First Reliance Announces 3rd Quarter Net Income of $765,178 - Up 31%

FLORENCE, S.C., Oct. 11 /PRNewswire-FirstCall/ -- First Reliance Bancshares, Inc., (BULLETIN BOARD: FSRL) , the holding company for First Reliance Bank, today announced 3rd quarter 2008 unaudited net income of $765,178, an increase of 31%.

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Unaudited net income for the three months ended September 30, 2008 was $765,178, compared to $584,877 reported in the prior-year period. Earnings benefited from growth in net interest income and reduction in non interest expense. Net interest income increased to $4.9 million in the third quarter of 2008 over $4.7 million reported the prior year period. Non interest expense decreased 3%, to $4.5 million in the third quarter of 2008. Diluted earnings per share were $0.21, compared to the $0.17 reported in the prior year period.

Unaudited net income for the nine months ended September 30, 2008 was $2.3 million, an increase of 3%, or $0.63 per diluted share, compared to $2.2 million, or $0.62 per diluted share, for the nine months ended September 30, 2007. Net interest income increased to $14.7 million in the nine months ended September 30, 2008, over $13.8 million reported the prior year period, while non-interest income was $3.9 million for both periods.

As of September 30, 2008, total assets were $573.7 million, an increase of $48.9 million or 9%, over the $524.8 million reported for September 30, 2007. Loans increased 6% to $459.7 million, while deposits increased to $447.6 million, up 2% from $440.8 million reported for the prior year period.

"In this difficult economic environment, we are not without our challenges; our nonperforming assets to total asset ratio has increased from 0.90 to 1.70 as September 30, 2008," commented Jeff Paolucci, Senior Vice President and CFO of First Reliance Bank. "However, we have taken an aggressive approach to increasing our loan reserves from 1.09% of loans receivable to 1.35%. Even though we have made aggressive provisions for loan losses throughout the year, we continue to exceed our earnings estimate."

"It is clear from the positive results of the 3rd quarter that our focus on profitable growth backed by conservative business decisions has been a rewarding business strategy for our bank," commented Rick Saunders, president and CEO of First Reliance Bank. "In a challenging economic environment where many companies have reported negative growth in earnings, we are pleased to report positive growth in earnings. Our conservative investment practices have never included risks related to Fannie Mae or Freddie Mac or any other high risk mortgage backed securities. In addition, we do not make sub-prime mortgage loans and have no exposure in this area. While other banks have suffered the negative effects of these products and practices, First Reliance's conservative and sound business and banking practices, have allowed us to produce great earnings and position ourselves for future expansion and growth throughout the industry turmoil."

"First Reliance is a financially sound and well capitalized company with a solid deposit base, and 98% of our customers are satisfied with our excellent service and convenience. We are a safe, strong, and profitable South Carolina community bank specializing in relationship banking with individuals and businesses and we have a long and bright future to look forward to."

Jeff Paolucci, Senior Vice President and CFO of First Reliance Bank, commented, "First Reliance is financially strong and well capitalized. First Reliance remains in every measurable category a "well capitalized" institution under all regulatory standards. In fact, our capital ratios are well in excess of all regulatory "well capitalized" thresholds, which we feel is a significant accomplishment considering the state of the economy and the problems facing other institutions. Our strong capital, liquidity, and focus on closely monitoring and controlling expenses has increased our lending capabilities and provided us the opportunity to expand our franchise. During the first quarter of 2009, we will further enhance our commitment to be Easy To Do Business With(TM) by opening a new branch in West Columbia, SC. Additional 2009 expansion efforts include a branch on Forest Drive in Columbia, SC."

"First Reliance is a strong and viable company committed to addressing issues quickly and efficiently as we stay focused on building a strong company for the future. As we continue to move forward in this difficult economic environment, we will continue to carefully and cautiously monitor our banking and business practices to prevent any potential and unforeseen challenges. Our proactive and aggressive risk management systems and emphasis on credit quality have resulted in our strong asset quality, which continues to improve. In addition, our footprint expands into different geographic markets throughout the state of South Carolina thereby reducing the credit risk associated with operating in one location."

