Slide 1: 2015 US Bank Conference
Mike Crapps President and CEO 2015 US BANK CONFERENCE September 9, 2015 Joe Sawyer EVP and CFO
Slide 2: Outline
2 OUTLINE I. First Community 3 II. 2014 – Transformative Year 6 IV. Risk Management 25 • Commercial and Retail Banking 12 • Residential Mortgage Banking 19 • Financial Planning and Investment Advisory Services 22 III. Line of Business Review 11 V. Results 28 VI. Capital & Shareholder Return 32 VII.
Slide 3: First Community
3 FIRST COMMUNITY
Slide 4: First Community Bank Highlights
4 FIRST COMMUNITY BANK HIGHLIGHTS » Began in 1995 x Lexington x Forest Acres » Five (5) 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. » Eight (8) De - Novo Branche
Slide 5: Vision, Core Values and Cultural Beliefs
5 As the provider of choice of financial solutions to local businesses and professionals in the markets we serve, we optimize the long - term return to our shareholders, while providing a safe and sound investment. VISION » Quality and integrity in all endeavors » Passionate focus on customer experi
Slide 6: 2014 Transformative Year
6 2014 TRANSFORMATIVE YEAR
Slide 7: 2014 – Transformative Year: 1Q Savannah River Acquisition
7 2014 – TRANSFORMATIVE YEAR 1Q Completed the Savannah River Financial Corporation (SRFC) acquisition • Total Assets -- $154 million • P / TBV -- 1.1 • Stock / Cash -- 40% / 60%
Slide 8: 2014 – Transformative Year: 2Q
8 2014 – TRANSFORMATIVE YEAR 2Q Opened downtown Columbia (Lady Street) office • 1 st Floor – Banking office • 2 nd Floor – Financial /Investment Advisory Team
Slide 9: 2014 – Transformative Year: 3Q and 4Q
9 3Q Combined Palmetto South and First Community Mortgage Completed deposit assumption and loan purchase from First South • Deposits -- $40 million • Loans -- $9 million • Premium – 1.78% 2014 – TRANSFORMATIVE YEAR 4Q Blythewood Office Ground Breaking (opened April 9, 2015)
Slide 10: Results 2014 – Transformative Year
10 Results 2014 – TRANSFORMATIVE YEAR 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% 2013 2014 Increase
Slide 11: 11 LINE OF BUSINESS REVIEW
11 LINE OF BUSINESS REVIEW
Slide 12: Line of Business Review
12 LINE OF BUSINESS REVIEW » Commercial and Retail Banking » Residential Mortgage Banking » Financial Planning & Investment Advisory Services
Slide 13: Commercial and Retail Banking Deposit Growth & Cost
13 LINE OF BUSINESS REVIEW Commercial and Retail Banking Deposit Growth & Cost Total Deposit Cost 0.54% 0.31% 0.25% 0.25% $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 12/31/2012 12/31/2013 12/31/2014 6/30/2015 $319.5 $363.2 $504.5 $526.7 Certificates of Deposit (CDs) Customer Cash Ma
Slide 14: Deposit Market Share
14 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 15: Commercial and Retail Banking Loan Portfolio
15 LINE OF BUSINESS REVIEW Commercial and Retail Banking Composition 6/30/2015 Yield 5.54% 5.11% 4.99% 4.84% Loan Portfolio 2015 Annualized Growth = 13.6% $332.1 $347.6 $443.8 $474.0 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 12/31/2012 12/31/2013 12/31/2014 6/30/2015 Const & Dev 10% 1 - 4
Slide 16: Commercial and Retail Banking Investment Portfolio
16 Agency Bonds 1% SBA Loan Pools (Fixed Rate) 8% SBA Loan Pools (Variable Rate) 14% Agency CMOs (Fixed Rate) 17% Agency CMO's (Variable Rate) 1% Agency MBS (Fixed Rate) 28% Agency MBS (Variable Rate) 7% Municipal 24% Corporate/Other 2% LINE OF BUSINESS REVIEW Yield 2.22% 1.85% 2.06% 1.91% Compositi
Slide 17: Commercial and Retail Banking Strategy
17 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 18: Commercial and Retail Banking Strategic Impact
18 LINE OF BUSINESS REVIEW Commercial and Retail Banking Strategic Impact FFS & Interest Bearing $ 17.6 2.3% 2% Securities $275.8 36.0% 18% Loans $ 472.6 61.7 % 80 % Total Earnings Assets $766.6 100.0% 100% 2Q15 Average Target Projected Increase in Loans $ 140.20 Yield Pick - up at 200 bps $2,804.00
Slide 19: Residential Mortgage Banking
19 LINE OF BUSINESS REVIEW » Commercial and Retail Banking » Residential Mortgage Banking » Financial Planning & Investment Advisory Services
