First Community Corporation · NASDAQ:FCCO
First Community — 2019 Community Bank Forum
52 slides from First Community's conference presentation, Nov 5, 2019
Slide 1: The Bank Behind Your Business - 2019 Community Bank Forum
The Bank Behind Your Business 2019 COMMUNITY BANK FORUM November 3 - 5, 2019 Mike Crapps President and CEO Ted Nissen Chief Commercial & Retail Banking Officer
Slide 2: Highlights
HIGHLIGHTS 2
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: Our Identity
OUR IDENTITY 4
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 e
Slide 6: Three Geographically Diverse Markets
THREE GEOGRAPHICALLY DIVERSE MARKETS 6
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 8
Slide 9: Lines of Business
Commercial & Retail Banking Online Banking ACH / Wire Transfer Service Remote Deposit Capture Positive Pay, Loans & Lines of Credit. Construction / Permanent ‘Commercial Real Estate Equipment Financing » First Community Bank Va Financial Planning & Investment Advisory Services Home Purchase Financia
Slide 10: Foundational Franchise Value
FOUNDATIONAL FRANCHISE VALUE 10
Slide 11: Foundational Franchise Value: Deposits, Asset Quality, Capital
FOUNDATIONAL FRANCHISE VALUE Great Deposits Excellent Asset Quality Strong Capital 11
Slide 12: Excellent Deposit Franchise
$0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 $1,000.0 1 2 3 4 5 $563.1 $611.9 $729.5 $777.2 $804.1 $153.0 $154.7 $158.8 $148.4 $144.7 Pure (Non-CD) Deposit Total Customer Cash Management Certificates of Deposit (CDs) Pure Deposit Growth $737.1 $786.1 $907.6 2 $953.6 1 Total De
Slide 13: Credit Quality: NPA / Assets
0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 2015 2016 2017 2018 9/30/2019 0.93% 0.58% 0.51% 0.37% 0.33% Credit Quality NPA / Assets FOUNDATIONAL FRANCHISE VALUE 13
Slide 14: Credit Quality: Net Loan Charge-Offs
-0.04% -0.02% 0.00% 0.02% 0.04% 0.06% 0.08% 0.10% 0.12% 0.14% 0.16% 0.15% 0.03% - 0.03% - 0.03% - 0.03% Credit Quality Net Loan Charge - Offs 2015 2016 2017 2018 9/30/19 FOUNDATIONAL FRANCHISE VALUE 14
Slide 15: Capital: Share Repurchase Authorization
FOUNDATIONAL FRANCHISE VALUE Share repurchase authorization of 300,000 shares announced May 30, 2019. Fully exercised as of July 18, 2019, at an average pri ce of $18.79 per share. Additional share repurchase authorization of 200,000 shares announced September 18, 2019. 15 Capital
Slide 16: Enhance Earnings
ENHANCE EARNINGS 16
Slide 17: Enhance Earnings
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 / Earning Asset Ratio ENHANCE EARNINGS Average Loans to Average Earning Assets 18
Slide 19: Net Interest Margin - Components
ENHANCE EARNINGS Net Interest Margin - Components + 66 bps + 24 bps + 27 bps 19
Slide 20: Net Interest Margin trend
3.19% 3.25% 3.33% 3.39% 3.42% 3.45% 3.61% 3.67% 3.55% 3.65% 3.68% 3.64% 3.57% 3.29% 3.35% 3.43% 3.49% 3.52% 3.54% 3.66% 3.71% 3.60% 3.70% 3.73% 3.67% 3.60% 2.90% 3.00% 3.10% 3.20% 3.30% 3.40% 3.50% 3.60% 3.70% 3.80% 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 Net Interest Margin
Slide 21: Loan Growth and Composition
Loan Growth (millions) LTM Growth = 5.5% 1 Cornerstone Merger: $59.0 million CRE as a % of RBC = 271.2% Yield 4.76% 4.52% 4.53% 4.90% 4.87% (Qtr Ending) ENHANCE EARNINGS Composition 09/30/19 21 Const & Dev 10% 1 - 4 Family Residential 14% Home Equity 4% Owner - OCC CRE 30% Other CRE 31% Multi - Fami
Slide 22: Investment Portfolio
Investment Portfolio ENHANCE EARNINGS Yield 1.87% 1.97% 2.20% 2.53% 2.48% (Qtr Ending) Composition 09/30/19 Modified Duration = 4.45 (millions) 22 US Treasury Securities 2.7% Agency Bonds 0.4% SBA Loan Pools (Fixed) 5.6% SBA Loan Pools (Variable) 12.3% Agency CMOs (Fixed ) 33.6% Agency CMOs (Variabl
Slide 23: Financial Planning / Investment Advisory Services AUM
Financial Planning / Investment Advisory Services AUM (millions) ENHANCE EARNINGS *S&P 500 – Total Return – 57.2% 23
Slide 24: Financial Planning / Investment Advisory Services Revenue
Financial Planning / Investment Advisory Services Revenue (000s omitted) ENHANCE EARNINGS 1 Revenue as of 9/30/18 was $1,207. 1 24
Slide 25: Residential Mortgage Banking Production
Residential Mortgage Banking Production (millions) ENHANCE EARNINGS 1 Production as of 9/30/18 was $93.9. 1 25
Slide 26: Residential Mortgage Banking Revenue
