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First Reliance Bancshares Reports Fourth Quarter 2022 Results
First Reliance Bancshares Reports Fourth Quarter 2022 Results
PR Newswire
FLORENCE, S.C., Feb. 1, 2023
FLORENCE, S.C., Feb. 1, 2023 /PRNewswire/ — First Reliance Bancshares, Inc. (OTC:FSRL), the holding company for First Reliance Bank (collectivel…
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First Reliance Bancshares Reports Fourth Quarter 2022 Results
PR Newswire
FLORENCE, S.C., Feb. 1, 2023
FLORENCE, S.C., Feb. 1, 2023 /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 of 2022.
Fourth Quarter and Full Year 2022 Highlights
- Net income for the fourth quarter of 2022 increased 60.2% to $1.5 million, or $0.18 per diluted share, compared to $0.9 million, or $0.12 per diluted share, for the fourth quarter of 2021. Net income for the year ended December 31, 2022 was $5.9 million, or $0.73 per diluted share, compared to $5.3 million, or $0.65 per diluted share, for the year ended December 31, 2021.
- Net interest income for the quarter was $7.9 million, which represents a decrease of $0.4 million, or 4.3%, on a linked quarter basis and an increase of $1.3 million, or 19.1% compared to the same period in 2021. Net interest income for the full year was $30.0 million, which represents an increase of $5.3 million, or 21.6%, compared to the same period in 2021.
- Net interest margin compressed during the quarter to 3.68% at December 31, 2022 compared to 3.71% for the third quarter of 2022, but increased 58 basis points compared to the same period in 2021.
- Total loans increased $14.6 million, or 9.0% annualized, to $661.3 million at December 31, 2022 from $646.6 million at September 30, 2022. For the full year 2022, total loans increased $74.8 million, or 12.8%, from $586.4 million at December 31, 2021. Included in the increase in loans for the year was a $22.7 million decrease to $29.6 million at December 31, 2022 from $52.3 million at December 31, 2021 in the bank's indirect auto loan portfolio.
- Total deposits decreased $42.2 million, or 20.1% annualized, to $798.2 million at December 31, 2022 from $840.4 million at September 30, 2022. While we saw declines in deposit balances for the quarter, a significant portion of the decline was in our real estate trust accounts and internal mortgage servicing accounts which regularly fluctuate. For the full year 2022, total deposits increased $17.4 million, or 2.2%, from $780.8 million at December 31, 2021.
- Asset quality improved with nonperforming assets as a percentage of total assets of 0.05% at December 31, 2022 compared to 0.06% at September 30, 2022. The Company had net charge-offs of $85.4 thousand, or annualized 0.05% of average loans during the quarter compared to net charge-offs of $34.0 thousand, or annualized 0.02% of average loans, for the quarter ended September 30, 2022.
- Cost of funds for the fourth quarter of 2022 increased to 0.71% from 0.33% on a linked quarter basis and from 0.23% for the same period in 2021. Cost of funds for the full year of 2022 increased slightly to 0.37% from 0.27% for the year 2021.
Rick Saunders, Chief Executive Officer, remarked: "2022 has brought rapid improvement in our net interest margin, continued successes in moving new client relationships to our Bank, and an extremely tough environment for the mortgage industry. I am very proud of the accomplishments and resiliency of our team.
As we look forward to 2023, we know that rising deposit competition in the short run will pressure some of the gains made in net interest margin during 2022. Our loan portfolio will reprice over the next couple of years, which will help offset funding cost increases. We will continue to focus on improving our cost structure in order to maximize operating leverage as well as ensuring our risk management framework remains robust."
