2024
Five-Year Financial
Performance
Earnings & Cash Dividends
Paid Since 1987
These statements have not been reviewed, or confirmed for accuracy or relevance, by the Federal Deposit Insurance Corporation.
$67.2M
CUMULATIVE CASH DIVIDENDS
$117.2M
CUMULATIVE EARNINGS
is a state-chartered
financial institution with
depository accounts
insured by the FDIC. The
Bank was organized on
October 23, 1986, and
our first office opened
for business on February
26, 1987. It is a wholly-
owned subsidiary of
Bank of South Carolina
Corporation which
became effective on
April 17, 1995.
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
$5,000,000
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
Annual Cash Dividend History
Year Ended December 31
2024
2023
2022
2021
2020
Net Income:
$ 6,749,736
$ 5,493,616
$ 6,655,140
$ 6,744,865
$ 6,460,631
Performance Ratios:
Return on Average Equity
13.55%
12.90%
15.26%
12.30%
11.96%
Return on Average Assets
1.14%
0.86%
1.01%
1.14%
1.29%
Community Bank Leverage Ratio
10.97%
9.64%
9.30%
9.30%
10.72%
Efficiency Ratio
60.69%
65.70%
59.18%
57.94%
57.39%
Net Interest Margin
3.66%
3.04%
3.01%
3.06%
3.52%
Net (Recoveries) Charge-offs
0.00%
0.00%
0.00%
(0.02%)
0.02%
Allowance for Credit Losses as a
Percentage of Total Loans (1)
1.01%
1.07%
1.30%
1.43%
1.30%
Per Share Data:
Basic Income
$ 1.24
$ 0.99
$ 1.20
$ 1.22
$ 1.17
Diluted Income
$ 1.23
$ 0.98
$ 1.18
$ 1.19
$ 1.14
Year-End Book Value
$ 9.63
$ 8.61
$ 6.99
$ 9.73
$ 9.96
Cash Dividends Declared
$ 0.72
$ 0.68
$ 0.68
$ 0.78
$ 0.66
Dividend Payout Ratio
58.13%
68.25%
56.73%
63.98%
56.44%
Selected Average Balances:
Total Assets
$ 590,707,455
$ 639,728,141
$ 656,833,125
$ 589,379,985
$ 502,628,318
Total Loans(2)
$ 358,649,574
$ 339,912,450
$ 320,826,946
$ 324,078,445
$ 313,303,363
Total Deposits
$ 511,959,761
$ 552,955,814
$ 596,881,098
$ 519,900,412
$ 434,071,108
Total Shareholders’ Equity
$ 49,802,167
$ 42,597,908
$ 43,602,112
$ 54,838,166
$ 54,021,647
(1) Excluding mortgage loans to be sold
(2) Including mortgage loans to be sold
DEAR SHAREHOLDERS, CUSTOMERS, EMPLOYEES, AND FRIENDS:
Douglas H. Sass
Executive Vice President
& Senior Lender
Eugene H. Walpole, IV
President & CEO
Susanne K. Boyd
Executive Vice President
& COO
Hugh C. Lane, Jr.
Chairman
On behalf of the Directors and employees of Bank of South Carolina Corporation and its subsidiary, The Bank of South Carolina, it is our privilege to invite
you to attend the annual meeting of shareholders on April 8, 2025 at 2:00 p.m. at our North Charleston office. During the meeting, we will conduct an
election of Directors, vote on other matters described in the proxy statement, and review the Company’s operating results for the first quarter of 2025.
We encourage you to review the information contained in this Annual Report to acquaint yourself with the Company’s 2024 financial performance.
What a difference a year makes. As anticipated, the Federal Reserve took decisive action in 2024 to begin easing its policies, marking a shift after
implementing 525 basis points of rate hikes over the previous two years. The Fed lowered its target rate three times, reducing it by a total of 100 basis
points. These adjustments favorably impacted our balance sheet by allowing us to lower funding costs, which improved our net interest margin by 62
basis points over the course of the year. Combined with a rise in noninterest income, consistent loan pricing, and disciplined management of overhead,
we are proud to have achieved the second highest net income in our Company’s thirty-eight-year history.
From a performance standpoint, it was a year marked by significant highlights, with the most notable being:
• Return on Average Equity of 13.55%
• Return on Average Assets of 1.14%
• Increased Earnings per Share by $0.25 or 25%
• Average Loans increased by 6%
• Increased Book Value by $1.02 per share or 12%
• Community Bank Leverage Ratio for the Bank and Company increased to 11.08% and 10.97%, respectively
• Increased cash dividends declared by $0.04 per share or 6%
• Paid our 141st quarterly cash dividend to shareholders
In May 2023, our board of directors authorized the repurchase of up to $2 million of the Company’s outstanding common stock, with the program
running through May 2026. Throughout the past year, we were active in repurchasing shares, acquiring 36,489 shares at an average price of $12.54
per share. Combining this with the repurchase activity from 2023, we’ve now repurchased a total of 119,589 shares totaling just under $1.5 million. We
consider share repurchases a prudent use of capital so long as two things are true: (1) the share price is below its true earning power as conservatively
estimated by management and (2) that we have ample liquidity. Over time, and as the market presents opportunities to do so, our goal is to increase
the earning power of the Company and decrease the number of shares outstanding. Put another way, we want to grow both the size of the pie AND
your share of the pie. It is our belief that we did just that in 2024.
Significant strides were also made to enhance our technology offerings, including improvements to our mobile app such as enabling customers to
add debit cards to digital wallets and facilitate balance transfers between accounts at different financial institutions. As we look ahead, we remain
committed to evolving and prioritizing technology as an enhancement to, rather than a replacement for, the exceptional service we provide our
customers. Meanwhile, our industry continues to face challenges with respect to attempted check fraud. We took steps during the year to not only
strengthen internal procedures but also encourage customers to embrace electronic forms of payment and regularly monitor account activity. In this
ongoing battle, we all must remain vigilant and proactive in protecting our financial security.
We also had the honor of celebrating the retirements of two esteemed employees. Susan Getz devoted nearly twenty years to serving as the Drive-
Thru Teller at our Summerville office, while Costa Thomas has been a dedicated Operations Officer and Corporate Secretary for the past twenty-
six years. Both of these ladies will be deeply missed by their colleagues and customers they’ve served so well. We also bid farewell to Dr. Alan I.
Nussbaum, who retired as a Director after twenty-five years of loyal service. Alan’s wisdom, humility, and servant leadership, particularly as Lead
Independent Director, will leave a lasting legacy. We are delighted that Graham M. Eubank, Jr. was elected by our board to succeed Alan as Lead
Independent Director, and we have the utmost confidence in Graham to continue serving our shareholders with excellence in this role.
As mentioned in last year’s letter, your bank was built to prosper no matter the current economic cycle. We are confident in our capacity to deliver
strong financial results and deploy capital in a manner that demonstrates our steadfast commitment to rewarding our shareholders. Above all, we
express our sincere gratitude to our loyal employees – who are prominently featured on the cover of this Annual Report – for their dedication to the
Bank, our customers, and the communities we serve. As our Founder and Chairman, Hugh C. Lane, Jr., has so often said, “Our greatest asset is not on
our balance sheet; it is our people.” This team and their remarkable ability to uphold our core principles of customer service, responsiveness, attention
to detail, and long-term relationships has truly set us apart and made all the difference.
BANK OF SOUTH CAROLINA CORPORATION
AND SUBSIDIARY
Table of Contents
Notice of Annual Meeting of Shareholders……………………………………………………….…………..1
Proxy Statement……………………………………………………………………………....………………3
Management’s Discussion and Analysis of Financial Condition
and Results of Operations…………………………………………………………..………………….…….1
Selected Financial Data…………………………………………………………………………………..….2
Independent Auditor’s Report……………………………………………….…………..………..…….…...2
Consolidated Balance Sheets…………………………………………….……………….…….……….…..2
Consolidated Statements of Income ………………………….…………..……………..…....….………… 2
Consolidated Statements of Comprehensive Income.……..….…………………………..……..……..……2
Consolidated Statements of Changes in Shareholders’ Equity………………………………………………2
Consolidated Statements of Cash Flows………………….…………….……………………………………2
Notes to Consolidated Financial Statements…………………………...……………………………………2
1
BANK OF SOUTH CAROLINA CORPORATION
256 Meeting Street
Charleston, South Carolina 29401
(843) 724-1500
Dear Shareholder:
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 8, 2025
I cordially invite you to attend the Annual Meeting of Shareholders of Bank of South Carolina Corporation, to be held on April 8,
2025 at 2:00 p.m. EDT at 9403 Highway 78, North Charleston, South Carolina 29456, for the following purposes:
1. to elect sixteen Directors to our Board of Directors to serve a one-year term;
2. to ratify the appointment of Elliott Davis, LLC as the Company’s independent auditors for the year ending December 31,
2025;
3. to transact such other business as may properly come before the Annual Meeting or any adjournment of the meeting.
The Board of Directors has set the close of business on February 27, 2025 as the record date to determine the Shareholders who are
entitled to vote at the Annual Meeting. We are providing access to our proxy materials by sending you this full set of proxy materials,
including a proxy card, and notifying you of the availability of our proxy materials on the internet.
Although we would like each Shareholder to attend the Annual Meeting, we realize that for some of you this is not possible. Whether
or not you plan to attend the Annual Meeting, we encourage you to vote as soon as possible through the internet, by telephone or
by signing, dating and mailing your proxy card in the enclosed postage-paid envelope. Internet voting permits you to vote at your
convenience, 24 hours a day, seven days a week. For specific instructions on voting, please refer to the instructions on the enclosed
proxy card.
Our 2025 Proxy Statement and Annual Report for the year ended December 31, 2024 are available free of charge at
https://www.banksc.com and https://www.proxyvote.com.
Your vote is very important, and I appreciate the time and consideration that I am sure you will give it.
On behalf of the Board of Directors,
/s/ Richard W. Hutson, Jr.
Richard W. Hutson, Jr., Secretary
March 7, 2025
2
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3
PROXY STATEMENT
FOR
THE ANNUAL MEETING OF SHAREHOLDERS
OF BANK OF SOUTH CAROLINA CORPORATION
TO BE HELD ON APRIL 8, 2025
PROXY STATEMENT
The Board of Directors of Bank of South Carolina Corporation (the “Company”) is using this Proxy Statement to solicit Proxies from
the Company’s Shareholders for the 2025 Annual Meeting of Shareholders. The Company is making this Proxy Statement and the
enclosed form of Proxy available to its Shareholders on or about March 7, 2025. The mailing address of the Company’s principal
executive offices is 256 Meeting Street, Charleston, South Carolina 29401.
The information provided in this Proxy Statement contains important information for you to consider when deciding how to vote on
the matters brought before the meeting. The Board encourages you to read it carefully.
INFORMATION ABOUT THE ANNUAL MEETING
Time and Place of the Annual Meeting
The Annual Meeting will be held as follows:
Date:
April 8, 2025
Time:
2:00 p.m. Eastern Daylight Time
Place: The Bank of South Carolina, 9403 Highway 78, North Charleston, South Carolina
Matters to be Considered at the Annual Meeting
At the meeting, you will be asked to consider and vote upon the following matters:
Proposal 1: To elect sixteen Directors of Bank of South Carolina Corporation to serve until the Company’s 2026 Annual
Meeting of Shareholders;
Proposal 2: To ratify the appointment of Elliott Davis, LLC as the Company’s independent auditors for the year ended
December 31, 2025;
Proposal 3: To transact such other business as may properly come before the meeting and any adjournment or postponement
of the meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDERS’ MEETING TO BE HELD APRIL 8, 2025
This Proxy Statement (providing important information for the Annual Meeting) and the Company’s Annual Report accompany this
Notice. The Proxy Statement and 2024 Annual Report are available at https://www.banksc.com and at https://www.proxyvote.com.
4
Who is Entitled to Vote?
The Board of Directors of the Company has fixed the close of business on February 27, 2025, as the record date for Shareholders entitled
to notice of and to vote at the Annual Meeting of Shareholders. Only holders of record of Bank of South Carolina Corporation’s Common
Stock on that date are entitled to notice of and to vote at the Annual Meeting. Each Shareholder is entitled to one vote for each share of Bank
of South Carolina Corporation Common Stock that the Shareholder owns; provided, however, that the Shareholders have cumulative
voting rights for the election of Directors. The right to cumulate votes means that the Shareholders are entitled to multiply the number of
votes they are entitled to cast by the number of Directors for whom they are entitled to vote and cast the product for a single candidate or
distribute the product among two or more candidates. On February 27, 2025, there were 5,429,005 shares of Bank of South Carolina
Corporation’s Common Stock outstanding and entitled to vote at the Annual Meeting.
How Do I Vote?
If you are the “record holder” of your shares, meaning that you own your shares in your own name and not through a bank, broker or other
nominee, you may vote in one of four ways.
1. You may vote over the internet. If you have internet access, you may vote your shares from any location in the world by following
the “Vote by Internet” instructions on the enclosed proxy card.
2. You may vote by telephone. You may vote your shares by following the “Vote by Telephone” instructions on the enclosed proxy
card.
3. You may vote by mail. You may vote by completing and signing the proxy card enclosed with this proxy statement and promptly
mailing it in the enclosed postage-prepaid envelope. You do not need to put a stamp on the enclosed envelope if you mail it in
the United States.
4. You may vote in person. If you attend the Annual Meeting, you may vote by delivering your completed proxy card in person or
voting in person at the Annual Meeting.
How Do I Vote at the Annual Meeting?
Proxies are solicited to provide all Shareholders of record on the voting record date an opportunity to vote on matters scheduled for the
Annual Meeting and described in these materials. You are a Shareholder of record if your shares of the Company’s Common Stock are held
in your name. If you are a beneficial owner of the Company’s Common Stock held by a broker, bank or other nominee (i.e., in “street
name”), please see the instructions in the following question.
Shares of the Company’s Common Stock can only be voted if the Shareholder is present in person or by Proxy at the Annual Meeting. To
ensure your representation at the Annual Meeting, the Board recommends that you vote by Proxy even if you plan to attend the Annual
Meeting. You can always change your vote at the meeting if you are a Shareholder of record.
Voting instructions are included in this material. Shares of the Company’s Common Stock represented by properly executed Proxies will
be voted by the individuals named on the Proxy, selected by the Board of Directors, in accordance with the Shareholder’s instructions.
Where properly executed Proxies are returned with no specific instructions as to how to vote at the Annual Meeting, the persons named in
the Proxy will vote the shares “For” the election of each of the sixteen nominees named in Proposal 1 and “For” Proposal 2. If any other
matters are properly presented at the Annual Meeting for action, the persons named in the enclosed Proxy and acting thereunder will have
the discretion to vote on these matters in accordance with their best judgment.
As a Shareholder of the Company’s Common Stock, you may receive more than one Proxy card depending on how your shares are held.
For example, you may hold some of your shares individually, some jointly with your spouse and some in trust for your children. In this
example, you will receive three separate Proxy cards to vote.
What if My Shares Are Held in Street Name?
If your shares are held in street name, you will need proof of ownership to be admitted to the Annual Meeting. A recent brokerage statement
or a letter from the record holder of your shares are examples of proof of ownership. If you want to vote your shares of the Company’s
Common Stock held in street name in person at the Annual Meeting, you will have to get a written Proxy in your name from the broker,
bank or other nominee who holds your shares.
5
Who Will Pay the Expenses of the Proxy Solicitation?
The solicitation of Proxies on behalf of the Board of Directors is conducted by Directors, officers and regular employees of the Company
and its wholly owned subsidiary, The Bank of South Carolina (the “Bank”), at no additional compensation over regular salaries. All proxy
solicitation expenses, including the cost of printing and mailing of all Proxy materials, will be paid by the Company. Brokers and others
involved in handling and forwarding the Proxy materials to their customers having beneficial interests in the stock of the Company
registered in the names of Nominees will be reimbursed for their reasonable expenses in doing so.
How Many Shares Must Be Present to Hold the Meeting?
A quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person or by Proxy, of at least
a majority of the shares of the Company’s Common Stock entitled to vote at the Annual Meeting as of the record date shall constitute a
quorum. Proxies received but marked as abstentions or broker non-votes (as defined below) will be included in the calculation of the number
of shares considered to be present at the meeting.
What if a Quorum is Not Present at the Meeting?
If a quorum is not present at the scheduled time of the meeting, a majority of the Shareholders present or represented by Proxy may
adjourn the meeting until a quorum is present. The time and place of the adjourned meeting will be announced at the time the adjournment
is taken, and no other notice will be given unless the meeting is adjourned for 30 days or more. An adjournment will have no effect on the
business that may be conducted at the meeting.
Will Cumulative Voting Apply for the Election of Directors?
Yes. Per Article II, Section 13 of the Company’s by-laws, every Shareholder entitled to vote on the election of directors has the right to
vote the number of shares owned for as many persons as there are directors to be elected, or to cumulate their votes by giving one
candidate a number of votes equal to the number of directors multiplied by the number of shares owned by the shareholder, or by
distributing such votes among any number of candidates. A shareholder who intends to cumulate their votes shall either (1) give written
notice of such intention to the President or other officer of the Company at least 48 hours before the Annual Meeting, or (2) announce their
intention at the Annual Meeting before the voting for directors begins.
How will votes be counted?
“Withhold” votes, abstentions, and broker non-votes are counted as present or represented for purposes of determining the presence of
absence of a quorum for the Annual Meeting. A broker non-vote occurs when a nominee holding shares in street name for a beneficial owner
votes on one proposal but does not vote on another proposal because, with respect to such other proposal, the nominee does not have
discretionary voting power and has not received voting instructions from the beneficial owner.
Under New York Stock Exchange (“NYSE”) rules, Proposal 2, the ratification of the appointment of Elliott Davis, LLC, as the Company’s
independent auditors for 2025, is considered a “routine” matter, which means that brokerage firms may vote in their discretion on this
proposal on behalf of clients who have not furnished voting instructions. However, Proposal 1, the election of directors, is a non-routine
matter under the NYSE rules, which means that brokerage firms that have not received voting instructions from their clients on this matter
may not vote on this proposal.
With respect to Proposal 1, the election of directors, only “for” and “withhold” votes may be cast. Broker non-votes are not considered votes
cast on Proposal 1 and will therefore have no effect on the election of director nominees. “Withhold” votes will also generally have no
effect on the election of director nominees.
With respect to Proposal 2, you may vote “for” or “against” this proposal or you may “abstain” from voting on this proposal. Abstentions
will be counted as votes present or represented and entitled to vote on this proposal and will therefore have the same effect as a vote
“against” this proposal. Because Proposal 2 is considered a “routine” matter, we do not expect any broker non-votes with respect to this
proposal.
6
What vote is required to approve each of the proposals?
The following sets forth the voting requirement to approve each of the proposals:
Proposal 1, Election of Directors. Directors are elected by a plurality of votes cast (meaning that the 16 director nominees who receive the
highest number of votes cast “for” their election will be elected as directors).
Proposal 2, Ratification of the Appointment of Independent Auditors. Ratification of the appointment of Elliott Davis, LLC, to serve as
the Company’s independent auditors for 2025 requires the affirmative vote of the holders of a majority of shares present in person or
represented by proxy and entitled to vote on the proposal (meaning that of the shares represented at the Annual Meeting and entitled to
vote, a majority of them must be voted “for” the proposal for it to be approved).
Other Items. Approval of any other matters requires the affirmative vote of the holders of a majority of shares present in person or
represented by proxy and entitled to vote on the item (meaning that of the shares represented at the Annual Meeting and entitled to vote,
a majority of them must be voted “for” the item for it to be approved).
How do I revoke my proxy or change my vote?
You may revoke your proxy or change your vote at any time before the vote is taken at the Annual Meeting. If you are a Shareholder of
record, you may revoke your proxy or change your vote by (1) submitting a written notice of revocation to the Company’s President;
(2) delivering a proxy bearing a later date via the internet, by telephone, or by mail until the applicable deadline for each method; or (3)
attending the Annual Meeting and voting in person. Attending the Annual Meeting will not cause your previously granted proxy to be
revoked unless you vote during the meeting. For all methods of voting, the last vote cast will supersede all previous votes. If you hold your
shares in street name and you have instructed your broker, bank, trustee, or other nominee to vote your shares, you may revoke or change
your voting instructions by following the specific instructions provided to you by your broker, bank, trustee, or other nominee.
