PR Newswire | Jul 21, 2021 09:02AM EDT

07/21 08:00 CDT

First Community Corporation Announces Second Quarter Results and Cash Dividend LEXINGTON, S.C., July 21, 2021

LEXINGTON, S.C., July 21, 2021 /PRNewswire/ --

Highlights for Second Quarter of 2021

* Net income of $3.543 million, up 59.8% year-over-year and 8.8% linked quarter. * Pre-tax pre-provision earnings of $4.632 million, up 15.8% year-over year and 7.1% linked quarter. * Diluted EPS of $0.47 per common share for the quarter and $0.90 year-to-date through June 30, 2021. * Total loans increased during the second quarter by $9.3 million, an annualized growth rate of 4.3%. Excluding Paycheck Protection Program (PPP) loans and a related credit facility, loan growth was $24.7 million, a 12.3% annualized growth rate. * Pure deposit growth, including customer cash management, of $19.3 million, an annualized growth rate of 6.4% on a linked quarter. * Investment advisory line of business revenue of $957 thousand, an increase of 42.6% year-over-year and 9.1% linked quarter. * Net interest margin on a tax equivalent basis of 3.20%, including PPP loans and 3.11% excluding PPP loans. * Cash dividend of $0.12 per common share, which is the 78th consecutive quarter of cash dividends paid to common shareholders.

Today, First Community Corporation (Nasdaq: FCCO), the holding company for First Community Bank, reported net income for the second quarter of 2021 of $3.543 million as compared to $2.217 million in the second quarter of 2020, an increase of 59.8% year-over-year. Diluted earnings per common share were $0.47 for the second quarter of 2021 as compared to $0.30 for the second quarter of 2020, an increase of 56.7%. On a linked quarter basis, net income increased 8.8% from $3.255 million in the first quarter of 2021 and diluted earnings per common share increased 9.3% from $0.43. Pre-tax pre-provision earnings or PTPPE in the second quarter of 2021 were $4.632 million compared to second quarter of 2020 PTPPE of $3.999 million and first quarter 2021 PTPPE of $4.323 million, an increase of 15.8% and 7.1% respectively.

Year-to-date through June 30, 2021 net income was $6.798 million compared to $4.011 million during the first six months of 2020, an increase of 69.5%. Diluted earnings per share for the first half of 2021 were $0.90, compared to $0.54 during the same time period in 2020, an increase of 66.7%. Year-to-date through June 30, 2021 PTPPE were $8.955 million compared to $7.306 million during the first half of 2020, an increase of 22.6%.

Cash Dividend and Capital

The Board of Directors approved a cash dividend for the second quarter of 2021. The company will pay a $0.12 per share dividend to holders of the company's common stock. This dividend is payable August 17, 2021 to shareholders of record as of August 3, 2021. First Community President and CEO Mike Crapps commented, "Our entire board is pleased that our performance enables the company to continue its cash dividend for the 78th consecutive quarter."

On April 12, 2021, the Company announced that its Board of Directors approved the repurchase of up to 375,000 shares of its common stock, which represents approximately 5% of the Company's 7,539,587 shares outstanding as of June 30, 2021. Under the repurchase plan, the Company may repurchase shares from time to time. No share repurchases have been made under the plan as of June 30, 2021. Crapps noted, "This approved share repurchase plan provides us with some flexibility in managing capital going forward."

Each of the regulatory capital ratios for the bank exceed the well capitalized minimum levels currently required by regulatory statute. At June 30, 2021, the bank's regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) were 8.48%, 13.52%, and 14.66%, respectively. This compares to the same ratios as of June 30, 2020 of 9.31%, 13.02%, and 14.03%, respectively. As of June 30, 2021, the bank's Common Equity Tier I ratio was 13.52% compared to 13.02% at June 30, 2020.

Asset Quality / Allowance for Loan and Lease Losses

Asset quality metrics remain strong. The non-performing assets ratio as of June 30, 2021 was 0.62% of total assets and total past dues ratio was 0.49%. One large loan relationship that impacted these calculations was brought current four business days after quarter end. The non-performing assets ratio and total past dues ratio adjusted for this loan relationship would be 0.34% and 0.02%, respectively. Net loan charge-offs excluding overdrafts for the quarter were $87 thousand and the year-to-date through June 30, 2021 were $95 thousand. The ratio of classified loans plus OREO now stands at 9.45% of total bank regulatory risk-based capital as of June 30, 2021.

