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FIRST COMMUNITY CORP /SC/

FCCO
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Business Summary

First Community Corporation operates as a bank holding company primarily engaged in a general commercial and retail banking business, emphasizing the needs of small-to-medium sized businesses, professionals, and individuals. The company serves its customers from its main office in Lexington, South Carolina, and 21 full-service offices located in the Midlands, Upstate, Piedmont, and Central Savannah River Area (CSRA) regions of South Carolina and Georgia. The principal components of the economy within its market areas are service industries, government and education, and wholesale and retail trade, with a diversified economic base that management believes reduces economic volatility.

The banking business is highly competitive, and as of June 30, 2025, there were 27 financial institutions operating approximately 156 offices in the Midlands market, 23 financial institutions operating 95 branches in the CSRA market, 41 financial institutions operating 229 branches in the Upstate market, and 18 financial institutions operating 47 branches in the Piedmont market. The company does not generally attempt to compete for the banking relationships of large corporations, instead concentrating its efforts on small-to-medium sized businesses and individuals, believing it has competed effectively by offering quality and personal service.

The company generates revenue primarily through net interest income, which is the difference between interest income from interest-earning assets such as loans and investment securities and interest expense on interest-bearing liabilities such as deposits and borrowings. Non-interest income is derived from sources including service charges on deposit accounts, mortgage banking income from originating and selling residential loans in the secondary market, investment advisory fees and commissions on non-deposit investment products, ATM/debit card fees, and bank owned life insurance income.

The company offers a full range of deposit services including checking accounts, NOW accounts, savings accounts, money market accounts, and time deposits such as certificates of deposit, as well as retirement account services like IRAs. It also offers a full range of commercial and personal loans, including secured and unsecured loans for working capital, business expansion, equipment purchase, and consumer purposes, as well as real estate construction and acquisition loans, and fixed and variable rate mortgage loans, some of which are sold into the secondary market. Other bank services include internet banking, cash management services, safe deposit boxes, and non-deposit investment products and brokerage services through a registered representative with an affiliation through LPL Financial.

The company's loan portfolio is composed of several categories. At December 31, 2025, commercial, financial & agricultural loans totaled $91.9 million ; real estate construction loans totaled $152.1 million ; mortgage-residential loans totaled $130.5 million ; mortgage-commercial loans totaled $863.4 million ; consumer home equity loans totaled $53.7 million ; and other consumer loans totaled $19.4 million . The investment advisory segment had total assets under management of $1.2 billion at December 31, 2025 , compared to $926.0 million at December 31, 2024 . Total mortgage production during the twelve months ended December 31, 2025 was $202.7 million , of which $115.4 million was originated to be sold in the secondary market, $16.8 million was originated as ARM loans for the held-for-investment portfolio, and $70.5 million was commitments for new construction residential real estate loans.

During the year ended December 31, 2025, the company incurred merger expenses of $1.3 million due to the acquisition of Signature Bank of Georgia. On May 9, 2025, the board of directors approved a plan to utilize up to $7.5 million of capital to repurchase shares of common stock (the 2025 Repurchase Plan), which expires at the market close on May 8, 2026. No repurchases have been made under this plan. The company paid dividends of $0.62 per common share during the year ended December 31, 2025, compared to $0.58 in 2024.

For the year ended December 31, 2025, net income was $19.2 million , or $2.47 diluted earnings per common share, compared to $14.0 million , or $1.81 diluted earnings per common share, for the year ended December 31, 2024. The $5.3 million increase in net income was primarily due to an increase in net interest income of $10.0 million , a decrease in provision for credit losses of $39 thousand , and an increase in non-interest income of $2.9 million , partially offset by an increase in non-interest expense of $5.9 million and an increase in income tax expense of $1.8 million . Net interest income increased to $62.0 million from $52.0 million in the prior year, and the net interest margin (tax equivalent) improved to 3.23% from 2.92% .

