FLORENCE, S.C., July 22, 2026 /PRNewswire/ -- First Reliance Bancshares, Inc. (OTCQX:FSRL), the holding company for First Reliance Bank (collectively, "First Reliance" or the "Company"), today announced its financial results for the second quarter of 2026.
Second Quarter 2026 Highlights
Net income decreased 23.2% for the second quarter of 2026 to $2.8 million, or $0.34 per diluted share, compared to $3.7 million, or $0.44 per diluted share, for the second quarter of 2025. For the six months ended June 30, 2026, net income totaled $6.2 million, or $0.76 per diluted share, compared to $5.3 million, or $0.63 per diluted share for the same period in 2025. Operating earnings (Non-GAAP) were $3.1 million, or $0.38 per diluted share, for the second quarter of 2026, compared to $2.2 million, or $0.27 per diluted share, for the second quarter of 2025. For the first half of 2026, operating earnings (Non-GAAP) totaled $6.3 million or $0.77 per diluted share, compared to $3.9 million, or $0.47 per diluted share, for the first half of 2025.
Book value per share rose $1.67, or 15.5%, to $12.47 at June 30, 2026, from $10.80 at June 30, 2025. Tangible book value per share (Non-GAAP) increased $1.67, or 15.6%, to $12.38 from $10.71 over the same period.
Net interest income totaled $9.9 million for the second quarter of 2026, up $762 thousand, or 8.4%, from the same quarter in 2025 and up $348 thousand, or 3.7%, from the first quarter of 2026.
Net interest margin decreased during the second quarter of 2026 to 3.74%, compared to 3.77% in the first quarter of 2026, and increased 21 basis points compared to the second quarter of 2025.
Total loans held for investment increased $19.5 million, or 9.8% annualized, to $820.7 million at June 30, 2026, from $801.2 million at March 31, 2026. Total loan growth for 2026 totaled $40.8 million, or 10.6% annualized.
Unfunded commitments declined $3.1 million during the quarter, primarily due to construction loans. As a result, the unfunded commitment reserve decreased $99 thousand to $629 thousand from $728 thousand at March 31, 2026.
Total deposits were $920.3 million at June 30, 2026, down $8.7 million, or 3.8% annualized, from $929.0 million at March 31, 2026.
Asset quality remained strong as nonperforming assets declined to $626 thousand, or 0.06% of total assets, at June 30, 2026, compared with $2.1 million, or 0.19% of total assets, at March 31, 2026. The decrease was primarily due to the full collection of one loan.
In June 2026, the Company announced a partnership with Colony Bank (CBAN), headquartered in Fitzgerald, Georgia. The merger is expected to close in the fourth quarter of 2026, with systems conversion planned for the second quarter of 2027. Based on each company's total assets at June 30, 2026, the combined company will have nearly $5.0 billion in total assets.
Rick Saunders, Chief Executive Officer, commented, "Tangible book value per share increased $1.67, or 15.6%, over the past year to $12.38. Loans grew $19.5 million, or 9.8% annualized, during the second quarter of 2026, while net interest margin expanded 21 basis points year over year to 3.74%. Asset quality remained strong, as nonperforming assets declined significantly following the payoff of our largest nonperforming loan. We were also pleased with our announced partnership with Colony Bank and look forward to joining a team that shares our commitment to exceptional customer service and support for the South Carolina communities that we serve."
