First Reliance Bancshares Reports Third Quarter 2024 Results

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Oct 24, 2024, 16:30 ET

FLORENCE, S.C., Oct. 24, 2024 /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 third quarter of 2024.

Third Quarter 2024 Highlights

Net income increased 26.4% for the third quarter of 2024 to $1.8 million, or $0.22 per diluted share, compared to $1.4 million, or $0.18 per diluted share, for the third quarter of 2023. Operating earnings, which excludes securities gains (losses), net of tax, was $2.0 million, or $0.24 per diluted share, for the third quarter of 2024, compared to $1.7 million, or $0.20 per diluted share, in the third quarter of 2023.
Book value per share increased $1.86, or 22.9%, from $8.12 per share at September 30, 2023, to $9.98 per share at September 30, 2024. Tangible book value per share increased $1.87, or 23.3%, from $8.02 per share at September 30, 2023, to $9.89 per share at September 30, 2024.
Net interest income for the quarter was $8.1 million, which represents an increase of $900,000, or 12.5%, compared to the same quarter one year ago. On a linked quarter basis, the increase was $438,000, or 5.7%.
Net interest margin increased during the quarter to 3.27% at September 30, 2024, compared to 3.20% at June 30, 2024, and increased 16 basis points compared to the same period in 2023.
The Company recorded securities losses of $162 thousand pre-tax in the third quarter of 2024 compared to $268 thousand pre-tax in third quarter of 2023. The after-tax impact of these securities losses was $125 thousand and $209 thousand, respectively.
Total loans held for investment decreased $214 thousand, or (0.12%) annualized, to $739.2 million at September 30, 2024, from $739.4 million at June 30, 2024.
Total deposits increased $52.1 million, or 23.2% annualized, to $951.9 million at September 30, 2024, from $899.8 million at June 30, 2024.
Asset quality remained steady with nonperforming assets totaling $924 thousand, or 0.09% of total assets at September 30, 2024, compared to $310 thousand, or 0.03% of total assets at June 30, 2024.
Cost of funds for the third quarter of 2024 decreased to 2.23% from 2.28% on a linked quarter basis and increased from 1.91% for the same period in 2023.

Rick Saunders, Chief Executive Officer, remarked: "The third quarter of 2024 provided some clarity relative to the economy and interest rates as the Fed began to lower interest rates. Our net interest margin improved seven basis points to 3.27%, expenses were flat from the second quarter of 2024, credit quality remained steady with low net charge offs and low nonperforming assets, and deposit growth totaled $52.1 million. Our loan to deposit ratio dropped below 80% (77.65%) for the first time since the first quarter of 2023. Tangible book value per share improved by $0.76 during the quarter with $0.51 per share being attributable to the lower unrealized losses in the securities portfolio."

Financial Summary

	Three Months Ended					Nine Months Ended
	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30	Sep 30	Sep 30
($ in thousands, except per share data)	2024	2024	2024	2023	2023	2024	2023
Earnings:
Net income available to common shareholders	$ 1,825	$ 1,942	$ 1,238	$ 776	$ 1,444	$ 5,005	$ 3,828
Operating earnings (Non-GAAP)	1,950	1,942	1,238	1,424	1,653	5,130	4,398
Earnings per common share, diluted	0.22	0.24	0.15	0.10	0.18	0.61	0.47
Operating earnings, diluted (Non-GAAP)	0.24	0.24	0.15	0.17	0.20	0.63	0.54
Total revenue⁽¹⁾	9,855	10,226	9,690	8,285	9,219	29,771	27,607
Net interest margin	3.27 %	3.20 %	3.11 %	3.16 %	3.11 %	3.20 %	3.20 %
Return on average assets⁽²⁾	0.69 %	0.75 %	0.49 %	0.32 %	0.58 %	0.65 %	0.52 %
Return on average equity⁽²⁾	9.60 %	10.69 %	7.01 %	4.70 %	8.68 %	9.16 %	7.77 %
Efficiency ratio⁽³⁾	76.90 %	75.21 %	81.04 %	89.83 %	80.35 %	77.67 %	80.66 %

