Bank of Oak Ridge Reports Record Third Quarter Earnings.OAK RIDGE Oak Ridge, city (1990 pop. 27,310), Anderson and Roane counties, E Tenn., on Black Oak Ridge and the Clinch River; founded by the U.S. government 1942, inc. as an independent city 1959. , N.C. -- Bank of Oak Ridge (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : BKOR) today reported record basic earnings per share of 13 cents for the third quarter of 2005, compared with basic earnings per share of 6 cents for the same period of 2004. Net income for the third quarter of 2005 was $225,000, compared with net income of $114,000 for the same period in 2004. Bank of Oak Ridge President, Ron Noun 1. Ron - a Chadic language spoken in northern Nigeria Bokkos, Daffo West Chadic - a group of Chadic languages spoken in northern Nigeria; Hausa in the most important member Black, in commenting on the results, noted, "We are very pleased with our record results in the third quarter of 2005 as well as a 46 percent increase in loans and a 32 percent increase in deposits from September September: see month. 30, 2004 to September 30, 2005. Additionally, we are very happy with the 21 percent increase in non-interest income for the nine month period ending September 30, 2005 compared with the same period in 2004. Lastly, we are very encouraged with the significant decrease in nonperforming loans from September 30, 2004 to September 30, 2005. My thanks to all the great efforts of the employees and our Board of Directors in helping us to achieve these results." Operating Results for the nine months ended September 30, 2005 and 2004 Net Income. Bank of Oak Ridge ("The Bank") recorded net income of $495,000 and $227,000 for the first nine months of September 30, 2005 and 2004, respectively. Net Interest Income The Bank's net interest income in the first nine months of 2005 was $3.8 million, up $1.1 million, or 41 percent, from $2.7 million for the same period of 2004. The net interest margin in the first nine months of 2005 was 3.64 percent, compared with 3.40 percent for the same period in 2004. The 24 basis point increase in the net interest margin in the first nine months of 2005 over the same period in 2004 is primarily a result of a 104 basis point increase in earning asset Earning asset An asset that generates income, e.g., income from rental property. yields, offset by a 65 basis point increase in funding costs during the two periods. The interest rates on the Bank's interest-earning assets, principally in the loan portfolio, repriced more quickly than the rates on its interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid liabilities during the nine months ended September 30, 2005, which contributed to the improvement in the net interest margin from 2004 to 2005. An increase of $31.2 million in average interest-earning assets, and an increase of $39.6 million in interest-bearing liabilities from the first nine months of 2004 to the same period in 2005 offset the increase in the net interest margin as discussed above. Provision for Loan Losses The provision for loan losses increased to $390,000 for the nine months ended September 30, 2005 compared to $330,000 for the same year ago period. The allowance for loan losses to total loans was 1.14, 1.11 and 1.12 percent at September 30, 2005, December December: see month. 31, 2004 and September 30, 2004, respectively. Non-interest Income Non-interest income totaled $922,000 for the first nine months of 2005, up $159,000, or 21 percent, from $763,000 for the same period in 2004. Increases from 2004 to 2005 in service charges on deposit accounts, net realized gain Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. on sale of investment securities available-for-sale, mortgage loan origination The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. fees, investment and insurance commissions, income earned on bank owned life insurance, and other service charges and fees of $45,000, $1,000, $49,000, $6,000, $56,000, and $6,000, respectively, contributed to the increase in non-interest income. Offsetting the above increases was a net realized loss Realized Loss A loss recognized when assets are sold for a price lower than the original purchase price. Notes: A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes. of $4,000 on the sale of other real estate owned Real Estate Owned Property owned by a lender - usually a bank - after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most . The