PR Newswire | Jan 28, 2021 08:30AM EST

01/28 07:30 CST

First Reliance Bancshares Reports Fourth Quarter 2020 Results FLORENCE, S.C., Jan. 28, 2021

FLORENCE, S.C., Jan. 28, 2021 /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 2020.

Fourth Quarter and Year Ended 2020 Highlights

* Net income for the fourth quarter of 2020 was $1.4 million, or $0.17 per diluted share, compared to $0.6 million, or $0.07 per diluted share, for the fourth quarter of 2019, representing an increase of 131.9%. Net income for the year ended December 31, 2020 was $10.6 million, or $1.32 per diluted share, compared to $4.1 million, or $0.51 per diluted share, for the year ended December 31, 2019, representing an increase of 159.6%. * Pre-tax, pre-provision earnings for the fourth quarter of 2020 were $2.2 million, up $0.9 million, or 72.3%, from the same period in 2019. Pre-tax, pre-provision earnings for the year ended December 31, 2020 were $16.8 million, up $10.5 million, or 165.6%, from the same period in 2019. * Mortgage volume remained near record levels and resulted in mortgage income (net of mortgage servicing rights amortization and valuation adjustment) of $5.0 million during the fourth quarter of 2020, an increase of $4.3 million, or 647.2%, from the fourth quarter of 2019. * Mortgage servicing rights were $12.0 million at December 31, 2020, representing a value of 0.96% of total mortgage loans being serviced, compared to $11.0 million at December 31, 2019, representing a value of 1.15% of total mortgage loans being serviced. * Asset quality remained strong, with non-performing assets as a percentage of total assets decreasing to 0.21% at December 31, 2020 compared to 0.28% at December 31, 2019. * Cost of funds for the fourth quarter of 2020 decreased to 0.60% from 0.71% on a linked quarter basis and from 1.33% for the same period in 2019. * The Company paid off $55.0 million in Federal Home Loan Bank advances at the end of December 2020, resulting in prepayment penalties of $0.3 million. These advances had a weighted average interest rate of 0.86% and a weighted average remaining life of 1.7 years. The advances and the associated cash balances negatively impacted net interest margin by approximately 34 basis points for the fourth quarter of 2020. * The Company elected to forego development of a previously planned branch location in Forest Acres, SC and wrote off $0.5 million in capitalized assets associated with the site during the fourth quarter.

"We are pleased to report that First Reliance closed out a record-setting year with another strong quarter and ended with net income of $10.6 million, or $1.32 per diluted common share, for the year, which represents the best year in the Company's 21-year history. While this year has presented many challenges, we believe our resilience and our commitment to superior customer service positions the Company for continued growth in our markets," Rick Saunders, Chief Executive Officer, said. "I would like to thank all of our team members, especially those on the frontlines, for their tireless work in meeting the needs of our customers and for their commitment to our core values during this challenging and tumultuous time."

Mr. Saunders continued, "Given the strong performance and income during the year, the Company has taken the opportunity to fortify our balance sheet, as reflected by increased capital, liquidity, and loan loss reserve levels at the end of the year. We have been intentional about our current balance sheet mix, which provides protection from the potential economic fallout from COVID-19 while also positioning us to deploy cash strategically as those risks begin to subside. With additional economic stimulus as well as positive developments in vaccine efficacy, we intend to begin executing our strategy of funding high-quality interest-earning assets in the coming quarters. We will also continue to focus on countering the potential negative implications of COVID-19 by diversifying our revenue streams, growing our core deposit base, and eliminating unnecessary expenses."

Mr. Saunders concluded, "While this year has been challenging, it has also brought about immense positive change to our organization. We've focused on bringing in highly qualified personnel across all areas of the Company, including executive management, lending and retail, finance, operations, and information technology. We believe this team positions us to take on the inevitable challenges ahead and to create a very bright future for our organization."

COVID-19 Update

The fourth quarter brought about significant new developments in the fight against COVID-19. Positive trends in vaccine efficacy as well as additional economic stimulus provides defense against the worst economic outcomes from the pandemic. The Company has already begun taking applications for the second round of Paycheck Protection Program (PPP) loans and we stand ready to continue providing assistance to our customers. Our branch locations are back open to better serve our customers and we've taken the necessary precautions to ensure the safety of those customers as well as our team members. As of December 31, 2020, total loan deferrals had fallen to $7.1 million on four loans, all on their second deferral, totaling 1.5% of total loans receivable.