Financial Summary
Three Months Ended | Six Months Ended | ||||||||
Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Jun 30 | Jun 30 | |||
($ in thousands, except per share data) | 2026 | 2026 | 2025 | 2025 | 2025 | 2026 | 2025 | ||
Earnings: | |||||||||
Net income available to common shareholders | $ 2,807 | $ 3,436 | $ 2,926 | $ 2,714 | $ 3,653 | $ 6,243 | $ 5,266 | ||
Operating earnings (Non-GAAP) | 3,089 | 3,233 | 2,852 | 2,714 | 2,248 | 6,322 | 3,913 | ||
Earnings per common share, diluted (GAAP) | 0.34 | 0.41 | 0.36 | 0.33 | 0.44 | 0.76 | 0.63 | ||
Operating earnings per common share, diluted (Non-GAAP) | 0.38 | 0.39 | 0.35 | 0.33 | 0.27 | 0.77 | 0.47 | ||
Total revenue(1) | 12,803 | 13,025 | 12,353 | 12,238 | 13,920 | 25,828 | 25,078 | ||
Net interest margin | 3.74 % | 3.77 % | 3.71 % | 3.66 % | 3.53 % | 3.76 % | 3.54 % | ||
Return on average assets(2) | 1.00 % | 1.25 % | 1.06 % | 0.99 % | 1.32 % | 1.12 % | 0.97 % | ||
Return on average assets - Operating Non-GAAP(2) | 1.10 % | 1.18 % | 1.03 % | 0.99 % | 0.81 % | 1.14 % | 0.72 % | ||
Return on average equity(2) | 11.58 % | 14.53 % | 12.83 % | 12.55 % | 17.84 % | 13.04 % | 13.14 % | ||
Return on average equity - Operating Non-GAAP(2) | 12.75 % | 13.67 % | 12.51 % | 12.55 % | 10.98 % | 13.20 % | 9.76 % | ||
Efficiency ratio(3) | 71.44 % | 64.84 % | 71.08 % | 69.61 % | 64.61 % | 68.11 % | 69.46 % | ||
Adjusted efficiency ratio - Non-GAAP(3) | 68.67 % | 66.16 % | 71.59 % | 69.61 % | 74.03 % | 67.42 % | 74.52 % |
As of | |||||
Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | |
($ in thousands) | 2026 | 2026 | 2025 | 2025 | 2025 |
Balance Sheet: | |||||
Total assets | $ 1,126,912 | $ 1,118,388 | $ 1,093,359 | $ 1,097,846 | $ 1,102,203 |
Total loans receivable | 820,741 | 801,243 | 779,935 | 779,997 | 784,749 |
Total deposits | 920,329 | 929,045 | 948,120 | 959,300 | 950,339 |
Total transaction deposits(4) to total deposits | 38.29 % | 36.83 % | 36.59 % | 40.68 % | 39.50 % |
Loans to deposits | 89.18 % | 86.24 % | 82.26 % | 81.31 % | 82.58 % |
Bank Capital Ratios: | |||||
Total risk-based capital ratio | 14.26 % | 14.15 % | 13.82 % | 13.58 % | 12.88 % |
Tier 1 risk-based capital ratio | 13.16 % | 13.04 % | 12.72 % | 12.48 % | 11.84 % |
Tier 1 leverage ratio | 10.53 % | 10.53 % | 10.16 % | 9.94 % | 9.74 % |
Common equity tier 1 capital ratio | 13.16 % | 13.04 % | 12.72 % | 12.48 % | 11.84 % |
Asset Quality Ratios: | |||||
Nonperforming assets as a percentage of | 0.06 % | 0.19 % | 0.23 % | 0.03 % | 0.02 % |
Allowance for credit losses as a percentage | 1.14 % | 1.14 % | 1.13 % | 1.12 % | 1.09 % |
Annualized net charge-offs as a percentage | (0.00 %) | (0.01 %) | (0.03 %) | 0.02 % | 0.03 % |
CONDENSED CONSOLIDATED INCOME STATEMENTS – Unaudited
Three Months Ended | Six Months Ended | ||||||
Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Jun 30 | ||
($ in thousands, except per share data) | 2026 | 2026 | 2025 | 2025 | 2025 | 2026 | 2025 |
Interest income | |||||||
Loans | $ 12,252 | $ 11,534 | $ 11,518 | $ 11,842 | $ 11,657 | $ 23,786 | $ 22,950 |
Investment securities | 2,292 | 2,413 | 2,302 | 2,300 | 2,145 | 4,705 | 4,311 |
Other interest income | 307 | 189 | 406 | 323 | 505 | 496 | 823 |
Total interest income | 14,851 | 14,136 | 14,226 | 14,465 | 14,307 | 28,987 | 28,084 |
Interest expense | |||||||
Deposits | 4,065 | 3,930 | 4,215 | 4,536 | 4,703 | 7,995 | 9,171 |
Other interest expense | 915 | 683 | 393 | 476 | 495 | 1,598 | 1,039 |
