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Oak Ridge Financial Services, Inc. Announces Second Quarter 2022 Results

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Oak Ridge Financial Services
Oak Ridge Financial Services

OAK RIDGE, N.C., July 22, 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 three and six months ended June 30, 2022.

June 30, 2022 Highlights

  • Basic and diluted earnings per share of $0.63 for the three months ended June 30, 2022, down two cents, or 3.1%, from the comparable 2021 period;

  • Annualized return on average common stockholders’ equity of 13.52% for the three months ended June 30, 2022, compared to 14.71% for the same period in 2021;

  • Tangible book value per common share of $18.77 as of June 30, 2022, up 4.7%, or $0.84, from $17.93 as of June 30, 2021;

  • Through June 30, 2022, have forgiven and recognized 94% of the unamortized fees and associated costs on the $80.0 million of first and second round of Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans;

  • Period end total loans of $432.4 million, up 0.64% (1.27% annualized), or $2.7 million, from $429.7 million as of December 31, 2021;

  • Period end allowance for loan losses of $4.8 million, up 27.1%, from $3.8 million on December 31, 2021;

  • Nonperforming assets of $884,000, down 69.5% from $2.9 million on December 31, 2021;

  • Period end deposits of $535.5 million, up 5.1%, or $26.2 million from $509.3 million as of December 31, 2021; and

  • Named to American Banker magazine’s Top 200 Publicly Traded Community Banks and Thrifts. The ranking is based on a company’s three-year average return on average equity (ROAE) through December 31, 2021. This is the sixth consecutive year the Company has been on the prestigious list.

Tom Wayne, Chief Executive Officer and Chief Financial Officer, reported, “I am extremely pleased with our continued strong financial performance in the second quarter of 2022 given the reduction in the bank’s PPP income. Our team has shown great resilience and performance as we navigate the changing economic and social environment, with the Company producing greater than double digit return on equity for the last six consecutive quarters. Additionally, our nonperforming assets to total assets declined from 0.51% on December 31, 2021, to 0.14% on June 30, 2022.”

A quarterly cash dividend of $0.08 per share of common stock is payable on September 2, 2022, to stockholders of record as of the close of business on August 19, 2022. “We are pleased to pay another quarterly cash dividend to our stockholders,” said Mr. Wayne. “Paying stockholders a portion of our earnings reflects our continuing commitment to enhance stockholder value.”

As of June 30, 2022, the Bank’s Community Bank Leverage Ratio was 10.2%, unchanged from December 31, 2021. Stockholders’ equity on June 30, 2022, was $50.7 million, down 1.2% from $51.3 million on December 31, 2021, due to an increase in accumulated other comprehensive loss in 2022.

For the three months ended June 30, 2022 and 2021, net interest income was $5.2 million and $5.1 million, respectively. For the three months ended June 30, 2022, the annualized net interest margin was 3.66% compared to 3.79% for the same period in 2021, a decrease of 13 basis points. For the six months ended June 30, 2022, net interest income was $10.6 million, compared to $10.7 million during the same period in 2021. The annualized net interest margin was 3.87% for the six months ended June 30, 2022, compared to 4.02% for the same period in 2021, a decrease of 15 basis points.

The Company recorded a recovery of provision for loan losses of $107,000 for the three months ended June 30, 2022, with no provision for loan losses for the same period in 2021. For the six months ended June 30, 2022 and 2021, the Company recorded a recovery of provision for loan losses of $19,000 and $112,000, respectively. The allowance for loan losses as a percentage of total loans was 1.10% on June 30, 2022, compared to 0.87% on December 31, 2021. The increase in the allowance for loan losses in 2022 was largely the result of the Company increasing the qualitative factors in its allowance for loan loss model due to the declining overall economic outlook. Nonperforming assets represented 0.14% of total assets on June 30, 2022, compared to 0.64% on December 31, 2021.

Noninterest income totaled $1.3 million for the three months ended June 30, 2022, compared with $659,000 for the same period in 2021, an increase of $641,000 or 97.3%. The biggest contributor to the increase was gains on sales of SBA loans (not PPP loans) of $485,000 in the second quarter of 2022 and no gains in the comparable period in 2021. Additionally, Income from Small Business Investment Company totaled $100,000 for the three months ended June 30, 2022, with no income in the comparable period in 2021. Noninterest income totaled $2.1 million for the six months ended June 30, 2022, compared with $1.3 million for the same period in 2021, an increase of $750,000 or 56.4%. The biggest contributor to the increase was gains on sales of SBA loans (not PPP loans) of $514,000 for the six months ended June 30, 2022, with no gains in the comparable period in 2021. Additionally, Income from Small Business Investment Company totaled $100,000 for the six months ended June 30, 2022, with no income in the comparable period in 2021.

