First Reliance Bancshares Reports Third Quarter 2023 Results
FLORENCE, S.C., Oct. 26, 2023 /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 2023.
Third Quarter 2023 Highlights
- Net income for the third quarter of 2023 was $1.4 million, or $0.18 per diluted share, compared to $2.5 million, or $0.31 per diluted share, for the third quarter of 2022.
- During the third quarter of 2023, the Company recorded a loss on the sale of securities of $209 thousand, net of tax, or $0.03 per diluted share. The proceeds from the security sold have been reinvested with an expected earn back of less than six months, which should continue to improve margins and net interest income.
- Net interest income for the quarter was $7.2 million, which is the same as the second quarter of 2023, and a decrease of $1.0 million, or 12.6% compared to the same period in 2022.
- Net interest margin decreased during the quarter to 3.11% at September 30, 2023, compared to 3.16% for the second quarter of 2023, and decreased 60 basis points, from 3.71%, compared to the same period in 2022.
- Total loans increased $12.5 million, or 7.2% annualized, to $706.6 million at September 30, 2023, from $694.1 million at June 30, 2023.
- Total deposits increased $31.1 million, or 14.9% annualized, to $861.2 million at September 30, 2023, from $830.1 million at June 30, 2023.
- During the third quarter of 2023, the Allowance for credit losses (ACL) was 1.19% of loans, or $8.4 million, compared to the second quarter where the ACL was 1.19% of loans, or $8.2 million. The ACL was increased with a $210 thousand charge to the provision for credit losses during the third quarter of 2023.
- Asset quality remained steady with nonperforming assets as a percentage of total assets of 0.05% at September 30, 2023, and June 30, 2023. The Company had net charge-offs of $10 thousand or annualized 0.01% of average loans, during the 3rd quarter of 2023, compared to net charge-offs of $117 thousand, or annualized 0.07% of average loans, for the quarter ended June 30, 2023.
- Cost of funds, including noninterest-bearing deposits, for the third quarter of 2023 increased to 1.89% from 1.67% on a linked quarter basis and from 0.33% for the same period in 2022.
Rick Saunders, Chief Executive Officer, remarked: "The third quarter continued to provide an uncertain economic environment. Rising interest rates impacted both our net interest margin and our mortgage business, while deposit betas have slowed relative to prior quarters. Our company was successful in holding expenses flat from the second quarter of 2023, while credit quality remained strong with low net charge offs, nonaccrual loans, and nonperforming assets."
Financial Summary - unaudited | ||||||||
Three Months Ended | Nine Months Ended | |||||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Sep 30 | Sep 30 | ||
($ in thousands, except per share data) | 2023 | 2023 | 2023 | 2022 | 2022 | 2023 | 2022 | |
Earnings: | ||||||||
Net income available to common shareholders | $ 1,444 | $ 1,013 | $ 1,371 | $ 1,493 | $ 2,522 | $ 3,828 | $ 4,438 | |
Earnings per common share, diluted | 0.18 | 0.12 | 0.17 | 0.18 | 0.31 | 0.47 | 0.55 | |
Total revenue(1) | 9,219 | 8,959 | 9,430 | 9,417 | 11,103 | 27,607 | 29,604 | |
Net interest margin | 3.11 % | 3.16 % | 3.34 % | 3.68 % | 3.71 % | 3.20 % | 3.41 % | |
Return on average assets(2) | 0.58 % | 0.41 % | 0.57 % | 0.65 % | 1.06 % | 0.52 % | 0.63 % | |
Return on average equity(2) | 8.68 % | 6.13 % | 8.53 % | 9.78 % | 15.60 % | 7.77 % | 8.91 % | |
Efficiency ratio(3) | 80.35 % | 82.50 % | 79.20 % | 78.14 % | 69.40 % | 80.66 % | 79.76 % | |
As of | ||||||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | ||||
(dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | |||
Balance Sheet: | ||||||||
Total assets | $ 991,721 | $ 992,596 | $ 1,000,535 | $ 937,113 | $ 946,437 | |||
Total loans receivable | 706,596 | 694,130 | 669,969 | 661,251 | 646,634 | |||
Total deposits | 861,229 | 830,085 | 836,902 | 798,184 | 840,392 | |||
