0001007273 false --12-31 2022 Q3 13585730 14041843 13585730 14041843 0001007273 2022-01-01 2022-09-30 0001007273 2022-10-20 0001007273 2022-09-30 0001007273 2021-12-31 0001007273 2022-07-01 2022-09-30 0001007273 2021-07-01 2021-09-30 0001007273 2021-01-01 2021-09-30 0001007273 us-gaap:CommonStockMember 2021-12-31 0001007273 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001007273 us-gaap:RetainedEarningsMember 2021-12-31 0001007273 us-gaap:TreasuryStockMember 2021-12-31 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31 0001007273 us-gaap:CommonStockMember 2022-03-31 0001007273 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001007273 us-gaap:RetainedEarningsMember 2022-03-31 0001007273 us-gaap:TreasuryStockMember 2022-03-31 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-03-31 0001007273 2022-03-31 0001007273 us-gaap:CommonStockMember 2022-06-30 0001007273 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001007273 us-gaap:RetainedEarningsMember 2022-06-30 0001007273 us-gaap:TreasuryStockMember 2022-06-30 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-06-30 0001007273 2022-06-30 0001007273 us-gaap:CommonStockMember 2020-12-31 0001007273 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001007273 us-gaap:RetainedEarningsMember 2020-12-31 0001007273 us-gaap:TreasuryStockMember 2020-12-31 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001007273 2020-12-31 0001007273 us-gaap:CommonStockMember 2021-03-31 0001007273 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001007273 us-gaap:RetainedEarningsMember 2021-03-31 0001007273 us-gaap:TreasuryStockMember 2021-03-31 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001007273 2021-03-31 0001007273 us-gaap:CommonStockMember 2021-06-30 0001007273 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001007273 us-gaap:RetainedEarningsMember 2021-06-30 0001007273 us-gaap:TreasuryStockMember 2021-06-30 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0001007273 2021-06-30 0001007273 us-gaap:CommonStockMember 2022-01-01 2022-03-31 0001007273 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-03-31 0001007273 us-gaap:RetainedEarningsMember 2022-01-01 2022-03-31 0001007273 us-gaap:TreasuryStockMember 2022-01-01 2022-03-31 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-03-31 0001007273 2022-01-01 2022-03-31 0001007273 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0001007273 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0001007273 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0001007273 us-gaap:TreasuryStockMember 2022-04-01 2022-06-30 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-04-01 2022-06-30 0001007273 2022-04-01 2022-06-30 0001007273 us-gaap:CommonStockMember 2022-07-01 2022-09-30 0001007273 us-gaap:AdditionalPaidInCapitalMember 2022-07-01 2022-09-30 0001007273 us-gaap:RetainedEarningsMember 2022-07-01 2022-09-30 0001007273 us-gaap:TreasuryStockMember 2022-07-01 2022-09-30 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-07-01 2022-09-30 0001007273 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001007273 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001007273 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001007273 us-gaap:TreasuryStockMember 2021-01-01 2021-03-31 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-03-31 0001007273 2021-01-01 2021-03-31 0001007273 us-gaap:CommonStockMember 2021-04-01 2021-06-30 0001007273 us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0001007273 us-gaap:RetainedEarningsMember 2021-04-01 2021-06-30 0001007273 us-gaap:TreasuryStockMember 2021-04-01 2021-06-30 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-04-01 2021-06-30 0001007273 2021-04-01 2021-06-30 0001007273 us-gaap:CommonStockMember 2021-07-01 2021-09-30 0001007273 us-gaap:AdditionalPaidInCapitalMember 2021-07-01 2021-09-30 0001007273 us-gaap:RetainedEarningsMember 2021-07-01 2021-09-30 0001007273 us-gaap:TreasuryStockMember 2021-07-01 2021-09-30 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-07-01 2021-09-30 0001007273 us-gaap:CommonStockMember 2022-09-30 0001007273 us-gaap:AdditionalPaidInCapitalMember 2022-09-30 0001007273 us-gaap:RetainedEarningsMember 2022-09-30 0001007273 us-gaap:TreasuryStockMember 2022-09-30 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-09-30 0001007273 us-gaap:CommonStockMember 2021-09-30 0001007273 us-gaap:AdditionalPaidInCapitalMember 2021-09-30 0001007273 us-gaap:RetainedEarningsMember 2021-09-30 0001007273 us-gaap:TreasuryStockMember 2021-09-30 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-09-30 0001007273 2021-09-30 0001007273 us-gaap:USTreasurySecuritiesMember 2022-09-30 0001007273 us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2022-09-30 0001007273 us-gaap:USStatesAndPoliticalSubdivisionsMember 2022-09-30 0001007273 us-gaap:USTreasurySecuritiesMember 2021-12-31 0001007273 us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2021-12-31 0001007273 us-gaap:USStatesAndPoliticalSubdivisionsMember 2021-12-31 0001007273 us-gaap:AssetPledgedAsCollateralMember 2022-09-30 0001007273 us-gaap:AssetPledgedAsCollateralMember 2021-12-31 0001007273 bksc:PaycheckProtectionProgramMember 2020-03-27 0001007273 bksc:PaycheckProtectionProgramMember 2020-04-24 0001007273 bksc:PaycheckProtectionProgramMember 2021-12-31 0001007273 bksc:PaycheckProtectionProgramMember 2020-01-01 2021-12-31 0001007273 bksc:PaycheckProtectionProgramMember 2022-07-01 2022-09-30 0001007273 bksc:PaycheckProtectionProgramMember 2021-07-01 2021-09-30 0001007273 bksc:PaycheckProtectionProgramMember 2022-01-01 2022-09-30 0001007273 bksc:PaycheckProtectionProgramMember 2021-01-01 2021-09-30 0001007273 bksc:InterestOnlyLoansMember 2022-09-30 0001007273 bksc:CARESActMember 2020-01-01 2020-12-31 0001007273 bksc:PrincipalDefermentsMember 2022-09-30 0001007273 bksc:PrincipalDefermentsMember 2021-12-31 0001007273 us-gaap:CommercialLoanMember 2022-09-30 0001007273 us-gaap:CommercialLoanMember 2021-12-31 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2022-09-30 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-12-31 0001007273 us-gaap:CommercialPortfolioSegmentMember 2022-09-30 0001007273 us-gaap:CommercialPortfolioSegmentMember 2021-12-31 0001007273 us-gaap:ResidentialMortgageMember 2022-09-30 0001007273 us-gaap:ResidentialMortgageMember 2021-12-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2022-09-30 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2021-12-31 0001007273 bksc:PaycheckProtectionProgramMember 2022-09-30 0001007273 us-gaap:CommercialLoanMember us-gaap:PassMember 2022-09-30 0001007273 bksc:CommercialRealEstateConstructionFinancingReceivableMember us-gaap:PassMember 2022-09-30 0001007273 bksc:CommercialRealEstateOtherReceivableMember us-gaap:PassMember 2022-09-30 0001007273 us-gaap:ResidentialMortgageMember us-gaap:PassMember 2022-09-30 0001007273 bksc:ConsumerOtherFinancingReceivableMember us-gaap:PassMember 2022-09-30 0001007273 us-gaap:PassMember 2022-09-30 0001007273 us-gaap:CommercialLoanMember bksc:WatchMember 2022-09-30 0001007273 bksc:CommercialRealEstateOtherReceivableMember bksc:WatchMember 2022-09-30 0001007273 us-gaap:ResidentialMortgageMember bksc:WatchMember 2022-09-30 0001007273 bksc:ConsumerOtherFinancingReceivableMember bksc:WatchMember 2022-09-30 0001007273 bksc:WatchMember 2022-09-30 0001007273 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember 2022-09-30 0001007273 bksc:CommercialRealEstateOtherReceivableMember us-gaap:SpecialMentionMember 2022-09-30 0001007273 us-gaap:ResidentialMortgageMember us-gaap:SpecialMentionMember 2022-09-30 0001007273 bksc:ConsumerOtherFinancingReceivableMember us-gaap:SpecialMentionMember 2022-09-30 0001007273 us-gaap:SpecialMentionMember 2022-09-30 0001007273 us-gaap:CommercialLoanMember us-gaap:SubstandardMember 2022-09-30 0001007273 bksc:CommercialRealEstateOtherReceivableMember us-gaap:SubstandardMember 2022-09-30 0001007273 us-gaap:ResidentialMortgageMember us-gaap:SubstandardMember 2022-09-30 0001007273 bksc:ConsumerOtherFinancingReceivableMember us-gaap:SubstandardMember 2022-09-30 0001007273 us-gaap:SubstandardMember 2022-09-30 0001007273 bksc:CommercialRealEstateConstructionFinancingReceivableMember 2022-09-30 0001007273 bksc:CommercialRealEstateOtherReceivableMember 2022-09-30 0001007273 bksc:ConsumerOtherFinancingReceivableMember 2022-09-30 0001007273 us-gaap:CommercialLoanMember us-gaap:PassMember 2021-12-31 0001007273 bksc:CommercialRealEstateConstructionFinancingReceivableMember us-gaap:PassMember 2021-12-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember us-gaap:PassMember 2021-12-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:PassMember 2021-12-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember us-gaap:PassMember 2021-12-31 0001007273 bksc:PaycheckProtectionProgramMember us-gaap:PassMember 2021-12-31 0001007273 us-gaap:PassMember 2021-12-31 0001007273 us-gaap:CommercialLoanMember bksc:WatchMember 2021-12-31 0001007273 bksc:CommercialRealEstateConstructionFinancingReceivableMember bksc:WatchMember 2021-12-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember bksc:WatchMember 2021-12-31 0001007273 us-gaap:ResidentialMortgageMember bksc:WatchMember 2021-12-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember bksc:WatchMember 2021-12-31 0001007273 bksc:WatchMember 2021-12-31 0001007273 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember 2021-12-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember us-gaap:SpecialMentionMember 2021-12-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:SpecialMentionMember 2021-12-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember us-gaap:SpecialMentionMember 2021-12-31 0001007273 us-gaap:SpecialMentionMember 2021-12-31 0001007273 us-gaap:CommercialLoanMember us-gaap:SubstandardMember 2021-12-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember us-gaap:SubstandardMember 2021-12-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:SubstandardMember 2021-12-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember us-gaap:SubstandardMember 2021-12-31 0001007273 us-gaap:SubstandardMember 2021-12-31 0001007273 bksc:CommercialRealEstateConstructionFinancingReceivableMember 2021-12-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember 2021-12-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember 2021-12-31 0001007273 us-gaap:CommercialLoanMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2022-09-30 0001007273 us-gaap:CommercialLoanMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2022-09-30 0001007273 us-gaap:CommercialLoanMember us-gaap:FinancialAssetPastDueMember 2022-09-30 0001007273 us-gaap:CommercialLoanMember us-gaap:FinancialAssetNotPastDueMember 2022-09-30 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:FinancialAssetNotPastDueMember 2022-09-30 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2022-09-30 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2022-09-30 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancialAssetPastDueMember 2022-09-30 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancialAssetNotPastDueMember 2022-09-30 0001007273 us-gaap:ResidentialMortgageMember us-gaap:FinancialAssetNotPastDueMember 2022-09-30 0001007273 us-gaap:ConsumerPortfolioSegmentMember us-gaap:FinancialAssetNotPastDueMember 2022-09-30 0001007273 us-gaap:FinancingReceivables30To59DaysPastDueMember 2022-09-30 0001007273 us-gaap:FinancingReceivables60To89DaysPastDueMember 2022-09-30 0001007273 us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2022-09-30 0001007273 us-gaap:FinancialAssetPastDueMember 2022-09-30 0001007273 us-gaap:FinancialAssetNotPastDueMember 2022-09-30 0001007273 us-gaap:CommercialLoanMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2021-12-31 0001007273 us-gaap:CommercialLoanMember us-gaap:FinancialAssetPastDueMember 2021-12-31 0001007273 us-gaap:CommercialLoanMember us-gaap:FinancialAssetNotPastDueMember 2021-12-31 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:FinancialAssetNotPastDueMember 2021-12-31 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2021-12-31 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2021-12-31 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2021-12-31 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancialAssetPastDueMember 2021-12-31 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancialAssetNotPastDueMember 2021-12-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:FinancialAssetNotPastDueMember 2021-12-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2021-12-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember us-gaap:FinancialAssetPastDueMember 2021-12-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember us-gaap:FinancialAssetNotPastDueMember 2021-12-31 0001007273 bksc:PaycheckProtectionProgramMember us-gaap:FinancialAssetNotPastDueMember 2021-12-31 0001007273 us-gaap:FinancingReceivables30To59DaysPastDueMember 2021-12-31 0001007273 us-gaap:FinancingReceivables60To89DaysPastDueMember 2021-12-31 0001007273 us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2021-12-31 0001007273 us-gaap:FinancialAssetPastDueMember 2021-12-31 0001007273 us-gaap:FinancialAssetNotPastDueMember 2021-12-31 0001007273 us-gaap:CommercialLoanMember 2022-07-01 2022-09-30 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2022-07-01 2022-09-30 0001007273 us-gaap:CommercialPortfolioSegmentMember 2022-07-01 2022-09-30 0001007273 us-gaap:ResidentialMortgageMember 2022-07-01 2022-09-30 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2022-07-01 2022-09-30 0001007273 us-gaap:CommercialLoanMember 2022-06-30 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2022-06-30 0001007273 us-gaap:CommercialPortfolioSegmentMember 2022-06-30 0001007273 us-gaap:ResidentialMortgageMember 2022-06-30 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2022-06-30 0001007273 bksc:PaycheckProtectionProgramMember 2022-06-30 0001007273 us-gaap:CommercialLoanMember 2022-01-01 2022-09-30 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2022-01-01 2022-09-30 0001007273 us-gaap:CommercialPortfolioSegmentMember 2022-01-01 2022-09-30 0001007273 us-gaap:ResidentialMortgageMember 2022-01-01 2022-09-30 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2022-01-01 2022-09-30 0001007273 us-gaap:CommercialLoanMember 2021-07-01 2021-09-30 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-07-01 2021-09-30 0001007273 us-gaap:CommercialPortfolioSegmentMember 2021-07-01 2021-09-30 0001007273 us-gaap:ResidentialMortgageMember 2021-07-01 2021-09-30 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2021-07-01 2021-09-30 0001007273 us-gaap:CommercialLoanMember 2021-06-30 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-06-30 0001007273 us-gaap:CommercialPortfolioSegmentMember 2021-06-30 0001007273 us-gaap:ResidentialMortgageMember 2021-06-30 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2021-06-30 0001007273 bksc:PaycheckProtectionProgramMember 2021-06-30 0001007273 us-gaap:CommercialLoanMember 2021-09-30 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-09-30 0001007273 us-gaap:CommercialPortfolioSegmentMember 2021-09-30 0001007273 us-gaap:ResidentialMortgageMember 2021-09-30 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2021-09-30 0001007273 bksc:PaycheckProtectionProgramMember 2021-09-30 0001007273 us-gaap:CommercialLoanMember 2021-01-01 2021-09-30 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-01-01 2021-09-30 0001007273 us-gaap:CommercialPortfolioSegmentMember 2021-01-01 2021-09-30 0001007273 us-gaap:ResidentialMortgageMember 2021-01-01 2021-09-30 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2021-01-01 2021-09-30 0001007273 us-gaap:CommercialLoanMember 2020-12-31 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2020-12-31 0001007273 us-gaap:CommercialPortfolioSegmentMember 2020-12-31 0001007273 us-gaap:ResidentialMortgageMember 2020-12-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2020-12-31 0001007273 bksc:PaycheckProtectionProgramMember 2020-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember us-gaap:FairValueInputsLevel1Member 2022-09-30 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2022-09-30 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member 2022-09-30 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2022-09-30 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel2Member 2022-09-30 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel3Member 2022-09-30 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2022-09-30 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2022-09-30 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2022-09-30 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2022-09-30 0001007273 us-gaap:FairValueMeasurementsRecurringMember 2022-09-30 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember us-gaap:FairValueInputsLevel1Member 2021-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2021-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member 2021-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2021-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel2Member 2021-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel3Member 2021-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2021-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2021-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2021-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2021-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel1Member 2022-09-30 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel2Member 2022-09-30 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel3Member 2022-09-30 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember 2022-09-30 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel1Member 2021-12-31 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel2Member 2021-12-31 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel3Member 2021-12-31 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember 2021-12-31 0001007273 us-gaap:MarketApproachValuationTechniqueMember us-gaap:MeasurementInputDiscountRateMember srt:MinimumMember 2022-09-30 0001007273 us-gaap:MarketApproachValuationTechniqueMember us-gaap:MeasurementInputDiscountRateMember srt:MinimumMember 2021-12-31 0001007273 us-gaap:MarketApproachValuationTechniqueMember us-gaap:MeasurementInputDiscountRateMember srt:MaximumMember 2021-12-31 0001007273 us-gaap:MarketApproachValuationTechniqueMember us-gaap:MeasurementInputDiscountRateMember srt:MaximumMember 2022-09-30 0001007273 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2022-09-30 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel1Member 2022-09-30 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel2Member 2022-09-30 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel3Member 2022-09-30 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2022-09-30 0001007273 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2021-12-31 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel1Member 2021-12-31 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel2Member 2021-12-31 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel3Member 2021-12-31 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2021-12-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure bksc:Number

