First Reliance Reports First Quarter 2020 Financial Results

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May 05, 2020, 06:01 ET

FLORENCE, S.C., May 5, 2020 /PRNewswire/ -- First Reliance Bancshares, Inc. (OTC:FSRL), holding company for First Reliance Bank ("Company"), today announced its financial results for the three-month period ended March 31, 2020.

2020 First Quarter Highlights

Net income improved to $858 thousand, a 29.4% increase over Q1 2019;
Diluted EPS improved to $0.11 per share, a 37.5% increase over Q1 2019;
Absent a $0.33 per share charge related to the quarterly mortgage servicing rights valuation adjustment, Net Income after Adjustments (a non-GAAP financial measure) would be $3.5 million, or $0.44 per diluted share;
Net interest margin increased 14 basis points to 4.09% for Q1 2020, compared to 3.95% for Q1 2019;
Tangible book value increased 9.81% over Q1 2019 to $6.83;
Total assets increased 9.35% to $661 million at Q1 2020, compared to $604 million at Q1 2019;
Total loans increased 7.03% to $481 million at Q1 2020, compared to $449 million at Q1 2019;
Transaction deposits to total deposits increased to 49.1% at Q1 2020, compared to 39.5% at Q1 2019;
Tier 1 Leverage Capital "Bank level" increased to 10.29% at Q1 2020, compared to 9.48% at Q1 2019;
Asset quality at the end of Q1 2020 continued to be strong, with nonperforming assets to average assets at 0.26%;
Frank Bullard joins the First Reliance team as Charleston Market President; and
Record mortgage volume levels of $74.2 million for Q1 2020.

Rick Saunders, President and CEO of First Reliance said, "our Company began fiscal year 2020 positioned to continue the successful financial performance of 2019, reporting very good loan growth, increasing capital levels, higher liquidity levels, and record-setting mortgage volumes during the first quarter of 2020. When COVID-19 thrust us all into a worldwide pandemic, First Reliance moved to protect its community's health and economic interests. In order to help ensure the safety of our associates, the welfare of our customers, and the strength of our Company, First Reliance invoked its Crisis Management Team and Pandemic Response Plan in early March to swiftly address the unique challenges presented to the Bank and its management, employees, customers, and communities. Our team quickly implemented associate communications and rolled out customer relief programs for Skip-a-Payment, loan payment deferrals, and forbearance options on loans and mortgages. We closed our lobbies, except by appointment, in order to keep our customers and associates safe. Additionally, we aided customers in using our robust digital banking services, and we increased the amount that could be deposited through mobile banking. We are a participating lender in the Small Business Administration ("SBA") Paycheck Protection Program ("PPP"), and we will continue to work with our customers who are participating in the PPP to support their employees and business operations. As additional funds are dedicated to the PPP by Congress, we intend to work with those customers who would like to participate, but have not yet, in the PPP. We have developed and implemented an efficient process to allow our customers to apply, get approved from the SBA and get the PPP loans closed quickly, so the proceeds are in our customers' accounts as soon as possible. To date, we have accepted 798 PPP loan applications totaling $58 million. We have also responded to the needs of many of our customers by granting short-term loan modifications to borrowers who are, or may be, unable to meet their contractual payment obligations because of the effect of COVID-19. I am proud of our First Reliance team's accomplishments in the first quarter and its deep dedication to the communities it serves as evidenced during the current crisis. Looking forward, when our customers can reopen for business and governmental orders limiting activities are lifted, our Company is positioned to continue our first quarter's strong performance."

