8-K: First Community Corporation Announces Strong First Quarter Results and Declares Cash Dividend

First Community Corporation reports a solid first quarter with increased net income, loan growth, and deposit growth, while also declaring a cash dividend of $0.15 per share.

Summary

• First Community Corporation (FCCO) announced its first quarter 2025 financial results, reporting net income of $3.997 million, or $0.51 per diluted share.
• This compares favorably to $2.597 million ($0.34 per diluted share) year-over-year, but is slightly lower than the $4.232 million ($0.55 per diluted share) reported in the previous quarter.
• The company's Board of Directors approved a cash dividend of $0.15 per share, payable on May 20, 2025, to shareholders of record as of May 6, 2025.
• Total deposits grew by $49.8 million during the quarter, reaching $1.726 billion, representing an annualized growth rate of 12.1%.
• Total loan growth was $31.4 million during the quarter, resulting in an annualized growth rate of 10.4%.
• The net interest margin expanded by 13 basis points to 3.13% in the first quarter of 2025.
• Key credit quality metrics remained strong, with net recoveries of $11 thousand and non-performing assets at 0.03% of total assets.
• Assets under management (AUM) in the investment advisory business were $892.8 million at March 31, 2025.
• Mortgage line of business fee revenue was $759 thousand, including $755 thousand in gain-on-sale revenue.
• The bank's regulatory capital ratios exceed well-capitalized minimum levels, with a Leverage ratio of 8.45%, Tier I Risk Based ratio of 12.90%, and Total Risk Based ratio of 13.99%.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with strong loan and deposit growth, improved net interest margin, and excellent asset quality. However, there are some concerns about decreased net income on a linked quarter basis and a decrease in AUM, which temper the overall sentiment.

Positives

• Net income increased year-over-year, from $2.597 million to $3.997 million.
• The company continues its 93rd consecutive quarter of cash dividends, providing shareholder value.
• Strong deposit growth of $49.8 million indicates customer confidence.
• Loan growth of $31.4 million demonstrates successful business development.
• Net interest margin expansion to 3.13% improves profitability.
• Excellent asset quality with low non-performing assets at 0.03%.
• Tangible Book Value (TBV) per share increased during the quarter to $17.56 per share at March 31, 2025, from $16.93 per share as of December 31, 2024, and $15.51 at March 31, 2024.
• Commercial loan production was $53.6 million during the first quarter of 2025 with advances of unfunded commercial construction loans of $9.0 million during the quarter.

Negatives

• Net income decreased on a linked quarter basis, from $4.232 million to $3.997 million.
• Assets Under Management (AUM) decreased from $926.0 million at December 31, 2024 to $892.8 million at March 31, 2025.
• Non-interest expense increased $928 thousand on a linked quarter basis to $12.754 million in the first quarter of 2025 from $11.826 million in the fourth quarter of 2024.

Risks

• Competitive pressures among financial institutions could impact pricing and revenues.
• Changes in the strength of the U.S. and local economies could affect performance.
• Delinquencies, charge-offs, and asset quality issues could increase credit risk.
• Changes in legislation, regulation, and policies could create challenges.
• Adverse conditions in the stock market and capital markets could have a negative impact.
• Changes in interest rates could affect deposit costs, net income, and asset values.
• Technology and cybersecurity risks could lead to business disruptions and financial losses.
• Elevated inflation could pose challenges to customers and the business.
• Increases in FDIC assessments could increase the cost of doing business.
• Events beyond the company's control, such as trade disputes, epidemics, war, or utility outages, could destabilize financial markets and the economy.

Future Outlook

The company's future performance is subject to various risks and uncertainties, including competitive pressures, economic conditions, regulatory changes, interest rate fluctuations, and cybersecurity risks. The company undertakes no obligation to update or revise any forward-looking statements.

Management Comments

• First Community President and CEO, Mike Crapps commented, 'The entire board is pleased that our performance enables the company to continue its cash dividend for the 93rd consecutive quarter.'
• First Community Bank President and CEO Ted Nissen noted, 'Loan growth was strong in the first quarter of 2025 with production up 93% over the same period in 2024 and 62% over the fourth quarter of 2024. This combined with lower payoffs and paydowns combined for a strong quarter in net loan growth.'
• Mr. Nissen commented, 'A strength of our bank has been and continues to be the value of our deposit franchise. Of the $49.8 million in total deposit growth in the first quarter of 2025, $38.6 million of that was in pure deposits, which are more relationship based than the more price sensitive certificates of deposit. Further, during the quarter, we were able to reduce both cost of funds and cost of deposits due to this improved mix of deposit balances and the current interest rate environment.'
• Mr. Nissen noted, 'Our mortgage line of business is still experiencing the headwinds of a higher interest rate environment and low housing inventory; however, we are encouraged by recent trends including an increase in production year-over-year of 19.7%. Our financial planning and investment advisory line of business continues to do well with net new asset growth from existing and new clients, even in the face of market volatility.'

Industry Context

The announcement reflects the ongoing challenges and opportunities within the banking sector, including managing interest rate risk, growing loan portfolios, and maintaining asset quality in a dynamic economic environment. Community banks are focused on local relationships and navigating the current interest rate environment.

Comparison to Industry Standards

• The company's net interest margin of 3.13% is comparable to other community banks, but performance varies based on asset size, geographic location, and business mix.
• The efficiency ratio of 69.23% indicates the bank's operational efficiency compared to its peers.
• The regulatory capital ratios exceeding well-capitalized minimum levels align with industry standards and regulatory requirements.
• Comparing First Community Corporation to regional peers like South State Corporation (SSB) and United Community Banks, Inc. (UCBI) in terms of loan growth and deposit mix would provide further context.

Stakeholder Impact

• Shareholders will benefit from the continued cash dividend and potential for future growth.
• Employees may see opportunities for career advancement due to the company's expansion.
• Customers will have access to a wider range of financial products and services.
• The company's success will support the local economies in the regions it serves.

Key Dates

Keywords

financial results, cash dividend, net income, loan growth, deposit growth, net interest margin, asset quality, AUM, FCCO, First Community Corporation, bank