Oak Ridge Financial Services, Inc. Announces Third Quarter 2023 Results and Quarterly Cash Dividend of $0.10 Per Share

Rhea-AI Summary

Oak Ridge Financial Services, Inc. announced unaudited financial results for Q3 2023, with earnings per share of $0.55 and a return on equity of 10.63%. The company declared a quarterly cash dividend of $0.10 per common share. Total assets increased by $22.0 million.

Positive

• Earnings per share of $0.55, up from $0.54 in the previous quarter
• Return on equity of 10.63%, slightly lower than the previous quarter
• Dividends declared per common share of $0.10, unchanged from the previous quarter
• Total assets increased by $22.0 million, or 3.7%
• Net interest margin of 3.84%, lower than the previous quarter
• Efficiency ratio improved to 68.72%, compared to 70.39% in the previous quarter
• Nonperforming assets to total assets decreased to 0.08%

Negative

• None.

OAK RIDGE, N.C., Oct. 25, 2023 (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 third quarter of 2023 and a quarterly cash dividend of $0.10 per common share.

Third Quarter 2023 Performance and Accomplishments

• Earnings per share of $0.55, compared to $0.54 in the linked quarter and $0.59 for the third quarter of 2022.
• Return on equity of 10.63%, compared to 10.84% in the linked quarter and 12.35% for the third quarter of 2022.
• Dividends declared per common share of $0.10, unchanged from the linked quarter and up from $0.08 for the third quarter of 2022.
• Tangible book value per common share of $20.26 as of period end, compared to $20.14 at the end of the linked quarter and $18.67 at the end of the third quarter of 2022.
• Net interest margin of 3.84%, compared to 3.89% in the linked quarter and 4.10% for the third quarter of 2022.
• Efficiency ratio of 68.72%, compared to 70.39% in the linked quarter and 66.76% for the third quarter of 2022.
• Nonperforming assets to total assets of 0.08% at quarter end, compared to 0.10% as of the linked quarter end and 0.15% as of the third quarter end of 2022.
  

Tom Wayne, Chief Executive Officer and Chief Financial Officer, reported, “Oak Ridge’s operating performance in the third quarter was solid, especially considering the continued increase in market interest rates and concerns regarding the banking industry’s financial performance and safety and soundness. Asset quality was strong at the end of the quarter, our net interest margin was strong during the quarter, and our loans increased while deposits decreased just slightly from year end. Capital and liquidity levels remain strong. Oak Ridge remains focused on its full client relationships including long-term core deposit and lending solutions and other products and services that meet our customers’ financial objectives. We are incredibly proud of our team and appreciate their efforts in serving our clients and managing the Bank in a safe and sound manner.”

A quarterly cash dividend of $0.10 per share of common stock is payable on December 4, 2023, to stockholders of record as of the close of business on November 17, 2023, which represents the 20^th consecutive quarterly dividend paid by the Company. “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.”

Review of Balance Sheet at September 30, 2023, as compared to December 31, 2022

• Total assets increased $22.0 million, or 3.7%, to $611.3 million, from $589.3 million.
• Cash and cash equivalents decreased $25.9 million, or 51.4%, to $24.5 million, from $50.4 million.
• Securities available-for-sale increased $9.2 million, or 11.4%, to $90.1 million, from $80.9 million.
• Securities held-to-maturity increased $7.6 million, or 67.7%, to $18.7 million due to reclassifications of subordinated debenture investments in other banks and bank holding companies from loans receivable to held-to-maturity securities. The reclassifications were $10.9 million and $7.4 million in December of 2022 and June of 2023, respectively. The lowest, largest, and average balance of each subordinated debenture investment in one bank or bank holding company as of September 30, 2023, was $331,000, $1.5 million, and $909,000, respectively. The average book life of the subordinated debenture portfolio was 3.28 years as of September 30, 2023.
• Total net loans increased $27.0 million, or 6.4%, to $448.4 million, from $421.4 million.
  • The allowance for loan losses as a percentage of total loans was 1.06% and 1.14% on September 30, 2023, and December 31, 2022, respectively.
  • Nonperforming assets represented 0.08% of total assets on September 30, 2023, compared to 0.13% on December 31, 2022.
  • On January 1, 2023, the Company adopted Current Expected Credit Loss ("CECL") methodology for establishing it allowance for loan loss. As a result of adopting this standard the Company’s retained earnings increased $24,000, the allowance for loan losses decreased $247,000, and the reserves for unfunded commitments increased $223,000.
• Total deposits decreased $3.1 million, or 0.6%, to $477.9 million, from $481.0 million.
• Total borrowings from Federal Home Loan Bank of Atlanta advances and under the Federal Reserve Term Funding Program increased $20.0 million, or 66.7%, to $50.0 million, from $30.0 million.
• Stockholders’ equity increased $2.7 million, or 6.2%, to $55.3 million, from $52.6 million. Accumulated other comprehensive loss was $3.4 million, or 4.2% of total stockholders’ equity as of September 30, 2023. The Bank’s Community Bank Leverage Ratio (“CBLR”) was 11.26% at September 30, 2023, compared to 11.27% at December 31, 2022. Financial institutions that follow the CBLR guidelines and have a CBLR of greater than 9.0% meet the well-capitalized regulatory requirement.
  