PROPOSAL 1: ELECTION OF DIRECTORS:
Our by-laws provide for a Board of Directors consisting of not fewer than 15 individuals and not more than 25 individuals. The number
of Directors may be increased or decreased from time to time by majority vote of the Board of Directors or the Shareholders.
The Board of Directors proposes that the sixteen nominees described below be elected for a new term expiring at the 2026 Annual Meeting
of Shareholders or until their respective successors are duly elected and qualified. Each nominee has agreed to serve if elected. If any
named nominee is unable to serve, the Board of Directors, upon the recommendation of the Nominating Committee, may select different
nominees for election as Directors.
The name of each Nominee designated by the Board of Directors of the Company for election as a Director of the Company and certain
information provided by such Nominee to the Company are set forth in the table below.
The Board of Directors believes that it is necessary for each one of our Directors to possess many qualities and skills to fulfill his or
her role successfully. When searching for new candidates, the Nominating Committee considers the evolving needs of the Board of
Directors and searches for candidates that fill any current or anticipated future gap. The Board of Directors also believes that all Directors
must possess a considerable amount of business management (such as experience as a Chief Executive Officer or Chief Financial Officer)
and educational experience. The Nominating Committee first considers management experience and then considers issues of judgment,
background, community involvement, conflicts of interest, integrity, ethics, and commitment to the goal of maximizing Shareholder value
when considering Director candidates. The Nominating Committee focuses on issues of diversity, such as diversity in gender, race and
national origin, education, professional experience and differences in viewpoints and skills. The Nominating Committee does not have a
formal policy with respect to diversity; however, the Board of Directors and the Nominating Committee believe it is essential that the
Directors represent diverse viewpoints. In considering candidates for the Board of Directors, the Nominating Committee considers the
entirety of each candidate’s credentials in the context of these standards. With respect to the nomination of continuing Directors for re-
election, the individual’s contributions to the Board are also considered.
Certain information with respect to each of the nominees is set forth below, including his or her principal occupation, qualifications, and
directorships during the past five years. The Nominating Committee, whose goal is to assemble a Board that operates cohesively, encourages
candid communication and discussion, and focuses on activities that help us maximize Shareholder value, recommends each of the
nominees to the Board of Directors. The Nominating Committee also looks at the individual strengths of Directors, his or her ability to
contribute to the Board, and whether his or her skills and experience complement those of the other Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR ALL” OF THE NOMINEES.
7
Executive Officer Directors
Susanne K. Boyd
Age 48
First elected to the Board 2018
Ms. Boyd has been with the Bank since 1997 and has served as the Courier Teller, Check Card Specialist, Electronic Banking Officer,
Information Security Officer, Assistant Vice President, Vice President, and Senior Vice President of Operations and Technology. She
has served as the Chief Operating Officer for the Bank and the Corporation since November 2015 and was named Executive Vice
President for the Bank and Corporation in December 2017. Ms. Boyd is a graduate of College of Charleston, South Carolina Bankers
School and Georgia Bankers Association Southern Operations and Technology School. She has received training in Information
Security, Administration of the Bank’s core system, Internet Banking Compliance and Cyber Crime and is a Certified Regulatory
Vendor Program Manager. Ms. Boyd has served on the South Carolina Bankers Association Operations Committee and has been a
member of the InfraGard South Carolina Chapter. Ms. Boyd serves as an Administrator and Trustee of the Bank of South Carolina Employee
Stock Ownership Plan and Trust. Ms. Boyd also serves on the Executive/Long-Range Planning and Asset Liability/Investment
Committees.
The Nominating Committee recommends the re-election of Ms. Boyd given her broad and unique experience in banking, in-depth
knowledge of the technology and its risks related to banks, and continued commitment to the success of the Company.
Hugh C. Lane, Jr.
Age 76
First elected to the Board 1995
Mr. Lane, brother of Charles G. Lane, organized the Bank in 1986, where he served as President/Chief Executive Officer of the Bank
from 1986 until 2012. He served as Chairman of the Board of Directors of the Bank since its organization in 1986, and Chairman of
the Board of Directors of the Company since its organization in 1995. Mr. Lane was born in Charleston, SC. He earned a BA in
economics from the University of Pennsylvania. Mr. Lane began his banking career at Citizens and Southern National Bank of Georgia
in Atlanta. His banking career also included working in the Bond, Leasing, and International Departments at the Chemical Bank in
New York; City Executive of Citizens and Southern National Bank in Sumter South Carolina; and Executive Vice President, heading
the Citizens and Southern National Bank’s Southern Region. Mr. Lane also served on the Board of Directors of Citizens and Southern
National Bank of South Carolina for 14 years. Mr. Lane formerly served as an Administrator and Trustee of the Bank of South Carolina
Employee Stock Ownership Plan and Trust. In addition to his responsibilities at The Bank of South Carolina, Mr. Lane is the former
Chairman of the Charleston County Conservation Board, former Chairman of the Baruch Foundation, and is the former Treasurer of
the Board of Trustees of Ashley Hall School. He has been the recipient of Honorary Doctorates from Charleston Southern University,
The Citadel, and Wofford College. He has also received the “Distinguished Citizen Award” from the Wofford College National
Alumni Council, the Avery Citizenship Award for outstanding community service, the Joseph P. Riley Leadership Award, and the
Order of the Palmetto presented by the Governor of South Carolina. In 2015, Mr. Lane was inducted into the South Carolina Business
Hall of Fame. Mr. Lane serves on the Executive/Long-Range Planning, Asset Liability/Investment, Community Reinvestment Act,
and Loan Committees.
The Nominating Committee recommends the re-election of Mr. Lane based on his unique and valuable perspective relevant to our
Bank’s business and financial performance and strong commitment to the local community. In addition, the Committee considered
his current contribution to the Board and his continued devotion to serving the Shareholders of the Company.
Douglas H. Sass
Age 67
First Elected to the Board 2013
Mr. Sass joined the Bank in January 1994. He has over forty years of experience in banking and oversaw the implementation of the
Bank’s Real Estate Appraisal Review Program. He has served in various officer level positions at the Bank, including Security Officer,
Appraisal Officer, and CRA Officer before becoming Executive Vice President and Senior Lender in April 2012. Additionally, he
oversees the Bank’s Loan Department and Credit Department. Mr. Sass serves as an Administrator and Trustee of the Bank of South
Carolina Employee Stock Ownership Plan and Trust. Mr. Sass is a native of Charleston and a graduate of The Citadel with a degree in
Business Administration. He is a graduate of the South Carolina Bankers School and The Graduate School of Bank Management at
the University of Virginia. Mr. Sass previously served as President of The Charleston Museum Board of Trustees, was on the Board
of the Regents Tri-County Family Ministries, and is active in various civic organizations. Mr. Sass serves on the Executive/Long-
Range Planning, Asset Liability/Investment, Community Reinvestment Act, and Loan Committees.
Based on Mr. Sass’s experience in banking, appraising, his robust background in commercial lending and business development, and
his continued devotion to the success of the Company, the Nominating Committee recommends his re-election.
8
Eugene H. Walpole, IV
Age 39
First elected to the Board 2018
Mr. Walpole joined the Bank in September 2012. Since that time, he has served as an Assistant Vice President, Vice President, and
Senior Vice President in the role of Risk Management Officer. In March 2016, Mr. Walpole was named Chief Financial Officer of the
Bank and Corporation and, in December 2017, was named Executive Vice President of the Bank and Corporation. On October 1,
2023, Mr. Walpole assumed the role of President & Chief Executive Officer of the Bank and Corporation. Mr. Walpole also serves
as Administrator and Trustee of the Bank of South Carolina Employee Stock Ownership Plan and Trust. Prior to joining the Bank,
Mr. Walpole spent four years performing financial statement audits, regulatory filing reviews, and Sarbanes-Oxley 404 compliance
testing for publicly traded and privately held financial institutions. Mr. Walpole is a Charleston native and graduate of Presbyterian
College, University of South Carolina, and South Carolina Bankers School. He holds the designations of Certified Public Accountant,
Certified Financial Services Auditor, and a Certification in Risk Management Assurance. Mr. Walpole previously served on the Board of
the Lowcountry Land Trust and currently serves on the Boards of the Coastal Conservation Association of South Carolina, the Preservation
Society of Charleston, and the Community Bankers Division of the South Carolina Bankers Association. Mr. Walpole serves on the
Executive/Long-Range Planning, Asset Liability/Investment, Community Reinvestment Act, and Loan Committees.
The Nominating Committee recommends the re-election of Mr. Walpole given his experience in banking, in-depth knowledge of the
financials of the Company, commitment to the local community, and continued devotion to the success of the Company.
Non-Employee Directors
David W. Bunch
Age 74
First elected to the Board 2009
Mr. Bunch has been a member of the Board of Directors of the Bank and the Company since 2009. He is a native of Charleston, South
Carolina and graduated from Clemson University with a BS in Animal Science. He has been employed by X O Bunch Organizations
since graduating from Clemson University in 1973, currently serving as Chairman & CEO, Bunch Truck Group; Managing Member,
Bunch Business Services, LLC; Chairman & CEO, Bunch Realty Co. Inc.; Managing Member, Wando Properties, LLC; Managing
Member XOB, LLC; Managing Member, Charleston Campground & Plantation Acres, LLC; and Managing Member, Mini-
Warehouses of Goose Creek, LLC. Mr. Bunch is active on the Board of the South Carolina Automobile Dealers Association, serving
as Vice President. In addition to serving on the Board of Directors of the Bank and Company, Mr. Bunch serves as Chairman of the
Loan and Community Reinvestment Act Committees.
The Nominating Committee recommends the re-election of Mr. Bunch based on his valuable knowledge of business and his
participation on the Loan and Community Reinvestment Act Committees.
Graham M. Eubank, Jr.
Age 57
First elected to the Board 2005
Mr. Eubank has been a member of the Board of Directors of the Bank and the Company since 2005. He was born in Fayetteville,
North Carolina and raised in Charleston, South Carolina. He received a BS in Management from Clemson University. He is also a
graduate of the National Automobile Dealers Association Dealer Candidate Academy. In 1992, Mr. Eubank began working with his
family’s business, Palmetto Ford, Inc., where he has held various positions including New Vehicle Sales Manager, Used Vehicle Sales
Manager and Parts and Service Director. Currently, Mr. Eubank is President and CEO of the Palmetto Automotive Group, which is
comprised of Palmetto Ford, Palmetto Lincoln, Palmetto Bronco, and Palmetto Boat Sales. Mr. Eubank serves as the Lead Director
of the Bank and Company and has held this position since 2024. Mr. Eubank serves on the Nominating Committee, Executive/Long-
Range Planning Committee, and is Chairman of the Compensation Committee.
As a local business owner, Mr. Eubank provides an important perspective on economic issues relevant to our community and
company, which is why the Nominating Committee recommends Mr. Eubank for re-election.
Fleetwood S. Hassell
Age 65
First elected to the Board 2006
Mr. Hassell had been with Bank since its organization in 1986 and retired in 2023. During his career of over forty years in banking,
Mr. Hassell held the positions of Assistant Vice President, Vice President, Senior Vice President, Executive Vice President, Senior
Lender, and President/Chief Executive Officer. Born and raised in Charleston, SC, Mr. Hassell earned a BS and MBA from the
University of South Carolina School of Business. He was elected to the Board of Directors of the Bank and the Company in 2006.
Mr. Hassell serves as a Trustee of the Bank of South Carolina Employee Stock Ownership Plan and Trust. Mr. Hassell previously
served on the boards of the South Carolina State Board of Financial Institutions, the Association for the Blind and Visually Impaired,
Trident United Way (Past Chairman), the College of Charleston Foundation, and the South Carolina Bankers Association. Mr. Hassell
serves on the Executive/Long-Range Planning, Asset Liability/Investment, Community Reinvestment Act, and Loan Committees.
9
Given Mr. Hassell’s experience in banking, his strong background in commercial lending and business development, and his current
contributions to the Board of Directors and its committees, the Nominating Committee recommends his re-election.
Glen B. Haynes, DVM
Age 70
First elected to the Board 2007
Dr. Haynes has been a member of the Board of Directors of the Bank and the Company since 2007. He was born in Charlottesville,
Virginia and has lived in Summerville, South Carolina for 40 years. He graduated from Virginia Tech with a BS in Biology. He received
a DVM from the University of Georgia. In addition to serving on the Board of Directors of the Bank and the Company, Dr. Haynes
has served as President of the Summerville Rotary Club, President of Frances Willis SPCA, Chairman of the South Carolina Board
of Veterinary Medical Examiners, and President of Trident Veterinary Medical Association. Currently, Dr. Haynes is Chairman of
the Frances Willis SPCA Endowment Board and is a construction volunteer for Habitat for Humanity. He and his therapy dog, Gracie,
also visit rehab and nursing homes. Dr. Haynes is a member of the American Veterinary Medical Association and a member of St.
Paul’s Anglican Church, where he has served on the vestry. Dr. Haynes serves on the Loan Committee, Community Reinvestment
Act Committee, and is Chairman of the Nominating Committee.
In recommending Dr. Haynes for re-election, the Nominating Committee considered this experience as well as his strong ties to the
Summerville community and his work ethic demonstrated in having run his own practice.
William L. Hiott, Jr.
Age 80
First elected to the Board 1995
Mr. Hiott was with the Bank from its organization in 1986 until his retirement in 2011. He held various positions including Executive
Vice President and Cashier of the Bank and Company. He has served on the Board of Directors of the Bank since its organization in
1986 and the Company since its organization in 1995. He received a BS in Accounting from Charleston Southern University and is a
graduate of the South Carolina Bankers School and the University of Wisconsin’s Bank Administration Graduate School. In addition
to serving on the Board of Directors of the Bank and Company, Mr. Hiott serves on the Executive/Long-Range Planning, Asset
Liability/Investment, and Compensation Committees.
The Nominating Committee recommends Mr. Hiott for re-election based on his experience in banking, in-depth knowledge of the
financials of the Company, strong commitment to the local community, and current contributions to the Board of Directors.
Richard W. Hutson, Jr.
Age 67
First elected to the Board 2005
Mr. Hutson has been a member of the Board of Directors of the Bank and Company since 2005. He received a BA from The University
of the South. Mr. Hutson is the Manager of William M. Means Insurance Company. Mr. Hutson has served on the Boards of the South
Carolina Historical Society and the Historic Charleston Foundation. He has served as President of the South Carolina Historical
Society. In addition to serving on the Board of Directors of the Bank and Company, Mr. Hutson serves on the Asset
Liability/Investment and Audit & Compliance Committees, and he is also Secretary of the Board.
The Nominating Committee recommends Mr. Hutson for re-election due to his business experience, commitment to the Bank and
Company, and strong ties to the Charleston community.
Charles G. Lane
Age 70
First elected to the Board 1995
Mr. Lane is the brother of Hugh C. Lane, Jr. and has been a member of the Board of Directors of the Bank since its organization in
1986, and a member of the Board of Directors of the Company since its organization in 1995. He has devoted over thirty years to
ensuring the success of the Company. He is a graduate of Clemson University. Mr. Lane is a Managing Member of Holcombe, Fair and
Lane, LLC - a commercial real estate company. He serves on the Executive/Long-Range Planning, Asset Liability/Investment, Loan,
and Community Reinvestment Act Committees.
Mr. Lane’s expertise in the real estate market and the local community has been valuable to the Board in its decision-making and is
why the Nominating Committee recommends his re-election.
Josette R. E. Pelzer, PhD, CPA
Age 41
First elected to the Board 2022
Josette Renee Edwards Pelzer is an associate professor in the department of Accounting and Business Law at the College of Charleston
(SC). She currently teaches introductory accounting, intermediate accounting, and an audit course in the graduate program. Dr. Pelzer
has five years of audit experience with a global CPA firm and eight years in academia, during which time she has published several
articles on auditor reporting and audit education. She is a member of the South Carolina Association of CPAs. Dr. Pelzer is a native
Charlestonian and earned both a BS in Business Administration and a Master of Accountancy from the University of South Carolina,
as well as a PhD in Accounting from Florida State University. In addition to serving on the Board of Directors of the Bank and the
10
Company, Dr. Pelzer is Chairman of the Audit & Compliance Committee.
The Nominating Committee recommends Dr. Pelzer for re-election due to her extensive background in accounting, financial expertise,
and unique perspective relevant to financial performance.
Karen J. Phillips
Age 63
First elected to the Board 2017
Mrs. Phillips received a BA in Political Science from The University of the South and an MBA in Finance from The University of
South Carolina. She is a Certified Financial Planner and is President of Atlantic Coast Asset Management, Inc., a financial
management firm. She is a past member of the Board of Directors of Kanuga Conferences, Inc., past Chairman of the Board of
Trustees of Ashley Hall School, where she served as a Trustee Emerita, and previous board member of Life Resources, Inc. In addition
to serving on the Board of Directors of the Bank and Company, Mrs. Phillips serves on the Audit & Compliance, Executive/Long-
Range Planning, Nominating, Loan, and Community Reinvestment Act Committees.
The Nominating Committee recommends Mrs. Phillips for re-election due to her leadership within the community, financial expertise,
and experience running a business.
Malcolm M. Rhodes, MD
Age 65
First elected to the Board 2005
Dr. Rhodes has been a member of the Board of Directors of the Bank and Company since 2005. He received a BA from Duke
University and a MD from the Medical University of South Carolina. He is a Fellow of the American Board of Pediatrics and former
partner at Parkwood Pediatric Group. Dr. Rhodes served on the clinical faculty at MUSC and Bon-Secours St. Francis Hospitals. In
addition to serving on the Board of Directors of the Bank and the Company, Dr. Rhodes serves on the Asset Liability/Investment and
Audit & Compliance Committees. He also represents South Carolina on the Atlantic States Marine Fisheries Commission and serves
on the boards of the Carolina Gold Rice Foundation and the TriCounty Forestry Association. He has served previously on the boards
of Charleston Stage Company, Coastal Conservation Association, and Ashley Hall School.
The Nominating Committee recommends the re-election of Dr. Rhodes based on his knowledge of business, including running a
medical practice, involvement with several local hospitals, and commitment to the success of the Company.
Sheryl G. Sharry
Age 70
First elected to the Board 2010
Mrs. Sharry was with the Bank since its organization in 1986 until her retirement in 2016. She held various positions in the Bank,
including but not limited to Assistant Vice President – Operations Department, Vice President – Operations & Technology, Senior
Vice President – Operations & Technology, and Chief Financial Officer/Executive Vice President. Mrs. Sharry became a member of
the Board of Directors of the Bank and Company in 2010. She is a graduate of the College of Charleston, South Carolina Bankers
School, and the School of Bank Investments and Financial Management. In addition to serving on the Board of Directors of the Bank
and the Company, Mrs. Sharry serves on the Executive/Long-Range Planning Committee and is Chairman of the Asset
Liability/Investment Committee.
The Nominating Committee recommends Mrs. Sharry for re-election based on her strong background in operations and technology of
the Bank, experience in banking, valuable knowledge of financial reporting and performance of the Company, and continued devotion
to the success of the Company.
Thaddeus T. Shuler
Age 45
First elected to the Board 2023
Mr. Shuler is a Charleston native. After receiving a BS in Industrial Management and a minor in German at Clemson University, he
worked overseas for a large multi-national corporation. When he returned home to Charleston, he began working for his family business,
Southern Lumber and Millwork Corporation, where he assumed the role of President and CEO in 2016. Mr. Shuler has served on the
Board of the Building Materials Supplier Association for over 10 years, including as Chairman in 2019. He also served on the Clemson
University Wood Utilization Department Board. He currently serves on the Lumbermen Merchandising Corporation Education
Committee. In addition to serving on the Board of Directors of the Bank and the Company, Mr. Shuler serves on the Compensation and
Audit & Compliance Committees.
The Nominating Committee recommends Mr. Shuler for re-election based on his valuable knowledge of business and local industry,
as well as his strong ties to the community.
