Exhibit 99.1

 

News Release

For Release October 19, 2022

9:00 A.M.

Contact: (803) 951- 2265

D. Shawn Jordan, EVP & Chief Financial Officer or

Robin D. Brown, EVP & Chief Marketing Officer

First Community Corporation Announces Third Quarter Results and Cash Dividend

Highlights for Third Quarter of 2022

· Net income of $3.951 million, an increase of 26.2% on a linked quarter basis.

· Diluted EPS of $0.52 per common share for the quarter and $1.39 year-to-date through September 30, 2022.

· Total loans increased during the third quarter by $33.9 million, an annualized growth rate of 14.7%.

· Cost of deposits were unchanged on a linked quarter basis at 0.09% for the third quarter of 2022.

· Margin expansion of 0.36% during the third quarter with net interest margin on a tax equivalent basis of 3.29%.

· Investment advisory line of business revenue of $1.053 million

· Strong credit quality metrics with non-performing assets (NPAs) ratio of 0.36%, past due ratio of 0.04% and net loan recovery excluding overdrafts of $88 thousand during the third quarter, with a year-to-date net recovery of $349 thousand.

· Cash dividend of $0.13 per common share, which is the 83^rd consecutive quarter of cash dividends paid to common shareholders.

· Regulatory approval received for full-service office in Rock Hill, South Carolina

Lexington, SC – October 19, 2022 Today, First Community Corporation (Nasdaq: FCCO), the holding company for First Community Bank, reported net income for the third quarter of 2022 of $3.951 million as compared to $3.130 million in the second quarter of 2022 and $4.748 million in the third quarter of 2021. Diluted earnings per common share were $0.52 for the third quarter of 2022 as compared to $0.41 for the second quarter of 2022 and $0.63 for the third quarter of 2021. As a note, during the third quarter of 2021, the bank recognized $1.561 million in non-recurring PPP related fee income compared to $729 in the third quarter of 2022.

Year-to-date through September 30, 2022 net income was $10.570 million compared to $11.546 million during the first nine months of 2021. Diluted earnings per share for the first nine months of 2022 were $1.39, compared to $1.53 during the same time period in 2021. As a note, during the first nine months of 2021, the bank recognized $2.714 million in non-recurring PPP related fee income compared to $45 thousand in the first nine months of 2022.

Cash Dividend and Capital

The Board of Directors approved a cash dividend for the third quarter of 2022. The company will pay a $0.13 per share dividend to holders of the company’s common stock. This dividend is payable November 15, 2022 to shareholders of record as of November 1, 2022. Mike Crapps, First Community President and CEO, commented, “Our entire board is pleased that our performance enables the company to continue its cash dividend for the 83^rd consecutive quarter.”

As previously announced, the Company’s Board of Directors has approved a share repurchase plan that provides for the repurchase of up to 375,000 shares of its common stock, which represents approximately 5% of the Company’s 7,572,517 shares outstanding on September 30, 2022. Under the repurchase plan, the Company may repurchase shares from time to time. No shares have been repurchased under this plan.

Each of the regulatory capital ratios for the bank exceed the well capitalized minimum levels currently required by regulatory statute. At September 30, 2022, the bank’s regulatory capital ratios (Leverage, Tier I Risk Based and Total Risk Based) were 8.53%, 13.42%, and 14.49%, respectively. This compares to the same ratios as of September 30, 2021 of 8.56%, 13.58%, and 14.74%, respectively. As of September 30, 2022, the bank’s Common Equity Tier I ratio was 13.42% compared to 13.58% at September 30, 2021. Further, the company’s Tangible Common Equity to Tangible Assets (TCE) ratio was 6.03% as of September 30, 2022 compared to 8.00% as of September 30, 2021. It should be noted that while the TCE ratio declined during the third quarter by 9 basis points from 6.12% as of June 30, 2022 to this level of 6.03%, excluding the Accumulated Other Comprehensive Loss (AOCL), the ratio increased in the quarter from 7.59% as of June 30, 2022 to 7.90% as of September 30, 2022.

Further, while the Tangible Book Value (TBV) per share declined during the quarter from $13.50 per share as of June 30, 2022 to $13.03 per share as of September 30, 2022, excluding AOCL, TBV per share increased in the quarter from $17.00 per share as of June 30, 2022 to $17.43 per share as of September 30, 2022.

