Oak Ridge Financial Services, Inc. (Nasdaq:BKOR), parent company of Bank of Oak Ridge, headquartered in Oak Ridge, North Carolina, announced unaudited net income for the three months ended June 30, 2010, before adjusting for the effective dividend on preferred stock, of $15,000 compared to net income of $242,000 for the prior year period. After adjusting for $182,000 in dividends and accretion on preferred stock, net loss available for common shareholders for the current period was $167,000 or $0.09 per diluted share compared with diluted earnings per share of $0.04 for the quarter ended June 30, 2009. Earnings in the current period were positively impacted by an increased net interest margin as well as an increase in noninterest income. Negatively impacting net income were higher loan loss provisions in response to continuing economic weaknesses both locally and nationally, as well as an increase in noninterest operating expenses driven in part by a $300,000 Employee Stock Ownership Plan (“ESOP”) accrual.
Oak Ridge Financial Services President, Ron Black, in commenting on the results, noted, “Given the difficult economic environment, we are pleased that we were profitable in the second quarter of 2010 and were able to reduce our nonperforming assets from March 31, 2010 to June 30, 2010. Additionally, net income includes a $300,000 pretax ESOP accrual that the Company plans to use as an option to increase our common equity at some point in the future. We believe that the ESOP is a cost effective way to raise capital in this challenging economic environment.”
Mr. Black further commented “Our primary areas of focus for the rest of 2010 will be continuing to service our loan and other real estate owned portfolios and growing net interest income and noninterest income by providing extraordinary service to existing and prospective clients. We plan to continue to support our local economy by taking deposits, making loans, and providing financial advice for our clients in these difficult times. The community was incredibly supportive of our Bank in the first six months of 2010 and we had increases in loans and deposits. Lastly, at June 30, 2010 we were well-capitalized with ample capital for future growth. ”