Mr. Crapps commented, "Our credit metrics continue to indicate the current strong quality of our loan portfolio."

Balance Sheet

Total loans increased during the second quarter by $9.3 million, which is an annualized growth rate of 4.3%. Total loans, excluding PPP loans and a related credit facility, increased during the second quarter by $24.7 million which is an annualized growth rate of 12.3%. Commercial loan production was $61.1 million during the second quarter compared to $40.2 million in the first quarter of 2021.

Total deposits were $1.290 billion at June 30, 2021 compared to $1.271 billion at March 31, 2021. Pure deposits, which are defined as total deposits less certificates of deposits, increased $19.0 million, an annualized growth rate of 6.7%, to $1.162 billion at June 30, 2021 from $1.143 billion at March 31, 2021. Securities sold under agreements to repurchase, which are related to customer cash management accounts or business sweep accounts, were relatively flat at $60.5 million at June 30, 2021 compared to 60.3 million at March 31, 2021. Costs of deposits decreased on a linked quarter basis to 0.14% in the second quarter of 2021 from 0.17% in the first quarter of the year. Cost of funds also decreased on a linked quarter basis to 0.17% in the second quarter of 2021 from 0.21% in the first quarter of the year.

Mr. Crapps commented, "Our success in gathering low cost deposits continues to be a strength for our company."

Revenue

Net Interest Income/Net Interest Margin

Net interest income increased $525 thousand or 5.0% to $11.092 million for the second quarter of 2021 compared to first quarter net interest income of $10.567 million. Year-over-year, net interest income increased $1.3 million or 13.8% from $9.743 million in the second quarter of 2020. Second quarter net interest margin, on a tax equivalent basis, was 3.20% compared to 3.23% in the first quarter of the year. Second quarter net interest margin, excluding PPP loans, was 3.11% compared to 3.16% in the first quarter of the year.

Non-Interest Income

Non-interest income increased on a linked quarter basis to $3.418 million in the second quarter of 2021, an increase of $122 thousand over the first quarter of the year. Year-over-year, non-interest income increased $31 thousand from $3.387 million in the second quarter of 2020. Revenues in the mortgage line of business were $1.143 million in the second quarter of 2021, an increase on a linked quarter basis of 15.5% from $990 thousand in the first quarter. Mortgage loan production was $33.7 million in the second quarter, down from $42.7 million in the first quarter of the year; however the impact to net income was offset by gain-on-sale margins which improved as anticipated during the quarter. Revenue in the investment advisory line of business increased 9.1% on a linked quarter basis to $957 thousand in the second quarter of 2021 from $877 thousand in the first quarter and year-over-year increased 42.6% from $671 thousand in the second quarter of 2020. Assets under management (AUM), were $577.5 million at June 30, 2021 up from $519.3 million in the first quarter of the year and $501.0 million at December 31, 2020. Mr. Crapps commented, "Our strategy of multiple revenue streams continues to serve us well as we focus our efforts to accelerate growth in these lines of business."

Non-Interest Expense

Non-interest expense was $9.878 million in the second quarter of 2021, compared to $9.540 million in the first quarter of the year. Expenses in the Other category were the main contributor to the increase, including some non-recurring legal expenses as well as one-time costs related to product and service enhancements and expenses associated with the conversion to a new mortgage origination system.

About First Community Corporation

First Community Corporation stock trades on the NASDAQ Capital Market under the symbol "FCCO" and is the holding company for First Community Bank, a local community bank based in the Midlands of South Carolina. First Community Bank is a full-service commercial bank offering deposit and loan products and series, residential mortgage lending and financial planning/investment advisory services for businesses and consumers. First Community serves customers in the Midlands, Aiken, and Greenville, South Carolina markets as well as Augusta, Georgia. For more information, visit www.firstcommunitysc.com.