Financial Summary | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Dec 31 | Dec 31 | ||
($ in thousands, except per share data) | 2022 | 2022 | 2022 | 2022 | 2021 | 2022 | 2021 | |
Earnings: | ||||||||
Net income available to common shareholders | $ 1,493 | $ 2,522 | $ 1,064 | $ 852 | $ 932 | $ 5,931 | $ 5,276 | |
Earnings per common share, diluted | 0.18 | 0.31 | 0.13 | 0.11 | 0.12 | 0.73 | 0.65 | |
Total revenue(1) | 9,417 | 11,103 | 9,404 | 9,097 | 9,253 | 39,021 | 38,907 | |
Net interest margin | 3.68 % | 3.71 % | 3.39 % | 3.12 % | 3.10 % | 3.48 % | 3.25 % | |
Return on average assets(2) | 0.65 % | 1.06 % | 0.45 % | 0.37 % | 0.41 % | 0.63 % | 0.64 % | |
Return on average equity(2) | 9.78 % | 15.60 % | 6.60 % | 4.85 % | 5.28 % | 9.11 % | 7.56 % | |
Efficiency ratio(3) | 78.14 % | 69.40 % | 84.49 % | 87.50 % | 88.45 % | 79.37 % | 82.75 % | |
As of | |||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | |
(dollars in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 |
Balance Sheet: | |||||
Total assets | $ 937,113 | $ 946,437 | $ 946,853 | $ 953,784 | $ 910,797 |
Total loans receivable | 661,251 | 646,634 | 637,953 | 592,089 | 586,446 |
Total deposits | 798,184 | 840,392 | 830,992 | 837,663 | 780,833 |
Total transaction deposits(4) to total deposits | 51.05 % | 51.42 % | 51.14 % | 52.71 % | 50.19 % |
Loans to deposits | 82.84 % | 76.94 % | 76.77 % | 70.68 % | 75.11 % |
Bank Capital Ratios: | |||||
Total risk-based capital ratio | 13.43 % | 13.47 % | 12.97 % | 13.67 % | 14.07 % |
Tier 1 risk-based capital ratio | 12.43 % | 12.45 % | 11.98 % | 12.65 % | 13.03 % |
Tier 1 leverage ratio | 10.37 % | 9.84 % | 9.66 % | 9.67 % | 9.66 % |
Common equity tier 1 capital ratio | 12.43 % | 12.45 % | 11.98 % | 12.65 % | 13.03 % |
Asset Quality Ratios: | |||||
Nonperforming assets as a percentage of | 0.05 % | 0.06 % | 0.06 % | 0.11 % | 0.10 % |
Allowance for loan losses as a percentage of | 1.16 % | 1.18 % | 1.17 % | 1.22 % | 1.20 % |
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) | 2022 | 2022 | 2022 | 2022 | 2021 | 2022 | 2021 | |
Interest income | ||||||||
Loans | $ 7,848 | $ 7,555 | $ 6,781 | $ 6,380 | $ 6,663 | $ 28,565 | $ 25,286 | |
Investment securities | 1,247 | 1,097 | 840 | 571 | 359 | 3,755 | 1,203 | |
Other interest income | 316 | 321 | 176 | 73 | 79 | 886 | 234 | |
Total interest income | 9,411 | 8,973 | 7,797 | 7,024 | 7,101 | 33,206 | 26,723 | |
Interest expense | ||||||||
Deposits | 1,106 | 446 | 212 | 197 | 224 | 1,961 | 1,022 | |
Other interest expense | 417 | 283 | 252 | 252 | 256 | 1,204 | 996 | |
Total interest expense | 1,523 | 729 | 464 | 449 | 480 | 3,165 | 2,018 | |
Net interest income | 7,888 | 8,244 | 7,333 | 6,575 | 6,621 | 30,041 | 24,705 | |
Provision for loan losses | 115 | 170 | 110 | 85 | 95 | 480 | 303 | |
Net interest income after provision for loan | 7,773 | 8,074 | 7,223 | 6,490 | 6,526 | 29,561 | 24,402 | |
Noninterest income | ||||||||
Mortgage banking income | 378 | 1,721 | 897 | 1,420 | 1,407 | 4,416 | 9,531 | |
Service fees on deposit accounts | 330 | 343 | 357 | 362 | 356 | 1,392 | 1,221 | |
Debit card and other service charges, | 500 | 536 | 559 | 498 | 543 | 2,093 | 2,038 | |
Income from bank owned life insurance | 92 | 91 | 89 | 88 | 93 | 360 | 374 | |
Gain on sale of securities, net | - | - | - | - | - | - | 81 | |
Gain on sale of loans | - | - | - | - | - | - | 326 | |
Gain (Loss) on disposal of fixed assets | 24 | (10) | - | 10 | 69 | 23 | 69 | |
Other income | 205 | 178 | 168 | 144 | 164 | 696 | 562 | |
Total noninterest income | 1,529 | 2,859 | 2,070 | 2,522 | 2,632 | 8,980 | 14,202 | |
Noninterest expense | ||||||||
Compensation and benefits | 4,364 | 4,505 | 5,059 | 5,079 | 4,965 | 19,006 | 20,742 | |
Occupancy and equipment | 883 | 923 | 890 | 893 | 862 | 3,589 | 3,221 | |
Data processing, technology, and communications | 878 | 846 | 789 | 837 | 920 | 3,351 | 3,554 | |
Professional fees | 207 | 185 | 180 | 180 | 202 | 751 | 916 | |
Marketing | 279 | 206 | 184 | 74 | 150 | 744 | 419 | |
Other | 748 | 1,040 | 843 | 897 | 1,085 | 3,529 | 3,345 | |
Total noninterest expense | 7,359 | 7,705 | 7,945 | 7,960 | 8,184 | 30,970 | 32,197 | |
Income before provision for income taxes | 1,943 | 3,228 | 1,348 | 1,052 | 974 | 7,571 | 6,407 | |
Income tax expense | 450 | 706 | 284 | 200 | 42 | 1,640 | 1,131 | |
Net income available to common shareholders | $ 1,493 | $ 2,522 | $ 1,064 | $ 852 | $ 932 | $ 5,931 | $ 5,276 | |
Weighted average common shares - basic | 7,775 | 7,777 | 7,782 | 7,784 | 7,785 | 7,779 | 7,749 | |
Weighted average common shares - diluted | 8,152 | 8,073 | 8,094 | 8,100 | 8,096 | 8,127 | 8,142 | |
Basic income per common share | $ 0.19 | $ 0.32 | $ 0.32 | $ 0.14 | $ 0.12 | $ 0.76 | $ 0.68 | |
Diluted income per common share | $ 0.18 | $ 0.31 | $ 0.31 | $ 0.13 | $ 0.12 | $ 0.73 | $ 0.65 | |
Net income for the three months ended December 31, 2022 was $1.5 million, or $0.18 per diluted common share, compared to $0.9 million, or $0.12 per diluted common share, for the three months ended December 31, 2021. Net income for the twelve months ended December 31, 2022 totaled $5.9 million, or $0.73 per diluted common share, compared to $5.3 million, or $0.65 per diluted common share for the twelve months ended December 31, 2021.