11
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth, as of February 27, 2025, information regarding share ownership of:
•
those persons or entities (or groups of affiliated persons or entities) known by management to beneficially own more
than five percent of our common stock;
•
each employee Director; and
•
each non-employee Director
To the extent known to the Board of Directors, no other person or entity, other than those set forth below, beneficially owned more than
five percent of the outstanding shares our Common Stock as of the close of business on February 27, 2025.
The tables below include shares owned by spouses, other immediate family members in trust, shares held in retirement accounts or
funds for the benefit of the named individuals, and other forms of ownership over which shares the persons named in the table may
possess voting and/or investment power.
The table below shows the security ownership of certain owners known to us to beneficially own more than five percent of any class
of our securities, each employee Director and each non-employee Director.
Title of class
Name and Address of Beneficial Owner
Amount and Nature of
Beneficial Ownership
Percent of Class
Common Stock…………………
Hugh C. Lane, Jr.(1)
256 Meeting Street
Charleston, South Carolina 29401
744,954(2)
13.72%
Common Stock…………………
The Bank of South Carolina
Employee Stock Ownership
Plan and Trust (“the ESOP”)
256 Meeting Street
Charleston, South Carolina 29401
393,181(3)
7.24%
Common Stock…………………
Charles G. Lane
256 Meeting Street
Charleston, South Carolina 29401
299,094(4)
5.51%
The table below shows the security ownership of management and directors.
Title of class
Name of Beneficial Owner
Amount and Nature of
Beneficial Ownership
Percent of Class
Executive Officers/Directors
Common Stock …………………
Susanne K. Boyd(3)
15,678 (4)
*
Common Stock …………………
Hugh C. Lane, Jr.(1)
744,954 (2)
13.72 %
Common Stock …………………
Douglas H. Sass(3)
47,816 (4)
*
Common Stock …………………
Eugene H. Walpole, IV(3)
21,204 (4)
*
Current Directors
Common Stock …………………
David W. Bunch
3,952
*
Common Stock …………………
Graham M. Eubank, Jr.
5,191
*
Common Stock …………………
Elizabeth M. Hagood
421
*
Common Stock …………………
Fleetwood S. Hassell(3)
118,511 (4)
2.18 %
Common Stock …………………
Glen B. Haynes, DVM
14,478
*
Common Stock …………………
William L. Hiott, Jr.
212,949 (4)
3.92 %
Common Stock …………………
Richard W. Hutson, Jr.
10,691
*
Common Stock …………………
Charles G. Lane
299,094 (4)
5.51 %
Common Stock …………………
Josette R. E. Pelzer, PhD, CPA
122
*
Common Stock …………………
Karen J. Phillips
11,696 (4)
*
Common Stock …………………
Malcolm M. Rhodes, MD
6,918
*
Common Stock …………………
Sheryl G. Sharry
99,918
1.84 %
Common Stock …………………
Thaddeus T. Shuler
101
*
Total …………………
1,613,695
29.72%
* Represents less than 1%
12
(1)
To the extent known to the Board, the emancipated children and grandchildren of Hugh C. Lane, Jr. have beneficial ownership of 430,574 shares, or 7.93%,
of the outstanding shares. Hugh C. Lane, Jr., disclaims any beneficial interest in those shares in which other members of his family have a beneficial interest
other than those shares his wife owns and those for which he serves as Trustee or she serves as custodian (as more fully described in the following footnote).
(2)
To the extent known to the Board, Hugh C. Lane, Jr., Chairman of the Board of both the Bank and the Company, owns and has sole voting and investment
power with respect to 231,245 shares; as a Trustee for the Mills Bee Lane Memorial Foundation, he has shared voting and investment power with respect to
13,084 shares; he is indirectly beneficial owner of 16,986 shares owned by his wife and 53,065 shares owned by the ESOP, in which he has a vested interest.
Hugh C. Lane, Jr. disclaims any beneficial interest in the 430,574 shares owned by extended family members. Hugh C. Lane, Jr., has had beneficial ownership
of more than 5% of our common stock since October 23, 1986.
(3)
The Trustees of the Employee Stock Ownership Plan (“ESOP’), Fleetwood S. Hassell, Director of the Bank and Company; Eugene H. Walpole, IV,
President/Chief Executive Officer and Director of the Bank and Company; Douglas H. Sass, Senior Lender/Executive Vice President and Director of the Bank
and Company; and Susanne K. Boyd, Chief Operating Officer/Executive Vice President and Director of the Bank and Company disclaim beneficial ownership
of the 393,181 shares owned by the ESOP with all shares allocated to members of the Plan each of whom under the terms of the Plan has the right to direct the
Trustees as to the manner in which voting rights are to be exercised.
(4)
To the extent known to the Board of Directors, each of the following Directors (each of whom directly owns and has sole voting and investment power of all
shares beneficially owned by him or her except as set forth in this footnote) indirectly owns the following number of shares: Fleetwood S. Hassell – an
aggregate of 49,477 shares owned by his wife, held by him as a co-Trustee with Charles G. Lane for the children of Hugh C. Lane, Jr., and shares owned by
the ESOP in which he has a vested interest; Douglas H. Sass – an aggregate of 26,787 shares owned by the ESOP in which he has a vested interest and owned
by his wife; William L. Hiott, Jr. – 12,312 shares owned by his wife; Charles G. Lane – an aggregate of 74,367 shares owned by his wife, held by him as a
co-Trustee with Fleetwood S. Hassell for the children of Hugh C. Lane, Jr., held by him as a Trustee of Mills Bee Lane Memorial Foundation, and held by
him as a Trustee of Holcombe Trust; Karen J. Phillips – 6,721 shares owned by her husband; Susanne K. Boyd – an aggregate of 11,813 shares owned by
her children and shares owned by the ESOP in which she has a vested interest; Eugene H. Walpole, IV – 9,372 shares owned by the ESOP in which he has a
vested interest. All such indirectly owned shares are included in the totals of the number of shares set forth in the above table and beneficially owned by the
Directors.
13
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE MATTERS
Introduction
The Company’s Board of Directors conducts its business through Board meetings and through its committees. Hugh C. Lane,
Jr. presently serves as Chairman of the Board of Directors. The Board of Directors of the Company held six meetings (including
all regularly scheduled and special meetings) during the year ended December 31, 2024. With the exception of Elizabeth M.
Hagood, Sheryl G. Sharry and Thaddeus T. Shuler, no Directors attended fewer than 75% of the aggregate of (i) the total number
of meetings of the Board of Directors and (ii) the total number of meetings held by all committees of the Board of Directors on
which they served. The Company does not have a policy with regard to Directors’ attendance at annual meetings of shareholders.
However, Directors are expected to attend the annual meeting of shareholders absent a valid reason for not doing so.
Director Independence
The Board of Directors is comprised of a majority of non-employee Directors. All members of the Audit & Compliance
Committee, the Compensation Committee, and the Nominating Committee are non-employees. The members of these
committees do not have any relationship to the Bank or Company that may interfere with the exercise of their independence from
management. None of the members of the Nominating Committee are current or former officers or employees of the Bank or
Company. One member of the Compensation Committee, William L. Hiott, Jr., retired from the Bank in April 2010. Three
members of the Executive/Long-Range Planning Committee, William L. Hiott, Jr., Sheryl G. Sharry, and Fleetwood S. Hassell
retired from the Bank in April 2010, April 2016, and September 2023, respectively. All members of the Board of Directors are
non-employees except Hugh C. Lane, Jr., Chairman of the Board, Douglas H. Sass, Senior Lender/Executive Vice President,
Susanne K. Boyd, Chief Operating Officer/Executive Vice President, and Eugene H. Walpole, IV, President/Chief Executive
Officer.
Board Leadership Structure
The Board of Directors currently separates the roles of Chairman of the Board and Chief Executive Officer. The Board of
Directors believes that Hugh C. Lane, Jr., is the best person to serve as Chairman because he is the Director most familiar with
our business and industry, and most capable of effectively identifying strategic priorities and leading the discussion and
execution of strategy.
Non-employee Directors and management have different perspectives and roles in strategy development. Our non-employee
Directors bring experience, oversight and expertise from outside the Company and industry, while Hugh C. Lane, Jr. brings
Company-specific experience and expertise. The Board of Directors believes that the combined experience as Chairman and
past President/Chief Executive Officer promotes strategic development and executions, and facilitates information flow between
management and the Board of Directors which are essential to effective governance.
One of the key responsibilities of the Board of Directors is to develop strategic direction and hold management accountable for
the execution of strategy once it is developed. The Board believes the combined role of the Chairman and a non-employee Lead
Director, having the duties described below, is in the best interest of Shareholders, as it provides the appropriate balance between
strategy development and independent oversight of management.
Lead Director
The Board of Directors elected Graham M. Eubank, Jr., a non-employee director, to serve as the Lead Director of all meetings
of the non-management Directors held in executive session. Mr. Eubank has held this position since September 26, 2024.
Risk Management
The Board of Directors has an active role, as a whole and at the committee level, in overseeing the management of our risks. The
Board of Directors regularly reviews information regarding our credit, liquidity, and operations, as well as the risks associated
with each. The Audit & Compliance Committee oversees the management of financial risks. The Nominating Committee
manages risks associated with the independence of the Board of Directors and potential conflicts of interest. The Board of
Directors monitors financial and independence risks and oversees the management of such risks through committee reports. In
addition, the Audit & Compliance Officer oversees internal controls.
14
Committees and Committee Charters
The Board of Directors of the Company has four standing committees: the Executive/Long-Range Planning Committee, the
Compensation Committee, the Nominating Committee, and the Audit & Compliance Committee. Each committee serves in a
dual capacity as a committee of the Company and the Bank.
The following table lists the membership of the standing committees of the Board of Directors of the Company.
Director
Audit &
Compliance
Executive/
Long-Range
Planning
Compensation
Committee
Nominating
Committee
Susanne K. Boyd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
David W. Bunch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Graham M. Eubank, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
•
•
Elizabeth M. Hagood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
Fleetwood S. Hassell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
Glen B. Haynes, DVM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
William L. Hiott, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
•
Richard W. Hutson, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
Charles G. Lane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
Hugh C. Lane, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
Josette R. E. Pelzer, PhD, CPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
Karen J. Phillips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
•
•
Malcolm M. Rhodes, MD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
Douglas H. Sass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
Sheryl G. Sharry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
Thaddeus T. Shuler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
•
Eugene H. Walpole, IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
•
Audit & Compliance Committee
The Board of Directors appoints and approves the members of the Audit & Compliance Committee annually. Under the terms
of its Charter, the Audit & Compliance Committee is to be comprised of not less than four members of the Board or such larger
number as approved by the Board of Directors. During 2024, the Audit & Compliance Committee held four meetings. Members
are considered independent of the Company under applicable rules and regulations.
The Audit & Compliance Committee operates under a written Charter adopted by the Board of Directors, which is renewed and
reassessed for adequacy on an annual basis. The Charter outlines the Committee’s responsibilities for overseeing the entire audit
function and appraising the effectiveness of internal and external audit efforts including reviewing our financial statements,
evaluating internal accounting controls, reviewing reports of regulatory authorities, and determining that all examinations
required by law are performed. The Board of Directors may amend the Charter at any time.
The Audit & Compliance Committee recommends to the Board of Directors the appointment of the independent auditors for
the next fiscal year, reviews and approves the auditors’ audit plan, and reviews with the independent auditors the results of the
audit and management’s response.
Executive/Long-Range Planning Committee
The Executive/Long-Range Planning Committee consists of our President/Chief Executive Officer, Chairman, Senior Lender/
Executive Vice President, Chief Operating Officer/Executive Vice President, and six designated non-employee Directors.
During 2024, the Executive/Long-Range Planning Committee held one meeting. In addition to long-range and strategic planning,
the principal function of the Committee is to exercise all authority of the Board of Directors in the management and affairs of
the Company and the Bank. In addition, the Committee acts on behalf of the entire Board of Directors between the regular
Board meetings.
Compensation Committee
The Compensation Committee consists of three non-employee Directors appointed by the Board of Directors to assist the Board
in fulfilling its oversight responsibilities. The Committee also functions as the Compensation Committee of the Bank. The duties
and responsibilities of the Compensation Committee are as follows:
15
•
to review and approve compensation of the Executive Officers in light of our goals and objectives (Executive
Officers may not be present during voting or deliberations on their compensation);
•
to administer the 2021 Stock Incentive Plan for non-employee Directors;
•
to oversee regulatory compliance and risk management with respect to compensation matters;
•
to make regular reports to the Board of Directors; and
•
to perform any other duties or responsibilities expressly delegated to the Committee by the Board of Directors from
time to time.
The Compensation Committee has sole discretion to hire, retain, terminate and approve fees and other retention terms of
independent legal, accounting or other advisors (including compensation consultants) as it deems appropriate without
management or Board approval. The Committee met one time during 2024 and did not consult independent legal counsel or
compensation consultants. The Compensation Committee operates under a written Charter adopted by the Board of Directors,
which is reviewed and reassessed for adequacy on an annual basis.
Nominating Committee
The Nominating Committee consists of four non-employee Directors. The function of the Nominating Committee is to
recommend a slate of proposed Directors to the Board of Directors. The Nominating Committee operates under a written Charter
adopted by the Board of Directors, which is reassessed for adequacy on an annual basis. The Nominating Committee met once
during 2024.
Nominations, other than those made by the Nominating Committee, may be made in writing and delivered or mailed to the
President/Chief Executive Officer of the Company not less than 14 days or no more than 50 days prior to any meeting of
Shareholders calling for election of Directors; provided however, that if less than 21 days’ notice of the meeting is given to
Shareholders, such nomination shall be mailed or delivered to the President/Chief Executive Officer of the Company not later
than the close of business on the 7th day following the day on which the Notice of Meeting was mailed. Nominations not made
according to these procedures will be disregarded.
The Nominating Committee has a policy to consider any and all Director candidates recommended by Shareholders. The
Nominating Committee has adopted specific minimum qualifications which the Nominating Committee believes must be met
by a nominee for a position on our Board of Directors. The qualifications include:
•
nominee must be recognized as successful in such nominee’s business or community efforts;
•
have a recognized reputation for honesty and integrity;
•
have demonstrated a commitment to the community in which we operate;
•
have demonstrated in meetings with the Nominating Committee a commitment to the best interest of the
Company, its subsidiary Bank, and their officers, Directors, employees and Shareholders
The Nominating Committee’s process for identifying and evaluating nominees for Director, including nominees recommended
by Shareholders, is to investigate whether or not such nominee meets the specific minimum qualifications adopted as a policy
by the Committee through contacts the members have in their community. There are no differences in the manner in which the
Committee evaluates nominees for Director, regardless as to whether the nominee is recommended by a Committee member or
a Shareholder.
We do not utilize or pay a fee to any third party to evaluate nominees for Director.
Code of Business Conduct and Ethics
We expect all of our employees to conduct themselves honestly and ethically. Our Board of Directors has adopted a Code of
Ethics that applies to all employees. The Code of Ethics requires the officers, employees, and Directors to maintain the highest
standards of professional ethical conduct. The Code includes guidelines relating to the ethical handling of actual or potential
conflicts of interest, compliance with laws, accurate financial reporting and procedures for promoting compliance with, and
reporting violations of the Code.
16
Shareholder Communication with the Board of Directors
The Board of Directors has adopted a process by which Shareholders may communicate with them. Shareholders may send a
written communication to Eugene H. Walpole, IV, President/Chief Executive Officer, Bank of South Carolina Corporation, 256
Meeting Street, Charleston, South Carolina 29401, or email such communication to Eugene H. Walpole, IV, President/Chief
Executive Officer, at gwalpole@banksc.com. A Shareholder is free to address any communication to any Director at the address
of the Bank of South Carolina. Any communication from a Shareholder received by the President/Chief Executive Officer
shall be sent to all members of the Executive/Long-Range Planning Committee and, if any member of the Executive/Long-
Range Planning Committee so directs, will be sent to all members of the Board of Directors.
PROPOSAL 2: TO RATIFY THE APPOINTMENT OF ELLIOTT DAVIS, LLC AS THE COMPANY’S INDEPENDENT
AUDITORS FOR THE YEAR ENDED DECEMBER 31, 2025.
The Audit & Compliance Committee of the Board of Directors has appointed Elliott Davis, LLC as our independent auditors for
the year ended December 31, 2025, and that appointment is being submitted to Shareholders for ratification. The appointment
of Elliott Davis, LLC as our independent auditors was approved by the Audit & Compliance Committee of the Board of
Directors and ratified by the Shareholders at the 2024 Annual Shareholders’ Meeting. At the 2025 Annual Shareholders’
Meeting, the following resolution will be subject to ratification by a simple majority vote of shares represented at the meeting:
RESOLVED, that the selection of Elliott Davis, LLC as the independent auditors of Bank of South Carolina
Corporation (the “Company”) and its sole subsidiary, The Bank of South Carolina (the “Bank”), for the fiscal year
ending December 31, 2025, is hereby ratified.
If ratification is not achieved, the selection of an independent auditor will be reconsidered and made by the Board of Directors.
Even if selection is ratified, the Board of Directors reserves the right to, and in its discretion may, direct the appointment of any
other independent auditors at any time if the Board of Directors decides that such a change would be in the best interests of the
Company and our Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE
RATIFICATION OF THE APPOINTMENT OF ELLIOTT DAVIS, LLC AS THE COMPANY’S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2025.
OTHER MATTERS
We are not aware of any matters to come before the meeting that will require the vote of Shareholders other than those matters
indicated in the Notice of Meeting and this Proxy Statement.
However, if any other matter calling for Shareholder action should properly come before the Annual Meeting or any
adjournments thereof, those persons named as Proxies in the enclosed Proxy Form will vote thereon according to their best
judgment.
ANNUAL REPORT
The Annual Report for the fiscal year ended December 31, 2024 is mailed herewith to all Shareholders. Additional copies may
be obtained without charge by written request or by visiting https://www.otcmarkets.com.
If you and others who share your address own your shares in street name, your broker or other holder of record may be sending
one copy only of the annual report and proxy statement to your address. Known as “householding,” this practice reduces the
Company’s printing and postage costs. However, if you wish to receive a separate annual report or proxy statement in the future,
you should contact your broker or other holder of record. If you own your shares in street name and are receiving multiple
copies of our annual report and proxy statement, you can request householding by contacting your broker or other holder of
record.
1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
Bank of South Carolina Corporation (the “Company”) is a bank holding company headquartered in Charleston, South Carolina, with $557.2 million
in assets as of December 31, 2024 and net income of $6.7 million for the year ended December 31, 2024. The Company offers a broad range of
financial services through its wholly owned subsidiary, The Bank of South Carolina (the “Bank”). The Bank is a state-chartered commercial bank,
which operates principally in the Charleston, Dorchester, and Berkeley counties of South Carolina. The Bank’s original and current concept is to
be a full-service financial institution specializing in personal service, responsiveness, and attention to detail to foster long-standing relationships.
We derive most of our income from interest on loans and investment securities. The primary source of funding for making these loans and
purchasing investment securities is our interest-bearing and non-interest-bearing deposits. Consequently, one of the key measures of our success is
the amount of net interest income, or the difference between the income on our interest-earning assets, such as loans and investments, and the
expense on our interest-bearing liabilities, such as deposits. Another key measure is the spread between the yield we earn on these interest-earning
assets and the rate we pay on our interest-bearing liabilities.
A consequence of lending activities is that we may incur credit losses. The amount of such losses will vary depending upon the risk characteristics
of the loan portfolio as affected by economic conditions such as rising interest rates and the financial performance of borrowers. The reserve
for credit losses consists of the allowance for credit losses (the “allowance”) and a reserve for unfunded commitments (the “unfunded reserve”).
The allowance provides for probable and estimable losses inherent in our loan portfolio while the unfunded reserve provides for potential losses
related to unfunded lending commitments.
In addition to earning interest on loans and investment securities, we earn income through fees and other expenses we charge to the customer.
The various components of other income and other expenses are described in the following discussion. The discussion and analysis also identify
significant factors that have affected our financial position and operating results as of and for the year ended December 31, 2024 as compared to
December 31, 2023, and should be read in conjunction with the consolidated financial statements and the related notes included in this report.
