First Reliance Bancshares Reports Fourth Quarter 2022 Results

FLORENCE, S.C., Feb. 1, 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 fourth quarter of 2022.

Fourth Quarter and Full Year 2022 Highlights

• Net income for the fourth quarter of 2022 increased 60.2% to $1.5 million, or $0.18 per diluted share, compared to $0.9 million, or $0.12 per diluted share, for the fourth quarter of 2021. Net income for the year ended December 31, 2022 was $5.9 million, or $0.73 per diluted share, compared to $5.3 million, or $0.65 per diluted share, for the year ended December 31, 2021.
• Net interest income for the quarter was $7.9 million, which represents a decrease of $0.4 million, or 4.3%, on a linked quarter basis and an increase of $1.3 million, or 19.1% compared to the same period in 2021. Net interest income for the full year was $30.0 million, which represents an increase of $5.3 million, or 21.6%, compared to the same period in 2021.
• Net interest margin compressed during the quarter to 3.68% at December 31, 2022 compared to 3.71% for the third quarter of 2022, but increased 58 basis points compared to the same period in 2021.
• Total loans increased $14.6 million, or 9.0% annualized, to $661.3 million at December 31, 2022 from $646.6 million at September 30, 2022. For the full year 2022, total loans increased $74.8 million, or 12.8%, from $586.4 million at December 31, 2021. Included in the increase in loans for the year was a $22.7 million decrease to $29.6 million at December 31, 2022 from $52.3 million at December 31, 2021 in the bank’s indirect auto loan portfolio.
• Total deposits decreased $42.2 million, or 20.1% annualized, to $798.2 million at December 31, 2022 from $840.4 million at September 30, 2022. While we saw declines in deposit balances for the quarter, a significant portion of the decline was in our real estate trust accounts and internal mortgage servicing accounts which regularly fluctuate. For the full year 2022, total deposits increased $17.4 million, or 2.2%, from $780.8 million at December 31, 2021.
• Asset quality improved with nonperforming assets as a percentage of total assets of 0.05% at December 31, 2022 compared to 0.06% at September 30, 2022. The Company had net charge-offs of $85.4 thousand, or annualized 0.05% of average loans during the quarter compared to net charge-offs of $34.0 thousand, or annualized 0.02% of average loans, for the quarter ended September 30, 2022.
• Cost of funds for the fourth quarter of 2022 increased to 0.71% from 0.33% on a linked quarter basis and from 0.23% for the same period in 2021. Cost of funds for the full year of 2022 increased slightly to 0.37% from 0.27% for the year 2021.

Rick Saunders, Chief Executive Officer, remarked: “2022 has brought rapid improvement in our net interest margin, continued successes in moving new client relationships to our Bank, and an extremely tough environment for the mortgage industry. I am very proud of the accomplishments and resiliency of our team.

As we look forward to 2023, we know that rising deposit competition in the short run will pressure some of the gains made in net interest margin during 2022.  Our loan portfolio will reprice over the next couple of years, which will help offset funding cost increases.  We will continue to focus on improving our cost structure in order to maximize operating leverage as well as ensuring our risk management framework remains robust.” 

 

Financial Summary
		Three Months Ended					Twelve Months Ended
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31		Dec 31	Dec 31
($ in thousands, except per share data)	2022	2022	2022	2022	2021		2022	2021
Earnings:
Net income available to common shareholders	$     1,493	$     2,522	$     1,064	$          852	$          932		$      5,931	$      5,276
Earnings per common share, diluted	0.18	0.31	0.13	0.11	0.12		0.73	0.65
Total revenue(1)	9,417	11,103	9,404	9,097	9,253		39,021	38,907
Net interest margin	3.68 %	3.71 %	3.39 %	3.12 %	3.10 %		3.48 %	3.25 %
Return on average assets(2)	0.65 %	1.06 %	0.45 %	0.37 %	0.41 %		0.63 %	0.64 %
Return on average equity(2)	9.78 %	15.60 %	6.60 %	4.85 %	5.28 %		9.11 %	7.56 %
Efficiency ratio(3)	78.14 %	69.40 %	84.49 %	87.50 %	88.45 %		79.37 %	82.75 %

 

