First Reliance Bancshares Reports Third Quarter 2026 Results

FLORENCE, S.C., Oct. 28, 2026 /PRNewswire/ -- First Reliance Bancshares, Inc. (OTCQX:FSRL), the holding company for First Reliance Bank (collectively, "First Reliance" or the "Company"), today announced its financial results for the third quarter of 2026.

Third Quarter 2026 Highlights

• Net income for the third quarter of 2026 was $2.7 million, or $0.33 per diluted share, compared to $2.7 million, or $0.33 per diluted share, for the third quarter of 2025.  For the nine-months ended September 30, 2026, net income totaled $9.0 million, or $1.10 per diluted share, compared to $8.0 million, or $0.96 per diluted share for the same period in 2025.  Operating earnings (Non-GAAP) were $2.9 million, or $0.36 per diluted share, for the third quarter of 2026, compared to $2.7 million, or $0.33 per diluted share, for the third quarter of 2025.  For the nine-months ended September 30, 2026, operating earnings (Non-GAAP) totaled $9.2 million or $1.13 per diluted share, compared to $6.6 million, or $0.79 per diluted share, for the nine-months ended September 30, 2025.
• Book value per share rose $0.98, or 8.6%, to $12.40 at September 30, 2026, from $11.42 at September 30, 2025.  Tangible book value per share (Non-GAAP) increased $0.98, or 8.7%, to $12.31 from $11.33 over the same period. 
• Net interest income totaled $9.9 million for the third quarter of 2026, up $430 thousand, or 4.6%, from the same quarter in 2025 and up $12 thousand, or 0.12%, from the second quarter of 2026.
• Net interest margin decreased during the third quarter of 2026 to 3.73%, compared to 3.74% in the second quarter of 2026, and increased 7 basis points compared to the third quarter of 2025.
• Total loans held for investment decreased $8.4 million, or 4.1% annualized, to $812.3 million at September 30, 2026, from $820.7 million at June 30, 2026.  Total loan growth for 2026 totaled $32.4 million, or 5.5% annualized.
• Unfunded commitments decreased $7.7 million during the quarter, primarily due to construction loan balances declining.  As a result, the unfunded commitment reserve decreased $123 thousand to $506 thousand from $629 thousand at June 30, 2026.
• Total deposits were $922.4 million at September 30, 2026, an increase of $2.1 million, or 0.90% annualized, from $920.3 million at June 30, 2026. 
• Nonperforming assets increased by $5.9 million to $6.6 million or 0.59% of total assets, at September 30, 2026, compared with $626 thousand, or 0.06% of total assets, at June 30, 2026.  The increase was primarily due to one loan totaling $5.5 million.  This loan was sufficiently collateralized and there was no specific allowance for credit loss recorded as of September 30, 2026.
• In June 2026, the Company announced a partnership with Colony Bank (CBAN), headquartered in Fitzgerald, Georgia.  Bank regulatory approvals have been received, and shareholders of both companies have approved the merger.  The remaining customary closing requirements should be completed and closing is scheduled for November 1, 2026.  Systems conversion is scheduled for June 2027.  Based on each company's total assets at September 30, 2026, the combined company will have nearly $5.0 billion in total assets.

Rick Saunders, Chief Executive Officer, stated, "Overall the third quarter of 2026 was steady from an earnings standpoint. The margin compressed slightly compared to the second quarter and tangible book value was affected by the increase in the unrealized loss of the securities portfolio as interest rates have risen during the quarter. Net interest margin declined by one basis point compared to the second quarter of 2026. The bank experienced net recoveries in the third quarter of 2026, the fourth quarter in a row.  We have received regulatory approval and shareholder approval for our announced partnership with Colony Bank and look forward to joining that team with closing anticipated on November 1, 2026."

Footnotes to table located at the end of this release.

Net income for the three months ended September 30, 2026, was $2.7 million, or $0.33 per diluted common share, compared to $2.7 million, or $0.33 per diluted common share, for the three months ended September 30, 2025.  Operating net income (Non-GAAP), for the three months ended September 30, 2026, was $2.9 million, or $0.36 per diluted common share, compared to $2.7 million, or $0.33 per diluted common share for the three months ended September 30, 2025.  Net income for the nine months ended September 30, 2026, totaled $9.0 million, or $1.10 per diluted common share, compared to $8.0 million, or $0.96 per diluted common share, at September 30, 2025.  On an operating basis, diluted EPS (Non-GAAP) was $1.13 per diluted common share, for the nine months ended September 30, 2026, which includes adding back the impact of securities losses, net of tax, subtracting the gain on the sale of mortgage servicing rights, net of tax, and adding back the impact of merger related expenses, net of tax.  The items affecting the nine months ended September 30, 2025, net of tax, include the following:  the addback of loss on fixed asset write downs, adding back the impact of expenses related to the branch sales, adding back securities losses, offset by subtracting the gain recognized on the sale of branches and the gain from the early extinguishment of debt, which resulted in $0.79 per diluted common share.

Noninterest income, for the three months ended September 30, 2026, was $2.3 million, a decrease of $514 thousand from $2.8 million for the same period in 2025.  Mortgage banking income totaled $1.0 million in the third quarter of 2026 compared to $1.6 million in the third quarter of 2025.

