PR Newswire | Jul 22, 2020 09:02AM EDT

07/22 08:00 CDT

First Community Corporation Announces Second Quarter Results and Cash Dividend LEXINGTON, S.C., July 22, 2020

LEXINGTON, S.C., July 22, 2020 /PRNewswire/ --

Highlights for Second Quarter of 2020

* Net income of $2.217 million. * Pre-tax pre-provision earnings of $3.999 million, up 9.2% year-over year and 20.9% linked quarter. * Diluted EPS of $0.30 per common share for the quarter and $0.54 year-to-date through June 30, 2020 * Total loans increased during the second quarter by $67.843 million, an annualized growth rate of 36.4%. Excluding Paycheck Protection Program or PPP loans, loan growth was $19.978 million, a 10.7% annualized growth rate. * Facilitated PPP loans (combined direct and external channels) for 896 customers totaling $80.7 million as of July 17, 2020. * Pure deposit growth, including customer cash management, of $133.5 million, an annualized growth rate of 59.9%. * Record quarter for mortgage line of business with revenue growth of 27.0% year-over-year. * Net interest margin on a tax equivalent basis of 3.38%, including PPP loans and 3.40% excluding PPP loans. * Strong credit quality metrics with non-performing assets (NPAs) of 0.25%, past due ratio of 0.04% and net loan charge-offs excluding overdrafts of $4.7 thousand, with a year-to-date through June 30, 2020 net recovery of $3.6 thousand. * Cash dividend of $0.12 per common share, which is the 74th 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 2020 of $2.217 million as compared to $2.881 million in the second quarter of 2019. Diluted earnings per common share were $0.30 for the second quarter of 2020 as compared to $0.37 for the second quarter of 2019. On a linked quarter basis, net income increased 23.6% from $1.794 million in the first quarter of 2020 and diluted earnings per common share increased 25.0% from $0.24. Pre-tax pre-provision earnings or PTPPE in the second quarter of 2020 were $3.999 million compared to second quarter of 2019 PTPPE of $3.662 million and first quarter 2020 PTPPE of $3.307 million, an increase of 9.2% and 20.9% respectively.

Year-to-date through June 30, 2020 net income was $4.011 million compared to $5.376 million during the first six months of 2019. Diluted earnings per share for the first half of 2020 were $0.54, compared to $0.70 during the same time period in 2019. Year-to-date through June 30, 2020 PTPPE were $7.306 million compared to $6.868 million during the first half of 2019, an increase of 6.4%. Mike Crapps, First Community President and CEO, commented, "We are pleased with growth in our core earnings even during these unprecedented times. Our ability to quickly launch a platform to process PPP loans along with the revenue diversification with our three lines of business helped to support our performance in the second quarter. While our credit metrics remain strong, again this quarter we increased the provision for loan losses in anticipation of potential future impact from the COVID-19 pandemic."

Cash Dividend and Capital

The Board of Directors approved a cash dividend for the second quarter of 2020. The company will pay a $0.12 per share dividend to holders of the company's common stock. This dividend is payable August 17, 2020 to shareholders of record as of August 3, 2020. Mr. Crapps commented, "Our entire board is pleased that our performance enables the company to continue its cash dividend for the 74th consecutive quarter."

During the second quarter, no share repurchases have been made under our existing share repurchase plan approved during the third quarter of 2019. Our existing repurchase plan provides the company with some flexibility in managing capital going forward.

In 2018, the Federal Reserve increased the asset size to qualify as a small bank holding company. As a result of this change, the company is generally not subject to the Federal Reserve capital requirements unless advised otherwise. The bank remains subject to capital requirements including a minimum leverage ratio and a minimum ratio of "qualifying capital" to risk weighted assets. These requirements are essentially the same as those that applied to the company prior to the change in the definition of a small bank holding company. Each of the regulatory capital ratios for the bank exceed the well capitalized minimum levels currently required by regulatory statute. At June 30, 2020, the bank's regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) were 9.31%, 13.02%, and 14.03%, respectively. This compares to the same ratios as of June 30, 2019 of 10.20%, 13.47%, and 14.25%, respectively. As of June 30, 2020, the bank's Common Equity Tier I ratio was 13.02% compared to 13.47% at June 30, 2019.

