First Community Corporation · NASDAQ:FCCO
First Community — Investor Presentation (August 2020)
50 slides from First Community's investor presentation, Aug 24, 2020
Slide 1: The Bank Behind Your Business
The Bank Behind Your Business
Slide 2: 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 its our responsibilty to make sure it’s a positive one, Employees Impacting lives for
Slide 3: Our Identity
OUR IDENTITY ) Purpose & Cause Impacting li latters | Spirit of Service ith Humility
Slide 4: Highlights
HIGHLIGHTS
Slide 5: Highlights: Background
» Began in 1995 – Celebrating 25 th Anniversary x Lexington x Columbia » Six (6) Acquisitions x 2004 – Newberry Federal x 2006 – Bank of Camden x 2008 – EAH Financial Planning Practice x 2011 – Palmetto South Mortgage Corp. x 2014 – Savannah River Financial Corp. x 2017 – Cornerstone National Bank »
Slide 6: Three Geographically Diverse Markets
» Columbia (Midlands of SC) ▪ State Capitol ▪ University of SC ▪ Fort Jackson ▪ Quality Public Schools ▪ Lake Murray » Greenville (Upstate of SC) ▪ Great Pure Business Market ▪ Attractive to Millennials » Augusta (CSRA) ▪ Cybersecurity x Fort Gordon x Private Sector ▪ Augusta University ▪ Excellent
Slide 7: Commercial & Retail Banking, Mortgage, Financial Planning
Commercial & Retail Banking 2 First Online Banking ACH / Wire Transfer Service Community Remote Deposit Capture Bank Positive Pay, Loans & Lines of Credit. Construction / Permanent ‘Commercial Real Estate Equipment Financing Va Financial Planning & Investment Advisory Services Residential Mortgage B
Slide 8: Foundational Franchise Value
FOUNDATIONAL FRANCHISE VALUE
Slide 9: Great Deposits, Excellent Asset Quality, Strong Capital
FOUNDATIONAL FRANCHISE VALUE Great Deposits Excellent Asset Quality Strong Capital 9
Slide 10: Excellent Deposit Franchise
Total Deposit Cost 0.22% 0.39% 0.47% 0.28% (Quarterly Average) Pure Deposit Growth Commercial and Retail Banking FOUNDATIONAL FRANCHISE VALUE Millions 10 12/31/2017 12/31/2018 12/31/2019 06/30/2020 $907.6 $953.5 $1,021.5 $1,164.5 Excellent Deposit Franchise • 88% Pure (Non - CD) Deposits • 33% (Non
Slide 11: Credit Quality: NPA / Assets and Net Charge-Offs
Credit Quality FOUNDATIONAL FRANCHISE VALUE 11 NPA / Assets Net Loan Charge - Offs
Slide 12: Credit Quality: Loan Deferrals
12 Credit Quality FOUNDATIONAL FRANCHISE VALUE Loan Deferrals Millions 1 2 1 27.2% of Total Loans (excluding PPP). 2 4.4% of Total Loans (excluding PPP).
Slide 13: Industry Segments Most Impacted by Pandemic
Credit Quality FOUNDATIONAL FRANCHISE VALUE Industry Segments Most Impacted by Pandemic 13 06/30/20
Slide 14: Allowance for Loan Losses to Loans
14 Allowance for Loan Losses to Loans FOUNDATIONAL FRANCHISE VALUE Credit Quality
Slide 15: Capital
FOUNDATIONAL FRANCHISE VALUE Capital 15 Note: Share repurchase authorization of 200,000 shares announced September 18, 2019, which provides flexibility for capital management in the future.
Slide 16: Enhance Earnings
ENHANCE EARNINGS
Slide 17: Quality Loan Portfolio Growth to Remix Balance Sheet
ENHANCE EARNINGS Quality Loan Portfolio Growth to Remix Asset Side of Balance Sheet Residential Mortgage Banking Financial Planning and Investment Advisory Services 17
Slide 18: Loan / Earning Asset Ratio
Loan 1 / Earning Asset Ratio ENHANCE EARNINGS Average Loans to Average Earning Assets 18 12/31/2017 12/31/2018 12/31/2019 06/30/2020 1 Excludes loans held - for - sale.