0001007273 false --12-31 2023 Q1 http://fasb.org/us-gaap/2023#AccountingStandardsUpdate201613Member 13275236 13433692 13275236 13433692 0001007273 2023-01-01 2023-03-31 0001007273 2023-05-01 0001007273 2023-03-31 0001007273 2022-12-31 0001007273 2022-01-01 2022-03-31 0001007273 us-gaap:CommonStockMember 2022-12-31 0001007273 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001007273 us-gaap:RetainedEarningsMember 2022-12-31 0001007273 us-gaap:TreasuryStockCommonMember 2022-12-31 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-12-31 0001007273 us-gaap:CommonStockMember 2021-12-31 0001007273 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001007273 us-gaap:RetainedEarningsMember 2021-12-31 0001007273 us-gaap:TreasuryStockCommonMember 2021-12-31 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31 0001007273 2021-12-31 0001007273 us-gaap:CommonStockMember 2023-01-01 2023-03-31 0001007273 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-03-31 0001007273 us-gaap:RetainedEarningsMember 2023-01-01 2023-03-31 0001007273 us-gaap:TreasuryStockCommonMember 2023-01-01 2023-03-31 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-01-01 2023-03-31 0001007273 us-gaap:CommonStockMember 2022-01-01 2022-03-31 0001007273 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-03-31 0001007273 us-gaap:RetainedEarningsMember 2022-01-01 2022-03-31 0001007273 us-gaap:TreasuryStockCommonMember 2022-01-01 2022-03-31 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-03-31 0001007273 us-gaap:CommonStockMember 2023-03-31 0001007273 us-gaap:AdditionalPaidInCapitalMember 2023-03-31 0001007273 us-gaap:RetainedEarningsMember 2023-03-31 0001007273 us-gaap:TreasuryStockCommonMember 2023-03-31 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-03-31 0001007273 us-gaap:CommonStockMember 2022-03-31 0001007273 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001007273 us-gaap:RetainedEarningsMember 2022-03-31 0001007273 us-gaap:TreasuryStockCommonMember 2022-03-31 0001007273 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-03-31 0001007273 2022-03-31 0001007273 2022-01-01 2022-12-31 0001007273 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2022-12-31 0001007273 us-gaap:USTreasurySecuritiesMember 2023-03-31 0001007273 us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2023-03-31 0001007273 us-gaap:USStatesAndPoliticalSubdivisionsMember 2023-03-31 0001007273 us-gaap:USTreasurySecuritiesMember 2022-12-31 0001007273 us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2022-12-31 0001007273 us-gaap:USStatesAndPoliticalSubdivisionsMember 2022-12-31 0001007273 us-gaap:AssetPledgedAsCollateralMember 2023-03-31 0001007273 us-gaap:AssetPledgedAsCollateralMember 2022-12-31 0001007273 us-gaap:AssetPledgedAsCollateralMember bksc:FederalReserveBankTermFundingProgramMember 2023-03-31 0001007273 us-gaap:ExtendedMaturityMember 2023-03-31 0001007273 bksc:InterestOnlyLoansMember 2023-03-31 0001007273 bksc:InterestOnlyLoansMember us-gaap:PerformingFinancingReceivableMember 2023-03-31 0001007273 us-gaap:CommercialLoanMember 2023-03-31 0001007273 us-gaap:CommercialLoanMember 2022-12-31 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2023-03-31 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2022-12-31 0001007273 us-gaap:CommercialPortfolioSegmentMember 2023-03-31 0001007273 us-gaap:CommercialPortfolioSegmentMember 2022-12-31 0001007273 us-gaap:ResidentialMortgageMember 2023-03-31 0001007273 us-gaap:ResidentialMortgageMember 2022-12-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2023-03-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2022-12-31 0001007273 us-gaap:CommercialLoanMember us-gaap:PassMember 2023-03-31 0001007273 us-gaap:CommercialLoanMember bksc:WatchMember 2023-03-31 0001007273 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember 2023-03-31 0001007273 us-gaap:CommercialLoanMember us-gaap:SubstandardMember 2023-03-31 0001007273 us-gaap:CommercialLoanMember 2023-01-01 2023-03-31 0001007273 bksc:CommercialRealEstateConstructionFinancingReceivableMember us-gaap:PassMember 2023-03-31 0001007273 bksc:CommercialRealEstateConstructionFinancingReceivableMember 2023-03-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember us-gaap:PassMember 2023-03-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember bksc:WatchMember 2023-03-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember us-gaap:SpecialMentionMember 2023-03-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember us-gaap:SubstandardMember 2023-03-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember 2023-03-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:PassMember 2023-03-31 0001007273 us-gaap:ResidentialMortgageMember bksc:WatchMember 2023-03-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:SpecialMentionMember 2023-03-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:SubstandardMember 2023-03-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember us-gaap:PassMember 2023-03-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember bksc:WatchMember 2023-03-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember us-gaap:SpecialMentionMember 2023-03-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember us-gaap:SubstandardMember 2023-03-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember 2023-03-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember 2023-01-01 2023-03-31 0001007273 us-gaap:CommercialLoanMember us-gaap:PassMember 2022-12-31 0001007273 bksc:CommercialRealEstateConstructionFinancingReceivableMember us-gaap:PassMember 2022-12-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember us-gaap:PassMember 2022-12-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:PassMember 2022-12-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember us-gaap:PassMember 2022-12-31 0001007273 us-gaap:PassMember 2022-12-31 0001007273 us-gaap:CommercialLoanMember bksc:WatchMember 2022-12-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember bksc:WatchMember 2022-12-31 0001007273 us-gaap:ResidentialMortgageMember bksc:WatchMember 2022-12-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember bksc:WatchMember 2022-12-31 0001007273 bksc:WatchMember 2022-12-31 0001007273 us-gaap:CommercialLoanMember us-gaap:SpecialMentionMember 2022-12-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember us-gaap:SpecialMentionMember 2022-12-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:SpecialMentionMember 2022-12-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember us-gaap:SpecialMentionMember 2022-12-31 0001007273 us-gaap:SpecialMentionMember 2022-12-31 0001007273 us-gaap:CommercialLoanMember us-gaap:SubstandardMember 2022-12-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember us-gaap:SubstandardMember 2022-12-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:SubstandardMember 2022-12-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember us-gaap:SubstandardMember 2022-12-31 0001007273 us-gaap:SubstandardMember 2022-12-31 0001007273 bksc:CommercialRealEstateConstructionFinancingReceivableMember 2022-12-31 0001007273 bksc:CommercialRealEstateOtherReceivableMember 2022-12-31 0001007273 bksc:ConsumerOtherFinancingReceivableMember 2022-12-31 0001007273 us-gaap:CommercialLoanMember us-gaap:FinancialAssetNotPastDueMember 2023-03-31 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:FinancialAssetNotPastDueMember 2023-03-31 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2023-03-31 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2023-03-31 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancialAssetPastDueMember 2023-03-31 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancialAssetNotPastDueMember 2023-03-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2023-03-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:FinancialAssetPastDueMember 2023-03-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:FinancialAssetNotPastDueMember 2023-03-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember us-gaap:FinancialAssetNotPastDueMember 2023-03-31 0001007273 us-gaap:FinancingReceivables30To59DaysPastDueMember 2023-03-31 0001007273 us-gaap:FinancingReceivables60To89DaysPastDueMember 2023-03-31 0001007273 us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2023-03-31 0001007273 us-gaap:FinancialAssetPastDueMember 2023-03-31 0001007273 us-gaap:FinancialAssetNotPastDueMember 2023-03-31 0001007273 us-gaap:CommercialLoanMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2022-12-31 0001007273 us-gaap:CommercialLoanMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2022-12-31 0001007273 us-gaap:CommercialLoanMember us-gaap:FinancialAssetPastDueMember 2022-12-31 0001007273 us-gaap:CommercialLoanMember us-gaap:FinancialAssetNotPastDueMember 2022-12-31 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:FinancialAssetNotPastDueMember 2022-12-31 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2022-12-31 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2022-12-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:FinancialAssetPastDueMember 2022-12-31 0001007273 us-gaap:CommercialPortfolioSegmentMember us-gaap:FinancialAssetNotPastDueMember 2022-12-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2022-12-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember us-gaap:FinancialAssetPastDueMember 2022-12-31 0001007273 us-gaap:ResidentialMortgageMember us-gaap:FinancialAssetNotPastDueMember 2022-12-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember us-gaap:FinancialAssetNotPastDueMember 2022-12-31 0001007273 us-gaap:FinancingReceivables30To59DaysPastDueMember 2022-12-31 0001007273 us-gaap:FinancingReceivables60To89DaysPastDueMember 2022-12-31 0001007273 us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2022-12-31 0001007273 us-gaap:FinancialAssetPastDueMember 2022-12-31 0001007273 us-gaap:FinancialAssetNotPastDueMember 2022-12-31 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2023-01-01 2023-03-31 0001007273 us-gaap:CommercialPortfolioSegmentMember 2023-01-01 2023-03-31 0001007273 us-gaap:ResidentialMortgageMember 2023-01-01 2023-03-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2023-01-01 2023-03-31 0001007273 us-gaap:CommercialLoanMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2022-12-31 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2022-12-31 0001007273 us-gaap:CommercialPortfolioSegmentMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2022-12-31 0001007273 us-gaap:ResidentialMortgageMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2022-12-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2022-12-31 0001007273 us-gaap:CommercialLoanMember 2022-01-01 2022-03-31 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2022-01-01 2022-03-31 0001007273 us-gaap:CommercialPortfolioSegmentMember 2022-01-01 2022-03-31 0001007273 us-gaap:ResidentialMortgageMember 2022-01-01 2022-03-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2022-01-01 2022-03-31 0001007273 bksc:PaycheckProtectionProgramMember 2022-01-01 2022-03-31 0001007273 us-gaap:CommercialLoanMember 2021-12-31 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-12-31 0001007273 us-gaap:CommercialPortfolioSegmentMember 2021-12-31 0001007273 us-gaap:ResidentialMortgageMember 2021-12-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2021-12-31 0001007273 bksc:PaycheckProtectionProgramMember 2021-12-31 0001007273 us-gaap:CommercialLoanMember 2022-03-31 0001007273 us-gaap:CommercialRealEstatePortfolioSegmentMember 2022-03-31 0001007273 us-gaap:CommercialPortfolioSegmentMember 2022-03-31 0001007273 us-gaap:ResidentialMortgageMember 2022-03-31 0001007273 us-gaap:ConsumerPortfolioSegmentMember 2022-03-31 0001007273 bksc:PaycheckProtectionProgramMember 2022-03-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember us-gaap:FairValueInputsLevel1Member 2023-03-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2023-03-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member 2023-03-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2023-03-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel2Member 2023-03-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel3Member 2023-03-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2023-03-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2023-03-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2023-03-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2023-03-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember 2023-03-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember us-gaap:FairValueInputsLevel1Member 2022-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2022-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member 2022-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2022-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel2Member 2022-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel3Member 2022-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2022-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2022-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2022-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2022-12-31 0001007273 us-gaap:FairValueMeasurementsRecurringMember 2022-12-31 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel1Member 2023-03-31 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel2Member 2023-03-31 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel3Member 2023-03-31 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember 2023-03-31 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel1Member 2022-12-31 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel2Member 2022-12-31 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:FairValueInputsLevel3Member 2022-12-31 0001007273 us-gaap:FairValueMeasurementsNonrecurringMember 2022-12-31 0001007273 us-gaap:MarketApproachValuationTechniqueMember us-gaap:MeasurementInputDiscountRateMember srt:MinimumMember 2023-03-31 0001007273 us-gaap:MarketApproachValuationTechniqueMember us-gaap:MeasurementInputDiscountRateMember srt:MinimumMember 2022-12-31 0001007273 us-gaap:MarketApproachValuationTechniqueMember us-gaap:MeasurementInputDiscountRateMember srt:MaximumMember 2023-03-31 0001007273 us-gaap:MarketApproachValuationTechniqueMember us-gaap:MeasurementInputDiscountRateMember srt:MaximumMember 2022-12-31 0001007273 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2023-03-31 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel1Member 2023-03-31 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel2Member 2023-03-31 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel3Member 2023-03-31 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2023-03-31 0001007273 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2022-12-31 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel1Member 2022-12-31 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel2Member 2022-12-31 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueInputsLevel3Member 2022-12-31 0001007273 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2022-12-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure bksc:Number

United States ~~Securities and Exchange Commission~~

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September~~March 3031, ~~2022~~2023

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

~~Commission~~For ~~file~~the ~~number:~~transition ~~0-27702~~period from _____ to _____

Commission file number: 000-27702

Bank of South Carolina Corporation

(Exact name of registrant ~~issuer~~ as specified in its charter)

South Carolina		57-1021355
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification ~~Number~~No.)

256 Meeting Street, Charleston, SC 29401 (Address of principal executive offices)

256 Meeting Street, Charleston, SC		29401
(Address of principal executive offices)		(Zip Code)

(843) 724-1500 ~~(Registrant’s telephone number)~~

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading ~~symbol~~Symbol(s) Name of each exchange on which registered Common stock BKSC The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act ~~(Check one)~~:

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐☒ Smaller reporting company ☒ ~~(Do not check if a smaller reporting company)~~ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October~~May 201, ~~2022~~2023, there were 5,552,351 Common Shares outstanding.

Part I. Financial Information	Page
Item 1. Financial Statements	3
Consolidated Balance Sheets – September 30, 2022 and December 31, 2021	3
Consolidated Balance Sheets – March 31, 2023 and December 31, 2022	3
Consolidated Statements of Income – Three and Nine months ended September 30, 2022 and 2021	4
Consolidated Statements of Income – Three months ended March 31, 2023 and 2022	4
Consolidated Statements of Comprehensive Income (Loss) – Three and Nine months ended September 30, 2022 and 2021	6
Consolidated Statements of Comprehensive Income (Loss) – Three months ended March 31, 2023 and 2022	5
Consolidated Statements of Shareholders’ Equity – Nine months ended September 30, 2022 and 2021	7
Consolidated Statements of Shareholders’ Equity – Three months ended March 31, 2023 and 2022	6
Consolidated Statements of Cash Flows – Nine months ended September 30, 2022 and 2021	8
Consolidated Statements of Cash Flows – Three months ended March 31, 2023 and 2022	7
Notes to Consolidated Financial Statements	98
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2421
Item 3. Quantitative and Qualitative Disclosures About Market Risk	3026
Item 4. Controls and Procedures	3026
Part II. Other Information
Item 1. Legal Proceedings	3126
Item 1A. Risk Factors	3126
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3126
Item 3. Defaults Upon Senior Securities	3126
Item 4. Mine Safety Disclosures	31
Item 4. Mine Safety Disclosure	26
Item 5. Other Information	3126
Item 6. Exhibits	3126
Signatures	3227
Certifications	3328

Part I. Financial Information

Item 1. Financial Statements

BANK OF SOUTH CAROLINA CORPORATION AND SUBSIDIARY ~~CONSOLIDATED BALANCE SHEETS~~

	(Unaudited)			(Audited)
	September 30,			December 31,
	2022			2021
ASSETS
Cash and due from banks	$	5,597,144		$	11,140,559
Interest-bearing deposits at the Federal Reserve		3,456,566			128,971,429
Investment securities available for sale		269,386,643			212,347,489
Mortgage loans to be sold		654,944			2,774,388
Loans		328,284,273			306,632,229
Less: Allowance for loan losses		(4,329,221	)		(4,376,987	)
Net loans		323,955,052			302,255,242
Premises, equipment and leasehold improvements, net		3,723,404			3,782,936
Right of use asset		13,585,730			14,041,843
Accrued interest receivable		1,755,179			1,404,227
Other assets		8,015,143			2,502,533
Total assets	$	630,129,805		$	679,220,646
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Non-interest bearing demand	$	234,757,823		$	255,783,644
Interest bearing demand		161,299,986			165,335,038
Money market accounts		103,909,416			98,113,942
Time deposits $250,000 and over		4,901,501			7,417,864
Other time deposits		12,300,498			13,870,356
Other savings deposits		60,943,285			68,670,732
Total deposits		578,112,509			609,191,576
Accrued interest payable and other liabilities		2,418,321			2,069,594
Lease liability		13,585,730			14,041,843
Total liabilities		594,116,560			625,303,013
Shareholders' equity
Common stock - no par 12,000,000 shares authorized; Issued 5,852,325 shares at September 30, 2022 and 5,841,240 shares at December 31, 2021. Shares outstanding 5,552,351 and 5,541,266 at September 30, 2022 and December 31, 2021, respectively.		—			—
Additional paid in capital		47,997,431			47,745,285
Retained earnings		13,138,685			11,122,710
Treasury stock: 299,974 shares at September 30, 2022 and December 31, 2021		(2,817,392	)		(2,817,392	)
Accumulated other comprehensive loss, net of income taxes		(22,305,479	)		(2,132,970	)
Total shareholders' equity		36,013,245			53,917,633
Total liabilities and shareholders' equity	$	630,129,805		$	679,220,646

CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	March 31,			December 31,
	2023			2022
ASSETS
Cash and due from banks	$	7,099,250		$	14,772,564
Interest-bearing deposits at the Federal Reserve		14,885,733			12,999,135
Investment securities available for sale		267,439,924			271,172,226
Mortgage loans to be sold		1,278,158			866,594
Loans		333,789,455			330,981,782
Less: Allowance for credit losses		(3,688,503	)		(4,291,221	)
Net loans		330,100,952			326,690,561
Premises, equipment and leasehold improvements, net		4,005,565			3,988,607
Right of use asset		13,275,236			13,433,692
Accrued interest receivable		1,842,995			2,145,522
Other assets		7,433,816			7,276,708

Total assets	$	647,361,629		$	653,345,609

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Non-interest bearing demand	$	211,238,078		$	223,117,903
Interest bearing demand		149,605,230			195,143,514
Money market accounts		102,387,646			100,014,125
Time deposits $250,000 and over		52,635,553			5,303,509
Other time deposits		11,919,031			11,266,099
Other savings deposits		59,806,921			63,825,108
Total deposits		587,592,459			598,670,258

Accrued interest payable and other liabilities		2,986,116			2,430,272
Lease liability		13,275,236			13,433,692
Total liabilities		603,853,811			614,534,222

Shareholders' equity
Common stock - no par 12,000,000 shares authorized; Issued 5,852,325 shares at both March 31, 2023 and December 31, 2022. Shares outstanding 5,552,351 at both March 31, 2023 and December 31, 2022.		—			—
Additional paid in capital		48,058,836			48,028,689
Retained earnings		14,647,449			14,002,571
Treasury stock: 299,974 shares at March 31, 2023 and December 31, 2022		(2,817,392	)		(2,817,392	)
Accumulated other comprehensive loss, net of income taxes		(16,381,075	)		(20,402,481	)
Total shareholders' equity		43,507,818			38,811,387

Total liabilities and shareholders' equity	$	647,361,629		$	653,345,609

See accompanying notes to consolidated financial statements.

BANK OF SOUTH CAROLINA CORPORATION AND SUBSIDIARY ~~CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)~~

	Three Months Ended
	September 30,
	2022		2021
Interest and fee income
Loans, including fees	$	4,037,017	$	3,610,842
Taxable securities		675,306		468,862
Tax-exempt securities		156,104		90,176
Other		179,325		31,189
Total interest and fee income		5,047,752		4,201,069
Interest expense
Deposits		37,519		39,319
Total interest expense		37,519		39,319
Net interest income		5,010,233		4,161,750
Provision for loan losses		—		—
Net interest income after provision for loan losses		5,010,233		4,161,750
Other income
Service charges and fees		324,610		338,854
Mortgage banking fees		107,798		524,016
Gain on sales of securities		—		266,944
Other non-interest income		10,932		8,617
Total other income		443,340		1,138,431
Other expense
Salaries and employee benefits		1,875,576		1,849,254
Net occupancy expense		641,547		587,682
Other operating expenses		289,579		302,863
Professional fees		120,103		149,125
Data processing fees		140,928		158,610
Total other expense		3,067,733		3,047,534
Income before income tax expense		2,385,840		2,252,647
Income tax expense		545,573		525,710
Net income	$	1,840,267	$	1,726,937
Weighted average shares outstanding
Basic		5,552,351		5,535,906
Diluted		5,650,799		5,686,250
Basic income per common share	$	0.33	$	0.31
Diluted income per common share	$	0.33	$	0.30

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	Three Months Ended
	March 31,
	2023		2022
Interest and fee income
Loans, including fees	$	4,668,099	$	3,551,875
Taxable securities		690,324		559,670
Tax-exempt securities		161,444		109,129
Other		111,967		34,286
Total interest and fee income		5,631,834		4,254,960

Interest expense
Deposits		931,101		36,797
Total interest expense		931,101		36,797

Net interest income		4,700,733		4,218,163
Provision for credit losses		45,000		(75,000	)
Net interest income after provision for credit losses		4,655,733		4,293,163

Other income
Service charges and fees		327,073		307,593
Mortgage banking income		112,160		258,896
Gain on sales of securities		—		61,780
Other non-interest income		9,968		6,285
Total other income		449,201		634,554

Other expense
Salaries and employee benefits		1,966,523		1,812,155
Net occupancy expense		654,062		620,942
Other operating expenses		305,181		294,733
Professional fees		167,777		139,642
Data processing fees		156,818		149,090
Total other expense		3,250,361		3,016,562

Income before income tax expense		1,854,573		1,911,155
Income tax expense		265,794		447,049

Net income	$	1,588,779	$	1,464,106

Weighted average shares outstanding
Basic		5,552,351		5,544,546
Diluted		5,640,313		5,688,619

Basic income per common share	$	0.29	$	0.26
Diluted income per common share	$	0.28	$	0.26

See accompanying notes to consolidated financial statements.

