About Bank of South Carolina

Bank of South Carolina Corporation operates as the bank holding company for The Bank of South Carolina that provides a broad range of financial services and products to the Charleston – North Charleston metro area, which includes Charleston, Berkeley, and Dorchester County. The company has banking house locations 256 Meeting Street, Charleston, South Carolina (SC); 100 North Main Street, Summerville, SC; 1337 Chuck Dawley Boulevard, Mt. Pleasant, SC; 2027 Sam Rittenberg Boulevard, Charleston, SC; and 9403 Highway 78, North Charleston, SC. The company also has a future banking house location at 1730 Maybank Highway, Charleston, SC it expects to open in June 2023. Lending Activities The company focuses its lending activities on small and middle market businesses, professionals and individuals in its geographic markets and typically require personal guarantees. The company’s primary lending activities are for commercial, commercial real estate, and consumer purposes with the largest category being commercial real estate. Most of the company’s lending activity is to borrowers within its market area. Commercial Loans The company originates various types of secured and unsecured commercial loans to customers in its market area in order to provide customers with working capital and funds for other general business purposes. Commercial Real Estate Loans Commercial real estate construction loans consist of its loan portfolio. The company makes construction loans for commercial properties to businesses. Advances on construction loans are made in accordance with a schedule reflecting the cost of construction. Loans are typically underwritten with a maximum loan to value ratio of 80% based on current appraisals with value defined as the purchase price, appraised value, or cost of construction, whichever is lower. Repayment of construction loans on non-residential and income-producing properties is normally attributable to rental income, income from the borrower’s operating entity, or the sale of the property. Before making a commitment to fund a construction loan, the company requires an appraisal of the property by a state-certified or state-licensed appraiser. The company reviews and inspects properties before disbursement of funds during the term of the construction loan Construction financing generally involves greater credit risk than long-term financing on improved, owner-occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimated value of the property at completion of construction compared to the estimated cost (including interest) of construction and other assumptions. Properties securing the company’s commercial real estate loans are primarily consisted of business owner-occupied properties, small office buildings and office suites, and income-producing real estate. The company typically requires property casualty insurance, title insurance, earthquake insurance, wind and hail coverage, and, if appropriate, flood insurance, in order to protect the company’s security interest in the underlying property. Commercial real estate loans generally carry higher credit risks than the company’s other lending activities, as they typically involve larger loan balances concentrated with single borrowers or a group of related borrowers. In addition, the payment of loans secured by income-producing properties typically depends on the successful operation of the property, as repayment of the loan generally is largely dependent upon sufficient income from the property to cover operating expenses and debt service. Consumer Loans Consumer real estate loans consist of consumer construction loans, home equity lines of credit (HELOCs), and mortgage originations. The company makes mortgage and construction loans for owner-occupied residential properties. Advances on construction loans are in accordance with a schedule reflecting the cost of construction, but are limited to a maximum loan-to-value ratio of 80%. Before making a commitment to fund a construction loan, the company requires an appraisal of the property by a state-certified or state-licensed appraiser. The company reviews and inspects properties before disbursement of funds during the term of the construction loan. This category of loans consists of loans secured by first or second mortgages on primary residences and originate as adjustable-rate or fixed-rate loans. Owner-occupied properties located in the Company’s market area serve as the collateral for these loans. The company originates residential mortgage loans for its portfolio with a maximum loan-to-value ratio of 80% for traditional owner-occupied homes. The company offers home equity loans and lines of credit secured by the borrower’s primary or secondary residence. The company’s home equity loans and lines of credit currently originate with an adjustable-rate with a floor. The company generally underwrites home equity loans and lines of credit with the same criteria that it uses to underwrite mortgage loans to be sold. For a borrower’s primary and secondary residences, home equity loans and lines of credit are typically underwritten with a maximum loan-to-value ratio of 80% when combined with the principal balance of the existing mortgage loan. The company requires a current appraisal or internally prepared real estate evaluations on home equity loans and lines of credit. At the time the company closes a home equity loan or line of credit, the company records a mortgage to perfect its security interest in the underlying collateral. Other consumer loans are originated for various purposes, including the purchase of automobiles, boats, and other personal items or needs. Paycheck Protection Program The company originated PPP loans to 480 customers as of December 31, 2021. These loans are 100% guaranteed by the SBA. Deposits The company’s core deposits consist of non-interest bearing demand accounts, NOW accounts, money market accounts, time deposits and savings accounts. The company closely monitors its reliance on certificates of deposit greater than $250,000 and other large deposits. The company maintains a Contingency Funding Plan (CFP) that identifies liquidity needs and weighs alternate courses of action designed to address these needs in emergency situations. Investment Portfolio As of December 31, 2022, the company’s investment securities included U.S. treasury notes, government-sponsored enterprises, and municipal securities. Supervision and Regulation The company is a one-bank holding company registered under the Bank Holding Company Act of 1956, as amended. As a result, the company is primarily subject to the supervision, examination and reporting requirements of the Board of Governors (the Federal Reserve Board) under the act and its regulations promulgated thereunder. The Federal Reserve Board, together with the applicable Federal Reserve Bank that is delegated with primary supervision responsibilities over the company (collectively, the Federal Reserve), is the company’s primary federal banking regulator. As a state-chartered bank located in South Carolina, the bank is also subject to the regulations of the South Carolina State Board of Financial Institutions. Activities of the bank are subject to a variety of statutes and regulations designed to protect consumers. Interest and other charges collected by the bank are subject to state usury laws and federal laws concerning interest rates. The company’s loan operations are also subject to federal laws applicable to credit transactions, such as: The federal Truth-In-Lending Act, which governs disclosures of credit terms to consumer borrowers; The Home Mortgage Disclosure Act of 1975, which requires financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; The Fair Lending Act, which requires fair, equitable, and nondiscriminatory access to credit for consumers; The Equal Credit Opportunity Act, which prohibits discrimination on the basis of race, creed or other prohibited factors in extending credit; The Fair Credit Reporting Act of 1978, which governs the use and provision of information to credit reporting agencies; The Fair Debt Collection Act, which governs the manner in which consumer debt may be collected by collection agencies; The Gramm - Leach - Bliley Act, which governs the protection of consumer information; and The rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws. The deposit operations of the bank also are subject to The Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; The Electronic Funds Transfer Act and Regulation E, issued by the Federal Reserve Board to implement the act, which govern automatic deposits to and withdrawals from deposit accounts and customer’s rights and liabilities arising from the use of automated teller machines and other electronic banking services; and Regulation DD, which implements the Truth in Savings Act to enable consumers to make informed decisions about deposit accounts at depository institutions. The company is subject to supervision and examination by the FDIC, the Federal Reserve and the South Carolina State Board of Financial Institutions. The company is subject to the Bank Secrecy Act and other anti-money laundering laws and regulations, including the USA Patriot Act of 2001 (USA Patriot Act). The company must maintain a Bank Secrecy Act Program that includes established internal policies, procedures, and controls; a designated compliance officer; an ongoing employee-training program; and testing of the program by an independent audit function. In connection with its lending activities, the company is subject to a number of federal laws designed to protect borrowers and promote lending to various sectors of the economy and population. These include the Equal Credit Opportunity Act, the Truth-in-Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, and the Community Reinvestment Act (the CRA). The CRA requires the appropriate federal banking agency, in connection with its examination of a bank, to assess the bank’s record in meeting the credit needs of the communities served by the bank, including low and moderate income neighborhoods. History Bank of South Carolina Corporation was founded in 1986.