First Reliance Bancshares Reports Fourth Quarter 2023 Results

Rhea-AI Summary

First Reliance Bancshares, Inc. announced its financial results for Q4 and full year 2023, revealing a decrease in net income and net interest income compared to the previous year. The company's net interest margin expanded in Q4 2023, but decreased compared to the same period in 2022. Total loans and deposits experienced fluctuations throughout the year. Asset quality improved, with nonperforming assets decreasing. However, cost of funds increased significantly in 2023.

Positive

• Net income for Q4 2023 was $0.8 million, compared to $1.5 million for Q4 2022, and $4.6 million for the full year 2023, compared to $5.9 million for 2022.
• Net interest margin expanded by five basis points in Q4 2023 but decreased by 51 basis points compared to the same period in 2022.
• Total loans decreased by 0.5% annualized, and total deposits decreased by 1.2% annualized in Q4 2023.
• Asset quality improved, with nonperforming assets decreasing to 0.04% at December 31, 2023, compared to 0.06% at September 30, 2023.
• Cost of funds, including noninterest-bearing deposits, increased significantly in 2023.

Negative

• Adjusted net income for the full year 2023 was $5.8 million, compared to $5.9 million for 2022.
• Net interest margin decreased by 51 basis points compared to the same period in 2022.
• Total deposits decreased by 1.2% annualized in Q4 2023.
• Cost of funds for the full year of 2023 increased significantly compared to 2022.

FLORENCE, S.C., Jan. 26, 2024 /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 and full year of 2023.

Fourth Quarter and Full Year 2023 Highlights

• Net income for the fourth quarter of 2023 was $0.8 million, or $0.10 per diluted share, compared to $1.5 million, or $0.18 per diluted share, for the fourth quarter of 2022. Net income for the year ended December 31, 2023, was $4.6 million, or $0.56 per diluted share, compared to $5.9 million, or $0.73 per diluted share, for the year ended December 31, 2022. The fourth quarter of 2023 included a securities loss of $0.8 million pre-tax and the full year securities loss totals $1.5 million pre-tax.
• Adjusted net income (which includes adding back securities losses, net of tax) for the fourth quarter of 2023 was $1.4 million, or $0.17 per diluted share, compared to $0.18 per share, for the fourth quarter of 2022. Adjusted net income for the year ended December 31, 2023, was $5.8 million, or $0.71 per share, compared to $5.9 million, or $0.73 per diluted share, for the year ended December 31, 2022.
• Net interest income for the quarter was $7.3 million, which represents an increase of $69 thousand, or 1.0%, on a linked quarter basis and a decrease of $0.6 million, or 7.8% compared to the same period in 2022. Net interest income for the full year was $29.0 million, which represents a decrease of $1.1 million, or 3.6%, compared to the same period in 2022.
• Net interest margin expanded by five basis points during the fourth quarter of 2023 to 3.16% at December 31, 2023, compared to 3.11% for the third quarter of 2023, but decreased 51 basis points compared to the same period in 2022. During the fourth quarter of 2023, the Company entered into a pay fixed/ receive variable rate swap designated as a fair value hedge of $50.0 million in fixed rate loans for two years. This hedge had minimal impact in the fourth quarter of 2023 given the timing of execution in mid-December 2023. Loan interest income is projected to improve from this hedge in the first quarter of 2024.
• Total loans decreased $0.9 million, or 0.5% annualized, to $705.7 million at December 31, 2023, from $706.6 million at September 30, 2023. For the full year 2023, total loans increased $44.4 million, or 6.7%, from $661.3 million at December 31, 2022. This loan growth was impacted by the decline in the bank's indirect automobile loan portfolio, which decreased by $13.6 million in 2023, and totaled $16.0 million at December 31, 2023. The bank decided to exit the indirect automobile lending approximately two years ago.
• Total deposits decreased $2.6 million, or 1.2% annualized, to $858.6 million at December 31, 2023, from $861.2 million at September 30, 2023. The company experienced declines in deposit balances for the quarter, in noninterest-bearing and savings, which were partially offset by growth in NOW, money market and time deposits. For the full year 2023, total deposits increased $60.4 million, or 7.6%, from $798.2 million at December 31, 2022.
• Asset quality improved with nonperforming assets as a percentage of total assets of 0.04% at December 31, 2023, compared to 0.06% at September 30, 2023. The Company had net recoveries of $1 thousand, or 0.00% annualized of average loans during the quarter compared to net charge-offs of $10 thousand, or annualized 0.01% of average loans, for the quarter ended September 30, 2023. For the full year of 2023, net charge-offs totaled $228 thousand, or 0.03% of average loans.
• Cost of funds, including noninterest-bearing deposits, for the fourth quarter of 2023 increased to 2.03% from 1.89% on a linked quarter basis and from 0.71% for the same period in 2022. Cost of funds for the full year of 2023 increased to 1.71% from 0.37% for the year 2022.

