Market Overview

First Reliance Bancshares, Inc. Reports 4th Quarter 2018 Results And Reaffirms Stock Repurchase Plan


FLORENCE, S.C., Jan. 25, 2019 /PRNewswire/ -- First Reliance Bancshares, Inc. (OTC:FSRL), the holding company (the "Company") for First Reliance Bank (the "Bank"), reported fourth quarter 2018 net income of $1,205,120, or $0.15 per diluted share, up significantly from fourth quarter 2017 net loss of $2,719,627 or $0.35 per diluted share.  The increase in net income for the fourth quarter of 2018 versus 2017 was due primarily to loan growth of $97.1 million, up 29.1% year over year, thus increasing net interest income by $1.0 million, or 26.6%, year over year, and the one-time gain on nonmarketable securities of $800,000.  Also during the fourth quarter, the Company incurred new market expansion costs totaling approximately $200,000 and higher provision for loan losses, which was $285,918 in 2018's fourth quarter, versus no provision in the fourth quarter of 2017.  The higher provision in 2018 was principally driven by higher loan balances, as asset quality improved over that period.  For the twelve months ended December 31, 2018, net income was $2,466,087, or $0.31 per diluted share, versus a net loss of $689,360, or $0.13 per diluted share, for the twelve months ended December 31, 2017.  Net income for 2018 reflects the impact of $877,420 in merger-related expenses related to the purchase of Independence Bancshares, Inc. in January 2018.   Also during 2018, the Company expanded into Winston-Salem and Charlotte, NC and Myrtle Beach, SC, which reduced net income for the year by approximately $1.3 million

First Reliance Bancshares

F. R. Saunders, Jr., the Company's Chief Executive Officer, stated, "We are very pleased with our fourth quarter operating results as we continue to see a positive impact on earnings with organic growth from our recent expansions and from our acquisition in Greenville, South Carolina.  We have we begun an efficiency improvement initiative to remove legacy cost from our operations and are already beginning to results from this. For 2019, we look to reduce operating expenses by $1.5 million, which we expect to improve our efficiency ratio further to the 70-72% range by 2020. Additionally, the Company announced the closure of our Loris, SC branch which is expected to reduce annual operating costs by $500,000."

The Board of Directors of the Company recently authorized the repurchase of up to approximately 100,000 shares of the Company's Common Stock and Series D Preferred Stock in open market and privately negotiated transactions through December 31, 2019.  The Board implemented the repurchase plan because it believes recent share trading prices undervalue the Company and to provide smaller shareholders with a source of liquidity.


  • Net interest income improved 27% at $5.2 million for the three months ended December 31, 2018, compared to the same period of 2017;
  • Loans increased 29% over the past year, with organic loan growth of $47.0 million and $50 million in loan growth attributed to the acquisition with Independence Bancshares in January 2018;
  • Deposits grew 35% over the past year, with organic deposit growth of $52 million and $71 million in deposit growth attributed to the acquisition of Independence Bancshares in January 2018;
  • Announced the closure of the Loris, South Carolina branch effective December 31, 2018. Customers will be serviced from the Myrtle Beach office at 507, 21st Avenue N., Myrtle Beach, SC;
  • Approved a 100,000 share Common Stock and Series D Preferred Stock Repurchase program to create liquidity for our smaller shareholders;
  • Transaction accounts increased $30 million, or 19%, over the past year; and
  • Net interest margin continues to remain relatively stable at 4.30% as of December 31, 2018.

Review of Income Statement

Net interest income improved 27% to $5.2 million for the fourth quarter of 2018, compared to the same period of 2017.  The increase in net interest income was due principally to growth in earning assets while net interest margin remained stable at to 4.30% for the quarter ended December 31, 2018 compared to the previous quarter.  Yield on earning assets increased to 4.91% for the quarter ended December 31, 2018, compared to 4.89% for the third quarter of 2018.  Cost of funds increased to 61 basis points for the fourth quarter of 2018, compared to 54 basis points for preceding quarter.

Noninterest income improved to $3.0 million for the quarter ended December 31, 2018, up from $2.0 million in the fourth quarter of 2017 primarily due to the one-time gain on nonmarketable securities and continuous improvement in gain on sale of mortgage loans.  According to Jeffrey Paolucci, Executive Vice President and Chief Financial Officer,

"Gain on sale of mortgage loans increased modestly by $151,000 to $1.2 million for the three months ending December 31, 2018 compared to $1.0 million for the three months ending December 31, 2017 despite a higher interest rate environment and tighter operating margins.  Our investment in a diversified mortgage income strategy continues to produce positive results as purchase mortgage business continues to increase, servicing income is increasing, and delinquencies are nominal."