Financial Summary

	Quarter Ended
	March 31	December 31	September 30	June 30	March 31
	2020	2019	2019	2019	2019
Earnings ($ in thousands, except per share data):
Net income available to common shareholders	$ 858	599	1,507	1,320	663
Earnings per common share, diluted	0.11	0.07	0.19	0.16	0.08
Total revenue⁽¹⁾	7,542	7,502	8,631	8,328	7,139
Net interest margin	4.09%	3.96%	3.86%	4.05%	3.95%
Return on average assets⁽²⁾	0.54%	0.37%	0.94%	0.86%	0.45%
Return on average equity⁽²⁾	5.89%	4.20%	10.85%	9.79%	5.04%
Efficiency ratio⁽³⁾	80.25%	83.11%	72.94%	79.02%	86.32%
Balance Sheet($ in thousands):
Total assets	$ 660,886	661,612	657,533	634,749	604,383
Total loans⁽⁴⁾	480,598	480,185	473,451	475,527	449,028
Total deposits	506,225	505,088	508,885	527,763	512,382
Total transaction deposits ⁽⁵⁾to total deposits	49.06%	44.84%	40.06%	38.19%	39.50%
Loans to deposits	94.94%	95.07%	93.04%	90.10%	87.64%
Bank Capital Ratios:
Total risk-based capital ratio	12.45%	11.54%	11.13%	11.18%	11.64%
Tier 1 risk-based capital ratio	11.75%	10.88%	10.53%	10.56%	10.99%
Tier 1 Leverage ratio	10.29%	9.23%	9.11%	9.19%	9.48%
Common equity tier 1 ratio⁽⁶⁾	11.75%	10.88%	10.53%	10.56%	10.99%
Asset Quality Ratios:
Nonperforming assets as a percentage of total assets	0.26%	0.28%	0.29%	0.40%	0.37%
Allowance for loan losses as a percentage of loans⁽⁴⁾	0.81%	0.74%	0.69%	0.68%	0.72%
Allowance for loan losses as a percentage of nonaccrual loans	291.72%	240.99%	187.59%	134.52%	162.77%

Footnotes to table located on page 9.

INCOME STATEMENTS – Unaudited

	Quarter Ended					Twelve Months Ended
	Mar 31	Dec 31	Sept 30	June 30	Mar 31	December 31
(in thousands, except per share data)	2020	2019	2019	2019	2019	2019	2018
Interest income
Loans	$ 6,568	6,760	6,688	6,603	6,139	26,190	22,011
Investment securities	323	327	327	347	334	1,335	1,187
Other interest income	90	91	68	82	88	329	427
Total interest income	6,981	7,178	7,083	7,032	6,561	27,854	23,625
Interest expense
Deposits	828	1,043	1,259	1,226	1,106	4,635	2,726
Other interest expense	336	397	337	276	313	1,322	964
Total interest expense	1,164	1,440	1,596	1,502	1,419	5,957	3,690
Net interest income	5,817	5,738	5,487	5,530	5,142	21,897	19,935
Provision for loan losses	375	480	208	150	146	984	511
Net interest income after provision for loan losses	5,442	5,258	5,279	5,380	4,996	20,913	19,424
Noninterest income
Mortgage banking income	4,274	1,798	2,301	1,800	1,002	6,901	4,814
Mortgage servicing rights valuation adjustment	(3,512)	(1,127)	(180)	-	-	(1,307)	325
Service fees on deposit accounts	463	447	438	399	398	1,682	1,597
Debit Card and other service charges, commissions, and fees:	315	408	382	387	371	1,548	1,510
Income from bank owned life insurance	103	96	96	97	95	386	391
Gain on sale of securities, net	(9)	1	1	3	34	37	800
Other income	91	141	106	112	97	456	487
Total noninterest income	1,725	1,764	3,144	2,798	1,997	9,703	9,924
Noninterest expense
Compensation and benefits	3,583	3,718	3,819	4,074	3,758	15,369	15,373
Occupancy	612	603	602	582	589	2,377	2,227
Furniture and equipment related expenses	537	435	440	475	471	1,822	2,021
Electronic data processing	194	190	252	267	217	926	83
Professional fees	267	377	438	284	242	1,340	730
Marketing	77	84	71	77	73	304	577
Other	783	828	673	822	776	3,099	4,160
Merger related expenses	-	-	-	-	37	37	1,005
Total noninterest expenses	6,053	6,235	6,295	6,581	6,163	25,274	26,176
Income before provision for income taxes	1,114	787	2,128	1,597	830	5,342	3,172
Income tax expense	256	188	621	277	167	1,253	742
Net income available to common shareholders	$ 858	599	1,507	1,320	663	4,089	2,430