continued growth in the Bank's loan and deposit portfolios generally lead to a higher level of non-interest income. Therefore, to a large extent, most of the increases, with the exception of the gain on investment securities and income earned on bank owned life insurance, were indirectly caused by the continued growth of the Bank's loan and deposit portfolios. Non-interest Expense Non-interest expense totaled $3.8 million for the first nine months of 2005, up $884,000, or 30 percent, from $2.9 million for the same period in 2004. Salaries and employee benefits increased $485,000, or 34 percent, to $1.9 million compared to 2004, due to a higher number of bank employees in first nine months of 2005 compared to the same period in 2004. The decrease in data and items processing expenses of $27,000, or 11 percent, to $215,000 compared to 2004 is primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to savings associated with the conversion to an in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a system from a outsourced Outsourced is a modern day comedy of cross-cultural conflict and romance, directed by John Jeffcoat, released in 2007. Synopsis Todd Anderson (Josh Hamilton) spends his days managing a customer call center for American Novelty Products in Seattle, until his job, data processing system. Equipment expense increased $65,000, or 28 percent, to $294,000 compared to 2004, due to higher depreciation expense associated with computer hardware and software placed in service in March of 2005 associated with the Bank's conversion to an in-house data processing system. To a lesser extent, the increase in equipment expenses was associated with the opening in Greensboro Greensboro, city (1990 pop. 183,521), seat of Guilford co., N central N.C.; inc. 1829. The city is a financial, insurance, and distribution center for the region. of the Bank's third banking office in August of 2005. Professional and advertising expenses increased $134,000, or 29 percent, to $598,000, primarily as a result of higher advertising expenses in 2005 compared to 2004. Other non-interest expenses increased $192,000, or 62 percent, to $502,000, primarily as a result of one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. costs associated with the conversion to an in-house data processing system as well as the opening in Greensboro of the Bank's third banking office in August of 2005. Operating Results for the three months ended September 30, 2005 and 2004 Net Income. The Bank recorded net income of $225,000 and $114,000 for the three months ended September 30, 2005 and 2004, respectively. Net Interest Income The Bank's net interest income in the third quarter of 2005 was $1.4 million, up $400,000, or 40 percent, from $1.0 million in the third quarter of 2004. The net interest margin in the third quarter of 2005 was 3.64 percent, compared with 3.38 percent for the same period in 2004. The 26 basis point increase in the net interest margin in the third quarter 2005 over the same period in 2004 is primarily a result of a 123 basis point increase in earning asset yields, offset by an 81 basis point increase in funding costs during the two periods. The interest rates on the Bank's interest-earning assets, principally in the loan portfolio, repriced more quickly than the rates on its interest-bearing liabilities during the three months ended September 30, 2005, which contributed to the improvement in the net interest margin from 2004 to 2005. An increase of $29.2 million in average interest-earning assets, and an increase of $43.4 million in interest-bearing liabilities from the first three months of 2004 to the same period in 2005 offset the increase in the net interest margin as discussed above. Provision for Loan Losses The provision for loan losses was $128,000 for each of the three month periods ended September 30, 2005 and 2004. The allowance for loan losses to total loans was 1.14, 1.11 and 1.12 percent at September 30, 2005, December 31, 2004 and September 30, 2004, respectively. Non-interest Income Non-interest income totaled $334,000 for the 2005 third quarter, down $22,000, or 6 percent, from $356,000 for the 2004 third quarter. The primary reason for the overall decline in non-interest income was a decline in investment and insurance commissions of $64,000 between the two periods. Increases from 2004 to 2005 in service charges on deposit accounts, mortgage loan origination fees, income earned on bank owned