	As of
	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30
($ in thousands)	2024	2024	2024	2023	2023
Balance Sheet:
Total assets	$ 1,071,480	$ 1,058,395	$ 1,027,616	$ 974,157	$ 991,721
Total loans receivable	739,219	739,433	725,234	705,672	706,596
Total deposits	951,948	899,799	881,309	858,597	861,229
Total transaction deposits⁽⁴⁾ to total deposits	38.82 %	39.18 %	39.86 %	41.31 %	43.55 %
Loans to deposits	77.65 %	82.18 %	82.29 %	82.19 %	82.05 %
Bank Capital Ratios:
Total risk-based capital ratio	13.56 %	13.34 %	13.46 %	13.86 %	13.54 %
Tier 1 risk-based capital ratio	12.51 %	12.28 %	12.37 %	12.75 %	12.43 %
Tier 1 leverage ratio	9.87 %	10.01 %	10.16 %	10.32 %	10.11 %
Common equity tier 1 capital ratio	12.51 %	12.28 %	12.37 %	12.75 %	12.43 %
Asset Quality Ratios:
Nonperforming assets as a percentage of total assets	0.09 %	0.03 %	0.03 %	0.03 %	0.05 %
Allowance for credit losses as a percentage of total loans receivable	1.13 %	1.15 %	1.17 %	1.19 %	1.19 %
Net charge-offs as a percentage of average total loans receivable	0.03 %	0.05 %	0.06 %	0.00 %	0.01 %

Footnotes to table located at the end of this release.

CONDENSED CONSOLIDATED INCOME STATEMENTS – Unaudited

	Three Months Ended					Nine Months Ended
	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30	Sep 30
($ in thousands, except per share data)	2024	2024	2024	2023	2023	2024	2023
Interest income
Loans	$ 10,930	$ 10,746	$ 10,085	$ 9,678	$ 9,394	$ 31,761	$ 26,492
Investment securities	1,969	1,875	1,972	1,832	1,596	5,816	4,310
Other interest income	623	419	291	396	536	1,333	1,680
Total interest income	13,522	13,040	12,348	11,906	11,526	38,910	32,482
Interest expense
Deposits	4,833	4,652	4,332	4,076	3,671	13,817	8,470
Other interest expense	585	722	808	558	651	2,115	2,312
Total interest expense	5,418	5,374	5,140	4,634	4,322	15,932	10,782
Net interest income	8,104	7,666	7,208	7,272	7,204	22,978	21,700
Provision for credit losses	(83)	55	207	(118)	(42)	179	487
Net interest income after provision for loan losses	8,187	7,611	7,001	7,390	7,246	22,799	21,213
Noninterest income
Mortgage banking income	805	1,416	1,375	694	1,147	3,596	3,127
Service fees on deposit accounts	327	307	336	336	371	970	1,038
Debit card and other service charges, commissions, and fees	528	568	519	544	537	1,615	1,617
Income from bank owned life insurance	105	103	102	99	95	310	429
Loss on sale of securities, net	(162)	-	-	(802)	(268)	(162)	(723)
Gain on disposal of fixed assets	-	-	20	11	-	20	19
Other income	148	166	130	132	132	444	400
Total noninterest income	1,751	2,560	2,482	1,014	2,014	6,793	5,907
Noninterest expense
Compensation and benefits	4,682	4,693	4,878	4,558	4,603	14,253	13,716
Occupancy and equipment	848	837	841	798	882	2,526	2,630
Data processing, technology, and communications	994	1,119	1,039	985	923	3,152	2,796
Professional fees	265	96	110	56	58	471	364
Marketing	66	102	160	104	151	328	584
Other	723	844	826	942	790	2,393	2,177
Total noninterest expense	7,578	7,691	7,854	7,443	7,407	23,123	22,267
Income before provision for income taxes	2,360	2,480	1,629	961	1,853	6,469	4,853
Income tax expense	535	538	391	185	409	1,464	1,025
Net income available to common shareholders	$ 1,825	$ 1,942	$ 1,238	$ 776	$ 1,444	$ 5,005	$ 3,828
Add back securities losses, net of tax	125	-	-	648	209	125	570
Operating earnings (Non-GAAP)	$ 1,950	$ 1,942	$ 1,238	$ 1,424	$ 1,653	$ 5,130	$ 4,398
Weighted average common shares - basic	7,847	7,851	7,837	7,826	7,834	7,845	7,822
Weighted average common shares - diluted	8,221	8,260	8,217	8,164	8,149	8,255	8,161
Basic net income per common share	$ 0.23	$ 0.25	$ 0.16	$ 0.10	$ 0.18	$ 0.64	$ 0.49
Diluted net income per common share	$ 0.22	$ 0.24	$ 0.15	$ 0.10	$ 0.18	$ 0.61	$ 0.47
Operating earnings per common share (Non-GAAP)	$ 0.25	$ 0.25	$ 0.16	$ 0.18	$ 0.21	$ 0.66	$ 0.56
Operating earnings per diluted common share (Non-GAAP)	$ 0.24	$ 0.24	$ 0.15	$ 0.17	$ 0.20	$ 0.63	$ 0.54

