NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
1: Nature of Business and Basis of Presentation
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.
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 purposes.
Basis
of Presentation
The
accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally
accepted accounting principles (“GAAP”), for the interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, our interim consolidated financial statements do not include all of the
information and footnotes required by GAAP for complete financial statements and should be read in conjunction with our
Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 3, 2018. In the
opinion of management, these interim financial statements present fairly, in all material respects, the Company’s
consolidated financial position and results of operations for each of the interim periods presented. Results of operations
for interim periods are not necessarily indicative of the results of operations that may be expected for a full year or any
future period.
Accounting
Estimates and Assumptions
The
preparation of the consolidated financial statements requires 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 loan losses, impaired loans, other real estate owned, deferred tax
assets, the fair value of financial instruments and other-than-temporary impairment of investment securities.
Reclassification
Certain
amounts in the prior years’ financial statements have been reclassified to conform to the current period’s presentation.
Such reclassifications had no effect on shareholders’ equity or the net income as previously reported.
Income
per share
Basic
income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period.
Dilutive income 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. Retroactive recognition has been given for the effects of all stock dividends.
On March 22, 2018, the Company approved a 10% stock dividend
payable May 31, 2018 to shareholders of record as of April 30, 2018. Shares and share data have been adjusted retroactively to
reflect the stock dividend.
BANK
OF SOUTH CAROLINA CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
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 at 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 at the date of the balance sheet but arose after that date.
We have reviewed events occurring through the date the financial statements were available to be issued and no subsequent events
occurred requiring accrual or disclosure.
Recent
Accounting Pronouncements
The
following is a summary of recent authoritative pronouncements that could impact the accounting, reporting and/or disclosure of
financial information by the Company.
In
May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2014-09,
Revenue from Contracts with Customers, Topic 606.
The core principle of the new standard is that an entity should
recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity
receives or expects to receive. This guidance also includes expanded disclosure requirements that result in an entity providing
users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and
cash flows arising from the entity’s contracts with customers. The guidance became effective January 1, 2018. The amendment
does not apply to revenue associated with financial instruments, such as loans and investment securities available for sale, and
therefore had no material effect on our consolidated financial statements.
In
January 2016, the FASB issued ASU 2016-01,
Financial Instruments – Overall (Subtopic 825-10); Recognition and Measurement
of Financial Instruments and Financial Liabilities.
This update addresses certain aspects of recognition, measurement, presentation,
and disclosure of financial instruments. The amendments became effective on January 1, 2018 and did not have a material effect
on the financial statements.
In
February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842),
which revises certain aspects of recognition,
measurement, presentation, and disclosure of leasing transactions. The amendments will be effective for fiscal years
beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the
effect that implementation of the new standard will have on our results of operations and cash flows, and financial position.
In
March 2016, the FASB issued ASU 2016-08,
Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations
(Reporting Revenue Gross versus Net),
to clarify the implementation guidance on principal versus agent considerations and
address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties.
The guidance became effective January 1, 2018. The Company completed an assessment of revenue streams and a review of related
contracts potentially affected by the ASU and, based on this assessment, the Company concluded that the ASU did not materially
change the method in which the Company currently recognizes revenue for these revenue streams. As such, a cumulative effect adjustment
to opening retained earnings was not deemed necessary.
In
April 2016, the FASB issued ASU 2016-10,
Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations
and Licensing
, to clarify guidance related to identifying performance obligations and accounting for licenses of intellectual
property. The amendment became effective for the Company January 1, 2018 and did not have a material effect on the financial statements.
In
May 2016, the FASB issued ASU 2016-12,
Revenue from Contracts with Customers (Topic 606): Narrow- Scope Improvements and Practical
Expedients
, to clarify guidance related to collectability, noncash consideration, presentation of sales tax, and transition.
The amendment became effective on January 1, 2018 and did not have a material effect on the financial statements.
In
June 2016, the FASB issued ASU 2016-13,
Financial instruments – Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments,
to change the accounting for credit losses and modify the impairment model for certain debt securities.
The amendments will be effective for the Company for reporting periods beginning after December 15, 2019. Early adoption is permitted
for all organizations for periods beginning after December 15, 2018. The Company is currently evaluating the effect that implementation
of the new standard will have on its financial position, results of operations, and cash flows.
In
August 2016, the FASB issued ASU 2016-15,
Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and
Cash Payments,
to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash
flows. The amendment became effective on January 1, 2018 and did not have a material effect on the financial statements.
BANK
OF SOUTH CAROLINA CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
In
December 2016, the FASB issued ASU 2016-20,
Technical Corrections and Improvements to Topic 606, Revenue from Contracts with
Customers
. These corrections make a limited number of revisions to several pieces of the revenue recognition standard issued
in 2014. The amendment became effective on January 1, 2018 and did not have a material effect on the financial statements.
In
January 2017, the FASB issued ASU 2017-01,
Clarifying the Definition of a Business
, which provided guidance to assist with
evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The update is
intended to address concerns that the existing definition of a business has been applied too broadly and has resulted in many
transactions being recorded as business acquisitions that in substance are more akin to asset acquisitions. The amendments became
effective on January 1, 2018 and did not have a material effect on the financial statements.
In
February 2017, the FASB issued ASU 2017-05,
Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial
Sales of Nonfinancial Assets
, to clarify the scope of established guidance on nonfinancial asset derecognition, issued as
part of ASU 2014-09,
Revenue from Contracts with Customers
, as well as accounting for partial sales of nonfinancial assets.
The amendments conform the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue standard.
The amendments became effective on January 1, 2018 and did not have a material effect on the financial statements.
In
March 2017, the FASB issued ASU 2017-08,
Receivables – Nonrefundable Fees and Other Costs
(Subtopic 310-20):
Premium
Amortization of Purchased Callable Debt Securities
, which shortens the amortization period for the premium to the earliest
call date. The amendment will be effective for the Company for interim and annual periods beginning after December 15, 2018. Early
adoption is permitted. The Company does not expect this amendment to have a material effect on its financial statements.
In
February 2018, the FASB issued ASU 2018-02,
Income Statement – Reporting Comprehensive Income
(Topic 220):
Reclassification
of Certain Tax Effects from Accumulated Other Comprehensive Income
, which requires companies to reclassify the stranded effects
in other comprehensive income to retained earnings as a result of the change in the tax rates under the Tax Cuts and Jobs Act
(the 2017 Tax Act”). The Company adopted this pronouncement early by retrospective application to each period in which the
effect of the change in the tax rate under the 2017 Tax Act is recognized. The impact of the reclassification from other comprehensive
income to retained earnings was included in the Statement of Changes in Shareholders’ Equity for the year ended December
31, 2017.
