First Reliance Bancshares Inc (QX) (FSRL)

$PCLB Pinnacle Bancshares Announces Results for First Quarter Ended March 31, 2022Press Release | 04/27/2022

Robert B. Nolen, Jr., President and Chief Executive Officer of Pinnacle Bancshares, Inc. (OTCBB: PCLB), today announced Pinnacle’s results of operations for the first quarter ended March 31, 2022:

For the three months ended March 31, 2022, Pinnacle reported net income of $1,111,000, compared to $907,000 for the three months ended March 31, 2021.
Net interest income after the provision for loan losses for the three months ended March 31, 2022, was $2,735,000, compared with $2,379,000 in the same period last year.
Included in net interest income for the three months ended March 31, 2022 are Paycheck Protection Program (“PPP”) amortized loan fees of approximately $120,000 as compared to $141,000 for the three months ended March 31, 2021.
For the three months ended March 31, 2022, basic and diluted earnings per share were each $1.14. For the same period in 2021 basic and diluted earnings per share were each $0.93.
For the three months ended March 31, 2022, return on average assets was 1.29%, compared to 1.26% in the comparable 2021 period.

The Company’s net interest margin was 4.06% for the three months March 31, 2022, compared to 3.61% for the three months ended March 31, 2021.

At March 31, 2022, Pinnacle’s allowance for loan losses as a percent of total loans was 2.05%, compared to 2.02% at December 31, 2021. Excluding PPP loans of $2.2 million dollars and $4.3 million dollars, the allowance for loan losses as a percent of total loans as of March 31, 2022 and December 31, 2021, was both 2.09%. Nonperforming assets were $11,000 at March 31, 2022, compared to $30,000 at December 31, 2021. The ratio of nonperforming assets to total loans was .01% at March 31, 2022, and .01% at December 31, 2021.

Pinnacle was classified as “well capitalized” at March 31, 2022. All capital ratios are significantly higher than the requirements for a well-capitalized institution.

Dividends of $.25 per share were paid to shareholders during the first quarter of 2022 and $.22 per share during the first quarter 2021.

Impact of COVID-19 on Our Business

As a result of the spread of the COVID-19 coronavirus, economic uncertainties have arisen which are likely to negatively impact the Company. The extent of COVID-19’s impact on the Company’s operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, the virus’ impact on the Company’s customers, employees and vendors, and vaccination supply and delivery. At this point, the extent to which COVID-19 may impact the Company’s financial condition or results of operations remains uncertain.

Effects of Inflation

We do not believe that inflation has had a material effect on our results of operations for the three-month period ended March 31, 2022 and March 31, 2021; however, our business could be affected by inflation in the future which we plan to mitigate through a combination of pricing actions and operating efficiencies, although these actions could have an adverse impact on demand.

Forward-Looking Statements

Information contained in this press release, other than historical information, may be considered forward-looking in nature and is subject to various risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. Pinnacle undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in Pinnacle’s expectations. Certain tabular presentations may not reconcile because of rounding.

Pinnacle Bancshares, Inc.’s wholly owned subsidiary Pinnacle Bank has seven offices located in central and northwest Alabama.

PINNACLE BANCSHARES, INC.

AND SUBSIDIARY


UNAUDITED FINANCIAL HIGHLIGHTS








Three Months Ended March 31,







2022





2021

Net Income





$


1,110,760








$


907,000




Weighted average basic shares outstanding








970,791











973,505




Weighted average diluted shares outstanding








970,791











973,505




Dividend per share





$


.25








$


.22




Provision for loan losses





$


-








$


-




Basic and diluted earnings per share





$


1.14








$


0.93




Performance Ratios: (annualized)



















Return on average assets








1.29


%








1.26


%

Return on average equity








12.96


%








11.90


%

Interest rate spread








4.01


%








3.51


%

Net interest margin








4.06


%








3.61


%

Operating cost to assets








2.06


%








2.33


%




































(Audited)







March 31, 2022





December 31, 2021

Total assets





$


349,351,000








$


339,710,000




Loans receivable, net





$


120,432,000








$


122,659,000




Deposits





$


320,414,000








$


298,693,000




Brokered CD’s included in deposits





$


19,944,000








$


24,937,000




Total stockholders’ equity





$


23,851,000








$


35,659,000




Weighted average book value per share (excluding OCI)





$


36.04








$


35.15




Total average stockholders' equity to asset ratio








9.92


%








10.19


%

Asset Quality Ratios:



















Nonperforming loans as a percent of total loans








.01


%








.01


%

Nonperforming assets as a percent of total loans








.01


%








.01


%

Allowance for loan losses as a percent of total loans








2.05


%








2.02


%

Allowance for loan losses as a percent of nonperforming loans








22936.36


%








8460.00


%


PINNACLE BANCSHARES, INC.

AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF CONDITION





(Unaudited)





(Audited)




March 31,





December 31,




2022





2021

Assets
















Cash and cash equivalents


$


2,069,123








$


1,730,327




Interest bearing deposits in banks





17,111,285











11,146,497




Securities available for sale





185,344,095











183,516,514




Restricted equity securities





773,600











741,600





















Loans





122,954,984











125,196,462




Less allowance for loan losses





2,522,536











2,537,948




Loans, net





120,432,448











122,658,514





















Premises and equipment, net





6,929,559











7,015,537




Operating right-of-use lease assets





469,697











493,627




Goodwill





306,488











306,488




Bank owned life insurance





9,918,414











9,822,441




Accrued interest receivable





1,458,577











1,917,598




Other assets





4,537,826











361,228





















Total assets


$


349,351,112








$


339,710,371





















Liabilities and Stockholders’ Equity
















Deposits:
















Noninterest-bearing


$


91,773,265








$


88,430,320




Interest-bearing





228,640,848











210,262,213




Total deposits





320,414,113











298,692,533





















Subordinated debentures





3,093,000











3,093,000




Accrued interest payable





92,745











77,843




Operating lease liabilities





469,697











493,627




Other liabilities





1,430,708











1,694,225




Total liabilities





325,500,263











304,051,228





















Stockholders’ equity
















Common stock, $.01 par value, 2,400,000 shares authorized;
















1,872,313 shares issued; 970,791 shares outstanding





18,723











18,723




Additional paid-in capital





8,923,223











8,923,223




Treasury stock, at cost (901,522 shares)





(13,533,621


)








(13,533,621


)

Retained earnings





39,578,402











38,710,339




Accumulated other comprehensive income (loss), net of tax





(11,135,878


)








1,540,479




Total stockholders’ equity





23,850,849











35,659,143





















Total liabilities and stockholders’ equity


$


349,351,112








$


339,710,371





PINNACLE BANCSHARES, INC.

AND SUBSIDIARY


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31, 2022 and 2021





2022





2021

Interest income
















Loans, including fees


$


1,654,949





$


1,538,243


Taxable securities





1,179,914











912,113




Nontaxable securities





34,384











58,493




Other interest





10,321











5,632




Total interest income





2,879,568











2,514,481





















Interest expense
















Deposits





106,235











97,172




Subordinated debentures





38,600











38,500




Total interest expense





144,835











135,672





















Net interest income





2,734,733











2,378,809




Provision for loan losses





-











-




Net interest income after provision for loan losses





2,734,733











2,378,809





















Other income
















Fees and service charges on deposit accounts





357,833











346,188




Servicing fee income, net





886











1,059




Bank owned life insurance





95,973











97,967




Mortgage fee income





14,361











2,487




Total other income





469,053











447,701





















Other expenses
















Salaries and employee benefits





1,025,583











958,973




Occupancy expenses





229,622











222,144




Marketing and professional expenses





64,901











64,637




Other operating expenses





461,841











432,901




Total other expenses





1,781,947











1,678,655





















Income before income taxes





1,421,839











1,147,855





















Income tax expense





311,079











240,903





















Net income


$


1,110,760








$


906,952





















Basic and diluted earnings per share


$


1.14








$


0.93





















Cash dividends per share


$


0.25








$


0.22




Weighted-average basic and diluted shares outstanding





970,791











973,505





PINNACLE BANCSHARES, INC.

