Oak Ridge Financial Services, Inc. Announces First Quarter 2018 Results - Oak Ridge Finl Servs (OTC:BKOR)

OAK RIDGE, N.C., April 30, 2018 (GLOBE NEWSWIRE) -- Oak Ridge Financial Services, Inc. (the "Company") BKOR, the parent company of Bank of Oak Ridge (the "Bank"), announced unaudited financial results for the first quarter of 2018.

2018 First Quarter Highlights

Earnings per share of $0.40 for the three months ended March 31, 2018, up 14 cents from 2017
Return on average common stockholders' equity of 12.44% for the three months ended March 31, 2018, compared to 9.21% for 2017
Period end loans of $345.5 million, up 1.4% (5.9% annualized) from December 31, 2017
Period end deposits of $364.7 million, up 0.8% (3.3% annualized) from December 31, 2017
Period end noninterest-bearing deposits of $53.7 million, up 2.6% (10.6% annualized) from December 31, 2017
Nonperforming assets of $2.8 million, unchanged from December 31, 2017

Tom Wayne, President and Chief Financial Officer, reported, "We were very pleased with the year over year growth in our pretax and after tax net income and earnings per share for 2018 compared to the same period in 2017. Loan and deposit growth was more measured in the first quarter of 2018 compared to all of 2017, but there were less loan opportunities in our market in 2018 than in 2017. I am very pleased with our overall performance in the first quarter of 2018 and thank our stockholders, our dedicated employees, our Board of Directors, and our clients for their continued support."

Bank of Oak Ridge's capital ratios remain strong and exceed all regulatory requirements at March 31, 2018. As of March 31, 2018, the Company's stockholders' equity was 7.3% of total assets, compared to 7.2% as of December 31, 2017. Book value per common share was $13.06 as of March 31, 2018, compared to $11.77 as of March 31, 2017.

With respect to the consolidated statement of operations for 2018 and 2017, net interest income was $3.8 million for all of 2018, which was an increase from $3.4 million during the same period in 2017. For 2018, the net interest margin was 3.83% compared to 3.73% for the same period in 2017, an increase of 10 basis points.

The Company recorded no provision for loan losses in 2018, compared with a provision of $65,000 for 2017. The allowance for loan losses as a percentage of total loans was 1.02% at March 31, 2018 compared to 1.04% at December 31, 2017. The need to supplement the allowance for loan losses in 2018 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 March 31, 2018, unchanged from December 31, 2017.

Noninterest income totaled $956,000 in 2018, compared with $585,000 in 2017, an increase of $371,000 or 63.4%. The biggest noninterest income category contributing to the increase were gains on sale of SBA loans of $305,000 in 2018. There were no gains on sale of SBA loans in 2017.

Noninterest expense totaled $3.6 million in 2018, an increase of $551,000, or 18.2%, from 2017. There were several expense categories that mostly contributed to the overall increase in noninterest expense. Salaries increased due to higher incentive payments in 2018 compared to 2017, salary merit increases that took effect on January 1, 2018, and commissions related to the gain on sale of SBA loans in 2018. Employee benefits increased due to lower post-retirement benefit costs in 2017 compared to 2018. Other expenses increased due to higher check and debit card losses in 2018 compared to 2017, as well as higher expenses in 2018 related to the gain on sale of SBA loans.

The enactment of the new federal tax law, signed in late December 2017, positively affected net income for the Company for the current quarter. The law provides for the corporate tax rate to be reduced from 35% to 21%.

About Oak Ridge Financial Services, Inc.
Oak Ridge Financial Services, Inc. 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.