In
February 2018, the FASB issued ASU 2018-03,
Technical Corrections and Improvements to Financial Instruments—Overall
(Subtopic
825-10):
Recognition and Measurement of Financial Assets and Financial Liabilities
to clarify certain aspects of the guidance
issued in ASU 2016-01. The amendments will be effective for the third quarter of 2018 subsequent to adopting the amendments in
ASU 2016-01. All entities may early adopt these amendments for fiscal years beginning after December 15, 2017, including interim
periods within those fiscal years, as long as they have adopted ASU 2016-01. The Company does not expect these amendments to have
a material effect on its financial statements.
In
March 2018, the FASB issued ASU 2018-4,
Investments—Debt Securities
(Topic 320)
and Regulated Operations
(Topic
980):
Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273
which
incorporate into the Accounting Standards Codification recent SEC guidance which was issued in order to make the relevant interpretive
guidance consistent with current authoritative accounting and auditing guidance and SEC rules and regulations. The amendments
were effective upon issuance. The Company does not expect these amendments to have a material effect on its financial statements.
In
March 2018, the FASB issued ASU 2018-05,
Income Taxes
(Topic 740):
Amendments to SEC Paragraphs Pursuant to SEC Staff
Accounting Bulletin No. 118
. The amendments incorporate into the Accounting Standards Codification recent SEC guidance related
to the income tax accounting implications of the Tax Cuts and Jobs Act. The amendments were effective upon issuance. The Company
does not expect these amendments to have a material effect on its financial statements.
In
May 2018, the FASB amended the Financial Services – Depository and Lending Topic of the ASC to remove outdated guidance
related to Circular 202. The amendments were effective upon issuance and did not have a material effect on the 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
Note
2: Investment Securities
The
amortized cost, gross unrealized gains and losses, and estimated fair value of investment securities available for sale are
summarized as follows:
|
|
|
June 30, 2018
|
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Estimated
Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Notes
|
|
$
|
32,969,932
|
|
|
$
|
—
|
|
|
$
|
(939,735
|
)
|
|
$
|
32,030,197
|
|
|
Government-Sponsored Enterprises
|
|
|
60,768,977
|
|
|
|
—
|
|
|
|
(1,847,892
|
)
|
|
|
58,921,085
|
|
|
Municipal Securities
|
|
|
29,268,532
|
|
|
|
179,950
|
|
|
|
(568,439
|
)
|
|
|
28,880,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
123,007,441
|
|
|
$
|
179,950
|
|
|
$
|
(3,356,066
|
)
|
|
$
|
119,831,325
|
|
|
|
|
December 31, 2017
|
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Estimated
Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Notes
|
|
$
|
35,970,990
|
|
|
$
|
—
|
|
|
$
|
(411,145
|
)
|
|
$
|
35,559,845
|
|
|
Government-Sponsored Enterprises
|
|
|
64,444,315
|
|
|
|
—
|
|
|
|
(887,811
|
)
|
|
|
63,556,504
|
|
|
Municipal Securities
|
|
|
40,191,502
|
|
|
|
487,545
|
|
|
|
(545,146
|
)
|
|
|
40,133,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
140,606,807
|
|
|
$
|
487,545
|
|
|
$
|
(1,844,102
|
)
|
|
$
|
139,250,250
|
|
The
amortized cost and estimated fair value of investment securities available for sale as of June 30, 2018 and December 31, 2017,
by contractual maturity are as follows:
|
|
|
June 30, 2018
|
|
|
December 31, 2017
|
|
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair
Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
|
$
|
4,371,538
|
|
|
$
|
4,391,446
|
|
|
$
|
11,554,040
|
|
|
$
|
11,546,968
|
|
|
Due in one year to five years
|
|
|
94,804,499
|
|
|
|
92,553,106
|
|
|
|
72,622,056
|
|
|
|
72,124,395
|
|
|
Due in five years to ten years
|
|
|
22,991,242
|
|
|
|
22,088,221
|
|
|
|
53,290,088
|
|
|
|
52,576,036
|
|
|
Due in ten years and over
|
|
|
840,162
|
|
|
|
798,552
|
|
|
|
3,140,623
|
|
|
|
3,002,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
123,007,441
|
|
|
$
|
119,831,325
|
|
|
$
|
140,606,807
|
|
|
$
|
139,250,250
|
|
Investment
securities pledged to secure deposits had a fair value of $43.4 million and $49.4 million as of June 30, 2018 and December
31, 2017, respectively.
BANK
OF SOUTH CAROLINA CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
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, as of June 30, 2018 and December 31, 2017. We believe that all unrealized losses have resulted from temporary
changes in the interest rates and current market conditions and not as a result of credit deterioration. We do not intend to
sell and it is not likely that we will be required to sell any of the securities referenced in the table below before
recovery of their amortized cost.
|
|
|
Less Than 12 Months
|
|
|
12 Months or Longer
|
|
|
Total
|
|
|
|
|
#
|
|
|
Fair Value
|
|
|
Gross Unrealized Loss
|
|
|
#
|
|
|
Fair Value
|
|
|
Gross Unrealized Loss
|
|
|
#
|
|
|
Fair Value
|
|
|
Gross Unrealized Loss
|
|
June 30, 2018
Available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Notes
|
|
|
7
|
|
|
$
|
32,030,197
|
|
|
$
|
(939,735
|
)
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
7
|
|
|
$
|
32,030,197
|
|
|
$
|
(939,735
|
)
|
|
Government-Sponsored Enterprises
|
|
|
10
|
|
|
|
48,880,925
|
|
|
|
(1,245,021
|
)
|
|
|
3
|
|
|
|
10,040,160
|
|
|
|
(602,871
|
)
|
|
|
13
|
|
|
|
58,921,085
|
|
|
|
(1,847,892
|
)
|
|
Municipal Securities
|
|
|
19
|
|
|
|
8,158,197
|
|
|
|
(187,439
|
)
|
|
|
19
|
|
|
|
7,368,072
|
|
|
|
(381,000
|
)
|
|
|
38
|
|
|
|
15,526,269
|
|
|
|
(568,439
|
)
|
|
Total
|
|
|
36
|
|
|
$
|
89,069,319
|
|
|
$
|
(2,372,195
|
)
|
|
|
22
|
|
|
$
|
17,408,232
|
|
|
$
|
(983,871
|
)
|
|
|
58
|
|
|
$
|
106,477,551
|
|
|
$
|
(3,356,066
|
)
|
December 31, 2017
Available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Notes
|
|
|
8
|
|
|
$
|
35,559,845
|
|
|
$
|
(411,145
|
)
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
8
|
|
|
$
|
35,559,845
|
|
|
$
|
(411,145
|
)
|
|
Government-Sponsored Enterprises
|
|
|
12
|
|
|
|
53,275,064
|
|
|
|
(462,174
|
)
|
|
|
3
|
|
|
|
10,281,440
|
|
|
|
(425,637
|
)
|
|
|
15
|
|
|
|
63,556,504
|
|
|
|
(887,811
|
)
|
|
Municipal Securities
|
|
|
20
|
|
|
|
7,815,221
|
|
|
|
(134,998
|
)
|
|
|
29
|
|
|
|
11,056,185
|
|
|
|
(410,148
|
)
|
|
|
49
|
|
|
|
18,871,406
|
|
|
|
(545,146
|
)
|
|
Total
|
|
|
40
|
|
|
$
|
96,650,130
|
|
|
$
|
(1,008,317
|
)
|
|
|
32
|
|
|
$
|
21,337,625
|
|
|
$
|
(835,785
|
)
|
|
|
72
|
|
|
$
|
117,987,755
|
|
|
$
|
(1,844,102
|
)
|
BANK
OF SOUTH CAROLINA CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
We
received proceeds from sales of securities available for sale and gross realized gains and losses as follows:
|
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
Gross proceeds
|
|
$
|
11,970,378
|
|
|
$
|
—
|
|
|
Gross realized gains
|
|
|
25,490
|
|
|
|
—
|
|
|
Gross realized losses
|
|
|
(25,103
|
)
|
|
|
—
|
|
|
|
|
$
|
11,970,765
|
|
|
$
|
—
|
|
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
Gross proceeds
|
|
$
|
21,434,634
|
|
|
$
|
—
|
|
|
Gross realized gains
|
|
|
104,634
|
|
|
|
—
|
|
|
Gross realized losses
|
|
|
(99,899
|
)
|
|
|
—
|
|
|
|
|
$
|
21,439,369
|
|
|
$
|
—
|
|
For
the six months ended June 30, 2018, the tax provision related to these gains was $994.