Total transaction deposits(4) to total deposits | 43.55 % | 44.00 % | 46.46 % | 51.05 % | 51.42 % | |||
Loans to deposits | 82.05 % | 83.62 % | 80.05 % | 82.84 % | 76.94 % | |||
Bank Capital Ratios: | ||||||||
Total risk-based capital ratio | 13.54 % | 13.57 % | 13.45 % | 13.43 % | 13.47 % | |||
Tier 1 risk-based capital ratio | 12.43 % | 12.43 % | 12.41 % | 12.43 % | 12.45 % | |||
Tier 1 leverage ratio | 10.11 % | 9.95 % | 10.14 % | 10.37 % | 9.84 % | |||
Common equity tier 1 capital ratio | 12.43 % | 12.43 % | 12.41 % | 12.43 % | 12.45 % | |||
Asset Quality Ratios: | ||||||||
Nonperforming assets as a percentage of | 0.05 % | 0.05 % | 0.05 % | 0.05 % | 0.06 % | |||
Allowance for credit losses as a percentage of | 1.19 % | 1.19 % | 1.20 % | 1.16 % | 1.18 % | |||
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 | |||
(dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 | 2023 | 2022 | |
Interest income | ||||||||
Loans | $ 9,394 | $ 8,837 | $ 8,260 | $ 7,848 | $ 7,555 | $ 26,492 | $ 20,716 | |
Investment securities | 1,596 | 1,371 | 1,343 | 1,247 | 1,097 | 4,310 | 2,508 | |
Other interest income | 536 | 782 | 362 | 316 | 321 | 1,680 | 570 | |
Total interest income | 11,526 | 10,990 | 9,965 | 9,411 | 8,973 | 32,482 | 23,794 | |
Interest expense | ||||||||
Deposits | 3,671 | 2,876 | 1,922 | 1,106 | 446 | 8,470 | 855 | |
Other interest expense | 651 | 893 | 769 | 417 | 283 | 2,312 | 787 | |
Total interest expense | 4,322 | 3,769 | 2,691 | 1,523 | 729 | 10,782 | 1,642 | |
Net interest income | 7,204 | 7,221 | 7,274 | 7,888 | 8,244 | 21,700 | 22,152 | |
Provision for loan losses | (42) | 280 | 248 | 115 | 170 | 487 | 365 | |
Net interest income after provision for loan | 7,246 | 6,941 | 7,026 | 7,773 | 8,074 | 21,213 | 21,787 | |
Noninterest income | ||||||||
Mortgage banking income | 1,147 | 1,063 | 916 | 378 | 1,721 | 3,127 | 4,038 | |
Service fees on deposit accounts | 371 | 341 | 326 | 330 | 343 | 1,038 | 1,062 | |
Debit card and other service charges, | 537 | 563 | 517 | 500 | 536 | 1,617 | 1,593 | |
Income from bank owned life insurance | 95 | 91 | 244 | 92 | 91 | 429 | 268 | |
Loss on sale of securities, net | (268) | (455) | - | - | - | (723) | - | |
Gain (Loss) on disposal of fixed assets | - | - | 19 | 24 | (10) | 19 | (1) | |
Other income | 132 | 134 | 134 | 205 | 178 | 400 | 492 | |
Total noninterest income | 2,014 | 1,737 | 2,156 | 1,529 | 2,859 | 5,907 | 7,452 | |
Noninterest expense | ||||||||
Compensation and benefits | 4,603 | 4,461 | 4,652 | 4,364 | 4,505 | 13,716 | 14,642 | |
Occupancy and equipment | 882 | 856 | 892 | 883 | 923 | 2,630 | 2,707 | |
Data processing, technology, and communications | 985 | 942 | 869 | 878 | 846 | 2,796 | 2,473 | |
Professional fees | 58 | 111 | 196 | 207 | 185 | 364 | 544 | |
Marketing | 151 | 206 | 226 | 279 | 206 | 584 | 464 | |
Other | 728 | 815 | 634 | 748 | 1,040 | 2,177 | 2,781 | |
Total noninterest expense | 7,407 | 7,391 | 7,469 | 7,359 | 7,705 | 22,267 | 23,611 | |
Income before provision for income taxes | 1,853 | 1,287 | 1,713 | 1,943 | 3,228 | 4,853 | 5,628 | |
Income tax expense | 409 | 274 | 342 | 450 | 706 | 1,025 | 1,190 | |
Net income available to common shareholders | $ 1,444 | $ 1,013 | $ 1,371 | $ 1,493 | $ 2,522 | $ 3,828 | $ 4,438 | |
Weighted average common shares - basic | 7,834 | 7,825 | 7,807 | 7,775 | 7,777 | 7,822 | 7,781 | |
Weighted average common shares - diluted | 8,149 | 8,142 | 8,189 | 8,152 | 8,073 | 8,161 | 8,088 | |
Basic income per common share | $ 0.18 | $ 0.13 | $ 0.18 | $ 0.19 | $ 0.32 | $ 0.49 | $ 0.57 | |
Diluted income per common share | $ 0.18 | $ 0.12 | $ 0.17 | $ 0.18 | $ 0.31 | $ 0.47 | $ 0.55 | |
Net income for the three months ended September 30, 2023, was $1.4 million, or $0.18 per diluted common share, compared to $2.5 million, or $0.31 per diluted common share, for the three months ended September 30, 2022. Net income for the nine months ended September 30, 2023, totaled $3.8 million, or $0.47 per diluted common share, compared to $4.4 million, or $0.55 per diluted common share for the nine months ended September 30, 2022.
