OAK RIDGE, N.C., April 18, 2016 (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 first quarter of 2016 today.

The Company’s net income for the first quarter of 2016 was $562,000 compared to net income of $714,000 for the first quarter of 2015, a decrease of $152,000.  Net income available to common stockholders for the first quarter of 2016 was $445,000 compared to net income of $597,000 for the first quarter of 2015, a decrease of $152,000.  Basic and diluted income per common share decreased $0.07 to $0.20 for the first quarter of 2016 compared to diluted income per common share of $0.27 in the first quarter of 2015.

Tom Wayne, President of the Company and the Bank, commented, “During the first quarter, net loans increased 3.0% and deposits increased 4.3%. Although net interest income decreased slightly from 2015 to 2016, if the Company can maintain loan growth throughout 2016 net interest income should increase over prior periods, barring any sudden, significant market interest rate changes. Although noninterest income decreased from 2015 to 2016, the majority of that decrease was due to a gain on the sale of securities of $678,000 in 2015 that allowed us to restructure the investment portfolio for the remainder of 2015 and into 2016. As we move forward into 2016 our primary objectives are to continue to grow loans, core deposits, and noninterest income, while closely managing noninterest expense. I am thankful for our employees’ contributions to our growth in the first quarter and am excited about the remainder of 2016.”

Profitability as measured by the Company’s annualized return on average assets was 0.62% and 0.80% for the three months ended March 31, 2016 and 2015, respectively.

The Company produced net interest income of $3.3 million during the first three months of 2016, which was slightly lower than the $3.4 million generated for the same time period of 2015. The decrease was partly caused by lower interest income and partly by higher interest expense. Interest income decreased $30,000 or approximately 0.77% to $3.9 million for the first three months of 2016 as compared to the same time period of the prior year. Most of the decrease in interest income from 2015 to 2016 was caused by decreases in interest income from investment securities. Interest expense increased $10,000 or approximately 1.9% to $533,000 for the first three months of 2016 as compared to the same time period of the prior year.

The provision for loan loss was $75,000 for the three months ended March 31, 2016, compared to $25,000 for the same period in 2015. The allowance for loan losses was $4.0 million as of March 31, 2016, which represented 1.38% of total loans outstanding. The allowance for loan losses was $3.9 million, or 1.39% of total loans outstanding, as of December 31, 2015.  Material improvements in asset quality over the last year lowered the Company’s nonperforming assets to total assets to 0.83% as of March 31, 2016 compared to 1.47% as of March 31, 2015. Nonperforming assets decreased to $3.0 million as of March 31, 2016 from $5.3 million as of March 31, 2015.  This 43.1% decrease has been driven by significant efforts by the Bank to dispose of nonperforming assets. Nonperforming assets to total assets decreased slightly from 0.85% as of December 31, 2015 to 0.83% as of March 31, 2016.

Noninterest income decreased $721,000 or approximately 54.6% to $600,000 during the first three months of 2016 as compared to the same time period of 2015. The majority of the net decrease was associated with a $678,000 gain on sale of securities during the three months ended March 31, 2015, offset by smaller increases and decreases in other noninterest income categories. Increases from 2015 to 2016 of $18,000 and $12,000 in debit card interchange income and insurance commissions, were offset by decreases during the same period of $16,000, $30,000, $11,000, and $10,000 in service charges on deposit accounts, mortgage loan origination fees, investment commissions, and fee income from accounts receivable financing, respectively. There were other smaller increases and decreases in noninterest income from 2015 to 2016 that contributed to the overall net decrease during that period of time. Additionally, there was a $7,000 impairment loss on securities for the three months ended March 31, 2016 and no such loss during the same period in 2015.    

