UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2012

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _______ to _______

Commission File Number: 000-52588

RELIANCE BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Missouri (State or other jurisdiction of incorporation or organization)	43-1823071 (I.R.S. Employer Identification No.)
10401 Clayton Road Frontenac, Missouri (Address of principal executive offices)	63131 (Zip Code)

(314) 569-7200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer o Accelerated filer o Non-accelerated filer :o (Do not check if a smaller reporting company) Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No þ

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 22,761,792 shares of common stock outstanding as of May 1, 2012.

RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		Page
PART I — FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	Interim Condensed Consolidated Balance Sheets (Unaudited)	3
	Interim Condensed Consolidated Statements of Operations (Unaudited)	4
	Interim Condensed Consolidated Statements of Comprehensive Loss (Unaudited)	5
	Interim Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	6
	Interim Condensed Consolidated Statements of Cash Flows (Unaudited)	7
	Notes to Interim Condensed Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	46
PART II — OTHER INFORMATION		46
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	47
Item 6.	Exhibits	47
SIGNATURES		48

2

PART I — FINANCIAL INFORMATION

Part I — Item 1 — Financial Statements

RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Interim Condensed Consolidated Balance Sheets

March 31, 2012 and December 31, 2011

	March 31,			December 31,
(In thousands, except share and per share data)	2012			2011
	(Unaudited)
ASSETS
Cash and due from banks	$	11,210		9,731
Interest-earning deposits in other financial institutions	98,197			43,799
Investments in available-for-sale debt securities, at fair value	234,841			222,207
Loans	671,265			720,531
Add net deferred loan costs	26			45
Less reserve for possible loan losses	(31,865		)	(31,370	)
Net loans	639,426			689,206
Residential mortgage loans held for sale	895			1,505
Premises and equipment, net	33,638			34,030
Accrued interest receivable	2,407			3,128
Other real estate owned	29,021			34,565
Identifiable intangible assets, net of accumulated amortization of $144 and $140 at March 31, 2012 and December 31, 2011, respectively	100			105
Other assets	7,992			8,550
	$	1,057,727		1,046,826
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	66,195		66,765
Interest-bearing	819,765			820,121
Total deposits	885,960			886,886
Short-term borrowings	16,830			17,243
Long-term Federal Home Loan Bank borrowings	67,000			67,000
Accrued interest payable	633			673
Other liabilities	18,991			5,382
Total liabilities	989,414			977,184
Commitments and contingencies
Stockholders’ equity:
Preferred stock, no par value; 2,000,000 shares authorized:
Series A, 40,000 shares issued and outstanding	40,000			40,000
Series B, 2,000 shares issued and outstanding	2,000			2,000
Series C, 555 shares issued and outstanding	555			555
Common stock, $0.25 par value; 250,000,000 shares authorized, 22,737,491 and 22,642,491 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively	5,684			5,661
Surplus	121,764			122,315
Accumulated deficit	(101,604		)	(102,323	)
Accumulated other comprehensive income — net unrealized holding gains (losses) on available-for-sale debt securities	(86		)	1,434
Total stockholders’ equity	68,313			69,642
	$	1,057,727		1,046,826

See accompanying notes to interim condensed consolidated financial statements.

3

RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Interim Condensed Consolidated Statements of Operations

Three Months Ended March 31, 2012 and 2011

(unaudited)

(In thousands, except share and per share data)	2012			2011
Interest income:
Interest and fees on loans	$	8,541		12,070
Interest on loans held for sale	10			4
Interest on debt securities:
Taxable	887			1,516
Exempt from federal income taxes	144			188
Interest on short-term investments	37			19
Total interest income	9,619			13,797
Interest expense:
Interest on deposits	1,971			3,568
Interest on short-term borrowings	31			22
Interest on long-term Federal Home Loan Bank borrowings	598			872
Total interest expense	2,600			4,462
Net interest income	7,019			9,335
Provision for possible loan losses	2,598			5,100
Net interest income after provision for possible loan losses	4,421			4,235
Noninterest income:
Net gains on sales of debt securities	2,523			—
Service charges on deposit accounts	146			191
Other real estate owned income	142			216
Other noninterest income	354			312
Total noninterest income	3,165			719
Noninterest expense:
Other-than-temporary impairment losses on available-for-sale securities:
Total other-than-temporary impairment losses	—			564
Portion of other-than-temporary losses recognized in other comprehensive income	—			(558	)
Net impairment loss realized	—			6
Salaries and employee benefits	2,921			3,624
Other real estate owned expense	1,248			2,538
Occupancy and equipment expense	907			1,058
FDIC assessment	574			909
Data processing	416			414
Professional fees	252			589
Amortization of intangible assets	4			4
Other noninterest expenses	545			1,004
Total noninterest expense	6,867			10,146
Income (loss) before applicable income taxes	719			(5,192	)
Applicable income tax	—			—
Net income (loss)	$	719		(5,192	)
Net income (loss)	$	719		(5,192	)
Preferred stock dividends	(584		)	(554	)
Net income (loss) attributable to common shareholders	$	135		(5,746	)
Per share amounts:
Basic income (loss) per share	$0.01			$(0.25)
Basic weighted average common shares outstanding	22,714,304			22,556,804
Diluted income (loss) per share	$0.01			$(0.25)
Diluted weighted average common shares outstanding	22,714,304			22,556,804

See accompanying notes to interim condensed consolidated financial statements.

4

RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Interim Condensed Consolidated Statements of Comprehensive Loss

Three Months Ended March 31, 2012 and 2011

(unaudited)

	2012			2011
(In thousands)
Net income (loss)	$	719		(5,192	)
Other comprehensive income (loss) before tax:
Change in unrealized losses on available-for-sale securities for which a portion of an other-than-temporary impairment loss has been recognized in earnings, net of reclassification	—			(75	)
Change in unrealized gains (losses) on other securities available-for-sale, net of reclassification	220			(40	)
Reclassification adjustments for:
Available-for-sale security gains included in net income (loss)	(2,523		)	—
Write-down of investment securities included in net income (loss)	—			6
Other comprehensive loss before tax	(2,303		)	(109	)
Income tax related to items of other comprehensive loss	783			37
Other comprehensive loss, net of tax	(1,520		)	(72	)
Total comprehensive loss	$	(801	)	(5,264	)

See accompanying notes to interim condensed consolidated financial statements.

5

RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Interim Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended March 31, 2012 and 2011

(unaudited)

	Preferred stock		Common stock	Surplus		Accumulated deficit		Accumulated other comprehensive income		Total stockholders' equity
(In thousands, except shares)
Balance at December 31, 2010	$	42,555	5,620	124,366		(68,325	)	30		104,246
Net loss	—		—	—		(5,192	)	—		(5,192	)
Accrual of dividends on preferred stock	—		—	(554	)	—		—		(554	)
Stock option expense	—		—	10		—		—		10
Issuance of restricted stock to officers - 75,000 shares	—		19	(19	)	—		—		—
Amortization of restricted stock	—		—	58		—		—		58
Change in valuation of available-for-sale securities, net of related tax effect	—		—	—		—		(72	)	(72	)
Balance at March 31, 2011	$	42,555	5,639	123,861		(73,517	)	(42	)	98,496
Balance at December 31, 2011	$	42,555	5,661	122,315		(102,323	)	1,434		69,642
Net income	—		—	—		719		—		719
Issuance of 95,000 shares of restricted stock	—		23	(23	)	—		—		—
Accrual of dividends on preferred stock	—		—	(584	)	—		—		(584	)
Amortization of restricted stock	—		—	56		—		—		56
Change in valuation of available-for-sale securities, net of related tax effect	—		—	—		—		(1,520	)	(1,520	)
Balance at March 31, 2012	$	42,555	5,684	121,764		(101,604	)	(86	)	68,313

See accompanying notes to interim condensed consolidated financial statements.

6

RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Interim Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2012 and 2011

(unaudited)

(In thousands)	2012			2011
Cash flows from operating activities:
Net income (loss)	$	719		(5,192	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	1,621			883
Provision for possible loan losses	2,598			5,100
Net losses (gains) on sales and write-downs of debt securities	(2,523		)	6
Write-downs of premises and equipment, net of gains on sales	—			89
Net losses on sales and write-downs of other real estate owned	676			1,839
Stock option compensation cost	—			10
Amortization of restricted stock expense	56			58
Mortgage loans originated for sale in the secondary market	(7,562		)	(3,136	)
Mortgage loans sold in the secondary market	8,172			4,975
Decrease (increase) in accrued interest receivable	721			(158	)
Decrease in accrued interest payable	(40		)	(68	)
Other operating activities, net	14,367			1,926
Net cash provided by operating activities	18,805			6,332
Cash flows from investing activities:
Purchase of available-for-sale debt securities	(107,286		)	(30,267	)
Proceeds from maturities and issuer calls of available-for-sale debt securities	15,808			25,856
Proceeds from sales of available-for-sale debt securities	77,856			—
Net decrease in loans	50,718			48,912
Proceeds from sale of other real estate owned	1,332			512
Purchase of premises and equipment	(17		)	(89	)
Net cash provided by investing activities	38,411			44,924
Cash flows from financing activities:
Net decrease in deposits	(926		)	(17,683	)
Net decrease in short-term borrowings	(413		)	(494	)
Payments of long-term Federal Home Loan Bank borrowings	—			(5,000	)
Net cash used in financing activities	(1,339		)	(23,177	)
Net increase in cash and cash equivalents	55,877			28,079
Cash and cash equivalents at beginning of period	53,530			27,164
Cash and cash equivalents at end of period	$	109,407		55,243
Supplemental information:
Cash paid for interest	$	2,640		4,530
Noncash transactions:
Transfers to other real estate in settlement of loans	302			17,898
Loans made to facilitate the sale of other real estate	3,838			170
Accrual of preferred dividends	584			554
Issuance of restricted stock	23			19

See accompanying notes to interim condensed consolidated financial statements.

7

RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reliance Bancshares, Inc. (the “Company”) provides a full range of banking services to individual and corporate customers throughout the St. Louis metropolitan area in Missouri and Illinois and southwestern Florida through its wholly owned subsidiaries, Reliance Bank and Reliance Bank, FSB (hereinafter referred to as “the Banks”).

The Company and Banks are subject to competition from other financial and nonfinancial institutions providing financial products throughout the St. Louis metropolitan area and southwestern Florida. Additionally, the Company and Banks are subject to the regulations of certain federal and state agencies and undergo periodic examinations by those regulatory agencies.

The accounting and reporting policies of the Company and Banks conform to generally accepted accounting principles within the banking industry. In compiling the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates that are particularly susceptible to change in a short period of time include the determination of the reserve for possible loan losses, valuation of other real estate owned and deferred tax assets, and determination of possible impairment of intangible assets. Actual results could differ from those estimates.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Certain amounts in the 2011 consolidated financial statements have been reclassified to conform to the 2012 presentation. Such reclassifications have no effect on previously reported net loss or stockholders’ equity.

Operating results for the three-month period ended March 31, 2012 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2012. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2011, included in the Company’s previously issued Annual Report on Form 10-K.

Principles of Consolidation

The interim condensed consolidated financial statements include the accounts of the Company and Banks. All significant intercompany accounts and transactions have been eliminated in consolidation.

Basis of Accounting

The Company and Banks utilize the accrual basis of accounting, which includes in the total of net income all revenues earned and expenses incurred, regardless of when actual cash payments are received or paid. The Company is also required to report comprehensive income, of which net income is a component. Comprehensive income is defined as the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from nonowner sources, including all changes in equity during a period, except those resulting from investments by, and distributions to, owners, and cumulative effects of any changes in accounting principles, tax benefits, or capital transactions recorded directly to capital accounts.

Cash Flow Information

For purposes of the interim condensed consolidated statements of cash flows, cash equivalents include amounts due from banks and interest-earning deposits in other financial institutions (all of which are payable on demand). Certain balances maintained in other financial institutions are fully insured by the Federal Deposit Insurance Corporation (“FDIC”) under the Federal Deposit Insurance Act through December 31, 2012. After that date, these balances would generally exceed the level of deposits insured by the FDIC.

8

RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

Subsequent Events

The Company has considered all events occurring subsequent to March 31, 2012 for possible disclosures through the filing date of this Form 10-Q.

Income Taxes

Applicable income tax totaled $0 for the three months ended March 31, 2012 and 2011. Given the Company's cumulative losses that have occurred over the past three years, the Company maintains a full valuation reserve of $44,374 at March 31, 2012 for its deferred tax assets.

Earnings per Share

Basic earnings per share data is calculated by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution of earnings per share which could occur under the treasury stock method if contracts to issue common stock, such as stock options, were exercised. The following table presents a summary of per share data and amounts for the periods indicated.

	Three-Months Ended March 31,
(In thousands, except shares and per share data)	2012		2011
Basic
Net income (loss) attributable to common shareholders	$	135	$	(5,746	)
Weighted average common shares outstanding	22,714,304		22,556,804
Basic income (loss) per share	$	0.01	$	(0.25	)
Diluted
Net income (loss) attributable to common shareholders	$	135	$	(5,746	)
Weighted average common shares outstanding	22,714,304		22,556,804
Effect of dilutive stock options	—		—
Diluted weighted average common shares outstanding	22,714,304		22,556,804
Diluted income (loss) per share	$	0.01	$	(0.25	)

NOTE 2 — INTANGIBLE ASSETS

(Amounts in thousands)

Identifiable intangible assets include the core deposit premium relating to the Company’s acquisition of The Bank of Godfrey, which is being amortized into noninterest expense on a straight-line basis over 15 years. Amortization of the core deposit intangible assets existing at March 31, 2012 will be $4 per quarter until completely amortized.

