GlobeNewswire Inc | Feb 3, 2021 12:39PM EST

February 03, 2021

OAK RIDGE, N.C., Feb. 03, 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 fourth quarter and full year of 2020, and a quarterly cash dividend of $0.06 per share.

Fourth Quarter and Full Year 2020 Highlights

-- Earnings per share of $1.23 for 2020, down 39 cents, or 24%, from 2019; earnings per share of $0.38 for the three months ended December 31, 2020, down one cent, or 3%, from 2019; -- Return on average common stockholders equity of 7.68% for 2020, compared to 11.25% for 2019; return on average common stockholders equity of 9.17% for the three months ended December 31, 2020, compared to 10.23% for the same period in 2019; -- Loan loss provision for the year ended December 31, 2020 of $2.7 million, up from $185,000 for 2019; 2020 loan loss provision of $2.7 million predominantly related to the potential adverse economic impact of the COVID-19 pandemic, and the primary reason for the decline in earnings per share and return on average common stockholders equity from 2019 to 2020; -- Tangible book value per common share of $16.86, up 9.8%, or $1.50, from $15.36 as of December 31, 2019. -- Through the end of the first round of the Small Business Administration (SBA) Payroll Protection Program (PPP) in August 2020, the Bank funded 606 PPP loans totaling $50.1 million, and has collected fees from the SBA of $2.1 million; these fees and associated origination costs will be recognized as interest income over the life of the PPP loans; -- Period end loans of $450.6 million, up 15.8% from December 31, 2019. period end loans, net of PPP loans, of $403.4 million, up 3.7% from December 31, 2019; -- Outstanding balance of loans granted deferrals of principal and/or interest payments in response to COVID-19 of $1.1 million (0.2% of total loans) as of December 31, 2020, down from a peak of $133.7 million (29.2% of loans); -- Period end allowance for loan losses of $5.5 million, up 89.1%, from $2.9 million at December 31, 2019. -- Nonperforming assets of $3.5 million, down 8.4% from $3.9 million at December 31, 2019. -- Period end deposits of $455.7 million, up 14.5% from December 31, 2019, period end noninterest-bearing deposits of $94.2 million, up 46.4% from December 31, 2019.

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 in 2020, and very proud of our Banks support of the local community through our participation in the PPP program and our loan deferral program, which was structured to assist borrowers that have been impacted by COVID-19. Loans in deferral peaked at 29% of total loans in the second quarter of 2020 and have declined significantly to just 0.2% of total loans at December 31, 2020, a very positive sign. Since the pandemic began, we have followed local, state, and national guidelines, and have adapted our sales and service processes to seamlessly service new and existing clients while keeping our team 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.

A quarterly cash dividend of $0.06 per share of common stock is payable on March 1, 2021 to stockholders of record as of the close of business on February 16, 2021. We are pleased to announce 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 December 31, 2020 the Banks CBLR was 9.22%. As of December 31, 2020, the Companys stockholders equity was $44.5 million, up 10.4%, from $40.3 million at December 31, 2019.

With respect to the consolidated statement of operations for 2020 and 2019, net interest income was $17.6 million for 2020, up $1.3 million, or 8.0%, from $16.3 million during the year ending December 31, 2019. For 2020, the net interest margin was 3.50% compared to 3.69% for year ending December 31, 2019, a decrease of 19 basis points. The primary reason for the decrease in the net interest margin was an increase in interest expense associated with the Companys $10 million subordinated debenture issue that closed in June 2020.

The Company recorded a provision for loan losses of $2.7 million in 2020, compared with a loan loss provision of $185,000 in 2019. The allowance for loan losses as a percentage of total loans was 1.21% at December 31, 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 1.35% as of December 31, 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 0.64% of total assets as of December 31, 2020, compared to 0.82% at December 31, 2019.

Noninterest income totaled $3.2 million in 2020, unchanged from 2019. Noninterest expense totaled $14.0 million in 2019, down slightly from $14.1 million in 2019.

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 Banks employees are stockholders in Oak Ridge Financial Services, Inc. through their participation in the Banks Employee Stock Ownership Plan. We are proud of our many accolades and awards, including seven Best Bank in the Triad wins, Triads Top Workplace finalist, Triads 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.