Residential Mortgage Banking Revenue (millions) ENHANCE EARNINGS 1 Revenue as of 9/30/18 was $3.1. 1 26
Slide 27: Efficiency Ratio
Efficiency Ratio ENHANCE EARNINGS 27
Slide 28: Risk Management & Technology
RISK MANAGEMENT & TECHNOLOGY 28
Slide 29: Risk Management & Technology: Compliance, Cybersecurity, ERM
RISK MANAGEMENT & TECHNOLOGY Compliance Cybersecurity / Fraud Audit Enterprise Risk Management (ERM) - Internal P.T. Risk Report - External September 30, 2019 29
Slide 30: Risk Management & Technology: Core System Conversion
RISK MANAGEMENT & TECHNOLOGY » 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 system utilization
Slide 31: Financial Results
FINANCIAL RESULTS 31
Slide 32: Core Net Income and Earnings Per Share
$6,027 $6,458 $7,796 $11,496 $8,168 $500 $2,500 $4,500 $6,500 $8,500 $10,500 $12,500 2015 2016 2017 2018 9/30/2019 Core Net Income and Earnings Per Share (EPS)* 1 *Core net income and EPS exclude merger and acquisition cost, gains (losses) on sale of securities and losses on early exting uis hment o
Slide 33: ROAA
0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 2015 2016 2017 2018 9/30/2019 0.73% 0.75% 0.62% 1.04% 1.00% ROAA FINANCIAL RESULTS 1 Includes an increase in deferred tax expense of $1.247 million as a result of the lower tax rates enacted by the Tax Cut and Job s Act passed December 22, 2017. Without this
Slide 34: ROTCE
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 2015 2016 2017 2018 9/30/2019 8.68% 8.76% 7.22% 12.44% 11.10% ROTCE 1 FINANCIAL RESULTS 1 See Non - GAAP reconciliation on page 52. 2 Includes an increase in deferred tax expense of $1.247 million as a result of the lower tax rates enacted by the Ta
Slide 35: Dividend
$0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 2015 2016 2017 2018 9/30/2019 $0.28 $0.32 $0.36 $0.40 $0.33 Increased January 2019 to $0.11 for the quarter Dividend FINANCIAL RESULTS 35
Slide 36: Tangible Book Value
$9.00 $9.50 $10.00 $10.50 $11.00 $11.50 $12.00 $12.50 $13.00 $13.50 $14.00 12/31/15 12/31/16 12/31/17 12/31/18 9/30/19 $10.84 $11.28 $11.66 $12.56 $13.84 Tangible Book Value 1 FINANCIAL RESULTS 36 1 See Non - GAAP reconciliation on page 52.
Slide 37: Shareholder Return vs. Benchmark
SHAREHOLDER RETURN VS. BENCHMARK 37
Slide 38: 2019 Total Shareholder Return vs. Indexes
2019 Total Shareholder Return vs. Index(es) SHAREHOLDER RETURN vs. BENCHMARK As of September 30, 2019 38
Slide 39: Three-Year Total Shareholder Return vs. Indexes
Total Shareholder Return vs. Index(es) Three Years Ended September 30, 2019 SHAREHOLDER RETURN vs. BENCHMARK 39
Slide 40: Investment in the Franchise
INVESTMENT IN THE FRANCHISE 40
Slide 41: October 2017 Cornerstone National Bank Merger
INVESTMENT IN THE FRANCHISE October 2017 Cornerstone National Bank Merger 41
Slide 42: March 2018 Downtown Augusta Office
March 2018 Downtown Augusta Office INVESTMENT IN THE FRANCHISE 42
Slide 43: February 2019 Downtown Greenville Office
February 2019 Downtown Greenville Office INVESTMENT IN THE FRANCHISE 43
Slide 44: June 2019 Evans GA Office
INVESTMENT IN THE FRANCHISE June 2019 Evans GA Office 44
Slide 45: New Products/Services (2019, 2018)
INVESTMENT IN THE FRANCHISE New Products/Services (2019) • *Digital One is dependent on FIS New Products/Services (2018) • Mobile Wallet • Mobile Deposit • Fraud Monitoring Alerts • e-Alerts 45
Slide 46: New Products/Services (2019, 2018) - Commercial
INVESTMENT IN THE FRANCHISE New Products/Services (2019) • *Digital One is dependent on FIS • Paypoint • Full Reconcilement • Deposit Reconcilement • Contactless Cards • ACH Positive Pay New Products/Services (2018) • Origination Transaction Monitoring (Wire & ACH Origination) • Mobile Deposit • Mob
Slide 47: What's Ahead
WHAT’S AHEAD 47
Slide 48: What's Ahead
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 $400 million Drive operating leverage from recent investment in the franch
Slide 49: Summary
SUMMARY 49
Slide 50: 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 51: Forward-Looking Statements
FORWARD - LOOKING STATEMENTS SAFE HARBOR STATEMENT – THIS PRESENTATION 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 AND EXCHANGE COMMISSION THE “SEC” OR OTHERWISE . THE WORD
Slide 52: Non-GAAP Reconciliation
NON - GAAP RECONCILIATION The Bank Behind Your Business 52 1, 2