NOTE 3 — STOCK-BASED COMPENSATION

(Amounts in thousands, except shares and per share amounts)

Various stock option plans have been adopted (both incentive stock option plans and nonqualified stock option plans) under which options to purchase shares of Company common stock may be granted to officers, employees, and directors of the Company and its subsidiary banks. All options were authorized and granted at prices approximating or exceeding the fair value of the Company’s common stock at the date of grant. Various vesting schedules have been authorized for the options granted to date by the Company’s Board of Directors, including certain performance measures used to determine vesting of certain options granted. Options expire up to ten years from the date of grant if not exercised. For certain of the options granted, the Company’s Board of Directors has the ability, at its sole discretion, to grant to key officers of the Company and Banks the right to surrender their options held to the Company, in whole or in part, and to receive in exchange for payment by the Company an amount equal to the excess of the fair value of the shares subject to such options over the exercise price to acquire such options. Such payments may be made in cash, shares of Company common stock, or a combination thereof.

The Company may issue common stock with restrictions to certain key employees. The shares are restricted as to transfer, but are not restricted as to dividend payment or voting rights. The transfer restrictions lapse over time depending upon whether the awards are service-based or performance-based. Service-based awards are contingent upon continued employment, and

9

RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

performance-based awards are based on the Company meeting specified net income goals and continued employment.

Following is a summary of the Company’s stock option activity for the three-month periods ended March 31, 2012 and 2011:

	Weighted average option price per share		Number of shares		Remaining contractual term (years)	Aggregate intrinsic value
Three months ended March 31, 2011:
Balance at December 31, 2010	$	7.98	1,969,916
Forfeited	5.31		(462,500	)
Balance at March 31, 2011	8.80		1,507,416		3.38	$	—
Exercisable at March 31, 2011	8.83		1,473,916		3.28	—
Three months ended March 31, 2012:
Balance at December 31, 2011	$	9.45	671,516
Forfeited	10.90		(11,600	)
Balance at March 31, 2012	9.43		659,916		2.83	$	—
Exercisable at March 31, 2012	9.43		659,916		2.83	—

A summary of the activity of nonvested options for the three-month periods ended March 31, 2012 and 2011 is as follows:

	Shares		Weighted average grant date fair value
Nonvested at December 31, 2010	77,139		$	0.61
Granted	—		—
Vested	(41,556	)	0.72
Forfeited	(2,083	)	—
Nonvested at March 31, 2011	33,500		0.51
Nonvested at December 31, 2011	6,250		$	—
Granted	—		—
Vested	(6,250	)	—
Forfeited	—		—
Nonvested at March 31, 2012	—		—

The total fair value of shares (based on the fair value of the options at their respective grant dates) subject to options that vested during the three months ended March 31, 2012 and 2011 was $0 and $30, respectively.

As of March 31, 2012, there was no remaining unrecognized compensation expense related to nonvested stock options granted. During the three months ended March 31, 2012 and 2011, the Company recognized stock option expense of $0 and $10, respectively.

During the three months ended March 31, 2012 and 2011, the Company awarded 95,000 and 75,000 shares, respectively, of the Company’s common stock on a restricted basis to certain officers which will vest over varying periods up to three years. The awarded shares are being amortized over the estimated vesting periods.

A summary of the activity of the Company’s restricted stock for the three months ended March 31, 2012 and 2011 is as follows:

10

RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

	Number of shares		Weighted average grant date fair value
Outstanding at December 31, 2010	191,366		$	1.28
Granted	75,000		1.61
Vested	—		—
Forfeited	(12,750	)	—
Outstanding at March 31, 2011	253,616		1.44
Outstanding at December 31, 2011	212,633		$	1.34
Granted	95,000		0.90
Vested	—		—
Forfeited	(400	)	—
Outstanding at March 31, 2012	307,233		1.20

The Company amortizes the expense related to restricted stock as compensation expense over the requisite vesting period specified in the grant. Restricted stock awards granted to senior executive officers will vest in two or three years after the grant date, and when all funds received under the Troubled Assets Relief Program Capital Purchase Program have been paid in full. Expense for restricted stock of $56 and $58 was recorded for the three months ended March 31, 2012 and 2011, respectively. As of March 31, 2012, the total unrecognized compensation expense related to restricted stock awards was $195, and the related weighted average period over which it was expected to be recognized was approximately 22 months.

NOTE 4 — INVESTMENTS IN DEBT SECURITIES

(Amounts in thousands)

The amortized cost, gross unrealized gains and losses, and estimated fair value of the Banks’ available-for-sale debt securities at March 31, 2012 and December 31, 2011 are as follows:

(In thousands)	Amortized cost		Gross unrealized gains	Gross unrealized losses		Estimated fair value
March 31, 2012
Obligations of U.S. government agencies and corporations	$	44,239	131	(141	)	44,229
Obligations of state and political subdivisions	13,110		637	(14	)	13,733
Trust preferred securities	3,062		—	(2,345	)	717
U.S. agency residential mortgage-backed securities	174,561		1,965	(364	)	176,162
	$	234,972	2,733	(2,864	)	234,841

December 31, 2011
Obligations of U.S. government agencies and corporations	$	45,743	424	(9	)	46,158
Obligations of state and political subdivisions	14,608		700	(15	)	15,293
Trust preferred securities	3,063		—	(2,277	)	786
U.S. agency residential mortgage-backed securities	156,620		3,573	(223	)	159,970
	$	220,034	4,697	(2,524	)	222,207

The amortized cost and estimated fair value of debt and equity securities classified as available-for-sale at March 31, 2012, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain issuers have the right to call or prepay obligations with or without prepayment penalties.

11

RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

(In thousands)	Amortized cost		Estimated fair value
Due one year or less	$	978	999
Due one year through five years	24,113		24,321
Due five years through ten years	31,065		31,436
Due after ten years	4,255		1,923
U.S. agency residential mortgage-backed securities	174,561		176,162
	$	234,972	234,841

Provided below is a summary of available-for-sale investment securities which were in an unrealized loss position at March 31, 2012 and December 31, 2011:

	March 31, 2012
	Less than 12 months				12 months or more			Total
(In thousands)	Estimated fair value		Unrealized losses		Estimated fair value	Unrealized losses		Estimated fair value	Unrealized losses
Obligations of U.S. government agencies and corporations	$	19,296	(141	)	—	—		19,296	(141	)
Obligations of state and political subdivisions	566		(14	)	—	—		566	(14	)
Trust preferred securities	—		—		717	(2,345	)	717	(2,345	)
U.S. agency residential mortgage-backed securities	63,160		(364	)	—	—		63,160	(364	)
	$	83,022	(519	)	717	(2,345	)	83,739	(2,864	)

	December 31, 2011
	Less than 12 months				12 months or more			Total
	Estimated fair value		Unrealized losses		Estimated fair value	Unrealized losses		Estimated fair value	Unrealized losses
Obligations of U.S. government agencies and corporations	$	4,201	(9	)	—	—		4,201	(9	)
Obligations of state and political subdivisions	565		(15	)	—	—		565	(15	)
Trust preferred securities	—		—		786	(2,277	)	786	(2,277	)
U.S. agency residential mortgage-backed securities	24,255		(223	)	—	—		24,255	(223	)
	$	29,021	(247	)	786	(2,277	)	29,807	(2,524	)

The obligations of U.S. government agencies and corporations and U.S. agency residential mortgage-backed securities with unrealized losses are primarily issued from and guaranteed by the Federal Home Loan Bank, Federal National Mortgage Association, or Federal Home Loan Mortgage Corporation. The obligations of state and political subdivisions with unrealized losses are primarily comprised of municipal bonds with adequate credit ratings, underlying collateral, and/or cash flow projections. The unrealized losses associated with these securities are not believed to be attributed to credit quality, but rather to changes in interest rates and temporary market movements. In addition, the Banks do not intend to sell the securities with unrealized losses, and it is not more likely than not that the Banks will be required to sell them before recovery of their amortized cost basis, which may be at maturity.

Trust preferred securities are comprised of trust preferred collateralized debt obligations issued by banks, thrifts, and insurance companies. The market for trust preferred securities at March 31, 2012 was not active and markets for similar securities were also not active. The new issue market is also inactive as a minimal number of trust preferred securities have been issued since 2007. Very few market participants are willing and/or able to transact for these securities. The market values for the securities are very depressed relative to historical levels. The Banks do not intend to sell the trust preferred securities, and it is not more likely than not that the Banks will be required to sell them.

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RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

The Banks’ trust preferred securities consist of the following issues:

	Pools
(In thousands, except banks/insurers)	I PreTsl III			PreTsl XXVIII		PreTsl XIV		T Pref I		Total
Class	C			B		B-1		B
Original par	$	1,000		1,000		1,000		1,000
Book value	1,000			934		550		578		3,062
Fair value	256			96		15		350		717
Discounted cash flows	1,005			939		559		617
Year-to-date 2012 impairment	—			—		—		—		—
Lowest credit rating assigned to security:
Moody's	NR			Ca		Ca		Ca
Fitch	CCC			CC		C		D
Number of banks/insurers	24			56		60		17
Banks/insurers currently performing	22			38		31		13
Actual deferrals and defaults as a percentage of
the original collateral	11.61		%	26.88	%	38.23	%	12.42	%
Excess subordination as a percentage of the
remaining performing collateral	(0.52		)%	(6.12	)%	(46.50	)%	(65.86	)%

The Company has reviewed its trust preferred security pools and determined that the collateral should be divided between two specific industries for credit analysis — banks and insurance companies. The Company then determined the industry specific default rates for the two industries. The bank rate was determined by reviewing each individual institution and its performance using publicly available information. The insurance company rate was determined by examining a study by a well-known rating agency that displayed the average one-year impairment rate.

To determine a pool-specific loss rate, the Company determined that a common indicator was needed for each issuer. For banks, the Company obtained an estimated regulatory rating from a well-known financial institution rating service to use as an indicator of default probability. The Company then adjusted the default rate from 0.20% to 1.00% based on the regulatory rating obtained. For insurance companies, the Company obtained the rating for the primary insurance company to use as an indicator of default probability and modified the default rate from 0.25% to 1.25% based on the ratings.

To obtain the expected annual default rate for the pool, the Company computed the weighted average rating for each issuer based on the remaining issuance amount as a percentage of the total remaining collateral. Any issuer with a specific default rate was weighted only by the portion of the issuance remaining after the application of the specific default rate. The Company reviews the assumptions quarterly for reasonableness and will update those assumptions that management believes have changed given market conditions, changes in deferrals and defaults, as well as other factors that can impact these assumptions. Based on the results of this analysis, the Company ensures that actual deferrals/defaults, as well as forecasted deferrals/defaults of specific institutions, are appropriately factored into the cash flow projections for each security.

In the tables above, “Excess subordination as a percentage of the remaining performing collateral” (Excess Subordination Ratio) was calculated as follows: (total face value of performing collateral less face value of all outstanding note balances not subordinate to the Company’s investment) ÷ total face value of performing collateral. The Excess Subordination Ratio measures the extent to which there may be tranches within each pooled trust preferred structure available to absorb credit losses before the Company’s securities would be impacted. A positive Excess Subordination Ratio signifies there is some support from subordinate tranches available to absorb losses before the Company’s investment would be impacted, while a negative Excess Subordination Ratio for each of the mezzanine tranche securities indicates there is no support. A negative Excess Subordination Ratio is not definitive, in isolation, for determining whether or not an other-than-temporary credit loss should be recorded for a pooled trust preferred security. Other factors affect the timing and amount of cash flows available for payments to the note holders (investors), including the excess interest paid by the issuers (the issuers typically pay higher rates of interest than are paid out to the note holders).

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RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

As noted in the above table, some of the Company’s investments in trust preferred securities have experienced fair value deterioration due to credit losses but are not otherwise considered to be other-than-temporarily impaired (OTTI). The following table provides information about those trust preferred securities for which only a credit loss was recognized in income, and other losses are recorded in other comprehensive loss for the three months ended March 31, 2012 and 2011:

(In thousands)	March 31, 2012		March 31, 2011
Accumulated credit losses on trust preferred securities:
Beginning of period	$	955	919
Additions related to OTTI losses not previously recognized	—		—
Reductions due to sales	—		—
Reductions due to change in intent or likelihood of sale	—		—
Additions related to increases in previously recognized OTTI losses	—		6
Reductions due to increases in expected cash flows	—		—
End of period	$	955	925

During the first quarter of 2012, certain available-for-sale securities were sold for proceeds totaling $77,856, resulting in gross gains of $2,523.

NOTE 5 — LOANS

(Amounts in thousands)

The composition of the loan portfolio at March 31, 2012 and December 31, 2011 is as follows:

(In thousands)	March 31, 2012		December 31, 2011
Commercial:
Real estate	$	465,262	512,094
Other	51,570		69,989
Real estate:
Construction	83,654		71,163
Residential	70,136		66,858
Consumer	643		427
	$	671,265	720,531

The Banks grant commercial, industrial, residential, and consumer loans (including overdrafts totaling $309 and $52 at March 31, 2012 and December 31, 2011, respectively) throughout the St. Louis, Missouri metropolitan area and southwestern Florida. The Banks do not have any particular concentration of credit in any one economic sector, except that a substantial portion of the portfolio is concentrated in and secured by real estate in the St. Louis, Missouri metropolitan area and southwestern Florida, particularly commercial real estate and construction of commercial and residential real estate. The ability of the Banks’ borrowers to honor their contractual obligations is dependent upon the local economies and their effect on the real estate market.