Asset Quality

Asset quality metrics remained strong as of September 30, 2022. The non-performing assets ratio for the third quarter was 0.36% of total assets and a total past due ratio of 0.04%. Net loan recoveries excluding overdrafts for the quarter were $88 thousand and the year-to-date through September 30, 2022 net recovery was $349 thousand. The ratio of classified loans plus OREO now stands at 4.9% of total bank regulatory risk-based capital as of September 30, 2022.

Balance Sheet

Total loans increased during the third quarter by $33.9 million which is an annualized growth rate of 14.7%. Commercial loan production was $70.5 million during the third quarter of 2022. First Community Bank President Ted Nissen noted, “The strong loan growth that we have experienced in 2022 continued through the third quarter. Year-to-date through September 30, 2022, we have experienced $86.5 million in loan growth which is a 13.4% annualized growth rate.”

Total deposits were $1.436 billion at September 30, 2022 compared to $1.469 billion at June 30, 2022. Pure deposits, which are defined as total deposits less certificates of deposits, were $1.326 billion at September 30, 2022 compared to $1.349 billion at June 30, 2022. Securities sold under agreements to repurchase, which are related to customer cash management accounts or business sweep accounts, were $73.7 million at September 30, 2022, compared to $71.8 million at June 30, 2021. Costs of deposits were unchanged on a linked quarter basis at 0.09% in the third quarter of 2022. Cost of funds increased slightly on a linked quarter basis to 0.14% in the third quarter of 2022 from 0.12% in the second quarter of the year. Mr. Crapps commented, “A strength of our bank has been and continues to be our low-cost deposit base. We have been able to continue to manage our cost of deposits and costs of funds in the rapidly rising rate environment. During the third quarter, we did experience a slight contraction in our deposit base.”

Revenue

Net Interest Income/Net Interest Margin

Net interest income increased $1.743 million or 15.8% to $12.794 million for the third quarter of 2022 compared to second quarter net interest income of $11.051 million. Year-over-year, net interest income increased $338 thousand or 2.7% from $12.456 million in the third quarter of 2021. In the third quarter of 2021, the Company recognized PPP fee income of $1.561 million. Third quarter net interest margin, on a tax equivalent basis, was 3.29% compared to net interest margin of 2.93% in the second quarter of the year. Margin expansion was primarily due to higher yields in the loan and investment portfolios and the lag in the increase in interest rates paid on interest bearing deposit accounts. In addition, interest income on variable rate collateralized mortgage obligations, primarily consisting of GNMA home equity conversion mortgages improved $449 thousand on a linked quarter basis from ($202) thousand in the second quarter of 2022 to $247 thousand in the third quarter of the year. There was an improvement and stabilization in prepayments and an increase in the coupons on these bonds due to higher market interest rates.

Non-Interest Income

Total non-interest income, excluding other non-recurring income, was $2.673 million in the third quarter of 2022 compared to $3.004 million in the second quarter of the year and $3.517 million in the third quarter of 2021. This decrease is primarily attributable to lower production and revenue in the bank’s mortgage line of business.

Gain on sale revenues in the mortgage line of business were $290 thousand in the third quarter of 2022 compared to $481 thousand in the second quarter of the year and $1.147 million in the third quarter of 2021. Revenues in the investment advisory line of business were $1.053 million in the third quarter of 2022, compared to $1.195 million in the second quarter of 2022 and $1.040 million in the third quarter of 2021. Assets under management (AUM) were $529.5 million at September 30, 2022 compared to $524.3 million at June 30, 2022 and $650.9 million at December 31, 2021. Mr. Crapps commented, “Revenue in the mortgage line of business has been impacted by the headwinds of rising mortgage rates and low housing inventory. To help offset this impact, our bank began to market an Adjustable Rate Mortgage (ARM) loan product to provide borrowers with an alternative to fixed rate mortgage loans in the second quarter. As these loans are being held on our balance sheet, the result is additive to loan growth but results in less gain-on-sale fee revenue. During the third quarter, we have also increased focus on construction lending where demand has remained more constant. Although still strong, revenue in our financial planning and investment advisory line of business and related AUM have been affected by the stock market performance in the first nine months of the year.”

Non-Interest Expense

Non-interest expense was $10.417 million in the third quarter of 2022, up $229 thousand over the second quarter of 2022. Other expense was $307 thousand higher in the third quarter of the year due to higher legal, professional, recruiting and consulting fees. Salaries and Benefits expense was $198 thousand higher due to expenses related to the acquisition of additional mortgage lenders in the third quarter, increased compensation levels for banking office employees implemented at the beginning of the third quarter and lower vacancy rates during the quarter. Marketing and Public Relations expenses were down $283 thousand in the third quarter due to a planned lighter media schedule during the summer months.

