OAK RIDGE, N.C., Aug. 03, 2020 (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 second quarter of 2020 and a quarterly cash common dividend of $0.06 per share.

Second Quarter 2020 Highlights

  • Basic and diluted earnings per share of $0.45 for the three months ended June 30, 2020, up $0.07, or 18.4%, from $0.38 for the same period in 2019
  • Return on average common stockholders’ equity of 11.61% (annualized) for the three months ended June 30, 2020, compared to 10.75% (annualized) for the same period in 2019
  • Period end loans net of outstanding Small Business Administration (“SBA”) Payroll Protection Program (“PPP”) loans of $405.3 million, up 4.2% (8.4% annualized) from December 31, 2019
  • Period end loans of $452.3 million, up 16.3% (32.7% annualized) from December 31, 2019
  • Through July 31, 2020, the Bank has funded 587 PPP loans totaling $49.6 million, and had collected fees from the SBA of $1.96 million; these fees will be recognized as interest income over the life of the PPP loans
  • Proactively deferred $133.0 million in loans as of June 30, 2020 in response to COVID-19
  • Loan loss provisions through the six months ended June 30, 2020 were $1.6 million, up from $185,000 for the same period in 2019, most of the 2020 loan loss provisions are related to the potential adverse economic impact of the COVID-19 pandemic
  • Period end deposits of $463.0 million, up 16.3% (32.8% annualized) from December 31, 2019
  • Period end noninterest-bearing deposits of $101.9 million, up 58.3% (117.3% annualized) from December 31, 2019
  • On June 4, 2020, the Company completed a private placement of $10 million of subordinated notes to certain qualified institutional and other accredited investors. The Company intends to use the net proceeds for general corporate purposes, including possible repayment of the currently outstanding subordinated debt which is callable in 2021
  • Nonperforming assets of $3.6 million, down 7.7% from December 31, 2019
  • On April 27, 2020, the Bank became a member bank of the Federal Reserve System through the Federal Reserve Bank of Richmond
  • 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, 2019. The Company came in at #90, up 20 spots from last year. This is the fourth consecutive year the Company has been named to the prestigious list.

Tom Wayne, Chief Executive Officer and Chief Financial Officer, reported, “In the midst of the unprecedented challenges presented by the ongoing COVID-19 pandemic, I am extremely pleased with our financial performance thus far in 2020, and very proud of our bank’s support of the local community through our participation in the PPP program and our loan deferral program which is structured to assist borrowers that have been impacted by COVID-19. Since the pandemic began, we have followed local, state, and national guidelines, and have adapted our sales and service processes to seamlessly service our clients and new clients while keeping our teams safe. While it is 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 announced that its board of directors has declared a quarterly cash dividend of $0.06 per share of common stock. The dividend is payable on September 4, 2020 to stockholders of record as of the close of business on August 21, 2020. “We are pleased to announce our quarterly cash dividend to our stockholders,” said Tom Wayne. “Paying stockholders a portion of our earnings reflects our continuing commitment to enhance stockholder value.”

The Bank’s capital ratios remain strong and exceeded all regulatory requirements at June 30, 2020. As of June 30, 2020, the Company’s stockholders’ equity was 7.7% of total assets, down from 8.5% as of December 31, 2019.

With respect to the consolidated statement of operations for the three months ended June 30, 2020, net interest income was $4.4 million, which was an increase from $4.1 million during the same period in 2019. For the three months ended June 30, 2020, the net interest margin was 3.60% compared to 3.72% for the same period in 2019, a decrease of 12 basis points. For the six months ended June 30, 2020, net interest income was $8.4 million, compared to $8.1 million during the same period in 2019. The net interest margin was 3.58% for the six months ended June 30, 2020, compared to 3.72% for the same period in 2019, a decrease of 14 basis points.

The Company recorded a provision for loan losses of $489,000 for the three months ended June 30, 2020, compared with a provision of $225,000 for the same period in 2019. For the six months ended June 30, 2020 the Company recorded a provision of $1.6 million compared with a provision of $185,000 for the same period in 2019. The allowance for loan losses as a percentage of total loans was 1.00% at June 30, 2020 compared to 0.90% at December 31, 2019. The allowance for loan losses as a percentage of total loans not including PPP loans was 1.11% at June 30, 2020. The increase in the allowance for loan losses in 2020 was largely the result of the Company increasing the qualitative factors in its allowance for loan loss model due to the deteriorating economic outlook related to COVID-19. Nonperforming assets represented 0.65% of total assets at June 30, 2020, compared to 0.82% at December 31, 2019.

Noninterest income totaled $946,000 for the three months ended June 30, 2020, compared with $847,000 for the same period in 2019, an increase of $99,000 or 11.7%. The biggest contributor to the increase 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 2019. A $164,000 gain on sale of securities for the three months ended June 30, 2019, and no such gain in 2020 partially offset the increase in gain on sale of SBA loans. Noninterest income totaled $1.6 million for the six months ended June 30, 2020, compared with $1.4 million for the same period in 2019, an increase of $170,000 or 11.7%. The biggest contributor to the increase 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 2019. A $164,000 gain on sale of securities for the three months ended June 30, 2019, and no such gain in 2020 partially offset the increase in gain on sale of SBA loans.

Noninterest expense totaled $3.4 million in the three months ended June 30, 2020, a decrease of $144,000, or 4.1%, from the same period in 2019. A decrease in salaries, primarily due to credits in payroll taxes as a result of provisions in the CARES Act, was responsible for most of this decrease. Noninterest expense totaled $6.7 million in the six months ended June 30, 2020, a decrease of $174,000, or 2.5%, from 2019. A decrease in salaries, primarily due to credits in payroll taxes as a result of provisions in the CARES Act as well as lower incentive payments in 2020 compared to 2019, was responsible for most of this decrease.

