PR Newswire | Oct 28, 2020 06:01AM EDT

10/28 05:01 CDT

First Reliance Reports Record 3rd Quarter 2020 Net Income Of $4.5 Million FLORENCE, S.C., Oct. 28, 2020

FLORENCE, S.C., Oct. 28, 2020 /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 three-month period ended September 30, 2020.

2020 Third Quarter Highlights

* Pre-tax, pre-provision Q3 2020 earnings of $6.9 million, a 193.4% increase over Q3 2019; * Pre-tax, pre-provision earnings for the nine-month period ended September 30, 2020 of $14.6 million, a 437.4% increase over the same period of 2019; * Net income for Q3 2020 improved to $4.5 million, a 196.5% increase over Q3 2019; * Diluted EPS for Q3 2020 improved to $0.56 per common share, a 194.7% increase over Q3 2019; * Net income for the nine-month period ended Q3 2020 totaled $9.2 million, or $1.15 per diluted common share, compared to $2.0 million, or $0.25 per diluted common share for the same nine-month period of 2019; * Tangible book value increased 18.5% over Q3 2019 to $7.95; * Total risk-based capital improved 362 basis points to 14.75% at Q3 2020, compared to 11.13% at Q3 2019; * Total assets increased 18.9% to $782 million at Q3 2020, compared to $658 million at Q3 2019; * Cost of funds decreased 60 basis points to 0.54% for Q3 2020 compared to 1.14% for Q3 2019; * Cost of funds percentile ranking of all banks in the U.S. improved to 34% at September 30, 2020, compared to 65% one year ago (Source: SP Global); * Total loan deferrals outstanding at Q3 2020 totaled $7.8 million, or 1.6% of total loans; * Transaction deposits to total deposits increased to 47.3% at Q3 2020 compared to 40.06% at Q3 2019; * Net interest margin remained flat at 3.86% compared to Q3 2019, however improved 31 basis points from Q2 2020; * Provision expense totaled $1 million for Q3 2020 compared to $209 thousand for Q3 2019; * Total deposits increased 17.1% to $596 million at Q3 2020 compared to $509 million at Q3 2019; * Total deposits increased $13.1 million at $596 million for Q3 2020 compared to $582 million for Q2 2020; * Asset quality continues to be strong, with nonperforming assets to average assets at 0.19% and past due ratio at 0.37% at Q3 2020; and * Strong mortgage revenues of $7.5 million for Q3 2020 compared to $2.3 million for Q3 2019

"We are extremely pleased to report that First Reliance again has achieved record-setting revenues with a net income of $4.5 million, or $0.56 per diluted common share, for the three-month period ended September 30, 2020. This achievement in Q3 2020 positions the Company to continue its successful financial performance through the balance of 2020," Rick Saunders, President and CEO, said. "I am proud to announce that this quarter supplants last quarter as best in the Company's 21-year history, showing excellent loan growth, increased capital levels, higher liquidity levels, and record-setting mortgage volumes."

Mr. Saunders continued, "During Q3 2020, First Reliance recognized mortgage revenues of $7.5 million compared to $2.3 million during the same period one year ago. Given the strong performance and income, the Company has taken the opportunity to fortify the overall balance sheet, as reflected in the increase in capital levels and liquidity position. In addition, the Company has taken this period to acquire key talent and to enhance its infrastructure and Information Technology department. We have strategically slowed loan growth to counter the potential negative implications of COVID, focusing on diversifying our revenue streams, growing our core deposit base, and eliminating unnecessary expenses. As COVID concerns diminish and with our Company operating within eight distinct markets throughout North and South Carolina, we stand ready to take advantage of market disruptions brought on by bank consolidations. We expanded our Lake Norman loan production office in North Carolina into a full service branch at the end of August in order to serve the growing needs of this market. Additionally, we are exploring expansion within the next few months into the downtown Columbia, South Carolina market, an area well-positioned for growth."

