Core Viewpoint - First Community (FCCO) is experiencing solid improvement in earnings estimates, which may lead to continued short-term price momentum for the stock [1][2]. Earnings Estimates - The rising trend in earnings estimate revisions reflects growing analyst optimism regarding First Community Bank's earnings prospects, which is expected to positively impact the stock price [2]. - For the current quarter, First Community is projected to earn $0.44 per share, representing a significant increase of +91.3% compared to the same quarter last year [4]. - Over the past 30 days, the Zacks Consensus Estimate for First Community has risen by 9.09%, with two estimates moving higher and no negative revisions [4]. - For the full year, the earnings estimate stands at $1.67 per share, indicating a change of +7.74% from the previous year [5]. - The consensus estimate for the current year has increased by 8.44%, with two estimates moving higher and no negative revisions [5]. Zacks Rank - First Community has achieved a Zacks Rank 1 (Strong Buy), indicating strong agreement among analysts in revising earnings estimates upward [7]. - The Zacks Rank system has a proven track record, with Zacks 1 Ranked stocks generating an average annual return of +25% since 2008 [3]. Investment Outlook - The positive estimate revisions have led to a 27.5% increase in First Community's stock price over the past four weeks, suggesting potential for further upside [8].

| --- | --- | --- | |-------|-------|-------------------------------------------------------------------| | | | News Release For Release July 17, 2024 9:00 A.M. | | | | | | | | Contact: (803) 951- 2265 | | | | D. Shawn Jordan, EVP & Chief Financial Officer or | | | | Robin D. Brown, EVP & Chief Marketing Officer | | --- | --- | |-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

First Community (FCCO) reported $16.34 million in revenue for the quarter ended June 2024, representing a year-over-year increase of 7.5%. EPS of $0.42 for the same period compares to $0.43 a year ago. Here is how First Community performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Net Interest Margin (taxable equivalent): 2.9% versus 2.8% estimated by two analysts on average. Efficiency Ratio: 72.8% versus the two-analyst average estima ...

First Community (FCCO) came out with quarterly earnings of $0.42 per share, beating the Zacks Consensus Estimate of $0.37 per share. This compares to earnings of $0.43 per share a year ago. These figures are adjusted for non-recurring items. Over the last four quarters, the company has surpassed consensus EPS estimates two times. First Community, which belongs to the Zacks Banks - Southeast industry, posted revenues of $16.34 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate b ...

PART I – FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for First Community Corporation, showing total assets of **$1.89 billion** and a net income of **$2.6 million** for the quarter ended March 31, 2024 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$1.89 billion** as of March 31, 2024, driven by loan growth and a **$67 million** rise in deposits Consolidated Balance Sheet Highlights (Unaudited) | (Dollars in thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$1,886,991** | **$1,827,688** | | Net loans held-for-investment | $1,144,846 | $1,121,752 | | Total investment securities (AFS & HTM) | $489,579 | $499,396 | | **Total Liabilities** | **$1,753,498** | **$1,696,629** | | Total deposits | $1,578,067 | $1,511,001 | | Federal Home Loan Bank advances | $60,000 | $90,000 | | **Total Shareholders' Equity** | **$133,493** | **$131,059** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q1 2024 decreased to **$2.6 million** due to a significant rise in interest expense, impacting net interest income Consolidated Income Statement Summary (Unaudited) | (Dollars in thousands, except per share) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total interest income | $21,256 | $15,890 | | Total interest expense | $9,179 | $3,533 | | **Net interest income** | **$12,077** | **$12,357** | | Provision for credit losses | $129 | $70 | | Total non-interest income | $3,184 | $2,575 | | Total non-interest expense | $11,805 | $10,436 | | **Net income** | **$2,597** | **$3,463** | | **Diluted earnings per common share** | **$0.34** | **$0.45** | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for Q1 2024 was **$3.3 million**, a decrease from the prior year due to lower net income and other comprehensive income Comprehensive Income (Unaudited) | (Dollars in thousands) | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Net income | $2,597 | $3,463 | | Other comprehensive income | $749 | $2,913 | | **Comprehensive income** | **$3,346** | **$6,376** | [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity increased to **$133.5 million** driven by net income and other comprehensive income, partially offset by dividends - Key drivers for the change in shareholders' equity in Q1 2024 included net income of **$2.6 million**, other comprehensive income of **$749 thousand**, and common stock dividends of **$1.1 million** (**$0.14** per share)[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash increased by **$48.9 million** in Q1 2024, driven by financing activities, primarily a **$67.1 million** rise in deposits Cash Flow Summary (Unaudited) | (Dollars in thousands) | Three months ended March 31, 2024 | | :--- | :--- | | Net cash provided by operating activities | $4,702 | | Net cash used in investing activities | $(10,939) | | Net cash provided by financing activities | $55,124 | | **Net increase in cash and cash equivalents** | **$48,887** | | Cash and cash equivalents at end of period | $143,582 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details accounting policies and financial data, covering EPS, loan and investment quality, fair value, deposits, and derivatives - Diluted earnings per share was **$0.34** for Q1 2024, down from **$0.45** in Q1 2023[25](index=25&type=chunk) - The company's loan portfolio grew to **$1.16 billion** as of March 31, 2024, with commercial real estate mortgages comprising the largest segment at **$792.3 million**[44](index=44&type=chunk) - Total uninsured deposits were **$470.0 million** at March 31, 2024, of which **$94.4 million** were collateralized public funds[79](index=79&type=chunk) - The company entered into a **$150.0 million** notional pay-fixed/receive-floating interest rate swap in May 2023 to hedge the fair value of its fixed-rate loan portfolio[84](index=84&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2024 financial results, highlighting a net income decline to **$2.6 million** due to margin compression, strong loan and deposit growth, and robust credit quality [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Net income decreased to **$2.6 million** in Q1 2024 due to lower net interest income and higher non-interest expense, despite non-interest income growth Net Income Comparison | (Dollars in thousands, except per share) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income | $2,600 | $3,500 | | Diluted EPS | $0.34 | $0.45 | - Net interest margin decreased by **39 basis points** to **2.78%** in Q1 2024 from **3.17%** in Q1 2023, driven by a significant increase in the cost of interest-bearing liabilities from **1.30%** to **2.88%**[113](index=113&type=chunk)[118](index=118&type=chunk) - Non-interest income increased by **$609 thousand**, primarily due to a **$270 thousand** increase in mortgage banking income and a **$291 thousand** increase in investment advisory fees[125](index=125&type=chunk) - Non-interest expense rose by **$1.4 million**, largely due to a **$770 thousand** increase in salaries and benefits from normal salary adjustments and new staff additions[130](index=130&type=chunk)[131](index=131&type=chunk) [Allowance for Credit Losses](index=37&type=section&id=Allowance%20for%20Credit%20Losses) The allowance for credit losses remained stable at **1.08%** of loans, with strong credit quality and a low **0.04%** non-performing asset ratio Credit Quality Metrics | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | ACL as % of total loans | 1.08% | 1.08% | | Non-performing assets as % of total assets | 0.04% | 0.05% | | Non-accrual loans | $56,000 | $27,000 | - The company experienced net loan charge-offs of **$22 thousand** in Q1 2024, compared to net recoveries of **$11 thousand** in Q1 2023[141](index=141&type=chunk) [Financial