Financial Summary

Three Months Ended Twelve Months Ended

($ in thousands, except per share data) Dec 31 Sept 30 June 30 Mar 31 Dec 31 Dec 31 Dec 31 2020 2020 2020 2020 2019 2020 2019

Earnings:

Net income available to common shareholders $ 1,389 $ 4,468 $ 3,901 $ 858 $ 599 $ 10,616 $ 4,089

Earnings per common share, diluted 0.17 0.56 0.49 0.11 0.07 1.32 0.51

Total revenue^(1) 10,858 14,820 13,241 7,542 7,502 46,461 31,600

Net interest margin 3.27% 3.86% 3.55% 4.09% 3.96% 3.69% 3.97%

Return on average assets^(2) 0.72% 2.31% 2.12% 0.54% 0.37% 1.46% 0.66%

Return on average equity^(2) 8.08% 27.73% 26.20% 5.89% 4.20% 16.91% 7.46%

Efficiency ratio^(3) 80.05% 54.28% 54.40% 81.15% 84.09% 63.83% 79.98%

Footnotes to table located at the end of this release.

As of

($ in thousands, except per share data) Dec 31 Sept 30 June 30 Mar 31 Dec 31 2020 2020 2020 2020 2019

Balance Sheet:

Total assets $ 710,168 $ 781,655 $ 762,647 $ 660,886 $ 661,612

Total loans receivable 477,968 478,745 512,384 480,573 480,183

Total deposits 641,439 595,767 582,361 506,225 505,088

Total transaction deposits^(4)to total deposits 48.51% 47.30% 49.62% 49.06% 44.84%

Loans to deposits 80.47% 80.36% 87.98% 94.93% 95.07%

Bank Capital Ratios:

Total risk-based capital ratio 15.67% 14.75% 13.31% 12.45% 11.54%

Tier 1 risk-based capital ratio 14.52% 13.72% 12.48% 11.75% 10.88%

Tier 1 leverage ratio 10.31% 9.96% 9.68% 10.29% 9.23%

Common equity tier 1 capital ratio 14.52% 13.72% 12.48% 11.75% 10.88%

Asset Quality Ratios:

Nonperforming assets as a percentage of 0.21% 0.19% 0.21% 0.26% 0.28% total assets

Allowance for loan losses as a percentage of 1.29% 1.20% 0.92% 0.81% 0.74% total loans receivable

Footnotes to table located at the end of this release.

CONDENSED CONSOLIDATED INCOME STATEMENTS - Unaudited

Three Months Ended Twelve Months Ended

Dec 31 Sept 30 June 30 Mar 31 Dec 31 December 31

(in thousands, except per share data) 2020 2020 2020 2020 2019 2020 2019

Interest income

Loans $ 6,156 $ 7,403 $ 6,650 $ 6,568 $ 6,760 $ 26,777 $ 26,190

Investment securities 231 218 299 323 327 1,071 1,335

Other interest income 75 67 41 90 91 273 329

Total interest income 6,462 7,688 6,990 6,981 7,178 28,121 27,854

Interest expense

Deposits 376 519 652 828 1,043 2,375 4,635

Other interest expense 388 400 371 336 397 1,495 1,322

Total interest expense 764 919 1,023 1,164 1,440 3,870 5,957

Net interest income 5,698 6,769 5,967 5,817 5,738 24,251 21,897

Provision for loan losses 350 1,000 1,178 380 470 2,908 984

Net interest income after provision for loan 5,348 5,769 4,789 5,437 5,268 21,343 20,913 losses

Noninterest income

Mortgage banking income 5,916 8,270 8,062 4,274 1,798 26,522 6,901

Mortgage servicing rights amortization and (902) (1,155) (1,429) (3,512) (1,127) (6,998) (1,307) valuation adjustment

Service fees on deposit accounts 315 290 242 463 447 1,310 1,682

Debit card and other service charges, 427 426 429 315 408 1,597 1,548 commissions, and fees