Other

During the third quarter of 2022, the Company received regulatory approval to open a full service banking office in Rock Hill, South Carolina. Earlier this year, the Company entered this market with the launch of a Loan Production Office. The full-service office is scheduled to open on October 20, 2022.

About First Community Corporation

First Community Corporation stock trades on The NASDAQ Capital Market under the symbol “FCCO” and is the holding company for First Community Bank, a local community bank based in the Midlands of South Carolina. First Community Bank is a full-service commercial bank offering deposit and loan products and services, residential mortgage lending and financial planning/investment advisory services for businesses and consumers. First Community serves customers in the Midlands, Aiken, Upstate and Piedmont Regions of South Carolina as well as Augusta, Georgia. For more information, visit www.firstcommunitysc.com.

FORWARD-LOOKING STATEMENTS

This news release and certain statements by our management may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans, goals, projections and expectations, and are thus prospective. Forward looking statements can be identified by words such as “anticipate”, “expects”, “intends”, “believes”, “may”, “likely”, “will”, “plans” or other statements that indicate future periods. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors, include, among others, the following: (1) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (2) the strength of the United States economy in general and the strength of the local economies in which we conduct operations may be different than expected including, but not limited to, due to the negative impacts and disruptions resulting from the outbreak of the novel coronavirus, or COVID-19, on the economies and communities we serve, which has had and may continue to have an adverse impact on our business, operations, and performance, and could continue to have a negative impact on our credit portfolio, share price, borrowers, and on the economy as a whole both domestically and globally; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for loan loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (4) changes in legislation, regulation, policies or administrative practices, whether by judicial, governmental, or legislative action, (5) 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 on the company; (6) technology and cybersecurity risks, including potential business disruptions, reputational risks, and financial losses, associated with potential attacks on or failures by our computer systems and computer systems of our vendors and other third parties; and (7) risks, uncertainties and other factors disclosed in our most recent Annual Report on Form 10-K filed with the SEC, or in any of our Quarterly Reports on Form 10-Q or Current Reports on Form 8-K filed with the SEC since the end of the fiscal year covered by our most recently filed Annual Report on Form 10-K, which are available at the SEC’s Internet site (http://www.sec.gov).

Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. We can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by our company or any person that the future events, plans, or expectations contemplated by our company will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

###

FIRST COMMUNITY CORPORATION

BALANCE SHEET DATA

(Dollars in thousands, except per share data)

	As of
	September 30,			June 30,			March 31,			December 31,			September 30,
	2022			2022			2022			2021			2021
Total Assets	$	1,651,829		$	1,684,824		$	1,652,279		$	1,584,508		$	1,560,326
Other Short-term Investments and CD’s1		17,244			76,918			68,169			47,049			55,259
Investment Securities
Investments Held-to-Maturity		233,301			233,730			—			—			—
Investments Available-for-Sale		338,350			337,254			577,820			564,839			513,500
Other Investments at Cost		1,929			1,929			1,879			1,785			1,760
Total Investment Securities		573,580			572,913			579,699			566,624			515,260
Loans Held for Sale		1,758			4,533			12,095			7,120			6,213
Loans
Paycheck Protection Program (PPP) Loans		238			250			269			1,467			9,109
Non-PPP Loans		949,972			916,082			875,528			862,235			872,411
Total Loans		950,210			916,332			875,797			863,702			881,520
Allowance for Loan Losses		11,315			11,220			11,063			11,179			11,025
Goodwill		14,637			14,637			14,637			14,637			14,637
Other Intangibles		801			840			879			919			959
Total Deposits		1,436,256			1,468,975			1,430,748			1,361,291			1,333,568
Securities Sold Under Agreements to Repurchase		73,659			71,800			68,060			54,216			59,821
Federal Home Loan Bank Advances		—			—			—			—			—
Junior Subordinated Debt		14,964			14,964			14,964			14,964			14,964
Shareholders’ Equity		114,145			117,592			125,380			140,998			139,113
Book Value Per Common Share	$	15.07		$	15.54		$	16.59		$	18.68		$	18.44
Tangible Book Value Per Common Share	$	13.03		$	13.50		$	14.53		$	16.62		$	16.37
Tangible Book Value Per Common Share excluding Accumulated Other Comprehensive Income (Loss)	$	17.43		$	17.00		$	16.52		$	16.18		$	15.76
Equity to Assets		6.91	%		6.98	%		7.59	%		8.90	%		8.92	%
Tangible Common Equity to Tangible Assets (TCE Ratio)		6.03	%		6.12	%		6.71	%		8.00	%		8.00	%
TCE Ratio excluding Accumulated Other Comprehensive Income (Loss)		7.90	%		7.59	%		7.56	%		7.80	%		7.72	%
Loan to Deposit Ratio (Includes Loans Held for Sale)		66.28	%		62.69	%		62.06	%		63.97	%		66.57	%
Loan to Deposit Ratio (Excludes Loans Held for Sale)		66.16	%		62.38	%		61.21	%		63.45	%		66.10	%
Allowance for Loan Losses/Loans		1.19	%		1.22	%		1.26	%		1.29	%		1.25	%
Regulatory Capital Ratios (Bank):
Leverage Ratio		8.53	%		8.34	%		8.43	%		8.45	%		8.56	%
Tier 1 Capital Ratio		13.42	%		13.47	%		13.89	%		13.97	%		13.58	%
Total Capital Ratio		14.49	%		14.57	%		15.03	%		15.15	%		14.74	%
Common Equity Tier 1 Capital Ratio		13.42	%		13.47	%		13.89	%		13.97	%		13.58	%
Tier 1 Regulatory Capital	$	142,305		$	137,910		$	135,555		$	132,918		$	129,741
Total Regulatory Capital	$	153,620		$	149,130		$	146,618		$	144,097		$	140,766
Common Equity Tier 1 Capital	$	142,305		$	137,910		$	135,555		$	132,918		$	129,741

