11,045	$	—		$	11,045
Interest-bearing		102,891		211	(f)		103,102
Total deposits		113,936		211			114,147
FHLB advances		8,684		22	(g)		8,706
Other liabilities		345		—			345
Total liabilities		122,965		233			123,198
Net identifiable assets acquired over (under) liabilities assumed		30,724		(1,716	)		29,008
Goodwill		—		4,507			4,507
Net assets acquired over liabilities assumed	$	30,724	$	2,791		$	33,515
Consideration:
First Community Corporation common shares issued		1,274,200
Purchase price per share of the Company’s common stock	$	10.76
	$	13,710
Cash exchanged for stock and fractional shares		19,805
Fair value of total consideration transferred	$	33,515

Explanation of fair value adjustments

(a)—Adjustment reflects marking the securities portfolio to fair value as of the acquisition date.

(b)—Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired loan portfolio. and excludes the allowance for loan losses recorded by Savannah River.

(c)—Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired premises and equipment.

(d)—Adjustment reflects the recording of the core deposit intangible on the acquired deposit accounts.

(e)—Adjustment reflects the deferred tax adjustment related to fair value adjustments at 34%.

(f)—Adjustment reflects the fair value adjustment on interest-bearing deposits.

(g)—Adjustment reflects the fair value adjustment on FHLB Advances which was equal to the prepayment fee paid to pay-off the FHLB Advances upon consummation of the merger.

Schedule of Impact of Merger and Pro Forma Information

The following table discloses the impact of the merger with Savannah River (excluding the impact of merger-related expenses) since the acquisition on February 1, 2014 through March 31, 2014. The table also presents certain pro forma information as if Savannah River had been acquired on January 1, 2014. The results combine the historical results of Savannah River in the Company’s consolidated statement of income and, while certain adjustments were made for the estimated impact of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition taken place on January 1, 2014.The results for the three month period ended March 31, 2015 do not have any merger related expenses and include the impact of the Savannah River acquisition for the entire period, and therefore, no pro-forma information is presented for such period.

	Actual since
	Acquisition		Pro Forma
	(February 1, 2014		Three Months
(Dollars in thousands)	through March 31, 2014)		Ended March 31, 2014
Total revenues (net interest income plus noninterest income)	$	7,371	$	7,850
Net income	$	862	$	1,302

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Investment Securities (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Available-for-sale securities
Less Than 12 Months, Fair Value	$ 26,862	$ 51,230
Less Than 12 Months, Unrealized Losses	200	378
12 Months Or Longer, Fair Value	46,339	54,791
12 Months Or Longer, Unrealized Losses	620	980
Total Fair Value	73,201	106,021
Total Unrealized Losses	820	1,358
Held-to-maturity debt securities
Less Than 12 Months, Fair Value	7,727	8,655
Less Than 12 Months, Unrealized Losses	81	68
12 Months Or Longer, Fair Value
12 Months Or Longer, Unrealized Losses
Total Fair Value	7,727	8,655
Total Unrealized Losses	81	68
Government sponsored enterprises [Member]
Available-for-sale securities
Less Than 12 Months, Fair Value
Less Than 12 Months, Unrealized Losses
12 Months Or Longer, Fair Value		1,486
12 Months Or Longer, Unrealized Losses		14
Total Fair Value		1,486
Total Unrealized Losses		14
Government Sponsored Enterprise mortgage-backed securities [Member]
Available-for-sale securities
Less Than 12 Months, Fair Value	15,585	38,341
Less Than 12 Months, Unrealized Losses	116	283
12 Months Or Longer, Fair Value	19,334	26,232
12 Months Or Longer, Unrealized Losses	224	429
Total Fair Value	34,919	64,573
Total Unrealized Losses	340	712
Small Business Administration pools [Member]
Available-for-sale securities
Less Than 12 Months, Fair Value	10,929	12,313
Less Than 12 Months, Unrealized Losses	77	89
12 Months Or Longer, Fair Value	22,815	20,896
12 Months Or Longer, Unrealized Losses	267	394
Total Fair Value	33,744	33,209
Total Unrealized Losses	344	483
Non-agency mortgage-backed securities [Member]
Available-for-sale securities
Less Than 12 Months, Fair Value	348	576
Less Than 12 Months, Unrealized Losses	7	6
12 Months Or Longer, Fair Value		18
12 Months Or Longer, Unrealized Losses		1
Total Fair Value	348	594
Total Unrealized Losses	7	7
State and local government [Member]
Available-for-sale securities
Less Than 12 Months, Fair Value
Less Than 12 Months, Unrealized Losses
12 Months Or Longer, Fair Value	3,306	5,270
12 Months Or Longer, Unrealized Losses	91	109
Total Fair Value	3,306	5,270
Total Unrealized Losses	91	109
Held-to-maturity debt securities
Less Than 12 Months, Fair Value	7,727	8,655
Less Than 12 Months, Unrealized Losses	81	68
12 Months Or Longer, Fair Value
12 Months Or Longer, Unrealized Losses
Total Fair Value	7,727	8,655
Total Unrealized Losses	81	68
Corporate and other securities [Member]
Available-for-sale securities
Less Than 12 Months, Fair Value
Less Than 12 Months, Unrealized Losses
12 Months Or Longer, Fair Value	884	889
12 Months Or Longer, Unrealized Losses	38	33
Total Fair Value	884	889
Total Unrealized Losses	$ 38	$ 33

