First Community Corporation · NASDAQ:FCCO
First Community — Investor Presentation (May 2024)
50 slides from First Community's investor presentation, May 15, 2024
Slide 1: The Bank Behind Your Business
The Bank Behind Your Business May 15, 2024
Slide 2: Outline
OUTLINE 2 I. Overview 3 II. 1Q24 Highlights / Topics of Interest 9 » Earning Assets 10 » Funding 15 » Net Interest Margin (NIM) 20 » Risk Management 25 » Capital 30 » Non - Interest Income Highlights 34 » Revenue 39 » Non - Interest Expense 42 » Net Income 45 Impacting Lives for Success and Signific
Slide 3: Overview
OVERVIEW Impacting Lives for Success and Significance
Slide 4: Our Purpose and Cause
OUR PURPOSE AND CAUSE Everything we do has an impact. Providing the best products and services possible is what we do; however, that’s not why we do it. We know that everything we do has an impact, and we believe it’s our responsibility to make sure it’s a positive one. for success and Employees A s
Slide 5: Our Identity
OUR IDENTITY ) Purpose Mission fina and ot in our ur safe, sound investment. Goals & Tactics Cultural Beliefs ty and Integrity | Everyone Matters | Spirit of Service Strong Work Ethic | Excellence with Humility
Slide 6: Overview Highlights
» Began in 1995 » Focused on Organic Growth, Augmented with Opportunistic Acquisitions ▪ 2004 – Newberry Federal ▪ 2006 – Bank of Camden ▪ 2008 – EAH Financial Planning Practice ▪ 2011 – Palmetto South Mortgage Corp. ▪ 2014 – Savannah River Financial Corp. ▪ 2017 – Cornerstone National Bank » Execut
Slide 7: Geographically Diverse and Growing Markets
» Columbia (Midlands of SC) ▪ State Capitol ▪ University of SC ▪ Fort Jackson ▪ Quality Public Schools ▪ Lake Murray ▪ Riverbanks Zoo » Greenville (Upstate of SC) ▪ Great Pure Business Market ▪ Attractive to Millennials » Augusta (CSRA) ▪ Cybersecurity x Fort Gordon x Private Sector ▪ Augusta Univer
Slide 8: Three Lines of Business
Three Lines of Business OVERVIEW 8
Slide 9: 1Q24 Highlights / Topics of Interest
1Q24 HIGHLIGHTS / TOPICS OF INTEREST Impacting Lives for Success and Significance
Slide 10: Earning Assets
EARNING ASSETS Impacting Lives for Success and Significance
Slide 11: Loan Portfolio
Loan Portfolio LTM Growth = 16.6% 2 1 Includes PPP and related LOC to SBA partner. 2 Excludes PPP and related LOC to SBA partner. CRE as a % of RBC = 316.0% (4 th Quarter for 2020 - 2023 and 1 st Quarter for 2024) $980.9 $1,134.0 $844.2 Yield 4.36% 4.29% 4.43% 5.32% 5.44% 11 EARNING ASSETS $1,157.3
Slide 12: Loan Portfolio Growth
» 1Q24 $23.3 million 8.3% annualized growth rate » 2023 $153.2 million 15.6% annualized growth rate Notes: » Percent of Growth : 2023 1Q24 ▪ CRE 66% 56% ▪ Residential Mortgage 27% 55% ▪ Other 7% (11%) » Interest Rate Sensitivity (3/31/24) : ▪ Principal cash flows, including prepayment estimates • 04
Slide 13: Investment Portfolio
Investment Portfolio Yield 1.98% 1.56% 2.78% 3.59% 3.66% AOCI/(AOCL) 1 $11.3 $3.3 ($32.4) ($28.2) ($27.4) (4 th Quarter for 2020 - 2023, and 1 st Quarter for 2024) Average Life: 6.1 years Effective Duration: 3.9 Composition 3/31/24 $361.9 $564.8 $506.2 EARNING ASSETS Millions $495.1 13 $566.6 1 AOCI
Slide 14: Investment Portfolio Notes
Notes: 2023 Activity : » Sold $39.9 million of book value US Treasuries (3Q23) » Weighted average book yield of securities sold was 1.75% » Pre - tax loss of $1.2 million » Proceeds used to reduce FHLB borrowings and build liquidity to fund future loan growth » Projected earn back period of 1.6 year
Slide 15: Funding
FUNDING Impacting Lives for Success and Significance
Slide 16: High Quality Deposit Franchise
Total Deposit Cost 0.20% 0.11% 0.25% 1.69% 1 1.90% 1 Non - Interest Bearing 32% 33% 33% 29% 28% Millions $1,230.3 $1,415.5 $1,454.1 $1,573.9 (4 th Quarter for 2020 - 2023 & 1 st Quarter for 2024) 16 High Quality Deposit Franchise $1,659.9 FUNDING 12/31/2020 12/31/2021 12/31/2022 12/31/2023 03/31/2 0
