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| 8-K - FORM 8-K - FIRST RELIANCE BANCSHARES INC | v392212_8k.htm |
Exhibit 99.1
For Immediate Release
Contact:
Rick Saunders, CEO
(888) 543-5510
rsaunders@firstreliance.com
First Reliance Announces Strong 3rd Quarter Results
October 27, 2014 Florence, S.C., (Global Newswire) - First Reliance Bancshares, Inc (OTC: FSRL) announced that it had unaudited net income of $4,447,675, or $0.77 per diluted share, for the nine months ended September 30, 2014. This compares to unaudited net loss of $2,651,556, or $0.84 per diluted share, for the nine months ended September 30, 2013. The difference in net income between the two periods primarily relates to a tax benefit of $3.1 million derived from the recapture of a portion of the Company’s deferred tax asset in the third quarter of 2014. The Company has a remaining DTA valuation allowance of $6,598,788 as of September 30, 2014. Net Income per share for the period ending September 30, 2014 is based on 4,648,535 diluted average shares compared to 4,202,251 diluted average shares for 2013. Income before income taxes increased 152.2% to $1,382,806 from a loss before income taxes of $2,651,556 for the nine months ended September 30, 2014 and 2013, respectively. The 2014 pretax operating results were influenced by growth in net interest income, reduced provision for loan losses, and reductions in noninterest expenses.
Net interest income increased $1,064,754 and totaled $10,142,202 for the nine months ended September 30, 2014, compared to $9,077,448 for the nine months ended September 30, 2013.
Noninterest income decreased $107,640 and totaled $3,306,955 for the nine months ended September 30, 2014 compared to $3,414,595 for 2013, primarily due to an $86,498 reduction in fees on mortgage loans sold.
Noninterest expense levels decreased $2,565,266 and totaled $11,968,525 for the nine months ended September 30, 2014 compared to $14,533,791 for 2013. Contributing to this decrease were reductions in salaries and benefits, and overhead expenses on other real estate owned.
(First Reliance Announces continued) – Pg. 2
For the quarter ended September 30, 2014, unaudited net income was $3,728,986, or $0.72 per diluted share. This compares to an unaudited net loss of $2,469,901, or $0.63 per diluted share for the quarter ended September 30, 2013. The income per share for the quarter is based on 4,665,290 diluted average shares compared to 4,413,119 diluted average shares for 2013. Pretax income increased 127% to $664,117 for the quarter ended September 30, 2014 from a loss before income taxes of $2,469,901. The 2014 pretax operating results were influenced by a growth in net interest income, reduced provision for loan losses, and reductions in noninterest expenses.
Total assets increased 3.56% and were $368.1 million as of September 30, 2014 compared to $355.4 million as of December 31, 2013.
Loans increased 5.70% or $13.6 million, excluding loans held for sale, to $252.1 million as of September 30, 2014, from $238.5 million as of December 31, 2013.
Deposits increased by $9.9 million, or 3.51% to $292.3 million at September 30, 2014, from $282.4 million at December 31, 2013. The increase in loans was funded by an increase in core non-time deposits.
The Company continues to show improvement in asset quality. For the first nine months ended September 30, 2014, additions to the allowance for loan losses were minimal at $97,826. Increased recoveries, reduced non-performing assets, declining delinquencies, and reduced classified loans all contributed to this result. The ratio of nonperforming assets to total assets was 1.11% as of September 30, 2014, compared to 6.31% as of September 30, 2013. The allowance for loan losses as a percentage of loans was 1.15% as of September 30, 2014, compared to 1.25% as of September 30, 2013. The allowance for loan losses as a percentage of total nonperforming loans totaled 141.73% as of September 30, 2014, compared to 32.47% as of September 30, 2013.
(First Reliance Announces continued) – Pg. 3
“We are very pleased with our Company’s third quarter results as our asset quality continues to strengthen and as we maintain solid trends within our business model. Our capital remains strong and well above regulatory requirements and we have experienced growth in core deposits, loans, as well as increasing our liquidity. ” said Jeffrey Paolucci, Executive Vice President and Chief Financial Officer of First Reliance Bank.