Position](index=40&type=section&id=Financial%20Position) Total assets grew to **$1.9 billion** in Q1 2024, driven by **$23.3 million** in loan growth and **$67.1 million** in deposit increases - Total assets increased by **$59.3 million**, or **3.2%**, during the first quarter of 2024[145](index=145&type=chunk) - Loans held-for-investment grew by **$23.3 million**, or **8.2%** annualized, during the quarter[146](index=146&type=chunk) - Total deposits increased by **$67.1 million**, or **17.8%** annualized, to **$1.6 billion**. The company utilized **$60.5 million** in brokered certificates of deposit as of March 31, 2024[159](index=159&type=chunk) - Shareholders' equity increased by **$2.4 million**, primarily due to retained earnings and a **$749 thousand** improvement in accumulated other comprehensive loss[166](index=166&type=chunk) [Market Risk, Liquidity, and Capital Resources](index=46&type=section&id=Market%20Risk%2C%20Liquidity%2C%20and%20Capital%20Resources) The company is liability-sensitive to interest rate risk, maintains strong liquidity with **$481.9 million** in facilities, and remains well-capitalized with a **13.71%** Total Capital Ratio - The company is primarily liability sensitive. A hypothetical **+100 basis point** parallel shift in interest rates is projected to decrease net interest income by **2.13%** over the next 12 months[171](index=171&type=chunk)[173](index=173&type=chunk) - Total available liquidity, including FHLB and other credit lines, exceeds **$481.9 million**, which is greater than the **$375.6 million** of uninsured and uncollateralized deposits[179](index=179&type=chunk) Bank Capital Ratios (Actual vs. Well Capitalized) | Capital Ratio | Actual (Mar 31, 2024) | Well Capitalized Req. | | :--- | :--- | :--- | | Leverage Ratio | 8.35% | 5.00% | | Common Equity Tier 1 | 12.65% | 6.50% | | Tier 1 Capital | 12.65% | 8.00% | | Total Capital | 13.71% | 10.00% | [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable, as market risk disclosures are provided within the Management's Discussion and Analysis section - The report states this section is not applicable, as market risk disclosures are provided within the MD&A section[191](index=191&type=chunk) [Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during Q1 2024 - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the period[192](index=192&type=chunk) - No material changes were made to internal control over financial reporting during the quarter ended March 31, 2024[194](index=194&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any pending legal proceedings that would materially impact its financial condition or operations - There are no material pending legal proceedings against the company[197](index=197&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have been reported since the company's last Annual Report on Form 10-K - No material changes to risk factors were reported since the last Annual Report on Form 10-K[199](index=199&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued **4,056** deferred stock units to directors in Q1 2024 under a compensation plan, with no share repurchases made - An aggregate of **4,056** deferred stock units were issued to directors in Q1 2024 under a deferred compensation plan[204](index=204&type=chunk) - No share repurchases were made during the three months ended March 31, 2024[204](index=204&type=chunk) [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and iXBRL data files - Exhibits filed include CEO and CFO certifications (**31.1**, **31.2**), Section **1350** certifications (**32**), and iXBRL formatted financial statements (**101**)[205](index=205&type=chunk)

