First Reliance Announces Strong 1st Quarter Results

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Apr 30, 2015, 06:30 ET

FLORENCE, S.C., April 30, 2015 /PRNewswire/ -- First Reliance Bancshares, Inc. (OTC: FSRL) announced that it had net income of $513,427, for the quarter ended March 31, 2015. This compares to a net income of $346,357, for the quarter ended March 31, 2014. The increase in net income from March 31, 2014 to March 31, 2015 is primarily attributed to an increase in net interest income of $217,673, supported by no-cost/low-cost annual deposit growth of $10.3 million, and an increase in noninterest income of $142,481. The Company's operating results for the quarter were positively impacted by annual asset growth of $8.2 million, annual consumer loan growth of $5.4 million, and annual non performing asset reduction of $3.7 million.

Net interest income increased $217,673, and totaled $3.5 million for the quarter ended March 31, 2015, compared to $3.2 million for the quarter ended March 31, 2014. Interest income increased $79,206 while interest expense was reduced by $138,465. The indirect auto finance business line launched last year is strategically positioned for a slow to moderate growth; primarily focused on high quality loan customers and transacting business only in the markets we currently are serving. This line has reached profitability and is now contributing positively to the bottom line.

Noninterest income increased $142,481, and totaled $1.1 million for the quarter ended March 31, 2015 compared to $1 million for the first quarter of 2014. The increase in noninterest income was primarily attributable to a year over year increase of $128,875 in gain on sale of mortgage loans.

Noninterest expense levels increased $91,949, and totaled $4.0 million for the quarter ended March 31, 2015 compared to $3.9 million for 2014. Contributing to this increase is expense associated with the expansion of our mortgage division, where we've added approximately 20 new associates as part of our strategic plan to diversify our revenue. As this business line grows, we expect noninterest income to be positively impacted.

Total assets increased 2.25% to $376 million as of March 31, 2015, compared to $367.8 million as of December 31, 2014.

Loans increased $1.1 million, excluding loans held for sale, to $256.5 million as of March 31, 2015, from $255.4 million as of December 31, 2014. The Company continues to focus efforts on its strategic initiatives of diversifying revenue streams, expanding its consumer lending platform, increasing its portfolio of 1-4 family mortgage loans, and further expanding its Charleston and Columbia market presence.

Deposits increased by $6.3 million, or 2.21%, to $291.6 million at March 31, 2015, from $285.3 million at December 31, 2014. The increase in deposits was primarily due to the increase in core non-time deposits. No-cost/low-cost deposits increased 4.86%, to $221.8 million as of March 31, 2015, compared to $211.5 million at December 31, 2014.

The Company continues to show improvement in asset quality. The ratio of nonperforming assets to total assets was 1.60% as of March 31, 2015, compared to 4.24% as of March 31, 2014. The allowance for loan losses as a percentage of loans was 1.05% as of March 31, 2015, compared to 1.15% as of March 31, 2014. For the three months ended March 31, 2015, additions to the allowance for loan losses were minimal at $78,827.

"We are pleased that First Reliance Bank is off to a good start in 2015, realizing profits in our first quarter," says Rick Saunders, President and CEO of First Reliance Bank. "The bank continues to be well capitalized and in excess of regulatory requirements, and has strong liquidity," he adds. Saunders noted that during the first quarter of 2015, First Reliance also benefitted from lower cost of funds.

"Additionally, credit quality is stabilizing," says Saunders. "We have a sound credit review process and aggressive risk review methodology. We continue to grow our consumer lending platform and diversify our revenue stream with the expansion of our mortgage line of business and indirect auto finance. The indirect finance business line has reached profitability and we are on target for our mortgage line of business profitability projections."

Quarter Ended
	March 31, 2015 (unaudited)	March 31, 2014 (unaudited)	% Change
Income Statement Data
Net interest income	3,455,873	3,238,202	6.72%
Provision for loan losses	78,827	-	-
Noninterest income	1,148,265	1,005,784	14.17%
Noninterest expense	3,989,578	3,897,629	2.36%
Net income	513,427	346,357	54.68%

Per Share Data
Net Income Per Common Share
Basic	$ 0.03	$ 0.02
Diluted	$ 0.03	$ 0.02

Average Shares Outstanding
Basic	4,739,836	4,569,122
Diluted	4,828,021	4,649,502

Key Ratios
Return on assets	0.65%	0.50%	30.00%
Return on equity	5.54%	4.60%	20.43%
Nonperforming assets to assets	1.60%	4.24%	-62.26%
Reserve to loans	1.05%	1.15%	-8.69%
Reserve to nonperforming loans	46.01%	18.78%	144.99%
Net interest margin	4.42%	4.50%	-1.78%

ABOUT FIRST RELIANCE BANCSHARES, INC.

First Reliance Bancshares, Inc. is the holding company for First Reliance Bank. The Bank was founded in 1999, employs approximately 120 highly-talented associates and serves the Columbia, Lexington, Charleston, Mount Pleasant and Florence markets in South Carolina. First Reliance Bank offers several unique customer programs which include a Hometown Heroes package of benefits to serve those who are serving our communities, Check 'N Save, a community outreach program for the unbanked or under-banked, a Moms First program, and an iMatter program targeted to young people. The Bank also offers a Customer Service Guaranty, a Mortgage Service Guaranty, FREE Coin Machines for customers to use, Mobile Banking, and is open on most traditional bank holidays. Its commitment to making customers' lives better, and the idea that "There's More to Banking Than Money" has earned the Bank a customer satisfaction rating of 95% (2013 results from an outside survey firm.)

