First Reliance Reports Record 2nd Quarter 2020 Net Income Of $3.9 Million And Completes S5.5 Million Subordinated Debt Issuance

FLORENCE, S.C., July 27, 2020 /PRNewswire/ — First Reliance Bancshares, Inc. (OTC:FSRL), the holding company for First Reliance Bank (collectively,…

FLORENCE, S.C., July 27, 2020 /PRNewswire/ — First Reliance Bancshares, Inc. (OTC:FSRL), the holding company for First Reliance Bank (collectively, «Company» or the «Company»), today announced its financial results for the three-month period ended June 30, 2020.

2020 Second Quarter Highlights

  • Pre-tax pre-provision earnings of $6.3 million, a 255.8% increase over Q2 2019;
  • Net income for Q2 2020 improved to $3.9 million, a 195.5% increase over Q2 2019;
  • Diluted EPS improved to $0.49 per common share, a 206.3% increase over Q2 2019;
  • Tangible book value increased 13.6% over Q2 2019 to $7.34;
  • Total risk-based capital improved 213 basis points to 13.31% for Q2 2020, compared to 11.18% for Q2 2019;
  • Total assets increased 20.2% to $763 million at Q2 2020, compared to $635 million at Q2 2019;
  • Cost of funds decreased 49 basis points to 0.63% at Q2 2020, compared to 1.12% for Q2 2019;
  • Transaction deposits to total deposits increased to 49.6% at Q2 2020, compared to 38.2% at Q2 2019;
  • Completed $5.5 million subordinated debt issuance June 2020 with funds retained at the holding company;
  • Net interest margin decreased to 3.55% (decreased to 3.73% excluding PPP loans) for Q2 2020, compared to 4.05% for Q2 2019;
  • Provision expense totaled $1.2 million for Q2 2020 compared to $169 thousand for Q2 2019;
  • Total loan deferrals outstanding as of Q2 2020 totaled $14.7 million or 2.9% of total loans;
  • Asset quality continued to be strong, with nonperforming assets to average assets at 0.21% and past due ratio at 0.34% at Q2 2020;
  • Consolidated Charleston market offices and Charlotte market offices;
  • Opened Stratford Road branch office in Winston Salem, North Carolina in Q2 2020; and
  • Record mortgage revenues of $8.1 million for Q2 2020 compared to $1.8 million for Q2 2019.

«We are extremely pleased to report that First Reliance achieved record-setting net income of $3.9 million, or $0.49 per diluted common share, for the three months ended June 30, 2020. Our financial performance in Q2 2020 positions the Company to continue its successful financial performance from 2019,» Rick Saunders, President and CEO of First Reliance said. «This is the best quarter in the Company’s 21-year history, showing excellent loan growth, increased capital levels, higher liquidity levels, and record-setting mortgage volumes.

«During Q2 2020, First Reliance recognized record mortgage revenues of $8.1 million compared to $1.8 million during the same period one year ago.  Additionally, we completed the issuance of $5.5 million of subordinated debt to be held at the holding company, with no immediate plans to inject into the Bank. We have strategically slowed loan growth, focusing on diversifying our revenue streams, growing our core deposit base, and eliminating unnecessary expenses.

«The conditions surrounding COVID-19 and the corresponding economic outlook remain uncertain.  While there is much unknown about the economic impact of the pandemic, our Company has reacted by crafting effective response plans and also preparing our balance sheet and our resources for an uncertain future. In order to aid our many business customers in their time of financial hardship, we modified or deferred payments on 414 loans up to 60 days, totaling $82.2 million during Q2 2020. As of June 30, 2020, total loan deferrals had reduced to $14.7 million on 44 loans, which included $12 million on 21 loans on their second deferral. 

«In order to protect our customers and employees during the COVID-19 Pandemic, we again moved to drive-through only on July 17, 2020. We continue to serve our customers through other channels or in person when requested.  In order to protect against economic uncertainty as related to the COVID-19 pandemic, we have performed stress testing on our loan portfolio, as well as capital and liquidity needs. Results indicated no material exposure to industries with an elevated risk to Covid-19 within our loan portfolio. 

