First Reliance Bancshares Reports Second Quarter 2026 Results

Rhea-AI Summary

First Reliance Bancshares (OTCQX: FSRL) reported second quarter 2026 net income of $2.8 million, or $0.34 per diluted share, down 23.2% from $3.7 million, or $0.44, a year earlier. Operating earnings (non-GAAP) rose to $3.1 million, or $0.38 per diluted share, from $2.2 million, or $0.27.

For the first half of 2026, net income was $6.2 million, or $0.76 per diluted share, versus $5.3 million, or $0.63, while operating earnings (non-GAAP) increased to $6.3 million, or $0.77 per diluted share, from $3.9 million, or $0.47. Book value per share grew 15.5% year over year to $12.47 and tangible book value per share (non-GAAP) rose 15.6% to $12.38.

Net interest income increased 8.4% year over year to $9.9 million and net interest margin was 3.74%, up 21 basis points from the prior year quarter. Loans held for investment reached $820.7 million, up $19.5 million during the quarter, while deposits declined $8.7 million to $920.3 million. Asset quality remained strong, with nonperforming assets falling to $626 thousand, or 0.06% of total assets.

According to First Reliance, it announced a partnership and planned merger with Colony Bank, expected to close in the fourth quarter of 2026, with systems conversion targeted for the second quarter of 2027. Based on June 30, 2026 balances, the combined company would have nearly $5.0 billion in total assets.

Positive

• Operating EPS (non-GAAP) up to $0.38 from $0.27 in Q2 2025
• Book value per share increased 15.5% year over year to $12.47
• Loans held for investment grew $19.5 million in Q2 2026 to $820.7 million
• Nonperforming assets declined to $626 thousand, 0.06% of total assets
• Net interest income rose 8.4% year over year to $9.9 million
• Announced merger with Colony Bank targeting nearly $5.0 billion in combined assets

Negative

• GAAP net income fell 23.2% year over year in Q2 2026 to $2.8 million
• Noninterest income declined $1.9 million year over year in Q2 2026
• Net interest margin slipped sequentially to 3.74% from 3.77% in Q1 2026
• Total deposits decreased $8.7 million in the quarter to $920.3 million
• Efficiency ratio worsened to 71.44% from 64.61% in Q2 2025

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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    total assets	0.06 %	0.19 %	0.23 %	0.03 %	0.02 %
Allowance for credit losses as a percentage of total loans receivable	1.14 %	1.14 %	1.13 %	1.12 %	1.09 %
Annualized net charge-offs as a percentage of average total loan receivables	(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,    commissions, and fees	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- bearing deposits	$                   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				94,614				81,890
Total liabilities and shareholders' equity	$              1,127,129				$  1,097,364				$   1,106,547
Net interest income (tax equivalent) / interest   rate spread		$                    9,871	3.05 %			$   9,523	3.09 %			$  9,109	2.92 %
Net Interest Margin			3.74 %				3.77 %				3.53 %
Cost of funds, including noninterest-bearing deposits			1.96 %				1.89 %				2.06 %

Net interest income for the three months ended June 30, 2026, was $9.9 million, compared with $9.1 million for the same period in 2025.  The increase reflected a $544 thousand rise in interest income and a $218 thousand decrease in interest expense. Net interest margin improved to 3.74% from 3.53% a year earlier.  Loans and securities generated the largest increases in both income and yields compared with the prior year, while lower yields on most interest-bearing liabilities, excluding NOW accounts, also contributed to the margin improvement.  In addition, the total cost of funds, including noninterest-bearing deposits, decreased to 1.96% in the second quarter of 2026, compared to 2.06% in the second quarter of 2025. 