Asset Quality / Allowance for Loan and Lease Losses

Asset quality metrics remained strong as of June 30, 2020. The non-performing assets ratio for the second quarter was 0.25% of total assets and total past dues (ratio) was 0.04%. Net loan charge-offs excluding overdrafts for the quarter were $4.7 thousand and the year-to-date through June 30, 2020 net recovery is $3.6 thousand. The ratio of classified loans plus OREO now stands at 5.41% of total bank regulatory risk-based capital as of June 30, 2020.

Mr. Crapps indicated, "As a way to serve our many local businesses and individuals during the past few challenging months, we proactively offered payment deferrals for up to 90 days to our loan customers." The company reported that at its peak, there were payment deferments on loans totaling approximately $206.9 million (26.9% of the non-PPP loan portfolio). Loans in which payments have been deferred decreased to $175.0 million (22.7% of the non-PPP loan portfolio) at June 30, 2020 and $110.6 million (14.4% of the non-PPP loan portfolio) at July 16, 2020. This is primarily the result of payments being restarted at the conclusion of their payment deferral period. It is also noteworthy that the percentage of loans, in certain identified industries deemed to be "high risk" due to the pandemic, is largely unchanged from prior disclosures.

Even with strong credit quality metrics, due to the uncertainty of future credit losses related to the COVID-19 pandemic and its effect on local businesses, the bank funded $1.250 million to the provision for loan losses in the second quarter compared to $9 thousand in the second quarter of 2019. Year-to-date through June 30, 2020, the bank has funded $2.325 million in provision for loan losses compared to $114 thousand during the first six months of 2019. During the first six months of 2020, the ratio of the Allowance for Loan Loss to total loans has increased from 0.90% as of December 31, 2019 to 1.09% as of June 30, 2020. Mr. Crapps commented, "Our credit metrics continue to indicate the current strong quality of our loan portfolio. This combined with the significant reduction in loans with payments deferred is good news for our company. At the same time, there is much unknown about the economic impact of the pandemic; therefore, we continue to prepare our balance sheet and our resources for an uncertain future."

Balance Sheet

Total loans increased during the second quarter by $67.843 million, which is an annualized growth rate of 36.4%. Total loans, excluding PPP loans, increased during the second quarter by $19.978 million which is an annualized growth rate of 10.7%. Non-PPP loan growth during the quarter was the result of increased production and lower payoffs/paydowns on a linked quarter. Commercial loan production was $39.3 million during the second quarter compared to $33.5 million in the first quarter of 2020. Early payoffs were less impactful, as evidenced by the ratio of loan portfolio growth to loan production at 50.8% compared to 37.3% on the linked quarter and the average of 31.8% in 2018 and 2019.

In addition to the strong non-PPP loan growth during the quarter, through July 17, 2020 the bank has helped facilitate $80.7 million in PPP loans to 896 customers through a combination of direct loans and referrals to an SBA partner. As of June 30, 2020, the bank had $47.9 million in PPP loans on the balance sheet. As of July 17, 2020, PPP loans on the balance sheet had increased to $49.7 million. Crapps noted, "As a community bank committed to the success of local businesses, we are pleased to be able to support our customers with access to the PPP funding."

Total deposits were $1.119 billion at June 30, 2020 compared to $986.6 million at March 31, 2020. Pure deposits, which are defined as total deposits less certificates of deposits, increased $133.8 million or 15.7% to $983.8 million at June 30, 2020 from $850.0 million at March 31, 2020. This increase in deposits was partially due to the proceeds of PPP loans that were made during the quarter and stimulus funds. The bank had no brokered deposits and no listing services deposits at June 30, 2020. Securities sold under agreements to repurchase, which are related to customer cash management accounts or business sweep accounts, were relatively flat at $45.7 million at June 30, 2020 compared to 46.0 million at March 31, 2020. Costs of deposits decreased on a linked quarter basis to 0.28% in the second quarter of 2020 from 0.42 in the first quarter of the year. Cost of funds also decreased on a linked quarter basis to 0.33% in the second quarter of 2020 from 0.50 in the first quarter of the year.

Mr. Crapps commented, "Our low cost deposits; our ability to borrow against approved lines of credit (federal funds purchased) from correspondent banks; and our ability to obtain advances secured by certain securities and loans from the Federal Home Loan Bank provide ample liquidity as we continue to meet the needs of our customers and to manage through the COVID-19 pandemic."

