The effects of the recession continued to pinch earnings at the Bank of South Carolina Corp. in the first quarter, when its profit slipped about 6 percent from the same period a year ago.
The bank owner on Wednesday reported net income of $726,867, or 18 cents a share, which was "above our expectations," said Hugh C. Lane Jr., president and chief executive officer.
The Charleston-based lender said it had to set aside more money to cover potential loan losses "based on the current economic environment," triggering most of the year-over-year profit decline.
Total assets as of March 31 were $271 million, up about 10 percent from the first quarter of 2009.
Lane said Wednesday that his customers seem to be feeling more optimistic about the economy, a welcome break after a long period of
pessimism. He noted that the Charleston region is set to do well in the future, citing the Boeing Co.'s 787 plant and other business developments that are expected to bring new jobs and new residents to the area.
"I would say ... we're hearing slightly more encouraging things from our customers," he said.
While interest rates have been creeping up in recent weeks, Lane predicted that they will remain attractive this year, which should drive more loan demand for banks as long as the economy continues to improve.
For now, lenders are waiting to see how the real estate market reacts after April 30. That marks the end of a temporary federal tax credit that has stoked housing demand by providing qualified buyers with $6,500 to $8,000 rebates.
"We're seeing a flurry of activity by people getting contracts done to get that credit," Lane said.
The four-branch Bank of South Carolina recently restored its quarterly dividend after suspending it for six months. The hiatus allowed the company to add more than $2 million to its reserves, partly because of the shaky economy and partly in response to growth in its loan portfolio. The cash dividend of 10 cents a share will be paid April 30.
Bank of South Carolina's stock rose Wednesday, closing up about 6 percent to $11.10.