Note
3: Loans and Allowance for Loan Losses
Major
classifications of loans (net of deferred loan fees of $158,808 as of June 30, 2018 and $152,047 as of December 31, 2017) are
as follows:
|
|
|
June 30,
2018
|
|
|
December 31,
2017
|
|
|
Commercial loans
|
|
$
|
55,495,828
|
|
|
$
|
51,723,237
|
|
|
Commercial real estate:
|
|
|
|
|
|
|
|
|
|
Construction
|
|
|
4,340,323
|
|
|
|
2,317,857
|
|
|
Other
|
|
|
139,665,319
|
|
|
|
140,186,324
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
|
73,570,322
|
|
|
|
70,797,973
|
|
|
Other
|
|
|
5,032,745
|
|
|
|
5,155,249
|
|
|
|
|
|
278,104,537
|
|
|
|
270,180,640
|
|
|
Allowance for loan losses
|
|
|
(4,007,464
|
)
|
|
|
(3,875,398
|
)
|
|
Loans, net
|
|
$
|
274,097,073
|
|
|
$
|
266,305,242
|
|
We
had $104.7 million and $113.4 million of loans pledged as collateral to secure funding with the Federal Reserve Bank (“FRB”)
Discount Window as of June 30, 2018 and as of December 31, 2017, 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.
|
BANK
OF SOUTH CAROLINA CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
●
|
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 a 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.
|
The
following tables illustrate credit quality by class and internally assigned grades as of June 30, 2018 and December 31, 2017.
“Pass” includes loans internally graded as excellent, good and satisfactory.
|
June 30, 2018
|
|
|
|
|
Commercial
|
|
|
Commercial
Real Estate -
Construction
|
|
|
Commercial
Real Estate - Other
|
|
|
Consumer
Real Estate
|
|
|
Consumer Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
$
|
52,482,953
|
|
|
$
|
4,340,323
|
|
|
$
|
134,593,256
|
|
|
$
|
71,539,014
|
|
|
$
|
4,734,323
|
|
|
$
|
267,689,869
|
|
|
Watch
|
|
|
1,279,459
|
|
|
|
—
|
|
|
|
3,144,222
|
|
|
|
1,781,555
|
|
|
|
213,412
|
|
|
|
6,418,648
|
|
|
OAEM
|
|
|
13,400
|
|
|
|
—
|
|
|
|
600,071
|
|
|
|
—
|
|
|
|
—
|
|
|
|
613,471
|
|
|
Sub-standard
|
|
|
1,720,016
|
|
|
|
—
|
|
|
|
1,327,770
|
|
|
|
249,753
|
|
|
|
85,010
|
|
|
|
3,382,549
|
|
|
Doubtful
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
|
$
|
55,495,828
|
|
|
$
|
4,340,323
|
|
|
$
|
139,665,319
|
|
|
$
|
73,570,322
|
|
|
$
|
5,032,745
|
|
|
$
|
278,104,537
|
|
|
December 31, 2017
|
|
|
|
|
Commercial
|
|
|
Commercial
Real
Estate -
Construction
|
|
|
Commercial
Real
Estate -
Other
|
|
|
Consumer
Real Estate
|
|
|
Consumer Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
$
|
47,456,205
|
|
|
$
|
1,936,335
|
|
|
$
|
134,401,977
|
|
|
$
|
68,570,298
|
|
|
$
|
4,933,696
|
|
|
$
|
257,298,511
|
|
|
Watch
|
|
|
2,403,978
|
|
|
|
381,522
|
|
|
|
3,605,621
|
|
|
|
1,934,802
|
|
|
|
185,746
|
|
|
|
8,511,669
|
|
|
OAEM
|
|
|
—
|
|
|
|
—
|
|
|
|
610,806
|
|
|
|
—
|
|
|
|
—
|
|
|
|
610,806
|
|
|
Sub-standard
|
|
|
1,863,054
|
|
|
|
—
|
|
|
|
1,567,920
|
|
|
|
292,873
|
|
|
|
35,807
|
|
|
|
3,759,654
|
|
|
Doubtful
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
|
$
|
51,723,237
|
|
|
$
|
2,317,857
|
|
|
$
|
140,186,324
|
|
|
$
|
70,797,973
|
|
|
$
|
5,155,249
|
|
|
$
|
270,180,640
|
|
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:
|
|
|
June 30, 2018
|
|
|
|
|
30-59
Days Past
Due
|
|
|
60-89
Days Past
Due
|
|
|
Greater
Than 90
Days
|
|
|
Total
Past Due
|
|
|
Current
|
|
|
Total
|
|
|
Recorded
Investment >
90 Days and
Accruing
|
|
|
Commercial
|
|
$
|
259,506
|
|
|
$
|
65,000
|
|
|
$
|
—
|
|
|
$
|
324,506
|
|
|
$
|
55,171,322
|
|
|
$
|
55,495,828
|
|
|
$
|
—
|
|
|
Commercial Real Estate - Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,340,323
|
|
|
|
4,340,323
|
|
|
|
—
|
|
|
Commercial Real Estate - Other
|
|
|
73,115
|
|
|
|
158,228
|
|
|
|
571,292
|
|
|
|
802,635
|
|
|
|
138,862,684
|
|
|
|
139,665,319
|
|
|
|
—
|
|
|
Consumer Real Estate
|
|
|
64,424
|
|
|
|
—
|
|
|
|
—
|
|
|
|
64,424
|
|
|
|
73,505,898
|
|
|
|
73,570,322
|
|
|
|
—
|
|
|
Consumer Other
|
|
|
21,531
|
|
|
|
424
|
|
|
|
—
|
|
|
|
21,955
|
|
|
|
5,010,790
|
|
|
|
5,032,745
|
|
|
|
—
|
|
|
Total
|
|
$
|
418,576
|
|
|
$
|
223,652
|
|
|
$
|
571,292
|
|
|
$
|
1,213,520
|
|
|
$
|
276,891,017
|
|
|
$
|
278,104,537
|
|
|
$
|
—
|
|
|
|
|
December 31, 2017
|
|
|
|
|
30-59
Days Past
Due
|
|
|
60-89
Days Past
Due
|
|
|
Greater
Than 90
Days
|
|
|
Total
Past Due
|
|
|
Current
|
|
|
Total
|
|
|
Recorded
Investment >
90 Days and
Accruing
|
|
|
Commercial
|
|
$
|
3,531
|
|
|
$
|
192,846
|
|
|
$
|
—
|
|
|
$
|
196,377
|
|
|
$
|
51,526,860
|
|
|
$
|
51,723,237
|
|
|
$
|
—
|
|
|
Commercial Real Estate - Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,317,857
|
|
|
|
2,317,857
|
|
|
|
—
|
|
|
Commercial Real Estate - Other