First Reliance Bank's commitment to making their customers' lives better has resulted in a 93% customer satisfaction score in a 2020 independent customer survey. The rating is 13 points higher than the average national bank satisfaction score of 80% and 10 points higher than the average for community banks of 83% according to the 2019 American Customer Satisfaction Index. Additionally, the Company has been named a "Best Places to Work in South Carolina" for the 15th consecutive year. In the "Best Places To Work" survey, the bank's associate engagement score increased to 95%up from 90% in 2019 and a remarkable 23 points above the average engagement score for a company. "We are especially excited to achieve these three benchmarks even through the COVID pandemic," said Mr. Saunders.

Payroll Protection Program Participation

During Q2 and Q3 2020, the Company was a participating lender in the Small Business Administration ("SBA") Payroll Protection Program ("PPP") created under the Coronavirus Aid, Relief, and Economic Security Act. The Company directly originated 186 PPP loans totaling $30.2 million. As regulations and guidance for PPP loans and the forgiveness process continued to change and evolve, management recognized the operational risk and complexity associated with this portfolio and decided to pursue the sale of the PPP loan portfolio to a third party better suited to support and serve our PPP customers through the loan forgiveness process. This loan sale will allow our team to focus on serving our customers and proactively monitor and address potential credit risk brought on by the pandemic. On August 28, 2020, we completed the sale of our PPP loan portfolio to The Loan Source, Inc., together with its servicing partner ACAP SME LLC, and immediately recognized SBA lender fee income of $504 thousand, net of sale and processing costs.

COVID-19 Response

The conditions surrounding COVID-19 and the corresponding economic outlook continue to remain uncertain. While there is much unknown about the economic impact of the pandemic, First Reliance has reacted by crafting effective response plans and also preparing our balance sheet and our resources for an uncertain future. In order to aid our many business customers in their time of financial hardship, we modified or deferred payments on 414 loans up to 60 days, totaling $82.2 million during Q2 2020 with no additional new modifications or deferments in Q3 2020. As of September 30, 2020, total loan deferrals had fallen to $7.8 million on seven loans, all on their second deferral, totaling 1.6% of total loans outstanding.

In order to protect our customers and employees during the COVID-19 pandemic, we again moved to drive-through only service on July 17, 2020. We continue to serve our customers through other channels or in person when requested. In order to protect against economic uncertainty arising from the COVID-19 pandemic, we have performed stress testing on our loan portfolio, as well as capital and liquidity needs. Results indicated no material exposure to industries with an elevated risk to Covid-19 within our loan portfolio. We continue to monitor the COVID-19 pandemic trends and anticipate reopening our lobbies sometime in Q4 2020 unless changes occur in our markets.

First Reliance hosted a roundtable discussion in July to talk about the South Carolina banking community's support of small businesses during the COVID-19 pandemic. Congressman Tom Rice (SC-7) and Fred Green, President and CEO of the S.C. Bankers Association, led the panel of 13 small business owners in the Florence area. The discussion focused on the experience of each business applying for PPP funds and the role the loan had in helping their businesses survive as non-essential businesses were mandated to close.

"We are committed to supporting our customers and feel it's important to connect them with our congressional leaders so that they have an opportunity to discuss the impact of the Paycheck Protection Program and the ongoing challenges they face with their businesses during these unprecedented times," said Mr. Saunders.

