Executive Summary

Q1 2023 net income was $1.59M ($0.29 basic, $0.28 diluted), up 8.52% YoY; ROAA 1.00% and ROAE 15.73% signaled solid profitability despite a tougher funding environment .
Sequentially, earnings declined from Q4 2022 ($1.81M; $0.33 basic, $0.32 diluted) as management flagged sharply higher deposit costs and “thin” margins despite higher loan interest income .
Dividend maintained at $0.17 per share (declared March 23, 2023), extending a 36-year record of quarterly payouts .
Key narrative drivers: deposit competition raising funding costs and pressuring margins; branch expansion (James Island opening targeted for Q2 2023) and planned CEO transition on 10/1/23 provide medium-term strategic context .

What Went Well and What Went Wrong

What Went Well

YoY profit growth with strong returns: net income +8.52% YoY to $1.59M; ROAA 1.00% and ROAE 15.73% in Q1 2023 .
Book value per share advanced sequentially to $7.84 at 3/31/23 from $6.99 at 12/31/22, reflecting partial recovery from bond portfolio valuation pressure noted in 2022 .
Consistent capital returns: quarterly dividend of $0.17 per share declared March 23, 2023, marking the 134th consecutive quarterly dividend .

Quote (President, Q1 PR): “Although loan interest income has increased, our margins remain thin…Nonetheless, our business model and asset quality remain sound…” .

What Went Wrong

Behind internal profit plan due to “precipitous” increases in deposit costs amid intense competition from banks, brokerages, and the U.S. Treasury; management flagged thin margins despite higher loan yields .
Mortgage origination slowdown and deposit competition persisted across late 2022 into 2023, pressuring spread income (context from Q4 commentary) .
Higher rates previously hit bond portfolio values and book value (Q4 commentary); while book value recovered in Q1, the macro rate backdrop remains an overhang on securities valuations .

Financial Results

Metric	Q3 2022	Q4 2022	Q1 2023
Net Income ($USD)	$1,840,267	$1,807,785	$1,588,779
Basic EPS ($)	$0.33	$0.33	$0.29
Diluted EPS ($)	$0.33	$0.32	$0.28
Book Value/Share ($)	$6.49	$6.99	$7.84
Total Assets ($USD)	$630,129,805	$653,345,609	$646,761,629
Shares O/S (End of Period)	5,552,351	5,552,351	5,552,351

KPIs (YoY for Q1)

Metric	Q1 2022	Q1 2023
Net Income ($USD)	$1,464,106	$1,588,779
Basic EPS ($)	$0.26	$0.29
Diluted EPS ($)	$0.26	$0.28
ROAA (%)	0.89%	1.00%
ROAE (%)	11.40%	15.73%

Estimates vs. Actuals

Consensus EPS/Revenue: Unavailable for Q1 2023 due to S&P Global request-limit constraints; unable to assess beat/miss versus Street for this quarter.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue/NIM/Expense	2023	None provided	None provided	Maintained (no formal guidance)
Dividend per Share	Q1→Q2 2023	$0.17 (declared 12/15/22)	$0.17 (declared 3/23/23)	Maintained
Branch Expansion	Q2 2023	N/A	James Island office expected to open in Q2 2023	New operational milestone
Leadership Transition	10/1/2023	N/A	CEO transition to Eugene H. Walpole, IV on 10/1/23; Fleetwood S. Hassell to retire 9/30/23	Announced timeline

Note: No quantitative revenue/NIM/tax guidance disclosed in the cited materials .

Earnings Call Themes & Trends

Note: No earnings call transcript was available in the filing set; themes below synthesize management commentary from quarterly press releases.

Topic	Previous Mentions (Q-2: Q3’22 and Q-1: Q4’22)	Current Period (Q1’23)	Trend
Deposit competition/funding costs	Q4’22: “intense competition for deposits” noted ; Q3’22 emphasized rate changes and shift in mortgage mix	“Precipitous increases in…deposit costs…margins remain thin”	Worsening funding pressure
Mortgage origination activity	Q4’22: “mortgage activity has slowed” ; Q3’22: mortgage decline offset by higher rates	Not reiterated in detail in Q1 PR; funding cost commentary dominated	Continued headwind context from late 2022
Interest rate environment	Q4’22: expected to benefit from further Fed hikes ; Q3’22: higher rates aided offset of mortgage softness	“Potential for further rate increases…is uncertain”	From tailwind to uncertainty
Capital/book value/AOCI	Q4’22: bond portfolio values impacted by higher rates; book value fell to $6.99	Book value recovered to $7.84 at 3/31/23	Sequential improvement
Expansion/footprint	Q3’22/Q4’22: James Island branch targeted Q2’23	“Opening of our sixth office later this quarter on James Island”	On track
Credit/capital stance	Q3’22: “adequately reserved…well capitalized”	“Business model and asset quality remain sound”	Stable/constructive

Management Commentary

Strategy and operating environment: “Although we are ahead of 2022 first quarter results, we are behind in our profit plan…precipitous increases in our deposit costs…Although loan interest income has increased, our margins remain thin…Nonetheless, our business model and asset quality remain sound…” (Fleetwood S. Hassell, President) .
2022 backdrop and capital/book value context: “Although interest rate spreads have improved, mortgage activity has slowed and intense competition for deposits has emerged. Bond portfolio values have also been impacted by higher rates, which indirectly impacts our capital and book value…The bank is well positioned to benefit from additional Federal Reserve rate increases…” .
Earlier quarter set-up: “Increased interest rates…have helped offset a decline in…mortgage originations. We are adequately reserved for credit losses and remain well capitalized…” .
Capital returns: “This represents our 134th quarterly cash dividend paid to shareholders since our inception.” .
Leadership transition: CEO retirement effective 9/30/23; EVP/CFO Eugene H. Walpole, IV to become CEO on 10/1/23 .

Q&A Highlights

No analyst Q&A available; we did not locate an earnings call transcript for Q1 2023 in the company filings during the period.

Estimates Context

Street consensus (EPS/Revenue): Not available for Q1 2023 due to S&P Global request-limit constraints at query time; we cannot assess beat/miss versus consensus for this quarter.
Implications: Given management’s commentary on higher funding costs and thin margins, Street models may need to reflect lower NIM assumptions and elevated deposit beta near-term until competitive pressures abate .

Key Takeaways for Investors

Funding-cost shock compressed margins despite higher asset yields; management’s “thin” margin comment plus being “behind” the internal profit plan frames near-term earnings risk until deposit competition stabilizes .
Sequential earnings down from Q4’22, though YoY growth and strong returns (ROAA/ROAE) underscore resilient core profitability .
Book value improved sequentially ($7.84 vs. $6.99), consistent with some relief from prior AOCI pressure; monitor rate path for further BV volatility .
Dividend durability remains a support (134th consecutive payout), offering income while spread dynamics normalize .
Operational catalysts: James Island branch opening (Q2’23) could support funding and loan growth over time; leadership transition likely orderly given long-tenured internal successor .
Modeling updates: Trim NIM near-term, assume elevated deposit betas, and moderate mortgage-related fee income; revisit spread recovery timing given management’s uncertainty on future Fed moves .
Risk/reward: Near-term spread pressure vs. steady asset quality and stable capital/branch expansion; stock narrative driven by deposit mix/pricing, loan yield progression, and any signs of deposit competition easing .

BANK OF SOUTH CAROLINA CORP (BKSC)·Q1 2023 Earnings Summary