Slide 1: Mike Crapps President and CEO, Joe Sawyer EVP and CFO
Mike Crapps President and CEO March 4, 2015 Joe Sawyer EVP and CFO
Slide 2: Outline
2 OUTLINE I. First Community 2 II. 2014 – Transformative Year 7 IV. Risk Management 23 • Initiatives 8 • Results 9 • Commercial and Retail Banking 11 • Residential Mortgage Banking 17 • Financial Planning and Investment Advisory Services 20 III. Line of Business Review 10 V. Results 26 VI. Capital &
Slide 3: First Community
3 FIRST COMMUNITY
Slide 4: First Community: Celebrating Anniversary
4 FIRST COMMUNITY » Celebrating 20 th Anniversary x A lot has changed x Really important fundamentals have remained the same
Slide 5: Retrospective
5 Retrospective Branch Purchases One Total Assets $0 Banking Offices 0 Bank M&A Two 1995 2007 2012 $565 million $603 million 11 11 0 0 FIRST COMMUNITY 2014 $812 million 14 One One
Slide 6: Focus on Mission and Core Values
6 FIRST COMMUNITY Focus on Mission and Core Values x Quality and integrity in all endeavors x Passionate focus on the customer experience x Mutual respect for our colleagues and their role in our success » We remain grounded in our three core values: » Mission -- As the provider of choice of financi
Slide 7: 2014 Transformative Year
7 2014 TRANSFORMATIVE YEAR
Slide 8: Initiatives
8 Initiatives 1Q Completed the SRFC acquisition Launched enhanced website Launched mobile banking application Sold non - licensed portion of financial planning unit 2Q Prosperity Grand Opening Completed renovation of Lady Street office building Opened Lady Street Columbia banking office Moved Financ
Slide 9: Results
9 Results 2014 – TRANSFORMATIVE YEAR 2013 2014 Increase Total Assets $633 million $812 million $179 million 28.3% Loans $348 $444 $ 96 27.6% Deposits $497 $670 $173 34.8% Shareholder Equity $ 53 $ 75 $ 22 41.5%
Slide 10: 10 LINE OF BUSINESS REVIEW
10 LINE OF BUSINESS REVIEW
Slide 11: Line of Business Review: Commercial and Retail Banking
11 LINE OF BUSINESS REVIEW » Commercial and Retail Banking » Residential Mortgage Banking » Financial Planning and Investment Advisory Services
Slide 12: Commercial and Retail Banking Deposit Growth & Cost
12 LINE OF BUSINESS REVIEW Commercial and Retail Banking Deposit Growth & Cost $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 12/31/2011 12/31/2012 12/31/2013 12/31/2014 $286.8 $319.5 $363.2 $504.5 Certificates of Deposit (CDs) Customer Cash Management Pure (Non-CD) Deposit Total Total Deposi
Slide 13: Deposit Market Share
13 LINE OF BUSINESS REVIEW Deposit Market Share $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 30.42% 24.91% Midlands Deposit Market Share 13.54% 9.31% 5.10% 3.78% 3.29% 2.26% 1.55% 0.90% CSRA Deposit Market Share 0 200,000 400,000 600,
Slide 14: Loan Portfolio Composition
14 Const & Dev 6% 1 - 4 Family Residential 23% Home Equity 7% Owner - OCC CRE 19% Other CRE 33% Multi - Family 2% Commercial & Industrial 8% Consr & Other 2% LINE OF BUSINESS REVIEW Commercial and Retail Banking Composition 12/31/2014 Yield 5.80% 5.54% 5.11% 4.99% Loan Portfolio $324.3 $332.1 $347.6
Slide 15: Investment Portfolio
15 Agency Bonds 1% SBA Loan Pools (Fixed Rate) 8% SBA Loan Pools (Variable Rate) 13% Agency CMOs (Fixed Rate) 23% Agency MBS (Fixed Rate) 29% Agency MBS (Variable Rate) 5% Municipal 1 20% Corporate/Other 1% LINE OF BUSINESS REVIEW Yield 3.08% 2.22% 1.85% 2.06% Composition 12/31/2014 Commercial and R
Slide 16: Commercial and Retail Banking Strategy
16 LINE OF BUSINESS REVIEW Commercial and Retail Banking Strategy » Focus on re - mix of the asset side of the balance sheet » Leverage our low cost deposit base and excess liquidity to more aggressively price loan opportunities » 2015 Marketing Plan has a more singular focus » Recruiting a high lev
Slide 17: Line of Business Review: Residential Mortgage Banking
17 LINE OF BUSINESS REVIEW » Commercial and Retail Banking » Residential Mortgage Banking » Financial Planning and Investment Advisory Services
Slide 18: Residential Mortgage Banking
18 Residential Mortgage Banking LINE OF BUSINESS REVIEW MORTGAGE 2012 2013 2014 Production (millions) $140.1 $119.5 $90.8 Purchase $44.8 $63.3 $67.0 Refinance $95.3 $56.2 $23.7 % Purchase 32.0% 51.6% 73.9% Revenue (000s omitted) $4,242 $3,769 $3,186 % Yield - Fees 3.03% 3.15% 3.51% Pre-Tax Profit Ma
Slide 19: Residential Mortgage Banking Strategy
19 LINE OF BUSINESS REVIEW Strategy » Culture » Simplification of the administrative and accounting processes » Recruit high level mortgage bankers » Eye on longer term target of $200 million in production Residential Mortgage Banking x Customer Centric x Risk Management / Compliance x Optimal Effic
Slide 20: Line of Business Review: Financial Planning
20 LINE OF BUSINESS REVIEW » Commercial and Retail Banking » Residential Mortgage Banking » Financial Planning and Investment Advisory Services
Slide 21: Financial Planning / Investment Advisory Services
21 Financial Planning / Investment Advisory Services LINE OF BUSINESS REVIEW FINANCIAL PLANNING / INVESTMENT ADVISORY 2012 2013 2014 AUM (millions) $107.7 $147.1 $142.6 1 Revenue (000s omitted) $650.6 $972.0 $1,268.0 1 On March 31, 2014, sold non-licensed channel (AUM of $20.0 million).