|
|
|
—
|
|
|
|
—
|
|
|
|
651,578
|
|
|
|
651,578
|
|
|
|
139,534,746
|
|
|
|
140,186,324
|
|
|
|
—
|
|
|
Consumer Real Estate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
70,797,973
|
|
|
|
70,797,973
|
|
|
|
—
|
|
|
Consumer Other
|
|
|
10,302
|
|
|
|
—
|
|
|
|
34,107
|
|
|
|
44,409
|
|
|
|
5,110,840
|
|
|
|
5,155,249
|
|
|
|
34,107
|
|
|
Total
|
|
$
|
13,833
|
|
|
$
|
192,846
|
|
|
$
|
685,685
|
|
|
$
|
892,364
|
|
|
$
|
269,288,276
|
|
|
$
|
270,180,640
|
|
|
$
|
34,107
|
|
There were no loans as of June 30, 2018 and two loans as
of December 31, 2017 over 90 days past due and still accruing.
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the balances of non-accrual
loans:
|
|
|
Loans Receivable on Non-Accrual
|
|
|
|
|
June 30,
2018
|
|
|
December 31,
2017
|
|
|
Commercial
|
|
$
|
30,892
|
|
|
$
|
41,651
|
|
|
Commercial Real Estate - Construction
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate - Other
|
|
|
933,364
|
|
|
|
790,208
|
|
|
Consumer Real Estate
|
|
|
—
|
|
|
|
—
|
|
|
Consumer Other
|
|
|
4,914
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
969,170
|
|
|
$
|
831,859
|
|
The following tables set forth
the changes in the allowance for loan losses and an allocation of the allowance for loan losses by class for the three and
six months ended June 30, 2018 and June 30, 2017. The allowance for loan losses consists of specific and general components.
The specific component relates to loans that are individually classified as impaired. The general component covers
non-impaired loans and is based on historical loss experience adjusted for current economic factors.
|
Three Months Ended June 30, 2018
|
|
|
|
Commercial
|
|
Commerical Real Estate - Construction
|
|
Commercial Real Estate - Other
|
|
Consumer Real Estate
|
|
Consumer Other
|
|
Total
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
1,326,246
|
|
|
$
|
11,136
|
|
|
$
|
1,041,088
|
|
|
$
|
567,075
|
|
|
$
|
884,975
|
|
|
$
|
3,830,520
|
|
|
Charge-offs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Recoveries
|
|
|
1,000
|
|
|
|
—
|
|
|
|
55,252
|
|
|
|
45,412
|
|
|
|
280
|
|
|
|
101,944
|
|
|
Provisions
|
|
|
16,514
|
|
|
|
17,955
|
|
|
|
(124,302
|
)
|
|
|
(23,436
|
)
|
|
|
188,269
|
|
|
|
75,000
|
|
|
Ending Balance
|
|
$
|
1,343,760
|
|
|
$
|
29,091
|
|
|
$
|
972,038
|
|
|
$
|
589,051
|
|
|
$
|
1,073,524
|
|
|
$
|
4,007,464
|
|
|
Six Months Ended June 30, 2018
|
|
|
|
Commercial
|
|
Commerical Real Estate - Construction
|
|
Commercial Real Estate - Other
|
|
Consumer Real Estate
|
|
Consumer Other
|
|
Total
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
1,403,588
|
|
|
$
|
23,638
|
|
|
$
|
1,549,755
|
|
|
$
|
796,918
|
|
|
$
|
101,499
|
|
|
$
|
3,875,398
|
|
|
Charge-offs
|
|
|
(31,250
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(71,843
|
)
|
|
|
(103,093
|
)
|
|
Recoveries
|
|
|
2,500
|
|
|
|
—
|
|
|
|
56,827
|
|
|
|
45,412
|
|
|
|
420
|
|
|
|
105,159
|
|
|
Provisions
|
|
|
(31,078
|
)
|
|
|
5,453
|
|
|
|
(634,544
|
)
|
|
|
(253,279
|
)
|
|
|
1,043,448
|
|
|
|
130,000
|
|
|
Ending Balance
|
|
$
|
1,343,760
|
|
|
$
|
29,091
|
|
|
$
|
972,038
|
|
|
$
|
589,051
|
|
|
$
|
1,073,524
|
|
|
$
|
4,007,464
|
|
|
Three Months Ended June 30, 2017
|
|
|
|
Commercial
|
|
Commerical Real Estate - Construction
|
|
Commercial Real Estate - Other
|
|
Consumer Real Estate
|
|
Consumer Other
|
|
Total
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
1,553,159
|
|
|
$
|
57,071
|
|
|
$
|
1,418,575
|
|
|
$
|
756,892
|
|
|
$
|
91,160
|
|
|
$
|
3,876,857
|
|
|
Charge-offs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,372
|
)
|
|
|
(2,372
|
)
|
|
Recoveries
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
21,000
|
|
|
|
2,030
|
|
|
|
23,030
|
|
|
Provisions
|
|
|
75,513
|
|
|
|
(4,308
|
)
|
|
|
(35,656
|
)
|
|
|
(6,039
|
)
|
|
|
490
|
|
|
|
30,000
|
|
|
Ending Balance
|
|
$
|
1,628,672
|
|
|
$
|
52,763
|
|
|
$
|
1,382,919
|
|
|
$
|
771,853
|
|
|
$
|
91,308
|
|
|
$
|
3,927,515
|
|
|
Six Months Ended June 30, 2017
|
|
|
|
Commercial
|
|
Commerical Real Estate - Construction
|
|
Commercial Real Estate - Other
|
|
Consumer Real Estate
|
|
Consumer Other
|
|
Total
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
1,545,188
|
|
|
$
|
51,469
|
|
|
$
|
1,374,706
|
|
|
$
|
726,391
|
|
|
$
|
153,863
|
|
|
$
|
3,851,617
|
|
|
Charge-offs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,372
|
)
|
|
|
(2,372
|
)
|
|
Recoveries
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
42,000
|
|
|
|
3,770
|
|
|
|
45,770
|
|
|
Provisions
|
|
|
83,484
|
|
|
|
1,294
|
|
|
|
8,213
|
|
|
|
3,462
|
|
|
|
