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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1996
--------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number: 0-27702
Bank of South Carolina Corporation
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(Exact name of small business issuer as specified in its charter)
South Carolina 57-1021355
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
256 Meeting Street, Charleston, SC 29401
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(Address of principal executive offices)
(803) 724-1500
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(Issuer's Telephone Number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 X No
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As of March 31, 1996, there were 1,190,261 Common Shares outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes No X
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Table of Contents
BANK OF SOUTH CAROLINA CORPORATION
Report on Form 10-QSB
for quarter ended
March 31, 1996
<TABLE>
<CAPTION>
Page
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - March 31, 1996
and December 31, 1995 ................................. 3
Consolidated Statements of Operations - Three months
ended March 31, 1996 and 1995 ......................... 4
Consolidated Statements of Changes in Shareholders
Equity - Three months ended March 31, 1996 ............ 5
Consolidated Statements of Cash Flows - Three months
ended March 31, 1996 and 1995 ......................... 6
Notes to Consolidated Financial Statements .............. 7 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ....... 9 - 11
Liquidity ........................................... 11
Capital Resources ...................................11 - 12
Impact of New Accounting Pronouncements .............12 - 13
Effect of Inflation and Changing Prices ............. 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ................................. 14
Item 2. Changes in Securities ............................. 14
Item 3. Default Upon Senior Securities .................... 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information ................................. 15
Item 6. Exhibits and Reports on Form 8-K .................. 15
Signatures ................................................. 16
</TABLE>
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PART I - ITEM 1 - FINANCIAL STATEMENTS
BANK OF SOUTH CAROLINA CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
Assets: March 31, 1996 December 31, 1995
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<S> <C> <C>
Cash and due from banks $ 4,517,115 $ 4,239,424
Interest bearing deposits in other banks 6,013 5,957
Federal funds sold and repurchase agreements 11,525,000 15,025,000
Investment securities available for sale 15,390,240 12,505,634
Loans 62,553,642 61,986,536
Discount on loans receivable 41,401 -
Allowance for loan losses 951,200 960,103
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Net loans 61,561,041 61,026,433
Equipment and leasehold improvements, net 515,422 543,326
Other assets 1,413,657 1,902,305
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Total assets $94,928,488 $95,248,079
=========== ===========
Liabilities and Shareholders' Equity:
Deposits:
Non-interest bearing demand $16,891,560 $19,398,922
Interest bearing demand 14,859,606 15,410,415
Money market accounts 20,278,579 19,414,137
Certificates of deposit $100,000 and over 12,244,604 11,941,512
Other time deposits 9,649,250 9,143,811
Other savings deposits 3,897,708 3,681,547
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Total deposits 77,821,307 78,990,344
Short-term borrowings 1,653,452 1,078,569
Other liabilities 748,017 663,934
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Total liabilities 80,222,776 80,732,847
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Common Stock - No par value
Authorized 3,000,000 Shares;
Issued and outstanding 1,190,261 shares
at March 31, 1996, and 1,179,640 shares
at December 31, 1995 -- --
Additional paid in capital 10,848,000 10,724,000
Retained earnings 3,762,586 3,556,267
Unrealized gain (loss) on securities
available for sale, net of income taxes 135,785 234,965
Treasury stock 40,659 -
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Total shareholders' equity 14,705,712 14,515,232
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Total liabilities and shareholders' equity $94,928,488 $95,248,079
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</TABLE>
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BANK OF SOUTH CAROLINA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
March 31, 1996 March 31, 1995
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<S> <C> <C>
Interest and Fee Income
Interest and fees on loans $1,488,356 $1,341,027
Interest and dividends on investment securities 217,754 243,248
Other interest income 139,947 19,134
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Total interest and fee income 1,846,057 1,603,409
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Interest Expense
Interest on deposits 557,571 464,042
Interest on short-term borrowings 15,033 19,505
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Total interest expense 572,604 483,547
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Net Interest Income 1,273,453 1,119,862
Provision for loan losses 15,000 15,000
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Net Interest Income After Provision for Loan Losses 1,258,453 1,104,862
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Other Income
Service charges, fees and commissions 92,167 74,434
(Loss) on investment securities 2,569 -
Other non-interest income (expense) 53,954 118,136
