First Community Corporation · NASDAQ:FCCO
First Community — US Bank Conference September 2018
44 slides from First Community's conference presentation, Sep 5, 2018
Slide 1: The Local Bank for Local Business
The Local Bank for Local Business Mike Crapps President and CEO Joe Sawyer CFO Tanya Butts COO and CRO US BANK CONFERENCE September 2018
Slide 2: Highlights
HIGHLIGHTS
Slide 3: Highlights
» Began in 1995 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 » Executive Leadership Team Stabi
Slide 4: Identity
IDENTITY
Slide 5: Our Identity: Vision, Core Values, Cultural Beliefs
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. VISION » Quality and integrity in all endeavors » Passionate focus on customer exp
Slide 6: Three Geographically Diverse Markets
THREE GEOGRAPHICALLY DIVERSE MARKETS
Slide 7: 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 8: Lines of Business
LINES OF BUSINESS
Slide 9: Lines of Business
Commereia I & Retail Banking Online Banking ACH / \ 'Vire Trc1nsfer Set vice Remote Depo·;1t C1ptur e Pos1t1ve Paylocrns &Lme·; of Credit Construction/ Perm 1nent Commerc1c1I Real Estcite Equ1pmE - nt F1n,1ncing Residential Mortgage Banking ,, - ,· Ż 0 1 1rst Commu11ity l3ank Financial Planning & In
Slide 10: Foundational Franchise Value
FOUNDATIONAL FRANCHISE VALUE
Slide 11: Foundational Franchise Value
FOUNDATIONAL FRANCHISE VALUE Great Deposits E x celle n t Asset Quality Strong Capi t a l
Slide 12: Excellent Deposit Franchise
$737.1 $786.1 $907.6 2 $961.6 1 0.25% 0.24% 0.22% 0.28% Total Deposit Cost (Quarter ending) Pure Deposit Growth Commercial and Retail Banking Excellent Deposit Franchise • 83% Pure (Non - CD) Deposits • 26% (Non - Interest Bearing DDA Balances) • Largest Community Bank in the Midlands of SC 1 Corner
Slide 13: Credit Quality: NPA / Assets
Credit Quality NPA / Assets FOUNDATIONAL FRANCHISE VALUE
Slide 14: Credit Quality: Net Loan Charge-Offs
Credit Quality Net Loan Charge-Offs 2015 2016 2017 6/30/2018 FOUNDATIONAL FRANCHISE VALUE
Slide 15: Capital
Capital Corporation 12/31/17 6 / 30 / 18 TCE / TA Ratio 8.56% 8.38% Leverage Ratio 10.11% 1 0 . 20% Total Capital Ratio 14.79% 1 4 . 52% FOUNDATIONAL FRANCHISE VALUE
Slide 16: Enhance Earnings
ENHANCE EARNINGS
Slide 17: Enhance Earnings
» Residential Mortgage Banking » Financial Planning and Investment Advisory Services ENHANCE EARNINGS Not complicated, but also not easy » Quality Loan Portfolio Growth to Remix Asset side of Balance Sheet
Slide 18: Loan / Earning Asset Ratio
64.84% 66.03% 67.22% 68.50% 67.33% 68.67% 68.75% 64.00% 63.00% 62.00% 65.00% 66.00% 67.00% 68.00% 69.00% Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 J u n- 18 ENHANCE EARNINGS Loan / Earning Asset Ratio Average Loans to Average Earning Assets 70.00%
Slide 19: Net Interest Margin
3.25% 3.42% 3.39% 3.42% 3.45% 3.61% 3.67% 3.29% 3.35% 3.49% 3.52% 3.54% 3.66% 3.71% 3.19% 3.10% 3 . 2 0% 3 . 3 0% 3 . 4 0% 3 . 5 0% 3 . 6 0% 3 . 7 0% 3 . 8 0% 3 Q16 4 Q16 1 Q18 2 Q18 1 Q17 2 Q 17 Net Interest Margin 3Q17 4Q17 FTE Net Int Margin ENHANCE EARNINGS Net Interest Margin Eight Consecutive
Slide 20: Net Interest Margin
ENHANCE EARNINGS Net Interest Margin + 48 bps +/ - 0 bps + 3 bps
Slide 21: Loan Growth and Portfolio Composition
Const & Dev 13% 1 - 4 Family R esidential 16% Home Equity 5% Owner - OCC CRE 27% Other CRE 29% Multi - Fa m ily 2% 7% Loan Growth Commercial and Retail Banking Loan Portfolio Composition 6/30/18 Consr & Other 2% Comm'l & Indust r ial LTM Organic Growth = 13.0% CR E a s a P e r cent a g e o f RB C =
Slide 22: Investment Portfolio
Investment Portfolio Modified Duration = 3.69 Composition 6/30/18 ENHANCE EARNINGS US Treasury Securities 2.9% Agency Bonds 0.4% SBA Loan Pools (Fixed) 8.3% SBA Loan Pools (Variable) 11.7% Agency CMOs (Fixed) 26.5% Agency MBS (Variable) 11.9% Agency MBS (Fixed) 12.7% Municipal 24.9% Corp & Other 0.7
Slide 23: Residential Mortgage Banking Production
Residential Mortgage Banking Production 1 1 1H17 Mortgage Production was $55.0 million. ENHANCE EARNINGS
Slide 24: Residential Mortgage Banking Revenue
Residential Mortgage Banking Revenue (millions) 1 1 1H17 Mortgage Revenue was $1.9 million. ENHANCE EARNINGS
Slide 25: Financial Planning / Investment Advisory AUM
ENHANCE EARNINGS Financial Planning / Investment Advisory Services AUM (millions)
Slide 26: Financial Planning / Investment Advisory Revenue
Financial Planning / Investment Advisory Services Revenue (000s omitted) 1 1 1H17 FCFC Revenue was $572.0. ENHANCE EARNINGS
Slide 27: Risk Management & Technology
RISK MANAGEMENT & TECHNOLOGY
Slide 28: Risk Management
RISK MANAGEMENT & TECHNOLOGY June 30, 2018 » Compliance » Cybersecurity / Fraud » Audit » Enterprise Risk Management (ERM) - Internal » P.T. Risk Report - External
Slide 29: Technology: Core System Conversion
RISK MANAGEMENT & TECHNOLOGY June 30, 2018 » Technology – Core System Conversion in 2017 x Enhanced client experience and product delivery x Increased security and fraud detection x Greater capacity for future growth x Focused project plan, i.e., M&A systems conversion x 2018 – Higher level of syste
Slide 30: Financial Results
FINANCIAL RESULTS
Slide 31: Core Net Income and Earnings Per Share
Core Net Income and Earnings Per Share (EPS)* FINANCIAL RESULTS *Core net income and EPS exclude merger and acquisition cost, gains (losses) on sale of securities and losses on early extinguishment of debt, and SC State income tax credit. 1 1H17 - $3,520 ($0.52 EPS) 1
Slide 32: ROAA
ROAA FINANCIAL RESULTS 1 1 Includes an increase in deferred tax expense of $1.247 million as a result of the lower tax rates enacted in the Tax Cut and Jobs Act passed December 22, 2017. Without this one - time adjustment, the ROAA would have been 0.75%.
Slide 33: ROTCE
ROTCE FINANCIAL RESULTS 1 1 Includes an increase in deferred tax expense of $1.247 million as a result of the lower tax rates enacted in the Tax Cut and Jobs Act passed December 22, 2017. Without this one - time adjustment, the ROTCE would have been 8.76%.
Slide 34: Dividend
Increased January 2018 to $0.10 for the quarter Dividend FINANCIAL RESULTS
Slide 35: Tangible Book Value
Tangible Book Value FINANCIAL RESULTS
Slide 36: 2018 YTD Total Shareholder Return vs. Indices
FINANCIAL RESULTS 2018 YTD Total Shareholder Return vs. Index(s) (as of 6/30/18)
Slide 37: Three-Year Total Shareholder Return vs. Indices
Total Shareholder Return vs. Index(s) Three Years Ended 6/30/18 FINANCIAL RESULTS
Slide 38: What's Ahead
WHAT’S AHEAD
Slide 39: What's Ahead
WHAT’S AHEAD » Maximize use of technology to build efficiency and capacity » Quality loan portfolio growth to reach the long - term target of 80% loan/earning asset ratio » Increase mortgage loan production to reach $200 million » FCFC to grow AUM to $375 million » Leverage what we have started in A
Slide 40: What's Ahead: Augusta
WHAT’S AHEAD Augusta » Savannah River Bank merger -- 2014 » 771 Broad Street office (opened 3.8.18) » Evans office (opening 2Q19) » New Board of Director member – Ed Tarver » Additional Commercial Bankers ▪ Jordan Pierce ▪ James Heffner » Additional Mortgage Bankers ▪ Melynda Cleveland ▪ Erin Slade
Slide 41: What's Ahead: Greenville
WHAT’S AHEAD Greenville 2019) » Loan Production Office -- 2016 » Cornerstone National Bank merger -- 2017 » Downtown Greenville office (opening early » Business Services Specialist ▪ Rachel Weatherford » Mortgage Banker ▪ Jacob Cook » Financial Advisor ▪ Daniel Felder
Slide 42: Summary
SUMMA R Y
Slide 43: Summary
SUMMA R Y » High quality balance sheet x Deposit Mix / Franchise Value x Asset Quality x Capital Strength » Revenue Diversity x Commercial and Retail Banking x Mortgage Banking x Financial Planning / Investment Advisory » Geographical Diversity x Columbia x Augusta x Greenville » Focused Strategic P
Slide 44: Forward-Looking Statements
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 COMMIS