Provision for credit losses (release) was $(42 thousand) for the quarter. This release was the net result of a $210 thousand increase in the ACL offset by a release in the unfunded commitment reserve of $252 thousand. This release was primarily attributable to a decline in the balance of unfunded commitments within construction lending.
Noninterest income for the three months ended September 30, 2023, was $2.0 million, a decrease of $0.9 million from $2.9 million for the same period in 2022. Noninterest income is primarily driven by the Company's mortgage banking division, which produced net revenue of $1.1 million during the three months ended September 30, 2023, compared to $1.7 million for the same period in 2022. During the third quarter of 2022, mortgage banking income included a gain of $0.6 million on the sale of $4.9 million of mortgage servicing right assets. Also, included in noninterest income was a loss on sale of securities of $268 thousand, pre -tax.
Noninterest expense for the three months ended September 30, 2023, was $7.4 million, a decrease of approximately $300 thousand from $7.7 million for the same period in 2022. This decrease was reflected in the other expense category was mostly driven by a decrease in fraud and forgery related losses and lower employee meeting and travel related cost. The remaining categories of expense offset each other.
NET INTEREST INCOME AND MARGIN – Unaudited | |||||||
For the Three Months Ended | |||||||
September 30, 2023 | September 30, 2022 | ||||||
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 | $ 44,271 | $ 499 | 4.47 % | $ 66,503 | $ 317 | 1.89 % | |
Investment securities | 159,740 | 1,596 | 3.96 % | 163,843 | 1,097 | 2.66 % | |
Nonmarketable equity securities | 1,486 | 37 | 9.87 % | 522 | 4 | 3.61 % | |
Loans held for sale | 16,058 | 271 | 6.70 % | 10,073 | 152 | 5.98 % | |
Loans | 697,797 | 9,123 | 5.19 % | 639,929 | 7,403 | 4.59 % | |
Total interest-earning assets | 919,352 | 11,526 | 4.97 % | 880,870 | 8,973 | 4.04 % | |
Allowance for credit losses | (8,278) | (7,570) | |||||
Noninterest-earning assets | 77,741 | 81,448 | |||||
Total assets | $ 988,815 | $ 954,748 | |||||
Liabilities and Shareholders' Equity | |||||||
Interest-bearing liabilities | |||||||
NOW accounts | $ 146,469 | $ 257 | 0.70 % | $ 152,444 | $ 29 | 0.08 % | |
Savings & money market | 322,635 | 2,123 | 2.61 % | 304,629 | 321 | 0.42 % | |
Time deposits | 157,991 | 1,291 | 3.24 % | 108,258 | 95 | 0.25 % | |
Total interest-bearing deposits | 627,095 | 3,671 | 2.32 % | 565,331 | 445 | 0.31 % | |
FHLB advances and other borrowings | 22,105 | 286 | 5.12 % | 11,264 | 5 | 0.16 % | |
Subordinated debentures | 25,710 | 365 | 5.64 % | 25,679 | 279 | 4.31 % | |
Total interest-bearing liabilities | 674,910 | 4,322 | 2.54 % | 602,274 | 729 | 0.48 % | |
Noninterest bearing deposits | 233,425 | 274,832 | |||||
Other liabilities | 13,915 | 12,967 | |||||
Shareholders' equity | 66,565 | 64,675 | |||||
Total liabilities and shareholders' equity | $ 988,815 | $ 954,748 | |||||
Net interest income (tax equivalent) / interest | $ 7,204 | 2.43 % | $ 8,244 | 3.56 % | |||
Net Interest Margin | 3.11 % | 3.71 % | |||||
Net interest income for the three months ended September 30, 2023, was $7.2 million compared to $8.2 million for the three months ended September 30, 2022. This $1.0 million decrease in net interest income was driven by rates paid on interest-bearing liabilities. Yield on interest-earning assets increased to 4.97% for the three months ended September 30, 2023, up from 4.04% for the same period in 2022. Interest income improved by $2.6 million, while interest expense increased by $3.6 million comparing third quarter of 2023 to 2022. This increase in interest expense reflects the rise in interest rates across all funding categories.
