First Reliance Bancshares Reports Fourth Quarter 2020 Results

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Jan 28, 2021, 08:30 ET

FLORENCE, S.C., Jan. 28, 2021 /PRNewswire/ -- First Reliance Bancshares, Inc. (OTC:FSRL), the holding company for First Reliance Bank (collectively, "First Reliance" or the "Company"), today announced its financial results for the fourth quarter of 2020.

Fourth Quarter and Year Ended 2020 Highlights

Net income for the fourth quarter of 2020 was $1.4 million, or $0.17 per diluted share, compared to $0.6 million, or $0.07 per diluted share, for the fourth quarter of 2019, representing an increase of 131.9%. Net income for the year ended December 31, 2020 was $10.6 million, or $1.32 per diluted share, compared to $4.1 million, or $0.51 per diluted share, for the year ended December 31, 2019, representing an increase of 159.6%.
Pre-tax, pre-provision earnings for the fourth quarter of 2020 were $2.2 million, up $0.9 million, or 72.3%, from the same period in 2019. Pre-tax, pre-provision earnings for the year ended December 31, 2020 were $16.8 million, up $10.5 million, or 165.6%, from the same period in 2019.
Mortgage volume remained near record levels and resulted in mortgage income (net of mortgage servicing rights amortization and valuation adjustment) of $5.0 million during the fourth quarter of 2020, an increase of $4.3 million, or 647.2%, from the fourth quarter of 2019.
Mortgage servicing rights were $12.0 million at December 31, 2020, representing a value of 0.96% of total mortgage loans being serviced, compared to $11.0 million at December 31, 2019, representing a value of 1.15% of total mortgage loans being serviced.
Asset quality remained strong, with non-performing assets as a percentage of total assets decreasing to 0.21% at December 31, 2020 compared to 0.28% at December 31, 2019.
Cost of funds for the fourth quarter of 2020 decreased to 0.60% from 0.71% on a linked quarter basis and from 1.33% for the same period in 2019.
The Company paid off $55.0 million in Federal Home Loan Bank advances at the end of December 2020, resulting in prepayment penalties of $0.3 million. These advances had a weighted average interest rate of 0.86% and a weighted average remaining life of 1.7 years. The advances and the associated cash balances negatively impacted net interest margin by approximately 34 basis points for the fourth quarter of 2020.
The Company elected to forego development of a previously planned branch location in Forest Acres, SC and wrote off $0.5 million in capitalized assets associated with the site during the fourth quarter.

"We are pleased to report that First Reliance closed out a record-setting year with another strong quarter and ended with net income of $10.6 million, or $1.32 per diluted common share, for the year, which represents the best year in the Company's 21-year history. While this year has presented many challenges, we believe our resilience and our commitment to superior customer service positions the Company for continued growth in our markets," Rick Saunders, Chief Executive Officer, said. "I would like to thank all of our team members, especially those on the frontlines, for their tireless work in meeting the needs of our customers and for their commitment to our core values during this challenging and tumultuous time."

Mr. Saunders continued, "Given the strong performance and income during the year, the Company has taken the opportunity to fortify our balance sheet, as reflected by increased capital, liquidity, and loan loss reserve levels at the end of the year. We have been intentional about our current balance sheet mix, which provides protection from the potential economic fallout from COVID-19 while also positioning us to deploy cash strategically as those risks begin to subside. With additional economic stimulus as well as positive developments in vaccine efficacy, we intend to begin executing our strategy of funding high-quality interest-earning assets in the coming quarters. We will also continue to focus on countering the potential negative implications of COVID-19 by diversifying our revenue streams, growing our core deposit base, and eliminating unnecessary expenses."

Mr. Saunders concluded, "While this year has been challenging, it has also brought about immense positive change to our organization. We've focused on bringing in highly qualified personnel across all areas of the Company, including executive management, lending and retail, finance, operations, and information technology. We believe this team positions us to take on the inevitable challenges ahead and to create a very bright future for our organization."

COVID-19 Update

The fourth quarter brought about significant new developments in the fight against COVID-19. Positive trends in vaccine efficacy as well as additional economic stimulus provides defense against the worst economic outcomes from the pandemic. The Company has already begun taking applications for the second round of Paycheck Protection Program (PPP) loans and we stand ready to continue providing assistance to our customers. Our branch locations are back open to better serve our customers and we've taken the necessary precautions to ensure the safety of those customers as well as our team members. As of December 31, 2020, total loan deferrals had fallen to $7.1 million on four loans, all on their second deferral, totaling 1.5% of total loans receivable.