¹ Includes federal funds sold and interest-bearing deposits

Average Balances:	Three months ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Average Total Assets	$	1,667,737	$	1,542,820	$	1,644,803	$	1,495,657
Average Loans (Includes Loans Held for Sale)		938,318		893,888		903,989		891,987
Average Investment Securities		581,044		488,526		571,131		431,332
Average Short-term Investments and CDs		37,529		58,547		59,071		71,804
Average Earning Assets		1,556,891		1,440,961		1,534,191		1,395,123
Average Deposits		1,449,951		1,312,565		1,417,855		1,268,965
Average Other Borrowings		86,602		77,840		90,361		77,179
Average Shareholders’ Equity		119,001		140,404		124,038		137,087

Asset Quality:	As of
	September 30,		June 30,		March 31,		December 31,		September 30,
	2022		2022		2022		2021		2021
Loan Risk Rating by Category (End of Period)
Special Mention	$	596	$	684	$	1,668	$	1,626	$	2,851
Substandard		6,539		6,710		7,849		7,872		7,992
Doubtful		—		—		—		—		—
Pass		943,075		908,938		866,280		854,204		870,677
	$	950,210	$	916,332	$	875,797	$	863,702	$	881,520
Nonperforming Assets
Non-accrual Loans	$	4,875	$	4,351	$	148	$	250	$	359
Other Real Estate Owned and Repossessed Assets		984		984		1,146		1,165		1,165
Accruing Loans Past Due 90 Days or More		30		—		174		—		—
Total Nonperforming Assets	$	5,889	$	5,335	$	1,468	$	1,415	$	1,524
Accruing Trouble Debt Restructurings	$	91	$	125	$	1,393	$	1,444	$	1,474

	Three months ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
Loans Charged-off	$	1		$	—		$	4		$	127
Overdrafts Charged-off		13			21			43			40
Loan Recoveries		(89	)		(355	)		(352	)		(386	)
Overdraft Recoveries		(2	)		(4	)		(8	)		(23	)
Net Charge-offs (Recoveries)	$	(77	)	$	(338	)	$	(313	)	$	(242	)
Net Charge-offs / (Recoveries) to Average Loans2		(0.03	%)		(0.15	%)		(0.05	%)		(0.04	%)

² Annualized

FIRST COMMUNITY CORPORATION

INCOME STATEMENT DATA

(Dollars in thousands, except per share data)