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RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

At March 31, 2012, the Company's consolidated reserve for loan losses calculation had the following components (in thousands of dollars):

Specifically identifiable exposure on impaired loans:

Loan type	Number of credits	Loan balance		Exposure
Real estate construction	21	$	27,360	2,131
Residential real estate	12	4,037		416
Commercial real estate	28	36,778		3,968
Commercial and industrial	5	3,148		475
Consumer	—	—		—
		$	71,323	6,990

     General reserve for nonimpaired credits:

Loan type	Historical charge-off percentage		Adjusted charge-off percentage		Nonimpaired loan balance		Calculated reserve
Real estate construction	10.96	%	13.23	%	$	56,294	7,450
Residential real estate	1.93		3.48		66,099		2,299
Commercial real estate	2.74		3.28		428,484		14,040
Commercial and industrial	1.16		2.19		48,422		1,061
Consumer	1.91		3.90		643		25
					599,942		24,875
Total					$	671,265	31,865

At December 31, 2011, the Company’s consolidated reserve for loan losses calculation had the following components (in thousands of dollars):

Specifically identifiable exposure on impaired loans:

Loan type	Number of credits	Loan balance		Exposure
Real estate construction	25	$	17,176	2,179
Residential real estate	12	2,805		91
Commercial real estate	35	72,347		4,084
Commercial and industrial	11	16,062		1,072
Consumer	1	3		—
		$	108,393	7,426

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RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

     General reserve for nonimpaired credits:

Loan type	Historical charge-off percentage		Adjusted charge-off percentage		Nonimpaired loan balance		Calculated reserve
Real estate construction	12.28	%	14.15	%	$	53,987	7,639
Residential real estate	2.03		3.29		64,053		2,106
Commercial real estate	2.59		3.00		439,747		13,193
Commercial and industrial	1.11		1.84		53,927		991
Consumer	1.27		3.65		424		15
					612,138		23,944
Total					$	720,531	31,370

Following is an analysis of the reserve for loan losses by loan type and those loans that have been specifically evaluated or evaluated in aggregate at March 31, 2012 and 2011 (in thousands of dollars):

	March 31, 2012
(In thousands)	Commercial real estate			Commercial other		Real estate construction		Residential real estate		Consumer		Total
Reserve for possible loan losses:
Beginning balance, December 31	$	17,277		2,063		9,818		2,197		15		31,370
Charge-offs	(2,246		)	(2	)	(84	)	(98	)	(10	)	(2,440	)
Recoveries	267			8		49		6		7		337
Provision	2,710			(533	)	(202	)	610		13		2,598
Ending balance, March 31	$	18,008		1,536		9,581		2,715		25		31,865
Individually evaluated for impairment	$	3,968		475		2,131		416		—		6,990
Collectively evaluated for impairment	14,040			1,061		7,450		2,299		25		24,875
Financial receivables:
Individually evaluated for impairment	$	36,778		3,148		27,360		4,037		—		71,323
Collectively evaluated for impairment	428,484			48,422		56,294		66,099		643		599,942
Ending balance, March 31	$	465,262		51,570		83,654		70,136		643		671,265

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RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

	March 31, 2011
(In thousands)	Commercial real estate			Commercial other		Real estate construction		Residential real estate		Consumer		Total
Reserve for possible loan losses:
Beginning balance, December 31	$	21,406		2,029		11,966		1,871		29		37,301
Charge-offs	(3,351		)	(50	)	(3,562	)	(352	)	(8	)	(7,323	)
Recoveries	6			1		1,945		10		2		1,964
Provision	3,987			114		750		264		(15	)	5,100
Ending balance, March 31	$	22,048		2,094		11,099		1,793		8		37,042
Individually evaluated for impairment	$	9,143		1,709		3,591		263		1		14,707
Collectively evaluated for impairment	12,905			385		7,508		1,530		7		22,335
Financial receivables:
Individually evaluated for impairment	$	115,640		11,990		27,982		5,032		4		160,648
Collectively evaluated for impairment	554,591			61,881		59,156		61,416		540		737,584
Ending balance, March 31	$	670,231		73,871		87,138		66,448		544		898,232

Following is a summary of past-due loans by type and by number of days delinquent at March 31, 2012 and December 31, 2011 (in thousands of dollars):

	30-59 days past due		60-89 days past due	Greater than 90 days	Total past due	Current	Total financing receivables	Recorded investment > 90 days and accruing
2012
Commercial:
Real estate	$	420	4,308	18,389	23,117	442,145	465,262	—
Other	—		—	248	248	51,322	51,570	—
Real estate:
Construction	—		—	24,727	24,727	58,927	83,654	—
Residential	—		85	1,955	2,040	68,096	70,136	—
Consumer	—		—	—	—	643	643	—
Total	$	420	4,393	45,319	50,132	621,133	671,265	—
2011
Commercial:
Real estate	$	6,718	4,295	32,542	43,555	468,539	512,094	—
Other	—		4	117	121	69,868	69,989	—
Real estate:
Construction	—		—	15,862	15,862	55,301	71,163	61
Residential	—		—	1,073	1,073	65,785	66,858	100
Consumer	—		—	3	3	424	427	—
Total	$	6,718	4,299	49,597	60,614	659,917	720,531	161

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RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

Following is a summary of impaired loans by type at March 31, 2012 and December 31, 2011 (in thousands of dollars):

	Recorded investment with no reserve		Recorded investment with reserve	Total recorded investment	Unpaid principal balance	Related reserve
2012
Commercial:
Real estate	$	23,498	13,280	36,778	43,891	3,968
Other	3,148		—	3,148	3,393	475
Real estate:
Construction	15,420		11,940	27,360	44,882	2,131
Residential	1,584		2,453	4,037	4,900	416
Consumer	—		—	—	—	—
Total	$	43,650	27,673	71,323	97,066	6,990
2011
Commercial:
Real estate	$	40,329	32,018	72,347	89,977	4,084
Other	1,787		14,275	16,062	16,723	1,072
Real estate:
Construction	723		16,453	17,176	35,077	2,179
Residential	2,466		339	2,805	3,614	91
Consumer	—		3	3	3	—
Total	$	45,305	63,088	108,393	145,394	7,426

Following is a summary of impaired loans by type for the three months ended March 31, 2012 and 2011 (in thousands of dollars):

	Three months ended March 31, 2012			Three months ended March 31, 2011
	Average recorded investment		Interest income recognized	Average recorded investment	Interest income recognized
Commercial:
Real estate	$	52,431	40	120,087	308
Other	3,303		2	11,102	7
Real estate:
Construction	27,879		6	29,644	13
Residential	4,076		—	5,229	—
Consumer	2		—	4	—
Total	$	87,691	48	166,066	328

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RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

Following is a summary of loans on nonaccrual status by type at March 31, 2012 and December 31, 2011 (in thousands of dollars):

(In thousands)	2012		2011
Commercial:
Real estate	$	36,339	68,031
Other	3,145		1,553
Real estate:
Construction	27,205		16,269
Residential	4,035		2,776
Consumer	—		3
Total	$	70,724	88,632

Following is a summary of loans segregated based on credit quality indicators at March 31, 2012 and December 31, 2011 (in thousands of dollars):

2012 Grade	Commercial real estate		Commercial other	Real estate construction	Residential real estate	Consumer	Total
Pass	$	381,341	34,171	34,367	62,887	641	513,407
Special mention	28,310		2,986	1,745	2,915	2	35,958
Substandard	55,611		14,413	47,542	4,334	—	121,900
Doubtful	—		—	—	—	—	—
Total	$	465,262	51,570	83,654	70,136	643	671,265
2011 Grade	Commercial real estate		Commercial other	Real estate construction	Residential real estate	Consumer	Total
Pass	$	398,900	50,900	32,808	61,182	422	544,212
Special mention	31,910		3,008	21,179	2,600	2	58,699
Substandard	81,284		16,081	17,176	3,007	3	117,551
Doubtful	—		—	—	69	—	69
Total	$	512,094	69,989	71,163	66,858	427	720,531

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RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

The Company classifies loan modifications as troubled debt restructurings (TDRs) when a borrower is experiencing financial difficulties and a concession has been granted to the borrower. The Company's modifications generally include interest rate adjustments, payment relief, and amortization and maturity date extensions. These modifications allow the debtor short-term cash relief to allow them to improve their financial condition. The Company's restructured loans are individually evaluated for impairment and evaluated as part of the reserve for possible loan losses.

The following table shows the pre- and post-modification recorded investment in TDR loans by loan segment that have occurred during the three months ended March 31, 2012 and 2011 (in thousands of dollars):

	Three months ended March 31,
2012	Number of loans	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
Commercial:
Real estate	2	$	1,328	1,328
Other	—	—		—
Real estate:
Construction	—	—		—
Residential	1	489		384
Consumer	—	—		—
	3	$	1,817	1,712
2011
Commercial:
Real estate	1	$	1,187	1,187
Other	—	—		—
Real estate:
Construction	1	116		116
Residential	—	—		—
Consumer	—	—		—
	2	$	1,303	1,303

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RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

The following table shows the recorded investment in TDR loans by segment that have been modified within the previous twelve months and have subsequently had a payment default during the three months ended March 31, 2012 and 2011 (in thousands of dollars):

	Three months ended March 31,
2012	Number of loans	Recorded investment
Commercial:
Real estate	—	$	—
Other	—	—
Real estate:
Construction	—	—
Residential	—	—
Consumer	—	—
	—	$	—
2011
Commercial:
Real estate	—	$	—
Other	—	—
Real estate:
Construction	—	—
Residential	—	—
Consumer	—	—
	—	$	—

NOTE 6 — FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

(Amounts in thousands)

The Banks issue financial instruments with off-balance sheet risk in the normal course of the business of meeting the financing needs of their customers. These financial instruments include commitments to extend credit and standby letters of credit and may involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the balance sheets. The contractual amounts of those instruments reflect the extent of involvement the Banks have in particular classes of these financial instruments.

The Banks’ exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Banks use the same credit policies in making commitments and conditional obligations as they do for financial instruments included on the balance sheets. Following is a summary of the Banks’ off-balance sheet financial instruments at March 31, 2012:

Financial instruments for which contractual amounts represent:
Commitments to extend credit	$	47,301
Standby letters of credit	11,277
	$	58,578

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established

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RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

in the contract. Of the total commitments to extend credit at March 31, 2012, $11,926 was made at fixed rates of interest. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since certain of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Banks evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Banks upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral held varies, but is generally residential or income-producing commercial property or equipment on which the Banks generally have a superior lien.

Standby letters of credit are conditional commitments issued by the Banks to guarantee the performance of a customer to a third party, for which draw requests have historically not been made. Such guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

NOTE 7 — FAIR VALUE MEASUREMENTS

(Amounts in thousands)

The Company uses fair value measurements to determine fair value disclosures. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods, including market, income, and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

• Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

• Level 2 — Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

• Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or value assigned to such assets or liabilities.

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RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

The following table summarizes financial instruments measured at fair value on a recurring basis as of March 31, 2012 and December 31, 2011, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)	Significant unobservable inputs (Level 3)	Total fair value
March 31, 2012:
Assets:
Available-for-sale securities:
Obligations of U.S. government agencies and corporations	$	—	44,229	—	44,229
Obligations of state and political subdivisions	—		13,733	—	13,733
Trust preferred securities	—		—	717	717
U.S. agency residential mortgage-backed securities	—		176,162	—	176,162
Total available for sale securities	—		234,124	717	234,841
Loans held for sale	—		895	—	895
Total recurring fair value measurements	$	—	235,019	717	235,736
December 31, 2011:
Assets:
Available-for-sale securities:
Obligations of U.S. government agencies and corporations	$	—	46,158	—	46,158
Obligations of state and political subdivisions	—		15,293	—	15,293
Trust preferred securities	—		—	786	786
U.S. agency residential mortgage-backed securities	—		159,970	—	159,970
Total available for sale securities	—		221,421	786	222,207
Loans held for sale	—		1,505	—	1,505
Total recurring fair value measurements	$	—	222,926	786	223,712

Following is a description of the inputs and valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of those instruments under the valuation hierarchy:

Investments in Available-for-Sale Debt Securities — The Company’s available-for-sale debt securities are measured at fair value using Levels 2 and 3 valuations. For all debt securities other than the trust preferred securities described below, the market valuation utilizes several sources, primarily pricing services, which include observable inputs rather than “significant unobservable inputs” and, therefore, fall into the Level 2 category.

Trust preferred securities are valued using Level 3 valuation inputs as described in note 4 because significant adjustments are required to determine fair value at the measurement date, particularly regarding estimated default probabilities based on the credit quality of the specific issuer institutions for the trust preferred securities. The trust preferred securities are the only assets measured on a recurring basis using Level 3 inputs.

Loans Held for Sale - Loans held for sale, which consist generally of certain fixed-rate, first-lien residential mortgage loans, are carried at the lower of cost or estimated fair value. The estimated fair value of residential mortgage loans held for sale is based on what secondary markets are currently offering for portfolios with similar characteristics, which the Company classifies as a Level 2 fair value measurement.

For the three months ended March 31, 2012 and 2011, the changes in assets, consisting solely of trust preferred securities, measured at fair value on a recurring basis and classified within Level 3 of the fair value hierarchy were as follows:

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RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

	2012			2011
Balance, at fair value on December 31	$	786		511
Transfers into Level 3	—			—
Transfers out of Level 3	—			—
Total gains (losses) for the period:
Net unrealized gain (loss) arising through March 31	(67		)	171
Impairment write-downs recognized through March 31	—			(6	)
Purchases, issues, sales, and settlements:
Principal payments received through March 31	(2		)	(2	)
Balance, at fair value on March 31	$	717		674

The following table summarizes financial instruments measured at fair value on a nonrecurring basis as of March 31, 2012 and December 31, 2011, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value:

	Quoted prices in active markets for identical assets (Level 1)	Significant other observable inputs (Level 2)	Significant unobservable inputs (Level 3)	Total fair value
March 31, 2012:
Assets:
Impaired loans	—	—	64,333	64,333
Other real estate owned	—	—	29,021	29,021
Total nonrecurring fair value measurements	—	—	93,354	93,354
December 31, 2011:
Assets:
Impaired loans	—	—	100,967	100,967
Other real estate owned	—	—	34,565	34,565
Total nonrecurring fair value measurements	—	—	135,532	135,532

Following is a description of the inputs and valuation methodologies used for instruments measured at fair value on a nonrecurring basis, as well as the general classification of these instruments under the valuation hierarchy:

Impaired Loans - At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the reserve for possible loan losses. For collateral-dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches, including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower's financial statements, or aging reports, adjusted or discounted based on management's historical knowledge, changes in market conditions from the time of the valuation, and management's expertise and knowledge of the client and the client's business, resulting in a Level 3 fair value classification.

