FCCO - First Community Corporation: A Strong Loan Book But Earnings Are Under Pressure

2024-06-24 23:45:18 ET

Summary

• First Community Corporation's earnings are under pressure due to lower net interest income and increasing salaries.
• Despite this, the bank's loan loss provisions remain low and its loan book, primarily in commercial real estate, is performing well.
• The bank's tangible book value per share has increased, but with weak earnings and a premium to book value, a 'hold' rating is advised.

Introduction

First Community Corporation ( FCCO ) is the holding company that owns the First Community Bank, which is active in South Carolina. In my previous article , I was very impressed with the bank’s ability to keep the loan loss provisions very low, mainly due to the fact that most of the loans are current. That situation hasn’t changed and as of the end of the first quarter, only 0.04% of the loans was categorized as ‘past due’. That being said, the bank’s earnings are under pressure due to a lower net interest income while the increase in salaries also has an impact on the bottom line result....

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