Financial Summary

	Three Months Ended					Twelve Months Ended
($ in thousands, except per share data)	Dec 31 2020	Sept 30 2020	June 30 2020	Mar 31 2020	Dec 31 2019	Dec 31 2020	Dec 31 2019
Earnings:
Net income available to common shareholders	$ 1,389	$ 4,468	$ 3,901	$ 858	$ 599	$ 10,616	$ 4,089
Earnings per common share, diluted	0.17	0.56	0.49	0.11	0.07	1.32	0.51
Total revenue⁽¹⁾	10,858	14,820	13,241	7,542	7,502	46,461	31,600
Net interest margin	3.27%	3.86%	3.55%	4.09%	3.96%	3.69%	3.97%
Return on average assets⁽²⁾	0.72%	2.31%	2.12%	0.54%	0.37%	1.46%	0.66%
Return on average equity⁽²⁾	8.08%	27.73%	26.20%	5.89%	4.20%	16.91%	7.46%
Efficiency ratio⁽³⁾	80.05%	54.28%	54.40%	81.15%	84.09%	63.83%	79.98%

Footnotes to table located at the end of this release.

	As of
($ in thousands, except per share data)	Dec 31 2020	Sept 30 2020	June 30 2020	Mar 31 2020	Dec 31 2019
Balance Sheet:
Total assets	$ 710,168	$ 781,655	$ 762,647	$ 660,886	$ 661,612
Total loans receivable	477,968	478,745	512,384	480,573	480,183
Total deposits	641,439	595,767	582,361	506,225	505,088
Total transaction deposits⁽⁴⁾to total deposits	48.51%	47.30%	49.62%	49.06%	44.84%
Loans to deposits	80.47%	80.36%	87.98%	94.93%	95.07%
Bank Capital Ratios:
Total risk-based capital ratio	15.67%	14.75%	13.31%	12.45%	11.54%
Tier 1 risk-based capital ratio	14.52%	13.72%	12.48%	11.75%	10.88%
Tier 1 leverage ratio	10.31%	9.96%	9.68%	10.29%	9.23%
Common equity tier 1 capital ratio	14.52%	13.72%	12.48%	11.75%	10.88%
Asset Quality Ratios:
Nonperforming assets as a percentage of total assets	0.21%	0.19%	0.21%	0.26%	0.28%
Allowance for loan losses as a percentage of total loans receivable	1.29%	1.20%	0.92%	0.81%	0.74%

Footnotes to table located at the end of this release.

CONDENSED CONSOLIDATED INCOME STATEMENTS – Unaudited

	Three Months Ended					Twelve Months Ended
	Dec 31	Sept 30	June 30	Mar 31	Dec 31	December 31
(in thousands, except per share data)	2020	2020	2020	2020	2019	2020	2019
Interest income
Loans	$ 6,156	$ 7,403	$ 6,650	$ 6,568	$ 6,760	$ 26,777	$ 26,190
Investment securities	231	218	299	323	327	1,071	1,335
Other interest income	75	67	41	90	91	273	329
Total interest income	6,462	7,688	6,990	6,981	7,178	28,121	27,854
Interest expense
Deposits	376	519	652	828	1,043	2,375	4,635
Other interest expense	388	400	371	336	397	1,495	1,322
Total interest expense	764	919	1,023	1,164	1,440	3,870	5,957
Net interest income	5,698	6,769	5,967	5,817	5,738	24,251	21,897
Provision for loan losses	350	1,000	1,178	380	470	2,908	984
Net interest income after provision for loan losses	5,348	5,769	4,789	5,437	5,268	21,343	20,913
Noninterest income
Mortgage banking income	5,916	8,270	8,062	4,274	1,798	26,522	6,901
Mortgage servicing rights amortization and valuation adjustment	(902)	(1,155)	(1,429)	(3,512)	(1,127)	(6,998)	(1,307)
Service fees on deposit accounts	315	290	242	463	447	1,310	1,682
Debit card and other service charges, commissions, and fees	427	426	429	315	408	1,597	1,548
Income from bank owned life insurance	101	103	102	103	96	409	386
Gain (loss) on sale of securities, net	8	-	(211)	(9)	1	(212)	37
Loss on extinguishment of debt	(287)	-	-	-	-	(287)	-
Loss on disposal of fixed assets	(528)	-	-	-	-	(528)	-
Other income	110	117	79	91	141	397	456
Total noninterest income	5,160	8,051	7,274	1,725	1,764	22,210	9,703
Noninterest expense
Compensation and benefits	5,359	4,892	4,395	3,583	3,718	18,229	15,369
Occupancy	641	628	619	612	603	2,500	2,377
Furniture and equipment	616	572	585	537	435	2,310	1,822
Electronic data processing	241	231	200	194	190	866	926
Professional fees	400	230	329	267	377	1,226	1,124
Marketing	155	122	56	77	84	410	304
Other	1,280	1,288	771	778	838	4,117	3,352
Total noninterest expense	8,692	7,963	6,955	6,048	6,245	29,658	25,274
Income before provision for income taxes	1,816	5,857	5,108	1,114	787	13,895	5,342
Income tax expense	427	1,389	1,207	256	188	3,279	1,253
Net income available to common shareholders	$ 1,389	$ 4,468	$ 3,901	$ 858	$ 599	$ 10,616	$ 4,089

