First Community Corporation (FCCO): 5 FORCES Analysis [Nov-2025 Updated]

You're looking for a clear-eyed assessment of First Community Corporation's (FCCO) competitive landscape, so let's map out the five forces using their Q3 2025 financial performance as our anchor. Honestly, the picture is one of intense pressure: with depositors holding sway over $1.771 billion in funds and rivals pushing the Net Interest Margin to just 3.27%, the fight for every basis point is on. We're breaking down exactly how vulnerable FCCO is to customers shopping loan rates, the threat from FinTech substitutes, and the high fixed costs driving their 64.4% efficiency ratio, so you can see the near-term risks and opportunities clearly. Dive in below for the full, unvarnished strategic breakdown.

First Community Corporation (FCCO) - Porter's Five Forces: Bargaining power of suppliers

The primary suppliers for First Community Corporation (FCCO) are its depositors, as their funds represent the core liability funding source. The power of this supplier group is a dynamic balance between the stickiness of established customer relationships and the ever-present threat of rate-sensitive migration to higher-yielding alternatives.

Depositors, as the main supplier, generally have low switching costs, meaning they can move their money relatively easily if better rates are offered elsewhere. As of the third quarter of 2025, First Community Corporation (FCCO) managed total deposits of approximately \$1.771 billion. This large base of funding is critical, but the underlying cost remains a key lever for suppliers to exert pressure.

While First Community Corporation (FCCO) has successfully managed its funding costs, industry-wide pressures persist. For instance, First Community Corporation (FCCO)'s own cost of deposits was reported at 1.81% in the third quarter of 2025, with the overall cost of funds at 1.89%. Although this shows a slight improvement from the second quarter of 2025, where the cost of deposits was 1.82% and cost of funds was 1.91%, the broader industry faces sticky deposit costs due to the lingering effect of higher-rate Certificates of Deposit (CDs) maturing slowly. The general industry environment suggests funding costs remain elevated compared to earlier cycles.

The bargaining power of depositors is tempered by the quality and composition of First Community Corporation (FCCO)'s deposit base. The bank emphasizes relationship accounts, which are inherently less price-sensitive. At September 30, 2025, non-interest bearing accounts stood at \$483.3 million, comprising 27.3% of total deposits. These non-interest-bearing funds represent the lowest-cost funding available and significantly reduce the immediate power of the supplier group to demand higher rates.

Still, competition for funds is defintely intense. Nonbank competitors, such as online banks, often have much higher deposit betas, putting upward pressure on rates across the market. This competitive landscape forces First Community Corporation (FCCO) to balance maintaining a strong net interest margin with retaining its core funding base.

Beyond core deposits, First Community Corporation (FCCO) has access to wholesale capital markets. While this access is generally strong, the cost is dictated by broader market rates and spreads, which have been normalizing toward historical averages in 2025. The ability to tap wholesale funding acts as a ceiling on how much power core depositors can exert, as the bank can shift its marginal funding source if deposit costs become prohibitive.

Here's a quick look at the key supplier-related financial metrics for First Community Corporation (FCCO) as of Q3 2025:

The strength of First Community Corporation (FCCO)'s relationship-based funding provides a buffer against the low switching costs of individual depositors. You need to monitor the growth rate of those non-interest-bearing accounts versus the growth of higher-cost time deposits to gauge the immediate risk from this supplier group.

• Low switching costs for the core depositor base.
• Competition from high-beta online banks persists.
• Relationship deposits temper overall funding cost pressure.
• Wholesale capital cost is market-driven, not supplier-driven.
• FCCO's cost of deposits was 1.81% in Q3 2025.

First Community Corporation (FCCO) - Porter's Five Forces: Bargaining power of customers

The bargaining power of customers for First Community Corporation is a dynamic factor, heavily influenced by the fungibility of its core products and the size of its key client relationships. For the largest clients, this power is substantial, while for the average retail customer, it remains relatively low, though not negligible.

Borrowers seeking commercial or real estate financing can, and often do, price-shop across multiple institutions. First Community Corporation's total loan portfolio, which stood at $1.279 billion as of the figures you are working with, is subject to this competitive pressure. When a large commercial loan is under consideration, the borrower has leverage to negotiate terms, especially if First Community Corporation is eager for loan growth or if the borrower represents a significant portion of the bank's lending volume.

The concentration in Commercial Real Estate (CRE) lending makes First Community Corporation particularly sensitive to demands from large CRE borrowers. While specific Q3 2025 CRE concentration data for First Community Corporation is proprietary, industry context shows that community banks often carry higher CRE exposures relative to their capital base than larger national firms. Regulatory guidance suggests a concentration threshold of 300% for the Commercial Real Estate Loans to Common Equity Tier 1 (CET1) Ratio, which signals where regulators start to increase scrutiny. Large borrowers in this sector, therefore, hold significant sway.

