8-K: First Community Q3 Net Income Up 34.5%, Dividend Maintained

First Community Corporation announced a 34.5% year-over-year increase in third-quarter net income and maintained its $0.16 per share cash dividend.

Summary

• Net income for the third quarter of 2025 was $5.192 million, an increase of 34.5% year-over-year, while remaining flat on a linked-quarter basis.
• Diluted EPS for the third quarter of 2025 was $0.67, up 34.0% year-over-year and flat on a linked-quarter basis.
• Excluding the after-tax effect of merger expenses, net income was $5.630 million (+45.8% YoY, +5.0% QoQ) and diluted EPS was $0.72 (+44.0% YoY, +4.3% QoQ).
• Year-to-date net income through September 30, 2025, reached $14.375 million, a 47.8% increase over the same period in 2024.
• The net interest margin on a tax equivalent basis expanded by six basis points to 3.27% in Q3 2025, marking the sixth consecutive quarter of margin expansion.
• Total loans increased by $19.3 million during Q3 2025, representing a 6.1% annualized growth rate, and $58.8 million year-to-date (6.4% annualized).
• Total deposits grew by $17.1 million in Q3 2025 (3.9% annualized), with customer deposits (excluding brokered CDs) increasing by $27.6 million (6.3% annualized).
• Assets under management (AUM) reached a record $1.103 billion at September 30, 2025, a 19.1% increase year-to-date.
• Credit quality metrics remained strong with a non-performing assets (NPAs) ratio of 0.04% and a past due ratio of 0.07%.
• The Board of Directors approved a cash dividend of $0.16 per common share for the third quarter of 2025, marking the 95th consecutive quarter of cash dividends.
• The company's Board approved a plan to repurchase up to $7.5 million of common stock, representing approximately 4.6% of total shareholders' equity as of September 30, 2025, with the plan expiring on May 8, 2026.
• Regulatory capital ratios for the bank (Leverage, Tier I Risk Based, and Total Risk Based) were 8.55%, 13.10%, and 14.15% respectively, all exceeding well-capitalized minimum levels.
• Non-interest income for Q3 2025 was $4.469 million, an increase of 25.2% year-over-year, including $188 thousand in non-recurring revenue from a fintech fund investment.
• The acquisition of Signature Bank of Georgia is anticipated to close financially in early Q1 2026, with operational conversion in late Q1 or early Q2 2026.

Sentiment

Score: 8

Explanation: The company reported strong year-over-year financial performance, including significant increases in net income and EPS, consistent margin expansion, robust loan and deposit growth, and excellent asset quality. The planned acquisition and share repurchase program also indicate strategic confidence and capital management. While some metrics were flat quarter-over-quarter or saw slight declines (e.g., mortgage production), the overall trend and financial health are very positive.

Positives

• Net income increased significantly by 34.5% year-over-year in Q3 2025.
• Diluted EPS saw a strong 34.0% year-over-year increase in Q3 2025.
• Net interest margin expanded for the sixth consecutive quarter, reaching 3.27% in Q3 2025.
• Total loans demonstrated robust growth of 6.1% annualized in Q3 2025 and 6.4% annualized year-to-date.
• Customer deposits, excluding brokered CDs, grew at a healthy 6.3% annualized rate in Q3 2025.
• Assets under management (AUM) reached a record $1.103 billion, increasing 19.1% year-to-date.
• Credit quality metrics are excellent, with a non-performing assets ratio of 0.04% and a past due ratio of 0.07%.
• The company maintained its cash dividend of $0.16 per share for the 95th consecutive quarter.
• Regulatory capital ratios exceed well-capitalized minimums, indicating strong financial stability.
• Tangible Common Shareholders Equity to Tangible Assets (TCE) ratio improved to 7.15% at September 30, 2025.
• Tangible Book Value (TBV) per common share increased to $19.06 at September 30, 2025.
• Non-interest income increased by 25.2% year-over-year, partly due to a non-recurring gain on a fintech fund investment.
• The approved share repurchase plan provides flexibility in managing capital.
• The bank has no brokered deposits as of September 30, 2025, indicating a strong core deposit base.
• The company benefited from $120,000 in South Carolina State tax credits during Q3 2025.

Negatives

• Net income and diluted EPS were flat on a linked-quarter basis (GAAP).
• Mortgage production decreased on a linked-quarter basis from $62.9 million in Q2 2025 to $51.6 million in Q3 2025.
• Non-interest expense increased on a linked-quarter basis, partly due to higher marketing expenses and merger-related costs.
• Loan payoffs and paydowns were down 24.7% on a linked-quarter basis.
• The yield on the investment portfolio slightly decreased from 3.43% in Q2 2025 to 3.41% in Q3 2025.

