First Reliance Bancshares Reports Second Quarter 2026 Results

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

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

($ in thousands, except per share data)

2026

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

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 %

10.16 %

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 %

1.13 %

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

($ in thousands, except per share data)

2026

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

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

Gain on sale of mortgage servicing right (MSR)

266

Gain on early extinguishment of debt

140

Gain (loss) on disposal /write down of fixed assets

382

(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

195

248

221

401

Marketing

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

Subtract gain on sale of branches, net of tax

(1,746)

Subtract gain on sale of MSR, net of tax

(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

246

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

4.49 %

2,994

3.21 %

1,665

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

3.95 %

1,676

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

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

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

Common Stock - $.01 par value; 20,000,000 shares

authorized

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

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

2025

Nonperforming Assets

Commercial

Owner occupied RE

$ 332

$ 1,357

$ 1,573

$ 36

$ 39

Non-owner occupied RE

Construction

Commercial business

Consumer

Real estate

208

226

Home equity

Construction

Other

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

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

2025

Allowance for Credit Losses

Balance, beginning of period

$ 9,105

$ 8,827

$ 8,741

$ 8,535

$ 8,654

Loans charged-off

110

Recoveries of loans previously charged-off

Net charge-offs (recoveries)

(7)

(9)

(65)

Provision for credit losses

222

269

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 %

1.13 %

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

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

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

[email protected]

SOURCE First Reliance Bancshares, Inc.