Financial Performance - First Community Corporation reported net income of $2.597 million for Q1 2024, with diluted earnings per share of $0.34, down from $3.463 million and $0.45 in Q1 2023[4]. - Net income for the three months ended March 31, 2024, was $2,597 thousand, down from $3,297 thousand in the previous quarter and $3,463 thousand in the same quarter last year, indicating a decline of 25% year-over-year[28]. - Return on average assets decreased to 0.56% for the three months ended March 31, 2024, compared to 0.72% in the previous quarter and 0.83% in the same quarter last year[28]. - Return on average tangible common equity (non-GAAP) decreased to 8.95% for the three months ended March 31, 2024, down from 11.93% for the same period in 2023[30]. - The company reported a decrease in pre-tax, pre-provision earnings adjustment of $859 million for the three months ended March 31, 2024[30]. Deposits and Loans - Total deposits increased to $1.578 billion, reflecting a growth of $67.1 million or 17.9% annualized compared to $1.511 billion at December 31, 2023[10]. - Customer deposit growth was $54.7 million during the quarter, representing a 15.0% annualized growth rate[5]. - Total loans increased by $23.3 million to $1.157 billion, an 8.3% annualized growth rate, driven by growth in residential and commercial loan portfolios[16]. - Total loans amounted to $1,157,305 thousand as of March 31, 2024, an increase from $1,134,019 thousand at December 31, 2023, and $992,720 thousand at March 31, 2023, showing a year-over-year growth of 16.5%[27]. - The loan to deposit ratio (including loans held-for-sale) was 73.45% as of March 31, 2024, down from 75.34% at the end of 2023[26]. Income and Expenses - Non-interest income for Q1 2024 was $3.184 million, up from $2.931 million in Q4 2023 and $2.575 million in Q1 2023[19]. - Non-interest income increased to $3,184 thousand for the three months ended March 31, 2024, up from $2,931 thousand in the previous quarter and $2,575 thousand in the same quarter last year, reflecting a growth of 23.6% year-over-year[28]. - Non-interest expense increased by $1.125 million to $11.805 million in Q1 2024 from $10.680 million in Q4 2023, driven by higher salaries and benefits, marketing expenses, and other costs[20]. - Salaries and benefits expense rose by $689 thousand, primarily due to $389 thousand in higher incentive accruals and increased payroll taxes[20]. Capital and Assets - The bank's regulatory capital ratios were above required minimums, with a Tier I Risk Based ratio of 12.65% as of March 31, 2024[6]. - The bank's tangible book value per share increased to $15.51 at March 31, 2024, up from $15.23 at December 31, 2023[7]. - Total assets increased to $1,886,991 thousand as of March 31, 2024, up from $1,827,688 thousand at the end of 2023[26]. - Average total assets increased to $1,857,716 thousand as of March 31, 2024, up from $1,809,653 thousand at December 31, 2023, and $1,695,654 thousand at March 31, 2023, representing a year-over-year growth of 9.6%[27]. - The company reported a book value per common share of $17.50 as of March 31, 2024, up from $17.23 at the end of 2023[26]. Dividends and Future Plans - Cash dividend of $0.14 per common share was declared, marking the 89th consecutive quarter of cash dividends paid[6]. - The company plans to close its banking office in Augusta, Georgia, effective June 27, 2024, with estimated annual cost savings of $327 thousand[21]. Risks and Non-GAAP Measures - The company highlighted potential risks including competitive pressures, economic conditions, and technology risks that could impact future performance[23]. - The company emphasizes that non-GAAP measures are useful for evaluating operating results but should not be considered in isolation from GAAP results[31]. - Definitions of non-GAAP measures include tangible book value per common share and pre-tax, pre-provision earnings, which are critical for financial analysis[32].

First Community (FCCO) reported $15.26 million in revenue for the quarter ended March 2024, representing a year-over-year increase of 2.2%. EPS of $0.34 for the same period compares to $0.45 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $14.83 million, representing a surprise of +2.91%. The company has not delivered EPS surprise, with the consensus EPS estimate being $0.34.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Stre ...

First Community (FCCO) came out with quarterly earnings of $0.34 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.45 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this holding company for First Community Bank would post earnings of $0.37 per share when it actually produced earnings of $0.43, delivering a surprise of 16.22%.Over the last four quarters, the company has surpassed consensus EPS estimates two time ...