life insurance of $11,000, $16,000, and $19,000, respectively, offset the decrease in investment and insurance commissions of $64,000. The net realized loss on sale of other real estate owned of $4,000 during the three months ended September 30, 2005 accounted for the remainder of the net decrease in non-interest income. The continued growth in the Bank's loan and deposit portfolios generally lead to a higher level of non-interest income. Therefore, to a large extent, most of the increases, with the exception of the gain on investment securities and income earned on bank owned life insurance, were indirectly caused by the continued growth of the Bank's loan and deposit portfolios. Non-interest Expense Non-interest expense totaled $1.4 million for the 2005 third quarter, up $254,000, or 23 percent, from $1.1 million for the 2004 third quarter. Salaries and employee benefits increased $147,000, or 27 percent, to $701,000 compared to the third quarter of 2004, due to a higher number of bank employees in 2005 third quarter compared to the same period in 2004. Equipment expense increased $25,000, or 31 percent, to $105,000 compared to 2004, due to higher depreciation expense associated with computer hardware and software placed in service in March of 2005 associated with the Bank's conversion to an in-house data processing system at that time. The decrease in data and items processing expenses of $46,000, or 55 percent, to $37,000 compared to the third quarter of 2004 is primarily attributable to a shifting of expenses from data processing to furniture expense associated with the Bank's conversion from an outsourced data processing system to an in-house data processing system in March of 2005. Professional and advertising expenses increased $33,000, or 18 percent, to $217,000, primarily as a result of higher advertising expenses in 2005 compared to 2004. Other non-interest expenses increased $60,000, or 52 percent, to $176,000, primarily as a result of one-time costs associated with the conversion to an in-house data processing system, as well as the opening in Greensboro of the Bank's third banking office in August of 2005. Comparison of Financial Condition at September 30, 2005 and December 31, 2004 The Bank's assets increased from $134.4 million to $162.5 million, or 21 percent, from December 31, 2004 to September 30, 2005, respectively. The majority of the net increase in assets between the two periods was caused by increase in loans, offset by a decrease in securities available-for-sale. Loans The Bank's lending operations continue to generate strong growth. Net loans totaled $114.4 million at the end of the 2005 third quarter, up $27.8 million, or 32 percent, from $86.6 million at the end of the 2004 fourth quarter. The average yield on loans was 7.04 percent for the 2005 third quarter, up 124 basis points from 5.80 percent for the same period in 2004. Investments Investments, which consist of interest-bearing deposits with banks, federal funds Federal Funds Funds deposited to regional Federal Reserve Banks by commercial banks, including funds in excess of reserve requirements. Notes: These non-interest bearing deposits are lent out at the Fed funds rate to other banks unable to meet overnight reserve sold, securities available-for-sale and held-to-maturity, and Federal Home Loan Bank stock, totaled $32.7 million at the end of the 2005 third quarter, down $5.3 million, or 14 percent, from $38.1 million at the end of the 2004 fourth quarter. The average yield on investments was 4.09 percent for the 2005 third quarter, up 45 basis points from 3.64 percent for the same period in 2004. Property and Equipment Property and equipment, net, totaled $4.6 million at the end of the 2005 third quarter, up 35 percent, from $3.4 million at the end of the 2004 fourth quarter. The net increase is primarily due to the construction of the Bank's third branch located on New Garden Road in Greensboro, NC. The Bank opened this branch in August of 2005. To a lesser extent the net increase was caused by the purchase of software and equipment associated with the Bank's conversion in March of 2005 from an outsourced data processing system to an in-house data processing system. The remaining offsetting decrease was mostly due to depreciation expense during the nine months ended September 30, 2005. Deposits Deposits totaled $123.3 million at the end of the 2005 third quarter, up $25.6 million, or 26 percent, from $97.7 million