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Total other income 35,644 43,702
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Other Expense
Salaries and employee benefits 442,220 411,106
Net occupancy expense of premises 185,698 169,549
Net cost of operation of other real estate 1,088 5,777
Other operating expenses 165,927 177,341
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Total other expense 794,933 763,773
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Income before income tax expense 499,164 297,387
Income tax expense 184,639 105,000
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Net Income $ 314,525 $ 192,387
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Net Income Per Common Share $ .26 $ .16
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Dividends Per Common Share $ .09 $ .05
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</TABLE>
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BANK OF SOUTH CAROLINA CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
Unrealized
Gain (Loss)
on Securities
Common Additional Retained Treasury Available
Stock Paid In Capital Earnings Stock for Sale Total
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<S> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1995 $ - $10,724,000 $3,556,267 $ - $234,965 $14,515,232
Shares issued for the
exercise of stock options - 124,000 - - - 124,000
Purchase of
Treasury Stock - - - 40,659 - 40,659
Net income - - 314,525 - - 314,525
Change in unrealized gain
(loss) on securities
available for sale,
net of income taxes - - - - 99,180 99,180
Cash dividends - - 108,206 - - 108,206
--------------- ----------- ---------- --------- -------- -----------
Balance,
December 31, 1996 $ - $10,848,000 $3,762,586 $40,659 $135,785 $14,705,712
=============== =========== ========== ========= ======== ===========
</TABLE>
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BANK OF SOUTH CAROLINA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
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Cash flows from operating activities:
Net income $ 314,525 $ 192,387
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation 31,537 30,665
Accretion/amortization of unearned
discounts/premiums on investments 4,928 7,678
Change in discount on loans receivable 41,401 -
Amortization of organizational costs 1,862 -
Loss on sale of investments 2,569 -
Loss on sale of OREO 58,378 -
(Increase) in receivables and other assets 372,266 11,873
Provision for loan losses 15,000 15,000
Increase in other liabilities 84,083 77,289
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Net cash used in operating activities 182,017 295,790
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Cash flows from investing activities:
Proceeds from sale/maturity of investments 3,997,501 1,000,000
Purchase of investments 7,047,031 -
Net (increase) decrease in loans 591,009 164,813
Proceeds from sale of OREO 858,922 -
Purchase of office property and equipment 3,634 16,547
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Net cash provided by investing activities 2,785,251 1,148,266
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Cash flows from financing activities:
Net (decrease) increase in deposit accounts 1,169,037 2,129,331
Net increase (decrease) in short-term borrowings 574,883 837,130
Exercise of stock options 124,000 -
Treasury stock 40,659 -
Dividends 108,206 63,600
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Net cash (used) provided by financing activities 619,019 1,228,601
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Net (decrease) increase in cash and cash equivalents 3,222,253 2,672,657
Cash and cash equivalents, beginning of period 19,270,381 4,872,442
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Cash and cash equivalents, end of period $16,048,128 $7,545,099
=========== ==========
Supplemental disclosure of cash flow data:
Cash paid during the year for:
Interest $ 564,941 $ 527,243
Taxes 137,862 13,468
</TABLE>
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BANK OF SOUTH CAROLINA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
NOTE 1: BASIS OF PRESENTATION
Bank of South Carolina Corporation (the Company) was organized as a South
Carolina Corporation on April 17, 1995, as a one-bank holding company. The
Company, through its bank subsidiary The Bank of South Carolina (the Bank),
provides a full range of banking services including the taking of demand and
time deposits and the making of commercial, consumer and mortgage loans. The
Bank currently has two locations, one in Charleston, South Carolina, and one in
Summerville, South Carolina. Its third location is schedule to open in late
May, 1996, in Mt. Pleasant, South Carolina. The Consolidated Statements of
Operations for three months ended March 31, 1996, is that of Bank of South
Carolina Corporation and its subsidiary, whereas three months ended March 31,
1995, is that of The Bank of South Carolina before reorganization in which each
share of common stock of the Bank was exchanged for two shares of common stock
of the Corporation. Earnings per share reflect the reorganization and have
been retroactively restated. The financial statements in this report are
unaudited. All adjustments consisting of normal recurring accruals which are,
in the opinion of management, necessary for fair presentation of the interim
consolidated financial statements have been included and fairly and accurately
present the financial position as of those dates of the Company and the Bank,
respectively. The results of operations for the periods ending March 31, 1996,
are not necessarily indicative of the results which may be expected for the
entire year.