PART I [Business](index=7&type=section&id=Item%201.%20Business) First Community Corporation is a bank holding company providing commercial and retail banking services in South Carolina and Georgia Company Financial Snapshot (as of December 31, 2023) | Metric | Amount (in billions) | | :--- | :--- | | Total Assets | $1.8 | | Total Loans | $1.1 | | Total Deposits | $1.5 | | Shareholders' Equity | $0.1311 | - The company operates **22 full-service offices** across the Midlands, Upstate, and Piedmont regions of South Carolina, as well as the Central Savannah River Area (CSRA) including Augusta, Georgia[29](index=29&type=chunk)[34](index=34&type=chunk) - The company offers a wide range of traditional banking products, including commercial and consumer loans, mortgage services, deposit accounts, brokerage, and investment services[30](index=30&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - As of December 31, 2023, the company employed **268 full-time, 14 part-time, and five seasonal/on-call employees**[44](index=44&type=chunk) [Supervision and Regulation](index=13&type=section&id=SUPERVISION%20AND%20REGULATION) The company and its bank are subject to extensive state and federal banking regulations, including capital and anti-money laundering rules - The Bank is subject to Basel III capital rules, requiring minimum ratios for Common Equity Tier 1 (**4.5%**), Tier 1 (**6.0%**), and Total capital (**8.0%**), plus a **2.5% capital conservation buffer**[61](index=61&type=chunk)[63](index=63&type=chunk)[68](index=68&type=chunk) - The Bank is subject to the Community Reinvestment Act (CRA), which requires meeting the credit needs of its community, including low- and moderate-income neighborhoods, and received a "satisfactory" rating in its most recent CRA examination[110](index=110&type=chunk) - The Bank's non-owner-occupied commercial real estate loans were approximately **313% of total risk-based capital** as of December 31, 2023, exceeding the **300% supervisory threshold** in the CRE Guidance, which may warrant greater supervisory scrutiny[156](index=156&type=chunk) - The Company and Bank must comply with anti-money laundering (AML) programs under the Bank Secrecy Act (BSA) and the USA PATRIOT Act, which include requirements for customer identification, suspicious activity reporting, and enhanced due diligence[125](index=125&type=chunk)[127](index=127&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from economic conditions, credit losses, interest rate changes, operational failures, and regulations - The business is highly dependent on economic conditions in its primary markets of South Carolina and Georgia, where a downturn could deteriorate credit quality and reduce demand for its products[160](index=160&type=chunk)[161](index=161&type=chunk) - A significant concentration of credit exposure exists in commercial real estate, which comprised approximately **78.5% of total loans** as of December 31, 2023, posing a risk if this market experiences a downturn[167](index=167&type=chunk) - Changes in prevailing interest rates can significantly impact net interest income, with the Federal Reserve's monetary policies directly affecting profitability[178](index=178&type=chunk)[188](index=188&type=chunk) - Operational risks include system failures and cybersecurity attacks, where a breach could lead to disclosure of confidential information, reputational damage, and financial losses[209](index=209&type=chunk)[212](index=212&type=chunk) - The company operates in a highly regulated industry, and changes in laws, accounting standards, or regulatory policies could restrict activities and impose significant compliance costs[219](index=219&type=chunk)[220](index=220&type=chunk) [Unresolved Staff Comments](index=46&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - Not applicable[247](index=247&type=chunk) [Cybersecurity](index=46&type=section&id=Item%201C.%20Cybersecurity) The company's cybersecurity program, based on NIST, is overseen by the Information Security Officer and board - The cybersecurity program is overseen by the Information Security Officer, who reports to the Chief Operations/Chief Risk Officer and periodically to the Audit & Compliance Committee of the board of directors[248](index=248&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk) - The information security program is designed around the National Institute of Standards and Technology (NIST) Cybersecurity Framework and utilizes a layered, defensive strategy[249](index=249&type=chunk)[250](index=250&type=chunk) - An Incident Response Program is in place to provide a framework for responding to cybersecurity incidents, including escalation to executive officers and the board[251](index=251&type=chunk) - To date, cybersecurity threats have not had a material effect on the company[252](index=252&type=chunk) [Properties](index=47&type=section&id=Item%202.