Other Real Estate Owned - Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value

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RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches, including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of March 31, 2012 the significant unobservable inputs used in the fair value measurements were as follows:

	Fair value		Valuation technique	Significant unobservable inputs	Range (Weighted average)
Trust preferred securities	$	717	Discounted cash flows	Prepayment rate	0.0%-1.0% (0.5%)
Impaired loans	64,333		Appraisal value	N/A	N/A
Other real estate owned	29,021		Appraisal value	N/A	N/A

25

RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

Following is a summary of the carrying amounts and estimated fair values of the Company’s financial instruments at March 31, 2012 and December 31, 2011:

			Fair value measurements using
(In thousands)	Carrying Amount		Level 1	Level 2	Level 3	Total fair value
March 31, 2012
Financial assets:
Cash and due from banks	$	109,407	109,407	—	—	109,407
Investments in debt securities	234,841		—	234,124	717	234,841
Loans, net	639,426		—	—	640,872	640,872
Loans held for sale	895		—	895	—	895
Accrued interest receivable	2,407		2,407	—	—	2,407
	$	986,976	111,814	235,019	641,589	988,422
Financial liabilities:
Deposits	$	885,960	508,356	—	382,275	890,631
Short-term borrowings	16,830		16,830	—	—	16,830
Long-term Federal Home Loan Bank borrowings	67,000		—	—	77,114	77,114
Accrued interest payable	633		633	—	—	633
	$	970,423	525,819	—	459,389	985,208
December 31, 2011
Financial assets:
Cash and due from banks	$	53,530	53,530	—	—	53,530
Investments in debt securities	222,207		—	221,421	786	222,207
Loans, net	689,206		—	—	692,936	692,936
Loans held for sale	1,505		—	1,505	—	1,505
Accrued interest receivable	3,128		3,128	—	—	3,128
	$	969,576	56,658	222,926	693,722	973,306
Financial liabilities:
Deposits	$	886,886	503,733	—	384,875	888,608
Short-term borrowings	17,243		17,243	—	—	17,243
Long-term Federal Home Loan Bank borrowings	67,000		—	—	71,407	71,407
Accrued interest payable	673		673	—	—	673
	$	971,802	521,649	—	456,282	977,931

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value:

Cash and Other Short-Term Instruments — For cash and due from banks (including interest-earning deposits in other financial institutions), accrued interest receivable (payable), and short-term borrowings, the carrying amount is a reasonable estimate of fair value, as such instruments are due on demand and/or reprice in a short time period.

Loans — The fair value of loans is estimated by discounting future cash flows using current rates for loans with similar characteristics and maturities. The Banks' current loan rates are comparable with rates offered by other financial institutions. The reserve for possible loan losses is considered to be a reasonable estimate of discount for credit quality concerns.

Deposits — The fair value of demand deposits, savings accounts, and interest-bearing transaction account deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.

26

RELIANCE BANCSHARES, INC. AND SUBSIDIARIES

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

(In thousands of dollars, except shares and per share data)

Long-Term Borrowings — Rates currently available to the Company with similar terms and remaining maturities are used to estimate the fair value of existing long-term debt.

Commitments to Extend Credit and Standby Letters of Credit — The fair values of commitments to extend credit and standby letters of credit are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the likelihood of the counterparties drawing on such financial instruments, and the present creditworthiness of such counterparties. The Company believes such commitments have been made on terms that are competitive in the markets in which it operates.

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Part I — Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following presents management’s discussion and analysis of the consolidated financial condition and results of operations of Reliance Bancshares, Inc. (the “Company”) for the three-month periods ended March 31, 2012 and 2011. This discussion and analysis is intended to review the significant factors affecting the financial condition and results of operations of the Company, and provides a more comprehensive review which is not otherwise apparent from the consolidated financial statements alone. This discussion should be read in conjunction with the accompanying interim condensed consolidated financial statements included in this report and the consolidated financial statements for the year ended December 31, 2011, included in our most recent annual report on Form 10-K.

The Company has prepared all of the consolidated financial information in this report in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). In preparing the consolidated financial statements in accordance with U.S. GAAP, the Company makes estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. No assurances can be given that actual results will not differ from those estimates.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, some of the information in this report contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements typically are identified with use of terms such as “may,” “will,” “expect,” “anticipate,” “estimate,” “potential,” “could,” and similar words, although some forward-looking statements are expressed differently. These forward-looking statements are subject to numerous risks and uncertainties. There are important factors that could cause actual results to differ materially from those in forward-looking statements, certain of which are beyond our control. These factors, risks, and uncertainties are discussed in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), as updated from time to time in our subsequent filings. The Company does not intend to publicly revise or update forward-looking statements to reflect events or circumstances that arise after the date of this report, unless otherwise required by applicable rules.

Overview of Operations

The Company provides a full range of banking services to individual and corporate customers throughout the St. Louis metropolitan area in Missouri and Illinois and southwestern Florida through the 22 locations of its wholly owned subsidiaries, Reliance Bank and Reliance Bank, FSB (hereinafter referred to as the “Banks”). Since its opening in 1999 through March 31, 2012, Reliance Bank has established a total of 20 branch locations in the St. Louis metropolitan area of Missouri and Illinois, and has total assets, loans, and deposits of $994 million, $641 million, and $826 million, respectively, at March 31, 2012.

On January 17, 2006, the Company opened a new federal savings bank, Reliance Bank, FSB, in Ft. Myers, Florida. At March 31, 2012, Reliance Bank, FSB has two branch locations in southwestern Florida and has total assets, loans, and deposits of $66 million, $30 million, and $60 million, respectively.

The St. Louis metropolitan and southwestern Florida markets in which the Company’s banking subsidiaries operate are highly competitive in the financial services area. The Banks are subject to competition from other financial and nonfinancial institutions providing financial products throughout these markets.

Executive Summary of Results of Operations and Financial Condition

The Company’s consolidated net income (loss) for the quarters ended March 31, 2012 and 2011 totaled $719 thousand and $(5.2 million), respectively. Provision for loan losses declined by $2.5 million (49.06%) for the same period last year. Noninterest income increased by $2.4 million over the same period last year. Total noninterest expense decreased by $3.28 million (32.33%) compared to first quarter 2011. The Company’s year-to-date net interest margin percentage dropped to 2.89% at March 31, 2012 from 3.12% for the same period last year. Net interest income declined by $2.3 million from the same period last year. The reasons for these changes are discussed in more detail in the following paragraphs.

Provision and Asset Quality

Provision for loan losses declined by $2.5 million (49.06%) for the first three months of 2012 compared to the same period last year, partially due to a decrease in the Company's nonperforming loans of $23.2 million (22.2%) to $81.1 million at March 31, 2012, compared to $104.3 million at December 31, 2011. Total nonperforming assets decreased $28.9 million (20.7%) to $110.5 million at March 31, 2012, from $139.4 million at December 31, 2011. Nonperforming loans declined during the quarter due to principal payments, payoffs, charge-offs, and foreclosures. Year-to-date net charge-offs declined $3.3 million compared with the same period last year.

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Management remains focused on improving credit quality and, as a result of continued economic strains, has implemented problem credit action plans. The Company has maintained elevated personnel levels to address asset quality issues and dispose of nonperforming assets.

Noninterest Income

Total noninterest income during the first quarter of 2012 increased by $2.4 million (340.19%) to $3.17 million compared to $719 thousand during the same period last year. The Company realized a gain of $2.5 million on the sale of investment securities during the first quarter of 2012.

Noninterest Expense

Total noninterest expense decreased by $3.2 million for the first quarter of 2012 to $6.9 million from $10.1 million during the first quarter of 2011, primarily driven by a reduction in costs associated with other real estate owned and reduced personnel costs.

Net Interest Margin

The Company’s year-to-date net interest margin percentage dropped to 2.89% at March 31, 2012 from 3.12% for the same period last year. Year-to-date net interest income declined by $2.3 million from the same period last year. The reduction in net interest income is primarily due to a planned decline in commercial real estate loan volumes, mitigated by a positive impact to earnings as a result of reduced deposit costs and enhanced deposit mix.

The following are certain ratios generally followed in the banking industry for the three-month periods ended March 31, 2012 and 2011:

	As of and for the quarters ended March 31,
	2012		2011
Percentage of net income (loss) to:
Average total assets	0.28	%	(1.66	)%
Average stockholders’ equity	4.12	%	(20.27	)%
Net interest margin	2.89	%	3.12	%
Percentage of average stockholders’ equity to average total assets	6.75	%	8.05	%

Recent Developments

Regulatory Agreements

(amounts in thousands of dollars)

On November 30, 2009, Reliance Bank’s Board of Directors entered into an Agreement (the Agreement) with the Missouri Division of Finance and the FDIC. The Agreement is discussed in detail within the Company's March 31, 2011 Quarterly Report on Form 10-Q, which was filed on May 13, 2011. On February 14, 2011, Reliance Bank’s Board of Directors entered into a Consent Order (the Consent Order) with the FDIC, which superseded the Agreement noted previously. The Consent Order requires the Bank to (a) develop a written management plan to have and retain qualified management; (b) charge off adversely classified assets identified during the FDIC’s September 20, 2010 examination of Reliance Bank; (c) develop a written plan to reduce Reliance Bank’s risk exposure in each asset in excess of $2,000 classified as substandard or doubtful in

the FDIC’s Report of Examination for its September 20, 2010 examination; (d) not extend, directly or indirectly, any additional credit to, or for the benefit of, any borrower who has a loan or other extension of credit or obligation with Reliance Bank that has been, in whole or in part, charged off or adversely classified as substandard or doubtful in the FDIC’s Report of Examination, unless the denial of additional credit would be detrimental to Reliance Bank, as determined by the Bank’s Board of Directors; (e) develop a written plan for systematically reducing and monitoring the Bank’s concentrations of credit as listed in the FDIC’s Report of Examination to an amount that is commensurate with Reliance Bank’s business strategy, management expertise, size, and location; (f) review and maintain an adequate reserve for loan losses on a quarterly basis; (g) maintain minimum capital ratios of an 8% Tier 1 leverage capital ratio and 12% Total risk-based capital ratio; (h) not increase salaries or pay bonuses for any executive officer, pay management fees, or declare or pay any dividends; (i) review the liquidity, contingent funding, and interest rate risk policies and plans and develop or amend such policies and plans to address how the Bank will increase its liquid assets and reduce its reliance on volatile liabilities for liquidity purposes; (j) not accept, increase, renew, or roll over any brokered deposits; (k) develop a written three-year business/strategic plan and one-year profit and

29

budget plan; (l) eliminate and/or correct any violations of laws, rules, and regulations identified in the FDIC’s Report of Examination; and (m) provide periodic progress reports on the above matters to the FDIC.

On February 10, 2010, the Reliance Bank, FSB Board of Directors entered into a Memorandum of Understanding (the OTS MOU) with the Office of Thrift Supervision (OTS). The OTS MOU is discussed in detail within the Company's March 31, 2011 Quarterly Report on Form 10-Q, which was filed on May 13, 2011. On June 8, 2011, the OTS issued a Cease and Desist Order (OTS Order) to Reliance Bank, FSB, which supersedes the OTS MOU. The OTS Order requires Reliance Bank, FSB to (a) by September 30, 2011, have and maintain minimum capital ratios of 7% Tier 1 capital ratio and 13% Total risk-based capital ratio; (b) submit a revised written plan to achieve and maintain the capital levels noted above; (c) on a quarterly basis, the Reliance Bank, FSB Board of Directors shall review compliance with the capital plan; (d) within fifteen days of (1) failing to meet the capital requirements noted in (a) above; (2) failing to comply with the capital plan noted in (b) above, or (3) any written request from the OTS, Reliance Bank, FSB shall submit a written contingency plan that details actions to be taken to achieve one of the following results (i) merger with, or acquisition by, another federally insured depository institution or holding company thereof; or (ii) voluntary dissolution by filing an appropriate application with the OTS in conformity with applicable laws, regulations, and guidance; (e) submit a new business plan for the second half of 2011, and annually thereafter; (f) prepare and adopt a detailed written plan to reduce the level of criticized assets; (g) not originate, purchase, or commit to originate or purchase any new commercial real estate loans without the prior written nonobjection of the OTS; (h) not increase total assets during any quarter in excess of an amount equal to net interest credited on deposit liabilities during the prior quarter without the prior written notice of nonobjection of the OTS; (i) comply with prior notification requirements for changes in directors and senior executive officers; (j) not declare or pay dividends or make any other capital distributions; (k) not enter into, renew, extend, or revise any contractual agreement relating to compensation or benefits for any senior executive officer or director without prior written notice to the OTS; (l) not make any golden parachute payment or prohibited indemnification payment; (m) not enter into any arrangement or contract with a third-party service provider that is significant to the overall operation or financial condition of Reliance Bank, FSB; (n) prohibit the increase in the dollar amount of brokered deposits; and (o) not engage in any new transaction with an affiliate unless Reliance Bank, FSB has complied with notice requirements. During July 2011, responsibility for the supervision and regulation of federal savings banks was transferred to the Office of the Comptroller of the Currency (OCC) and the OTS no longer exists. The Company's obligations under the OTS Order are to the OCC.

The Company has filed an application with the applicable federal regulatory authorities to merge Reliance Bank, FSB into Reliance Bank under the Missouri banking charter.

