First Community Corp 10-Q for FY2024 Q1

First Community Corp (FCCO)

10-Q 2024-05-13 For: 2024-03-31

Added on April 07, 2026

About this 10-Q

First Community Corp filed this 10-Q on May 13, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).

Headline figures

Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $259K; up 11.6% from $232K a year earlier
Net income: $2.6M; down 25.0% from net income of $3.46M a year earlier
Diluted EPS: $0.34; down 24.4% from $0.45 a year earlier

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FIRST COMMUNITY CORPORATION
(Exact name of registrant as specified in its charter)

South Carolina	57-1010751
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common stock, par value $1.00 per share	FCCO	The Nasdaq Capital Market

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated Filer ☒		Smaller reporting company x
		Emerging growth company ☐

PART I – FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Changes in Shareholders’ Equity	4
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	47

PART II – OTHER INFORMATION		48
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	49

SIGNATURES		50

	March 31,
(Dollars in thousands, except par values)	2024			December 31,
	(Unaudited)			2023
ASSETS
Cash and due from banks	$	20,804		$	27,908
Interest-bearing bank balances		122,778			66,787
Investment securities available-for-sale		274,349			282,226
Investment securities held-to-maturity, fair value of $201,753 and $205,518 at March 31, 2024 and December 31, 2023, respectively, net of allowance for credit losses — investments		215,230			217,170
Other investments, at cost		5,504			6,800
Loans held-for-sale		1,719			4,433
Loans held-for-investment		1,157,305			1,134,019
Less, allowance for credit losses – loans		12,459			12,267
Net loans held-for-investment		1,144,846			1,121,752
Property and equipment – net		30,444			30,589
Lease right-of-use asset		3,172			3,248
Bank owned life insurance		30,369			30,174
Other real estate owned		622			622
Intangible assets		564			604
Goodwill		14,637			14,637
Other assets		21,953			20,738
Total assets	$	1,886,991		$	1,827,688
LIABILITIES
Deposits:
Non-interest bearing	$	443,257		$	432,333
Interest bearing		1,134,810			1,078,668
Total deposits		1,578,067			1,511,001
Securities sold under agreements to repurchase		81,833			62,863
Federal Home Loan Bank advances		60,000			90,000
Junior subordinated debt		14,964			14,964
Lease liability		3,357			3,426
Other liabilities		15,277			14,375
Total liabilities		1,753,498			1,696,629
SHAREHOLDERS’ EQUITY
Preferred stock, par value $1.00 per share, 10,000,000 shares authorized; none issued and outstanding		—			—
Common stock, par value $1.00 per share; 20,000,000 shares authorized; issued and outstanding 7,629,005 at March 31, 2024 and 7,606,172 at December 31, 2023		7,629			7,606
Nonvested restricted stock and stock units		1,920			2,181
Additional paid in capital		93,556			93,167
Retained earnings		57,830			56,296
Accumulated other comprehensive loss		(27,442	)		(28,191	)
Total shareholders’ equity		133,493			131,059
Total liabilities and shareholders’ equity	$	1,886,991		$	1,827,688

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2024

☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ____ to ____


(Dollars in thousands, except per share amounts)	Three Months ended March 31,
	2024		2023
Interest and dividend income:
Loans, including fees	$	15,550	$	11,159
Investment securities – taxable		4,189		4,061
Investment securities – non taxable		357		375
Other short term investments and CDs		1,160		295
Total interest income		21,256		15,890
Interest expense:
Deposits		7,203		1,993
Securities sold under agreement to repurchase		609		356
Other borrowed money		1,367		1,184
Total interest expense		9,179		3,533
Net interest income		12,077		12,357
Provision for credit losses		129		70
Net interest income after provision for credit losses		11,948		12,287
Non-interest income:
Deposit service charges		259		232
Mortgage banking income		425		155
Investment advisory fees and non-deposit commissions		1,358		1,067
Other		1,142		1,121
Total non-interest income		3,184		2,575
Non-interest expense:
Salaries and employee benefits		7,101		6,331
Occupancy		790		830
Equipment		330		336
Marketing and public relations		566		346
FDIC Insurance assessments		278		182
Other real estate expense, net		12		(133	)
Amortization of intangibles		39		39
Other		2,689		2,505
Total non-interest expense		11,805		10,436
Net income before tax		3,327		4,426
Income tax expense		730		963
Net income	$	2,597	$	3,463

