BANK SOUTH CAROL(BKSC) - 2023 Q2 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements This section presents the unaudited consolidated financial statements, including balance sheets, income statements, comprehensive income, equity, and cash flows, with detailed notes on accounting policies and financial instruments Consolidated Balance Sheets Total assets slightly decreased from $653.3 million to $648.4 million, driven by lower investment securities and deposits, offset by increased loans and short-term borrowings Consolidated Balance Sheet Highlights | Metric | June 30, 2023 | December 31, 2022 | | :---------------------------------- | :-------------- | :---------------- | | Total Assets | $648,405,848 | $653,345,609 | | Total Liabilities | $605,834,496 | $614,534,222 | | Total Shareholders' Equity | $42,571,352 | $38,811,387 | | Net Loans | $337,649,010 | $326,690,561 | | Total Deposits | $564,753,262 | $598,670,258 | | Short-term borrowings | $25,000,000 | $0 | Consolidated Statements of Income Net income decreased for both three and six-month periods ending June 30, 2023, primarily due to a significant rise in interest expense despite increased total interest and fee income Three Months Ended June 30, 2023 vs 2022 | Metric | 2023 | 2022 | Change (YoY) | | :----------------------------- | :----------- | :----------- | :----------- | | Net income | $1,277,717 | $1,542,982 | -17.19% | | Basic income per common share | $0.23 | $0.28 | -17.86% | | Diluted income per common share | $0.23 | $0.27 | -14.81% | | Total interest and fee income | $6,027,060 | $4,583,251 | +31.50% | | Total interest expense | $1,420,080 | $37,824 | +3652.9% | | Net interest income | $4,606,980 | $4,545,427 | +1.35% | | Total other income | $437,121 | $593,698 | -26.37% | | Total other expense | $3,386,022 | $3,138,415 | +7.89% | | Income tax expense | $380,362 | $457,728 | -16.90% | Six Months Ended June 30, 2023 vs 2022 | Metric | 2023 | 2022 | Change (YoY) | | :----------------------------- | :----------- | :----------- | :----------- | | Net income | $2,866,496 | $3,007,088 | -4.68% | | Basic income per common share | $0.52 | $0.54 | -3.70% | | Diluted income per common share | $0.51 | $0.53 | -3.77% | | Total interest and fee income | $11,658,894 | $8,838,212 | +31.93% | | Total interest expense | $2,351,181 | $74,621 | +3040.1% | | Net interest income | $9,307,713 | $8,763,591 | +6.21% | | Provision for credit losses | $45,000 | $(75,000) | N/A | | Total other income | $886,322 | $1,228,252 | -27.84% | | Total other expense | $6,636,383 | $6,154,978 | +7.82% | | Income tax expense | $646,156 | $904,777 | -28.58% | Consolidated Statements of Comprehensive Income (Loss) Total comprehensive income significantly improved for both periods ending June 30, 2023, primarily due to a substantial reduction in unrealized losses on available-for-sale securities Total Comprehensive Income (Loss) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $1,277,717 | $1,542,982 | $2,866,496 | $3,007,088 | | Other comprehensive loss (after tax) | $(1,241,481) | $(3,991,447) | $2,779,925 | $(13,640,900) | | Total comprehensive income (loss) | $36,236 | $(2,448,465) | $5,646,421 | $(10,633,812) | Consolidated Statements of Shareholders' Equity Total shareholders' equity increased from $38.8 million to $42.6 million, driven by net income and a positive change in accumulated other comprehensive loss Shareholders' Equity Changes (Six Months Ended June 30, 2023) | Item | Amount | | :------------------------------------ | :----------- | | Beginning balance (Dec 31, 2022) | $38,811,387 | | Net income | $2,866,496 | | Other comprehensive income | $2,779,925 | | Stock-based compensation expense | $57,935 | | Repurchase of common shares | $(57,290) | | Cash dividends | $(1,887,801) | | Ending balance (June 30, 2023) | $42,571,352 | Consolidated Statements of Cash Flows Net cash from operating activities increased, while net cash used in financing activities decreased, and investing activities significantly improved due to security maturities and reduced purchases Cash Flow Summary (Six Months Ended June 30) | Metric | 2023 | 2022 | | :------------------------------------ | :----------- | :----------- | | Net cash provided by operating activities | $2,264,547 | $1,674,515 | | Net cash provided by (used in) investing activities | $6,204,884 | $(86,014,076) | | Net cash used in financing activities | $(10,862,087) | $(13,125,371) | | Net decrease in cash and cash equivalents | $(2,392,656) | $(97,464,932) | | Cash and cash equivalents at end of period | $25,379,043 | $42,647,056 | - Proceeds from calls and maturities of investment