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 Data | December 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 | ||||||||||||||||||