Basic earnings per common share	$	0.34	$	0.46
Diluted earnings per common share	$	0.34	$	0.45


	Three months ended March 31,
(Dollars in thousands)	2024		2023
Net income	$	2,597	$	3,463
Other comprehensive income:
Unrealized gain during the period on available-for-sale securities, net of tax benefit of $80 and expense of $689, respectively		408		2,593
Reclassification adjustment for amortization of unrealized losses on securities transferred from available-for-sale to held-to-maturity, net of tax expense of $91 and $85, respectively		341		320
Other comprehensive income		749		2,913
Comprehensive income	$	3,346	$	6,376

																Accumulated
	Common						Additional			Nonvested						Other
(Dollars in thousands)	Shares			Common			Paid-in			Restricted			Retained			Comprehensive
	Issued			Stock			Capital			Stock			Earnings			Loss			Total
Balance, December 31, 2022		7,578		$	7,578		$	92,683		$	1,461		$	49,025		$	(32,386	)	$	118,361
Net income		—			—			—			—			3,463			—			3,463
Adoption of new accounting standard-CECL net of tax of $90		—			—			—			—			(337	)		—			(337	)
Other comprehensive income net of tax expense of $774		—			—			—			—			—			2,913			2,913
Issuance of common stock-share based compensation		2			2			39			(69	)		—			—			(28	)
Issuance of restricted stock		8			8			146			(154	)		—			—			—
Grant restricted stock units		—			—			—			72			—			—			72
Amortization of compensation on restricted stock		—			—			—			191			—			—			191
Shares forfeited		(5	)		(5	)		(100	)		—			—			—			(105	)
Dividends: Common ($0.14 per share)		—			—			—			—			(1,057	)		—			(1,057	)
Dividend reinvestment plan		5			5			103			—			—			—			108
Balance, March 31, 2023		7,588		$	7,588		$	92,871		$	1,501		$	51,094		$	(29,473	)	$	123,581

Balance, December 31, 2023		7,606		$	7,606		$	93,167		$	2,181		$	56,296		$	(28,191	)	$	131,059
Net income		—			—			—			—			2,597			—			2,597
Other comprehensive income net of tax expense of $11		—			—			—			—			—			749			749
Issuance of common stock-share based compensation		9			9			160			(273	)		—			—			(104	)
Issuance of restricted stock		14			14			228			(242	)		—			—			—
Grant restricted stock units		—			—			—			70			—			—			70
Amortization of compensation on restricted stock		—			—			—			184			—			—			184
Shares forfeited		(6	)		(6	)		(97	)		—			—			—			(103	)
Dividends: Common ($0.14 per share)		—			—			—			—			(1,063	)		—			(1,063	)
Dividend reinvestment plan		6			6			98			—			—			—			104
Balance, March 31, 2024		7,629		$	7,629		$	93,556		$	1,920		$	57,830		$	(27,442	)	$	133,493


