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MERGERS AND ACQUISITIONS | 12 Months Ended
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Dec. 31, 2020
Business Combinations [Abstract] |
MERGERS AND ACQUISITIONS | Note 3—MERGERS AND ACQUISITIONS On October 20, 2017, the Company acquired all of the outstanding common stock of Cornerstone Bancorp headquartered in Easley, South Carolina (“Cornerstone”) the bank holding company for Cornerstone National Bank (“CNB”), in a cash and stock transaction. The total purchase price was approximately $27.1 million, consisting of $7.8 million in cash and 877,364 shares of the Company’s common stock valued at $19.3 million based on a provision in the merger agreement that 30% of the outstanding shares of Cornerstone common stock be exchanged for cash and 70% of the outstanding shares of Cornerstone 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 October 19, 2017 as reported by NASDAQ, which was $22.05. Cornerstone common shareholders received 0.54 shares of the Company’s common stock in exchange for each share of Cornerstone common stock, or $11.00 per share, subject to the limitations discussed above. The Company issued 877,364 shares of its common stock in connection with the merger. The Cornerstone 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 based on a third party valuation of significant accounts. Fair values are subject to refinement for up to a year. The following table presents the assets acquired and liabilities assumed as of October 20, 2017 as recorded by the Company on the acquisition date and initial fair value adjustments.
(Dollars in thousands, except per share data) |  | As Recorded by Cornerstone |  |  | Fair Value Adjustments |  |  | As Recorded by the Company |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 30,060 |  |  | $ | — |  |  | $ | 30,060 |
Investment securities |  |  | 44,018 |  |  |  | (358 | )(a) |  |  | 43,660 |
Loans |  |  | 60,835 |  |  |  | (734 | )(b) |  |  | 60,101 |
Premises and equipment |  |  | 4,164 |  |  |  | 573 | (c) |  |  | 4,737 |
Intangible assets |  |  | — |  |  |  | 1,810 | (d) |  |  | 1,810 |
Bank owned life insurance |  |  | 2,384 |  |  |  | — |  |  |  | 2,384 |
Other assets |  |  | 3,082 |  |  |  | (452 | )(e) |  |  | 2,630 |
Total assets |  | $ | 144,543 |  |  | $ | 839 |  |  | $ | 145,382 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |  |
Non-interest bearing |  | $ | 27,296 |  |  | $ | — |  |  | $ | 27,296 |
Interest-bearing |  |  | 99,152 |  |  |  | 150 | (f) |  |  | 99,302 |
Total deposits |  |  | 126,448 |  |  |  | 150 |  |  |  | 126,598 |
Securities sold under agreements to repurchase |  |  | 849 |  |  |  | — |  |  |  | 849 |
Other liabilities |  |  | 320 |  |  |  | 96 | (g) |  |  | 416 |
Total liabilities |  |  | 127,617 |  |  |  | 246 |  |  |  | 127,863 |
Net identifiable assets acquired over liabilities assumed |  |  | 16,926 |  |  |  | 593 |  |  |  | 17,519 |
Goodwill |  |  | — |  |  |  | 9,558 |  |  |  | 9,558 |
Net assets acquired over liabilities assumed |  | $ | 16,926 |  |  | $ | 10,151 |  |  | $ | 27,077 |
Consideration: |  |  |  |  |  |  |  |  |  |  |  |
First Community Corporation common shares issued |  |  | 877,364 |  |  |  |  |  |  |  |  |
Purchase price per share of the Company’s common stock |  | $ | 22.05 |  |  |  |  |  |  |  |  |
|  | $ | 19,346 |  |  |  |  |  |  |  |  |
Cash exchanged for stock and fractional shares |  |  | 7,731 |  |  |  |  |  |  |  |  |
Fair value of total consideration transferred |  | $ | 27,077 |  |  |  |  |  |  |  |  |
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 Cornerstone.
(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 post-retirement benefits.
The operating results of the Company for the period ended December 31, 2017 include the operating results of the acquired assets and assumed liabilities for the 72 days subsequent to the acquisition date of October 20, 2017. Merger-related charges related to the Cornerstone acquisition of $945 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 Cornerstone (excluding the impact of merger-related expenses) since the acquisition on October 20, 2017 through December 31, 2017. The table also presents certain pro forma information as if Cornerstone had been acquired on January 1, 2017 and January 1, 2016. These results combine the historical results of Cornerstone 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, 2017 or January 1, 2016.
(Dollars in thousands) |  | Pro Forma Twelve Months Ended December 31, 2017 |  |  | Pro Forma Twelve Months Ended December 31, 2016 |
Total revenues (net interest income plus noninterest income) |  | $ | 43,602 |  |  | $ | 41,300 |
Net income |  | $ | 6,791 |  |  | $ | 7,750 |

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