%20Properties) The company operates 22 full-service offices across South Carolina and Georgia, mostly owned - The company operates **22 full-service offices** in South Carolina and Georgia, with most properties owned, except for three leased full-service branch offices[257](index=257&type=chunk) - The company intends to close one office in downtown Augusta, Georgia on June 27, 2024[257](index=257&type=chunk) [Legal Proceedings](index=47&type=section&id=Item%203.%20Legal%20Proceedings) The company reports that it is not a party to any pending or threatened legal proceedings that would have a material effect - In the ordinary course of operations, the company may be a party to various legal proceedings, but none are currently believed to have a material effect[258](index=258&type=chunk) [Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[259](index=259&type=chunk) PART II [Market for Registrant's Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities](index=48&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Shareholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ, paid quarterly dividends, and had an expired stock repurchase plan Quarterly Common Stock Dividends per Share | Year | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | **2023** | $0.14 | $0.14 | $0.14 | $0.14 | | **2022** | $0.13 | $0.13 | $0.13 | $0.13 | - The company's ability to pay dividends is dependent on the Bank's ability to pay dividends to the holding company, which is subject to regulatory restrictions, including maintaining a capital conservation buffer[264](index=264&type=chunk)[265](index=265&type=chunk) - A stock repurchase plan approved in April 2022 for up to **375,000 shares** expired on December 31, 2023, with no repurchases made under the plan[267](index=267&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income decreased in 2023 due to lower non-interest income and higher expenses, with CECL adoption impacting results Key Performance Indicators | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Income (in millions) | $11.8 | $14.6 | | Diluted EPS | $1.55 | $1.92 | | Return on Average Assets | 0.68% | 0.88% | | Return on Average Common Equity | 9.59% | 11.99% | | Net Interest Margin (tax equivalent) | 3.01% | 3.14% | - The decline in 2023 net income was primarily driven by lower non-interest income, higher non-interest expenses, and an increased provision for credit losses[293](index=293&type=chunk) - Total assets increased by **$154.7 million (9.2%)** to **$1.8 billion** at year-end 2023, mainly due to a **$153.2 million (15.6%)** increase in loans[369](index=369&type=chunk) - The company adopted the CECL accounting standard for credit losses on January 1, 2023, resulting in a day-one adjustment that decreased retained earnings by **$337 thousand**[277](index=277&type=chunk)[325](index=325&type=chunk) [Results of Operations](index=53&type=section&id=Results%20of%20Operations) Net income decreased to $11.8 million in 2023, primarily due to lower non-interest income and higher expenses Comparison of Results of Operations (2023 vs. 2022) | Item (in thousands) | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $48,892 | $47,943 | +$949 | | Provision for Credit Losses | $1,129 | ($152) | +$1,281 | | Non-interest Income | $10,421 | $11,569 | -$1,148 | | Non-interest Expense | $43,144 | $41,253 | +$1,891 | | **Net Income** | **$11,843** | **$14,613** | **-$2,770** | - The increase in provision for credit losses in 2023 was mainly due to significant loan growth and an increase in unfunded commitments[294](index=294&type=chunk) - The decline in non-interest income was driven by a **$1.2 million loss** on the sale of securities and a **$494 thousand decrease** in mortgage banking income[295](index=295&type=chunk) - The rise in non-interest expense was attributed to higher costs in salaries, equipment, marketing, and FDIC insurance assessments[295](index=295&type=chunk) [Net Interest Income](index=55&type=section&id=Net%20Interest%20Income) Net interest income increased to $48.9 million in 2023, but net interest margin compressed due to rising funding costs Net Interest Income and Margin Analysis | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Interest Income (in thousands) | $48,892 | $47,943 | | Average Earning Assets (in thousands) | $1,632,111 | $1,541,381 | | Yield on Earning Assets | 4.45% | 3.32% | | Cost of Interest-Bearing Liabilities | 2.06% | 0.30% | | Net Interest Margin (tax equivalent) | 3.01% | 3.14% | - The increase in net interest income was primarily driven by a **$90.7 million increase** in average earning assets, led by a **$127.7 million increase** in average loans[300](index=300&type=chunk)[301](index=301&type=chunk) - A **$150.0 million pay-fixed/receive-floating interest rate swap**, effective May 5, 2023, positively impacted loan yields by **16 basis points** and the net interest margin by **10 