Noninterest income for the three months ended December 31, 2022 was $1.5 million, a decrease of $1.1 million from $2.6 million for the same period in 2021. Noninterest income is largely driven by the Company's mortgage banking division, which produced net revenue of $0.4 million during the three months ended December 31, 2022 and $4.4 million during the twelve months ended December 31, 2022. The decrease in mortgage noninterest income is primarily due to a decrease in sales volume compared to the prior year quarter in 2021. Additionally, the Bank has chosen to portfolio select loans out of the higher margin retail channel which has also contributed to reduced gain on sale proceeds.
Noninterest expense for the three months ended December 31, 2022 was $7.4 million, a decrease of $0.8 million from $8.2 million for the same period in 2021. This decrease was primarily driven by a decrease in compensation and benefits data processing, technology, and communications somewhat offset by an increase in marketing expense compared to fourth quarter 2021.
NET INTEREST INCOME AND MARGIN – Unaudited | |||||||
For the Three Months Ended | |||||||
December 31, 2022 | December 31, 2021 | ||||||
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 | $ 33,754 | $ 310 | 3.64 % | $ 170,402 | $ 72 | 0.17 % | |
Investment securities | 158,204 | 1,247 | 3.13 % | 71,327 | 359 | 2.00 % | |
Nonmarketable equity securities | 871 | 6 | 2.82 % | 837 | 7 | 3.44 % | |
Loans held for sale | 4,767 | 83 | 6.91 % | 29,269 | 253 | 3.43 % | |
Loans | 654,285 | 7,765 | 4.71 % | 575,351 | 6,410 | 4.42 % | |
Total interest-earning assets | 851,881 | 9,411 | 4.38 % | 847,186 | 7,101 | 3.33 % | |
Allowance for loan losses | (7,665) | (6,973) | |||||
Noninterest-earning assets | 78,848 | 76,359 | |||||
Total assets | $ 923,064 | $ 916,572 | |||||
Liabilities and Shareholders' Equity | |||||||
Interest-bearing liabilities | |||||||
NOW accounts | $ 146,865 | $ 67 | 0.18 % | $ 143,784 | $ 18 | 0.05 % | |
Savings & money market | 290,709 | 858 | 117.00 % | 267,404 | 86 | 0.13 % | |
Time deposits | 99,847 | 181 | 0.72 % | 129,717 | 120 | 0.37 % | |
Total interest-bearing deposits | 537,421 | 1,106 | 0.82 % | 540,905 | 224 | 0.16 % | |
FHLB advances and other borrowings | 14,330 | 96 | 2.67 % | 17,995 | 47 | 1.05 % | |
Subordinated debentures | 25,687 | 321 | 4.95 % | 25,654 | 209 | 3.23 % | |
Total interest-bearing liabilities | 577,438 | 1,523 | 1.05 % | 584,554 | 480 | 0.33 % | |
Noninterest bearing deposits | 270,975 | 249,831 | |||||
Other liabilities | 13,551 | 11,549 | |||||
Shareholders' equity | 61,100 | 70,638 | |||||
Total liabilities and shareholders' equity | $ 923,064 | $ 916,572 | |||||
Net interest income (tax equivalent) / interest | $ 7,888 | 3.34 % | $ 6,621 | 3.00 % | |||
Net Interest Margin | 3.67 % | 3.10 % | |||||
For the Twelve Months Ended | |||||||
December 31, 2022 | December 31, 2021 | ||||||
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 | $ 81,509 | $ 863 | 1.06 % | $ 139,380 | $ 181 | 0.13 % | |
Investment securities | 145,694 | 3,755 | 2.58 % | 55,480 | 1,203 | 2.17 % | |
Nonmarketable equity securities | 632 | 23 | 3.69 % | 891 | 53 | 5.97 % | |
Loans held for sale | 14,218 | 647 | 4.55 % | 33,296 | 993 | 2.98 % | |
Loans | 622,418 | 27,918 | 4.49 % | 532,090 | 24,293 | 4.57 % | |
Total interest-earning assets | 864,471 | 33,206 | 3.84 % | 761,137 | 26,723 | 3.51 % | |
Allowance for loan losses | (7,415) | (6,602) | |||||
Noninterest-earning assets | 80,187 | 74,896 | |||||
Total assets | $ 937,243 | $ 829,431 | |||||
Liabilities and Shareholders' Equity | |||||||
Interest-bearing liabilities | |||||||
NOW accounts | $ 158,135 | $ 136 | 0.09 % | $ 133,350 | $ 62 | 0.05 % | |