For the wealth management segment, the power of the customer is also concentrated based on asset size. Clients managing assets with First Community Corporation, which totaled a record $1.103 billion in AUM as of September 30, 2025, can easily move their portfolios. If a high-net-worth individual decides to consolidate services with a larger national firm offering potentially lower advisory fees or a broader product suite, the impact on First Community Corporation's non-interest income is immediate and material.

Conversely, the retail customer base for basic banking products faces lower individual switching costs. You see this when you look at what community banks offer:

• Checking accounts often have no monthly fee if a low minimum balance is met.
• Savings accounts frequently have minimal or no minimum balance requirements.
• Digital access is standard, reducing the need for physical branch visits.
• Early account closing fees, if present, are typically small, often around $10.00 to $14.01 at comparable institutions.

Still, the friction of changing direct deposits and automatic payments means that while the cost to switch is low, the effort involved can keep some customers in place, but this is a weak barrier.

First Community Corporation (FCCO) - Porter's Five Forces: Competitive rivalry

You're looking at the competitive landscape for First Community Corporation (FCCO), and the rivalry component is definitely heating up. It's a tough spot to be in when you're established but still fighting for share against much bigger players.

First Community Corporation is the fifth largest bank in South Carolina, operating as the holding company for First Community Bank. As of September 30, 2025, the company reported total assets of $2.1 billion and operated 21 banking offices across South Carolina and the Augusta, Georgia area. This positioning means First Community Corporation is constantly competing for deposits and loans against regional banks with significantly larger footprints and balance sheets.

M&A activity is accelerating, which only increases the scale of your competitors. Take, for example, the pending acquisition of Signature Bank of Georgia. First Community Corporation agreed to acquire Signature Bank of Georgia in an all-stock transaction valued at approximately $41.6 million, based on the July 11, 2025, closing price of $24.84 per share. This deal, approved by shareholders on November 20, 2025, and expected to close in early Q1 2026, is set to create a combined company with roughly $2.3 billion in total assets, $2.0 billion in total deposits, and $1.5 billion in total loans, expanding the footprint into the Atlanta-Sandy Springs-Roswell, GA MSA. This move is a direct response to the need to compete on scale.

Competition is high on pricing, and you see that reflected in the Net Interest Margin (NIM) performance. For the third quarter of 2025, First Community Corporation reported a tax-equivalent NIM of 3.27%, which was an expansion of six basis points linked quarter-over-linked quarter. That's the sixth consecutive quarter of margin expansion, which suggests aggressive pricing competition is being met with disciplined asset/liability management. Here's a quick look at some key Q3 2025 metrics:

Still, the pressure to manage costs remains intense. High fixed costs, common in banking, drive aggressive competition to improve operating leverage. The efficiency ratio improved to 64.44% in Q3 2025 from 66.04% in Q2 2025, showing progress, but there is still work to do to reach best-in-class levels. Non-interest expense rose to $13.674 million in Q3 2025, which included $341K in merger-related costs that management is working to absorb or offset.

The drive to improve that efficiency ratio forces management to compete hard on every front. You have to win on loan volume, deposit costs, and fee income generation to keep the operating leverage moving in the right direction. The competitive rivalry is about more than just interest rates; it's about scale and cost control.

• Fifth largest bank in South Carolina.
• Acquisition target: Signature Bank of Georgia for $41.6 million.
• Pro forma assets post-merger projected at $2.3 billion.
• Q3 2025 NIM expansion to 3.27%.
• Q3 2025 efficiency ratio was 64.44%.
• Non-interest expense included $341K in merger costs.

Finance: draft the pro forma efficiency ratio impact analysis post-Signature Bank of Georgia close by next Wednesday.

First Community Corporation (FCCO) - Porter's Five Forces: Threat of substitutes

You're looking at the external pressures on First Community Corporation (FCCO), specifically how readily customers can find alternative products that do the same job as your core banking services. This threat of substitutes is very real, especially in the current financial environment where technology has lowered the barrier for non-traditional players.

Loan Substitutes: Non-bank Lenders and FinTechs

The market for credit is seeing a significant shift, with non-bank lenders and private credit funds taking a larger piece of the pie, particularly in the middle market. These entities offer flexible financing that traditional banks, like First Community Corporation (FCCO), sometimes struggle to match due to regulatory constraints. For instance, PitchBook data shows private credit's market share in middle market lending was projected to hit 40% by 2025. Furthermore, the U.S. banks' lending to the nonbank financial sector-which includes these lenders-stood at $1.14 trillion in loans outstanding as of the first quarter of 2025. This non-depository lending segment saw a growth rate of 9.3% in that same quarter. In mortgage credit, non-bank mortgage companies reported strong origination volume growth year-over-year through the first half of 2025, driven by refinance activity, showing they are highly competitive in that specific product area.