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Fair Value of Financial Instruments (Details 3) (Corporate Preferred Stock [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Corporate Preferred Stock [Member]
Reconciliation of changes in level 3 financial instruments
Balance at the beginning of the period	$ 417	$ 417
Total gains or losses (realized/unrealized)
Included in earnings
Included in other comprehensive income
Purchases, issuances, and settlements
Transfers in and/or out of Level 3
Balance at the end of the period	$ 417	$ 417

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Consolidated Statements Of Comprehensive Income
Net income	$ 1,404	$ 862
Other comprehensive income:
Unrealized gain during the period on available-for-sale securities, net of tax of $495 and $876, respectively	962	1,696
Less: Reclassification adjustment for gain on available-for-sale securities included in net income, net of tax expense of $35 and $2, respectively	(69)	(6)
Other comprehensive income	893	1,690
Comprehensive income	$ 2,297	$ 2,552

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Earnings Per Common Share

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Earnings Per Common Share

Note 2 – Earnings Per Common Share

The following reconciles the numerator and denominator of the basic and diluted earnings per common share computation:

(In thousands except average market price)

	Three months ended
	March 31,
	2015		2014
Numerator (Net income available to common shareholders)	$	1,404	$	862
Denominator
Weighted average common shares outstanding for:
Basic earnings per share		6,522		6,169
Dilutive securities:
Deferred compensation		20		17
Warrants/Restricted stock -Treasury stock method		123		43
Diluted earnings per share		6,665		6,229
The average market price used in calculating assumed number of shares	$	11.42	$	10.86

At March 31, 2015, there were 8,903 outstanding options at an average exercise price of $14.21. None of these options has an exercise price below the average market price of $11.42 for the three-month period ended March 31, 2015, and, therefore they are not deemed to be dilutive. At March 31, 2014, there were 70,903 outstanding options at an average exercise price of $19.48. None of these options had an exercise price below the average market price of $10.86 for the three-month period ended March 31, 2014, and, therefore they were not deemed to be dilutive. In the fourth quarter of 2011, we issued $2.5 million in 8.75% subordinated notes maturing December 16, 2019. On November 15, 2012, the subordinated notes were redeemed in full at par. Warrants for 107,500 shares of common stock at $5.90 per share were issued in connection with the issuance of the subordinated debt. At March 31, 2015 there were 97,180 warrants outstanding. These warrants expire December 16, 2019 and are included in dilutive securities in the table above. The Company has issued a total of 157 thousand restricted shares under the terms of its compensation plans and employment agreements. These shares cliff vest over a three year period. The unrecognized compensation cost at March 31, 2015 for non-vested shares amounts to $694 thousand.