Net income for the three months ended September 30, 2024, was $1.8 million, or $0.22 per diluted common share, compared to $1.4 million, or $0.18 per diluted common share, for the three months ended September 30, 2023. On an operating basis, third quarter of 2024 diluted EPS was $0.24, compared to $0.20 diluted EPS for the third quarter of 2023. Both amounts include adding back the impact of securities losses, after tax, of $125 thousand and $209 thousand, respectively. Net income for the nine months ended September 30, 2024, totaled $5.0 million, or $0.61 per diluted common share, compared to $3.8 million, or $0.47 per diluted common share, for the nine months ended September 30, 2023. On an operating basis, diluted EPS was $0.63 per diluted common share or net income of $5.1 million, for the nine months ended September 30, 2024, compared to $0.54 per diluted common share or net income of $4.4 million, for the nine months ended September 30, 2023, both include adding back the impact of securities losses, after tax.

Noninterest income for the three months ended September 30, 2024, was $1.8 million, a decrease of $0.2 million from $2.0 million for the same period in 2023. Noninterest income was primarily driven by mortgage banking income and totaled $0.8 million in the third quarter of 2024 compared to $1.1 million in the third quarter of 2023. This decrease was the result of the decline in the fair value of the mortgage servicing asset (MSR) compared to 2023 when the MSR increased in fair value. In the third quarter of 2024, the Company recognized securities losses totaling $162 thousand compared to $268 thousand in the third quarter of 2023.

For the nine months ended September 30, 2024, noninterest income increased by $0.9 million, driven by improved mortgage banking income of $469 thousand primarily related to more sales volume within the secondary market, and securities losses that were $561 thousand less in 2024 compared to 2023. These increases were partially offset by a decline in bank owned life insurance income of $119 thousand.

Noninterest expense for the three months ended September 30, 2024, was $7.6 million, an increase of $171 thousand from $7.4 million for the same period in 2023. This increase in expense was primarily driven by an increase in higher legal and consulting professional fees of $207 thousand and higher compensation and benefits of $79 thousand due primarily to an increase in employee medical benefits. These increases were partially offset by lower marketing expense of $85 thousand comparing 3Q 2024 to 3Q 2023.

Noninterest expense for the nine months ended September 30, 2024, was $23.1 million and increased $856 thousand over the same period one year ago. This increase in noninterest expense was primarily related to compensation and benefits of $537 thousand attributable to mortgage commissions and an increase in employee medical benefits, and an increase in data processing and technology totaling $356 thousand resulting from higher core processor cost and software expense. These increases were partially offset by lower occupancy and equipment expense and lower marketing cost.

