First Reliance Bancshares, Inc., the holding company for First Reliance Bank, reported third quarter 2017 net income of $733,000, down 30% from third quarter 2016 net income of $1.04 million.
Profitability continues to be led by strong loan and deposit growth and expanding operating efficiencies but has been impacted temporarily with the opening of two new branch offices and a decline in mortgage income stemming from a slowdown in correspondent bank mortgage originations. Diluted earnings per share for the three months ended September 30, 2017 was $0.15 compared to $0.23 in the third quarter of 2016.
Financial Highlights (at or for the nine months ended September 30, 2017, except as noted)
- Entered into a definitive agreement to acquire Independence Bancshares, Inc., with an expectation of closing in the first quarter of 2018.
- The combined company is expected to have approximately $532.9 million in assets.
- Completed a private placement of $25.1 million in common and preferred stock.
- Strengthened capital position significantly, with a tangible book value per share of $6.91, up 23% from one year ago.
- Achieved a return on assets of 0.65%.
- Opened a loan production office in Winston-Salem, North Carolina.
- Loan growth is up $41.6 million or 15%, while earning asset yields improved to 4.64% for the nine months ended September 30, 2017 compared to 4.52% for the same period of 2016.
- Non-interest bearing checking accounts increased $10.8 million to 24% of total deposits from one year ago, as we continue to attract new customers through unique programs and the convenience of mobile banking.
- Repaid $7.0 million of senior debt with a portion of the proceeds from the private placement, which will reduce interest expense by approximately $350,000 annually.
Net interest margin (NIM) was 4.32% for the nine months ended September 30, 2017, as the Company continued to leverage its low cost of funds of 32 bp.