Reliance Bank and Reliance Bank, FSB have submitted revised capital plans to the applicable regulators for their approval. The revised plans address efforts to raise additional capital and its timing. Although no capital is guaranteed, the revised plans demonstrate the Company's efforts to raise the additional capital. If the regulators choose not to accept these revised plans, they could revise the current agreements and provide new limitations or require additional reporting in the future.

On March 6, 2010, the Company entered into a Memorandum of Understanding (the Fed MOU) with the Federal Reserve Bank of St. Louis (the Federal Reserve). The Agreement is discussed in detail within the Company's March 31, 2011 Quarterly Report on Form 10-Q, which was filed on May 13, 2011. On July 14, 2011, the Company entered into an agreement (the Fed Agreement) with the Federal Reserve Bank of St. Louis, which superseded the Fed MOU. The Fed Agreement requires the Company to (a) take steps to ensure that the Bank complies with Reliance Bank's Consent Order noted above; (b) not, without the prior written approval of the Federal Reserve, (i) declare or pay any dividends, (ii) receive dividends or any other form of payment from Reliance Bank representing a reduction in capital, (iii) receive dividends or any other form of payment from Reliance Bank, FSB representing a reduction in capital, to the extent that any restriction by Reliance Bank, FSB's federal regulator limiting the payment of dividends or other inter-corporate payments is in force, (iv) incur, increase, or guarantee any debt, or (v) purchase or redeem any shares of its stock; (c) submit to the Federal Reserve an acceptable written plan to maintain sufficient capital at the Company on a consolidated basis; (d) within 30 days after the end of any quarter in which the Company's capital ratios fall below the approved capital plan's minimum ratios, provide the Federal Reserve with a written notice and plan detailing the Registrant's planned steps to increase its capital ratios; (e) submit to the Federal Reserve a written statement of planned sources and uses of cash; (f) comply with notice provisions of laws and regulations regarding the appointment of any new directors or senior executive officers; (g) comply with certain banking laws and regulations restricting indemnification of and severance payments to executives and employees; and (h) submit quarterly progress reports to the Federal Reserve.

While no absolute assurance can be given, management of the Company and Banks believe the necessary actions have been or are being taken toward complying with the provisions of the Consent Order, OTS Order, and Fed Agreement. It is not presently determinable what actions, if any, the banking regulators might take if the provisions of the Consent Order, OTS Order, and Fed Agreement are not complied with within the specific time periods required.

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Suspension of Dividend Payments

(amounts in thousands)

On February 11, 2011, the Company announced that it had suspended dividends on its preferred stock. The Company has outstanding $40,000 of 5% Series A Fixed Rate Cumulative Perpetual Preferred Stock, $2,000 of 9% Series B Fixed Rate Cumulative Preferred Stock, and $555 of 7% Series C Perpetual Convertible Preferred Stock. The Series A and Series B Preferred Stock were issued to the U. S. Treasury under the federal TARP program. The Series C Preferred Stock was issued to various shareholders in a private placement. Deferred dividends totaled $2,847 as of March 31, 2012. The Company does not pay dividends on its common stock.

De-registration of Common Stock

On April 27, 2012, the Company filed a Form 15 with the SEC to terminate the registration of our Class A Common Stock under Section 12(g) of the Exchange Act. The Company is eligible to terminate our registration because of a provision of the recently-signed Jumpstart Our Business Startups Act of 2012 (the JOBS Act) that permits banks and bank holding companies to terminate the registration of a class of securities that is held of record by fewer than 1,200 persons.

Critical Accounting Policies

The impact and any associated risks related to the Company’s critical accounting policies on reporting operations are discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” where such policies affect reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see the Company’s consolidated financial statements as of and for the year ended December 31, 2011 and the related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our most recent Annual Report on Form 10-K, which was filed March 30, 2012. Management believes that there have been no material changes to our critical accounting policies during the first three months of 2012.

Results of Operations for the Three-Month Periods Ended March 31, 2012 and 2011

(Amounts in thousands)

Net Interest Income

The Company’s net interest income decreased $2,316 (24.81%) to $7,019 for the three-month period ended March 31, 2012 from the $9,335 earned during the three-month period ended March 31, 2011. The Company’s net interest margin for the three-month periods ended March 31, 2012 and 2011 was 2.89% and 3.12%, respectively. The reduction in net interest income is primarily due to a planned decline in commercial real estate loan volumes. The Company has realized a positive impact to earnings as a result of reduced deposit costs and enhanced deposit mix. The Company’s average rate on interest-bearing liabilities for the three-month periods ended March 31, 2012 and 2011 was 1.16% and 1.62%, respectively. The Company’s average yield on interest earning assets for the three-month periods ended March 31, 2012 and 2011 was 3.95% and 4.60%, respectively.

Average earning assets for the first three months of 2012decreased $236,234 (19.30%) to $987,775 from the level of $1,224,009 for the first three months of 2011. A significant portion of this decline can be attributed to the decrease in outstanding loan balances. Total average loans for the first three months of 2012decreased $247,426 (26.28%) to $694,091 from the level of $941,517 for the first three months of 2011. The decline is the result of the planned shrinkage of the balance sheet and to lessen the reliance on commercial real estate.

Total average investment securities for the first three months of 2012 decreased $17,242 (7.02%) to $228,323 from the level of $245,565 for the first three months of 2011. The Company uses its investment portfolio to (a) provide support for borrowing arrangements for securities sold under repurchase agreements, (b) provide support for pledging purposes for deposits of governmental and municipal deposits over insured limits, (c) provide support for pledging purposes for borrowing agreements with correspondent banks, the Federal Home Loan Banks, and the Federal Reserve, (d) provide a secondary source of liquidity through “laddered” maturities of such securities, and (e) provide increased interest income over that which would be earned on overnight/daily investments. The total carrying value of securities pledged to secure deposits and repurchase agreements and borrowing capabilities through correspondent banks, the Federal Home Loan Banks, and the Federal Reserve Bank was approximately $145,067 and $147,400 at March 31, 2012 and 2011, respectively.

Average short-term investments can fluctuate significantly from day to day based on a number of factors, including, but not limited to, the collected balances of customer deposits, loan demand, and investment security maturities. Excess funds not invested in loans or investment securities are invested overnight with various unaffiliated financial institutions. The average balances of such short-term investments for the three-month periods ended March 31, 2012 and 2011 were $65,361 and

31

$36,927, respectively.

Total average interest-bearing deposits for the first three months of 2012 were $822,023, a decrease of $191,155 (18.87%) from the level of $1,013,178 for the first three months of 2011. With the decline in loan demand and low rates available on investments, the Banks have reduced their rate sensitive deposits.

The Company’s short-term borrowings consist of overnight funds from unaffiliated financial institutions, securities sold under sweep repurchase agreements with larger deposit customers, and borrowings of Reliance Bancshares, Inc. Average short-term borrowings for the three months ended March 31, 2012 decreased $831 (5.87%) to $13,322 from $14,153 for the three months ended March 31, 2011. Short-term borrowings can fluctuate significantly based on short-term liquidity needs and changes in deposit volumes.

The Company has used longer-term advances to match with longer-term fixed rate assets. The average balance of Federal Home Loan Bank (FHLB) advances decreased $25,409 (27.50%) to $67,000 for the first three months of 2012, compared with $92,409 for the first three months of 2011. The decline is the result of the Company’s efforts to increase core retail deposits and reduce its percentage of wholesale funding.

The overall mix of the Company’s funding sources has a significant impact on the Company’s net interest margin. Following is a summary of the percentage of the various components of average interest-bearing liabilities and noninterest-bearing deposits to the total of all average interest-bearing liabilities and noninterest-bearing deposits (hereinafter described as “total funding sources”) for the three-month periods ended March 31, 2012 and 2011:

	Three months ended
	March 31,
	2012		2011
Average deposits:
Noninterest-bearing	6.37	%	5.26	%
Transaction accounts	21.47		21.85
Savings	23.74		26.58
Time deposits of $100,000 or more	17.31		13.21
Other time deposits	22.78		24.08
Total average interest-bearing deposits	85.30		85.72
Total average deposits	91.67		90.98
Average short-term borrowings	1.38		1.20
Average long-term advances from Federal Home Loan Bank	6.95		7.82
	100.00	%	100.00	%

The overall level of interest rates will also cause fluctuations between categories. The Company has sought to increase the percentage of its noninterest-bearing deposits to total funding sources and increase its percentage of lower cost savings and interest-bearing transaction accounts. Average noninterest-bearing accounts have increased to 6.37% of total funding sources for the three months ended March 31, 2012, compared to 5.26% of total funding sources for the three months ended March 31, 2011. However, interest-bearing transaction, and savings deposits have decreased to 45.21% of total funding sources for the three months ended March 31, 2012, compared to 48.43% of total funding sources for the three months ended March 31, 2011. Higher cost time deposits have increased to 40.09% of total funding sources for the three months ended March 31, 2012 from 37.29% for the three months ended March 31, 2011.

In spite of the change in funding composition noted above, the average rate paid on total interest-bearing liabilities declined from 1.62% to 1.16% for the three months ended March 31, 2012, compared to the same period in 2011. Rates on each category of interest-bearing deposits dropped for the three-month period ended March 31, 2012, compared to the same period in 2011. Given the low rate of interest rates for all deposits, customers are more willing to maintain their accounts in lower-yielding savings accounts with the expectation that rates will eventually increase, rather than locking up their funds in lower-yielding time deposits for any length of time.

Management has placed increased focus on growing lower-cost core transaction deposits by concentrating on overall customer deposit relationships, allowing for a reduction in total deposit pricing and increased customer retention.

The following tables show the condensed average balance sheets for the periods reported and the percentage of each principal

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category of assets, liabilities, and stockholders’ equity to total assets. Also shown is the average yield on each category of interest-earning assets and the average rate paid on each category of interest-bearing liabilities for each of the periods reported.

	Three months ended March 31, 2012
(In thousands of dollars)	Average balance			Percent of total assets		Interest income/expense		Average yield/rate
ASSETS
Loans (1) (2) (3)	$	694,091		66.73	%	$	8,556	4.96	%
Investment securities:
Taxable	214,214			20.59		887		1.67
Exempt from federal income taxes (3)	14,109			1.36		215		6.13
Short-term investments	65,361			6.28		37		0.23
Total earning assets	987,775			94.96		9,695		3.95
Nonearning assets:
Cash and due from banks	6,330			0.61
Reserve for possible loan losses	(32,577		)	(3.13	)
Premises and equipment	33,890			3.26
Other assets	42,798			4.11
Available-for-sale investment market valuation	2,010			0.19
Total nonearning assets	52,451			5.04
Total assets	$	1,040,226		100.00	%
LIABILITIES
Interest-bearing liabilities:
Interest-bearing transaction accounts	$	206,903		19.89	%	251		0.49	%
Savings	228,793			21.99		276		0.49
Time deposits of $100,000 or more	166,815			16.04		565		1.36
Other time deposits	219,512			21.11		879		1.61
Total interest-bearing deposits	822,023			79.03		1,971		0.96
Long-term borrowings	67,000			6.44		598		3.59
Short-term borrowings	13,322			1.28		31		0.94
Total interest-bearing liabilities	902,345			86.75		2,600		1.16
Noninterest-bearing deposits	61,399			5.90
Other liabilities	6,268			0.60
Total liabilities	970,012			93.25
STOCKHOLDERS’ EQUITY	70,214			6.75
Total liabilities and stockholders’ equity	$	1,040,226		100.00	%
Net interest income						$	7,095
Net yield on earning assets								2.89	%

(continued)

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	Three months ended March 31, 2011
(In thousands of dollars)	Average balance			Percent of total assets		Interest income/expense		Average yield/rate
ASSETS
Loans (1) (2) (3)	$	941,517		73.01	%	$	12,080	5.20	%
Investment securities:
Taxable	227,210			17.62		1,516		2.71
Exempt from federal income taxes (3)	18,355			1.42		271		5.99
Short-term investments	36,927			2.86		19		0.21
Total earning assets	1,224,009			94.91		13,886		4.60
Nonearning assets:
Cash and due from banks	4,996			0.39
Reserve for possible loan losses	(39,337		)	(3.05	)
Premises and equipment	37,150			2.88
Other assets	63,009			4.89
Available-for-sale investment market valuation	(195		)	(0.02	)
Total nonearning assets	65,623			5.09
Total assets	$	1,289,632		100.00	%
LIABILITIES
Interest-bearing liabilities:
Interest-bearing transaction accounts	$	258,226		20.02	%	401		0.63	%
Savings	314,190			24.36		645		0.83
Time deposits of $100,000 or more	156,083			12.10		909		2.36
Other time deposits	284,679			22.08		1,613		2.30
Total interest-bearing deposits	1,013,178			78.56		3,568		1.43
Long-term borrowings	92,409			7.17		873		3.83
Short-term borrowings	14,153			1.10		22		0.63
Total interest-bearing liabilities	1,119,740			86.83		4,463		1.62
Noninterest-bearing deposits	62,219			4.82
Other liabilities	3,808			0.30
Total liabilities	1,185,767			91.95
STOCKHOLDERS’ EQUITY	103,865			8.05
Total liabilities and stockholders’ equity	$	1,289,632		100.00	%
Net interest income						$	9,423
Net yield on earning assets								3.12	%

(1) Interest includes loan fees, recorded as discussed in note 1 to our consolidated financial statements for the year ended December 31, 2011, included in our Annual Report on Form 10-K, which was filed March 30, 2012.

(2) Average balances include nonaccrual loans. The income on such loans is included in interest, but is recognized only upon receipt.

(3) Interest yields are presented on a tax-equivalent basis. Nontaxable income has been adjusted upward by the amount of federal income tax that would have been paid if the income had been taxed at a rate of 34%, adjusted downward by the disallowance of the interest cost to carry nontaxable loans and securities.