Weighted Average Shares - Basic	7,901	7,903	7,946	7,959	7,950	7,938	7,739
Weighted Average Shares - Diluted	8,014	8,104	8,077	8,071	8,058	8,081	7,868
Basic income per common share	$ 0.11	$ 0.08	$ 0.19	$ 0.17	$ 0.08	$ 0.52	$ 0.31
Diluted income per common share	$ 0.11	$ 0.07	$ 0.19	$ 0.16	$ 0.08	$ 0.51	$ 0.31

	Quarter Ended					Twelve Months Ended
	Mar 31	Dec 31	Sept 30	June 30	Mar 31	December 31
(in thousands, except per share data)	2020	2019	2019	2019	2019	2019	2018
Non-GAAP financial measurements (unaudited)
Net income available to common shareholders
before adjustments	$ 858	599	1,507	1,320	663	4,089	2,430
MSR Valuation Adj.	3,512	1,127	180	-	-	-	-
Income tax expense - associate with MSR adj.	843	270	52	-	-	-	-
Total adjustments	2,669	857	128	-	-	-	-

Net income after adjustments (non-GAAP)	$ 3,527	1,456	1,635	1,320	663	4,089	2,430

Adjusted Income per common share:
Basic income per common share (non-GAAP)	$ 0.45	$ 0.18	$ 0.21	$ 0.17	$ 0.08	$ 0.52	$ 0.31
Diluted income per common share (non-GAAP)	$ 0.44	$ 0.18	$ 0.20	$ 0.16	$ 0.08	$ 0.51	$ 0.31

Net income for the first quarter of 2020 was $858 thousand, or $0.11 per diluted share, compared to $663 thousand, or $0.08 per diluted share, for the first quarter of 2019. In the first quarter of 2020, the Company took a $0.33 per share charge for the quarterly mortgage servicing rights ("MSR") valuation adjustment totaling $3.5 million. Absent the MSR adjustment, net income after adjustments (a non-GAAP financial measure) would be $3.5 million, or $0.44 per diluted share for the three-months ending March 31, 2020. Despite the MSR adjustment, total revenues for the three-months ended March 31, 2020 were $7.5 million, up 5.63% from $7.1 million for the same period one-year ago.

Noninterest income for the three-months ending March 31, 2020 was $1.7 million, a $200 thousand decline from $1.9 million for the same period one-year ago. Noninterest income is largely driven by the Company's mortgage banking division. Net income for the three-month period ending March 31, 2020 was impacted by a quarterly MSR valuation adjustment totaling $3.5 million. The MSR valuation is negatively impacted by reductions in the United States Treasury 10-year index, which reached record lows during the first quarter 2020. While the MSR valuation was impacted by low interest rates, the favorable interest rate environment provided the Company with record level mortgage volumes which is expected to carry forward and may offset the negative MSR valuation adjustment. In the first quarter of 2020, mortgage production volumes reached $74.2 million as compared with $50.5 million for the same period one-year ago. The mortgage pipeline remains robust and the Company is projecting volumes for Q2 2020 to more than double that of first quarter 2020. "As mortgage rates reached all-time record lows, we saw unprecedented mortgage volume throughout our markets in the first 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 decreased by $110 thousand or 3%, for the first quarter of 2020 compared to the same period one-year ago. The decrease in noninterest expense is primarily attributable to planned expense reduction efforts with declines in compensation and benefits and professional fees. Expense control continues to be in the forefront of the Company's strategic efforts and measures are being implemented where feasible; however, additional costs of the initial setup of working remote and deep cleaning of offices may offset all or a portion of these expense control measures. "On the First Reliance front, approximately 32% of our associates are working from home in order to limit the number of associates in our buildings for social distancing, while helping to ensure appropriate backup should anyone be exposed to the Covid-19 virus. Our associates took it upon themselves to send positive messages to our customers through video on our social media. We are showing our customers how much we truly care about them," said Rick Saunders, CEO and President.