Rick Saunders, Chief Executive Officer, stated: "The Company continues to execute on its key strategies of funding its asset growth with deposits in 2023.  We are beginning to see our net interest margin expand as the fourth quarter of 2023 increased to 3.16% from 3.11% in third quarter of 2023.  We have taken actions in 2023 to enhance our net interest margin with a hedge of loans, repositioning of our securities portfolio, and increased credit spreads on loan pricing.  The mortgage industry remains subdued in the higher interest rate environment; however, we have added some outstanding mortgage producers during the year.  Credit quality remains strong with minimal nonperforming assets and net charge offs.  I am proud of our team and the accomplishments in 2023."  Saunders continued, "As we enter 2024, we expect our net interest margin to expand as our loan portfolio continues to reprice and deposit costs stabilize.  We will continue to focus on gaining operating efficiencies by improving our cost structure and ensuring sound risk management practices."

Financial Summary
	Three Months Ended						Twelve Months Ended
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31		Dec 31	Dec 31
($ in thousands, except per share data)	2023	2023	2023	2023	2022		2023	2022
Earnings:
Net income available to common shareholders	$    776	$     1,444	$  1,013	$  1,371	$  1,493		$  4,603	$  5,931
Earnings per common share, diluted	0.10	0.18	0.12	0.17	0.18		0.56	0.73
Total revenue(1)	8,285	9,219	8,959	9,430	9,417		35,892	39,021
Net interest margin	3.16 %	3.11 %	3.16 %	3.34 %	3.67 %		3.19 %	3.48 %
Return on average assets(2)	0.32 %	0.58 %	0.41 %	0.57 %	0.65 %		0.47 %	0.63 %
Return on average equity(2)	4.70 %	8.68 %	6.13 %	8.53 %	9.78 %		7.00 %	9.11 %
Efficiency ratio(3)	89.83 %	80.35 %	82.50 %	79.20 %	78.14 %		82.78 %	79.37 %

 

	As of
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(dollars in thousands)	2023	2023	2023	2023	2022
Balance Sheet:
Total assets	$  974,157	$  991,721	$  992,596	$  1,000,535	$  937,113
Total loans receivable	705,672	706,596	694,130	669,969	661,251
Total deposits	858,597	861,229	830,085	836,902	798,184
Total transaction deposits(4) to total deposits	41.31 %	43.55 %	44.00 %	46.46 %	51.05 %
Loans to deposits	82.19 %	82.05 %	83.62 %	80.05 %	82.84 %
Bank Capital Ratios:
Total risk-based capital ratio	13.86 %	13.54 %	13.57 %	13.45 %	13.43 %
Tier 1 risk-based capital ratio	12.75 %	12.43 %	12.43 %	12.41 %	12.43 %
Tier 1 leverage ratio	10.32 %	10.11 %	9.95 %	10.14 %	10.37 %
Common equity tier 1 capital ratio	12.75 %	12.43 %	12.43 %	12.41 %	12.43 %
Asset Quality Ratios:
Nonperforming assets as a percentage of    total assets	0.04 %	0.06 %	0.05 %	0.05 %	0.05 %
Allowance for loan losses as a percentage of    total loans receivable	1.19 %	1.19 %	1.19 %	1.20 %	1.16 %
Footnotes to table located at the end of this release.

