Oak Ridge Financial Services, Inc. Announces Record First Quarter 2021 Results, increase in Quarterly Cash Dividend to $0.07 Per Share

Rhea-AI Summary

Oak Ridge Financial Services, Inc. (OTCPink: BKOR) reported strong first-quarter 2021 results. Earnings per share reached a record $0.77, a significant rise of $0.70 year-over-year. The return on average common stockholders’ equity soared to 18.45%, compared to 1.68% in Q1 2020. The tangible book value per share increased by 13.3% to $17.24. Total loans increased by 2.8% to $463.0 million, while deposits climbed 8.1% to $492.6 million. A quarterly cash dividend was raised to $0.07, payable on June 10, 2021. These results highlight the company’s commitment to enhancing stockholder value amidst ongoing economic challenges.

Positive

• Record earnings per share of $0.77, up from $0.07 in Q1 2020.
• Annualized return on equity at 18.45%, a substantial increase from 1.68% year-over-year.
• Tangible book value per share rose by 13.3% to $17.24.
• Total loans increased by 2.8% to $463.0 million.
• Deposits grew 8.1% to $492.6 million.
• Increased quarterly cash dividend to $0.07 per share, reflecting commitment to shareholder value.

Negative

• Nonperforming assets rose 2.9% to $3.6 million, from $3.5 million at end of 2020.

OAK RIDGE, N.C., May 10, 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 first three months of 2021, and an increase in its quarterly cash dividend to $0.07.

First Quarter 2021 Highlights

• Record earnings per share of $0.77 for the three months ended March 31, 2021, up 70 cents from the comparable 2020 period;
• Record annualized return on average common stockholders’ equity of 18.45% for the three months ended March 31, 2021, compared to 1.68% for the same period in 2020;
• Tangible book value per common share of $17.24 as of March 31, 2021, up 13.3%, or $2.02, from $15.22 as of March 31, 2020;
• As of March 31, 2021, forgave and recognized remaining unamortized fees and associated costs of approximately 45% on the $50.1 million of first round of Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans;
• As of March 31, 2021, the Bank funded 353 Round 2 PPP loans totaling $27.8 million, the associated fees and origination costs will be recognized as interest income and expense, respectively, over the life of the PPP loans
• Period end loans of $463.0 million, up 2.8% (11.2% annualized) from December 31, 2020;
• Outstanding balance of loans granted deferrals of principal and/or interest payments in response to COVID-19 of $1.6 million (0.40% of total loans) as of March 31, 2021, down from a peak of $133.7 million (29.2% of loans);
• Period end allowance for loan losses of $5.3 million, down 3.8%, from $5.5 million at December 31, 2020;
• Nonperforming assets of $3.6 million, up 2.9% from $3.5 million at December 31, 2020;
• Period end deposits of $492.6 million, up 8.1% from December 31, 2020;
• Opened the Bank’s fifth bank branch in High Point, NC in February of 2021.
  

Tom Wayne, Chief Executive Officer and Chief Financial Officer, reported, “I am extremely pleased with our record performance in the first quarter of 2021, and very proud of our Bank’s support of the local community through our continued participation in the PPP program. Loans in deferral peaked at 29% of total loans in the second quarter of 2020 and have since fallen to 0.40% of total loans at March 31, 2021, a very positive sign. While it remains 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.”

The Company also announced a $0.01 increase in its quarterly cash dividend to $0.07 per share of common stock. The dividend is payable on June 10, 2021 to stockholders of record as of the close of business on May 25, 2021. “We are pleased to increase 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 March 31, 2021 the Bank’s CBLR was 9.56%, up from 9.22% at December 31, 2021. As of March 31, 2021, the Company’s stockholders’ equity was $45.9 million, up 3.1%, from $44.5 million at December 31, 2020.

With respect to the consolidated statement of operations for the first three months of 2021, net interest income was $5.6 million in 2021, up $1.6 million, or 40.0%, from $4.0 million for the first quarter of 2020.

The Company recorded a negative provision for loan losses of $112,000 million in the first three months 2021, compared with a loan loss provision of $1.1 million in the same period of 2020. The allowance for loan losses as a percentage of total loans was 1.21% at December 31, 2021 compared to 0.90% at December 31, 2020. The Company increased the allowance for loan losses in 2020, largely due to increase in the qualitative factors in the Company’s allowance for loan loss model due to the deteriorating economic outlook related to COVID-19. Nonperforming assets represented 0.62% of total assets as of March 31, 2021, down slightly from 0.64% at December 31, 2020.

Noninterest income totaled $671,000 in the first three months of 2021, unchanged from the same period in 2020. Noninterest expense totaled $3.7 million in the first three months in 2021, up slightly from $3.3 million in the same period in 2020.