NET INTEREST INCOME AND MARGIN – Unaudited

	For the 3 Months Ended
	March 31, 2020			December 31, 2019			March 31, 2019
	Average	Income/	Yield/	Average	Income/	Yield/	Average	Income/	Yield/
(dollars in thousands)	Balance	Expense	Rate	Balance	Expense	Rate	Balance	Expense	Rate
Interest-earning assets
Federal funds sold and interest-bearing deposits	$19,487	$57	1.17%	$19,876	$71	1.42%	$16,088	$72	1.79%
Investment securities	45,175	323	2.86%	46,413	327	2.82%	47,779	334	2.80%
Nonmarketable equity securities	2,119	33	6.15%	2,179	20	3.75%	1,078	16	5.87%
Loans⁽⁸⁾	501,507	6,568	5.24%	511,005	6,760	5.29%	455,649	6,139	5.39%
Total interest-earning assets	568,288	6,981	4.91%	579,473	7,178	4.95%	520,594	6,561	5.04%
Allowance for loan losses	(3,584)			(3,216)			(3,178)
Noninterest-earning assets	73,621			73,050			64,665
Total assets	$638,325			$649,307			$582,081
Interest-bearing liabilities
NOW accounts	$95,462	$11	0.05%	$86,535	$11	0.05%	$ 80,563	$9	0.04%
Savings & money market	119,672	116	0.39%	121,712	132	0.43%	116,229	130	0.45%
Time deposits	148,721	701	1.89%	170,875	900	2.11%	184,504	967	2.10%
Total interest-bearing deposits	363,855	828	0.91%	379,122	1,043	1.10%	381,296	1,106	1.15%
FHLB advances and other borrowings	50,935	252	1.98%	56,290	312	2.22%	23,422	230	3.91%
Subordinated debentures	15,309	84	2.20%	15,310	85	2.22%	15,310	83	2.18%
Total interest-bearing liabilities	430,099	1,164	1.08%	450,722	1,440	1.28%	420,028	1,419	1.35%
Noninterest bearing deposits	140,338			131,282			105,832
Other Liabilities	9,603			10,235			3,641
Shareholders' equity	58,285			57,068			52,580
Total liabilities and shareholders' equity	$638,325			$649,307			$582,081

Net interest income (tax equivalent) / interest rate spread		$5,817	3.83%		$5,738	3.67%		$5,142	3.69%
Net Interest Margin			4.09%			3.96%			3.95%

Footnotes to table located on page 9.

Net interest income was $5.8 million for the first quarter of 2020, a 13.1% increase from the first quarter of 2019. The increase in net interest income as compared to the first quarter of 2019 resulted primarily from the growth in our loan portfolio, a significant increase in noninterest bearing deposits, and lower cost deposit balances. Despite experiencing a 225 basis drop in interest rates by the Federal Reserve since August 2019, our net interest margin improved to 4.09% for the first quarter of 2020, a 14 basis point increase from 3.95% for the first quarter of 2019. The improvement to date is attributable primarily to a reduction in our cost of funds and $35 million of growth in noninterest bearing deposits. While a low rate environment for an extended period of time will exert margin pressure, the Company has actively positioned the balance sheet to help protect 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 49.06% for the three-months ended March 31, 2020 compared to 39.50% for the same period one-year ago. The Company experienced 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 5.6%.