securities available for sale increased significantly to $17.4 million in 2023 from $3.5 million in 2022[19] - Purchases of investment securities available for sale were $0 in 2023, compared to $94.7 million in 2022[19] - Net decrease in deposit accounts was $(33.9) million in 2023, compared to $(11.4) million in 2022[19] - The Company reported $25.0 million in net increase in short-term borrowings in 2023, compared to $0 in 2022[19] Notes to Consolidated Financial Statements This section provides detailed explanations for the financial statements, covering business, accounting policies, investment securities, loans, leases, fair value, and earnings per share Note 1. Nature of Business and Basis of Presentation This note outlines the Company's operations, basis of interim financial statement presentation, use of accounting estimates, and adoption of ASU 2016-13 (CECL) on January 1, 2023 - The Company adopted ASU 2016-13 (CECL) on January 1, 2023, resulting in an increase in the allowance for unfunded commitments of $600,000 and a decrease in the allowance for credit losses of $600,000, with no adjustment to retained earnings[31] - 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[30] - The Company uses the Loss Rate Approach for collective loan evaluations and the fair value of collateral for individually impaired loans[38][41] Note 2. Investment Securities The investment securities portfolio, primarily available for sale, had a net unrealized loss of approximately $23.5 million, considered temporary, and $35.0 million in securities were pledged for funding Investment Securities Available for Sale (Fair Value) | Date | Fair Value | | :---------------- | :----------- | | June 30, 2023 | $255,698,103 | | December 31, 2022 | $271,172,226 | Net Unrealized Loss on Investment Securities | Date | Gross Unrealized Losses | | :---------------- | :---------------------- | | June 30, 2023 | $(23,469,236) | | December 31, 2022 | $(25,828,434) | - Securities pledged to secure funding from the Bank Term Funding Program at amortized cost were $35.0 million at June 30, 2023[52] - There was no allowance for credit losses on available for sale securities at June 30, 2023[50] Note 3. Loans and Allowance for Credit Losses Net loans increased by $11.0 million to $337.7 million, while the allowance for credit losses decreased to $3.7 million, representing 1.08% of outstanding loans, with nonaccrual loans totaling $625,677 Loans and Allowance for Credit Losses | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------- | :-------------- | :---------------- | | Net Loans | $337,649,010 | $326,690,561 | | Allowance for credit losses | $3,689,863 | $4,291,221 | | Nonaccrual loans | $625,677 | $631,453 | Allowance for Credit Losses as % of Outstanding Loans | Date | Percentage | | :---------------- | :----------- | | June 30, 2023 | 1.08% | | December 31, 2022 | 1.30% | Loan Portfolio Composition (June 30, 2023) | Loan Type | Amount | Percent | | :----------------------------- | :----------- | :----------- | | Commercial Real Estate Other | $174,739,069 | 51.19% | | Consumer Real Estate | $92,895,470 | 27.22% | | Commercial | $46,173,490 | 13.53% | | Commercial Real Estate Construction | $23,752,103 | 6.96% | | Consumer Other | $3,778,741 | 1.10% | - Net charge-offs for the six months ended June 30, 2023, were $46,358, resulting from $48,318 in charge-offs and $1,960 in recoveries[70][136] - Loans modified for borrowers experiencing financial difficulty totaled $815,086 (amortized cost basis) at June 30, 2023, primarily in Commercial Real Estate Other, with concessions including term extensions and interest-only periods[81] Note 4. Leases The Company holds operating leases for land, branch facilities, and parking, with right-of-use assets and lease liabilities both at $13.1 million and a weighted average remaining lease term of 15.1 years Operating Lease Balances | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------- | :-------------- | :---------------- | | Operating ROU assets | $13,116,779 | $13,433,692 | | Operating lease liabilities | $13,116,779 | $13,433,692 | - Weighted average remaining lease term was 15.1 years at June 30, 2023[83] Total Lease Expense (Six Months Ended June 30) | Year | Amount | | :--- | :----------- | | 2023 | $612,017 | | 2022 | $597,335 | Note 5. Disclosures Regarding Fair Value of Financial Statements The Company measures financial instruments at fair value using a three-level hierarchy, with investment securities primarily Level 1 and 2, and individually assessed loans as Level 3 - The fair value hierarchy prioritizes unadjusted quoted market prices (Level 1), followed by