"We have realized several positive accomplishments this quarter," stated Rick Saunders, president and CEO. "We are pleased to announce that for the past 3 consecutive years, we have been named One of the Best Places to Work in SC(TM). Providing a great place to work, allows us to recruit and develop great, talented people who are aligned with our company's vision, mission, and values. It is clear that the quality of our work environment has a direct impact on our customers' experience, due to our recent customer satisfaction score of 98%. We intend to continue to increase our level of customer satisfaction by making every effort to meet and exceed our customers' expectations. It is our goal to provide the utmost convenience in products and services and excellent customer service."

"Throughout 2008, we will continue to focus on growing core deposits and leveraging our customer loyalty ratings, while improving our operating efficiencies and managing operating expenses. As we continue to diligently maintain disciplined risk and credit management practices, I am confident that we will continue to attain consistent and sustainable growth."

ABOUT FIRST RELIANCE BANK

First Reliance Bank, founded in 1999, has assets of approximately $574 million, and employs over 145 highly talented associates. The bank serves Columbia, Charleston, Greenville and Florence markets in South Carolina. The bank has been recognized for its success including being the only company ever to be named to The Top 25 Fastest Growing Companies(TM) in South Carolina four times including 2002, 2004, 2005, and 2006 (SC Chamber/Elliott Davis). In June 2007, the bank was added to the Palmetto 25, a list of S.C.'s largest publicly held companies. In 2006, 2007, and 2008 the bank was also recognized as One of the Best Places to Work in South Carolina by the SC Chamber of Commerce. First Reliance Bank offers a unique Hometown Heroes package of benefits to serve those who are serving our communities, Totally FREE Checking, Totally FREE Business, FREE Coin Machines, a Nationwide NO FEE ATM Network, and a 5 Way Mortgage Service Promise. It also offers 8-8 Extended Hours in all of their Florence, Mt. Pleasant, and Lexington locations and is open on most traditional bank holidays. Its Easy to Do Business With(TM) standard has earned the young bank a customer satisfaction rating of 98% (Lamothe & Associates, Inc., Research Firm). First Reliance Bank is traded as FSRL.OB.

This press release contains forward-looking statements about branch openings within the meaning of the Securities Litigation Reform Act of 1995. Forward-looking statements give our expectations or forecasts of future events.

Any or all of our forward-looking statements here or in other publications may turn out to be incorrect. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining our actual future results. Consequently, no forward- looking statements can be guaranteed. Our actual results may vary materially, and there are no guarantees about the performance of our stock.

We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future results or otherwise. You are advised, however, to consult any future disclosures we make on related subjects in our reports to the SEC.

Contact Jeffrey A. Paolucci, Senior Vice President and Chief Financial Officer, [phone]