“We believe that First Reliance’s third quarter results combined with the strategic actions to managing key areas of the bank over the past few years show the strength of our plan and our management team. Third quarter performance provided confirmation that positive trends for the core business remains in place. We continue to be a community bank of choice in our local communities as many people have discovered the exceptional service they receive and recognize us for our support of the communities we are in,” said Rick Saunders, President and CEO of First Reliance Bank.
(First Reliance Announces continued) – Pg. 4
| Three Months Ended | ||||||||||||
| September 30, 2014 | September 30, 2013 | % Change | ||||||||||
| Income Statement Data | ||||||||||||
| Net Interest Income | 3,550,435 | 3,008,565 | 18.01 | % | ||||||||
| Provision for loan losses | 51,896 | 609,808 | -91.49 | % | ||||||||
| Noninterest Income | 1,165,575 | 1,180,580 | -1.27 | % | ||||||||
| Noninterest Expense | 3,999,997 | 6,049,238 | -33.88 | % | ||||||||
| Income Tax Expense (Benefit) | (3,064,869 | ) | - | |||||||||
| Net Income (Loss) | 3,728,986 | (2,469,901 | ) | |||||||||
| Per Share Data | ||||||||||||
| Net Income Per Share | ||||||||||||
| Basic | $ | 0.74 | $ | (0.63 | ) | 217.46 | % | |||||
| Diluted | $ | 0.72 | $ | (0.63 | ) | 214.29 | % | |||||
| Average Shares Outstanding | ||||||||||||
| Basic | 4,571,726 | 4,413,119 | 3.59 | % | ||||||||
| Diluted | 4,665,290 | 4,413,119 | 5.71 | % | ||||||||
| Key Ratios | ||||||||||||
| Return on Assets | 1.01 | % | -0.68 | % | 248.41 | % | ||||||
| Return on Equity | 10.25 | % | -6.63 | % | 254.75 | % | ||||||
| Nonperforming assets to assets | 1.11 | % | 6.31 | % | -82.41 | % | ||||||
| Reserve to loans | 1.15 | % | 1.25 | % | -8.30 | % | ||||||
| Reserve to nonperforming loans | 141.73 | % | 32.47 | % | 336.50 | % | ||||||
| Net Interest Margin | 4.41 | % | 3.81 | % | 15.76 | % | ||||||
(First Reliance Announces continued) – Pg. 5
ABOUT FIRST RELIANCE BANK
First Reliance Bank, founded in 1999, employs approximately 100 highly-talented associates. The bank serves the Columbia, Lexington, Charleston, Mount Pleasant and Florence markets in South Carolina. The bank has been recognized as “One of the Best Places to Work in South Carolina” by the SC BIZ for eight consecutive years and was named 2009 Lender of the Year by the South Carolina Housing Authority. First Reliance Bank offers several unique customer programs which include a Hometown Heroes package of benefits to serve those who are serving our communities, Check ‘N Save, a community outreach program for the unbanked or under-banked, a Moms First program, and an iMatter program targeted to young people. The Bank also offers a Customer Service Guaranty, a Mortgage Service Guaranty, FREE Coin Machines for customers to use, Mobile Banking, and is open on most traditional bank holidays. Its commitment to making customers' lives better, and the idea that “There's More to Banking Than Money” has earned the bank a customer satisfaction rating of 95% (2013 results from an outside survey firm.)
First Reliance Bank is traded as FSRL.OB. Information about the Company is available on the Company’s web site at 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.
Contact Jeffrey A. Paolucci, Executive Vice President and Chief Financial Officer, (843) 674-3250.