observable inputs (Level 2), and then unobservable inputs (Level 3)[89][91] Investment Securities Available for Sale by Fair Value Level (June 30, 2023) | Security Type | Level 1 | Level 2 | Level 3 | Total | | :-------------------------- | :----------- | :----------- | :----------- | :----------- | | U.S. Treasury Notes | $169,341,280 | $0 | $0 | $169,341,280 | | Government-Sponsored Enterprises | $0 | $52,593,496 | $0 | $52,593,496 | | Municipal Securities | $0 | $16,273,594 | $17,489,733 | $33,763,327 | | Total | $169,341,280 | $68,867,090 | $17,489,733 | $255,698,103 | Assets Measured at Fair Value on a Nonrecurring Basis (June 30, 2023) | Asset Type | Level 1 | Level 2 | Level 3 | Total | | :-------------------------- | :--- | :----------- | :----------- | :----------- | | Individually assessed loans | $0 | $0 | $1,428,036 | $1,428,036 | | Mortgage loans to be sold | $0 | $2,868,776 | $0 | $2,868,776 | - For Level 3 individually assessed loans, valuation uses appraisal values/comparable sales, with appraisals discounted 10% to 20% for sales commissions and other holding costs[103] Note 6. Income Per Common Share Basic and diluted income per common share decreased for both the three and six months ended June 30, 2023, consistent with the overall decrease in net income Income Per Common Share (Three Months Ended June 30) | Metric | 2023 | 2022 | | :----------------------------- | :--- | :--- | | Basic income per common share | $0.23 | $0.28 | | Diluted income per common share | $0.23 | $0.27 | Income Per Common Share (Six Months Ended June 30) | Metric | 2023 | 2022 | | :----------------------------- | :--- | :--- | | Basic income per common share | $0.52 | $0.54 | | Diluted income per common share | $0.51 | $0.53 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, highlighting key trends, significant changes, and critical accounting policies Overview Bank of South Carolina Corporation, with $648.4 million in assets, focuses on personal service, with primary income from interest on loans and investments, while facing economic, interest rate, and competition risks - Total assets of Bank of South Carolina Corporation were $648.4 million as of June 30, 2023[117] - The primary source of income is interest on loans and investments, with net interest income being a key measure of success[120] - Potential risks include changes in economic, monetary policy, and industry conditions; interest rate fluctuations; competition for deposits; and recent adverse developments in the banking industry[118] Critical Accounting Policies The Company's critical accounting policies involve significant judgments and assumptions, primarily related to the allowance for credit losses, with the adoption of ASC 326 (CECL) being the only significant change - Critical accounting policies involve significant judgments and assumptions that materially impact the carrying value of certain assets and liabilities[123] - The only significant change to critical accounting policies was the adoption of ASC 326 (CECL) as of January 1, 2023[123] Balance Sheet Analysis The balance sheet analysis reveals decreased cash and deposits, offset by increased loans and new short-term borrowings, with investment securities remaining a significant asset portion Cash and Cash Equivalents Total cash and cash equivalents decreased by 8.7% to $25.4 million, primarily due to lower deposits and increased loans, partially offset by short-term borrowings and investment securities maturities - Total cash and cash equivalents decreased by $2.4 million (8.7%) to $25.4 million at June 30, 2023, from $27.8 million at December 31, 2022[124] - The decrease was primarily due to a net decrease in deposit accounts of $33.9 million and a net increase in loans of $11.0 million[124] - This was partially offset by short-term borrowings of $25.0 million and net proceeds from maturities of investment securities of $17.4 million[124] Investment Securities Available for Sale The available-for-sale investment portfolio decreased in fair market value to $255.7 million, representing 39.43% of total assets, with a net unrealized loss of approximately $23.5 million due to interest rate changes - Fair market value of available for sale investment portfolio was $255.7 million at June 30, 2023, with an amortized cost of $279.2 million, resulting in a net unrealized loss of approximately $23.5 million[127] - Investment securities represented 39.43% of total assets at June 30, 2023, down from 41.5% at December 31, 2022[127] - The average yield on investment securities was 1.13% at June 30, 2023, compared to 1.18% at December 31, 2022[127] Loans Net loans increased by $11.0 