LOANS
We focus our lending activities on small and middle market businesses, professionals, and individuals in our geographic market. At December
31, 2024, outstanding loans (including deferred loan fees of $319,979) totaled $364.1 million, which equaled 74.32% of total deposits and 65.35%
of total assets.
The following table presents our loan portfolio, excluding both mortgage loans to be sold and deferred loan fees, as of December 31, 2024,
compared to the prior four years.
(in thousands)
2024
2023
2022
2021
2020
Commercial
$
55,737 $
54,954 $
45,072 $
45,804 $
51,041
Commercial real estate construction
21,585
25,884
17,524
12,054
14,814
Commercial real estate other
173,258
170,774
172,897
165,719
146,188
Consumer real estate
109,712
91,592
91,637
71,307
71,836
Consumer other
3,797
3,787
3,852
3,769
4,481
Paycheck protection program
—
—
—
7,979
32,443
Total
$
364,089 $
346,991 $
330,982 $
306,632 $
320,803
During the year ended December 31, 2024, total loans increased $17.1 million or 4.93%. This increase is primarily due to growth in our consumer
and commercial real estate portfolios.
ALLOWANCE FOR CREDIT LOSSES
At December 31, 2024, the allowance for credit losses totaled $3.7 million or 1.01% of loans, unchanged from $3.7 million as of December 31,
2023. The adequacy of the allowance for credit losses (the “allowance”) is reviewed by Management and the Board of Directors on a quarterly
basis. For purposes of this analysis, adequacy is defined as a level sufficient to absorb estimated losses in the loan portfolio as of the balance sheet
date presented. To remain consistent with GAAP, the methodology employed for this analysis has been modified over the years to reflect the
economic environment and new accounting pronouncements. Our Credit Department also reviews this calculation on a quarterly basis. In addition,
an independent third party validates the allowance calculation on a periodic basis.
DEPOSITS
During the year ended December 31, 2024, deposits decreased $35.8 million or 6.81% to $489.9 million from $525.7 million as of December 31,
2023. Non-interest bearing deposits decreased $21.3 million to $160.7 million as of December 31, 2024, while interest-bearing deposits decreased
$14.5 million to $329.2 million as of December 31, 2024. The overall decline in deposits stems principally from increased deposit rates paid from
other sectors of the financial industry that continue to create intense competition.
The following table presents average deposits by category.
2024
2023
2022
(in thousands)
Average
Balance
Average Rate
Paid
Average
Balance
Average Rate
Paid
Average
Balance
Average Rate
Paid
Non-interest-bearing demand
$
172,130
N/A
$
202,745
N/A
$
243,110
N/A
Interest-bearing transaction
accounts
247,918
1.77%
257,104
1.65%
269,510
0.08%
Savings
52,565
0.83%
56,259
0.67%
65,817
0.06%
Time deposits
39,347
1.78%
36,848
0.71%
18,444
0.21%
$
511,960
$
552,956
$
596,881
The following table shows the contractual maturities of time deposits in denominations of $250,000 or more at December 31, 2024 and the amount of
time deposits in excess of FDIC insurance limits.
One Day
Less than
three
months
Three
months to
less than six
months
Six months to
less than one
year
One year to
less than
five years
Five years
or more
Total
(in thousands)
CD’s and other time deposits
less than $250,000
$
— $
2,685 $
1,902 $
2,889 $
2,147 $
— $
9,623
CD’s and other time deposits
$250,000 and over
—
9,256
19,012
1,566
13,265
—
43,099
Total
$
— $
11,941 $
20,914 $
4,455 $
15,412 $
— $
52,722
CD’s and other time deposits in
excess of FDIC insurance
limit
$
— $
8,506 $
17,014 $
564 $
12,265 $
—
38,349
CAPITAL RESOURCES
Our capital needs have been met to date through the $10.6 million in capital raised in our initial offering, the retention of earnings less dividends
paid, and the exercise of options to purchase stock. Total shareholders’ equity at December 31, 2024 was $52.3 million. The rate of asset growth
since our inception has not negatively impacted our capital base.
On July 2, 2013, the Federal Reserve Board approved the final rules implementing the Basel Committee on Banking Supervision’s (“BCBS”)
capital guidelines for U.S. banks (“Basel III”). Following the actions by the Federal Reserve, the FDIC also approved regulatory capital
requirements on July 9, 2013. The FDIC’s rule is identical in substance to the final rules issued by the Federal Reserve Bank.
The purpose of Basel III is to improve the quality and increase the quantity of capital for all banking organizations. The minimum requirements
for the quantity and quality of capital were increased. The rule includes a new common equity Tier 1 capital to risk- weighted assets ratio of 4.5%
and a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets. The rule also raised the minimum ratio of Tier 1 capital
to risk-weighted assets from 4% to 6% and requires a minimum leverage ratio of 4%. In addition, the rule implemented a strict eligibility
criterion for regulatory capital instruments and improved the methodology for calculating risk-weighted assets to enhance risk sensitivity.
On November 4, 2019, the federal banking agencies jointly issued a final rule on an optional, simplified measure of capital adequacy for qualifying
community banking organizations called the community bank leverage ratio (“CBLR”) framework effective on January 1, 2020. A qualifying
community banking organization is defined as having less than $10 billion in total consolidated assets, a leverage ratio greater than 9%, off-balance
sheet exposures of 25% or less of total consolidated assets, and trading assets and liabilities of 5% or less of total consolidated assets. Additionally,
the qualifying community banking institution must be a non-advanced approaches FDIC supervised institution. The final rule adopts Tier 1 capital
and existing leverage ratio into the CBLR framework. The Bank adopted this rule as of September 30, 2020 and is no longer subject to other capital
and leverage requirements. A CBLR bank meeting qualifying criterion is deemed to have met the “well capitalized” ratio requirements and be in
compliance with the generally applicable capital rule. The Bank’s CBLR as of December 31, 2024 was 11.08%. As of December 31, 2024, the
Company and the Bank were categorized as “well capitalized.” We believe, as of December 31, 2024, that the Company and the Bank meet all
capital adequacy requirements to which we are subject.
There are no current conditions or events that we are aware of that would change the Company’s or the Bank’s capital adequacy category.
COMPARISON OF THE YEAR ENDED DECEMBER 31, 2024 TO DECEMBER 31, 2023
Net income increased $1.2 million or 22.9% to $6.7 million, or basic and diluted income per share of $1.24 and $1.23, respectively, for the year ended
December 31, 2024 from $5.5 million or basic and diluted income per share of $0.99 and $0.98, respectively, for the year ended December 31,
2023. This increase was primarily due to an increase in net interest income, as well as higher service charges, fees, and mortgage banking income.
Our returns on average assets and average equity for the year ended December 31, 2024 were 1.14% and 13.55%, respectively, compared to 0.86%
and 12.90%, respectively, for the year ended December 31, 2023.
Net Interest Income
Net interest income is affected by the size and mix of our balance sheet components as well as the spread between interest earned on assets and
interest paid on liabilities. Net interest margin is a measure of the difference between interest income on earning assets and interest paid on
interest-bearing liabilities relative to the amount of interest-bearing assets. Net interest income increased $2.1 million, or 11.03%, to $20.6 million
for the year ended December 31, 2024 from $18.5 million for the year ended December 31, 2023. Net interest margin increased 62 basis points to
3.66% for the year ended December 31, 2024 compared to 3.04% for the year ended December 31, 2023.
Average loans increased $18.7 million or 5.51% to $358.6 million for the year ended December 31, 2024, compared to $339.9 million for the
year ended December 31, 2023. The yield on average loans (including fees) was 6.80% and 6.20% for the years ended December 31, 2024 and
December 31, 2023, respectively. The increase in the yield on average loans was the result of higher interest rates assigned to variable rate loans,
as well as higher interest rates on new originations and renewals of fixed rate loans. Interest income on loans increased $3.3 million for the year
ended December 31, 2024 to $23.8 million from $20.5 million for the year ended December 31, 2023.
The average balance of interest-bearing deposits at the Federal Reserve increased $0.3 million, or 2.59%, to $12.3 million for the year ended
December 31, 2024, with a yield of 5.33% as compared to $12.0 million for the year ended December 31, 2023, with a yield of 5.11%.
Average earning assets decreased $46.6 million or, 7.66%, to $562.3 million for the year ended December 31, 2023 from $608.9 million for the
year ended December 31, 2023. This change is primarily related to a decrease in the average balance of investment securities partially offset by an
increase in loans and interest-bearing deposits at the Federal Reserve.
The average balance of deposits decreased $41.1 million or 7.41% to $511.9 million for the year ended December 31, 2024, with a yield of
1.12% as compared to $553.0 million for the year ended December 31, 2023, with a yield of 0.78%. Our funding costs have risen as high deposit
rates paid by other sectors of the financial industry continue to create intense competition.
We incurred $0.7 million of interest on short-term borrowings during the year ended December 31, 2024, as compared to $1.5 million during the
year ended December 31, 2023. This decrease was due to our ability to extinguish all short-term borrowings during the year.
Provision for Credit Losses
We recorded a provision for credit losses of $75,000 for the year ended December 31, 2024 compared to $45,000 for the year ended December 31,
2023. The Board of Directors determined that this provision was appropriate based upon our analysis of the adequacy of the allowance for credit
losses. Charge-offs of $121,421 and recoveries of $3,733, combined with the provision for credit losses of $75,000, resulted in an allowance for
credit losses of $3.7 million or 1.01% of total loans as of December 31, 2024.
Non-Interest Income
Other income increased $0.2 million, or 11.1%, to $2.0 million for the year ended December 31, 2024 from $1.8 million for the year ended
December 31, 2023. The increase in other income reflects higher mortgage banking income, which increased $0.1 million, or 18.03%, to $0.5
million for the year ended December 31, 2024 from $0.4 million for the year ended December 31, 2023. The improvement reflects increased loan
volume associated with the lower interest rate environment experienced in 2024, as mortgage banking income is directly impacted by movement
in interest rates as well as the housing market. Service charges and fees also increased $0.1 million, or 7.1%, to $1.5 million for the year ended
December 31, 2024 from $1.4 million for the year ended December 31, 2023.
Non-Interest Expense
Other expense increased $0.4 million, or 3.01%, to $13.7 million for the year ended December 31, 2024 from $13.3 million for the year ended
December 31, 2023. Net occupancy expense increased $0.2 million due to rent escalation provisions in certain of our leases while data processing
expense increased $0.1 million. We also realized $0.1 million in loss on the sale of securities.
Income Tax Expense
Income tax expense was $2.0 million for the year ended December 31, 2024 as compared to $1.4 million for the year ended December 31, 2023.
Our effective tax rate was 22.79% and 20.55% for the years ended December 31, 2024 and 2023, respectively. The higher effective tax rate in
2024 is the result of the decreaseLQ the &RPSDQ\
Vnet deferred tax assetDVRI'HFHPEHUFRPSDUHGWR'HFHPEHU
Selected Financial Data
The following table sets forth certain summary financial information concerning the Company and its wholly-owned subsidiary for the last five years.
The information was derived from the audited consolidated financial statements. The information should be read in conjunction with this section of
the report and the audited consolidated financial statements and notes.
2024
2023
2022
2021
2020
For December 31:
Net income
$
6,749,736
$
5,493,616
$
6,655,140
$
6,744,865
$
6,460,631
Selected year end balances:
Total assets . . . . . . . . . . . . . . . . . . . . . . . .
557,160,417
633,815,719
653,345,609
679,220,646
532,494,599
Total loans1 . . . . . . . . . . . . . . . . . . . . . . . .
369,101,317
349,120,944
331,848,376
309,406,617
333,768,406
Investment securities available for sale ...
157,470,622
241,216,453
271,172,226
212,347,489
134,819,818
Interest-bearing deposits at the
Federal Reserve . . . . . . . . . . . . . . . . . . .
4,804,819
7,250,912
12,999,135
128,971,429
42,348,085
Earning assets . . . . . . . . . . . . . . . . . . . . .
531,376,758
597,588,309
616,019,737
650,725,535
510,936,309
Total deposits . . . . . . . . . . . . . . . . . . . . . .
489,912,358
525,702,538
598,670,258
609,191,576
462,197,631
Total shareholders’ equity . . . . . . . . . . . .
52,301,012
47,080,862
38,811,387
53,917,633
54,980,356
Weighted Average Shares
Outstanding - basic . . . . . . . . . . . . . . . . . . . .
5,454,342
5,528,596
5,550,078
5,531,518
5,526,948
Weighted Average Shares
Outstanding - diluted . . . . . . . . . . . . . . . . . . .
5,506,149
5,626,139
5,644,698
5,680,482
5,678,543
For the Year:
Selected average balances:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . $ 590,707,455 $
639,728,141
$
656,833,125 $
589,379,985 $ 502,628,318
Total loans1 . . . . . . . . . . . . . . . . . . . . . . . .
358,649,574
339,912,450
320,826,946
324,078,445
313,303,363
Investment securities available for sale ...
191,312,503
257,007,704
266,432,504
167,250,568
112,970,054
Interest-bearing deposits at the
Federal Reserve . . . . . . . . . . . . . . . .
12,333,148
12,021,914
41,131,016
75,734,060
54,231,372
Earning assets . . . . . . . . . . . . . . . . . . . . .
562,295,225
608,942,068
628,390,466
567,063,073
480,504,789
Total deposits . . . . . . . . . . . . . . . . . . . . . .
511,959,761
552,955,814
596,881,098
519,900,412
434,071,108
Total shareholders’ equity . . . . . . . . . . . .
49,802,167
42,597,908
43,602,112
54,838,166
54,021,647
Performance Ratios:
Return on average equity
13.55%
12.90%
15.26%
12.30%
11.96%
Return on average assets
1.14%
0.86%
1.01%
1.14%
1.29%
Average equity to average assets
8.43%
6.66%
6.64%
9.30%
10.75%
Net interest margin
3.66%
3.04%
3.01%
3.06%
3.52%
Net (recoveries) charge-offs to average loans
0.00%
0.00%
0.00%
(0.02%)
0.02%
Allowance for credit losses as a percentage of total
loans2
1.01%
1.07%
1.30%
1.43%
1.30%
Per Share:
Basic income per common share
$
1.24
$
0.99
$
1.20
$
1.22
$
1.17
Diluted income per common share
$
1.23
$
0.98
$
1.18
$
1.19
$
1.14
Year end book value
$
9.63
$
8.61
$
6.99
$
9.73
$
9.96
Dividends per common share
$
0.72
$
0.68
$
0.68
$
0.78
$
0.66
Dividend payout ratio
58.13%
68.25%
56.73%
63.98%
56.44%
Full time employee equivalents
82
78
79
79
76
(1)
Including mortgage loans to be sold
(2)
Excluding mortgage loans to be sold
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BANK OF SOUTH CAROLINA CORPORATION AND SUBSIDIARY
See accompanying notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
December 31,
December 31,
2024
2023
ASSETS
Cash and due from banks
$
6,202,303 $
14,665,148
Interest-bearing deposits at the Federal Reserve
4,804,819
7,250,912
Investment securities available for sale (amortized cost of $171,273,925 and
$258,788,034 in 2024 and 2023, respectively)
157,470,622
241,216,453
Mortgage loans to be sold
5,012,224
2,130,899
Loans
364,089,093
346,990,045
Less: Allowance for credit losses
(3,679,525)
(3,722,213)
Net loans
360,409,568
343,267,832
Premises, equipment and leasehold improvements, net
3,809,307
4,084,703
Right of use asset
12,139,178
12,799,866
Accrued interest receivable
2,012,059
2,380,972
Other assets
5,300,337
6,018,934
Total assets
$
557,160,417 $
633,815,719
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits:
Non-interest-bearing demand
$
160,723,772 $
182,053,144
Interest bearing demand
123,526,039
163,353,919
Money market accounts
109,395,947
104,919,984
Time deposits $250,000 and over
43,098,983
15,054,652
Other time deposits
9,623,113
9,738,823
Other savings deposits
43,544,504
50,582,016
Total deposits
489,912,358
525,702,538
Short-term borrowings
—
46,000,000
Accrued interest payable and other liabilities
2,807,869
2,232,453
Lease liability
12,139,178
12,799,866
Total liabilities
504,859,405
586,734,857
Commitments and contingencies in Note 11
Shareholders’ equity
47,970,140
48,097,586
18,573,049
15,746,736
(4,255,680)
(3,800,022)
(9,986,497)
(12,963,438)
Common stock - no par 12,000,000 shares authorized; Issued 5,852,325 shares at both
December 31, 2024 and December 31, 2023 Shares outstanding 5,432,762 and
5,469,251 at December 31, 2024 and December 31, 2023, respectively
Additional paid in capital
Retained earnings
Treasury stock: 419,563 shares and 383,074 shares as of December 31, 2024, and 2023,
respectively
Accumulated other comprehensive loss
Total shareholders’ equity
52,301,012
47,080,862
Total liabilities and shareholders’ equity
$
557,160,417 $
633,815,719
BANK OF SOUTH CAROLINA CORPORATION AND SUBSIDIARY
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
2024
2023
Interest and fee income
Loans, including fees
$
23,845,545 $
20,470,618
Taxable securities
2,075,308
2,711,453
Tax-exempt securities
384,301
517,104
Other
658,556
614,450
Total interest and fee income
26,963,710
24,313,625
Interest expense
Deposits
5,725,438
4,331,944
Short-term borrowings
673,609
1,460,254
Total interest expense
6,399,047
5,792,198
Net interest income
20,564,663
18,521,427
Provision for credit losses
75,000
45,000
Net interest income after provision for credit losses
20,489,663
18,476,427
Other income
Service charges and fees
1,473,410
1,346,521
Mortgage banking income
451,254
382,303
Other non-interest income
40,020
35,917
Total other income
1,964,684
1,764,741
Other expense
Salaries and employee benefits
7,984,410
8,016,197
Net occupancy expense
2,867,394
2,699,335
Data processing fees
818,701
674,350
Professional expenses
553,479
637,567
Other operating expenses
1,386,802
1,299,580
Loss on sales of securities, net
101,820
—
Total other expense
13,712,606
13,327,029
Income before income tax expense
8,741,741
6,914,139
Income tax expense
1,992,005
1,420,523
Net income
$
6,749,736 $
5,493,616
Weighted average shares outstanding
Basic
5,454,342
5,528,596
Diluted
5,506,149
5,626,139
Basic income per common share
$
1.24 $
0.99
Diluted income per common share
$
1.23 $
0.98
BANK OF SOUTH CAROLINA CORPORATION AND SUBSIDIARY
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31,
2024
2023
Net income
$
6,749,736 $
5,493,616
Other comprehensive income
Unrealized gain on securities arising during the period
3,666,458
8,254,343
Reclassification adjustment for securities loss realized in net income
101,820
—
Other comprehensive income before tax
3,768,278
8,254,343
Income tax effect related to items of other comprehensive income before
tax
(791,337)
(815,300)
Other comprehensive income after tax
2,976,941
7,439,043
Total comprehensive income
$
9,726,677 $
12,932,659
BANK OF SOUTH CAROLINA CORPORATION AND SUBSIDIARY
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2024 AND 2023
Shares
Outstanding
Additional
Paid
in Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
December 31, 2022
5,552,351 $
48,028,689 $
14,002,571 $
(2,817,392) $
(20,402,481) $
38,811,387
Net income
—
—
5,493,616
—
—
5,493,616
Other comprehensive income
—
—
—
—
7,439,043
7,439,043
Repurchase of common shares
(83,100)
—
—
(982,630)
—
(982,630)
Stock-based compensation
expense
—
68,897
—
—
—
68,897
Cash dividends ($0.68 per
common share)
—
—
(3,749,451)
—
—
(3,749,451)
December 31, 2023
5,469,251 $
48,097,586 $
15,746,736 $
(3,800,022) $
(12,963,438) $
47,080,862
Net income
—
—
6,749,736
—
—
6,749,736
Other comprehensive income
—
—
—
—
2,976,941
2,976,941
Repurchase of common shares
(36,489)
—
—
(455,658)
—
(455,658)
Stock-based compensation
(surrender)
—
(127,446)
—
—
—
(127,446)
Cash dividends ($0.72 per
common share)
—
—
(3,923,423)
—
—
(3,923,423)
December 31, 2024
5,432,762 $
47,970,140 $
18,573,049 $
(4,255,680) $
(9,986,497) $
52,301,012
BANK OF SOUTH CAROLINA CORPORATION AND SUBSIDIARY
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
2024
2023
Cash flows from operating activities:
Net income
$
6,749,736 $
5,493,616
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense
416,417
372,950
Loss on sale of investment securities
101,820
—
Provision for credit losses
75,000
45,000
Stock-based compensation (surrender) expense
(127,446)
68,897
Increase (decrease) in deferred income taxes
(45,781)
73,401
Net amortization of unearned discounts on investment securities available for sale
224,874
777,116
Origination of mortgage loans held for sale
(53,643,022)
(40,279,576)
Proceeds from sale of mortgage loans held for sale
51,212,951
39,397,574
Net gain on sale of mortgage loans held for sale
(451,254)
(382,303)
Decrease in accrued interest receivable and other assets
359,564
133,623
(Decrease) increase in accrued interest payable and other liabilities
472,933
(783,692)
Net cash provided by operating activities
5,345,792
4,916,606
Cash flows from investing activities:
Proceeds from calls and maturities of investment securities available for sale
73,762,000
37,433,000
Proceeds from sale of investment securities available for sale
13,407,805
—
Net increase in loans
(17,216,736)
(16,022,271)
Purchase of premises, equipment, and leasehold improvements, net
(141,021)
(469,046)
Net cash provided by investing activities
69,812,048
20,941,683
Cash flows from financing activities:
Net increase (decrease) in short-term borrowings
(46,000,000)
46,000,000
Net decrease in deposit accounts
(35,790,180)
(72,967,720)
Dividends paid
(3,820,940)
(3,763,578)
Repurchase of common shares
(455,658)
(982,630)
Net cash used in financing activities
(86,066,778)
(31,713,928)
Net decrease in cash and cash equivalents
(10,908,938)
(5,855,639)
Cash and cash equivalents at the beginning of the period
21,916,060
27,771,699
Cash and cash equivalents at the end of the period
$
11,007,122 $
21,916,060
Cash paid during the period for:
Interest
$
6,087,432 $
5,631,429
Income taxes
$
1,951,143 $
1,666,396
Supplemental disclosures for non-cash investing and financing activity:
Change in unrealized gain on securities available for sale, net of income taxes
$
2,994,551 $
7,439,043
Change in dividends payable
$
102,451 $
(14,127)
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
ORGANIZATION
The Bank of South Carolina (the “Bank”) was organized on October 22, 1986 and opened for business as a state-chartered financial institution on
February 26, 1987, in Charleston, South Carolina. The Bank was reorganized into a wholly-owned subsidiary of Bank of South Carolina Corporation
(the “Company”), effective April 17, 1995. At the time of the reorganization, each outstanding share of the Bank was exchanged for two shares of
Bank of South Carolina Corporation Stock.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Our accounting and reporting policies conform, in all material respects, to U.S. generally accepted accounting principles (“GAAP”), and to general
practices within the banking industry. The following summarizes the more significant of these policies and practices.