(63,953
|
)
|
|
|
32,500
|
|
|
Ending Balance
|
|
$
|
1,628,672
|
|
|
$
|
52,763
|
|
|
$
|
1,382,919
|
|
|
$
|
771,853
|
|
|
$
|
91,308
|
|
|
$
|
3,927,515
|
|
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables present, by class
and reserving methodology, the allocation of the allowance for loan losses and the gross investment in loans:
|
June 30, 2018
|
|
|
|
|
Commercial
|
|
|
Commercial
Real Estate -
Construction
|
|
|
Commercial
Real Estate -
Other
|
|
|
Consumer
Real Estate
|
|
|
Consumer
Other
|
|
|
Total
|
|
|
Allowance for Loan Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
756,080
|
|
|
$
|
—
|
|
|
$
|
45,375
|
|
|
$
|
—
|
|
|
$
|
38,087
|
|
|
$
|
839,542
|
|
|
Collectively evaluated for impairment
|
|
|
587,680
|
|
|
|
29,091
|
|
|
|
926,663
|
|
|
|
589,051
|
|
|
|
1,035,437
|
|
|
|
3,167,922
|
|
|
Total Allowance for Losses
|
|
$
|
1,343,760
|
|
|
$
|
29,091
|
|
|
$
|
972,038
|
|
|
$
|
589,051
|
|
|
$
|
1,073,524
|
|
|
$
|
4,007,464
|
|
|
Loans Receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
1,677,581
|
|
|
$
|
—
|
|
|
$
|
1,341,159
|
|
|
$
|
249,754
|
|
|
$
|
38,087
|
|
|
$
|
3,306,581
|
|
|
Collectively evaluated for impairment
|
|
|
53,818,247
|
|
|
|
4,340,323
|
|
|
|
138,324,160
|
|
|
|
73,320,568
|
|
|
|
4,994,658
|
|
|
|
274,797,956
|
|
|
Total Loans Receivable
|
|
$
|
55,495,828
|
|
|
$
|
4,340,323
|
|
|
$
|
139,665,319
|
|
|
$
|
73,570,322
|
|
|
$
|
5,032,745
|
|
|
$
|
278,104,537
|
|
|
December 31, 2017
|
|
|
|
|
Commercial
|
|
|
Commercial
Real Estate -
Construction
|
|
|
Commercial
Real Estate -
Other
|
|
|
Consumer
Real Estate
|
|
|
Consumer
Other
|
|
|
Total
|
|
|
Allowance for Loan Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
832,571
|
|
|
$
|
—
|
|
|
$
|
99,523
|
|
|
$
|
43,042
|
|
|
$
|
34,107
|
|
|
$
|
1,009,243
|
|
|
Collectively evaluated for impairment
|
|
|
571,017
|
|
|
|
23,638
|
|
|
|
1,450,232
|
|
|
|
753,876
|
|
|
|
67,392
|
|
|
|
2,866,155
|
|
|
Total Allowance for Losses
|
|
$
|
1,403,588
|
|
|
$
|
23,638
|
|
|
$
|
1,549,755
|
|
|
$
|
796,918
|
|
|
$
|
101,499
|
|
|
$
|
3,875,398
|
|
|
Loans Receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
1,812,461
|
|
|
$
|
—
|
|
|
$
|
1,584,821
|
|
|
$
|
292,873
|
|
|
$
|
34,107
|
|
|
$
|
3,724,262
|
|
|
Collectively evaluated for impairment
|
|
|
49,910,776
|
|
|
|
2,317,857
|
|
|
|
138,601,503
|
|
|
|
70,505,100
|
|
|
|
5,121,142
|
|
|
|
266,456,378
|
|
|
Total
Loans Receivable
|
|
$
|
51,723,237
|
|
|
$
|
2,317,857
|
|
|
$
|
140,186,324
|
|
|
$
|
70,797,973
|
|
|
$
|
5,155,249
|
|
|
$
|
270,180,640
|
|
BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2018 and December 31, 2017, loans individually
evaluated for impairment and the corresponding allowance for loan losses are presented in the following table:
|
|
|
Impaired and Restructured Loans As of
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
|
|
|
Unpaid
Principal
Balance
|
|
Recorded Investment
|
|
Related Allowance
|
|
Unpaid
Principal Balance
|
|
Recorded Investment
|
|
Related Allowance
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$
|
134,155
|
|
|
$
|
134,155
|
|
|
$
|
—
|
|
|
$
|
152,490
|
|
|
$
|
152,490
|
|
|
$
|
—
|
|
|
Commercial Real Estate - Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate - Other
|
|
|
926,758
|
|
|
|
926,758
|
|
|
|
—
|
|
|
|
1,058,601
|
|
|
|
1,058,601
|
|
|
|
—
|
|
|
Consumer Real Estate
|
|
|
249,754
|
|
|
|
249,754
|
|
|
|
—
|
|
|
|
249,754
|
|
|
|
249,754
|
|
|
|
—
|
|
|
Consumer Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
|
|
1,310,667
|
|
|
|
1,310,667
|
|
|
|
—
|
|
|
|
1,460,845
|
|
|
|
1,460,845
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
1,543,426
|
|
|
|
1,543,426
|
|
|
|
756,080
|
|
|
|
1,659,971
|
|
|
|
1,659,971
|
|
|
|
832,571
|
|
|
Commercial Real Estate - Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate - Other
|
|
|
414,401
|
|
|
|
414,401
|
|
|
|
45,375
|
|
|
|
626,021
|
|
|
|
526,220
|
|
|
|
99,523
|
|
|
Consumer Real Estate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
43,119
|
|
|
|
43,119
|
|
|
|
43,042
|
|
|
Consumer Other
|
|
|
38,087
|
|
|
|
38,087
|
|
|
|
38,087
|
|
|
|
34,107
|
|
|
|
34,107
|
|
|
|
34,107
|
|
|
Total
|
|
|
1,995,914
|
|
|
|
1,995,914
|
|
|
|
839,542
|
|
|
|
2,363,218
|
|
|
|
2,263,417
|
|
|
|
1,009,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
1,677,581
|
|
|
|
1,677,581
|
|
|
|
756,080
|
|
|
|
1,812,461
|
|
|
|
1,812,461
|
|
|
|
832,571
|
|
|
Commercial Real Estate - Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate - Other
|
|
|
1,341,159
|
|
|
|
1,341,159
|
|
|
|
45,375
|
|
|
|
1,684,622
|
|
|
|