million, or 3.35%, to $337.7 million, driven by growth in Consumer and Commercial Real Estate loans, with the Bank continuing to originate 30-year, fixed-rate consumer mortgage loans for investment - Net loans increased by $11.0 million (3.35%) to $337.7 million at June 30, 2023, from $326.7 million at December 31, 2022[128] - The increase is primarily related to growth in Consumer and Commercial Real Estate loans[128] Loan Portfolio Composition (June 30, 2023) | Loan Type | Amount | Percent | | :----------------------------- | :----------- | :----------- | | Commercial Real Estate Other | $174,739,069 | 51.19% | | Consumer Real Estate | $92,895,470 | 27.22% | | Commercial | $46,173,490 | 13.53% | | Commercial Real Estate Construction | $23,752,103 | 6.96% | | Consumer Other | $3,778,741 | 1.10% | Nonperforming Assets Total nonperforming assets, solely nonaccruing loans, decreased slightly to $625,677, primarily from Commercial Real Estate Other loans, with no loans 90 days past due still accruing interest Total Nonperforming Assets | Date | Amount | | :---------------- | :----------- | | June 30, 2023 | $625,677 | | December 31, 2022 | $631,453 | - Nonperforming assets consist entirely of nonaccruing loans, with Commercial Real Estate Other being the largest component[133] - As of June 30, 2023, there were no loans 90 days past due still accruing interest[132] Allowance for Credit Losses The allowance for credit losses decreased to $3.7 million, representing 1.08% of outstanding loans and 589.74% coverage for nonperforming loans, with net charge-offs of $46,358 Allowance for Credit Losses | Date | Amount | | :---------------- | :----------- | | June 30, 2023 | $3,689,863 | | December 31, 2022 | $4,291,221 | Allowance for Credit Losses Metrics | Metric | June 30, 2023 | December 31, 2022 | | :------------------------------------ | :-------------- | :---------------- | | % of outstanding loans | 1.08% | 1.30% | | % of total nonperforming loans | 589.74% | 679.58% | - Net charge-offs for the six months ended June 30, 2023, totaled $46,358 ($48,138 in charge-offs and $1,960 in recoveries)[136] Deposits Total deposits decreased by 5.67% or $33.9 million to $564.8 million, primarily due to brokered time deposit maturities and increased competition, partially offset by new brokered time deposits - Total deposits decreased by $33.9 million (5.67%) to $564.8 million at June 30, 2023, from $598.7 million at December 31, 2022[138] - The decrease was primarily due to scheduled maturities of brokered time deposits ($23.0 million) and increased competition for deposits[138] Deposit Composition (June 30, 2023) | Deposit Type | Amount | Percent | | :----------------------------- | :----------- | :----------- | | Non-interest bearing demand | $206,034,702 | 36.49% | | Interest bearing demand | $154,348,295 | 27.33% | | Money market accounts | $104,930,669 | 18.58% | | Time deposits $250,000 and over | $30,596,097 | 5.42% | | Other time deposits | $11,106,990 | 1.97% | | Other savings deposits | $57,736,509 | 10.21% | | Total deposits | $564,753,262 | 100.00% | - Brokered time deposits increased to 4.36% of total deposits at June 30, 2023, from 0% at December 31, 2022, due to $24.6 million in new brokered time deposits acquired to meet short-term liquidity needs[138] Comparison of Three Months Ended June 30, 2023 to Three Months Ended June 30, 2022 Net income decreased by 17.19% to $1.3 million, with basic and diluted EPS at $0.23, driven by a substantial rise in interest expense and lower non-interest income despite a slight increase in net interest income - Net income decreased by $0.2 million (17.19%) to $1.3 million for the three months ended June 30, 2023[140] - Basic and diluted earnings per share were $0.23 for the three months ended June 30, 2023, down from $0.28 and $0.27, respectively, in the prior year[140] Net Interest Income Net interest income increased by 1.35% to $4.6 million, driven by a 31.50% increase in total interest and fee income from loans, but offset by a surge in total interest expense due to higher deposit rates and new borrowings - Net interest income increased by $0.1 million (1.35%) to $4.6 million[141] - Total interest and fee income increased by $1.3 million (31.50%) to $6.0 million, with loan interest income rising by $1.3 million[11][141] - Total interest expense dramatically increased from $37,824 in 2022 to $1,420,080 in 2023, primarily due to higher deposit rates and short-term borrowings[11][143] - The yield on average loans increased to 6.07% from 5.07%[141] Provision for Credit Losses No provision for credit losses was recognized during the three months ended June 