Financial Summary

Quarter Ended

Sept 30 June 30 Mar 31 Dec 31 Sept 30

2020 2020 2020 2019 2019

Earnings ($ in thousands, except per share data):

Net income available to common shareholders $ 4,468 $ 3,901 $ 858 599 1,507

Earnings per common share, diluted 0.56 0.49 0.11 0.08 0.19

Total revenue^(1) 14,820 13,241 7,542 7,502 8,641

Net interest margin 3.86% 3.55% 4.09% 3.96% 3.86%

Return on average assets^(2) 2.31% 2.12% 0.54% 0.37% 0.94%

Return on average equity^(2) 27.73% 26.20% 5.89% 4.20% 10.85%

Efficiency ratio^(3) 54.28% 54.40% 81.15% 84.09% 73.93%

Balance Sheet($ in thousands):

Total assets $ 781,655 $ 762,647 $ 660,886 661,612 657,533

Total loans^(4) 478,745 512,384 480,573 480,183 473,466

Total deposits 595,767 582,361 506,225 505,088 508,885

Total transaction deposits ^(5) to total deposits 47.30% 49.62% 49.06% 44.84% 40.06%

Loans to deposits 80.36% 87.98% 94.93% 95.07% 93.04%

Bank Capital Ratios:

Total risk-based capital ratio 14.75% 13.31% 12.45% 11.54% 11.13%

Tier 1 risk-based capital ratio 13.72% 12.48% 11.75% 10.88% 10.53%

Tier 1 Leverage ratio 9.96% 9.68% 10.29% 9.23% 9.11%

Common equity tier 1 ratio^(6) 13.72% 12.48% 11.75% 10.88% 10.53%

Asset Quality Ratios:

Nonperforming assets as a percentage of total assets 0.19% 0.21% 0.26% 0.28% 0.29%

Allowance for loan losses as a percentage of loans^(4) 1.20% 0.92% 0.81% 0.74% 0.69%

Allowance for loan losses as a percentage of 426.94% 332.75% 291.94% 240.47% 187.59%nonaccrual loans

Footnotes to table located on page 9.

INCOME STATEMENTS - Unaudited

Sept 30 Jun 30 Mar 31 Dec 31 Sept 30 September 30

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

Interest income

Loans $ 7,403 $ 6,556 $ 6,568 6,760 6,688 20,527 12,741

Investment securities 218 299 323 327 327 840 682

Other interest income 67 41 90 91 68 198 170

Total interest income 7,688 6,896 6,981 7,178 7,083 21,565 13,593

Interest expense

Deposits 519 652 828 1,043 1,250 1,999 2,333

Other interest expense 400 371 336 397 336 1,107 588

Total interest expense 919 1,023 1,164 1,440 1,586 3,106 2,921

Net interest income 6,769 5,873 5,817 5,738 5,497 18,459 10,672

Provision for loan losses 1,000 1,175 375 470 209 2,550 296

Net interest income after provision 5,769 4,698 5,442 5,268 5,288 15,909 10,376for loan losses

Noninterest income

Mortgage banking income 7,494 8,062 4,274 1,798 2,301 19,830 2,996

Mortgage servicing rights valuation (379) (1,429) (3,512) (1,127) (180) (5,320) (195)adjustment

Service fees on deposit accounts 290 242 463 447 438 995 797

Debit Card and other service charges, 426 429 315 408 382 1,170 758commissions, and fee:

Income from bank owned life insurance 103 102 103 96 96 308 192

Gain on sale of securities, net - (211) (9) 1 1 (220) 36

Other income 117 173 91 141 106 381 210

Total noninterest income 8,051 7,368 1,725 1,764 3,144 17,144 4,794

Noninterest expense

Compensation and benefits 4,892 4,395 3,583 3,718 3,819 12,870 7,831

Occupancy 628 619 612 603 602 1,859 1,171

Furniture and equipment related 572 585 537 435 440 1,694 947expenses

Electronic Data Processing 231 200 194 190 252 625 484

Professional Fees 230 329 267 377 438 826 480

Marketing 122 56 77 84 71 255 150

Other 1,288 774 783 838 682 2,845 1,644

Merger Related Expenses - - - - - - 37

Total noninterest expenses 7,963 6,958 6,053 6,245 6,304 20,974 12,744

Income before provision for income 5,857 5,108 1,114 787 2,128 12,079 2,426taxes

Income tax expense 1,389 1,207 256 188 621 2,852 444

Net income available to common $ 4,468 $ 3,901 $ 858 599 1,507 9,227 1,982shareholders