NOTE 2: ORGANIZATION AND DEVELOPMENT
The organization of the Bank began on April 24, 1986, and the Bank received
approval on October 22, 1986, to organize and operate as a state-chartered
bank. Common stock was issued on October 23, 1986. The Federal Deposit
Insurance Corporation (FDIC) issued approval to insure all deposits to the full
amount permitted by the law upon commencement of operations on February 26,
1987. On the effective date (12:01 a.m., April 17, 1995), shareholders of The
Bank of South Carolina became shareholders of Bank of South Carolina
Corporation at which time one share of common stock in the Bank was exchanged
for two shares of common stock in the Company. All prior period amounts have
been retroactively restated to give the effect of the two-for-one exchange.
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES
Interest income on loans is recognized over the terms of the loans based on the
unpaid principal balance. The recognition of interest income is normally
discontinued when a loan becomes 90 days delinquent as to principal or interest
or when, in management's judgment, the interest will not be collected in the
normal course of business. Upon such discontinuance, all unpaid accrued
interest is reversed.
The allowance for loan losses is based on management's evaluation of the loan
portfolio under current economic conditions. The evaluation includes a review
of delinquencies and an estimate of the possibility of loss based on the risk
characteristics of the portfolio. While management
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uses the best information available to make evaluations, future adjustments to
the allowance may be necessary if economic conditions differ substantially from
the assumptions used in making the evaluations.
The allowance for loan losses is subject to periodic evaluations by various
regulatory authorities and may be subject to adjustment upon their examination.
NOTE 4: INVESTMENT SECURITIES
Investment securities to be "Held for Investment" are carried at cost, adjusted
for amortization of premiums and accretion of discounts, computed by the
interest method. Investment securities classified as "Available for Sale" are
marked to market with unrealized gains and losses excluded from earnings and
reported as a separate component of shareholders' equity (net of estimated tax
effects). Realized gains or losses on the sale of investments are based on the
specific identification method. All the Company's securities are classified as
"Available for Sale".
The amortized cost of U.S. Treasury Securities held by the Company at March 31,
1996, and classified as "Available for Sale" is $15,254,455. The aggregate
market value of securities "Available for Sale" on the basis of market
quotations as of March 31, 1996, is $15,390,240. The unrealized gain as of
March 31, 1996, on such securities is $135,785.
The amortized cost of U.S. Treasury Securities held by the Company at December
31, 1996, and classified as "Available for Sale" is $12,740,599. The aggregate
market value of securities "Available for Sale" on the basis of market
quotations as of December 31, 1995, was $12,505,634. The unrealized gain as of
December 31, 1995, on such securities was $234,965.
NOTE 5: EQUIPMENT AND DEPRECIATION
Equipment is carried at cost less accumulated depreciation, calculated on the
straight-line method over the estimated useful life of the related assets
ranging from 5 to 12 years for financial reporting purposes and an accelerated
method for income tax purposes. Amortization of leasehold improvements is
recorded using the straight-line method over the lesser of the estimated useful
life of the asset or the term of the lease. Maintenance and repairs are
charged to operating expenses as incurred.
