GlobeNewswire Inc | Jan 31, 2022 06:48PM EST

January 31, 2022

OAK RIDGE, N.C., Jan. 31, 2022 (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 2021, and a quarterly cash dividend of $0.07 per share.

Fourth Quarter and Full Year 2021 Highlights

-- Earnings per share of $2.91 for 2021, up $1.68, or 137%, from 2020; earnings per share of $0.74 for the three months ended December 31, 2021, up 36 cents, or 95%, from the same period in 2020; -- Return on average common stockholders equity of 15.70% for 2021, compared to 7.68% for 2020; return on average common stockholders equity of 14.78% for the three months ended December 31, 2021, compared to 9.17% for the same period in 2020; -- Negative loan loss provision for the year ended December 31, 2021 of $682,000, compared to a loan loss provision of $2.7 million for 2020; 2020 loan loss provision of $2.7 million predominantly related to the potential adverse economic impact of the COVID-19 pandemic; -- Tangible book value per common share of $19.20, up 13.9%, or $2.34, from $16.86 as of December 31, 2020. -- Through December 31, 2021, forgave and recognized remaining unamortized fees and associated costs of approximately 92% on the $50.1 million of first round of Small Business Administration (SBA) Paycheck Protection Program (PPP) loans; -- In 2021, the Bank funded 418 second round PPP loans totaling $30.8 million, the associated fees and origination costs will be recognized as interest income and expense, respectively, over the life of the PPP loans; -- Through December 31, 2021, forgave and recognized remaining unamortized fees and associated costs of approximately 50% on the $30.8 million of second round of PPP loans; -- Period end loans of $429.7 million, down 4.6% from December 31, 2020. Period end loans, net of PPP loans, of $410.6 million, up 2.4% from December 31, 2020; -- Period end allowance for loan losses of $3.8 million, down 31.2%, from $5.5 million at December 31, 2020. -- Nonperforming assets of $3.0 million, down 14.3% from $3.5 million at December 31, 2020. -- Period end deposits of $509.3 million, up 11.7% from December 31, 2020. Period end noninterest-bearing deposits of $116.5 million, up 23.7% from December 31, 2020.

Tom Wayne, Chief Executive Officer and Chief Financial Officer of the Company and the Bank, reported, I am extremely pleased with our continued strong performance in the fourth quarter and for the full year of 2021. Despite the continued challenges presented by the ongoing pandemic, we experienced excellent financial performance. I am thankful for our experienced team of bankers and board of directors, and our supportive clients as we address future opportunities and challenges.

A quarterly cash dividend of $0.07 per share of common stock is payable on March 2, 2022 to stockholders of record as of the close of business on February 16, 2022. 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 September 30, 2020. As of December 31, 2021, the Banks CBLR was 10.17%, up from 9.37% on December 31, 2020. As of December 31, 2021, the Companys stockholders equity was $51.3 million, up 15.4%, from $44.5 million on December 31, 2020.

With respect to the consolidated statement of operations for 2021 and 2020, net interest income was $21.0 million for 2021, up $3.4 million, or 19.4%, from $17.6 million during the year ending December 31, 2020. For 2021, the net interest margin was 3.96% compared to 3.50% for year ending December 31, 2020, an increase of 39 basis points. The primary reason for the increase in the net interest margin was an increase in interest income on loans and fees on loans of $1.3 million from 2020 to 2021, as well as a $1.9 million decrease in interest expense on deposits from 2020 to 2021.

The Company recorded a negative provision for loan losses of $682,000 in 2021, compared with a loan loss provision of $2.7 million in 2020. The allowance for loan losses as a percentage of total loans not including PPP loans was 0.92% as of December 31, 2021 compared to 1.36% as of December 31, 2020. The decrease in the allowance for loan losses in 2021 was largely the result of the Company decreasing the qualitative factors in its allowance for loan loss model due to the improving economic outlook. Nonperforming assets represented 0.51% of total assets as of December 31, 2021, compared to 0.64% at December 31, 2020.

Noninterest income totaled $4.1 million in 2021, a 30% increase from 2020. The biggest contributor to the increase in noninterest income was a $641,000 increase in gain on sale of SBA loans from 2020 to 2021. Noninterest expense totaled $16.0 million in 2021, a 13.9% increase from 2020. The biggest contributor to the increase in noninterest expense was a 27% increase in salaries from 2020 to 2021. There were a variety of factors leading to the increase in salaries: PPP cost deferral in 2020 and recognition in 2021, higher incentive payments to employees due to better performance against goals in 2021 compared to 2020, scheduled merit increases on January 1, 2021, and accelerated merit increases on November 1, 2021.

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 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.