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
March 31, 2018 and December 31, 2017
(Dollars in thousands)


	2018		2017
Assets

Cash and due from banks	$	8,355	$	8,673
Interest-bearing deposits with banks		9,369		18,497
Federal Funds sold		4,925		2,298
Total cash and cash equivalents		22,649		29,468
Securities available-for-sale		42,711		43,375
Securities held-to-maturity (fair values of $1,208 in 2018 and $1,257 in 2017)		1,048		1,108
Federal Home Loan Bank Stock, at cost		917		1,133
Loans, net of allowance for loan losses of $3,529 in 2018 and $3,538 in 2017		341,996		337,105
Property and equipment, net		9,037		8,631
Foreclosed assets		4		4
Accrued interest receivable		1,345		1,388
Bank owned life insurance		5,660		5,635
Other assets		2,953		2,865
Total assets	$	428,320	$	430,712


Liabilities and Stockholders' Equity

*Liabilities*
Deposits:
Noninterest-bearing	$	53,727	$	52,361
Interest-bearing		310,982		309,360
Total deposits		364,709		361,721
Short-term borrowings		12,500		18,500
Long-term borrowings		875		1,000
Junior subordinated notes related to trust preferred securities		8,248		8,248
Subordinated debentures		5,560		5,553
Accrued interest payable		167		145
Other liabilities		4,944		4,460
Total liabilities		397,003		399,627



*Stockholders' equity*
Common stock, no par value; 50,000,000 shares authorized; 2,397,680 and 2,360,680 issued and outstanding in 2018 and 2017, respectively		20,551		20,413
Retained earnings		10,286		9,784
Accumulated other comprehensive income		480		888
Total stockholders' equity		31,317		31,085
Total liabilities and stockholders' equity	$	428,320	$	430,712

Oak Ridge Financial Services, Inc.
Consolidated Statements of Income
Three months ended March 31, 2018 and 2017
(Dollars in thousands except per share data)

		2018		2017
*Interest and dividend income*
Loans and fees on loans	$	4,202	$	3,662
Interest on deposits in banks		63		23
Federal Home Loan Bank stock dividends		15		8
Taxable investment securities		367		292
Total interest and dividend income		4,647		3,985
*Interest expense*
Deposits		611		426
Short-term and long-term debt		225		202
Total interest expense		836		628
Net interest income		3,811		3,357
*Provision for loan losses*		-		65
Net interest income after provision for loan losses		3,811		3,292
*Noninterest income*
Service charges on deposit accounts		164		142
Mortgage brokerage commissions		42		14
Investment commissions		14		20
Insurance commissions		74		66
Gain on sale of SBA loans		305		-
Fee income from accounts receivable financing		57		43
Debit card interchange income		203		203
Income earned on bank owned life insurance		24		24
Other service charges and fees		73		73
Total noninterest income		956		585
*Noninterest expense*
Salaries		1,739		1,502
Employee benefits		269		173
Occupancy		235		212
Equipment		164		129
Loss (gain) on sale of property and equipment		-		-
Data and item processing		399		404
Professional and advertising		213		190
Stationary and supplies		45		48
Impairment loss on securities		4		5
Telecommunications		128		107
FDIC assessment		56		56
Accounts receivable financing		18		15
Other expense		312		190
Total noninterest expense		3,582		3,031
Income before income taxes		1,185		846
*Income tax expense*		228		214
*Net income and income available to common stockholders*	$	957	$	632
*Basic income per common share*	$	0.40	$	0.26
*Diluted income per common share*	$	0.40	$	0.26
*Basic weighted average shares outstanding*		2,375,852		2,387,954
*Diluted weighted average shares outstanding*		2,385,380		2,398,997

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

Selected Financial Data	March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016
Return on average common stockholders' equity¹		12.44	%		8.88	%		10.82	%		10.82	%		9.21	%		8.89	%
Tangible book value per share	$	13.06		$	13.17		$	12.66		$	12.28		$	11.77		$	11.37
Return on average assets¹		0.90	%		0.65	%		0.77	%		0.76	%		0.65	%		0.64	%
Net interest margin¹		3.83	%		3.75	%		3.96	%		3.91	%		3.73	%		3.83	%
Net interest income to average assets¹		3.57	%		3.59	%		3.62	%		3.58	%		3.47	%		3.51	%
Efficiency ratio		75.1	%		73.2	%		75.9	%		76.4	%		76.1	%		79.1	%
Nonperforming assets to total assets		0.65	%		0.65	%		0.71	%		0.70	%		0.85	%		0.89	%

¹Annualized

Contact: Thomas W. Wayne, President and CFO
Phone: 336-644-9944

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