Noninterest expense totaled $4.5 million in the three months ended June 30, 2022, an increase of $827,000, or 22.7%, from the same period in 2021. The increase was driven by higher employee salaries which increased by $875,000 compared to the prior year period, partly due to annual merit increases effective November 1, 2021, higher 2022 commissions, and the absence of the Cares Act Employer Retention Credit in 2022. Additionally, other expenses increased $113,000 compared to the prior year period partly due to increased expenses related to SBA lending, deposit losses, insurance expenses, annual license fees, and appraisal fees. Noninterest expense totaled $8.5 million in the six months ended June 30, 2022, an increase of $1.1 million, or 15.2%, from 2021. The increase was driven by higher employee salaries which increased by $866,000 compared to the prior period, partly due to annual merit increases effective November 1, 2021, higher 2022 commissions, and the absence Cares Act Employer Retention Credit in 2022. Professional and advertising expenses increased $156,000 compared to the prior year period due to higher legal expenses related to the disposition of nonaccrual loans, and higher outsourced information technology security and cybersecurity expenses. Additionally, other expenses increased $197,000 compared to the prior year period, partly due to increased expenses related to SBA lending, insurance expenses, annual license fees, and appraisal fees.

About Oak Ridge Financial Services, Inc. and Bank of Oak Ridge
At Bank of Oak Ridge, we pride ourselves on knowing your name when you walk through our door. Whether in-person or through our digital offerings, managing your financial well-being is easy, safe, and convenient. We are the longest-running employee-owned community bank in the Triad and have served community members, local businesses, and non-profit organizations since 2000. Learn more about what makes Bank of Oak Ridge the Triad’s community bank by visiting one of our convenient locations in Greensboro, High Point, Summerfield & Oak Ridge.

Oak Ridge Financial Services, Inc. (OTC Pink: BKOR) is the holding company for Bank of Oak Ridge. Bank of Oak Ridge is a member of the FDIC and an Equal Housing Lender.

Awards & Recognitions | Best Bank in the Triad | Triad’s Top Workplace Finalist | 2016 Better Business Bureau Torch Award for Business Ethics | Triad’s Healthiest Employer Winner

Banking for Business & Personal | Mobile & Online Banking | Worldwide ATM | Debit, Credit + Rewards | Checking, Savings & Money Market | Loans + SBA | Mortgage | Insurance | Wealth Management

Let’s Talk | 336.644.9944 | www.BankofOakRidge.com | Extended Hours at all Triad Locations

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
As of June 30, 2022 (Unaudited) and December 31, 2021 (Audited)
(Dollars in thousands)

 

 

2022

 

2021

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

11,917

 

$

8,998

 

Interest-bearing deposits with banks

 

62,276

 

79,086

 

Total cash and cash equivalents

 

74,193

 

88,084

 

Securities available-for-sale

 

84,058

 

46,948

 

Securities held-to-maturity

 

354

 

387

 

Restricted stock, at cost

 

1,347

 

1,324

 

Loans, net of allowance for loan losses of $4,774 and

 

 

 

 

 

$3,756 at June 30, 2022 and December 31, 2021, respectively

 

427,621

 

425,900

 

Property and equipment, net

 

9,407

 

9,907

 

Accrued interest receivable

 

1,902

 

1,842

 

Bank owned life insurance

 

6,054

 

6,014

 

Right-of-use assets – operating leases

 

1,391

 

1,594

 

Other assets

 

6,249

 

4,921

 

Total assets

 

$

612,576

 

$

586,921

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

Noninterest-bearing

 

$

118,227

 

$

116,525

 

Interest-bearing

 

 

417,277

 

 

392,754

 

Total deposits

 

 

535,504

 

 

509,279

 

Long-term borrowings

 

 

551

 

 

683

 

Junior subordinated notes – trust preferred securities

 

 

8,248

 

 

8,248

 

Subordinated debentures

 

 

9,883

 

 

9,863

 

Lease liabilities – operating leases

 

 

1,391

 

 

1,594

 

Accrued interest payable

 

 

110

 

 

110

 

Other liabilities

 

 

6,170

 

 

5,816

 

Total liabilities

 

 

561,857

 

 

535,593

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

Common stock, no par value; 50,000,000 shares authorized;

 

 

 

 

 

 

 

2,702,370 and 2,672,620 issued and outstanding

 

 

 

 

 

 

 

at June 30, 2022 and December 31, 2021, respectively

 

 

25,945

 

 

25,532

 

Retained earnings

 

 

25,778

 

 

22,815

 

Accumulated other comprehensive income (loss)

 

 

(1,004

)

 

2,981

 

Total stockholders’ equity

 

 

50,719

 

 

51,328

 

Total liabilities and stockholders’ equity

 

$

612,576

 

$

586,921

 


Oak Ridge Financial Services, Inc.
Consolidated Statements of Income (Unaudited)
For the three and six months ended June 30, 2022 and 2021
(Dollars in thousands)

