PR Newswire | Oct 21, 2021 08:31AM EDT

10/21 07:30 CDT

First Reliance Bancshares Reports Third Quarter 2021 Results FLORENCE, S.C., Oct. 21, 2021

FLORENCE, S.C., Oct. 21, 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 third quarter of 2021.

Third Quarter 2021 Highlights

* Net income for the third quarter of 2021 was $1.3 million, or $0.16 per diluted share, compared to $4.5 million, or $0.56 per diluted share, for the third quarter of 2020. * Total assets increased $78.8 million, or 37.9% annualized, to $911.1 million at September 30, 2021 from $832.2 million at June 30, 2021. * Total loans increased $38.4 million, or 29.2% annualized, to $564.7 million at September 30, 2021 from $526.4 million at June 30, 2021. * Total deposits increased $76.0 million, or 42.7% annualized, to $787.5 million at September 30, 2021 from $711.5 million at June 30, 2021. This growth was primarily driven by noninterest-bearing deposits and money market deposits, which increased $30.7 million and $46.5 million, respectively. * Net interest income for the quarter was $6.3 million, which represents an increase of $44 thousand, or 0.7%, on a linked quarter basis and a decrease of $0.5 million, or 7.5%, compared to the same period in 2020. * Included within net interest income for the three months ended June 30, 2021 and the three months ended September 30, 2020 was $0.3 million and $0.9 million, respectively, of PPP interest and accelerated fee income. The Company sold the PPP portfolios in full during those periods. * Asset quality remained strong, with nonperforming assets as a percentage of total assets decreasing to 0.15% at September 30, 2021 from 0.17% at June 30, 2021. * The Company had net recoveries of $511 thousand, or annualized (0.37%) of average loans during the quarter compared to net recoveries of $6 thousand, or annualized (0.00%) of average loans, for the same period in 2020. * Cost of funds for the third quarter of 2021 decreased to 0.24% from 0.29% on a linked quarter basis and from 0.52% for the same period in 2020. * On August 5, 2021, the Company redeemed all $5.0 million of its 7.00% fixed-to-floating rate subordinated notes. On September 22, 2021, the Company issued $10.0 million of 3.375% fixed-to-floating rate subordinated notes with a 10-year maturity and a call option after 5 years.

Rick Saunders, Chief Executive Officer, remarked on the quarter: "Our third quarter results are representative of our continued focus on organic growth and improving operating scale. The operating environment for the banking industry remains challenging with normalizing mortgage revenues and continued low interest rates. However, despite these challenges, we are continuing to execute the early phase of our growth strategy. We had another quarter of extraordinary deposit growth and continued to grow our loan portfolio within our conservative underwriting framework. Annualized deposit growth of 42.7% and annualized loan growth of 29.2% during the quarter is reflective of our team's ability to move their relationships to First Reliance. I'm especially proud that we continue to maintain our deposit mix, with over 48% of total deposits being comprised of checking balances."

Mr. Saunders continued, "As our loan growth continues, we expect our balance sheet mix to normalize over time, especially as it relates to cash. While our large cash position continues to create downward pressure on net interest margin, revenue, and efficiency, the short-term duration of this asset has protected book value and provides future earnings potential. As the rate environment becomes more favorable, the Company will have more opportunities to deploy this cash strategically."

Mr. Saunders concluded, "I would like to thank all of our associates for their continued hard work and their commitment to our customers, our communities, and our shareholders."

Financial Summary

Three Months Ended Nine Months Ended

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

($ in thousands, except per share data) 2021 2021 2021 2020 2020 2021 2020

Earnings:

Net income available to common shareholders $ 1,288 $ 1,348 $ 1,708 $ 1,389 $ 4,468 $ 4,344 $ 9,227

Earnings per common share, diluted 0.16 0.17 0.21 0.17 0.56 0.53 1.15

Total revenue^(1) 9,570 10,169 9,917 10,858 14,820 29,655 35,603

Net interest margin 3.12% 3.40% 3.36% 3.27% 3.83% 3.30% 3.84%

Return on average assets^(2) 0.60% 0.67% 0.93% 0.72% 2.31% 0.72% 1.72%

Return on average equity^(2) 7.29% 7.83% 9.91% 8.08% 27.73% 8.34% 20.24%

Efficiency ratio^(3) 83.83% 81.82% 77.35% 80.05% 54.28% 80.98% 60.11%

Footnotes to table located at the end of this release.