Slide 19: NIM Overview
NIM Overview 19 ENHANCE EARNINGS
Slide 20: Loan Growth and Composition
LTM Growth = 4.5% 1 Excludes PPP and related LOC to SBA partner. 2 Includes $47.9 million in PPP loans originated by FCCO and a $10 million line of credit to an SBA partner, who funded PPP loa ns on behalf of FCCO customers. CRE as a % of RBC = 264.2% Yield 4.53% 4.90% 4.75% 4.46% (Quarterly Average
Slide 21: Investment Portfolio
Investment Portfolio ENHANCE EARNINGS Yield 2.20% 2.53% 2.49% 2.20% (Quarterly Average) Composition 06/30/20 Effective Duration = 3.52 (millions) 21
Slide 22: Financial Planning / Investment Advisory Services AUM
Financial Planning / Investment Advisory Services AUM (millions) ENHANCE EARNINGS *S&P 500 – Total Return – 21.8% 22
Slide 23: Financial Planning / Investment Advisory Services Revenue
Financial Planning / Investment Advisory Services Revenue (thousands) ENHANCE EARNINGS 1 This compares to $927 during 1H19. 23
Slide 24: Residential Mortgage Banking Production
Residential Mortgage Banking Production (millions) ENHANCE EARNINGS 1 This compares to $62.73 during 1H19. 24
Slide 25: Residential Mortgage Banking Revenue
Residential Mortgage Banking Revenue (millions) ENHANCE EARNINGS 1 This compares to $2.1 during 1H19. 25
Slide 26: Efficiency Ratio
Efficiency Ratio 1 ENHANCE EARNINGS 26 1 Calculated by dividing non - interest expense less merger expenses by net interest income on a tax equivalent basis and non - interest income, excluding gains (losses) on sales of securities and other assets, write - downs on premises held - for - sale, and l
Slide 27: Risk Management & Technology
RISK MANAGEMENT & TECHNOLOGY
Slide 28: Risk Management: Compliance, Cybersecurity, Audit, ERM
RISK MANAGEMENT & TECHNOLOGY Compliance Cybersecurity / Fraud Audit Enterprise Risk Management (ERM) - Internal P.T. Risk Report - External Risk Management 28
Slide 29: Technology and Customer Experience
RISK MANAGEMENT & TECHNOLOGY » Customer Experience ▪ Significant Focus on Digital Customer Experience ▪ Products and Features like Zelle and Debit Card “Automated Lock” keep FCB current ▪ Current Core Provider permits FCB to track along and, in some cases, “outpace” local competitor banks » Improved
Slide 30: Financial Results
FINANCIAL RESULTS
Slide 31: Core Net Income, Core EPS, Pre-Tax Pre-Provision Earnings
Core Net Income 1 / Core EPS 1 / Pre - Tax Pre - Provision Earnings 1 Core net income and EPS exclude merger and acquisition costs, gains (losses) on sale of securities and other assets, write - downs on premises held - for - sale, losses on early extinguishment of debt, SC State income tax credit,
Slide 32: ROA
ROA FINANCIAL RESULTS 1 Includes an increase in deferred tax expense of $1.2 million as a result of the lower tax rates enacted by the Tax Cut and Jo bs Act passed December 22, 2017. Without this one - time adjustment, the ROA would have been 0.75%. 1 32
Slide 33: ROTCE
ROTCE 1 FINANCIAL RESULTS 1 See Non - GAAP reconciliation on page 50. 2 Includes an increase in deferred tax expense of $1.2 million as a result of the lower tax rates enacted by the Tax Cut and Jo bs Act passed December 22, 2017. Without this one - time adjustment, the ROTCE would have been 8.76%.
Slide 34: Dividend
Increased to $0.12 per quarter in January 2020 Dividend FINANCIAL RESULTS 34
Slide 35: Tangible Book Value
Tangible Book Value 1 FINANCIAL RESULTS 1 See Non - GAAP reconciliation on page 50. 35
Slide 36: Investment in the Franchise
INVESTMENT IN THE FRANCHISE
Slide 37: October 2017 Cornerstone National Bank Merger
INVESTMENT IN THE FRANCHISE October 2017 Cornerstone National Bank Merger 37
Slide 38: March 2018 Downtown Augusta Office
March 2018 Downtown Augusta Office INVESTMENT IN THE FRANCHISE 38
Slide 39: February 2019 Downtown Greenville Office
February 2019 Downtown Greenville Office INVESTMENT IN THE FRANCHISE 39
Slide 40: June 2019 Evans GA Office
INVESTMENT IN THE FRANCHISE June 2019 Evans GA Office 40
Slide 41: Investment in the Franchise
INVESTMENT IN THE FRANCHISE 41
Slide 42: Investment in the Franchise
INVESTMENT IN THE FRANCHISE 42
Slide 43: What's Ahead
WHAT’S AHEAD
Slide 44: What's Ahead: Short-Term
WHAT’S AHEAD Short - Term » Prepare for Potential Credit Event » PPP Loan Forgiveness » Pandemic Related Operational Adjustments 44
Slide 45: What's Ahead: Longer-Term
Maximize use of technology to build efficiency and capacity Quality loan portfolio growth to reach long - term target of 80% loan/earning asset ratio Increase mortgage loan production to reach $200 million FCFC to Grow AUM to $500 million Drive operating leverage from recent investment in the franch
Slide 46: Summary
SUMMARY
Slide 47: Summary
SUMMARY » High quality balance sheet » Revenue Diversity x Commercial and Retail Banking x Mortgage Banking x Financial Planning / Investment Advisory x Deposit Mix / Franchise Value x Asset Quality x Capital Strength » Geographical Diversity x Columbia x Augusta x Greenville » Focused Strategic Pla
Slide 48: Forward-Looking Statements
FORWARD - LOOKING STATEMENTS 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 FCB
Slide 49: Disclaimer: Non-GAAP Financial Measures
DISCLAIMER The Bank Behind Your Business NON - GAAP FINANCIAL MEASURES – THIS PRESENTATION CONTAINS CERTAIN NON - GAAP FINANCIAL MEASURES THAT ARE NOT IN ACCORDANCE WITH U . S . GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“GAAP”) . WE USE CERTAIN NON - GAAP FINANCIAL MEASURES TO PROVIDE MEANINGFUL, SU
Slide 50: Non-GAAP Reconciliation
NON - GAAP RECONCILIATION 50 1, 2 The table below provides a reconciliation of non - GAAP measures to GAAP for each of the four years ended June 30, 2020: The table below provides a reconciliation of non - GAAP measures to GAAP for each of the periods presented: *Excludes merger and acquisition cost
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