NOTE 6: INCOME TAXES
Deferred income taxes represent the aggregate amount of income taxes payable or
refundable in future years as a result of cumulative temporary differences
between the bases of certain assets and liabilities for income tax and
financial reporting purposes.
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Bank of South Carolina Corporation (the Company) is a financial institution
holding company headquartered in Charleston, South Carolina, with a branch
operation in Summerville, South Carolina. It offers a broad range of financial
services through its wholly-owned subsidiary, The Bank of South Carolina (the
Bank). The Bank is a state-chartered commercial bank which operates
principally in the counties of Charleston, Dorchester and Berkeley in South
Carolina.
For the first three months of 1996, the Company reported net income of $314,525
or $.26 per share, an increase of $122,138 compared to the net income for the
first threee months of 1995 of $192,387 or $.16 per share. Total assets,
although relatively flat for the period, did decrease $319,591 or .34% from
December 31, 1995, to March 31, 1996.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1995, TO THREE MONTHS ENDED MARCH
31, 1996
The Company's results of operations depends primarily on the level of its net
interest income, its non-interest income and its operating expenses. Net
interest income depends upon the volume of and rates associated with interest
earning assets and interest bearing liabilities which results in the net
interest spread. Net income increased $122,138 or 63.5% to $314,525 for the
three months ended March 31, 1996, from $192,387 for the three months ended
March 31, 1995. The increase is primarily due to a higher loan volume and an
increase in federal funds sold during the three months ended March 31, 1996,
compared to the same period during 1995 and a non-recurring charge to other
real estate owned in 1995.
Net Interest Income
Net interest income increased $153,591 or 13.7% to $1,273,453 for the three
months ended March 31, 1996, from $1,119,862 for the three months ended March
31, 1995. Total interest and fee income increased $242,648 for the three
months ended March 31, 1996, to $1,846,057 from $1,603,409 for the three months
ended March 31, 1995. This increase in interest and fee income is primarily a
result of average total loans for the three months ended March 31, 1996, being
$62,300,000 compared to average total loans of $54,384,000 for the three months
ended March 31, 1995. The loan portfolio produces the highest yield of all
earning assets. Investment portfolio income decreased $25,494 or 10.5% to
$217,754 for the period ended March 31, 1996, as compared to $243,248 for the
three months ended March 31, 1995. This decrease in revenue is primarily a
result of a decrease in the average securities portfolio from approximately
$15,555,000 for the period ended March 31, 1995, to approximately $13,038,000
for the period ended March 31, 1996. Other interest income increased $120,813
or 631.4% to $139,947 for the three months ended March 31, 1996, from $19,134
for the three months ended March 31, 1995. This increase in revenue is
attributed to the increase in average federal funds sold of approximately
$13,227,000 for the period ended March 31, 1996 over the same period the
previous year.
Total interest expense increased $89,057 or 18.4% to $572,604 for the three
months ended March 31, 1996, from $483,547 for the three months ended March 31,
1995. The increase is
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due to an increase in interest bearing deposits. Interest paid on deposits of
$557,571 reflected an increase of 20.2% for the three months ended March 31,
1996, compared to $464,042 of interest paid on deposits for the three months
ended March 31, 1995. Total interest bearing deposits averaged approximately
$59,851,000 for the three months ended March 31, 1996, as opposed to
approximately $49,075,000 for the three months ended March 31, 1995, or an
average increase for the three month's period of $10,776,000 or 22%. The
average cost of interest bearing liabilities for the three months ended March
31, 1995, was approximately 3.83% as compared to average cost of interest
bearing liabilities of approximately 3.78% for the three months ended March 31,
1996. Interest on short-term borrowings decreased $4,472 to $15,033 for the
period ended March 31, 1996, from $19,505 for the three months ended March 31,
1995. Short-term borrowings consisted exclusively of demand notes to the U.S.
Treasury and securities sold under agreements to repurchase for the three
months ended March 31, 1995, and for the three months ended March 31, 1996.