	Three months ended March 31,
(Dollars in thousands)	2024			2023
Cash flows from operating activities:
Net income	$	2,597		$	3,463
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		424			427
Net premium amortization on investment securities available-for-sale		(1,030	)		(620	)
Net premium amortization on investment securities held-to-maturity		(156	)		(134	)
Provision for credit losses		129			70
Origination of loans held-for-sale		(50,253	)		(5,213	)
Sale of loans held-for-sale		52,967			5,680
Amortization of intangibles		39			39
Accretion on acquired loans		—			(20	)
(Gain) loss on fair value of equity securities		(21	)		2
Increase in other assets		(912	)		(559	)
Increase in other liabilities		918			843
Net cash provided by operating activities		4,702			3,978
Cash flows from investing activities:
Purchase of investment securities available-for-sale		—			(6,025	)
Purchase of other investment securities		—			(1,577	)
Maturity/call of investment securities available-for-sale		9,236			5,331
Maturity/call of investment securities held-to-maturity		2,096			5,698
Proceeds from sale of other investment securities		1,316			—
Increase in loans		(23,308	)		(11,829	)
Purchase of property and equipment		(279	)		(492	)
Net cash used in investing activities		(10,939	)		(8,894	)
Cash flows from financing activities:
Increase in deposit accounts		67,066			34,775
Increase in securities sold under agreements to repurchase		18,970			8,232
Decrease in Fed Funds Borrowed		—			(22,000	)
Advances from the Federal Home Loan Bank		—			124,000
Repayment of advances from the Federal Home Loan Bank		(30,000	)		(89,000	)
Shares retired / forfeited		(103	)		(105	)
Dividends paid: Common Stock		(1,063	)		(1,057	)
Restricted Stock Units Granted		70			72
Cost of issuance of common stock-deferred compensation		(104	)		(28	)
Change in non-vested restricted stock		184			191
Dividend reinvestment plan		104			108
Net cash provided by financing activities		55,124			55,188
Net increase in cash and cash equivalents		48,887			50,272
Cash and cash equivalents at beginning of period		94,695			37,401
Cash and cash equivalents at end of period	$	143,582		$	87,673
Supplemental disclosure:
Cash paid (received) during the period for:
Interest	$	8,703		$	3,137
Income taxes	$	(18	)	$	—
Non-cash investing and financing activities:
Unrealized gain on available-for-sale securities, net of tax	$	408		$	2,593
Amortization of unrealized losses on securities from transfer of available-for-sale securities to held-to-maturity, net of tax		341			320
Recognition of operating lease liability		—			3,602


	Three months
	Ended March 31,
(In thousands except average market price and per share data)	2024		2023
Numerator (Net income available to common shareholders)	$	2,597	$	3,463
Denominator
Weighted average common shares outstanding for:
Basic shares		7,601		7,555
Dilutive securities:
Deferred compensation		79		89
Diluted common shares outstanding		7,680		7,644
Earnings per common share:
Basic		0.34		0.46
Diluted		0.34		0.45
The average market price used in calculating assumed number of shares	$	17.78	$	20.34

			Gross		Gross
	Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses			Fair Value
March 31, 2024
US Treasury securities	$	15,800	$	—	$	(2,670	)	$	13,130
Government Sponsored Enterprises		2,500		—		(376	)		2,124
Mortgage-backed securities		253,480		14		(16,797	)		236,697
Small Business Administration pools		15,173		23		(493	)		14,703
Corporate and other securities		8,758		—		(1,063	)		7,695
Total	$	295,711	$	37	$	(21,399	)	$	274,349

			Gross		Gross
	Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses			Fair Value
December 31, 2023
US Treasury securities	$	20,791	$	—	$	(2,445	)	$	18,346
Government Sponsored Enterprises		2,500		—		(371	)		2,129
Mortgage-backed securities		255,757		15		(17,613	)		238,159
Small Business Administration pools		16,108		24		(411	)		15,721
Corporate and other securities		8,759				(888	)		7,871
Total	$	303,915	$	39	$	(21,728	)	$	282,226


March 31, 2024	Less than 12 months				12 months or more				Total
Available-for-sale securities:	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
US Treasury Securities	$	—	$	—	$	13,130	$	2,670	$	13,130	$	2,670
Government Sponsored Enterprise		—		—		2,124		376		2,124		376
Mortgage-backed securities		9,779		556		222,380		16,241		232,159		16,797
Small Business Administration pools		4,540		100		7,044		393		11,584		493
Corporate and other securities		3,374		372		4,316		691		7,690		1,063
Total	$	17,693	$	1,028	$	248,994	$	20,371	$	266,687	$	21,399

