Salty, RELIANCE BANK ANNOUNCES SECOND QUARTER 2014 FINANCIAL RESULTS
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ST. LOUIS, August 1, 2014 – Thomas H. Brouster, Sr., Chairman of the Board of Reliance Bank, the wholly owned subsidiary of Reliance Bancshares, Inc. (OTCPK: RLBS), today announced financial and operating results for the second quarter and six months ending June 30, 2014.
The Bank generated pre-tax earnings of $2.08 million for the second quarter and $3.85 million for the six months ended June 30, 2014, representing record results. Additionally, during the second quarter the Bank reversed the valuation reserve it had established on its deferred tax assets, thereby resulting in one-time income of $36.04 million. As a result of this non-recurring event, after tax net income was $38.04 million for the second quarter and $39.75 million for the six month period. The valuation reserve on the deferred tax assets had been established due to the net operating losses that the Bank incurred during 2009-2011. The Bank’s certified public accountants determined, based upon recent earnings and the strong likelihood of projected future earnings, that as of June 30, 2014, it was more likely than not that the Bank would realize its full deferred tax assets.
Key Financial Metrics for the Second Quarter 2014
Generated pre-tax income of $2.08 million for the second quarter and $3.85 million for the six months ended June 30, 2014
Achieved net income of $38.04 million for the second quarter and $39.75 million for the six months ended June 30, 2014
Loan portfolio grew 11.0% from June 30, 2013
Total deposits grew 2.4% from June 30, 2013
Texas Ratio improved to 18.3% from 42.2% at June 30, 2013
Nonperforming assets declined 43.0% from June 30, 2013
28 consecutive months of no loans past due 30 days or more
Exclusive of the one-time tax benefit, on a pre-tax basis the Bank’s earnings for the quarter and the six month period ended June 30, 2014 represent increases of $889 thousand (75%) and $1.12 million (41%) when compared to the same periods in 2013.
Thomas H. Brouster, Sr., Chairman of Reliance Bank said, “Our second quarter results reflect the success we have had over the past two years in restoring consistent profitability and significantly improving our asset quality and capital ratios. As a result of our progress, we were very pleased to be able to book the entry for our deferred tax assets, further improving the Bank’s capital position. With a strong balance sheet and talented management team, Reliance is well positioned for future earnings growth as we seek to become the premier community bank in the St. Louis region.”
The growth in pre-tax earnings is a direct result of increased loans, a reduction in the cost of deposits and the realization of ongoing expense controls. These results extend the Bank’s positive trend in earnings, which began in late 2012 and now consist of seven consecutive quarters of positive earnings.
The following provides a comparison of the Bank’s net earnings for the six months ended June 30, 2014 with each of the prior three years.
Reliance Bank -- Net Income (000's)
6 mos. 6 mos. 6 mos. 6 mos.
6/30/14 6/30/13 6/30/12 6/30/11
Pre-Tax Income $3,854 $2,711 ($462) ($12,412)
Income Tax Expense (Benefit) ($35,899) $0 $0 $0
Net Income $39,753 $2,711 ($462) ($12,412)
The Bank’s balance sheet showed continued growth during the second quarter as total loans were $644.0 million on June 30, 2014 reflecting an increase of $63.9 million or 11.0% compared to June 30, 2013. Investments equaled $295.6 million on June 30, 2014 as compared to $297.1 million on June 30, 2013. Total assets were $1.09 billion on June 30, 2014 representing an increase of $81.9 million or 8.1% since June 30, 2013.The aforementioned deferred tax assets contributed to the increase in assets.
Nonperforming assets, which include nonperforming loans and foreclosed real estate, fell by $10.7 million (27.4%) during the second quarter of 2014 and totaled $28.4 million as of June 30, 2014. This figure represents a reduction of $21.5 million (43%) during the past 12 months and also reflects a $173.5 million (85.9%) reduction from the peak of $201.9 million on December 31, 2010.