Balance Sheet and Asset Quality

Total assets increased $126.3 million, or 28%, to $584.9 million at December 31, 2018, compared to $458.6 million at December 31, 2017.

Loans receivable grew by $97.1 million, or 29%, to $430.8 million at December 31, 2018, compared to $333.7 million, at December 31, 2017 due to $47.1 million in organic loan growth in commercial portfolios, 1-4 family mortgage portfolios and our consumer loan portfolios, and $50.0 million in loans acquired in our merger with Independence Bancshares, Inc. in January 2018.  Mr. Saunders added, "Earning asset growth and yield expansion has primarily been the result of our focus on dealer services, consumer and commercial loans throughout the bank.  Additionally we see continuous growth in mortgage loans in all our markets including our newly acquired Greenville market, as well as our new markets which include Winston-Salem, Charlotte, and Myrtle Beach. Online mortgage applications continue to grow as customers want the convenience of applying online or using mobile devices. Over the next year, we expect to increase efficiencies as customers demand more virtual banking strategies which allow them to conduct transactions when, where and how they want to, as well as deploying online deposit and loan account opening." 

Transaction deposits increased by $29.6 million, or 19%, to $186.5 million at December 31, 2018, from $156.9 million one year ago.  Household checking accounts increased by 10.6% reflecting our strong year-over-year branch sales growth.  "Our focus for 2019 will be on expanding treasury services to our business customers and offering a full suite of digital banking services to enhance the customer experience. We continue to see strong demand and use from our customers in mobile banking, bill pay, mobile deposit and online banking," said Mr. Saunders. 

Nonperforming assets declined by $785,000 to $2.3 million at December 31, 2018 compared to one year ago.  The Company reduced OREO by $1.4 million via third party sales over the past twelve months to $342,000.  The ratio of nonperforming assets to total assets declined to 0.39% at December 31, 2018, compared to 0.67% one year earlier.  The allowance for loan losses as a percentage of loans was 0.63% at December 31, 2018 (adjusted for purchase accounting marks on acquired loans), compared to 0.72% one year earlier.  For the fourth quarter of 2018, loan charge offs were nominal and largely offset by the bank recoveries. 


First Reliance Bank continues to remain well capitalized under all regulatory measures with capital ratios exceeding the statutory well-capitalized thresholds by an ample margin.  At December 31, 2018, capital ratios were as follows:


First Reliance Bank

Well-capitalized Minimum

Tier 1 leverage ratio



Common equity tier 1 capital 



Tier 1 capital ratio



Total capital ratio




Founded in 1999, First Reliance Bancshares, Inc., (OTC:FSRL) is based in Florence, SC and has assets of approximately $567 million.  The Company employs more than 173 professional and has locations throughout the Carolinas.

First Reliance has redefined community banking with a commitment to making customers lives better, its founding principle.  Customers of the bank have given it a 94% customer satisfaction rating.  First Reliance Bank is also one of three companies throughout South Carolina who have received the Best Places To Work in South Carolina award all thirteen years since the program began.  We believe that this recognition confirms that our associates are engaged and committed to the Bank's 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 five unique community-customers programs, which include:  Hometown Heroes, a package of benefits for those serving our communities; Check N Save, an outreach program for the unbanked or under-banked; Moms First, a program recognizing inspiring mothers; and iMatter, a program supporting a younger audience.

The Company also offers a full suite of digital banking services, a Customer Service Guaranty, a Mortgage Service Guaranty, and is open on most traditional holidays.

Additional information about the Company is available on the Company's web site at

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; (7) the business related to the acquisition of Independence Bancshares, Inc., 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 the Independence acquisition may not be fully realized within expected timeframes; and (9) disruption from the Independence acquisition may make it more difficult to maintain relationships with clients, associates, or suppliers.  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, Executive Vice President and Chief Financial Officer, (888)543-5510,

First Reliance Bancshares, Inc. and Subsidiary

Consolidated Balance Sheets

December 31

September 30

December 31





Cash and cash equivalents:

Cash and due from banks

$           4,638,333

$               4,652,753

$            3,494,469

Interest-bearing deposits with other banks



View Comments and Join the Discussion!
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at