Slide 20: Residential Mortgage Banking
20 Residential Mortgage Banking LINE OF BUSINESS REVIEW MORTGAGE 2012 2013 2014 6 30 15 Production (millions) $140.1 $119.5 $90.8 $56.9 Purchase $44.8 $63.3 $67.0 $35.6 Refinance $95.3 $56.2 $23.7 $21.3 % Purchase 32.0% 51.6% 73.9% 62.8% Revenue (000s omitted) $4,242 $3,769 $3,186 $1,715 % Yield - F
Slide 21: Residential Mortgage Banking Strategy
21 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 22: Financial Planning & Investment Advisory Services
22 LINE OF BUSINESS REVIEW » Commercial and Retail Banking » Residential Mortgage Banking » Financial Planning & Investment Advisory Services
Slide 23: Financial Planning / Investment Advisory Services
23 Financial Planning / Investment Advisory Services LINE OF BUSINESS REVIEW 1 On March 31, 2014, sold non - licensed channel (AUM of $20.0 million). FINANCIAL PLANNING / INVESTMENT ADVISORY AUM (millions) $107.7 $147.1 $142.6 1 $175.7 Revenue (000s omitted) $650.6 $972.0 $1,268.0 $703.1 Pre-Tax Pro
Slide 24: Financial Planning / Investment Advisory Strategy
24 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
Slide 25: Risk Management
25 RISK MANAGEMENT
Slide 26: Risk Management: Credit Quality
26 RISK MANAGEMENT Credit Quality 1 Includes provision expense, OREO expenses, write - downs, and gain/loss on sale of assets. Credit Quality 12/31/2012 12/31/2013 12/31/2014 6/30/2015 NPAs 1.46% 1.39% 1.18% 0.94% Charge-Offs 0.17% 0.27% 0.28% 0.28% Classified Loan Ratio 32.68% 20.30% 20.28% 15.94%
Slide 27: Risk Management: Compliance / BSA
27 Compliance / BSA » Compliance / BSA » 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 28: Results
28 RESULTS
Slide 29: Net Income and Earnings Per Share
29 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)* $3,416 $4,316 $5,591 $2,738 0.82 0.81 0.85 0.41 0.10 0.30 0.50 0.70 0.90 1.10 1.30 1.50 $0 $500 $1,000
Slide 30: Quarterly Net Income and Earnings Per Share
30 *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)* $1,074 $1,075 $1,166 $1,206 $1,567 $1,652 $1,404 $1,335 0.20 0.20 0.19 0.18 0.23 0.25 0.21 0.20 0.00 0.
Slide 31: Key Ratios
31 Key Ratios RESULTS 2012 2013 2014 6/30/15 YTD ROA 0.55% 0.66% 0.73% 0.70% ROE 7.40% 7.68% 8.13% 7.54% ROTCE 7.55% 7.78% 8.88% 7.82% NIM (Tax Equivalent) 3.22% 3.18% 3.40% 3.47% Efficiency 74.82% 76.69% 74.61% 73.78% Non-Int. Income to Operating Revenue 31.16% 31.22% 26.98% 25.71%
Slide 32: Capital & Shareholder Return
32 CAPITAL & SHAREHOLDER RETURN
Slide 33: Capital
33 CAPITAL & SHAREHOLDER RETURN Capital 2012 2013 2014 6/30/15 YTD Leverage Ratio 10.63% 10.77% 10.02% 10.41% Tier 1 Capital Ratio 17.39% 17.60% 16.09% 15.67% Total Capital Ratio 18.64% 18.68% 16.91% 16.56% Common Equity Tier I Capital Ratio N/A N/A N/A 12.36% Tangible Common Equity/ Tangible Assets
Slide 34: Dividend
34 Dividend * 54 Consecutive Quarters of Dividends Paid *Increased dividend to $0.07 1Q15 and 2Q15. CAPITAL & SHAREHOLDER RETURN 12/31/2012 12/31/2013 12/31/2014 6/30/15 YTD Core EPS $0.82 $0.81 $0.85 $0.41 Cash Dividend $0.16 $0.22 $0.24 $0.14 Dividend Yield at End of Period 1.91% 2.12% 2.12% 2.30%
Slide 35: Shareholder Return
35 Shareholder Return CAPITAL & SHAREHOLDER RETURN 2014 Total Return 2015 YTD Total Return 3-Year Total Return FCCO 11.20% 9.08% 94.88% NASDAQ Bank Index 4.93% 8.84% 46.41% KBW Regional Bank Index 2.42% 11.77% 70.27%
Slide 36: Summary
36 SUMMARY
Slide 37: Summary
37 SUMMARY » High quality balance sheet » Well positioned for future growth and EPS impact in all three lines of business: x Commercial and Retail Banking » Combined Potential Strategic Impact: $0.41 EPS accretion 1 » Implied Deposit Premium: 1.5% (RJ coverage Universe Median: 6.7%) » Price / TBV: 1
Slide 38: Forward-Looking Statements Safe Harbor Statement
38 FORWARD - LOOKING STATEMENTS SAFE HARBOR STATEMENT – The Local Bank for Local Business This presentation, as well as other written communications made from time to time by First Community Corporation (the “ Company ”), and oral communications made from time to time by or on behalf of the Company,