BANK OF SOUTH CAROLINA CORPORATION AND SUBSIDIARY ~~CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)~~

	Nine Months Ended
	September 30,
	2022			2021
Interest and fee income
Loans, including fees	$	11,326,953		$	11,518,472
Taxable securities		1,848,955			1,407,040
Tax-exempt securities		398,160			222,530
Other		311,896			58,052
Total interest and fee income		13,885,964			13,206,094
Interest expense
Deposits		112,140			136,160
Total interest expense		112,140			136,160
Net interest income		13,773,824			13,069,934
Provision (recovery) for loan losses		(75,000	)		120,000
Net interest income after provision for loan losses		13,848,824			12,949,934
Other income
Service charges and fees		975,233			931,617
Mortgage banking fees		606,526			1,805,262
Gain on sales of securities		61,780			266,944
Other non-interest income		28,053			21,473
Total other income		1,671,592			3,025,296
Other expense
Salaries and employee benefits		5,551,871			5,502,178
Net occupancy expense		1,888,977			1,815,587
Other operating expenses		929,787			965,188
Professional fees		424,901			397,160
Data processing fees		427,175			482,732
Total other expense		9,222,711			9,162,845
Income before income tax expense		6,297,705			6,812,385
Income tax expense		1,450,350			1,606,689
Net income	$	4,847,355		$	5,205,696
Weighted average shares outstanding
Basic		5,549,312			5,528,868
Diluted		5,642,262			5,684,484
Basic income per common share	$	0.87		$	0.94
Diluted income per common share	$	0.86		$	0.92

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)


	Three Months Ended
	March 31,
	2023		2022
Net income	$	1,588,779	$	1,464,106
Other comprehensive income
Unrealized gain (loss) on securities arising during the period		3,928,218		(12,152,716	)
Reclassification adjustment for securities gains realized in net income		—		(61,780	)
Other comprehensive income (loss) before tax		3,928,218		(12,214,496	)
Income tax effect related to items of other comprehensive income before tax		93,188		2,565,043
Other comprehensive income (loss) after tax		4,021,406		(9,649,453	)
Total comprehensive income (loss)	$	5,610,185	$	(8,185,347	)

See accompanying notes to consolidated financial statements.

BANK OF SOUTH CAROLINA CORPORATION AND ~~SUBSIDIARY CONSOLIDATED~~ ~~STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)~~ SUBSIDIARY

	Three Months Ended
	September 30,
	2022			2021
Net income	$	1,840,267		$	1,726,937
Other comprehensive loss
Unrealized loss on securities arising during the period		(8,267,860	)		(845,754	)
Reclassification adjustment for securities gains realized in net income		—			(266,944	)
Other comprehensive loss before tax		(8,267,860	)		(1,112,698	)
Income tax effect related to items of other comprehensive loss before tax		1,736,251			233,667
Other comprehensive loss after tax		(6,531,609	)		(879,031	)
Total comprehensive (loss) income	$	(4,691,342	)	$	847,906

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

	Nine Months Ended
	September 30,
	2022			2021
Net income	$	4,847,355		$	5,205,696
Other comprehensive loss
Unrealized loss on securities arising during the period		(25,473,041	)		(3,035,326	)
Reclassification adjustment for securities gains realized in net income		(61,780	)		(266,944	)
Other comprehensive loss before tax		(25,534,821	)		(3,302,270	)
Income tax effect related to items of other comprehensive loss before tax		5,362,312			693,477
Other comprehensive loss after tax		(20,172,509	)		(2,608,793	)
Total comprehensive (loss) income	$	(15,325,154	)	$	2,596,903

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (UNAUDITED)


	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
Adoption of ASU 2016-13		—		—		—			—			—			—
Net income	-	—		—		1,588,779			—			—			1,588,779
Other comprehensive income		—		—		—			—			4,021,406			4,021,406
Stock-based compensation expense		—		30,147		—			—			—			30,147
Cash dividends ($0.17 per common share)		—		—		(943,901	)		—			—			(943,901	)
March 31, 2023	-	5,552,351	$	48,058,836	$	14,647,449		$	(2,817,392	)	$	(16,381,075	)	$	43,507,818


	Shares Outstanding		Additional Paid in Capital		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Total
December 31, 2021	-	5,541,266	$	47,745,285	$	11,122,710		$	(2,817,392	)	$	(2,132,970	)	$	53,917,633
Net income	-	—		—		1,464,106			—			—			1,464,106
Other comprehensive loss		—		—		—			—			(9,649,453	)		(9,649,453	)
Stock option exercises, net of surrenders		9,210		141,618		—			—			—			141,618
Stock-based compensation expense		—		27,989		—			—			—			27,989
Cash dividends ($0.17 per common share)		—		—		(943,580	)		—			—			(943,580	)
March 31, 2022	-	5,550,476	$	47,914,892	$	11,643,236		$	(2,817,392	)	$	(11,782,423	)	$	44,958,313

See accompanying notes to consolidated financial statements.

BANK OF SOUTH CAROLINA CORPORATION AND ~~SUBSIDIARY CONSOLIDATED~~ ~~STATEMENTS OF SHAREHOLDERS’ EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021 (UNAUDITED)~~ SUBSIDIARY

	Shares Outstanding		Additional Paid in Capital		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Total
December 31, 2021		5,541,266	$	47,745,285	$	11,122,710		$	(2,817,392	)	$	(2,132,970	)	$	53,917,633
Net income		—		—		1,464,106			—			—			1,464,106
Other comprehensive loss		—		—		—			—			(9,649,453	)		(9,649,453	)
Stock option exercises, net of surrenders		9,210		141,618		—			—			—			141,618
Stock-based compensation expense		—		27,989		—			—			—			27,989
Cash dividends ($0.17 per common share)		—		—		(943,580	)		—			—			(943,580	)
March 31, 2022		5,550,476	$	47,914,892	$	11,643,236		$	(2,817,392	)	$	(11,782,423	)	$	44,958,313
Net income		—		—		1,542,982			—			—			1,542,982
Other comprehensive loss		—		—		—			—			(3,991,447	)		(3,991,447	)
Stock option exercises, net of surrenders		1,875		20,022		—			—			—			20,022
Stock-based compensation expense		—		31,258		—			—			—			31,258
Cash dividends ($0.17 per common share)		—		—		(943,900	)		—			—			(943,900	)
June 30, 2022		5,552,351	$	47,966,172	$	12,242,318		$	(2,817,392	)	$	(15,773,870	)	$	41,617,228
Net income		—		—		1,840,267			—			—			1,840,267
Other comprehensive loss		—		—		—			—			(6,531,609	)		(6,531,609	)
Stock-based compensation expense		—		31,259		—			—			—			31,259
Cash dividends ($0.17 per common share)		—		—		(943,900	)		—			—			(943,900	)
September 30, 2022		5,552,351		47,997,431		13,138,685			(2,817,392	)		(22,305,479	)		36,013,245

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Shares Outstanding		Additional Paid in Capital		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total
December 31, 2020		5,520,469	$	47,404,869	$	8,693,519		$	(2,787,898	)	$	1,669,866		$	54,980,356
Net income		—		—		1,810,075			—			—			1,810,075
Other comprehensive loss		—		—		—			—			(2,343,977	)		(2,343,977	)
Stock option exercises, net of surrenders		4,147		39,589		—			(8,344	)		—			31,245
Stock-based compensation expense		—		22,997		—			—			—			22,997
Cash dividends ($0.27 per common share)		—		—		(1,491,646	)		—			—			(1,491,646	)
March 31, 2021		5,524,616	$	47,467,455	$	9,011,948		$	(2,796,242	)	$	(674,111	)	$	53,009,050
Net income		—		—		1,668,684			—			—			1,668,684
Other comprehensive income		—		—		—			—			614,215			614,215
Stock option exercises, net of surrenders		9,383		103,495		—			(21,150	)		—			82,345
Stock-based compensation expense		—		29,648		—			—			—			29,648
Cash dividends ($0.17 per common share)		—		—		(940,781	)		—			—			(940,781	)
June 30, 2021		5,533,999	$	47,600,598	$	9,739,851		$	(2,817,392	)	$	(59,896	)	$	54,463,161
Net income		—		—		1,726,937			—			—			1,726,937
Other comprehensive loss		—		—		—			—			(879,031	)		(879,031	)
Stock option exercises		2,662		24,438		—			—			—			24,438
Stock-based compensation expense		—		28,605		—			—			—			28,605
Cash dividends ($0.17 per common share)		—		—		(941,232	)		—			—			(941,232	)
September 30, 2021		5,536,661	$	47,653,641	$	10,525,556		$	(2,817,392	)	$	(938,927	)	$	54,422,878

(UNAUDITED)


	Three Months Ended
	March 31,
	2023			2022
Cash flows from operating activities:
Net income	$	1,588,779		$	1,464,106
Adjustments to reconcile net income net cash provided by operating activities:
Depreciation expense		85,157			97,694
Gain on sale of investment securities		—			(61,780	)
Provision for credit losses		45,000			(75,000	)
Stock-based compensation expense		30,147			27,989
Deferred income taxes and other assets		(63,922	)		(344,938	)
Net amortization of unearned discounts on investment securities available for sale		198,522			214,931
Origination of mortgage loans held for sale		(8,412,515	)		(17,582,370	)
Proceeds from sale of mortgage loans held for sale		8,000,951			17,729,759
Decrease (increase) in accrued interest receivable		302,527			(68,881	)
(Decrease) increase in accrued interest payable and other liabilities		(44,156	)		302,580
Net cash provided by operating activities		1,730,490			1,704,090

Cash flows from investing activities:
Proceeds from calls and maturities of investment securities available for sale		7,462,000			2,718,000
Proceeds from sale of investment securities available for sale		—			15,120,000
Purchase of investment securities available for sale		—			(75,764,462	)
Net increase in loans		(2,855,391	)		(8,271,231	)
Purchase of premises, equipment, and leasehold improvements, net		(102,115	)		(31,563	)
Net cash provided by (used in) investing activities		4,504,494			(66,229,256	)

Cash flows from financing activities:
Net decrease in deposit accounts		(11,077,799	)		(5,420,096	)
Dividends paid		(943,901	)		(942,015	)
Stock options exercised, net of surrenders		—			141,618
Net cash used in financing activities		(12,021,700	)		(6,220,493	)
Net decrease in cash and cash equivalents		(5,786,716	)		(70,745,659	)
Cash and cash equivalents at the beginning of the period		27,771,699			140,111,988
Cash and cash equivalents at the end of the period	$	21,984,983		$	69,366,329

Supplemental disclosure of cash flow data:
Cash paid during the period for:
Interest	$	578,256		$	37,340
Income taxes, net	$	616,245		$	—

Supplemental disclosures for non-cash investing and financing activity:
Change in unrealized gain (loss) on securities available for sale, net of income taxes	$	4,021,406		$	(9,649,453	)
Change in dividends payable	$	—		$	1,565

See accompanying notes to consolidated financial statements.

BANK OF SOUTH CAROLINA CORPORATION ~~AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)~~

	Nine Months Ended
	September 30,
	2022			2021
Cash flows from operating activities:
Net income	$	4,847,355		$	5,205,696
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		277,223			315,492
Gain on sale of investment securities		(61,780	)		(266,944	)
Provision (recovery) for loan losses		(75,000	)		120,000
Stock-based compensation expense		90,506			81,250
Deferred income taxes and other assets		(150,299	)		(365,317	)
Net amortization of unearned discounts on investment securities available for sale		655,923			386,724
Origination of mortgage loans held for sale		(50,913,927	)		(134,399,394	)
Proceeds from sale of mortgage loans held for sale		53,033,371			141,603,775
(Increase) decrease in accrued interest receivable		(350,952	)		172,588
Increase (decrease) in accrued interest payable and other liabilities		346,842			(379,960	)
Net cash provided by operating activities		7,699,262			12,473,910
Cash flows from investing activities:
Proceeds from calls and maturities of investment securities available for sale		3,539,000			26,967,000
Proceeds from sale of investment securities available for sale		15,120,000			15,572,500
Purchase of investment securities available for sale		(101,827,117	)		(104,335,011	)
Net (increase) decrease in loans		(21,624,810	)		8,030,641
Purchase of premises, equipment, and leasehold improvements, net		(217,691	)		(116,722	)
Net cash used in investing activities		(105,010,618	)		(53,881,592	)
Cash flows from financing activities:
Net (decrease) increase in deposit accounts		(31,079,067	)		160,593,648
Dividends paid		(2,829,495	)		(3,370,906	)
Stock options exercised, net of surrenders		161,640			138,028
Net cash (used in) provided by financing activities		(33,746,922	)		157,360,770
Net (decrease) increase in cash and cash equivalents		(131,058,278	)		115,953,088
Cash and cash equivalents at the beginning of the period		140,111,988			48,325,981
Cash and cash equivalents at the end of the period	$	9,053,710		$	164,279,069
Supplemental disclosure of cash flow data:
Cash paid during the period for:
Interest	$	112,138		$	156,380
Income taxes, net	$	1,100,502		$	2,345,420
Supplemental disclosures for non-cash investing and financing activity:
Change in unrealized loss on securities available for sale, net of income taxes	$	20,172,509		$	2,608,793
Change in dividends payable	$	1,885		$	2,753

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

See accompanying notes to consolidated financial statements.

BANK OF SOUTH CAROLINA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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~~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, or (“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 42, ~~2022~~2023. 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 consolidated 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 ~~loan~~credit losses, impaired loans, other real estate owned, deferred tax assets, and the fair value of financial instruments ~~and other-than-temporary impairment of investment securities~~.

Income Per Common 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.

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 June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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. ASU 2016-13 changes the impairment model for most financial assets to a current expected credit loss (“CECL”) model, replacing the incurred loss model that is currently in use. The new guidance requires an entity to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. The CECL model will apply to financial assets measured at amortized cost, such as loans and investments, as well as certain off-balance sheet credit exposures. In May 2019, the FASB issued guidance to provide entities with an option to irrevocably elect the fair value option, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments. In October 2019, the FASB voted to extend the implementation date for smaller reporting companies, non-SEC public companies, and private companies. This amendment will become effective for the Company on January 1, 2023. In connection with its efforts to implement ASU 2016-13, the Company internally developed and tested a model to apply the provisions of this guidance upon adoption. The Company is currently in the process of evaluating the impact on the consolidated financial statements of adopting ASU 2016-13. The actual impact of adopting ASU 2016-13 will be influenced by the quality, composition, and characteristics of our loan and investment portfolios, as well as the expected economic conditions and forecasts at the time of enactment and future reporting periods. 8

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 prospectively. Results for reporting periods beginning after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with the previously applicable incurred loss accounting methodology. 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.

Significant Accounting Policy Changes

Upon adoption of ASC 326, the Company revised the accounting policy for the Allowance for Credit Losses as detailed below.

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 CECL 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 impairment 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 uncollectability of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. At March 31, 2023, there was no allowance for credit losses related to the available-for-sale portfolio.

Accrued interest receivable on available for sale debt securities totaled $436,000 at March 31, 2023 and was excluded from the estimate of credit losses.

Allowance for Credit Losses - Loans

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 provision for credit losses and decreased by charge-offs, net of recoveries of amounts previously charged-off, or negative provisions, 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 and is adjusted by the estimated prepayment rate to get the lifetime historical loss rate, which 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 the 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, further segmentation would be granular and segments would be statistically insignificant.

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 impaired 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 $1.8 million at March 31, 2023 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 off-balance sheet credit exposures, 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 that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. 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.

The Company’s CECL allowances will fluctuate over time due to macroeconomic conditions and forecasts as well as the size and composition of the loan portfolios.

In March ~~2020~~2022, the FASB issued ~~guidance~~ ~~that~~ASU ~~makes narrow~~2022-~~scope improvements to various aspects of the financial instrument guidance~~02, ~~including~~Financial ~~the~~Instruments—Credit ~~current~~Losses ~~expected credit losses~~ (~~CECL~~Topic 326): ~~guidance~~Troubled ~~issued~~Debt inRestructurings ~~2016.~~and ~~The~~Vintage ~~amendments related to conforming amendments. For public business entities~~Disclosures, ~~the amendments~~which ~~are~~eliminates ~~effective~~the ~~upon~~accounting ~~issuance~~guidance ofon ~~this~~troubled ~~final~~debt ~~ASU.~~restructurings ~~For~~(TDRs) ~~the~~for ~~amendments~~creditors ~~related~~in toASC ~~ASU 2016~~310-~~13,~~402 ~~public~~and ~~business~~amends ~~entities~~the ~~that~~guidance ~~meet~~on ~~the~~“vintage ~~definition~~disclosures” ofto anrequire ~~SEC~~disclosure ~~filer,~~of ~~excluding~~current-period ~~eligible~~gross ~~smaller~~write-offs ~~reporting~~by ~~companies~~year ~~(SRCs)~~of asorigination. ~~defined~~The byASU ~~the~~also ~~SEC,~~updates ~~should adopt~~ the ~~amendments~~requirements inrelated ~~ASU~~to ~~2016-13~~accounting ~~during~~for ~~2020.~~credit ~~Early~~losses ~~adoption~~under ~~will~~ASC ~~continue~~326 toand beadds ~~permitted.~~enhanced ~~For~~disclosures ~~entities~~for ~~that~~creditors ~~have~~with ~~not~~respect ~~yet~~to ~~adopted~~loan ~~the~~refinancings ~~guidance in~~and ~~ASU~~restructurings ~~2016-13,~~for ~~the~~borrowers ~~effective~~experiencing ~~dates~~financial ~~and~~difficulty. ~~the~~The ~~transition~~Company ~~requirements~~adopted ~~for~~the ~~these~~ amendments ~~are~~in ~~the~~ASU ~~same~~2022-02 asupon the ~~effective date and transition~~Company’s ~~requirements~~adoption inof ASU 2016-13. ~~The~~as ~~Company~~of ~~does~~January ~~not~~1, ~~expect these amendments to have a material effect on its consolidated financial statements~~2023.

In March ~~2022~~2020, the FASB issued ASU ~~2022~~2020-0204, ~~Financial~~ ~~Instruments—Credit~~Reference ~~Losses~~Rate Reform (Topic ~~326~~848): ~~Troubled~~Facilitation ~~Debt~~of ~~Restructurings~~the ~~and~~Effects ~~Vintage~~of ~~Disclosures,~~Reference ~~which~~Rate ~~eliminates~~Reform ~~the accounting guidance~~ on ~~troubled~~Financial ~~debt~~Reporting, ~~restructurings~~which ~~(TDRs)~~provides ~~for~~temporary ~~creditors~~optional ~~in ASC 310-402 and amends the~~ guidance ~~on “vintage disclosures”~~ to ~~require~~ease ~~disclosure~~the ofpotential ~~current-period~~burden ~~gross~~in ~~write-offs~~accounting byfor ~~year~~reference ~~of origination~~rate reform. ~~The~~In ~~ASU~~December ~~also~~2022, ~~updates~~ the ~~requirements related~~FASB toextended ~~accounting~~the ~~for~~sunset ~~credit~~date ~~losses~~of ~~under~~ ASC ~~326~~848 ~~and~~from ~~adds~~December ~~enhanced~~31, ~~disclosures~~2022 ~~for~~to ~~creditors~~December ~~with~~31, ~~respect~~2024. toThe ~~loan refinancings~~Company ~~and~~does ~~restructurings~~not ~~for~~expect ~~borrowers~~these ~~experiencing financial difficulty. The~~ amendments into ~~ASU~~have ~~2022-02~~a ~~are~~material ~~effective~~effect ~~upon~~on ~~the~~its ~~Company’s adoption~~consolidated offinancial ~~ASU 2016-13~~statements.

