First munity (US:FCCO)2024-05-13 21:00PART I – FINANCIAL INFORMATION Financial Statements 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 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 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 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 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 Consolidated Statements of Cash Flows 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 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 202325 - 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 million44 - Total uninsured deposits were $470.0 million at March 31, 2024, of which $94.4 million were collateralized public funds79 - 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 portfolio84 Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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%113118 - 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 fees125 - 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 additions130131 Allowance for Credit Losses 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 2023141 Financial Position 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 2024145 - Loans held-for-investment grew by $23.3 million, or 8.2% annualized, during the quarter146 - 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, 2024159 - Shareholders' equity increased by $2.4 million, primarily due to retained earnings and a $749 thousand improvement in accumulated other comprehensive loss166 Market Risk, Liquidity, and Capital Resources 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 months171173 - 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 deposits179 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 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 section191 Controls and Procedures 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 period192 - No material changes were made to internal control over financial reporting during the quarter ended March 31, 2024194 PART II – OTHER INFORMATION Legal Proceedings 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 company197 Risk Factors 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-K199 Unregistered Sales of Equity Securities and Use of Proceeds 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 plan204 - No share repurchases were made during the three months ended March 31, 2024204 Exhibits 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