Balance Sheets – Unaudited

	Ending Balance
	March 31	December 31	September 30	June 30	March 31
($ in thousands, except per share data)	2020	2019	2019	2019	2019
Assets
Cash and cash equivalents:
Cash and due from banks	$ 16,869	12,945	5,342	5,084	5,029
Interest-bearing deposits with banks	18,922	27,649	21,786	11,926	21,651
Total cash and cash equivalents	35,791	40,594	27,128	17,010	26,680
Investment securities:
Investment securities available for sale	34,842	35,715	36,186	37,464	38,976
Investment securities held to maturity	9,767	10,417	10,801	11,423	11,728
Other investments	2,989	2,423	2,423	948	948
Total investment securities	47,598	48,555	49,410	49,835	51,652
Mortgage loans held for sale	34,042	27,901	41,959	27,226	12,180
Loans ⁽⁴⁾	480,598	480,185	473,451	475,527	449,028
Less allowance for loan losses	(3,877)	(3,530)	(3,223)	(2,960)	(3,001)
Loans, net	476,721	476,655	470,228	472,567	446,027
Property and equipment, net	20,528	19,967	20,016	20,133	26,491
Mortgage servicing rights	8,421	11,023	11,247	10,308	9,575
Bank owned life insurance	17,796	17,692	17,596	17,499	17,402
Deferred income taxes	6,156	6,581	6,728	7,293	7,699
Other assets	13,833	12,644	13,221	12,878	6,677
Total assets	$ 660,886	661,612	657,533	634,749	604,383
Liabilities
Deposits	$ 506,225	505,088	508,885	527,763	512,382
Federal Home Loan Bank advances	55,000	43,300	43,300	6,600	6,600
Federal funds and repurchase agreements	16,530	31,137	23,122	18,162	7,349
Subordinated debentures	4,835	4,881	4,838	4,900	4,853
Junior subordinated debentures	10,310	10,310	10,310	10,310	10,310
Other liabilities	9,971	9,811	10,626	11,854	9,709
Total liabilities	602,871	604,527	601,081	579,589	551,203
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	80	80	80	80
Non-Voting Common Stock, $.01 par value; 430,000 shares authorized	4	4	4	4	4
Treasury stock, at cost	(1,402)	(1,283)	(1,227)	(864)	(743)
Nonvested restricted stock	(1,757)	(1,254)	(1,010)	(1,427)	(1,533)
Additional paid-in capital	51,652	51,137	50,777	51,137	51,080
Accumulated other comprehensive income (loss)	606	308	334	243	(374)
Retained earnings	8,830	8,092	7,493	5,986	4,665
Total shareholders' equity	58,015	57,085	56,452	55,160	53,180
Total liabilities and shareholders' equity	$ 660,886	661,612	657,533	634,749	604,383
Common Stock
Tangible book value per common share ⁽⁷⁾	$ 6.83	6.76	6.71	6.46	6.22
Stock price:
High	7.82	7.90	8.00	7.29	7.25
Low	5.50	7.60	7.02	7.00	5.28
Period end	5.50	7.82	7.90	7.15	7.20
Common shares outstanding	8,103	8,034	7,990	8,039	8,033
Non-voting common shares outstanding	410	410	410	410	410
Treasury shares outstanding	187	184	177	116	110

Total assets increased 9.35% to $661 million at March 31, 2020, compared to $604 million at March 31, 2019. Total loans grew by $32 million, 7.03%, to $481 million at March 31, 2020, compared to $449 million for the same period one-year ago due to primarily organic loan growth in our commercial, 1-4 family mortgage and consumer loan portfolios.

Rick Saunders, President and CEO of First Reliance said, "We recently announced that Frank Bullard joined First Reliance Bank as President of our Charleston market. Mr. Bullard is responsible for the strategic expansion of First Reliance Bank's footprint in the Charleston market as well as oversee sales management and community development throughout that footprint. Mr. Bullard has over 37 years of experience in the banking industry. In addition, Mark Brady joined the First Reliance team as President of the Charlotte market. Mr. Brady will lead the strategic expansion of First Reliance Bank's footprint in the Charlotte area as well as oversee sales management and community development throughout that footprint. Susan Lambertson joined First Reliance Bank as Manager of our Winston-Salem branch. We welcome our new associates and look forward to continued growth opportunities in Charleston, Winston-Salem and Charlotte areas.

We will be breaking ground for a new Myrtle Beach branch – Grissom Parkway, as plans have been approved to begin building a new modern and hi-tech branch. As our North Carolina presence has grown, we are relocating and expanding the Winston-Salem office into a full service branch site in May, which will allow us to position ourselves 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. We will be closing our downtown Charleston branch in May and relocating our associates to our thriving Mt. Pleasant branch on Shelmore Boulevard. We consulted with a majority of our downtown Charleston customers prior to this decision to determine the impacts to their business needs. Overwhelmingly they indicate our company service quality, along with our digital services and Mt. Pleasant location, would meet their banking needs. This change benefits our customers, the Charleston community and our shareholders."