In March 2020, the FASB issued guidance to provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The amendments are effective as of March 12, 2020 through December 31, 2022. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In November 2021, the FASB added a topic to the Accounting Standards Codification, Government Assistance, to require certain annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy to other accounting guidance. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2021. The amendment became effective January 1, 2022 and did not have a material effect 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.

Note 2: Investment Securities

The amortized cost and fair value of investment securities available for sale are summarized as follows:

	September 30, 2022
	March 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Treasury Notes	$	180,~~427~~171,~~400~~098	$	—	$	(139,~~114~~934,~~300~~568	)	$	~~167~~170,~~313~~236,~~100~~530
Government-Sponsored Enterprises		6667,~~138~~332,~~873~~674		—		(109,~~797~~254,~~720~~200	)		5558,~~341~~078,~~153~~474
Municipal Securities		5141,~~055~~833,~~152~~858		342,679		(42,~~322~~711,~~796~~617	)		4639,~~732~~124,~~390~~920
Total	$	~~297~~289,~~621~~337,~~425~~630	$	342,679	$	(2821,~~234~~900,~~816~~385	)	$	~~269~~267,~~386~~439,~~643~~924

	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Treasury Notes	$	101,269,851	$	68,848	$	(1,276,399	)	$	100,062,300
Government-Sponsored Enterprises		76,355,720		275,123		(1,909,834	)		74,721,009
Municipal Securities		37,421,880		335,912		(193,612	)		37,564,180
Total	$	215,047,451	$	679,883	$	(3,379,845	)	$	212,347,489

There is no allowance for credit losses on available for sale securities at March 31, 2023.


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Treasury Notes	$	180,298,301	$	—	$	(12,110,986	)	$	168,187,315
Government-Sponsored Enterprises		67,384,808		—		(10,310,084	)		57,074,724
Municipal Securities		49,315,041		2,510		(3,407,364	)		45,910,187
Total	$	296,998,150	$	2,510	$	(25,828,434	)	$	271,172,226

The amortized cost and estimated fair value of investment securities available for sale as of March 31, 2023 and December 31, 2022, by contractual maturity are in the following table.

	March 31, 2023				December 31, 2022
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	63,661,723	$	61,990,046	$	42,722,655	$	41,698,011
Due in one year to five years		174,605,470		162,191,737		190,569,869		176,217,530
Due in five years to ten years		41,765,078		35,399,509		53,995,700		45,386,818
Due in ten years and over		9,305,359		7,858,632		9,709,926		7,869,867
Total	$	289,337,630	$	267,439,924	$	296,998,150	$	271,172,226

Securities pledged to secure deposits at March 31, 2023 and December 31, 2022, had a fair value of $30.6 million and $30.1 million, respectively. During the first quarter of 2023, the Federal Reserve established the Bank Term Funding Program in order to make available additional funding to eligible depository institutions so as to help assure banks have the ability to meet the needs of all their depositors. Securities pledged to secure funding made available by this program were $25.0 million at March 31, 2023.

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 March 31, 2023 and December 31, 2022. Unrealized losses have not been recognized into income as we believe that all unrealized losses have resulted from temporary changes in the interest rate market 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.

The amortized cost and estimated fair value of investment securities available for sale as of September 30, 2022 and December 31, 2021, by contractual maturity are in the following table.


	March 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		2	$	9,711,525	$	(186,791	)		23	$	160,525,005	$	(9,747,777	)		25	$	170,236,530	$	(9,934,568	)
Government-Sponsored Enterprises		1		1,294,810		(3,283	)		10		56,783,664		(9,250,917	)		11		58,078,474		(9,254,200	)
Municipal Securities		5		9,004,486		(88,018	)		66		29,583,232		(2,623,599	)		71		38,587,718		(2,711,617	)
Total		8	$	20,010,821	$	(278,092	)		99	$	246,891,901	$	(21,622,293	)		107	$	266,902,722	$	(21,900,385	)

	September 30, 2022				December 31, 2021
	December 31, 2022
	Amortized Cost		Estimated Fair Value		Amortized Cost			Estimated Fair Value
	Less Than 12 Months							12 Months or Longer							Total
Due in one year or less	$	27,376,382	$	26,827,999	$	12,756,176		$	12,859,086
	#		Fair Value		Gross Unrealized Loss			#		Fair Value		Gross Unrealized Loss			#		Fair Value		Gross Unrealized Loss
Due in one year to five years		189,340,366		175,487,805		116,602,790			115,896,465
U.S. Treasury Notes		7	$	38,181,255	$	(1,790,134	)		18	$	130,006,060	$	(10,320,852	)		25	$	168,187,315	$	(12,110,986	)
Due in five years to ten years		72,507,681		60,788,617		76,531,464			74,575,862
Government-Sponsored Enterprises		2		6,212,285		(84,170	)		9		50,862,439		(10,225,914	)		11		57,074,724		(10,310,084	)
Due in ten years and over		8,396,996		6,282,222		9,157,021			9,016,076
Municipal Securities		46		26,068,218		(932,565	)		31		14,859,459		(2,474,799	)		77		40,927,677		(3,407,364	)
Total	$	~~297,621,425~~55	$	~~269~~70,~~386~~461,~~643~~758	$	~~215~~(2,~~047~~806,~~451~~869	)	$	~~212,347,489~~58	$	195,727,958	$	(23,021,565	)		113	$	266,189,716	$	(25,828,434	)

Securities pledged to secure deposits at September 30, 2022 and December 31, 2021, had a fair value of $28.4 million and $33.3 million, 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 September 30, 2022 and December 31, 2021. We believe that all unrealized losses have resulted from temporary changes in the interest rate market 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.

	September 30, 2022
	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		13	$	103,560,555	$	(6,300,118	)		12	$	63,752,545	$	(6,814,182	)		25	$	167,313,100	$	(13,114,300	)
Government-Sponsored Enterprises		1		4,921,565		(75,999	)		9		50,419,588		(10,721,722	)		10		55,341,153		(10,797,721	)
Municipal Securities		54		34,629,937		(2,086,548	)		23		11,947,419		(2,236,248	)		77		46,577,356		(4,322,796	)
Total		68	$	143,112,057	$	(8,462,665	)		44	$	126,119,552	$	(19,772,152	)		112	$	269,231,609	$	(28,234,817	)

	December 31, 2021
	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		15	$	94,994,915	$	(1,276,399	)		—	$	—	$	—			15	$	94,994,915	$	(1,276,399	)
Government-Sponsored Enterprises		3		19,480,595		(519,405	)		6		39,909,134		(1,390,429	)		9		59,389,729		(1,909,834	)
Municipal Securities		19		11,384,462		(193,612	)		—		—		—			19		11,384,462		(193,612	)
Total		37	$	125,859,972	$	(1,989,416	)		6	$	39,909,134	$	(1,390,429	)		43	$	165,769,106	$	(3,379,845	)

The tables below show the proceeds from sales of securities available for sale and gross realized gains and losses.

	Three Months Ended
	September 30,
	March 31,
	2022		2021
	2023		2022
Gross proceeds	$	—	$	15,~~572~~120,~~500~~000
Gross realized gains		—		~~266~~61,~~944~~780
Gross realized losses		—		—

	Nine Months Ended
	September 30,
	2022		2021
Gross proceeds	$	15,120,000	$	15,572,500
Gross realized gains		61,780		266,944
Gross realized losses		—		—

There was a tax provision of $12,974 related to gains for the three months ended March 31, 2022.

~~There~~Note ~~was~~3: aLoans ~~tax~~and ~~provision~~Allowance ~~of $12,974 related to gains~~ for ~~the~~Credit ~~nine months ended September 30, 2022. There was a tax provision of $56,058 related to gains for the three and nine months September 30, 2021.~~Losses

~~Note~~Major 3:classifications ~~Loans~~of loans (net of deferred loan fees of $144,055 and ~~Allowance~~$159,434 ~~for~~at ~~Loan~~March ~~Losses~~31,2023 and December 31, 2022, respectively) are shown in the table below.

Major classifications of loans (net of deferred loan fees of $157,002 and $488,481 at September 30, 2022 and December 31, 2021, respectively) are shown in the table below.

	March 31, 2023			December 31, 2022
Commercial	$	46,212,003		$	45,072,059
Commercial real estate:
Construction		20,146,368			17,524,260
Other		174,860,808			172,897,387
Consumer:
Real estate		88,962,556			91,636,538
Other		3,607,720			3,851,538
		333,789,455			330,981,782
Allowance for credit losses		(3,688,503	)		(4,291,221	)
Loans, net	$	330,100,952		$	326,690,561

	September 30, 2022			December 31, 2021
Commercial	$	52,323,412		$	45,804,434
Commercial real estate:
Construction		16,339,084			12,054,095
Other		171,043,155			165,719,078
Consumer:
Real estate		84,706,632			71,307,488
Other		3,871,990			3,768,531
Paycheck Protection Program		—			7,978,603
		328,284,273			306,632,229
Allowance for loan losses		(4,329,221	)		(4,376,987	)
Loans, net	$	323,955,052		$	302,255,242

We had $107.9 million and $93.1 million of loans pledged as collateral to secure funding with the Federal Reserve Bank (“FRB”) Discount Window at March 31, 2023 and at December 31, 2022, respectively.

WeOur ~~had~~portfolio ~~$91.2~~grading ~~million~~analysis ~~and~~estimates ~~$94.7~~the ~~million~~capability of ~~loans~~the ~~pledged~~borrower asto ~~collateral~~repay tothe ~~secure~~contractual ~~funding~~obligations ~~with~~of the ~~Federal~~loan ~~Reserve~~agreements as ~~Bank~~scheduled. ~~(“FRB”) Discount~~Our ~~Window~~internal atcredit ~~September~~risk ~~30,~~grading ~~2022~~system ~~and~~is atbased ~~December~~on 31experience with similarly graded loans, ~~2021~~industry best practices, and ~~respectively~~regulatory guidance. Our portfolio is graded in its entirety.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law, which established the Paycheck Protection Program (“PPP”) and allocated $349.0 billion of loans to be issued by financial institutions. The Paycheck Protection Program and Health Care Enhancement Act (“PPP/ HCEA Act”) was signed into law on April 24, 2020. The PPP/HCEA Act authorized additional funding under the CARES Act of $310.0 billion for PPP loans to be issued by financial institutions through the SBA. In 2020 and 2021, the Bank provided $55.3 million in funding to 480 customers through the PPP and received a total of $2.4 million in processing fees. The processing fees were deferred and are being amortized over the life of the loans in accordance with ASC 310-20. During the three months ended September 30, 2022 and 2021, the Bank recognized $0.1 million and $0.1 million, respectively, in processing fees for the PPP. During the nine months ended September 30, 2022 and 2021, the Bank recognized $0.4 million and $1.0 million, respectively, in processing fees for the PPP.

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, with the exception of the PPP loans. Because the PPP loans are 100% guaranteed by the SBA and did not undergo the Bank’s typical underwriting process, they are not graded and do not have an associated reserve.

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~~loans to/from stockholders, and infrequent overdrafts. The borrower has consistent yet sometimes unpredictable sales and growth.

● ~~Other Assets Especially Mentioned (~~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 possible. The borrowing entity has declining sales, rising costs, and may need to look for secondary ~~source~~sources 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~~table ~~illustrate~~illustrates credit quality by class ~~and~~indicators ~~internally~~by ~~assigned~~year ~~grades~~of origination at ~~September~~March ~~30, 2022 and December~~ 31, ~~2021. “Pass” includes loans internally graded as excellent, good and satisfactory.~~2023:

September 30, 2022
	Term Loans by Year of Origination
		Commercial			Commercial Real Estate Construction			Commercial Real Estate Other			Consumer Real Estate			Consumer Other			Total
	2023			2022			2021			2020			2019			Prior			Revolving		Total
Pass		$	50,147,494		$	16,339,084		$	165,720,219		$	80,529,554		$	3,590,328		$	316,326,679
Commercial
Watch			601,185			—			3,149,899			3,654,235			234,836			7,640,155
Pass	$	6,126,737		$	15,777,976		$	5,724,744		$	5,283,844		$	954,143		$	436,185		$	9,651,873	$	43,955,503
OAEM			272,911			—			978,517			274,445			8,350			1,534,223
Watch		193,968			517,215			38,787			101,971			—			—			183,423		1,035,364
Substandard			1,301,822			—			1,194,520			248,398			38,476			2,783,216
OAEM		—			824			15,845			—			—			—			130,000		146,670
Doubtful			—			—			—			—			—			—
Substandard		—			939,656			—			134,810			—			—			—		1,074,466
Loss			—			—			—			—			—			—
Doubtful		—			—			—			—			—			—			—		—
Total		$	52,323,412		$	16,339,084		$	171,043,155		$	84,706,632		$	3,871,990		$	328,284,273
Loss		—			—			—			—			—			—			—		—
Total	$	6,320,705		$	17,235,671		$	5,779,376		$	5,520,626		$	954,143		$	436,185		$	9,965,297	$	46,212,003
Current period gross charge-offs	$	—		$	—		$	—		$	—		$	—		$	46,341		$	—	$	46,341
Commercial Real Estate Construction
Pass	$	2,717,256		$	9,691,545		$	3,159,648		$	4,577,919		$	—		$	—		$	—	$	20,146,368
Watch		—			—			—			—			—			—			—		—
OAEM		—			—			—			—			—			—			—		—
Substandard		—			—			—			—			—			—			—		—
Doubtful		—			—			—			—			—			—			—		—
Loss		—			—			—			—			—			—			—		—
Total	$	2,717,256		$	9,691,545		$	3,159,648		$	4,577,919		$	—		$	—		$	—	$	20,146,368
Current period gross charge-offs	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Commercial Real Estate Other
Pass	$	6,648,022		$	56,736,163		$	52,765,365		$	25,416,225		$	10,612,328		$	8,085,081		$	5,573,442	$	165,836,625
Watch		3,621,749			442,699			779,071			933,712			—			—			248,029		6,025,260
OAEM		863,683			—			648,343			14,244			—			—			297,909		1,824,180
Substandard		—			—			863,493			—			—			311,249			—		1,174,743
Doubtful		—			—			—			—			—			—			—		—
Loss		—			—			—			—			—			—			—		—
Total	$	11,133,454		$	57,178,862		$	55,056,273		$	26,364,181		$	10,612,328		$	8,396,330		$	6,119,380	$	174,860,808
Current period gross charge-offs	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Consumer Real Estate
Pass	$	4,439,050		$	29,475,217		$	8,479,952		$	9,320,267		$	291,943		$	29,311		$	34,899,380	$	86,935,121
Watch		—			—			—			—			—			—			1,503,232		1,503,232
OAEM		—			—			—			—			—			—			274,445		274,445
Substandard		—			—			—			—			—			—			249,758		249,758
Doubtful		—			—			—			—			—			—			—		—
Loss		—			—			—			—			—			—			—		—
Total	$	4,439,050		$	29,475,217		$	8,479,952		$	9,320,267		$	291,943		$	29,311		$	36,926,815	$	88,962,556
Current period gross charge-offs	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Consumer Other
Pass	$	633,324		$	1,204,254		$	626,934		$	359,183		$	116,129		$	51,352		$	389,933	$	3,381,110
Watch		4,055			87,544			21,822			40,864			—			—			28,469		182,755
OAEM		—			—			—			6,324			—			—			—		6,324
Substandard		37,530			—			—			—			—			—			—		37,530
Doubtful		—			—			—			—			—			—			—		—
Loss		—			—			—			—			—			—			—		—
Total	$	674,909		$	1,291,799		$	648,757		$	406,372		$	116,129		$	51,352		$	418,402	$	3,607,720
Current period gross charge-offs	$	—		$	—		$	1,977		$	—		$	—		$	—		$	—	$	1,977

December 31, 2021
	Commercial		Commercial Real Estate Construction		Commercial Real Estate Other		Consumer Real Estate		Consumer Other		Paycheck Protection Program		Total
Pass	$	43,853,889	$	11,616,118	$	159,825,281	$	69,920,347	$	3,565,716	$	7,978,603	$	296,759,954
Watch		450,319		437,977		3,082,408		862,938		133,418		—		4,967,060
OAEM		36,749		—		1,158,268		274,445		29,244		—		1,498,706
Substandard		1,463,477		—		1,653,121		249,758		40,153		—		3,406,509
Doubtful		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—
Total	$	45,804,434	$	12,054,095	$	165,719,078	$	71,307,488	$	3,768,531	$	7,978,603	$	306,632,229

13The following table illustrates credit quality by class and internally assigned grades at December 31, 2022. "Pass" includes loans internally graded as excellent, good and satisfactory.

December 31, 2022
	Commercial		Commercial Real Estate Construction		Commercial Real Estate Other		Consumer Real Estate		Consumer Other		Total
Pass	$	42,724,289	$	17,524,260	$	167,518,577	$	86,183,899	$	3,597,886	$	317,548,911
Watch		976,966		—		3,223,532		4,928,437		208,417		9,337,352
OAEM		94,803		—		968,611		274,445		7,345		1,345,204
Substandard		1,276,001		—		1,186,667		249,757		37,890		2,750,315
Doubtful		—		—		—		—		—		—
Loss		—		—		—		—		—		—
Total	$	45,072,059	$	17,524,260	$	172,897,387	$	91,636,538	$	3,851,538	$	330,981,782

The following tables include an aging analysis of the recorded investment in loans segregated by class.

September 30, 2022
March 31, 2023
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Recorded Investment ≥ 90 Days and Accruing
Commercial	$	~~199,690~~—	$	—	$	—	$	~~199,690~~—	$	5246,~~123~~212,~~722~~003	$	5246,~~323~~212,~~412~~003	$	—
Commercial Real Estate Construction		—		—		—		—		1620,~~339~~146,~~084~~368		1620,~~339~~146,~~084~~368		—
Commercial Real Estate Other		~~411~~360,~~866~~029		~~60,653~~—		~~634~~627,~~048~~927		1987,~~106,566~~956		~~169~~173,~~936~~872,~~589~~852		~~171~~174,~~043~~860,~~155~~808		—
Consumer Real Estate		—		—274,444		—		—274,444		8488,~~706~~688,~~632~~112		8488,~~706~~962,~~632~~556		—
Consumer Other		—		—		—		—		3,~~871~~607,~~990~~720		3,~~871~~607,~~990~~720		—
Total	$	~~611~~360,~~556~~029	$	60274,~~653~~444	$	~~634~~627,~~048~~927	$	1,~~306~~262,~~256~~400	$	~~326~~332,~~978~~527,~~017~~055	$	~~328~~333,~~284~~789,~~273~~455	$	—

December 31, 2021
December 31, 2022
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Recorded Investment ≥ 90 Days and Accruing
Commercial	$	8816,~~659~~451	$	—178,975	$	—	$	88195,~~659~~426	$	4544,~~715~~876,~~775~~633	$	45,~~804~~072,~~434~~059	$	—
Commercial Real Estate Construction		—		—		—		—		1217,~~054~~524,~~095~~260		1217,~~054~~524,~~095~~260		—
Commercial Real Estate Other		5945,~~269~~425		~~288,464~~—		~~337~~631,~~490~~453		~~685~~676,~~223~~878		~~165~~172,~~033~~220,~~855~~509		~~165~~172,~~719~~897,~~078~~387		—
Consumer Real Estate		—274,445		—		—		—274,445		7191,~~307~~362,~~488~~093		7191,~~307~~636,~~488~~538		—
Consumer Other		~~23,971~~—		—		—		~~23,971~~—		3,~~744~~851,~~560~~538		3,~~768~~851,~~531~~538		—
Paycheck Protection Program		—		—		—		—		7,978,603		7,978,603		—
Total	$	336,321	$	178,975	$	631,453	$	1,146,749	$	329,835,033	$	330,981,782	$	—
Total	$	171,899	$	288,464	$	337,490	$	797,853	$	305,834,376	$	306,632,229	$	—

There were no loans over 90 days past due and still accruing as of ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022.