Savings & money market | 289,213 | 1,364 | 0.47 % | 225,021 | 350 | 0.16 % | |
Time deposits | 110,028 | 461 | 0.42 % | 134,582 | 610 | 0.45 % | |
Total interest-bearing deposits | 557,376 | 1,961 | 0.35 % | 492,953 | 1,022 | 0.21 % | |
FHLB advances and other borrowings | 13,367 | 131 | 0.98 % | 17,748 | 188 | 1.06 % | |
Subordinated debentures | 25,675 | 1,073 | 4.18 % | 21,351 | 808 | 3.79 % | |
Total interest-bearing liabilities | 596,418 | 3,165 | 0.53 % | 532,052 | 2,018 | 0.38 % | |
Noninterest bearing deposits | 263,085 | 216,697 | |||||
Other liabilities | 12,656 | 10,910 | |||||
Shareholders' equity | 65,084 | 69,772 | |||||
Total liabilities and shareholders' equity | $ 937,243 | $ 829,431 | |||||
Net interest income (tax equivalent) / interest | $ 30,041 | 3.31 % | $ 24,705 | 3.13 % | |||
Net Interest Margin | 3.48 % | 3.25 % | |||||
Net interest income for the three months ended December 31, 2022 was $7.9 million compared to $6.6 million for the three months ended December 31, 2021. This increase was primarily driven by an increase in interest-earning assets, as well as an increase in interest rates. Yield on interest-earning assets increased to 4.38% for the three months ended December 31, 2022 from 3.33% for the same period in 2021.
Net interest income was $30.0 million for the twelve months ended December 31, 2022, an increase of $5.3 million over the same period in 2021. Increases in average loans and investments contributed to a majority of the increase in net interest income somewhat offset by an increase in yield on interest bearing liabilities.
CONDENSED CONSOLIDATED BALANCE SHEETS – Unaudited | |||||
As of | |||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | |
(dollars in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 |
Assets | |||||
Cash and cash equivalents: | |||||
Cash and due from banks | $ 3,917 | $ 4,147 | $ 7,702 | $ 4,672 | $ 5,299 |
Interest-bearing deposits with banks | 29,880 | 60,537 | 45,683 | 116,192 | 144,825 |
Total cash and cash equivalents | 33,797 | 64,684 | 53,385 | 120,864 | 150,124 |
Time deposits in other banks | 259 | 259 | 257 | 257 | 257 |
Investment securities: | |||||
Investment securities available for sale | 162,097 | 160,504 | 164,440 | 144,422 | 81,917 |
Other investments | 1,921 | 658 | 657 | 521 | 837 |
Total investment securities | 164,018 | 161,162 | 165,097 | 144,943 | 82,754 |
Mortgage loans held for sale | 7,940 | 4,599 | 19,648 | 23,528 | 23,844 |
Loans receivable: | |||||
Loans | 661,251 | 646,634 | 637,953 | 592,089 | 586,446 |
Less allowance for loan losses | (7,660) | (7,630) | (7,494) | (7,206) | (7,040) |
Loans receivable, net | 653,591 | 639,004 | 630,459 | 584,883 | 579,406 |
Property and equipment, net | 22,811 | 22,868 | 23,100 | 23,222 | 22,805 |
Mortgage servicing rights | 10,441 | 10,182 | 14,893 | 14,536 | 14,057 |
Bank owned life insurance | 18,836 | 18,744 | 18,653 | 18,564 | 18,476 |
Deferred income taxes | 8,629 | 8,629 | 7,376 | 5,862 | 4,128 |
Other assets | 16,791 | 16,306 | 13,985 | 17,125 | 14,946 |
Total assets | 937,113 | 946,437 | 946,853 | 953,784 | 910,797 |
Liabilities | |||||
Deposits | $ 798,184 | $ 840,392 | $ 830,992 | $ 837,663 | $ 780,833 |
Federal Home Loan Bank advances | 30,000 | - | - | - | 10,000 |
Federal funds and repurchase agreements | 7,368 | 3,726 | 13,805 | 11,886 | 11,372 |
Subordinated debentures | 15,381 | 15,373 | 15,365 | 15,357 | 15,349 |
Junior subordinated debentures | 10,310 | 10,310 | 10,310 | 10,310 | 10,310 |
Other liabilities | 12,574 | 14,472 | 12,412 | 11,937 | 12,131 |
Total liabilities | 873,817 | 884,273 | 882,884 | 887,153 | 839,995 |
Shareholders' equity | |||||
Preferred stock - Series D non-cumulative, no par | 1 | 1 | 1 | 1 | 1 |
Common Stock - $.01 par value; 20,000,000 shares | 87 | 88 | 88 | 88 | 88 |
