Oak Ridge Financial Services, Inc. Announces Fourth Quarter and Annual Results for 2018 and Initial Quarterly Cash Dividend of $0.05 Per Share

2/5/2019, 12:27 AM (Source: GlobeNewswire)

OAK RIDGE, N.C., Feb. 04, 2019 (GLOBE NEWSWIRE) -- Oak Ridge Financial Services, Inc. (the “Company”) (OTCPink: 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, 2018 and an initial quarterly cash dividend of $0.05 per share.

2018 Highlights

  • Earnings per share of $1.52 for 2018, up 41 cents, or 37%, from 2017; earnings per share of $0.44 for the three months ended December 31, 2018, up 18 cents, or 69%, from 2017
  • Return on average common stockholders’ equity of 12.26% for 2018, compared to 9.19% for 2017; return on average common stockholders’ equity of 13.57% for the three months ended December 31, 2018, compared to 8.88% for the same period in 2017
  • Period end book value per common share of $13.24, up $1.27, or 11%, from December 31, 2017
  • Period end loans of $371.9 million, up 9.4% from December 31, 2017
  • Period end deposits of $382.3 million, up 5.7% from December 31, 2017
  • Period end noninterest-bearing deposits of $58.7 million, up 12.1% from December 31, 2017
  • Period end nonperforming assets of $2.7 million, down from $2.8 million at December 31, 2017
  • Paid a 10% stock dividend on November 30, 2018 to stockholders of record of November 15, 2018. All share and per share information for the periods presented is adjusted to give effect to this stock dividend
  • Internally promoted Jeff Finberg and Charles Ryan to Chief Lending Officer and Chief Credit Officer, respectively, as part of the Bank’s management succession plan to replace Bill Vasaly, who retired as the Bank’s Chief Credit Officer on December 31, 2018.  Mr. Vasaly will continue to serve as a member of the Bank’s and the Company’s Board of Directors
  • The Company was recognized for the second consecutive year as one of the Top 200 Publicly Traded Community Banks and Thrifts by American Banker magazine, based on three-year average return on equity through December 31, 2017

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 2018. Our strong loan growth was primarily due to increased production by our lending team. Our retail banking team has supported our loan growth, as total deposits also increased significantly in 2018. We have also been very pleased with the growth in noninterest-bearing deposits during 2018. Lastly, the recognition we received from American Banker for the second consecutive year is indicative of our desire and success in providing good value to our stockholders.  I am very pleased with our overall performance in 2018 and thank our dedicated employees, our Board of Directors, and our clients for their continued support.”

The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.05 per share of common stock. The dividend will be paid on or about March 1, 2019 to stockholders of record as of the close of business on February 22, 2018. This is the first cash dividend declared by the Company on its common stock. “We are pleased to announce our first quarterly cash dividend to our stockholders,” said Tom Wayne. “We believe that paying stockholders a portion of our earnings reflects our continuing commitment to enhance stockholder value.”

The Bank’s capital ratios remain strong and exceed all regulatory requirements at December 31, 2018. As of December 31, 2018, the Company’s stockholders’ equity was 7.6% of total assets, compared to 7.2% as of December 31, 2017.

With respect to the consolidated statement of operations for 2018 and 2017, net interest income was $15.7 million for all of 2018, up $1.2 million, or 8.3%, from $14.5 million during the same period in 2017. For 2018, the net interest margin was 3.77% compared to 3.66% for the same period in 2017, an increase of 11 basis points.

The Company recorded a negative provision for loan losses of $96,000 in 2018, compared with a negative provision of $60,000 in 2017. The allowance for loan losses as a percentage of total loans was 0.90% at December 31, 2018 compared to 1.20% at December 31, 2017. The reduction in the allowance for loan losses in 2018 was due to improvements in various quantitative and qualitative factors used in the determination of the allowance. Nonperforming assets represented 0.63% of total assets at December 31, 2018, compared to 0.65% at December 31, 2017.

Noninterest income totaled $3.1 million in 2018, compared with $2.9 million in 2017, an increase of $200,000 or 6.9%. The biggest noninterest income category contributing to the increase was gain on sale of SBA loans, which increased $151,000 from 2017 to 2018.

Noninterest expense totaled $14.0 million in 2018, compared with $13.1 million in 2017, an increase of $850,000 or 6.5%. The majority of the increase was due to increases in salaries and employee benefits. Salaries increased primarily due to annual merit increases effective January 1, 2018 and incentive payments to employees. Employee benefits increased due to increases in postretirement employee benefits and contributions to the Bank’s Employee Stock Ownership Plan.

The enactment of the new federal tax law, signed in late December 2017, positively affected net income for the Company for the current quarter and year. The new tax rates become effective in 2018, but the 2017 enactment required companies to revalue their deferred tax assets as of December 31, 2017 at the reduced tax rate.  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 of 2017.

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 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 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.