Review of Income Statement for the three months ended September 30, 2023, as compared to the same period ending September 30, 2022

• Net interest income increased $38,000 to $5.6 million for the third quarter of 2023 compared to the year-ago quarter. The net interest margin decreased 26 basis points to 3.84% for the third quarter of 2023 compared to the year-ago quarter.
• Provision for credit losses was $137,000 in the third quarter of 2023 compared to a provision for credit losses of $160,000 in the year-ago quarter. The primary risks inherent in the Bank’s loan portfolio, including the adequacy of the allowance or reserve for loan losses, are based on management’s assumptions regarding, among other factors, general and local economic conditions, which are difficult to predict and are beyond the Bank’s control. In estimating these risks, and the related loss reserve levels, management also considers the financial conditions of specific borrowers and credit concentrations with specific borrowers, groups of borrowers, and industries.
• Noninterest income increased $62,000 to $1.0 million for the third quarter 2023 compared with the year-ago quarter. Significant contributors to the overall net increase were:
  • Decrease of $56,000 in gain on sale of Small Business Administration loans. On most 2023 originations the Bank is retaining the guaranteed portion of the loan whereas in 2022 the Company sold substantially all guaranteed portions of the loans.
  • Decrease of $39,000 in brokerage commissions on mortgage loans.
  • Increase of $135,000 in income from, Small Business Investment Company.
• Noninterest expense increased $198,000, or 4.5%, to $4.6 million for the third quarter of 2023 compared with the year-ago quarter. An increase of $116,000 in data and item processing accounted for most of the net increase.
  

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 Interactive Teller Machine 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 the 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 September 30, 2023 (Unaudited) and December 31, 2022 (Audited)
(Dollars in thousands)
		2023				2022
Assets
Cash and due from banks		$	9,182			$	12,467
Interest-bearing deposits with banks		15,294				37,889
Total cash and cash equivalents		24,476				50,356
Securities available-for-sale		90,148				80,939
Securities held-to-maturity, fair values of $16,494 and $10,350 at September
30, 2023 and December 31, 2022, respectively		18,720				11,161
Restricted stock, at cost		2,828				2,626
Loans, net of allowance for credit losses of $4,808 and
$4,851 at September 30, 2023, and December 31, 2022, respectively		448,420				421,444
Property and equipment, net		8,523				9,192
Accrued interest receivable		2,427				1,996
Bank owned life insurance		6,155				6,095
Right-of-use assets – operating leases		2,537				1,183
Other assets		7,028				4,289
Total assets		$	611,262			$	589,281
Liabilities and Stockholders’ Equity
Liabilities
Deposits
Noninterest-bearing		$	106,981			$	120,263
Interest-bearing		370,881				360,722
Total deposits		477,862				480,985
Short-term FHLB Advances		28,000				30,000
Federal Reserve bank term funding program		22,000				-
Other short-term borrowings		-				418
Junior subordinated notes – trust preferred securities		8,248				8,248
Subordinated debentures		9,933				9,903
Lease liabilities – operating leases		2,537				1,183
Accrued interest payable		1,094				226
Other liabilities		6,235				5,675
Total liabilities		555,909				536,638
Stockholders’ equity
Common stock, no par value; 50,000,000 shares authorized;
2,732,720 and 2,672,620 issued and outstanding
at September 30, 2023, and December 31, 2022, respectively		26,603				26,207
Retained earnings		32,161				28,642
Accumulated other comprehensive loss		(3,411		)		(2,206		)
Total stockholders’ equity		55,353				52,643
Total liabilities and stockholders’ equity		$	611,262			$	589,281