Slide 17: High Quality Deposit Franchise Notes
1Q24 Notes: » 35.6% Cumulative Cycle Beta – Cost of Deposits » 39.2% Cumulative Cycle Beta – Cost of Funds » Uninsured deposits of $470.0 million (29.8% of total), of which $94.4 million (6.0% of total) are public funds that are secured or collateralized ▪ Average balance of customer deposits accoun
Slide 18: Sources and Uses of Funds 2023
18 2023 » Sources of funds Investment Securities $ 58.6 million Customer Deposits & Cash Management 71.6 million Brokered CDs 48.1 million FHLB Borrowings and Federal Funds Purchased 1 8.0 million Capital 12.7 million Other 4.1 million Total $213.1 million » Uses of funds Cash/ Overnight Investments
Slide 19: Sources and Uses of Funds 1Q24
19 1Q24 » Sources of funds Investment Securities $ 11.1 million Customer Deposit & Cash Investment 73.6 million Brokered CDs 12.4 million Capital 2.4 million Total $99.5 million » Uses of funds Cash/ Overnight Investments $ 48.9 million Loans (includes held held - for - sale) 20.6 million FHLB Borro
Slide 20: Net Interest Margin
NET INTEREST MARGIN Impacting Lives for Success and Significance
Slide 21: Net Interest Margin: Loan Portfolio Yield
6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 46% 2022 NET INTEREST MARGIN (NIM) Loan Portfolio Yield soz 4022 1023 sum 532% 50% 2023 3023 4023 1024 8.30% 7.80% 7.30% 6.80% 6.30% 5.80% 5.30% 4.80% 430% 3.80% New/Renewed Loans Weighted Average Rate 7.81% 4.0896 2022 3022 4022 1023 2023 3023 4023 1024 2a
Slide 22: Net Interest Margin: Securities Portfolio Yield
400% 350% 3.00% 250% 200% 4.50% 4.00% 050% NET INTEREST MARGIN (NIM) Securities Portfolio Yield 250 me _ 3.66% 202 3023 4a23 1024 5.30% 4.80% 4.30% 3.80% 3.30% 2.80% Average Earnings Assets (AEA) Yield 4.82% _ 4.90% 4.56% 3.83 3.40%, 3.02% 2022 3022 4022 1023 2023 3023 4023 1024 2
Slide 23: Net Interest Margin: Cost of Deposits and Funds
2.00% 1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 0.09% 2022 NET INTEREST MARGIN (NIM) Cost of Deposits 3022 4022 1023 2023 3.50% 3.40% 3.30% 3.20% 3.10% 3.00% 2.90% 2.80% 270% 3023 4023 1024 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% os 202 Net Interest Margin FTE 32% 3022 Cost of Funds 4a
Slide 24: Net Interest Margin Notes
24 Notes: » Evidence of NIM Flattening NIM (non - FTE basis) • December 2023 2.81% • January 2024 2.79% • February 2024 2.77% • March 2024 2.79 % » $17.7 Million Brokered CD • All - in cost of 5.70% • Called on April 25, 2024 » Effective May 5, 2023, entered into a pay - fixed /receive floating inte
Slide 25: Risk Management
RISK MANAGEMENT Impacting Lives for Success and Significance
Slide 26: Credit Quality
26 Credit Quality RISK MANAGEMENT 2020 2021 2022 2023 1Q24 NPA / Assets Net Charge - Offs
Slide 27: Credit Quality: Allowance and Provision
27 Allowance for Credit Losses on Loans to Loans Provision for (Release of) Credit Losses (000s omitted) Credit Quality RISK MANAGEMENT
Slide 28: Credit Quality Notes
1Q24 Notes: » Key Loan Portfolio Sectors 28 • Only four loans secured by office buildings in excess of 50,000 square feet of rentable space. These four represent $10.4 million in loans outstanding and have a 33% weighted average loan - to - value. Credit Quality RISK MANAGEMENT
Slide 29: Risk Management
RISK MANAGEMENT Cybersecurity Program Formal ERM Program including Fraud Prevention Program Scorecard, External PT Score and Board Risk Appeti Enterprise Risk Management Framework is key to balance of Risk and Reward.... Audit poam BSA Program Compliance Program 29
Slide 30: Capital
CAPITAL Impacting Lives for Success and Significance
Slide 31: Leverage Ratio and Total Capital Ratio
31 Leverage Ratio (Bank) Total Capital Ratio (Bank) CAPITAL *On 5/14/24, announced a plan to utilize up to $7.1 million of capital to repurchase shares of FCCO’s common stock (5.3% of total shareholders’ equity as of 3/31/24).