Principles of Consolidation:
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. In consolidation,
all significant intercompany balances and transactions have been eliminated.
References to “we,” “us,” “our,” “the Bank,” or “the Company” refer to the parent and its subsidiary that are consolidated for financial reporting
purposes.
Accounting Estimates and Assumptions:
The financial statements are prepared in conformity with GAAP, which require management to make estimates and assumptions. These estimates
and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the
consolidated financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ
significantly from these estimates and assumptions. Material estimates generally susceptible to significant change are related to the determination of
the allowance for credit losses, individually assessed loans, other real estate owned, deferred tax assets and the fair value of financial instruments.
Subsequent Events:
Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent
events are events or transactions that provide additional evidence about conditions that existed as of the date of the balance sheet, including the
estimates inherent in the process of preparing financial statements. Non-recognized subsequent events are events that provide evidence about
conditions that did not exist as of the date of the balance sheet but arose after that date. We have reviewed events occurring through February 26,
2025 (the date the financial statements were available to be issued) and no subsequent events occurred requiring accrual or disclosure.
We have disclosed deposit concentrations in Note 8. We have monitored deposit concentrations through the date the financial statements were issued
noting no significant changes to concentrations. In addition, there has been no significant deterioration through the date the financial statements
were issued.
Cash and Cash Equivalents:
Cash and cash equivalents include working cash funds, due from banks, interest-bearing deposits at the Federal Reserve, items in process of
collection and federal funds sold. All cash equivalents are readily convertible to cash and have maturities of less than 90 days.
Depository institutions are required to maintain reserve and clearing balances at the Federal Reserve Bank. Vault cash satisfied our daily reserve
requirement as of December 31, 2024 and 2023.
Interest-bearing Deposits at the Federal Reserve:
Interest-bearing deposits at the Federal Reserve mature daily and are carried at cost.
Investment Securities:
We classify investments into three categories: (1) Held to Maturity - debt securities that we have the positive intent and ability to hold to maturity, which
are reported at amortized cost, adjusted for the amortization of any related premiums or the accretion of any related discounts into interest income using a
methodology which approximates a level yield of interest over the estimated remaining period until maturity; (2) Trading - debt securities that are bought
and held principally for the purpose of selling them in the near term, which are reported at fair value, with unrealized gains and losses included in earnings;
and (3) Available for Sale - debt securities that may be sold under certain conditions, which are reported at fair value, with unrealized gains and losses
excluded from earnings and reported as a separate component of shareholders’ equity, net of income taxes. Unrealized losses on securities due to credit
loss factors are recognized when it is determined that present value of cash flows expected to be collected is than the amortized cost basis of the securities.
Realized gains or losses on the sale of investments are recognized on a specific identification, trade date basis. All securities were classified as available
for sale for 2024 and 2023.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Allowance for Credit Losses - Securities Available for Sale:
For available for sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or if it is more likely than not that it
will be required to sell the security before recovery of the amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the
security’s amortized cost basis is written down to fair value through income with the establishment of an allowance under the Current Expected Credit Loss
(“CECL”) model compared to a direct write down of the security under Incurred Loss. For debt securities available for sale that do not meet the aforementioned
criteria, the Company evaluates whether any decline in fair value is due to credit loss factors. In making this assessment, management considers any changes
to the rating of the security by a rating agency and adverse conditions specifically related to the security, among other factors. If this assessment indicates that
a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the
present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded
for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any loss that has not been recorded through an allowance for
credit losses is recognized in other comprehensive income.
Changes in the allowance for credit losses under CECL are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the
allowance when management believes the collectability of an available-for-sale security is confirmed or when either of the criteria regarding intent or
requirement to sell is met. At December 31, 2024, there was no allowance for credit losses related to the available-for-sale portfolio.
Accrued interest receivable on available for sale debt securities totaled $0.6 million at December 31, 2024 and was excluded from the estimate of credit
losses.
Mortgage Loans to be Sold:
We originate fixed and variable rate residential mortgage loans on a service release basis in the secondary market. Loans closed but not yet settled with an
investor are carried in our loans to be sold portfolio. Virtually all of these loans have commitments to be purchased by investors and the majority of these
loans were locked in by price with the investors on the same day or shortly thereafter that the loan was locked in with our customers. Therefore, these
loans present very little market risk. We usually deliver to, and receive funding from, the investor within 30 to 60 days. Commitments to sell these loans
to the investor are considered derivative contracts and are sold to investors on a “best efforts” basis. We are not obligated to deliver a loan or pay a penalty
if a loan is not delivered to the investor. Because of the short-term nature of these derivative contracts, the fair value of the mortgage loans to be sold in
most cases is materially the same as the value of the loan amount at its origination.
Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated market value in the aggregate. Net
unrealized losses are provided for in a valuation allowance by charges to operations as a component of mortgage banking income. Gains or losses on sales
of loans are recognized when control over these assets is surrendered and is included in mortgage banking income in the consolidated statements of
income.
Loans and Allowance for Credit Losses:
Under the current expected credit loss model, the allowance for credit losses on loans is a valuation allowance estimated at each balance sheet date in
accordance with GAAP that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.
Management assesses the adequacy of the allowance on a quarterly basis. This assessment includes procedures to estimate the allowance and test the
adequacy and appropriateness of the resulting balance. The level of the allowance is based upon management’s evaluation of historical default and loss
experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect
the borrowers’ ability to repay a loan, the estimated value of any underlying collateral, composition of the loan portfolio, industry and peer bank loan
quality indications and other pertinent factors, including regulatory recommendations. Management believes the level of the allowance for credit losses
is adequate to absorb all expected future losses inherent in the loan portfolio at the balance sheet date. The allowance is increased through a provision for
credit losses and decreased by charge-offs, net of recoveries of amounts previously charged-off, or reversal of, when appropriate.
The allowance for credit losses is measured on a collective basis for pools of loans with similar risk characteristics. The Company uses the Loss Rate
Approach to estimate the current expected credit losses. The Bank calculates the annual loss rate by dividing the annual net charge-offs by the average
balance of loans. The Bank used the simple average of the prior year and current year balance to get the average balance by segment which is adjusted by
the estimated prepayment rate to get the lifetime historical loss rate. This loss rate is further adjusted by qualitative and forecast adjustments to get the
estimated lifetime loss rate.
The forecast adjustments (House Price Index, Vacancy Rate, and Unemployment Rate) are discussed by the Management Asset/Liability Committee
(ALCO) on a periodic basis. Upon ALCO’s recommendation, the calculation can be adjusted accordingly to reflect the current market and economic
conditions.
The Company uses loan purpose codes to segment loans based on similar purpose and risk characteristics. The Bank manages these loans on a collective
basis. This segmentation is used for call report purposes, and the Bank believes it is appropriate for the CECL calculations. Due to the size of the Bank’s
loan portfolio, management determined that further segmentation would be too granular and segments would be statistically insignificant.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Loans and Allowance for Credit Losses (Continued):
Loans that do not share similar risk characteristics with the collectively evaluated pools are evaluated on an individual basis and are excluded from the
collectively evaluated loan pools. Individual loan evaluations are generally performed for individually assessed loans, which includes nonaccrual loans.
Such loans are evaluated for credit losses based on either discounted cash flows or the fair value of collateral. The Company has elected the practical
expedient under ASC 326 to estimate expected credit losses based on the fair value of collateral, which considers selling costs in the event of the sale of
the collateral.
While the Company’s policies and procedures used to estimate the allowance for credit losses, as well as the resultant provision for credit losses charged
to income, are considered adequate by management and are reviewed periodically by regulators, model validators and internal audit, they are necessarily
approximate and imprecise. There are factors beyond the Company’s control, such as changes in projected economic conditions, real estate markets or
particular industry conditions which may materially impact asset quality and the adequacy of the allowance for credit losses and thus the resulting
provision for credit losses.
Allowance for Credit Losses - Accrued Interest Receivable
Accrued interest receivable related to loans totaled $1.4 million at December 31, 2024 and was reported in accrued interest receivable on the consolidated
balance sheets. The Company elected not to measure an allowance for credit losses for accrued interest receivable and instead elected to reverse interest
income on loans or securities that are placed on nonaccrual status, which is generally when the instrument is 90 days past due, or earlier if the Company
believes the collection of interest is doubtful. The Company has concluded that this policy results in the timely reversal of uncollectable interest.
Allowance for Credit Loss - Unfunded Commitments
Effective with the adoption of CECL, the Company estimates expected credit losses on commitments to extend credit over the contractual period in which
the Company is exposed to credit risk on the underlying commitments, unless the obligation is unconditionally cancelable by the Company. The allowance
for credit loss – unfunded commitments, which is reflected within accrued interest payable and other liabilities on the consolidated balance sheet, is
adjusted for as an increase or decrease to the provision for credit losses. The estimate includes consideration of the likelihood of funding and a credit loss
will occur. The allowance is calculated using the same aggregate reserve rates calculated for the funded portion of loans at the portfolio level applied to
the amount of commitments expected to fund.
Concentration of Credit Risk:
Our primary market consists of the counties of Berkeley, Charleston and Dorchester, South Carolina. As of December 31, 2024, the majority of the total
loan portfolio was to borrowers within this region. No other areas of significant concentration of credit risk have been identified.
Premises, Equipment and Leasehold Improvements and Depreciation:
Land is carried at cost. Buildings and equipment are stated at cost less accumulated depreciation. Depreciation is recorded using the straight-line
method for financial reporting purposes and accelerated methods for income tax purposes over the estimated useful lives of the assets ranging from 40
years for buildings and 3 to 15 years for equipment. Leasehold improvements are amortized over the shorter of the asset’s useful life or the remaining
lease term, including renewal periods when reasonably assured. The cost of maintenance and repairs is charged to operating expense as incurred.
Leases:
In accordance with ASU 2016-02, the Company determines if a contractual arrangement is a lease at inception. Operating leases are included in the
operating right of use (“ROU”) assets and current operating lease liabilities on the Company’s consolidated balance sheet. ROU assets represent the
Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising
from the lease. Currently, the Company does not have any finance leases.
Operating lease ROU assets and lease liabilities are recognized at the commencement of the lease based on the present value of lease payments over the
lease term. The lease payments included in the present value are fixed payments and index-based variable lease payments. The Company estimates the
incremental borrowing rate, based on information available at the commencement of the lease, as most of the Company’s leases do not include an implicit
rate.
Revenue Recognition:
In accordance with Topic 606, revenues are recognized when control of promised goods or services is transferred to customers in an amount that reflects
the consideration the Company expects to be entitled to in exchange for those goods or services. To determine revenue recognition for arrangements that
an entity determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii)
identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations
in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenue Recognition (Continued):
The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the
goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company
assesses the goods or services that are promised within each contract and identifies those that contain performance obligations, and assesses whether each
promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective
performance obligation when (or as) the performance obligation is satisfied.
Service Fees on Deposit Accounts
The Bank earns fees from its deposit customers for account maintenance, transaction-based and overdraft services. Account maintenance fees consist
primarily of account fees and analyzed account fees charged on deposit accounts on a monthly basis. The performance obligation is satisfied and the fees
are recognized on a monthly basis as the service period is completed. Transaction-based fees on deposits accounts are charged to deposit customers for
specific services provided to the customer, such as non-sufficient funds fees, overdraft fees, and wire fees. The performance obligation is completed as the
transaction occurs and the fees are recognized at the time each specific service is provided to the customer.
ATM and Check Card Fee Income
Check card fee income represents fees earned when a debit card issued by the Bank is used. The Bank earns interchange fees from debit cardholder
transactions through the Mastercard payment network. Interchange fees from cardholder transactions represent a percentage of the underlying
transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. The performance obligation
is satisfied and the fees are earned when the cost of the transaction is charged to the card. Certain expenses directly associated with the debit card are
recorded on a net basis with the fee income.
Income Taxes:
We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date. Net deferred tax assets are included in other assets in the consolidated balance sheet.
Accounting standards require the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. These standards also
prescribe a recognition threshold and measurement of a tax position taken or expected to be taken in an enterprise’s tax return. We believe that we had no
uncertain tax positions for the years ended December 31, 2024 and 2023.
The income tax effects of unrealized gains and losses on investment securities available for sale are released from accumulated other comprehensive
income at the time such securities are sold or impaired.
Stock-Based Compensation:
Compensation cost is recognized for stock options issued to employees, based on the fair value of these awards at the date of grant. A Black-Scholes model
is utilized to estimate the fair value of stock options. Compensation cost is recognized over the expected term of the stock options and is adjusted for
forfeitures as they occur.
Income Per Common Share:
Basic income per share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per share is
computed by dividing net income by the weighted-average number of common shares and potential common shares outstanding. Potential common shares
consist of dilutive stock options determined using the treasury stock method and the average market price of common stock. Earnings per share are restated
for all stock splits and stock dividends, if any, through the date of issuance of the consolidated financial statements.
Segment Information:
The Company adopted Accounting Standards Update 2023-07 “Segment Reporting (Topic 280) - Improvement to Reportable Segment Disclosures” on
January 1, 2024. The Company has determined that all of its banking divisions and subsidiaries meet the aggregation criteria of ASC 280, Segment
Reporting, as its current operating model is structured whereby banking divisions and subsidiaries serve a similar base of primarily commercial clients
utilizing a company-wide offering of similar products and services managed through similar processes and platforms that are collectively reviewed by the
Company’s Chief Executive Officer, who has been identified as the chief operating decision maker (“CODM”).
The CODM regularly assesses performance of the aggregated single operating and reporting segment and decides how to allocate resources based on net
income calculated on the same basis as net income reported in the Company’s consolidated statements of income and other comprehensive income. The
CODM is also regularly provided with expense information at a level consistent with that disclosed in the Company’s consolidated statements of income and
other comprehensive income.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Interest Rate Lock Commitments and Forward Sale Contracts:
Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these
mortgage loans are accounted for as free-standing derivatives. The fair value of the interest rate lock is recorded at the time the commitment to fund the
mortgage loan is executed and is adjusted for the expected exercise of the commitments before the loan is funded. In order to hedge the change in interest
rates resulting from commitments to fund the loans, we enter into forward commitments for the future delivery of mortgage loans when the interest rate is
locked. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date the interest on the loan is locked.
Changes in the fair values of these derivatives are included in income when they occur. As a result of the short-term nature of mortgage loans held
for sale (derivative contract), our derivative instruments were considered to be immaterial as of December 31, 2024 and 2023. We had no embedded
derivative instruments requiring hedge accounting treatment at December 31, 2024 and 2023. We do not currently engage in hedging activities.
Recent Accounting Pronouncements:
The following is a summary of recent authoritative pronouncements that could or have impacted the accounting, reporting and/or disclosure of financial
information by the Company.
In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326). The
Accounting Standards Update, or ASU, introduced a new credit loss methodology, the Current Expected Credit Loss (“CECL”) methodology, which
requires earlier recognition of credit losses, while also providing additional transparency about credit risk. Since its original issuance in 2016, the FASB
has issued several updates to the original ASU.
The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to-maturity
securities, and other receivables at the time the financial asset is originated or acquired. It also applies to off-balance sheet credit exposures such as
unfunded commitments to extend credit. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The
methodology replaces the multiple existing impairment methods in current GAAP, which generally require that a loss be incurred before it is recognized.
For available-for-sale securities where fair value is less than cost, credit-related impairment, if any, is recognized through an allowance for credit losses
and adjusted each period for changes in credit risk.
On January 1, 2023, the Company adopted the guidance. The adoption of CECL resulted in an increase in the allowance for unfunded commitments of
$600,000, a decrease in the allowance for credit losses of $600,000 and no change to the Company’s investment securities portfolio. There was no adjustment
to retained earnings as of January 1, 2023. Federal banking regulatory agencies provided optional relief to delay the adverse regulatory capital impact of
CECL at adoption. The Company did not elect to use this optional relief.
In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage
Disclosures, which eliminates the accounting guidance on troubled debt restructurings (TDRs) for creditors in ASC 310-402 and amends the guidance on
“vintage disclosures” to require disclosure of current-period gross write-offs by year of origination. The ASU also updates the requirements related to
accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers
experiencing financial difficulty. The Company adopted the amendments in ASU 2022-02 upon the Company’s adoption of ASU 2016-13 as of January
1, 2023.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial
Reporting, which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. In December 2022, the FASB
extended the sunset date of ASC 848 from December 31, 2022 to December 31, 2024. The Company adopted the amendments in ASU 2020-04, noting
no material impact on the consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disclosures of specific categories in the
rate reconciliation and additional information for reconciling items that meet a quantitative threshold. In addition, ASU 2023-09 requires disaggregated
disclosure of the amount of income taxes paid (net of refunds received) by tax jurisdiction. ASC 2023-09 is effective for the Company’s annual financial
statements for the year ending December 31, 2024. The Company adopted the amendments in ASU 2023-09 on the consolidated financial statements..