NET INTEREST INCOME AND MARGIN – Unaudited - QTD

	For the Three Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023
	Average	Income/	Yield/	Average	Income/	Yield/	Average	Income/	Yield/
($ in thousands)	Balance	Expense	Rate	Balance	Expense	Rate	Balance	Expense	Rate
Assets
Interest-earning assets:
Federal funds sold and interest-bearing deposits	$ 50,030	$ 588	4.68 %	$ 29,743	$ 379	5.13 %	$ 44,271	$ 499	4.47 %
Investment securities	173,728	1,969	4.51 %	168,826	1,875	4.47 %	159,740	1,596	3.96 %
Nonmarketable equity securities	1,509	35	9.19 %	2,037	40	7.82 %	1,486	37	9.87 %
Loans held for sale	21,629	347	6.38 %	24,965	446	7.19 %	16,058	271	6.70 %
Loans	737,666	10,583	5.71 %	736,944	10,300	5.62 %	697,797	9,123	5.19 %
Total interest-earning assets	984,562	13,522	5.46 %	962,515	13,040	5.45 %	919,352	11,526	4.97 %
Allowance for credit losses	(8,491)			(8,508)			(8,278)
Noninterest-earning assets	78,402			79,658			77,741
Total assets	$ 1,054,473			$ 1,033,665			$ 988,815

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
NOW accounts	$ 138,726	$ 236	0.68 %	$ 140,822	$ 247	0.70 %	$ 146,469	$ 257	0.70 %
Savings & money market	384,155	2,941	3.05 %	366,431	2,712	2.98 %	322,635	2,123	2.61 %
Time deposits	175,921	1,656	3.74 %	179,539	1,693	3.79 %	157,991	1,291	3.24 %
Total interest-bearing deposits	698,802	4,833	2.75 %	686,792	4,652	2.72 %	627,095	3,671	2.32 %
FHLB advances and other borrowings	15,979	226	5.63 %	26,917	356	5.32 %	22,105	286	5.12 %
Subordinated debentures	25,743	359	5.55 %	25,737	366	5.72 %	25,710	365	5.64 %
Total interest-bearing liabilities	740,524	5,418	2.91 %	739,446	5,374	2.92 %	674,910	4,322	2.54 %
Noninterest bearing deposits	224,121			207,573			233,425
Other liabilities	13,807			13,972			13,915
Shareholders' equity	76,021			72,674			66,565
Total liabilities and shareholders' equity	$ 1,054,473			$ 1,033,665			$ 988,815

Net interest income (tax equivalent) / interest rate spread		$ 8,104	2.55 %		$ 7,666	2.53 %		$ 7,204	2.43 %
Net Interest Margin			3.27 %			3.20 %			3.11 %

Cost of funds, including noninterest-bearing deposits			2.23 %			2.28 %			1.91 %

Net interest income for the three months ended September 30, 2024, was $8.1 million compared to $7.2 million for the three months ended September 30, 2023. This increase was the result of a larger increase in interest income of $2.0 million than the increase in interest expense of $1.1 million. This resulted in an improved net interest margin of 16 basis points to 3.27% from 3.11% one year ago. All categories of interest-earning assets reflected higher yields, except nonmarketable equity securities and loans held-for-sale. All categories of interest-bearing liabilities reflected higher yields, except interest bearing transaction accounts and subordinated debentures. Interest expense on FHLB and other borrowings declined compared to the prior year, reflecting lower average balance of FHLB advances in third quarter of 2024 compared to the third quarter of 2023. There were no outstanding FHLB advances at September 30, 2024. In addition, the total cost of funds, including noninterest-bearing deposits, increased to 2.23% in the third quarter of 2024, compared to 1.91% in the third quarter of 2023.