at the end of the 2004 fourth quarter. The average cost of interest-bearing deposits was 2.63 percent for the 2005 third quarter, up 57 basis points from 2.06 percent for the same period in 2004. Short and Long-term Debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. Short and long-term debt totaled $23.7 million at the end of the 2005 third quarter, up $2.4 million, or 11 percent, from $21.3 million at the end of the 2004 fourth quarter. The average cost of other borrowings was 3.64 percent for the 2005 third quarter, up 194 basis points from 1.70 percent for the 2004 third quarter. Stockholders' Equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. Stockholders' equity decreased $23,000 from the end of the 2004 fourth quarter to the end of the 2005 third quarter, primarily as a result of net income of $495,000, offset by a decrease in the market value of the Bank's securities available-for-sale of $518,000 for the nine months ended September 30, 2005. Stockholders' equity totaled $14.8 million at the end of the 2005 third quarter compared to $14.9 million at the end of the 2004 fourth quarter. Nonperforming Assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. Nonaccrual and accruing loans greater than ninety days past due totaled $312,000 at September 30, 2005, down $364,000, or 54 percent, from $676,000 at December 31, 2004. Management believes that the loan loss reserves allocated to these loans are adequate to cover any anticipated losses. Nonperforming loans to total loans were 0.27 percent, 0.77 percent, and 0.62 percent at September 30, 2005, December 31, 2004, and September 30, 2004, respectively. About the Bank of Oak Ridge Bank of Oak Ridge, headquartered in Oak Ridge, NC, is a community bank with locations in Oak Ridge, Summerfield Summerfield is the name of some places in the United States of America:
Forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. Information This earnings release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. with respect to the financial condition, results of operations and business of the Bank. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management of the Bank 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 Bank's markets, (2) changes in the interest rate environment, (3) general national, regional or local economic conditions may be less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. than expected, resulting in, among other things, a deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in credit quality and the possible impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of collectibility of loans, (4) legislative or regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. 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 Bank's other filings with the Federal Deposit Insurance Corporation Federal Deposit Insurance Corporation (FDIC), an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $100,000. . The Bank undertakes no obligation to update any forward-looking statements.
Bank of Oak Ridge
Financial Highlights
(dollars in thousands, except share and per share data)
Three months ended Nine months ended
September 30, September 30,
------------------ --------------------
2005 2004 Change 2005 2004 Change
------- --------- --------- --------- --------- ------
Income Statement
Data:
Total interest
income $2,367 $1,475 60.5 % $6,269 $4,024 55.8%
Total interest
expense 997 492 102.6 2,481 1,289 92.5
------- --------- --------- ---------
Net interest
income 1,370 983 39.4 3,788 2,735 38.5
Provision for
loan losses 128 128 - 390 330 18.2
Non-interest
income 334 356 (6.2) 922 763 20.8
Non-interest
expense 1,351 1,097 23.2 3,825 2,941 30.1
Provision for
income taxes - - n/a - - n/a
--------- --------- --------- ---------
Net income
(loss) $225 $114 97.4 $495 $227 118.1
========= ========= ========= =========
Per share data
and shares
outstanding:(1)
Basic net
income (loss)
per share $0.13 $0.06 116.7 % $0.28 $0.12 133.3%
Diluted net
income (loss)
per share $0.12 $0.06 100.0 $0.27 $0.13 107.7
Book value at
period end 8.30 8.31 (0.2) 8.30 8.31 (0.2)
Weighted average number
of common shares
outstanding (000's):
Basic 1,789.5 1,789.5 - % 1,789.5 1,708.7 4.7%
Diluted 1,802.8 1,800.3 0.1 1,807.0 1,725.2 4.7
Shares
outstanding at
period end 1,789.5 1,789.5 - 1,789.5 1,789.5 -
Change from
September December September December September
30, 31, 30, 31, 30,
Balance sheet data 2005 2004 2004 2004 2004
