First munity (FCCO) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Second Quarter 2025 Financial Highlights First Community Corporation reported record earnings for Q2 2025, with significant increases in net income and diluted EPS both on a linked quarter and year-over-year basis. The company also achieved margin expansion, record assets under management, and strong mortgage production, alongside excellent credit quality metrics and an increased cash dividend Key Financial Performance (Q2 2025) | Metric | Q2 2025 Value | Linked Quarter Change | Year-over-Year Change | | :-------------------------------- | :---------------- | :-------------------- | :-------------------- | | Net Income | $5.186 million | +29.7% | +58.8% | | Diluted EPS | $0.67 | +31.4% | +59.5% | | Net Interest Margin (tax equivalent) | 3.21% | +8 basis points | N/A | | Investment Advisory Revenue | $1.751 million | N/A | N/A | | Mortgage Production | $62.9 million | N/A | N/A | | Total Loans Increase | $8.1 million | N/A | N/A | | Customer Deposit Growth | $28.3 million | N/A | N/A | | Net Charge-offs (incl. overdrafts) | $10 thousand | N/A | N/A | | Non-performing Assets | 0.02% | N/A | N/A | | Past Due Loans | 0.02% | N/A | N/A | - The company increased its cash dividend to $0.16 per common share, marking the 94th consecutive quarter of cash dividends paid[1] Year-to-Date 2025 Financial Highlights For the first six months of 2025, First Community Corporation demonstrated strong financial growth, with substantial increases in net income and diluted EPS compared to the same period in 2024, supported by solid loan and customer deposit growth Key Financial Performance (Six Months Ended June 30, 2025) | Metric | YTD 2025 Value | YTD 2024 Value | Year-over-Year Change | | :-------------------------- | :------------- | :------------- | :-------------------- | | Net Income | $9.183 million | $5.862 million | +56.7% | | Diluted EPS | $1.18 | $0.76 | +55.3% | | Loans Increase | $39.5 million | N/A | +6.5% (annualized) | | Customer Deposit Growth | $78.1 million | N/A | +9.5% (annualized) | Operational & Strategic Highlights Operationally, the company achieved a significant milestone with assets under management exceeding $1 billion for the first time. Strategically, an agreement was announced to acquire Signature Bank of Georgia, signaling expansion into a new market and business line - Assets under management (AUM) reached a record $1.011 billion at June 30, 2025, marking a 9.1% increase year-to-date[1] - The company announced the signing of an agreement to acquire Signature Bank of Georgia[1] Financial Performance Overview Net Income and Earnings Per Share First Community Corporation reported substantial growth in net income and diluted earnings per share for both the second quarter and the first half of 2025, reflecting strong financial performance compared to previous periods Net Income and Diluted EPS Trends | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :---------------- | :------ | :------ | :------ | :------- | :------- | | Net Income (million) | $5.186 | $3.997 | $3.265 | $9.183 | $5.862 | | Diluted EPS | $0.67 | $0.51 | $0.42 | $1.18 | $0.76 | Cash Dividend and Capital Management The Board of Directors approved an increased cash dividend, continuing a long-standing payout history. The company maintains strong regulatory capital ratios well above minimum requirements and has a share repurchase plan in place, though no shares have been repurchased to date. Tangible book value per share also saw consistent growth - An increased cash dividend of $0.16 per share was approved for Q2 2025, marking the 94th consecutive quarter of cash dividends[4] - A share repurchase plan of up to $7.5 million was approved, representing approximately 5.0% of total shareholders' equity as of March 31, 2025, expiring May 8, 2026. No shares have been repurchased under this plan[4] Capital Ratios