Noninterest expense decreased $563,000 or approximately 15.5% to $3.1 million for the first three months of 2016 compared to $3.6 million for the same time period of 2015. The overall decrease is largely due to decreases in employee benefits, equipment expense, stationary and supplies, net cost of foreclosed assets, telecommunications, FDIC assessment, accounts receivable financing expense and other expenses. Employee benefits decreased $156,000 from 2015 to 2016 which was mostly due to a $168,000 decrease in the Employee Stock Ownership Plan accrual from 2015 to 2016, offset by decreases in other employee benefit expenses. Equipment expense decreased $30,000 from 2015 to 2016 mostly due to lower depreciation expense in 2016 compared to 2015. Stationary and supplies decreased $15,000 from 2015 to 2016 due to less supply purchases in 2016 compared to 2015. Net cost of foreclosed assets decreased $225,000 from 2015 to 2016 due to writedowns of several foreclosed assets during the three months ended March 31, 2015 totaling $238,000 compared to only $13,000 in writedowns during the same period in 2016. Telecommunications expense decreased $89,000 from 2015 to 2016 due to contingency fees paid to a fixed cost reduction company based on one-time and ongoing cost savings identified during the end of 2014 and during the three months ended March 31, 2015. Other expenses decreased $194,000 from 2015 to 2016 due to lower appraisal and collection expenses on problem assets, dues and subscriptions, and educational expenses. Data and items processing increased $83,000 from 2015 to 2016 due to the Bank’s continued investment in client facing and internally focused technology, including increased client adoption of a mobile banking suite introduced in 2014 and a new bill pay system introduced to clients in the second quarter of 2015. Professional and advertising expenses increased $19,000 from 2015 to 2016 largely the result of professional services required as a result of the execution of the Bank’s succession plan during the first quarter of 2016. Smaller decreases and increases in other expense items contributed to the overall net decrease in the expense category.

Total assets as of March 31, 2016 were $367.2 million, up approximately 1.6% or $5.9 million from $361.2 million as of December 31, 2015. The principal components of the Company’s assets as of the end of the 2016 time period were $284.4 million in net loans, $16.0 million in cash and cash equivalents and $48.8 million in available-for-sale and held-to-maturity investment securities. During the first three months of 2016, net loans increased to $284.4 million, up approximately 3.0% or $8.4 million from $276.0 million as of December 31, 2015. Cash and cash equivalents decreased approximately 11.0% or $2.0 million from $18.0 million as of December 31, 2015, and available-for-sale and held-to-maturity investment securities increased 0.9% or $452,000 to $48.8 million as of March 31, 2016 from $48.3 million as of December 31, 2015.

The allowance for loan losses was $4.0 million as of March 31, 2016, which represented 1.38% of total loans outstanding. The allowance for loan losses was $3.9 million, or 1.39% of total loans outstanding, as of December 31, 2015.  Improvements in asset quality over the last year lowered the Company’s nonperforming assets to total assets to 0.83% as of March 31, 2016 compared to 0.85% as of December 31, 2015. Nonperforming assets decreased to $3.0 million as of March 31, 2016 from $3.1 million as of December 31, 2015. 

Total liabilities as of March 31, 2016 were $336.3 million, up approximately 1.5% or $4.8 million from $331.5 million as of December 31, 2015. Deposits increased $13.1 million from December 31, 2015 to March 31, 2016, with noninterest-bearing deposits increasing $496,000 and interest-bearing deposits increasing $12.6 million. Short-term borrowings, which consist of FHLB advances, decreased $8.5 million from December 31, 2015 to March 31, 2016, and long-term borrowings decreased from $2.0 million to $1.9 million during the same period.  

Total stockholders’ equity as of March 31, 2016 was $30.8 million as compared to total stockholders’ equity as of December 31, 2015 of $29.7 million. Part of the increase in stockholders’ equity between the two periods was related to the continued amortization of restricted stock awards which increased common stock by $203,000. Accumulated other comprehensive income increased from $941,000 as of December 31, 2015 to $1.4 million as of March 31, 2016, driven by an increase in the market value of the Company’s available-for-sale investment securities during that period of time. Net income of approximately $562,000 offset by preferred dividends of $117,000 also contributed to the overall net increase in stockholders’ equity.

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 a community bank with a mission to provide Banking as It Should Be® by delivering personal attention and convenience for every client. Bank of Oak Ridge has been named Best Bank in the Triad four years in a row, as well as one of the Triad’s Healthiest Employers and Top Workplaces.  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 form 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, (6) the impact of changes in monetary and fiscal policies, laws, rules and regulations and (7) other risks and factors identified in the Company’s other filings with the Federal Deposit Insurance Corporation.  The Company undertakes no obligation to update any forward-looking statements.

Contact: Thomas W. Wayne, CFO
Phone: 336-644-9944