 

Three months ended June 30,

 

Six months ended June 30,

 

 

2022

 

2021

 

2022

 

2021

 

Interest and dividend income

 

Loans and fees on loans

$

5,051

 

$

5,440

$

10,539

 

$

11,316

 

Interest on deposits in banks

 

171

 

 

7

 

199

 

 

10

 

Restricted stock dividends

 

18

 

 

20

 

36

 

 

40

 

Interest on investment securities

 

408

 

 

328

 

764

 

 

684

 

Total interest and dividend income

 

5,648

 

 

5,795

 

11,538

 

 

12,050

 

Interest expense

 

 

 

 

 

 

 

Deposits

 

237

 

 

342

 

494

 

 

723

 

Short-term and long-term debt

 

217

 

 

330

 

428

 

 

646

 

Total interest expense

 

454

 

 

672

 

922

 

 

1,369

 

Net interest income

 

5,194

 

 

5,123

 

10,616

 

 

10,681

 

Provision for (recovery of) loan losses

 

(107)

 

 

-

 

(19)

 

 

(112)

 

Net interest income after provision for loan losses

 

5,301

 

 

5,123

 

10,635

 

 

10,793

 

Noninterest income

 

 

 

 

 

 

 

Service charges on deposit accounts

 

150

 

 

120

 

287

 

 

254

 

Brokerage commissions on mortgage loans

 

61

 

 

55

 

133

 

 

132

 

Insurance commissions

 

112

 

 

88

 

226

 

 

208

 

Gain on sale of Small Business Administration loans

 

485

 

 

-

 

514

 

 

-

 

Debit and credit card interchange income

 

308

 

 

293

 

585

 

 

547

 

Income from Small Business Investment Company

 

100

 

 

-

 

170

 

 

-

 

Income earned on bank owned life insurance

 

20

 

 

21

 

40

 

 

42

 

Other service charges and fees

 

64

 

 

82

 

124

 

 

146

 

Total noninterest income

 

1,300

 

 

659

 

2,079

 

 

1,329

 

Noninterest expense

 

 

 

 

 

 

 

Salaries

 

2,340

 

 

1,637

 

4,356

 

 

3,490

 

Employee benefits

 

304

 

 

271

 

551

 

 

565

 

Occupancy

 

251

 

 

243

 

547

 

 

530

 

Equipment

 

243

 

 

268

 

496

 

 

545

 

Data and item processing

 

408

 

 

429

 

854

 

 

875

 

Professional and advertising

 

294

 

 

271

 

584

 

 

428

 

Stationary and supplies

 

34

 

 

58

 

60

 

 

97

 

Impairment loss on securities

 

-

 

 

18

 

-

 

 

28

 

Telecommunications

 

104

 

 

96

 

211

 

 

190

 

FDIC assessment

 

53

 

 

36

 

107

 

 

94

 

Other expense

 

445

 

 

322

 

747

 

 

550

 

Total noninterest expense

 

4,476

 

 

3,649

 

8,513

 

 

7,392

 

Income before income taxes

 

2,125

 

 

2,133

 

4,201

 

 

4,730

 

Income tax expense

 

422

 

 

413

 

836

 

 

955

 

Net income and income available to common stockholders

$

1,703

 

$

1,720

$

3,365

 

$

3,775

 

Basic income per common share

$

0.63

 

$

0.65

$

1.25

 

$

1.43

 

Diluted income per common share

$

0.63

 

$

0.65

$

1.25

 

$

1.43

 

Basic weighted average shares outstanding

 

2,702,370

 

 

2,643,503

 

2,692,794

 

 

2,648,089

 

Diluted weighted average shares outstanding

 

2,702,370

 

 

2,643,503

 

2,692,794

 

 

2,648,089

 


Selected Financial Data

June 30,
2022

 

March 31,
2022

December 31,
2021

September 30,
2021

June 30,
2021

March 31,
2021

Return on average common stockholders' equity1

 

13.52

%

 

13.07

%

 

15.70

%

 

16.40

%

 

14.71

%

 

18.45

%

Tangible book value per share

$

18.77

 

$

18.63

 

$

19.20

 

$

18.53

 

$

17.93

 

$

17.24

 

Return on average assets1

 

1.11

%

 

1.14

%

 

1.36

%

 

1.41

%

 

1.20

%

 

1.49

%

Net interest margin1

 

3.66

%

 

4.07

%

 

3.65

%

 

3.94

%

 

3.79

%

 

4.26

%

Efficiency ratio

 

68.93

%

 

65.10

%

 

69.73

%

 

63.08

%

 

62.80

%

 

59.94

%

Nonperforming assets to total assets

 

0.14

%

 

0.16

%

 

0.51

%

 

0.50

%

 

0.55

%

 

0.62

%

1Annualized


Contact: Tom Wayne, CEO and CFO
Phone: 336.644.9944