Oak Ridge Financial Services, Inc. Announces Third Quarter and First Nine Months 2013 Net Income

Oak Ridge Financial Services, Inc. Announces Third Quarter and First Nine
Months 2013 Net Income

OAK RIDGE, N.C., Nov. 14, 2013 (GLOBE NEWSWIRE) -- Oak Ridge Financial
Services, Inc. ("Oak Ridge"; the "Company") (OTCQB:BKOR), the parent company
of Bank of Oak Ridge (the "Bank"), announced unaudited financial results for
the third quarter and first nine months of 2013 today.

The Company's net income for the third quarter of 2013 was $423,000 compared
to net income of $59,000 for the third quarter of 2012, an increase of
$364,000. Net income available to common shareholders was $245,000 for the
third quarter of 2013, an increase of $354,000 compared to a net loss to
common shareholders of $109,000 in the third quarter of 2012. Diluted income
per common share increased $0.20 to $0.14 for the third quarter of 2013
compared to a diluted loss per common share of $0.06 in the third quarter of
2012.

The Company's net income for the nine months ended September 30, 2013 was
$857,000 compared to a net loss of $608,000 for the same period in 2012, or an
increase of $1.5 million. Net income available to common shareholders was
$323,000 for the nine months ended September 30, 2013, or an increase of $1.4
million compared to a net loss to common shareholders of $1.1 million for the
same period in 2012. Diluted income per common share increased $0.80 to $0.18
for the nine months ended September 30, 2013 compared to diluted loss per
common share of $0.62 for the same period in 2012.

Ron Black, President and CEO of the Company and the Bank, commented:

"During the third quarter, the Company continued to focus on its basic core
banking business while undertaking a number of initiatives to improve its
operating efficiency. From our various initiatives to become more efficient,
we reduced our noninterest expense from $3.4 million in the third quarter of
2012 to $3.0 million in the third quarter of 2013, a decrease of $418,000 or
12.2%. On a year-to-date basis, we reduced our noninterest expense from $10.8
million in the first nine months of 2013 to $9.8 million during the same
period in 2012, a decrease of $977,000 or 9.1%. I am thankful for the support
of our clients, shareholders, employees and Board of Directors while we
improve the earnings of the Bank."

Profitability as measured by the Company's annualized return on average assets
was 0.33% and 0.49% for the nine and three months ended September 30, 2013,
respectively, which is an increase over the loss on average assets of 0.23%
and annualized return on average assets of 0.07% generated during the nine and
three months ended September 30, 2012, respectively.

The company produced net interest income of $10.0 million during the first
nine months of 2013, which was slightly lower than the $10.1 million generated
for the same time period of 2012. The decline was primarily caused by lower
interest income, which decreased $603,000 or approximately 5.0% to $11.4
million for the first nine months of 2013 as compared to the same time period
of the prior year. Correspondingly, interest expense decreased $495,000 or
approximately 26.8% to $1.3 million. The decreases in interest income and
expense were primarily attributable to lower interest rates on loans and
deposits.

The Company's net interest margin increased ten basis points to 4.14% for the
first nine months of 2013 compared to 4.04% the first nine months of 2012,
primarily as a result of active management of deposit pricing as well as the
purchase of higher yielding municipal securities in 2013. The Company's net
interest margin increased twenty-three basis points to 4.38% for the three
months ended September 30, 2013 compared to 4.15% in the same period in 2012.
The expansion of the net interest margin in the three months ended September
30, 2013 to the same period in 2012 was largely the result of the purchase of
higher yielding municipal securities in the third quarter of 2013, as well as
the receipt of approximately $135,000 in nonaccrual interest during the same
period.

Material improvements in asset quality over the last year lowered the
Company's provision for loan losses, which was $1.3 million for the first nine
months of 2013 as compared to $3.4 million for the first nine months of 2012.
This 62.6% decrease has been driven by a substantial decline in net
charge-offs, which totaled $1.3 million through September 30, 2013 versus $3.4
million through the same point in time of the prior year.