ASSET QUALITY MEASURES - Unaudited

	Ending Balance
	March 31	December 31	September 30	June 30	March 31
(dollars in thousands)	2020	2019	2019	2019	2019
Nonperforming Assets
Commercial
Owner occupied RE	$ 507	518	529	533	98
Non-owner occupied RE	-	-	-	-	106
Construction	-	-	-	-	-
Commercial business	12	39	112	693	796
Consumer
Real estate	526	591	597	725	664
Home equity	-	-	183	180	48
Construction	-	-	-	-	-
Other	284	328	312	256	273
Nonaccruing troubled debt restructurings
Total nonaccrual loans	$ 1,329	1,476	1,733	2,387	1,985
Other real estate owned	392	348	164	164	230
Total nonperforming assets	$ 1,721	1,824	1,897	2,551	2,215
Nonperforming assets as a percentage of:
Total assets	0.26%	0.28%	0.29%	0.40%	0.37%
Total loans	0.36%	0.38%	0.40%	0.54%	0.49%
Accruing troubled debt restructurings	$ 293	1,823	1,898	2,552	2,214

	Quarter Ended
	March 31	December 31	September 30	June 30	March 31
(dollars in thousands)	2020	2019	2019	2019	2019
Allowance for Loan Losses
Balance, beginning of period	$ 3,547	3,251	3,211	3,231	3,025
Loans charged-off	167	222	247	221	88
Recoveries of loans previously charged-off	122	48	78	32	156
Net loans charged-off	45	174	169	189	(68)
Provision for loan losses	375	480	209	169	138
Balance, end of period	$ 3,877	3,557	3,251	3,211	3,231
Allowance for loan losses to gross loans	0.81%	0.74%	0.69%	0.68%	0.72%
Allowance for loan losses to nonaccrual loans	291.72%	240.99%	187.59%	134.52%	162.77%
Net charge-offs to average loans QTD (annualized)	0.04%	0.14%	0.13%	0.16%	-0.06%

Our asset quality continued to be strong through March 31, 2020, with nonperforming assets declining by $494 thousand to $1.7 million at March 31, 2020 compared to the same date one-year ago. The ratio of nonperforming assets to total assets declined to 0.26% at March 31, 2020, a decrease of 11 basis points compared to March 31, 2019. OREO and repossessed assets remain nominal. The allowance for loan losses as a percentage of loans improved to 0.81% at March 31, 2020 (adjusted for purchase accounting marks on acquired loans), compared to 0.72% one year earlier due primarily to provisioning associated with the anticipated economic impact of the COVID-19 pandemic. "While we have not seen any direct impact of COVID-19 to our asset quality, we believe it is prudent to reflect this pandemic in our allowance models", said CEO Saunders. Year-to-date provision expense is up 156.9% to $375 thousand compared to the same period one-year ago. Net charge offs remain nominal.

LOAN COMPOSITION – Unaudited

	Quarter Ended
	March 31	December 31	September 30	June 30	March 31
(dollars in thousands)	2020	2019	2019	2019	2019
Commercial
Owner occupied RE	$ 115,711	116,244	109,133	109,329	97,028
Non-owner occupied RE	69,474	59,287	63,304	60,313	57,932
Construction	29,523	33,196	30,123	27,503	28,327
Business	63,522	61,129	57,573	60,783	55,700
Total commercial loans	278,230	269,856	260,133	257,928	238,987
Consumer
Real estate	97,465	99,394	101,742	104,309	100,775
Home equity	21,362	21,987	21,472	21,309	19,597
Construction	5,708	5,062	4,915	4,971	3,620
Other	77,833	83,886	84,502	87,010	86,049
Total consumer loans	202,368	210,329	212,631	217,599	210,041
Total gross loans, net of deferred fees	480,598	480,185	472,764	475,527	449,028
Less-allowance for loan losses	3,877	3,530	3,223	3,184	3,001
Total loans, net	$ 476,721	476,655	469,541	472,343	446,027

DEPOSIT COMPOSITION – Unaudited
	Quarter Ended
	March 31	December 31	September 30	June 30	March 31
(dollars in thousands)	2020	2019	2019	2019	2019
Non-interest bearing	$ 144,359	137,312	123,839	117,862	116,848
Interest bearing:
NOW accounts	104,003	89,169	80,017	83,695	85,550
Money market accounts	94,778	94,742	95,775	91,082	88,522
Savings	26,270	25,730	25,876	26,409	26,184
Time, less than $250,000	104,841	121,818	142,662	164,939	151,917
Time and out-of-market deposits, $250,000 and over	31,974	36,317	40,716	43,776	43,361
Total Deposits	$ 506,225	505,088	508,885	527,763	512,382

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 $661 million. The Company employs more than 148 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 90% 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 14 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 coronavirus 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
[email protected]

SOURCE First Reliance Bancshares, Inc.