and Tangible Book Value | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :----------------------------------- | :------------ | :------------- | :------------ | | Leverage Ratio | 8.44% | N/A | 8.44% | | Tier I Risk Based Ratio | 13.04% | N/A | 12.56% | | Total Risk Based Ratio | 14.10% | N/A | 13.62% | | Common Equity Tier I Ratio | 13.04% | N/A | 12.56% | | Tangible Common Equity to Tangible Assets (TCE) | 6.92% | 6.66% | 6.47% | | Tangible Book Value (TBV) per share | $18.28 | $17.56 | $15.85 | Loan Portfolio Quality and Allowance for Credit Losses The company maintained excellent asset quality metrics as of June 30, 2025, with very low non-performing assets and past due loan ratios. Net charge-offs were minimal, and the allowance for credit losses on loans saw a slight reduction due to improved external economic forecasts Key Asset Quality Metrics (June 30, 2025) | Metric | Value | | :-------------------------------- | :---- | | Non-performing Assets Ratio | 0.02% | | Total Past Dues Ratio | 0.02% | | Non-accrual Loans | $210 thousand | | Net Charge-offs (incl. overdrafts) Q2 2025 | $10 thousand | | Net Loan Recoveries (excl. overdrafts) Q2 2025 | $5 thousand | | Classified Loans + OREO / Total Bank Regulatory Risk-Based Capital | 0.82% | - The Allowance for Credit Losses (ACL) on total loans decreased to 1.06% at June 30, 2025, from 1.09% at March 31, 2025, primarily due to improvements in external forecasts for the probability of a U.S. recession[7] Balance Sheet Analysis Loans and Deposits Total loans and deposits experienced solid growth during Q2 2025, despite higher loan payoffs. The bank successfully managed its deposit franchise, achieving growth in total, pure, and non-interest bearing deposits while decreasing the cost of deposits and funds Loan and Deposit Growth (Q2 2025) | Metric | Q2 2025 Increase | Annualized Growth Rate | | :-------------------------------- | :--------------- | :--------------------- | | Total Loans | $8.1 million | 2.6% | | Total Deposits | $28.3 million | 6.6% | | Pure Deposits | $23.0 million | 6.5% | | Non-interest Bearing Accounts | $7.0 million | N/A | Loan Yields and Deposit Costs | Metric | Q2 2025 | Q1 2025 | | :---------------- | :------ | :------ | | Loan Yields | 5.77% | 5.71% | | Cost of Deposits | 1.82% | 1.85% | | Cost of Funds | 1.91% | 1.94% | - Non-interest bearing accounts represented 27.1% of total deposits at June 30, 2025[8] Liquidity and Investment Portfolio The company maintained strong liquidity with short-term investments and available credit lines, with no current borrowings. The investment portfolio grew, and a hedging strategy was implemented to convert fixed-rate mortgage-backed securities to synthetic floaters, improving accumulated other comprehensive loss Liquidity and Investment Portfolio Highlights | Metric | June 30, 2025 | March 31, 2025 | | :----------------------------------- | :------------ | :------------- | | Short-term Investments | $151.3 million | $173.2 million | | Investment Portfolio | $507.3 million | $495.7 million | | Investment Portfolio Yield (Q2 2025) | 3.43% | N/A | | Accumulated Other Comprehensive Loss (AOCL) | $21.9 million | $23.0 million | - The bank has additional liquidity sources totaling $87.5 million in federal funds purchased lines and Federal Reserve Discount Window, plus substantial FHLB borrowing capacity, with no borrowings against these lines as of June 30, 2025[9] - A hedging strategy was implemented in Q2 2025, involving the purchase of $20.0 million fixed-rate agency MBS bonds and an interest rate swap to convert them to synthetic floaters[10] Revenue Analysis Net Interest Income and Margin Net interest income and net interest margin both increased significantly in Q2 2025, driven by effective interest rate management, including the positive impact of an existing pay-fixed swap agreement Net Interest Income and Margin Trends | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | | Net Interest Income (million) | $15.3 | $14.4 | $12.7 | | Net Interest Margin (tax equivalent) | 3.21% | 3.13% | N/A | - An interest rate swap, converting fixed-rate loans to a synthetic floating SOFR rate, positively impacted interest on loans by $284 thousand in Q2 2025 and $571 thousand year-to-date, contributing 9 basis points to loan yields and 6 basis points to net interest margin in Q2[12] Non-Interest Income Non-interest income showed strong growth year-over-year, primarily fueled by record mortgage production and assets under management in investment advisory, despite a slight linked-quarter dip in advisory revenue Non-Interest Income Performance | Metric | Q2 2025 | Q1 2025 | Q2 2024 | Linked Quarter Change | Year-over-Year Change | | :-------------------------- | :------ | :------ | :------ | :-------------------- | :-------------------- | | Total Non-Interest Income (million) | $4.206 | $3.982 | $3.642 | +5.6% | +15.5% | | Mortgage Production (million) | $62.9 | N/A | $49.0 | N/A | +28.4% | | Mortgage Fee Revenue (thousand) | $879 | N/A | $655 | N/A | +34.2% | | Investment Advisory AUM (million) | $1,011 | $892.8 | N/A | +13.2% | N/A | | Investment Advisory Revenue (million) | $1.751 | $1.806 | $1.508 | -3.0% | +16.1% | - A $127 thousand gain on the sale of other real estate owned property was realized during the second quarter of 2025[15] Non-Interest Expense Non-interest expense increased in Q2 2025, primarily due to acquisition-related costs and higher salaries and benefits driven by increased variable compensation and incentive accruals. This was partially offset by reduced marketing and legal expenses Non-Interest Expense Breakdown (Q2 2025) | Expense Category | Q2 2025 Value (million) | Linked Quarter Change | | :-------------------------- | :---------------------- | :-------------------- | | Total Non-Interest Expense | $13.083 | +$329 thousand | | Acquisition Expenses | $234 thousand | N/A | | Salaries and Benefits | N/A | +$403 thousand | | Marketing and Public Relations | N/A | -$306 thousand | | Other Expense (non-acquisition) | N/A | -$70 thousand | | Other Real Estate Expenses | N/A | +$98 thousand | - The increase in salaries and benefits was attributed to higher variable compensation in mortgage and financial planning, increased incentive accruals, payroll taxes, and the full quarter impact of annual exempt employee increases[16] Strategic Initiatives Signature Bank of Georgia Acquisition First Community Corporation announced an agreement to acquire Signature Bank of Georgia, a strategic move to expand into the Atlanta market and add an SBA lending line of business. The acquisition is anticipated to close in early Q1 2026 - The company entered into an agreement on July 13, 2025, to acquire Signature Bank of Georgia[17] - This acquisition will establish a presence in the Atlanta area and introduce an SBA lending line of business[17] - The financial closing is expected in early Q1 2026, with operational conversion following later in Q1 or early Q2 2026[17] Forward-Looking Statements Disclaimer on Future Projections This section contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from projections. Key risks include the completion and benefits of the Signature Bank of Georgia acquisition, competitive pressures, economic conditions, regulatory changes, interest rate fluctuations, and cybersecurity risks - Forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from future results expressed or implied[18] - Risks include the possibility that the planned acquisition of Signature Bank of Georgia may not be completed or its anticipated benefits not realized, competitive pressures, economic conditions, changes in legislation/regulation, adverse stock/debt market conditions, interest rate changes, technology/cybersecurity risks, elevated inflation, and FDIC assessment