Weighted average common shares - basic	7,931	7,929	7,915	7,901	7,903	7,919	7,938
Weighted average common shares - diluted	8,089	8,015	7,998	8,014	8,047	8,038	8,062
Basic income per common share	$ 0.18	$ 0.56	$ 0.49	$ 0.11	$ 0.08	$ 1.34	$ 0.52
Diluted income per common share	$ 0.17	$ 0.56	$ 0.49	$ 0.11	$ 0.07	$ 1.32	$ 0.51

Net income for the three months ended December 31, 2020 was $1.4 million, or $0.17 per diluted common share, compared to $0.6 million, or $0.07 per diluted common share, for the three months ended December 31, 2019. Net income for the twelve months ended December 31, 2020 totaled $10.6 million, or $1.32 per diluted common share, compared to $4.1 million, or $0.51 per diluted common share for the nine months ended December 31, 2019.

Noninterest income for the three months ended December 31, 2020 was $5.2 million, a $3.4 million increase from $1.8 million for the same period in 2019. Noninterest income is largely driven by the Company's mortgage banking division, which produced income of $5.0 million on $172 million in mortgage volume during the three months ended December 31, 2020. That represents an increase of $4.3 million in income from the same period in 2019. Noninterest income for the three months ended December 31, 2020 was also affected by the Company's decision to pay off Federal Home Loan Bank advances and dispose of previously capitalized assets related to a planned branch site, resulting in one-time losses of $0.3 million and $0.5 million, respectively.

Noninterest expense increased by $2.4 million or 39.2%, for the three months ended December 31, 2020 compared to the same period in 2019. The increase in noninterest expense is largely driven by an increase of $1.6 million in compensation and benefits. The increase in compensation and benefits is driven by an increase in mortgage incentives as well as the addition of personnel throughout the year.

NET INTEREST INCOME AND MARGIN – Unaudited

	For the Three Months Ended
	December 31, 2020			December 31, 2019
	Average	Income/	Yield/	Average	Income/	Yield/
(dollars in thousands)	Balance	Expense	Rate	Balance	Expense	Rate
Assets
Interest-earning assets
Federal funds sold and interest-bearing deposits	$ 134,396	$ 33	0.10%	$ 19,378	$ 71	1.46%
Investment securities	34,175	231	2.69%	46,443	327	2.81%
Nonmarketable equity securities	3,261	42	5.01%	2,237	20	3.65%
Loans held for sale	48,984	367	3.01%	36,852	363	3.94%
Loans	476,253	5,789	4.86%	474,153	6,397	5.40%
Total interest-earning assets	697,069	6,462	3.71%	579,063	7,178	4.96%
Allowance for loan losses	(6,111)			(2,528)
Noninterest-earning assets	77,828			72,772
Total assets	$ 768,786			$ 649,307

Liabilities and Shareholders' Equity
Interest-bearing liabilities
NOW accounts	$ 115,304	$ 13	0.04%	$ 86,536	$ 10	0.05%
Savings & money market	160,555	77	0.20%	121,712	133	0.43%
Time deposits	146,406	286	0.79%	170,875	900	2.11%
Total interest-bearing deposits	422,265	376	0.36%	379,123	1,043	1.10%
FHLB advances and other borrowings	67,242	164	0.96%	38,872	209	2.17%
Subordinated debentures	20,757	224	4.28%	15,310	188	4.91%
Total interest-bearing liabilities	510,264	764	0.60%	433,305	1,440	1.33%
Noninterest bearing deposits	179,037			131,281
Other Liabilities	10,720			27,654
Shareholders' equity	68,765			57,067
Total liabilities and shareholders' equity	$ 768,786			$ 649,307