«We are proud to have worked throughout the pandemic to meet everyday banking needs, to provide the emergency relief needs of our customers and communities, and to protect our bank as much as possible against economic downturn. We are thankful for the continuing support shown by our customers, communities, and our shareholders.»   

Payroll Protection Program («PPP»)

During the quarter, the Company was a participating lender in the Small Business Administration («SBA») Payroll Protection Program created under the Coronavirus Aid, Relief, and Economic Security Act. The Company directly originated 186 PPP loans totaling $30.2 million. Gross origination fees from the PPP loans that we originated are currently expected to total $1.1 million, based on our current expectations with respect to the eligibility of such PPP loans to qualify for loan forgiveness. During the quarter, the Company recognized $94 thousand of the $1.1 million in estimated fees by originating PPP loans, with the remaining balance expected to be recognized over the next several quarters.

Financial Summary





Quarter Ended


June 30

March 31

December 31

September 30

June 30


2020

2020

2019

2019

2019

Earnings ($ in thousands, except per share data):






Net income available to common shareholders

$           3,901

858

599

1,507

1,320

Earnings per common share, diluted

0.49

0.11

0.07

0.19

0.16

Total revenue(1) 

13,241

7,542

7,502

8,631

8,328

Net interest margin

3.55%

4.09%

3.96%

3.86%

4.05%

Return on average assets(2) 

2.12%

0.54%

0.37%

0.94%

0.86%

Return on average equity(2) 

26.20%

5.89%

4.20%

10.85%

9.79%

Efficiency ratio(3)

54.40%

80.25%

83.11%

72.94%

79.02%

Balance Sheet($ in thousands):






Total assets

$        762,647

660,886

 

661,612

 

657,533

 

634,749

Total loans(4)

512,384

480,573

480,183

473,466

475,769

Total deposits

582,361

506,225

505,088

508,885

527,763

Total transaction deposits (5) to total deposits

49.62%

49.06%

44.84%

40.06%

38.19%

Loans to deposits

87.98%

94.93%

95.07%

93.04%

90.15%

Bank Capital Ratios:






Total risk-based capital ratio

13.31%

12.45%

11.54%

11.13%

11.18%

Tier 1 risk-based capital ratio

12.48%

11.75%

10.88%

10.53%

10.56%

Tier 1 Leverage ratio

9.68%

10.29%

9.23%

9.11%

9.19%

Common equity tier 1 ratio(6)

12.48%

11.75%

10.88%

10.53%

10.56%

Asset Quality Ratios:






Nonperforming assets as a percentage of total assets

0.21%

0.26%

0.28%

0.29%

0.33%

Allowance for loan losses as a percentage of loans(4)

0.92%

0.81%

0.74%

0.69%

0.68%

Allowance for loan losses as a percentage of nonaccrual loans

332.75%

291.94%

240.47%

187.59%

164.58%


Footnotes to table located on page 10.

 

INCOME STATEMENTS – Unaudited






Quarter Ended

Six Months Ended


June 30

Mar 31

Dec 31

Sept 30

June 30

June 30

(in thousands, except per share data)

2020

2020

2019

2019

2019

2020

2019

Interest income








Loans

$      6,556

$      6,568

6,760

6,688

6,603

13,124

12,741

Investment securities

299

323

327

327

347

622

682

Other interest income

41

90

91

68

82

131

170

Total interest income

6,896

6,981

7,178

7,083

7,032

13,877

13,593

Interest expense








Deposits

652

828

1,043

1,259

1,226

1,480

2,333

Other interest expense

371

336

397

337

276

707

588

Total interest expense

1,023

1,164

1,440

1,596

1,502

2,187

2,921

Net interest income

5,873

5,817

5,738

5,487

5,530

11,690

10,672

Provision for loan losses

1,175

375

470

209

169

1,550

296

Net interest income after provision for loan losses

4,698

5,442

5,268

5,278

5,361

10,140

10,376

Noninterest income








Mortgage banking income

8,062

4,274

1,798

2,301

1,800

12,336

2,996

Mortgage servicing rights valuation adjustment

(1,429)

(3,512)

(1,127)

(180)

(4,941)

(195)

Service fees on deposit accounts

242

463

447

438

399

705

797

Debit Card and other service charges, commissions, and fee:

429

315

408

382

387

744

758

Income from bank owned life insurance

102

103

96

96

97

205

192

Gain on sale of securities, net

(211)

(9)

1

1

3

(220)

36

Other income

173

91

141

106

112

264

210

Total noninterest income

7,368

1,725

1,764

3,144

2,798

9,093

4,794

Noninterest expense








Compensation and benefits

4,395

3,583

3,718

3,819

4,074

7,978

7,831

Occupancy

619

612

603

602

582

1,231

1,171

Furniture and equipment related expenses

585

537

435

440

475

1,122

947

Electronic Data Processing

200

194

190

252

267

394

484

Professional Fees

329

267

377

438

284

596

480

Marketing

56

77

84

71

77

133

150

Other

774

783

838

672

803

1,557

1,644

Merger Related Expenses

37

Total noninterest expenses

6,958

6,053

6,245

6,294

6,562

13,011

12,744

Income before provision for income taxes

5,108

1,114

787

2,128

1,597

6,222

2,426

Income tax expense

1,207

256

188

621

277

1,463

444

Net income available to common

shareholders

$      3,901

$         858

599

1,507

1,320

4,759

1,982









Weighted Average Shares – Basic

7,915

7,901

7,903

7,946

7,959

7,908

7,955

Weighted Average Shares – Diluted

7,998

8,014

8,047

8,077

8,071

8,010

8,065

Basic income per common share

$        0.49

$        0.11

$        0.08

$        0.19

$        0.17

$        0.60

$        0.25

Diluted income per common share

$        0.49

$        0.11

$        0.07

$        0.19

$        0.16

$        0.59

$        0.25

Net income for the three months ended June 30, 2020 was $3.9 million, or $0.49 per diluted common share, compared to $1.3 million, or $0.16 per diluted common share, for the three months ended June 30, 2019. Net Income for the six months ended June 30, 2020 totaled $4.8 million, or $0.59 per diluted common share, compared to $2.0 million, or $0.25 per diluted common share for the six months ended June 20, 2019.

Noninterest income for the three-months ended June 30, 2020 was $7.4 million, a $4.6 million increase from $2.8 million for the same period one-year ago. Noninterest income is largely driven by the Company’s mortgage banking division. In the second quarter of 2020, mortgage production volumes reached $223 million as compared with $76 million for the same period one-year ago. The mortgage pipeline remains robust and the Company is projecting volumes for Q3 2020 slightly lower but modestly consistent with second quarter 2020 volumes. «As mortgage rates reached all-time record lows, we saw unprecedented mortgage volume throughout our markets in the second quarter of 2020.  Our mortgage team is working tirelessly to support the demand and help our customers with refinancing their homes, renovations, or new home purchases,» said CEO Saunders.

Noninterest expense increased by $396 thousand or 6%, for the second quarter of 2020 compared to the same period one-year ago.  The increase in noninterest expense is attributed to higher mortgage division expenses of $565 thousand over the same period one year ago which contributed to the $4.6 million increase in noninterest income during the second quarter 2020. Expense control continues to be in the forefront of the Company’s strategic efforts and measures are being implemented where feasible. During the second quarter 2020, the Company consolidated its Charleston market offices and Charlotte market offices to gain operating efficiencies with continued focus building an infrastructure to support future growth when the pandemic subsides.

NET INTEREST INCOME AND MARGIN – Unaudited




For the 3 Months Ended


June 30, 2020

March 31, 2020

December 31, 2019

June 30 2019


Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

(dollars in thousands)

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Interest-earning assets













Federal funds sold and interest-bearing

deposits

$50,290

$12

0.09%

$19,487

$57

1.17%

$19,876

$71

1.42%

$15,902

$65

1.63%

Investment securities

41,189

300

2.91%

45,175

323

2.86%

46,413

327

2.82%

49,496

347

2.81%

Nonmarketable equity securities

4,089

29

2.85%

2,119

33

6.15%

2,179

20

3.75%

916

17

7.62%

Loans(8)

565,422

6,555

4.64%

501,507

6,568

5.24%

511,005

6,760

5.29%

480,724

6,603

5.49%

Total interest-earning assets

660,990

6,896

4.17%

568,288

6,981

4.91%

579,473

7,178

4.95%

547,038

7,032

5.14%

Allowance for loan losses

(4,085)