The following table summarizes the balances of non-accrual loans:

	September 30, 2022		December 31, 2021
	CECL						Incurred Loss
Commercial	$	—	$	178,975
	March 31, 2023						December 31, 2022
Commercial Real Estate Other		634,048		625,953
	Nonaccrual Loans with No Allowance		Nonaccrual Loans with an Allowance		Total Nonaccrual Loans		Nonaccrual Loans
Consumer Other		—		9,686
Commercial	$	—	$	—	$	—	$	—
Total	$	634,048	$	814,614
Commercial Real Estate Construction		—		—		—		—
Commercial Real Estate Other		627,927		—		627,927		631,453
Consumer Real Estate		—		—		—		—
Consumer Other		—		—		—		—
Total	$	627,927	$	—	$	627,927	$	631,453

~~The~~We ~~following~~designate ~~tables~~individually ~~set~~evaluated ~~forth~~loans ~~the~~on ~~changes~~nonaccrual instatus ~~the~~as ~~allowance~~collateral ~~for~~dependent ~~loan~~loans, ~~losses~~as ~~and~~well another ~~allocation~~loans ofthat ~~the~~management ~~allowance~~designates as having higher risk. Collateral dependent loans are loans for ~~loan~~which ~~losses~~repayment byis expected to be provided substantially through the ~~class~~operation ~~for~~or sale of the ~~three~~collateral and ~~nine~~the ~~months~~borrower ~~ended~~is ~~September~~experiencing ~~30,~~financial ~~2022~~difficulty. These loans do not share common risk characteristics and ~~2021.~~are ~~The~~not included within the collectively evaluated loans for determining the allowance for ~~loan~~credit losses. ~~consists~~Under ofCECL, ~~specific~~for ~~and~~collateral ~~general~~dependent ~~components.~~loans, ~~The~~we ~~specific~~adopted ~~component~~the ~~relates~~practical expedient to ~~loans~~measure ~~that~~the ~~are~~allowance ~~individually~~for ~~classified~~credit aslosses ~~impaired.~~based ~~The~~on ~~general~~the ~~component~~fair value of the collateral. ~~covers~~The ~~non-impaired~~allowance ~~loans~~for ~~and~~credit losses is calculated on an individual loan basis based on ~~historical~~the ~~loss~~shortfall ~~experience~~between the fair value of the loan’s collateral, which is adjusted for ~~current~~liquidation ~~economic~~costs/discounts, ~~factors~~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:

	March 31, 2023
Commercial	$	—
Commercial Real Estate Construction		—
Commercial Real Estate Other		1,188,986
Consumer Real Estate		249,758
Consumer Other		—
Total	$	1,438,744

The following table set forth the changes in the allowance for credit losses and an allocation of the allowance for credit losses by class for the three months ended March 31, 2023 under the CECL methodology.


Three Months Ended March 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	)		—			—			—			(1,977	)		(48,318	)
Recoveries		600			—			—			—			—			600
Provisions		(93,936	)		42,873			98,558			6,524			(9,019	)		45,000
Ending balance	$	514,081		$	236,989		$	2,000,520		$	860,498		$	76,415		$	3,688,503

Prior to the adoption of ASC 326 on January 1, 2023, we calculated the allowance for loan losses under the incurred loss methodology. The following table sets forth the changes in the allowance for loan losses for the three months ended March 31, 2022.


Three Months Ended March 31, 2022
	Commercial			Commercial Real Estate Construction		Commercial Real Estate Other			Consumer Real Estate			Consumer Other			Paycheck Protection Program			Total
Allowance for Loan Losses:
Beginning balance	$	795,689		$	175,493	$	2,376,306		$	924,784		$	104,715		$	—		$	4,376,987
Charge-offs		—			—		—			(2,035	)		—			(10	)		(2,045	)
Recoveries		—			—		—			—			4,200			360			4,560
Provisions		(7,596	)		28,075		(82,296	)		(2,777	)		(10,056	)		(350	)		(75,000	)
Ending balance	$	788,093		$	203,568	$	2,294,010		$	919,972		$	98,859		$	—		$	4,304,502

Prior to the adoption of ASC 326 on January 1, 2023, the Company calculated the allowance for loan losses under the incurred loss methodology. The tables are are disclosures related to the allowance for loan losses in prior periods.


	December 31, 2022
	Commercial		Commercial Real Estate Construction		Commercial Real Estate Other		Consumer Real Estate		Consumer Other		Total
Allowance for Loan Losses
Individually evaluated for impairment	$	179,230	$	—	$	—	$	—	$	37,889	$	217,119
Collectively evaluated for impairment		556,529		230,625		2,216,484		1,014,777		55,687		4,074,102
Total Allowance for Loan Losses	$	735,759	$	230,625	$	2,216,484	$	1,014,777	$	93,576	$	4,291,221
Loans Receivable
Individually evaluated for impairment	$	1,276,001	$	—	$	1,202,412	$	249,758	$	37,889	$	2,766,060
Collectively evaluated for impairment		43,796,058		17,524,260		171,694,975		91,386,780		3,813,649		328,215,722
Total Loans Receivable	$	45,072,059	$	17,524,260	$	172,897,387	$	91,636,538	$	3,851,538	$	330,981,782

Three Months Ended September 30, 2022
	Commercial			Commercial Real Estate Construction			Commercial Real Estate Other		Consumer Real Estate		Consumer Other			Paycheck Protection Program			Total
Allowance for Loan Losses:
Beginning balance	$	882,994		$	230,370		$	2,210,311	$	890,384	$	92,806		$	—		$	4,306,865
Charge-offs		—			—			—		—		—			—			—
Recoveries		200			—			18,000		—		4,000			156			22,356
Provisions		(51,621	)		(12,590	)		11,049		54,991		(1,673	)		(156	)		—
Ending balance	$	831,573		$	217,780		$	2,239,360	$	945,375	$	95,133		$	—		$	4,329,221

As of December 31, 2022, loans individually evaluated and considered impaired are presented in the following table.

Nine Months Ended September 30, 2022
	Impaired Loans as of
	Commercial		Commercial Real Estate Construction		Commercial Real Estate Other			Consumer Real Estate			Consumer Other			Paycheck Protection Program			Total
	December 31, 2022
Allowance for Loan Losses:
	Unpaid Principal Balance		Recorded Investment		Related Allowance
Beginning balance	$	795,689	$	175,493	$	2,376,306		$	924,784		$	104,715		$	—		$	4,376,987
With no related allowance recorded:
Charge-offs		—		—		—			(2,035	)		—			(10	)		(2,045	)
Commercial	$	317,553	$	317,553	$	—
Recoveries		200		—		18,000			—			10,224			855			29,279
Commercial Real Estate Construction		—		—		—
Provisions		35,684		42,287		(154,946	)		22,626			(19,806	)		(845	)		(75,000	)
Commercial Real Estate Other		1,202,412		1,202,412		—
Ending balance	$	831,573	$	217,780	$	2,239,360		$	945,375		$	95,133		$	—		$	4,329,221
Consumer Real Estate		249,758		249,758		—
Consumer Other		—		—		—
Total		1,769,723		1,769,723		—
With an allowance recorded:
Commercial		958,448		958,448		179,230
Commercial Real Estate Construction		—		—		—
Commercial Real Estate Other		—		—		—
Consumer Real Estate		—		—		—
Consumer Other		37,889		37,889		37,889
Total		996,337		996,337		217,119
Commercial		1,276,001		1,276,001		179,230
Commercial Real Estate Construction		—		—		—
Commercial Real Estate Other		1,202,412		1,202,412		—
Consumer Real Estate		249,758		249,758		—
Consumer Other		37,889		37,889		37,889
Total	$	2,766,060	$	2,766,060	$	217,119

Three Months Ended September 30, 2021
	Commercial			Commercial Real Estate Construction		Commercial Real Estate Other		Consumer Real Estate			Consumer Other		Paycheck Protection Program			Total
Allowance for Loan Losses:
Beginning balance	$	801,548		$	154,276	$	2,206,215	$	1,025,506		$	118,758	$	—		$	4,306,303
Charge-offs		—			—		—		—			—		(903	)		(903	)
Recoveries		10,746			—		—		47,711			4,600		—			63,057
Provisions		(9,338	)		1,248		72,060		(65,539	)		666		903			—
Ending balance	$	802,956		$	155,524	$	2,278,275	$	1,007,678		$	124,024	$	—		$	4,368,457

Nine Months Ended September 30, 2021
	Commercial			Commercial Real Estate Construction			Commercial Real Estate Other		Consumer Real Estate		Consumer Other			Paycheck Protection Program			Total
Allowance for Loan Losses:
Beginning balance	$	1,029,310		$	199,266		$	1,909,121	$	925,077	$	122,920		$	—		$	4,185,694
Charge-offs		—			—			—		—		(11,439	)		(8,879	)		(20,318	)
Recoveries		21,329			—			—		47,711		14,041			—			83,081
Provisions		(247,683	)		(43,742	)		369,154		34,890		(1,498	)		8,879			120,000
Ending balance	$	802,956		$	155,524		$	2,278,275	$	1,007,678	$	124,024		$	—		$	4,368,457

The following tables present, by portfolio segment and reserving methodology, the allocation of the allowance for loan losses and the gross investment in loans, for the periods indicated.

	September 30, 2022
	Commercial		Commercial Real Estate Construction		Commercial Real Estate Other		Consumer Real Estate		Consumer Other		Paycheck Protection Program		Total
Allowance for Loan Losses
Individually evaluated for impairment	$	179,891	$	—	$	—	$	—	$	38,475	$	—	$	218,366
Collectively evaluated for impairment		651,682		217,780		2,239,360		945,375		56,658		—		4,110,855
Total Allowance for Loan Losses	$	831,573	$	217,780	$	2,239,360	$	945,375	$	95,133	$	—	$	4,329,221
Loans Receivable
Individually evaluated for impairment	$	1,301,822	$	—	$	1,214,827	$	248,398	$	38,475	$	—	$	2,803,522
Collectively evaluated for impairment		51,021,590		16,339,084		169,828,328		84,458,234		3,833,515		—		325,480,751
Total Loans Receivable	$	52,323,412	$	16,339,084	$	171,043,155	$	84,706,632	$	3,871,990	$	—	$	328,284,273

	December 31, 2021
	Commercial		Commercial Real Estate Construction		Commercial Real Estate Other		Consumer Real Estate		Consumer Other		Paycheck Protection Program		Total
Allowance for Loan Losses
Individually evaluated for impairment	$	179,988	$	—	$	—	$	—	$	40,153	$	—	$	220,141
Collectively evaluated for impairment		615,701		175,493		2,376,306		924,784		64,562		—		4,156,846
Total Allowance for Loan Losses	$	795,689	$	175,493	$	2,376,306	$	924,784	$	104,715	$	—	$	4,376,987
Loans Receivable
Individually evaluated for impairment	$	1,463,477	$	—	$	1,653,121	$	249,758	$	40,153	$	—	$	3,406,509
Collectively evaluated for impairment		44,340,957		12,054,095		164,065,957		71,057,730		3,728,378		7,978,603		303,225,720
Total Loans Receivable	$	45,804,434	$	12,054,095	$	165,719,078	$	71,307,488	$	3,768,531	$	7,978,603	$	306,632,229

As of September 30, 2022 and December 31, 2021, loans individually evaluated and considered impaired are presented in the following table.

	Impaired Loans as of
	September 30, 2022						December 31, 2021
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Unpaid Principal Balance		Recorded Investment		Related Allowance
With no related allowance recorded:
Commercial	$	947,035	$	947,035	$	—	$	1,096,407	$	1,096,407	$	—
Commercial Real Estate Construction		—		—		—		—		—		—
Commercial Real Estate Other		1,214,827		1,214,827		—		1,653,121		1,653,121		—
Consumer Real Estate		248,398		248,398		—		249,758		249,758		—
Consumer Other		—		—		—		—		—		—
Paycheck Protection Program		—		—		—		—		—		—
Total		2,410,260		2,410,260		—		2,999,286		2,999,286		—
With an allowance recorded:
Commercial		354,787		354,787		179,891		367,070		367,070		179,988
Commercial Real Estate Construction		—		—		—		—		—		—
Commercial Real Estate Other		—		—		—		—		—		—
Consumer Real Estate		—		—		—		—		—		—
Consumer Other		38,475		38,475		38,475		40,153		40,153		40,153
Paycheck Protection Program		—		—		—		—		—		—
Total		393,262		393,262		218,366		407,223		407,223		220,141
Commercial		1,301,822		1,301,822		179,891		1,463,477		1,463,477		179,988
Commercial Real Estate Construction		—		—		—		—		—		—
Commercial Real Estate Other		1,214,827		1,214,827		—		1,653,121		1,653,121		—
Consumer Real Estate		248,398		248,398		—		249,758		249,758		—
Consumer Other		38,475		38,475		38,475		40,153		40,153		40,153
Paycheck Protection Program		—		—		—		—		—		—
Total	$	2,803,522	$	2,803,522	$	218,366	$	3,406,509	$	3,406,509	$	220,141

The following table presents average impaired loans and interest income recognized on those impaired loans, by class segment, for the periods indicated.

	Three Months Ended September 30,
	Three Months Ended March 31,
	2022				~~2021~~
	Average Recorded Investment		Interest Income Recognized		~~Average Recorded Investment~~		~~Interest Income Recognized~~
With no related allowance recorded:
Commercial	$	~~958~~181,~~895~~347	$	142,~~703~~720	$	~~1,327,590~~	$	~~20,140~~
Commercial Real Estate Construction		—		—		—		—
Commercial Real Estate Other		1,~~222~~226,~~909~~665		7,~~486~~706		~~1,954,514~~		~~14,402~~
Consumer Real Estate		249,~~684~~758		32,~~773~~617		~~249,758~~		~~2,675~~
Consumer Other		—		—		—		—
Paycheck Protection Program		—		—		—		—
		1,657,770		13,043
		2,431,488		25,962		3,531,862		37,217
With an allowance recorded:
With an allowance recorded:
Commercial		1,186,718		19,382
Commercial		354,787		6,063		178,975		4,564
Commercial Real Estate Construction		—		—
Commercial Real Estate Construction		—		—		—		—
Commercial Real Estate Other		—		—
Commercial Real Estate Other		—		—		—		—
Consumer Real Estate		—		—
Consumer Real Estate		—		—		—		—
Consumer Other		39,822		638
Consumer Other		38,685		634		40,921		670
		1,226,540		20,020
Paycheck Protection Program		—		—		—		—
Total
		393,472		6,697		219,896		5,234
Commercial		1,368,065		22,102
Total
Commercial Real Estate Construction		—		—
Commercial		1,313,682		20,766		1,506,565		24,704
Commercial Real Estate Other		1,226,665		7,706
Commercial Real Estate Construction		—		—		—		—
Consumer Real Estate		249,758		2,617
Commercial Real Estate Other		1,222,909		7,486		1,954,514		14,402
Consumer Other		39,822		638
Consumer Real Estate		249,684		3,773		249,758		2,675
	$	2,884,310	$	33,063
Consumer Other		38,685		634		40,921		670
Paycheck Protection Program		—		—		—		—
	$	2,824,960	$	32,659	$	3,751,758	$	42,451

	Nine Months Ended September 30,
	2022				2021
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	979,852	$	44,877	$	1,357,025	$	64,253
Commercial Real Estate - Construction		—		—		—		—
Commercial Real Estate - Other		1,237,330		24,678		1,948,369		45,482
Consumer Real Estate		249,724		11,338		249,783		8,842
Consumer Other		—		—		—		—
Paycheck Protection Program		—		—		—		—
		2,466,906		80,893		3,555,177		118,577
With an allowance recorded:
Commercial		358,450		13,341		178,975		8,173
Commercial Real Estate - Construction		—		—		—		—
Commercial Real Estate - Other		—		—		—		—
Consumer Real Estate		—		—		—		—
Consumer Other		39,241		1,923		41,384		2,047
Paycheck Protection Program		—		—		—		—
		397,691		15,264		220,359		10,220
Total
Commercial		1,338,302		58,218		1,536,000		72,426
Commercial Real Estate - Construction		—		—		—		—
Commercial Real Estate - Other		1,237,330		24,678		1,948,369		45,482
Consumer Real Estate		249,724		11,338		249,783		8,842
Consumer Other		39,241		1,923		41,384		2,047
Paycheck Protection Program		—		—		—		—
	$	2,864,597	$	96,157	$	3,775,536	$	128,797

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.

InBecause ~~general,~~ the ~~modification~~effect orof ~~restructuring~~most ofmodifications amade ~~debt~~to isborrowers ~~considered~~experiencing afinancial ~~troubled~~difficulty ~~debt~~is ~~restructuring~~already ~~(“TDR”)~~included ifin ~~we,~~the allowance for credit ~~economic~~losses orbecause ~~legal~~of ~~reasons~~the ~~related~~measurement tomethodologies aused ~~borrower’s~~to ~~financial~~estimate ~~difficulties~~the allowance, ~~grant~~ a ~~concession~~change to the ~~borrower~~allowance ~~that~~for wecredit ~~would~~losses ~~not~~is generally ~~otherwise~~not ~~consider.~~recorded Asupon ofmodification. ~~both September 30~~Occasionally, ~~2022~~we ~~and~~modify ~~December~~loans ~~31,~~by ~~2021,~~providing ~~there~~principal ~~were~~forgiveness ~~5 TDRs~~on ~~with~~certain anreal ~~aggregate~~estate ~~balance of $1~~loans.0 ~~million.~~When ~~These~~principal ~~TDRs~~forgiveness ~~were~~is ~~granted~~provided, ~~extended~~the ~~payment~~amortized ~~terms~~cost ~~with~~basis noof ~~principal~~the ~~reduction.~~asset ~~The~~is ~~structure~~written ofoff ~~two of~~against the ~~loans~~allowance ~~changed~~for tocredit ~~interest only~~losses. The ~~All~~amount ~~TDRs~~of ~~were~~the ~~performing~~principal asforgiveness ~~agreed~~is asdeemed ofto ~~September~~be 30uncollectible; therefore, ~~2022.~~that Noportion ~~TDRs~~of ~~defaulted during~~ the ~~three~~ ~~and~~loan ~~nine~~is ~~months~~written ~~ended September 30~~off, ~~2022~~resulting in ~~and~~a ~~2021,~~reduction ~~which~~of ~~were modified within~~ the ~~previous~~amortized ~~twelve~~cost ~~months.~~basis ~~There~~and ~~were~~a ~~no TDRs~~corresponding ~~added~~adjustment ~~during~~to the ~~three~~allowance ~~and~~for ~~nine~~credit ~~months ended September 30, 2022 and 2021~~losses.

17In 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.

