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Oak Ridge Financial Services, Inc. Announces Second Quarter 2021 Results

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OAK RIDGE, N.C., July 27, 2021 (GLOBE NEWSWIRE) -- Oak Ridge Financial Services, Inc. (“Oak Ridge”; or the “Company”) (OTCPink: BKOR), the parent company of Bank of Oak Ridge (the “Bank”), announced unaudited financial results for the three and six months ended June 30, 2021.

Second Quarter 2021 Highlights

  • Basic and diluted earnings per share of $0.65 for the three months ended June 30, 2021, up 20 cents, or 44.4%, from the comparable 2020 period;

  • Annualized return on average common stockholders’ equity of 14.71% for the three months ended June 30, 2021, compared to 11.61% for the same period in 2020;

  • Tangible book value per common share of $17.93 as of June 30, 2021, up 12.2%, or $1.95, from $15.98 as of June 30, 2020;

  • Through June 30, 2021, forgave and recognized remaining unamortized fees and associated costs of approximately 68% on the $50.1 million of first round of Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans;

  • Through the six months ending June 30, 2021, the Bank funded 418 Round 2 PPP loans totaling $28.4 million, the associated fees and origination costs will be recognized as interest income and expense, respectively, over the life of the PPP loans;

  • Period end loans of $447.3 million, down 0.73% (1.46% annualized), or $3.3 million from $450.6 million as of December 31, 2020;

  • Period end allowance for loan losses of $4.5 million, down 16.8%, from $5.5 million on December 31, 2020;

  • Nonperforming assets of $3.1 million, down 9.2% from $3.5 million on December 31, 2020;

  • Period end deposits of $495.2 million, up 8.7%, or $39.5 million from $455.7 million as of December 31, 2020.

  • Through the six months ending June 30, 2021, the Bank retired $8 million in short term borrowings and $5.6 million in subordinated debentures.

  • Named to American Banker magazine’s Top 200 Publicly Traded Community Banks and Thrifts. The ranking is based on a company’s three-year average return on average equity (ROAE) through December 31, 2020. This is the fifth consecutive year the Company has been named to the prestigious list.

Tom Wayne, Chief Executive Officer and Chief Financial Officer, reported, “I am extremely pleased with our strong performance in the second quarter of 2021, and very proud of our Bank’s support of the local community through our continued participation in the PPP program in 2021. I am thankful to have our experienced team of bankers and a supportive board of directors as we address future challenges and opportunities.”

A quarterly cash dividend of $0.07 per share of common stock is payable on September 3, 2021 to stockholders of record as of the close of business on August 20, 2021. “We are pleased to pay another quarterly cash dividend to our stockholders,” said Mr. Wayne. “Paying stockholders a portion of our earnings reflects our continuing commitment to enhance stockholder value.”

The Bank adopted the 9% community bank leverage ratio (“CBLR”) requirement as of June 30, 2020. As of June 30, 2021, the Bank’s CBLR was 9.53%, up from 9.37% on December 31, 2020. As of June 30, 2021, the Company’s stockholders’ equity was $47.9 million, up 7.7%, from $44.5 million on December 31, 2020.

With respect to the consolidated statement of operations for the three months ended June 30, 2021, net interest income was $5.1 million, compared to $4.4 million during the same period in 2020. For the three months ended June 30, 2021, the net interest margin was 3.79% compared to 3.60% for the same period in 2020, an increase of 19 basis points. For the six months ended June 30, 2021, net interest income was $10.7 million, compared to $8.4 million during the same period in 2020. The net interest margin was 4.02% for the six months ended June 30, 2021, compared to 3.58% for the same period in 2020, an increase of 44 basis points.

The Company recorded no provision for loan losses for the three months ended June 30, 2021, compared to a provision of $489,000 for the same period in 2020. For the six months ended June 30, 2021, the Company recorded a negative provision of $112,000 compared with a provision of $1.6 million for the same period in 2020. The allowance for loan losses as a percentage of total loans was 1.02% on June 30, 2021, compared to 1.21% on December 31, 2020. The allowance for loan losses as a percentage of total loans not including PPP loans was 1.13% on June 30, 2021, compared to 1.35% as of December 31, 2020. The decrease in the allowance for loan losses in 2021 was largely the result of the Company decreasing the qualitative factors in its allowance for loan loss model due to the improving overall economic outlook and specifically related to the economic effects COVID-19. Nonperforming assets represented 0.55% of total assets on June 30, 2021, compared to 0.64% on December 31, 2020.