Provision for Loan Losses
The amount charged to the provision for loan losses by the Bank is based on
management's evaluation as to the amounts required to maintain an allowance
adequate to provide for potential losses in the loan portfolio. The level of
this allowance is dependent upon the total amount of past due loans,
non-performing loans, general economic conditions and management's assessment
of potential losses based upon internal credit evaluations of the loans and
periodic reviews and assessments of credit risks associated with particular
loans. While management uses the best information available to make
evaluations, future adjustments to the allowance may be necessary if economic
conditions differ substantially from the assumptions used in making these
evaluations. The allowance for loan losses also is subject to periodic
evaluations by various regulatory authorities and may be subject to adjustment
upon their examination.
During the quarter ended March 31, 1996, $15,000 was charged to the provision
for loan losses compared to $15,000 for the quarter ended March 31, 1995. At
March 31, 1996, the allowance for loan losses was $951,200 or 1.52% of total
loans. This compares to an allowance of $985,022 or 1.81% as of March 31,
1995. During the quarter ended March 31, 1996, the Bank incurred two charge
offs totaling $25,478 as compared to three charge offs totaling $29,661 for the
same period quarter ended March 31, 1995. There was one loan totaling $82,280
on non-accrual status at March 31, 1996, and one loan totaling $43,978 on
non-accrual at March 31, 1995. Loans past due over 30 days totaled $745,269 or
1.19% of total loans at March 31, 1996, compared to $635,679 or 1.17% of total
loans at March 31, 1995. Generally, loans are placed on non-accrual status at
the earlier of when they are 90 days past due or when the collection of
interest becomes doubtful. The allowance for loan losses at March 31, 1996, in
management's opinion is adequate at this time for future losses that may occur
in the loan portfolio.
Other Income
Other income for the three months ended March 31, 1996, increased $79,346 or
181.6% to $35,644 from a loss of $43,702 for the three months ended March 31,
1995. The increase is due to a non-recurring charge to other real estate owned
taken in the first quarter of 1995.
General and Administrative Expenses
Bank overhead increased $31,160 or 4.1% to $794,933 for the three months period
ended March 31, 1996, from $763,773 for the three months ended March 31, 1995.
Salaries and employee
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benefits increased $31,114 or 7.6% to $442,220 for the period ended March 31,
1996, from $411,106 for the three months period ended March 31, 1995. This
increase is primarily attributed to merit raises given to the employees and the
addition of three employees to staff the Mt. Pleasant office. Net occupancy
expense increased $16,149 or 9.5% to 185,698 for three months ended March 31,
1996, from $169,549 for three months ended March 31, 1995. This increase is
primarily due to an annual adjustment of rent at 256 Meeting Street and the
addition of a ground lease for the Mt. Pleasant office. Other operating
expenses decreased $11,414 or 6.4% to $165,927 for the period ending March 31,
1996, from $177,341 for the period ending March 31, 1995.
LIQUIDITY
The Company must maintain an adequate liquidity position in order to respond to
the short-term demand for funds caused by withdrawals from deposit accounts,
maturities of repurchase agreements, extensions of credit and for the payment
of operating expenses. Maintaining this position of adequate liquidity is
accomplished through the management of a combination of liquid assets; those
which can be converted into cash and access to additional sources of funds.
Primary liquid assets of the Company are cash and due from banks, federal funds
sold, investments held as "available for sale" and other short-term investments
and maturing loans. The Company's primary liquid assets accounted for 33.99%
and 29.51% of average assets at March 31, 1996, and 1995, respectively.