	Three Months
	Ended
(Dollars in thousands)	March 31, 2024
Allowance for Credit Losses on Held-to-Maturity Securities:
State and local government
Beginning balance, December 31, 2023	$	(30	)
Recovery of (provision) for credit losses		1
Ending balance, March 31, 2024	$	(29	)

	Three Months
	Ended
(Dollars in thousands)	March 31, 2023
Allowance for Credit Losses on Held-to-Maturity Securities:
State and local government
Beginning balance, December 31, 2022	$	—
Adjustment for adoption of ASC 326		(43	)
Recovery of (provision) for credit losses		1
Ending balance, March 31, 2023	$	(42	)

	Available-for-sale
March 31, 2024	Amortized			Fair
(Dollars in thousands)	Cost			Value
Due in one year or less	$	6		$	6
Due after one year through five years		10,106			9,760
Due after five years through ten years		38,168			33,656
Due after ten years		247,431			230,927
Total	$	295,711		$	274,349

	Held-To-Maturity
March 31, 2024	Amortized			Fair
(Dollars in thousands)	Cost			Value
Due in one year or less	$	2,718		$	2,672
Due after one year through five years		48,943			46,815
Due after five years through ten years		65,572			62,564
Due after ten years		98,026			89,731
Allowance for Credit Losses on Held-to-Maturity Securities		(29	)		(29	)
Total	$	215,230		$	201,753

	March 31,		December 31,
(Dollars in thousands)	2024		2023
Commercial	$	78,787	$	78,134
Real estate:
Construction		136,445		118,225
Mortgage-residential		99,833		94,796
Mortgage-commercial		792,333		791,947
Consumer:
Home equity		33,637		34,752
Other		16,270		16,165
Total loans, net of deferred loan fees and costs	$	1,157,305	$	1,134,019

($ in thousands)	Commercial			Real Estate Construction		Real Estate Mortgage Residential		Real Estate Mortgage Commercial			Consumer Home Equity			Consumer Other			Total Loans
Balance at December 31, 2023	$	935		$	1,337	$	1,122	$	8,146		$	472		$	255		$	12,267
Charge-offs		(24	)		—		—		—			—			(25	)		(49	)
Recoveries		1			—		19		3			2			2			27
Provision for credit losses		29			246		53		(128	)		(20	)		34			214
Balance at March 31, 2024	$	941		$	1,583	$	1,194	$	8,021		$	454		$	266		$	12,459

($ in thousands)	Commercial			Real estate Construction			Real estate Mortgage Residential		Real estate Mortgage Commercial			Consumer Home equity			Consumer Other			Unallocated			Total
Balance at December 31, 2022	$	849		$	75		$	723	$	8,569		$	314		$	170		$	636		$	11,336
Adjustment to allowance for adoption of ASU 2016-13		193			1,075			32		(883	)		166			39			(636	)		(14	)
Charge-offs		—			—			—		—			—			(9	)		—			(9	)
Recoveries		2			—			—		11			3			4			—			20
Provisions		(48	)		(70	)		35		230			(59	)		(1	)		—			87
Ending balance March 31, 2023	$	996		$	1,080		$	790	$	7,927		$	424		$	203		$	—		$	11,420

					Greater than
(Dollars in thousands)	30-59 Days		60-89 Days		90 Days and				Total
March 31, 2024	Past Due		Past Due		Accruing		Non-accrual		Past Due		Current		Total Loans
Commercial	$	17	$	6	$	—	$	53	$	76	$	78,711	$	78,787
Real estate:
Construction		—		—		154		—		154		136,291		136,445
Mortgage-residential		13		—		—		—		13		99,820		99,833
Mortgage-commercial		76		124		—		—		200		792,133		792,333
Consumer:
Home equity		—		—		—		3		3		33,634		33,637
Other		15		—		3		—		18		16,252		16,270
Total	$	121	$	130	$	157	$	56	$	464	$	1,156,841	$	1,157,305

