8-K: FCCO: 2025 Net Income Up 37.6%, Dividend Maintained

First Community Corporation announced robust financial results for the year ended December 31, 2025, including a 37.6% increase in net income and the completion of the Signature Bank of Georgia acquisition.

Summary

• Net income for the fourth quarter of 2025 was $4.830 million, and $19.205 million for the full year ended December 31, 2025.
• Excluding merger expenses, net income was $5.357 million for Q4 2025 and $20.348 million for FY 2025.
• Diluted EPS was $0.62 for Q4 2025 and $2.47 for FY 2025; excluding merger expenses, diluted EPS was $0.69 for Q4 2025 and $2.62 for FY 2025.
• Net interest margin on a tax equivalent basis reached 3.32% in Q4 2025, marking the seventh consecutive quarter of margin expansion.
• Total loan growth for FY 2025 was $90.5 million (7.4%), with Q4 2025 seeing $31.7 million in growth (9.8% annualized).
• Total deposits increased $73.6 million (4.4%) for FY 2025, but declined $21.6 million (1.2%) in Q4 2025.
• Assets Under Management (AUM) reached a record $1.170 billion at December 31, 2025.
• Credit quality remains excellent with 2025 net charge-offs of $52 thousand, non-performing assets at 0.02%, and past due loans at 0.07%.
• The Board of Directors approved a cash dividend of $0.16 per common share for Q4 2025, marking the 96th consecutive quarter of cash dividends.
• The acquisition of Signature Bank of Georgia was completed on January 8, 2026, providing entry into a new market and SBA/government-guaranteed lending.
• A share repurchase plan of up to $7.5 million, representing approximately 4.5% of total shareholders' equity, was approved and expires on May 8, 2026.

Sentiment

Score: 8

Explanation: The company reported strong annual financial growth, consistent dividend payments, excellent asset quality, and a strategic acquisition, indicating robust performance and positive future prospects despite some quarterly declines and industry headwinds.

Positives

• Net income for the year ended December 31, 2025, increased 37.6% to $19.205 million compared to $13.955 million in 2024.
• Diluted earnings per share for FY 2025 increased 36.5% to $2.47 compared to $1.81 in 2024.
• Achieved seven consecutive quarters of net interest margin expansion, reaching 3.32% (tax equivalent) in Q4 2025.
• Strong total loan growth of $90.5 million (7.4%) for FY 2025 and an annualized growth rate of 9.8% in Q4 2025.
• Assets Under Management (AUM) reached a record $1.170 billion at year-end 2025, up from $926.0 million at year-end 2024.
• Key credit quality metrics remain excellent with 2025 net charge-offs of $52 thousand, non-performing assets of 0.02%, and past due loans of 0.07%.
• Approved a cash dividend of $0.16 per common share, marking the 96th consecutive quarter of cash dividends paid.
• Successfully completed the acquisition of Signature Bank of Georgia on January 8, 2026, expanding into a new market and SBA/government-guaranteed lending.
• Regulatory capital ratios for the bank exceed well-capitalized minimum levels: Leverage Ratio 8.66%, Tier I Risk Based 13.11%, and Total Risk Based 14.16% at December 31, 2025.
• Tangible Book Value (TBV) per share increased to $19.84 as of December 31, 2025, up from $16.93 at December 31, 2024.
• Costs of deposits decreased eight basis points to 1.73% in Q4 2025 compared to the prior quarter.
• Cost of funds decreased nine basis points to 1.80% in Q4 2025 compared to the prior quarter.

Negatives

• Net income for the fourth quarter of 2025 decreased to $4.830 million from $5.192 million in the third quarter of 2025.
• Diluted EPS for the fourth quarter of 2025 decreased to $0.62 from $0.67 in the third quarter of 2025.
• Total deposits declined $21.6 million (1.2%) during the fourth quarter of 2025 compared to the prior linked quarter.
• Pure deposits (total deposits less certificates of deposit) decreased $26.4 million on a linked quarter basis to $1.436 billion at December 31, 2025.
• Total non-interest income was $4.288 million in Q4 2025, down from $4.469 million in Q3 2025.
• Mortgage banking fee revenue decreased to $698 thousand in Q4 2025 from $934 thousand in Q3 2025.
• Non-interest bearing deposits decreased by $16.0 million on a linked quarter basis to $467.3 million.
• Other Loans Especially Mentioned (OLEM) increased to $5.2 million, an increase of $2.2 million, primarily due to two unrelated loan relationships where financial performance has not been as planned, though no losses are anticipated.