Treasury stock, at cost | (4,502) | (4,364) | (4,333) | (4,419) | (4,323) |
Nonvested restricted stock | (2,121) | (2,291) | (2,500) | (2,572) | (2,668) |
Additional paid-in capital | 53,968 | 54,013 | 54,088 | 53,980 | 53,856 |
Retained earnings | 29,916 | 28,423 | 25,901 | 24,837 | 23,985 |
Accumulated other comprehensive (loss) income | (14,053) | (13,706) | (9,276) | (5,284) | (137) |
Total shareholders' equity | 63,296 | 62,164 | 63,969 | 66,631 | 70,802 |
Total liabilities and shareholders' equity | $ 937,113 | $ 946,437 | $ 946,853 | $ 953,784 | $ 910,797 |
COMMON STOCK SUMMARY - Unaudited | |||||
As of | |||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | |
(shares in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 |
Voting common shares outstanding | 8,730 | 8,793 | 8,801 | 8,782 | 8,793 |
Treasury shares outstanding | (590) | (575) | (571) | (545) | (535) |
Total common shares outstanding | 8,140 | 8,218 | 8,230 | 8,237 | 8,258 |
Tangible book value per common share(5) | $ 7.67 | $ 7.46 | $ 7.66 | $ 7.98 | $ 8.46 |
Stock price: | |||||
High | $ 9.50 | $ 9.40 | $ 9.85 | $ 10.20 | $ 10.74 |
Low | $ 8.60 | $ 9.00 | $ 9.25 | $ 9.75 | $ 9.95 |
Period end | $ 8.72 | $ 9.14 | $ 9.25 | $ 9.85 | $ 10.20 |
ASSET QUALITY MEASURES – Unaudited | |||||
As of | |||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | |
(dollars in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 |
Nonperforming Assets | |||||
Commercial | |||||
Owner occupied RE | $ 134 | $ 135 | $ 140 | $ 144 | $ 152 |
Non-owner occupied RE | - | - | - | 295 | - |
Construction | - | - | - | - | - |
Commercial business | 76 | 146 | 81 | - | - |
Consumer | |||||
Real estate | 1 | 2 | 3 | 343 | 341 |
Home equity | - | - | - | - | - |
Construction | - | - | - | - | - |
Other | 119 | 130 | 160 | 104 | 84 |
Nonaccruing troubled debt restructurings | 143 | 160 | 173 | 190 | 205 |
Total nonaccrual loans | $ 473 | $ 573 | $ 557 | $ 1,076 | $ 782 |
Other real estate owned | - | - | - | - | 135 |
Total nonperforming assets | $ 473 | $ 573 | $ 557 | $ 1,076 | $ 917 |
Nonperforming assets as a percentage of: | |||||
Total assets | 0.05 % | 0.06 % | 0.06 % | 0.11 % | 0.10 % |
Total loans receivable | 0.07 % | 0.09 % | 0.09 % | 0.18 % | 0.16 % |
Accruing troubled debt restructurings | $ 1,151 | $ 1,312 | $ 1,349 | $ 1,393 | $ 1,405 |
Three Months Ended | |||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | |
(dollars in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 |
Allowance for Loan Losses | |||||
Balance, beginning of period | $ 7,630 | $ 7,494 | $ 7,206 | $ 7,040 | $ 6,934 |
Loans charged-off | 101 | 76 | 11 | 19 | 5 |
Recoveries of loans previously charged-off | 16 | 42 | 189 | 100 | 16 |
Net charge-offs (recoveries) | 85 | 34 | (178) | (81) | (11) |
Provision for loan losses | 115 | 170 | 110 | 85 | 95 |
Balance, end of period | $ 7,660 | $ 7,630 | $ 7,494 | $ 7,206 | $ 7,040 |
Allowance for loan losses to gross loans receivable | 1.16 % | 1.18 % | 1.17 % | 1.22 % | 1.20 % |
Allowance for loan losses to nonaccrual loans | 1619.45 % | 1331.59 % | 1345.42 % | 669.70 % | 900.26 % |
Footnotes to table located at the end of this release. | |||||
Our asset quality improved through December 31, 2022, with nonperforming assets decreasing $100 thousand to $0.5 million, which represents 0.05% of total assets, compared to $0.6 million or 0.06% of total assets at September 30, 2022. The allowance for loan losses as a percentage of total loans receivable decreased to 1.16% at December 31, 2022, compared to 1.18% at September 30, 2022. The Company had net charge-offs of $85 thousand for the three months ended December 31, 2022 compared to net recoveries of $11 thousand for the same period in 2021.