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 Bank’s employees are stockholders in Oak Ridge Financial Services, Inc. through their participation in the Bank’s Employee Stock Ownership Plan. We are proud of our many accolades and awards, including seven “Best Bank in the Triad” wins, “Triad’s Top Workplace” finalist, “Triad’s 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 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
As of March 31, 2021 (Unaudited) and December 31, 2020 (Audited)

	2021			2020
Assets
Cash and due from banks	$	8,624		$	9,354
Interest-bearing deposits with banks		37,628			11,994
Total cash and cash equivalents		46,252			21,348
Securities available-for-sale		45,153			46,357
Securities held-to-maturity		529			564
Restricted stock, at cost		1,525			1,806
Loans, net of allowance for loan losses of $5,250 at period end 2021 and $5,458 at year end 2020		457,734			445,127
Property and equipment, net		10,504			10,632
Accrued interest receivable		2,075			2,412
Bank owned life insurance		5,951			5,930
Right-of-use assets – operating leases		1,893			1,990
Other assets		5,137			4,464
Total assets	$	576,573		$	540,630
Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Noninterest-bearing	$	110,904		$	94,227
Interest-bearing		381,650			361,510
Total deposits		492,554			455,737
Short-term borrowings		5,000			8,000
Long-term borrowings		886			952
Junior subordinated notes related to trust preferred securities		8,248			8,248
Subordinated debentures		15,476			15,484
Lease liabilities – operating leases		1,892			1,990
Accrued interest payable		293			140
Other liabilities		6,528			5,604
Total liabilities		530,877			496,155
Stockholders’ equity
Common stock, no par value; 50,000,000 shares authorized; 2,675,500 issued and outstanding at period end 2021 and 2,639,345 at year end 2020		25,153			25,013
Retained earnings		17,669			15,771
Accumulated other comprehensive income		3,054			3,691
Total stockholders’ equity		45,875			44,475
Total liabilities and stockholders’ equity	$	576,573		$	540,630

Oak Ridge Financial Services, Inc. Consolidated Statements of Income Three months ended March 31, 2021 and 2020 (Unaudited) (Dollars in thousands except per share data)
	2021			2020
Interest and dividend income
Loans and fees on loans	$	5,874		$	4,924
Interest on deposits in banks		24			65
Restricted stock dividends		20			16
Taxable investment securities		336			298
Total interest and dividend income		6,254			5,303
Interest expense
Deposits		375			1,060
Short-term and long-term debt		321			274
Total interest expense		696			1,333
Net interest income		5,558			3,969
Provision for (recovery of) loan losses		(112	)		1,140
Net interest income after provision for loan losses		5,670			2,829
Noninterest income
Service charges on deposit accounts		135			181
Brokerage commissions on mortgage loans		77			82
Insurance commissions		121			84
Gain on sale of SBA loans		-			-
Debit and credit card interchange income		254			243
Income earned on bank owned life insurance		21			24
Other service charges and fees		63			59
Total noninterest income		671			673
Noninterest expense
Salaries		1,853			1,546
Employee benefits		294			272
Occupancy		286			236
Equipment		277			245
Data and item processing		446			512
Professional and advertising		157			166
Stationary and supplies		39			34
Net cost of foreclosed assets		-			5
Impairment loss on securities		10			-
Telecommunications		95			77
FDIC assessment		58			13
Other expense		229			228
Total noninterest expense		3,744			3,334
Income before income taxes		2,597			168
Income tax expense (benefit)		542			(4	)
Net income and income available to common stockholders	$	2,055		$	172
Basic income per common share	$	0.77		$	0.07
Diluted income per common share	$	0.77		$	0.07
Basic weighted average shares outstanding		2,675,500			2,635,135
Diluted weighted average shares outstanding		2,675,500			2,644,434

Selected Financial Data	March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019
Return on average common stockholders' equity1		18.45	%		9.17	%		8.50	%		11.66	%		1.68	%		10.23	%
Tangible book value per share	$	17.24		$	16.86		$	16.36		$	15.98		$	15.22		$	15.36
Return on average assets1		1.49	%		0.73	%		0.64	%		0.92	%		0.14	%		0.86	%
Net interest margin1		4.26	%		3.57	%		3.42	%		3.50	%		3.49	%		3.57	%
Net interest income to average assets1		4.03	%		3.32	%		3.27	%		3.34	%		3.32	%		3.37	%
Efficiency ratio		59.94	%		67.64	%		68.67	%		62.79	%		71.82	%		74.53	%
Nonperforming assets to total assets		0.62	%		0.64	%		0.64	%		0.65	%		0.78	%		0.81	%

¹Annualized

FAQ

What is the dividend amount for BKOR in 2021?

The dividend amount for BKOR is $0.07 per share.

When is the dividend for BKOR payable?

The dividend is payable on June 10, 2021.

What were BKOR's earnings per share in the first quarter of 2021?

BKOR reported earnings per share of $0.77 for Q1 2021.

How did BKOR's loan performance change in Q1 2021?

Total loans increased by 2.8% to $463.0 million in Q1 2021.

What is the return on equity for BKOR in Q1 2021?

The return on equity for BKOR in Q1 2021 was 18.45%.