During the second quarter of 2014, the Bank resolved its final non-accrual loan, as shown below, and has zero non-accrual loans as of June 30. As of June 30, 2014 the Bank had no loans past due 30 days or more for 28 consecutive months. On June 30, 2014 the Bank’s foreclosed real estate portfolio totaled $28.3 million representing a reduction of $3.6 million or 11.3% compared to June 30, 2013. Management continues to actively seek buyers for the remaining 15 properties in the portfolio.
Reliance Bank Non-Accrual Loans (000's)
6/30/14 3/31/14 6/30/13 6/30/12 6/30/11 12/31/10*
$0 $10,500 $16,318 $50,833 $110,472 $151,844
* the peak
Second quarter earnings benefited from the $10 thousand of net recoveries on loans previously charged off. This figure compares favorably to the $158 thousand of charge offs during the first quarter of 2014. For the first six months of 2014 the Bank has total charges offs of $148 thousand compared to $3.5 million for the same period in 2013.
The second quarter earnings increased the Bank’s book capital position to a total of $143.1 million as of June 30, 2014. This figure represents the highest book capital in the history of the Bank and provides a book capital ratio of 13.17%. The Bank’s regulatory capital ratios are strong and remain well in excess of the minimum required for a “well capitalized” bank as defined by the FDIC. On June 30, 2014 the Bank’s Tier One Leverage Ratio was 10.93% and the Total Risk Based Ratio was 15.45% representing an improvement from the March 31, 2014 figures of 10.22% and 14.77% respectively. Reliance remains one of the best-capitalized banks in the St. Louis region.
As a result of the second quarter earnings and the reduction in nonperforming assets, the Bank’s Texas Ratio improved to 18.3% on June 30, 2014 as compared to 33.4% on March 31, 2014 and 42.2% on June 30, 2013. The high of 146.5% occurred in June 2011. The Texas Ratio is a commonly used metric to determine a bank’s financial strength and is calculated by taking a bank’s non-performing assets as a percentage of its total capital plus loan loss reserves.
For detailed information on the Bank’s financial performance in the first quarter, please refer to our Call Report at: https://cdr.ffiec.gov/public/ManageFacsimiles.aspx
The Company also achieved several other significant accomplishments during the second quarter:
The Bank successfully completed a Compliance and Community Reinvestment Act (CRA) examination by the FDIC resulting in a “satisfactory” CRA rating. Management is proud of its community development program and its efforts to serve all of the communities in which the Bank operates.
The Bank closed on the purchase of the property located at 4301 Manchester Avenue in The Grove district of St. Louis. Management anticipates that construction will begin during August on the complete renovation of the historic building located at the intersection of Tower Grove and Manchester. This property will become the Bank’s first full-service branch located in the City of St. Louis and will provide a significant opportunity for the Bank to attract new loan and deposit business in an under-banked area. Management expects to open this new branch prior to the end of 2014.
The Bank continues to move closer to constructing a full-service branch on property it owns at the northwest corner of Clayton Road and Lindbergh Boulevard in the City of Frontenac, Missouri. Management anticipates beginning construction during the third quarter of 2014 and expects to complete the project in early 2015. The Bank will relocate its existing limited service Frontenac branch to this new location.
The Bank has implemented a new retail banking strategy and organizational structure designed to increase sales and improve operating efficiency. This new strategy includes better utilization of the Bank’s retail branches by seeking complementary businesses as tenants in certain locations throughout the St. Louis region.
About Reliance Bancshares, Inc.
Reliance Bancshares, Inc., headquartered in St. Louis, MO, is a Missouri bank holding company that provides a full range of banking services to individual and corporate customers. The Company’s common stock is quoted on the Pink Sheets (www.pinksheets.com) under the symbol “RLBS”. It currently operates twenty branches and one loan production office (LPO) in the St. Louis metropolitan area and two branches in Fort Myers, Florida under the name of Reliance Bank. The company’s total assets as of March 31, 2014 were approximately $1.04 Billion. Reliance Bank’s website can be found at www.reliancebankstl.com
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