30, 2023, or 2022 - No provision for credit losses was recognized for the three months ended June 30, 2023, or 2022[144] Non-Interest Income Other income decreased by 26.37% to $0.4 million, primarily due to a $0.1 million decrease in mortgage banking income, reflecting a lower volume of mortgage loans sold - Other income decreased by $0.2 million (26.37%) to $0.4 million[145] - This decrease was primarily due to a $0.1 million decrease in mortgage banking income[145] - Mortgage loans held for sale decreased to $12.2 million sold in 2023 from $21.5 million in 2022[145] Non-Interest Expense Non-interest expense increased by 7.89% to $3.4 million, mainly due to higher salaries and employee benefits and net occupancy expense, partly attributable to a new branch opening - Non-interest expense increased by $0.3 million (7.89%) to $3.4 million[146] - The increase was primarily due to increases in salaries and employee benefits and net occupancy expense[146] - The Bank opened its new James Island location in the second quarter of 2023[146] Income Tax Expense Income tax expense decreased to $0.4 million, maintaining a stable effective tax rate of approximately 22.94% - Income tax expense was $0.4 million in 2023, compared to $0.5 million in 2022[147] - The effective tax rate was 22.94% in 2023, similar to 22.88% in 2022[147] Comparison of Six Months Ended June 30, 2023 to Six Months Ended June 30, 2022 Net income decreased by 4.68% to $2.9 million, with basic and diluted EPS at $0.52 and $0.51, respectively, due to significantly higher interest expense and lower non-interest income despite increased net interest income - Net income decreased by $0.1 million (4.68%) to $2.9 million for the six months ended June 30, 2023[148] - Basic and diluted earnings per share were $0.52 and $0.51, respectively, for the six months ended June 30, 2023, down from $0.54 and $0.53 in the prior year[148] Net Interest Income Net interest income increased by 6.21% to $9.3 million, driven by a 31.93% increase in total interest and fee income from loans, but offset by a surge in total interest expense due to higher deposit rates and new borrowings - Net interest income increased by $0.5 million (6.21%) to $9.3 million[149] - Total interest and fee income increased by $2.4 million (31.93%) to $11.7 million, with loan interest income rising by $2.4 million[14][149] - Total interest expense dramatically increased from $74,621 in 2022 to $2,351,181 in 2023, primarily due to higher deposit rates and short-term borrowings[14][151] - The yield on average loans increased to 5.97% from 5.03%[149] Provision for Credit Losses The Company recorded a $45,000 increase to the allowance for credit losses in 2023, a change from a $75,000 reduction in the prior year, reflecting an analysis of the allowance's adequacy - A $45,000 increase to the allowance for credit losses was recorded in 2023, compared to a $75,000 reduction in 2022[152] Non-Interest Income Other income decreased by 27.84% to $0.9 million, primarily due to a $0.3 million decrease in mortgage banking income and a $0.1 million decrease in gains on sales of investment securities - Other income decreased by $0.3 million (27.84%) to $0.9 million[153] - This decrease was primarily due to a $0.3 million decrease in mortgage banking income and a $0.1 million decrease in gains on sales of investment securities[153] - Mortgage loans held for sale decreased to $20.2 million sold in 2023 from $39.2 million in 2022[153] Non-Interest Expense Non-interest expense increased by 7.82% to $6.6 million, mainly due to higher salaries and employee benefits and net occupancy expense, partly attributable to a new branch opening - Non-interest expense increased by $0.4 million (7.82%) to $6.6 million[154] - The increase was primarily due to increases in salaries and employee benefits and net occupancy expense[154] - The Bank opened its new James Island location in the second quarter of 2023[154] Income Tax Expense Income tax expense decreased to $0.6 million, with the effective tax rate falling to 18.40% from 23.13% in the prior year, attributed to the prior year's tax provision calculation - Income tax expense was $0.6 million in 2023, compared to $0.9 million in 2022[155] - The effective tax rate was 18.40% in 2023, down from 23.13% in 2022, due to the prior year tax provision calculation[155] Off-Balance Sheet Arrangements The Company has off-balance sheet arrangements including commitments to extend credit ($138.4 million) and standby letters of credit ($1.7 million), and retains recourse obligations on certain sold loans Off-Balance Sheet Commitments | Metric | June 30, 2023 | December 