| --- | --- | --- | |-------|-------|-------------------------------------------------------------------| | | | 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 ...

First Community (FCCO) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the syste ...