###
First Reliance BancShares
Condensed Consolidated Balance Sheets
| September 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Cash and cash equivalents: | ||||||||
| Cash and due from banks | $ | 4,354,369 | $ | 3,548,974 | ||||
| Interest-bearing deposits with other banks | 20,207,489 | 14,698,851 | ||||||
| Total cash and cash equivalents | 24,561,858 | 18,247,825 | ||||||
| Time deposits in other banks | 101,409 | 101,207 | ||||||
| Securities available-for-sale | 13,537,545 | 12,144,843 | ||||||
| Securities held-to-maturity (Estimated fair value of $33,247,693 and $36,951,934 at September 30, 2014 and December 31, 2013, respectively) | 32,626,235 | 36,951,934 | ||||||
| Nonmarketable equity securities | 1,142,500 | 1,594,900 | ||||||
| Total investment securities | 47,306,280 | 50,691,677 | ||||||
| Mortgage loans held-for-sale | 2,568,011 | 2,248,252 | ||||||
| Loans receivable | 252,090,858 | 238,502,131 | ||||||
| Less allowance for loan losses | (2,900,341 | ) | (2,894,153 | ) | ||||
| Loans, net | 249,190,517 | 235,607,978 | ||||||
| Premises, furniture and equipment, net | 23,905,800 | 24,333,616 | ||||||
| Accrued interest receivable | 1,048,362 | 1,129,881 | ||||||
| Other real estate owned | 2,009,212 | 8,932,634 | ||||||
| Cash surrender value life insurance | 13,197,741 | 12,945,693 | ||||||
| Other assets | 4,181,399 | 1,169,368 | ||||||
| Total assets | $ | 368,070,589 | $ | 355,408,131 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Liabilities | ||||||||
| Deposits | ||||||||
| Noninterest-bearing transaction accounts | $ | 69,328,528 | $ | 65,576,524 | ||||
| Interest-bearing transaction accounts | 61,570,826 | 46,046,043 | ||||||
| Savings accounts | 85,834,789 | 86,247,410 | ||||||
| Time deposits $100,000 and over | 37,137,622 | 39,934,745 | ||||||
| Other time deposits | 38,453,965 | 44,610,301 | ||||||
| Total deposits | 292,325,730 | 282,415,023 | ||||||
| Securities sold under agreement to repurchase | 7,639,859 | 4,876,118 | ||||||
| Advances from Federal Home Loan Bank | 17,000,000 | 23,000,000 | ||||||
| Junior subordinated debentures | 10,310,000 | 10,310,000 | ||||||
| Accrued interest payable | 747,529 | 587,649 | ||||||
| Other liabilities | 3,675,658 | 2,126,597 | ||||||
| Total liabilities | 331,698,776 | 323,315,387 | ||||||
| Shareholders’ Equity | ||||||||
| Preferred stock | ||||||||
| Series A cumulative perpetual preferred stock - 15,349 shares issued and outstanding at September 30, 2014 and December 31, 2013 | 15,179,709 | 15,145,597 | ||||||
| Series B cumulative perpetual preferred stock - 767 shares issued and outstanding at September 30, 2014 and December 31, 2013 | 767,000 | 769,894 | ||||||
| Common stock, $0.01 par value; 20,000,000 shares authorized, 4,738,370 and 4,568,695 shares issued and outstanding at, September 30, 2014 and December 31, 2013, respectively | 47,384 | 45,687 | ||||||
| Shareholders’ Equity | ||||||||
| Capital surplus | 30,909,652 | 30,609,281 | ||||||
| Treasury stock, at cost, 35,176 and 29,846 shares at September 30, 2014 and December 31, 2013, respectively | (205,513 | ) | (201,686 | ) | ||||
| Nonvested restricted stock | (426,090 | ) | (32,138 | ) | ||||
| Retained deficit | (10,031,450 | ) | (14,447,907 | ) | ||||
| Accumulated other comprehensive income | 131,121 | 204,016 | ||||||
| Total shareholders’ equity | 36,371,813 | 32,092,744 | ||||||