As of

Sept 30 June 30 Mar 31 Dec 31 Sept 30

(dollars in thousands) 2021 2021 2021 2020 2020

Balance Sheet:

Total assets $ 911,057 $ 832,241 $ 777,735 $ 710,168 $ 781,655

Total loans receivable 564,738 526,362 490,326 477,968 478,745

Total deposits 787,501 711,505 661,217 594,000 595,767

Total transaction deposits^(4)to total deposits 48.25% 48.92% 49.78% 48.51% 47.30%

Loans to deposits 71.71% 73.98% 74.16% 80.47% 80.36%

Bank Capital Ratios:

Total risk-based capital ratio 15.80% 14.89% 16.00% 15.67% 14.75%

Tier 1 risk-based capital ratio 14.64% 13.84% 14.87% 14.52% 13.72%

Tier 1 leverage ratio 10.24% 10.43% 11.13% 10.31% 9.96%

Common equity tier 1 capital ratio 14.64% 13.84% 14.87% 14.52% 13.72%

Asset Quality Ratios:

Nonperforming assets as a percentage of 0.15% 0.17% 0.17% 0.21% 0.19% total assets

Allowance for loan losses as a percentage of 1.23% 1.20% 1.26% 1.29% 1.20% total loans receivable

Footnotes to table located at the end of this release.

CONDENSED CONSOLIDATEDINCOME STATEMENTS - Unaudited

Three Months Ended Nine Months Ended

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

($ in thousands, except per share data) 2021 2021 2021 2020 2020 2021 2020

Interest income

Loans $ 6,382 $ 6,391 $ 5,851 $ 6,156 $ 7,403 $ 18,623 $ 20,621

Investment securities 294 311 238 231 218 844 840

Other interest income 58 38 60 75 67 155 198

Total interest income 6,734 6,740 6,149 6,462 7,688 19,622 21,659

Interest expense

Deposits 257 255 286 376 519 798 1,999

Other interest expense 213 265 262 388 400 740 1,107

Total interest expense 470 520 548 764 919 1,538 3,106

Net interest income 6,264 6,220 5,601 5,698 6,769 18,084 18,553

Provision for loan losses 100 108 - 350 1,000 208 2,550

Net interest income after provision for loan 6,164 6,112 5,601 5,348 5,769 17,876 16,003 losses

Noninterest income

Mortgage banking income 2,151 2,582 3,390 5,014 7,115 8,124 14,510

Service fees on deposit accounts 315 272 279 315 290 865 995

Debit card and other service charges, 532 509 454 427 426 1,495 1,170 commissions, and fees

Income from bank owned life insurance 94 94 93 101 103 281 308

Gain (loss) on sale of securities, net 48 39 - 8 - 87 (220)

Gain on sale of loans - 326 - - - 326 -

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

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

Other income 166 127 100 110 117 393 287

Total noninterest income 3,306 3,949 4,316 5,160 8,051 11,571 17,050

Noninterest expense

Compensation and benefits 5,268 5,518 4,992 5,359 4,892 15,777 12,870

Occupancy 616 584 597 641 628 1,796 1,859

Furniture and equipment 323 403 450 616 572 1,176 1,694

Electronic data processing 337 319 277 241 231 933 625

Professional fees 234 242 238 400 230 715 826

Marketing 113 88 69 155 122 270 255

Other 1,132 1,166 1,048 1,280 1,288 3,347 2,845

Total noninterest expense 8,023 8,320 7,671 8,692 7,963 24,014 20,974

Income before provision for income taxes 1,447 1,741 2,246 1,816 5,857 5,433 12,079

Income tax expense 159 393 538 427 1,389 1,089 2,852

Net income available to common shareholders $ 1,288 $ 1,348 $ 1,708 $ 1,389 $ 4,468 $ 4,344 $ 9,227

Weighted average common shares - basic 7,750 7,681 7,780 7,931 7,929 7,737 7,915

Weighted average common shares - diluted 8,084 8,164 8,168 8,089 8,015 8,160 8,012

Basic income per common share $ 0.17 $ 0.18 $ 0.22 $ 0.18 $ 0.56 $ 0.56 $ 1.17

Diluted income per common share $ 0.16 $ 0.17 $ 0.21 $ 0.17 $ 0.56 $ 0.53 $ 1.15

Net income for the three months ended September 30, 2021 was $1.3 million, or $0.16 per diluted common share, compared to $4.5 million, or $0.56 per diluted common share, for the three months ended September 30, 2020. Net income for the nine months ended September 30, 2021 totaled $4.3 million, or $0.53 per diluted common share, compared to $9.2 million, or $1.15 per diluted common share for the nine months ended September 30, 2020.