~~Regulatory~~There ~~agencies,~~were asno ~~set~~loans ~~forth~~modified induring the ~~Interagency~~first ~~Statement~~quarter onof ~~Loan~~2023. ~~Modifications~~As ~~and~~of ~~Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (initially issued on~~ March 2231, ~~2020 and revised on April 7~~2023, ~~2020),~~there ~~have~~were ~~encouraged~~five ~~financial institutions~~loans ~~to work prudently~~ with ~~borrowers~~a ~~who~~balance ~~are or may be unable to meet their contractual payment obligations because~~ of ~~the~~ ~~effects of COVID-19~~$1.0 Inmillion ~~this statement, the regulatory agencies expressed their view of loan modification programs as positive~~that ~~actions~~were ~~that~~granted ~~may~~extended ~~mitigate~~payment ~~adverse~~terms ~~effects on borrowers due to COVID-19 and that the agencies will not criticize institutions for working~~ with ~~borrowers~~no inprincipal ~~a safe and sound manner~~reduction. ~~Moreover,~~The ~~the~~structure ~~revised statement provides that eligible loan modifications related to COVID-19 may be accounted for under section 4013~~ of ~~the~~two ~~CARES Act or in accordance with ASC 310-40. Under Section 4013~~ of the ~~CARES~~ ~~Act,~~loans ~~banks~~changed ~~may elect not~~ to ~~categorize~~interest ~~loan~~only. ~~modifications~~One ~~as TDRs if the modifications are related to COVID-19, executed on a~~ loan ~~that~~ was ~~not~~performing ~~more~~as ~~than~~agreed ~~30 days past due~~ as of ~~December 31, 2019, and executed between~~ March ~~1, 2020 and the earlier of December~~ 31, 2020 or 60 days after the date of termination of the National Emergency. All short-term loan modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not considered TDRs. Beginning in March 20202023, ~~the~~while ~~Bank provided payment accommodations to customers, consisting of 60-day principal deferral to borrowers negatively impacted by COVID-19. During 2020,~~ the ~~Bank~~other ~~processed approximately $0.7 million in principal deferments to 84 loans, with an aggregate~~ loan ~~balance~~was ~~of $25.9 million. The principal deferments represented 0.24% of our total loan portfolio as of December 31, 2020. The Bank did~~ not ~~process~~performing ~~any~~and ~~principal~~we ~~deferments~~are ~~after~~considering ~~December~~further ~~31,~~collection ~~2020. As of September 30~~actions, ~~2022, there was one outstanding~~ ~~loan~~including ~~with~~potential aforeclosure ~~balance of $0~~proceedings.1 million in TDR status. There were two loans outstanding with a balance of $0.5 million in TDR status as of December 31, 2021. All other remaining outstanding loans were paying as agreed as of September 30, 2022 and December 31, 2021.

The following table shows the amortized cost basis as of March 31, 2023 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	$	303,143		0.7	%	Reduced monthly payment
Commercial Real Estate Other		613,682		0.4	%	Forbearance agreement signed for one loan and provided eleven months deferral to second borrower and added to the end of the original term loan
Consumer Other		37,529		1.0	%	Reduced monthly payment
Total	$	954,354

We maintain an allowance 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 off-balance sheet credit exposures 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 for unfunded loan commitments of $644,912 at March 31, 2023 and December 31, 2022 is classified on the balance sheet within Accrued interest payable and other liabilities.

Note 4: Leases

As of ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, the Company had operating right of use (“ROU”) assets of $13.63 million ~~and~~ and $1413.04 million, respectively, and had operating lease liabilities of $13.63 million and $1413.04 million, respectively. The Company maintains operating leases on land, branch facilities, and parking. 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 ~~September~~March 3031, ~~2022~~2023, the weighted average remaining lease term was 15.83 years and the weighted average incremental borrowing ~~rate~~ rate was 4.1718%.

The table below shows lease expense components for the three months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022.

	September 30,
	March 31,
	2022		2021
	2023		2022
Operating lease expense	$	~~296~~302,~~800~~645	$	~~269~~299,~~592~~571
Short-term lease expense		—		—
Total lease expense	$	~~296~~302,~~800~~645	$	~~269~~299,~~592~~571

~~The~~Total ~~table~~rental ~~below~~expense ~~shows~~was ~~lease~~$302,645 ~~expense~~and ~~components~~$299,571 for the ~~nine~~three months ended ~~September~~March 3031, 2023 and 2022, respectively and ~~2021~~was included in net occupancy expense within the consolidated statements of income.

	September 30,
	2022		2021
Operating lease expense	$	894,135	$	852,624
Short-term lease expense		—		—
Total lease expense	$	894,135	$	852,624

As of March 31, 2023 and December 31, 2022, we did not maintain any finance leases, and we determined that the number and dollar amount of equipment leases was immaterial. As of March 31, 2023, we had no operating leases that had not yet commenced.

Total rental expense was included in net occupancy expense within the consolidated statements of income.

As of September 30, 2022 and December 31, 2021, we did not maintain any finance leases, and we determined that the number and dollar amount of equipment leases was immaterial. As of September 30, 2022, we had no operating leases that had not yet commenced.

Note 5: Disclosures 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 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 ~~judgments~~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 in nature and involve uncertainties and matters of significant judgement and therefore cannot be determined with precision. Changes in in any of these assumptions used in calculating fair value also would also significantly affect the estimates. In addition, the ~~tax~~ 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 municipal 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.

We had no embedded derivative instruments requiring separate accounting treatment as of March 31, 2023 and December 31, 2022. We had freestanding derivative instruments ~~consisting~~ 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 contracts), our derivative instruments were immaterial to our consolidated financial statements as of ~~September~~March 3031, ~~2022~~2023 and ~~December~~ December 31, ~~2021~~2022.

19The following table presents information about assets measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022:

The following table presents information about assets measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021:

	March 31, 2023
	Level 1		Level 2		Level 3		Total
U.S. Treasury Notes	$	170,236,530	$	—	$	—	$	170,236,530
Government-Sponsored Enterprises		—		58,078,474		—		58,078,474
Municipal Securities		—		16,575,620		22,549,300		39,124,920
Total	$	170,236,530	$	74,654,094	$	22,549,300	$	267,439,924

September 30, 2022

December 31, 2022

Level 1

Level 2

Level 3

Total

U.S. Treasury Notes

~~167~~168,~~313~~187,~~100~~315

—

~~167~~168,~~313~~187,~~100~~315

Government-Sponsored Enterprises

—

5557,~~341~~074,~~153~~724

—

5557,~~341~~074,~~153~~724

Municipal Securities

—

1716,~~894~~448,~~895~~375

2829,~~837~~461,~~495~~812

4645,~~732~~910,~~390~~187

Total

~~167~~168,~~313~~187,~~100~~315

73,~~236~~523,~~048~~099

2829,~~837~~461,~~495~~812

~~269~~271,~~386~~172,~~643~~226

	December 31, 2021
	Level 1		Level 2		Level 3		Total
U.S. Treasury Notes	$	100,062,300	$	—	$	—	$	100,062,300
Government-Sponsored Enterprises		—		74,721,009		—		74,721,009
Municipal Securities		—		13,080,133		24,484,047		37,564,180
Total	$	100,062,300	$	87,801,142	$	24,484,047	$	212,347,489

There were no liabilities recorded at fair value on a recurring basis as of March 31, 2023 or December 31, 2022.

~~There~~The ~~were~~following notable ~~liabilities~~reconciles ~~recorded~~the changes in assets measured at fair value on a recurring basis asusing ofsignificant ~~September~~unobservable ~~30,~~inputs (Level ~~2022~~3) orfor ~~December~~the three months ended March 31, ~~2021.~~2023 and 2022:

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 and nine months ended September 30, 2022 and 2021:


	Three Months Ended March 31,
	2023			2022
Beginning balance	$	29,461,812		$	24,484,047
Total gains or (losses) (realized/unrealized)
Included in other comprehensive income (loss)		549,488			(1,444,393	)
Purchases, issuances, and settlements net of maturities		(7,462,000	)		(2,413,000	)
Ending balance	$	22,549,300		$	20,626,654

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Beginning balance	$	24,290,239		$	6,960,115		$	24,484,047		$	5,683,930
Included in other comprehensive loss		(277,744	)		(33,656	)		(1,737,552	)		(120,471	)
Purchases, issuances, and settlements net of maturities		4,825,000			12,142,000			6,091,000		$	13,505,000
Ending balance	$	28,837,495		$	19,068,459		$	28,837,495		$	19,068,459

There were no transfers between fair value levels during the three months ended March 31, 2023 or 2022.

There were no transfers between fair value levels during the three and nine months ended September 30, 2022 or 2021.

The following paragraphs describe the valuation methodologies used for assets and liabilities recorded at fair value on a nonrecurring basis.

~~Impaired~~ Individually Assessed Loans

~~Impaired~~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, 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.

20In 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.

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.17

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 ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022:

	September 30, 2022
	March 31, 2023
	Level 1		Level 2		Level 3		Total
Impaired loans	$	—	$	—	$	1,463,225	$	1,463,225
Individually assessed loans	$	—	$	—	$	1,438,744	$	1,438,744
Mortgage loans to be sold		—		~~654~~1,~~944~~278,158		—		~~654~~1,~~944~~278,158
Total	$	—	$	~~654~~1,~~944~~278,158	$	1,~~463~~438,~~225~~744	$	2,~~118~~716,~~169~~902

	December 31, 2021
	December 31, 2022
	Level 1		Level 2		Level 3		Total
Impaired loans	$	—	$	—	$	1,~~902~~452,~~879~~170	$	1,~~902~~452,~~879~~170
Other real estate owned		—		—		—		—
Mortgage loans to be sold		—		866,594		—		866,594
Mortgage loans to be sold		—		2,774,388		—		2,774,388
Total	$	—	$	866,594	$	1,452,170	$	2,318,764
Total	$	—	$	2,774,388	$	1,902,879	$	4,677,267

There were no liabilities measured at fair value on a nonrecurring basis as of ~~September~~March 3031, ~~2022~~2023 or December 31, ~~2021~~2022.

The following table provides information describing the unobservable inputs used in Level 3 fair value measurements at ~~September~~March 3031, ~~2022~~ 2023 and December 31, ~~2021~~2022:

		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
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, and interest-bearing deposits at the Federal Reserve Bank

The carrying value approximates fair value. All mature within 90 days and do not present unanticipated credit concerns.

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.

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 ~~impaired~~assessed 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. 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.

For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values approximate carrying values. Fair values for individually ~~impaired~~assessed loans are estimated based on the fair value of the underlying collateral. Individually ~~Impaired~~assessed loans measured using discounted future cash flows are not deemed to be measured at fair value.

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).

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.

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.

The following tables present the carrying amount, fair value, and placement in the fair value hierarchy of our financial instruments as of ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, respectively.

	September 30, 2022
			Estimated Fair Value
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and due from banks	$	5,597,144	$	5,597,144	$	—	$	—	$	5,597,144
Interest-bearing deposits at the Federal Reserve		3,456,566		3,456,566		—		—		3,456,566
Investment securities available for sale		269,386,643		167,313,100		73,236,048		28,837,495		269,386,643
Mortgage loans to be sold		654,944		—		654,944		—		654,944
Loans, net		323,955,052		—		—		305,520,421		305,520,421
Accrued interest receivable		1,755,179		—		1,755,179		—		1,755,179
Financial Liabilities:
Demand deposits		560,910,510		—		560,910,510		—		560,910,510
Time deposits		17,201,999		—		16,940,516		—		16,940,516
Accrued interest payable		14,916		—		14,916		—		14,916


	March 31, 2023
			Estimated Fair Value
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and due from banks	$	7,099,250	$	7,099,250	$	—	$	—	$	7,099,250
Interest-bearing deposits at the Federal Reserve		14,885,733		14,885,733		—		—		14,885,733
Investment securities available for sale		267,439,924		170,236,530		74,654,094		22,549,300		267,439,924
Mortgage loans to be sold		1,278,158		—		1,278,158		—		1,278,158
Loans, net		330,100,952		—		—		305,598,199		305,598,199
Accrued interest receivable		1,842,995		—		1,842,995		—		1,842,995
Financial Liabilities:
Demand deposits		523,037,875		—		523,037,875		—		523,037,875
Time deposits		64,554,584		—		65,658,921		—		65,658,921
Accrued interest payable		393,852		—		393,852		—		393,852

December 31, 2021

December 31, 2022

Estimated Fair Value

Carrying Value

Level 1

Level 2

Level 3

Total

Financial Assets:

Cash and due from banks

1114,~~140~~772,~~559~~564

—

1114,~~140~~772,~~559~~564

Interest-bearing deposits at the Federal Reserve

~~128~~12,~~971~~999,~~429~~135

—

~~128~~12,~~971~~999,~~429~~135

Investment securities available for sale

~~212~~271,~~347~~172,~~489~~226

~~100~~168,~~062~~187,~~300~~315

8773,~~801~~523,~~142~~099

2429,~~484~~461,~~047~~812

~~212~~271,~~347~~172,~~489~~226

Mortgage loans to be sold

2866,~~774,388~~594

—

2866,~~774,388~~594

—

2866,~~774,388~~594

Loans, net

~~302~~326,~~255~~690,~~242~~561

—

~~293~~304,~~731~~249,~~997~~626

Accrued interest receivable

12,~~404~~145,~~227~~522

—

12,~~404~~145,~~227~~522

Financial Liabilities:

Demand deposits

~~587~~582,~~903~~100,~~356~~650

—

~~587~~582,~~903~~100,~~356~~650

—

~~587~~582,~~903~~100,~~356~~650

Time deposits

2116,~~288~~569,~~220~~608

—

2116,~~428~~933,~~310~~818

—

2116,~~428~~933,~~310~~818

Accrued interest payable

1441,~~914~~007

—

1441,~~914~~007

Note 6: Income Per Common Share

The following table is a summary of the reconciliation of weighted average shares outstanding ~~for the three months ended September 30~~:

	2022		2021
	Three Months Ended March 31,
Net income	$	1,840,267	$	1,726,937
	2023		2022
Weighted average shares outstanding		5,552,351		5,535,906
Net income	$	1,588,779	$	1,464,106
Effect of dilutive shares		98,448		150,344
Weighted average shares outstanding		5,552,351		5,544,546
Weighted average shares outstanding - diluted		5,650,799		5,686,250
Effect of dilutive shares		87,962		144,073
Earnings per share - basic	$	0.33	$	0.31
Weighted average shares outstanding - diluted		5,640,313		5,688,619
Earnings per share - diluted	$	0.33	$	0.30
Earnings per share - basic	$	0.29	$	0.26
Earnings per share - diluted	$	0.28	$	0.26

~~The following table is a summary of the reconciliation of weighted average shares outstanding for the nine months ended September 30:~~20

	2022		2021
Net income	$	4,847,355	$	5,205,696
Weighted average shares outstanding		5,549,312		5,528,868
Effect of dilutive shares		92,950		155,616
Weighted average shares outstanding - diluted		5,642,262		5,684,484
Earnings per share - basic	$	0.87	$	0.94
Earnings per share - diluted	$	0.86	$	0.92

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including information included or incorporated by reference in this document, contains statements which constitute “forward-looking statements” within the meaning of Section ~~27A~~21E of the Securities Exchange Act of ~~1933~~1934. We We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of ~~1996~~1995 and are including this statement for the express purpose of availing the Company of protections of such safe harbor with respect to ~~all~~ all “forward-looking statements” contained in this Form 10-Q. Forward-looking statements may relate to, among other matters, the financial condition, results of operations, plans, objectives, future performance, and business of our Company. Forward-looking statements are based on many assumptions and estimates and are not guarantees of future performance. Our actual results may differ materially from those anticipated in any forward-looking statements, as they will depend on many factors about which we are unsure, including many factors that are beyond our control. The words “may,” “would,” “could,” “should,” “will,” “expect,” “anticipate,” “predict,” “project,” “potential,” “continue,” “assume,” “believe,” “intend,” “plan,” “forecast,” “goal,” and “estimate,” as well as similar expressions, are meant to identify such forward-looking statements. Potential risks and uncertainties that could cause our actual results to differ materially from those anticipated in our forward-looking statements include, without limitations, those described under the “Cautionary Statement Regarding Forward-Looking Statements” section of Part 1 of our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 as filed with the SEC and the following:

●

Risk from changes in economic, monetary policy, and industry conditions

●

Changes in interest rates, shape of the yield curve, deposit rates, the net interest margin and funding sources

●

Market risk (including net income at risk analysis and economic value of equity risk analysis) and inflation

●

Risk inherent in making loans including repayment risks and changes in the value of collateral

● Loan growth, the adequacy of the allowance for ~~loan~~credit losses, provisions for ~~loan~~credit losses, and the assessment of problem loans

●

Level, composition, and re-pricing characteristics of the securities portfolio

● ~~Deposit~~Competition ~~growth~~for deposits, which may result in a change in the mix or type of deposit products and services we offer and/or in the rates that we are required to pay to attract or retain deposits

●

Continued availability of senior management and ability to attract and retain key personnel

●

Technological changes

●

Ability to control expense

●

Ability to compete in our industry and competitive pressures among depository and other financial institutions

●

Changes in compensation

●

Risks associated with income taxes including potential for adverse adjustments

●

Changes in accounting policies and practices

●

Changes in regulatory actions, including the potential for adverse adjustments

●

Recently enacted or proposed legislation and changes in political conditions

●

Reputational risk

● ~~Pandemic~~Recent ~~risk~~adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity, and regulatory response to these developments.

● Impact of COVID-19 on the collectability of loans

● Changes in legislation as related to PPP loans

● Credit risks, determination of deficiency, or complete loss if SBA denies PPP loans

We will undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made to reflect the occurrence of unanticipated events. In addition, certain statements in future filings with the SEC, in our press releases, and in oral and written statements, which are not statements of historical fact, constitute forward-looking statements.

Overview

Bank of South Carolina Corporation (the “Company”) is a bank holding company headquartered in Charleston, South Carolina, with $~~630~~647.14 million in assets as of ~~September~~March 3031, ~~2022~~2023. 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 primarily 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 investments (interest-earning assets). The primary source of funding for making these loans and investments is our interest 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 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 and lease 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 loan 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.21

InA ~~addition~~consequence toof ~~earning~~lending ~~interest~~activities onis ~~loans~~that ~~and~~we ~~investments,~~may weincur ~~earn~~credit ~~income~~losses. ~~through~~The ~~fees~~amount ~~and~~of ~~other~~such ~~expenses~~losses wewill ~~charge~~vary todepending upon the ~~customer.~~risk ~~The~~characteristics ~~various components~~ of ~~non-interest~~the ~~income~~loan asand ~~well~~lease portfolio as ~~non-interest~~affected ~~expense~~by ~~are~~economic ~~described~~conditions insuch ~~the~~as ~~following~~rising ~~discussion.~~interest ~~The~~rates ~~discussion~~ and ~~analysis~~the ~~also~~financial performance ~~identify~~of ~~significant~~borrowers. ~~factors~~The ~~that~~reserve ~~have~~for ~~affected~~credit ~~our~~losses ~~financial~~consists ~~position and operating results as~~ of ~~and for~~ the ~~periods~~ ~~ending~~allowance ~~September~~for ~~30,~~credit ~~2022~~losses (the “allowance”) and ~~December~~a ~~31,~~reserve ~~2021,~~for ~~and~~unfunded ~~should~~commitments be(the ~~read~~“unfunded inreserve”). ~~conjunction~~The ~~with~~allowance ~~the~~provides ~~financial~~for ~~statements~~probable and ~~the~~estimable ~~related~~losses ~~notes~~inherent ~~included~~ in ~~this~~our ~~report.~~loan Inportfolio ~~addition,~~while athe ~~number~~unfunded ofreserve ~~tables~~provides ~~have~~for ~~been~~potential ~~included~~losses related to ~~assist~~unfunded inlending ~~the discussion~~commitments.

~~Macroeconomic~~In ~~Conditions~~addition to earning interest on loans and investments, we earn income through fees and other expenses we charge to the customer. The various components of non-interest income as well as non-interest expense 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 periods ending March 31, 2023 and 2022 and December 31, 2022, and should be read in conjunction with the financial statements and the related notes included in this report. In addition, a number of tables have been included to assist in the discussion.