Slide 32: Tangible Common Equity and Tangible Book Value
32 Tangible Common Equity Tangible Book Value CAPITAL
Slide 33: Capital: Dividend
CAPITAL Dividend 2019 2020 2021 2022 2023 1Q24 33
Slide 34: Non-Interest Income Highlights
NON - INTEREST INCOME HIGHLIGHTS Impacting Lives for Success and Significance
Slide 35: Financial Planning / Investment Advisory AUM
Financial Planning / Investment Advisory Services AUM (millions) 35 NON - INTEREST INCOME HIGHLIGHTS
Slide 36: Financial Planning Revenue and Pre-Tax Income
Financial Planning / Investment Advisory Services Revenue and Pre - Tax Income (thousands) 36 Pre - tax Profit Margin 29.7% 30.5% 33.9% 31.0% 31.9% NON - INTEREST INCOME HIGHLIGHTS
Slide 37: Residential Mortgage Banking Production
37 Residential Mortgage Banking Production (millions) NON - INTEREST INCOME HIGHLIGHTS $36.6 $107.2 $135.7
Slide 38: Residential Mortgage Banking Revenue and Pre-Tax Income
Pre - tax Profit Margin 31.6% 11.9% 3.6% 34.3% 56.4% Residential Mortgage Banking Revenue and Pre - Tax Income (000’s omitted) 38 $7,294.7 $ 5,327.8 $1,874.1 1 $3,763.8 1 $5,201.3 1 Note: Pre - tax net income does not include fund transfer pricing or ACL allocations. 1 Includes mortgage late charges
Slide 39: Revenue
REVENUE Impacting Lives for Success and Significance
Slide 40: Total Revenue: Strength in Diversity of Revenue
40 (Millions) $53.1 $56.2 $60.6 $59.5 Total Revenue 1, 2 Strength in Diversity of Revenue REVENUE 1 Adjusted for PPP deferred fees. 2 Adjusted for Securities Gains/Losses. 2 1
Slide 41: Total Non-Interest Revenue
41 (Thousands) $14,932 $15,188 $15,261 $15,226 Total Revenue 1 Strength in Diversity of Revenue 1 Adjusted for Securities Gains/Losses. 1 $15,216 REVENUE
Slide 42: Non-Interest Expense
NON - INTEREST EXPENSE Impacting Lives for Success and Significance
Slide 43: Non-Interest Expense (Annual)
NON - INTEREST EXPENSE 43 Non - interest Expense (Millions) $37.5 $39.2 $43.1 Notes: 2022 Opened new office – Rock Hill. $41.3
Slide 44: Non-Interest Expense (Quarterly)
NON - INTEREST EXPENSE 44 Non - interest Expense (Millions) $10.4 $10.8 $11.8 1 Incentive accruals at target payout level versus 4Q23, which had reduced accrual to match lower anticipated payout level. 2 Marketing higher on a linked quarter basis due to greater media placements. NOTE: Announced clos
Slide 45: Net Income
NET INCOME Impacting Lives for Success and Significance
Slide 46: Core Net Income, Core EPS and Pre-Tax Pre-Provision Earnings
1 Core net income and EPS exclude gains (losses) on sale of securities and bank premises, write - downs on bank premises held - for - sa le, non - recurring BOLI income, gains on insurance proceeds, and collection of summary judgements on two loans charged off at an FCCO acquired bank. S ee non - GA
Slide 47: Forward-Looking Statements
FORWARD - LOOKING STATEMENTS 47 SAFE HARBOR STATEMENT – In this presentation, unless the context suggests otherwise, references to the “Company” or “FCCO” refer to First Community Corporation and references to “we,” “us,” and “our” mean the combined business of the Company, First Community Bank (or
Slide 48: Non-GAAP Financial Measures
NON - GAAP FINANCIAL MEASURES The Bank Behind Your Business 48 NON - GAAP FINANCIAL MEASURES – This presentation contains certain non - GAAP financial measures that are not in accordance with US generally accepted accounting principles (GAAP) . We use certain non - GAAP financial measures to provide
Slide 49: Non-GAAP Reconciliation
NON - GAAP RECONCILIATION 49 The tables below provide a reconciliation of non - GAAP measures to GAAP for each of the periods indicated: 1 1
Slide 50: Non-GAAP Reconciliation
NON - GAAP RECONCILIATION 50 1 Excludes gains (losses) on sale of securities and bank premises, write - downs on bank premises held - for - sale, non - recurring BOLI income, gains on insuranc e proceeds, and collection of summary judgements on two loans charged off at an FCCO acquired bank. The tab