LOAN COMPOSITION – Unaudited | |||||
As of | |||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | |
(dollars in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 |
Commercial real estate | $ 391,661 | $ 378,589 | $ 368,316 | $ 334,508 | $ 333,060 |
Consumer real estate | 151,533 | 147,110 | 142,711 | 123,908 | 120,079 |
Commercial and industrial | 69,243 | 67,200 | 67,239 | 66,285 | 60,687 |
Consumer and other | 48,814 | 53,735 | 59,687 | 67,388 | 72,620 |
Total loans, net of deferred fees | 661,251 | 646,634 | 637,953 | 592,089 | 586,446 |
Less allowance for loan losses | 7,660 | 7,630 | 7,494 | 7,206 | 7,040 |
Total loans, net | $ 653,591 | $ 639,004 | $ 630,459 | $ 584,883 | $ 579,406 |
DEPOSIT COMPOSITION – Unaudited | |||||
As of | |||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | |
(dollars in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 |
Noninterest-bearing | $ 255,427 | $ 277,587 | $ 265,049 | $ 273,118 | $ 238,019 |
Interest-bearing: | |||||
DDA and NOW accounts | 152,012 | 154,550 | 159,939 | 168,401 | 153,889 |
Money market accounts | 221,550 | 232,711 | 230,840 | 217,812 | 204,432 |
Savings | 65,494 | 71,929 | 66,727 | 61,246 | 58,566 |
Time, less than $250,000 | 80,549 | 76,530 | 78,735 | 84,874 | 99,059 |
Time, $250,000 and over | 23,152 | 27,085 | 29,702 | 32,212 | 26,868 |
Total deposits | $ 798,184 | $ 840,392 | $ 830,992 | $ 837,663 | $ 780,833 |
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 $937 million. The company employs more than 180 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
Uncategorized
February Employment Situation
By Paul Gomme and Peter Rupert The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000…
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By Paul Gomme and Peter Rupert
The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000 average over the previous 12 months. The payroll data for January and December were revised down by a total of 167,000. The private sector added 223,000 new jobs, the largest gain since May of last year.
Temporary help services employment continues a steep decline after a sharp post-pandemic rise.
Average hours of work increased from 34.2 to 34.3. The increase, along with the 223,000 private employment increase led to a hefty increase in total hours of 5.6% at an annualized rate, also the largest increase since May of last year.
The establishment report, once again, beat “expectations;” the WSJ survey of economists was 198,000. Other than the downward revisions, mentioned above, another bit of negative news was a smallish increase in wage growth, from $34.52 to $34.57.
The household survey shows that the labor force increased 150,000, a drop in employment of 184,000 and an increase in the number of unemployed persons of 334,000. The labor force participation rate held steady at 62.5, the employment to population ratio decreased from 60.2 to 60.1 and the unemployment rate increased from 3.66 to 3.86. Remember that the unemployment rate is the number of unemployed relative to the labor force (the number employed plus the number unemployed). Consequently, the unemployment rate can go up if the number of unemployed rises holding fixed the labor force, or if the labor force shrinks holding the number unemployed unchanged. An increase in the unemployment rate is not necessarily a bad thing: it may reflect a strong labor market drawing “marginally attached” individuals from outside the labor force. Indeed, there was a 96,000 decline in those workers.
Earlier in the week, the BLS announced JOLTS (Job Openings and Labor Turnover Survey) data for January. There isn’t much to report here as the job openings changed little at 8.9 million, the number of hires and total separations were little changed at 5.7 million and 5.3 million, respectively.
As has been the case for the last couple of years, the number of job openings remains higher than the number of unemployed persons.
Also earlier in the week the BLS announced that productivity increased 3.2% in the 4th quarter with output rising 3.5% and hours of work rising 0.3%.