Income from bank owned life insurance 101 103 102 103 96 409 386

Gain (loss) on sale of securities, net 8 - (211) (9) 1 (212) 37

Loss on extinguishment of debt (287) - - - - (287) -

Loss on disposal of fixed assets (528) - - - - (528) -

Other income 110 117 79 91 141 397 456

Total noninterest income 5,160 8,051 7,274 1,725 1,764 22,210 9,703

Noninterest expense

Compensation and benefits 5,359 4,892 4,395 3,583 3,718 18,229 15,369

Occupancy 641 628 619 612 603 2,500 2,377

Furniture and equipment 616 572 585 537 435 2,310 1,822

Electronic data processing 241 231 200 194 190 866 926

Professional fees 400 230 329 267 377 1,226 1,124

Marketing 155 122 56 77 84 410 304

Other 1,280 1,288 771 778 838 4,117 3,352

Total noninterest expense 8,692 7,963 6,955 6,048 6,245 29,658 25,274

Income before provision for income taxes 1,816 5,857 5,108 1,114 787 13,895 5,342

Income tax expense 427 1,389 1,207 256 188 3,279 1,253

Net income available to common shareholders $ 1,389 $ 4,468 $ 3,901 $ 858 $ 599 $ 10,616 $ 4,089

Weighted average common shares - basic 7,931 7,929 7,915 7,901 7,903 7,919 7,938

Weighted average common shares - diluted 8,089 8,015 7,998 8,014 8,047 8,038 8,062

Basic income per common share $ 0.18 $ 0.56 $ 0.49 $ 0.11 $ 0.08 $ 1.34 $ 0.52

Diluted income per common share $ 0.17 $ 0.56 $ 0.49 $ 0.11 $ 0.07 $ 1.32 $ 0.51

Net income for the three months ended December 31, 2020 was $1.4 million, or $0.17 per diluted common share, compared to $0.6 million, or $0.07 per diluted common share, for the three months ended December 31, 2019. Net income for the twelve months ended December 31, 2020 totaled $10.6 million, or $1.32 per diluted common share, compared to $4.1 million, or $0.51 per diluted common share for the nine months ended December 31, 2019.

Noninterest income for the three months ended December 31, 2020 was $5.2 million, a $3.4 million increase from $1.8 million for the same period in 2019. Noninterest income is largely driven by the Company's mortgage banking division, which produced income of $5.0 million on $172 million in mortgage volume during the three months ended December 31, 2020. That represents an increase of $4.3 million in income from the same period in 2019. Noninterest income for the three months ended December 31, 2020 was also affected by the Company's decision to pay off Federal Home Loan Bank advances and dispose of previously capitalized assets related to a planned branch site, resulting in one-time losses of $0.3 million and $0.5 million, respectively.

Noninterest expense increased by $2.4 million or 39.2%, for the three months ended December 31, 2020 compared to the same period in 2019. The increase in noninterest expense is largely driven by an increase of $1.6 million in compensation and benefits. The increase in compensation and benefits is driven by an increase in mortgage incentives as well as the addition of personnel throughout the year.

NET INTEREST INCOME AND MARGIN - Unaudited

For the Three Months Ended

December 31, 2020 December 31, 2019

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 $ 134,396 $ 33 0.10% $ 19,378 $ 71 1.46%

Investment securities 34,175 231 2.69% 46,443 327 2.81%

Nonmarketable equity securities 3,261 42 5.01% 2,237 20 3.65%

Loans held for sale 48,984 367 3.01% 36,852 363 3.94%

Loans 476,253 5,789 4.86% 474,153 6,397 5.40%

Total interest-earning assets 697,069 6,462 3.71% 579,063 7,178 4.96%

Allowance for loan losses (6,111) (2,528)

Noninterest-earning assets 77,828 72,772

Total assets $ 768,786 $ 649,307

Liabilities and Shareholders' Equity

Interest-bearing liabilities

NOW accounts $ 115,304 $ 13 0.04% $ 86,536 $ 10 0.05%

Savings & money market 160,555 77 0.20% 121,712 133 0.43%

Time deposits 146,406 286 0.79% 170,875 900 2.11%

Total interest-bearing deposits 422,265 376 0.36% 379,123 1,043 1.10%

FHLB advances and other borrowings 67,242 164 0.96% 38,872 209 2.17%

Subordinated debentures 20,757 224 4.28% 15,310 188 4.91%

Total interest-bearing liabilities 510,264 764 0.60% 433,305 1,440 1.33%

Noninterest bearing deposits 179,037 131,281

Other Liabilities 10,720 27,654

Shareholders' equity 68,765 57,067

Total liabilities and shareholders' equity $ 768,786 $ 649,307

Net interest income (tax equivalent) / interest $ 5,698 3.11% $ 5,738 3.63% rate spread

Net Interest Margin 3.27% 3.96%

For the Twelve Months Ended

December 31, 2020 December 31, 2019

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 $ 78,452 $ 126 0.16% $ 14,280 $ 261 1.83%

