OAK RIDGE, N.C., Oct. 29, 2018 (GLOBE NEWSWIRE) -- Oak Ridge Financial Services, Inc. (“Oak Ridge”; the “Company”) (OTCPink: BKOR), the parent company of Bank of Oak Ridge (the “Bank”), announced unaudited financial results for the third quarter of 2018 and a 10% stock dividend, payable November 30, 2018 to stockholders of record as of November 15, 2018.

Third Quarter 2018 Highlights

• Net income available to common stockholders of $976,000 for the three months ended September 30, 2018, up $169,000, or 20.9%, from $807,000 for the same period in 2017  
• Basic and diluted earnings per share of $0.41 for the three months ended September 30, 2018, up $0.07 cents, or 20.6%, from $0.34 for the same period in 2017
• Annualized return on average common stockholders’ equity of 11.70% for the three months ended September 30, 2018, compared to 10.82% for the same period in 2017
• Period end loans of $356.8 million, up 5.8% (7.8% annualized) from December 31, 2017
• Period end deposits of $370.4 million, up 2.4% (3.4% annualized) from December 31, 2017
• Period end noninterest-bearing deposits of $55.9 million, up 6.7% (8.9% 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 are very pleased with our return on average stockholders’ equity during the third quarter of 2018, and the year over year growth in our pretax net income, after tax net income and earnings per share. The Company experienced slower loan and noninterest-bearing deposit growth in the third quarter of 2018 compared to the first six months of 2018 as a result of a decrease in loan opportunities. Our net interest margin decreased 14 basis points from the second quarter of 2018, mostly due to the increased competition for deposits as a result of higher short term rates. However, I am very pleased with our overall performance in the first nine months of 2018 and thank our stockholders, our dedicated employees, our Board of Directors, and our clients for their continued support. The 10% stock dividend reflects the continued confidence we have in our financial performance and our commitment to enhancing shareholder value in our Company.”

The Company’s Board of Directors authorized the issuance of a 10% stock dividend to shareholders payable November 30, 2018 to shareholders of record as of November 15, 2018. Cash-in-lieu of fractional shares will be calculated based on the stock’s market value at the close of business on November 15, 2018.

The Bank’s capital ratios remain strong and exceeded all minimum regulatory requirements at September 30, 2018. As of September 30, 2018, stockholders’ equity was 7.4% of total assets, compared to 7.2% as of December 31, 2017. Book value per common share was $13.85 as of September 30, 2018, compared to $12.66 as of September 30, 2017.

With respect to the consolidated statement of operations for the three months ended September 30, 2018, net interest income was $3.9 million, which was an increase from $3.8 million during the same period in 2017. For the three months ended September 30, 2018, the net interest margin was 3.76% compared to 3.96% for the same period in 2017, a decrease of 20 basis points. For the nine months ended September 30, 2018, net interest income was $11.7 million, which was an increase from $10.7 million during the same period in 2017. The net interest margin was 3.83% for the nine months ended September 30, 2018, compared to 3.80% for the same period in 2017, an increase of 3 basis points.

The Company recorded negative provisions for loan losses of $7,000 and $40,000 for the three months ended September 30, 2018 and 2017, respectively. For the nine months ended September 30, 2018 the Company recorded a provision for loan losses of $59,000 compared with a negative provision of $60,000 for the same period in 2017.  The allowance for loan losses as a percentage of total loans was 1.00% at September 30, 2018 compared to 1.04% at December 31, 2017. The need to supplement the allowance for loan losses in 2018 was eliminated due to an improvement in various quantitative and qualitative factors used in the determination of the allowance. Nonperforming assets represented 0.63% of total assets at September 30, 2018, unchanged from December 31, 2017.

Noninterest income totaled $745,000 for the three months ended September 30, 2018, compared with $696,000 for the same period in 2017, a increase of $49,000 or 7.0%. The biggest contributor to the increase were gains on sale of SBA loans of $40,000 during the three months ended September 30, 2018, with no gains during the same period in 2017. Noninterest income totaled $2.4 million for the nine months ended September 30, 2018, compared with $2.0 million for the same period in 2017, an increase of $427,000 or 21.7%. The biggest contributor to the increase were gains on sale of SBA loans of $345,000 during the nine months ended September 30, 2018, compared to $61,000 during the same period in 2017.

Noninterest expense totaled $3.5 million in the three months ended September 30, 2018, an increase of $77,000, or 2.3%, from the same period in 2017. Two expense categories primarily contributed to the overall increase in noninterest expense. Salaries increased due to higher incentive payments in 2018 compared to 2017 and salary merit increases that took effect on January 1, 2018. Also, employee benefits increased due to lower post-retirement benefit costs in 2017 compared to 2018. Increases in salaries and employee benefits during the three months ended September 30, 2018 were partially offset by a decrease in professional and advertising expenses during the same period of time. Noninterest expense totaled $10.5 million in the nine months ended September 30, 2018, an increase of $828,000, or 8.5%, from 2017. Several expense categories 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. Also, 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 three and nine-month period ending September 30, 2018. The law reduced the corporate tax rate to 35% to 21%.

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.

Oak Ridge Financial Services, Inc.
Consolidated Balance Sheets
September 30, 2018 (unaudited) and December 31, 2017 (audited)
(Dollars in thousands)

Oak Ridge Financial Services, Inc.
Consolidated Statements of Operations
For the three months and nine months ended September 30, 2018 and 2017 (Unaudited)
(Dollars in thousands except per share data)                                                                                           

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

¹Annualized

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