(3,584)



(3,216)



(2,933)



Noninterest-earning assets

77,900



73,621



73,050



72,065



Total assets

$734,805



$638,325



$649,307



$616,170



Interest-bearing liabilities













NOW accounts

$103,652

$15

0.06%

$95,462

$11

0.05%

$86,535

$11

0.05%

$    82,390

$9

0.05%

Savings & money market

127,968

104

0.33%

119,672

116

0.39%

121,712

132

0.43%

90,104

126

0.56%

Time deposits

151,414

533

1.41%

148,721

701

1.89%

170,875

900

2.11%

194,874

1,091

2.23%

Total interest-bearing deposits

383,034

652

0.68%

363,855

828

0.91%

379,122

1,043

1.10%

367,368

1,226

1.33%

FHLB advances and other borrowings

87,523

182

0.83%

50,935

252

1.98%

56,290

312

2.22%

23,166

76

1.32%

Subordinated debentures

16,942

189

4.45%

15,309

84

2.20%

15,310

85

2.22%

15,310

200

5.21%

Total interest-bearing liabilities

487,499

1,023

0.84%

430,099

1,164

1.08%

450,722

1,440

1.28%

405,844

1,502

1.48%

Noninterest bearing deposits

176,688



140,338



131,282



120,530



Other Liabilities

11,057



9,603



10,235



35,857



Shareholders’ equity

59,561



58,285



57,068



53,938



Total liabilities and shareholders’ equity

$734,805



$638,325



$649,307



$616,169
















Net interest income (tax equivalent) / interest

rate spread


$5,873

3.33%


$5,817

3.83%


$5,738

3.67%


$5,530

3.66%

Net Interest Margin



3.55%



4.09%



3.96%



4.05%



















Footnotes to table located on page 10.





Net interest income increased $339 thousand, or 6.2%, to $5.9 million for the three months ended June 30, 2020 compared to $5.5 million for the three months ended June 30, 2019. The increase in net interest income resulted primarily from the growth in our loan portfolio, a significant increase in noninterest bearing deposits, and lower cost deposit balances. The Company continues to reduce its cost of funds which declined to 0.63% as of June 30, 2020 from 1.12% for the same period one year ago. Transaction deposits increased by $87.3 million, to $288.9 million for the second quarter 2020 from $201.5 million one year ago and were aided in part by deposit growth as a result of participating in the Paycheck Protection Program. Despite the growth in net interest income, the net interest margin for the three months ended June 30, 2020 decreased 50 basis points (and decreased 32 basis points excluding PPP loans) to 3.55% from 4.05% for the three months ended June 30, 2019, due primarily from the origination of lower yielding Paycheck Protection Program loans and realizing a full quarterly impact of the 150 basis point decrease in interest rates by the Federal Reserve on variable rate loans. While a low rate environment for an extended period of time will exert margin pressure, the Company has actively managed the balance sheet to minimize the impact on earnings. The Company intentionally reduced its exposure to higher cost deposits and focused on building relationships and growing deposits through core checking account acquisition. Transaction accounts (see footnote No. 5) to total deposits increased to a record high 49.6% for the three-months ended June 30, 2020 compared to 39.2% for the same period one-year ago. The Company continues to experience double-digit growth in commercial deposit accounts and treasury services.  Customers are doing more business overall and seem to like the Company’s brand of banking, as reflected in the strong services per household number of 5.8.

Balance Sheets – Unaudited




Ending Balance


June 30

March 31

December 31

September 30

June 30

($ in thousands, except per share data)

2020

2020

2019

2019

2019

Assets






Cash and cash equivalents:






Cash and due from banks

$          4,952

$       16,869

12,945

5,342

5,084

Interest-bearing deposits with banks

78,554

18,922

27,649

21,786

11,926

Total cash and cash equivalents

83,506

35,791

40,594

27,128

17,010

Investment securities:






Investment securities available for sale

28,237

34,842

35,715

36,186

37,464

Investment securities held to maturity

9,318

9,767

10,417

10,801

11,423

Other investments

4,264

2,989

2,423

2,423

948

Total investment securities

41,819

47,598

48,555

49,410

49,835

Mortgage loans held for sale

57,329

34,042

27,901

41,959

27,226

Loans (4) 