For the nine months ended September 30, 2026, noninterest income decreased $1.3 million compared with the same period in 2025. The decline was due to the $2.3 million gain on the sale of branches and the $140 thousand gain on early debt extinguishment recognized in 2025.  These two items were partially offset by a $361 thousand increase in mortgage banking income, a $266 thousand gain on the sale of mortgage servicing rights, a $113 thousand increase in other income, no fixed-asset write-down in 2026, and a $176 thousand reduction in losses on securities sold.

Noninterest expense was $9.0 million for the three months ended September 30, 2026, up $511 thousand from $8.5 million for the same period in 2025.  The increase was driven by $174 thousand rise in occupancy and equipment costs, $156 thousand in data processing, technology and communications, and $179 thousand in other expense, primarily related to merger expenses. 

Noninterest expense was $26.6 million for the nine months ended September 30, 2026, up $683 thousand from the prior-year period. The increase was primarily driven by a $429 thousand rise in compensation and benefits related to incentives and stock compensation expense.  Data processing, technology, and communication expenses increased $390 thousand. These increases were partially offset by a $222 thousand decrease in marketing expenses.

Operating adjustments – 3Q 2026 & 2Q 2026

During the second quarter of 2026, the Company announced the partnership with Colony Bank (CBAN) headquartered in Fitzgerald, Georgia.  The Company incurred $240 thousand, in the third quarter of 2026, and $354 thousand, in the second quarter of 2026, of merger-related expenses.

Operating adjustments – 1Q 2026

During the first quarter of 2026, the Company sold mortgage servicing rights (MSRs) related to approximately $565.9 million underlying mortgage loans for an initial gain of $266 thousand, net of direct expenses.  The Company also sold securities at a net loss of $6 thousand.

Operating adjustments – 4Q 2025

During the fourth quarter of 2025, the Company sold property in Florence which resulted in a gain of $382 thousand and sold five securities resulting in a net loss of $294 thousand.

There were no operating adjustments in 3Q 2025.

Net interest income for the three months ended September 30, 2026, was $9.9 million, compared with $9.5 million for the same period in 2025.  The increase reflected a $426 thousand rise in interest income and a $4 thousand decrease in interest expense.  Net interest margin improved to 3.73% from 3.66% a year earlier.  Loans and securities generated the largest increases in income compared with the prior year, while lower yields on all interest-bearing liabilities also contributed to the margin improvement.  In addition, the total cost of funds, including noninterest-bearing deposits, decreased to 1.97% in the third quarter of 2026, compared to 2.00% in the third quarter of 2025. 

Net interest income was $29.3 million for the nine months ended September 30, 2026, an increase of $2.0 million from $27.3 million for the same period in 2025.  Net interest margin rose year over year to 3.75% from 3.58%.  Yields improved on investment securities and loans, while yields declined across all interest-bearing liability categories.  The total cost of funds, including noninterest-bearing deposits, decreased to 1.94% from 2.04% in 2025.

Cash and cash equivalents totaled $31.9 million at September 30, 2026, compared with $27.0 million at June 30, 2026.  Cash held at the Federal Reserve Bank was $28.3 million, compared with $22.4 million at June 30, 2026.

First Reliance had no held-to-maturity (HTM) securities for any reported period.  All debt securities were classified as available-for-sale (AFS), with balances of $187.9 million at September 30, 2026, and $199.7 million at September 30, 2025.  The unrealized loss on these securities was $12.1 million at September 30, 2026, compared with $7.5 million at June 30, 2026, an increase of $4.6 million before taxes during the third quarter of 2026.

Deposits increased $2.1 million, or 0.90% annualized, as of September 30, 2026, primarily due to higher demand deposit accounts, money market account balances and time deposits. The increase was partially offset by decreases in noninterest-bearing deposits and savings accounts.  See the table on page 10 for details.

The Company had $60.0 million in outstanding borrowings with the Federal Home Loan Bank (FHLB) of Atlanta at September 30, 2026, down from $75.0 million at June 30, 2026.  The Company had remaining credit availability in excess of $262.0 million with the FHLB of Atlanta, subject to collateral requirements.

First Reliance also has access to approximately $16.5 million through the Federal Reserve Bank discount window with posted collateral.  There are currently no borrowings against the Federal Reserve Bank discount window.

Nonperforming assets increased in the third quarter of 2026 to $6.6 million or 0.59% of total assets from $626 thousand, or 0.06% of total assets, at June 30, 2026.  This increase was primarily the result of one owner-occupied loan totaling $5.5 million that has moved to nonaccrual in the third quarter of 2026.  This loan was supported by sufficient collateral and no allowance for credit losses recorded in the third quarter of 2026.  During the third quarter of 2026, the allowance for credit losses decreased $212 thousand, reflecting a $218 thousand release from the provision for credit losses and $6 thousand in net recoveries.  In the third quarter of 2025, the Company recorded $42 thousand in net charge-offs and increased the allowance for credit losses through a $248 thousand provision for credit losses.  The allowance was 1.12% of total loans at September 30, 2025.

Footnotes to table located at the end of this release.

ABOUT FIRST RELIANCE

Founded in 1999, First Reliance Bancshares, Inc. (OTCQX: FSRL), is based in Florence, South Carolina and has assets of approximately $1.11 billion. The Company employs approximately 160 professionals and has locations throughout South 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 92% customer satisfaction rating, well above the bank industry average of 82%.  First Reliance is also one of two companies throughout South Carolina to receive the Best Places to Work in South Carolina award all 20 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 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.