	As of
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(dollars in thousands)	2022	2022	2022	2022	2021
Balance Sheet:
Total assets	$       937,113	$       946,437	$       946,853	$       953,784	$       910,797
Total loans receivable	661,251	646,634	637,953	592,089	586,446
Total deposits	798,184	840,392	830,992	837,663	780,833
Total transaction deposits(4) to total deposits	51.05 %	51.42 %	51.14 %	52.71 %	50.19 %
Loans to deposits	82.84 %	76.94 %	76.77 %	70.68 %	75.11 %
Bank Capital Ratios:
Total risk-based capital ratio	13.43 %	13.47 %	12.97 %	13.67 %	14.07 %
Tier 1 risk-based capital ratio	12.43 %	12.45 %	11.98 %	12.65 %	13.03 %
Tier 1 leverage ratio	10.37 %	9.84 %	9.66 %	9.67 %	9.66 %
Common equity tier 1 capital ratio	12.43 %	12.45 %	11.98 %	12.65 %	13.03 %
Asset Quality Ratios:
Nonperforming assets as a percentage of    total assets	0.05 %	0.06 %	0.06 %	0.11 %	0.10 %
Allowance for loan losses as a percentage of    total loans receivable	1.16 %	1.18 %	1.17 %	1.22 %	1.20 %
Footnotes to table located at the end of this release.

 

CONDENSED CONSOLIDATED INCOME STATEMENTS – Unaudited
		Three Months Ended					Twelve Months Ended
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31		Dec 31
($ in thousands, except per share data)	2022	2022	2022	2022	2021		2022	2021
Interest income
Loans	$        7,848	$        7,555	$        6,781	$        6,380	$        6,663		$        28,565	$        25,286
Investment securities	1,247	1,097	840	571	359		3,755	1,203
Other interest income	316	321	176	73	79		886	234
Total interest income	9,411	8,973	7,797	7,024	7,101		33,206	26,723
Interest expense
Deposits	1,106	446	212	197	224		1,961	1,022
Other interest expense	417	283	252	252	256		1,204	996
Total interest expense	1,523	729	464	449	480		3,165	2,018
Net interest income	7,888	8,244	7,333	6,575	6,621		30,041	24,705
Provision for loan losses	115	170	110	85	95		480	303
Net interest income after provision for loan    losses	7,773	8,074	7,223	6,490	6,526		29,561	24,402
Noninterest income
Mortgage banking income	378	1,721	897	1,420	1,407		4,416	9,531
Service fees on deposit accounts	330	343	357	362	356		1,392	1,221
Debit card and other service charges,    commissions, and fees	500	536	559	498	543		2,093	2,038
Income from bank owned life insurance	92	91	89	88	93		360	374
Gain on sale of securities, net	–	–	–	–	–		–	81
Gain on sale of loans	–	–	–	–	–		–	326
Gain (Loss) on disposal of fixed assets	24	(10)	–	10	69		23	69
Other income	205	178	168	144	164		696	562
Total noninterest income	1,529	2,859	2,070	2,522	2,632		8,980	14,202
Noninterest expense
Compensation and benefits	4,364	4,505	5,059	5,079	4,965		19,006	20,742
Occupancy and equipment	883	923	890	893	862		3,589	3,221
Data processing, technology, and communications	878	846	789	837	920		3,351	3,554
Professional fees	207	185	180	180	202		751	916
Marketing	279	206	184	74	150		744	419
Other	748	1,040	843	897	1,085		3,529	3,345
Total noninterest expense	7,359	7,705	7,945	7,960	8,184		30,970	32,197
Income before provision for income taxes	1,943	3,228	1,348	1,052	974		7,571	6,407
Income tax expense	450	706	284	200	42		1,640	1,131
Net income available to common shareholders	$        1,493	$        2,522	$        1,064	$             852	$             932		$           5,931	$           5,276
Weighted average common shares – basic	7,775	7,777	7,782	7,784	7,785		7,779	7,749
Weighted average common shares – diluted	8,152	8,073	8,094	8,100	8,096		8,127	8,142
Basic income per common share	$           0.19	$           0.32	$           0.32	$           0.14	$           0.12		$              0.76	$              0.68
Diluted income per common share	$           0.18	$           0.31	$           0.31	$           0.13	$           0.12		$              0.73	$              0.65

Net income for the three months ended December 31, 2022 was $1.5 million, or $0.18 per diluted common share, compared to $0.9 million, or $0.12 per diluted common share, for the three months ended December 31, 2021.  Net income for the twelve months ended December 31, 2022 totaled $5.9 million, or $0.73 per diluted common share, compared to $5.3 million, or $0.65 per diluted common share for the twelve months ended December 31, 2021.