Risks

• The risk that anticipated cost savings or other expected benefits of the acquisition of Signature Bank of Georgia may not be realized.
• Potential disruption to client or employee relationships as a result of the acquisition of Signature Bank of Georgia.
• Competitive pressures among depository and other financial institutions may increase significantly and affect pricing, spending, third-party relationships, and revenues.
• The strength of the United States economy in general and the local economies in which operations are conducted may be different than expected.
• Adverse changes in asset quality in the loan portfolio, including rates of delinquencies, charge-offs, and the level of allowance for credit loss, which may result in increased credit risk-related losses and expenses.
• Changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action.
• Adverse conditions in the stock market, the public debt markets, and other capital markets (including changes in interest rate conditions) could continue to have a negative impact.
• Changes in interest rates, which have and may continue to affect deposit and funding costs, net income, prepayment penalty income, mortgage banking income, other future cash flows, or the market value of assets, including investment securities.
• Technology and cybersecurity risks, including potential business disruptions, reputational risks, and financial losses, associated with potential attacks on or failures by computer systems and those of vendors and third parties.
• Elevated inflation causing adverse risk to the overall economy, which could indirectly pose challenges to customers and business.
• Any increases in FDIC assessment, which has increased and may continue to increase the cost of doing business.
• The adverse effects of events beyond control that may have a destabilizing effect on financial markets and the economy, such as epidemics and pandemics, war or terrorist activities, essential utility outages, government shutdowns, deterioration in the global economy, instability in the credit markets, disruptions in customer supply chains, or disruption in transportation.
• Other risks, uncertainties, and factors disclosed in the most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, or Current Reports on Form 8-K filed with the SEC.

Future Outlook

The company believes it has positive momentum entering the first quarter of 2026, particularly regarding net interest margin expansion. The acquisition of Signature Bank of Georgia is expected to provide entry into a new market and a new line of business focused on SBA and other government-guaranteed lending. Management acknowledges ongoing headwinds in the mortgage business due to a higher interest rate environment and low housing inventory but is encouraged by recent trends.

Management Comments

• "The entire board is pleased that our performance enables the company to continue our cash dividend uninterrupted for 96 consecutive quarters." Mike Crapps, President and CEO.
• "This approved share repurchase provides us with some flexibility in managing capital going forward." Mike Crapps, President and CEO.
• "Loan growth was strong in 2025; a combination of loan production and advances of unfunded commercial loans available for draws even with the headwinds of payoffs and paydowns during the year." Ted Nissen, First Community Bank President and CEO.
• "While we are still experiencing the headwinds of a higher interest rate environment and low housing inventory, we are encouraged by recent trends." Ted Nissen, First Community Bank President and CEO.
• "A strength of our bank has been and continues to be the value of our deposit franchise." Ted Nissen, First Community Bank President and CEO.

Industry Context

The banking sector is navigating a dynamic environment characterized by fluctuating interest rates and competitive pressures for deposits. First Community Corporation's achievement of seven consecutive quarters of net interest margin expansion and strong annual loan growth suggests effective interest rate risk management and robust regional demand, outperforming some industry trends. The strategic acquisition of Signature Bank of Georgia aligns with a broader trend of regional banks pursuing M&A to expand market reach and diversify into specialized lending areas like SBA loans, enhancing competitive positioning. While overall deposits saw a quarterly decline, the increase in average deposits and management's emphasis on its deposit franchise highlight the importance of stable funding in the current market.

Comparison to Industry Standards

• NA

Corporate Governance

Stakeholder Impact

• Shareholders: Benefit from strong annual financial performance, continued cash dividends, increased tangible book value per share, and potential share repurchases.
• Employees: Potential for disruption to employee relationships as a result of the acquisition of Signature Bank of Georgia (mentioned as a risk).
• Customers: Potential for disruption to client relationships as a result of the acquisition of Signature Bank of Georgia (mentioned as a risk).
• Creditors: Strong regulatory capital ratios and excellent asset quality indicate a stable financial position, reducing credit risk.

Next Steps

• Operational systems conversion for the Signature Bank of Georgia acquisition is scheduled for mid-March 2026.
• The company may repurchase shares under the approved plan, which expires on May 8, 2026.

Key Dates

Recommendation

First Community Corporation delivered exceptional annual growth in net income and EPS, demonstrating strong operational performance. The company's consistent dividend payments, record AUM, and excellent asset quality underscore its financial health and stability. The strategic acquisition of Signature Bank of Georgia expands its market footprint and diversifies its lending portfolio into high-growth areas like SBA loans. While there were minor quarterly dips in deposits and non-interest income, the overall trajectory, robust capital position, and management's proactive capital management through a share repurchase plan signal a compelling investment opportunity for long-term growth and shareholder returns.

Keywords

Banking, Community Bank, Financial Results, Net Income, EPS, Dividend, Loan Growth, Deposit Growth, AUM, Acquisition, Signature Bank of Georgia, Capital Ratios, Asset Quality, Share Repurchase, SEC Filing, FCCO, South Carolina, Georgia