On January 24, 2024, First Community Corp (FCCO, Financial) released its 8-K filing, announcing its financial results for the fourth quarter and year-end of 2023. The bank holding company, which operates through segments including Commercial and Retail Banking, Mortgage Banking, Investment Advisory and Non-Deposit, and Corporate, reported a decrease in net income and diluted earnings per share for the year compared to 2022. However, the company also highlighted strong loan growth and the continuation of its cash dividend, which has been consistent for 88 quarters.
Fiscal Summary and Performance
First Community Corp's net income for the fourth quarter of 2023 was $3.297 million, with diluted earnings per share at $0.43. This represents a decrease from the fourth quarter of 2022, which saw a net income of $4.043 million and diluted earnings per share of $0.53. The year-end net income for 2023 totaled $11.843 million, down from $14.613 million in the previous year, with diluted earnings per share falling from $1.92 to $1.55. Despite this decline, the company's loan portfolio experienced significant growth, with a 15.6% annual growth rate, bringing the total loans to $1.134 billion.
The company's decision to sell $39.9 million of U.S. Treasuries in the third quarter was a strategic move to improve liquidity and fund loan growth, despite incurring a one-time pre-tax loss of $1.2 million. This action is expected to enhance the balance sheet's efficiency, improve net interest margin, and position the company for higher future earnings.
Dividend and Capital Strength
First Community Corp's Board of Directors approved a fourth-quarter cash dividend of $0.14 per common share, payable on February 20, 2024, to shareholders of record as of February 6, 2024. President and CEO Mike Crapps expressed satisfaction with the company's performance, which has allowed the continuation of the cash dividend. The company's share repurchase plan, which expired on December 31, 2023, did not result in any share repurchases.
The bank's regulatory capital ratios remain robust, with all ratios exceeding the well-capitalized minimum levels. The Tangible Common Equity to Tangible Assets (TCE) ratio improved to 6.39% as of December 31, 2023, compared to 6.21% at the end of 2022. Additionally, Tangible Book Value (TBV) per share increased from $14.25 to $15.23 during the fourth quarter.
Asset Quality and Balance Sheet Resilience
First Community Corp's asset quality remains strong, with non-performing assets at a mere 0.05% of total assets. The past due ratio for all loans was stable at 0.06%, and the bank experienced net recoveries throughout the year. The company's focus on diversified lending without significant individual or industry concentrations contributes to its solid asset quality.
On the balance sheet, total loans increased by $42.4 million during the fourth quarter, reflecting an annualized growth rate of 15.4%. Deposit growth was also notable, with total deposits reaching $1.511 billion, an annual growth rate of 9.1%. The bank has successfully managed its deposit franchise, despite experiencing pressure on interest rates for interest-bearing deposits.
Investment Portfolio and Non-Interest Income
The investment portfolio remained stable at $506.2 million as of December 31, 2023. Net interest income for the year increased by 2.0% to $48.9 million, and the net interest margin contracted by 7 basis points to 2.89% in the fourth quarter. Non-interest income for the fourth quarter was $2.931 million, with total non-interest income for the year at $10.421 million, impacted by a loss on the sale of securities in the third quarter.
The mortgage line of business produced $38.62 million in the fourth quarter, with fee revenue from secondary market loans at $372 thousand. The investment advisory line of business generated $1.176 million in revenue for the fourth quarter, with assets under management (AUM) ending the year at $755.4 million.
Conclusion
First Community Corp's 2023 financial results reflect a mixed performance with a decrease in net income but strong loan growth and a stable dividend. The company's strategic decisions and robust capital ratios position it well for future growth. The continued excellence in asset quality and the resilience of the deposit franchise underscore the company's stability in a challenging economic environment.
For a detailed view of First Community Corp's financial performance and strategic initiatives, investors and interested parties can access the full 8-K filing.
Explore the complete 8-K earnings release (here) from First Community Corp for further details.