FORWARD-LOOKING STATEMENTS

This news release and certain statements by our management may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans, goals, projections and expectations, and are thus prospective. Forward looking statements can be identified by words such as "anticipate', "expects", "intends", "believes", "may", "likely", "will" or other statements that indicate future periods. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors, include, among others, the following: (1) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (2) the strength of the United States economy in general and the strength of the local economies in which we conduct operations may be different than expected including, but not limited to, due to the negative impacts and disruptions resulting from the outbreak of the novel coronavirus, or COVID-19, on the economies and communities we serve, which has had and may continue to have an adverse impact on our business, operations, and performance, and could continue to have a negative impact on our credit portfolio, share price, borrowers, and on the economy as a whole both domestically and globally; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for loan loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (4) changes in legislation, regulation, policies or administrative practices, whether by judicial, governmental, or legislative action, including, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act, or the "CARES Act"; (5) adverse conditions in the stock market, the public debt markets and other capital markets (including changes in interest rate conditions) could have a negative impact on the company; (6) technology and cybersecurity risks, including potential business disruptions, reputational risks, and financial losses, associated with potential attacks on or failures by our computer systems and computer systems of our vendors and other third parties; and (7) risks, uncertainties and other factors disclosed in our most recent Annual Report on Form 10-K filed with the SEC, or in any of our Quarterly Reports on Form 10-Q or Current Reports on Form 8-K filed with the SEC since the end of the fiscal year covered by our most recently filed Annual Report on Form 10-K, which are available at the SEC's Internet site ( http://www.sec.gov).

Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. We can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by our company or any person that the future events, plans, or expectations contemplated by our company will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

FIRST COMMUNITY CORPORATION

BALANCE SHEET DATA

(Dollars in thousands, except per share data)

As of

June 30, March 31, December 31, June 30,

2021 2021 2020 2020

Total Assets $ 1,514,973 $ 1,492,494 $ 1,395,382 $ 1,324,800

Other Short-term Investments and CD's^1 52,316 88,389 46,062 77,666

Investment Securities 470,669 407,547 361,919 297,972

Loans Held for Sale 11,416 23,481 45,020 33,496

Loans

Paycheck Protection Program (PPP) Loans 47,229 61,836 42,242 47,865

Non-PPP Loans 831,089 807,230 801,915 769,507

Total Loans 878,318 869,066 844,157 817,372

Allowance for Loan Losses 10,638 10,563 10,389 8,936

Goodwill 14,637 14,637 14,637 14,637

Other Intangibles 1,011 1,063 1,120 1,283

Total Deposits 1,289,883 1,271,440 1,189,413 1,118,872

Securities Sold Under Agreements to Repurchase 60,487 60,319 40,914 45,651

Federal Home Loan Bank Advances - - - -

Junior Subordinated Debt 14,964 14,964 14,964 14,964

Shareholders' Equity 137,927 132,687 136,337 130,801

Book Value Per Common Share $ 18.29 $ 17.63 $ 18.18 $ 17.47

Tangible Book Value Per Common Share $ 16.22 $ 15.55 $ 16.08 $ 15.35

Equity to Assets 9.10% 8.89% 9.77% 9.87%

Tangible Common Equity to Tangible Assets 8.16% 7.92% 8.74% 8.78%

Loan to Deposit Ratio (Includes Loans Held for Sale) 68.98% 70.20% 74.76% 76.05%

Loan to Deposit Ratio (Excludes Loans Held for Sale) 68.09% 68.35% 70.97% 73.05%

Allowance for Loan Losses/Loans 1.21% 1.22% 1.23% 1.09%

Regulatory Capital Ratios (Bank):

Leverage Ratio 8.48% 8.73% 8.84% 9.31%

Tier 1 Capital Ratio 13.52% 13.20% 12.83% 13.02%

Total Capital Ratio 14.66% 14.34% 13.94% 14.03%

Common Equity Tier 1 Capital Ratio 13.52% 13.20% 12.83% 13.02%

Tier 1 Regulatory Capital $ 125,732 $ 122,854 $ 120,385 $ 115,795

Total Regulatory Capital $ 136,371 $ 133,417 $ 130,774 $ 124,731

Common Equity Tier 1 Capital $ 125,732 $ 122,854 $ 120,385 $ 115,795

^1 Includes federal funds sold, securities sold under agreement to resell andinterest-bearing deposits