Noninterest income for the three months ended December 31, 2022 was $1.5 million, a decrease of $1.1 million from $2.6 million for the same period in 2021.  Noninterest income is largely driven by the Company’s mortgage banking division, which produced net revenue of $0.4 million during the three months ended December 31, 2022 and $4.4 million during the twelve months ended December 31, 2022.  The decrease in mortgage noninterest income is primarily due to a decrease in sales volume compared to the prior year quarter in 2021.  Additionally, the Bank has chosen to portfolio select loans out of the higher margin retail channel which has also contributed to reduced gain on sale proceeds.   

Noninterest expense for the three months ended December 31, 2022 was $7.4 million, a decrease of $0.8 million from $8.2 million for the same period in 2021.  This decrease was primarily driven by a decrease in compensation and benefits data processing, technology, and communications somewhat offset by an increase in marketing expense compared to fourth quarter 2021.    

NET INTEREST INCOME AND MARGIN – Unaudited
	For the  Three Months Ended
	December 31, 2022				December 31, 2021
	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	$      33,754	$              310	3.64 %		$    170,402	$              72	0.17 %
Investment securities	158,204	1,247	3.13 %		71,327	359	2.00 %
Nonmarketable equity securities	871	6	2.82 %		837	7	3.44 %
Loans held for sale	4,767	83	6.91 %		29,269	253	3.43 %
Loans	654,285	7,765	4.71 %		575,351	6,410	4.42 %
Total interest-earning assets	851,881	9,411	4.38 %		847,186	7,101	3.33 %
Allowance for loan losses	(7,665)				(6,973)
Noninterest-earning assets	78,848				76,359
Total assets	$   923,064				$    916,572
Liabilities and Shareholders’ Equity
Interest-bearing liabilities
NOW accounts	$   146,865	$                 67	0.18 %		$    143,784	$              18	0.05 %
Savings & money market	290,709	858	117.00 %		267,404	86	0.13 %
Time deposits	99,847	181	0.72 %		129,717	120	0.37 %
Total interest-bearing deposits	537,421	1,106	0.82 %		540,905	224	0.16 %
FHLB advances and other borrowings	14,330	96	2.67 %		17,995	47	1.05 %
Subordinated debentures	25,687	321	4.95 %		25,654	209	3.23 %
Total interest-bearing liabilities	577,438	1,523	1.05 %		584,554	480	0.33 %
Noninterest bearing deposits	270,975				249,831
Other liabilities	13,551				11,549
Shareholders’ equity	61,100				70,638
Total liabilities and shareholders’ equity	$   923,064				$    916,572
Net interest income (tax equivalent) / interest   rate spread		$         7,888	3.34 %			$       6,621	3.00 %
Net Interest Margin			3.67 %				3.10 %

 

	For the  Twelve Months Ended
	December 31, 2022				December 31, 2021
	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	$      81,509	$              863	1.06 %		$    139,380	$           181	0.13 %
Investment securities	145,694	3,755	2.58 %		55,480	1,203	2.17 %
Nonmarketable equity securities	632	23	3.69 %		891	53	5.97 %
Loans held for sale	14,218	647	4.55 %		33,296	993	2.98 %
Loans	622,418	27,918	4.49 %		532,090	24,293	4.57 %
Total interest-earning assets	864,471	33,206	3.84 %		761,137	26,723	3.51 %
Allowance for loan losses	(7,415)				(6,602)
Noninterest-earning assets	80,187				74,896
Total assets	$   937,243				$    829,431
Liabilities and Shareholders’ Equity
Interest-bearing liabilities
NOW accounts	$   158,135	$              136	0.09 %		$    133,350	$              62	0.05 %
Savings & money market	289,213	1,364	0.47 %		225,021	350	0.16 %
Time deposits	110,028	461	0.42 %		134,582	610	0.45 %
Total interest-bearing deposits	557,376	1,961	0.35 %		492,953	1,022	0.21 %
FHLB advances and other borrowings	13,367	131	0.98 %		17,748	188	1.06 %
Subordinated debentures	25,675	1,073	4.18 %		21,351	808	3.79 %
Total interest-bearing liabilities	596,418	3,165	0.53 %		532,052	2,018	0.38 %
Noninterest bearing deposits	263,085				216,697
Other liabilities	12,656				10,910
Shareholders’ equity	65,084				69,772
Total liabilities and shareholders’ equity	$   937,243				$    829,431
Net interest income (tax equivalent) / interest   rate spread		$      30,041	3.31 %			$    24,705	3.13 %
Net Interest Margin			3.48 %				3.25 %

