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BANK OF SOUTH CAROLINA CORP (BKSC)·Q4 2022 Earnings Summary

Executive Summary

  • Q4 2022 net income rose 17.5% year over year to $1.81M, with basic/diluted EPS of $0.33/$0.32; full-year 2022 earnings were $6.66M and ROA/ROE of 1.01%/15.26% .
  • Management highlighted improved interest rate spreads but noted mortgage activity slowed, deposit competition intensified, and bond portfolio values were pressured by higher rates, impacting book value; they expect AOCI-related declines to be temporary as investments mature .
  • The company declared a $0.17 quarterly dividend on Dec 15, 2022 (record date Dec 27; payable Jan 31, 2023) .
  • No formal financial guidance or earnings-call transcript was available; leadership succession was announced on Jan 26, 2023 with CFO Eugene Walpole to become CEO effective Oct 1, 2023, a governance catalyst for 2023 .

What Went Well and What Went Wrong

What Went Well

  • Net income increased 17.45% YoY in Q4 2022 to $1,807,785; diluted EPS rose to $0.32 vs $0.27 in Q4 2021, reflecting stronger interest rate spreads and disciplined expense control .
  • CEO emphasized “safe and sound banking practices with consistent lending… [and] excellent management of operating expenses,” positioning the bank to benefit from additional Fed rate increases .
  • Q3 2022 showed resilience with $1,840,267 in quarterly earnings and improving margins from Fed actions, offsetting mortgage weakness, and a well-capitalized balance sheet as PPP wound down .

What Went Wrong

  • Mortgage origination activity slowed materially, reducing fee contributions as rates rose, a trend management flagged across 2H22 .
  • Deposit competition intensified in Q4, pressuring funding costs and potentially compressing future net interest margins despite spread improvements .
  • Bond portfolio values declined as rates rose, indirectly impacting capital and book value per share ($6.99 at 12/31/22 vs $9.73 at 12/31/21); management views this as temporary but it weighs on tangible book optics near-term .

Financial Results

Quarterly Trend (Q2 → Q3 → Q4 2022)

MetricQ2 2022Q3 2022Q4 2022
Net Income ($USD)$1,542,981 $1,840,267 $1,807,785
Basic EPS ($)$0.28 $0.33 $0.33
Diluted EPS ($)$0.27 $0.33 $0.32
Total Assets ($USD)$655,465,190 $630,129,805 $653,345,609
Book Value per Share ($)$7.50 $6.49 $6.99

Year-over-Year Comparison (Q4 2021 → Q4 2022)

MetricQ4 2021Q4 2022
Net Income ($USD)$1,539,169 $1,807,785
Basic EPS ($)$0.28 $0.33
Diluted EPS ($)$0.27 $0.32
Total Assets ($USD)$679,220,646 $653,345,609
Book Value per Share ($)$9.73 $6.99

KPIs and Returns

KPIQ2 2022 (six-month annualized)Q3 2022 (nine-month annualized)FY 2022
Return on Avg Assets (%)0.90% 0.98% 1.01%
Return on Avg Equity (%)12.57% 14.11% 15.26%
Weighted Avg Shares (Basic)5,550,951 5,552,351 5,552,351
Weighted Avg Shares (Diluted)5,693,808 5,650,799 5,652,399

Note: Revenue and margin details by line item (e.g., net interest income, noninterest income, NIM) were not disclosed in the press releases cited; management commentary indicated “interest rate spreads have improved” and “margins are improving” .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Financial Guidance (Revenue/EPS/Margins)Q4 2022/FY 2023None provided None provided; directional commentary only (benefit from further Fed rate increases; mortgage slowdown; deposit competition; AOCI headwinds) Maintained (no formal guidance)
Dividend per ShareQ4 2022N/A disclosed in these docs$0.17 declared; record date Dec 27, 2022; payable Jan 31, 2023 Declared

Earnings Call Themes & Trends

No earnings-call transcript was available for Q4 2022; the company communicates via press releases and 8-Ks in the period reviewed . Thematic trajectory is synthesized from Q2/Q3 releases and Q4 earnings press release.

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2022)Trend
Interest rate environment“Margins are improving… optimistic higher loan interest income will offset declines in mortgage volume” (Q2) ; “Increased interest rates… helped offset a decline in mortgage originations” (Q3) “Interest rate spreads have improved… bank well positioned to benefit from additional Fed rate increases” Improving spreads; tailwind from rate hikes
Mortgage activityOptimism despite expected declines (Q2) Contribution declined (Q3) “Mortgage activity has slowed” (Q4)
Deposits/fundingNot emphasizedNot emphasized“Intense competition for deposits has emerged”
Bond portfolio/AOCINot emphasizedNot emphasized“Bond portfolio values… impacted by higher rates, indirectly impacts capital and book value; expected to be temporary as investments mature”
Capital/asset quality“Adequately reserved… well capitalized; closed PPP” (Q3) Reiterated safe and sound practices Stable capital and reserves

Management Commentary

  • “Maintaining safe and sound banking practices with consistent lending… along with excellent management of operating expenses has resulted in another solid year.”
  • “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. We expect these declines to be temporary as investments mature over the coming months.”
  • “Increased interest rates from recent Federal Reserve actions have helped offset a decline in the contribution from mortgage originations… We have closed our books on the PPP program and are focused on finishing out another successful year.” (Q3 context)
  • Leadership transition: CEO Fleetwood Hassell to retire 9/30/23; CFO Eugene Walpole to become CEO effective 10/1/23 .

Q&A Highlights

No Q4 2022 earnings-call transcript was available; thus, analyst Q&A themes, clarifications, or tone shifts cannot be assessed for the period reviewed .

Estimates Context

Wall Street consensus estimates via S&P Global (Capital IQ) were not available for BKSC for Q4 2022 in our retrieval window; coverage appears limited for this micro-cap community bank, and no estimates could be compared against reported results. If/when consensus becomes available, EPS and NII/NIM estimates would be the primary anchors; in absence of coverage, investors should rely on reported EPS trends and management directional commentary .
Note: We attempted to retrieve S&P Global estimates but were unable to access them due to request limits; therefore, no estimate comparisons are presented.

Key Takeaways for Investors

  • EPS and net income strengthened in Q4 2022 on improved spreads; results were robust vs Q4 2021 despite mortgage headwinds—positive for near-term NII momentum if rate tailwinds persist .
  • Watch funding costs: management flagged “intense competition for deposits,” a risk to NIM as deposit betas rise; deposit pricing strategy will be critical to sustaining margin gains .
  • Book value pressure from AOCI is a near-term optical headwind; management expects normalization as the bond portfolio rolls down—monitor OCI trends and duration positioning .
  • Mortgage origination slowdown is likely to continue with higher rates; fee income mix may remain soft—offset hinges on loan growth and disciplined OpEx management .
  • Capital and reserves appear solid, with PPP fully wound down—supports credit resilience amid macro uncertainty .
  • Governance continuity: announced CEO succession to Eugene Walpole effective Oct 1, 2023—expect continuity in strategy and operating discipline; monitor any changes in growth priorities .
  • Dividend stability remains a shareholder-friendly feature; the $0.17 declaration underscores ongoing capital return while balancing capital impacts from AOCI .