512,384

480,573

480,183

473,466

475,769

Less allowance for loan losses

(4,715)

(3,877)

(3,547)

(3,251)

(3,211)

Loans, net

507,669

476,696

476,636

470,215

472,558

Property and equipment, net

20,523

20,528

19,967

20,016

20,133

Mortgage servicing rights

9,698

8,421

11,023

11,247

10,308

Bank owned life insurance

17,898

17,796

17,692

17,596

17,499

Deferred income taxes

5,068

6,156

6,581

6,728

7,293

Other assets

19,137

13,858

12,663

13,234

12,887

Total assets

$      762,647

$     660,886

661,612

657,533

634,749

Liabilities






Deposits

$      582,361

$     506,225

505,088

508,885

527,763

Federal Home Loan Bank advances

85,000

55,000

43,300

43,300

6,600

Federal funds and repurchase agreements

2,464

16,530

31,137

23,122

18,162

Subordinated debentures

10,358

4,835

4,881

4,838

4,900

Junior subordinated debentures

10,310

10,310

10,310

10,310

10,310

Other liabilities

9,814

9,971

9,811

10,626

11,854

Total liabilities

700,307

602,871

604,527

601,081

579,589

Shareholders’ equity






Preferred stock – Series D non-cumulative, no par value

1

1

1

1

1

Common Stock – $.01 par value; 20,000,000 shares authorized

81

81

80

80

80

Non-Voting Common Stock, $.01 par value; 430,000 shares authorized

4

4

4

4

4

Treasury stock, at cost

(1,478)

(1,402)

(1,283)

(1,227)

(864)

Nonvested restricted stock

(1,748)

(1,757)

(1,254)

(1,010)

(1,427)

Additional paid-in capital

51,822

51,652

51,137

50,777

51,137

Accumulated other comprehensive income (loss)

806

606

308

334

243

Retained earnings

12,852

8,830

8,092

7,493

5,986

Total shareholders’ equity

62,340

58,015

57,085

56,452

55,160

Total liabilities and shareholders’ equity

$      762,647

$     660,886

661,612

657,533

634,749

Common Stock






Tangible book value per common share (7)

$            7.34

$           6.83

6.76

6.71

6.46

Stock price:






High

5.50

7.82

7.90

8.00

7.29

Low

4.93

5.50

7.60

7.02

7.00

Period end

5.07

5.50

7.82

7.90

7.15

Common shares outstanding

8,130

8,103

8,034

7,990

8,039

   Non-voting common shares outstanding

410

410

410

410

410

   Treasury shares outstanding

200

187

184

177

116

Total assets increased 20.2% to $763 million at June 30, 2020, compared to $635 million at June 30, 2019. Total loans grew by $36 million, or 7.7%, to $512 million at June 30, 2020, compared to $476 million for the same period one-year ago due to primarily Paycheck Protection Program loan originations, organic loan growth in our commercial, 1-4 family mortgage and consumer loan portfolios. 

CEO Saunders said, «We are one of the very few community banks strategically positioned for growth in the premier markets in the Carolinas. Because of this potential, our long history and our strong culture, we have attracted new talent from other financial institutions as we aim to take advantage of current market disruptions.»

«As our North Carolina presence has grown, we relocated and expanded the Winston-Salem office into a full service branch site in May to position the Company for future growth in the Winston-Salem market. We are also actively looking for branch sites in the Lake Norman and other fast growing markets in the Charlotte MSA. With developing economic uncertainty, current and future market expansion plans will be evaluated prudently.» For example, we have moved breaking ground for a new Myrtle Beach branch – Grissom Parkway out a little further into the near future as we continue to monitor the impact COVID-19 has on the economy.