AND SUBSIDIARY


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended March 31, 2022 and 2021












































Accumulated




























Additional























Other





Total




Common Stock





Paid-in





Treasury





Retained





Comprehensive





Stockholders’




Shares





Par Value





Capital





Stock





Earnings





Income (Loss)





Equity




























































Balance, December 31, 2012


1,872,313





$


18,723





$


8,923,223





$


(13,441,345


)





$


34,874,072








$


3,957,193








$


34,331,866




Net income


-











-











-











-











906,952











-











906,952




Cash dividends declared,


























































$0.22 per share


-











-











-











-











(214,171


)








-











(214,171


)

Other comprehensive loss


-











-











-











-











-











(2,924,470


)








(2,924,470


)

Balance, March 31, 2021


1,872,313








$


18,723








$


8,923,223








$


(13,441,345


)





$


35,566,853








$


1,032,723








$


32,100,177































































Balance, December 31, 2021


1,872,313








$


18,723








$


8,923,223








$


(13,533,621


)





$


38,710,339








$


1,540,479








$


35,659,143




Net income


-











-











-











-











1,110,760











-











1,110,760




Cash dividends declared,


























































$0.25 per share


-











-











-











-











(242,697


)








-











(242,697


)

Other comprehensive loss


-











-











-











-











-











(12,676,357


)








(12,676,357


)

Balance, March 31, 2022


1,872,313








$


18,723








$


8,923,223








$


(13,533,621


)





$


39,578,402








$


(11,135,878


)





$


23,850,849





PINNACLE BANCSHARES, INC.

AND SUBSIDIARY


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31, 2022 and 2021





2022





2021

OPERATING ACTIVITIES
















Net income


$


1,110,760








$


906,952




Adjustments to reconcile net income to net cash
















provided by operating activities:
















Depreciation





115,917











103,599




Net amortization of securities





71,700











81,760




Bank owned life insurance





(95,973


)








(97,967


)

Decrease in accrued interest receivable





459,021











307,664




Increase (decrease) in accrued interest payable





14,902











(22,632


)

Net other operating activities





265,363











539,307




Net cash provided by operating activities





1,941,690











1,818,683




INVESTING ACTIVITIES
















Net (increase) decrease in loans





2,226,066











(10,896,412


)

Net increase in interest-bearing deposits in banks





(5,964,788


)








(10,902,836


)

Purchase of securities available for sale





(20,435,341


)








(19,626,046


)

Proceeds from maturing or callable securities available for sale





1,154,225











6,103,652




Net (purchase) redemption of restricted equity securities





(32,000


)








69,500




Purchase of premises and equipment





(29,939


)








(469,528


)

Net cash used in investing activities





(23,081,777


)








(35,721,670


)


















FINANCING ACTIVITIES
















Net increase in deposits





21,721,580











34,077,734




Payments of cash dividends





(242,697


)








(214,171


)

Net cash provided by financing activities





21,478,883











33,863,563





















Net increase (decrease) in cash and cash equivalents





338,796











(39,424


)


















Cash and cash equivalents at beginning of year





1,730,327











2,080,667





















Cash and cash equivalents at end of year


$


2,069,123








$


2,041,243





















SUPPLEMENTAL DISCLOSURE
















Cash paid during the year for:
















Interest


$


129,933








$


158,304




Taxes


$


-








$


-




OTHER NONCASH TRANSACTIONS
















Real estate acquired through foreclosure


$


-








$


-

$FSRL
First Reliance Bancshares Reports First Quarter 2022 Results

PR Newswire

FLORENCE, S.C., April 27, 2022

FLORENCE, S.C., April 27, 2022 /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 first quarter of 2022.

First Reliance Bancshares

First Quarter 2022 Highlights

$FSRL First Reliance Bancshares Reports Third Quarter 2021 Results
Press Release | 10/21/2021
First Reliance Bancshares Reports Third Quarter 2021 Results
PR Newswire

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.

First Reliance Bancshares

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
total assets

0.15%

0.17%

0.17%

0.21%

0.19%

Allowance for loan losses as a percentage of
total loans receivable

1.23%

1.20%

1.26%

1.29%

1.20%

Footnotes to table located at the end of this release.

CONDENSED CONSOLIDATED INCOME 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
losses

6,164

6,112

5,601

5,348

5,769


17,876

16,003

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,
commissions, and fees

532

509

454

427

426


1,495

1,170

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.

CONDENSED CONSOLIDATED 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
value

1

1

1

1

1

Common Stock - $.01 par value; 20,000,000 shares
authorized

88

88

88

82

81

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

-

-

-

4

4

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.

(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 $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 Haile
SEVP & Chief Financial Officer
(843) 656-5000
rhaile@firstreliance.com

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