Average Balances: Three months ended Six months ended

June 30, June 30,

2021 2020 2021 2020

Average Total Assets $1,507,708 $ 1,269,244 $ 1,471,684 $ 1,222,797

Average Loans (Includes Loans Held for Sale) 895,612 824,842 891,021 789,250

Average Earning Assets 1,404,236 1,171,183 1,371,825 1,124,213

Average Deposits 1,285,101 1,060,087 1,246,804 1,014,732

Average Other Borrowings 75,434 68,913 76,842 69,623

Average Shareholders' Equity 135,223 126,916 135,401 125,190

Asset Quality: As of

June 30, March 31, December 31, June 30,

2021 2021 2020 2020

Loan Risk Rating by Category (End of Period)

Special Mention $ 3,085 $ 3,507 $ 7,757 $ 2,848

Substandard 11,708 12,137 7,810 5,300

Doubtful - - - -

Pass 863,525 853,422 828,590 809,224

$ 878,318 $ 869,066 $ 844,157 $ 817,372

Nonperforming Assets

Non-accrual Loans $ 3,985 $ 4,520 $ 4,562 $ 1,806

Other Real Estate Owned and Repossessed Assets 1,182 1,076 1,201 1,449

Accruing Loans Past Due 90 Days or More 4,165 - 1,260 -

Total Nonperforming Assets $ 9,332 $ 5,596 $ 7,023 $ 3,255

Accruing Trouble Debt Restructurings $ 1,510 $ 1,515 $ 1,552 $ 1,613

Three months ended Six months ended

June 30, June 30,

2021 2020 2021 2020

Loans Charged-off $ 111 $ 16 $ 127 $ 16

Overdrafts Charged-off 11 9 19 32

Loan Recoveries (24) (11) (32) (20)

Overdraft Recoveries (5) (6) (19) (12)

Net Charge-offs (Recoveries) $ 93 $ 8 $ 95 $ 16

Net Charge-offs to Average Loans^2 0.04% 0.00% 0.02% 0.00%

^2 Annualized

FIRST COMMUNITY CORPORATION

INCOME STATEMENT DATA

(Dollars in thousands, except per share data)

Three months ended Three months ended Six months ended

June 30, March 31, June 30,

2021 2020 2021 2020 2021 2020

Interest income $ 11,664 $ 10,666 $ 11,218 $ 10,710 $ 22,882 $ 21,376

Interest expense 572 923 651 1,293 1,223 2,216

Net interest income 11,092 9,743 10,567 9,417 21,659 19,160

Provision for loan losses 168 1,250 177 1,075 345 2,325

Net interest income after provision 10,924 8,493 10,390 8,342 21,314 16,835

Non-interest income

Deposit service charges 212 210 246 399 458 609

Mortgage banking income 1,143 1,572 990 982 2,133 2,554

Investment advisory fees and non-deposit commissions 957 671 877 634 1,834 1,305

Gain (loss) on sale of other assets - - 77 6 77 6

Other 1,106 934 1,106 907 2,212 1,841

Total non-interest income 3,418 3,387 3,296 2,928 6,714 6,315

Non-interest expense

Salaries and employee benefits 5,948 5,840 5,964 5,653 11,912 11,493

Occupancy 734 679 730 643 1,464 1,322

Equipment 338 298 275 318 613 616

Marketing and public relations 313 247 396 354 709 601

FDIC assessment 146 88 169 42 315 130

Other real estate expenses 55 40 29 35 84 75

Amortization of intangibles 52 95 57 105 109 200

Other 2,292 1,844 1,920 1,888 4,212 3,732

Total non-interest expense 9,878 9,131 9,540 9,038 19,418 18,169

Income before taxes 4,464 2,749 4,146 2,232 8,610 4,981

Income tax expense 921 532 891 438 1,812 970

Net income $ 3,543 $ 2,217 $ 3,255 $ 1,794 $ 6,798 $ 4,011

Per share data

Net income, basic $ 0.47 $ 0.30 $ 0.44 $ 0.24 $ 0.91 $ 0.54

Net income, diluted $ 0.47 $ 0.30 $ 0.43 $ 0.24 $ 0.90 $ 0.54

Average number of shares outstanding - basic 7,485,625 7,435,933 7,475,522 7,427,257 7,477,678 7,431,595