ASSET QUALITY MEASURES – Unaudited

Our asset quality continued to be strong through June 30, 2020, with nonperforming assets declining by $489 thousand to $1.6 million at June 30, 2020 compared to the same date one-year ago. The ratio of nonperforming assets to total assets declined to 0.21% at June 30, 2020, a decrease of 12 basis points compared to June 30, 2019. OREO and repossessed assets remain nominal. The allowance for loan losses as a percentage of loans improved to 0.92% at June 30, 2020 (adjusted for purchase accounting marks on acquired loans), compared to 0.68% one year earlier due primarily to provisioning associated with the anticipated economic impact of the COVID-19 pandemic. «While we have not seen increased delinquencies or any direct impact of COVID-19 to our asset quality, we believe it is prudent to reflect this pandemic in our allowance models. During Q2 2020, we made provisions for loan losses totaling $1.2 million compared to $169 thousand for the same period one year ago. Year to date through June 30, 2020, the Company has funded $1.6 million in provisions for loan losses compared to $296 thousand during the six months of 2019. We are actively performing stress tests on our loan portfolio, monitoring the political and regulatory landscape, and also monitoring COVID-19 hotspots and the impact it may have on the markets we serve. The Company continues to actively monitor loan deferral levels which have declined to $14.7 million or less than 3% of the loan portfolio as of the end of the second quarter 2020 and there has not been any unusual or unforeseen credit line drawdowns to date and no increase in overdraft activity. The Company has minimal exposure to any industry that may have an elevated exposure to Covid-19″, said CEO Saunders. Net charge offs remain nominal.


June 30

March 31

December 31

September 30

June 30

(dollars in thousands)

2020

2020

2019

2019

2019

Nonperforming Assets






Commercial






Owner occupied RE

$             999

$                 507

518

529

97

Non-owner occupied RE

Construction

Commercial business

135

12

39

112

693

Consumer






Real estate

10

526

591

597

725

Home equity

183

180

Construction

Other

273

283

327

312

256

Nonaccruing troubled debt restructurings






Total nonaccrual loans

$          1,417

$              1,328

1,475

1,733

1,951

Other real estate owned

209

392

347

164

164

Total nonperforming assets

$          1,626

$              1,720

1,822

1,897

2,115

Nonperforming assets as a percentage of:






Total assets

0.21%

0.26%

0.28%

0.29%

0.33%

Total loans

0.32%

0.36%

0.38%

0.40%

0.54%

Accruing troubled debt restructurings

$          2,620

$              3,502

3,584

3,119

2,630








Quarter Ended


June 30

March 31

December 31

September 30

June 30

(dollars in thousands)

2020

2020

2019

2019

2019

Allowance for Loan Losses






Balance, beginning of period

$          3,877

$              3,547

3,251

3,211

3,231

Loans charged-off

452

168

222

247

221

Recoveries of loans previously charged-off

115

123

48

78

32

Net loans charged-off

337

45

174

169

189

Provision for loan losses

1,175

375

470

209

169

Balance, end of period

$          4,715

$              3,877

3,547

3,251

3,211

Allowance for loan losses to gross loans

0.92%

0.81%

0.74%

0.69%

0.68%

Allowance for loan losses to nonaccrual loans

332.75%

291.94%

240.47%

187.59%

164.58%

Net charge-offs to average loans QTD (annualized)

0.24%

0.04%

0.14%

0.13%

0.16%

 

 

LOAN COMPOSITION – Unaudited




Quarter Ended


June 30

March 31

December 31

September 30

June 30

(dollars in thousands)

2020

2020

2019

2019

2019

Commercial






Owner occupied RE

$       113,205

$        115,711

116,244

109,133

109,329

Non-owner occupied RE

70,748

69,474

59,287

63,304

60,313

Construction

35,029

29,523

33,196

30,123

27,503

Business

62,464

63,522

61,129

57,573

60,783

PPP

30,211





Total commercial loans

311,657

278,230

269,856

260,133

257,928

Consumer






Real Estate

99,565

97,465

99,394

101,742

104,309

Home equity

21,895

21,362

21,987

21,472

21,309

Construction

5,496

5,708

5,062

4,915

4,971

Other

73,771

77,808

83,884

85,204

87,252

Total consumer loans

200,727

202,343

210,327

213,333

217,841

Total gross loans, net of deferred fees

512,384

480,573

480,183

473,466

475,769

Less-allowance for loan losses

4,715

3,877

3,547

3,251

3,211

DEPOSIT COMPOSITION – Unaudited





Quarter Ended


June 30

March 31 

December 31

September 30

June 30

(dollars in thousands)

