First Reliance Makes Partial Redemption of TARP Preferred And Notices Intent to Redeem All Remaining Shares Outstanding
FLORENCE, South Carolina – June 3, 2016 – First Reliance Bancshares, Inc. (OTC: FSRL), the holding company (the “Company”) for First Reliance Bank (the “Bank”), announced that it made a partial redemption of 4,000 shares, or 26.1 % of its 15,349 shares of outstanding Fixed Rate Cumulative Perpetual Preferred Stock, Series A (“Series A Preferred Stock”) that were originally issued to the United States Department of the Treasury (“U.S. Treasury”) under the Troubled Asset Relief Program Capital Purchase Program (“TARP”). In March 2013, the U.S. Treasury sold all 15,349 shares of Series A Preferred Stock and Fixed Rate Cumulative Perpetual Preferred Stock, Series B (“Series B Preferred Stock”) previously held by it to private investors. The redemption price for the shares of Series A Preferred Stock was $1,000 per share, plus accrued and unpaid dividends. The total aggregate redemption prices of the shares of Series A Preferred Stock was $4 million.
The Company also announced today that it has sent required thirty day notice letters to owners informing them of redemption of the remaining 11,349 shares of Series A Preferred Stock and 767 shares of Series B Preferred Stock, subject to receipt of requisite regulatory approval. The redemption price for the shares of Series A and Series B Preferred Stock will be the stated amount of $1,000 per share, plus accrued and unpaid dividends. The total aggregate redemption price of the shares of Series A Preferred Stock will be $11,349,000 and Series B Preferred Stock will be $767,000.
“We are pleased to be in a position to replace the securities originally issued to the U.S. Treasury under the TARP Capital Purchase Program with lower cost financing alternatives,” said Rick Saunders, President and CEO.
Following completion of the redemptions, the capital ratios of First Reliance Bank are expected to continue to far exceed regulatory capital standards to be categorized as well-capitalized and the bank will have sufficient capital to support future balance sheet growth. Redemption of the TARP securities will reduce the Company’s after-tax interest expense and is expected to positively impact earnings per share on an annual basis by $0.21 per share, or approximately $977,000 additional net income to common stockholders.
“Strategically, we continue to be focused on growing our market presence in the Coastal and Midlands regions of South Carolina, diversifying our revenue sources growing our loan portfolio with 1-4 family mortgage and consumer loans, funding this growth with low cost core deposits, increasing non-interest income and improving our efficiency,” said Rick Saunders, President and CEO. “We also continue to focus on delivering profits that are consistent and sustainable for our shareholder.”