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The following table sets forth, on a tax-equivalent basis for the periods indicated, a summary of the changes in interest income and interest expense resulting from changes in volume, and changes in yield/rates:

	Amount of increase (decrease)
	First quarter
	Change from 2011 to 2012 due to
(In thousands)	Volume (1)				Yield/rate (2)		Total
Interest income:
Loans	$	(2,998	)		(526	)	(3,524	)
Investment securities:
Taxable	(82		)		(547	)	(629	)
Exempt from federal income taxes	(62		)		6		(56	)
Short-term investments	16			1	2		18
Total interest income	(3,126		)		(1,065	)	(4,191	)
Interest expense:
Interest-bearing transaction accounts	(71		)		(79	)	(150	)
Savings accounts	(147		)		(222	)	(369	)
Time deposits of $100,000 or more	62				(406	)	(344	)
Other time deposits	(318		)		(416	)	(734	)
Total deposits	(474		)		(1,123	)	(1,597	)
Short-term borrowings	(224		)		(51	)	(275	)
Long-term borrowings	(1		)		10		9
Total interest expense	(699		)		(1,164	)	(1,863	)
Net interest income	$	(2,427	)		99		(2,328	)

(1)Change in volume multiplied by yield/rate of prior year.

(2)Change in yield/rate multiplied by volume of prior year.

NOTE: The change in interest due to both rate and volume has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

Provision for Possible Loan Losses

The provision for possible loan losses charged to earnings for the three-month periods ended March 31, 2012 and 2011 was $2,598 and $5,100, respectively. Net charge-offs for the three-month periods ended March 31, 2012 and 2011 totaled $2,103 and $5,359, respectively. At March 31, 2012 and 2011, the reserve for possible loan losses as a percentage of net outstanding loans was 4.75% and 4.12%, respectively. The reserve for possible loan losses as a percentage of nonperforming loans (comprised of loans for which the accrual of interest has been discontinued, loans still accruing interest that were 90 days delinquent, and troubled debt restructurings) was 39.31% and 23.62% at March 31, 2012 and 2011, respectively. Problem loans have declined for the past five consecutive quarters.

Noninterest Income

Total noninterest income for the first three months of 2012, excluding security gains and losses, decreased $77 (10.71%) to $642 from the $719 earned for the first three months of 2011. Income generated from other real estate properties during the first three months of 2012 decreased $74 (34.26%) to $142 from the $216 earned for the first three months of 2011.

Noninterest Expense

Total noninterest expense decreased $3,279 (32.32%) for the first quarter of 2012 to $6,867 from the $10,146 incurred during the first quarter of 2011. Expenses in each category, except data processing expense, were reduced primarily due to cost saving initiatives.

Total personnel costs decreased by $703 (19.40%) to $2,921 for the first quarter of 2012 from the $3,624 incurred in the first quarter of 2011. The decrease is attributed to cost savings initiatives including restructuring of staff and attrition.

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Total other real estate owned expenses for the first quarter of 2012decreased $1,290 (50.83%) to $1,248, as compared with the $2,538 of expenses incurred for the first quarter of 2011. Other real estate owned balances had steadily increased through mid-2011, but have dropped for the past three consecutive quarters. Net losses on sales and write-downs recognized based upon new property valuations for the first quarter of 2012 were $676.

Total occupancy and equipment expenses decreased $151 (14.27%) to $907 for the first quarter of 2012 from the $1,058 incurred in the first quarter of 2011. The Company closed its Houston, Texas and Chandler, Arizona loan production offices as well as a Reliance Bank, FSB branch location. Charges related to these closures were taken during the first quarter of 2011, lowering ongoing occupancy expenses.

FDIC assessment expense for the first quarter of 2012decreased $335 (36.85%) to $574 as compared with the $909 of expenses incurred for the first quarter of 2011. The decline is due to both the Banks' declining balance sheet totals and the FDIC's revision to its general assessment calculation. This revised calculation lowered the assessment rates for both Reliance Bank and Reliance Bank, FSB.

Professional fees for the first quarter of 2012decreased $337 (57.22%) to $252 as compared with the $589 of expenses incurred for the first quarter of 2011. The Company's use of a consulting firm to assist in addressing problem assets was higher during the first quarter of 2011 compared to the same period during 2012.

Other noninterest expenses for the first quarter of 2012decreased $459 (45.72%) to $545, as compared with $1,004 of expenses incurred for the first quarter of 2011. A portion of the decrease is attributed to first quarter 2011 charges related to the announced closure of the Houston, Texas and Chandler, Arizona loan production offices, as well as the closure of a Reliance Bank, FSB branch location.

Income Taxes

Applicable income tax benefits totaled $0 and $0 for the three-month periods ended March 31, 2012 and 2011. In light of the Company’s cumulative losses that have occurred in preceding years, the Company maintains a 100% valuation reserve for its deferred tax assets. In addition, a tax valuation is being applied on tax benefits or expense created since the valuation was established, resulting in the $0 and $0 applicable income tax benefits for the three-month periods ended March 31, 2012 and 2011.

Financial Condition

(Amounts in thousands)

Total assets of the Company increased $10,901 (1.04%) to $1,057,727 at March 31, 2012 from a level of $1,046,826 at December 31, 2011.

Total deposits of the Company decreased $926 (0.10%) in the first three months of 2012 to $885,960 at March 31, 2012 from the level of $886,886 at December 31, 2011. See the "Results of Operations" section of this report for a discussion of changes in deposit composition.

Short-term borrowings at March 31, 2012decreased $413 (2.40%) to $16,830 from the level of $17,243 at December 31, 2011. Short-term borrowings will fluctuate significantly based on short-term liquidity needs and certain seasonal deposit trends. Total longer-term advances from the Federal Home Loan Bank remained consistent at $67,000 for both March 31, 2012 and December 31, 2011. These longer-term fixed rate advances were used as an alternative funding source and are matched up with longer-term fixed rate assets.

Other liabilities increased $13,609 (252.86%) to $18,991 from the level of $5,382 at December 31, 2011. The Company received a payoff of a loan on March 30, 2012, the last business day of the quarter. A portion of the loan was participated with other banks and $13,603 was owed to these banks as of March 31, 2012.

Interest-earning deposits in other financial institutions increased $54,398 (124.20%) to $98,197 from the level of $43,799 at December 31, 2011. Interest-earning deposits in other financial institutions will fluctuate significantly based on short term cash flows, and was elevated at March 31, 2012 due to the loan payoff discussed above.

Net loans decreased $49,780 (7.22%) in the first three months of 2012 to $639,426 at March 31, 2012 from the level of $689,206 at December 31, 2011. The economy and a reduced focus on commercial real estate have lowered the Company’s loan totals.

Investment securities, all of which are maintained as available-for-sale, increased $12,634 (5.69%) in the first three months of 2012 to $234,841 at March 31, 2012 from the level of $222,207 at December 31, 2011. The Company’s investment portfolio growth is dependent upon the level of deposit growth exceeding opportunities to grow the loan portfolio, and the funding

36

requirements of the Company’s loan portfolio, as described above.

Total stockholders’ equity decreased $1,329 (1.91%) in the first three months of 2012 to $68,313 at March 31, 2012 from the level of $69,642 at December 31, 2011 due to changes in unrealized gains (losses) on available for sale securities. The Company’s capital-to-asset percentage was 6.46% at March 31, 2012, compared to 6.65% at December 31, 2011.

Risk Management

(Amounts in thousands)

Management’s objective in structuring the balance sheet is to maximize the return on average assets while minimizing the associated risks. The major risks concerning the Company are credit, liquidity, and interest rate risks. The following is a discussion concerning the Company’s management of these risks.

Credit Risk Management

Managing risks that the Company’s banking subsidiaries assume in providing credit products to customers is extremely important. Credit risk management includes defining an acceptable level of risk and return, establishing appropriate policies and procedures to govern the credit process, and maintaining a thorough portfolio review process.

Of equal importance in the credit risk management process are the ongoing monitoring procedures performed as part of the Company’s loan review process. Credit policies are examined and procedures reviewed for compliance each year. Loan personnel also continually monitor loans after disbursement in an attempt to recognize any deterioration which may occur so that appropriate corrective action can be initiated on a timely basis.

Net charge-offs for the first three months of 2012 were $2,103, compared to $5,359 for the first three months of 2011. The decrease in charge-off levels resulted from the decline in nonperforming loans. The Company’s banking subsidiaries had no loans to any foreign countries at March 31, 2012 and 2011, nor did they have any concentration of loans to any industry on these dates, except that a significant portion of the Company’s loan portfolio is secured by real estate in the St. Louis metropolitan and southwestern Florida areas. The Company has also refrained from financing speculative transactions such as highly leveraged corporate buyouts, or thinly capitalized speculative start-up companies.

Nonperforming assets were $110,543, $139,434, and $203,484 as of March 31, 2012, December 31, 2011, and March 31, 2011, respectively. Nonperforming loans dropped $23,287 (22.32%) to $81,061 at March 31, 2012 compared to $104,348 at December 31, 2011, and declined $75,787 (48.32%) from March 31, 2011. Nonperforming loans as of March 31, 2012, December 31, 2011, and March 31, 2011 were comprised of nonaccrual loans of $70,724, $88,632, and $137,090, respectively, loans 90 days delinquent and still accruing interest of $0, $161, and $221, respectively, and restructured loans (not already included in nonaccrual loans above) totaling $10,337, $15,555, and $19,537, respectively. The Company has taken an aggressive approach toward collection and resolution of such problem credits. Such loans are continually reviewed for impairment as the underlying real estate values have declined, resulting in additional loan charge-offs. Once foreclosure occurs, additional declines in the value of the properties result in other real estate owned write-downs. The Company believes the reserve for loan losses calculation at March 31, 2012 adequately considers the fair value of the underlying collateral on its problem loan portfolio; however, the values of these properties have continued to deteriorate, albeit at a slower pace than in previous years, requiring the additional provision for loan losses. Additional provisions and other real estate write-downs may be required in subsequent quarters if the values of such properties continue to decline.

Nonperforming loans are defined as loans on nonaccrual status, loans 90 days or more past due but still accruing, and restructured loans. Loans are placed on nonaccrual status when contractually past due 90 days or more as to interest or principal payments, unless the loans are well secured and in the process of collection. Additionally, whenever management becomes aware of facts or circumstances that may adversely impact the collectibility of principal or interest on loans, it is management’s practice to place such loans on nonaccrual status immediately, rather than delaying such action until the loans become 90 days past due. Previously accrued and uncollected interest on such loans is reversed, and income is recorded only to the extent that interest payments are subsequently received in cash and a determination has been made that the principal balance of the loan is collectible. If collectibility of the principal is in doubt, payments received are applied to loan principal for financial reporting purposes.

Loans past due 90 days or more but still accruing interest are also included in nonperforming loans. Loans past due 90 days or more but still accruing interest are classified as such when the underlying loans are both well secured (the collateral value is sufficient to cover principal and accrued interest) and are in the process of collection. Also included in nonperforming loans are “restructured” loans. Restructured loans involve the granting of some concession to the borrower involving the modification of terms of the loan, such as changes in payment schedule or interest rate, due to the borrower's financial difficulties.

Nonperforming loans have dropped during the past five quarters from their high at December 31, 2010. At March 31, 2012, nonperforming loans had decreased $23,287 (22.32%) to $81,061 from $104,348 at December 31, 2011, the largest components of which were comprised of the following loan relationships (which comprise approximately 71% of total

37

nonperforming loans):

• A loan for approximately $11.6 million to a commercial real estate developer in Houston, Texas. The loan is secured by undeveloped commercial land. The Company and the borrower are in negotiations to extend a recently expired forbearance agreement. Additionally, the Company expects some of the collateral to be sold to a third party, further diminishing the outstanding balance.

• A loan for approximately $2.2 million to finance the purchase of a retail center in O'Fallon, Missouri. The center is currently experiencing high vacancy in an overdeveloped area. The loan is in default. Three guarantors have settled their obligation and the Company has engaged counsel to pursue collection from the remaining guarantors.

• A loan of approximately $9.5 million on a 61,000 sq. ft. medical office building located in St. Louis County, Missouri. A professional management company is in place to take over day-to-day operations. The Company is currently pursuing its options related to this property.

• Loans for approximately $5.6 million to refinance and provide additional capital to complete phase II of a land development project in St. Charles, Missouri. The development has slowed significantly. The Company has engaged legal counsel to evaluate its options, including pursuit of guarantors for payment.

• Loans totaling approximately $2.3 million for the construction and operation of a full-service car wash in Napa County, California. The plan suffered delays, cost overruns, and lower than expected revenues. The Company is now considering alternatives with this relationship, which could include foreclosure and sale.

• A loan for approximately $7.3 million to a group of investors secured by a retail strip center. The borrower and the Company continue to negotiate terms to maintain the property in the name of the borrower. The current extension gives the borrower through year end to improve occupancy. There has been improved occupancy at this time.

• A loan for approximately $2.0 million to a group of investors secured by a piece of unimproved commercial real estate in southwest Florida. Legal action was initiated against the borrower and all guarantors, but is currently suspended to provide the borrower an opportunity to market the property.

• A loan for approximately $2.4 million secured with a hotel in St. Louis, Missouri. The Company is currently reviewing its options related to this property.

• Loans for approximately $7.3 million for the purchase of four commercial buildings located in St. Louis County and Jefferson County, Missouri. The loans are performing on an interest-only basis.

• A loan for approximately $2.9 million secured by two Florida self-storage facilities located in southwest Florida. While each facility is experiencing vacancies, cash flow is sufficient to keep this loan current. There are several covenant violations and the Company is considering its options to cure these violations.

• A loan for approximately $2.0 million secured by commercial real estate located in suburban St. Louis, Missouri. The Company is currently considering its options which could include foreclosure and suit for deficiency or note sale.

• A loan for approximately $2.4 million secured by commercial real estate located in San Antonio, Texas. The Company is currently considering its options, which could include foreclosure and suit for deficiency or note sale.