NET INTEREST INCOME AND MARGIN – Unaudited - YTD 

	For the  Six Months Ended
	June 30, 2026				June 30, 2025
	Average	Income/	Yield/		Average	Income/	Yield/
($ in thousands)	Balance	Expense	Rate		Balance	Expense	Rate
Assets
Interest-earning assets
Federal funds sold and interest-bearing deposits	$                  27,898	$                  427	3.08 %		$         39,262	$              769	3.95 %
Investment securities	195,921	4,704	4.84 %		183,408	4,311	4.74 %
Nonmarketable equity securities	3,574	70	3.95 %		1,676	54	6.45 %
Loans held for sale	13,428	482	7.24 %		17,937	717	8.06 %
Loans	800,211	23,304	5.87 %		776,521	22,233	5.77 %
Total interest-earning assets	1,041,032	28,987	5.62 %		1,018,804	28,084	5.56 %
Allowance for credit losses	(9,035)				(8,593)
Noninterest-earning assets	80,332				80,765
Total assets	$             1,112,329				$  1,090,976
Liabilities and Shareholders' Equity
Interest-bearing liabilities
NOW accounts	$                  98,209	$                  318	0.65 %		$      152,565	$              473	0.62 %
Savings & money market	429,569	5,291	2.48 %		427,502	5,998	2.83 %
Time deposits	153,071	2,386	3.14 %		157,773	2,700	3.45 %
Total interest-bearing deposits	680,849	7,995	2.37 %		737,840	9,171	2.51 %
FHLB advances and other borrowings	57,887	1,112	3.88 %		18,732	404	4.35 %
Subordinated debentures	19,795	486	4.95 %		24,111	635	5.31 %
Total interest-bearing liabilities	758,531	9,593	2.55 %		780,683	10,210	2.64 %
Noninterest bearing deposits	245,120				217,556
Other liabilities	12,900				12,585
Shareholders' equity	95,778				80,152
Total liabilities and shareholders' equity	$             1,112,329				$   1,090,976
Net interest income (tax equivalent) / interest   rate spread		$             19,394	3.07 %			$        17,874	2.92 %
Net Interest Margin			3.76 %				3.54 %
Cost of funds,including noninterest bearing deposits			1.93 %				2.06 %

Net interest income was $19.4 million for the six months ended June 30, 2026, an increase of $1.5 million from $17.9 million for the same period in 2025.  Net interest margin rose year over year to 3.76% from 3.54%.  Yields improved on investment securities and loans, while yields declined across all interest-bearing liability categories except NOW accounts.  The total cost of funds, including noninterest-bearing deposits, decreased to 1.93% from 2.06% in 2025.

CONDENSED CONSOLIDATED BALANCE SHEETS – Unaudited

	As of
	Jun 30	Mar 31	Dec 31	Sep 30	Jun 30
($ in thousands)	2026	2026	2025	2025	2025
Assets
Cash and cash equivalents:
Cash and due from banks	$                    4,036	$             4,236	$             4,031	$             5,072	$             4,066
Interest-bearing deposits with banks	22,991	26,477	28,101	26,695	29,487
Total cash and cash equivalents	27,027	30,713	32,132	31,767	33,553
Investment securities:
Investment securities available for sale	188,825	200,886	196,043	199,674	194,136
Other investments	4,400	3,682	1,764	1,527	2,497
Total investment securities	193,225	204,568	197,807	201,201	196,633
Mortgage loans held for sale	18,135	15,636	12,280	13,336	14,944
Loans receivable:
Loans	820,741	801,243	779,935	779,997	784,749
Less allowance for credit losses	(9,334)	(9,105)	(8,827)	(8,741)	(8,535)
Loans receivable, net	811,407	792,138	771,108	771,256	776,214
Property and equipment, net	24,321	24,454	24,348	23,313	22,469
Mortgage servicing rights	9,481	8,728	14,656	14,421	14,093
Bank owned life insurance	19,240	19,134	19,029	18,922	18,815
Deferred income taxes	6,944	6,438	6,117	6,221	6,510
Other assets	17,132	16,579	15,882	17,409	18,972
Total assets	$         1,126,912	1,118,388	1,093,359	1,097,846	1,102,203
Liabilities
Deposits	$            920,329	$       929,045	$       948,120	$       959,300	$       950,339
Federal Home Loan Bank advances	75,000	60,000	20,000	15,000	32,500
Federal funds and repurchase agreements	-	-	-	-	207
Subordinated debentures	9,492	9,484	9,476	9,469	9,461
Junior subordinated debentures	10,310	10,310	10,310	10,310	10,310
Reserve for unfunded commitments	629	728	822	767	925
Other liabilities	12,736	12,937	11,565	13,498	12,560
Total liabilities	1,028,496	1,022,504	1,000,293	1,008,344	1,016,302
Shareholders' equity
Preferred stock - Series D non-cumulative, no par   value	1	1	1	1	1
Common Stock - $.01 par value; 20,000,000 shares   authorized	89	89	88	88	88
Treasury stock, at cost	(8,635)	(8,536)	(8,085)	(7,883)	(6,654)
Nonvested restricted stock	(1,241)	(1,592)	(1,949)	(2,359)	(2,536)
Additional paid-in capital	57,041	57,026	56,869	56,931	56,708
Retained earnings	56,821	54,014	50,578	47,652	44,937
Accumulated other comprehensive loss	(5,660)	(5,118)	(4,436)	(4,928)	(6,643)
Total shareholders' equity	98,416	95,884	93,066	89,502	85,901
Total liabilities and shareholders' equity	$         1,126,912	$     1,118,388	$     1,093,359	$     1,097,846	$    1,102,203

Cash and cash equivalents totaled $27.0 million at June 30, 2026, compared with $30.7 million at March 31, 2026.  Cash held at the Federal Reserve Bank was $22.4 million, compared with $26.3 million at March 31, 2026.