Various macroeconomic challenges have adversely impacted economic conditions in the United States. The United States has experienced significantly elevated levels of inflation, resulting in central banks, including the Federal Reserve Bank (“FRB”). implementing a series of increases to the federal funds target rate, with potential additional increases in the near term. Our results have been impacted by higher interest rates in the following manners:

● Lower mortgage volumes resulting from the impact of higher interest rates on new and existing home sales.

● Increased levels of unrealized losses in our investment portfolio.

● Increases in asset yields on our excess cash held at the FRB.

● Increases in interest rates on variable rate loans, as well as higher interest rates on new originations and renewals of fixed rate loans.

● Higher non-interest expenses due to temporary discretionary wage increases for non-executive staff to help offset inflation.

These macroeconomic conditions could potentially further adversely affect our customers and our results during the remainder of 2022 and beyond.

COVID-19

Effects of COVID-19 may negatively impact management assumptions and estimates, such as the allowance for loan losses. However, it is difficult to assess or predict how, and to what extent, COVID-19 will affect the Bank in the future. Refer to Note 3: Loans and Allowance for Loan Losses for additional information about COVID-19 and programs that were established to assist borrowers.

Critical Accounting Policies

Our critical accounting policies, ~~which~~ involve significant judgments and assumptions that have a material impact on the carrying value of certain assets and liabilities, ~~and~~ used in the preparation of the Consolidated Financial Statements as of ~~September~~March 3031, 2023. With the ~~2022~~exception of the adoption of ASC 326 as of January 1, 2023 as discussed in Note 1: Nature of Business and Basis of Presentation, our critical accounting policies have ~~remained~~remain unchanged from the disclosures presented in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~ 2022.

Balance Sheet

Cash and Cash Equivalents

Total cash and cash equivalents decreased 9351.59% or $~~131~~7.07 million to $97.1 million as of ~~September~~March 3031, ~~2022~~2023, from $~~140~~14.18 million as of ~~December~~ December 31, ~~2021~~2022. The decrease in total cash and cash equivalents is primarily due to ~~purchases~~a ofnet ~~investment~~decrease ~~securities~~in ~~available for~~deposit ~~sale~~accounts, ~~net~~partially ofoffset by net proceeds from ~~sales, calls and~~ maturities, ~~and~~of toinvestment asecurities ~~lesser extent, a net increase in loans~~ and acash ~~net~~generated ~~decrease in~~from ~~deposit accounts~~operations.

Investment Securities Available for Sale

Our primary objective in managing the investment portfolio is to maintain a portfolio of high quality, highly liquid investments yielding competitive returns. We are required under federal regulations to maintain adequate liquidity to ensure safe and sound operations. We maintain investment balances based on continuing assessment of cash flows, the level of current and expected loan production, current interest rate risk strategies and the assessment of potential future direction of market interest rate changes. Investment securities differ in terms of default, interest rate, liquidity and expected rate of return risk.

We use the investment securities portfolio to serve as a vehicle to manage interest rate and prepayment risk, to generate interest and dividend income from investment of funds, to provide liquidity to meet funding requirements, and to provide collateral for pledging of public funds.

As of ~~September~~March 3031, ~~2022~~2023, our available for sale investment portfolio included U.S. Treasury Notes, Government-Sponsored Enterprises and Municipal Securities with a fair market value of $~~269~~267.4 million and an amortized cost of $~~297~~289.63 million for a net unrealized loss of approximately $2821.29 million. As of ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, our investment securities portfolio represented approximately 4241.7535% and 3141.265% of our total assets, respectively. The average yield on our investment securities was 1.1715% and 1.0218% at ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, respectively.

Loans We focus our lending activities on small and middle market businesses, professionals and individuals in our geographic markets. Substantially all of our loans are to borrowers located in our market area of Charleston, Dorchester and Berkeley counties of South Carolina.

~~Net~~We ~~loans~~focus ~~increased~~our ~~$21.7~~lending ~~million,~~activities oron ~~7.2%,~~small toand ~~$324.0~~middle ~~million~~market ~~as of September 30~~businesses, ~~2022~~professionals ~~from~~and ~~$302.3~~individuals ~~million~~in asour ofgeographic ~~December 31, 2021~~markets. Substantially ~~The~~all ~~increase~~of isour ~~primarily~~loans ~~related~~are to ~~growth~~borrowers located in ~~Consumer~~our ~~and~~market ~~Commercial~~area ~~Real~~of ~~Estate~~Charleston, ~~loans~~Dorchester ~~offset~~and byBerkeley acounties ~~decrease~~of inSouth ~~PPP loans~~Carolina.

InNet ~~January~~loans ~~2020,~~increased ~~the~~$3.4 ~~Bank began originating 30-year~~million, ~~fixed~~or ~~rate consumer mortgage loans in excess of the conforming loan amount which are held for investment rather than for sale in the secondary market~~1.044%, ~~Prior~~ to ~~January~~$330.1 ~~2020,~~million ~~all~~as ~~consumer mortgage loans made by the Bank were originated for the purpose~~ of ~~sale~~March ~~and~~31, ~~reflected~~2023 onfrom ~~the~~$326.7 ~~consolidated~~million ~~balance sheet~~ as ~~mortgage~~of ~~loans~~December ~~held~~31, ~~for sale~~2022. ~~This~~The increase ~~mortgage~~is ~~product~~primarily ~~continues~~related to begrowth ~~well-received~~in byConsumer ~~the Bank’s customers,~~ and ~~the~~Commercial ~~associated~~Real ~~volume~~Estate ofloans ~~originations has~~offset ~~continued~~by toa ~~contribute~~decrease ~~to the increase~~ in Consumer Real Estate ~~lending~~ loans.

~~The~~In ~~following~~January ~~table~~2020, isthe aBank ~~summary~~began originating 30-year, fixed rate consumer mortgage loans in excess of ~~our~~the conforming loan ~~portfolio~~amount ~~composition~~which are ~~(net~~held offor ~~deferred~~investment ~~fees~~rather ~~and~~than ~~costs~~for ofsale ~~$157,002~~in ~~and~~the ~~$488~~secondary market. Prior to January 2020,~~481~~ atall ~~September~~consumer mortgage loans made ~~30,~~by ~~2022~~the ~~and~~Bank ~~December~~were ~~31,~~originated ~~2021,~~for ~~respectively)~~the purpose of sale and reflected on the ~~corresponding~~consolidated ~~percentage~~balance ofsheet ~~total~~as mortgage loans asheld for sale. This mortgage product continues to be well-received by the Bank’s customers, and the associated volume of originations has continued to contribute to the ~~dates~~increase ~~indicated~~in Consumer Real Estate lending, though we did experience a decrease in Consumer Real Estate Loans at March 31, 2023 compared to December 31, 2022.

	September 30, 2022						December 31, 2021
	Amount			Percent			Amount			Percent
Commercial	$	52,323,412			15.94	%	$	45,804,434			14.94	%
Commercial Real Estate Construction		16,339,084			4.98	%		12,054,095			3.93	%
Commercial Real Estate Other		171,043,155			52.10	%		165,719,078			54.04	%
Consumer Real Estate		84,706,632			25.80	%		71,307,488			23.26	%
Consumer Other		3,871,990			1.18	%		3,768,531			1.23	%
Payroll Protection Program		—			0.00	%		7,978,603			2.60	%
Total loans		328,284,273			100.00	%		306,632,229			100.00	%
Allowance for loan losses		(4,329,221	)					(4,376,987	)
Total loans, net	$	323,955,052					$	302,255,242

The following table is a summary of our loan portfolio composition (net of deferred fees and costs of $144,055 and $159,434 at March 31, 2023 and December 31, 2022, respectively) and the corresponding percentage of total loans as of the dates indicated.

The decrease in the deferred fees is primarily associated with the recognition of the processing fees the Bank received from the SBA for the PPP loans. The fees are deferred and amortized over the life of the loans in accordance with ASC 310-20.22

	March 31, 2023						December 31, 2022
	Amount			Percent			Amount			Percent
Commercial	$	46,212,003			13.84	%	$	45,072,059			13.62	%
Commercial Real Estate Construction		20,146,368			6.04	%		17,524,260			5.29	%
Commercial Real Estate Other		174,860,808			52.39	%		172,897,387			52.24	%
Consumer Real Estate		88,962,556			26.65	%		91,636,538			27.69	%
Consumer Other		3,607,720			1.08	%		3,851,538			1.16	%
Total loans		333,789,455			100.0	%		330,981,782			100.00	%
Allowance for credit losses		(3,688,503	)					(4,291,221	)

Total loans, net	$	330,100,952					$	326,690,561

Nonperforming Assets

Nonperforming Assets include real estate acquired through foreclosure or deed taken in lieu of foreclosure and loans on nonaccrual status. Generally, a loan is placed on nonaccrual status when it becomes 90 days past due as to principal or interest, or when we believe, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that collection of the contractual principal or interest on the loan is doubtful. A payment of interest on a loan that is classified as nonaccrual is recognized as a reduction in principal when received. As of ~~September~~March 3031, ~~2022~~2023, there were no loans 90 days past due still accruing interest.

The following table is a summary of our Nonperforming Assets:

	September 30, 2022		December 31, 2021
	March 31, 2023		December 31, 2022
Commercial	$	—	$	~~178,975~~—
Commercial Real Estate Other		~~634~~627,~~048~~927		~~625~~631,~~953~~453
Consumer Other		—		9,686
Consumer Real Estate		—		—
Total nonaccruing loans		634,048		814,614
Consumer Other		—		—
Total nonperforming assets	$	634,048	$	814,614
Total nonaccruing loans		627,927		631,453
Total nonperforming assets	$	627,927	$	631,453

Allowance for ~~Loan~~Credit Losses

The allowance for ~~loan~~credit losses was $4.3.7 million as of ~~September~~March 3031, ~~2022~~2023 and ~~$4.4 million as of~~ December 31, ~~2021~~2022, or 1.3211% and 1.4730%, respectively, of outstanding loans~~, net of PPP loans~~. ~~Because PPP loans are 100% guaranteed by the SBA and did not undergo the Bank’s typical underwriting process, they are not graded and do not have an associated reserve.~~ At ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, the allowance for ~~loan~~credit losses represented ~~682~~587.7941% and ~~537~~679.3158%, respectively, of the total amount of nonperforming loans. Based on the level of coverage on nonperforming loans and analysis of our loan portfolio, we believe the allowance for ~~loan~~ credit losses at ~~September~~March 3031, ~~2022~~2023 is adequate.

At ~~September~~March 3031, ~~2022~~2023, ~~impaired~~individually assessed loans totaled $2.86 million, of which $0.41 million of these loans had a reserve of approximately $0.2 1 million allocated in the allowance for ~~loan~~credit losses. Comparatively, ~~impaired~~individually assessed loans totaled $32.4 8 million as of December 31, ~~2021~~2022, and $01.41 million of these loans had a reserve of approximately $0.2 million allocated in the allowance for ~~loan~~credit losses.

During the three months ended ~~September~~March 3031, ~~2022~~2023, we recorded ~~no charge-offs and~~ $2248,~~356~~138 ~~of recoveries on loans previously charged-off. During the nine months ended September 30, 2022, we recorded $2,045~~ in charge-offs and $~~29,279~~600 of recoveries on loans previously charged-off, for net ~~recoveries~~charge-offs of $2747,~~234~~718.

Deposits

Deposits remain our primary source of funding for loans and investments. Average interest-bearing deposits provided funding for 5560.7401% of of average earning assets for the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, and 5653.6785% for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022. The Company encounters strong competition for deposits from other financial institutions, asinsurance ~~well as consumer and commercial finance~~ companies, ~~insurance~~ ~~companies and~~ brokerage firms ~~located~~and in the ~~primary service area of the Bank~~U.S. Treasury. However, the percentage of funding provided by deposits has remained relatively stable.

The breakdown of total deposits by type and the respective percentage of total deposits are as follows:

	September 30, 2022					December 31, 2021
	Amount		Percent			Amount		Percent
Deposits
Non-interest bearing demand	$	234,757,823		40.61	%	$	255,783,644		41.98	%
Interest bearing demand		161,299,986		27.90	%		165,335,038		27.14	%
Money market accounts		103,909,416		17.97	%		98,113,942		16.11	%
Time deposits $250,000 and over		4,901,501		0.85	%		7,417,864		1.22	%
Other time deposits		12,300,498		2.13	%		13,870,356		2.28	%
Other savings deposits		60,943,285		10.54	%		68,670,732		11.27	%
Total deposits	$	578,112,509		100.00	%	$	609,191,576		100.00	%

Deposits decreased 5.1% or $31.1 million from December 31, 2021 to September 30, 2022 primarily due to a decrease in the balances of a related group of demand deposit accounts. The higher balance in 2021 for these demand deposit accounts was temporary in nature.

	March 31, 2023					December 31, 2022
	Amount		Percent			Amount		Percent
Deposits
Non-interest bearing demand	$	211,238,078		35.95	%	$	223,117,903		37.26	%
Interest bearing demand		149,605,230		25.46	%		195,143,514		32.60	%
Money market accounts		102,387,646		17.42	%		100,014,125		16.71	%
Time deposits $250,000 and over		52,635,553		8.96	%		5,303,509		0.89	%
Other time deposits		11,919,031		2.03	%		11,266,099		1.88	%
Other savings deposits		59,806,921		10.18	%		63,825,108		10.66	%

Total deposits	$	587,592,459		100.00	%	$	598,670,258		100.00	%

AtDeposits ~~September~~decreased ~~30,~~1.85% ~~2022~~or ~~and~~$11.1 million from December 31, ~~2021~~2022 to March 31, ~~deposits~~2023 ~~with~~primarily andue ~~aggregate~~to ~~deficit~~a ~~balance~~net decrease in the balances of ~~$139,928~~a related group of demand deposit accounts. Decreases in interest bearing and non-interest bearing demand deposits were partially offset by a significant increase in time deposits $28250,~~549,~~000 ~~respectively~~and over, which is the result of the Bank's acquisition of $47.8 million in brokered time deposits during the quarter. These deposits were obtained to meet short-term liquidity needs of the Bank and are a combination of 90, re180 and 270-~~classified~~day asmaturities, ~~other~~which ~~loans~~align with securities maturing within the Bank's portfolio later this year. Brokered time deposits totaled 8.15% and 0% of total deposits at March 31, 2023 and December 31, 2022, respectively.

~~Comparison~~At ofMarch ~~Three~~31, ~~Months~~2023 ~~Ended~~and ~~September~~December 3031, 2022, todeposits ~~Three~~with ~~Months~~an ~~Ended~~aggregate ~~September~~deficit 30balance of $11,766 ~~2021~~and $80,524, respectively, were re-classified as other loans.

~~Net~~Comparison ~~income increased $0.1 million or 6.56% to $1.8 million, or basic and diluted earnings per share~~ of ~~$0.33~~Three ~~and~~Months ~~$0.33,~~Ended ~~respectively, for~~March ~~the three months ended September 30~~31, ~~2022,~~2023 ~~from~~to ~~$1.7~~Three ~~million,~~Months orEnded ~~basic~~March ~~and diluted earnings per share of $0.~~31 ~~and $0.30~~, ~~respectively,~~ ~~for the three months ended September 30, 2021. Our annualized returns on average assets and average equity for the three months ended September 30,~~ 2022 ~~were 1.11% and 11.24%, respectively, compared with 1.15% and 12.32%, respectively, for the three months ended September 30, 2021.~~

27Net income increased $0.1 million or 8.52% to $1.6 million, or basic and diluted earnings per share of $0.29 and $0.28, respectively, for the three months ended March 31, 2023, from $1.5 million, or basic and diluted earnings per share of $0.26 for the three months ended March 31, 2022. Our annualized returns on average assets and average equity for the three months ended March 31, 2023 were 1.00% and 15.73%, respectively, compared with 0.89% and 11.40%, respectively, for the three months ended March 31, 2022.

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 $01.84 million or 2032.236% to $5.06 million for the three months ended ~~September~~March 3031, ~~2022~~2023 from $4.2 million for the three ~~months~~ months ended ~~September~~March 3031, ~~2021~~2022. Average loans increased $624.0 million or 17.972% to $~~325~~334.15 million for the three months ended ~~September 30,~~March ~~2022~~31, 2023, compared to $~~319~~310.15 million for the three months ended ~~September~~March 3031, ~~2021~~2022. The yield on average loans (including fees) was 5.0886% and 5 4.0299% for the three months ended ~~September~~March 3031, ~~2022~~2023 and ~~September~~March 3031, ~~2021~~2022, respectively. The increase in the yield on average loans was the result of interest rates on variable rate loans, as well as higher interest rates on new originations and renewals of fixed rate loans. Interest income on loans increased $01.41 million for the three months ended ~~September~~March 3031, ~~2022~~2023 to $4.07 million from $3.6 million for the three months ended ~~September~~ 30March 31, ~~2021~~2022.

The average balance of interest bearing deposits at the Federal Reserve decreased $4660.09 million or 5985.187% to $3110.90 million for the three months ended ~~September~~March 3031, ~~2022~~2023, with a yield of 24.2353% as compared to $7770.9 million for the three months ended ~~September 30,~~March ~~2021~~31, 2022, with a yield of 0.1620%.

Provision for ~~Loan~~Credit Losses

We have established an allowance for ~~loan~~credit losses through a charge (credit) to the provision for ~~loan~~credit losses on our consolidated statements of income. We review our loan portfolio periodically to evaluate our outstanding loans and to measure both the performance of the portfolio and the adequacy of our allowance for ~~loan~~credit losses. WeFor ~~did~~the ~~not~~three ~~recognize~~months ended March 31, 2023, we recorded a ~~provision~~$45,000 increase ~~during~~to the ~~three~~allowance ~~months~~for ~~ended September~~credit 30losses as compared with a reduction to the allowance for credit losses of $75,000 ~~2022~~for ~~and~~the ~~2021~~same period in the prior year. The net increase in the provision for credit losses was based on our analysis of the adequacy of the allowance for credit losses. For additional information about the changes in the allowance and an allocation of the allowance by class, refer to Note 3. Loans and Allowance for ~~Loan~~Credit Losses.

Non-Interest Income

Other income decreased $0.72 million or 6129.121% to $0.4 million for the three months ended ~~September~~March 3031, ~~2022~~2023, from $10.16 million for the ~~three~~ three months ended ~~September~~March 3031, ~~2021~~2022. This decrease was primarily due to a $0.41 million decrease in mortgage banking income ~~compared~~and decrease toof ~~the~~$0.1 ~~three~~million ~~months~~on ~~ended September 30, 2021 and~~ gains on sales of investment securities. ofThe Bank sold $8.0 million of mortgage loans held for sale during the three months ended March 31, 2023 as compared with $17.37 million during the three months ended ~~September 30~~March 31, ~~2021~~2022.

Non-Interest Expense

Non-interest expense increased $0.12 million or 07.6675% to $3.12 million for the three months ended ~~September~~March 3031, ~~2022~~2023, from $3.0 million for the three months ended ~~September~~March 3031, ~~2021~~2022. ~~For~~The ~~the~~increase ~~three~~in ~~months~~non-interest ~~ended~~expense ~~September~~was ~~30,~~primarily ~~2022,~~due weto ~~experienced marginal~~ increases in salaries and employee benefits and net occupancy expense.. ~~costs~~The ~~and~~Bank ~~salaries~~intends ~~which~~to ~~were~~open ~~largely~~its ~~offset~~new byJames ~~lower~~Island ~~professional~~location ~~fees~~in ~~and~~the ~~other~~second ~~operating~~quarter ~~expenses~~of 2023.

Income Tax Expense

Income tax expense was $0.53 million for ~~both~~ the three months ended ~~September~~March 3031, ~~2022~~2023 ~~and~~as ~~2021~~compared to $0.4 million during the same period in 2022. Our effective tax rate was 2214.8733% and 23.3439% for the three months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022, respectively. The lower effective rate is the result of the prior year tax provision calculation.