 

CONDENSED CONSOLIDATED INCOME STATEMENTS – Unaudited
	Three Months Ended						Twelve Months Ended
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31		Dec 31
($ in thousands, except per share data)	2023	2023	2023	2023	2022		2023	2022
Interest income
Loans	$    9,678	$   9,394	$   8,837	$   8,260	$   7,848		$    36,171	$    28,565
Investment securities	1,832	1,596	1,371	1,343	1,247		6,142	3,755
Other interest income	396	536	782	362	316		2,076	886
Total interest income	11,906	11,526	10,990	9,965	9,411		44,389	33,206
Interest expense
Deposits	4,076	3,671	2,876	1,922	1,106		12,546	1,961
Other interest expense	558	651	893	769	417		2,870	1,204
Total interest expense	4,634	4,322	3,769	2,691	1,523		15,416	3,165
Net interest income	7,272	7,204	7,221	7,274	7,888		28,973	30,041
Provision for loan losses	(118)	(42)	280	248	115		369	480
Net interest income after provision for loan    losses	7,390	7,246	6,941	7,026	7,773		28,604	29,561
Noninterest income
Mortgage banking income	694	1,147	1,063	916	378		3,821	4,416
Service fees on deposit accounts	336	371	341	326	330		1,374	1,392
Debit card and other service charges,    commissions, and fees	544	537	563	517	500		2,160	2,093
Income from bank owned life insurance	99	95	91	244	92		529	360
Gain on sale of securities, net	(802)	(268)	(455)	-	-		(1,526)	-
Gain (Loss) on disposal of fixed assets	11	-	-	19	24		30	23
Other income	132	132	134	134	205		531	696
Total noninterest income	1,014	2,014	1,737	2,156	1,529		6,919	8,980
Noninterest expense
Compensation and benefits	4,558	4,603	4,461	4,652	4,364		18,274	19,006
Occupancy and equipment	798	882	856	892	883		3,429	3,589
Data processing, technology, and communications	985	923	942	771	818		3,614	3,268
Professional fees	56	58	111	196	207		420	751
Marketing	104	151	206	226	279		687	744
Other	942	790	815	732	809		3,286	3,612
Total noninterest expense	7,443	7,407	7,391	7,469	7,359		29,710	30,970
Income before provision for income taxes	961	1,853	1,287	1,713	1,943		5,813	7,571
Income tax expense	185	409	274	342	450		1,210	1,640
Net income available to common shareholders	$      776	$   1,444	$   1,013	$   1,371	$   1,493		$      4,603	$      5,931
Addback securities losses, net of tax	648	355	211	-	-		1,208	-
Adjusted net income (non-GAAP)	$   1,424	$   1,799	$   1,224	$   1,371	$   1,493		$      5,812	$      5,931
Weighted average common shares - basic	7,826	7,834	7,825	7,807	7,775		7,823	7,779
Weighted average common shares - diluted	8,164	8,149	8,142	8,189	8,152		8,164	8,127
Basic income per common share	$     0.10	$     0.18	$     0.13	$     0.18	$     0.19		$        0.59	$        0.76
Diluted income per common share	$     0.10	$     0.18	$     0.12	$     0.17	$     0.18		$        0.56	$        0.73
Adjusted basic net income per common share (non-GAAP)	$     0.18	$     0.23	$     0.16	$     0.18	$     0.19		$        0.74	$        0.76
Adjusted diluted net income per common share (non-GAAP)	$     0.17	$     0.22	$     0.15	$     0.17	$     0.18		$        0.71	$        0.73

Net income for the three months ended December 31, 2023, was $0.8 million, or $0.10 per diluted common share, compared to $1.5 million, or $0.18 per diluted common share, for the three months ended December 31, 2022.  Net income for the twelve months ended December 31, 2023, totaled $4.6 million, or $0.56 per diluted common share, compared to $5.9 million, or $0.73 per diluted common share for the twelve months ended December 31, 2022.

Noninterest income for the three months ended December 31, 2023, was $1.0 million, a decrease of $0.5 million from $1.5 million for the same period in 2022.  This decrease was the result of the bank disposing of its remaining low yielding US Treasury securities resulting in a loss of $0.8 million.  Mortgage banking income produced net revenue of $0.7 million during the three months ended December 31, 2023, compared to $0.4 million for same period last year, which partially offset the securities loss.    For the twelve months ended December 31, 2023, noninterest income decreased by $2.1 million compared to 2022.  This decrease was the result of the realized securities losses of $1.5 million on low yielding US Treasury securities and the decrease in mortgage banking income of $0.6 million, due to the decline in sales volume compared to calendar year 2022.   

