First Reliance Bank Reports Positive Earnings

FLORENCE, S.C., May 5 /PRNewswire-FirstCall/ -- First Reliance Bancshares (OTC:FSRL) (BULLETIN BOARD: FSRL) , the parent company of First Reliance Bank, today reported capital ratios representative of a strong, healthy and 'well-capitalized' bank. Pre-provision pre-tax income for the quarter ending March 31, 2009 was $1.1 Million. Net income for the quarter ending March 31, 2009 was $13,865 compared to $826,123 earned for the quarter ending March 31, 2008 due primarily to loan loss provisions of $1.3 million and a declining interest rate environment during the period. "The commercial and real estate construction industry in our coastal region has been the hardest hit causing us to be prudent and build up our loan loss provisions. We are taking a very conservative approach to our business until we see more consistent and positive trends in our communities' economic indicators," said Rick Saunders, CEO. (Logo: http://www.newscom.com/cgi-bin/prnh/20041022/CLF051LOGO ) As of March 31, 2009, total assets were $637.4 million, an increase of $39.8 million over $597.6 million reported for March 31, 2008. Total deposits increased $51.9 million, from $450 million reported for March 31, 2008. Management continues its focus on increasing core deposits and reducing its reliance on wholesale funding. For the quarter ending March 31, 2009, checking account deposits grew 8.2% over quarter ended March 31, 2008. "Our Mortgage Banking team results for the first quarter were very strong. " Mortgage originations for three months ending March 31, 2009 increased 34% over three months ending March 31, 2008. In addition, the mortgage application pipeline in the first quarter has increased by 40% over annual 2008 volume, setting the stage for strong mortgage demand in the second quarter. We are proud of our team for being recognized by the South Carolina State Housing Authority as Lender of the Year (Division II category). This is a terrific achievement and reflects our commitment to first time homebuyers and homeownership," said Saunders. Diluted earnings loss per share for March 31, 2009 totaled $(0.02) compared to $0.23 earned for the quarter ended March 31, 2008. Earnings were primarily impacted by a loan loss provision of $1.3 million. "Our nonperforming loans are primarily isolated to the coastal region and are related to the construction industry and declining property values. However, we continue to see benefits from our bank's strong geographic diversity with solid loan quality in our Florence and Columbia markets," he said. "Our daily focus is to provide our customers with a great service experience, differentiated programs, and products that earn their loyalty. We sincerely appreciate our customer's support and their efforts have helped us grow our local deposits by 13.0% from quarter ended March 31, 2008 to March 31, 2009 and our households at 15.4% first quarter annualized. It is a reflection that our customers enjoy our Easy To Do Business With(TM) brand of banking." "In late 2008, we introduced a unique program called Hometown Heroes, which recognizes and provides special financial products and rewards to heroes in our community- teachers, police, firefighters, military, not-for-profit and medical professionals, people who help us and protect us every day. This program, is our way of saying thank you, and it has been a great success. As a benefit of the program we will make a significant contribution to many Hometown Heroes support organizations. Giving back to the community and honoring our Hometown Heroes is a winning combination and we look forward to the continued growth of this program," he said. "Looking ahead in 2009 we will introduce a new banking program to provide a safe, convenient, checking and savings and financial counseling to people in our community who have had limited access to the banking system. In June we will also open a new branch in the West Columbia and welcome the community to try out our distinctive brand of convenient and friendly service." "While the issues facing our economy are difficult, we have a talented and visionary team at First Reliance bank who are dedicated to serving our customers by fulfilling our purpose - to make a positive difference in every life we touch," said Rick Saunders ABOUT FIRST RELIANCE BANK The Company's one bank subsidiary, First Reliance, has been recognized for its success including being the only bank ever to be named to The Top 25 Fastest Growing Companies(TM) in South Carolina four times (Elliott Davis). First Reliance Bank operates in five branch locations. Its Easy To Do Business With(TM) products and services include: Totally FREE Checking, Totally FREE Business Checking, FREE Coin Machines, a Retail Service Guaranty, and Five Way Mortgage Service Promise, a Worldwide NO FEE ATM Network, and 8-8 Extended Hours in their Florence, Lexington, and Mt. Pleasant locations. Based in Florence, South Carolina, First Reliance Bancshares, Inc., is a bank holding company with approximately $637 million in consolidated assets as of March 31, 2009 First Reliance Bank, which was opened in 1999, is the Company's sole operating subsidiary. The bank has two branch locations, a Technology Center, and a Learning Center in Florence, SC. In addition, the bank's aggressive statewide growth strategy includes current branches in Lexington, Mount Pleasant and downtown Charleston, SC. Additional branch expansions include new sites located in Charleston, and the Midlands Region. The Company's stock is traded on the OTC Bulletin Board under the symbol FSRL.OB. Information about the Company is available on the company's website at http://www.firstreliance.com/. This press release contains forward-looking statements about branch openings within the meaning of the Securities Litigation Reform Act of 1995. Forward-looking statements give our expectations or forecasts of future events. Any or all of our forward-looking statements here or in other publications may turn out to be incorrect. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining our actual future results. Consequently, no forward- looking statements can be guaranteed. Our actual results may vary materially, and there are no guarantees about the performance of our stock. We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future results or otherwise. You are advised, however, to consult any future disclosures we make on related subjects in our reports to the SEC. Media Contacts: F.R. (Rick) Saunders Jr., Pamela Rhoads, President and CEO VP Customer Experience First Reliance Bank First Reliance Bank (843) 674-3001 (843) 674-3261 First Reliance Bancshares,Inc. Balance Sheet March 31 March 31 December 31 2009 2008 2008 (Unaudited) (Unaudited) Audited Assets: Cash and Cash Equivalents Cash and Due From Banks 31,683,883 7,929,684 $5,451,607 Federal funds sold - - 257,000 Total cash and cash equivalents 31,683,883 7,929,684 5,708,607 Investment securities Securities available for sale 73,593,711 57,630,118 76,310,816 Nonmarketable equity securities 5,594,600 4,372,200 4,574,700 Total investment securities 79,188,311 62,002,318 80,885,516 Loans held for sale 24,250,382 18,403,137 9,589,081 Loans receivable 464,124,999 473,069,194 468,990,202 Less allowance for loan losses (7,331,051) (5,539,601) (8,223,899) Loans, net 456,793,948 467,529,593 460,766,303 Premises, furniture, and equipment, net 26,462,326 23,713,588 28,612,022 Accrued Interest receivable 2,462,465 2,977,560 2,653,260 Other real estate owned 1,423,582 327,950 379,950 Cash surrender value life insurance 11,091,634 10,662,027 10,986,484 Other assets 4,044,994 4,047,044 3,852,660 Total Assets 637,401,525 597,592,901 $603,433,883 Liabilities: Deposits: Noninterest bearing transaction accounts 48,085,212 45,178,443 $39,467,609 Interest bearing transaction accounts 34,414,993 31,058,228 34,708,951 Savings 85,396,666 90,229,421 110,629,005 Time deposits $100,000 and over 190,458,083 185,683,283 137,444,867 Other time deposits 143,596,606 97,861,715 138,884,952 Total deposits 501,951,560 450,011,090 461,135,384 Securities sold under agreements to repurchase 864,994 7,858,845 8,197,451 Federal funds purchased - 11,482,000 - Advances from Federal Home Loan Bank 69,500,000 73,500,000 78,000,000 Note Payable - 3,000,000 6,950,000 Junior subordinated debentures 10,310,000 10,310,000 10,310,000 Accrued interest payable 610,924 684,067 623,330 Other liabilities 1,205,844 2,960,384 791,960 Total Liabilities 584,443,322 556,806,386 566,008,125 Shareholders' Equity: Senior Preferred Stock 15,349,000 - - Warrant Preferred Stock 767,000 - - Discount Senior Preferred Stock (959,400) - - Premium Warrant Preferred Stock 81,396 - - Common Stock 35,872 35,132 35,250 Capital Surplus 26,259,837 26,047,924 26,120,460 Restricted Stock (312,580) (273,344) (207,653) Retained Earnings 11,852,870 12,039,496 11,839,005 Accretion Disc Senior Preferred Stock (13,860) - - Amortization Prem Warrant Preferred Stock 1,176 - - Accumulated other comprehensive income 60,325 94,282 (201,527) Treasury Stock (163,433) (156,975) (159,777) Total Shareholders Equity 52,958,203 37,786,515 37,425,758 Total Liabilities and Shareholders Equity 637,401,525 594,592,901 $603,433,883 First Reliance Bancshares,Inc. Consolidated Reports of Income Three Three Months Months Ended Ended Mar 31,2009 Mar 31,2008 (Unaudited) (Unaudited) Interest Income Loans and Fees 6,967,737 9,099,475 Investment Securities Taxable 531,316 346,384 Tax exempt 313,418 327,610 Federal funds sold 983 1,893 Other interest income 9,599 51,290 Total 7,823,053 9,826,652 Interest Expense Time deposits $100,000 and over 1,192,567 2,037,053 Other deposits 1,622,844 1,902,095 Other interest expense 854,549 919,520 Total 3,669,960 4,858,668 Net Interest Income 4,153,093 4,967,984 Provision for loan losses (1,300,380) (501,603) Net Interest Income after provision 2,852,713 4,466,381 Noninterest Income Service charges on deposit accounts 460,608 437,135 Gain on sale of mortgage loans 660,499 559,384 Income from bank owned life insurance 105,150 50,330 Brokerage fees 3,922 121,754 Other charges, commisions and fees 126,999 113,272 Gain on sale of securities Available for sale - - Gain on sale of other real estate 308 - Gain on sale of fixed assets 86,810 - Other 265,021 49,919 Total 1,709,317 1,331,794 Noninterest Expense Salaries and benefits 2,808,915 2,944,751 Occupancy 355,857 339,703 Furniture and equipment related 285,865 212,959 Other operating 1,290,442 1,236,983 Total 4,741,079 4,734,396 Income (loss) before tax (179,049) 1,063,779 Income tax expense (benefit) (192,914) 237,656 Net Income 13,865 826,123 Accretion of preferred stock to redemption value 12,684 - Preferred dividends accrued 59,584 - Net Income (loss) available to common shareholders (58,403) 826,123 Basic earnings (loss) per share (0.02) 0.24 Diluted earnings (loss) per share (0.02) 0.23 http://www.newscom.com/cgi-bin/prnh/20041022/CLF051LOGO http://photoarchive.ap.org/ DATASOURCE: First Reliance Bancshares Inc. CONTACT: F.R. (Rick) Saunders Jr., President and CEO, +1-843-674-3001, or , or Pamela Rhoads, VP Customer Experience, +1-843-674-3261, or , both of First Reliance Bank Web Site: http://www.firstreliance.com/