First Community Corporation · NASDAQ:FCCO
First Community — Q3 2024 Earnings Presentation
49 slides from First Community's earnings presentation, Nov 5, 2024
Slide 1: The Bank Behind Your Business
The Bank Behind Your Business November 2024
Slide 2: Outline
OUTLINE 2 I. Overview 3 II. 3Q24 Highlights / Topics of Interest 9 » Earning Assets 10 » Funding 15 » Net Interest Margin (NIM) 19 » Risk Management 24 » Capital 29 » Non - Interest Income Highlights 33 » Revenue 38 » Non - Interest Expense 41 » Net Income 44 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. S Employees Shareholders Se «
Slide 5: Our Identity
OUR IDENTITY Purpose & Cause Impacting lives for success and significance Mission To provide best in class financial solutions to local businesses, professionals, and organizations in our markets as well as optimize the long-term return to our shareholders, while providing a safe, sound investment.
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: 3Q24 Highlights / Topics of Interest
3Q24 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 Composition
Yield 4.36% 4.29% 4.43% 5.32% 5.73% Loan Portfolio LTM Growth = 9.6% 2 1 Includes PPP and related LOC to SBA partner. 2 Excludes PPP and related LOC to SBA partner. CRE as a % of RBC = 304.3% (4 th Quarter for 2020 - 2023 and 3 rd Quarter for 2024) $980.9 $1,134.0 $844.2 11 EARNING ASSETS $1,196.7 C
Slide 12: Loan Portfolio Growth
» 3Q24 $7.5 million 2.5% annualized growth rate » YTD 2024 $62.6 million 7.4% annualized growth rate Notes: » Percent of Growth : 3Q24 YTD24 ▪ CRE (57%) 30% ▪ C&I 20% 11% ▪ Residential Mortgage 128% 56% ▪ Other 9% 3% » Interest Rate Sensitivity (9/30/24) : ▪ Principal cash flows, including prepaymen
Slide 13: Investment Portfolio
Investment Portfolio Yield 1.98% 1.56% 2.78% 3.59% 3.53% AOCI/(AOCL) 1 $11.3 $3.3 ($32.4) ($28.2) ($23.2) (4 th Quarter for 2020 - 2023, and 3 rd Quarter for 2024) Average Life: 5.3 years Effective Duration: 3.4 Composition 9/30/24 $361.9 $564.8 $506.2 EARNING ASSETS Millions $486.8 13 $566.6 1 AOCI
Slide 14: Investment Portfolio Notes
Notes: Mix (3Q24) : » Floating 32% » Fixed 68% Principal Cash Flows : » 10/01/24 – 12/31/24 $10.6 million » FY2025 $56.6 million 14 Investment Portfolio EARNING ASSETS
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% 2.03% Non - Interest Bearing 32% 33% 33% 29% 27% Millions $1,230.3 $1,415.5 $1,454.1 $1,573.9 (4 th Quarter for 2020 - 2023 & 3 rd Quarter for 2024) 16 High Quality Deposit Franchise $1,711.0 FUNDING 12/31/2020 12/31/2021 12/31/2022 12/31/2023 09/30/2 024
Slide 17: High Quality Deposit Franchise Notes
3Q24 Notes: » 37.5% Cumulative Cycle Beta 1 – Cost of Deposits » 40.2% Cumulative Cycle Beta 1 – Cost of Funds » Uninsured deposits of $492.5 million (30.0% of total), of which $88.3 million (5.4% of total) are public funds that are secured or collateralized ▪ Average balance of customer deposits ac
Slide 18: Sources and Uses of Funds
18 YTD 2024 » Sources of funds (Millions) Customer Deposits $ 158.8 Customer Cash Management 4.1 Investment Portfolio 19.4 Capital 12.3 Other 7.1 Total $ 201.7 » Uses of funds Loans (includes held held - for - sale) $ 62.1 Short - Term Investments & CDs 77.6 Brokered CDs 25.7 FHLB Borrowings / FFP 3
Slide 19: Net Interest Margin
NET INTEREST MARGIN Impacting Lives for Success and Significance
Slide 20: Net Interest Margin: Loan Portfolio Yield
7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% NET INTEREST MARGIN (NIM) Loan Portfolio Yield 9g 5.84% 5.60% 5.73% 5.32: a 427% 3% 3Q22 4Q22 1023 2023 3023 4Q23 1Q24 2024 3Q24 8.30% 7.80% 7.30% 6.80% 6.30% 5.80% 5.30% 4.80% 4.30% 3.80% 3Q22 4Q22 New/Renewed Loans Weighted Average Rate 1Q23 2Q23 3Q2
Slide 21: Net Interest Margin: Securities and Earning Assets Yield
NET INTEREST MARGIN (NIM) Securities Portfolio Yield 4.00% 3.50% 3:56% 3.6696 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 3Q22 4022 1023 2023 3023 4Q23 1024 2024 3024 . . Average Earnings Assets (AEA) Yield 5.30% 4.80% 430% 3.80% 3.30% 280% 3Q22 4Q22 1Q23 2023 3Q23 4023 1Q24 2024 3Q24 2
Slide 22: Net Interest Margin: Cost of Deposits and Funds
2.50% 2.00% 1.50% 1.00% 0.50% 0.00% NET INTEREST MARGIN (NIM) Cost of Deposits 3Q22 4022 1023 2023 3023 4Q23 1024 3.50% 3.40% 3.30% 3.20% 3.10% 3.00% 2.90% 2.80% 2.70% 3.42% 3022 4022 Cost of Funds 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2Q24 3024 3Q22 4022 1023 2Q23 3023 4Q23 Net Interest Margin FTE 10