					Greater than
(Dollars in thousands)	30-59 Days		60-89 Days		90 Days and				Total
December 31, 2023	Past Due		Past Due		Accruing		Non-accrual		Past Due		Current		Total Loans
Commercial	$	19	$	7	$	—	$	24	$	50	$	78,084	$	78,134
Real estate:
Construction		—		—		—		—		—		118,225		118,225
Mortgage-residential		244		15		214		—		473		94,323		94,796
Mortgage-commercial		67		124		—		—		191		791,756		791,947
Consumer:
Home equity		—		—		—		3		3		34,749		34,752
Other		22		—		1		—		23		16,142		16,165
Total	$	352	$	146	$	215	$	27	$	740	$	1,133,279	$	1,134,019


	Term Loans by year of Origination
($ in thousands)	2020		2021		2022		2023		2024		Prior		Revolving		Revolving Converted to Term		Total
Commercial
Pass	$	1,247	$	22,778	$	7,973	$	9,806	$	5,577	$	9,779	$	21,506	$	44	$	78,710
Special mention		—		—		—		—		—		23		—		—		23
Substandard		—		54		—		—		—		—		—		—		54
Total commercial		1,247		22,832		7,973		9,806		5,577		9,802		21,506		44		78,787

Current period gross write-offs		—		24		—		—		—		—		—		—		24
Real estate construction
Pass		—		5,073		38,295		58,814		2,691		6,317		25,255		—		136,445
Total real estate construction		—		5,073		38,295		58,814		2,691		6,317		25,255		—		136,445

Current period gross write-offs		—		—		—		—		—		—		—		—		—

Real estate mortgage-residential
Pass		10,195		6,123		33,413		33,037		565		9,988		1,037		4,867		99,225
Special mention		222		—		—		—		—		174		—		—		396
Substandard		—		—		—		—		—		212		—		—		212
Total real estate mortgage-residential		10,417		6,123		33,413		33,037		565		10,374		1,037		4,867		99,833

Current period gross write-offs		—		—		—		—		—		—		—		—		—

Real estate mortgage-commercial
Pass		92,867		129,577		201,446		112,448		13,659		227,031		14,828		99		791,955
Special mention		—		123		—		—		—		162		—		—		285
Substandard		—		—		—		—		—		93		—		—		93
Total real estate mortgage-commercial		92,867		129,700		201,446		112,448		13,659		227,286		14,828		99		792,333

Current period gross write-offs		—		—		—		—		—		—		—		—		—

Consumer - home equity
Pass		—		—		—		—		—		—		32,467		—		32,467
Special mention		—		—		—		—		—		—		111		—		111
Substandard		—		—		—		—		—		—		1,059		—		1,059
Total consumer - home equity		—		—		—		—		—		—		33,637		—		33,637

Current period gross write-offs		—		—		—		—		—		—		—		—		—

Consumer - other
Pass		171		373		1,010		1,816		496		1,272		11,114		—		16,252
Special mention		—		—		—		18		—		—		—		—		18
Substandard		—		—		—		—		—		—		—		—		—
Total consumer - other		171		373		1,010		1,834		496		1,272		11,114		—		16,270

Current period gross write-offs		—		—		—		—		—		—		25		—		25


	Term Loans by year of Origination
($ in thousands)	2019		2020		2021		2022		2023		Prior		Revolving		Revolving Converted to Term		Total
Commercial
Pass	$	1,149	$	1,375	$	23,226	$	9,018	$	12,950	$	9,230	$	21,033	$	49	$	78,030
Special mention		—		—		—		—		—		26		—		—		26
Substandard		—		—		78		—		—		—		—		—		78
Total commercial		1,149		1,375		23,304		9,018		12,950		9,256		21,033		49		78,134