basis points** for the year[303](index=303&type=chunk) [Provision and Allowance for Credit Losses](index=63&type=section&id=Provision%20and%20Allowance%20for%20Credit%20Losses) Following CECL adoption, credit loss provision increased, ACL grew, and non-performing assets decreased Allowance for Credit Losses (ACL) on Loans | Metric | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | ACL on Loans (in thousands) | $12,267 | $11,336 | | ACL as % of Total Loans | 1.08% | 1.16% | | Provision for (Release of) Credit Losses (in thousands) | $1,129 | ($152) | - Non-performing assets decreased to **$864 thousand (0.05% of total assets)** at year-end 2023 from **$5.8 million (0.35% of total assets)** at year-end 2022[330](index=330&type=chunk) - The decrease in non-performing assets was mainly due to the successful resolution of two customer relationships with non-accrual loans, including one large **$3.9 million relationship** resolved through foreclosure and sale of the property[330](index=330&type=chunk) [Non-interest Income and Expense](index=69&type=section&id=Non-interest%20Income%20and%20Expense) Non-interest income decreased due to securities sales loss, while non-interest expense increased Non-interest Income & Expense Summary (in thousands) | Category | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | **Non-interest Income** | **$10,421** | **$11,569** | **($1,148)** | | Mortgage Banking Income | $1,406 | $1,900 | ($494) | | Loss on Sale of Securities | ($1,249) | $0 | ($1,249) | | **Non-interest Expense** | **$43,144** | **$41,253** | **$1,891** | | Salaries and Employee Benefits | $25,864 | $25,357 | $507 | | FDIC Insurance Assessments | $904 | $468 | $436 | - A one-time pre-tax loss of **$1.2 million** was recognized in Q3 2023 from the sale of **$39.9 million of U.S. Treasuries** to improve liquidity and future net interest margin[349](index=349&type=chunk) - Mortgage banking income declined due to a higher interest rate environment and low housing inventory, which reduced secondary market production from **$65.8 million in 2022** to **$49.7 million in 2023**[350](index=350&type=chunk) [Financial Position](index=74&type=section&id=Financial%20Position) Total assets grew to $1.83 billion in 2023, driven by loan growth funded by increased deposits Balance Sheet Highlights (as of Dec 31) | (in millions) | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Total Assets | $1,827.7 | $1,672.9 | +9.2% | | Net Loans | $1,121.8 | $969.5 | +15.7% | | Investment Securities | $506.2 | $564.8 | -10.4% | | Total Deposits | $1,511.0 | $1,385.4 | +9.1% | - The loan portfolio's growth was driven by increases across all major categories, with commercial mortgage loans remaining the largest component at **69.8% of the total portfolio**[373](index=373&type=chunk) - The investment securities portfolio decreased mainly due to a sale of **$39.9 million** in U.S. Treasuries and normal principal cash flows[378](index=378&type=chunk) [Capital Adequacy and Dividend Policy](index=80&type=section&id=Capital%20Adequacy%20and%20Dividend%20Policy) Shareholders' equity increased to $131.1 million, and the Bank remained well-capitalized Bank Regulatory Capital Ratios (as of Dec 31, 2023) | Ratio | Actual | Required (Well Capitalized) | | :--- | :--- | :--- | | Tier 1 Risk-Based Capital | 12.53% | > 8.0% | | Total Risk-Based Capital | 13.58% | > 10.0% | | CET1 Capital | 12.53% | > 6.5% | | Tier 1 Leverage | 8.45% | > 5.0% | - The increase in shareholders' equity was driven by **$11.8 million in net income**, partially offset by **$4.2 million in dividends**, with a **$4.2 million improvement** in accumulated other comprehensive loss also contributing[399](index=399&type=chunk) - The quarterly dividend was increased to **$0.14 per share** in 2023, resulting in a total annual dividend of **$0.56 per share**[401](index=401&type=chunk) [Financial Statements and Supplementary Data](index=80&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements, with an unqualified auditor's opinion - The independent auditor, Elliott Davis, LLC, issued an unqualified opinion on the consolidated financial statements[428](index=428&type=chunk) - The auditor identified the Allowance for Credit Losses as a critical audit matter due to the high degree of subjectivity and judgment involved, especially with the adoption of the new CECL standard (ASC 326) on January 1, 2023[433](index=433&type=chunk)[436](index=436&type=chunk) [Consolidated Balance Sheets](index=84&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $1.83 billion in 2023, driven by loan growth, with increased liabilities and equity Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$1,827,688** | **$1,672,946** | | Net Loans Held-for-Investment | $1,121,752 | $969,521 | | Investment Securities (AFS & HTM) | $499,396 | $560,563 | | **Total Liabilities** | **$1,696,629** | **$1,554,585** | | Total