Bank of Oak Ridge Records Fourth Quarter Profit.

Business Editors

OAK RIDGE, N.C.--(BUSINESS WIRE)--Feb. 5, 2004

Bank of Oak Ridge, Oak Ridge, North Carolina (NASDAQ: BKOR) announced 2003 fourth quarter net income and basic earnings per share of $5,000 and $0.01, respectively, compared to net income and earnings per share of $7,000 and $0.01, respectively, for the same period in 2002. For all of 2003 the bank recorded a net loss and basic loss per share of $263,000 and $(0.33), respectively, compared to net income and earnings per share of $101,000 and $0.17, respectively, for 2002.

Bank of Oak Ridge President, Ron Black, in commenting on the results, noted, "We are extremely encouraged by the significant increase in loans, deposits and noninterest income from last December to this December. The continued growth in loans, deposits and noninterest income, combined with the recently completed successful public stock offering, continues to reinforce the viability of our bank in Northwest Guilford County. The opening of two banking offices in Oak Ridge and Summerfield in late April and associated increases in personnel, marketing, data processing and other expenses were the primary reason for the losses in the first three quarters of 2003, and our profitability in the fourth quarter shows that total revenues are beginning to cover total expenses."

Loans, deposits and investments all increased significantly from December 31, 2002 to December 31, 2003. Net loans, which are the greatest source of income for the Bank, increased 76% from December 31, 2002 to $62.9 million at December 31, 2003. Investments increased 24% to $30.1 million during the same period of time. Deposits, which helped fund loan and investment growth, increased 63% from December 31, 2002 to $71.5 million at December 31, 2003. The overall growth in deposits of 63% was comprised of increases in noninterest bearing and interest bearing deposits of 102% and 60%, respectively, from the same period in the prior year. An increase in other interest bearing liabilities of 46% to $18.3 million at December 31, 2003 also contributed to fund the growth in earning assets from December 31, 2002 to December 31, 2003.

Total interest income for 2003 increased 33%, compared to the same period in 2002, and interest expense increased at a smaller rate of 15% during the same period of time. This caused the Bank's net interest margin before provision for loan loss to increase 48% from 2002 to 2003. Noninterest income increased 82% to $700,000 from 2002 to 2003, due to increases in deposit service charge income, mortgage loan origination fees, investment and insurance commissions, customer service fees and other income.

The bank's provision for loan loss increased 167% to $262,000 from 2002 to 2003. This increase was primarily the result of strong loan growth in 2003. As of December 31, 2003, the Bank's allowance for loan loss to total loans was 1.00%, compared to 1.23% on the same date in 2002. Lastly, non-interest operating expense increased 68% to $3.2 million from 2002 to 2003. This increase is primarily due to additional personnel and other expenses associated with the opening in April 2003 of new banking and financial services offices in Summerfield and Oak Ridge.

Bank of Oak Ridge offers a complete line of banking services, including savings and checking accounts, mortgage and business loans, Saturday hours, same-day deposits, free coin counting machines, business and personal internet banking, free internet bill payment, and accounts designed specifically for seniors, small businesses and civic organizations. For more information, contact Bank of Oak Ridge at 336-644-9944, or visit www.bankofoakridge.com.

                          Bank of Oak Ridge
                         Financial Highlights
                             (Unaudited)

                         For the quarter ended,   For the year ended,
                              December 31,           December 31,
Statement of Income      2003    2002  % change   2003   2002 % change
----------------------------------------------------------------------
Interest on
 investments             $268    $273     -1.8% $1,021 $1,021     0.0%
Interest on loans         878     546     60.8%  2,963  1,965    50.8%
----------------------------------------------------------------------
Total interest income   1,146     819     39.9%  3,984  2,986    33.4%
Interest on deposits      324     300      8.0%  1,266  1,055    20.0%
Interest on other
 interest bearing
 liabilities               59      58      1.7%    226    244    -7.4%
----------------------------------------------------------------------
Total interest
 expense                  383     358      7.0%  1,492  1,299    14.9%
----------------------------------------------------------------------
Net interest margin
 before provision for
 loan loss                763     461     65.5%  2,492  1,687    47.7%
Provision for loan
 loss                      60      32     87.5%    262     98   167.3%
----------------------------------------------------------------------
Net interest margin
 after provision for
 loan loss                703     429     63.9%  2,230  1,589    40.3%
Total noninterest
 operating income         167     144     16.0%    700    384    82.3%
Total noninterest
 operating expense        866     588     47.3%  3,226  1,924    67.7%
Total non-operating
 income                     1      22    -95.5%     33     52   -36.5%
----------------------------------------------------------------------
Net income (loss)
 before taxes               5       7    -28.6%   (263)   101  -360.4%
Income taxes                -       -      N/A       -      -     N/A
----------------------------------------------------------------------
Net income (loss)
 after taxes               $5      $7    -28.6%  $(263)  $101  -360.4%
----------------------------------------------------------------------
Basic earnings (loss)
 per share              $0.01   $0.01    -44.4% $(0.33) $0.17  -295.5%
----------------------------------------------------------------------


                           As of December 31,
Balance Sheet            2003    2002    % change
------------------------------------------------------
Assets
  Investments         $30,136 $24,366     23.7%
  Loans                63,526  36,122     75.9%
Allowance for loan
 loss                    (635)   (443)    43.3%
-----------------------------------------------
  Net Loans            62,891  35,679     76.3%
-----------------------------------------------
Total earning assets   93,662  60,488     54.8%
Noninterest earning
 assets                 4,260   2,734     55.8%
-----------------------------------------------
Total Assets          $97,287 $62,779     55.0%
-----------------------------------------------

Liabilities and Stockholders' Equity

Deposits              $71,477 $43,953     62.6%
Other interest
 bearing liabilities   18,273  12,500     46.2%
-----------------------------------------------
Total interest
 bearing liabilities   89,750  56,453     59.0%
Noninterest bearing
 liabilities              178     246    -27.6%
-----------------------------------------------
Total liabilities      89,928  56,699     58.6%
Total stockholders'
 equity                 7,359   6,080     21.0%
-----------------------------------------------
Total liabilities and
 stockholders' equity $97,287 $62,779     55.0%
-----------------------------------------------

Balance Sheet Ratios
Investments to assets    31.0%   38.8%
Loans to assets          65.3%   57.5%
Loans to deposits        88.9%   82.2%
Allowance for loan
 loss to loans            1.0%    1.2%
Earning assets to
 assets                  96.3%   96.4%
Deposits to assets       73.5%   70.0%
Other interest-
 bearing liabilities
 to assets               18.8%   19.9%
Stockholders' equity
 to total assets          7.6%    9.7%