	Three months ended						Three months ended						Three months ended						Nine months ended
	September 30,						June 30,						March 31,						September 30,
	2022			2021			2022			2021			2022			2021			2022			2021
Interest income	$	13,352		$	12,982		$	11,513		$	11,664		$	11,195		$	11,218		$	36,060		$	35,864
Interest expense		558			526			462			572			462			651			1,482			1,749
Net interest income		12,794			12,456			11,051			11,092			10,733			10,567			34,578			34,115
Provision for (release of) loan losses		18			49			(70	)		168			(125	)		177			(177	)		394
Net interest income after provision		12,776			12,407			11,121			10,924			10,858			10,390			34,755			33,721
Non-interest income
Deposit service charges		243			257			262			212			265			246			770			715
Mortgage banking income		290			1,147			481			1,143			839			990			1,610			3,280
Investment advisory fees and non-deposit commissions		1,053			1,040			1,195			957			1,198			877			3,446			2,874
Gain (loss) on sale of other assets		—			13			(45	)		—			—			77			(45	)		90
Other non-recurring income		—			47			5			—			4			100			9			147
Other		1,087			1,060			1,111			1,106			1,068			1,006			3,266			3,172
Total non-interest income		2,673			3,564			3,009			3,418			3,374			3,296			9,056			10,278
Non-interest expense
Salaries and employee benefits		6,373			6,394			6,175			5,948			6,119			5,964			18,667			18,306
Occupancy		786			743			786			734			705			730			2,277			2,207
Equipment		331			336			329			338			332			275			992			949
Marketing and public relations		163			140			446			313			361			396			970			849
FDIC assessment		121			189			105			146			130			169			356			504
Other real estate expenses		19			58			29			55			47			29			95			142
Amortization of intangibles		39			52			40			52			39			57			118			161
Other		2,585			1,993			2,278			2,292			2,221			1,920			7,084			6,205
Total non-interest expense		10,417			9,905			10,188			9,878			9,954			9,540			30,559			29,323
Income before taxes		5,032			6,066			3,942			4,464			4,278			4,146			13,252			14,676
Income tax expense		1,081			1,318			812			921			789			891			2,682			3,130
Net income	$	3,951		$	4,748		$	3,130		$	3,543		$	3,489		$	3,255		$	10,570		$	11,546
Per share data
Net income, basic	$	0.52		$	0.63		$	0.42		$	0.47		$	0.46		$	0.44		$	1.40		$	1.54
Net income, diluted	$	0.52		$	0.63		$	0.41		$	0.47		$	0.46		$	0.43		$	1.39		$	1.53
Average number of shares outstanding - basic		7,531,104			7,498,832			7,526,284			7,485,625			7,518,375			7,475,522			7,523,792			7,486,746
Average number of shares outstanding - diluted		7,607,909			7,555,998			7,607,349			7,537,179			7,594,840			7,522,568			7,605,540			7,540,332
Shares outstanding period end		7,572,517			7,544,374			7,566,633			7,539,587			7,559,760			7,524,944			7,572,517			7,544,374
Return on average assets		0.94	%		1.22	%		0.76	%		0.94	%		0.87	%		0.92	%		0.86	%		1.03	%
Return on average common equity		13.17	%		13.42	%		10.82	%		10.51	%		10.31	%		9.74	%		11.39	%		11.26	%
Return on average common tangible equity		15.14	%		15.10	%		12.48	%		11.89	%		11.63	%		11.01	%		13.02	%		12.71	%
Net interest margin (non taxable equivalent)		3.26	%		3.43	%		2.90	%		3.17	%		2.87	%		3.20	%		3.01	%		3.27	%
Net interest margin (taxable equivalent)		3.29	%		3.47	%		2.93	%		3.20	%		2.91	%		3.23	%		3.05	%		3.30	%
Efficiency ratio1		66.78	%		61.56	%		71.60	%		67.50	%		69.93	%		69.16	%		69.36	%		65.87	%

¹ Calculated by dividing non-interest expense by net interest income on tax equivalent basis and non interest income, excluding gain on sale of other assets and other non-recurring noninterest income.