Business Outlook

A key growth vector is the expansion of the mortgage banking business. Total mortgage production during the twelve months ended December 31, 2025 was $202.7 million , up from $165.6 million in 2024. The company has added a new construction residential real estate team and product, and offers adjustable rate mortgage (ARM) products to provide borrowers with alternatives to fixed-rate mortgages. During 2025, $70.5 million of loan production was commitments for new construction residential real estate loans, and $16.8 million was originated as ARM loans for the held-for-investment portfolio, which is additive to loan growth and interest income.

Another significant growth vector is the investment advisory and non-deposit business. Investment advisory fees increased by $1.4 million to $7.6 million during the twelve months ended December 31, 2025 from $6.2 million in 2024. Total assets under management grew to $1.2 billion at December 31, 2025 from $926.0 million at December 31, 2024. Net new assets were $83.4 million during the twelve months ended December 31, 2025. The company's investment performance for the twelve months ended December 31, 2025 was 17.3% .

The company's net interest margin (tax equivalent) improved to 3.23% for the year ended December 31, 2025 from 2.92% in 2024. The cost of deposits, including demand deposits, was 1.80% during the twelve months ended December 31, 2025 compared to 1.96% in 2024. The cost of funds, including demand deposits, was 1.88% during the twelve months ended December 31, 2025 compared to 2.15% in 2024. The company continues to focus on growing pure deposits plus customer cash management repurchase agreements, which averaged 84.9% of total deposits plus customer cash management repurchase agreements during 2025, compared to 83.1% in 2024.

The company had 265 full-time employees, 10 part-time employees, and seven seasonal/on-call employees at December 31, 2025 , compared to 260 full-time employees, 10 part-time employees, and eight seasonal/on-call employees at December 31, 2024 . The company created the First Community Bank Leadership Institute, an 18-month program to develop current and future leaders. Salary and benefit expense increased $2.7 million to $31.9 million during the twelve months ended December 31, 2025 from $29.3 million in 2024, primarily due to higher incentive compensation and annual bonuses and normal salary adjustments.

On May 9, 2025, the board of directors approved a plan to utilize up to $7.5 million of capital to repurchase shares of common stock (the 2025 Repurchase Plan), which expires at the market close on May 8, 2026. No repurchases have been made under this plan. The company paid dividends of $0.62 per common share during the year ended December 31, 2025. The company has a dividend reinvestment plan that allows existing shareholders the option of reinvesting cash dividends as well as making optional purchases of up to $5,000 in the purchase of common stock per quarter.

The company faces headwinds from its concentration in commercial real estate lending. As of December 31, 2025, non-owner-occupied commercial real estate loans and construction and land development loans were approximately 307% and 71% of total risk-based capital, respectively. The three-year growth in non-owner occupied commercial real estate loans was 37% from December 31, 2022 to December 31, 2025. The company also faces risks from changes in prevailing interest rates, as a significant change could potentially have a material adverse effect on profitability. The net interest income sensitivity analysis shows that a +400bp change in short-term interest rates would result in a hypothetical -15.11% change in net interest income.

The company faces risks from the potential for higher credit losses than allowed for in its allowance for credit losses. As of December 31, 2025, approximately 84.5% of the loan portfolio (excluding loans held for sale) is composed of construction, commercial mortgage, and commercial and industrial loans. The company also faces risks from inflationary pressures, which could lead to increased costs to customers and increase credit risk. The annual inflation rate was approximately 2.7% in 2025.

Risk Factors

The company has a significant concentration of credit exposure in commercial real estate, with approximately $978.5 million in loans outstanding secured by commercial real estate as of December 31, 2025, representing approximately 74.63% of total loans. Non-owner-occupied commercial real estate loans were approximately 307% of total risk-based capital, and construction and land development loans were 71% of total risk-based capital. The repayment of commercial business loans, which comprised 7.0% of the total loan portfolio at December 31, 2025, is often dependent on the cash flows of the borrower, which may be unpredictable. The company's focus on lending to small to mid-sized community-based businesses may increase credit risk, as these businesses generally have fewer financial resources. As of December 31, 2025, approximately $23.1 million of loans, or 11.9% of the Bank's regulatory capital, had loan-to-value ratios that exceeded regulatory supervisory guidelines.