Net interest income (tax equivalent) / interest rate spread		$ 5,698	3.11%		$ 5,738	3.63%
Net Interest Margin			3.27%			3.96%

	For the Twelve Months Ended
	December 31, 2020			December 31, 2019
	Average	Income/	Yield/	Average	Income/	Yield/
(dollars in thousands)	Balance	Expense	Rate	Balance	Expense	Rate
Assets
Interest-earning assets
Federal funds sold and interest-bearing deposits	$ 78,452	$ 126	0.16%	$ 14,280	$ 261	1.83%
Investment securities	39,237	1,071	2.73%	47,992	1,335	2.78%
Nonmarketable equity securities	3,422	147	4.29%	1,441	68	4.73%
Loans held for sale	46,546	1,485	3.19%	25,479	1,019	4.00%
Loans	489,218	25,292	5.17%	462,881	25,171	5.44%
Total interest-earning assets	656,875	28,121	4.28%	552,073	27,854	5.05%
Allowance for loan losses	(4,707)			(2,788)
Noninterest-earning assets	76,419			72,394
Total assets	$ 728,587			$ 621,679

Liabilities and Shareholders' Equity
Interest-bearing liabilities
NOW accounts	$ 105,621	$ 47	0.04%	$ 82,455	$ 37	0.05%
Savings & money market	138,210	379	0.27%	118,984	525	0.44%
Time deposits	151,918	1,949	1.28%	187,177	4,073	2.18%
Total interest-bearing deposits	395,749	2,375	0.60%	388,616	4,635	1.19%
FHLB advances and other borrowings	71,870	681	0.95%	19,889	541	2.72%
Subordinated debentures	18,382	814	4.43%	15,310	781	5.11%
Total interest-bearing liabilities	486,001	3,870	0.80%	423,815	5,957	1.41%
Noninterest bearing deposits	168,859			119,712
Other Liabilities	10,941			23,346
Shareholders' equity	62,786			54,806
Total liabilities and shareholders' equity	$ 728,587			$ 621,679

Net interest income (tax equivalent) / interest rate spread		$ 24,251	3.48%		$ 21,897	3.64%
Net Interest Margin			3.69%			3.97%

Net interest income decreased $40 thousand, or 0.7%, to $5.7 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019. The minimal change in net interest income over the period was caused by a decrease in both the yield on interest-earning assets and the cost of interest-bearing liabilities. Yield on interest-earning assets decreased to 3.71% for the three months ended December 31, 2020 from 4.96% for three months ended December 31, 2019. The decrease was mainly driven by a change in balance sheet mix, which was strategically positioned to be cash-heavy during the quarter. Yield was also negatively affected to a lesser degree by decreases in the federal funds target rate. The Company continues to reduce its cost of funds, which decreased to 0.60% for the three months ended December 31, 2020 from 1.33% for the same period in 2019. Transaction deposits increased by $76.5 million, to $294.3 million at December 31, 2020 from $217.8 million at December 31, 2019 and were aided in part by deposit growth as a result of participating in the PPP.

Net interest income increased $2.4 million, or 10.8%, to $24.3 million for the twelve months ended December 31, 2020 compared to $21.9 for the twelve months ended December 31, 2019. The increase is mainly driven by lower cost of funds, which decreased to 0.80% for the twelve months ended December 31, 2020 compared to 1.41% for the twelve months ended December 31, 2019.