Current period gross write-offs		—		20		—		—		—		—		—		—		20
Real estate construction
Pass		6,864		—		5,074		39,514		47,992		—		18,781		—		118,225
Total real estate construction		6,864		—		5,074		39,514		47,992		—		18,781		—		118,225

Current period gross write-offs		—		—		—		—		—		—		—		—		—

Real estate mortgage-residential
Pass		1,894		10,548		6,219		28,843		28,517		8,420		977		8,962		94,380
Special mention		—		25		—		—		—		177		—		—		202
Substandard		—		—		—		—		—		214		—		—		214
Total real estate mortgage-residential		1,894		10,573		6,219		28,843		28,517		8,811		977		8,962		94,796

Current period gross write-offs		—		—		—		—		—		—		—		—		—

Real estate mortgage-commercial
Pass		47,962		95,120		136,892		201,380		106,125		189,983		14,038		329		791,829
Special mention		—		—		—		—		—		21		—		—		21
Substandard		—		—		—		—		—		97		—		—		97
Total real estate mortgage-commercial		47,962		95,120		136,892		201,380		106,125		190,101		14,038		329		791,947

Current period gross write-offs		—		—		—		—		—		—		—		—		—

Consumer - home equity
Pass		—		—		—		—		—		—		33,621		—		33,621
Special mention		—		—		—		—		—		—		67		—		67
Substandard		—		—		—		—		—		—		1,064		—		1,064
Total consumer - home equity		—		—		—		—		—		—		34,752		—		34,752

Current period gross write-offs		—		—		—		—		—		—		—		—		—

Consumer - other
Pass		420		203		435		1,164		2,043		902		10,982		—		16,149
Special mention		—		—		—		—		16		—		—		—		16
Substandard		—		—		—		—		—		—		—		—		—
Total consumer - other		420		203		435		1,164		2,059		902		10,982		—		16,165

Current period gross write-offs		—		—		—		—		—		—		67		—		67


	CECL
	March 31, 2024
(Dollars in thousands)	Non-accrual Loans with No Allowance		Non-accrual Loans with an Allowance		Total Non-accrual Loans
Commercial	$	—	$	53	$	53
Real estate:
Construction		—		—		—
Mortgage-residential		—		—		—
Mortgage-commercial		—		—		—
Consumer:
Home equity		—		3		3
Other		—		—		—
Total	$	—	$	56	$	56

	CECL
	December 31, 2023
(Dollars in thousands)	Non-accrual Loans with No Allowance		Non-accrual Loans with an Allowance		Total Non-accrual Loans
Commercial	$	—	$	24	$	24
Real estate:
Construction		—		—		—
Mortgage-residential		—		—		—
Mortgage-commercial		—		—		—
Consumer:
Home equity		—		3		3
Other		—		—		—
Total	$	—	$	27	$	27

(Dollars in thousands)	Total Allowance for Credit Losses - Unfunded Commitments
Balance, December 31, 2023	$	597
Provision for unfunded commitments		(85	)
Balance, March 31, 2024	$	512


	March 31, 2024
	Carrying		Fair Value
(Dollars in thousands)	Amount		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and short term investments	$	143,582	$	143,582	$	143,582	$	—	$	—
Available-for-sale securities		274,349		274,349		—		274,349		—
Held-to-maturity securities		215,530		201,783		—		201,783		—
Other investments, at cost		5,504		5,504		—		—		5,504
Loans held for sale		1,719		1,719		—		1,719		—
Derivative financial instruments		2,539		2,539		—		2,539		—
Net loans receivable		1,144,846		1,081,143		—		—		1,081,143
Accrued interest receivable		5,736		5,736		5,736		—		—
Financial liabilities:
Non-interest bearing demand	$	443,257	$	443,257	$	—	$	443,257	$	—
Interest bearing demand deposits and money market accounts		712,018		712,018		—		712,018		—
Savings		115,760		115,760		—		115,760		—
Time deposits		307,032		300,789		—		300,789		—
Total deposits		1,578,067		1,571,824		—		1,571,824		—
Federal Home Loan Bank Advances		60,000		60,000		—		60,000		—
Short term borrowings		81,833		81,833		—		81,833		—
Junior subordinated debentures		14,964		13,000		—		13,000		—
Accrued interest payable		4,681		4,681		4,681		—		—