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and 

Rates on Average Interest-Bearing Liabilities

	Three months ended September 30, 2022								Three months ended September 30, 2021
	Average			Interest		Yield/			Average			Interest		Yield/
	Balance			Earned/Paid		Rate			Balance			Earned/Paid		Rate
Assets
Earning assets
Loans
PPP loans	$	244		$	1		1.63	%	$	31,936		$	1,646		20.45	%
Non-PPP loans		938,074			10,099		4.27	%		861,952			9,310		4.29	%
Total loans		938,318			10,100		4.27	%		893,888			10,956		4.86	%
Non-taxable securities		52,732			385		2.90	%		54,626			388		2.82	%
Taxable securities		528,312			2,673		2.01	%		433,900			1,607		1.47	%
Int bearing deposits in other banks		37,486			194		2.05	%		58,541			31		0.21	%
Fed funds sold		43			—		0.00	%		6			—		0.00	%
Total earning assets		1,556,891			13,352		3.40	%		1,440,961			12,982		3.57	%
Cash and due from banks		25,033								24,903
Premises and equipment		32,016								33,747
Goodwill and other intangibles		15,457								15,621
Other assets		49,587								38,376
Allowance for loan losses		(11,247	)							(10,788	)
Total assets	$	1,667,737							$	1,542,820
Liabilities
Interest-bearing liabilities
Interest-bearing transaction accounts	$	335,648		$	48		0.06	%	$	306,108		$	43		0.06	%
Money market accounts		320,202			156		0.19	%		278,958			109		0.16	%
Savings deposits		167,302			23		0.05	%		139,540			20		0.06	%
Time deposits		144,338			105		0.29	%		157,485			231		0.58	%
Fed funds purchased		262			3		4.54	%		—			—		NA
Securities sold under agreements to repurchase		71,376			32		0.18	%		62,876			19		0.12	%
Other short-term debt		—			—		NA			—			—		NA
Other long-term debt		14,964			191		5.06	%		14,964			104		2.76	%
Total interest-bearing liabilities		1,054,092			558		0.21	%		959,931			526		0.22	%
Demand deposits		482,461								430,474
Other liabilities		12,183								12,011
Shareholders’ equity		119,001								140,404
Total liabilities and shareholders’ equity	$	1,667,737							$	1,542,820
Cost of deposits, including demand deposits							0.09	%							0.12	%
Cost of funds, including demand deposits							0.14	%							0.15	%
Net interest spread							3.19	%							3.35	%
Net interest income/margin - excluding PPP loans				$	12,793		3.26	%				$	10,810		3.04	%
Net interest income/margin - including PPP loans				$	12,794		3.26	%				$	12,456		3.43	%
Net interest income/margin (tax equivalent) - excl. PPP loans				$	12,924		3.29	%				$	10,939		3.08	%
Net interest income/margin (tax equivalent) - incl. PPP loans				$	12,925		3.29	%				$	12,585		3.47	%

FIRST COMMUNITY CORPORATION

Yields on Average Earning Assets and 

Rates on Average Interest-Bearing Liabilities

	Nine months ended September 30, 2022								Nine months ended September 30, 2021
	Average			Interest		Yield/			Average			Interest		Yield/
	Balance			Earned/Paid		Rate			Balance			Earned/Paid		Rate
Assets
Earning assets
Loans
PPP loans	$	368		$	48		17.44	%	$	47,605		$	3,086		8.67	%
Non-PPP loans		903,621			28,359		4.20	%		844,382			27,061		4.28	%
Total loans		903,989			28,407		4.20	%		891,987			30,147		4.52	%
Non-taxable securities		52,480			1,140		2.90	%		54,896			1,164		2.83	%
Taxable securities		518,651			6,126		1.58	%		376,436			4,459		1.58	%
Int bearing deposits in other banks		59,050			387		0.88	%		71,052			94		0.18	%
Fed funds sold		21			—		0.00	%		752			—		0.00	%
Total earning assets		1,534,191			36,060		3.14	%		1,395,123			35,864		3.44	%
Cash and due from banks		27,295								22,844
Premises and equipment		32,391								34,065
Goodwill and other intangibles		15,496								15,673
Other assets		46,658								38,581
Allowance for loan losses		(11,228	)							(10,629	)
Total assets	$	1,644,803							$	1,495,657
Liabilities
Interest-bearing liabilities
Interest-bearing transaction accounts	$	336,584		$	138		0.05	%	$	296,430		$	152		0.07	%
Money market accounts		309,717			384		0.17	%		267,143			359		0.18	%
Savings deposits		155,856			65		0.06	%		132,700			58		0.06	%
Time deposits		149,559			387		0.35	%		158,969			801		0.67	%
Fed funds purchased		88			3		4.56	%		1			—		0.00	%
Securities sold under agreements to repurchase		75,309			79		0.14	%		62,214			66		0.14	%
Other short-term debt		—			—		NA			—			—		NA
Other long-term debt		14,964			426		3.81	%		14,964			313		2.80	%
Total interest-bearing liabilities		1,042,077			1,482		0.19	%		932,421			1,749		0.25	%
Demand deposits		466,139								413,723
Other liabilities		12,549								12,426
Shareholders’ equity		124,038								137,087
Total liabilities and shareholders’ equity	$	1,644,803							$	1,495,657
Cost of deposits, including demand deposits							0.09	%							0.14	%
Cost of funds, including demand deposits							0.13	%							0.17	%
Net interest spread							2.95	%							3.19	%
Net interest income/margin - excluding PPP loans				$	34,530		3.01	%				$	31,029		3.08	%
Net interest income/margin - including PPP loans				$	34,578		3.01	%				$	34,115		3.27	%
Net interest income/margin (tax equivalent) - excl. PPP loans				$	34,921		3.04	%				$	31,389		3.11	%
Net interest income/margin (tax equivalent) - incl. PPP loans				$	34,969		3.05	%				$	34,475		3.30	%