NET INTEREST INCOME AND MARGIN – Unaudited - YTD

	For the Nine Months Ended
	September 30, 2024			September 30, 2023
	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	$ 36,339	$ 1,233	4.53 %	$ 48,298	$ 1,599	4.43 %
Investment securities	170,643	5,816	4.55 %	160,991	4,310	3.58 %
Nonmarketable equity securities	1,897	100	7.02 %	1,893	81	5.75 %
Loans held for sale	20,563	1,047	6.80 %	14,223	721	6.78 %
Loans	728,337	30,714	5.63 %	681,508	25,771	5.06 %
Total interest-earning assets	957,779	38,910	5.43 %	906,913	32,482	4.79 %
Allowance for loan losses	(8,464)			(8,064)
Noninterest-earning assets	79,272			78,062
Total assets	$ 1,028,587			$ 976,911

Liabilities and Shareholders' Equity
Interest-bearing liabilities
NOW accounts	$ 140,904	$ 774	0.73 %	$ 142,011	$ 495	0.47 %
Savings & money market	362,942	8,097	2.98 %	313,050	5,400	2.31 %
Time deposits	176,586	4,946	3.74 %	135,993	2,575	2.53 %
Total interest-bearing deposits	680,432	13,817	2.71 %	591,054	8,470	1.69 %
FHLB advances and other borrowings	24,322	1,019	5.59 %	39,167	1,248	4.26 %
Subordinated debentures	25,735	1,096	5.69 %	25,703	1,064	5.53 %
Total interest-bearing liabilities	730,489	15,932	2.91 %	655,924	10,782	2.20 %
Noninterest bearing deposits	211,620			241,588
Other liabilities	13,639			13,745
Shareholders' equity	72,839			65,654
Total liabilities and shareholders' equity	$ 1,028,587			$ 976,911

Net interest income (tax equivalent) / interest rate spread		$ 22,978	2.52 %		$ 21,700	2.59 %
Net Interest Margin			3.20 %			3.20 %

Cost of funds,including noninterest bearing deposits			2.26 %			1.61 %

Net interest income for the nine months ended September 30, 2024, totaled $23.0 million compared to $21.7 million for the nine months ended September 30, 2023, an increase of $1.3 million. The net interest margin was 3.20% for both of the nine months ended September 30, 2024 and September 30, 2023. All of the yields on interest-earning assets increased and totaled 5.43% from 4.79% in the same period one year ago. For interest-bearing liabilities, the rate paid totaled 2.91% compared to 2.20% in the same period one year ago, reflecting an increase in yield in all categories. The total cost of funds, including noninterest-bearing deposits, was 2.26% compared to 1.61% in 2023.

CONDENSED CONSOLIDATED BALANCE SHEETS – Unaudited

	As of
	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30
($ in thousands)	2024	2024	2024	2023	2023
Assets
Cash and cash equivalents:
Cash and due from banks	$ 4,730	$ 5,669	$ 5,482	$ 4,354	$ 3,158
Interest-bearing deposits with banks	61,934	41,391	36,173	17,590	32,835
Total cash and cash equivalents	66,664	47,060	41,655	21,944	35,993
Investment securities:
Investment securities available for sale	177,641	173,298	171,075	171,400	162,573
Other investments	883	2,788	2,548	1,078	2,025
Total investment securities	178,524	176,087	173,623	172,478	164,598
Mortgage loans held for sale	19,929	25,776	18,307	7,156	17,506
Loans receivable:
Loans	739,219	739,433	725,234	705,672	706,596
Less allowance for credit losses	(8,317)	(8,498)	(8,497)	(8,393)	(8,430)
Loans receivable, net	730,902	730,935	716,737	697,279	698,166
Property and equipment, net	21,861	22,040	22,185	22,298	22,505
Mortgage servicing rights	12,690	12,680	12,226	11,638	11,394
Bank owned life insurance	18,501	18,396	18,293	18,191	18,092
Deferred income taxes	6,292	7,612	7,990	7,775	9,184
Other assets	16,117	17,809	16,600	15,398	14,283
Total assets	1,071,480	1,058,395	1,027,616	974,157	991,721
Liabilities
Deposits	$ 951,948	$ 899,799	$ 881,309	$ 858,597	$ 861,229
Federal Home Loan Bank advances (FHLB)	-	40,000	35,000	5,000	25,000
Federal funds and repurchase agreements	-	408	-	307	81
Subordinated debentures	15,436	15,428	15,421	15,413	15,405
Junior subordinated debentures	10,310	10,310	10,310	10,310	10,310
Reserve for unfunded commitments	410	364	398	407	488
Other liabilities	12,866	17,590	13,070	12,727	13,186
Total liabilities	990,970	983,899	955,508	902,761	925,699
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	88	88	88	88	88
Treasury stock, at cost	(5,285)	(5,216)	(4,965)	(4,821)	(4,750)
Nonvested restricted stock	(2,444)	(2,463)	(2,900)	(2,518)	(2,387)
Additional paid-in capital	55,763	55,645	56,134	55,471	55,068
Retained earnings	38,753	36,928	34,986	33,748	32,972
Accumulated other comprehensive (loss) income	(6,366)	(10,487)	(11,236)	(10,573)	(14,970)
Total shareholders' equity	80,510	74,496	72,108	71,396	66,022
Total liabilities and shareholders' equity	$ 1,071,480	$ 1,058,395	$ 1,027,616	$ 974,157	$ 991,721