Total interest expense | 4,980 | 4,613 | 4,608 | 5,012 | 5,198 | 9,593 | 10,210 |
Net interest income | 9,871 | 9,523 | 9,618 | 9,453 | 9,109 | 19,394 | 17,874 |
Provision for credit losses | 123 | 175 | 76 | 90 | 88 | 298 | 795 |
Net interest income after provision for credit losses | 9,748 | 9,348 | 9,542 | 9,363 | 9,021 | 19,096 | 17,079 |
Noninterest income | |||||||
Mortgage banking income | 1,764 | 2,103 | 1,405 | 1,577 | 1,586 | 3,867 | 2,937 |
Service fees on deposit accounts | 361 | 366 | 405 | 412 | 299 | 727 | 618 |
Debit card and other service charges, | 528 | 506 | 527 | 531 | 543 | 1,034 | 1,072 |
Income from bank owned life insurance | 107 | 104 | 107 | 108 | 104 | 211 | 206 |
Loss on sale of securities, net | - | (6) | (294) | - | - | (6) | (182) |
Gain on sale of branches | - | - | - | - | 2,313 | - | 2,313 |
Gain on sale of mortgage servicing right (MSR) | - | 266 | 266 | ||||
Gain on early extinguishment of debt | - | - | - | - | - | - | 140 |
Gain (loss) on disposal /write down of fixed assets | - | - | 382 | - | (200) | - | (200) |
Other income | 172 | 163 | 203 | 157 | 166 | 335 | 300 |
Total noninterest income | 2,932 | 3,502 | 2,735 | 2,785 | 4,811 | 6,434 | 7,204 |
Noninterest expense | |||||||
Compensation and benefits | 5,726 | 5,447 | 5,499 | 5,431 | 5,574 | 11,173 | 10,855 |
Occupancy and equipment | 724 | 796 | 725 | 736 | 770 | 1,520 | 1,561 |
Data processing, technology, and communications | 1,315 | 1,218 | 1,216 | 1,061 | 1,143 | 2,533 | 2,299 |
Professional fees | 144 | 77 | 85 | 195 | 248 | 221 | 401 |
Marketing | 65 | 96 | 71 | 155 | 175 | 161 | 298 |
Other | 1,172 | 812 | 1,185 | 941 | 1,083 | 1,984 | 2,006 |
Total noninterest expense | 9,146 | 8,446 | 8,781 | 8,519 | 8,993 | 17,592 | 17,420 |
Income before provision for income taxes | 3,534 | 4,404 | 3,496 | 3,629 | 4,839 | 7,938 | 6,863 |
Income tax expense | 727 | 968 | 570 | 915 | 1,186 | 1,695 | 1,597 |
Net income available to common shareholders | $ 2,807 | $ 3,436 | $ 2,926 | $ 2,714 | $ 3,653 | $ 6,243 | $ 5,266 |
(Subtract gain) / addback loss on fixed assets, net of tax | - | - | (320) | - | 151 | - | 151 |
Subtract gain on sale of branches, net of tax | - | - | - | - | (1,746) | - | (1,746) |
Subtract gain on sale of MSR, net of tax | - | (208) | (208) | ||||
Subtract gain on early extinguishment of debt, net of tax | - | - | - | - | - | - | (111) |
Addback expenses related to merger/branch sale, net of tax | 282 | - | - | - | 190 | 282 | 208 |
Addback securities losses, net of tax | - | 5 | 246 | - | - | 5 | 145 |
Operating net income (non-GAAP) | $ 3,089 | $ 3,233 | $ 2,852 | $ 2,714 | $ 2,248 | $ 6,322 | $ 3,913 |
Weighted average common shares - basic | 7,784 | 7,866 | 7,745 | 7,902 | 7,892 | 7,825 | 7,880 |
Weighted average common shares - diluted | 8,210 | 8,302 | 8,218 | 8,349 | 8,350 | 8,259 | 8,342 |
Basic net income per common share* | $ 0.36 | $ 0.44 | $ 0.38 | $ 0.34 | $ 0.46 | $ 0.80 | $ 0.67 |
Diluted net income per common share* | $ 0.34 | $ 0.41 | $ 0.36 | $ 0.33 | $ 0.44 | $ 0.76 | $ 0.63 |
Operating basic net income per common share (nonGAAP)* | $ 0.40 | $ 0.41 | $ 0.37 | $ 0.34 | $ 0.28 | $ 0.81 | $ 0.50 |
Operating diluted net income per common share (nonGAAP)* | $ 0.38 | $ 0.39 | $ 0.35 | $ 0.33 | $ 0.27 | $ 0.77 | $ 0.47 |
*Note that the sum of the quarters may not equal the YTD result due to rounding of earnings per share each quarter, given the weighted average shares outstanding basic and/or diluted.