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, 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
June 30, 2020 (Unaudited) and December 31, 2019 (Audited)
(Dollars in thousands)

    2020     2019
Assets          
           
Cash and due from banks $ 11,455   $ 4,030
Interest-bearing deposits with banks   17,712     19,539
Total cash and cash equivalents   29,167     23,569
Securities available-for-sale   44,125     41,183
Securities held-to-maturity (fair values of $777 in 2020 and $898 in 2019)   651     730
Federal Home Loan Bank Stock, at cost   1,880     1,042
Loans, net of allowance for loan losses of $4,505 in 2020 and $2,886 in 2019   447,755     386,056
Property and equipment, net   10,230     10,491
Accrued interest receivable   2,986     1,478
Bank owned life insurance   5,883     5,837
Right-of-use assets – operating leases   1,174     1,336
Other assets   3,903     3,984
Total assets $ 547,754   $ 475,706
           
Liabilities and Stockholders’ Equity          
           
Liabilities          
Deposits:          
Noninterest-bearing $ 101,930   $ 64,374
Interest-bearing   361,041     333,752
Total deposits   462,971     398,126
Short-term borrowings   10,000     15,000
Long-term borrowings   1,085     1,184
Junior subordinated notes related to trust preferred securities   8,248     8,248
Subordinated debentures   15,431     5,608
Lease liabilities – operating leases   1,174     1,336
Accrued interest payable   176     281
Other liabilities   6,424     5,608
Total liabilities   505,509     435,391
           
Stockholders’ equity          
Common stock, no par value; 50,000,000 shares authorized; 2,643,945 and 2,621,315 issued and outstanding in 2020 and 2019, respectively   24,720     24,850
Retained earnings   14,227     13,146
Accumulated other comprehensive income   3,298     2,319
Total stockholders’ equity   42,245     40,315
Total liabilities and stockholders’ equity $ 547,754   $ 475,706
           

Oak Ridge Financial Services, Inc.
Consolidated Statements of Operations
For the three months and six months ended June 30, 2020 and 2019 (Unaudited)
(Dollars in thousands except per share data)

                                                                                                           

  Three months ended June 30, Six months ended June 30,
  2020 2019 2020 2019
Interest and dividend income        
Loans and fees on loans $ 5,221 $ 5,048 $ 10,145 $ 9,927
Interest on deposits in banks   3   90   68   172
Federal Home Loan Bank stock dividends   25   17   41   33
Investment securities   317   368   615   734
Total interest and dividend income   5,566   5,523   10,869   10,866
Interest expense        
Deposits   854   1,129   1,914   2,201
Short-term and long-term debt   265   277   538   590
Total interest expense   1,119   1,406   2,452   2,791
Net interest income   4,447   4,117   8,417   8,075
Provision for loan losses   489   225   1,629   185
Net interest income after provision for loan losses   3,958   3,892   6,788   7,890
         
Noninterest income        
Service charges on deposit accounts   128   195   309   340
Gain on sale of securities     164     164
Brokerage commissions on mortgage loans   116   68   198   136
Insurance commissions   88   81   172   168
Gain on sale of SBA loans   261     261  
Fee income from accounts receivable financing   1   1   1   12
Debit and credit card interchange income   278   252   521   458
Income earned on bank owned life insurance   23   24   47   48
Other service charges and fees   51   62   110   123
Total noninterest income   946   847   1,619   1,449
Noninterest expense        
Salaries   1,341   1,598   2,888   3,272
Employee benefits   229   275   501   560
Occupancy expense   217   208   452   427
Equipment expense   248   271   493   461
Data and item processing   581   526   1,093   976
Professional and advertising   148   183   314   287
Stationary and supplies   19   39   52   90
Impairment loss on securities   22   4   22   10
Telecommunications expense   104   95   182   189
FDIC assessment   74   48   87   99
Accounts receivable financing expense         3
Other expense   403   283   636   520
Total noninterest expense   3,386   3,530   6,720   6,894
Income before income taxes   1,518   1,209   1,687   2,445
Income tax expense   317   214   314   442
Net income and net income available to common stockholders $ 1,201 $ 995 $ 1,373 $ 2,003
Basic net income per common share $ 0.45 $ 0.38 $ 0.52 $ 0.77
Diluted income per common share $ 0.45 $ 0.38 $ 0.52 $ 0.76
Basic weighted average common shares outstanding   2,644,388   2,625,695   2,639,787   2,616,459
Diluted weighted average common shares outstanding   2,652,469   2,633,641   2,648,468   2,624,405
         

Oak Ridge Financial Services, Inc.
Selected Quarterly Financial Ratios (unaudited)

Selected Financial Data June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019
Return on average common stockholders’ equity1   11.66 %   1.68 %   10.23 %   11.08 %   10.75 %   11.61 %
Tangible book value per share $ 15.98   $ 15.22   $ 15.36   $ 14.99   $ 14.37   $ 13.80  
Return on average assets1   0.92 %   0.14 %   0.86 %   0.92 %   0.85 %   0.89 %
Net interest margin1   3.60 %   3.55 %   3.57 %   3.80 %   3.72 %   3.72 %
Net interest income to average assets1   3.41 %   3.23 %   3.37 %   3.51 %   3.51 %   3.52 %
Efficiency ratio   62.79 %   71.82 %   74.53 %   69.9 %   71.1 %   73.1 %
Nonperforming assets to total assets   0.65 %   0.78 %   0.81 %   0.91 %   0.50 %   0.56 %
                                     

1Annualized

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

Source

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