Weighted Average Shares - Basic 7,929 7,915 7,901 7,903 7,946 7,915 7,955

Weighted Average Shares - Diluted 8,015 7,998 8,014 8,047 8,077 8,012 8,065

Basic income per common share $ $ 0.49 $ 0.11 $ 0.08 $ 0.19 $ 1.17 $ 0.25 0.56

Diluted income per common share $ $ 0.49 $ 0.11 $ 0.07 $ 0.19 $ 1.15 $ 0.25 0.56

Net income for the three-month period ended September 30, 2020 was $4.5 million, or $0.56 per diluted common share, compared to $1.5 million, or $0.19 per diluted common share, for the same three-month period ended September 30, 2019. Net income for the nine-month period ended September 30, 2020 totaled $9.2 million, or $1.15 per diluted common share, compared to $2.0 million, or $0.25 per diluted common share for the same nine-month period ended September 30, 2019.

Noninterest income for the three-month period ended September 30, 2020 was $8.1 million, a $4.9 million increase from $3.1 million for the same period one-year ago. Noninterest income is largely driven by the Company's mortgage banking division. In Q3 2020, mortgage production volumes reached $204 million as compared with $121 million for the same period one-year ago. "Given the ongoing housing market recovery and low rate environment, both purchase and refinance applications remain robust compared to one-year ago. The Company is projecting volumes for Q4 2020 to be 20% lower than the highs of Q2 and Q3 of 2020," said Mr. Saunders.

Noninterest expense increased by $1.6 million or 26%, for the third quarter of 2020 compared to the same period one-year ago. The increase in noninterest expense is attributed to higher mortgage division expenses of $525 thousand over the same period one year ago which contributed to the $4.9 million increase in noninterest income during the third quarter 2020. Additionally, included in other expenses is the $455 thousand one-time expense associated with the sale of the PPP loan portfolio.

NET INTEREST INCOME AND MARGIN - Unaudited

For the 3 Months Ended

September 30, 2020 June 30, 2020 December 31, 2019 September 30, 2020

Average Income/ Yield Average Income/ Yield Average Income/ Yield Average Income/ Yield / / / /

(dollars in thousands) Balance Expense Rate Balance Expense Rate Balance Expense Rate Balance Expense Rate

Interest-earning assets

Federal funds sold and interest-bearing deposits $110,453 $23 0.08% $50,290 $12 0.09% $19,876 $71 1.42% $14,402 $54 1.49%

Investment securities 36,389 218 2.40% 41,189 300 2.91% 46,413 327 2.82% 47,940 326 2.72%

Nonmarketable equity securities 4,039 44 4.38% 4,089 29 2.85% 2,179 20 3.75% 1,347 15 4.32%

Loans^(8) 550,838 7,403 5.38% 565,422 6,555 4.64% 511,005 6,760 5.29% 505,271 6,688 5.29%

Total interest-earning assets 701,719 7,688 4.38% 660,990 6,896 4.17% 579,473 7,178 4.95% 568,960 7,083 4.98%

Allowance for loan losses (5,027) (4,085) (3,216) (2,679)

Noninterest-earning assets 76,978 77,900 73,050 71,957

Total assets $773,670 $734,805 $649,307 $638,238

Interest-bearing liabilities

NOW accounts $107,936 $13 0.05% $103,652 $15 0.06% $86,535 $11 0.05% $ $9 0.05% 80,290

Savings & money market 144,333 80 0.22% 127,968 104 0.33% 121,712 132 0.43% 95,220 137 0.57%

Time deposits 161,090 426 1.06% 151,414 533 1.41% 170,875 900 2.11% 198,480 1,104 2.22%