Net interest income for the three months ended December 31, 2022 was $7.9 million compared to $6.6 million for the three months ended December 31, 2021.  This increase was primarily driven by an increase in interest-earning assets, as well as an increase in interest rates.  Yield on interest-earning assets increased to 4.38% for the three months ended December 31, 2022 from 3.33% for the same period in 2021.   

Net interest income was $30.0 million for the twelve months ended December 31, 2022, an increase of $5.3 million over the same period in 2021.  Increases in average loans and investments contributed to a majority of the increase in net interest income somewhat offset by an increase in yield on interest bearing liabilities.

CONDENSED CONSOLIDATED BALANCE SHEETS – Unaudited
	As of
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(dollars in thousands)	2022	2022	2022	2022	2021
Assets
Cash and cash equivalents:
Cash and due from banks	$             3,917	$             4,147	$                 7,702	$                 4,672	$                 5,299
Interest-bearing deposits with banks	29,880	60,537	45,683	116,192	144,825
Total cash and cash equivalents	33,797	64,684	53,385	120,864	150,124
Time deposits in other banks	259	259	257	257	257
Investment securities:
Investment securities available for sale	162,097	160,504	164,440	144,422	81,917
Other investments	1,921	658	657	521	837
Total investment securities	164,018	161,162	165,097	144,943	82,754
Mortgage loans held for sale	7,940	4,599	19,648	23,528	23,844
Loans receivable:
Loans	661,251	646,634	637,953	592,089	586,446
Less allowance for loan losses	(7,660)	(7,630)	(7,494)	(7,206)	(7,040)
Loans receivable, net	653,591	639,004	630,459	584,883	579,406
Property and equipment, net	22,811	22,868	23,100	23,222	22,805
Mortgage servicing rights	10,441	10,182	14,893	14,536	14,057
Bank owned life insurance	18,836	18,744	18,653	18,564	18,476
Deferred income taxes	8,629	8,629	7,376	5,862	4,128
Other assets	16,791	16,306	13,985	17,125	14,946
Total assets	937,113	946,437	946,853	953,784	910,797
Liabilities
Deposits	$       798,184	$       840,392	$           830,992	$           837,663	$           780,833
Federal Home Loan Bank advances	30,000	–	–	–	10,000
Federal funds and repurchase agreements	7,368	3,726	13,805	11,886	11,372
Subordinated debentures	15,381	15,373	15,365	15,357	15,349
Junior subordinated debentures	10,310	10,310	10,310	10,310	10,310
Other liabilities	12,574	14,472	12,412	11,937	12,131
Total liabilities	873,817	884,273	882,884	887,153	839,995
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	87	88	88	88	88
Treasury stock, at cost	(4,502)	(4,364)	(4,333)	(4,419)	(4,323)
Nonvested restricted stock	(2,121)	(2,291)	(2,500)	(2,572)	(2,668)
Additional paid-in capital	53,968	54,013	54,088	53,980	53,856
Retained earnings	29,916	28,423	25,901	24,837	23,985
Accumulated other comprehensive (loss) income	(14,053)	(13,706)	(9,276)	(5,284)	(137)
Total shareholders’ equity	63,296	62,164	63,969	66,631	70,802
Total liabilities and shareholders’ equity	$       937,113	$       946,437	$           946,853	$           953,784	$           910,797

 

COMMON STOCK SUMMARY – Unaudited
			As of
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(shares in thousands)	2022	2022	2022	2022	2021
Voting common shares outstanding	8,730	8,793	8,801	8,782	8,793
Treasury shares outstanding	(590)	(575)	(571)	(545)	(535)
Total common shares outstanding	8,140	8,218	8,230	8,237	8,258
Tangible book value per common share(5)	$                     7.67	$                     7.46	$                     7.66	$                     7.98	$                     8.46
Stock price:
High	$                     9.50	$                     9.40	$                     9.85	$                  10.20	$                  10.74
Low	$                     8.60	$                     9.00	$                     9.25	$                     9.75	$                     9.95
Period end	$                     8.72	$                     9.14	$                     9.25	$                     9.85	$                  10.20