Deposit Substitutes: Money Market Funds and Treasuries

For customers holding cash, low-risk, highly liquid alternatives directly compete with First Community Corporation (FCCO)'s deposit base. Money Market Funds (MMFs) are a prime example. As of November 25, 2025, total MMF assets in the U.S. were reported at $7.57 trillion. This massive pool of readily available cash offers yields that compete directly with bank savings and checking accounts. You can see the scale of this substitution threat when comparing it to First Community Corporation (FCCO)'s own deposit base.

Here's a quick look at the scale:

The cost of deposits for First Community Corporation (FCCO) was 1.81% in the third quarter of 2025, meaning any MMF offering a competitive or better yield without the same regulatory overhead for the provider presents a clear substitute for customer funds.

Investment Advisory Substitution

The revenue stream from investment advisory services at First Community Corporation (FCCO) faces pressure from automated, lower-cost digital platforms. For the second quarter of 2025, First Community Corporation (FCCO)'s investment advisory revenue was $1.751 million, on Assets Under Management (AUM) that hit a record $1.011 billion at June 30, 2025, later exceeding $1.1 billion in Q3 2025. This fee-based income is directly targeted by robo-advisors.

The threat is quantified by the growth and cost structure of these digital competitors:

• Global robo-advisor market size is projected to reach $9.2413 billion by the end of 2025.
• In the U.S. alone, robo-advisors are expected to manage $520 billion in assets by 2025.
• The average annual fee charged by robo-advisors hovers around 0.20% of AUM in 2025.
• Customer acquisition rates for these platforms surged by approximately 18% in 2025, driven by younger generations.

The low-cost structure and increasing adoption of AI-driven portfolio customization mean that clients seeking pure investment management may bypass the traditional advisory relationship entirely.

Bypassing Intermediation

Direct capital markets funding, including peer-to-peer (P2P) lending and other direct funding channels, allows businesses to secure capital without relying on a bank like First Community Corporation (FCCO) to intermediate the transaction. While P2P data is less granular in the latest reports, the broader trend of private credit dominance shows this disintermediation is happening. Non-bank lenders financed 85% of U.S. leveraged buyouts in 2024, up from 64% in 2019. This indicates that for larger commercial clients, the traditional bank loan product is increasingly substituted by private capital solutions that offer speed and structural customization.

The key substitute channels you are competing against are:

• Private credit funds for commercial lending.
• FinTech platforms using their balance sheets for origination.
• Direct capital raising for larger, sophisticated borrowers.

First Community Corporation (FCCO) - Porter's Five Forces: Threat of new entrants

Regulatory barriers definitely keep the traditional bank startup path steep. While First Community Corporation's own capital ratios as of June 30, 2025, show a strong buffer-with a Leverage ratio of 8.44% and a Common Equity Tier I ratio of 13.04%-a new entrant must still meet the baseline requirements set by regulators. For context, the minimum Common Equity Tier 1 (CET1) capital ratio requirement for large banks is set at 4.5%, with a Stress Capital Buffer (SCB) of at least 2.5%, effective October 1, 2025. This regulatory floor, even before considering individual bank surcharges, represents a substantial initial capital hurdle.

The landscape shifts when you look at FinTech companies. These new players often bypass the physical branch network overhead entirely. Their customer acquisition cost (CAC) advantage is stark; they can attract new customers for as little as $5-$15, which compares very poorly to the $150-$350 per customer cost often seen by traditional banks. This low-overhead entry model allows them to focus on single, high-margin services like specialized lending or payments, creating immediate, targeted competition for First Community Corporation's service lines.

For any new physical bank, or an existing one like First Community Corporation looking to upgrade, the cost of technology is a massive barrier. Experts suggest that banks currently spend about 78% of their total IT budgets just maintaining legacy core systems. The sheer scale of this sunk cost and the complexity of migration act as a deterrent to new entrants who would need to build modern systems from scratch. Still, the payoff for modernization is significant, with some upgraded banks reporting a reduction in Total Cost of Ownership (TCO) by 38-52%.

Organic growth in the regional market, where First Community Corporation has established its footprint across South Carolina and Georgia, is not always fast enough to justify a massive, ground-up branch network build. First Community Corporation itself is pursuing strategic expansion through acquisition, such as the announced plan to enter the Atlanta-Sandy Springs-Roswell, GA MSA via the acquisition of Signature Bank of Georgia, which suggests M&A is the preferred route over slow, organic branch expansion. As of September 30, 2025, First Community Corporation reported total assets of $2.1 billion, indicating it operates at a scale where organic growth alone may not outpace the speed of market changes or M&A opportunities.

Here's a quick look at how First Community Corporation's capital strength compares to the general regulatory floor for large institutions:

The threat from technology-first competitors is also visible in the efficiency gap they create:

• FinTech Customer Acquisition Cost: $5-$15
• Traditional Bank Customer Acquisition Cost: $150-$350
• IT Budget Allocation to Legacy Maintenance: Approximately 78%
• Reported TCO Reduction from Core Modernization: 38-52%
• Reported Operational Efficiency Boost Post-Modernization: 45%

Finance: draft 13-week cash view by Friday.