Noninterest income totaled $659,000 for the three months ended June 30, 2021, compared with $946,000 for the same period in 2020, a decrease of $287,000 or 30.3%. The biggest contributor to the decrease was a gain on sale of SBA loans (not PPP loans) of $261,000 in the second quarter of 2020 and no such gains in the comparable period in 2021. Noninterest income totaled $1.3 million for the six months ended June 30, 2021, compared with $1.6 million for the same period in 2020, a decrease of $290,000 or 17.9%. The biggest contributor to the decrease was the above-mentioned sale of SBA loans in the comparable period in 2020.

Noninterest expense totaled $3.6 million in the three months ended June 30, 2021, an increase of $263,000, or 7.8%, from the same period in 2020. The increase was driven by higher employee salaries which increased by $296,000 compared to the prior period. Annual merit increases effective January 1, 2021, higher 2021 incentive payments, and higher 2020 deferred loan origination expense contributed to the increase in salaries. Noninterest expense totaled $7.4 million in the six months ended June 30, 2021, an increase of $672,000, or 10.0%, from 2020. The increase was driven by higher employee salaries which increased by $602,000 compared to the prior period. Annual merit increases effective January 1, 2021, higher 2021 incentive payments, and higher 2020 deferred loan origination expense contributed to the salary increase.

About Oak Ridge Financial Services, Inc.
Oak Ridge Financial Services, Inc. (OTCPink: BKOR) is the holding company for Bank of Oak Ridge. Bank of Oak Ridge delivers personal attention and convenience for every client. Substantially all the Bank’s employees are stockholders in Oak Ridge Financial Services, Inc. through their participation in the Bank’s Employee Stock Ownership Plan. We are proud of our many accolades and awards, including seven “Best Bank in the Triad” wins, “Triad’s Top Workplace” finalist, “Triad’s Healthiest Employer” winner and a 2016 Better Business Bureau “Torch Award” winner. We offer a complete range of banking services for individuals and businesses. Bank of Oak Ridge is a member of the FDIC and an Equal Housing Lender.

Banking Services | ATM Usage Worldwide | Mobile Banking | Online Billpay | Remote and Mobile Deposit | Checking | Savings | Mortgage | Insurance | Lending | Wealth Management

Visit Us | To learn more, visit us during our extended weekday and Saturday hours at one of our convenient locations in Greensboro, High Point, Summerfield and Oak Ridge, North Carolina, or call 336.644.9944, or online at www.BankofOakRidge.com.

Forward-looking Information
This earnings release contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Company. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management of the Company and on the information available to management at the time that these disclosures were prepared. These statements can be identified by the use of words like “expect,” “anticipate,” “estimate” and “believe,” variations of these words and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, (1) competition in the Company’s markets, (2) changes in the interest rate environment, (3) general national, regional or local economic conditions may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and the possible impairment of collectability of loans, (4) legislative or regulatory changes, including changes in accounting standards, (5) significant changes in the federal and state legal and regulatory environment and tax laws, and (6) the impact of changes in monetary and fiscal policies, laws, rules and regulations. The Company undertakes no obligation to update any forward-looking statements.

Oak Ridge Financial Services, Inc.
Consolidated Balance Sheets
As of June 30, 2021 (Unaudited) and December 31, 2020 (Audited)

2021

2020

Assets

Cash and due from banks

$

11,047

$

9,354

Interest-bearing deposits with banks

41,168

11,994

Total cash and cash equivalents

52,215

21,348

Securities available-for-sale

46,852

46,357

Securities held-to-maturity

480

564

Restricted stock, at cost

1,313

1,806

Loans, net of allowance for loan losses of $4,544 at period end 2021 and $5,458 at year end 2020

442,764

445,127

Property and equipment, net

10,367

10,632

Accrued interest receivable

2,061

2,412

Bank owned life insurance

5,972

5,930

Right-of-use assets – operating leases

1,795

1,990

Other assets

5,519

4,464

Total assets

$

569,338

$

540,630

Liabilities and Stockholders’ Equity

Liabilities

Deposits:

Noninterest-bearing

$

114,061

$

94,227

Interest-bearing

381,165

361,510

Total deposits

495,226

455,737

Short-term borrowings

-

8,000

Long-term borrowings

816

952

Junior subordinated notes related to trust preferred securities

8,248

8,248

Subordinated debentures

9,843

15,484

Lease liabilities – operating leases

1,795

1,990

Accrued interest payable

121

140

Other liabilities

5,380

5,604

Total liabilities

521,429

496,155

Stockholders’ equity

Common stock, no par value; 50,000,000 shares authorized; 2,672,620 issued and outstanding at period end 2021 and 2,639,345 at year end 2020

25,261

25,013

Retained earnings

19,201

15,771

Accumulated other comprehensive income

3,447

3,691

Total stockholders’ equity

47,909

44,475

Total liabilities and stockholders’ equity

$

569,338

$

540,630

Oak Ridge Financial Services, Inc.
Consolidated Statements of Income
Six and three months ended June 30, 2021 and 2020 (Unaudited)
(Dollars in thousands except per share data)

Three months ended June 30,

Six months ended June 30,

2021

2020

2021

2020

Interest and dividend income

Loans and fees on loans

$

5,440

$

5,221

$

11,316

$

10,145

Interest on deposits in banks

7

3

10

68

Restricted stock dividends

20

25

40

41

Taxable investment securities

328

317

684

615

Total interest and dividend income

5,795

5,566

12,050

10,869

Interest expense

Deposits

342

854

723

1,914

Short-term and long-term debt

330

265

646

538

Total interest expense

672

1,119

1,369

2,452

Net interest income

5,123

4,447

10,681

8,417

Provision for (recovery of) loan losses

-

489

(112)

1,629

Net interest income after provision for loan losses

5,123

3,958

10,793

6,788

Noninterest income

Service charges on deposit accounts

120

128

254

309

Brokerage commissions on mortgage loans

55

116

132

198

Insurance commissions

88

88

208

172

Gain on sale of SBA loans

-

261

-

261

Debit and credit card interchange income

293

278

547

521

Income earned on bank owned life insurance

21

23

42

47

Other service charges and fees

82

52

146

111

Total noninterest income

659

946

1,329

1,619

Noninterest expense

Salaries

1,637

1,341

3,490

2,888

Employee benefits

271

229

565

501

Occupancy

243

217

530

452

Equipment

268

248

545

493

Data and item processing

429

581

875

1,093

Professional and advertising

271

148

428

314

Stationary and supplies

58

19

97

52

Net cost of foreclosed assets

-

-

-

-

Impairment loss on securities

18

22

28

22

Telecommunications

96

104

190

182

FDIC assessment

36

74

94

87

Other expense

322

403

550

636

Total noninterest expense

3,649

3,386

7,392

6,720

Income before income taxes

2,133

1,518

4,730

1,687

Income tax expense

413

317

955

314

Net income and income available to common stockholders

$

1,720

$

1,201

$

3,775

$

1,373

Basic income per common share

$

0.65

$

0.45

$

1.43

$

0.52

Diluted income per common share

$

0.65

$

0.45

$

1.43

$

0.52

Basic weighted average shares outstanding

2,643,503

2,644,388

2,648,089

2,639,787

Diluted weighted average shares outstanding

2,643,503

2,652,469

2,648,089

2,648,468


Selected Financial Data

June 30,
2021

March 31,
2021

December 31,
2020

September
30, 2020

June 30,
2020

March 31,
2020

Return on average common stockholders' equity1

14.71

%

18.45

%

9.17

%

8.50

%

11.61

%

1.68

%

Tangible book value per share

$

17.93

$

17.24

$

16.86

$

16.36

$

15.98

$

15.22

Return on average assets1

1.20

%

1.49

%

0.73

%

0.64

%

0.92

%

0.14

%

Net interest margin1

3.79

%

4.26

%

3.57

%

3.42

%

3.60

%

3.49

%

Net interest income to average assets1

3.67

%

4.03

%

3.32

%

3.27

%

3.41

%

3.32

%

Efficiency ratio

62.80

%

59.94

%

67.64

%

68.67

%

62.79

%

71.82

%

Nonperforming assets to total assets

0.55

%

0.62

%

0.64

%

0.64

%

0.65

%

0.78

%

1Annualized

Contact: Tom Wayne, CEO and CFO
Phone: 336-644-9944


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