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


Oak Ridge Financial Services, Inc.
Consolidated Balance Sheets
December 31, 2018 (unaudited) and December 31, 2017 (audited)
(Dollars in thousands)

   
 2018
 2017
Assets    
   
Cash and due from banks$4,566 $8,673
Interest-bearing deposits with banks 13,894  18,497
Federal Funds sold 791  2,298
Total cash and cash equivalents 19,251  29,468
Securities available-for-sale 41,443  43,375
Securities held-to-maturity (fair values of $1,030 in 2018 and $1,257 in 2017) 892  1,108
Federal Home Loan Bank Stock, at cost 1,023  1,133
Loans, net of allowance for loan losses of $3,347 in 2018 and $3,538 in 2017 368,562  337,105
Property and equipment, net 9,886  8,631
Foreclosed assets -  4
Accrued interest receivable 1,555  1,388
Bank owned life insurance 5,739  5,635
Other assets 4,990  2,865
Total assets$453,341 $430,712
     
Liabilities and Stockholders’ Equity  
   
Liabilities  
Deposits:  
Noninterest-bearing$58,672 $52,361
Interest-bearing 323,646  309,360
Total deposits 382,318  361,721
Short-term borrowings 15,000  18,500
Long-term borrowings 1,304  1,000
Junior subordinated notes related to trust preferred securities 8,248  8,248
Subordinated debentures 5,581  5,553
Accrued interest payable 263  145
Other liabilities 6,298  4,460
Total liabilities 419,012  399,627
     
Stockholders’ equity  
Common stock, no par value; 50,000,000 shares authorized; 2,592,434 and 2,596,748 shares issued and outstanding in 2018 and 2017, respectively 20,466  20,413
Retained earnings 13,309  9,784
Accumulated other comprehensive income 554  888
Total stockholders’ equity 34,329  31,085
Total liabilities and stockholders’ equity$453,341 $430,712
     


Oak Ridge Financial Services, Inc.
Consolidated Statements of Operations
For the three months and years ended December 31, 2018 and 2017 (Unaudited)
(Dollars in thousands except per share data)

   Three months ended December 31, Year ended December 31,
   2018  2017 2018  2017 
 Interest and dividend income    
 Loans and fees on loans$4,808 $4,181$18,007 $15,787 
 Interest on deposits in banks 84  49 308  177 
 Federal Home Loan Bank stock dividends 14  15 58  51 
 Investment securities 346  352 1,414  1,328 
 Total interest and dividend income 5,252  4,597 19,787  17,343 
      
 Interest expense    
 Deposits 954  552 3,049  1,911 
 Short-term and long-term debt 288  233 1,061  898 
 Total interest expense 1,242  785 4,110  2,809 
 Net interest income 4,010  3,812 15,677  14,534 
 Provision for loan losses (155) - (96) (60)
 Net interest income after provision for loan losses 4,165  3,812 15,773  14,594 
      
 Noninterest income    
 Service charges on deposit accounts 164  178 664  640 
 Gain on sale of securities 10  42 10  39 
 Mortgage commissions 45  73 198  161 
 Investment commissions -  4 21  34 
 Insurance commissions 80  78 307  294 
 Gain on sale of SBA loans -  133 345  194 
 Fee income from accounts receivable financing 39  53 199  195 
 Debit and credit card interchange income 241  208 955  893 
 Income earned on bank owned life insurance 27  26 104  99 
 Other service charges and fees 65  66 263  280 
 Total noninterest income 671  861 3,066  2,829 
 Noninterest expense    
 Salaries 1,713  1,720 6,805  6,347 
 Employee benefits 280  225 1,170  801 
 Occupancy expense 230  197 856  794 
 Equipment expense 196  201 709  623 
 Loss (gain) on sale of property and equipment -  - -  (5)
 Data and item processing 438  411 1,657  1,721 
 Professional and advertising 94  181 605  870 
 Stationary and supplies 56  44 236  231 
 Net cost of foreclosed assets -  - 2  6 
 Impairment loss on securities 13  3 28  22 
 Telecommunications expense 90  89 451  427 
 FDIC assessment 55  55 219  231 
 Accounts receivable financing expense 12  15 63  62 
 Other expense 264  281 1,162  985 
 Total noninterest expense 3,441  3,422 13,963  13,115 
 Income before income taxes 1,395  1,251 4,876  4,308 
 Income tax expense 255  563 896  1,415 
 Net income and net income available to common stockholders$1,140 $688$3,980 $2,893 
 Basic net income per common share$0.44 $0.26$1.52 $1.11 
 Diluted income per common share$0.44 $0.26$1.52 $1.11 
 Basic weighted average common shares outstanding 2,593,958  2,625,165 2,614,414  2,603,780 
 Diluted weighted average common shares outstanding 2,602,862  2,638,972 2,623,189  2,615,382 
      


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

Selected Financial DataDecember
31, 2018
September
30, 2018
June 30,
2018
March 31,
2018
December
31, 2017
September
30, 2017
Return on average common stockholders' equity1 13.57%  11.70%  11.42%  12.44%  8.88%  10.82% 
Tangible book value per share$13.24 $12.59 $12.31 $11.87 $11.97 $11.51 
Return on average assets1 1.01%  0.85%  0.85%  0.90%  0.65%  0.77% 
Net interest margin1 3.71%  3.76%  3.90%  3.83%  3.75%  3.96% 
Net interest income to average assets1 3.54%  3.53%  3.68%  3.57%  3.59%  3.62% 
Efficiency ratio 73.5%  74.3%  75.0%  75.1%  73.2%  75.9% 
Nonperforming assets to total assets 0.63%  0.63%  0.63%  0.65%  0.65%  0.71% 
                   
1Annualized                  

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