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, High Point, Summerfield and Oak Ridge, North Carolina, or call 336.644.9944, or online atwww.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 SheetsAs of December 31, 2021 (Unaudited) and 2020 (Audited)(Dollars in thousands) 2021 2020Assets Cash and due from banks $ 8,998 $ 9,354Interest-bearing deposits with banks 79,086 11,994Total cash and cash equivalents 88,084 21,348Securities available-for-sale 46,948 46,357Securities held-to-maturity 387 564Restricted stock, at cost 1,324 1,806Loans, net of allowance for loan losses of $3,756 and $5,458 at December 31, 2021 and 2020, respectively 425,900 445,127Property and equipment, net 9,907 10,632Accrued interest receivable 1,842 2,412Bank owned life insurance 6,014 5,930Right-of-use assets ? operating leases 1,594 1,990Other assets 4,921 4,464Total assets $ 586,921 $ 540,630 Liabilities and Stockholders? Equity Liabilities Deposits Noninterest-bearing $ 116,525 $ 94,227Interest-bearing 392,754 361,510Total deposits 509,279 455,737Short-term borrowings - 8,000Long-term borrowings 683 952Junior subordinated notes related to trust preferred 8,248 8,248securitiesSubordinated debentures 9,863 15,484Lease liabilities ? operating leases 1,594 1,990Accrued interest payable 110 140Other liabilities 5,816 5,604Total liabilities 535,593 496,155 Stockholders? equity Common stock, no par value; 50,000,000 shares authorized; 2,672,620 and 2,639,345 issued and outstanding at December 31, 2021 and 2020, respectively 25,532 25,013Retained earnings 22,815 15,771Accumulated other comprehensive income 2,981 3,691Total stockholders? equity 51,328 44,475Total liabilities and stockholders? equity $ 586,921 $ 540,630

Oak Ridge Financial Services, Inc.Consolidated Statements of IncomeFor the three months and years ended December 31, 2021 and 2020 (Unaudited)(Dollars in thousands) Three months Three months Year ended Year ended ended December ended December December December 31, 2021 31, 2020 31, 2021 31, 2020Interest and dividend incomeLoans and fees on $ 5,135 $ 5,196 $ 21,922 $ 20,649 loansInterest on 23 4 44 58 deposits in banksRestricted stock 18 48 78 98 dividendsInterest oninvestment 317 367 1,331 1,329 securitiesTotal interest and 5,493 5,615 23,375 22,134 dividend income Interest expense Deposits 279 570 1,306 3,213 Short-term and 204 365 1,059 1,319 long-term debtTotal interest 483 935 2,365 4,532 expenseNet interest 5,010 4,680 21,010 17,602 income Provision for loan (435 ) 500 (682 ) 2,746 lossesNet interestincome after 5,445 4,180 21,692 14,856 provision for loanlosses Noninterest incomeService charges on 144 143 534 588 deposit accountsGain on sale of - - 182 - securitiesLoss on sale ofproperty and - - - (6 )equipmentBrokeragecommissions on 91 86 290 381 mortgage loansInsurance 92 87 413 362 commissionsGain on sale of 1,049 - 1,105 464 SBA loansDebit and creditcard interchange 300 252 1,129 1,047 incomeIncome from SBIC 102 - 102 - Income earned onbank owned life 21 23 84 93 insuranceOther service 42 57 251 227 charges and feesTotal noninterest 1,841 648 4,090 3,156 income Noninterest expenseSalaries 2,603 1,731 7,801 6,138 Employee benefits 289 286 1,119 1,117 Occupancy 285 285 1,086 998 Equipment 280 258 1,109 1,003 Data and item 550 514 1,925 2,147 processingProfessional and 107 118 831 579 advertisingStationary and 39 29 179 132 suppliesNet cost of - - - 5 foreclosed assetsImpairment loss on 46 5 74 58 securitiesTelecommunications 88 86 369 351 FDIC assessment 30 72 171 266 Other expense 460 234 1,326 1,245 Total noninterest 4,777 3,618 15,990 14,039 expenseIncome before 2,509 1,210 9,792 3,973 income taxes Income tax expense 534 200 2,029 714 Net income and income availableto common $ 1,975 $ 1,010 $ 7,763 $ 3,259 stockholders Basic income per $ 0.74 $ 0.38 $ 2.91 $ 1.23 common shareDiluted income per $ 0.74 $ 0.38 $ 2.91 $ 1.23 common shareBasic weightedaverage shares 2,672,620 2,639,345 2,668,720 2,640,504 outstandingDiluted weightedaverage shares 2,672,620 2,639,345 2,668,720 2,640,504 outstanding

Selected December September June 30, March 31, December SeptemberFinancial 31, 2021 30, 2021 2021 31, 2020 30, 2020Data 2021Return onaveragecommon 15.70 % 16.40 % 14.71 % 18.45 % 9.17 % 8.50 %stockholders'equity^1Tangible bookvalue per $ 19.20 $ 18.53 $ 17.93 $ 17.24 $ 16.85 $ 16.36 shareReturn onaverage 1.36 % 1.41 % 1.20 % 1.49 % 0.73 % 0.64 %assets^1Net interest 3.65 % 3.94 % 3.79 % 4.26 % 3.57 % 3.42 %margin^1Efficiency 69.73 % 63.08 % 62.80 % 59.94 % 67.64 % 68.67 %ratioNonperformingassets to 0.51 % 0.50 % 0.55 % 0.62 % 0.64 % 0.64 %total assets

1Annualized

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