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Investment Securities (Details 4) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Available-for-sale, Amortized Cost
Due in one year or less	$ 6,668,000
Due after one year through five years	126,652,000
Due after five years through ten years	108,647,000
Due after ten years	14,242,000
Total	256,209,000	268,358,000
Available-for-sale, Fair Value
Due in one year or less	6,727,000
Due after one year through five years	127,963,000
Due after five years through ten years	110,567,000
Due after ten years	14,112,000
Total	259,369,000	270,164,000
Held To Maturity Securities, Amortized Cost
Due in one year or less
Due after one year through five years	494,000
Due after five years through ten years	11,715,000
Due after ten years	547,000
Total	12,756,000	10,647,000
Held To Maturity Securities, Fair value
Due in one year or less
Due after one year through five years	497,000
Due after five years through ten years	11,720,000
Due after ten years	530,000
Total	$ 12,747,000	$ 10,585,000

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Loans (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Receivables [Abstract]
Non-accrual loans	$ 5,943,000		$ 6,585,000
Troubled debt restructurings	2,000,000		2,200,000
Troubled debt restructurings in non accrual status	2,300,000		2,600,000
Loans outstanding to bank directors, executive officers and their related business interests	9,500,000	11,100,000
Loans to bank directors, executive officers and their related business interests repaid during the period	961,500	517,300
Loans made to bank directors, executive officers and their related business interests during the period	$ 871,700	$ 977,000

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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Schedule of carrying amount and estimated fair value by classification Level of the Company's financial instruments

The carrying amount and estimated fair value by classification level of the Company’s financial instruments as of March 31, 2015 and December 31, 2014 are as follows:

	March 31, 2015
			Fair Value
(Dollars in thousands)	Carrying Amount		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and short term investments	$	44,211	$	44,211	$	44,211	$	—	$	—
Held-to-maturity securities		12,756		12,747		—		12,747		—
Available-for-sale securities		259,369		259,369		834		258,118		417
Other investments, at cost		1,969		1,969		—		—		1,969
Loans held for sale		5,446		5,446		—		5,446		—
Net loans receivable		450,049		451,219		—		443,329		7,890
Accrued interest		2,485		2,485		2,485		—		—
Financial liabilities:
Non-interest bearing demand	$	140,689	$	140,689	$	—	$	140,689	$	—
NOW and money market accounts		305,851		305,851		—		305,851		—
Savings		56,467		56,467		—		56,467		—
Time deposits		191,566		192,161		—		192,161		—
Total deposits		694,573		695,168		—		695,168		—
Federal Home Loan Bank Advances		27,552		29,373		—		29,373		—
Short term borrowings		16,684		16,684		—		16,684		—
Junior subordinated debentures		15,464		15,464		—		15,464		—
Accrued interest payable		695		695		695		—		—

	December 31, 2014
			Fair Value
(Dollars in thousands)	Carrying Amount		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and short term investments	$	22,532	$	22,532	$	22,532	$	—	$	—
Held-to-maturity securities		10,647		10,585		—		10,585		—
Available-for-sale securities		270,164		270,164		839		268,908		417
Other investments, at cost		2,003		2,003		—		—		2,003
Loans held for sale		4,124		4,124		—		4,124		—
Net loans receivable		439,712		441,944		—		433,446		8,498
Accrued interest		2,712		2,712		2,712		—		—
Financial liabilities:
Non-interest bearing demand	$	133,004	$	133,004	$	—	$	133,004	$	—
NOW and money market accounts		287,982		287,982		—		287,982		—
Savings		53,583		53,583		—		53,583		—
Time deposits		195,014		195,721		—		195,721		—
Total deposits		669,583		670,290		—		670,290		—
Federal Home Loan Bank Advances		28,807		30,745		—		30,745		—
Short term borrowings		17,383		17,383		—		17,383		—
Junior subordinated debentures		15,464		15,464		—		15,464		—
Accrued interest payable		725		725		725		—		—

Schedule of fair value for each category of assets carried at fair value that are measured on a recurring basis

The following tables summarize quantitative disclosures about the fair value for each category of assets carried at fair value as of March 31, 2015 and December 31, 2014 that are measured on a recurring basis. There were no liabilities carried at fair value as of March 31, 2015 or December 31, 2014 that are measured on a recurring basis.