Investment securities 39,237 1,071 2.73% 47,992 1,335 2.78%

Nonmarketable equity securities 3,422 147 4.29% 1,441 68 4.73%

Loans held for sale 46,546 1,485 3.19% 25,479 1,019 4.00%

Loans 489,218 25,292 5.17% 462,881 25,171 5.44%

Total interest-earning assets 656,875 28,121 4.28% 552,073 27,854 5.05%

Allowance for loan losses (4,707) (2,788)

Noninterest-earning assets 76,419 72,394

Total assets $ 728,587 $ 621,679

Liabilities and Shareholders' Equity

Interest-bearing liabilities

NOW accounts $ 105,621 $ 47 0.04% $ 82,455 $ 37 0.05%

Savings & money market 138,210 379 0.27% 118,984 525 0.44%

Time deposits 151,918 1,949 1.28% 187,177 4,073 2.18%

Total interest-bearing deposits 395,749 2,375 0.60% 388,616 4,635 1.19%

FHLB advances and other borrowings 71,870 681 0.95% 19,889 541 2.72%

Subordinated debentures 18,382 814 4.43% 15,310 781 5.11%

Total interest-bearing liabilities 486,001 3,870 0.80% 423,815 5,957 1.41%

Noninterest bearing deposits 168,859 119,712

Other Liabilities 10,941 23,346

Shareholders' equity 62,786 54,806

Total liabilities and shareholders' equity $ 728,587 $ 621,679

Net interest income (tax equivalent) / interest $ 24,251 3.48% $ 21,897 3.64% rate spread

Net Interest Margin 3.69% 3.97%

Net interest income decreased $40 thousand, or 0.7%, to $5.7 million for the three months ended December 31, 2020 compared to the three months ended December 31, 2019. The minimal change in net interest income over the period was caused by a decrease in both the yield on interest-earning assets and the cost of interest-bearing liabilities. Yield on interest-earning assets decreased to 3.71% for the three months ended December 31, 2020 from 4.96% for three months ended December 31, 2019. The decrease was mainly driven by a change in balance sheet mix, which was strategically positioned to be cash-heavy during the quarter. Yield was also negatively affected to a lesser degree by decreases in the federal funds target rate. The Company continues to reduce its cost of funds, which decreased to 0.60% for the three months ended December 31, 2020 from 1.33% for the same period in 2019. Transaction deposits increased by $76.5 million, to $294.3 million at December 31, 2020 from $217.8 million at December 31, 2019 and were aided in part by deposit growth as a result of participating in the PPP.

Net interest income increased $2.4 million, or 10.8%, to $24.3 million for the twelve months ended December 31, 2020 compared to $21.9 for the twelve months ended December 31, 2019. The increase is mainly driven by lower cost of funds, which decreased to 0.80% for the twelve months ended December 31, 2020 compared to 1.41% for the twelve months ended December 31, 2019.

CONDENSED CONSOLIDATED BALANCE SHEETS - Unaudited

As of

Dec 31 Sept 30 Jun 30 March 31 Dec 31

($ in thousands, except per share data) 2020 2020 2020 2020 2019

Assets

Cash and cash equivalents:

Cash and due from banks $ 5,521 $ 5,133 $ 4,952 $ 16,869 $ 12,945

Interest-bearing deposits with banks 93,167 134,592 78,299 18,667 27,395

Total cash and cash equivalents 98,688 139,725 83,251 35,536 40,340

Time deposits in other banks 256 256 255 255 254

Investment securities:

Investment securities available for sale 32,759 35,567 28,237 34,842 35,715

Investment securities held to maturity - - 9,318 9,767 10,417

Other investments 1,076 3,839 4,264 2,989 2,423

Total investment securities 33,835 39,406 41,819 47,598 48,555

Mortgage loans held for sale 35,642 57,853 57,329 34,042 27,901

Loans receivable:

Loans 477,968 478,745 512,384 480,573 480,183

Less allowance for loan losses (6,173) (5,721) (4,715) (3,877) (3,547)