Slide 23: Net Interest Margin Notes
23 Notes: » NIM Inflection began 2Q24 » $12.0 Million Brokered CD • All - in cost of 5.15% • Called on October 31, 2024 » Effective May 5, 2023, entered into a pay - fixed /receive floating interest rate • Notional amount: $150 million • Synthetically converts approximately 13% of the Loan Portfolio
Slide 24: Risk Management
RISK MANAGEMENT Impacting Lives for Success and Significance
Slide 25: Credit Quality
25 Credit Quality RISK MANAGEMENT NPA / Assets Net Charge - Offs (Recoveries)
Slide 26: Credit Quality: Provision and Allowance
26 Provision for (Release of) Credit Losses (000s omitted) Credit Quality RISK MANAGEMENT Allowance for Credit Losses on Loans to Loans
Slide 27: Credit Quality Notes
3Q24 Notes: » Key Loan Portfolio Sectors 27 • There are only four loans secured by office buildings in excess of 50,000 square feet of rentable space. These four represent $10.7 million in loans outstanding and have a 33% weighted average loan - to - value. Credit Quality RISK MANAGEMENT
Slide 28: Risk Management
RISK MANAGEMENT Formal ERM Program including Measures, like Internal Risk Scorecard, External PT Score and Board Risk Appetite Cybersecurity Program Enterprise Risk Management Framework is key to balance of Risk and Reward.... Compliance Program Fraud Prevention Program BSA Progra
Slide 29: Capital
CAPITAL Impacting Lives for Success and Significance
Slide 30: Capital Ratios
30 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 at the time of the announcement).
Slide 31: Tangible Book Value and Tangible Common Equity
31 Tangible Book Value CAPITAL Tangible Common Equity
Slide 32: Dividend
$0.65 4 $0.55 + $0.45 5 $0.35 5 $0.25 | $0.15 - $0.05 CAPITAL Dividend 2020 2021 2022 2023 YTD 2024 32
Slide 33: Non-Interest Income Highlights
NON - INTEREST INCOME HIGHLIGHTS Impacting Lives for Success and Significance
Slide 34: Financial Planning / Investment Advisory AUM
Financial Planning / Investment Advisory Services AUM (millions) 34 NON - INTEREST INCOME HIGHLIGHTS
Slide 35: Financial Planning Revenue and Pre-Tax Income
Financial Planning / Investment Advisory Services Revenue and Pre - Tax Income (thousands) 35 Pre - tax Profit Margin 29.7% 30.5% 33.9% 31.0% 32.8% NON - INTEREST INCOME HIGHLIGHTS
Slide 36: Residential Mortgage Banking Production
36 Residential Mortgage Banking Production (millions) NON - INTEREST INCOME HIGHLIGHTS $123.7 $107.2 $135.7
Slide 37: Residential Mortgage Banking Revenue and Pre-Tax Income
Pre - tax Profit Margin 31.6% 11.9% 3.6% 34.3% 59.4% Residential Mortgage Banking Revenue and Pre - Tax Income (000’s omitted) 37 $7,294.7 $ 5,327.8 $6,708.6 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 38: Revenue
REVENUE Impacting Lives for Success and Significance
Slide 39: Total Revenue: Strength in Diversity of Revenue
39 (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 $48.6
Slide 40: Total Revenue by Quarter
40 (Thousands) $15,216 $16,982 $15,261 Total Revenue 1 Strength in Diversity of Revenue 1 Adjusted for Securities Gains/Losses. 1 $15,226 REVENUE $16,336
Slide 41: Non-Interest Expense
NON - INTEREST EXPENSE Impacting Lives for Success and Significance
Slide 42: Non-Interest Expense
NON - INTEREST EXPENSE 42 Non - interest Expense (Millions) $37.5 $39.2 $35.6 Notes: 2022 Opened new office – Rock Hill. $41.3 $43.1
Slide 43: Non-Interest Expense by Quarter
NON - INTEREST EXPENSE 43 Non - interest Expense (Millions) $11.3 $12.0 NOTE: Closed downtown banking office at 771 Broad Street, Augusta, GA, as of June 27, 2024. Cost savings are estimated to be $327,000 annually going forward. $10.7 $11.8 $11.8
Slide 44: Net Income
NET INCOME Impacting Lives for Success and Significance
Slide 45: 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 46: Forward-Looking Statements
FORWARD - LOOKING STATEMENTS 46 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 47: Non-GAAP Financial Measures
NON - GAAP FINANCIAL MEASURES The Bank Behind Your Business 47 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 48: Non-GAAP Reconciliation
NON - GAAP RECONCILIATION 48 The tables below provide a reconciliation of non - GAAP measures to GAAP for each of the periods indicated:
Slide 49: Non-GAAP Reconciliation
NON - GAAP RECONCILIATION 49 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 loans charged off at an FCCO acquired bank. The tables