The allowance for loan losses was $5.5 million as of September 30, 2013, which
represented 2.08% of total loans outstanding. The allowance for loan losses
was $5.5 million, or 2.12% of total loans outstanding, as of December 31,
2012. The slight decrease in the Company's allowance to total loans ratio is
reflective of continued improvement in the Company's asset quality as
referenced above. Nonperforming assets (including nonaccrual loans, accruing
loans more than 90 days past due and foreclosed assets) declined to $8.1
million, or 2.3% of total assets, as of September 30, 2013, as compared to
$13.4 million, or 4.1% of total assets, as of December 31, 2012. The allowance
for loan loss was 75.6% of nonperforming loans as of September 30, 2013 versus
48.6% as of the prior year end, which management views as sufficient to offset
potential future losses associated with problem loans.

Noninterest income decreased $536,000 or approximately 18.8% to $2.3 million
during the first nine months of 2013 as compared to the same time period of
2012. The majority of the net decline was associated with a $478,000 decrease
in investment commissions as a result of the disposition of the Bank's former
investment services division on July 1, 2012. Net of the decline in investment
commissions, noninterest income declined 2.5% in the nine months ended
September 30, 2013 compared to the same period in 2012.

Noninterest expense decreased $1.0 million or approximately 9.1% to $9.8
million for the first nine months of 2013 compared to $10.8 million for the
same time period of 2012. This decrease is largely due to declines in
salaries, employee benefits, occupancy expense, data and items processing,
stationary and supplies, net cost of foreclosed assets, and other expense.

Total assets as of September 30, 2013 were $351.0 million, up approximately
2.4% or $8.1 million from $342.9 million as of December 31, 2012. The
principal components of the Company's assets as of the end of the time period
were $260.3 million in net loans, $18.1 million in cash and cash equivalents
and $53.4 in available-for-sale and held-to-maturity securities. During the
first nine months of 2013, net loans experienced an increase of $5.9 million
as compared to $254.3 million as of December 31, 2012. Cash and cash
equivalents increased approximately 6.1% or $1.0 million from $17.0 million as
of December 31, 2012, and available-for-sale and held-to-maturity investment
securities increased approximately 11.5% or $5.5 from $47.9 million.

Total liabilities as of September 30, 2013 were $325.7 million, up
approximately 2.8% or $8.8 million from $316.9 million as of December 31,
2012. Higher levels of deposits drove the increase as interest-bearing
deposits increased $9.6 million or approximately 3.6% from December 31, 2012
to September 30, 2013.

Total stockholders' equity as of September 30, 2013 was $25.3 million as
compared to total stockholders' equity as of December 31, 2012 of $26.0
million. Most of the decrease was a result of a decline in accumulated other
comprehensive income from $1.5 million as of December 31, 2012 to $339,000 as
of September 30, 2013, driven by a decline in the market value of the
Company's available-for-sale investment securities during that period of time.
Additionally, the repayment of the warrant in February 2013 contributed to the
increase in common stock and decrease in warrant from December 31, 2012 to
September 30, 2012. Net income of $857,000 partially offset the declines noted
above.

About Oak Ridge Financial Services, Inc.

Oak Ridge Financial Services, Inc. (OTCQB:BKOR) is the holding company for
Bank of Oak Ridge. Bank of Oak Ridge (http://www.BankOfOakRidge.com) is a
community bank with locations in Greensboro, Summerfield and Oak Ridge, North
Carolina. The bank was established in 2000 with the goal of delivering Banking
As It Should Be®. With a focus on providing personal attention and convenience
for every client, we offer a complete range of banking services for
individuals and businesses including Saturday and extended weekday hours at
all locations, ATM usage world-wide, remote deposits for businesses, and a
full line of checking accounts; savings accounts; mortgage services; insurance
services; lending options; and wealth management services. Bank of Oak Ridge
is a Member FDIC and Equal Housing Lender. For more information, call
336-644-9944 or visit the office location closest to you.

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 collectibility 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.


Consolidated Balance Sheets
September 30, 2013 and December31, 2012 (unaudited)
(Dollars in thousands

                                                          2013      2012
                                                                   
Assets                                                              
                                                                   
Cash and due from banks                                    $ 4,864   $ 5,134
Interest-bearing deposits with banks                       13,227    11,909
Total cash and cash equivalents                            18,091    17,043
Securities available-for-sale                              50,081    43,937
Securities held-to-maturity (fair values of $3,341 in 2013 3,275     3,928
and $4,183 in 2012)
Federal Home Loan Bank Stock, at cost                      411       528
Loans held for sale                                        —         1,787
Loans, net of allowance for loan losses of $5,516 in 2013  260,255   254,347
and $5,500 in 2012
Property and equipment, net                                8,483     9,371
Foreclosed assets                                          759       2,116
Accrued interest receivable                                1,320     1,514
Bank owned life insurance                                  5,178     5,078
Other assets                                               3,114     3,202
Total assets                                               $ 350,967 $ 342,851
                                                                   