31, 2022 | | :------------------------------------ | :-------------- | :---------------- | | Commitments to extend credit | $138.4 million | $145.4 million | | Standby letters of credit | $1.7 million | $2.5 million | | Forward sales commitments on mortgage loans held for sale | $2.9 million | $0.9 million | - The unpaid principal balance of loans sold with recourse was $11.7 million at June 30, 2023[160] Liquidity The Company maintains adequate liquidity through deposits, loan payments, and security sales, with primary liquid assets at 43.79% of total assets, utilizing short-term lines of credit and the Federal Reserve's Bank Term Funding Program - Primary liquid assets accounted for 43.79% of total assets at June 30, 2023, compared to 45.89% at December 31, 2022[163] - The Company had unused short-term lines of credit totaling approximately $41.0 million at June 30, 2023[163] - A $35.0 million credit line was established under the Federal Reserve's Bank Term Funding Program, with $25.0 million in borrowings at June 30, 2023[164] Liquidity Ratio | Date | Ratio | | :---------------- | :------ | | June 30, 2023 | 47.75% | | December 31, 2022 | 48.09% | Capital Resources Total shareholders' equity was $42.6 million, and the Company and Bank are categorized as "well capitalized" under the CBLR framework, with the Bank's CBLR at 9.35% - Total shareholders' equity was $42.6 million as of June 30, 2023[166] - The Company and the Bank are categorized as "well capitalized" under the Community Bank Leverage Ratio (CBLR) framework[169] - The Bank's CBLR was 9.35% as of June 30, 2023[169] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the registrant is not required to provide detailed quantitative and qualitative disclosures about market risk - Smaller reporting companies are not required to provide the information for this item[171] Item 4. Controls and Procedures Management evaluated disclosure controls and procedures as effective as of June 30, 2023, with no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2023[172] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2023[173] Part II. Other Information Item 1. Legal Proceedings The Company reports no legal proceedings pending other than routine litigation incidental to its business, involving amounts not material to its financial condition - No legal proceedings are pending that are material to the Company's financial condition, other than routine litigation incidental to its business[176] Item 1A. Risk Factors As a smaller reporting company, the registrant is not required to provide detailed risk factor disclosures - Smaller reporting companies are not required to provide the information for this item[177] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company had no unregistered sales of equity securities but repurchased 4,112 common shares under a new $2.0 million repurchase program authorized in May 2023 - No unregistered sales of equity securities occurred[178] - The Company repurchased 4,112 common shares during the second quarter of 2023 at an average price of $13.93 per share[179] - A new stock repurchase program was authorized on May 25, 2023, for up to $2.0 million of common stock through May 2026[179] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities - No defaults upon senior securities were reported[180] Item 4. Mine Safety Disclosures The Company reported no mine safety disclosures - No mine safety disclosures were reported[180] Item 5. Other Information The Company reported no other information requiring disclosure under this item - No other information was reported under this item[181] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL taxonomy documents - Exhibits include certifications (31.1, 31.2, 32.1, 32.2) and XBRL Taxonomy Extension documents (101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[181] Signatures The report is duly signed on August 4, 2023, by Fleetwood S. Hassell, President/Chief Executive Officer, and Eugene H. Walpole, IV, Chief Financial Officer/Executive Vice President - The report was signed by Fleetwood S. Hassell (President/Chief Executive Officer) and Eugene H. Walpole, IV (Chief Financial Officer/Executive Vice President) on August 4, 2023[185] Certifications This section contains the certifications required by Rule 13a-14(a)/15d-14(a) and Section 1350, confirming the accuracy and completeness of the financial statements and other information in the report - Certifications pursuant to Rule 13a-14(a)/15d-14(a) by the Chief Executive Officer and Chief Financial Officer are included as exhibits[181] - Certifications pursuant to Section 1350 are also included as exhibits[181]