First Community Q3 2026 Earnings: Margin Expansion Supports Profit Growth

First Community Corporation (Nasdaq: FCCO) reported Q3 2026 net interest income of $20.238 million, up from $15.994 million a year earlier, while diluted EPS increased to $0.85 from $0.67. Net income rose 54.9% to $8.044 million, supported by a wider net interest margin, loan growth and higher fee income. The comparison also includes the Signature Bank of Georgia acquisition and a $797,000 non-recurring SBA loan settlement gain.

Core Earnings Data

The bank’s tax-equivalent net interest margin expanded by 32 basis points year over year to 3.59%, marking its tenth consecutive quarterly increase. Management attributed the latest sequential improvement to higher loan yields, loan growth and a more favorable earning-asset mix, while deposit and funding costs held steady from Q2.

Non-interest income increased 34.0%, helped by investment advisory revenue and the SBA settlement gain. Non-interest expenses also rose, but at a slower rate than net interest income and fee revenue.

Net income and EPS excluding the after-tax effect of merger expenses are non-GAAP measures. Merger expenses were only $104,000 in the quarter, leaving a relatively small difference between GAAP and adjusted results.

Business and Lending Performance

Total loans reached $1.610 billion at September 30, increasing $32.1 million during the quarter for an annualized growth rate of 8.1%. Commercial loan production was $53.3 million, while advances on previously unfunded commercial construction loans contributed another $17.9 million.

Year-to-date loan growth was $299.4 million, but $195.7 million came from the acquired Signature Bank portfolio. Excluding those day-one balances, organic loan growth was $103.7 million, equivalent to a 10.6% annualized rate for the first nine months of 2026.

Fee-generating businesses produced mixed results:

• Investment advisory revenue increased 39.9% year over year to $2.605 million. Assets under management rose to $1.404 billion from $1.103 billion a year earlier.
• Mortgage banking income declined to $614,000 from $934,000. Mortgage production fell to $45.9 million from $51.6 million, and the gain-on-sale margin decreased to 2.65% from 2.91%.
• Government-guaranteed lending generated $534,000 of fee revenue, down from $704,000 in Q2. SBA production was relatively stable sequentially, but the volume of loans sold decreased to $5.10 million from $8.94 million.

Profitability and Balance Sheet

The loan portfolio yield increased to 6.08% from 6.02% in Q2 and 5.84% a year earlier. At the same time, the cost of deposits remained unchanged sequentially at 1.76%, and the total cost of funds held at 1.82%. Purchase-accounting amortization related to the acquired loan portfolio reduced the quarter’s net interest margin by three basis points.

The efficiency ratio improved to 60.81% from 64.44% a year earlier, indicating that revenue grew faster than operating expenses on the company’s adjusted calculation. Return on average assets increased to 1.34% from 1.00%, while return on average common equity reached 13.83% compared with 13.04%.

Total deposits declined to $2.005 billion from $2.025 billion at the end of Q2. Securities sold under repurchase agreements increased to $101.5 million from $96.5 million, leaving average deposits plus repurchase agreements essentially flat. The loan-to-deposit ratio, excluding loans held for sale, rose to 80.34% from 77.95% as loan growth outpaced deposit growth.

Credit losses remained limited. Net charge-offs, including overdrafts, were $9,000, non-performing assets were 0.04% of total assets and past-due loans represented 0.27% of loans. The allowance for credit losses was $18.703 million, or 1.16% of total loans. However, substandard loans increased to $5.9 million from $1.3 million at the end of 2025.

Capital ratios improved from year-end levels. Shareholders’ equity represented 9.74% of total assets, tangible common equity to tangible assets was 8.50%, and the bank’s leverage ratio was 9.52%. Tangible book value increased to $21.09 per share from $19.06 a year earlier.

The board approved a quarterly dividend of $0.17 per common share, payable November 17, 2026, to shareholders of record on November 3. The company made no repurchases during Q3 under its authorized $7.5 million repurchase plan.

Acquisition Effects and One-Time Income Complicate Comparability

The reported year-over-year growth rate is not a like-for-like measure because Q3 2026 includes the Signature Bank of Georgia acquisition, which closed on January 8. Average loans increased to $1.593 billion from $1.281 billion, while average diluted shares rose to 9.515 million from 7.786 million. The higher share count helps explain why net income grew 54.9% but diluted EPS increased by a smaller 26.9%.

The $797,000 SBA settlement gain also supported non-interest income. The company’s adjusted earnings measure removes merger expenses but does not remove this settlement gain or the broader contribution from the acquired business. As a result, the 44.3% increase in adjusted net income should not be interpreted as a fully organic or recurring growth rate.

Recent Insider Transactions

The supplied insider data shows six purchases totaling 2,288 shares and four sales totaling 33,699 shares during the past six months, resulting in net sales of 31,411 shares. These transactions are presented without inferring insiders’ views on the company’s outlook.

All five transactions were reported as direct ownership. The October 5 value is reproduced exactly as provided in the source data.

Risks Investors Need to Watch

• Earnings comparability: The acquisition and non-recurring SBA settlement gain contributed to reported growth, making it harder to isolate the recurring performance of the existing business.
• Credit migration: Non-performing assets and charge-offs remained low, but substandard loans increased from $1.3 million at year-end 2025 to $5.9 million.
• Deposit and liquidity trends: Period-end deposits declined while loans continued to expand, pushing the loan-to-deposit ratio higher. Continued divergence could place more pressure on funding needs.
• Interest-rate effects: Higher rates supported loan yields and the margin, but they also increased accumulated other comprehensive loss to $22.9 million from $18.2 million in Q2 by reducing the market value of securities.
• Acquisition integration: Future results depend partly on retaining clients and employees and realizing the expected benefits of the Signature Bank transaction.

Summary

First Community’s Q3 2026 profit growth was driven by a wider net interest margin, a larger loan portfolio and higher non-interest income, with investment advisory services providing a notable fee contribution. Credit losses remained limited and capital ratios improved, but the acquisition and one-time SBA gain affect year-over-year comparability. The main items to monitor are recurring earnings without one-time benefits, deposit growth relative to lending, and the increase in substandard loans.