Noninterest income for the three months ended September 30, 2021 was $3.3 million, a decrease of $4.8 million from $8.1 million for the same period in 2020. Noninterest income is largely driven by the Company's mortgage banking division, which produced net revenue of $2.2 million on $124 million of mortgage sale volume during the three months ended September 30, 2021. The primary driver of the decrease in mortgage banking income period-over-period was a decrease in margin on loan sales. Additionally, growth in the retail channel drove the increased utilization of bank portfolio products. This negatively affected gain on sale during the quarter by approximately $0.4 million.

Noninterest expense for the three months ended September 30, 2021 was consistent with the same period in 2020 at $8.0 million. Increases in compensation and benefits expense of $0.4 million and electronic data processing expense of $0.1 million were offset by decreases in furniture and equipment expense of $0.2 million and other expenses of $0.2 million. Included in compensation and benefits for the current quarter is approximately $24 thousand in severance expense. The additional increase in compensation and benefits is driven mainly by increased headcount year-over-year.

NET INTEREST INCOME AND MARGIN - Unaudited

For the Three Months Ended

September 30, 2021 September 30, 2020

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 $ 159,307 $ 51 0.13% $ 110,453 $ 23 0.08%

Investment securities 55,049 294 2.12% 36,389 218 2.38%

Nonmarketable equity securities 837 7 3.38% 4,039 44 4.32%

Loans held for sale 32,181 244 3.01% 52,919 442 3.31%

Loans 548,028 6,138 4.44% 497,919 6,961 5.55%

Total interest-earning assets 795,402 6,734 3.36% 701,719 7,688 4.35%

Allowance for loan losses (6,764) (5,027)

Noninterest-earning assets 75,650 76,978

Total assets $ 864,288 $ 773,670

Liabilities and Shareholders' Equity

Interest-bearing liabilities

NOW accounts $ 133,577 $ 16 0.05% $ 107,936 $ 13 0.05%

Savings & money market 246,212 101 0.16% 144,333 80 0.22%

Time deposits 132,972 140 0.42% 161,090 426 1.05%

Total interest-bearing deposits 512,761 257 0.20% 413,359 519 0.50%

FHLB advances and other borrowings 19,839 48 0.96% 85,383 176 0.82%

Subordinated debentures 18,144 165 3.61% 20,810 224 4.27%

Total interest-bearing liabilities 550,744 470 0.34% 519,552 919 0.70%

Noninterest bearing deposits 231,993 179,196

Other liabilities 10,903 10,474

Shareholders' equity 70,648 64,448

Total liabilities and shareholders' equity $ 864,288 $ 773,670

Net interest income / interest rate spread $ 6,264 3.02% $ 6,769 3.65%

Net interest margin 3.12% 3.83%

For the Nine Months Ended

September 30, 2021 September 30, 2020

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 $ 128,926 $ 109 0.11% $ 59,668 $ 93 0.21%

Investment securities 50,139 844 2.25% 40,926 840 2.74%

Nonmarketable equity securities 909 46 6.75% 3,476 105 4.06%

Loans held for sale 34,653 740 2.85% 45,727 1,117 3.25%

Loans 517,512 17,883 4.62% 493,571 19,504 5.26%

Total interest-earning assets 732,139 19,622 3.58% 643,368 21,659 4.48%

Allowance for loan losses (6,478) (4,235)