Comparison of Nine Months Ended September 30, 2022 to Nine Months Ended September 30, 2021

Net income decreased $0.4 million or 6.88% to $4.8 million, or basic and diluted earnings per share of $0.87 and $0.86 for the nine months ended September 30, 2022, respectively, from $5.2 million, or basic and diluted earnings per share of $0.94 and $0.92, respectively, for the nine months ended September 30, 2021. Our annualized returns on average assets and average equity for the nine months ended September 30, 2022 were 0.98% and 14.11%, respectively, compared with 1.23% and 12.64%, respectively, for the nine months ended September 30, 2021.

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 $0.7 million or 5.39% to $13.8 million for the nine months ended September 30, 2022 from $13.1 million for the nine months ended September 30, 2021. Average loans decreased $9.0 million or 2.73% to $318.6 million for the nine months ended September 30, 2022, compared to $327.6 million for the nine months ended September 30, 2021. The yield on average loans (including fees) was 5.05% and 5.24% for the nine months ended September 30, 2022 and 2021, respectively. Interest income on loans decreased $0.2 million for the nine months ended September 30, 2022 to $11.3 million from $11.5 million for the nine months ended September 30, 2021.

The average balance of interest bearing deposits at the Federal Reserve decreased $10.2 million or 16.42% to $52.0 million for the nine months ended September 30, 2022, with a yield of 0.80% as compared to $62.2 million for the nine months ended September 30, 2021, with a yield of 0.12%.

Provision for Loan Losses

We have established an allowance for loan losses through a charge (credit) to the provision for loan losses on our consolidated statements of income. We review our loan portfolio periodically to evaluate our outstanding loans and to measure both the performance of the portfolio and the adequacy of our allowance for loan losses. For the nine months ended September 30, 2022, we recorded a $75,000 reduction to the allowance for loan losses. For the nine months ended September 30, 2021, we had a provision of loan losses of $120,000. The net decrease in the provision for loan losses was based on our analysis of the adequacy of the allowance for loan losses. For additional information about the changes in the allowance and an allocation of the allowance by class, refer to Note 3. Loans and Allowance for Loan Losses.

Non-Interest Income

Other income decreased $1.4 million or 44.75% to $1.7 million for the nine months ended September 30, 2022, from $3.0 million for the nine months ended September 30, 2021. This decrease was primarily due to a $1.2 million decrease in mortgage banking income and decrease of $0.2 million of gain on sales of investment securities. The Bank sold $53.0 million of mortgage loans held for sale during the nine months ended September 30, 2022 as compared with $141.6 million during the nine months ended September 30, 2021.

Non-Interest Expense

Non-interest expense was $9.2 million for both the nine months ended September 30, 2022 and 2021. For the nine months ended September 30, 2022, marginal increases in professional fees, salaries and employee benefits, including temporary discretionary wage increases for non-executive staff to help offset inflation, and net occupancy expense were offset by decreases in data processing fees and other operating expense.

Income Tax Expense

Income tax expense was $1.5 million for the nine months ended September 30, 2022 as compared to $1.6 million during the same period in 2021. Our effective tax rate was 23.03% and 23.58% for the nine months ended September 30, 2022 and 2021, respectively.

Off-Balance Sheet Arrangements

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. The amount of collateral obtained if deemed necessary by the Company 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 $~~146~~141.51 million and $~~117~~145.54 million at ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, respectively.

Standby letters of credit represent our obligation to a third-party contingent upon the failure of 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 amounts paid from the borrower. The majority of these standby letters of credit are unsecured.

Commitments under standby letters of credit are usually for one year or less. The maximum potential amount of undiscounted future payments related to standby letters of credit at September 30, 2022 and December 31, 2021 was $2.5 million and $0.6 million, respectively.24

WeCommitments ~~originate~~under ~~certain~~standby ~~fixed~~letters ~~rate~~of ~~residential~~credit ~~loans~~are ~~and~~usually ~~commit~~for ~~these~~one ~~loans~~year ~~for~~or ~~sale~~less. The ~~commitments~~maximum topotential ~~originate~~amount ~~fixed~~of ~~rate~~undiscounted ~~residential~~future payments ~~loans~~related ~~and~~to ~~the~~standby ~~sales~~letters ~~commitments~~of ~~are~~credit ~~freestanding~~at ~~derivative~~March ~~instruments.~~31, We2023 ~~had~~and ~~forward~~December ~~sales~~31, ~~commitments~~2022 onwas ~~mortgage loans held for sale totaling~~ $01.7 million and $2.85 million ~~at September 30~~, ~~2022 and December 31, 2021,~~ respectively. ~~The fair value of these commitments was not significant at September 30, 2022 or December 31, 2021. We had no embedded derivative instruments requiring separate accounting treatment.~~

~~Once~~We weoriginate ~~sell~~ certain fixed rate residential loans, ~~the~~and ~~loans~~commit ~~are~~these noloans ~~longer~~for ~~reportable~~sale. onThe ~~our~~commitments ~~balance~~to ~~sheet.~~originate ~~With~~fixed ~~most~~rate ~~of these sales,~~residential weloans ~~have~~and ~~an obligation to repurchase~~ the ~~loan~~sales incommitments ~~the~~are ~~event~~freestanding ofderivative ainstruments. ~~default~~We ofhad ~~principal~~forward orsales ~~interest~~commitments on ~~the~~mortgage ~~loan.~~loans ~~This recourse period~~held ~~ranges~~for ~~from~~sale ~~three~~totaling to$1.3 ~~nine~~million ~~months~~and $0.9 ~~Misrepresentation~~million orat ~~fraud~~March ~~carries~~31, ~~unlimited~~2023 ~~time~~and ~~for~~December ~~recourse~~31, 2022, respectively. The ~~unpaid~~fair ~~principal~~value ~~balance~~ of ~~loans~~these commitments ~~sold with recourse~~ was ~~$9.7~~not ~~million~~significant at ~~September~~March 3031, ~~2022.~~2023 ~~There~~or ~~were~~December ~~two loans repurchased during the nine months ended September 30~~31, 2022. ~~and~~We ~~one~~had ~~loan~~no ~~was~~embedded ~~repurchased~~derivative ~~during~~instruments ~~the~~requiring ~~nine~~separate accounting ~~months ended September 30, 2021~~treatment.

Once we sell certain fixed rate residential loans, the loans are no longer reportable on our balance sheet. With most of these sales, we have an obligation to repurchase the loan in the event of a default of principal or interest on the loan. This recourse period ranges from three to nine months. Misrepresentation or fraud carries unlimited time for recourse. The unpaid principal balance of loans sold with recourse was $8.5 million at March 31, 2023. There were no loans repurchased during the three months ended March 31, 2023 and 2022.

Liquidity

Historically, we have maintained our liquidity at levels believed to be adequate to meet requirements of normal operations, potential deposit outflows and strong loan demand and still allow for optimal investment of funds and return on assets.

We manage our assets and liabilities to ensure there is sufficient liquidity to enable management to fund deposit withdrawals, loan demand, capital expenditures, reserve requirements, operating expenses, dividends and to manage daily operations on an ongoing basis. Funds are primarily provided by the Bank through customer deposits, principal and interest payments on loans, mortgage loan sales, the sale or maturity of securities, temporary investments and earnings.

29Proper liquidity management is crucial to ensure that we are able to take advantage of new business opportunities as well as meet the credit needs of our existing customers. Investment securities are an important tool in our liquidity management. Our primary liquid assets are cash and due from banks, investment securities available for sale, interest-bearing deposits at the Federal Reserve, and mortgage loans held for sale. Our primary liquid assets accounted for 44.95% and 45.89% of total assets at March 31, 2023 and December 31, 2022, respectively. Securities classified as available for sale, which are not pledged, may be sold in response to changes in interest rates and liquidity needs. All of the investment securities presently owned are classified as available for sale. Net cash provided by operations and deposits from customers have been the primary sources of liquidity. At March 31, 2023, we had unused short-term lines of credit totaling approximately $41.0 million (which can be withdrawn at the lender’s option). Additional sources of funds available to us for liquidity include borrowing on a short-term basis from the Federal Reserve System, increasing deposits by raising interest rates paid and sale of mortgage loans held for sale. We have established a Borrower-In-Custody arrangement with the Federal Reserve. This arrangement permits us to retain possession of assets pledged as collateral to secure advances from the Federal Reserve Discount Window. At March 31, 2023, we could borrow up to $107.9 million. There have been no borrowings under this arrangement.

~~Proper~~During ~~liquidity~~the ~~management~~first isquarter ~~crucial~~of to2023, ~~ensure~~the ~~that~~Federal weReserve ~~are~~authorized ~~able~~all totwelve ~~take~~Reserve ~~advantage~~Banks ofto ~~new~~establish ~~business~~the ~~opportunities~~Bank asTerm ~~well~~Funding asProgram ~~meet~~ (the ~~credit~~“Program”) ~~needs~~to ofmake ~~our~~available ~~existing~~additional ~~customers.~~funding ~~Investment~~to ~~securities~~eligible ~~are~~depository aninstitutions ~~important tool~~ in ~~our~~order ~~liquidity~~to ~~management.~~help ~~Our~~assure ~~primary~~banks ~~liquid~~have ~~assets~~the ~~are~~ability ~~cash~~to ~~and~~meet ~~due from banks, investment securities available for sale, interest-bearing deposits at~~ the ~~Federal~~needs ~~Reserve, and~~of ~~mortgage~~all ~~loans~~their ~~held for sale~~depositors. ~~Our~~The ~~primary~~Program ~~liquid~~offers ~~assets~~advances ~~accounted~~of ~~for~~up ~~44.29%~~to ~~and~~one ~~52.30%~~year ofin ~~total~~length ~~assets~~to ~~at September 30~~banks, ~~2022~~savings ~~and December 31~~associations, ~~2021,~~credit ~~respectively.~~unions ~~Securities~~and ~~classified~~other aseligible ~~available~~depository ~~for~~institutions ~~sale,~~pledging ~~which~~any ~~are~~collateral ~~not~~eligible ~~pledged,~~for ~~may~~purchase beby ~~sold~~the ~~in response~~Federal toReserve ~~changes~~Bank in ~~interest~~open ~~rates~~market ~~and~~options, ~~liquidity~~such ~~needs. All of the investment securities presently owned are classified~~ as ~~available for sale~~U.S. ~~Net~~Treasuries, ~~cash~~U.S. ~~provided~~agency bysecurities ~~operations~~ and ~~deposits from customers have been the primary sources of liquidity~~U.S. Atagency ~~September 30, 2022, we had unused short~~mortgage-~~term~~backed ~~lines of credit totaling approximately $41~~securities.0 Advances ~~million~~are ~~(which~~limited ~~can~~to ~~be withdrawn at~~ the ~~lender’s option).~~par ~~Additional~~value ~~sources~~ of ~~funds available to us for liquidity include borrowing on a short-term basis from~~ the ~~Federal~~eligible ~~Reserve System,~~collateral ~~increasing~~pledged ~~deposits~~ by ~~raising~~the ~~interest~~eligible ~~rates paid and sale of mortgage loans held for sale~~borrower. WeThe Bank established a ~~Borrower-In-Custody~~$25.0 ~~arrangement~~million ~~with~~credit ~~the~~line ~~Federal~~under ~~Reserve.~~the ~~This~~Program ~~arrangement~~during ~~permits~~the usfirst toquarter ~~retain possession~~ of ~~assets pledged as collateral to secure advances from the Federal Reserve Discount Window~~2023. AtAs ~~September~~of 30March 31, ~~2022~~2023, wethere ~~could~~were ~~borrow up to $77.2 million. There have been~~ no borrowings under ~~this arrangement~~the Program.

Our core deposits consist of non-interest-bearing accounts, NOW accounts, money market accounts, time deposits and savings accounts. We closely monitor our level of certificates of deposit greater than $250,000 and other large deposits. We maintain a Contingency Funding Plan (“CFP’) that identifies liquidity needs and weighs alternate courses of action designed to address these needs in emergency situations. We perform a quarterly cash flow analysis and stress test the CFP to evaluate the expected funding needs and funding capacity during a liquidity stress event. We believe our liquidity sources are adequate to meet our operating needs ~~and do not know of any trends, events or uncertainties that may result in a significant adverse effect on our liquidity position~~. At ~~September~~March 3031, ~~2022~~2023 and December 31, ~~2021~~2022, our liquidity ratio was 4557.9782% and 5648.4309%, respectively.

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 stock options to purchase stock. Total shareholders’ equity, ~~which includes accumulated other comprehensive losses, was $36.0 million and $53.9 million~~ as of ~~September~~March ~~30, 2022 and December~~ 31, ~~2021,~~2023 ~~respectively. The year-to-date decrease~~ was ~~primarily the result of a~~ $2043.25 million ~~change in the net unrealized loss on available-for-sale securities, net of tax, due to rising interest rates~~. Exclusive of accumulated other comprehensive losses of $22.3 million and $2.1 million as of September 30, 2022 and December 31, 2021, respectively, shareholders' equity was $58.3 million and $56.1 million as of September 30, 2022 and December 31, 2021, respectively. The rate of asset growth since our inception has not negatively impacted this 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 USU.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 criteria for regulatory capital instruments and improved the methodology for calculating risk-weighted assets to enhance risk ~~sensivitity~~sensitivity.

AtOn November ~~September 30~~4, ~~2022~~2019, the ~~Bank~~federal ~~was~~banking ~~categorized as~~agencies ~~“well~~jointly ~~capitalized”.~~issued Toa befinal ~~categorized~~rule ason ~~“well~~an ~~capitalized~~optional,” simplified measure of capital adequacy for qualifying community banking organizations called the ~~Bank~~community ~~must~~bank ~~maintain~~leverage ~~total~~ratio ~~risk~~(“CBLR”) ~~based,~~framework ~~Tier~~effective on January 1, ~~risk~~2020. ~~based,~~A ~~common~~qualifying ~~equity~~community ~~Tier~~banking 1organization ~~risk~~is ~~based~~defined ~~capital~~as ~~and~~having ~~Tier~~less 1than $10 billion in total consolidated assets, a leverage ~~ratios~~ratio ofgreater ~~10.00~~than 9%, ~~8.00~~off-balance sheet exposures of 25% or less of total consolidated assets, ~~6.50%~~and trading assets and liabilities of 5~~.00~~%, ~~respectively,~~or ~~and to~~less beof ~~categorized~~total asconsolidated ~~“adequately~~assets. ~~capitalized~~Additionally,” the ~~Bank~~qualifying community banking institution must ~~maintain~~be ~~total~~a ~~risk~~non-advanced ~~based,~~approaches FDIC supervised institution. The final rule adopts Tier 1 ~~risk~~capital ~~based,~~and ~~common~~existing ~~equity~~leverage ratio ~~Tier~~into 1the ~~risk~~CBLR ~~based~~framework. ~~capital~~The ~~and~~Bank ~~Tier~~adopted 1this ~~leverage~~rule ~~ratios~~as of ~~8.00%,~~September ~~6.00%~~30, ~~4.50%~~2020 and ~~4.00%,~~is ~~respectively.~~no ~~The~~longer ~~Bank’s~~subject ~~total~~to ~~risk~~other ~~based,~~capital and leverage ~~Tier~~requirements. 1A ~~risk~~CBLR ~~based,~~bank ~~common~~meeting ~~equity~~qualifying ~~Tier~~criterion 1is ~~risk~~deemed ~~based~~to ~~capital~~have met the “well capitalized” ratio requirements and ~~Tier~~be 1in ~~leverage~~compliance ~~ratios~~with the generally applicable capital rule. The Bank’s CBLR as of ~~September~~March 3031, ~~2022~~2023 ~~were~~was 169.7542%. As of March 31, ~~15.58%~~2023, ~~15.58%~~ the Company and 8the Bank were categorized as “well capitalized.~~70%~~” We believe, ~~respectively~~as of March 31, 2023, 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.

Failure to meet minimum capital requirements can initiate certain mandatory – and possibly additional discretionary – actions by regulators that, if undertaken, could have a material effect on the financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Not~~Smaller reporting companies are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of ~~disclosure~~Disclosure ~~controls~~Controls and ~~procedures and internal controls and procedures for financial reporting~~Procedures

An evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities and Exchange Act of 1934 as amended (the “Act”) was carried out as of ~~September~~March 3031, ~~2022~~2023 under the supervision and with the participation of the Bank of South Carolina Corporation’s management, including its President/Chief Executive Officer and the Chief Financial Officer/Executive Vice President and several other members of the Company’s senior management. Based upon that evaluation, Bank of South Carolina Corporation’s management, including the President/Chief Executive Officer and the Chief Financial Officer/Executive Vice President concluded that, as of ~~September~~March 3031, ~~2022~~2023, the Company’s ~~disclosure~~ disclosure controls and procedures were effective in ensuring that the information the Company is required to disclose in the reports filed or submitted under the Act has been (i) accumulated and communicated to management (including the President/Chief Executive Officer and Chief Financial Officer/Executive Vice President) to allow timely decisions regarding required disclosure, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

30Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended ~~September~~March 3031, ~~2022~~2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Audit and Compliance Committee, composed entirely of independent Directors, meets periodically with management, the Bank’s Audit and Compliance Officer, and Elliott Davis, LLC, ~~the Company’s independent registered public accounting firm,~~ (separately and jointly) to discuss audit, financial and related matters. Elliott Davis, LLC and the Audit and Compliance Officer have direct access to the Audit and Compliance Committee.

~~Part~~PART II. ~~Other~~OTHER ~~Information~~INFORMATION

Item 1. Legal Proceedings .

In our opinion, there are no other legal proceedings pending other than routine litigation incidental to our business involving amounts which are not material to our financial condition.

Item 1A. Risk Factors .

~~Not~~ Smaller reporting companies are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds .

None.

Item 3. Defaults Upon Senior Securities .

None.

Item 4. Mine Safety Disclosures .

None.

Item 5. Other Information .

None.

Item 6. Exhibits.

Exhibits
31.1	Certification pursuant to Rule 13a-14(a)/15d-14(a) by Chief Executive Officer
31.2	Certification pursuant to Rule 13a-14(a)/15d-14(a) by Chief Financial Officer
32.1	Certification pursuant to Section 1350 (1)
32.2	Certification pursuant to Section 1350 (1)
101.SCH	XBRL Taxonomy Extension Schema Document (2)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (2)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (2)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document (2)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (2)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Exhibits

31.1	Certification pursuant to Rule 13a-14(a)/15d-14(a) by Chief Executive Officer

31.2	Certification pursuant to Rule 13a-14(a)/15d-14(a) by Chief Financial Officer

32.1	Certification pursuant to Section 1350 (1)

32.2	Certification pursuant to Section 1350 (1)

101.SCH

XBRL Taxonomy Extension Schema Document (2)

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document (2)

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document (2)

101.LAB

XBRL Taxonomy Extension Label Linkbase Document (2)

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (2)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

(1)

This certification is being furnished solely to accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any file of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

(2)

In accordance with Rule 406T of Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q is deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under those sections.

3126

~~Signatures~~SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Bank of South Carolina Corporation
November 4, 2022	By:	/s/ Fleetwood S. Hassell
May 11, 2023	By:	/s/ Fleetwood S. Hassell
		Fleetwood S. Hassell
		President/Chief Executive Officer
November 4, 2022	By:	/s/ Eugene H. Walpole, IV
May 11, 2023	By:	/s/ Eugene H. Walpole, IV
		Eugene H. Walpole, IV
		Chief Financial Officer/Executive Vice President

3227

Filing Compare · BANK OF SOUTH CAROLINA CORP