increases[18] - The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[19] Additional Information Regarding Acquisition SEC Filings and Shareholder Information First Community Corporation will file a registration statement on Form S-4, including a joint proxy statement/prospectus, with the SEC regarding the proposed acquisition of Signature Bank of Georgia. Investors and shareholders are urged to review these documents for important information, which will be available on the SEC's website - First Community intends to file a registration statement on Form S-4 containing a joint proxy statement/prospectus with the SEC for the proposed acquisition[20] - Investors and shareholders are encouraged to read the entire joint proxy statement/prospectus and other filed documents carefully when they become available, as they will contain important information[20] - This communication does not constitute an offer to sell or a solicitation of an offer to buy securities[21] Financial Tables Balance Sheet Data This section presents the company's balance sheet data, including assets, liabilities, and shareholders' equity, along with key financial ratios, across several quarters. It details trends in total assets, loans, deposits, and capital adequacy Selected Balance Sheet Data (Dollars in thousands) | Metric | June 30, 2025 (thousands) | March 31, 2025 (thousands) | December 31, 2024 (thousands) | September 30, 2024 (thousands) | June 30, 2024 (thousands) | | :----------------------------------- | :------------------------ | :------------------------- | :---------------------------- | :----------------------------- | :------------------------ | | Total Assets | $2,046,265 | $2,039,371 | $1,958,021 | $1,943,548 | $1,884,844 | | Total Investment Securities | $507,282 | $495,657 | $491,697 | $486,850 | $488,653 | | Loans | $1,260,055 | $1,251,980 | $1,220,542 | $1,196,659 | $1,189,189 | | Total Deposits | $1,754,041 | $1,725,718 | $1,675,901 | $1,644,064 | $1,604,528 | | Shareholders' Equity | $155,500 | $149,959 | $144,494 | $143,312 | $136,179 | | Tangible Book Value Per Common Share | $18.28 | $17.56 | $16.93 | $16.78 | $15.85 | | TCE Ratio | 6.92% | 6.66% | 6.66% | 6.65% | 6.47% | | Leverage Ratio (Bank) | 8.44% | 8.45% | 8.40% | 8.39% | 8.44% | Asset Quality (Dollars in thousands) | Metric | June 30, 2025 (thousands) | March 31, 2025 (thousands) | December 31, 2024 (thousands) | September 30, 2024 (thousands) | June 30, 2024 (thousands) | | :-------------------------------- | :------------------------ | :------------------------- | :---------------------------- | :----------------------------- | :------------------------ | | Non-accrual Loans | $210 | $215 | $219 | $119 | $173 | | Other Real Estate Owned | $194 | $437 | $543 | $544 | $544 | | Total Nonperforming Assets | $470 | $658 | $810 | $874 | $717 | | Net Charge-offs (Recoveries) Q2 | $10 | N/A | N/A | N/A | $5 | | Net Charge-offs (Recoveries) YTD | $(1) | N/A | N/A | N/A | $28 | Income Statement Data This section provides a detailed breakdown of the company's income statement, highlighting revenue, expenses, and profitability metrics for the second quarter and first six months of 2025 and 2024. It shows significant growth in net interest income and net income Selected Income Statement Data (Dollars in thousands) | Metric | Q2 2025 (thousands) | Q1 2025 (thousands) | Q2 2024 (thousands) | YTD 2025 (thousands) | YTD 2024 (thousands) | | :----------------------------------- | :------------------ | :------------------ | :------------------ | :------------------- | :------------------- | | Interest Income | $24,173 | $23,082 | $21,931 | $47,255 | $43,187 | | Interest Expense | $8,849 | $8,692 | $9,237 | $17,541 | $18,416 | | Net Interest Income | $15,324 | $14,390 | $12,694 | $29,714 | $24,771 | | (Release of) Provision for Credit Losses | $(237) | $437 | $454 | $200 | $583 | | Total Non-Interest Income | $4,206 | $3,982 | $3,642 | $8,188 | $6,826 | | Total Non-Interest Expense | $13,083 | $12,754 | $11,843 | $25,837 | $23,648 | | Net Income | $5,186 | $3.997 | $3,265 | $9,183 | $5,862 | | Diluted EPS | $0.67 | $0.51 | $0.42 | $1.18 | $0.76 | | Return on Average Assets | 1.02% | 0.82% | 0.71% | 0.92% | 0.63% | | Return on Average Common Equity | 13.68% | 11.05% | 9.82% | 12.39% | 8.87% | | Net Interest Margin (taxable equivalent) | 3.21% | 3.13% | 2.93% | 3.17% | 2.86% | | Efficiency Ratio | 66.04% | 69.23% | 72.75% | 67.59% | 74.88% | Yields on Average Earning Assets and Rates on Average Interest-Bearing Liabilities This section details the yields earned on average earning assets and the rates paid on average interest-bearing liabilities for the three and six months ended June 30, 2025, and 2024. It illustrates the components contributing to net interest income and margin Yields on Average Earning Assets (Q2 2025 vs Q2 2024) | Asset Category | Q2 2025 Average Balance (million) | Q2 2025 Yield | Q2 2024 Average Balance (million) | Q2 2024 Yield | | :-------------------------------- | :-------------------------------- | :------------ | :-------------------------------- | :------------ | | Loans | $1,263,027 | 5.77% | $1,178,342 | 5.60% | | Non-taxable securities | $46,160 | 2.99% | $48,982 | 2.95% | | Taxable securities | $459,313 | 3.47% | $442,205 | 3.74% | | Int bearing deposits in other banks | $155,861 | 4.32% | $79,956 | 5.32% | | Total Earning Assets | $1,924,379 | 5.04% | $1,749,525 | 5.04% | Rates on Average Interest-Bearing Liabilities (Q2 2025 vs Q2 2024) | Liability Category | Q2 2025 Average Balance (million) | Q2 2025 Rate | Q2 2024 Average Balance (million) | Q2 2024 Rate | | :-------------------------------- | :-------------------------------- | :----------- | :-------------------------------- | :----------- | | Interest-bearing transaction accounts | $347,536 | 1.23% | $303,825 | 1.07% | | Money market accounts | $460,865 | 3.04% | $400,656 | 3.36% | | Savings deposits | $110,193 | 0.27% | $113,620 | 0.40% | | Time deposits | $343,998 | 3.81% | $308,164 | 4.51% | | Securities sold under agreements to repurchase | $110,233 | 2.48% | $68,591 | 2.91% | | Total Interest-Bearing Liabilities | $1,387,789 | 2.56% | $1,265,430 | 2.94% | | Cost of Deposits (incl. demand) | N/A | 1.82% | N/A | 1.98% | | Cost of Funds (incl. demand) | N/A | 1.91% | N/A | 2.17% | Non-GAAP Financial Measures Reconciliation This section provides reconciliations of non-GAAP financial measures, such as tangible book value per common share, tangible common shareholders' equity to tangible assets, return on average tangible common equity, and pre-tax, pre-provision earnings, to their most directly comparable GAAP measures. Management uses these non-GAAP measures to enhance the evaluation of operating results - Non-GAAP measures are used by management and investors to evaluate and compare operating results, but should not be considered in isolation from GAAP results[30] Tangible Book Value Per Common Share Reconciliation | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :----------------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Tangible book value per common share (non-GAAP) | $18.28 | $17.56 | $16.93 | $16.78 | $15.85 | | Effect to adjust for intangible assets | $1.95 | $1.96 | $1.97 | $1.98 | $1.99 | | Book value per common share (GAAP) | $20.23 | $19.52 | $18.90 | $18.76 | $17.84 | Return on Average Tangible Common Equity Reconciliation | Metric | Q2 2025 | Q2 2024 | Q1 2025 | Q1 2024 | YTD 2025 | YTD 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | :------- | :------- | | Return on average tangible common equity (non-GAAP) | 15.18% | 11.08% | 12.31% | 8.95% | 13.78% | 10.02% | | Effect to adjust for intangible assets | (1.50)% | (1.26)% | (1.26)% | (1.04)% | (1.39)% | (1.15)% | | Return on average common equity (GAAP) | 13.68% | 9.82% | 11.05% | 7.91% | 12.39% | 8.87% |