Noninterest-earning assets 74,404 76,679

Total assets $ 800,065 $ 715,812

Liabilities and Shareholders' Equity

Interest-bearing liabilities

NOW accounts $ 129,834 $ 45 0.05% $ 102,370 $ 35 0.04%

Savings & money market 210,738 263 0.17% 130,707 302 0.31%

Time deposits 136,221 490 0.48% 153,769 1,662 1.44%

Total interest-bearing deposits 476,793 798 0.22% 386,846 1,999 0.69%

FHLB advances and other borrowings 17,665 141 1.06% 74,653 517 0.93%

Subordinated debentures 19,901 599 4.03% 17,698 590 4.46%

Total interest-bearing liabilities 514,359 1,538 0.40% 479,197 3,106 0.86%

Noninterest bearing deposits 205,531 165,458

Other liabilities 10,695 10,378

Shareholders' equity 69,480 60,779

Total liabilities and shareholders' equity $ 800,065 $ 715,812

Net interest income / interest rate spread $ 18,084 3.18% $ 18,553 3.62%

Net interest margin 3.30% 3.84%

Net interest income for the three months ended September 30, 2021 was $6.3 million compared to $6.8 million for the three months ended September 30, 2020. Included within the three months ended September 30, 2020 was approximately $0.9 million of interest and accelerated fee income on PPP loans, which were sold in August 2020. Adjusting for this PPP income, net interest income increased by $0.4 million, or 7.5%, for the three months ended September 30, 2021 compared to the same period in 2020. This increase was primarily driven by an increase in interest-earning assets as well as a decrease in the cost of interest-bearing liabilities, which decreased from 0.70% to 0.34%. Improvements in costs of interest-bearing liabilities continue to be offset to some extent by downward pressure on asset yield. Yield on interest-earning assets decreased to 3.36% for the three months ended September 30, 2021 from 3.93% (excluding PPP interest and fee income) for the same period in 2020. This decrease was driven by both a change in balance sheet mix and an overall decrease in interest rates stemming from decreases in the federal funds target rate during 2020.

Net interest income for the nine months ended September 30, 2021 was $18.1 million compared to $18.6 million for the nine months ended September 30, 2020. As mentioned previously, the prior period amounts were positively affected by $0.9 million of interest and fee income on PPP loans. If interest and fee income on PPP loans are removed from both nine-month periods, net interest income increased by $0.2 million, or 1.1%, period over period.

CONDENSEDCONSOLIDATED BALANCE SHEETS - Unaudited

As of

Sept 30 June 30 Mar 31 Dec 31 Sept 30

(dollars in thousands) 2021 2021 2021 2020 2020

Assets

Cash and cash equivalents:

Cash and due from banks $ 4,930 $ 5,486 $ 5,547 $ 5,521 $ 5,133

Interest-bearing deposits with banks 184,739 144,937 115,577 93,167 134,592

Total cash and cash equivalents 189,669 150,423 121,124 98,688 139,725

Time deposits in other banks 257 256 256 256 256

Investment securities:

Investment securities available for sale 58,470 56,881 54,413 32,759 35,567

Other investments 837 837 837 1,076 3,839

Total investment securities 59,307 57,718 55,250 33,835 39,406

Mortgage loans held for sale 33,667 33,097 48,912 35,642 57,853

Loans receivable:

Loans 564,738 526,362 490,326 477,968 478,745

Less allowance for loan losses (6,934) (6,323) (6,168) (6,173) (5,721)

Loans receivable, net 557,804 520,039 484,158 471,795 473,024

Property and equipment, net 22,364 21,818 18,465 18,491 20,548

Mortgage servicing rights 13,785 13,603 13,353 12,021 11,000

Bank owned life insurance 18,383 18,289 18,195 18,102 18,001

Deferred income taxes 2,798 2,820 3,234 3,452 3,872

Other assets 13,023 14,178 14,788 17,886 17,970

Total assets 911,057 832,241 777,735 710,168 781,655

Liabilities

Deposits $ 787,501 $ 711,505 $ 661,217 $ 594,000 $ 595,767

Federal Home Loan Bank advances 10,000 10,000 10,000 10,000 75,000

Federal funds and repurchase agreements 6,353 8,946 6,955 5,523 12,591

Subordinated debentures 15,498 10,496 10,487 10,459 10,427

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

Other liabilities 10,983 11,393 10,548 11,147 10,178

Total liabilities 840,645 762,650 709,517 641,439 714,273

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 88 88 88 82 81 authorized

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

Treasury stock, at cost (4,281) (3,858) (3,744) (1,680) (1,488)

Nonvested restricted stock (2,737) (2,928) (2,868) (1,487) (1,577)

Additional paid-in capital 53,765 53,776 53,617 51,972 51,824

Retained earnings 23,053 21,765 20,417 18,709 17,320

Accumulated other comprehensive income 523 747 707 1,128 1,217

Total shareholders' equity 70,412 69,591 68,218 68,729 67,382

Total liabilities and shareholders' equity $ 911,057 $ 832,241 $ 777,735 $ 710,168 $ 781,655

COMMON STOCK SUMMARY - Unaudited

As of

Sept 30 June 30 Mar 31 Dec 31 Sept 30

(shares in thousands) 2021 2021 2021 2020 2020

Voting common shares outstanding 8,784 8,788 8,784 8,154 8,129

Non-voting common shares outstanding - - - 410 410

Treasury shares outstanding (530) (489) (481) (234) (202)

Total common shares outstanding 8,254 8,299 8,303 8,330 8,337

Tangible book value per common share^(5) $ 8.41 $ 8.27 $ 8.09 $ 8.12 $ 7.95

Stock price:

High $ 10.50 $ 10.05 $ 10.00 $ 7.80 $ 6.05

Low $ 9.80 $ 9.65 $ 7.46 $ 5.55 $ 4.85

Period end $ 10.30 $ 9.90 $ 9.90 $ 7.75 $ 6.05

Footnotes to table located at the end of this release.