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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 InformationThis 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 Companys 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, 2020 (Unaudited) and December 31, 2019 (Audited) (Dollars in thousands)

2020 2019Assets Cash and due from banks $ 9,104 $ 4,030Interest-bearing deposits with banks 9,027 14,928Total cash and cash equivalents 18,131 18,958Federal Funds Sold 3,217 4,611Securities available-for-sale 46,357 41,183Securities held-to-maturity (fair values of $715 at year 564 730end 2020 and $898 at year end 2019)FRB and FHLB Stock, at cost 1,806 1,042Loans, net of allowance for loan losses of $5,458 at year 445,127 386,056end 2020 and $2,886 at year end 2019Property and equipment, net 10,632 10,491Accrued interest receivable 2,412 1,478Bank owned life insurance 5,930 5,837Right-of-use assets ? operating leases 1,990 1,336Other assets 4,464 3,984Total assets $ 540,630 $ 475,706 Liabilities and Stockholders? Equity Liabilities Deposits: Noninterest-bearing $ 94,225 $ 64,374Interest-bearing 361,512 333,752Total deposits 455,737 398,126Short-term borrowings 8,000 15,000Long-term borrowings 952 1,184Junior subordinated notes related to trust preferred 8,248 8,248securitiesSubordinated debentures 15,459 5,608Lease liabilities ? operating leases 1,990 1,336Accrued interest payable 140 281Other liabilities 5,603 5,608Total liabilities 496,129 435,391 Stockholders? equity Common stock, no par value; 50,000,000 shares authorized;2,639,345 and 2,621,315 issued and outstanding as of 25,013 24,850December 31, 2020 and 2019, respectivelyRetained earnings 15,797 13,146Accumulated other comprehensive income 3,691 2,319Total stockholders? equity 44,501 40,315Total liabilities and stockholders? equity $ 540,630 $ 475,706

Oak Ridge Financial Services, Inc.Consolidated Statements of OperationsFor the three months and year ended December 31, 2020 and 2019 (Unaudited)(Dollars in thousands except per share data)



Three months ended December Year ended December 31, 31, 2020 2019 2020 2019Interest and dividend incomeLoans and fees on loans $ 5,196 $ 5,029 $ 20,649 $ 20,077Interest on deposits in 4 73 83 371banksFederal Home Loan Bank 48 16 98 66stock dividendsInvestment securities 367 313 1,304 1,346Total interest and 5,615 5,431 22,134 21,860dividend incomeInterest expense Deposits 570 1,106 3,213 4,398Short-term and long-term 365 277 1,319 1,162debtTotal interest expense 935 1,383 4,532 5,560Net interest income 4,680 4,048 17,602 16,300Provision for loan losses 500 - 2,746 185Net interest income after 4,180 4,048 14,856 16,115provision for loan losses Noninterest income Service charges on 143 196 588 732deposit accountsGain on sale of - - - 164securitiesBrokerage commissions on 86 69 381 306mortgage loansInsurance commissions 87 80 362 349Gain on sale of SBA loans - 195 464 278Fee income from accounts - - - 13receivable financingDebit and credit card 252 248 1,048 963interchange incomeIncome earned on bank 23 25 93 98owned life insuranceOther service charges and 57 67 226 267feesTotal noninterest income 648 880 3,162 3,170Noninterest expense Salaries 1,731 1,701 6,138 6,678Employee benefits 286 296 1,117 1,159Occupancy expense 285 234 998 880Equipment expense 258 242 1,010 915Data and item processing 514 508 2,147 1,976Professional and 118 176 579 658advertisingStationery and supplies 29 29 132 141Net cost of foreclosed - 40 4 52assetsImpairment loss on 5 12 58 28securitiesTelecommunications 86 97 351 403expenseFDIC assessment 72 - 266 48Accounts receivable - - - 3financing expenseOther expense 234 338 1,245 1,134Total noninterest expense 3,618 3,673 14,045 14,075Income before income 1,210 1,255 3,973 5,210taxesIncome tax expense 200 225 714 960Net income and net incomeavailable to common $ 1,010 $ 1,030 $ 3,259 $ 4,250stockholdersBasic net income per $ 0.38 $ 0.39 $ 1.23 $ 1.62common shareDiluted income per common $ 0.38 $ 0.39 $ 1.23 $ 1.62shareBasic weighted average 2,639,345 2,625,685 2,640,504 2,621,007common shares outstandingDiluted weighted average 2,639,345 2,634,729 2,640,504 2,630,244common shares outstanding

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

Selected December September June 30, March 31, December SeptemberFinancial 31, 2020 30, 2020 2020 2020 31, 2019 30, 2019DataReturn onaveragecommon 9.17 % 8.50 % 11.66 % 1.68 % 10.23 % 11.08 %stockholders'equity^1Tangible bookvalue per $ 16.86 $ 16.36 $ 15.98 $ 15.22 $ 15.36 $ 14.99 shareReturn onaverage 0.73 % 0.64 % 0.92 % 0.14 % 0.86 % 0.92 %assets^1Net interest 3.57 % 3.42 % 3.50 % 3.49 % 3.57 % 3.80 %margin^1Net interestincome to 3.32 % 3.27 % 3.34 % 3.32 % 3.37 % 3.51 %averageassets^1Efficiency 67.64 % 68.67 % 62.79 % 71.82 % 74.53 % 69.9 %ratioNonperformingassets to 0.64 % 0.64 % 0.65 % 0.78 % 0.81 % 0.91 %total assets

1Annualized

Contact: Tom Wayne, CEO and CFOPhone: 336-644-9944