Management Priorities

Management's message emphasizes the company's strong financial performance in 2025, with net income of $19.2 million and diluted earnings per common share of $2.47 , representing a significant increase from $14.0 million and $1.81 in 2024. Key themes include the improvement in net interest income, which increased $10.0 million to $62.0 million , and the expansion of the net interest margin (tax equivalent) to 3.23% from 2.92% . Management highlights growth in the mortgage banking and investment advisory segments, with total mortgage production of $202.7 million and investment advisory fees increasing to $7.6 million . The strategic priorities emphasized for the period ahead include continuing to focus on quality loan growth, managing the cost of funds by growing pure deposits, and executing on the acquisition of Signature Bank of Georgia, which resulted in $1.3 million in merger expenses during 2025.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Financial Condition
  2. [2] Item 7, MD&A — Financial Condition
  3. [3] Item 7, MD&A — Financial Condition
  4. [4] Item 7, MD&A — Financial Condition
  5. [5] Item 7, MD&A — Financial Condition
  6. [6] Item 7, MD&A — Financial Condition
  7. [7] Item 7, MD&A — Results of Operations
  8. [8] Item 7, MD&A — Results of Operations
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  14. [14] Item 5, Market for Registrant's Common Equity
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  17. [17] Item 7, MD&A — Results of Operations
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  49. [49] Item 1, Business — Human Capital
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  51. [51] Item 1, Business — Human Capital
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  55. [55] Item 5, Market for Registrant's Common Equity
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  57. [57] Item 7, MD&A — Capital Adequacy and Dividend Policy
  58. [58] Item 1A, Risk Factors
  59. [59] Item 1A, Risk Factors
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  62. [62] Item 1A, Risk Factors
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  82. [82] Item 8, Financial Statements — Consolidated Statements of Income
  83. [83] Item 8, Financial Statements — Consolidated Statements of Income
  84. [84] Item 8, Financial Statements — Consolidated Statements of Income
  85. [85] Item 8, Financial Statements — Consolidated Statements of Income
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  94. [94] Item 8, Financial Statements — Consolidated Statements of Income
  95. [95] Item 8, Financial Statements — Consolidated Statements of Income
  96. [96] Item 7, MD&A — Results of Operations
  97. [97] Item 7, MD&A — Results of Operations
  98. [98] Item 7, MD&A — Financial Highlights
  99. [99] Item 7, MD&A — Financial Highlights
  100. [100] Item 7, MD&A — Financial Highlights
  101. [101] Item 7, MD&A — Financial Highlights
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  103. [103] Item 7, MD&A — Financial Highlights
  104. [104] Item 8, Financial Statements — Consolidated Balance Sheets
  105. [105] Item 8, Financial Statements — Consolidated Balance Sheets
  106. [106] Item 8, Financial Statements — Consolidated Balance Sheets
  107. [107] Item 8, Financial Statements — Consolidated Balance Sheets
  108. [108] Item 7, MD&A — Provision and Allowance for Credit Losses
  109. [109] Item 7, MD&A — Provision and Allowance for Credit Losses
  110. [110] Item 7, MD&A — Provision and Allowance for Credit Losses
  111. [111] Item 7, MD&A — Provision and Allowance for Credit Losses
  112. [112] Item 7, MD&A — Financial Highlights
  113. [113] Item 7, MD&A — Financial Highlights
  114. [114] Item 7, MD&A — Liquidity Management
  115. [115] Item 7, MD&A — Liquidity Management
  116. [116] Item 7, MD&A — Capital Adequacy
  117. [117] Item 7, MD&A — Capital Adequacy

Analysis on 6/21/2026