Additional sources of funds are available through the Bank for additional
liquidity needs include borrowing on a short-term basis from the Federal
Reserve System, the purchasing of federal funds from other financial
institutions and increasing deposits by raising rates paid. The Company's core
deposits consist of IPCs, NOW accounts, money market accounts, time deposits
and savings. Although such core deposits are becoming increasingly more costly
and interest sensitive for both the Company and the industry as a whole, such
core deposits continue to provide the Company with a large and stable source of
funds. Core deposits averaged 87.23% of earning assets during the first three
months of 1996 compared to 85.45% of earning assets for the same period ending
three months 1995. The Company closely monitors its reliance on certificates
on deposit greater than $100,000. The Company plans to meet its future needs
through maturities of investments and loans and through the generation of
deposits. The Company's management believes its liquidity sources are adequate
to meet its operating needs and does not know of any trends, events or
uncertainties that may result in a significant adverse effect on the Company's
liquidity position. At three months ended March 31, 1996, the Bank's liquidity
ratio was 29.91% and at March 31, 1995, the liquidity ratio was 26.47%.
CAPITAL RESOURCES
The capital needs of the Company have been met to date through the $10,600,000
in capital through the Bank's initial offering and the retention of earnings
less dividends paid and the exercising of stock options in April, 1995, of
$124,000 and the exercising of stock option in March, 1996, of $124,000 for a
total shareholders' equity at March 31, 1996, of $14,705,712. The rate of
asset growth from the Bank's inception does not negatively impact this capital
base. Effective December 31, 1990, regulatory authorities adopted risk based
capital guidelines for financial institutions. These risk based guidelines are
designed to highlight differences in risk profiles among financial institutions
and to account for off balance sheet risk. The guidelines
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established requires a risk based capital ratio of 8% for bank holding
companies and banks. The risk based capital ratio at March 31, 1996, for the
Bank is 21.70% and at March 31, 1995, was 24.69%. The Company has no
commitments or immediate plans for significant capital expenditures. The
Company applied for another branch in its market area during the fourth quarter
of 1995 which should open for business in late May, 1996, and believes it can
finance this growth primarily with funds provided through normal operations.
The Company's management does not know of any trends, events or uncertainties
that may result in the Company's capital resources materially increasing or
decreasing.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
In May, 1995, the FASB issued a SFAS No. 122, "Accounting for Mortgage
Servicing Rights, an amendment of SFAS No. 65" which is effective prospectively
for years beginning after December 15, 1995. The statement requires the
recognition of an asset for the right to service mortgage loans for others,
regardless of how those rights were acquired (either purchased or originated).
Further, it amends SFAS 65 to require assessment of impairment based on fair
value. The Company recently commenced the origination and sale of mortgage
loans. Currently, the Company is pre-selling all mortgages and, based upon the
Company's present mortgage lending operation, the adoption of this statement
has not had a material effect on the Company.
SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair
Value of Financial Instruments" was issued in late 1994 and is effective for
fiscal years ending after December 15, 1994, except for entities with less than
$150 million in total assets. For those entities, this statement is effective
for fiscal years ending after December 15, 1995. SFAS No. 119 requires
disclosure about amounts, nature and terms of derivative financial instruments.
It also requires that a distinction be made between financial instruments held
or issued for trading purposes or issued for purposes other than trading. The
adoption of this statement did not have a material impact on the Company as it
does not own any derivatives at this time.
On March 31, 1996, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" which is
effective for financial statements issued for fiscal years beginning after
December 15, 1995. SFAS No. 121 provides guidance for recognition and
measurement of impairment of long-lived assets, certain identifiable
intangibles and goodwill related both to assets to be held and used and assets
to be disposed of. The adoption of this statement did not have a material
effect on the Company.
In October, 1995, the FASB issued a SFAS No. 123, "Accounting for Stock Based
Compensation." This statement is effective for financial statements issued for
fiscal years beginning after December 15, 1995. SFAS No. 123 provides guidance
on the valuation of compensation costs arising from both fixed and performance
stock compensation plans. The Company plans to retain its existing methods of
accounting for stock based compensation, as provided for in the Standard, and
will make the required disclosures in the 1996 financial statements included in
the Company's annual report.