Noninterest expense for the three months ended December 31, 2023, was $7.4 million, an increase of $84,000 for the same period in 2022.  For the twelve-month period ended December 31, 2023, noninterest expense was $29.7 million compared to $31.0 million in 2022.  This $1.3 million decrease was driven by declines in all categories of expense, except data processing, technology and communications, which increased by $346,000.

NET INTEREST INCOME AND MARGIN – Unaudited
	For the Three Months Ended
	December 31, 2023				December 31, 2022
	Average	Income/	Yield/		Average	Income/	Yield/
(dollars in thousands)	Balance	Expense	Rate		Balance	Expense	Rate
Assets
Interest-earning assets
Federal funds sold and interest-bearing deposits	$     30,212	$      370	4.86 %		$     33,754	$      310	3.64 %
Investment securities	161,824	1,832	4.49 %		158,204	1,247	3.13 %
Nonmarketable equity securities	1,420	26	7.36 %		871	6	2.82 %
Loans held for sale	13,860	274	7.85 %		4,767	83	6.91 %
Loans	706,002	9,404	5.28 %		654,285	7,765	4.71 %
Total interest-earning assets	913,318	11,906	5.17 %		851,881	9,411	4.38 %
Allowance for loan losses	(8,484)				(7,665)
Noninterest-earning assets	78,914				78,848
Total assets	$  983,748				$  923,064
Liabilities and Shareholders' Equity
Interest-bearing liabilities
NOW accounts	$  142,290	$      269	0.75 %		$  146,865	$         67	0.18 %
Savings & money market	334,068	2,331	2.77 %		290,709	858	1.17 %
Time deposits	165,466	1,476	3.54 %		99,847	181	0.72 %
Total interest-bearing deposits	641,823	4,076	2.52 %		537,421	1,106	0.82 %
FHLB advances and other borrowings	15,001	193	5.09 %		14,330	96	2.67 %
Subordinated debentures	25,719	365	5.63 %		25,687	321	4.95 %
Total interest-bearing liabilities	682,543	4,634	2.69 %		577,438	1,523	1.05 %
Noninterest bearing deposits	221,275				270,975
Other liabilities	13,957				13,551
Shareholders' equity	65,972				61,100
Total liabilities and shareholders' equity	$  983,748				$  923,064
Net interest income (tax equivalent) / interest   rate spread		$  7,272	2.48 %			$  7,888	3.34 %
Net Interest Margin			3.16 %				3.67 %

 

	For the Twelve Months Ended
	December 31, 2023				December 31, 2022
	Average	Income/	Yield/		Average	Income/	Yield/
(dollars in thousands)	Balance	Expense	Rate		Balance	Expense	Rate
Assets
Interest-earning assets
Federal funds sold and interest-bearing deposits	$     43,739	$     1,969	4.50 %		$     81,509	$         863	1.06 %
Investment securities	161,201	6,142	3.81 %		145,694	3,755	2.58 %
Nonmarketable equity securities	1,774	108	6.08 %		632	23	3.69 %
Loans held for sale	14,131	995	7.04 %		14,218	647	4.55 %
Loans	687,682	35,175	5.12 %		622,418	27,918	4.49 %
Total interest-earning assets	908,527	44,389	4.89 %		864,471	33,206	3.84 %
Allowance for loan losses	(8,170)				(7,415)
Noninterest-earning assets	78,277				80,187
Total assets	$  978,634				$  937,243
Liabilities and Shareholders' Equity
Interest-bearing liabilities
NOW accounts	$  142,082	$         764	0.54 %		$  158,135	$         136	0.09 %
Savings & money market	318,347	7,731	2.43 %		289,213	1,364	0.47 %
Time deposits	143,422	4,051	2.82 %		110,028	461	0.42 %
Total interest-bearing deposits	603,851	12,546	2.08 %		557,376	1,961	0.35 %
FHLB advances and other borrowings	33,076	1,441	4.36 %		13,367	131	0.98 %
Subordinated debentures	25,707	1,429	5.56 %		25,675	1,073	4.18 %
Total interest-bearing liabilities	662,634	15,416	2.33 %		596,418	3,165	0.53 %
Noninterest bearing deposits	236,468				263,085
Other liabilities	13,798				12,656
Shareholders' equity	65,734				65,084
Total liabilities and shareholders' equity	$  978,634				$  937,243
Net interest income (tax equivalent) / interest   rate spread		$  28,973	2.56 %			$  30,041	3.31 %
Net Interest Margin			3.19 %				3.48 %

Net interest income for the three months ended December 31, 2023, was $7.3 million compared to $7.9 million for the three months ended December 31, 2022.  This decline was driven by the increases in the rates paid on deposits and borrowings which outpaced the yield increases and the average balances of loans and investments.  Yields on interest-earning assets increased to 5.17% for the three months ended December 31, 2023, compared to 4.38% for the same period in 2022. 