The tables below provide a reconciliation of non-GAAP measures to GAAP for the periods indicated:

	September 30,			June 30,			March 31,			December 31,			September 30,
Tangible book value per common share	2022			2022			2022			2021			2021
Tangible common equity per common share (non-GAAP)	$	13.03		$	13.50		$	14.53		$	16.62		$	16.37
Effect to adjust for intangible assets		2.04			2.04			2.06			2.06			2.07
Book value per common share (GAAP)	$	15.07		$	15.54		$	16.59		$	18.68		$	18.44
Tangible common shareholders’ equity to tangible assets
Tangible common equity to tangible assets (non-GAAP)		6.03	%		6.12	%		6.71	%		8.00	%		8.00	%
Effect to adjust for intangible assets		0.88	%		0.86	%		0.88	%		0.90	%		0.92	%
Common equity to assets (GAAP)		6.91	%		6.98	%		7.59	%		8.90	%		8.92	%
Tangible book value per common share excluding accumulated other comprehensive income (loss)	September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
Tangible common equity per common share excluding accumulated other comprehensive income (loss) (non-GAAP)	$	17.43		$	17.00		$	16.52		$	16.18		$	15.76
Effect to adjust for intangible assets and accumulated other comprehensive income (loss)		(2.36	)		(1.46	)		0.07			2.50			2.68
Book value per common share (GAAP)	$	15.07		$	15.54		$	16.59		$	18.68		$	18.44
Tangible common shareholders’ equity to tangible assets excluding accumulated other comprehensive income (loss)
Tangible common equity to tangible assets excluding accumulated other comprehensive income (loss) (non-GAAP)		7.90	%		7.59	%		7.56	%		7.80	%		7.72	%
Effect to adjust for intangible assets and accumulated other comprehensive income (loss)		(0.99	)%		(0.61	)%		0.03	%		1.10	%		1.20	%
Common equity to assets (GAAP)		6.91	%		6.98	%		7.59	%		8.90	%		8.92	%

Return on average tangible common equity	Three months ended September 30,						Three months ended June 30,						Three months ended March 31,						Nine months ended September 30,
	2022			2021			2022			2021			2022			2021			2022			2021
Return on average tangible common equity (non-GAAP)		15.14	%		15.10	%		12.48	%		11.89	%		11.63	%		11.01	%		13.02	%		12.71	%
Effect to adjust for intangible assets		(1.97	)%		(1.68	)%		(1.66	)%		(1.38	)%		(1.32	)%		(1.27	)%		(1.63	)%		(1.45	)%
Return on average common equity (GAAP)		13.17	%		13.42	%		10.82	%		10.51	%		10.31	%		9.74	%		11.39	%		11.26	%

	Three months ended									Nine months ended
	September 30,			June 30,			September 30,			September 30,
Pre-tax, pre-provision earnings	2022			2022			2021			2022			2021
Pre-tax, pre-provision earnings (non-GAAP)	$	5,050		$	3,872		$	6,115		$	13,075		$	15,070
Effect to adjust for pre-tax, pre-provision earnings		(1,099	)		(742	)		(1,367	)		(2,505	)		(3,524	)
Net Income (GAAP)	$	3,951		$	3,130		$	4,748		$	10,570		$	11,546

	Three months ended						Nine months ended
	September 30,						September 30,
Net interest margin excluding PPP Loans	2022			2021			2022			2021
Net interest margin excluding PPP loans (non-GAAP)		3.26	%		3.04	%		3.01	%		3.08	%
Effect to adjust for PPP loans		0.00			0.39			0.00			0.19
Net interest margin (GAAP)		3.26	%		3.43	%		3.01	%		3.27	%

	Three months ended						Nine months ended
	September 30,						September 30,
Net interest margin on a tax-equivalent basis excluding PPP Loans	2022			2021			2022			2021
Net interest margin on a tax-equivalent basis excluding PPP loans (non-GAAP)		3.29	%		3.08	%		3.04	%		3.11	%
Effect to adjust for PPP loans		0.00			0.39			0.01			0.19
Net interest margin on a tax equivalent basis (GAAP)		3.29	%		3.47	%		3.05	%		3.30	%