First Reliance cash and cash equivalents totaled $66.7 million at September 30, 2024, compared to $47.1 million at June 30, 2024. Cash with the Federal Reserve Bank totaled $61.6 million compared to $41.3 million at June 30, 2024.

First Reliance does not have any Held-to-Maturity (HTM) securities for any reported period. All debt securities were classified as Available-For-Sale (AFS) securities with balances of $177.6 million and $173.3 million, at September 30, 2024 and June 30, 2024, respectively. The unrealized loss recorded on AFS securities totaled $8.4 million as of September 30, 2024, compared to $13.9 million at June 30, 2024, a decline during the third quarter of 2024 of $5.5 million (before taxes).

As of September 30, 2024, deposits increased by $52.1 million, or 23.2% annualized. The deposit growth was in money market accounts and interest bearing DDA and NOW accounts (see table on page 10 for detail).

The Company had no outstanding borrowings with the FHLB of Atlanta at September 30, 2024, compared to $40.0 million in outstanding borrowings with the FHLB of Atlanta at June 30, 2024. The Company had credit availability in excess of $306.8 million with the FHLB of Atlanta, subject to collateral requirements.

First Reliance also has access to approximately $30.5 million through the Federal Reserve Bank discount window with posted collateral. There are currently no borrowings against the Federal Reserve Bank discount window.

COMMON STOCK SUMMARY - Unaudited

			As of
	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30
(shares in thousands)	2024	2024	2024	2023	2023
Voting common shares outstanding	8,820	8,819	8,785	8,772	8,754
Treasury shares outstanding	(751)	(743)	(649)	(633)	(623)
Total common shares outstanding	8,069	8,076	8,136	8,139	8,131

Book value per common share	$ 9.98	$ 9.22	$ 8.86	$ 8.77	$ 8.12
Tangible book value per common share⁽⁵⁾	$ 9.89	$ 9.13	$ 8.77	$ 8.68	$ 8.02

Stock price:
High	$ 10.59	$ 8.30	$ 8.65	$ 9.00	$ 7.40
Low	$ 7.60	$ 7.60	$ 7.70	$ 6.91	$ 6.30
Period end	$ 10.14	$ 7.90	$ 8.15	$ 8.57	$ 7.20

ASSET QUALITY MEASURES – Unaudited

	As of
	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30
($ in thousands)	2024	2024	2024	2023	2023
Nonperforming Assets
Commercial
Owner occupied RE	$ 46	$ 49	$ -	$ -	$ -
Non-owner occupied RE	701	-	-	86	86
Construction	-	62	-	-	-
Commercial business	57	12	12	99	164
Consumer
Real estate	44	46	48	-	-
Home equity	-	-	-	-	145
Construction	-	-	-	-	-
Other	61	66	52	8	14
Nonaccruing loan modifications	-	-	56	56	65
Total nonaccrual loans	$ 909	$ 235	$ 168	$ 249	$ 474
Other assets repossessed	15	75	114	47	45
Total nonperforming assets	$ 924	$ 310	$ 282	$ 296	$ 519
Nonperforming assets as a percentage of:
Total assets	0.09 %	0.03 %	0.03 %	0.03 %	0.05 %
Total loans receivable	0.12 %	0.04 %	0.04 %	0.04 %	0.07 %
Accruing loan modifications	$ 428	$ 460	$ 970	$ 947	$ 1,027

