Bank of Oak Ridge Records Profit For Third Straight Quarter.

Business Editors

OAK RIDGE, N.C.--(BUSINESS WIRE)--Oct. 16, 2002

Bank of Oak Ridge today reported the third consecutive quarter of profitability for the community bank, which began operations about 30 months ago.

Net income was $34,000 and $94,940 for the three and nine month periods, respectively, ending September 30, 2002, with earnings per share of $0.06 and $0.16 for the three and nine month periods, respectively.

Bank of Oak Ridge President, Ron Black, noted, "Our third consecutive quarter of profitability continues to reinforce the current and future viability of a bank in Oak Ridge. Our positive financial performance, combined with our recently announced secondary stock offering, the anticipated opening of our new Summerfield branch in the first quarter of 2003, and the anticipated opening of our permanent Oak Ridge office in the second quarter of 2003, are all the result of our customer-focused business model."

Loans, deposits and investments all increased significantly from September 30, 2001 to September 30, 2002. Loans, which are the greatest source of income for the Bank, increased 68.0% from September 30, 2001 to $32.4 million as of September 30, 2002. Investments increased 222.6% to $24.5 million during the same period of time. Deposits, which helped to fund loan and investment growth, increased 79.6% from September 30, 2001 to $40.0 million as of September 30, 2002. Borrowed funds, which were $12.5 million at September 30, 2002, also helped fund the growth in earning assets from 2001 to 2002.

Total interest income for the three months ended September 30, 2002 increased 63.2%, compared to the same period in 2001, and for the nine months ended September 30, 2002 increased 79.5% compared to the same period in 2001. Interest expense increased at a smaller rate of 38.7% and 51.7% for the three and nine-month periods, respectively, compared to the same periods in 2001, which contributed to an increase in the Bank's net interest margin before provision for loan loss in the three and nine-month periods ending September 30, 2002 of 89.6% and 109.0%, respectively, compared to the same three and nine-month periods in 2001.

Another factor contributing to the third consecutive quarterly profit was a decrease in the provision for loan loss in the three and nine-month periods ending September 30, 2002 of 31.2% and 60.4%, respectively, compared to the same periods in 2001. In management's opinion, the decline in the provision is warranted given the satisfactory loan loss and past due experience of the bank's loan portfolio since the Bank began operations in April of 2000. In the three and nine-month periods ending September 30, 2002, non-interest operating income increased 21.4% and 35.6%, respectively, compared to the same periods in 2001. Lastly, an emphasis on controlling expenses contributed to increases in non-interest operating expense of only 20.3% and 16.1% in the three and nine-month periods, respectively, compared to the same periods in 2001.

Bank of Oak Ridge is the area's only locally owned community bank and offers a complete line of banking services, including savings and checking accounts, mortgage and business loans, Saturday hours, same-day deposits, online banking, online 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

                                          For the quarter ended
                                              September 30,
Statement of Income                         2002        2001 % Change
----------------------------------------------------------------------
  Interest on investments               $260,498    $108,463    140.2%
  Interest on loans                      503,171     359,544     39.9%
----------------------------------------------------------------------
  Total interest income                  763,669     468,007     63.2%
  Interest on deposits                   276,040     243,196     13.5%
  Interest on other interest-
   bearing liabilities                    61,369           -      N/A
----------------------------------------------------------------------
  Total interest expense                 337,409     243,196     38.7%
----------------------------------------------------------------------
  Net interest margin before
   provision for loan loss               426,260     224,811     89.6%
    Provision for loan loss               22,052      32,047    (31.2%)
----------------------------------------------------------------------
  Net interest margin after
   provision for loan loss               404,208     192,764    109.7%
  Total non-interest operating
   income                                 82,935      68,334     21.4%
  Total non-interest operating
   expense                               466,602     388,017     20.3%
  Total non-operating income              13,621           -      N/A
----------------------------------------------------------------------
  Net Income (loss) before taxes          34,162    (126,919)      NM
    Income taxes                               -           -      N/A
----------------------------------------------------------------------
  Net Income (loss) after taxes          $34,162   $(126,919)      NM
----------------------------------------------------------------------
Basic and fully diluted earnings
 (loss) per share                          $0.06      ($0.21)      NM
----------------------------------------------------------------------


                                          For the Nine Months Ended
                                              September   30,
Statement of Income                         2002      2001   % Change
----------------------------------------------------------------------
  Interest on investments               $747,539    $319,351    134.1%
  Interest on loans                    1,418,841     887,492     59.9%
----------------------------------------------------------------------
  Total interest income                2,166,380   1,206,843     79.5%
  Interest on deposits                   754,880     620,772     21.6%
  Interest on other interest-
   bearing liabilities                   186,624        -         N/A
----------------------------------------------------------------------
  Total interest expense                 941,504     620,772     51.7%
----------------------------------------------------------------------
  Net interest margin before
   provision for loan loss             1,224,876     586,071    109.0%
    Provision for loan loss               65,639     165,815    (60.4%)
----------------------------------------------------------------------
  Net interest margin after
   provision for loan loss             1,159,237     420,256    175.8%
  Total non-interest operating
   income                                240,339     177,262     35.6%
  Total non-interest operating
   expense                             1,335,178   1,149,919     16.1%
  Total non-operating income              30,542         -        N/A
----------------------------------------------------------------------
  Net Income (loss) before taxes          94,940    (552,401)      NM
    Income taxes                            -           -         N/A
----------------------------------------------------------------------
  Net Income (loss) after taxes          $94,940   $(552,401)      NM
----------------------------------------------------------------------
Basic and fully diluted earnings
 (loss) per share                          $0.16      ($0.90)      NM
----------------------------------------------------------------------


                                           As of September 30,
Balance Sheet                               2002        2001 % Change
----------------------------------------------------------------------
 Assets
  Investments                        $24,447,510  $7,579,291    222.6%
  Loans                               32,369,182  19,263,823     68.0%
    Allowance for Loan Loss             (411,088)   (286,546)    43.5%
----------------------------------------------------------------------
  Net Loans                           31,958,094  18,977,277     68.4%
----------------------------------------------------------------------
  Total Earning Assets                56,405,604  26,556,568    112.4%
  Non-interest earning assets          1,869,470   1,048,935     78.2%
----------------------------------------------------------------------
Total Assets                         $58,275,074 $27,605,503    111.1%
----------------------------------------------------------------------

 Liabilities and Stockholders'
  Equity
  Deposits                           $39,988,811 $22,268,993     79.6%
  Other interest-bearing
   liabilities                        12,500,000           -      N/A
----------------------------------------------------------------------
  Total interest-bearing
   liabilities                        52,488,811  22,268,993    135.7%
  Non-interest bearing
   liabilities                           224,904      83,039    170.8%
----------------------------------------------------------------------
Total liabilities                     52,713,715  22,352,032    135.8%
Total stockholders' equity             5,561,359   5,253,471      5.9%
----------------------------------------------------------------------
Total liabilities and
 stockholders' equity                $58,275,074 $27,605,503    111.1%
----------------------------------------------------------------------

Balance Sheet Ratios
  Investments to assets                    41.95%      27.46%
  Loans to assets                          55.55%      69.78%
  Loans to deposits                        80.95%      86.51%
  Allowance for loan loss to
   loans                                    1.27%       1.49%
  Earning assets to assets                 96.79%      96.20%
  Deposits to assets                       68.62%      80.67%
  Other interest-bearing
   liabilities to assets                   21.45%       0.00%
  Stockholders' equity to total
   assets                                   9.54%      19.03%

    N/A - Not applicable; NM - Not meaningful.