First Reliance had no held-to-maturity (HTM) securities for any reported period.  All debt securities were classified as available-for-sale (AFS), with balances of $188.8 million at June 30, 2026, and $194.1 million at June 30, 2025.  The unrealized loss on these securities was $7.5 million at June 30, 2026, compared with $6.8 million at March 31, 2026, an increase of $700 thousand before taxes during the second quarter of 2026.

Deposits decreased $8.7 million, or 3.8% annualized, as of June 30, 2026, primarily due to lower money market account balances. The decline was partially offset by increases in noninterest-bearing deposits, DDA and NOW accounts, and time deposits under $250 thousand. See the table on page 10 for details.

The Company had $75.0 million in outstanding borrowings with the Federal Home Loan Bank (FHLB) of Atlanta at June 30, 2026, up from $60.0 million at March 31, 2026.  The Company had remaining credit availability in excess of $245.0 million with the FHLB of Atlanta, subject to collateral requirements.

First Reliance also has access to approximately $17.9 million through the Federal Reserve Bank discount window with posted collateral.  There are currently no borrowings against the Federal Reserve Bank discount window.

COMMON STOCK SUMMARY - Unaudited

			As of
	Jun 30	Mar 31	Dec 31	Sep 30	Jun 30
(shares in thousands)	2026	2026	2025	2025	2025
Voting common shares outstanding	8,905	8,896	8,804	8,794	8,787
Treasury shares outstanding	(1,010)	(1,003)	(972)	(954)	(830)
Total common shares outstanding	7,895	7,893	7,832	7,840	7,957
Book value per common share	$                    12.47	$                    12.15	$                    11.88	$                     11.42	$                    10.80
Tangible book value per common share - Non-GAAP(5)	$                    12.38	$                    12.06	$                    11.79	$                     11.33	$                    10.71
Stock price:
High	$                    18.75	$                    16.03	$                    13.70	$                     10.21	$                    10.00
Low	$                    13.03	$                    12.00	$                    10.00	$                       9.36	$                      9.00
Period end	$                    18.43	$                    13.90	$                    12.26	$                     10.10	$                      9.60

ASSET QUALITY MEASURES – Unaudited

	As of
	Jun 30	Mar 31	Dec 31	Sep 30	Jun 30
($ in thousands)	2026	2026	2025	2025	2025
Nonperforming Assets
Commercial
Owner occupied RE	$          332	$   1,357	$   1,573	$             36	$             39
Non-owner occupied RE	-	-	-	-	-
Construction	-	-	-	-	-
Commercial business	24	27	31	38	43
Consumer
Real estate	208	69	36	226	39
Home equity	-	-	-	-	-
Construction	-	-	-	-	-
Other	62	65	71	69	84
Nonaccruing loan modifications	-	-	-	-	-
Total nonaccrual loans	$          626	$    1,518	$    1,711	$          369	$          205
Loans past due 90 days or more & accruing interest	-	$       592	$       744	$               -
Other assets repossessed	-	-	6	-	-
Total nonperforming assets	$          626	$    2,110	$    2,461	$          369	$          205
Nonperforming assets as a percentage of:
Total assets	0.06 %	0.19 %	0.23 %	0.03 %	0.02 %
Total loans receivable	0.08 %	0.26 %	0.32 %	0.05 %	0.03 %
Accruing loan modifications	$          526	$       555	$       668	$          683	$          797
	Three Months Ended
	Jun 30	Mar 31	Dec 31	Sep 30	Jun 30
($ in thousands)	2026	2026	2025	2025	2025
Allowance for Credit Losses
Balance, beginning of period	$       9,105	$   8,827	$   8,741	$       8,535	$       8,654
Loans charged-off	10	8	15	48	110
Recoveries of loans previously charged-off	17	17	80	6	57
Net charge-offs (recoveries)	(7)	(9)	(65)	42	53
Provision for credit losses	222	269	21	248	(66)
Balance, end of period	$       9,334	$   9,105	$   8,827	$       8,741	$       8,535
Allowance for credit losses to gross loans receivable	1.14 %	1.14 %	1.13 %	1.12 %	1.09 %
Allowance for credit losses to nonaccrual loans	1491.67 %	599.78 %	515.87 %	2368.83 %	4163.41 %

Asset quality improved in the second quarter of 2026, as nonperforming assets declined to $626 thousand, or 0.06% of total assets, primarily due to the payoff of one nonaccrual loan.  The allowance for credit losses was 1.14% of total loans receivable at June 30, 2026, unchanged from March 31, 2026, and up from 1.09% at June 30, 2025.  During the second quarter of 2026, the allowance increased $229 thousand, reflecting a $222 thousand provision for credit losses and $7 thousand in net recoveries. In the second quarter of 2025, the Company recorded $53 thousand in net charge-offs and reduced the allowance through a $66 thousand provision for credit losses.  The allowance was 1.09% of total loans at June 30, 2025.