Revenue

Net Interest Income/Net Interest Margin

Net interest income increased $326 thousand or 3.5% to $9.743 million for the second quarter of 2020 compared to first quarter net interest income of $9.417 million. Year-over-year, net interest income increased $627 thousand or 6.9% from $9.116 million in the second quarter of 2019. Second quarter net interest margin, on a tax equivalent basis, was 3.38% compared to net interest margin of 3.55% in the first quarter. Second quarter net interest margin, excluding PPP loans, was 3.40%. The net interest margin has declined as a result of multiple factors, including the Federal Reserve reducing the target range for federal funds to near zero with two rate reductions in March of this year totaling 150 basis points; the modest yield earned on the PPP loans; and the excess liquidity on the bank's balance sheet.

Non-Interest Income

Non-interest income increased 15.7% on a linked quarter basis to $3.387 million in the second quarter of 2020, an increase from $2.928 million in the first quarter of this year. Year-over-year, non-interest income, adjusted for securities gains and losses, increased 12.1% from $3.022 million in the second quarter of 2019. Revenues in the mortgage line of business increased 27.0% year-over-year to $1.572 million compared to $1.238 million in the second quarter of 2019. On a linked quarter basis, mortgage revenue increased 60.1% from $982 thousand in the first quarter. Mortgage loan production increased 46.1% year-over-year from $36.89 million in the second quarter of 2019 to $53.89 million in the second quarter of 2020. Revenue in the investment advisory line of business increased 5.8% on a linked quarter basis to $671 thousand in the second quarter of 2020 from $634 thousand in the first quarter and year-over-year increased 37.2% from $489 thousand in the second quarter of 2019. It is noteworthy that the assets under management (AUM), which was $369.7 million at December 31, 2019, declined to $319.7 million at March 31, 2020, bounced back to $390.7 million at June 30, 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. Our mortgage line of business had a record quarter and revenues in our investment advisory line of business continue to grow. We are pleased with the activity and momentum in each of our business units."

Non-Interest Expense

Non-interest expense was $9.131 million in the second quarter of 2020, compared to $9.038 million in the first quarter of 2020. Salaries and benefits expense increased $187 thousand which was mainly related to increased commissions paid on higher production in the mortgage line of business and temporary help and overtime pay in the mortgage support areas.

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 "anticipated', "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 recent outbreak of the novel coronavirus, or COVID-19, on the economies and communities we serve, which may have an adverse impact on our business, operations, and performance, and could 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, December 31, June 30,

2020 2019 2019

Total $1,324,800 $ 1,170,279 $ 1,115,968Assets

OtherShort-term 77,666 32,741 24,898Investments^1

Investment 297,972 288,792 252,302Securities

Loans Held 33,496 11,155 8,730for Sale

Loans

Paycheck Protection 47,865 - -Program (PPP) Loans

Non-PPP 769,507 737,028 726,707Loans

Total Loans 817,372 737,028 726,707

Allowance for Loan 8,936 6,627 6,362Losses

Goodwill 14,637 14,637 14,637

Other 1,283 1,483 1,742Intangibles

Total 1,118,872 988,201 937,391Deposits

Securities Sold Under 45,651 33,296 33,889Agreements to Repurchase

Federal Home Loan Bank - 211 221Advances

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

Shareholders' 130,801 120,194 117,489Equity

Book Value Per Common $ 17.47 $ 16.16 $ 15.64Share

Tangible Book Value Per $ 15.35 $ 13.99 $ 13.46Common Share

Equity to 9.87% 10.27% 10.53%Assets

Tangible Common Equity 8.78% 9.02% 9.20%to Tangible Assets

Loan to Deposit Ratio(Includes Loans Held for 76.05% 75.71% 78.46%Sale)

Allowance for Loan 1.09% 0.90% 0.88%Losses/Loans

Regulatory Capital Ratios(Bank):

Leverage Ratio 9.31% 9.97% 10.20%

Tier 1 13.02% 13.47% 13.47%Capital Ratio

Total 14.03% 14.26% 14.25%Capital Ratio

Common Equity Tier 1 13.02% 13.47% 13.47%Capital Ratio

Tier 1 Regulatory $ 115,788 $ 112,754 $ 110,756Capital

Total Regulatory $ 124,724 $ 119,381 $ 117,118Capital

Common Equity Tier 1 $ 115,788 $ 112,754 $ 110,756Capital

^1 Includes federal funds sold, securities sold under agreement toresell and interest-bearing deposits