---------- --------- -------- -------- ---------
Total assets $162,507 $134,406 $125,917 20.9 % 29.1 %
Loans receivable 115,689 87,612 78,971 32.0 46.5
Allowance for loan
losses 1,316 970 883 35.7 49.0
Other interest-earning
assets 32,737 38,065 35,013 (14.0) (6.5)
Total deposits 123,272 97,679 93,430 26.2 31.9
Borrowings 23,700 21,405 17,250 10.7 37.4
Shareholders' equity 14,847 14,870 14,842 (0.2) 0.0
Three months Nine months
ended ended
September 30, September 30,
------------- --------------
Selected performance ratios: 2005 2004 2005 2004
------ ------ ------ ------
Return (loss) on average assets (2) 0.57 % 0.38 % 0.46 % 0.27 %
Return (loss) on average stockholders'
equity (2) 5.97 3.09 4.45 2.16
Net interest margin (2)(3) 3.64 3.38 3.64 3.40
Net interest spread (2)(4) 3.53 3.11 3.52 3.13
Noninterest income as a % of total revenue 19.6 26.6 19.6 21.8
Noninterest income as a % of average
assets (2) 0.8 1.2 0.8 0.9
Efficiency ratio (5) 79.28 81.93 88.18 81.21
Noninterest expense as a % of average
assets (2) 3.4 3.7 3.5 3.5
September December September
30, 31, 30,
Asset quality ratios (at period end): 2005 2004 2004
--------- -------- ---------
Nonperforming assets to period-end
loans (6) 0.27% 0.77 % 0.62 %
Allowance for loan losses to period-end
loans 1.14 1.11 1.12
Allowance for loan losses to total assets 0.81 0.65 0.70
Net loan charge-offs to average loans
outstanding (2) 0.17 0.45 0.45
September December September
30, 31, 30,
Capital and liquidity ratios: 2005 2004 2004
--------- -------- ---------
Total capital ratio 13.2 % 16.7 % 18.5 %
Tier 1 capital ratio 12.2 15.6 17.5
Leverage capital ratio 9.7 11.5 12.3
Equity to assets ratio 9.1 11.1 11.8
Bank of Oak Ridge
Financial Highlights
(dollars in thousands, except share and per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------- -------------------
Total Revenue 2005 2004 Change 2005 2004 Change
--------- --------- --------- --------- --------- ------
Net interest
income $1,370 $983 39.4 % $3,788 $2,735 38.5%
Fees and other
revenue:
Customer
service and
other fees 110 99 11.1 296 251 17.9
Mortgage loan
origination
fees 85 69 23.2 210 161 30.4
Investment and
insurance
commissions 79 143 (44.8) 230 224 2.7
Other 60 45 33.3 186 127 46.5
--------- --------- --------- ---------
Total
noninterest
income 334 356 (6.2) 922 763 20.8
--------- --------- --------- ---------
Total revenue $1,704 $1,339 27.3 $4,710 $3,498 34.6
========= ========= ========= =========
Three months ended Nine months ended
September 30, September 30,
------------------- --------------------
Noninterest
Expense 2005 2004 Change 2005 2004 Change
--------- --------- --------- --------- -------- -------
Compensation
and employee
benefits $701 $554 26.5 % $1,930 $1,445 33.6%
Occupancy and
equipment 220 160 37.5 580 480 20.8
Data and items
processing 37 83 (55.4) 215 242 (11.2)
Professional
and advertising
expenses 217 184 17.9 598 464 28.9
Other 176 116 51.7 502 310 61.9
--------- --------- --------- ---------
Total
noninterest
expense $1,351 $1,097 23.2 $3,825 $2,941 30.1
========= ========= ========= =========
Three months ended Nine months ended
September 30, September 30,
------------------- -------------------
Average
Balances 2005 2004 Change 2005 2004 Change
--------- --------- --------- --------- --------- ------
Total assets $156,390 $119,081 31.3% $145,451 $110,808 31.3%
Loans
receivable 111,431 76,695 45.3 100,171 72,315 38.5
Allowance for
loan losses 1,243 812 53.1 1,100 740 48.6
Other
interest-
earning
assets 34,578 36,296 (4.7) 36,084 30,234 19.3
Total deposits 117,673 87,195 35.0 107,836 79,464 35.7
Borrowings 23,771 17,250 37.8 22,737 17,364 30.9
Shareholders'
equity 14,946 14,636 2.1 14,878 13,980 6.4
(1) Computed based on the weighted average number of shares
outstanding during each period.
(2) Ratios for the three and six-month periods ended June 30, 2005
and 2004 are presented on an annualized basis.
(3) Net interest margin is net interest income divided by average
interest earning assets.
(4) Net interest spread is the difference between the average
yield on interest earning assets and the average cost of
interest bearing liabilities.
(5) Efficiency ratio is noninterest expense divided by the sum of
net interest income and noninterest income, excluding gains
on the sale of investment securities.
(6) Nonperforming assets consist of non-accruing loans,
restructured loans and foreclosed assets, where applicable.
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