(Dollars in thousands)

Description	March 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities
Government sponsored enterprises	$	3,503	$	—	$	3,503	$	—
Mortgage-backed securities		148,553		—		148,553		—
Small Business Administration securities		59.555		—		59,555		—
State and local government		46,447		—		46,447		—
Corporate and other securities		1,311		834		60		417
Total	$	259,369	$	834	$	258,118	$	417

(Dollars in thousands)

Description	December 31, 2014		Quoted Prices in Active Markets for   Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable   Inputs (Level 3)
Available for sale securities
Government sponsored enterprises	$	3,434	$	—	$	3,434	$	—
Mortgage-backed securities		160,353		—		160,353		—
Small Business Administration securities		58,545		—		58,545		—
State and local government		46,516		—		46,516		—
Corporate and other securities		1,316		839		60		417
Total	$	270,164	$	839	$	268,908	$	417

Schedule reconciling the changes in Level 3 financial instruments measured on a recurring basis

The following table reconciles the changes in Level 3 financial instruments for the three months ended March 31, 2015 and March 31, 2014 that are measured on a recurring basis.

	March 31,
	2015		2014
(Dollars in thousands)	Corporate Preferred Stock		Corporate Preferred Stock
Beginning Balance	$	417	$	417
Total gains or losses (realized/unrealized) Included in earnings		—		—
Included in other comprehensive income		—		—
Purchases, issuances, and settlements		—		—
Transfers in and/or out of Level 3		—		—
Ending Balance	$	417	$	417

Schedule of the fair value for each category of assets carried at fair value that are measured on a non-recurring basis

The following tables summarize quantitative disclosures about the fair value for each category of assets carried at fair value as of March 31, 2015 and December 31, 2014 that are measured on a non-recurring basis.

(Dollars in thousands)
Description	March 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial & Industrial	$	—	$	—	$	—	$	—
Real estate:
Mortgage-residential		1,062		—		—		1,062
Mortgage-commercial		6,737		—		—		6,737
Consumer:
Home equity		91		—		—		91
Other		—		—		—		—
Total impaired		7,890		—		—		7,890
Other real estate owned:
Construction		276		—		—		276
Mortgage-residential		219		—		—		219
Mortgage-commercial		2,253		—		—		2,253
Total other real estate owned		2,748		—		—		2,748
Total	$	10,638	$	—	$	—	$	10,638

(Dollars in thousands)
Description	December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial & Industrial	$	55	$	—	$	—	$	55
Real estate:
Mortgage-residential		1,074		—		—		1,074
Mortgage-commercial		7,277		—		—		7,277
Consumer:
Home equity		92		—		—		92
Other		—		—		—		—
Total impaired		8,498		—		—		8,498
Other real estate owned:
Construction.		424		—		—		424
Mortgage-residential		232		—		—		232
Mortgage-commercial		2,287		—		—		2,287
Total other real estate owned		2,943		—		—		2,943
Total	$	11,441	$	—	$	—	$	11,441

Schedule of significant unobservable inputs used in the fair value measurements

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2015 and December 31, 2014, the significant unobservable inputs used in the fair value measurements were as follows:

(Dollars in thousands)	Fair Value as of March 31, 2015	Valuation Technique	Significant Observable Inputs	Significant Unobservable Inputs
Preferred stock	$417	Estimation based on comparable non-listed securities	Comparable transactions	n/a
OREO	$2,748	Appraisal Value/Comparison Sales/Other estimates	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost
Impaired loans	$7,890	Appraisal Value	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost

(Dollars in thousands)	Fair Value as of December 31, 2014	Valuation Technique	Significant Observable Inputs	Significant Unobservable Inputs
Preferred stock	$417	Estimation based on comparable non-listed securities	Comparable transactions	n/a
OREO	$2,943	Appraisal Value/Comparison Sales/Other estimates	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost
Impaired loans	$8,498	Appraisal Value	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost