First Community Corporation · NASDAQ:FCCO
First Community — Q3 2023 Earnings Presentation
48 slides from First Community's earnings presentation, Nov 1, 2023
Slide 1: The Bank Behind Your Business
The Bank Behind Your Business November 2023
Slide 2: Outline
OUTLINE 2 I. Overview 3 II. 3Q23 Highlights / Topics of Interest 9 » Earning Assets 10 » Funding 15 » Net Interest Margin (NIM) 19 » Risk Management 24 » Capital 29 » Non - Interest Income Highlights 34 » Non - Interest Expense 39 » Net Income 42 Impacting Lives for Success and Significance
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. Employees Impacting lives for
Slide 5: Our Identity
OUR IDENTITY 5 Purpose & Cause ncial nals, and org s optim while providi Cultural Beliefs ty and Integrity | Everyone Matters | Spirit of Strong Work Ethic | Excellence h 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: 3Q23 Highlights / Topics of Interest
3Q23 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 = 14.9% 2 1 Includes PPP and related LOC to SBA partner. 2 Excludes PPP and related LOC to SBA partner. CRE as a % of RBC = 310.1% (4 th Quarter for 2019 - 2022 and 3 rd Quarter for 2023) $863.7 $980.9 $844.2 Yield 4.75% 4.36% 4.29% 4.43% 5.14% 11 EARNING ASSETS $1,091.6 Co
Slide 12: Loan Portfolio Growth
» 3Q23 1 $59.5 million 22.9% annualized growth rate » 2023 YTD 2 $110.8 million 15.1% annualized growth rate 3Q23 Notes: » CRE – 64% of growth » Mortgage – 32% of growth (ARMs, residential construction, and home equity) » Production was moderate and unfunded commercial construction loan advances had
Slide 13: Investment Portfolio
Investment Portfolio Yield 2.49% 1.98% 1.56% 2.78% 3.42% (4 th Quarter for 2019 - 2022, and 3 rd Quarter for 2023) Effective Duration AFS - 3.04 HTM - 5.55 Composition 9/30/23 $288.3 $566.6 $564.8 EARNING ASSETS Millions $506.7 13 $361.9
Slide 14: Investment Portfolio Notes
3Q23 Notes: Activity : » Sold $39.9 million of book value US Treasuries » 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 years Mix :
Slide 15: Funding
FUNDING Impacting Lives for Success and Significance
Slide 16: High Quality Deposit Franchise
Total Deposit Cost 0.47% 0.20% 0.11% 0 .25% 1.28% 1 Non - Interest Bearing 29% 32% 33% 33% 31% 1 Millions $1,021.5 $1,230.3 $1,415.5 $1,454.1 (4 th Quarter for 2019 - 2022 & 3 rd Quarter for 2023) 16 High Quality Deposit Franchise $1,559.2 FUNDING 12/31/2019 12/31/2020 12/31/2021 12/31/2022 09/30 /2
Slide 17: High Quality Deposit Franchise Notes
3Q23 Notes: ▪ 26.7% Cumulative Cycle Deposit Beta ▪ Uninsured deposits of $429.7 million (28.8% of total), of which $85.7 million (5.7% of total) are public funds that are secured or collateralized ▪ Average balance of customer deposits accounts - $27,978 ▪ Total remaining credit availability in exc
Slide 18: Sources and Uses
18 2023 YTD (09/30/2023) » Sources of funds Investment Securities $ 58 million Customer Deposits & Cash Management 57 million Brokered CDs 48 million FHLB Borrowings and Federal Funds Purchased 8 million Capital / Other 4 million Total $175 million » Uses of funds Cash / Overnight Investments $ 60 m
Slide 19: Net Interest Margin
NET INTEREST MARGIN Impacting Lives for Success and Significance
Slide 20: Net Interest Margin (NIM)
6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2a22 NET INTEREST MARGIN (NIM) Yield 2023 3023 7.30% 6.80% 6.30% 5.80% 5.30% 4.80% 4.30% 3.80% New/Renewed Loans Weighted Average Rate 6.15% 6.16% 5.04% 4.495% 4.0856 2022 «3022 422 102320233023 20
Slide 21: Net Interest Margin (NIM) Securities Portfolio Yield
4.00% 2.50% 3.00% 2.50% 2.00% 150% 4.00% 0.50% NET INTEREST MARGIN (NIM) Securities Portifolio Yield 2288, az 1023 3023 480% 480% 440% 420% 4.00% 3.80% 3.60% 3.40% 3.20% 3.00% 2.80% Average Earnings Assets (AEA) Yield 4.56% voz 3a «= 4a 1023) 20233023 a1
Slide 22: Net Interest Margin (NIM)
NET INTEREST MARGIN (NIM) Cost of Deposits Cost of Funds 140% igre 1.80% ia rae 1.60% 140% 1.00% 28 120% 090% 4.00% 0.60% _ 0.80% 0.40% baa oy 040% 020% oe 20% 0.00% 005% 0.00% mm 3a = samt 2033008 mm saz = am tas ams 3028 Net Interest Margin FTE 3.50% 242% 340% 30% 229%, 2.19% 3.20% 310% 07% 3.00%
Slide 23: Net Interest Margin Notes
23 Notes: » NIM Contraction decelerating • 1Q23 23 bps • 2Q23 17 bps • 3Q23 6 bps » Effective May 5, 2023, entered into a pay - fixed / receive floating interest rate swap • Notional amount: $150 million • Synthetically converts approximately 14% of the Loan Portfolio from fixed to floating • Pay a
Slide 24: Risk Management
RISK MANAGEMENT Impacting Lives for Success and Significance
Slide 25: Credit Quality
25 Credit Quality RISK MANAGEMENT 2019 2020 2021 2022 2023 YTD NPA / Assets Net Loan Charge - Offs
Slide 26: Credit Quality
26 Allowance for Credit Losses on Loans to Loans Provision for (Release of) Credit Losses (000s omitted) Credit Quality RISK MANAGEMENT 1 1 September 30, 2023 year - to - date.
Slide 27: Credit Quality Notes
3Q23 YTD Notes: » Key Loan Portfolio Sectors 27 • 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 28: Risk Management
RISK MANAGEMENT Cybersecurity Program Formal ERM Program including, Measures, i Internal Ris! Scorecard, External PT Score and Board Risk Appetite Fraud Prevention Program Enterprise Risk Management Framework is key to balance of Risk and Reward... Audit Progen BSA Program Compliance Program 28
Slide 29: Capital
CAPITAL Impacting Lives for Success and Significance
Slide 30: Leverage Ratio and Total Capital Ratio
30 Leverage Ratio (Bank) Total Capital Ratio (Bank) *On 4/20/22, announced a share repurchase authorization of 375,000 shares (5% of the outstanding shares) CAPITAL
Slide 31: Tangible Common Equity
31 Tangible Common Equity Tangible Common Equity (ex. AOCI) CAPITAL 1 See Non - GAAP reconciliation on pages 46.
Slide 32: Dividend
Dividend 32 CAPITAL On 4/20/22, announced a share repurchase authorization of 375,000 shares (5% of the outstanding shares). 1 1 September 30, 2023 year - to - date.
Slide 33: Tangible Book Value
Tangible Book Value 1 1 See Non - GAAP reconciliation on pages 46. 33 Tangible Book Value Tangible Book Value (ex. AOCI) CAPITAL
Slide 34: Non-Interest Income Highlights
NON - INTEREST INCOME HIGHLIGHTS Impacting Lives for Success and Significance
Slide 35: Financial Planning / Investment Advisory Services AUM
Financial Planning / Investment Advisory Services AUM (millions) 35 NON - INTEREST INCOME HIGHLIGHTS
Slide 36: Financial Planning / Investment Advisory Revenue and Pre-Tax Income
Financial Planning / Investment Advisory Services Revenue and Pre - Tax Income (thousands) 36 Pre - tax Profit Margin 14.3% 29.7% 30.5% 33.9% 30.7% NON - INTEREST INCOME HIGHLIGHTS 1 1 September 30, 2023 year - to - date.
Slide 37: Residential Mortgage Banking Production
37 Residential Mortgage Banking Production (millions) NON - INTEREST INCOME HIGHLIGHTS $97.1 $107.2 1 1 September 30, 2023 year - to - date.
Slide 38: Residential Mortgage Banking Revenue and Pre-Tax Income
Pre - tax Profit Margin 32.9% 31.6% 11.9% 3.6% 27.0% Residential Mortgage Banking Revenue and Pre - Tax Income (000’s omitted) 38 $5,616.5 $7,294.7 $5,327.8 $3,763.8 1 $3,565.4 1 Note: Pre - tax net income does not include fund transfer pricing or ACL allocations. 1 Includes mortgage late charges an
Slide 39: Non-Interest Expense
NON - INTEREST EXPENSE Impacting Lives for Success and Significance
Slide 40: Non-Interest Expense
NON - INTEREST EXPENSE 40 Non interest Expense (Millions) $34.6 $37.5 $39.2 Notes: 2019 Opened two additional offices – Greenville and Augusta. 2022 Opened new office – Rock Hill. $32.5 $41.3 1 1 September 30, 2023 year - to - date.
Slide 41: Non-Interest Expense Notes
3Q23 Notes: » Non - Interest Expenses increased $518,000 on a linked quarter basis • Marketing expenses increased $239,000 due to media timing and new production • Mail check fraud losses were elevated in the quarter at $230,000 41 NON - INTEREST EXPENSE
Slide 42: Net Income
NET INCOME Impacting Lives for Success and Significance
Slide 43: Net Income
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 44: Forward-Looking Statements
FORWARD - LOOKING STATEMENTS 44 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 45: Non-GAAP Financial Measures
NON - GAAAP FINANCIAL MEASURES The Bank Behind Your Business 45 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 provid
Slide 46: Non-GAAP Reconciliation
NON - GAAP RECONCILIATION 46 The tables below provide a reconciliation of non - GAAP measures to GAAP for each of the periods presented:
Slide 47: Non-GAAP Reconciliation
NON - GAAP RECONCILIATION 47 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
Slide 48: First Community Corporation
§) First Community Corporation