CONDENSED CONSOLIDATED BALANCE SHEETS – Unaudited

	As of
	Dec 31	Sept 30	Jun 30	March 31	Dec 31
($ in thousands, except per share data)	2020	2020	2020	2020	2019
Assets
Cash and cash equivalents:
Cash and due from banks	$ 5,521	$ 5,133	$ 4,952	$ 16,869	$ 12,945
Interest-bearing deposits with banks	93,167	134,592	78,299	18,667	27,395
Total cash and cash equivalents	98,688	139,725	83,251	35,536	40,340
Time deposits in other banks	256	256	255	255	254
Investment securities:
Investment securities available for sale	32,759	35,567	28,237	34,842	35,715
Investment securities held to maturity	-	-	9,318	9,767	10,417
Other investments	1,076	3,839	4,264	2,989	2,423
Total investment securities	33,835	39,406	41,819	47,598	48,555
Mortgage loans held for sale	35,642	57,853	57,329	34,042	27,901
Loans receivable:
Loans	477,968	478,745	512,384	480,573	480,183
Less allowance for loan losses	(6,173)	(5,721)	(4,715)	(3,877)	(3,547)
Loans receivable, net	471,795	473,024	507,669	476,696	476,636
Property and equipment, net	18,491	20,548	20,523	20,528	19,967
Mortgage servicing rights	12,021	11,000	9,698	8,421	11,023
Bank owned life insurance	18,102	18,001	17,898	17,796	17,692
Deferred income taxes	3,452	3,872	5,068	6,156	6,581
Other assets	17,886	17,970	19,137	13,858	12,663
Total assets	710,168	781,655	762,647	660,886	661,612
Liabilities
Deposits	$ 594,000	$ 595,767	$ 582,361	$ 506,225	$ 505,088
Federal Home Loan Bank advances	10,000	75,000	85,000	55,000	43,300
Federal funds and repurchase agreements	5,523	12,591	2,464	16,530	31,137
Subordinated debentures	10,459	10,427	10,358	4,835	4,881
Junior subordinated debentures	10,310	10,310	10,310	10,310	10,310
Other liabilities	11,147	10,178	9,814	9,971	9,811
Total liabilities	641,439	714,273	700,307	602,871	604,527
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	82	81	81	81	80
Non-Voting Common Stock, $.01 par value; 430,000 shares authorized	4	4	4	4	4
Treasury stock, at cost	(1,680)	(1,488)	(1,478)	(1,402)	(1,283)
Nonvested restricted stock	(1,487)	(1,577)	(1,748)	(1,757)	(1,254)
Additional paid-in capital	51,972	51,824	51,822	51,652	51,137
Accumulated other comprehensive income	1,128	1,217	806	606	308
Retained earnings	18,709	17,320	12,852	8,830	8,092
Total shareholders' equity	68,729	67,382	62,340	58,015	57,085
Total liabilities and shareholders' equity	$ 710,168	$ 781,655	$ 762,647	$ 660,886	$ 661,612

COMMON STOCK SUMMARY - Unaudited

			As of
	Dec 31	Sept 30	Jun 30	Mar 31	Dec 31
(shares in thousands)	2020	2020	2020	2020	2019
Voting common shares outstanding	8,154	8,129	8,133	8,103	8,034
Non-voting common shares outstanding	410	410	410	410	410
Treasury shares outstanding	(234)	(202)	(200)	(187)	(184)
Total common shares outstanding	8,330	8,337	8,343	8,326	8,260

Tangible book value per common share⁽⁵⁾	$ 8.12	$ 7.95	$ 7.34	$ 6.83	$ 6.76

Stock price:
High	$ 7.80	$ 6.05	$ 5.50	$ 7.82	$ 7.90
Low	$ 5.55	$ 4.85	$ 4.93	$ 5.50	$ 7.60
Period end	$ 7.75	$ 6.05	$ 5.07	$ 5.50	$ 7.82

Footnotes to table located at the end of this release.

ASSET QUALITY MEASURES – Unaudited

	Ending Balance
(dollars in thousands)	Dec 31 2020	Sept 30 2020	June 30 2020	Mar 31 2020	Dec 31 2019
Nonperforming Assets
Commercial
Owner occupied RE	$ 394	$ 404	$ 413	$ 416	$ 425
Non-owner occupied RE	-	-	-	-	-
Construction	-	-	-	-	-
Commercial business	-	-	135	12	39
Consumer
Real estate	461	346	345	356	411
Home equity	-	-	-	-	-
Construction	-	-	-	-	-
Other	242	299	206	246	256
Nonaccruing troubled debt restructurings	270	291	318	298	344
Total nonaccrual loans	$ 1,367	$ 1,340	$ 1,417	$ 1,328	$ 1,475
Other real estate owned	164	164	209	392	347
Total nonperforming assets	$ 1,531	$ 1,504	$ 1,626	$ 1,720	$ 1,822
Nonperforming assets as a percentage of:
Total assets	0.21%	0.19%	0.21%	0.26%	0.28%
Total loans receivable	0.32%	0.31%	0.32%	0.36%	0.38%
Accruing troubled debt restructurings	$ 1,584	$ 2,508	$ 2,620	$ 3,502	$ 3,584