Deposits | $1,511,001 | $1,385,382 | | **Total Shareholders' Equity** | **$131,059** | **$118,361** | [Consolidated Statements of Income](index=85&type=section&id=Consolidated%20Statements%20of%20Income) Net income decreased to $11.8 million in 2023, primarily due to higher credit loss provision and expenses Consolidated Income Statement Summary (in thousands) | Item | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net Interest Income | $48,892 | $47,943 | $45,279 | | Provision for (Release of) Credit Losses | $1,129 | ($152) | $335 | | Non-interest Income | $10,421 | $11,569 | $13,904 | | Non-interest Expense | $43,144 | $41,253 | $39,201 | | **Net Income** | **$11,843** | **$14,613** | **$15,465** | | **Diluted EPS** | **$1.55** | **$1.92** | **$2.05** | [Notes to Consolidated Financial Statements](index=89&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, CECL adoption, portfolio composition, and capital adequacy - The company adopted the CECL methodology (ASU 2016-13) on January 1, 2023, replacing the incurred loss model with an expected loss model for financial assets, resulting in a net decrease to retained earnings of **$337,400**[477](index=477&type=chunk)[478](index=478&type=chunk) - The loan portfolio's largest concentration is in commercial mortgage loans, which totaled **$791.9 million (69.8% of total gross loans)** as of December 31, 2023[373](index=373&type=chunk)[528](index=528&type=chunk) - The Bank's regulatory capital ratios at December 31, 2023, were all above the levels required to be considered "well capitalized," with a Total Risk-Based Capital ratio of **13.6%**[628](index=628&type=chunk) - The company has four reportable segments: Commercial and retail banking, Mortgage Banking, Investment advisory and non-deposit, and Corporate, with the Commercial and Retail Banking segment generating the majority of net income in 2023[642](index=642&type=chunk)[644](index=644&type=chunk) [Controls and Procedures](index=131&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of December 31, 2023[646](index=646&type=chunk) - Management assessed internal control over financial reporting using the COSO framework and concluded it was effective as of December 31, 2023[648](index=648&type=chunk) - No material changes were made to internal controls over financial reporting during the most recent fiscal quarter[649](index=649&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=132&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 proxy statement - The information required for this item is incorporated by reference from the company's 2024 proxy statement[654](index=654&type=chunk) [Executive Compensation](index=132&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement for its 2024 annual meeting of shareholders - The information required for this item is incorporated by reference from the company's 2024 proxy statement[656](index=656&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=132&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Information on security ownership is incorporated by reference from the 2024 proxy statement, with no outstanding options reported - The information required for this item is incorporated by reference from the company's 2024 proxy statement[658](index=658&type=chunk) - There were no outstanding options as of December 31, 2023[657](index=657&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=132&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's definitive proxy statement for its 2024 annual meeting of shareholders - The information required for this item is incorporated by reference from the company's 2024 proxy statement[659](index=659&type=chunk) [Principal Accountant Fees and Services](index=132&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's definitive proxy statement for its 2024 annual meeting of shareholders - The information required for this item is incorporated by reference from the company's 2024 proxy statement[660](index=660&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=133&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements from Item 8 and exhibits filed with the Form 10-K - This section contains a list of all financial statements filed with the report, which are located in Item 8[662](index=662&type=chunk) - An index of exhibits filed with the Form 10-K is provided, including governance documents, material contracts, certifications, and XBRL data files[664](index=664&type=chunk)[667](index=667&type=chunk)

First Community (FCCO) shares rallied 7.9% in the last trading session to close at $17.40. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 8.9% loss over the past four weeks.After getting hammered because of industry-wide concern related to commercial real estate (CRE) loans, shares of First Community are showing signs of improvement. The company’s manageable CRE loan exposure and the Federal Reserve’s signal ...