	Three Months Ended
	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30
($ in thousands)	2024	2024	2024	2023	2023
Allowance for Credit Losses
Balance, beginning of period	$ 8,498	$ 8,497	$ 8,393	$ 8,430	$ 8,229
CECL adoption	-	-	-	-	-
Loans charged-off	69	102	195	108	41
Recoveries of loans previously charged-off	17	14	82	109	31
Net charge-offs (recoveries)	52	88	113	(1)	10
Provision for credit losses (release)	(129)	89	217	(38)	211
Balance, end of period	$ 8,317	$ 8,498	$ 8,497	$ 8,393	$ 8,430
Allowance for credit losses to gross loans receivable	1.13 %	1.15 %	1.17 %	1.19 %	1.19 %
Allowance for credit losses to nonaccrual loans	914.96 %	3616.17 %	5057.74 %	3370.68 %	1778.48 %

Asset quality remained steady during the third quarter of 2024, with nonperforming assets increasing to $0.9 million, which represents 0.09% of total assets. The increase of $600 thousand was primarily related to one loan and no loss is expected given the collateral value and guarantees. The allowance for credit losses as a percentage of total loans receivable decreased to 1.13% at September 30, 2024, compared to 1.15% at June 30, 2024, and 1.19% at December 31, 2023. The allowance for credit losses declined by a provision for credit losses (release) of ($129) thousand along with net charge-offs of $52 thousand, during the third quarter of 2024. In the third quarter of 2023, the Company experienced net charge-offs of $10 thousand and increased the ACL with a provision for credit losses by $211 thousand.

Footnotes to table located at the end of this release.

LOAN COMPOSITION – Unaudited

	As of
	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30
($ in thousands)	2024	2024	2024	2023	2023
Commercial real estate	$ 456,775	$ 450,936	$ 434,743	$ 433,687	$ 430,825
Consumer real estate	193,362	188,759	184,969	177,102	172,702
Commercial and industrial	66,561	76,149	77,023	63,946	67,740
Consumer and other	22,521	23,589	28,499	30,937	35,329
Total loans, net of deferred fees	739,219	739,433	725,234	705,672	706,596
Less allowance for credit losses	8,317	8,498	8,497	8,393	8,430
Total loans, net	$ 730,902	$ 730,935	$ 716,737	$ 697,279	$ 698,166

DEPOSIT COMPOSITION – Unaudited

	As of
	Sep 30	Jun 30	Mar 31	Dec 31	Sep 30
($ in thousands)	2024	2024	2024	2023	2023
Noninterest-bearing	$ 219,279	$ 220,330	$ 212,083	$ 210,604	$ 231,672
Interest-bearing:
DDA and NOW accounts	150,312	132,186	139,229	144,039	143,393
Money market accounts	362,834	325,769	307,696	289,158	281,325
Savings	41,184	42,479	44,191	45,558	47,422
Time, less than $250,000	133,940	128,869	125,248	121,035	117,989
Time, $250,000 and over	44,399	50,166	52,862	48,203	39,428
Total deposits	$ 951,948	$ 899,799	$ 881,309	$ 858,597	$ 861,229

Footnotes to tables:
(1)	Total revenue is the sum of net interest income and noninterest income.
(2)	Annualized for the respective period.
(3)	Noninterest expense divided by the sum of net interest income and noninterest income.
(4)	Includes noninterest-bearing and interest-bearing DDA and 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 $1.071 billion. The Company employs approximately 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 two companies throughout South Carolina to receive the Best Places to Work in South Carolina award all 17 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. The Company offers a full range of personalized community banking products and services for individuals, small businesses, and corporations. The Company also offers a full suite of digital banking services, Treasury Services, a Customer Service Guaranty, a Mortgage Service Guaranty, and First Reliance Wealth Strategies.

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 credit losses; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for credit 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.