(Dollars in thousands)	March 31, 2024
Description	Total		Level 1		Level 2		Level 3
Available- for-sale securities
US Treasury Securities	$	13,130	$	—	$	13,130	$	—
Government Sponsored Enterprises		2,124		—		2,124		—
Mortgage-backed securities		236,697		—		236,697		—
Small Business Administration pools		14,703		—		14,703		—
Corporate and other securities		7,695		—		7,695		—
Total Available-for-sale securities		274,349		—		274,349		—
Derivative financial instruments		2,539				2,539
Loans held for sale		1,719		—		1,719		—
Total	$	278,607	$	—	$	278,607	$	—


(Dollars in thousands)	December 31, 2023
Description	Total		Level 1		Level 2		Level 3
Available- for-sale securities
US Treasury Securities	$	18,346	$	—	$	18,346	$	—
Government Sponsored Enterprises		2,129		—		2,129		—
Mortgage-backed securities		238,159		—		238,159		—
Small Business Administration pools		15,721		—		15,721		—
Corporate and other securities		7,871		—		7,871		—
Total Available-for-sale securities		282,226		—		282,226		—
Derivative financial instruments		1,069				1,069
Loans held for sale		4,433		—		4,433		—
Total	$	287,728	$	—	$	287,728	$	—

(Dollars in thousands)	Fair Value as of March 31, 2024		Valuation Technique	Significant Observable Inputs	Significant Unobservable Inputs
OREO	$	622	Appraisal Value/Comparison Sales/Other estimates	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost

(Dollars in thousands)	Fair Value as of December 31, 2023		Valuation Technique	Significant Observable Inputs	Significant Unobservable Inputs
OREO	$	622	Appraisal Value/Comparison Sales/Other estimates	Appraisals and or sales of comparable properties	Appraisals discounted 6% to 16% for sales commissions and other holding cost

	·	Mortgage Banking: This segment provides mortgage origination services for loans that will be sold to investors in the secondary market, consumer mortgage loans that will be held-for-investment, and consumer residential construction loans. The Company allocates a provision for credit loss, cost of funds, and other operating costs to this segment.
	·	Investment advisory and non-deposit: This segment provides investment advisory services and non-deposit products.
	·	Corporate: This segment includes the parent company financial information, including interest on parent company debt and dividend income received from the Bank.

(Dollars in thousands)	Commercial					Investment
Three months ended March 31, 2024	and Retail			Mortgage		advisory and
	Banking			Banking		non-deposit		Corporate			Eliminations			Consolidated
Dividend and Interest Income	$	19,799		$	1,447	$	—	$	1,379		$	(1,369	)	$	21,256
Interest expense		8,311			560		—		308			—			9,179
Net interest income	$	11,488		$	887	$	—	$	1,071		$	(1,369	)	$	12,077
Provision for (release of) loan losses		(10	)		139		—		—			—			129
Noninterest income		1,399			427		1,358		—			—			3,184
Noninterest expense		9,694			832		924		355			—			11,805
Net income before taxes	$	3,203		$	343	$	434	$	716		$	(1,369	)	$	3,327
Income tax provision (benefit)		883			—		—		(153	)		—			730
Net income	$	2,320		$	343	$	434	$	869		$	(1,369	)	$	2,597

	Commercial				Investment
(Dollars in thousands)	and Retail		Mortgage		advisory and
	Banking		Banking		non-deposit		Corporate		Eliminations			Consolidated
Total Assets as of March 31, 2024	$	1,776,179	$	109,504	$	4	$	174,443	$	(173,139	)	$	1,886,991
Total Assets as of December 31, 2023	$	1,727,245	$	99,310	$	5	$	174,468	$	(173,340	)	$	1,827,688