Footnotes to table located at the end of this release.
Net income for the three months ended June 30, 2026, was $2.8 million, or $0.34 per diluted common share, compared to $3.7 million, or $0.44 per diluted common share, for the three months ended June 30, 2025. Operating net income (Non-GAAP), for the three months ended June 30, 2026, was $3.1 million, or $0.38 per diluted common share, compared to $2.2 million, or $0.27 per diluted common share for the three months ended June 30, 2025. Net income for the six months ended June 30, 2026, totaled $6.2 million, or $0.76 per diluted common share, compared to $5.3 million, or $0.63 per diluted common share, at June 30, 2025. On an operating basis, diluted EPS (Non-GAAP) was $0.77 per diluted common share, for the six months ended June 30, 2026, which includes adding back the impact of securities losses, net of tax, subtracting the gain on the sale of mortgage servicing rights, net of tax, and adding back the impact of merger related expenses, net of tax. The items affecting June 30, 2025, net of tax, include the following: the addback of loss on fixed asset write downs, adding back the impact of expenses related to the branch sales, adding back securities losses, offset by subtracting the gain recognized on the sale of branches and the gain from the early extinguishment of debt, which resulted in $0.47 per diluted common share, for the six months ended June 30, 2025.
Noninterest income, for the three months ended June 30, 2026, was $2.9 million, a decrease of $1.9 million from $4.8 million for the same period in 2025. Mortgage banking income totaled $1.8 million in the second quarter of 2026 compared to $1.6 million in the second quarter of 2025. In the second quarter of 2025, the Company sold its two branches in NC recognizing a gain of $2.3 million and wrote down a parcel of land by $200 thousand.
For the six months ended June 30, 2026, noninterest income decreased $770 thousand compared with the same period in 2025. The decline was due to the $2.3 million gain on the sale of branches and the $140 thousand gain on early debt extinguishment recognized in 2025. These two items were partially offset by a $930 thousand increase in mortgage banking income, a $266 thousand gain on the sale of mortgage servicing rights, a $109 thousand increase in deposit account service fees, no fixed-asset write-down in 2026, and a $176 thousand reduction in losses on securities sold.
Noninterest expense was $9.1 million for the three months ended June 30, 2026, up $152 thousand from $9.0 million for the same period in 2025. The increase was driven by a $152 thousand rise in compensation and benefits, primarily due to higher incentives and mortgage commissions, partially offset by lower salaries, payroll taxes, and insurance benefits. All other expense categories offset one another.
Noninterest expense was $17.6 million for the six months ended June 30, 2026, up $172 thousand from the prior-year period. The increase was primarily driven by a $318 thousand rise in compensation and benefits related to mortgage commissions, incentives, and stock compensation expense, partially offset by lower salaries, payroll taxes, and benefits. Data processing, technology, and communications expense increased $234 thousand. These increases were partially offset by a $137 thousand decrease in marketing expense and $181 thousand decrease in professional fees related to FDICIA compliance audit and legal costs.
Operating adjustments – 2Q 2026
During the second quarter of 2026, the Company announced the partnership with Colony Bank (CBAN) headquartered in Fitzgerald, Georgia. The Company incurred $354 thousand of merger related expenses.
Operating adjustments – 1Q 2026
During the first quarter of 2026, the Company sold mortgage servicing rights (MSRs) related to approximately $565.9 million of underlying mortgage loans for an initial gain of $266 thousand, net of direct expenses. The Company also sold securities at a net loss of $6 thousand.