Total interest-bearing deposits 413,359 519 0.50% 383,034 652 0.68% 379,122 1,043 1.10% 373,990 1,250 1.34%

FHLB advances and other borrowings 85,383 176 0.82% 87,523 182 0.83% 56,290 312 2.22% 35,644 141 1.58%

Subordinated debentures 20,810 224 4.31% 16,942 189 4.45% 15,310 85 2.22% 15,310 195 5.11%

Total interest-bearing liabilities 519,552 919 0.71% 487,499 1,023 0.84% 450,722 1,440 1.28% 424,944 1,586 1.49%

Noninterest bearing deposits 179,196 176,688 131,282 120,912

Other Liabilities 10,474 11,057 10,235 36,798

Shareholders' equity 64,448 59,561 57,068 55,584

Total liabilities and shareholders' equity $773,670 $734,805 $649,307 $638,238

Net interest income (tax equivalent) / interest rate spread $6,769 3.67% $5,873 3.33% $5,738 3.67% $5,497 3.49%

Net Interest Margin 3.86% 3.55% 3.96% 3.86%

Footnotes to table located on page 9.

Net interest income increased $1.3 million, or 23.1%, to $6.8 million for the three-month period ended September 30, 2020 compared to $5.5 million for the three-month period ended September 30, 2019. The increase in net interest income resulted primarily from the growth in our loan portfolio, recognition of loan fees totaling $959 thousand associated with the sale of the PPP loan portfolio, a significant increase in noninterest bearing deposits, and lower cost deposit balances. The Company continues to reduce its cost of funds, which declined to 0.54% as of September 30, 2020 from 1.14% for the same period one year ago. Transaction deposits increased by $77.9 million, to $281.8 million at September 30, 2020 from $203.9 million one year ago and were aided in part by deposit growth as a result of participating in the PPP. The net interest margin for the three-month period ended September 30, 2020 remained flat at 3.86% compared to the same period one year ago. However, the net interest margin improved 31 basis points to 3.86% for three-month period ended September 30 2020 compared to the previous quarter-ended June 2020, due in part from the recognition of loan fees and lower average balances within the loan portfolio associated with the sale of PPP portfolio loans and continued reduction of funding costs. "We are optimistic that our net interest margin has stabilized and may increase in the near term as asset yields are remaining constant with anticipated improvement in our funding costs over next quarters. Our percentile ranking for cost of funds within all banks in the U.S. improved to 34% at Q3 2020 compared to 65% one year ago (Source: SP Global)," said Mr. Saunders.

Balance Sheets - Unaudited

Ending Balance

Sept 30 Jun 30 March 31 Dec 31 Sept 30

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

Assets

Cash and cash equivalents:

Cash and due from banks $ 5,133 $ 4,952 $ 16,869 12,945 5,342

Interest-bearing deposits with banks 134,848 78,554 18,922 27,649 21,786

Total cash and cash equivalents 139,981 83,506 35,791 40,594 27,128

Investment securities:

Investment securities available for sale 35,567 28,237 34,842 35,715 36,186

Investment securities held to maturity - 9,318 9,767 10,417 10,801

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

Total investment securities 39,406 41,819 47,598 48,555 49,410

Mortgage loans held for sale 57,853 57,329 34,042 27,901 41,959

Loans ^(4) 478,745 512,384 480,573 480,183 473,466

Less allowance for loan losses (5,721) (4,715) (3,877) (3,547) (3,251)