Footnotes to table located at the end of this release.

LOAN COMPOSITION – Unaudited

	As of
	Jun 30	Mar 31	Dec 31	Sep 30	Jun 30
($ in thousands)	2026	2026	2025	2025	2025
Commercial real estate	$             480,996	$             475,483	$             466,293	$             471,002	$             483,278
Consumer real estate	251,864	238,369	230,379	220,767	223,310
Commercial and industrial	78,375	76,142	71,212	71,802	61,255
Consumer and other	9,506	11,249	12,051	16,426	16,906
Total loans, net of deferred fees	820,741	801,243	779,935	779,997	784,749
Less allowance for credit losses	9,334	9,105	8,827	8,741	8,535
Total loans, net	$             811,407	$             792,138	$             771,108	$             771,256	$             776,214

DEPOSIT COMPOSITION – Unaudited

	As of
	Jun 30	Mar 31	Dec 31	Sep 30	Jun 30
($ in thousands)	2026	2026	2025	2025	2025
Noninterest-bearing	$        249,674	$        247,577	$        254,618	$        292,107	$        219,352
Interest-bearing:
DDA and NOW accounts	102,681	94,579	92,310	98,135	156,062
Money market accounts	368,363	394,279	419,683	360,621	379,078
Savings	35,206	36,168	37,416	38,279	38,995
Time, less than $250,000	120,402	103,678	104,671	126,195	125,607
Time, $250,000 and over	44,003	52,764	39,422	43,963	31,245
Total deposits	$        920,329	$        929,045	$        948,120	$        959,300	$        950,339

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. (OTCQX: FSRL), is based in Florence, South Carolina and has assets of approximately $1.13 billion. The Company employs approximately 160 professionals and has locations throughout South 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 92% customer satisfaction rating, well above the bank industry average of 82%.  First Reliance is also one of two companies throughout South Carolina to receive the Best Places to Work in South Carolina award all 20 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 credit losses; (3) the rate of delinquencies and amounts of charge-offs, the level of allowance for credit 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  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, Inc.

FAQ

How did First Reliance Bancshares (FSRL) perform in Q2 2026?

First Reliance reported Q2 2026 net income of $2.8 million, or $0.34 per diluted share. According to First Reliance, operating earnings (non-GAAP) were $3.1 million, or $0.38 per diluted share, and net interest income rose 8.4% year over year to $9.9 million.

What were First Reliance Bancshares’ 2026 year-to-date earnings and EPS (FSRL)?

For the first half of 2026, First Reliance earned $6.2 million, or $0.76 per diluted share. According to First Reliance, operating earnings (non-GAAP) totaled $6.3 million, or $0.77 per diluted share, compared with $3.9 million, or $0.47, in the first half of 2025.

How did loans, deposits, and asset quality trend at First Reliance Bancshares (FSRL) in Q2 2026?

Loans held for investment grew to $820.7 million, while deposits declined to $920.3 million. According to First Reliance, nonperforming assets fell to $626 thousand, representing 0.06% of total assets, reflecting continued strong asset quality metrics during the quarter.

What happened to First Reliance Bancshares’ net interest margin in Q2 2026?

Net interest margin was 3.74% in Q2 2026, down from 3.77% in Q1 but up from 3.53% a year earlier. According to First Reliance, this reflected higher net interest income alongside changes in interest-earning asset yields and funding costs.

How did book value per share change for First Reliance Bancshares (FSRL) year over year?

Book value per share increased to $12.47 at June 30, 2026, from $10.80 a year earlier. According to First Reliance, this represents a 15.5% year-over-year increase, while tangible book value per share (non-GAAP) rose 15.6% to $12.38.

What are the key terms of the First Reliance and Colony Bank merger announced in 2026?

First Reliance announced a partnership and planned merger with Colony Bank, expected to close in Q4 2026. According to First Reliance, systems conversion is planned for Q2 2027, and based on June 30, 2026 assets, the combined company would have nearly $5.0 billion in total assets.

Why did First Reliance Bancshares’ noninterest income decline in 2026 compared with 2025?

Noninterest income decreased mainly because 2025 included a $2.3 million gain on branch sales and a $140 thousand debt extinguishment gain. According to First Reliance, these were partially offset in 2026 by higher mortgage banking income, mortgage servicing rights sale gains, and reduced securities losses.