(Dollars in thousands)	March 31, 2024			December 31, 2023
Right-of-use assets	$	3,172		$	3,248
Lease liabilities	$	3,357		$	3,426
Weighted average remaining lease term		11.53 years			11.70 years
Weighted average discount rate		4.30	%		4.29	%


	Three Months Ended March 31,
(Dollars in thousands)	2024		2023
Operating lease cost	$	112.1	$	111.5
Cash paid for amounts included in the measurement of lease liabilities	$	105.2	$	102.6

(Dollars in thousands)
Year	Operating Leases
2024	$	318
2025		434
2026		444
2027		422
2028		364
Thereafter		2,344
Total undiscounted lease payments	$	4,326
Less effect of discounting		(969	)
Present value of estimated lease payments (lease liability)	$	3,357

(Dollars in thousands)	Securities Available for Sale			Securities Held to Maturity			Accumulated Other Comprehensive Loss
Balance at December 31, 2023		(17,135	)		(11,056	)		(28,191	)
Other comprehensive loss		408			—			408
Amortization of unrealized loss on securities transferred to held-to-maturity		—			341			341
Net other comprehensive income (loss) during period		408			341			749
Balance at March 31, 2024		(16,727	)		(10,715	)		(27,442	)

	·	the rate of delinquencies and amounts of loans charged-off;
	·	the rate of loan growth in recent years and the lack of seasoning of a portion of our loan portfolio;

	·	our ability to attract and retain key personnel;
	·	our ability to retain our existing customers, including our deposit relationships;

	·	our use of brokered deposits may be an unstable and/or an expensive deposit source to fund earning asset growth;
	·	our ability to obtain brokered deposits as an additional funding source could be limited;
	·	adverse changes in asset quality and resulting credit risk-related losses and expenses;
	·	the potential effects of events beyond our control that may have a destabilizing effect on financial markets and the economy, such as epidemics and pandemics (including COVID-19), war or terrorist activities, such as the war in Ukraine, the Middle East conflict, and the conflict between China and Taiwan, disruptions in our customers’ supply chains, disruptions in transportation, essential utility outages or trade disputes and related tariffs;

	·	The decline in net interest income results from a 39 basis points decline in net interest margin partially offset by a $164.2 million increase in average earning assets between the two periods.

	·	The $129,000 provision for credit losses during the three months ended March 31, 2024 is primarily related to a $23.3 million increase in loans held-for-investment, which was partially offset by a $17.9 million decrease in unfunded commitments net of unconditionally cancellable commitments

	·	The $1.4 million increase in non-interest expense is primarily due to an increase of $770,000 in salaries and employee benefits, an increase of $220,000 in marketing and public relations, an increase of $145,000 in other real estate expenses, an increase of $96,000 in FDIC insurance assessment, and an increase of $184,000 in other non-interest expenses.

	·	The $609,000 increase in non-interest income is primarily related to increases in mortgage banking income of $270,000 and investment advisory fees and non-deposit commissions of $291,000.

	·	Our effective tax rate was 21.94% during the three months ended March 31, 2024 compared to 21.76% during the three months ended March 31, 2023.

	·	The decrease in net interest income was driven by a 39 basis points reduction in net interest margin partially offset by a $164.2 million increase in average earning assets.

	·	The increase in average earning assets was due to a $162.8 million, or 16.5%, increase in loans and a $67.3 million increase in interest bearing deposits in other banks, partially offset by a decline of $65.7 million in investment securities.

	·	Market interest rates increased in 2023, driving an increase in funding costs. Earning asset yield growth, which included the benefit of a pay-fixed/receive-floating interest rate swap (the “Pay-Fixed Swap Agreement”) described below, was more than offset by the rising price of funding, leading to the net interest margin compression.