ASSET QUALITY MEASURES - Unaudited

As of

Sept 30 June 30 Mar 31 Dec 31 Sept 30

(dollars in thousands) 2021 2021 2021 2020 2020

Nonperforming Assets

Commercial

Owner occupied RE $ 526 $ 535 $ 385 $ 394 $ 404

Non-owner occupied RE - - - - -

Construction - - - - -

Commercial business - - - - -

Consumer

Real estate 346 383 344 461 346

Home equity - - - - -

Construction - - - - -

Other 121 129 164 242 299

Nonaccruing troubled debt restructurings 220 235 252 270 291

Total nonaccrual loans $ 1,213 $ 1,282 $ 1,145 $ 1,367 $ 1,340

Other real estate owned 150 150 150 164 164

Total nonperforming assets $ 1,363 $ 1,432 $ 1,295 $ 1,531 $ 1,504

Nonperforming assets as a percentage of:

Total assets 0.15% 0.17% 0.17% 0.21% 0.19%

Total loans receivable 0.24% 0.27% 0.26% 0.32% 0.31%

Accruing troubled debt restructurings $ 1,444 $ 1,478 $ 1,544 $ 1,584 $ 2,508

Three Months Ended

Sept 30 June 30 Mar 31 Dec 31 Sept 30

(dollars in thousands) 2021 2021 2021 2020 2020

Allowance for Loan Losses

Balance, beginning of period $ 6,323 $ 6,168 $ 6,173 $ 5,721 $ 4,715

Loans charged-off 72 59 55 43 76

Recoveries of loans previously charged-off 583 106 50 145 82

Net charge-offs (recoveries) (511) (47) 5 (102) (6)

Provision for loan losses 100 108 - 350 1,000

Balance, end of period $ 6,934 $ 6,323 $ 6,168 $ 6,173 $ 5,721

Allowance for loan losses to gross loans receivable 1.23% 1.20% 1.26% 1.29% 1.20%

Allowance for loan losses to nonaccrual loans 571.64% 493.21% 538.69% 451.57% 426.94%

Our asset quality remained strong through September 30, 2021, with nonperforming assets remaining at $1.4 million. The ratio of nonperforming assets to total assets decreased to 0.15% at September 30, 2021 from 0.17% at June 30, 2021. Other real estate owned and repossessed assets remain nominal. The allowance for loan losses as a percentage of total loans receivable increased slightly to 1.23% at September 30, 2021, compared to 1.20% at June 30, 2021. The Company had net recoveries of $511 thousand for the three months ended September 30, 2021 compared to net recoveries of $6 thousand for the same period in 2020. Included in net recoveries for the current quarter was a $532 thousand recovery of a previous charge-off from a single borrower.

LOAN COMPOSITION - Unaudited

As of

Sept 30 June 30 Mar 31 Dec 31 Sept 30

(dollars in thousands) 2021 2021 2021 2020 2020

Commercial real estate $ 318,849 $ 290,198 $ 253,300 $ 259,486 $ 259,100

Consumer real estate 107,651 97,969 91,504 92,602 92,651

Commercial and industrial 61,778 63,545 60,432 58,445 59,704

PPP - - 16,784 - -

Consumer and other 76,460 74,650 68,306 67,435 67,290

Total loans, net of deferred fees 564,738 526,362 490,326 477,968 478,745

Less allowance for loan losses 6,934 6,323 6,168 6,173 5,721

Total loans, net $ 557,804 $ 520,039 $ 484,158 $ 471,795 $ 473,024

DEPOSIT COMPOSITION - Unaudited

As of

Sept 30 June 30 Mar 31 Dec 31 Sept 30

(dollars in thousands) 2021 2021 2021 2020 2020

Noninterest-bearing $ 246,534 $ 215,814 $ 197,831 $ 167,274 $ 173,628

Interest-bearing:

NOW accounts 133,474 132,269 131,304 120,891 108,152

Money market accounts 216,243 169,707 137,913 119,716 113,203

Savings 59,941 57,880 52,085 46,688 41,549

Time, less than $250,000 103,126 106,219 109,295 105,327 122,139

Time, $250,000 and over 28,183 29,616 32,789 34,104 37,096

Total deposits $ 787,501 $ 711,505 $ 661,217 $ 594,000 $ 595,767

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 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 $911 million. The Company employs more than 187 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) 656-5000rhaile@firstreliance.com

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SOURCE First Reliance Bancshares