In November 2023, the FASB amended the Segment Reporting topic of the ASC focuses on enhancing the guidance around segment reporting by
improving the transparency of financial information related to operating segments. This update is designed to make segment disclosures more consistent
and relevant for users of financial statement. The amendments are effective for fiscal years beginning after December 15, 2023 for public business entities
and for fiscal years beginning after December 15, 2024 for non-public entities. Early adoption is permitted. The Company adopted the amendments, noting
no material impact on the consolidated financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on
our financial position, results of operations or cash flows.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3.
INVESTMENT SECURITIES AVAILABLE FOR SALE
The amortized cost and fair value of investment securities available for sale are summarized as follows.
December 31, 2024
Amortized Cost
Gross
Unrealized
Gains
Gross Unrealized
Losses
Estimated Fair
Value
U.S. Treasury Notes ..................................................
$
79,925,787 $
— $
(3,153,376) $
76,772,411
Government-Sponsored Enterprises ..........................
60,660,970
—
(7,553,043)
53,107,927
Municipal Securities .................................................
30,687,168
5
(3,096,889)
27,590,284
Total ..........................................................................
$
171,273,925 $
5 $
(13,803,308) $
157,470,622
December 31, 2023
Amortized Cost
Gross
Unrealized
Gains
Gross Unrealized
Losses
Estimated Fair
Value
U.S. Treasury Notes ..................................................
$
159,808,100 $
— $
(6,726,584) $
153,081,516
Government-Sponsored Enterprises ..........................
62,173,776
—
(8,435,620)
53,738,156
Municipal Securities .................................................
36,806,158
5,494
(2,414,871)
34,396,781
Total ..........................................................................
$
258,788,034 $
5,494 $
(17,577,075)
$
241,216,453
The amortized cost and estimated fair value of investment securities available for sale at December 31, 2024 and 2023 by contractual maturity, are in
the following table.
December 31, 2024
December 31, 2023
Amortized
Cost
Estimated Fair
Value
Amortized
Cost
Estimated Fair
Value
Due in one year or less
$
29,759,018 $
29,370,312 $
78,840,342 $
77,638,329
Due in one year to five years
101,524,144
95,100,732
134,373,684
124,608,670
Due in five years to ten years
35,546,000
29,598,713
36,787,552
31,468,308
Due in ten years and over
4,444,763
3,400,865
8,786,456
7,501,146
Total
$
171,273,925 $
157,470,622 $
258,788,034 $
241,216,453
Securities pledged to secure deposits at December 31, 2024 and 2023, had a carrying amount of $36,932,928 and $76,663,644, respectively.
The tables below summarize gross unrealized losses on investment securities and the fair market value of the related securities, aggregated by
investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2024 and 2023.
Unrealized losses have not been recognized into income because the issuer(s) bonds are of high credit quality (rated AA or higher), we do not intend
to sell prior to their anticipated recovery and the decline in fair value is largely due to changes in interest rates and other market conditions. The
issuer(s) continue to make timely principal and interest payments on the securities. The fair value is expected to recover as the securities near
maturity. At December 31, 2024, and December 31, 2023, there was no allowance for credit losses – securities available for sale.
December 31, 2024
Less Than 12 Months
12 Months or Longer
Total
#
Fair Value
Gross
Unrealized
Loss
#
Fair Value
Gross
Unrealized
Loss
#
Fair Value
Gross
Unrealized
Loss
U.S. Treasury Notes
-
$
-
$
-
12 $
76,772,411 $ (3,153,376)
12 $
76,772,411 $ (3,153,376)
Government-Sponsored
Enterprises
-
$
-
$
--
9
53,107,927
(7,553,043)
9
53,107,927
(7,553,043)
Municipal Securities
-
$
-
$
--
59
27,535,279
(3,096,889)
59
27,535,279
(3,096,889)
Total
-
$
-
$
--
80 $ 157,415,617 $ (13,803,308)
80 $ 157,415,617 $ (13,803,308)
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
Less Than 12 Months
12 Months or Longer
Total
#
Fair Value
Gross
Unrealized
Loss
#
Fair Value
Gross
Unrealized
Loss
#
Fair Value
Gross
Unrealized
Loss
U.S. Treasury Notes
-
$
-
$
-
22 $ 148,081,516 $
(6,726,584)
22 $ 148,081,516 $ (6,726,584)
Government-Sponsored
Enterprises
1
1,278,016
(20,267)
9
52,460,140
(8,415,353)
10
53,738,156
(8,435,620)
Municipal Securities
1
1,310,114
(2,838)
67
32,052,498
(2,412,033)
68
33,362,612
(2,414,871)
Total
2 $
2,588,130 $
(23,105)
98 $ 232,594,154 $ (17,553,970)
100 $ 235,182,284 $ (17,577,075)
The table below shows the proceeds received from sales of securities available for sale and gross realized gains and losses.
For the Year Ended December 31,
2024
2023
Gross proceeds
$
13,407,805
$
—
Gross realized gains
1,337
—
Gross realized losses
(103,157)
—
4.
LOANS AND ALLOWANCE FOR CREDIT LOSSES
Major classifications of loans (net of deferred loan fees and costs of $319,979 at December 31, 2024, and $212,006 at December 31, 2023) are
shown in the table below.
December 31, 2024
December 31, 2023
Commercial
$
55,737,073 $
54,953,535
Commercial Real Estate:
Construction
21,585,210
25,884,216
Other
173,257,821
170,773,511
Consumer:
Real Estate
109,711,491
91,592,183
Other
3,797,498
3,786,600
364,089,093
346,990,045
Allowance for credit losses
(3,679,525)
(3,722,213)
Loans, net
$
360,409,568 $
343,267,832
We had $84.4 million and $138.4 million of loans pledged as collateral to secure funding with the Federal Reserve Bank (“FRB”) Discount Window at
December 31, 2024 and 2023, respectively.
Our portfolio grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled. Our
internal credit risk grading system is based on experience with similarly graded loans, industry best practices, and regulatory guidance. Our portfolio is
graded in its entirety.
Our internally assigned grades pursuant to the Board-approved lending policy are as follows:
•
Excellent (1) The borrowing entity has more than adequate cash flow, unquestionable strength, strong earnings and capital, and where
applicable, no overdrafts.
•
Good (2) The borrowing entity has dependable cash flow, better than average financial condition, good capital and usually no overdrafts.
•
Satisfactory (3) The borrowing entity has adequate cash flow, satisfactory financial condition, and explainable overdrafts (if any).
•
Watch (4) The borrowing entity has generally adequate, yet inconsistent cash flow, cyclical earnings, weak capital, loan to/from
stockholders, and infrequent overdrafts. The borrower has consistent yet sometimes unpredictable sales and growth.
•
OAEM (5) The borrowing entity has marginal cash flow, occasional past dues, and frequent and unexpected working capital needs.
•
Substandard (6) The borrowing entity has cash flow barely sufficient to service debt, deteriorated financial condition, and bankruptcy is a
possibility. The borrowing entity has declining sales, rising costs, and may need to look for secondary source of repayment.
•
Doubtful (7) The borrowing entity has negative cash flow. Survival of the business is at risk, full repayment is unlikely, and there are frequent
and unexplained overdrafts. The borrowing entity shows declining trends and no operating profits.
•
Loss (8) The borrowing entity has negative cash flow with no alternatives. Survival of the business is unlikely.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table illustrates credit quality by class indicators by year of origination at December 31, 2024. “Pass” includes loans internally graded as
excellent, good and satisfactory.
Term Loans by Year of Origination
2024
2023
2022
2021
2020
Prior
Revolving
Total
Commercial
Pass
$ 20,410,875 $ 9,961,098 $ 5,947,781 $ 1,390,446 $ 2,571,244 $
96,202 $ 13,671,807 $ 54,049,453
Watch
269,933
83,556
43,052
—
3,732
—
390,333
790,606
OAEM
217,500
—
—
—
—
—
—
217,500
Substandard
—
679,514
—
—
—
—
—
679,514
Doubtful
—
—
—
—
—
—
—
—
Loss
—
—
—
—
—
—
—
—
Total
$ 20,898,308 $ 10,724,168 $ 5,990,833 $ 1,390,446 $ 2,574,976 $
96,202 $ 14,062,140 $ 55,737,073
Current period gross
charge-offs
$
— $
— $
— $
— $
— $
121,421 $
— $
121,421
Commercial Real Estate
Construction
Pass
$ 10,009,391 $
— $ 7,561,174 $ 3,186,313 $
828,332 $
— $
— $ 21,585,210
Watch
—
—
—
—
—
—
—
—
OAEM
—
—
—
—
—
—
—
—
Substandard
—
—
—
—
—
—
—
—
Doubtful
—
—
—
—
—
—
—
—
Loss
—
—
—
—
—
—
—
—
Total
$ 10,009,391 $
— $ 7,561,174 $ 3,186,313 $
828,332 $
— $
— $ 21,585,210
Current period gross
charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
Commercial Real Estate Other
Pass
$ 42,233,208 $ 21,475,893 $ 32,090,364 $ 36,865,929 $ 18,050,910 $ 3,752,169 $ 9,682,603 $ 164,151,076
Watch
1,729,373
1,829,987
406,736
3,786,488
1,005,065
—
—
8,757,649
OAEM
—
6,975
—
—
—
—
—
6,975
Substandard
—
—
—
342,121
—
—
—
342,121
Doubtful
—
—
—
—
—
—
—
—
Loss
—
—
—
—
—
—
—
—
Total
$ 43,962,581 $ 23,312,855 $ 32,497,100 $ 40,994,538 $ 19,055,975 $ 3,752,169 $ 9,682,603 $ 173,257,821
Current period gross
charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
Consumer Real Estate
Pass
$ 22,597,049 $ 4,384,807 $ 21,004,599 $ 7,665,343 $ 7,573,064 $
362,306 $ 44,739,944 $ 108,327,112
Watch
—
—
—
—
—
—
1,136,017
1,136,017
OAEM
—
—
—
—
—
—
—
—
Substandard
—
—
—
—
—
—
248,362
248,362
Doubtful
—
—
—
—
—
—
—
—
Loss
—
—
—
—
—
—
—
—
Total
$ 22,597,049 $ 4,384,807 $ 21,004,599 $ 7,665,343 $ 7,573,064 $
362,306 $ 46,124,323 $ 109,711,491
Current period gross
charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
Consumer Other
Pass
$ 1,745,430 $
721,062 $
466,686 $
161,181 $
24,334 $
— $
554,061 $
3,672,754
Watch
51,293
18,348
—
9,409
—
—
—
79,050
OAEM
11,509
—
—
—
—
—
—
11,509
Substandard
—
34,185
—
—
—
—
—
34,185
Doubtful
—
—
—
—
—
—
—
—
Loss
—
—
—
—
—
—
—
—
Total
$ 1,808,232 $
773,595 $
466,686 $
170,590 $
24,334 $
— $
554,061 $
3,797,498
Current period gross
charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table illustrates credit quality by class indicators by year of origination at December 31, 2023. “Pass” includes loans internally graded as
excellent, good and satisfactory.
Term Loans by Year of Origination
2023
2022
2021
2020
2019
Prior
Revolving
Total
Commercial
Pass
$ 23,071,516 $ 7,939,040 $ 3,026,211 $ 3,891,097 $
742,486 $
7,654 $ 14,104,085 $ 52,782,089
Watch
453,708
388,324
—
14,186
5,812
—
338,383
1,200,413
OAEM
241,000
—
—
—
—
—
—
241,000
Substandard
—
730,033
—
—
—
—
—
730,033
Doubtful
—
—
—
—
—
—
—
—
Loss
—
—
—
—
—
—
—
—
Total
$ 23,766,224 $ 9,057,397 $ 3,026,211 $ 3,905,283 $
748,298 $
7,654 $ 14,442,468 $ 54,953,535
Current period gross
charge-offs
$
— $
— $
— $
— $
— $
46,341 $
— $
46,341
Commercial Real Estate
Construction
Pass
$ 10,473,495 $ 7,664,760 $ 3,292,829 $ 4,453,132 $
— $
— $
— $ 25,884,216
Watch
—
—
—
—
—
—
—
—
OAEM
—
—
—
—
—
—
—
—
Substandard
—
—
—
—
—
—
—
—
Doubtful
—
—
—
—
—
—
—
—
Loss
—
—
—
—
—
—
—
—
Total
$ 10,473,495 $ 7,664,760 $ 3,292,829 $ 4,453,132 $
— $
— $
— $ 25,884,216
Current period gross
charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
Commercial Real Estate Other
Pass
$ 32,161,087 $ 43,468,700 $ 45,481,726 $ 23,104,565 $ 9,564,467 $ 2,576,408 $ 4,667,248 $ 161,024,201
Watch
2,500,509
427,839
4,674,010
423,390
—
—
—
8,025,748
OAEM
873,679
—
—
—
—
—
—
873,679
Substandard
—
—
849,883
—
—
—
—
849,883
Doubtful
—
—
—
—
—
—
—
—
Loss
—
—
—
—
—
—
—
—
Total
$ 35,535,275 $ 43,896,539 $ 51,005,619 $ 23,527,955 $ 9,564,467 $ 2,576,408 $ 4,667,248 $ 170,773,511
Current period gross
charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
Consumer Real Estate
Pass
$ 17,313,427 $ 21,420,283 $ 8,141,547 $ 8,494,119 $
317,645 $
74,408 $ 34,194,701 $ 89,956,130
Watch
—
—
—
—
—
—
1,137,636
1,137,636
OAEM
—
—
—
—
—
—
—
—
Substandard
—
—
—
—
248,776
—
249,641
498,417
Doubtful
—
—
—
—
—
—
—
—
Loss
—
—
—
—
—
—
—
—
Total
$ 17,313,427 $ 21,420,283 $ 8,141,547 $ 8,494,119 $
566,421 $
74,408 $ 35,581,978 $ 91,592,183
Current period gross
charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
Consumer Other
Pass
$ 1,846,061 $
809,330 $
341,652 $
125,233 $
47,302 $
— $
439,764 $
3,609,342
Watch
82,605
10,865
16,518
414
—
—
27,528
137,930
OAEM
—
—
—
3,173
—
—
—
3,173
Substandard
36,155
—
—
—
—
—
—
36,155
Doubtful
—
—
—
—
—
—
—
—
Loss
—
—
—
—
—
—
—
—
Total
$ 1,964,821 $
820,195 $
358,170 $
128,820 $
47,302 $
— $
467,292 $
3,786,600
Current period gross
charge-offs
$
— $
— $
2,077 $
— $
— $
— $
— $
2,077
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables include an aging analysis of the recorded investment in loans segregated by class.
The following table summarizes the balances of non-accrual loans for December 31, 2024 and December 31, 2023.
December 31, 2024
Nonaccrual
Loans with No
Allowance
Nonaccrual
Loans with an
Allowance
Total
Nonaccrual
Loans
Commercial
$
—
$
—
$
—
Commercial Real Estate Construction
—
—
—
Commercial Real Estate Other
349,096
—
349,096
Consumer Real Estate
—
—
—
Consumer Other
—
—
—
Total
$
349,096
$
—
$
349,096
December 31, 2024
30-59 Days
Past Due
60-89 Days
Past Due
Greater
than 90
Days
Nonaccrual
Total
Past Due
Current
Total Loans
Receivable
Recorded
Investment
90 Days
and
Accruing
Commercial
$
-
$
4,984
$
-
$
-
$
4,984
$
55,732,089
$
55,737,073
$
-
Commercial Real
Estate
Construction
-
-
-
-
-
21,585,210
21,585,210
-
Commercial
Real
Estate Other
332,238
49,819
103,346
349,096
834,499
172,423,322
173,257,821
-
Consumer Real
Estate
-
-
-
-
-
109,711,491
109,711,491
-
Consumer Other
57,104
31,201
-
-
88,305
3,709,193
3,797,498
-
Total
$
389,342
$
86,004
$
103,346
$
349,096
$
927,788
$
363,161,305
$
364,089,093
$
-
December 31, 2023
30-59 Days
Past Due
60-89 Days
Past Due
Greater
than 90
Days
Nonaccrual
Total
Past Due
Current
Total Loans
Receivable
Recorded
Investment
90 Days
and
Accruing
Commercial
$
171,000
$
-
$
-
$
-
$
171,000
$
54,782,535
$
54,953,535
$
-
Commercial Real
Estate
Construction
-
-
-
-
-
25,884,216
25,884,216
-
Commercial
Real
Estate Other
796,588
-
-
327,471
1,124,059
169,649,452
170,773,511
-
Consumer Real
Estate
278,944
-
-
248,776
527,720
91,064,463
91,592,183
-
Consumer Other
22,987
-
-
-
22,987
3,763,613
3,786,600
-
Total
$
1,269,519
$
-
$
-
$
576,247
$
1,845,766
$
345,144,279
$
346,990,045
$
-
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
Nonaccrual
Loans with No
Allowance
Nonaccrual
Loans with an
Allowance
Total
Nonaccrual
Loans
Commercial
$
—
$
—
$
—
Commercial Real Estate Construction
—
—
—
Commercial Real Estate Other
327,471
—
327,471
Consumer Real Estate
248,776
—
248,776
Consumer Other
—
—
—
Total
$
576,247
$
—
$
576,247
We designate individually evaluated loans on nonaccrual status as collateral dependent loans, as well as other loans that management designates as having
higher risk. Collateral dependent loans are loans for which repayment is expected to be provided substantially through the operation or sale of the collateral
and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively
evaluated loans for determining the allowance for credit losses. Under CECL, for collateral dependent loans, we adopted the practical expedient to measure
the allowance for credit losses based on the fair value of the collateral. The allowance for credit losses is calculated on an individual loan basis based on
the shortfall between the fair value of the loan’s collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the
collateral exceeds the amortized cost, no allowance is required.
The following table details the amortized cost of collateral dependent loans:
December 31,
2024
December 31,
2023
Commercial
$
— $
—
Commercial Real Estate Construction
—
—
Commercial Real Estate Other
349,096
859,879
Consumer Real Estate
248,362
498,417
Consumer Other
—
—
Total
$
597,458 $
1,358,296
The following table sets forth the changes in the allowance for credit losses and an allocation of the allowance for credit losses by class for the year ended
December 31, 2024.
Year Ended December 31, 2024
Commercial
Commercial
Real Estate
Construction
Commercial
Real Estate
Other
Consumer Real
Estate
Consumer
Other
Total
Allowance for Credit Losses:
Beginning balance
$
616,013 $
403,165 $
1,097,507 $
1,561,456 $
44,072 $
3,722,213
Charge-offs
(121,421)
—
—
—
—
(121,421)
Recoveries
3,733
—
—
—
—
3,733
Provisions
113,068
(6,449)
(10,661)
4,045
(25,003)
75,000
Ending balance
$
611,393 $
396,716 $
1,086,846 $
1,565,501 $
19,069 $
3,679,525
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table sets forth the changes in the allowance for credit losses and an allocation of the allowance for credit losses by class for the year ended
December 31, 2023.
Commercial
Commercial Real
Estate Construction
Commercial
Real Estate
Other
Consumer
Real Estate
Consumer
Other
Total
Allowance for Credit Losses:
Beginning balance
$
735,759 $
230,625
$
2,216,484 $
1,014,777 $
93,576 $4,291,221
Adoption of ASU 2016-13
(82,001)
(36,509)
(314,522)
(160,802)
(6,166) (600,000)
Charge-offs
(46,341)
—
—
—
(2,077)
(48,418)
Recoveries
2,400
—
24,000
—
8,010
34,410
Provisions
6,196
209,049
(828,455)
707,481
(49,271)
45,000
Ending balance
$
616,013 $
403,165
$
1,097,507 $
1,561,456 $
44,072 $3,722,213
The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition.
The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables
to borrowers experiencing financial difficulty. We use the loss rate approach to determine the allowance for credit losses. An assessment of whether a
borrower is experiencing financial difficulty is made on the date of a modification.
Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because
of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification.
Occasionally, we modify loans by providing principal forgiveness on certain real estate loans. When principal forgiveness is provided, the amortized cost
basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that
portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.
In some cases, we will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is
granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.
There were $327,667 and $0 in loans modified for borrowers experiencing financial difficulty during the years ended December 31, 2024 and December
31, 2023.