Net interest income was $29.0 million for the twelve months ended December 31, 2023, a decrease of $1.1 million over the same period in 2022.  Increases in the rates paid on deposits and borrowings outpaced the yield increases and the average balances of loans and investments resulting in lower net interest income in 2023.

CONDENSED CONSOLIDATED BALANCE SHEETS – Unaudited
	As of
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(dollars in thousands)	2023	2023	2023	2023	2022
Assets
Cash and cash equivalents:
Cash and due from banks	$        4,354	$        3,158	$        3,748	$            4,233	$        3,917
Interest-bearing deposits with banks	17,590	32,835	55,496	71,590	29,880
Total cash and cash equivalents	21,944	35,993	59,244	75,823	33,797
Time deposits in other banks	-	-	-	-	259
Investment securities:
Investment securities available for sale	171,400	162,573	158,143	164,150	162,097
Other investments	1,078	2,025	2,563	2,570	1,921
Total investment securities	172,478	164,598	160,706	166,720	164,018
Mortgage loans held for sale	7,156	17,506	12,485	16,236	7,940
Loans receivable:
Loans	705,672	706,596	694,130	669,969	661,251
Less allowance for loan losses	(8,393)	(8,430)	(8,229)	(8,052)	(7,660)
Loans receivable, net	697,279	698,166	685,901	661,917	653,591
Property and equipment, net	22,298	22,505	22,588	22,634	22,811
Mortgage servicing rights	11,638	11,394	10,893	10,491	10,441
Bank owned life insurance	18,191	18,092	17,997	17,906	18,836
Deferred income taxes	6,248	9,184	8,534	8,263	8,629
Other assets	16,925	14,283	14,248	20,545	16,791
Total assets	974,157	991,721	992,596	1,000,535	937,113
Liabilities
Deposits	$  858,597	$  861,229	$  830,085	$      836,902	$  798,184
Federal Home Loan Bank advances	5,000	25,000	45,000	45,000	30,000
Federal funds and repurchase agreements	307	81	11,910	12,974	7,368
Subordinated debentures	15,413	15,405	15,397	15,389	15,381
Junior subordinated debentures	10,310	10,310	10,310	10,310	10,310
Reserve for unfunded commitments	407	488	740	754	-
Other liabilities	12,727	13,186	12,616	12,743	12,574
Total liabilities	902,761	925,699	926,058	934,072	873,817
Shareholders' equity
Preferred stock - Series D non-cumulative, no par   value	1	1	1	1	1
Common Stock - $.01 par value; 20,000,000 shares   authorized	88	88	88	88	87
Treasury stock, at cost	(4,821)	(4,750)	(4,666)	(4,598)	(4,502)
Nonvested restricted stock	(2,518)	(2,387)	(2,542)	(2,765)	(2,121)
Additional paid-in capital	55,471	55,068	54,972	54,984	53,968
Retained earnings	33,748	32,972	31,626	30,564	29,916
Accumulated other comprehensive (loss) income	(10,573)	(14,970)	(12,941)	(11,811)	(14,053)
Total shareholders' equity	71,396	66,022	66,538	66,463	63,296
Total liabilities and shareholders' equity	$  974,157	$  991,721	$  992,596	$  1,000,535	$  937,113

First Reliance cash and cash equivalents totaled $21.9 million at December 31, 2023, compared to $36.0 million at September 30, 2023.  Cash with the Federal Reserve Bank totaled $17.6 million at December 31, 2023, compared to $32.8 million at September 30, 2023.

All debt securities were classified as available for sale (AFS) securities with balances of $171.4 million at December 31, 2023, compared to $162.6 million at September 30, 2023.  The unrealized loss recorded on these securities totaled $14.0 million at December 31, 2023, compared to $19.8 million at September 30, 2023, a decrease in the fourth quarter of 2023 of $5.8 million (before taxes).  Total securities represented 17.7% of total assets at December 31, 2023, compared to 17.5% of total assets at December 31, 2022.