The bottom line is that the labor market continues its surprisingly (to some) strong performance, once again proving stronger than many had expected. This strength makes it difficult to justify any interest rate cuts soon, particularly given the recent inflation spike.
unemployment pandemic unemploymentUncategorized
Mortgage rates fall as labor market normalizes
Jobless claims show an expanding economy. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.
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Everyone was waiting to see if this week’s jobs report would send mortgage rates higher, which is what happened last month. Instead, the 10-year yield had a muted response after the headline number beat estimates, but we have negative job revisions from previous months. The Federal Reserve’s fear of wage growth spiraling out of control hasn’t materialized for over two years now and the unemployment rate ticked up to 3.9%. For now, we can say the labor market isn’t tight anymore, but it’s also not breaking.
The key labor data line in this expansion is the weekly jobless claims report. Jobless claims show an expanding economy that has not lost jobs yet. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.
From the Fed: In the week ended March 2, initial claims for unemployment insurance benefits were flat, at 217,000. The four-week moving average declined slightly by 750, to 212,250
Below is an explanation of how we got here with the labor market, which all started during COVID-19.
1. I wrote the COVID-19 recovery model on April 7, 2020, and retired it on Dec. 9, 2020. By that time, the upfront recovery phase was done, and I needed to model out when we would get the jobs lost back.
2. Early in the labor market recovery, when we saw weaker job reports, I doubled and tripled down on my assertion that job openings would get to 10 million in this recovery. Job openings rose as high as to 12 million and are currently over 9 million. Even with the massive miss on a job report in May 2021, I didn’t waver.
Currently, the jobs openings, quit percentage and hires data are below pre-COVID-19 levels, which means the labor market isn’t as tight as it once was, and this is why the employment cost index has been slowing data to move along the quits percentage.
3. I wrote that we should get back all the jobs lost to COVID-19 by September of 2022. At the time this would be a speedy labor market recovery, and it happened on schedule, too
Total employment data
4. This is the key one for right now: If COVID-19 hadn’t happened, we would have between 157 million and 159 million jobs today, which would have been in line with the job growth rate in February 2020. Today, we are at 157,808,000. This is important because job growth should be cooling down now. We are more in line with where the labor market should be when averaging 140K-165K monthly. So for now, the fact that we aren’t trending between 140K-165K means we still have a bit more recovery kick left before we get down to those levels.
From BLS: Total nonfarm payroll employment rose by 275,000 in February, and the unemployment rate increased to 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in government, in food services and drinking places, in social assistance, and in transportation and warehousing.
Here are the jobs that were created and lost in the previous month:
In this jobs report, the unemployment rate for education levels looks like this:
- Less than a high school diploma: 6.1%
- High school graduate and no college: 4.2%
- Some college or associate degree: 3.1%
- Bachelor’s degree or higher: 2.2%
Today’s report has continued the trend of the labor data beating my expectations, only because I am looking for the jobs data to slow down to a level of 140K-165K, which hasn’t happened yet. I wouldn’t categorize the labor market as being tight anymore because of the quits ratio and the hires data in the job openings report. This also shows itself in the employment cost index as well. These are key data lines for the Fed and the reason we are going to see three rate cuts this year.
recession unemployment covid-19 fed federal reserve mortgage rates recession recovery unemploymentUncategorized
Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month
Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month
Last month we though that the January…
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Last month we though that the January jobs report was the "most ridiculous in recent history" but, boy, were we wrong because this morning the Biden department of goalseeked propaganda (aka BLS) published the February jobs report, and holy crap was that something else. Even Goebbels would blush.
What happened? Let's take a closer look.
On the surface, it was (almost) another blockbuster jobs report, certainly one which nobody expected, or rather just one bank out of 76 expected. Starting at the top, the BLS reported that in February the US unexpectedly added 275K jobs, with just one research analyst (from Dai-Ichi Research) expecting a higher number.
Some context: after last month's record 4-sigma beat, today's print was "only" 3 sigma higher than estimates. Needless to say, two multiple sigma beats in a row used to only happen in the USSR... and now in the US, apparently.
Before we go any further, a quick note on what last month we said was "the most ridiculous jobs report in recent history": it appears the BLS read our comments and decided to stop beclowing itself. It did that by slashing last month's ridiculous print by over a third, and revising what was originally reported as a massive 353K beat to just 229K, a 124K revision, which was the biggest one-month negative revision in two years!
Of course, that does not mean that this month's jobs print won't be revised lower: it will be, and not just that month but every other month until the November election because that's the only tool left in the Biden admin's box: pretend the economic and jobs are strong, then revise them sharply lower the next month, something we pointed out first last summer and which has not failed to disappoint once.