The common stock of First Reliance Bancshares, Inc. is traded under the symbol FSRL.OB. Additional information about the Company is available on the Company's web site at www.firstreliance.com.

This press release contains forward-looking statements about branch openings within the meaning of the Securities Litigation Reform Act of 1995. Forward-looking statements give our expectations or forecasts of future events. The preliminary results for the year quarter ended March 31, 2015 presented herein above are the Company's expectations. However, these results are subject to adjustment by management before the audit is completed and may be adjusted based upon the results of the audit. Should management or audit adjustments be necessary, audited results could differ materially from these preliminary results.

Any or all of our forward-looking statements here or in other publications may turn out to be incorrect. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining our actual future results. Consequently, no forward- looking statements can be guaranteed. Our actual results may vary materially, and there are no assurances about the performance of our common stock.

We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future results or otherwise.

Contact:
Jeffrey A. Paolucci, EVP & CFO
(888) 543-5510
[email protected]

FIRST RELIANCE BANCSHARES, INC. AND SUBSIDIARY

Consolidated Balance Sheets

	March 2015	December 2014
Assets	(Unaudited)	(Audited)
Cash and cash equivalents:
Cash and due from banks	$ 4,335,734	$ 4,955,110
Interest-bearing deposits with other banks	26,834,419	17,891,077
Total cash and cash equivalents	31,170,153	22,846,187

Time deposits in other banks	101,511	101,409

Securities available-for-sale	12,556,613	13,045,588
Securities held-to-maturity	29,732,414	31,384,418
Nonmarketable equity securities	1,513,400	1,502,400
Total investment securities	43,802,427	45,932,406

Mortgage loans held for sale	3,509,790	1,970,068

Loans receivable	256,516,028	255,381,014
Less allowance for loan losses	(2,763,488)	(3,002,922)
Loans, net	253,752,540	252,378,092

Premises, furniture and equipment, net	23,245,438	23,395,306
Accrued interest receivable	889,865	1,034,316
Other real estate owned	1,986,203	2,444,253
Cash surrender value life insurance	13,364,598	13,282,565
Other assets	4,201,155	4,371,719
Total assets	$ 376,023,680	$ 367,756,321

Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing transaction accounts	$ 68,083,873	$ 65,445,513
Interest-bearing transaction accounts	64,208,274	57,229,738
Savings	89,485,025	88,822,371
Time deposits $100,000 and over	34,447,273	36,500,148
Other time deposits	35,411,601	37,320,848
Total deposits	291,636,046	285,318,618
Securities sold under agreement to repurchase	8,738,115	7,573,403
Advances from Federal Home Loan Bank	25,000,000	25,000,000
Junior subordinated debentures	10,310,000	10,310,000
Accrued interest payable	847,301	806,079
Other liabilities	2,561,434	2,380,554
Total liabilities	339,092,896	331,388,654

Shareholders' Equity
Preferred stock
Series A cumulative perpetual preferred stock - 15,349 shares issued and outstanding	15,179,709	15,179,709
Series B cumulative perpetual preferred stock - 767 shares issued and outstanding	767,000	767,000
Common stock, $0.01 par value; 20,000,000 shares authorized, 4,741,023 and 4,739,823 shares issued and outstanding at March 31, 2015 and December 31, 2014	47,410	47,398
Capital surplus	30,919,018	30,914,242
Treasury stock, at cost, 35,176 and 29,846 shares at December 31, 2014 and 2013, respectively	(206,010)	(205,512)
Nonvested restricted stock	(370,819)	(385,330)
Retained deficit	(9,558,088)	(10,071,514)
Accumulated other comprehensive income	152,564	121,674
Total shareholders' equity	36,930,784	36,367,677
Total liabilities and shareholders' equity	$ 376,023,680	$ 367,756,321

FIRST RELIANCE BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Operations
(Unaudited)

	For the three months ended March 31,
	2015	2014
Interest income:
Loans, including fees	$ 3,382,150	$ 3,273,679
Investment securities:
Taxable	247,596	287,981
Tax exempt	28,452	28,571
Other interest income	23,142	11,902
Total	3,681,340	3,602,134

Interest expense:
Time deposits	135,836	249,119
Other deposits	32,540	33,333
Other interest expense	57,091	81,480
Total	225,467	363,932

Net interest income	3,455,873	3,238,202

Provision for loan losses	78,827	-

Net interest income after provision for loan losses	3,377,046	3,238,202

Noninterest income:
Service charges on deposit accounts	360,879	383,375
Gain on sale of mortgage loans	330,115	201,240
Income from bank owned life insurance	82,032	83,525
Other service charges, commissions, and fees	279,230	258,614
Gain on sale of available-for-sale securities	-	5,322
Other	96,009	73,708
Total	1,148,265	1,005,784

Noninterest expenses:
Salaries and benefits	2,100,316	1,812,735
Occupancy	377,755	367,030
Furniture and equipment related expenses	388,130	419,149
Other	1,123,377	1,298,715
Total	3,989,578	3,897,629


Income before income taxes	535,733	346,357

Income tax expense	22,306	-

Net income	513,427	346,357

Preferred stock dividends accrued	362,610	209,120
Deemed dividends on preferred stock resulting from net accretion of discount and amortization of premium	-	31,218

Net income available to common shareholders	$ 150,817	$ 106,019

Average common shares outstanding, basic	4,739,836	4,569,122
Average common shares outstanding, diluted	4,828,021	4,649,502

Income per common share:
Basic income per share	$ 0.03	$ 0.02
Diluted income per share	$ 0.03	$ 0.02