First Community Corporation · NASDAQ:FCCO
First Community — US Bank Conference 2019
52 slides from First Community's conference presentation, Sep 4, 2019
Slide 1: The Bank Behind Your Business
The Bank Behind Your Business US BANK CONFERENCE September 4, 2019 Mike Crapps President and CEO Joe Sawyer CFO Tanya Butts COO and CRO
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
FOUNDATIONAL FRANCHISE VALUE Great Deposits Excellent Asset Quality Strong Capital 11
Slide 12: Deposit Growth and 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 $791.6 $153.0 $154.7 $158.8 $148.4 $145.8 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 6/30/2019 0.93% 0.58% 0.51% 0.37% 0.37% 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% - 0.01% Credit Quality Net Loan Charge - Offs 2015 2016 2017 2018 1H19 FOUNDATIONAL FRANCHISE VALUE 14
Slide 15: Capital and 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. 15 12/31/17 12/31/18 06/30/19 TCE / TA Ratio (Corporation) 8.56% 8.92% 9.20% Leverage Ratio (Bank) 9.86% 9.98% 10.19% T
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
3.55% 3.59% 3.76% 3.71% 3.75% 3.74% 3.95% 4.03% 3.99% 4.22% 4.23% 4.23% 0.37% 0.35% 0.35% 0.33% 0.34% 0.30% 0.34% 0.37% 0.45% 0.49% 0.57% 0.61% 0.25% 0.24% 0.24% 0.23% 0.24% 0.22% 0.25% 0.28% 0.35% 0.39% 0.45% 0.51% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 3Q16 4Q16 1Q17 2Q17 3Q17
Slide 20: Net Interest Margin
3.19% 3.25% 3.33% 3.39% 3.42% 3.45% 3.61% 3.67% 3.55% 3.65% 3.68% 3.64% 3.29% 3.35% 3.43% 3.49% 3.52% 3.54% 3.66% 3.71% 3.60% 3.70% 3.73% 3.67% 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 Net Interest Margin FTE Net Int Marg
Slide 21: Loan Growth and Composition
$0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $489.2 $546.7 $646.8 1 $718.5 $726.7 Loan Growth (millions) LTM Growth = 6.2% 1 Cornerstone Merger: $59.0 million CRE as a % of RBC = 260.9% Yield 4.76% 4.52% 4.53% 4.90% 4.84% (Qtr Ending) ENHANCE EARNINGS Composition 06/30/19 12/31/15 12
Slide 22: Investment Portfolio
US Treasury Securities 3.6% Agency Bonds 0.4% SBA Loan Pools (Fixed) 6.3% SBA Loan Pools (Variable) 14.2% Agency CMOs (Fixed ) 32.8% Agency CMOs (Variable) 11.4% Agency MBS (Fixed ) 9.8% Agency MBS (Variable) 4.7% Municipal 15.8% Corp./Other 0.8% $235.0 $240.0 $245.0 $250.0 $255.0 $260.0 $265.0 $270
Slide 23: Financial Planning / Investment Advisory Services AUM
$0.0 $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 12.31.15 12.31.16 12.31.17 12.31.18 06.30.19 $175.6 $200.6 $269.2 $288.5 $333.9 Financial Planning / Investment Advisory Services AUM (millions) ENHANCE EARNINGS *S&P 500 – Total Return – 54.6% 23 12/31/15 12/31/16 12/31/17 12/31/18 06/30/19
Slide 24: Financial Planning / Investment Advisory Services Revenue
$200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 2015 2016 2017 2018 1H2019 $1,287 $1,135 $1,291 $1,683 $927 Financial Planning / Investment Advisory Services Revenue (000s omitted) ENHANCE EARNINGS 1 1H2018 Revenue was $784. 1 24
Slide 25: Residential Mortgage Banking Production
$0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 2015 2016 2017 2018 1H2019 $111.4 $102.5 $108.6 $119.8 $62.7 Residential Mortgage Banking Production (millions) ENHANCE EARNINGS 1 1H2018 Production was $61.6. 1 25
Slide 26: Residential Mortgage Banking Revenue
$0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 2015 2016 2017 2018 1H2019 $3.4 $3.4 $3.8 $3.9 $2.1 Residential Mortgage Banking Revenue (millions) ENHANCE EARNINGS 1 1H2018 Revenue was $2.0. 1 26
Slide 27: Efficiency Ratio
72.45% 73.11% 72.81% 68.74% 71.59% 66.00% 67.00% 68.00% 69.00% 70.00% 71.00% 72.00% 73.00% 74.00% 2015 2016 2017 2018 1H2019 Efficiency Ratio Efficiency Ratio ENHANCE EARNINGS 27
Slide 28: Risk Management & Technology
RISK MANAGEMENT & TECHNOLOGY 28
Slide 29: Risk Management & Technology
RISK MANAGEMENT & TECHNOLOGY Compliance Cybersecurity / Fraud Audit Enterprise Risk Management (ERM) - Internal P.T. Risk Report - External June 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
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 of debt, and SC State income tax credit. 1 See Non - GAAP reconciliation on page 52. 2 1H2018 Core net income and EP
Slide 33: ROAA
0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 2015 2016 2017 2018 1H2019 0.73% 0.75% 0.62% 1.04% 0.99% 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 on
Slide 34: ROTCE
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 2015 2016 2017 2018 1H2019 8.68% 8.76% 7.22% 12.44% 10.95% 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 Tax C
Slide 35: Dividend
$0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 2015 2016 2017 2018 1H2019 $0.28 $0.32 $0.36 $0.40 $0.22 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 12/31/15 12/31/16 12/31/17 12/31/18 6/30/19 $10.84 $11.28 $11.66 $12.56 $13.46 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. Index(es)
-4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% - 3.65% 13.76% 5.95% 2019 Total Shareholder Return vs. Index(es) SHAREHOLDER RETURN vs. BENCHMARK As of June 30, 2019 38
Slide 39: Three-Year Total Shareholder Return vs. Index(es)
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% 50.00% FCCO NASDAQ Bank Index SNL Microcap Bank Index 39.98% 43.16% 47.83% Total Shareholder Return vs. Index(es) Three Years Ended June 30, 2019 SHAREHOLDER RETURN vs. BENCHMARK 39
Slide 40: Investment in the Franchise
INVESTMENT IN THE FRANCHISE 40
Slide 41: Cornerstone National Bank Merger
INVESTMENT IN THE FRANCHISE October 2017 Cornerstone National Bank Merger 41
Slide 42: Downtown Augusta Office
March 2018 Downtown Augusta Office INVESTMENT IN THE FRANCHISE 42
Slide 43: Downtown Greenville Office
February 2019 Downtown Greenville Office INVESTMENT IN THE FRANCHISE 43
Slide 44: Evans GA Office
INVESTMENT IN THE FRANCHISE June 2019 Evans GA Office 44
Slide 45: New Products/Services
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
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 $375 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 Safe Harbor Statement
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