Average number of shares outstanding - diluted 7,537,179 7,465,212 7,522,568 7,472,956 7,527,829 7,467,755

Shares outstanding period end 7,539,587 7,486,151 7,524,944 7,462,247 7,539,587 7,486,151

Return on average assets 0.94% 0.70% 0.92% 0.61% 0.93% 0.66%

Return on average common equity 10.51% 7.03% 9.74% 5.84% 10.12% 6.44%

Return on average common tangible equity 11.89% 8.04% 11.01% 6.72% 11.45% 7.39%

Net interest margin (non taxable equivalent) 3.17% 3.35% 3.20% 3.52% 3.18% 3.43%

Net interest margin (taxable equivalent) 3.20% 3.38% 3.23% 3.55% 3.22% 3.46%

Efficiency ratio^1 67.50% 69.00% 69.16% 72.79% 68.31% 70.83%

^1 Calculated by dividing non-interest expense by net interest income on taxequivalent basis and non interest income, excluding gain on sale of otherassets and other non-recurring noninterest income.

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and

Rates on Average Interest-Bearing Liabilities

Three months ended June 30, 2021 Three months ended June 30, 2020

Average Interest Yield/ Average Interest Yield/

Balance Earned/Paid Rate Balance Earned/Paid Rate

Assets

Earning assets

Loans

PPP loans $ 55,599 $ 756 5.45% $ 31,816 $ 217 2.74%

Non-PPP loans 840,013 8,985 4.29% 793,026 8,801 4.46%

Total loans 895,612 9,741 4.36% 824,842 9,018 4.40%

Securities 430,865 1,894 1.76% 294,915 1,611 2.20%

Other short-term investments and CD's 77,759 29 0.15% 51,426 37 0.29%

Total earning assets 1,404,236 11,664 3.33% 1,171,183 10,666 3.66%

Cash and due from banks 25,128 14,820

Premises and equipment 34,105 34,837

Goodwill and other intangibles 15,674 15,967

Other assets 39,235 40,489

Allowance for loan losses (10,670) (8,052)

Total assets $ 1,507,708 $ 1,269,244

Liabilities

Interest-bearing liabilities

Interest-bearing transaction accounts $ 305,393 $ 51 0.07% $ 232,611 $ 59 0.10%

Money market accounts 267,788 109 0.16% 203,641 179 0.35%

Savings deposits 132,429 19 0.06% 108,608 17 0.06%

Time deposits 159,133 269 0.68% 165,995 481 1.17%

Other borrowings 75,434 124 0.66% 68,913 187 1.09%

Total interest-bearing liabilities 940,177 572 0.24% 779,768 923 0.48%

Demand deposits 420,358 349,232

Other liabilities 11,950 13,328

Shareholders' equity 135,223 126,916

Total liabilities and shareholders' equity $ 1,507,708 $ 1,269,244

Cost of deposits, including demand deposits 0.14% 0.28%

Cost of funds, including demand deposits 0.17% 0.33%

Net interest spread 3.09% 3.18%

Net interest income/margin - excluding PPP loans $ 10,336 3.07% $ 9,526 3.36%

Net interest income/margin - including PPP loans $ 11,092 3.17% $ 9,743 3.35%

Net interest income/margin (tax equivalent) - excl. PPP loans $ 10,459 3.11% $ 9,629 3.40%

Net interest income/margin (tax equivalent) - incl. PPP loans $ 11,215 3.20% $ 9,846 3.38%

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and

Rates on Average Interest-Bearing Liabilities

Six months ended June 30, 2021 Six months ended June 30, 2020

Average Interest Yield/ Average Interest Yield/

Balance Earned/Paid Rate Balance Earned/Paid Rate

Assets

Earning assets

Loans

PPP loans $ 55,570 $ 1,440 5.23% $ 15,908 $ 217 2.74%

Non-PPP loans 835,451 17,751 4.28% 773,342 17,628 4.58%

Total loans 891,021 19,191 4.34% 789,250 17,845 4.55%

Securities 402,261 3,628 1.82% 290,624 3,337 2.31%

Other short-term investments and CD's 78,543 63 0.16% 44,339 194 0.88%

Total earning assets 1,371,825 22,882 3.36% 1,124,213 21,376 3.82%

Cash and due from banks 21,797 14,926

Premises and equipment 34,227 34,920

Goodwill and other intangibles 15,700 16,015

Other assets 38,683 40,089

Allowance for loan losses (10,548) (7,366)