Loans, net 473,024 507,669 476,696 476,636 470,215

Property and equipment, net 20,548 20,523 20,528 19,967 20,016

Mortgage servicing rights 11,000 9,698 8,421 11,023 11,247

Bank owned life insurance 18,001 17,898 17,796 17,692 17,596

Deferred income taxes 3,872 5,068 6,156 6,581 6,728

Other assets 17,970 19,137 13,858 12,663 13,234

Total assets $ 781,655 $ 762,647 $ 660,886 661,612 657,533

Liabilities

Deposits $ 595,767 $ 582,361 $ 506,225 505,088 508,885

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

Federal funds and repurchase agreements 12,591 2,464 16,530 31,137 23,122

Subordinated debentures 10,427 10,358 4,835 4,881 4,838

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

Other liabilities 10,178 9,814 9,971 9,811 10,626

Total liabilities 714,273 700,307 602,871 604,527 601,081

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 81 81 81 80 80

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

Treasury stock, at cost (1,488) (1,478) (1,402) (1,283) (1,227)

Nonvested restricted stock (1,577) (1,748) (1,757) (1,254) (1,010)

Additional paid-in capital 51,824 51,822 51,652 51,137 50,777

Accumulated other comprehensive income (loss) 1,217 806 606 308 334

Retained earnings 17,320 12,852 8,830 8,092 7,493

Total shareholders' equity 67,382 62,340 58,015 57,085 56,452

Total liabilities and shareholders' equity $ 781,655 $ 762,647 $ 660,886 661,612 657,533

Common Stock

Tangible book value per common share ^(7) $ 7.95 $ 7.34 $ 6.83 6.76 6.71

Stock price:

High 6.05 5.50 7.82 7.90 8.00

Low 4.85 4.93 5.50 7.60 7.02

Period end 6.05 5.07 5.50 7.82 7.90

Common shares outstanding 8,129 8,130 8,103 8,034 7,990

Non-voting common shares outstanding 410 410 410 410 410

Treasury shares outstanding 202 200 187 184 177

ASSET QUALITY MEASURES - Unaudited

Ending Balance

Sept 30 June 30 March 31 Dec 31 Sept 30

(dollars in 2020 2020 2020 2019 2019thousands)

NonperformingAssets

Commercial

Owner occupied $ 87 $ 999 $ 507 518 529RE

Non-owner - - - - -occupied RE

Construction - - - - -

Commercial - 135 12 39 112business

Consumer

Real estate 566 10 526 591 597

Home equity 9 - - - 183

Construction - - - - -

Other 387 273 283 327 312

Nonaccruingtroubled debt 291 - - - -restructurings

Total nonaccrual $ 1,340 $ 1,417 $ 1,328 1,475 1,733loans

Other real 164 209 392 347 164estate owned

Totalnonperforming $ 1,504 $ 1,626 $ 1,720 1,822 1,897assets

Nonperformingassets as apercentage of:

Total assets 0.19% 0.21% 0.26% 0.28% 0.29%

Total loans 0.31% 0.32% 0.36% 0.38% 0.40%

Accruingtroubled debt $ 2,508 $ 2,620 $ 3,502 3,584 3,119restructurings

Quarter Ended

Sept 30 June 30 March 31 Dec 31 Sept 30

(dollars in 2020 2020 2020 2019 2019thousands)

Allowance forLoan Losses

Balance,beginning of $ 4,715 $ 3,877 $ 3,547 3,251 3,211period

Loans 76 452 168 222 247charged-off

Recoveries ofloans previously 82 115 123 48 78charged-off

Net loans 6 337 45 174 169charged-off

Provision for 1,000 1,175 375 470 209loan losses

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

Allowance forloan losses to 1.20% 0.92% 0.81% 0.74% 0.69%gross loans

Allowance forloan losses to 426.94% 332.75% 291.94% 240.47% 187.59%nonaccrual loans