Media Contact: Jeff Paolucci, Senior Vice President Ashleigh Miles, PR & and CFO Advertising Manager First Reliance Bank First Reliance Bank [phone] [phone]First Reliance Bancshares, Inc. Consolidated Reports of Income Three Three Nine Months Nine Months Months Months Ended Ended Ended Ended September September September September 30,2008 30,2007 30,2008 30,2007 (Unaudited) (Unaudited) (Unaudited)(Unaudited) Interest Income Loans and Fees 25,895,022 25,745,192 8,234,706 9,234,300 Investment Securities Taxable 1,025,605 638,647 349,641 192,571 Tax exempt 981,013 552,593 325,521 199,636 Federal funds sold 54,502 384,420 42,662 48,010 Other interest income 212,941 121,958 98,977 34,078 Total 28,169,083 27,442,810 9,051,507 9,708,595 Interest Expense Time deposits $100,000 and over 5,524,539 5,062,204 1,491,623 1,909,567 Other deposits 5,128,023 7,218,069 1,722,955 2,613,580 Other interest expense 2,817,167 1,412,171 932,809 488,234 Total 13,469,729 13,692,444 4,147,387 5,011,381 - Net Interest Income 14,699,354 13,750,366 4,904,120 4,697,214 Provision for loan losses 1,757,364 869,397 609,967 408,961 Net Interest Income after provision 12,941,990 12,880,969 4,294,153 4,288,253 Noninterest Income Service charges on deposit accounts 1,477,950 1,394,945 548,098 486,508 Gain on sale of mortgage loans 1,445,876 1,635,949 319,519 519,818 Brokerage fees 112,242 124,220 5,685 38,351 Income (Expense) from Bank Owned Life Insurance 340,376 3,820 110,811 (786) Other charges, commissions and fees 361,643 259,087 123,548 96,299 Gain (Loss) on sale of securities available for sale - 4,187 - (16,187) Gain on sale of other real estate 700 16,104 700 - Gain on sale of fixed assets 7,091 5,996 7,091 - Other 147,574 437,163 46,705 140,557 Total 3,893,452 3,881,471 1,162,157 1,264,560 Noninterest Expense Salaries and benefits 8,343,153 7,922,140 2,589,777 2,694,710 Occupancy 1,149,437 979,034 418,005 323,142 Furniture and equipment related 645,114 607,784 222,624 188,021 Other operating 3,803,663 4,107,690 1,248,888 1,418,732 Total 13,941,367 13,616,648 4,479,294 4,624,605 Income before tax 2,894,075 3,145,792 977,016 928,208 Income tax expense 619,353 946,000 211,838 343,331 Net Income 2,274,722 2,199,792 765,178 584,877 Basic earnings per share 0.65 0.64 0.22 0.17 Diluted earnings per share 0.63 0.62 0.21 0.17 First Reliance Bancshares, Inc. Balance Sheet September 30 September 30 December 31 2008 2007 2007 (Unaudited) (Unaudited) Audited Assets: Cash and Cash Equivalents Cash and Due From Banks 5,928,325 12,303,957 7,164,650 Federal funds sold - - - Total cash and cash equivalents 5,928,325 12,303,957 7,164,650 Investment securities Securities available for sale 56,982,931 34,101,361 58,580,313 Nonmarketable equity securities 3,922,200 1,905,400 3,930,400 Investment in trust 310,000 310,000 - Total investment securities 61,215,131 36,316,761 62,510,713 Loans held for sale 11,226,920 9,008,486 19,600,850 Loans receivable 459,686,752 434,389,319 468,137,690 Less allowance for loan losses (6,210,754) (4,736,321) (5,270,607) Loans, net 453,475,998 429,652,998 462,867,083 Premises, furniture, and equipment, net 23,770,377 20,828,686 22,233,746 Accrued interest receivable 3,049,352 2,648,767 3,092,767 Other real estate owned 293,700 134,349 196,950 Cash surrender value life insurance 10,880,649 10,436,829 10,540,273 Other assets 3,833,230 3,444,406 3,497,180 Total Assets 573,673,682 524,775,239 591,704,212 Liabilities: Deposits: Noninterest bearing transaction accounts 42,917,049 42,917,750 43,542,528 Interest bearing transaction accounts 27,159,758 53,403,111 39,450,393 Savings 121,475,590 82,138,499 85,819,481 Time deposits $100,000 and over 131,809,645 150,067,645 169,825,252 Other time deposits 124,196,593 112,300,558 110,860,061 Total deposits 447,558,635 440,827,563 449,497,715 Securities sold under agreements to repurchase 7,195,414 8,568,084 7,927,754 Federal Funds Purchased 2,170,000 3,000,000 13,359,000 Advances from Federal Home Loan Bank 63,500,000 24,000,000 69,000,000 Note Payable 3,000,000 - 3,000,000 Junior subordinated debentures 10,310,000 10,310,000 10,310,000 Accrued interest payable 583,346 913,244 767,577 Other liabilities 1,401,244 752,981 814,262 Total Liabilities 535,718,639 488,371,872 554,676,308 Shareholders' Equity: Common Stock 35,337 34,874 34,946 Restricted Stock (197,635) (147,729) (152,762) Capital Surplus 26,064,686 25,808,044 25,875,012 Treasury Stock (155,259) (145,198) (145,198) Retained Earnings 13,488,094 11,057,547 11,417,275 Accumulated other comprehensive income (1,280,180) (204,171) (1,369) Total Shareholders Equity 37,955,043 36,403,367 37,027,904 Total Liabilities and Shareholders Equity 573,673,682 524,775,239 591,704,212

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