The Company had $5.0 million in outstanding borrowings with the Federal Home Loan Bank (FHLB) of Atlanta at December 31, 2023, and $25.0 million at September 30, 2023, respectively.  The Company had remaining credit availability in excess of $291.9 million with the FHLB of Atlanta, subject to collateral requirements.

First Reliance also has access to more than $35.5 million through the Federal Reserve Bank discount window with posted collateral.  There are currently no borrowings against the Federal Reserve Bank discount window.

COMMON STOCK SUMMARY - Unaudited
			As of
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(shares in thousands)	2023	2023	2023	2023	2022
Voting common shares outstanding	8,772	8,754	8,752	8,763	8,730
Treasury shares outstanding	(633)	(623)	(612)	(601)	(590)
Total common shares outstanding	8,139	8,131	8,140	8,162	8,140
Tangible book value per common share(5)	$  8.68	$  8.02	$  8.08	$  8.04	$  7.67
Stock price:
High	$  9.00	$  7.40	$  8.80	$  8.80	$  9.50
Low	$  6.91	$  6.30	$  6.00	$  6.50	$  8.60
Period end	$  8.57	$  7.20	$  6.37	$  7.44	$  8.72

 

ASSET QUALITY MEASURES – Unaudited
	As of
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(dollars in thousands)	2023	2023	2023	2023	2022
Nonperforming Assets
Commercial
Owner occupied RE	$                -	$                -	$                -	$             80	$          134
Non-owner occupied RE	86	86	82	-	-
Construction	-	-	-	-	-
Commercial business	99	164	159	278	76
Consumer
Real estate	-	-	-	-	1
Home equity	-	145	145	-	-
Construction	-	-	-	-	-
Other	55	59	94	65	119
Nonaccruing loan modifications or troubled debt restructurings	56	65	65	71	143
Total nonaccrual loans	$          296	$          519	$          545	$          494	$          473
Other real estate owned or other assets owned	47	45	-	-	-
Total nonperforming assets	$          343	$          564	$          545	$          494	$          473
Nonperforming assets as a percentage of:
Total assets	0.04 %	0.06 %	0.05 %	0.05 %	0.05 %
Total loans receivable	0.05 %	0.08 %	0.08 %	0.07 %	0.07 %
Accruing loan modifications or troubled debt restructurings	$          947	$      1,027	$      1,059	$      1,381	$      1,151
	Three Months Ended
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(dollars in thousands)	2023	2023	2023	2023	2022
Allowance for Credit Losses
Balance, beginning of period	$      8,429	$      8,229	$      8,052	$      7,660	$      7,630
CECL adoption				$          114
Loans charged-off	108	41	145	125	101
Recoveries of loans previously charged-off	109	31	28	23	16
Net charge-offs (recoveries)	(1)	10	117	102	85
Provision for loan losses	(38)	210	294	380	115
Balance, end of period	$      8,393	$      8,429	$      8,229	$      8,052	$      7,660
Allowance for loan losses to gross loans receivable	1.19 %	1.19 %	1.19 %	1.20 %	1.16 %
Allowance for loan losses to nonaccrual loans	2835.47 %	1624.28 %	1509.91 %	1629.96 %	1619.45 %
Footnotes to table located at the end of this release.

 

Our asset quality improved through December 31, 2023, with nonperforming assets decreasing $221 thousand to $343 thousand which represents 0.04% of total assets, compared to $564,000 or 0.06% of total assets at September 30, 2023.  The allowance for credit losses as a percentage of total loans receivable was 1.19% at December 31, 2023 and at September 30, 2023.  The Company had net recoveries of $1 thousand for the three months ended December 31, 2023, compared to net charge offs of $85 thousand for the same period in 2022.

