Market Overview

Oak Ridge Financial Services, Inc. Announces Fourth Quarter and Annual Results for 2017


OAK RIDGE, N.C., Jan. 30, 2018 (GLOBE NEWSWIRE) -- Oak Ridge Financial Services, Inc. (the "Company") (OTC:BKOR), the parent company of Bank of Oak Ridge (the "Bank"), announced unaudited financial results for the fourth quarter and full year ending December 31, 2017.

2017 Highlights

  • Earnings per share of $1.22 for all of 2017, up 23 cents from 2016; earnings per share of $0.29 for the three months ended December 31, 2017, up 3 cents from 2016 - the enactment of the new federal tax law reduced 2017 annual and fourth quarter basic and diluted earnings per share by $0.10
  • Return on average common stockholders' equity of 9.19% for all of 2017, compared to 8.79% for 2016; return on average common stockholders' equity of 8.88% for the three months ended December 31, 2017, compared to 8.89% for 2016
  • Period end loans of $340.6 million, up 11.1% from December 31, 2016
  • Period end deposits of $361.7 million, up 9.8% from December 31, 2016
  • Period end noninterest-bearing deposits of $52.4 million, up 10.4% from December 31, 2016
  • Nonperforming assets of $2.8 million, down from $3.5 million at December 31, 2016
  • Repurchased 23,000 of the Company's outstanding common shares
  • The Company was recognized as one of top 200 Publicly Traded Community Banks and Thrifts by American Banker magazine (based on three-year average return on equity through December 31, 2016), was a winner of the Best Bank in the Triad for the sixth consecutive year and was a finalist for Triad Business Journal's annual Best Places to Work awards

Tom Wayne, President and Chief Financial Officer, reported, "We were very pleased with loan and deposit growth in the fourth quarter and indeed, all of 2017. Our strong loan growth was due to increased production by our lending team, and our retail banking team has supported our loan growth, as total deposits also increased significantly in 2017. We have also been very pleased with the growth in noninterest-bearing deposits during 2017. Lastly, the recognition we received reflected our achievements in support of three very important stakeholder groups – our shareholders, our clients and our employees.  I am very pleased with our overall performance in 2017 and thank our dedicated employees, our Board of Directors, and our clients for their continued support."

The enactment of the new federal tax law, signed in late December 2017, negatively affected net income for the Company for the current quarter and year. The new tax rates become effective in 2018, but the 2017 enactment requires companies to revalue their deferred tax assets at the new tax rate in 2017.  Accordingly, the Company recognized a $245,000 ($0.10 per basic and diluted share) charge to its deferred tax asset and a corresponding increase in income tax expense in the fourth quarter. Beginning in 2018, income tax expense will be positively affected by the substantial reduction in the corporate tax rate. The law provides for the corporate tax rate to be reduced from 35% to 21%. 

Bank of Oak Ridge's capital ratios remain strong and exceed all regulatory requirements at December 31, 2017. As of December 31, 2017, the Company's stockholders' equity was 7.2% of total assets, compared to 7.0% as of December 31, 2016. Book value per common share was $13.17 as of December 31, 2017, compared to $11.37 as of December 31, 2016.

With respect to the consolidated statement of operations for 2017 and 2016, net interest income was $14.5 million for all of 2017, which was an increase from $13.4 million during the same period in 2016. For 2017, the net interest margin was 3.66% compared to 3.84% for the same period in 2016, a decrease of 18 basis points.

The Company recorded a negative provision for loan losses of $60,000 for 2017, compared with a negative provision of $170,000 for 2016. The allowance for loan losses as a percentage of total loans was 1.04% at December 31, 2017 compared to 1.20% at December 31, 2016. The need to supplement the allowance for loan losses in 2017 was reduced by improvement in various quantitative and qualitative factors used in the determination of the allowance. Nonperforming assets represented 0.65% of total assets at December 31, 2017, compared to 0.89% at December 31, 2016.

Noninterest income totaled $2.81 million in 2017, compared with $2.94 million in 2016, a decrease of $130,000 or 4.4%. The biggest noninterest income category contributing to the decline was decreases in gain on sale of securities, which declined $236,000 from 2016 to 2017.

Noninterest expense totaled $13.10 million in 2017, compared with $12.74 million in 2016, an increase of $360,000 or 2.8%.

About Oak Ridge Financial Services, Inc.
Oak Ridge Financial Services, Inc. (OTC:BKOR) is the holding company for Bank of Oak Ridge. Bank of Oak Ridge is an employee-owned community bank that delivers personal attention and convenience for every client. Bank of Oak Ridge has been named Best Bank in the Triad six years in a row, a 2017 Top Workplace, one of the Triad's Healthiest Employers, and was the winner of the Better Business Bureau's Torch award for ethics in 2016. 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 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

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
December 31, 2017 (unaudited) and December 31, 2016 (audited)
(Dollars in thousands)
  2017   2016
Cash and due from banks  $   8,673   $   7,718
Interest-bearing deposits with banks      18,497       10,626
Federal Funds sold     2,298       1,203
Total cash and cash equivalents      29,468       19,547
Securities available-for-sale      43,375       44,563
Securities held-to-maturity (fair values of $1,256 in 2017 and $1,520 in 2016)      1,108       1,397
Federal Home Loan Bank Stock, at cost      1,133       811
Loans, net of allowance for loan losses of $3,538 in 2017 and $3,678 in 2016  .     337,105       302,798
Property and equipment, net     8,631       8,795
Foreclosed assets     4       4
Accrued interest receivable      1,388       1,272
Bank owned life insurance      5,635       5,536
Other assets      2,865       3,086
Total assets . $   430,712   $   387,809
Liabilities and Stockholders' Equity          
Noninterest-bearing $   52,361   $   47,426
Interest-bearing  .     309,360       282,148
Total deposits      361,721       329,574
Short-term borrowings      18,500       11,500
Long-term borrowings     1,000       1,500
Junior subordinated notes related to trust preferred securities     8,248       8,248
Subordinated debentures      5,553       5,526
Accrued interest payable  .     145       98
Other liabilities      4,460       4,227
Total liabilities      399,627       360,673
Stockholders' equity          
Common stock, no par value; 50,000,000 shares authorized; 2,360,680 and 2,386,514 issued and
outstanding in 2017 and 2016, respectively 
    20,413       20,064
Retained earnings     9,557       6,664
Accumulated other comprehensive income     1,115       408
Total stockholders' equity     31,085       27,136
Total liabilities and stockholders' equity $   430,712   $  387,809

Oak Ridge Financial Services, Inc.  
Consolidated Statements of Operations  
For the three months and years ended December 31, 2017 and 2016  
(Dollars in thousands except per share data)  
  Three months ended December 31,     
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