In the past month the Biden department of goalseeking stuff higher before revising it lower, has revised the following data sharply lower:
— zerohedge (@zerohedge) August 30, 2023
- Jobs
- JOLTS
- New Home sales
- Housing Starts and Permits
- Industrial Production
- PCE and core PCE
To be fair, not every aspect of the jobs report was stellar (after all, the BLS had to give it some vague credibility). Take the unemployment rate, after flatlining between 3.4% and 3.8% for two years - and thus denying expectations from Sahm's Rule that a recession may have already started - in February the unemployment rate unexpectedly jumped to 3.9%, the highest since February 2022 (with Black unemployment spiking by 0.3% to 5.6%, an indicator which the Biden admin will quickly slam as widespread economic racism or something).
And then there were average hourly earnings, which after surging 0.6% MoM in January (since revised to 0.5%) and spooking markets that wage growth is so hot, the Fed will have no choice but to delay cuts, in February the number tumbled to just 0.1%, the lowest in two years...
... for one simple reason: last month's average wage surge had nothing to do with actual wages, and everything to do with the BLS estimate of hours worked (which is the denominator in the average wage calculation) which last month tumbled to just 34.1 (we were led to believe) the lowest since the covid pandemic...
... but has since been revised higher while the February print rose even more, to 34.3, hence why the latest average wage data was once again a product not of wages going up, but of how long Americans worked in any weekly period, in this case higher from 34.1 to 34.3, an increase which has a major impact on the average calculation.
While the above data points were examples of some latent weakness in the latest report, perhaps meant to give it a sheen of veracity, it was everything else in the report that was a problem starting with the BLS's latest choice of seasonal adjustments (after last month's wholesale revision), which have gone from merely laughable to full clownshow, as the following comparison between the monthly change in BLS and ADP payrolls shows. The trend is clear: the Biden admin numbers are now clearly rising even as the impartial ADP (which directly logs employment numbers at the company level and is far more accurate), shows an accelerating slowdown.
But it's more than just the Biden admin hanging its "success" on seasonal adjustments: when one digs deeper inside the jobs report, all sorts of ugly things emerge... such as the growing unprecedented divergence between the Establishment (payrolls) survey and much more accurate Household (actual employment) survey. To wit, while in January the BLS claims 275K payrolls were added, the Household survey found that the number of actually employed workers dropped for the third straight month (and 4 in the past 5), this time by 184K (from 161.152K to 160.968K).
This means that while the Payrolls series hits new all time highs every month since December 2020 (when according to the BLS the US had its last month of payrolls losses), the level of Employment has not budged in the past year. Worse, as shown in the chart below, such a gaping divergence has opened between the two series in the past 4 years, that the number of Employed workers would need to soar by 9 million (!) to catch up to what Payrolls claims is the employment situation.
There's more: shifting from a quantitative to a qualitative assessment, reveals just how ugly the composition of "new jobs" has been. Consider this: the BLS reports that in February 2024, the US had 132.9 million full-time jobs and 27.9 million part-time jobs. Well, that's great... until you look back one year and find that in February 2023 the US had 133.2 million full-time jobs, or more than it does one year later! And yes, all the job growth since then has been in part-time jobs, which have increased by 921K since February 2023 (from 27.020 million to 27.941 million).
Here is a summary of the labor composition in the past year: all the new jobs have been part-time jobs!
But wait there's even more, because now that the primary season is over and we enter the heart of election season and political talking points will be thrown around left and right, especially in the context of the immigration crisis created intentionally by the Biden administration which is hoping to import millions of new Democratic voters (maybe the US can hold the presidential election in Honduras or Guatemala, after all it is their citizens that will be illegally casting the key votes in November), what we find is that in February, the number of native-born workers tumbled again, sliding by a massive 560K to just 129.807 million. Add to this the December data, and we get a near-record 2.4 million plunge in native-born workers in just the past 3 months (only the covid crash was worse)!
The offset? A record 1.2 million foreign-born (read immigrants, both legal and illegal but mostly illegal) workers added in February!
Said otherwise, not only has all job creation in the past 6 years has been exclusively for foreign-born workers...
... but there has been zero job-creation for native born workers since June 2018!
This is a huge issue - especially at a time of an illegal alien flood at the southwest border...
... and is about to become a huge political scandal, because once the inevitable recession finally hits, there will be millions of furious unemployed Americans demanding a more accurate explanation for what happened - i.e., the illegal immigration floodgates that were opened by the Biden admin.
Which is also why Biden's handlers will do everything in their power to insure there is no official recession before November... and why after the election is over, all economic hell will finally break loose. Until then, however, expect the jobs numbers to get even more ridiculous.
Mortgage rates fall as labor market normalizes
Economic Earthquake Ahead? The Cracks Are Spreading Fast
February Employment Situation
Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month
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