During this period of declining real estate values, the Company has sought to add loans to its portfolio with increased collateral margins or excess payment capacity from proven borrowers to enhance the quality of the loan portfolio, yet remaining focused on reducing overall loan balances. Given the collateral values maintained in its loan portfolio, including the nonperforming loans discussed above, the Company believes the reserve for possible loan losses is adequate to absorb losses in the portfolio existing at March 31, 2012. However, should the real estate market continue to decline, the Company may require additional provisions to the reserve for possible loan losses to address such declining collateral values.

The Company also has nonperforming assets in the form of other real estate owned. The Banks maintained other real estate owned totaling $29,021 and $34,565 at March 31, 2012 and December 31, 2011, respectively. Other real estate owned represents property acquired through foreclosure, or deeded to the Banks in lieu of foreclosure for loans on which borrowers have defaulted as to payment of principal and interest. The following table details the activity within other real estate owned

38

since December 31, 2011:

Other Real Estate Owned
(In thousands)
Balance at December 31, 2011	$	34,565
Foreclosures	302
Cash proceeds from sales	(1,332		)
Loans made to facilitate sales of other real estate	(3,838		)
Losses and write-downs	(676		)
Balance at March 31, 2012	$	29,021

Potential Problem Loans

(in thousands of dollars)

As of March 31, 2012, the Company had three loans with a total principal balance of $545 that were identified by management as having possible credit problems that raise doubts as to the ability of the borrower to comply with the current repayment terms, which are not included in nonperforming loans. These loans were continuing to accrue interest and were less than 90 days past due on any scheduled payments. However, various concerns, including, but not limited to, payment history, loan agreement compliance, adequacy of collateral coverage, and borrowers’ overall financial condition caused management to believe that these loans may result in reclassification at some future time as nonaccrual, past due, or restructured. Such loans are not necessarily indicative of future nonperforming loans, as the Company continues to work on resolving issues with both nonperforming and potential problem credits on its watch list.

The Company’s credit management policies and procedures focus on identifying, measuring, and controlling credit exposure. These procedures employ a lender-initiated system of rating credits, which is ratified in the loan approval process and subsequently tested with internal loan review and regulatory bank examinations. The system requires rating all loans at the time they are made, at each renewal date, and as conditions warrant.

Adversely rated credits, including loans requiring close monitoring, are included on a monthly loan watch list. Other loans are added whenever any adverse circumstances are detected, which might affect the borrower’s ability to meet the terms of the loan. This could be initiated by any of the following:

• Delinquency of a scheduled loan payment;

• Deterioration in the borrower’s financial condition identified in a review of periodic financial statements;

• Decrease in the value of collateral securing the loan; or

• Change in the economic environment in which the borrower operates.

Loans on the watch list require periodic detailed loan status reports, including recommended corrective actions, prepared by the responsible loan officer, which are discussed at each monthly loan committee meeting.

Downgrades of loan risk ratings may be initiated by the responsible loan officer, internal loan review, the watch list committee, the loan committee, or senior lending personnel at any time. Upgrades of certain risk ratings may be made only with the concurrence of a majority of the members of the loan committee.

The Company’s loan underwriting policies limit individual loan officers to specific amounts of lending authority, over which various committees must get involved and approve a credit. The Company’s underwriting policies require an analysis of a borrower’s ability to pay the loan and interest on a timely basis in accordance with the loan agreement. Collateral is then considered as a secondary source of payment, should the borrower not be able to pay.

The Company conducts weekly loan committee meetings of all of its loan officers, including the Chief Risk Officer, Chief Lending Officer, Chief Credit Officer, and the Chief Executive Officer. This committee may approve individual credit relationships up to $2,500. Larger credits must go to the loan committee of the Board of Directors, which is comprised of three directors on a rotating basis. The Company’s legal lending limit was $24,833 at March 31, 2012.

At March 31, 2012 and 2011, the reserve for possible loan losses was $31,865 and $37,042, respectively, or 4.75% and 4.12% of net outstanding loans, respectively. The following table summarizes the Company’s loan loss experience for the three-month periods ended March 31, 2012 and 2011. The decrease in the level of the reserve and the increase in the reserve percentage is attributed to a smaller loan portfolio, particularly with a decline in nonperforming loans. However, the economy continues to present challenges to borrowers and it could be likely that others will experience difficulties in meeting obligations.

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	Three-month periods
	ended March 31,
(In thousands)	2012			2011
Average loans outstanding	$	694,091		$	941,517
Reserve at beginning of period	$	31,370		$	37,301
Provision for possible loan losses	2,598			5,100
	33,968			42,401
Charge-offs:
Commercial loans:
Real estate	(2,246		)	(3,351		)
Other	(2		)	(50		)
Real estate:
Construction	(84		)	(3,562		)
Residential	(98		)	(352		)
Consumer	(10		)	(8		)
Total charge-offs	(2,440		)	(7,323		)
Recoveries:
Commercial loans:
Real estate	267			6
Other	8			1
Real estate:
Construction	49			1,945
Residential	6			10
Consumer	7			2
Total recoveries	337			1,964
Reserve at end of period	$	31,865		$	37,042
Net charge-offs to average loans (annualized)	1.22		%	2.31		%
Ending reserve to net outstanding loans at end of period	4.75		%	4.12		%

Loans charged off are subject to continuous review, and specific efforts are taken to achieve maximum recovery of principal, accrued interest, and related expenses.

Since its inception in 1999 through 2009, the Company experienced significant loan growth in the St. Louis metropolitan area and in southwestern Florida, with expansion to that area by the Company in 2005. The southwestern Florida area began experiencing economic distress ahead of most of the country, with the long-booming real estate market in Florida beginning its decline in 2007. As a result, the Company began experiencing an increase in troubled asset situations in 2007 and began increasing its reserve for loan losses accordingly, as the Florida real estate market weakened. After several years of a free-fall decline in Florida real estate values, Company management believes that the Florida real estate market has begun to stabilize at the low valuation levels to which it has dropped during this economic recession. While the Florida real estate market has begun to stabilize, the real estate market in the St. Louis metropolitan area continues to experience stress, albeit at a slower pace in 2012.

While considering the level of nonperforming assets when assessing the appropriate level of the reserve for loan losses at a particular point in time, the Company does not use a preassigned coverage ratio of nonperforming assets. Since a significant percentage of the Company’s loan portfolio is concentrated in commercial and construction real estate, the most significant factor when determining an appropriate level for the reserve for loan losses is a detailed analysis of the individual credit relationships and their potential for loss after considering the value of the underlying real estate collateral. During the past several years (first in Florida and then migrating to the Company’s St. Louis market), the Company has experienced continued declines in collateral values. Company management has assessed that this additional uncertainty has warranted caution in assessing an appropriate level for the reserve for loan losses, and that somewhat greater conservatism is warranted at this time to ensure that the provisions reflect the level of losses inherent within the portfolio at a particular point in time.

The Company risk rates all of the loans in its loan portfolio, using a 1-7 risk rating system, with a “1” - rated credit being a high-quality loan and a “7” - rated credit having some level of loss in the credit. Loan officers are responsible for risk-rating

40

their own credits, including maintaining the risk rating on a current basis. Downgrades are discussed at various management and loan committee meetings. The risk ratings are also subject to an ongoing review by an extensive loan review process performed independently of the loan officers. An adequately controlled risk rating process allows Company management to conclude that the Banks’ watch lists (which include all credits risk-rated “4” or greater) are, for all practical purposes, a complete profile of situations with current loss exposure.

All loans included in the watch lists require separate action plans to be developed to reduce the level of risk inherent in the credit relationship. Based on the information included on the watch list and a review of each individual credit relationship thereon, the Company determines whether a credit is impaired. The Company considers a loan to be impaired when all amounts due — both principal and interest — will not be collected in accordance with the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value (and marketability), and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of shortfall in relation to the principal and interest owed.

When measuring impairment for loans, the expected future cash flows of impaired loans are discounted at the loan’s effective interest rate. Alternatively, impairment is measured by reference to an observable market price, if one exists, or the fair value of collateral for a collateral-dependent loan. However, substantially all of the Company’s presently impaired credit relationships are collateralized by (and derive their ultimate cash flows from) commercial, construction, or residential real estate and, accordingly, virtually all of the Company’s impairment calculations for the present portfolio have been based on the underlying values of the real estate collateral.

The Banks’ watch lists include complete listings of credit relationships that are considered to be impaired, along with an assessment of the estimated impairment loss to be included as specific exposure for impaired loans. Such impairment calculations are based on current (less than six months old) appraisals of the underlying real estate collateral. The Company regularly obtains updated appraisals for all of its impaired credit relationships. As noted above, the continued decline in real estate values experienced by the Company during the past three years has resulted in an increased level of the reserve for loan losses for these specifically identifiable impairment losses.

The sum of all exposure amounts calculated for impaired loans is included in the reserve for loan losses as the specifically identifiable losses portion of the account balance. This is one portion of the reserve for loan losses. The second portion of the reserve for loan losses is a general reserve for all credit relationships not considered to be specifically impaired. This amount is calculated by first calculating the historical charge-off ratio for each of the particular loan categories and then subjectively adjusting these historical ratios for several economic and environmental factors. The adjusted ratio for each loan category is then applied against the nonimpaired loans in that loan category, resulting in a general reserve for that particular loan category. The sum of these general reserve categories, when added to the amount of specifically identified losses on impaired credits, results in the final reserve for loan losses balance for a particular date. The Company follows this process for calculating the reserve for loan losses on a quarterly basis.

In calculating the general portion of the reserve for possible loan losses, the loan categories used are real estate construction, residential real estate, commercial real estate, commercial and industrial, and consumer loans. Through 2009, historical charge-off ratios were calculated on a rolling three-year basis, which resulted in higher reserve levels with the increased levels of charge-offs experienced during the past three years. This was reduced to a rolling two-year historical charge-off ratio in the fourth quarter of 2010. The economic and environmental factors for which adjustments are made to the historical charge-off ratios include the following:

• Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses.

• Changes in international, national, regional, and local economic and business conditions and developments that affect the collectibility of the portfolio, including the condition of various market segments.

• Changes in the nature and volume of the portfolio and in the terms of loans.

• Changes in the experience, ability, and depth of lending management and other relevant staff.

• Changes in the volume and severity of past-due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans.

• Changes in the quality of the Banks’ loan review systems.

• Changes in the value of underlying collateral for collateral-dependent loans.

• The existence and effect of any concentrations of credit, and changes in the level of such concentrations.

41

• The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the Banks’ existing portfolios.

The total reserve for possible loan losses is available to absorb losses from any segment of the portfolio. Management continues to target and maintain the reserve for possible loan losses equal to the allocation methodology outlined above.

In determining an adequate balance in the reserve for possible loan losses, management places its emphasis as follows: evaluation of the loan portfolio with regard to potential future exposure on loans to specific customers and industries; reevaluation of each watch list loan or loan classified by supervisory authorities; and an overall review of the remaining portfolio in light of loan loss experience normally experienced in our banking market. Any problems or loss exposure estimated in these categories is provided for in the total current period reserve.

The perception of risk with respect to particular loans within the portfolio will change over time as a result of the characteristics and performance of those loans, overall economic and market trends, and the actual and expected trends in nonperforming loans.

While the Company has no significant specific industry concentration risk, over 92% of the loan portfolio was dependent on real estate collateral at March 31, 2012, including commercial real estate, residential real estate, and construction and land development loans. The following table details the significant categories of real estate loans as a percentage of total regulatory capital:

	Real estate loan balances as a percentage
	of total regulatory capital
	3/31/2011		12/31/2011		3/31/2012
Construction, land development, and other land loans	89	%	91	%	107	%
Nonfarm nonresidential:
Owner occupied	153	%	115	%	107	%
Nonowner occupied	422	%	436	%	403	%
1- to 4-family closed end loans	51	%	69	%	73	%
Multifamily	107	%	97	%	79	%
Other	23	%	26	%	24	%

Outstanding balances in all real estate loan categories have declined between March 31, 2011 and March 31, 2012. However, total regulatory capital declined at a faster pace than some of the loan category declines, thus resulting in increased percentages noted above.

Liquidity and Capital Resources

(Amounts in thousands)

Liquidity is a measurement of the Banks’ ability to meet the borrowing needs and the deposit withdrawal requirements of their customers. The composition of assets and liabilities is actively managed to maintain the appropriate level of liquidity in the balance sheet. Management is guided by regularly reviewed policies when determining the appropriate portion of total assets which should be comprised of readily marketable assets available to meet conditions that are reasonably expected to occur.

Liquidity is primarily provided to the Banks through earning assets, including federal funds sold and maturities and principal payments in the investment portfolio, all funded through deposits and short-term borrowings. Secondary sources of liquidity available to the Banks include the sale of securities included in the available-for-sale category (with a carrying value of $234,841 at March 31, 2012, of which approximately $145,067 is pledged to secure deposits and repurchase agreements) and borrowing capabilities through correspondent banks, the Federal Home Loan Banks, and the Federal Reserve Bank. Maturing loans also provide liquidity on an ongoing basis. Bank management believes it has the liquidity necessary to meet unexpected deposit withdrawal requirements or increases in loan demand.

The Banks have borrowing capabilities through correspondent banks and the Federal Home Loan Banks of Des Moines and Atlanta. The Banks have federal funds lines of credit totaling $21,000, through correspondent banks, of which $21,000 was available at March 31, 2012. Also, Reliance Bank has a credit line with the Federal Home Loan Bank of Des Moines in the amount of $124,442 and availability under that line was $51,981 at March 31, 2012. Reliance Bank, FSB maintained a credit line with the Federal Home Loan Bank of Atlanta in the amount of $6,880, of which $4,673 was available at March 31, 2012. In addition, Reliance Bank maintained a line of credit with the Federal Reserve Bank of St. Louis in the amount of $28,271, of which $28,271 was available, subject to a collateral and credit review, at March 31, 2012. As of March 31, 2012, the combined availability under these arrangements totaled $105,925. Company management believes it has the liquidity necessary to meet

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unexpected deposit withdrawal requirements or increases in loan demand. However, availability of the funds noted above is subject to the Banks’ maintaining an acceptable rating by their regulators. If the Banks were to become distressed to the point that their regulatory ratings were deemed unacceptable, it could negatively impact the ability of the Banks to borrow the funds.