 

ASSET QUALITY MEASURES – Unaudited
	As of
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(dollars in thousands)	2022	2022	2022	2022	2021
Nonperforming Assets
Commercial
Owner occupied RE	$                     134	$                     135	$                     140	$                     144	$                       152
Non-owner occupied RE	–	–	–	295	–
Construction	–	–	–	–	–
Commercial business	76	146	81	–	–
Consumer
Real estate	1	2	3	343	341
Home equity	–	–	–	–	–
Construction	–	–	–	–	–
Other	119	130	160	104	84
Nonaccruing troubled debt restructurings	143	160	173	190	205
Total nonaccrual loans	$                     473	$                     573	$                     557	$                1,076	$                       782
Other real estate owned	–	–	–	–	135
Total nonperforming assets	$                     473	$                     573	$                     557	$                1,076	$                       917
Nonperforming assets as a percentage of:
Total assets	0.05 %	0.06 %	0.06 %	0.11 %	0.10 %
Total loans receivable	0.07 %	0.09 %	0.09 %	0.18 %	0.16 %
Accruing troubled debt restructurings	$                1,151	$                1,312	$                1,349	$                1,393	$                  1,405
	Three Months Ended
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(dollars in thousands)	2022	2022	2022	2022	2021
Allowance for Loan Losses
Balance, beginning of period	$                7,630	$                7,494	$                7,206	$                7,040	$                  6,934
Loans charged-off	101	76	11	19	5
Recoveries of loans previously charged-off	16	42	189	100	16
Net charge-offs (recoveries)	85	34	(178)	(81)	(11)
Provision for loan losses	115	170	110	85	95
Balance, end of period	$                7,660	$                7,630	$                7,494	$                7,206	$                  7,040
Allowance for loan losses to gross loans receivable	1.16 %	1.18 %	1.17 %	1.22 %	1.20 %
Allowance for loan losses to nonaccrual loans	1619.45 %	1331.59 %	1345.42 %	669.70 %	900.26 %
Footnotes to table located at the end of this release.

Our asset quality improved through December 31, 2022, with nonperforming assets decreasing $100 thousand to $0.5 million, which represents 0.05% of total assets, compared to $0.6 million or 0.06% of total assets at September 30, 2022.  The allowance for loan losses as a percentage of total loans receivable decreased to 1.16% at December 31, 2022, compared to 1.18% at September 30, 2022.  The Company had net charge-offs of $85 thousand for the three months ended December 31, 2022 compared to net recoveries of $11 thousand for the same period in 2021.

LOAN COMPOSITION – Unaudited
	As of
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(dollars in thousands)	2022	2022	2022	2022	2021
Commercial real estate	$             391,661	$             378,589	$             368,316	$             334,508	$             333,060
Consumer real estate	151,533	147,110	142,711	123,908	120,079
Commercial and industrial	69,243	67,200	67,239	66,285	60,687
Consumer and other	48,814	53,735	59,687	67,388	72,620
Total loans, net of deferred fees	661,251	646,634	637,953	592,089	586,446
Less allowance for loan losses	7,660	7,630	7,494	7,206	7,040
Total loans, net	$             653,591	$             639,004	$             630,459	$             584,883	$             579,406

 

DEPOSIT COMPOSITION – Unaudited
	As of
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(dollars in thousands)	2022	2022	2022	2022	2021
Noninterest-bearing	$        255,427	$        277,587	$        265,049	$        273,118	$        238,019
Interest-bearing:
DDA and NOW accounts	152,012	154,550	159,939	168,401	153,889
Money market accounts	221,550	232,711	230,840	217,812	204,432
Savings	65,494	71,929	66,727	61,246	58,566
Time, less than $250,000	80,549	76,530	78,735	84,874	99,059
Time, $250,000 and over	23,152	27,085	29,702	32,212	26,868
Total deposits	$        798,184	$        840,392	$        830,992	$        837,663	$        780,833

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 $937 million. The company employs more than 180 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 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 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

rhaile@firstreliance.com

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SOURCE First Reliance Bancshares