Loans receivable, net 471,795 473,024 507,669 476,696 476,636

Property and equipment, net 18,491 20,548 20,523 20,528 19,967

Mortgage servicing rights 12,021 11,000 9,698 8,421 11,023

Bank owned life insurance 18,102 18,001 17,898 17,796 17,692

Deferred income taxes 3,452 3,872 5,068 6,156 6,581

Other assets 17,886 17,970 19,137 13,858 12,663

Total assets 710,168 781,655 762,647 660,886 661,612

Liabilities

Deposits $ 594,000 $ 595,767 $ 582,361 $ 506,225 $ 505,088

Federal Home Loan Bank advances 10,000 75,000 85,000 55,000 43,300

Federal funds and repurchase agreements 5,523 12,591 2,464 16,530 31,137

Subordinated debentures 10,459 10,427 10,358 4,835 4,881

Junior subordinated debentures 10,310 10,310 10,310 10,310 10,310

Other liabilities 11,147 10,178 9,814 9,971 9,811

Total liabilities 641,439 714,273 700,307 602,871 604,527

Shareholders' equity

Preferred stock - Series D non-cumulative, no par 1 1 1 1 1 value

Common Stock - $.01 par value; 20,000,000 shares 82 81 81 81 80 authorized

Non-Voting Common Stock, $.01 par value; 4 4 4 4 4 430,000 shares authorized

Treasury stock, at cost (1,680) (1,488) (1,478) (1,402) (1,283)

Nonvested restricted stock (1,487) (1,577) (1,748) (1,757) (1,254)

Additional paid-in capital 51,972 51,824 51,822 51,652 51,137

Accumulated other comprehensive income 1,128 1,217 806 606 308

Retained earnings 18,709 17,320 12,852 8,830 8,092

Total shareholders' equity 68,729 67,382 62,340 58,015 57,085

Total liabilities and shareholders' equity $ 710,168 $ 781,655 $ 762,647 $ 660,886 $ 661,612

COMMON STOCK SUMMARY - Unaudited

As of

Dec 31 Sept 30 Jun 30 Mar 31 Dec 31

(shares in thousands) 2020 2020 2020 2020 2019

Voting common shares outstanding 8,154 8,129 8,133 8,103 8,034

Non-voting common shares outstanding 410 410 410 410 410

Treasury shares outstanding (234) (202) (200) (187) (184)

Total common shares outstanding 8,330 8,337 8,343 8,326 8,260

Tangible book value per common share^(5) $ 8.12 $ 7.95 $ 7.34 $ 6.83 $ 6.76

Stock price:

High $ 7.80 $ 6.05 $ 5.50 $ 7.82 $ 7.90

Low $ 5.55 $ 4.85 $ 4.93 $ 5.50 $ 7.60

Period end $ 7.75 $ 6.05 $ 5.07 $ 5.50 $ 7.82

Footnotes to table located at the end of this release.

ASSET QUALITY MEASURES - Unaudited

Ending Balance

(dollars in thousands) Dec 31 Sept 30 June 30 Mar 31 Dec 31 2020 2020 2020 2020 2019

Nonperforming Assets

Commercial

Owner occupied RE $ 394 $ 404 $ 413 $ 416 $ 425

Non-owner occupied RE - - - - -

Construction - - - - -

Commercial business - - 135 12 39

Consumer

Real estate 461 346 345 356 411

Home equity - - - - -

Construction - - - - -

Other 242 299 206 246 256

Nonaccruing troubled debt restructurings 270 291 318 298 344

Total nonaccrual loans $ 1,367 $ 1,340 $ 1,417 $ 1,328 $ 1,475

Other real estate owned 164 164 209 392 347

Total nonperforming assets $ 1,531 $ 1,504 $ 1,626 $ 1,720 $ 1,822

Nonperforming assets as a percentage of:

Total assets 0.21% 0.19% 0.21% 0.26% 0.28%

Total loans receivable 0.32% 0.31% 0.32% 0.36% 0.38%

Accruing troubled debt restructurings $ 1,584 $ 2,508 $ 2,620 $ 3,502 $ 3,584

Quarter Ended

(dollars in thousands) Dec 31 Sept 30 June 30 March 31 Dec 31 2020 2020 2020 2020 2019

Allowance for Loan Losses

Balance, beginning of period $ 5,721 $ 4,715 $ 3,877 $ 3,547 $ 3,251

Loans charged-off 43 76 452 168 222

Recoveries of loans previously charged-off 145 82 112 118 48

Net charge-offs (recoveries) (102) (6) 340 50 174

Provision for loan losses 350 1,000 1,178 380 470

Balance, end of period $ 6,173 $ 5,721 $ 4,715 $ 3,877 $ 3,547

Allowance for loan losses to gross loans receivable 1.29% 1.20% 0.92% 0.81% 0.74%