For the Nine Months Ended | |||||||
September 30, 2023 | September 30, 2022 | ||||||
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 | $ 48,298 | $ 1,599 | 4.43 % | $ 97,344 | $ 552 | 0.76 % | |
Investment securities | 160,991 | 4,310 | 3.58 % | 141,479 | 2,508 | 2.37 % | |
Nonmarketable equity securities | 1,893 | 81 | 5.75 % | 552 | 17 | 4.16 % | |
Loans held for sale | 14,223 | 721 | 6.78 % | 17,402 | 564 | 4.33 % | |
Loans | 681,508 | 25,771 | 5.06 % | 611,679 | 20,153 | 4.40 % | |
Total interest-earning assets | 906,913 | 32,482 | 4.79 % | 868,456 | 23,794 | 3.66 % | |
Allowance for loan losses | (8,064) | (7,331) | |||||
Noninterest-earning assets | 78,062 | 80,919 | |||||
Total assets | $ 976,911 | $ 942,044 | |||||
Liabilities and Shareholders' Equity | |||||||
Interest-bearing liabilities | |||||||
NOW accounts | $ 142,011 | $ 495 | 0.47 % | $ 161,932 | $ 69 | 0.06 % | |
Savings & money market | 313,050 | 5,400 | 2.31 % | 288,708 | 507 | 0.23 % | |
Time deposits | 135,993 | 2,575 | 2.53 % | 113,460 | 280 | 0.33 % | |
Total interest-bearing deposits | 591,054 | 8,470 | 1.69 % | 564,100 | 856 | 0.20 % | |
FHLB advances and other borrowings | 39,167 | 1,248 | 4.26 % | 13,044 | 34 | 0.35 % | |
Subordinated debentures | 25,703 | 1,064 | 5.53 % | 25,671 | 752 | 3.92 % | |
Total interest-bearing liabilities | 655,924 | 10,782 | 2.20 % | 602,815 | 1,642 | 0.36 % | |
Noninterest bearing deposits | 241,588 | 260,426 | |||||
Other liabilities | 13,745 | 12,376 | |||||
Shareholders' equity | 65,654 | 66,427 | |||||
Total liabilities and shareholders' equity | $ 976,911 | $ 942,044 | |||||
Net interest income (tax equivalent) / interest | $ 21,700 | 2.59 % | $ 22,152 | 3.30 % | |||
Net Interest Margin | 3.20 % | 3.41 % | |||||
Net interest income was $21.7 million for the nine months ended September 30, 2023, a decrease of $0.5 million over the same period in 2022. Increases in average loans and investments as well as yields on interest earning assets contributed to the increase in interest income, which was fully offset by the increase in rates on interest-bearing deposits and borrowings.