Average Three months ended Six months endedBalances:

June 30, June 30,

2020 2019 2020 2019

Average $1,269,244 $1,103,347 $ 1,222,797 $ 1,096,371Total Assets

AverageLoans(Includes 824,842 728,711 789,250 726,398Loans Held forSale)

Average 1,171,183 1,005,402 1,124,213 999,464Earning Assets

Average 1,060,087 924,200 1,014,732 916,513Deposits

AverageOther 68,913 50,012 69,623 53,290Borrowings

AverageShareholders' 126,916 117,255 125,190 115,529Equity

Asset As of Quality:

June 30, March 31, December 31,

2020 2020 2019

Loan Risk Rating byCategory (End of Period)

Special $ 2,849 $ 3,950 $ 4,936Mention

Substandard 5,300 4,467 4,691

Doubtful - - -

Pass 809,223 741,112 727,401

$ 817,372 $ 749,529 $ 737,028

NonperformingAssets

Non-accrual $ 1,806 $ 1,739 $ 2,329Loans

Other Real Estate Owned 1,449 1,481 1,410and Repossessed Assets

Accruing Loans Past Due - 168 -90 Days or More

Total Nonperforming $ 3,255 $ 3,388 $ 3,739Assets

Accruing Trouble Debt $ 1,613 $ 1,635 $ 1,669Restructurings

Three months ended Six months ended

June 30, June 30,

2020 2019 2020 2019

Loans $ $ $ $ Charged-off 16 13 17 23

Overdrafts 9 30 31 53Charged-off

Loan (11) (32) (20) (44)Recoveries

Overdraft (6) (10) (12) (17)Recoveries

Net $ $ $ $ Charge-offs 8 1 16 15(Recoveries)

NetCharge-offs to 0.00% 0.00% 0.00% 0.00%Average Loans^2

^2 Annualized

FIRST COMMUNITY CORPORATION

INCOME STATEMENT DATA

(Dollars in thousands, except pershare data)

Three months ended Three months ended Six months ended

June 30, March 31, June 30,

2020 2019 2020 2019 2020 2019

Interest $ $ $ $ $ $ income 10,666 10,606 10,710 10,374 21,376 20,980

Interest 923 1,490 1,293 1,354 2,216 2,844expense

Net interest 9,743 9,116 9,417 9,020 19,160 18,136income

Provision for 1,250 9 1,075 105 2,325 114loan losses

Net interestincome after 8,493 9,107 8,342 8,915 16,835 18,022provision

Non-interestincome

Deposit 210 380 399 411 609 791service charges

Mortgage 1,572 1,238 982 844 2,554 2,082banking income

Investmentadvisory fees 671 489 634 438 1,305 927and non-depositcommissions

Gain (loss)on sale of - 164 - (29) - 135securities

Gain (loss)on sale of - (3) 6 - 6 (3)other assets

Other 934 918 907 845 1,841 1,763

Totalnon-interest 3,387 3,186 2,928 2,509 6,315 5,695income

Non-interestexpense

Salariesand employee 5,840 5,210 5,653 5,170 11,493 10,380benefits

Occupancy 679 647 643 655 1,322 1,302

Equipment 298 389 318 386 616 775

Marketingand public 247 430 354 175 601 605relations

FDIC 88 71 42 74 130 145assessment

Other real 40 18 35 29 75 47estate expenses

Amortization of 95 132 105 132 200 264intangibles

Other 1,844 1,743 1,888 1,702 3,732 3,445

Totalnon-interest 9,131 8,640 9,038 8,323 18,169 16,963expense

Income before 2,749 3,653 2,232 3,101 4,981 6,754taxes

Income tax 532 772 438 606 970 1,378expense

Net income $ $ $ $ $ $ 2,217 2,881 1,794 2,495 4,011 5,376

Per sharedata

Net $ $ $ $ $ $ income, basic 0.30 0.38 0.24 0.33 0.54 0.70

Net $ $ $ $ $ $ income, 0.30 0.37 0.24 0.32 0.54 0.70diluted

Average numberof shares 7,435,933 7,626,559 7,427,257 7,633,908 7,431,595 7,628,868outstanding -basic

Average numberof shares 7,465,212 7,704,221 7,472,956 7,724,780 7,467,755 7,708,267outstanding -diluted

