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Oak Ridge Financial Services, Inc. Announces Record First Quarter 2021 Results, increase in Quarterly Cash Dividend to $0.07 Per Share

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OAK RIDGE, N.C., May 10, 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 first three months of 2021, and an increase in its quarterly cash dividend to $0.07.

First Quarter 2021 Highlights

  • Record earnings per share of $0.77 for the three months ended March 31, 2021, up 70 cents from the comparable 2020 period;

  • Record annualized return on average common stockholders’ equity of 18.45% for the three months ended March 31, 2021, compared to 1.68% for the same period in 2020;

  • Tangible book value per common share of $17.24 as of March 31, 2021, up 13.3%, or $2.02, from $15.22 as of March 31, 2020;

  • As of March 31, 2021, forgave and recognized remaining unamortized fees and associated costs of approximately 45% on the $50.1 million of first round of Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans;

  • As of March 31, 2021, the Bank funded 353 Round 2 PPP loans totaling $27.8 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 $463.0 million, up 2.8% (11.2% annualized) from December 31, 2020;

  • Outstanding balance of loans granted deferrals of principal and/or interest payments in response to COVID-19 of $1.6 million (0.40% of total loans) as of March 31, 2021, down from a peak of $133.7 million (29.2% of loans);

  • Period end allowance for loan losses of $5.3 million, down 3.8%, from $5.5 million at December 31, 2020;

  • Nonperforming assets of $3.6 million, up 2.9% from $3.5 million at December 31, 2020;

  • Period end deposits of $492.6 million, up 8.1% from December 31, 2020;

  • Opened the Bank’s fifth bank branch in High Point, NC in February of 2021.

Tom Wayne, Chief Executive Officer and Chief Financial Officer, reported, “I am extremely pleased with our record performance in the first quarter of 2021, and very proud of our Bank’s support of the local community through our continued participation in the PPP program. Loans in deferral peaked at 29% of total loans in the second quarter of 2020 and have since fallen to 0.40% of total loans at March 31, 2021, a very positive sign. While it remains difficult to accurately predict the next few quarters and the impact of COVID-19 on our local and national economy, I am thankful to have our experienced team of bankers and a supportive board of directors as we address future challenges and opportunities.”

The Company also announced a $0.01 increase in its quarterly cash dividend to $0.07 per share of common stock. The dividend is payable on June 10, 2021 to stockholders of record as of the close of business on May 25, 2021. “We are pleased to increase our 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 March 31, 2021 the Bank’s CBLR was 9.56%, up from 9.22% at December 31, 2021. As of March 31, 2021, the Company’s stockholders’ equity was $45.9 million, up 3.1%, from $44.5 million at December 31, 2020.

With respect to the consolidated statement of operations for the first three months of 2021, net interest income was $5.6 million in 2021, up $1.6 million, or 40.0%, from $4.0 million for the first quarter of 2020.

The Company recorded a negative provision for loan losses of $112,000 million in the first three months 2021, compared with a loan loss provision of $1.1 million in the same period of 2020. The allowance for loan losses as a percentage of total loans was 1.21% at December 31, 2021 compared to 0.90% at December 31, 2020. The Company increased the allowance for loan losses in 2020, largely due to increase in the qualitative factors in the Company’s allowance for loan loss model due to the deteriorating economic outlook related to COVID-19. Nonperforming assets represented 0.62% of total assets as of March 31, 2021, down slightly from 0.64% at December 31, 2020.

Noninterest income totaled $671,000 in the first three months of 2021, unchanged from the same period in 2020. Noninterest expense totaled $3.7 million in the first three months in 2021, up slightly from $3.3 million in the same period in 2020.