The following table shows the amortized cost basis as of December 31, 2024, of the loans modified for borrowers experiencing financial difficulty,
disaggregated by class of loans, and describes the financial effect of the modifications made for borrowers experiencing financial difficulty:
Term Extension
Amortized Cost Basis
% of Total
Loan Type
Financial Effect
Commercial Real Estate Other
$
293,482
0.2% Forbearance agreement signed for one loan; eleven-
month deferral added to end of original term for one
loan.
Consumer Other
34,185
1.0% Reduced monthly payment for one loan.
Total
$
327,667
We maintain an allowance for credit loss – unfunded commitments for off-balance sheet credit exposures such as unfunded balances for existing lines of
credit, commitments to extend future credit, as well as both standby and commercial letters of credit when there is a contractual obligation to extend credit
and when this extension of credit is not unconditionally cancellable (i.e., commitment cannot be canceled at any time). The allowance for credit loss –
unfunded commitments is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur,
which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be
funded over its estimated life, which are the same loss rates that are used in computing the allowance for credit losses on loans. The allowance for credit
losses-unfunded loan commitments of $539,912 at December 31, 2024 and December 31, 2023, respectively, is classified on the balance sheet
within Accrued interest payable and other liabilities. During the year ended December 31, 2024 there was no provision for the allowance for credit loss
± unfunded commitments.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5.
CONCENTRATIONS OF CREDIT RISK
We grant short to intermediate term commercial and consumer loans to customers throughout our primary market area of Charleston, Berkeley and
Dorchester counties of South Carolina. Although we have a diversified loan portfolio, a substantial portion of our debtors’ ability to honor their contracts is
dependent upon the stability of the economic environment in their primary market. The majority of the loan portfolio is located in our immediate
market area with a concentration in real estate related activities.
Our loans were concentrated in the following categories.
December 31, 2024
December 31, 2023
15.31%
15.84%
5.93%
7.46%
48.68%
49.22%
29.04%
26.40%
1.04%
1.08%
100.00%
100.00%
Commercial
Commercial Real Estate Construction
Commercial Real Estate Other
Consumer Real Estate
Consumer Other
Total
6.
PREMISES, EQUIPMENT AND LEASEDHOLD IMPROVEMENTS
Premises, equipment and leasehold improvements are summarized in the table below.
December 31,
2024
2023
Bank buildings
$
1,861,237
$
1,861,237
Land
838,075
838,075
Leasehold purchases
30,000
30,000
Leasehold improvements
3,373,720
3,240,292
Construction in progress
-
31,654
Equipment
4,674,561
4,635,314
10,777,593
10,636,572
Accumulated depreciation
(6,968,286)
(6,551,869)
Total
$
3,809,307
$
4,084,703
Depreciation on our bank premises and equipment charged to operating expense totaled $416,417 and $372,950 during the years ended December 31, 2024,
and 2023, respectively.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7.
LEASES
As of December 31, 2024, and 2023, the Company had operating right of use (“ROU”) assets of $12.1 million and $12.8 million, respectively, and
operating lease liabilities of $12.1 million and $12.8 million, respectively. The Company maintains operating leases on land, branch facilities, and parking.
Operating leases generally contain initial fixed payment terms that adjust in future years based on the consumer price index or similar measure. Most
of the leases include one or more options to renew, with renewal terms extending up to 20 years. Leases with an initial term of 12 months or less are not
recorded on the balance sheet and are recognized in lease expense.
As of December 31, 2024, the weighted average remaining lease term is 12.17 years and the weighted average incremental borrowing rate is 5.50%.
The exercise of renewal options is based on the sole judgement of management and what they consider to be reasonably certain. Based on the market areas,
past practices, and contract terms of all leases, the Bank assumed all renewal options will be exercised. Minimum rental commitments for these leases as of
December 31, 2024 are presented in the table below.
2025
$
1,182,745
2026
1,182,745
2027
1,182,745
2028
1,182,745
2029
1,182,745
2030 and thereafter
15,857,490
Total undiscounted lease payments
$
21,771,215
Less: effect of discounting
(9,632,037)
Present value of estimated lease payments
$
12,139,178
The table below shows lease expense components for the years ended December 31, 2024 and 2023.
December 31,
Lease Expense Components:
2024
2023
Operating lease expense
$
1,341,184
$
1,239,861
Short-term lease expense
—
—
Total lease expense
$
1,341,184
$
1,239,861
As of December 31, 2024, we did not maintain any finance leases, and we determined that the number and dollar amount of equipment leases was immaterial.
As of December 31, 2024, we have no additional operating leases that have not yet commenced.
8.
DEPOSITS
As of December 31, 2024 and 2023, time deposits exceeding the FDIC insurance limit of $250,000 or more totaled approximately $43,098,983 and $15,054,652,
respectively, representing 81.7% and 60.7%, respectively, of time deposits. In addition, we consider any deposit customers with balances in excess of 5% of
total deposits to be large deposit customers. As of December 31, 2024 and 2023, we had no large deposit customers.
The scheduled maturities of certificates of deposit as of December 31, 2024 are presented in the table below:
2025
$
37,970,638
2026
14,304,946
2027
286,609
2028
159,903
2029 and thereafter
—
$
52,722,096
As of December 31, 2024 and 2023, deposits with a deficit balance of $41,843 and $29,666, respectively, were re-classified as other loans. The Company
held brokered deposits totaling $30,758,923 and $28,258,048 at December 31, 2024 and 2023, respectively which are obtained through third-party deposit
brokers and may be subject to certain regulatory restrictions and conditions.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9.
SHORT-TERM BORROWINGS
During the first quarter of 2023, the Federal Reserve authorized all twelve Reserve Banks to establish the Bank Term Funding Program (the “Program”)
to make available additional funding to eligible depository institutions in order to help assure banks have the ability to meet the needs of all their depositors.
The Program offers advances of up to one year in length to banks, savings associations, credit unions and other eligible depository institutions pledging
any collateral eligible for purchase by the Federal Reserve Bank in open market options, such as U.S. Treasuries, U.S. agency securities and U.S. agency
mortgage-backed securities. Advances are limited to the par value of the eligible collateral pledged by the eligible borrower. The Bank established a $25.0
million credit line under the Program during the first quarter of 2023 and subsequently increased the credit line by an additional $25.0 million during the
second quarter of 2023 to $50.0 million. As of December 31, 2024 and 2023, there were $0.0 and $46.0 million in borrowings under the Program,
respectively. The interest rate on borrowings under the Program is the one-year overnight swap rate plus 10 basis points and is fixed for the term of the
advance. All borrowings were repaid during 2024.
We have a Borrower-In-Custody arrangement with the Federal Reserve, which we established as an additional source of liquidity. This arrangement
permits the Company to retain possession of loans pledged as collateral to secure advances from the Federal Reserve Discount Window. Under this
agreement, we may borrow up to $75.2 million as of December 31, 2024. We had no outstanding borrowings under this arrangement at December 31,
2024 and 2023.
At December 31, 2024 and 2023, the Bank had unused short-term lines of credit totaling approximately $41.0 million (which are withdrawable at the
lender’s option).
10. INCOME TAXES
Total income taxes for the years ended December 31, 2024 and 2023 are presented in the table below.
Year ending December 31,
2024
2023
Current income taxes
Federal
$
1,734,207 $
1,089,154
State
303,579
257,968
Total current tax expense
2,037,786
1,347,122
Deferred income tax expense (benefit)
(45,781)
73,401
Total income tax expense
$
1,992,005 $
1,420,523
The differences between actual income tax expense and the amounts computed by applying the U.S. federal income tax rate of 21% to pretax income from
continuing operations for the periods indicated are reconciled in the table below.
Year ending December 31,
2024
2023
Computed “expected” tax expense
$
1,835,765 $
1,470,959
Increase (reduction) in income taxes resulting from:
Stock based compensation
(27,534)
14,276
Valuation allowance
(1,118)
2,047
Other
(19,586)
(212,588)
State income tax, net of federal benefit
239,827
203,795
Tax exempt interest income
(35,349)
(57,966)
$
1,992,005 $
1,420,523
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2024
and 2023 are presented below.
As of December 31,
2024
2023
Deferred tax assets:
Allowance for credit losses
$
772,700
$
781,665
Unrealized loss on securities available for sale
3,816,807
4,608,144
Deferred loan fees
67,196
44,484
Pass through income
183,801
185,753
State net operating loss carryforward
89,292
90,555
Nonaccrual interest
12,633
10,048
Other
114,524
113,611
Total gross deferred tax assets
5,056,953
5,834,260
Valuation allowance
(89,473)
(90,591)
Total gross deferred tax assets, net of valuation allowance
4,967,480
5,743,669
Deferred tax liabilities:
Fixed assets, principally due to differences in depreciation
(299,632)
(334,153)
Prepaid expenses
(2,767)
—
Other
(55,641)
(55,636)
Total gross deferred tax liabilities
(358,040)
(389,789)
Net deferred tax asset
$
4,609,440
$
5,353,880
There was a $89,473 and $90,591 valuation allowance for deferred tax assets at December 31, 2024 and 2023, respectively, associated with the Company’s
state tax credits. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences become deductible and prior to their expiration governed by the income tax code. Management
considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based
upon the level of historical taxable income and projections for future taxable income over the periods during which the deferred income tax assets are
expected to be deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the
existing valuation allowance at December 31, 2024 and 2023. The amount of the deferred income tax asset considered realizable, however, could be reduced
in the near term if estimates of future taxable income during the carry forward period are reduced.
The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected
to be recovered or paid.
The Company has analyzed the tax positions taken or expected to be taken in its tax returns and concluded it has no liability related to uncertain tax positions
in accordance with applicable regulations.
Tax returns for 2021 and subsequent years are subject to examination by taxing authorities.
11.
COMMITMENTS AND CONTINGENCIES
We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers.
These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of
credit, interest rate, and liquidity risk. Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument for
commitments to extend credit and standby letters of credit is essentially the same as that involved in extending loan facilities to customers. We use the
same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. If deemed necessary, the amount of
collateral obtained upon extension of credit is based on our credit evaluation of the borrower. Collateral held varies, but may include accounts receivable,
negotiable instruments, inventory, property, plant and equipment, and real estate. Commitments to extend credit, including unused lines of credit,
amounted to $135,581,447 and $140,058,580 at December 31, 2024 and 2023, respectively.
Standby letters of credit represent our obligation to a third-party contingent upon the failure by our customer to perform under the terms of an underlying
contract with the third party or obligates us to guarantee or stand as surety for the benefit of the third party. The underlying contract may entail either
financial or nonfinancial obligations and may involve such things as the shipment of goods, performance of a contract, or repayment of an obligation.
Under the terms of a standby letter, generally drafts will be drawn only when the underlying event fails to occur as intended. We can seek recovery of the
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
amounts paid from the borrower. Commitments under standby letters of credit are usually for one year or less. At December 31, 2024 and 2023, we have
recorded no liability for the current carrying amount of the obligation to perform as a guarantor; as such amounts are not considered material. The
maximum potential amount of undiscounted future payments related to standby letters of credit at December 31, 2024 and 2023 was $4,756,783 and
$2,646,283, respectively.
12. RELATED PARTY TRANSACTIONS
In the opinion of management, loans to our Executive Officers and Directors are made on substantially the same terms, including interest rates and
collateral, as those terms prevailing at the time for comparable loans with persons not related to the lender that do not involve more than the normal risk
of collectability. There were no past due loans to our Executive Officers and Directors as of December 31, 2024 and 2023.
The table below summarizes related party loans.
December 31, 2024
December 31, 2023
Balance at beginning of the year ..........................................................................
$
4,790,721
$
4,184,758
New loans or advances .........................................................................................
(34,307)
1,439,574
Repayments ..........................................................................................................
(1,113,844)
(833,611)
Balance at the end of the year ..............................................................................
$
3,642,570
$
4,790,721
At December 31, 2024 and 2023, total deposits held by related parties were $12,046,595 and $18,928,881, respectively.
13. OTHER EXPENSE
The table below summarizes the components of other operating expense.
For the year ended December 31,
2024
2023
$
236,825
$
217,090
324,355
333,357
56,359
87,360
56,140
55,765
55,450
54,075
19,337
12,954
638,336
538,979
$
1,386,802
$
1,299,580
Telephone and postage
State and FDIC insurance and fees
Supplies
Courier service
Insurance
Advertising and business
development Other
Total other operating expenses
14. STOCK INCENTIVE PLANS
We have two employee Stock Incentive Plans: the first plan, which was approved in 2010, has 300,000 (363,000 adjusted for two 10% stock dividends)
shares reserved and the second plan, which was approved in 2020, has 300,000 shares reserved. No new options may be granted under the 2010 plan, as it
expired on April 14, 2020. Under the 2020 plan, options are periodically granted to employees at a price not less than the fair market value of the shares at
the date of grant. Employees become 20% vested after five years and then vest 20% each year until fully vested. The right to exercise each such 20% of the
options is cumulative and will not expire until the tenth anniversary of the date of the grant. All employees are eligible to participate in the 2020 plan if
the Executive/Long-Range Planning Committee, in its sole discretion, determines that such person has contributed or can be expected to contribute to our
profits or growth. With respect to Executive Officers, the Executive/Long-Range Planning Committee will obtain approval from the Compensation
Committee for any options granted to them.
We also have a stock incentive plan to provide equity incentive compensation to the Company’s eligible independent directors. The plan was
approved by the shareholders in 2021 and has 150,000 shares reserved. Under the 2021 plan, options may be granted to eligible independent directors at
a price not less than the fair market value of the shares at the date of grant. Options granted to independent directors become vested as to 20% of the
options per year and will be fully vested after five years. The right to exercise each such 20% of the options is cumulative and will not expire until the
tenth anniversary of the date of the grant. Each independent director is eligible to participate in the 2021 plan if the Compensation Committee, in its sole
discretion, determines that such person has contributed or can be expected to contribute to our profits or growth.
Option awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant. The fair value
of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the
table below. Expected volatilities are based on historical volatilities of our common stock. The expected term of the options granted shall not exceed ten
years from the date of grant (the amount of time options granted are expected to be outstanding). The risk-free interest rate for the expected term of the
option is based on the U.S. Treasury yield curve in effect at the time of the grant.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The fair value of options granted was determined using the following weighted-average assumptions as of grant date:
2024
2023
Risk free interest rate
4.70 %
4.15%
Expected life (in years)
7.50
6.19
Expected stock price volatility
37.10 %
36.95%
Dividend yield
4.17 %
4.08%
The following table presents a summary of the activity under the 2010, 2020 and 2021 Stock Incentive Plans for the years ended December 31:
2024
2023
Options
Weighted
Average Exercise
Price
Options
Weighted
Average Exercise
Price
Outstanding, January 1
258,193 $
14.93
254,412 $
17.56
Granted
90,016
12.32
133,250
13.43
Exercised
—
—
—
—
Forfeited
(85,983)
16.46 (129,469)
18.43
Outstanding, December 31
262,226 $
13.43
258,193 $
14.93
Exercisable at year end
22,060 $
13.71
9,316 $
12.75
The following table presents information pertaining to options outstanding at December 31, 2024.
Exercise
Price
Number of
Options
Outstanding
Weighted
Average
Remaining
Contractual
Life
Weighted
Average Exercise
Price of Options
Outstanding
Intrinsic Value
of Options
Outstanding
Number of
Options
Exercisable
Weighted
Average
Exercise Price
of Options
Exercisable
Intrinsic
Value of
Options
Exercisable
$
12.07
88,666
9.33 $
12.07 $
5,877
— $
12.26 $
—
$
13.05
7,260
0.33 $
13.05 $
6,428
7,260 $
13.05 $
—
$
13.31
105,000
9.01 $
13.31 $
65,570
13,000 $
13.31 $
—
$
13.47
13,750
8.59 $
13.47 $
7,796
— $
13.47 $
—
$
14.64
10,000
9.01 $
14.64 $
—
— $
14.64 $
—
$
15.21
23,500
5.33 $
15.21 $
—
— $
15.21 $
—
$
18.23
6,650
3.25 $
18.23 $
—
660 $
18.23 $
—
$
19.82
2,400
5.33 $
19.82 $
—
1,140 $
19.82 $
—
$
20.04
5,000
6.58 $
20.04 $
—
— $
20.04 $
—
262,226
8.30 $
13.43 $
85,671
22,060 $
12.75 $
—
The total intrinsic value of options exercised during the years ended December 31, 2024 and 2023 was $0 and $11,020, respectively. Shares issued upon
exercise of stock options are obtained from the authorized and unissued pool of common stock. Shares surrendered as payment of the stock
option exercise price are included in treasury stock.
We recognized compensation cost for the years ended December 31, 2024 and 2023 in the amount of ($127,446) and $68,897, respectively, related to
the granted options.
As of December 31, 2024, there was a total of $371,925 in unrecognized compensation cost related to nonvested share-based compensation
arrangements granted under the Plan. The cost is expected to be recognized over a weighted average period of 4.99 years.
15. EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
We established an Employee Stock Ownership Plan and Trust (“ESOP”) effective January 1, 1989. Any employee of the Bank is eligible to become
a participant in the ESOP upon reaching 21 years of age and credited with one-year of service (1,000 hours of service). The employee may enter the Plan
on the January 1st that occurs nearest the date on which the employee first satisfies the age and service requirements described above.
No contributions by employees are permitted. The amount and time of contributions are at the sole discretion of the Board of Directors of the Bank.
The contribution for all participants is based solely on each participant’s respective regular or base salary and wages paid by the Bank
including commissions, bonuses and overtime, if any.
The Company recognizes expense when the contribution is approved by the Board of Directors. The total expenses amounted to $600,638 and
$600,000 during the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, the plan owned 387,901
and 356,002 shares, respectively, of common stock of the Company.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A participant vests in the ESOP based upon the participant’s credited years of service. The vesting schedule is as follows:
•
1 Year of Service
0% Vested
•
2 Years of Service
25% Vested
•
3 Years of Service
50% Vested
•
4 Years of Service
75% Vested
•
5 Years of Service
100% Vested
Periodically, the Internal Revenue Service “IRS” requires a restatement of a qualified retirement plan to ensure that the plan document includes provisions
required by legislative and regulatory changes made since the last restatement. There have been no substantive changes to the plan. The Board of Directors
approved a restated plan, on January 26, 2012. The Plan was submitted to the IRS for approval and a determination letter was issued September 26, 2013,
stating that the plan satisfies the requirements of Code Section 4975(e)(7). On January 26, 2017, the Board of Directors approved a restated plan. The Plan
was submitted to the IRS for approval and a determination letter was issued November 17, 2017, stating that the plan satisfies the requirements of Code
Section 4975(e)(7). On June 30, 2020, the IRS issued an opinion letter for a non-standardized pre-approved profit sharing/CODA/ESOP plan document.
On May 25, 2023, the Board of Directors approved a restated plan utilizing this pre-approved document.
16. DIVIDENDS
The Bank’s ability to pay dividends to the Company is restricted by the laws and regulations of the State of South Carolina. Generally, these restrictions
allow the Bank to pay dividends from current earnings without the prior written consent of the South Carolina Commissioner of Banking, if it
received a satisfactory rating at its most recent examination. Cash dividends when declared, are paid by the Bank to the Company for distribution to
shareholders of the Company. The Bank paid dividends of $4.1 million and $4.0 million to the Company during the years ended December 31, 2024 and
2023, respectively.
7. INCOME PER COMMON SHARE
The following table is a summary of the reconciliation of weighted average shares outstanding for the years ended December 31:
2024
2023
Net income
$
6,749,736 $
5,493,616
Weighted average shares outstanding
5,454,342
5,528,596
Effect of dilutive shares
51,807
97,543
Weighted average shares outstanding – diluted
5,506,149
5,626,139
Earnings per share – basic
$
1.24 $
0.99
Earnings per share – diluted
$
1.23 $
0.98
18. REGULATORY CAPITAL REQUIREMENTS
The Company and the Bank are subject to various capital requirements administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material
effect on the Company and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action,
the Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance sheet items as calculated
under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgements by the regulators about
components, risk weightings, and other factors.