Sharesoutstanding 7,486,151 7,511,164 7,462,247 7,664,967 7,486,151 7,511,164period end

Return on 0.70% 1.05% 0.61% 0.93% 0.66% 0.99%average assets

Return onaverage common 7.03% 9.86% 5.84% 8.89% 6.44% 9.38%equity

Return onaverage common 8.04% 11.46% 6.72% 10.41% 7.39% 10.95%tangible equity

Net interestmargin (non 3.35% 3.64% 3.52% 3.68% 3.43% 3.66%taxableequivalent)

Net interestmargin (taxable 3.38% 3.67% 3.55% 3.73% 3.46% 3.70%equivalent)

Efficiency 69.00% 70.62% 72.79% 71.31% 70.83% 70.95%ratio^1

^1 Calculated by dividing non-interest expense by net interest income on taxequivalent basis and non interest income, excluding gains (losses) on sales ofsecurities and other assets.

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates

on Average Interest-Bearing Liabilities

Three months ended June 30, 2020 Three months ended June 30, 2019

Average Interest Yield/ Average Interest Yield/

Balance Earned/Paid Rate Balance Earned/Paid Rate

Assets

Earning assets

Loans

PPP loans $ $ 217 2.74% $ $ NA 31,816 - -

Non-PPP 793,026 8,801 4.46% 728,711 8,792 4.84%loans

Total loans 824,842 9,018 4.40% 728,711 8,792 4.84%

Securities 294,915 1,611 2.20% 250,316 1,658 2.66%

Othershort-term 51,426 37 0.29% 26,375 156 2.37%investments

Total earning 1,171,183 10,666 3.66% 1,005,402 10,606 4.23%assets

Cash and due 14,820 13,998from banks

Premises and 34,837 35,765equipment

Goodwill andother 15,967 16,443intangibles

Other assets 40,489 38,094

Allowance for (8,052) (6,355)loan losses

Total Assets $1,269,244 $1,103,347

Liabilities

Interest-bearingliabilities

Interest-bearing $ 232,611 $ 0.10% $ 202,096 $ 135 0.27%transaction 59accounts

Money market 203,641 179 0.35% 177,039 481 1.09%accounts

Savings 108,608 17 0.06% 107,638 36 0.13%deposits

Time deposits 165,995 481 1.17% 176,715 528 1.20%

Other 68,913 187 1.09% 50,012 310 2.49%borrowings

Totalinterest-bearing 779,768 923 0.48% 713,500 1,490 0.84%liabilities

Demand deposits 349,232 260,712

Other 13,328 11,880liabilities

Shareholders' 126,916 117,255equity

Totalliabilities and $1,269,244 $1,103,347shareholders'equity

Cost ofdeposits, 0.28% 0.51%including demanddeposits

Cost of funds,including demand 0.33% 0.61%deposits

Net interest 3.18% 3.39%spread

Net interestincome margin - $ 9,526 3.36% $ 9,116 3.64%excluding PPPloans

Net interestincome/margin - $ 9,743 3.35% $ 9,116 3.64%including PPPloans

Net interest income/margin(tax equivalent) - excl. PPP $ 9,629 3.40% $ 9,210 3.67%loans

Net interest income/margin(tax equivalent) - incl. PPP $ 9,846 3.38% $ 9,210 3.67%loans