The Federal Reserve Board established risk-based capital guidelines for bank holding companies, which require bank holding companies to maintain minimum levels of “Tier 1 Capital” and “Total Capital.” Tier 1 Capital consists of common and qualifying preferred stockholders’ equity and minority interests in equity accounts of consolidated subsidiaries, less goodwill and 50% of investments in unconsolidated subsidiaries. Total Capital consists of, in addition to Tier 1 Capital, mandatory convertible debt, preferred stock not qualifying as Tier 1 Capital, subordinated and other qualifying term debt, and a portion of the reserve for loan losses, less the remaining 50% of qualifying Total Capital. Risk-based capital ratios are calculated with reference to risk-weighted assets, which include both on- and off-balance sheet exposures. The minimum required ratio for qualifying Total Capital is 8%, of which at least 4% must consist of Tier 1 Capital.

In addition, Federal Reserve guidelines require bank holding companies to maintain a minimum ratio of Tier 1 Capital to average total assets (net of goodwill) of 3%. The Federal Reserve guidelines state that all of these capital ratios constitute the minimum requirements for the most highly rated banking organizations, and other banking organizations are expected to maintain capital at higher levels.

Also, Reliance Bank and Reliance Bank, FSB are required to maintain additional capital, as described in the Recent Development section above, under Regulatory Agreements.

The actual capital amounts and ratios for the Company, Reliance Bank, and Reliance Bank, FSB at March 31, 2012 are presented in the following table:

					For capital adequacy purposes			To be a well-capitalized bank under prompt corrective action provision
(in thousands of dollars)	Amount		Actual ratio		Amount		Ratio	Amount		Ratio
Total capital (to risk-weighted assets):
Consolidated	$	77,678	10.05	%	$	61,810	≥8.0%	N/A		N/A
Reliance Bank	$	77,369	10.49	%	$	59,030	≥8.0%	$	73,787	≥10.0%
Reliance Bank, FSB	$	3,882	11.04	%	$	2,812	≥8.0%	$	3,516	≥10.0%
Tier 1 capital (to risk-weighted assets):
Consolidated	$	67,744	8.77	%	$	30,905	≥4.0%	N/A		N/A
Reliance Bank	$	67,906	9.20	%	$	29,515	≥4.0%	$	44,272	≥6.0%
Reliance Bank, FSB	$	3,406	9.69	%	$	1,406	≥4.0%	$	2,109	≥6.0%
Tier 1 capital (to average assets):
Consolidated	$	67,744	6.53	%	$	41,523	≥4.0%	N/A		N/A
Reliance Bank	$	67,906	6.98	%	$	38,907	≥4.0%	$	48,634	≥5.0%
Reliance Bank, FSB	$	3,406	5.14	%	$	2,651	≥4.0%	$	3,314	≥5.0%

Federal law provides the federal banking regulators with broad power to take prompt corrective action to resolve the problems of undercapitalized banking institutions. The extent of the regulators’ powers depends on whether the banking institution in question is “well-capitalized,” “adequately-capitalized,” “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized,” which are defined by the regulators as follows:

	Total risk-based ratio		Tier 1 risk-based ratio		Tier 1 leverage ratio
Well-capitalized	10	%	6	%	5	%
Adequately-capitalized	8		4		4
Undercapitalized	<8		<4		<4
Significantly undercapitalized	<6		<3		<3
Critically undercapitalized	*		*		*

* A critically undercapitalized institution is defined as having a tangible equity to total assets ratio of 2% or less.

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Depending upon the capital category to which an institution is assigned, the regulators’ corrective powers include: requiring the submission of a capital restoration plan; placing limits on asset growth and restrictions on activities; requiring the institution to issue additional capital stock (including additional voting stock) or to be acquired; restricting transactions with affiliates; restricting the interest rate the institution may pay on deposits; ordering a new election of directors of the institution; requiring that senior executive officers or directors be dismissed; prohibiting the institution from accepting deposits from correspondent banks; requiring the institution to divest certain subsidiaries; prohibiting the payment of principal or interest on subordinated debt; and ultimately, appointing a receiver of the institution. The capital category of an institution also determines in part the amount of the premium assessed against the institution for FDIC insurance.

Contractual Obligations and Contingent Liabilities

Through the normal course of operations, the Banks have entered into certain contractual obligations. Such obligations relate to funding of operations through deposits or debt issuances, as well as leases for premises and equipment.

The required contractual obligations and other commitments at March 31, 2012 are as follows:

(In thousands)	Total cash commitment		Less than 1 year	Over 1 year less than 5 years	Over 5 years
Operating leases	$	6,296	503	1,793	4,000
Time deposits	377,604		228,246	148,596	762
Federal Home Loan Bank borrowings	67,000		5,000	10,000	52,000

Off-Balance Sheet Arrangements

The Banks issue financial instruments with off-balance sheet risk in the normal course of the business of meeting the financing needs of their customers. These financial instruments include commitments to extend credit and standby letters of credit and may involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the balance sheets. The contractual amounts of those instruments reflect the extent of involvement the Banks have in particular classes of these financial instruments. A significant portion of commitments to extend credit may expire without being drawn upon.

The Banks’ exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Banks use the same credit policies in making commitments and conditional obligations as they do for financial instruments included on the balance sheets.

Following is a summary of the Banks’ off-balance sheet financial instruments at March 31, 2012:

(In thousands)	Total cash commitment		Less than 1 year	Over 1 year less than 5 years	Over 5 years
Commitments to extend credit	$	47,301	15,224	14,646	17,431
Standby letters of credit	11,277		9,797	1,480	—

Impact of New and Not Yet Adopted Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board (FASB) issued ASU No. 2011-11 “Disclosures About Offsetting Assets and Liabilities”. The ASU amends Topic 210 by requiring additional improved information to be disclosed regarding financial instruments and derivatives instruments that are offset in accordance with the conditions under ASC 210-20-45 or ASC 810-10-45 or subject to an enforceable master netting arrangement or similar agreement. The amendments are effective for annual and interim reporting periods beginning on or after January 1, 2013. The disclosures required by the amendments should be applied retrospectively for all comparative periods presented. The Company is evaluating the impact of adopting this updated guidance.

Part I — Item 3 — Quantitative and Qualitative Disclosures About Market Risk

Management of rate-sensitive earning assets and interest-bearing liabilities remains a key to the Company’s profitability. The Company’s operations are subject to risk resulting from interest rate fluctuations to the extent that there is a difference between the amount of the Company’s interest-earning assets and the amount of interest-bearing liabilities that are prepaid or withdrawn, mature, or are repriced in specified periods. The principal objective of the Company’s asset/liability management activities is to provide maximum levels of net interest income while maintaining acceptable levels of interest rate and liquidity risk and facilitating the funding needs of the Company. The Banks utilize gap analyses as the primary quantitative tool in measuring the amount of interest rate risk that is present at the end of each quarter. Reliance Bank management also monitors,

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on a quarterly basis, the variability of earnings and fair value of equity in various interest rate environments. Bank management evaluates the Banks’ risk position to determine whether the level of exposure is significant enough to hedge a potential decline in earnings and value or whether the Banks can safely increase risk to enhance returns.

The asset/liability management process, which involves structuring the balance sheet to allow approximately equal amounts of assets and liabilities to reprice at the same time, is a dynamic process essential to minimize the effect of fluctuating interest rates on net interest income. The following table reflects the Company’s interest rate gap (rate-sensitive assets minus rate-sensitive liabilities) analysis as of March 31, 2012, individually and cumulatively, through various time horizons:

	Remaining maturity if fixed rate;
	earliest possible repricing interval if floating rate
(In thousands)	3 months or less			Over 3 months through 12 months		Over 1 year through 5 years	Over 5 years	Total
Interest-earning assets:
Loans	$	242,316		136,254		263,643	29,052	671,265
Residential mortgage loans held for sale	15			45		317	518	895
Investment securities, at amortized cost	29,327			31,038		107,726	66,881	234,972
Other interest-earnings assets	98,197			—		—	—	98,197
Total interest-earning assets	$	369,855		167,337		371,686	96,451	1,005,329
Interest-bearing liabilities:
Savings and interest-bearing transaction accounts	$	442,161		—		—	—	442,161
Time certificates of deposit of $100,000 or more	30,404			61,279		77,715	197	169,595
All other time deposits	47,875			88,688		70,881	565	208,009
Nondeposit interest-bearing liabilities	12,030			9,450		10,000	52,350	83,830
Total interest-bearing liabilities	$	532,470		159,417		158,596	53,112	903,595
Gap by period	$	(162,615	)	7,920		213,090	43,339	101,734
Cumulative gap	$	(162,615	)	(154,695	)	58,395	101,734	101,734
Ratio of interest-sensitive assets to interest-sensitive liabilities	0.69			1.05		2.34	1.82	1.11
Cumulative ratio of interest-sensitive assets to interest-sensitive liabilities	0.69			0.78		1.07	1.11	1.11

A gap report is used by Bank management to review any significant mismatch between the repricing points of the Banks’ rate-sensitive assets and liabilities in certain time horizons. A negative gap indicates that more liabilities reprice in that particular time frame and, if rates rise, these liabilities will reprice faster than the assets. A positive gap would indicate the opposite. Management has set policy limits specifying acceptable levels of interest rate risk as measured by the gap report. Gap reports can be misleading in that they capture only the repricing timing within the balance sheet and fail to capture other significant risks such as basis risk and embedded options risk. Basis risk involves the potential for the spread relationship between rates to change under different rate environments, and embedded options risk relates to the potential for the divergence from expectations in the level and/or timing of cash flows given changes in rates. As indicated in the above table, the Company operates on a short-term basis similar to most other financial institutions, as its liabilities, with savings and interest-bearing transaction accounts included, could reprice more quickly than its assets. However, the process of asset/liability management in a financial institution is dynamic. Bank management believes its current asset/liability management program will allow adequate reaction time for trends in the marketplace as they occur, allowing maintenance of adequate net interest margins.

Bank management also uses fair market value of equity analyses to help identify longer-term risk that may reside on the current balance sheet. The fair market value of equity is represented by the present value of all future income streams generated by the current balance sheet. The Company measures the fair market value of equity as the net present value of all asset and liability

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cash flows discounted at forward rates suggested by the current U.S. treasury curve plus appropriate credit spreads. This representation of the change in the fair market value of equity under different rate scenarios gives insight into the magnitude of risk to future earnings due to rate changes. Management has set policy limits relating to declines in the market value of equity. The results of these analyses at March 31, 2012 indicate that the Company’s fair market value of equity would decrease 11.45% and 8.64%, from an immediate and sustained parallel decrease in interest rates of 100 and 200 basis points, respectively, and increase 9.04% and 12.69%, from a corresponding increase in interest rates of 100 and 200 basis points, respectively.

Part I — Item 4 — Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company’s Chief Executive Officer and the Interim Chief Financial Officer, management has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and concluded that the Company’s disclosure controls and procedures were adequate and effective as of March 31, 2012.

Changes in Internal Control Over Financial Reporting

There were no changes during the period covered by this Quarterly Report on Form 10-Q in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

PART II — OTHER INFORMATION

Part II — Item 1 — Legal Proceedings

The Company and its subsidiaries are, from time to time, parties to various legal proceedings arising out of their businesses. Management believes that there are no such proceedings pending or threatened against the Company or its subsidiaries which, if determined adversely, would have a material adverse effect on the business, financial condition, results of operations, or cash flows of the Company or any of its subsidiaries.

Part II — Item 1A — Risk Factors

We are in the process of deregistering our common stock with the SEC. We expect our SEC reporting requirements to be reduced and eventually eliminated as a result of this process.

On April 27, 2012, we filed a Form 15 with the SEC to terminate the registration of our Class A Common Stock under Section 12(g) of the Exchange Act. We are eligible to terminate our registration because of a provision of the recently-signed Jumpstart Our Business Startups Act of 2012 (the JOBS Act) that permits banks and bank holding companies to terminate the registration of a class of securities that is held of record by fewer than 1,200 persons. We expect that deregistration will reduce and eventually result in the elimination of our obligation to make reports to the SEC, and that within the next twelve months we will become a private company.

Our stockholders can expect a reduced level of SEC disclosure over the coming months, and we expect all of our remaining reporting obligations (including the obligation to file periodic reports on Forms 10-K, 10-Q and 8-K) to cease within the next twelve months. The reduction and elimination of our SEC reporting obligations may lower our compliance-related costs, but stockholders should be aware that their access to information about us also may be reduced, along with their ability to rely on the protections afforded by certain requirements that the SEC imposes on public companies.

There have not been any other material changes in the risk factors as disclosed in the Company’s annual report in Form 10-K for the year ended December 31, 2011.

Part II — Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds

None.

Part II — Item 3 — Defaults Upon Senior Securities

None.

Part II — Item 4 — Mine Safety Disclosures

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None.

Part II — Item 5 — Other Information

(a) None.

(b) There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors implemented during the period covered by this Quarterly Report on Form 10-Q.

Part II — Item 6 — Exhibits

Exhibit
number	Description
31.1	Chief Executive Officer’s Certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Chief Financial Officer’s Certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Chief Executive Officer's Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Chief Financial Officer's Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RELIANCE BANCSHARES, INC.
By:	/s/ Allan D. Ivie, IV
	Allan D. Ivie, IV
	Chief Executive Officer
By:	/s/ David P. Franke
	David P. Franke
	Interim Chief Financial Officer

Date: May 15, 2012

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