FSRL First Reliance Bancshares Inc (PK)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): October 27, 2014

 

First Reliance Bancshares, Inc.

(Exact Name of Registrant As Specified in Its Charter)

 

   South Carolina    

(State or Other Jurisdiction of Incorporation)

 

000-49757		80-0030931
(Commission File Number)		(I.R.S. Employer Identification No.)

 

2170 West Palmetto Street, Florence, South Carolina		29501
(Address of Principal Executive Offices)		(Zip Code)

 

   (843) 656-5000   

(Registrant's Telephone Number, Including Area Code)

 

   Not Applicable   

(Former Name or Former Address, if Changed Since Last Report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On October 27, 2014, First Reliance Bancshares, Inc. issued a press release announcing its financial results for the period ended September 30, 2014. A copy of the press release is attached hereto as Exhibit 99.1.

 

Item 9.01 Financial Statements and Exhibits.

 

(d)

Exhibits

 

Item

Exhibits

 

99.1

Press Release for the period ended September 30, 2014.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	FIRST RELIANCE BANCSHARES, INC.
	By:	/s/ Jeffrey A. Paolucci
	Name:	Jeffrey A. Paolucci
	Title:	Executive Vice President and
		Chief Financial Officer
Dated:  October 27, 2014

 

 

Exhibit List

 

99.1

Release for the period ended September 30, 2014.

 

 

Exhibit 99.1

 

 

For Immediate Release

 

Contact:

Rick Saunders, CEO

(888) 543-5510

rsaunders@firstreliance.com

 

First Reliance Announces Strong 3^rd 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	)