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and Rates

on Average Interest-Bearing Liabilities

Six months ended June 30, 2020 Six months ended June 30, 2019

Average Interest Yield Average Interest Yield / /

Balance Earned/ Rate Balance Earned/Paid Rate Paid

Assets

Earning assets

Loans

PPP loans $ 15,908 $ 2.74% $ $ NA 217 - -

Non-PPP 773,342 17,628 4.58% 726,398 17,401 4.83%loans

Total loans 789,250 17,845 4.55% 726,398 17,401 4.83%

Securities 290,624 3,337 2.31% 251,114 3,315 2.66%

Othershort-term 44,339 194 0.88% 21,952 264 2.43%investments

Total earning 1,124,213 21,376 3.82% 999,464 20,980 4.23%assets

Cash and due from 14,926 13,680banks

Premises and 34,920 35,645equipment

Goodwill and 16,015 16,509other intangibles

Other assets 40,089 37,407

Allowance for (7,366) (6,334)loan losses

Total assets $1,222,797 $1,096,371

Liabilities

Interest-bearingliabilities

Interest-bearing $ 224,405 162 0.15% $ 198,270 284 0.29%transactionaccounts

Money market 200,967 528 0.53% 178,201 822 0.93%accounts

Savings 106,191 46 0.09% 107,779 71 0.13%deposits

Time deposits 167,696 1,019 1.22% 178,424 1,005 1.14%

Other 69,623 461 1.33% 53,290 662 2.51%borrowings

Totalinterest-bearing 768,882 2,216 0.58% 715,964 2,844 0.80%liabilities

Demand deposits 315,473 253,839

Other liabilities 13,252 11,039

Shareholders' 125,190 115,529equity

Total liabilitiesand shareholders' $1,222,797 $1,096,371equity

Cost of deposits,including demand 0.35% 0.48%deposits

Cost of funds,including demand 0.41% 0.59%deposits

Net interest 3.24% 3.43%spread

Net interest income margin - $ 3.44% $ 18,136 3.66%excluding PPP loans 18,943

Net interest income/margin - 19,160 3.43% 18,136 3.66%including PPP loans

Net interest income/margin (tax $ 3.47% $ 18,344 3.70%equivalent) - excl. PPP loans 19,124

Net interest income/margin (tax $ 3.46% $ 18,344 3.70%equivalent) - incl. PPP loans 19,341

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

June 30, December 31, June 30,

Tangible book value per common share 2020 2019 2019

Tangible common equity per common $ 15.35 $ 13.99 $ 13.46share (non-GAAP)

Effect to adjust for intangible assets 2.12 2.17 2.18

Book value per common share (GAAP) $ 17.47 $ 16.16 $ 15.64

Tangible common shareholders' equityto tangible assets

Tangible common equity to tangible 8.78 % 9.02 % 9.20 %assets (non-GAAP)

Effect to adjust for intangible assets 1.09 % 1.25 % 1.33 %

Common equity to assets (GAAP) 9.87 % 10.27 % 10.53 %

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

2020 2019 2020 2019 2020 2019

Return on averagecommon tangible equity 8.04 % 11.46 % 6.72 % 10.41 % 7.39 % 10.95 %(non-GAAP)

Effect to adjust for (1.01) % (1.60) % (0.88) % (1.52) % (0.95)% (1.57)%intangible assets

Return on average 7.03 % 9.86 % 5.84 % 8.89 % 6.44 % 9.38 %common equity (GAAP)

Three months ended Six months ended

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

Pre-tax, pre-provision 2020 2020 2019 2020 2019earnings

Pre-tax, pre-provision $ 3,999 3,307 $ 3,662 $ 7,306 6,686earnings (non-GAAP)

Effect to adjust for pre-tax, (1,782) (1,513) (781) (3,295) (1,310)pre-provision earnings

Net Income (GAAP) $ 2,217 1,794 $ 2,881 $ 4,011 5,376

Three months ended Six months ended

June 30, June 30,

Net interest margin excluding PPP Loans 2020 2019 2020 2019

Net interest margin excluding PPP loans 3.36% 3.64% 3.44% 3.66%(non-GAAP)

Effect to adjust for PPP loans (0.01) N/A (0.01) N/A

Net interest margin (GAAP) 3.35% 3.64% 3.43% 3.66%

Three months ended Six months ended

June 30, June 30,

Net Interest Margin on a tax-equivalent 2020 2019 2020 2019basis excluding PPP Loans

Net interest margin on a tax-equivalent 3.40% 3.67% 3.47% 3.70%basis excluding PPP loans (non-GAAP)

Effect to adjust for PPP loans (0.02) N/A (0.01) N/A

Net interest margin on a tax equivalent 3.38% 3.67% 3.46% 3.70%basis (GAAP)

June 30, March 31, Growth Rate Annualized Growth

Loans and loan growth 2020 2020 Dollars Rate

Non-PPP Loans (non-GAAP) $ 769,507 $ 749,529 $ 19,978 10.7 %

PPP Loans 47,865 - 47,865 N/A %

Total Loans (GAAP) $ 817,372 $ 749,529 $ 67,843 36.4 %

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 at period end," "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.", and "Non-PPP Loans," "Tangible book value at period end" 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" and "Net interest margin on a tax-equivalent basis excluding PPP loans" are calculated by determining the interest income divided by average earning assets less the average balance of PPP loans. "Non-PPP Loan 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. 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