On July 2, 2013, the Federal Reserve Board approved the final rules implementing the Basel Committee on Banking Supervision’s (“BCBS”) capital
guidelines for U.S. banks (“Basel III”). Following the actions by the Federal Reserve, the FDIC also approved regulatory capital requirements on July 9,
2013. The FDIC’s rule is identical in substance to the final rules issued by the Federal Reserve Bank.
Basel III became effective on January 1, 2015 and its purpose is to improve the quality and increase the quantity of capital for all banking organizations.
The rule was phased in over a four-year period, with full implementation occurring on January 1, 2019. The minimum requirements for the quantity and
quality of capital were increased. The rule includes a new common equity Tier 1 capital (as defined in the regulation) to risk-weighted assets ratio of 4.50%
and a common equity Tier 1 capital conservation buffer of 2.50% of risk-weighted assets. The rule also raises the minimum ratio of Tier 1 capital to risk-
weighted assets from 4.00% to 6.00% and requires a minimum leverage ratio of 4.00%. In addition, the rule also implements strict eligibility criteria for
regulatory capital instruments and improves the methodology for calculating risk-weighted assets to enhance risk sensitivity. On November 4, 2019, the
federal banking agencies jointly issued a final rule on an optional, simplified measure of capital adequacy for qualifying community banking organizations
called the community bank leverage ratio (“CBLR”) framework effective on January 1, 2020. A qualifying community banking organization is defined as
having less than $10 billion in total consolidated assets, a leverage ratio greater than 9%, off-balance sheet exposures of 25% or less of total consolidated
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
assets, and trading assets and liabilities of 5% or less of total consolidated assets. Additionally, the qualifying community banking institution must be a non-
advanced approaches FDIC supervised institution. The final rule adopts Tier 1 capital and existing leverage ratio into the CBLR framework. The Bank
adopted this rule as of September 30, 2020 and is no longer subject to other capital and leverage requirements. Under the CBLR framework, a qualifying
community banking organization is deemed to have met the “well capitalized” ratio requirements and be in compliance with the generally applicable capital
rule.
The following table presents the actual CBLR for the Bank and Company at:
December 31, 2024
December 31, 2023
Bank
11.08%
9.73%
Company
10.97%
9.64%
We believe that the Company and the Bank meet all capital adequacy requirements to which they were subject at December 31, 2024 and 2023.
19. DISCLOSURES REGARDING FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value measurements apply whenever GAAP requires or permits assets or liabilities to be measured at fair value either on a recurring or
nonrecurring basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous
market in an orderly transaction between market participants at the measurement date. An orderly transaction is a transaction that assumes exposure to
the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such
assets or liabilities; it is not a forced transaction. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of
observable inputs and minimizes the use of unobservable inputs. Observable inputs, which are developed based on market data we have obtained from
independent sources, are ones that market participants would use in pricing an asset or liability. Unobservable inputs, which are developed based
on the best information available in the circumstances, reflect our estimate of assumptions that market participants would use in pricing an asset or
liability.
The fair value hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets or liabilities (Level 1
measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The fair value hierarchy is broken down into three levels based on
the reliability of inputs as follows:
•
Level 1: valuation is based upon unadjusted quoted market prices for identical instruments traded in active markets.
•
Level 2: valuation is based upon quoted market prices for similar instruments traded in active markets, quoted market prices for identical or similar
instruments traded in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the
market or can be corroborated by market data.
•
Level 3: valuation is derived from other valuation methodologies, including discounted cash flow models and similar techniques that use
significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants
would use in determining fair value.
Fair value estimates are made at a specific point of time, based on relevant market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from offering for sale our entire holdings of a particular financial instrument. Because
no active market exists for a significant portion of our financial instruments, fair value estimates are based on judgment regarding future expected loss
experience, current economic conditions, current interest rates and prepayment trends, risk characteristics of various financial instruments, and other factors.
These estimates are subjective in nature and involve uncertainties and matters of significant judgement and therefore cannot be determined with precision.
Changes in any of these assumptions used in calculating fair value would also significantly affect the estimates. In addition, the tax ramifications related to
the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of these estimates.
The following paragraphs describe the valuation methodologies used for assets recorded at fair value on a recurring basis:
Investment Securities Available for Sale
Investment securities are recorded at fair value on a recurring basis and are based upon quoted prices if available. If quoted prices are not available, fair
value is measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for
the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active
exchange such as the New York Stock Exchange, or by dealers or brokers in active over-the counter markets. Level 2 securities include mortgage-backed
securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed and
municipal securities in less liquid markets.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Derivative Instruments
Derivative instruments include interest rate lock commitments and forward sale commitments. These instruments are valued based on the change in the value
of the underlying loan between the commitment date and the end of the period. We classify these instruments as Level 3.
We had no embedded derivative instruments requiring separate accounting treatment. We had freestanding derivative instruments consisting of fixed rate
conforming loan commitments with interest rate locks and commitments to sell fixed rate conforming loans on a best-efforts basis. We do not currently
engage in hedging activities. Based on the short-term nature of mortgage loans to be sold (derivative contract), our derivative instruments were immaterial
to our consolidated financial statements as of December 31, 2024 and 2023.
The following table presents information about assets measured at fair value on a recurring basis as of December 31, 2024 and 2023.
Balance as of December 31, 2024
Level 1
Level 2
Level 3
Total
U.S. Treasury Notes
$
76,772,411 $
— $
— $
76,772,411
Government-Sponsored Enterprises
—
53,107,927
—
53,107,927
Municipal Securities
—
13,282,687
14,307,597
27,590,284
Total
$
76,772,411 $
66,390,614 $
14,307,597 $
157,470,622
Balance as of December 31, 2023
Level 1
Level 2
Level 3
Total
U.S. Treasury Notes
$
153,081,516 $
— $
— $
153,081,516
Government-Sponsored Enterprises
—
53,738,156
—
53,738,156
Municipal Securities
—
16,505,244
17,891,537
34,396,781
Total
$
153,081,516 $
70,243,400 $
17,891,537 $
241,216,453
There were no liabilities recorded at fair value on a recurring basis as of December 31, 2024 or 2023.
The following table reconciles the changes in assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years
ended December 31, 2024 and 2023.
December 31, 2024
December 31, 2023
Beginning balance
$
17,891,537 $
29,461,812
Total realized/unrealized gains (losses)
Included in earnings
—
—
Included in other comprehensive income
2,455,240
(10,684,275)
Purchases, issuances, and settlements net of maturities
(6,039,180)
(886,000)
Transfers in and/or out of Level 3
—
—
Ending balance
$
14,307,597 $
17,891,537
The following paragraphs describe the valuation methodologies used for assets recorded at fair value on a nonrecurring basis:
Individually Assessed Loans
Individually assessed loans are carried at the lower of recorded investment or fair value. The fair value of the collateral less estimated costs to sell is the
most frequently used method. Typically, we review the most recent appraisal and if it is over 12 to 18 months old, we may request a new third-party
appraisal. Depending on the particular circumstances surrounding the loan, including the location of the collateral, the date of the most recent appraisal
and the value of the collateral relative to the recorded investment in the loan, we may order an independent appraisal immediately or, in some instances,
may elect to perform an internal analysis. Specifically, as an example, in situations where the collateral on a nonperforming commercial real estate loan is
out of our primary market area, we would typically order an independent appraisal immediately when the loan becomes nonperforming.
However, as a second example, on a nonperforming commercial real estate loan where we are familiar with the property and surrounding areas and where
the original appraisal value far exceeds the recorded investment in the loan, we may perform an internal analysis whereby the previous appraisal value
would be reviewed considering recent current conditions and known recent sales or listings of similar properties in the area, and any other relevant economic
trends. This analysis may result in the call for a new appraisal. These valuations are reviewed and updated on a quarterly basis.
In accordance with ASC 820, Fair Value Measurement, individually assessed loans, where an allowance is established based on the fair value of collateral,
require classification in the fair value hierarchy. These individually assessed loans are classified as Level 3. Individually assessed loans measured using
discounted future cash flows are not deemed to be measured at fair value.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Mortgage Loans to be Sold
Mortgage loans to be sold are carried at the lower of cost or market value. The fair values of mortgage loans to be sold are based on current market rates
from investors within the secondary market for loans with similar characteristics. Carrying value approximates fair value. These loans are classified as
Level 2.
Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for
example, when there is evidence of impairment). The following tables present information about certain assets measured at fair value on a nonrecurring
basis as of December 31, 2024 and 2023.
December 31, 2024
Level 1
Level 2
Level 3
Total
Individually assessed loans
$
— $
— $
597,459 $
597,459
Mortgage loans to be sold
—
5,012,224
—
5,012,224
Total
$
— $
5,012,224 $
597,459 $
$5,609,683
December 31, 2023
Level 1
Level 2
Level 3
Total
Individually assessed loans
$
— $
— $
1,358,296 $
1,358,296
Mortgage loans to be sold
—
2,130,899
—
2,130,899
Total
$
— $
2,130,899 $
1,358,296 $
3,489,195
There were no liabilities measured at fair value on a nonrecurring basis as of December 31, 2024 or 2023.
The following table provides information describing the unobservable inputs used in Level 3 fair value measurements at December 31, 2024
and December 31, 2023.
Inputs
Valuation Technique
Unobservable
Input
General Range of Inputs
Individually Assessed Loans
Appraisal Value/Comparison
Sales/Other Estimates
Appraisals and/or Sales of
Comparable Properties
Appraisals Discounted
10% to 20% for Sales
Commissions and Other
Holding Costs
Accounting standards require disclosure of fair value information for all of our assets and liabilities that are considered financial instruments, whether or
not recognized on the balance sheet, for which it is practicable to estimate fair value.
Under the accounting standard, fair value estimates are based on existing financial instruments without attempting to estimate the value of anticipated
future business and the value of the assets and liabilities that are not financial instruments. Accordingly, the aggregate fair value amounts of existing
financial instruments do not represent the underlying value of those instruments on our books.
The following paragraphs describe the methods and assumptions we use in estimating the fair values of financial instruments:
a. Cash and due from banks, interest-bearing deposits at the Federal Reserve Bank
The carrying value approximates fair value. All instruments mature within 90 days and do not present unanticipated credit concerns.
b. Investment securities available for sale
Investment securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available.
If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the
present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions.
c. Loans
The fair value of the Company’s loan portfolio includes a credit risk assumption in the determination of the fair value of its loans. This credit risk
assumption is intended to approximate the fair value that a market participant would realize in a hypothetical orderly transaction. The Company’s loan
portfolio is initially fair valued using a segmented approach. The Company divides its loan portfolio into the following categories: variable rate loans,
individually assessed loans and all other loans. The results are then adjusted to account for credit risk as described above. However, under ASC 326,
the Company believes a further credit risk discount must be applied through the use of a discounted cash flow model to compensate for illiquidity risk,
based on certain assumptions included within the discounted cash flow model, primarily the use of discount rates that better capture inherent credit risk
over the lifetime of a loan. Additionally, in accordance with ASU 2016-01, Recognition and Measurement of Financial Assets and Liabilities, this
consideration of enhanced credit risk provides an estimated exit price for the Company’s loan portfolio.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values approximate carrying values. Fair values for
individually assessed loans are estimated based on the fair value of the underlying collateral. Individually assessed loans measured using discounted
future cash flows are not deemed to be measured at fair value.
d. Deposits
The estimated fair value of deposits with no stated maturity is equal to the carrying amount. The fair value of time deposits is estimated by discounting
contractual cash flows, using interest rates currently being offered on the deposit products. The fair value estimates for deposits do not include the benefit
that results from the low-cost funding provided by the deposit liabilities as compared to the cost of alternative forms of funding (deposit base intangibles).
e. Accrued interest receivable and payable
Since these financial instruments will typically be received or paid within three months, the carrying amounts of such instruments are deemed a
reasonable estimate of fair value.
f. Loan commitments
Estimates of the fair value of these off-balance sheet items are not made because of the short-term nature of these arrangements and the credit standing
on the counterparties.
e. Short-term borrowings
Due to the short-term nature of the borrowings, the carrying amount of such instruments are deemed to be a reasonable estimate of fair value.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables present the carrying amount, fair value, and placement in the fair value hierarchy of our financial instruments as of December 31,
2024 and 2023, respectively.
Fair Value Measurements at December 31, 2024
Carrying
Amount
Estimated Fair
Value
Level 1
Level 2
Level 3
Financial Assets:
Cash and due from banks
$
6,202,303 $
6,202,303 $
6,202,303 $
— $
—
Interest-bearing deposits at the Federal
Reserve
4,804,819
4,804,819
4,804,819
—
—
Investment securities available for sale
157,470,622
157,470,622
76,772,411
66,390,614
14,307,597
Mortgage loans to be sold
5,012,224
5,012,224
—
5,012,224
—
Loans, net
360,409,568
346,440,414
—
—
346,440,414
Accrued interest receivable
2,012,059
2,012,059
—
2,012,059
—
Financial Liabilities:
Demand deposits
437,190,262
437,190,262
—
437,190,262
—
Time deposits
52,722,096
54,849,796
—
54,849,796
—
Accrued interest payable
513,391
513,391
—
513,391
—
Short-term borrowings
—
—
—
—
—
Fair Value Measurements at December 31, 2023
Carrying
Amount
Estimated Fair
Value
Level 1
Level 2
Level 3
Financial Assets:
Cash and due from banks
$
14,665,148 $
14,665,148 $
14,665,148 $
— $
—
Interest-bearing deposits at the Federal
Reserve
7,250,912
7,250,912
7,250,912
—
—
Investment securities available for sale
241,216,453
241,216,453
153,081,516
70,243,400
17,891,537
Mortgage loans to be sold
2,130,899
2,130,899
—
2,130,899
—
Loans, net
343,267,832
316,792,809
—
—
316,792,809
Accrued interest receivable
2,380,972
2,380,972
—
2,380,972
—
Financial Liabilities:
Demand deposits
500,909,063
500,909,063
—
500,909,063
—
Time deposits
24,793,475
29,580,987
—
29,580,987
—
Accrued interest payable
201,776
201,776
—
201,776
—
Short-term borrowings
46,000,000
46,000,000
—
46,000,000
—
20.
BANK OF SOUTH CAROLINA CORPORATION - PARENT COMPANY
The Company’s principal source of income is dividends from the Bank. Certain regulatory requirements restrict the amount of dividends which the Bank
can pay to the Company. The Company’s principal asset is its investment in its Bank subsidiary. The Company’s condensed statements of financial
condition as of December 31, 2024 and 2023, and the related condensed statements of income and cash flows for the years ended December 31, 2024 and
2023, are as follows:
Condensed Statements of Financial Condition
December 31,
2024
2023
Assets
Cash
$
1,185,147 $
1,040,661
Investment in wholly-owned bank subsidiary
51,709,666
46,561,551
Other assets
438,423
408,422
Total assets
$
53,333,236 $
48,010,634
Liabilities and shareholders’ equity
Dividends Payable
$
1,032,224 $
929,772
Shareholders’ equity
52,301,012
47,080,862
Total liabilities and shareholders’ equity
$
53,333,236 $
48,010,634
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Condensed Statements of Income
For the Years Ended December 31,
2024
2023
Interest income
$
1,244
$
1,221
Net operating income (expenses)
2,287
(240,231)
Dividends received from subsidiary
4,125,000
3,950,000
Distribution from subsidiary for repurchase of common
shares
450,000
1,000,000
Equity in undistributed earnings of subsidiary
2,171,205
782,626
Net income
$
6,749,736
$
5,493,616
Condensed Statements of Cash Flows
For the Years Ended December 31,
2024
2023
Cash flows from operating activities:
Net income
$
6,749,736 $
5,493,616
Stock-based compensation (surrender) expense
(127,446)
68,897
Equity in undistributed earnings of subsidiary
(2,171,205)
(782,626)
Increase in other assets
(30,001)
(70,100)
Net cash provided by operating activities
4,421,084
4,709,787
Cash flows from financing activities:
Dividends paid
(3,820,940)
(3,763,578)
Repurchase of common shares
(455,658)
(982,630)
Net cash used in financing activities
(4,276,598)
(4,746,208)
Net increase (decrease) in cash
144,486
(36,421)
Cash at the beginning of the year
1,040,661
1,077,082
Cash at the end of the year
$
1,185,147 $
1,040,661
Supplemental disclosure for non-cash investing and
financing activity
Change in dividends payable
$
102,483 $
(14,127)
Charles G. Lane
Managing Member
Holcombe, Fair & Lane
Graham M. Eubank, Jr.**
President & CEO
Palmetto Ford
Malcolm M. Rhodes, MD
Retired
Parkwood Pediatric Group
David W. Bunch
Chairman & CEO
Hughes Motors
Richard W. Hutson, Jr.
Manager
William M. Means Co. Insurance
William L. Hiott, Jr.
Retired CFO
Bank of South Carolina Corporation
Elizabeth M. Hagood
Former Executive Director
Lowcountry Land Trust
Sheryl G. Sharry
Retired CFO
Bank of South Carolina Corporation
Glen B. Haynes, DVM
Retired
Westbury Veterinary Clinic
Karen J. Phillips
President
Atlantic Coast Asset Management
Hugh C. Lane, Jr.*
Chairman of the Board
Bank of South Carolina Corporation
Fleetwood S. Hassell
Retired President & CEO
Bank of South Carolina Corporation
Douglas H. Sass
Executive Vice President
& Senior Lender
Bank of South Carolina Corporation
Eugene H. Walpole, IV
President & CEO
Bank of South Carolina Corporation
Susanne K. Boyd
Executive Vice President
& COO
Bank of South Carolina Corporation
B O A R D O F D I R E C T O R S
CORPORATE HEADQUARTERS
256 Meeting Street
P.O. Box 538
Charleston, SC 29401
843-724-1500
TRANSFER AGENT
Computershare Investor Services
150 Royall Street
Canton, MA 02021
877-373-6374
STOCK INFORMATION
The common stock of Bank of South Carolina
Corporation is traded on the OTCQX®
Best Market under the symbol “BKSC.”
INDEPENDENT AUDITORS
Elliott Davis, LLC
355 South Main Street
Greenville, SC 29601
ANNUAL MEETING
April 8, 2025
2:00 PM EST
9403 Highway 78
North Charleston, SC 29456
FORWARD-LOOKING STATEMENTS
Certain statements herein may constitute forward-
looking statements, which involve a number of
risks and uncertainties. We caution readers that any
forward-looking statements are based largely on our
expectations and are subject to a number of known
and unknown risks and uncertainties that are subject to
change based on factors which are, in many instances,
beyond our control. Additional information regarding
these risks and uncertainties to which our business and
future financial performance are subject is contained in
our most recent Annual Report. Any forward-looking
statements presented herein are made only as of the
date of this Annual Report, and we do not undertake
any obligation to update or revise any forward-looking
statements to reflect changes in assumptions, new
information, the occurrence of unanticipated events,
or otherwise, except as required by law. All forward-
looking statements, express or implied, included in this
Annual Report are qualified in their entirety by this
cautionary statement.
OFFICERS
Hugh C. Lane, Jr.
Chairman
Eugene H. Walpole, IV
President & CEO
Douglas H. Sass
Executive Vice President
& Senior Lender
Susanne K. Boyd
Executive Vice President & COO
Richard W. Hutson, Jr.
Secretary
Corporate Information
Josette R. E. Pelzer, Ph.D., CPA
Assistant Professor of Accounting
College of Charleston
* Chairman
** Lead Director
Thaddeus T. Shuler
President & CEO
Southern Lumber and Millwork
BKSC
www.banksc.com
256 Meeting Street
Charleston, SC 29401
P: 843-724-1500
F: 843-724-1513
100 North Main Street
Summerville, SC 29483
P: 843-832-7100
F: 843-832-7115
1337 Chuck Dawley Blvd.
Mt. Pleasant, SC 29464
P: 843-971-3300
F: 843-971-3315
2027 Sam Rittenberg Blvd.
Charleston, SC 29407
P: 843-958-1041
F: 843-958-1050
9403 Highway 78
North Charleston, SC 29456
P: 843-974-8701
F: 843-724-1530
1730 Maybank Hwy.
Charleston, SC 29412
P: 843-974-8680
F: 843-212-8330