CONDENSED CONSOLIDATED BALANCE SHEETS – Unaudited | |||||
As of | |||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | |
(dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 |
Assets | |||||
Cash and cash equivalents: | |||||
Cash and due from banks | $ 3,158 | $ 3,748 | $ 4,233 | $ 3,917 | $ 4,147 |
Interest-bearing deposits with banks | 32,835 | 55,496 | 71,590 | 29,880 | 60,537 |
Total cash and cash equivalents | 35,993 | 59,244 | 75,823 | 33,797 | 64,684 |
Time deposits in other banks | - | - | - | 259 | 259 |
Investment securities: | |||||
Investment securities available for sale | 162,573 | 158,143 | 164,150 | 162,097 | 160,504 |
Other investments | 2,025 | 2,563 | 2,570 | 1,921 | 658 |
Total investment securities | 164,598 | 160,706 | 166,720 | 164,018 | 161,162 |
Mortgage loans held for sale | 17,506 | 12,485 | 16,236 | 7,940 | 4,599 |
Loans receivable: | |||||
Loans | 706,596 | 694,130 | 669,969 | 661,251 | 646,634 |
Less allowance for credit losses | (8,430) | (8,229) | (8,052) | (7,660) | (7,630) |
Loans receivable, net | 698,166 | 685,901 | 661,917 | 653,591 | 639,004 |
Property and equipment, net | 22,505 | 22,588 | 22,634 | 22,811 | 22,868 |
Mortgage servicing rights | 11,394 | 10,893 | 10,491 | 10,441 | 10,182 |
Bank owned life insurance | 18,092 | 17,997 | 17,906 | 18,836 | 18,744 |
Deferred income taxes | 9,184 | 8,534 | 8,263 | 8,629 | 8,629 |
Other assets | 14,283 | 14,248 | 20,545 | 16,791 | 16,306 |
Total assets | 991,721 | 992,596 | 1,000,535 | 937,113 | 946,437 |
Liabilities | |||||
Deposits | $ 861,229 | $ 830,085 | $ 836,902 | $ 798,184 | $ 840,392 |
Federal Home Loan Bank advances | 25,000 | 45,000 | 45,000 | 30,000 | - |
Federal funds and repurchase agreements | 81 | 11,910 | 12,974 | 7,368 | 3,726 |
Subordinated debentures | 15,405 | 15,397 | 15,389 | 15,381 | 15,373 |
Junior subordinated debentures | 10,310 | 10,310 | 10,310 | 10,310 | 10,310 |
Reserve for unfunded commitments | 488 | 740 | 754 | - | - |
Other liabilities | 13,186 | 12,616 | 12,743 | 12,574 | 14,472 |
Total liabilities | 925,699 | 926,058 | 934,072 | 873,817 | 884,273 |
Shareholders' equity | |||||
Preferred stock - Series D non-cumulative, no par | 1 | 1 | 1 | 1 | 1 |
Common Stock - $.01 par value; 20,000,000 shares | 88 | 88 | 88 | 87 | 88 |
Treasury stock, at cost | (4,750) | (4,666) | (4,598) | (4,502) | (4,364) |
Nonvested restricted stock | (2,387) | (2,542) | (2,765) | (2,121) | (2,291) |
Additional paid-in capital | 55,068 | 54,972 | 54,984 | 53,968 | 54,013 |
Retained earnings | 32,972 | 31,626 | 30,564 | 29,916 | 28,423 |
Accumulated other comprehensive (loss) income | (14,970) | (12,941) | (11,811) | (14,053) | (13,706) |
Total shareholders' equity | 66,022 | 66,538 | 66,463 | 63,296 | 62,164 |
Total liabilities and shareholders' equity | $ 991,721 | $ 992,596 | $ 1,000,535 | $ 937,113 | $ 946,437 |
First Reliance cash and cash equivalents totaled $36.0 million at September 30, 2023, compared to $59.2 million at June 30, 2023. Cash with the Federal Reserve Bank totaled $32.2 million at September 30, 2023, compared to $54.3 million at June 30, 2023.
All debt securities were classified as available for sale (AFS) securities with balances of $162.6 million at September 30, 2023, compared to $158.1 million at June 30, 2023. The unrealized loss recorded on these securities totaled $19.8 million compared to $17.1 million, respectively, an increase in the third quarter of 2023 of $2.7 million (before taxes).
The Company had $25.0 million in outstanding borrowings with the Federal Home Loan Bank (FHLB) of Atlanta at September 30, 2023, and $45.0 million at June 30, 2023, respectively. The Company had remaining credit availability in excess of $272.0 million with the FHLB of Atlanta, subject to collateral requirements.