Liabilities and Stockholders' Equity                                
                                                                   
Liabilities                                                         
Deposits:                                                           
Noninterest-bearing                                        $ 40,374  $ 41,538
Interest-bearing                                           274,212   264,639
Total deposits                                             314,586   306,177
Junior subordinated notes related to trust preferred       8,248     8,248
securities
Accrued interest payable                                   87        94
Other liabilities                                          2,768     2,342
Total liabilities                                          325,689   316,861
                                                          —         —
Commitments and contingencies
                                                                   
Stockholders' equity                                                
Preferred stock, Series A, 7,700 shares authorized and
outstanding; no par value, $1,000 per share liquidation    7,610     7,366
preference
Common stock, no par value; 50,000,000 shares authorized;
1,810,946 and 1,808,445 issued and outstanding in 2013 and 17,213    15,956
2012, respectively
Warrant                                                    —         1,361
Retained deficit                                           116       (208)
Accumulated other comprehensive income                     339       1,515
Total stockholders' equity                                 25,278    25,990
Total liabilities and stockholders' equity                 $ 350,967 $ 342,851

         


Consolidated Statements of Operations
For the three and nine months ended September 30, 2012 and 2011 (Unaudited)
(Dollars in thousands except per share data)

                            Three months ended      Nine months ended
                             September 30,          September 30,
                            2013        2012        2013         2012
Interest and dividend income                                   
Loans and fees on loans      $3,524     $3,364     $9,922      $10,174
Interest on deposits in      12         6          30          35
banks
Federal Home Loan Bank stock 3          2          9           8
dividends
Taxable investment           496        495        1,428       1,775
securities
Total interest and dividend  4,035      3,867      11,389      11,992
income
                                                              
Interest expense                                               
Deposits                     394        465        1,227       1,710
Short-term and long-term     42         44         122         134
debt
Total interest expense       436        509        1,349       1,844
Net interest income          3,599      3,358      10,040      10,148
Provision for loan losses    567        833        1,279       3,419
Net interest income after    3,032      2,525      8,761       6,729
provision for loan losses
                                                              
Noninterest income                                             
Service charges on deposit   193        165        534         374
accounts
Gain (loss) on sale of       (25)       —          28          —
securities
Gain on sale of property and 3          51         —           58
equipment
Mortgage loan origination    68         202        315         493
fees
Investment commissions       3          32         49          527
Insurance commissions        42         24         102         75
Fee income from accounts     132        187        478         524
receivable financing
Debit card interchange       222        204        649         589
income
Income earned on bank owned  30         35         99          104
life insurance
Other service charges and    20         22         63          109
fees
Total noninterest income     688        922        2,317       2,853
                                                              
Noninterest expense                                            
Salaries                     1,362      1,486      4,321       4,801
Employee benefits            196        193        547         620
Occupancy expense            173        188        552         609
Equipment expense            227        235        709         678
Data and item processing     262        317        743         879
Professional and advertising 244        279        971         810
Stationary and supplies      39         72         159         244
Net cost of foreclosed       31         98         240         527
assets
Telecommunications expense   112        85         298         238
FDIC assessment              78         79         227         233
Accounts receivable          35         51         130         152
financing expense
Other-than-temporary         —          1          —           1
impairment loss
Other expense                254        347        907         989
Total noninterest expense    3,013      3,431      9,804       10,781
Income (loss) before income  707        16          1,274    (1,199)
taxes
                                                              
Income tax expense (benefit) 284        (43)       417         (591)
Net income (loss)            $423       $59       $857       $(608)
Preferred stock dividends    (97)       (96)        (290)       (290)
Accretion of discount        (81)       (72)       (244)       (218)
Loss available to common     $245       $(109)     $323       $(1,116)
stockholders
Basic income( loss) per      $0.14      $(0.06)    $0.18      $(0.62)
common share
Diluted income (loss) per    $0.14      $(0.06)    $0.18     $(0.62)
common share
Basic weighted average       1,810,946  1,808,745  1,810,946  1,808,745
common shares outstanding
Diluted weighted average     1,810,946  1,808,745  1,810,946    1,808,745
common shares outstanding

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