	September 30,		June 30,		Growth			Annualized Growth
Loans and loan growth	2022		2022		Dollars			Rate
Non-PPP Loans and Related Credit Facilities (non-GAAP)	$	949,972		916,082		33,890			14.7	%
PPP Related Credit Facilities		0		0		0			0	%
Non-PPP Loans (non-GAAP)	$	949,972	$	916,082	$	33,890			14.7	%
PPP Loans		238		250		(12	)		(19.0	)%
Total Loans (GAAP)	$	950,210	$	916,332	$	33,878			14.7	%
	September 30,		September 30,		Growth			Annualized Growth
Loans and loan growth	2022		2021		Dollars			Rate
Non-PPP Loans and Related Credit Facilities (non-GAAP)	$	949,972		870,608		79,364			9.1	%
PPP Related Credit Facilities		0		1,803		(1,803	)		(100.0	)%
Non-PPP Loans (non-GAAP)	$	949,972	$	872,411	$	77,561			8.9	%
PPP Loans		238		9,109		(8,871	)		(97.4	)%
Total Loans (GAAP)	$	950,210	$	881,520	$	68,690			7.8	%

Certain financial information presented above is determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). These non-GAAP financial measures include “Tangible book value per common share,” “Tangible common shareholders’ equity to tangible assets,” “Tangible book value per common share excluding accumulated other comprehensive income (loss),” “Tangible common shareholders’ equity to tangible assets excluding accumulated other comprehensive income (loss),” “Return on average tangible common equity,” “Pre-tax, pre-provision earnings,” “Net interest margin excluding PPP Loans,” “Net interest margin on a tax-equivalent basis excluding PPP Loans,” “Non-PPP Loans and Related Credit Facilities,” and “Non-PPP Loans.”

· “Tangible book value per common share” is defined as total equity reduced by recorded intangible assets divided by total common shares outstanding.

· “Tangible common shareholders’ equity to tangible assets” is defined as total common equity reduced by recorded intangible assets divided by total assets reduced by recorded intangible assets.

· “Tangible book value per common share excluding accumulated other comprehensive income (loss)” is defined as total equity reduced by recorded intangible assets and accumulated other comprehensive income (loss) divided by total common shares outstanding.

· “Tangible common shareholders’ equity to tangible assets excluding accumulated other comprehensive income (loss)” is defined as total common equity reduced by recorded intangible assets and accumulated other comprehensive income (loss) divided by total assets reduced by recorded intangible assets and other comprehensive income (loss).

· “Return on average tangible common equity” is defined as net income on an annualized basis divided by average total equity reduced by average recorded intangible assets.

· “Pre-tax, pre-provision earnings” is defined as net interest income plus non-interest income, reduced by non-interest expense.

· “Net interest margin excluding PPP Loans” is defined as annualized net interest income less annualized interest income on PPP Loans divided by average earning assets less the average balance of PPP Loans.

· “Net interest margin on a tax-equivalent basis excluding PPP Loans” is defined as annualized net interest income on a tax-equivalent basis less annualized interest income on PPP Loans divided by average earning assets less the average balance of PPP Loans.

· “Non-PPP Loans and Related Credit Facilities” is defined as Total Loans less PPP Related Credit Facilities and PPP Loans.

· “Non-PPP Loans” is defined as Total Loans less PPP Loans.

· “Non-PPP Loans and Related Credit Facilities Growth - Dollars” is calculated by taking the difference between two time periods compared for Total Loans less PPP Loans and PPP Related Credit Facilities.  “Non-PPP Loans and Related Credit Facilities – Annualized Growth Rate” is calculated by (i) dividing “Non-PPP Loans and Related Credit Facilities Loan Growth - Dollars” by the number of days between the two time periods compared (ii) times the number of days in the year (iii) divided by the prior time period Non-PPP Loans and Related Credit Facilities balance.

· “Non-PPP Loans Growth - Dollars” is calculated by taking the difference between two time periods compared for Total Loans less PPP Loans.  “Non-PPP Loans – Annualized Growth Rate” is calculated by (i) dividing “Non-PPP Loans Loan Growth - Dollars” by the number of days between the two time periods compared (ii) times the number of days in the year (iii) divided by the prior time period Non-PPP Loans balance.

Our management believes that these non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare our operating results from period-to-period in a meaningful manner. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the company’s results as reported under GAAP.