1,584,821
|
|
|
|
99,523
|
|
|
Consumer Real Estate
|
|
|
249,754
|
|
|
|
249,754
|
|
|
|
—
|
|
|
|
292,873
|
|
|
|
292,873
|
|
|
|
43,042
|
|
|
Consumer Other
|
|
|
38,087
|
|
|
|
38,087
|
|
|
|
38,087
|
|
|
|
34,107
|
|
|
|
34,107
|
|
|
|
34,107
|
|
|
Total
|
|
$
|
3,306,581
|
|
|
$
|
3,306,581
|
|
|
$
|
839,542
|
|
|
$
|
3,824,063
|
|
|
$
|
3,724,262
|
|
|
$
|
1,009,243
|
|
BANK
OF SOUTH CAROLINA CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
following table presents average impaired loans and interest income recognized on those impaired loans, by class, for the periods
indicated:
|
|
|
Three Months Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
With
no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$
|
137,684
|
|
|
$
|
2,227
|
|
|
$
|
175,568
|
|
|
$
|
4,886
|
|
|
Commercial Real Estate
- Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate
- Other
|
|
|
916,094
|
|
|
|
10,518
|
|
|
|
1,383,621
|
|
|
|
21,894
|
|
|
Consumer Real Estate
|
|
|
249,754
|
|
|
|
3,548
|
|
|
|
451,035
|
|
|
|
5,630
|
|
|
Consumer
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
|
$
|
1,303,532
|
|
|
$
|
16,293
|
|
|
$
|
2,010,224
|
|
|
$
|
32,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With
an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$
|
1,563,849
|
|
|
$
|
19,438
|
|
|
$
|
1,091,779
|
|
|
$
|
36,481
|
|
|
Commercial Real Estate
- Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate
- Other
|
|
|
517,936
|
|
|
|
1,840
|
|
|
|
1,020,012
|
|
|
|
5,331
|
|
|
Consumer Real Estate
|
|
|
—
|
|
|
|
—
|
|
|
|
43,119
|
|
|
|
431
|
|
|
Consumer
Other
|
|
|
39,396
|
|
|
|
483
|
|
|
|
36,107
|
|
|
|
516
|
|
|
Total
|
|
$
|
2,121,181
|
|
|
$
|
21,761
|
|
|
$
|
2,191,017
|
|
|
$
|
42,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$
|
1,701,533
|
|
|
$
|
21,665
|
|
|
$
|
1,267,347
|
|
|
$
|
41,367
|
|
|
Commercial Real Estate
- Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate
- Other
|
|
|
1,434,030
|
|
|
|
12,358
|
|
|
|
2,403,633
|
|
|
|
27,225
|
|
|
Consumer Real Estate
|
|
|
249,754
|
|
|
|
3,548
|
|
|
|
494,154
|
|
|
|
6,061
|
|
|
Consumer
Other
|
|
|
39,396
|
|
|
|
483
|
|
|
|
36,107
|
|
|
|
516
|
|
|
Total
|
|
$
|
3,424,713
|
|
|
$
|
38,054
|
|
|
$
|
4,201,241
|
|
|
$
|
75,169
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
With
no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$
|
141,909
|
|
|
$
|
4,430
|
|
|
$
|
179,698
|
|
|
$
|
10,032
|
|
|
Commercial Real Estate
- Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate
- Other
|
|
|
917,140
|
|
|
|
14,233
|
|
|
|
1,324,984
|
|
|
|
43,806
|
|
|
Consumer Real Estate
|
|
|
249,754
|
|
|
|
7,007
|
|
|
|
450,860
|
|
|
|
11,025
|
|
|
Consumer
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
|
$
|
1,308,803
|
|
|
$
|
25,670
|
|
|
$
|
1,955,542
|
|
|
$
|
64,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With
an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$
|
1,584,430
|
|
|
$
|
48,660
|
|
|
$
|
1,098,449
|
|
|
$
|
71,193
|
|
|
Commercial Real Estate
- Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate
- Other
|
|
|
523,141
|
|
|
|
5,507
|
|
|
|
1,020,012
|
|
|
|
7,941
|
|
|
Consumer Real Estate
|
|
|
—
|
|
|
|
—
|
|
|
|
43,119
|
|
|
|
838
|
|
|
Consumer
Other
|
|
|
41,823
|
|
|
|
1,131
|
|
|
|
36,848
|
|
|
|
1,086
|
|
|
Total
|
|
$
|
2,149,394
|
|
|
$
|
55,298
|
|
|
$
|
2,198,428
|
|
|
$
|
81,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$
|
1,726,339
|
|
|
$
|
53,090
|
|
|
$
|
1,278,147
|
|
|
$
|
81,225
|
|
|
Commercial Real Estate
- Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate
- Other
|
|
|
1,440,281
|
|
|
|
19,740
|
|
|
|
2,344,996
|
|
|
|
51,747
|
|
|
Consumer Real Estate
|
|
|
249,754
|
|
|
|
7,007
|
|
|
|
493,979
|
|
|
|
11,863
|
|
|
Consumer
Other
|
|
|
41,823
|
|
|
|
1,131
|
|
|
|
36,848
|
|
|
|
1,086
|
|
|
Total
|
|
$
|
3,458,197
|
|
|
$
|
80,968
|
|
|
$
|
4,153,970
|
|
|
$
|
145,921
|
|
In
general, the modification or restructuring of a debt is considered a troubled debt restructuring (“TDR”) if we, for
economic or legal reasons related to a borrower’s financial difficulties, grant a concession to the borrower that we would
not otherwise consider. As of June 30, 2018, there was one TDR with a balance of $25,717, compared to one TDR with a total balance
of $33,300 as of December 31, 2017. These TDRs were granted extended payment terms with no principal reduction. All TDRs were
performing as agreed as of June 30, 2018 and December 31, 2017, respectively. No TDRs defaulted during the six months ended June
30, 2018 and 2017, which were modified within the previous twelve months.