Our asset quality continued to be strong through September 30, 2020, with nonperforming assets declining by $393 thousand to $1.5 million at September 30, 2020 compared to the same date one year ago. The ratio of nonperforming assets to total assets declined to 0.19% at September 30, 2020, a decrease of 10 basis points compared to September 30, 2019. OREO and repossessed assets remain nominal. The allowance for loan losses as a percentage of total loans improved to 1.2% at September 30, 2020 (adjusted for purchase accounting marks on acquired loans), compared to 0.69% one year earlier due primarily to provisioning associated with the anticipated economic impact of the COVID-19 pandemic. "While we have not seen increased delinquencies or any direct impact of COVID-19 to our asset quality, we believe it is prudent to reflect this pandemic in our allowance models. During Q3 2020, we made provisions for loan losses totaling $1.0 million compared to $209 thousand for the same period one year ago. Year to date through September 30, 2020, the Company has funded $2.6 million in provisions for loan losses compared to $296 thousand during the nine months of 2019. We are actively performing stress tests on our loan portfolio, monitoring the political and regulatory landscape, and also monitoring COVID-19 hotspots and the impact it may have on the markets we serve. The Company continues to actively monitor loan deferral levels which have declined to $7.8 million or 1.6% of the loan portfolio as of the end of the third quarter 2020 and there has not been any unusual or unforeseen credit line drawdowns to date and no increase in overdraft activity. The Company has minimal exposure to any industry that may have an elevated exposure to Covid-19", said Mr. Saunders. Net charge offs remain nominal.

LOAN COMPOSITION - Unaudited

Quarter Ended

Sept 30 June 30 March 31 December 31 Sept 30

(dollars in thousands) 2020 2020 2020 2019 2019

Commercial

Owner occupied RE $ 104,173 $ 113,205 $ 115,711 116,244 109,133

Non-owner occupied RE 79,838 70,748 69,474 59,287 63,304

Construction 35,579 35,029 29,523 33,196 30,123

Business 63,163 62,464 63,522 61,129 57,573

PPP 0 30,211

Total commercial loans 282,753 311,657 278,230 269,856 260,133

Consumer

Real Estate 97,904 99,565 97,465 99,394 101,742

Home equity 20,244 21,895 21,362 21,987 21,472

Construction 12,831 11,642 9,617 8,205 9,448

Other 65,013 67,625 73,899 80,741 80,671

Total consumer loans 195,992 200,727 202,343 210,327 213,333

Total gross loans, net of deferred fees 478,745 512,384 480,573 480,183 473,466

Less-allowance for loan losses 5,721 4,715 3,877 3,547 3,251

Total loans, net $ 473,024 $ 507,669 476,696 476,636 470,215

DEPOSIT COMPOSITION - Unaudited

Quarter Ended

Sept 30 June 30 March 31 Dec 31 Sept 30

(dollars in thousands) 2020 2020 2020 2019 2019

Non-interest bearing $ 173,628 $ 185,208 $ 144,359 137,312 123,839

Interest bearing:

NOW accounts 108,152 103,732 104,003 89,169 80,017

Money market accounts 113,203 101,083 94,778 94,742 95,775

Savings 41,549 34,392 26,270 25,730 25,876

Time, less than $250,000 122,139 120,782 104,841 121,818 142,662

Time and out-of-market deposits, $250,000 and over 37,096 37,164 31,974 36,317 40,716

Total Deposits $ 595,767 $ 582,361 $ 506,225 505,088 508,885

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) Excludes mortgage loans held for sale.

(5) Includes noninterest bearing and interest bearing NOW accounts.

(6) The common equity tier 1 ratio is calculated as the sum of common equity divided by risk-weighted assets.

(7) The tangible book value per share is calculated as total shareholders' equity less intangible assets, divided by outstanding common shares.

(8) Includes mortgage loans held for sale.

ABOUT FIRST RELIANCE

Founded in 1999, First Reliance Bancshares, Inc. (OTC: FSRL.OB), is based in Florence, South Carolina and has assets of approximately $781 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:

Jeffrey A. Paolucci, EVP & CFO(888) 543-5510jpaolucci@firstreliance.com

View original content to download multimedia: http://www.prnewswire.com/news-releases/first-reliance-reports-record-3rd-quarter-2020-net-income-of-4-5-million-301161350.html

SOURCE First Reliance Bancshares, Inc.