Reliance Bancshares, Inc. (OTCPK: RLBS) the holding company of Reliance Bank today announced that Chairman Thomas H. Brouster, Sr. has successfully led the recapitalization of both Reliance Bancshares and Reliance Bank, raising $31 million dollars, representing one of the most significant bank recapitalizations in the State of Missouri during the current economic cycle.
ST. LOUIS, MO, April 5, 2013– Reliance Bancshares, Inc. (OTCPK: RLBS) the holding company of Reliance Bank today announced that Chairman Thomas H. Brouster, Sr. has successfully led the recapitalization of both Reliance Bancshares and Reliance Bank, raising $31 million dollars, representing one of the most significant bank recapitalizations in the State of Missouri during the current economic cycle.
Mr. Brouster and the local investors he assembled, now have a controlling interest in the recently delisted Company. With over 40 years of experience in the banking industry, Mr. Brouster is a highly regarded entrepreneur who has successfully led the turnaround of 14 other financial institutions throughout Missouri, Illinois and Kansas. "Our ability to raise this new capital locally, demonstrates the underlying strength of the Reliance 22 branch retail banking network," said Mr. Brouster. "This investment s us to grow the Bank, increase profitability and create additional franchise value."
Immediately following the injection of capital on March 29, 2013, the Company merged its Florida Bank , (Reliance Bank, FSB) into its Missouri Bank (Reliance Bank) thereby consolidating all banking operations into a single subsidiary.
Since the Third Quarter of 2010 Reliance Bank has operated under a Consent Order issued by the Federal Deposit Insurance Corporation (FDIC). This Order was lifted effective March 12, 2013 and the Bank is no longer subject to any regulatory orders.
Of the $31 million raised, $24 million has been injected into Reliance Bank as capital, resulting in a Tier One Capital Ratio of 10.16% as of March 31, 2013. Banking regulators consider banks with an excess of 5% capital as "well capitalized". The additional capital has improved the Bank's Texas Ratio – a commonly used metric to determine a bank's financial strength – to approximately 43% as of March 31, 2013, from a high point of 154% in March 2011.
Mr. Brouster joined Reliance Bancshares in early 2012 as a consultant. Under his guidance, the Company significantly reduced its portfolio of problem loans and assets and recorded a profit in 2012 – the first for the Company since 2007. Aiding Mr. Brouster in the Bank's turnaround has been long-term colleague Gaines S. Dittrich who is serving as Vice Chairman, and Allan D. Ivie, IV , Reliance Bank President and CEO.
Summary of Results of Operations and Financial Condition
Key Financial Metrics
• First Quarter net income of $1.3 million
• 2012 net income of $1.4 million compared to $34.0 million net loss for 2011
•Major and continued decrease in nonperforming loans
•Significant reduction in loan loss provision expense
• Ongoing decline in non-interest expense
The Company reported net income of $1.4 million for 2012 compared to a $34.0 million loss for 2011 and a $48.5 million loss for 2010. The improvement is primarily attributed to major progress made in reducing the level of problem loans, allowing for a significant reduction in provision for loan losses, which declined by $22.0 million (92.48%) for the year.
The positive financial trend has continued into 2013, as evidenced by first quarter net income for the Company of $1.3 million.
The chart below shows the positive trend in earnings and reduction in provision for loan losses over the past three years:
Net income (loss):
Provision for possible loan losses:
Watch list loans **
Reserve for possible loan*
$ 82.1 million
$ 28.9 million
* Nonperforming assets are comprised of nonperforming loans, nonperforming investments, and other real estate owned.
** Watch List Loans include nonperforming loans as well as loans that management considers high risk.
Another factor in the Company's improved results was the decline in noninterest expense by $6.1 million (20.9%) for yearto-date 2012, compared to the same period of 2011. Also, third quarter 2012 noninterest expense declined $241 thousand (3.0%) from the same period last year. The largest drop came from other real estate expense, which declined $2.8 million (33.8%) for year-to-date and $446 thousand (20.9%) for the quarter compared to the same periods of 2011. Salaries and benefits dropped $1.8 million (17.9%) for year-to-date and $309 thousand (9.6%) for the quarter compared to the same periods of 2011.
Net interest income declined $4.8 million (18.6%) and $1.3 million (15.6%) for the year-to-date and third quarter, respectively. The reduction in net interest income resulted from a shrinking balance sheet due to the Company's successful efforts in reducing its commercial real estate loans. Interest expense declined $5.0 million (41.0%) and $1.3 million (36.3%) for year-to-date and the quarter, compared to the same periods during 2011. As a result of the efforts to improve the quality of the portfolio, loans decreased 18.4% or $132.4 million compared to yearend December 2011. Total assets as of September 30, 2012 were $994 million, a 5.1% decrease compared to December 31, 2011.
Non-interest bearing deposits decreased 1.87% while interest bearing deposits declined 5.17% over the past nine months and total deposits as of September 30, 2012 were $843.3 million. The Company has reduced higher cost deposits compared to noninterest bearing deposits, decreasing interest expense.
“While we’ve been reducing problem assets and turning around our community Bank, our focus remains on our customers,” said Mr. Ivie. “Our strong team, innovative products and best in class service set us apart and will help us grow our successful banking franchise. Our markets need a bank that knows our community well, and what they need to be successful. Reliance Bank is that true community bank in St. Louis and Fort Meyers and we are ready to grow our relationships with our customers.”
About Reliance Bancshares, Inc.
Reliance Bancshares, Inc., headquartered in St. Louis, MO, is a publicly held 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 OTCQB (www.pinksheets.com) under the symbol “RLBS”. The Company filed a Form 15 with the Securities and Exchange Commission on April 27, 2012 to deregister its shares of common stock under Rule 12g-4 (a)(1). It currently operates 20 branches in the St. Louis metropolitan area under the name of Reliance Bank. It also owns and operates Reliance Bank, FSB, which is located in Fort Meyers, Florida, with two branches in the Southwest Florida area. The Company's total assets as of September 30, 2012 was $994 million. Reliance Bancshares, Inc. website can be found at www.reliancebancshares.com.