	Quarter Ended
(dollars in thousands)	Dec 31 2020	Sept 30 2020	June 30 2020	March 31 2020	Dec 31 2019
Allowance for Loan Losses
Balance, beginning of period	$ 5,721	$ 4,715	$ 3,877	$ 3,547	$ 3,251
Loans charged-off	43	76	452	168	222
Recoveries of loans previously charged-off	145	82	112	118	48
Net charge-offs (recoveries)	(102)	(6)	340	50	174
Provision for loan losses	350	1,000	1,178	380	470
Balance, end of period	$ 6,173	$ 5,721	$ 4,715	$ 3,877	$ 3,547
Allowance for loan losses to gross loans receivable	1.29%	1.20%	0.92%	0.81%	0.74%
Allowance for loan losses to nonaccrual loans	451.57%	426.94%	332.75%	291.94%	240.47%

Our asset quality continued to be strong through December 31, 2020, with nonperforming assets decreasing to $1.5 million at December 31, 2020 from $1.8 million at December 31, 2019. The ratio of nonperforming assets to total assets declined to 0.21% at December 31, 2020, a decrease of 7 basis points compared to December 31, 2019. Other real estate owned and repossessed assets remain nominal. The allowance for loan losses as a percentage of total loans receivable increased to 1.29% at December 31, 2020, compared to 0.74% at December 31, 2019, primarily due to provisioning associated with the potential economic impact of the COVID-19 pandemic. The Company had net recoveries of $102 thousand for the three months ended December 31, 2020 compared to net charge-offs of $174 thousand for the three months ended December 31, 2019. "While we have not seen increased delinquencies and do not anticipate a significant impact to our asset quality, we believe it is prudent to reflect the COVID-19 pandemic in our allowance models. During Q4 2020, we made provisions for loan losses totaling $0.4 million, which brings our total provisions for 2020 to $2.9 million, an increase of $1.9 million compared to 2019. We are actively performing stress tests on our loan portfolio, monitoring the political and regulatory landscape, and monitoring COVID-19 hotspots and the impact it may have on the markets we serve. The Company has minimal exposure to those industries that may have an elevated exposure to COVID-19," said Mr. Saunders.

LOAN COMPOSITION – Unaudited

	Quarter Ended
	Dec 31	Sept 30	June 30	Mar 31	Dec 31
(dollars in thousands)	2020	2020	2020	2020	2019
Commercial
Owner occupied RE	$ 106,721	$ 104,173	$ 113,205	$ 115,711	$ 116,244
Non-owner occupied RE	88,560	79,838	70,748	69,474	59,287
Construction	29,099	35,579	35,029	29,523	33,196
Business	57,512	63,163	62,464	63,522	61,129
PPP	-	-	30,211	-	-
Total commercial loans	281,892	282,753	311,657	278,230	269,856
Consumer
Real Estate	96,458	97,904	99,565	97,465	99,394
Home equity	19,456	20,244	21,895	21,362	21,987
Construction	13,892	12,831	11,642	9,617	8,205
Other	66,270	65,013	67,625	73,899	80,741
Total consumer loans	196,076	195,992	200,727	202,343	210,327
Total loans, net of deferred fees	477,968	478,745	512,384	480,573	480,183
Less allowance for loan losses	6,173	5,721	4,715	3,877	3,547
Total loans, net	$ 471,795	$ 473,024	$ 507,669	$ 476,696	$ 476,636

DEPOSIT COMPOSITION – Unaudited

	Quarter Ended
	Dec 31	Sept 30	June 30	Mar 31	Dec 31
(dollars in thousands)	2020	2020	2020	2020	2019
Non-interest bearing	$ 167,274	$ 173,628	$ 185,208	$ 144,359	$ 137,312
Interest bearing:
NOW accounts	120,891	108,152	103,732	104,003	89,169
Money market accounts	119,716	113,203	101,083	94,778	94,742
Savings	46,688	41,549	34,392	26,270	25,730
Time, less than $250,000	105,327	122,139	120,782	104,841	121,818
Time, $250,000 and over	34,104	37,096	37,164	31,974	36,317
Total Deposits	$ 594,000	$ 595,767	$ 582,361	$ 506,225	$ 505,088

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)	Includes noninterest-bearing and interest-bearing NOW accounts.
(5)	The tangible book value per share is calculated as total shareholders' equity less intangible assets, divided by period-end outstanding common shares.

ABOUT FIRST RELIANCE

Founded in 1999, First Reliance Bancshares, Inc. (OTC: FSRL.OB), is based in Florence, South Carolina and has assets of approximately $710 million. The Company employs more than 170 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:
Robert Haile
SEVP & Chief Financial Officer
(843) 656-5000
[email protected]

SOURCE First Reliance Bancshares, Inc.