First Reliance Reports 2Q17 Net Income Of $662,632

FLORENCE, S.C., Aug. 9, 2017 /PRNewswire/ -- First Reliance Bancshares, Inc. (OTC: FSRL), the holding company (the "Company") for First Reliance Bank (the "Bank"), reported second quarter 2017 net income after tax of $662,632, up 4.5% from first quarter 2017 net income after tax of $634,042.  Profitability continues to be led by strong loan and deposit growth and expanding operating efficiencies.  Diluted EPS as of June 30, 2017 was $0.14 compared to $0.13 in the first quarter of 2017.    

"We are proud of our continued strong financial performance which allows us to grow as a company while adding to the economic well being of the communities we serve in South Carolina. We continue our branch expansion into Horry and Dorchester counties of South Carolina.  While increased costs of opening branch offices have negatively impacted earnings in the short term, we anticipate increased profitability within these locations over the next 12 months which would be accretive to earnings," says Rick Saunders, President and CEO.   

Financial Highlights (at or for the periods ended June 30, 2017, except as noted)

• Diluted EPS improved to $0.14 as of June 30, 2017 compared to $0.13 as of March 31, 2017 
• Tangible book value per share is $5.98, up 10.5% from one year ago 
• Return on Assets of 0.62% and Return on Equity of 9.49%
• Branch expansion into Summerville and Dorchester County
• Loan growth is up $41.4 million or 15.3% from one year ago while earning asset yields improved to 4.63% compared to 4.54% one year ago.
• Non Interest Bearing checking accounts increased $9.9 million to 24.6% of total deposits from one year ago as we attract new customers through unique programs and the convenience of digital banking
• Total revenues year to date 2017 increased by 5.02% to $11.9 million compared to $11.3 million in 2016 reflecting balance sheet growth
• Net interest margin (NIM) was 4.32% as the Company continues to leverage its low cost of funds at 30bp
• Bank Total Capital Ratio improved to 12.83% from 12.48% a quarter earlier and remains well-capitalized

Review of Income Statement
Net interest income improved 2.08% at $3.8 million compared to a year ago despite increased interest expense of $176,061 associated with the secured loan and subordinated debt used to refinance higher cost Series A and B Preferred stock (TARP) and growth in interest-bearing deposit balances.  The Company continues to leverage its low cost of funds at 30bp.

Noninterest income increased 12.95% to $4.7 million year to date 2017, compared to $4.1 million year to date 2016.  The increase in noninterest income was largely due to the increase in gains on sales of mortgage loans, growth in service charges on deposit accounts, and growth in debit card income.  "Overall profitability within the mortgage business line increased 53% year over year as of June 30, 2017 due to improving operating margins, despite a reduction in mortgage originations of 4.1% year over year as of June 30, 2017.  As a community bank, we are putting a higher degree of emphasis on expanding the retail mortgage channel as originations are up 10.1% year over year," said Jeffrey Paolucci, Executive Vice President and CFO.

Balance Sheet and Asset Quality

Total assets increased $52.6 million, or 13.7% to $436.5 million at June 30, 2017, compared to $383.9 million from June 30, 2016.   

Loans receivable grew by $41.4 million, or 15.3%, at June 30, 2017, compared to $271 million, at June 30, 2016 largely due to continued growth in all our markets including commercial portfolios, 1-4 family mortgage portfolios and our consumer loan portfolios.  1-4 Family mortgage portfolio loans are up 75.9% year-over-year and Consumer loans are up 25.8%. "Our ability to continue to attract strong relationship bankers who are actively involved in their local communities has been a strong factor in the growth in both our loan and deposit portfolios.  We have been able to successfully integrate these talented bankers into our culture and they have quickly become strong supporters of our brand, our values and focus of making the lives of our customers BETTER," says Saunders.

No-cost/low cost deposits increased by $19 million, or 11.1%, to $188 million at June 30, 2017, from $169.1 million at June 30, 2016.  The Company grew household checking accounts by 5.02% reflecting our strong year over year branch sales growth. "Our associates continue to deliver a differentiated level of service to our customers through our unique programs such as Hometown Heroes and Moms First with special events that make them feel like more than a number at our bank," said Saunders.

Nonperforming assets declined $712 thousand to $4.5 million at June 30, 2017 compared to one year ago.  The ratio of nonperforming assets to total assets declined to 1.04% at June 30, 2017, compared to 1.37% one year earlier.  The allowance for loan losses as a percentage of loans was 0.90% at June 30, 2017, compared to 0.98% one year earlier.  For the second quarter of 2017, loan charge offs were nominal and largely offset by the bank recoveries. 

Capital
First Reliance Bank continues to remain well capitalized under all regulatory measures with capital ratios exceeding the statutory well-capitalized thresholds by an ample margin.  For the quarter ended December 31, 2016, capital ratios were as follows:

First Reliance's tangible book value was $5.98, at June 20, 2017, up 10.5% from $5.41, at June 30, 2016.  The Company currently trades at 116.1% of book value as of June 30, 2017.

First Reliance Bank was recently named as one of the Best Places to Work in South Carolina. This program was created by SC Biz News in partnership with the South Carolina Chamber of Commerce and Best Companies Group.  First Reliance is one of three companies throughout South Carolina who have received the award all twelve years since the program began. Our great team of dedicated associates is the main reason we are one of the Best Places to Work in SC.  This recognition reinforces that our associates are engaged and committed to the Bank and the communities we serve. We are committed to keeping our associate promise by providing them with the opportunity to do work that makes a difference. 

"We are also proud of recently being awarded the 5-Star Superior Rating from Bauer Financial, an independent financial institution rating organization.  This rating is based on first quarter 2017 financial data and indicates First Reliance is one of the strongest financial institutions in the nation; a dependable and financially sound community bank. While many financial institutions may look similar, we have remained committed to our purpose 'To Make The Lives of our Customers BETTER.' This unwavering commitment and the great work of our associates has allowed us to deliver the results that make us a dependable and financially sound community bank," said Saunders.

Regional Economic Conditions ? May 2017
According to recent reports, South Carolina's economy continues to improve as total employment rose by 0.4 percent and in May companies' added 7,600 new jobs.  Recently, one Florence county employer, Ruiz Foods a frozen food manufacturer, announced a $79 million expansion that will create 700 new jobs in the county where First Reliance is headquartered.  The growth we are experiencing in South Carolina continues to provide us with opportunities to earn business and grow our community banking footprint in many corners of the state.      
For more information on labor markets, household conditions and housing markets in South Carolina, please visit the link below: https://www.richmondfed.org/~/media/richmondfedorg/research/regional_economy/reports/snapshot/pdf/snapshot_sc.pdf

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 130 highly-talented associates and serves the Columbia, Lexington, Charleston, Mount Pleasant, Summerville, Loris, North Myrtle Beach, and Florence markets in South Carolina.  First Reliance Bank offers several unique customer programs which include a Hometown Heroes package of benefits for 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, Mobile mortgage applications, 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%.

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 three and six months ended June 30, 2017 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, Executive Vice President and Chief Financial Officer, (888)543-5510.

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

SOURCE First Reliance Bancshares, Inc.