Note 1Nature of Business and Basis of Presentation Basis of Presentation In the opinion of management, the accompanying unaudited consolidated balance sheets, and the consolidated statements of income, comprehensive income, changes in shareholders equity, and the cash flows of First Community Corporation (the Company) and its wholly owned subsidiary, First Community Bank (the Bank), present fairly in all material respects the Companys financial position at March 31, 2020 and December 31, 2019, and the Companys results of operations and cash flows for the three months ended March 31, 2020 and 2019. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. In the opinion of management, all adjustments necessary to fairly present the consolidated financial position and consolidated results of operations have been made. All such adjustments are of a normal, recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements and notes thereto are presented in accordance with the instructions for Form 10-Q. The information included in the Companys Annual Report on Form 10-K for the year ended December 31, 2019 should be referred to in connection with these unaudited interim financial statements. Risk and Uncertainties In December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in China, and has since spread to a number of other countries, including the United States. In March 2020, the World Health Organization declared COVID-19 a global pandemic and the United States declared a National Public Health Emergency. The COVID-19 pandemic has severely restricted the level of economic activity in the Banks markets. In response to the COVID-19 pandemic, the governments of the states in which the Bank has retail offices, and of most other states, have taken preventative or protective actions, such as imposing restrictions on travel and business operations, advising or requiring individuals to limit or forego their time outside of their homes, and ordering temporary closures of businesses that have been deemed to be non-essential. While the Banks business has been designated an essential business, which allows the Bank to continue to serve its customers, the Bank serves many customers that have been deemed, or who are employed by businesses that have been deemed, to be non-essential. And many of the Banks customers that have been categorized to date as essential businesses, or who are employed by businesses that have been categorized as essential businesses, have been adversely affected by the COVID-19 pandemic. The impact of the COVID-19 pandemic is fluid and continues to evolve. The COVID-19 pandemic and its associated impacts on trade (including supply chains and export levels), travel, employee productivity, unemployment, consumer spending, and other economic activities has resulted in less economic activity, lower equity market valuations and significant volatility and disruption in financial markets, and has had an adverse effect on the Companys business, financial condition and results of operations. The ultimate extent of the impact of the COVID-19 pandemic on the Companys business, financial condition and results of operations is currently uncertain and will depend on various developments and other factors, including, among others, the duration and scope of the pandemic, as well as governmental, regulatory and private sector responses to the pandemic, and the associated impacts on the economy, financial markets and the Companys customers, employees and vendors. The Companys business, financial condition and results of operations generally rely upon the ability of the Banks borrowers to repay their loans, the value of collateral underlying the Banks secured loans, and demand for loans and other products and services the Bank offers, which are highly dependent on the business environment in the Banks primary markets where it operates and in the United States as a whole. On March 3, 2020, the Federal Reserve reduced the target federal funds rate by 50 basis points, followed by an additional reduction of 100 basis points on March 16, 2020. These reductions in interest rates and other effects of the COVID-19 pandemic may adversely affect the Companys financial condition and results of operations. As a result of the spread of COVID-19, economic uncertainties have arisen which are likely to negatively impact net interest income, provision for loan losses, and noninterest income. Other financial impact could occur though such potential impact is unknown at this time. As of March 31, 2020, the Banks capital ratios were in excess of all regulatory requirements. While management believes that the Company has sufficient capital to withstand an extended economic recession brought about by the COVID-19 pandemic, the Banks reported and regulatory capital ratios could be adversely impacted by further credit losses. We believe that we have ample liquidity to meet the needs of our customers and to manage through the COVID-19 pandemic through our low cost deposits; our ability to borrow against approved lines of credit (federal funds purchased) from correspondent banks; and our ability to obtain advances secured by certain securities and loans from the Federal Home Loan Bank. Furthermore, we are eligible to participate in the Paycheck Protection Program Liquidity Facility (PPPLF) to fund Paycheck Protection Program (PPP) loans if needed. Beginning in early March 2020, the Company proactively reached out to its loan customers and offered deferrals for up to 90 days. As of March 31, 2020, the Company granted 183 deferral requests totaling $118.3 million of the Companys loan portfolio related to the COVID-19 pandemic. As of May 4, 2020, the Company has granted 383 deferrals totaling approximately $202.4 million of the Companys loan portfolio. The Company has evaluated its exposure to certain industry segments most impacted by the COVID-19 pandemic as of March 31, 2020: Industry Segments Outstanding % of Loan Ave. Loan Ave. Loan to (Dollars in millions) Loan Balance Portfolio Size Value Hotels $ 26.8 3.6 % $ 1.9 67 % Restaurants $ 17.6 2.4 % $ 0.6 64 % Assisted Living $ 9.2 1.2 % $ 1.8 50 % Retail $ 75.5 10.1 % $ 0.6 62 %