First Reliance also has access to more than $34.8 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) | 2023 | 2023 | 2023 | 2022 | 2022 |
Voting common shares outstanding | 8,754 | 8,752 | 8,763 | 8,730 | 8,793 |
Treasury shares outstanding | (623) | (612) | (601) | (590) | (575) |
Total common shares outstanding | 8,131 | 8,140 | 8,162 | 8,140 | 8,218 |
Tangible book value per common share(5) | $ 8.02 | $ 8.08 | $ 8.04 | $ 7.67 | $ 7.46 |
Stock price: | |||||
High | $ 7.40 | $ 8.20 | $ 8.80 | $ 9.50 | $ 9.40 |
Low | $ 6.30 | $ 6.00 | $ 6.50 | $ 8.60 | $ 9.00 |
Period end | $ 7.20 | $ 6.37 | $ 7.44 | $ 8.72 | $ 9.14 |
ASSET QUALITY MEASURES – Unaudited | |||||
As of | |||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | |
(dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 |
Nonperforming Assets | |||||
Commercial | |||||
Owner occupied RE | $ - | $ - | $ 80 | $ 134 | $ 135 |
Non-owner occupied RE | 86 | 82 | - | - | - |
Construction | - | - | - | - | - |
Commercial business | 164 | 159 | 278 | 76 | 146 |
Consumer | |||||
Real estate | - | - | - | 1 | 2 |
Home equity | 145 | 145 | - | - | - |
Construction | - | - | - | - | - |
Other | 59 | 94 | 65 | 119 | 130 |
Nonaccruing loan modifications | 65 | 65 | 71 | 143 | 160 |
Total nonaccrual loans | $ 519 | $ 545 | $ 494 | $ 473 | $ 573 |
Other real estate owned | - | - | - | - | - |
Total nonperforming assets | $ 519 | $ 545 | $ 494 | $ 473 | $ 573 |
Nonperforming assets as a percentage of: | |||||
Total assets | 0.05 % | 0.05 % | 0.05 % | 0.05 % | 0.06 % |
Total loans receivable | 0.07 % | 0.08 % | 0.07 % | 0.07 % | 0.09 % |
Accruing loan modifications | $ 1,027 | $ 1,059 | $ 1,381 | $ 1,151 | $ 1,312 |
Three Months Ended | |||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | |
(dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 |
Allowance for Credit Losses | |||||
Balance, beginning of period | $ 8,229 | $ 8,052 | $ 7,660 | $ 7,630 | $ 7,494 |
CECL adoption | - | - | 114 | - | - |
Loans charged-off | 41 | 145 | 125 | 101 | 76 |
Recoveries of loans previously charged-off | 31 | 28 | 23 | 16 | 42 |
Net charge-offs (recoveries) | 10 | 117 | 102 | 85 | 34 |
Provision for loan losses | 210 | 294 | 380 | 115 | 170 |
Balance, end of period | $ 8,430 | $ 8,229 | $ 8,052 | $ 7,660 | $ 7,630 |
Allowance for credit losses to gross loans receivable | 1.19 % | 1.19 % | 1.20 % | 1.16 % | 1.18 % |
Allowance for credit losses to nonaccrual loans | 1624.28 % | 1509.91 % | 1629.96 % | 1619.45 % | 1331.59 % |
Footnotes to table located at the end of this release. | |||||
Asset quality remained strong through September 30, 2023, with nonperforming assets remaining at $0.5 million, which represents 0.05% of total assets. The allowance for credit losses as a percentage of total loans receivable remained steady at 1.19% at September 30, 2023, compared to 1.19% at June 30, 2023, and 1.18% at September 30, 2022, respectively. The Company had net charge-offs of $10 thousand for the three months ended September 30, 2023, compared to net charge offs of $34 thousand for the same period in 2022.
LOAN COMPOSITION – Unaudited | |||||
As of | |||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | |
(dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 |
Commercial real estate | $ 430,825 | $ 415,616 | $ 401,534 | $ 391,661 | $ 378,589 |
Consumer real estate | 172,702 | 168,227 | 156,562 | 151,533 | 147,110 |
Commercial and industrial | 67,740 | 71,345 | 71,350 | 69,243 | 67,200 |
Consumer and other | 35,329 | 38,942 | 40,523 | 48,814 | 53,735 |
Total loans, net of deferred fees | 706,596 | 694,130 | 669,969 | 661,251 | 646,634 |
Less allowance for loan losses | 8,430 | 8,229 | 8,052 | 7,660 | 7,630 |
Total loans, net | $ 698,166 | $ 685,901 | $ 661,917 | $ 653,591 | $ 639,004 |
DEPOSIT COMPOSITION – Unaudited | |||||
As of | |||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | |
(dollars in thousands) | 2023 | 2023 | 2023 | 2022 | 2022 |
Noninterest-bearing | $ 231,672 | $ 230,153 | $ 249,688 | $ 255,427 | $ 277,587 |
Interest-bearing: | |||||
DDA and NOW accounts | 143,393 | 135,071 | 139,130 | 152,012 | 154,550 |
Money market accounts | 281,325 | 264,130 | 265,264 | 221,550 | 232,711 |
Savings | 47,422 | 51,029 | 54,247 | 65,494 | 71,929 |
Time, less than $250,000 | 117,989 | 113,536 | 97,223 | 80,549 | 76,530 |
Time, $250,000 and over | 39,428 | 36,166 | 31,350 | 23,152 | 27,085 |
Total deposits | $ 861,229 | $ 830,085 | $ 836,902 | $ 798,184 | $ 840,392 |
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 $992 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 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
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