LOAN COMPOSITION – Unaudited
	As of
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(dollars in thousands)	2023	2023	2023	2023	2022
Commercial real estate	$  433,687	$  430,825	$  415,616	$  401,534	$  391,661
Consumer real estate	177,102	172,702	168,227	156,562	151,533
Commercial and industrial	63,946	67,740	71,345	71,350	69,243
Consumer and other	30,937	35,329	38,942	40,523	48,814
Total loans, net of deferred fees	705,672	706,596	694,130	669,969	661,251
Less allowance for loan losses	8,393	8,430	8,229	8,052	7,660
Total loans, net	$  697,279	$  698,166	$  685,901	$  661,917	$  653,591

 

DEPOSIT COMPOSITION – Unaudited
	As of
	Dec 31	Sep 30	Jun 30	Mar 31	Dec 31
(dollars in thousands)	2023	2023	2023	2023	2022
Noninterest-bearing	$  210,604	$  231,672	$  230,153	$  249,688	$  255,427
Interest-bearing:
DDA and NOW accounts	144,039	143,393	135,071	139,130	152,012
Money market accounts	289,158	281,325	264,130	265,264	221,550
Savings	45,558	47,422	51,029	54,247	65,494
Time, less than $250,000	121,035	117,989	113,536	97,223	80,549
Time, $250,000 and over	48,203	39,428	36,166	31,350	23,152
Total deposits	$  858,597	$  861,229	$  830,085	$  836,902	$  798,184

Footnotes to tables:
(1)	Total revenue is the sum of net interest income and noninterest income.
(2)	Annualized for the respective period.
(3)	Noninterest expense divided by the sum of net interest income and noninterest income.
(4)	Includes noninterest-bearing and interest-bearing DDA and NOW accounts.
(5)	The tangible book value per share is calculated as total shareholders' equity less intangible assets, divided by period-end outstanding common shares.

About First Reliance

Founded in 1999, First Reliance Bancshares, Inc. (OTC: FSRL.OB), is based in Florence, South Carolina and has assets of approximately $974 million. The company employs more than 160 professionals and has locations throughout South Carolina and central North Carolina. First Reliance has redefined community banking with a commitment to making customers' lives better, its founding principle. Customers of the company have given it a 93% customer satisfaction rating well above the bank industry average of 81%. First Reliance is also one of two companies throughout South Carolina to receive the Best Places to Work in South Carolina award all 17 years since the program began. We believe that this recognition confirms that our associates are engaged and committed to our brand and the communities we serve. The company offers a full range of personalized community banking products and services for individuals, small businesses, and corporations.  The company also offers a full suite of digital banking services, Treasury Services, a Customer Service Guaranty, a Mortgage Service Guaranty, and First Reliance Wealth Strategies.

FORWARD-LOOKING STATEMENTS

Certain statements in this news release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective.  Such forward-looking statements include, but are not limited to, statements with respect to our plans, objectives, expectations and intentions and other statements that are not historical facts, and other statements identified by words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," and "projects," as well as similar expressions.  Such statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.  Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate.  Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized.  The inclusion of this forward-looking information should not be construed as a representation by the Company or any person that the future events, plans, or expectations contemplated by the Company will be achieved.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:  (1) competitive pressures among depository and other financial institutions may increase significantly and have an effect on pricing, spending, third-party relationships and revenues; (2) the strength of the United States economy in general and the strength of the local economies in which we conduct operations may be different than expected resulting in, among other things, a deterioration in the credit quality or a reduced demand for credit, including the resultant effect on the Company's loan portfolio and allowance for 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 Haile
SEVP & Chief Financial Officer
(843) 656-5000
rhaile@firstreliance.com

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SOURCE First Reliance Bancshares, Inc.

FAQ

What was First Reliance Bancshares, Inc.'s net income for Q4 2023?

First Reliance Bancshares, Inc.'s net income for Q4 2023 was $0.8 million.

How did First Reliance Bancshares, Inc.'s net interest margin change in Q4 2023 compared to Q4 2022?

First Reliance Bancshares, Inc.'s net interest margin expanded by five basis points in Q4 2023, but decreased by 51 basis points compared to the same period in 2022.

What happened to total loans and deposits in Q4 2023?

Total loans decreased by 0.5% annualized, and total deposits decreased by 1.2% annualized in Q4 2023.

What was the asset quality at First Reliance Bancshares, Inc. at the end of 2023?

Asset quality improved, with nonperforming assets decreasing to 0.04% at December 31, 2023, compared to 0.06% at September 30, 2023.

How did the cost of funds change for First Reliance Bancshares, Inc. in 2023?

Cost of funds, including noninterest-bearing deposits, increased significantly in 2023.