| Total liabilities and shareholders’ equity | $ | 368,070,589 | $ | 355,408,131 | ||||
First Reliance BancShares
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Interest income: | ||||||||||||||||
| Loans, including fees | $ | 3,461,473 | $ | 3,246,099 | $ | 10,058,113 | $ | 10,090,301 | ||||||||
| Investment securities: | ||||||||||||||||
| Taxable | 278,023 | 272,918 | 846,326 | 935,158 | ||||||||||||
| Nontaxable | 28,512 | 16,987 | 85,612 | 16,987 | ||||||||||||
| Other interest income | 27,200 | 20,295 | 56,956 | 73,230 | ||||||||||||
| Total | 3,795,208 | 3,556,299 | 11,047,007 | 11,115,676 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Time deposits | 147,846 | 376,271 | 562,813 | 1,502,759 | ||||||||||||
| Other deposits | 31,971 | 49,458 | 97,798 | 173,446 | ||||||||||||
| Other interest expense | 64,956 | 122,005 | 244,194 | 362,023 | ||||||||||||
| Total | 244,773 | 547,734 | 904,805 | 2,038,228 | ||||||||||||
| Net interest income | 3,550,435 | 3,008,565 | 10,142,202 | 9,077,448 | ||||||||||||
| Provision for loan losses | 51,896 | 609,808 | 97,826 | 609,808 | ||||||||||||
| Net interest income after provision for loan losses | 3,498,539 | 2,398,757 | 10,044,376 | 8,467,640 | ||||||||||||
| Noninterest income: | ||||||||||||||||
| Service charges on deposit accounts | 421,013 | 435,616 | 1,204,042 | 1,252,816 | ||||||||||||
| Gain on sales of mortgage loans | 287,752 | 303,781 | 791,324 | 877,822 | ||||||||||||
| Income from bank owned life insurance | 84,276 | 86,908 | 252,048 | 258,675 | ||||||||||||
| Other charges, commissions and fees | 272,496 | 271,658 | 807,392 | 739,322 | ||||||||||||
| Gain on sale of securities | - | - | 5,321 | 33,917 | ||||||||||||
| Other non-interest income | 100,038 | 82,617 | 246,828 | 252,043 | ||||||||||||
| Total | 1,165,575 | 1,180,580 | 3,306,955 | 3,414,595 | ||||||||||||
| Noninterest expenses: | ||||||||||||||||
| Salaries and employee benefits | 1,741,970 | 1,939,545 | 5,395,856 | 5,845,209 | ||||||||||||
| Occupancy expense | 372,572 | 390,355 | 1,125,353 | 1,123,502 | ||||||||||||
| Furniture and equipment expense | 371,530 | 435,846 | 1,178,101 | 908,688 | ||||||||||||
| Other operating expenses | 1,513,925 | 3,283,492 | 4,269,215 | 6,656,392 | ||||||||||||
| Total | 3,999,997 | 6,049,238 | 11,968,525 | 14,533,791 | ||||||||||||
| Net income (loss) before income taxes | 664,117 | (2,469,901 | ) | 1,382,806 | (2,651,556 | ) | ||||||||||
| Income tax benefit | (3,064,869 | ) | - | (3,064,869 | ) | - | ||||||||||
| Net income (loss) | 3,728,986 | (2,469,901 | ) | 4,447,675 | (2,651,556 | ) | ||||||||||
| Preferred stock dividends | 362,610 | 254,449 | 857,595 | 752,944 | ||||||||||||
| Deemed dividends on preferred stock resulting from net accretion of discount and amortization of premium | - | 44,876 | 31,218 | 133,164 | ||||||||||||
| Net income (loss) available to common shareholders | $ | 3,366,376 | $ | (2,769,226 | ) | $ | 3,558,862 | $ | (3,537,664 | ) | ||||||
| Average common shares outstanding, basic | 4,571,726 | 4,413,119 | 4,570,257 | 4,202,251 | ||||||||||||
| Average common shares outstanding, diluted | 4,665,290 | 4,413,119 | 4,648,535 | 4,202,251 | ||||||||||||
| Income (loss) per common share: | ||||||||||||||||
| Basic income (loss) per share | $ | 0.74 | $ | (0.63 | ) | $ | 0.78 | $ | (0.84 | ) | ||||||
| Diluted income (loss) per share | 0.72 | (0.63 | ) | 0.77 | (0.84 | ) | ||||||||||