Operating adjustments – 4Q 2025
During the fourth quarter of 2025, the Company sold a property in Florence which resulted in a gain of $382 thousand and sold five securities resulting in a net loss of $294 thousand.
There were no operating adjustments in 3Q 2025.
Operating adjustments – 2Q 2025
During the second quarter of 2025, the Company sold the two North Carolina locations to Carter Bank from Virginia. This sale resulted in a gain of $2.3 million on the deposits assumed by Carter Bank, before expenses. Expenses directly related to the branches sold totaled $252 thousand in the second quarter of 2025. Operating net income reflects the removal of these two items. Total deposits assumed by Carter Bank were $55.9 million. No loans were acquired in this transaction by Carter Bank.
Additionally, the Company wrote down a parcel of land in North Charleston by $200 thousand. This parcel is currently under contract to be sold. Operating net income reflects the add back of this item, net of tax, totaling $151 thousand.
NET INTEREST INCOME AND MARGIN – Unaudited - QTD
For the Three Months Ended | |||||||||||
June 30, 2026 | March 31, 2026 | June 30, 2025 | |||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||
($ in thousands) | Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | ||
Assets | |||||||||||
Interest-earning assets | |||||||||||
Federal funds sold and interest- | $ 31,859 | $ 261 | 3.28 % | $ 23,893 | $ 166 | 2.82 % | $ 46,216 | $ 478 | 4.15 % | ||
Investment securities | 194,063 | 2,292 | 4.74 % | 197,798 | 2,413 | 4.95 % | 186,573 | 2,145 | 4.61 % | ||
Nonmarketable equity securities | 4,147 | 46 | 4.49 % | 2,994 | 24 | 3.21 % | 1,665 | 28 | 6.65 % | ||
Loans held for sale | 16,354 | 318 | 7.80 % | 10,469 | 163 | 6.34 % | 16,269 | 353 | 8.70 % | ||
Loans | 811,650 | 11,934 | 5.90 % | 788,645 | 11,370 | 5.85 % | 783,489 | 11,304 | 5.79 % | ||
Total interest-earning assets | 1,058,073 | 14,851 | 5.63 % | 1,023,799 | 14,136 | 5.60 % | 1,034,212 | 14,307 | 5.55 % | ||
Allowance for credit losses | (9,181) | (8,886) | (8,652) | ||||||||
Noninterest-earning assets | 78,237 | 82,451 | 80,987 | ||||||||
Total assets | $ 1,127,129 | $ 1,097,364 | $ 1,106,547 | ||||||||
Liabilities and Shareholders' Equity | |||||||||||
Interest-bearing liabilities | |||||||||||
NOW accounts | $ 101,523 | $ 163 | 0.64 % | $ 94,858 | $ 155 | 0.66 % | $ 158,726 | $ 242 | 0.61 % | ||
Savings & money market | 429,446 | 2,679 | 2.50 % | 429,693 | 2,612 | 2.47 % | 435,548 | 3,127 | 2.88 % | ||
Time deposits | 152,404 | 1,223 | 3.22 % | 153,746 | 1,163 | 3.07 % | 158,378 | 1,334 | 3.38 % | ||
Total interest-bearing deposits | 683,373 | 4,065 | 2.39 % | 678,297 | 3,930 | 2.35 % | 752,652 | 4,703 | 2.51 % | ||
FHLB advances and other borrowings | 69,780 | 673 | 3.87 % | 45,861 | 439 | 3.88 % | 17,913 | 191 | 4.29 % | ||
Subordinated debentures | 19,799 | 242 | 4.90 % | 19,791 | 244 | 5.00 % | 23,228 | 304 | 5.25 % | ||
Total interest-bearing liabilities | 772,952 | 4,980 | 2.58 % | 743,949 | 4,613 | 2.51 % | 793,793 | 5,198 | 2.63 % | ||
Noninterest bearing deposits | 244,109 | 246,142 | 217,979 | ||||||||
Other liabilities | 13,139 | 12,659 | 12,885 | ||||||||
Shareholders' equity | 96,929 | ... |