2020

2020

2019

2019

2019

Non-interest bearing

$    185,208

$    144,359

137,312

123,839

117,862

Interest bearing:






NOW accounts

103,732

104,003

89,169

80,017

83,695

Money market accounts

101,083

94,778

94,742

95,775

91,082

Savings

34,392

26,270

25,730

25,876

26,409

Time, less than $250,000

120,782

104,841

121,818

142,662

164,939

Time and out-of-market deposits, $250,000 and over

37,164

31,974

36,317

40,716

43,776

Total Deposits

$    582,361

$    506,225

505,088

508,885

527,763

Footnotes to tables:

(1)

Total revenue is the sum of net interest income and noninterest income.

(2)

Annualized for the respective three-month period.

(3)

Noninterest expense divided by the sum of net interest income and noninterest income annualized for respective three-month period.

(4)

 Excludes mortgage loans held for sale.

(5)

 Includes noninterest bearing and interest bearing NOW accounts.

(6)

The common equity tier 1 ratio is calculated as the sum of common equity divided by risk-weighted assets.

(7)

The tangible book value per share is calculated as total shareholders’ equity less intangible assets, divided by

period end dilutive shares.

(8)

 Includes mortgage loans held for sale.

ABOUT FIRST RELIANCE BANCSHARES

Founded in 1999, First Reliance Bancshares, Inc. (OTC: FSRL.OB), is based in Florence, South Carolina and has assets of approximately $763 million. The Company employs more than 150 professionals and has locations throughout South Carolina and central North Carolina. First Reliance has redefined community banking with a commitment to making customers lives better, its founding principle. Customers of the company have given it a 93% customer satisfaction rating well above the bank industry average of 81%.  First Reliance is also one of three companies throughout South Carolina to receive the Best Places To Work in South Carolina award all 15 years since the program began. We believe that this recognition confirms that our associates are engaged and committed to our brand and the communities we serve. In addition to offering a full range of personalized community banking products and services for individuals, small businesses, and corporations, First Reliance offers two unique community-customers programs, which include: Hometown Heroes, a package of benefits for those serving our communities and Check N Save, an outreach program for the unbanked or under-banked.  We also offer a full suite of digital banking services, a Customer Service Guaranty, a Mortgage Service Guaranty, and are open on most traditional holidays.

FORWARD-LOOKING STATEMENTS

Certain statements in this news release contain «forward-looking statements» within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective. Such forward-looking statements include but are not limited to statements with respect to our plans, objectives, expectations and intentions and other statements that are not historical facts, and other statements identified by words such as «believes,» «expects,» «anticipates,» «estimates,» «intends,» «plans,» «targets,» and «projects,» as well as similar expressions. Such statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by the Company or any person that the future events, plans, or expectations contemplated by the Company will be achieved.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (2) the strength of the United States economy in general and the strength of the local economies in which we conduct operations may be different than expected resulting in, among other things, a deterioration in the credit quality or a reduced demand for credit, including the resultant effect on the Company’s loan portfolio and allowance for loan losses; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for loan loss, the rates of loan growth, or adverse changes in asset quality in our loan portfolio, which may result in increased credit risk-related losses and expenses; (4) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (5) changes in the U.S. legal and regulatory framework including, but not limited to, the Dodd-Frank Act and regulations adopted thereunder; (6) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) could have a negative impact on the Company, including the value of its MSR asset; (7) the business related to acquisitions may not be integrated successfully or such integration may take longer to accomplish than expected; (8) the expected cost savings and any revenue synergies from acquisitions may not be fully realized within expected timeframes; and (9) disruption from acquisitions may make it more difficult to maintain relationships with clients, associates or suppliers. Moreover, a trade war or other governmental action related to tariffs or international trade agreements or policies, as well as Covid-19 or other potential epidemics or pandemics, have the potential to negatively impact ours and/or our customers’ costs, demand for our customers’ products, and/or the U.S. economy or certain sectors thereof and, thus, adversely affect our business, financial condition, and results of operations. All subsequent written and oral forward-looking statements concerning the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. We do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

Contact:

Jeffrey A. Paolucci, EVP & CFO

(888) 543-5510

jpaolucci@firstreliance.com

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SOURCE First Reliance Bancshares, Inc.