Risks

• Competitive pressures among depository and other financial institutions may increase significantly, affecting pricing, spending, third-party relationships, and revenues.
• The strength of the United States economy in general and local economies where operations are conducted may differ from expectations.
• Adverse changes in asset quality in the loan portfolio, including increased delinquencies, charge-offs, or allowance for credit loss, could result in higher credit risk-related losses and expenses.
• Changes in legislation, regulation, policies, or administrative practices by judicial, governmental, or legislative action.
• Adverse conditions in the stock market, public debt markets, and other capital markets (including interest rate conditions) could negatively impact the company.
• Changes in interest rates may continue to affect deposit and funding costs, net income, prepayment penalty income, mortgage banking income, future cash flows, or the market value of assets.
• Technology and cybersecurity risks, including potential business disruptions, reputational risks, and financial losses from attacks on or failures of computer systems.
• Elevated inflation poses adverse risks to the overall economy and could indirectly challenge customers and the business.
• Increases in FDIC assessment costs, which have already risen, may continue to increase the cost of doing business.
• Adverse effects of events beyond control, such as trade disputes, epidemics, pandemics, war, terrorist activities, utility outages, government shutdowns, global economic deterioration, credit market instability, or supply chain/transportation disruptions.
• The planned acquisition of Signature Bank of Georgia may not be completed in a timely manner or at all.
• Failure to obtain required shareholder or regulatory approvals in connection with the planned acquisition.
• Anticipated cost savings or other expected benefits of the planned acquisition may not be realized.
• Potential disruption to client or employee relationships as a result of the planned acquisition.
• Assumptions underlying forward-looking statements could prove to be inaccurate, and there is no assurance that contemplated results will be realized.

Future Outlook

The company anticipates the financial closing of the Signature Bank of Georgia acquisition in early Q1 2026, with operational conversion following later in Q1 or early Q2 2026. The approved share repurchase plan provides flexibility in managing capital going forward.

Management Comments

• Mike Crapps, President and CEO, stated: "Our entire board is pleased that our performance enables the company to continue its cash dividend for the 95th consecutive quarter."
• Mike Crapps, President and CEO, noted: "This approved share repurchase provides us with some flexibility in managing capital going forward."
• Ted Nissen, First Community Bank President and CEO, commented: "A strength of our bank has been and continues to be the value of our deposit franchise. In the third quarter of the year, total deposits grew by $17.1 million with pure deposits growing $24.9 million. This shift toward pure deposits reflects a stronger focus on relationship-based accounts rather than more price-sensitive certificates of deposit."

Industry Context

The banking sector is currently navigating a complex interest rate environment. First Community Corporation's ability to achieve its sixth consecutive quarter of net interest margin expansion and maintain strong deposit growth, particularly in relationship-based accounts, suggests effective interest rate risk management and a robust local market presence, potentially outperforming some peers struggling with deposit retention and margin compression. The acquisition of Signature Bank of Georgia, including its SBA and government-guaranteed lending, indicates a strategic move to diversify revenue streams and expand into new markets, a common strategy for regional banks seeking growth.

Stakeholder Impact

• Shareholders are positively impacted by the continued cash dividend, strong financial performance, and the potential for increased shareholder value through the share repurchase program and strategic acquisition.
• Employees may experience integration efforts and potential new opportunities as a result of the Signature Bank of Georgia acquisition and expansion into new business lines.
• Customers benefit from continued strong loan and deposit services, and potentially expanded offerings and geographic reach through the acquisition.
• Creditors are positively impacted by the company's robust capital ratios and strong asset quality, indicating a healthy and stable financial position.

Next Steps

• Hold a special meeting of shareholders on November 19, 2025, to vote on the merger with Signature Bank of Georgia.
• Anticipate the financial closing of the Signature Bank of Georgia acquisition in early Q1 2026.
• Plan for the operational conversion of Signature Bank of Georgia later in Q1 or early Q2 2026.
• Potentially execute share repurchases under the approved $7.5 million plan, which expires on May 8, 2026.

Key Dates

Recommendation

The company demonstrates robust financial health with significant year-over-year growth in net income and EPS, consistent net interest margin expansion, and strong loan and deposit growth. Asset quality remains excellent, and capital ratios exceed regulatory minimums. The ongoing acquisition of Signature Bank of Georgia and the approved share repurchase plan signal strategic growth and effective capital management. These factors, combined with a consistent dividend history, present a compelling investment case for long-term value.

Keywords

banking, financial results, net income, EPS, dividends, loan growth, deposit growth, asset quality, net interest margin, AUM, share repurchase, capital ratios, merger, Signature Bank of Georgia, South Carolina, Georgia, community bank