First Community Corp., one of South Carolina’s stronger performing community bank companies, posted a $25.2 million loss for 2009.
While that was up sharply from a $6.8 million deficit the previous year, the poor showing in 2009 is attributable to a non-cash goodwill impairment charge of $27.8 million, according to information filed with the US Securities and Exchange Commission.
The loss “represents the complete write-off of our goodwill intangible,” Lexington-based First Community reported.
Goodwill arises from business acquisitions and represents the value attributable to unidentifiable intangible elements in the business acquired. First Community chose to write down its goodwill after evaluating its value in the ongoing economic downturn, the company reported.
“Industry-wide, market capitalization and acquisition multiples have significantly declined since 2004 and 2006, which are the dates of the acquisition of Dutchfork Bankshares and DeKalb Bancshares, respectively,” it reported. “Our company has experienced the same trend, with a decline in its market price per share and an extended period of time trading at a discount to book value and tangible book value. This non-cash charge is the accounting recognition of these events.”
The expense has no adverse impact upon First Community’s regulatory capital, liquidity position, operating performance or its prospects for future earnings.
Stock in First Community closed Monday at $6.20 a share.