Slide 22: Financial Planning / Investment Advisory Strategy
22 LINE OF BUSINESS REVIEW Strategy » Integrated solutions to preserve and build wealth » Recruit financial advisor(s) in CSRA » Build AUM and Recurring Revenue » Eye on longer term target of $300 million in AUM x Financial Planning x Estate Planning x Retirement Planning x Investment Management x 4
Slide 23: Risk Management
23 RISK MANAGEMENT
Slide 24: Credit Quality
24 RISK MANAGEMENT Credit Quality Credit Quality 12/31/2011 12/31/2012 12/31/2013 12/31/2014 NPAs 2.15% 1.46% 1.39% 1.18% Charge-Offs 0.49% 0.17% 0.27% 0.28% Classified Loan Ratio 42.43% 32.68% 20.30% 20.28% Credit Costs 1 $2.6 MM $1.5 MM $1.3 MM $1.5 MM 1 Includes provision expense, OREO expenses a
Slide 25: Compliance / BSA
25 Compliance / BSA » Compliance / BSA » Recruited Ann Robertson as Chief Compliance Officer » Compliance and BSA Staff Cross - Training » Developing an Enterprise Risk Model » Investing in additional cyber security fraud protection x BSA Consent Order RISK MANAGEMENT • Background • Status
Slide 26: Results
26 RESULTS
Slide 27: Net Income and Earnings Per Share (annual)
27 RESULTS *Core net income and EPS exclude merger and acquisition cost, gains (losses) on sale of securities and losses on early extinguishment o f d ebt. Net Income and Earnings Per Share (EPS)* $2,402 $3,416 $4,316 $5,591 0.73 0.82 0.81 0.85 0.10 0.30 0.50 0.70 0.90 1.10 1.30 1.50 $0 $500 $1,000
Slide 28: Net Income and Earnings Per Share (quarterly)
28 *Core net income and EPS exclude merger and acquisition cost, gains (losses) on sale of securities and losses on early extinguishment o f d ebt. RESULTS Net Income and Earnings Per Share (EPS)* $1,208 $1,074 $1,075 $1,166 $1,206 $1,567 $1,652 0.23 0.20 0.20 0.19 0.18 0.23 0.25 0.00 0.20 0.40 0.60
Slide 29: Key Ratios
29 Key Ratios RESULTS 2011 2012 2013 2014 ROA 0.44% 0.55% 0.66% 0.73% ROE 7.98% 7.40% 7.68% 8.13% ROTCE 8.16% 7.55% 7.78% 8.88% NIM (Tax Equivalent) 3.33% 3.22% 3.18% 3.40% Efficiency 75.55% 74.82% 76.69% 74.61% Non-Int. Income to Operating Revenue 25.55% 31.16% 31.22% 26.98%
Slide 30: Capital & Shareholder Return
30 CAPITAL & SHAREHOLDER RETURN
Slide 31: Capital
31 CAPITAL & SHAREHOLDER RETURN Capital 12/31/2011 12/31/2012 12/31/2013 12/31/2014 Leverage Ratio 9.40% 10.63% 10.77% 10.02% Tier 1 Capital Ratio 15.33% 17.39% 17.60% 16.09% Total Capital Ratio 17.25% 18.64% 18.68% 16.91% Tangible Common Equity/ Tangible Assets 6.07% 8.88% 8.23% 8.48% Tangible Book
Slide 32: Dividend
32 Dividend *52 Consecutive Quarters of Dividends Paid *Increased dividend to $0.07 for 1Q15 CAPITAL & SHAREHOLDER RETURN 12/31/2011 12/31/2012 12/31/2013 12/31/2014 Core EPS $0.73 $0.82 $0.81 $0.85 Annual Dividend $0.16 $0.16 $0.22 $0.24 Dividend Yield at End of Period 2.58% 1.91% 2.12% 2.12% Divid
Slide 33: Shareholder Return
33 Shareholder Return » FCCO 11.06% 92.74% » NASDAQ Bank Index 4.93% 52.84% » KBW Regional Bank Index 2.42% 77.35% 2014 Total Return 12/31/2014 3 - YearTotal Return CAPITAL & SHAREHOLDER RETURN
Slide 34: Summary
34 SUMMARY
Slide 35: Summary
35 SUMMARY » High quality balance sheet » Well positioned for future growth in all three lines of business: x Commercial and Retail Banking » Price / TBV: 1.15x » Cash dividend provides attractive yield at 2.38% x Residential Mortgage Banking ▪ Focus on re - mix of earning assets, i.e., growth in lo
Slide 36: Forward-Looking Statements Safe Harbor Statement
36 FORWARD - LOOKING STATEMENTS SAFE HARBOR STATEMENT – INCLUDING ALL DOCUMENTS INCORPORATED HEREIN BY REFERENCE, CONTAINS FORWARD - LOOKING STATEMENTS . ADDITIONAL WRITTEN OR ORAL FORWARD - LOOKING STATEMENTS MAY BE MADE BY THE COMPANY FROM TIME TO TIME IN FILINGS WITH THE SECURITIES & EXCHANGE COM