 

Oak Ridge Financial Services, Inc.
Consolidated Statements of Income (Unaudited)
For the three months ended September 30, 2023, and 2022
(Dollars in thousands)
	Three months ended							Nine months ended September 30,
	September 30, 2023		June 30, 2023			September 30, 2022		2023		2022
Interest and dividend income
Loans and fees on loans	$	6,455	$	5,780		$	5,197	$	18,151	$	15,735
Interest on deposits in banks		207		216			172		663		370
Restricted stock dividends		42		41			21		141		57
Interest on investment securities		1,516		1,368			689		3,721		1,454
Total interest and dividend income		8,220		7,405			6,079		22,676		17,616
Interest expense
Deposits		1,678		1,374			222		4,074		715
Short-term and long-term debt		915		645			268		2,229		696
Total interest expense		2,593		2,019			490		6,303		1,411
Net interest income		5,627		5,386			5,589		16,373		16,205
Provision for (recovery of) credit losses		137		(63	)		160		248		141
Net interest income after provision for loan losses		5,490		5,449			5,429		16,125		16,064
Noninterest income
Service charges on deposit accounts		161		149			151		459		437
Brokerage commissions on mortgage loans		9		12			48		43		181
Insurance commissions		135		109			124		340		350
Gain on sale of investment securities		-		-			-		77		-
Gain on sale of Small Business Administration loans		147		96			203		475		718
Debit and credit card interchange income		333		299			306		924		891
Income from Small Business Investment Company		135		51			-		186		170
Income earned on bank owned life insurance		21		20			21		60		60
Other service charges and fees		108		155			134		428		259
Total noninterest income		1,049		891			987		2,992		3,066
Noninterest expense
Salaries		2,175		2,180			2,219		6,666		6,575
Employee benefits		335		264			267		908		817
Occupancy		250		261			281		819		828
Equipment		208		239			237		658		732
Data and item processing		527		468			411		1,465		1,265
Professional and advertising		379		345			252		1,082		837
Stationery and supplies		26		34			19		94		80
Telecommunications		135		129			112		390		323
FDIC assessment		102		132			110		308		217
Impairment loss on securities		-		-			13		-		13
Other expense		451		366			469		1,207		1,216
Total noninterest expense		4,588		4,418			4,390		13,597		12,903
Income before income taxes		1,951		1,922			2,026		5,520		6,227
Income tax expense		456		434			421		1,256		1,257
Net income and income available to common stockholders	$	1,495	$	1,488		$	1,605	$	4,264	$	4,970
Basic and diluted income per common share	$	0.55	$	0.54		$	0.59	$	1.56	$	1.84
Basic and diluted weighted average shares outstanding	2,732,720			2,732,720			2,702,370		2,726,535		2,696,026

Selected Financial Data	September 30, 2023			June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022
Return on average common stockholders' equity¹		10.63	%		10.84	%		9.62	%		12.98	%		12.35	%		13.52	%
Tangible book value per share	$	20.26		$	20.14		$	19.94		$	19.48		$	18.67		$	18.77
Return on average assets¹		0.98	%		1.02	%		0.88	%		1.18	%		1.08	%		1.08	%
Net interest margin¹		3.84	%		3.89	%		3.91	%		4.02	%		4.10	%		3.66	%
Efficiency ratio		68.72	%		70.39	%		71.60	%		69.64	%		66.76	%		68.93	%
Nonperforming assets to total assets		0.08	%		0.10	%		0.11	%		0.13	%		0.15	%		0.14	%

_¹Annualized

Contact: Skylar Mearing, Marketing Director
Phone: 336.662.4840

FAQ

What were the earnings per share for Q3 2023?

Earnings per share were $0.55.

What was the return on equity for Q3 2023?

The return on equity was 10.63%.

What was the dividend declared per common share?

The dividend declared per common share was $0.10.

How much did total assets increase by?

Total assets increased by $22.0 million, or 3.7%.

What was the net interest margin for Q3 2023?

The net interest margin was 3.84%.

What was the efficiency ratio for Q3 2023?

The efficiency ratio improved to 68.72%.

What was the nonperforming assets to total assets ratio for Q3 2023?

The nonperforming assets to total assets ratio decreased to 0.08%.