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 3^rd 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    total assets		0.05 %	0.05 %	0.05 %	0.05 %		0.06 %
Allowance for credit losses as a percentage of    total loans receivable		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    losses	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,    commissions, and fees	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   rate spread		$         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   rate spread		$      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   value	1	1	1	1	1
Common Stock – $.01 par value; 20,000,000 shares   authorized	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

rhaile@firstreliance.com

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SOURCE First Reliance Bancshares