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 of 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 March 31, 2021 (Unaudited) and December 31, 2020 (Audited)

2021

2020

Assets

Cash and due from banks

$

8,624

$

9,354

Interest-bearing deposits with banks

37,628

11,994

Total cash and cash equivalents

46,252

21,348

Securities available-for-sale

45,153

46,357

Securities held-to-maturity

529

564

Restricted stock, at cost

1,525

1,806

Loans, net of allowance for loan losses of $5,250 at period end 2021 and $5,458 at year end 2020

457,734

445,127

Property and equipment, net

10,504

10,632

Accrued interest receivable

2,075

2,412

Bank owned life insurance

5,951

5,930

Right-of-use assets – operating leases

1,893

1,990

Other assets

5,137

4,464

Total assets

$

576,573

$

540,630

Liabilities and Stockholders’ Equity

Liabilities

Deposits:

Noninterest-bearing

$

110,904

$

94,227

Interest-bearing

381,650

361,510

Total deposits

492,554

455,737

Short-term borrowings

5,000

8,000

Long-term borrowings

886

952

Junior subordinated notes related to trust preferred securities

8,248

8,248

Subordinated debentures

15,476

15,484

Lease liabilities – operating leases

1,892

1,990

Accrued interest payable

293

140

Other liabilities

6,528

5,604

Total liabilities

530,877

496,155

Stockholders’ equity

Common stock, no par value; 50,000,000 shares authorized; 2,675,500 issued and outstanding at period end 2021 and 2,639,345 at year end 2020

25,153

25,013

Retained earnings

17,669

15,771

Accumulated other comprehensive income

3,054

3,691

Total stockholders’ equity

45,875

44,475

Total liabilities and stockholders’ equity

$

576,573

$

540,630


Oak Ridge Financial Services, Inc.
Consolidated Statements of Income
Three months ended March 31, 2021 and 2020 (Unaudited)
(Dollars in thousands except per share data)

2021

2020

Interest and dividend income

Loans and fees on loans

$

5,874

$

4,924

Interest on deposits in banks

24

65

Restricted stock dividends

20

16

Taxable investment securities

336

298

Total interest and dividend income

6,254

5,303

Interest expense

Deposits

375

1,060

Short-term and long-term debt

321

274

Total interest expense

696

1,333

Net interest income

5,558

3,969

Provision for (recovery of) loan losses

(112

)

1,140

Net interest income after provision for loan losses

5,670

2,829

Noninterest income

Service charges on deposit accounts

135

181

Brokerage commissions on mortgage loans

77

82

Insurance commissions

121

84

Gain on sale of SBA loans

-

-

Debit and credit card interchange income

254

243

Income earned on bank owned life insurance

21

24

Other service charges and fees

63

59

Total noninterest income

671

673

Noninterest expense

Salaries

1,853

1,546

Employee benefits

294

272

Occupancy

286

236

Equipment

277

245

Data and item processing

446

512

Professional and advertising

157

166

Stationary and supplies

39

34

Net cost of foreclosed assets

-

5

Impairment loss on securities

10

-

Telecommunications

95

77

FDIC assessment

58

13

Other expense

229

228

Total noninterest expense

3,744

3,334

Income before income taxes

2,597

168

Income tax expense (benefit)

542

(4

)

Net income and income available to common stockholders

$

2,055

$

172

Basic income per common share

$

0.77

$

0.07

Diluted income per common share

$

0.77

$

0.07

Basic weighted average shares outstanding

2,675,500

2,635,135

Diluted weighted average shares outstanding

2,675,500

2,644,434


Selected Financial Data

March 31, 2021

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

December 31, 2019

Return on average common stockholders' equity1

18.45

%

9.17

%

8.50

%

11.66

%

1.68

%

10.23

%

Tangible book value per share

$

17.24

$

16.86

$

16.36

$

15.98

$

15.22

$

15.36

Return on average assets1

1.49

%

0.73

%

0.64

%

0.92

%

0.14

%

0.86

%

Net interest margin1

4.26

%

3.57

%

3.42

%

3.50

%

3.49

%

3.57

%

Net interest income to average assets1

4.03

%

3.32

%

3.27

%

3.34

%

3.32

%

3.37

%

Efficiency ratio

59.94

%

67.64

%

68.67

%

62.79

%

71.82

%

74.53

%

Nonperforming assets to total assets

0.62

%

0.64

%

0.64

%

0.65

%

0.78

%

0.81

%

1Annualized