BANK
OF SOUTH CAROLINA CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
4: Disclosure Regarding Fair Value of Financial Statements
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 the 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 judgements 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 also would affect significantly 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 and liabilities 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 securities
in less liquid markets.
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. The fair value of these commitments was not significant as of June 30, 2018 or December 31, 2017.
We
had no embedded derivative instruments requiring separate accounting treatment. We had freestanding derivative instruments consisting
of fixed rate conforming loan commitments as 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 short term fair value of the mortgage loans held for
sale (derivative contract), our derivative instruments were immaterial to our consolidated financial statements as of June 30,
2018 and December 31, 2017.
BANK
OF SOUTH CAROLINA CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Assets
and liabilities measured at fair value on a recurring basis as of June 30, 2018 and December 31, 2017 are as
follows:
|
Balance at June 30,
2018
|
|
|
|
|
Quoted Market Price in active markets
(Level
1)
|
|
|
Significant Other Observable Inputs
(Level
2)
|
|
|
Significant Unobservable Inputs
(Level 3)
|
|
|
Total
|
|
|
U.S. Treasury Notes
|
|
$
|
32,030,197
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
32,030,197
|
|
|
Government Sponsored Enterprises
|
|
|
—
|
|
|
|
58,921,085
|
|
|
|
—
|
|
|
|
58,921,085
|
|
|
Municipal Securities
|
|
|
—
|
|
|
|
21,783,687
|
|
|
|
7,096,356
|
|
|
|
28,880,043
|
|
|
Total
|
|
$
|
32,030,197
|
|
|
$
|
80,704,772
|
|
|
$
|
7,096,356
|
|
|
$
|
119,831,325
|
|
|
Balance at December 31,
2017
|
|
|
|
|
Quoted Market Price in active markets
(Level
1)
|
|
|
Significant Other Observable Inputs
(Level
2)
|
|
|
Significant Unobservable Inputs
(Level 3)
|
|
|
Total
|
|
|
U.S. Treasury Notes
|
|
$
|
35,559,845
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35,559,845
|
|
|
Government Sponsored Enterprises
|
|
|
—
|
|
|
|
63,556,504
|
|
|
|
—
|
|
|
|
63,556,504
|
|
|
Municipal Securities
|
|
|
—
|
|
|
|
28,675,012
|
|
|
|
11,458,889
|
|
|
|
40,133,901
|
|
|
Total
|
|
$
|
35,559,845
|
|
|
$
|
92,231,516
|
|
|
$
|
11,458,889
|
|
|
$
|
139,250,250
|
|
There
were no liabilities recorded at fair value on a recurring basis as of June 30, 2018 or December 31, 2017.
BANK
OF SOUTH CAROLINA CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The following table reconciles the changes in assets measured at fair value on a recurring basis using significant unobservable
inputs (Level 3) for the three months and six months ended June 30, 2018 and 2017:
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Beginning Balance
|
|
$
|
7,483,696
|
|
|
$
|
13,458,445
|
|
|
$
|
11,458,889
|
|
|
$
|
13,977,857
|
|
|
Total gains or (losses) (realized/unrealized)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Included in other comprehensive income
|
|
|
2,660
|
|
|
|
215,500
|
|
|
|
67,467
|
|
|
|
241,088
|
|
|
Purchases, issuances, and settlements net of maturities
|
|
|
(390,000
|
)
|
|
|
(1,185,000
|
)
|
|
|
(4,430,000
|
)
|
|
|
(1,730,000
|
)
|
|
Transfers in and/or out of level 3
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Ending Balance
|
|
$
|
7,096,356
|
|
|
$
|
12,488,945
|
|
|
$
|
7,096,356
|
|
|
$
|
12,488,945
|
|
There
were no transfers between fair value levels during the six months ended June 30, 2018 or June 30, 2017.
The
following paragraphs describe the valuation methodologies used for assets and liabilities recorded at fair value on a nonrecurring
basis:
Other
Real Estate Owned (“OREO”)
Loans
secured by real estate are adjusted to the lower of the recorded investment in the loan or the fair value of the real estate upon
transfer to OREO. Subsequently, OREO is carried at the lower of carrying value or fair value. Fair value is based upon independent
market prices, appraised values of the collateral, or our estimation of the value of the collateral. When the fair value of the
collateral is based on an observable market price or a current appraisal, we record the asset as nonrecurring Level 2. When an
appraised value is not available or we determine the fair value of the collateral is further impaired below the appraised value
and there is no observable market price, we record the asset as nonrecurring Level 3.
Impaired
Loans
Impaired
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. 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, at the earlier of the date the loan becomes nonperforming
or immediately following the determination that the loan is impaired. 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”, impaired loans, where an allowance is established based on the fair
value of collateral, require classification in the fair value hierarchy. These impaired loans are classified as Level 3. Impaired
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 measured at fair value on a nonrecurring basis; that is, the instruments 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 table presents information about certain assets and liabilities measured at fair value on a nonrecurring basis as of
June 30, 2018 and December 31, 2017:
|
|
June 30, 2018
|
|
|
|
|
Quoted Market Price in active markets
(Level 1)
|
|
|
|
Significant Other Observable Inputs
(Level 2)
|
|
|
|
Significant Unobservable Inputs
(Level 3)
|
|
|
|
Total
|
|
|
Impaired loans
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,545,538
|
|
|
$
|
1,545,538
|
|
|
Other real estate owned
|
|
|
—
|
|
|
|
—
|
|
|
|
411,842
|
|
|
|
411,842
|
|
|
Loans held for sale
|
|
|
—
|
|
|
|
3,651,150
|
|
|
|
—
|
|
|
|
3,651,150
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
3,651,150
|
|
|
$
|
1,957,380
|
|
|
$
|
5,608,530
|
|
|
|
December 31, 2017
|
|
|
|
|
Quoted Market Price in active markets
(Level 1)
|
|
|
|
Significant Other Observable Inputs
(Level 2)
|
|
|
|
Significant Unobservable Inputs
(Level 3)
|
|
|
|
Total
|
|
|
Impaired loans
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,735,051
|
|
|
$
|
1,735,051
|
|
|
Other real estate owned
|
|
|
—
|
|
|
|
—
|
|
|
|
435,479
|
|
|
|
435,479
|
|
|
Loans held for sale
|
|
|
—
|
|
|
|
2,093,723
|
|
|
|
—
|
|
|
|
2,093,723
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
2,093,723
|
|
|
$
|
2,170,530
|
|
|
$
|
4,264,253
|
|
There
were no liabilities measured at fair value on a nonrecurring basis as of June 30, 2018 or December 31, 2017.