Total assets $ 1,471,684 $ 1,222,797

Liabilities

Interest-bearing liabilities

Interest-bearing transaction accounts $ 291,511 109 0.08% $ 224,405 162 0.15%

Money market accounts 261,137 250 0.19% 200,967 528 0.53%

Savings deposits 129,223 38 0.06% 106,191 46 0.09%

Time deposits 159,724 570 0.72% 167,696 1,019 1.22%

Other borrowings 76,842 256 0.67% 69,623 461 1.33%

Total interest-bearing liabilities 918,437 1,223 0.27% 768,882 2,216 0.58%

Demand deposits 405,209 315,473

Other liabilities 12,637 13,252

Shareholders' equity 135,401 125,190

Total liabilities and shareholders' equity $ 1,471,684 $ 1,222,797

Cost of deposits, including demand deposits 0.16% 0.35%

Cost of funds, including demand deposits 0.19% 0.41%

Net interest spread 3.09% 3.24%

Net interest income/margin - excluding PPP loans $ 20,219 3.10% $ 18,943 3.44%

Net interest income/margin - including PPP loans 21,659 3.18% 19,160 3.43%

Net interest income/margin (tax equivalent) - excl. PPP loans $ 20,450 3.13% $ 19,124 3.47%

Net interest income/margin (tax equivalent) - incl. PPP loans $ 21,890 3.22% $ 19,341 3.46%

The tables below provide a reconciliation of non-GAAP measures to GAAP for the periods indicated:

March 31, December 31, June 30, June 30,

Tangible book value 2021 2021 2020 2020per common share

Tangible commonequity per common $ 16.22 $ 15.55 $ 16.08 $ 15.35share (non-GAAP)

Effect to adjust for 2.07 2.08 2.10 2.12intangible assets

Book value per common $ 18.29 $ 17.63 $ 18.18 $ 17.47share (GAAP)

Tangible commonshareholders' equityto tangible assets

Tangible commonequity to tangible 8.16 % 7.92 % 8.74 % 8.78 %assets (non-GAAP)

Effect to adjust for 0.94 % 0.97 % 1.03 % 1.09 %intangible assets

Common equity to 9.10 % 8.89 % 9.77 % 9.87 %assets (GAAP)

Return on average Three months ended Three months ended Six months endedtangible common equity June 30, March 31, June 30,

2021 2020 2021 2020 2021 2020

Return on average common tangible equity 11.89 % 8.04 % 6.72 % 11.45 % 7.39 %(non-GAAP) 11.01 %

Effect to adjust for intangible assets (1.38) % (1.01) % % % (1.33) % (0.95) % (1.27) (0.88)

Return on average common equity (GAAP) 10.51 % 7.03 % 9.74 % 10.12 % 6.44 % % 5.84

Three months ended Six months ended

June March June

30, 31, 30, June 30,

Pre-tax, pre-provision 2021 2021 2020 2021 2020earnings

Pre-tax, pre-provision $ 4,632 $ 4,323 $ 3,999 $ 8,955 $ 7,306earnings (non-GAAP)

Effect to adjust forpre-tax, pre-provision (1,089) (1,068) (1,782) (2,157) (3,295)earnings

Net Income (GAAP) $ 3,543 $ 3,255 $ 2,217 $ 6,798 $ 4,011

Six months Three months ended ended

June 30, June 30,

Net interest margin excluding PPP Loans 2021 2020 2021 2020

Net interest margin excluding PPP loans 3.07% 3.36% 3.10% 3.44%(non-GAAP)

Effect to adjust for PPP loans 0.10 (0.01) 0.08 (0.01)

Net interest margin (GAAP) 3.17% 3.35% 3.18% 3.43%

Three months Six months ended ended

June 30, June 30,

Net interest margin on a tax-equivalent basis 2021 2020 2021 2020excluding PPP Loans