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EFFECT OF INFLATION AND CHANGING PRICES
The consolidated financial statements and related consolidated financial data
presented herein have been prepared in accordance with generally accepted
accounting principles (GAAP) which require the measurement of financial
position and operating results in terms of historical dollars without
considering the changes in relative purchasing power of money over time due to
inflation. The primary impact of inflation on operations of the Bank is
reflected in increased operating costs. Unlike most industrial companies,
virtually all the assets and liabilities of a financial institution are
monetary in nature. As a result, interest rates generally have a more
significant impact on a financial institution's performance than do general
levels of inflation. Interest rates do not necessarily in the same direction
or to the same extent as the prices of goods and services.
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PART II
ITEM 1. LEGAL PROCEEDINGS
The Company and its subsidiary from time to time and currently is involved as
plaintiff or defendant in various legal actions incident to its business.
These actions are not believed to be material either individually or
collectively to the consolidated financial condition of the Company or its
subsidiary.
ITEM 2. CHANGES IN SECURITIES
See footnotes to consolidated balance sheets, page 8.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of shareholders held on April 9, 1996, pursuant to the
Notice of Annual Meeting of Shareholders and Proxy Statement dated March 4,
1996, the following matters were voted upon:
1. Election of directors all to serve until the next annual meeting of
shareholders in 1997.
<TABLE>
<CAPTION>
Name Votes For Votes Abstained
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<S> <C> <C>
Nathaniel I. Ball, III 946,519 100
James E. Brown, DDS 946,519 100
William T. Cooper 946,519 100
C. Ronald Coward 946,519 100
Louis Y. Dawson, III 946,519 100
Leonard C. Fulghum 946,519 100
T. Dean Harton 946,519 100
John F. Hassell, Jr. 946,519 100
William L. Hiott, Jr. 946,519 100
James H. Holcombe 946,519 100
Katherine M. Huger 946,519 100
John E. Huguley 946,519 100
Charles G. Lane 946,519 100
Hugh C. Lane, Jr. 946,519 100
Louise J. Maybank 946,519 100
Thomas W. Myers 946,519 100
Thomas C. Stevenson, III 946,519 100
John M. Tupper 946,519 100
</TABLE>
14
<PAGE> 15
2. Approval of the appointment of KPMG Peat Marwick, LLP, as independent
auditors for the Company for the fiscal year ending December 31, 1996.
Votes for: 945,719; votes against: 900.
No other matters were submitted to the shareholders for a vote at the annual
meeting or at any other time during the quarter.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 Financial Data Schedule (for SEC use only)
15
<PAGE> 16
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
May 6, 1996
BY: /s/ Hugh C. Lane, Jr.
-------------------------------
Hugh C. Lane, Jr.
President
BY: /s/ William L. Hiott, Jr.
-------------------------------
William L. Hiott, Jr.
Executive Vice President & Cashier
16
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BANK OF SOUTH CAROLINA CORPORATION FOR THE 3 MONTHS
ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,517
<INT-BEARING-DEPOSITS> 6
<FED-FUNDS-SOLD> 11,525
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,390
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 62,512
<ALLOWANCE> 951
<TOTAL-ASSETS> 94,928
<DEPOSITS> 77,821
<SHORT-TERM> 1,653
<LIABILITIES-OTHER> 748
<LONG-TERM> 0
0
0
<COMMON> 0
<OTHER-SE> 14,706
<TOTAL-LIABILITIES-AND-EQUITY> 94,928
<INTEREST-LOAN> 1,488
<INTEREST-INVEST> 218
<INTEREST-OTHER> 140
<INTEREST-TOTAL> 1,846
<INTEREST-DEPOSIT> 558
<INTEREST-EXPENSE> 573
<INTEREST-INCOME-NET> 1,273
<LOAN-LOSSES> 15
<SECURITIES-GAINS> (3)
<EXPENSE-OTHER> 795
<INCOME-PRETAX> 499
<INCOME-PRE-EXTRAORDINARY> 499
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 315
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
<YIELD-ACTUAL> 0
<LOANS-NON> 82
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 960
<CHARGE-OFFS> 25
<RECOVERIES> 1
<ALLOWANCE-CLOSE> 951
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