BANK
OF SOUTH CAROLINA CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
following table provides information describing the unobservable inputs used in Level 3 fair value measurements as of June 30,
2018:
|
|
|
|
|
Inputs
|
|
|
|
Valuation
Technique
|
|
Unobservable
Input
|
|
General
Range of Inputs
|
|
|
|
|
|
|
|
|
|
Impaired
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
|
|
|
|
|
|
|
|
|
|
Other
Real Estate Owned
|
|
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 in other banks
The
carrying value approximates fair value. All 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, net
During
the first quarter of 2018, the Company adopted ASU 2016-01,
Recognition and Measurement of Financial Assets and Liabilities
.
The amendments included within this standard, which are applied prospectively, require the Company to measure and disclose fair
value of balance sheet financial instruments using an exit price notion. Prior to adopting the amendments included in the standard,
the Company measured fair value under an entry price notion. The entry price notion previously applied by the Company used a discounted
cash flows technique to calculate the present value of expected future cash flows for a financial instrument. The exit price notion
uses the same approach, but also incorporates other factors, such as enhanced credit risk, illiquidity risk, and market factors
that sometimes exist in exit prices in dislocated markets.
As
of June 30, 2018, the technique used by the Company to estimate the exit price of the loan portfolio consists of similar procedures
to those used as of December 31, 2017, but with added emphasis on both illiquidity risk and credit risk not captured by the previously
applied entry price notion. The fair value of the Company’s loan portfolio has always included 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,
impaired loans and all other loans. The results are then adjusted to account for credit risk as described above. However, under
the new guidance, 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. This consideration of enhanced
credit risk provides an estimated exit price for the Company’s loan portfolio.
For
variable-rate loans that reprice frequently and have no significant change in credit risk, fair values approximate carrying values.
Fair values for impaired loans are estimated using discounted cash flow models or based on the fair value of the underlying collateral.
BANK
OF SOUTH CAROLINA CORPORATION
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
As
of December 31, 2017, the fair value of the Company’s loan portfolio included a credit risk assumption in the determination
of the fair value of its loans. This credit risk assumption was 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, impaired loans and all other
loans. The results are then adjusted to account for credit risk. For variable-rate loans that reprice frequently and have no significant
change in credit risk, fair values approximate carrying values. Fair values for impaired loans are estimated using discounted
cash flow models or based on the fair value of the underlying collateral. For other loans, fair values are estimated using discounted
cash flow models, using current market interest rates offered for loans with similar terms to borrowers of similar credit quality.
The values derived from the discounted cash flow approach for each of the above portfolios are then further discounted to incorporate
credit risk. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price as of December
31, 2017.
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 to be 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 of the counterparties.
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 June 30, 2018 and December 31,
2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at June 30, 2018
|
|
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
$
|
7,945,003
|
$
|
7,945,003
|
$
|
7,945,003
|
$
|
—
|
$
|
—
|
|
Interest-bearing
deposits at the Federal Reserve
|
|
14,319,336
|
|
14,319,336
|
|
14,319,336
|
|
—
|
|
—
|
|
Investment securities available for sale
|
|
119,831,325
|
|
119,831,325
|
|
32,030,197
|
|
80,704,772
|
|
7,096,356
|
|
Mortgage loans to be sold
|
|
3,651,150
|
|
3,651,150
|
|
—
|
|
3,651,150
|
|
—
|
|
Loans, net
|
|
274,097,073
|
|
269,509,849
|
|
—
|
|
—
|
|
269,509,849
|
|
Accrued interest receivable
|
|
1,568,814
|
|
1,568,814
|
|
—
|
|
1,568,814
|
|
—
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
336,848,278
|
|
336,848,278
|
|
—
|
|
336,848,278
|
|
—
|
|
Time deposits
|
|
45,491,331
|
|
45,356,971
|
|
—
|
|
45,356,971
|
|
—
|
|
Accrued interest payable
|
|
134,746
|
|
134,746
|
|
—
|
|
134,746
|
|
—
|
|
Fair Value Measurements at December 31, 2017
|
|
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
$
|
8,486,025
|
$
|
8,486,025
|
$
|
8,486,025
|
$
|
—
|
$
|
—
|
|
Interest-bearing
deposits at the Federal Reserve
|
|
24,034,194
|
|
24,034,194
|
|
24,034,194
|
|
—
|
|
—
|
|
Investment
securities available for sale
|
|
139,250,250
|
|
139,250,250
|
|
35,559,845
|
|
92,231,516
|
|
11,458,889
|
|
Mortgage loans to be sold
|
|
2,093,723
|
|
2,093,723
|
|
—
|
|
2,093,723
|
|
—
|
|
Loans,
net
|
|
266,305,242
|
|
265,277,204
|
|
—
|
|
—
|
|
265,277,204
|
|
Accrued interest receivable
|
|
1,720,920
|
|
1,720,920
|
|
—
|
|
1,720,920
|
|
—
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
360,967,884
|
|
360,967,884
|
|
—
|
|
360,967,884
|
|
—
|
|
Time deposits
|
|
41,920,416
|
|
40,722,870
|
|
—
|
|
40,722,870
|
|
—
|
|
Accrued interest payable
|
|
96,190
|
|
96,190
|
|
—
|
|
96,190
|
|
—
|
BANK OF SOUTH
CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5: Income Per Common Share
Basic income per share is computed by
dividing net income by the weighted-average number of common shares outstanding, after giving retroactive effect to a stock
dividend paid on May 31, 2018. 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.
The following table is a summary of the reconciliation of average shares outstanding for the three months ended June 30:
|
|
|
2018
|
|
|
2017
|
|
|
Net income
|
|
$
|
1,726,357
|
|
|
$
|
1,386,385
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
5,492,896
|
|
|
|
5,464,697
|
|
|
Effect of dilutive shares
|
|
|
93,689
|
|
|
|
123,990
|
|
|
Weighted average shares outstanding - diluted
|
|
|
5,586,585
|
|
|
|
5,588,687
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic
|
|
$
|
0.31
|
|
|
$
|
0.25
|
|
|
Earnings per share - diluted
|
|
$
|
0.31
|
|
|
$
|
0.25
|
|
The following table is a summary of the reconciliation of average shares outstanding
for the six months ended June 30:
|
|
|
2018
|
|
|
2017
|
|
|
Net income
|
|
$
|
3,338,587
|
|
|
$
|
2,612,473
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
5,339,187
|
|
|
|
5,461,603
|
|
|
Effect of dilutive shares
|
|
|
94,173
|
|
|
|
122,770
|
|
|
Weighted average shares outstanding - diluted
|
|
|
5,433,360
|
|
|
|
5,584,373
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic
|
|
$
|
0.63
|
|
|
$
|
0.48
|
|
|
Earnings per share - diluted
|
|
$
|
0.61
|
|
|
$
|
0.47
|
|