Net interest margin on a tax-equivalent basis 3.11% 3.40% 3.13% 3.47%excluding PPP loans (non-GAAP)

Effect to adjust for PPP loans 0.09 (0.02) 0.09 (0.01)

Net interest margin on a tax equivalent basis 3.20% 3.38% 3.22% 3.46%(GAAP)

March Growth Annualized June 31, Growth 30,

Loans and loan growth 2021 2021 Dollars Rate

Non-PPP Loans and Related Credit $ 829,086 804,377 24,709 12.3 %Facilities (non-GAAP)

PPP Related Credit Facilities 2,003 2,853 (850) (119.5) %

Non-PPP Loans (non-GAAP) $ 831,089 $ 807,230 $ 23,859 11.9 %

PPP Loans 47,229 61,836 (14,607) (94.7) %

Total Loans (GAAP) $ 878,318 $ 869,066 $ 9,252 4.3 %

December Growth Annualized June 31, Growth 30,

Loans and loan growth 2021 2020 Dollars Rate

Non-PPP Loans and Related Credit $ 829,086 796,727 32,359 8.2 %Facilities (non-GAAP)

PPP Related Credit Facilities 2,003 5,188 (3,185) (123.8) %

Non-PPP Loans (non-GAAP) $ 831,089 $ 801,915 $ 29,174 7.3 %

PPP Loans 47,229 42,242 4,987 23.8 %

Total Loans (GAAP) $ 878,318 $ 844,157 $ 34,161 8.2 %

Certain financial information presented above is determined by methods other than in accordance with generally accepted accounting principles ("GAAP"). These non-GAAP financial measures include "Tangible book value per common share," "Tangible common shareholders' equity to tangible assets," "Return on average tangible common equity," "Pre-tax, pre-provision earnings," "Net interest margin excluding PPP Loans," "Net interest margin on a tax-equivalent basis excluding PPP Loans," "Non-PPP Loans and Related Credit Facilities," and "Non-PPP Loans."

* "Tangible book value per common share" is defined as total equity reduced by recorded intangible assets divided by total common shares outstanding. * "Tangible common shareholders' equity to tangible assets" is defined as total common equity reduced by recorded intangible assets divided by total assets reduced by recorded intangible assets. * "Return on average tangible common equity" is defined as net income on an annualized basis divided by average total equity reduced by average recorded intangible assets. * "Pre-tax, pre-provision earnings" is defined as net interest income plus non-interest income, reduced by non-interest expense. * "Net interest margin excluding PPP Loans" is defined as annualized net interest income less annualized interest income on PPP Loans divided by average earning assets less the average balance of PPP Loans. * "Net interest margin on a tax-equivalent basis excluding PPP Loans" is defined as annualized net interest income on a tax-equivalent basis less annualized interest income on PPP Loans divided by average earning assets less the average balance of PPP Loans. * "Non-PPP Loans and Related Credit Facilities" is defined as Total Loans less PPP Related Credit Facilities and PPP Loans. * "Non-PPP Loans" is defined as Total Loans less PPP Loans. * "Non-PPP Loans and Related Credit Facilities Growth - Dollars" is calculated by taking the difference between two time periods compared for Total Loans less PPP Loans and PPP Related Credit Facilities. "Non-PPP Loans and Related Credit Facilities - Annualized Growth Rate" is calculated by (i) dividing "Non-PPP Loans and Related Credit Facilities Loan Growth - Dollars" by the number of days between the two time periods compared (ii) times the number of days in the year (iii) divided by the prior time period Non-PPP Loans and Related Credit Facilities balance. * "Non-PPP Loans Growth - Dollars" is calculated by taking the difference between two time periods compared for Total Loans less PPP Loans. "Non-PPP Loans - Annualized Growth Rate" is calculated by (i) dividing "Non-PPP Loans Loan Growth - Dollars" by the number of days between the two time periods compared (ii) times the number of days in the year (iii) divided by the prior time period Non-PPP Loans balance.

Our management believes that these non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare our operating results from period-to-period in a meaningful manner. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the company's results as reported under GAAP.

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SOURCE First Community Corporation