Allowance for loan losses to nonaccrual loans 451.57% 426.94% 332.75% 291.94% 240.47%

Our asset quality continued to be strong through December 31, 2020, with nonperforming assets decreasing to $1.5 million at December 31, 2020 from $1.8 million at December 31, 2019. The ratio of nonperforming assets to total assets declined to 0.21% at December 31, 2020, a decrease of 7 basis points compared to December 31, 2019. Other real estate owned and repossessed assets remain nominal. The allowance for loan losses as a percentage of total loans receivable increased to 1.29% at December 31, 2020, compared to 0.74% at December 31, 2019, primarily due to provisioning associated with the potential economic impact of the COVID-19 pandemic. The Company had net recoveries of $102 thousand for the three months ended December 31, 2020 compared to net charge-offs of $174 thousand for the three months ended December 31, 2019. "While we have not seen increased delinquencies and do not anticipate a significant impact to our asset quality, we believe it is prudent to reflect the COVID-19 pandemic in our allowance models. During Q4 2020, we made provisions for loan losses totaling $0.4 million, which brings our total provisions for 2020 to $2.9 million, an increase of $1.9 million compared to 2019. We are actively performing stress tests on our loan portfolio, monitoring the political and regulatory landscape, and monitoring COVID-19 hotspots and the impact it may have on the markets we serve. The Company has minimal exposure to those industries that may have an elevated exposure to COVID-19," said Mr. Saunders.

LOAN COMPOSITION - Unaudited

Quarter Ended

Dec 31 Sept 30 June 30 Mar 31 Dec 31

(dollars in thousands) 2020 2020 2020 2020 2019

Commercial

Owner occupied RE $ 106,721 $ 104,173 $ 113,205 $ 115,711 $ 116,244

Non-owner occupied RE 88,560 79,838 70,748 69,474 59,287

Construction 29,099 35,579 35,029 29,523 33,196

Business 57,512 63,163 62,464 63,522 61,129

PPP - - 30,211 - -

Total commercial loans 281,892 282,753 311,657 278,230 269,856

Consumer

Real Estate 96,458 97,904 99,565 97,465 99,394

Home equity 19,456 20,244 21,895 21,362 21,987

Construction 13,892 12,831 11,642 9,617 8,205

Other 66,270 65,013 67,625 73,899 80,741

Total consumer loans 196,076 195,992 200,727 202,343 210,327

Total loans, net of deferred fees 477,968 478,745 512,384 480,573 480,183

Less allowance for loan losses 6,173 5,721 4,715 3,877 3,547

Total loans, net $ 471,795 $ 473,024 $ 507,669 $ 476,696 $ 476,636

DEPOSIT COMPOSITION - Unaudited

Quarter Ended

Dec 31 Sept 30 June 30 Mar 31 Dec 31

(dollars in thousands) 2020 2020 2020 2020 2019

Non-interest bearing $ 167,274 $ 173,628 $ 185,208 $ 144,359 $ 137,312

Interest bearing:

NOW accounts 120,891 108,152 103,732 104,003 89,169

Money market accounts 119,716 113,203 101,083 94,778 94,742

Savings 46,688 41,549 34,392 26,270 25,730

Time, less than $250,000 105,327 122,139 120,782 104,841 121,818

Time, $250,000 and over 34,104 37,096 37,164 31,974 36,317

Total Deposits $ 594,000 $ 595,767 $ 582,361 $ 506,225 $ 505,088

Footnotes to tables:

(1) Total revenue is the sum of net interest income and noninterest income.

(2) Annualized for the respective three-month period.

(3) Noninterest expense divided by the sum of net interest income and noninterest income annualized for respective three-month period.

(4) Includes noninterest-bearing and interest-bearing NOW accounts.

The tangible book value per share is calculated as total shareholders'(5) 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 $710 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 three companies throughout South Carolina to receive the Best Places To Work in South Carolina award all 15 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. In addition to offering a full range of personalized community banking products and services for individuals, small businesses, and corporations, First Reliance offers two unique community-customers programs, which include: Hometown Heroes, a package of benefits for those serving our communities and Check N Save, an outreach program for the unbanked or under-banked. We also offer a full suite of digital banking services, a Customer Service Guaranty, a Mortgage Service Guaranty, and are open on most traditional holidays.

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 HaileSEVP & Chief Financial Officer(843) 656-5000 rhaile@firstreliance.com

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SOURCE First Reliance Bancshares, Inc.