Red Oak Bank Reports First Quarter 2001 Results

Apr 26, 2001, 01:00 ET from Red Oak Bank

    MORRISTOWN, N.J., April 26 /PRNewswire/ -- Red Oak Bank
 (OTC Bulletin Board:   ROBK) reported its financial performance for the first
 quarter ended March 31, 2001 today at its Annual Meeting.
     The bank closed the quarter with assets of $50.1 million, more than double
 its size from the first quarter 2000.  "In our planning documents, our most
 optimistic growth scenario was to reach the $50 million goal by May of 2002,
 but in the fall of 2000, customers started to flock into our little bank in
 droves," said Dale G. Potter, Chairman and CEO.  Deposit growth, which started
 to accelerate in the second half of 2000, continued strong during the first
 quarter of 2001.  Deposits for the quarter grew 34% vs. 30% for the fourth
 quarter 2000 and ended the quarter at $43.3 million.
     The loan portfolio ended the quarter at $24.9 million, up $10.2 million
 from the end of the first quarter 2000, but down $1.3 million from year-end.
 "Loan growth is also accelerating," noted Potter, "however we had several loan
 participations totaling $4.4 million, that we put back to a correspondent bank
 near the end of the first quarter, causing a net decline in our loan portfolio
 compared to year-end outstandings."  The loss of the revenue will slow our
 earnings growth somewhat until new loans can be booked to replace those
 loans," Potter explained.  The core loan portfolio, excluding the paid off
 participation, grew $3.1 million for the quarter.  The portfolio remains sound
 with no delinquencies.
     The net loss for the quarter was $293,045 down from $299,069 for the
 fourth quarter 2000 and $305,592 for the same quarter last year.  "Our biggest
 challenge in attempting to reach breakeven was our need to grow deposits.  We
 have been successful in cranking up that engine," Potter said.  "Now we need
 to put our significant liquidity to work in higher yielding assets to improve
 our spreads."  First quarter earnings were negatively impacted by the sale of
 a significant portion of the investment portfolio, which resulted in a
 one-time charge of $49,000.  This had the temporary short-term effect of
 increasing liquidity at a time of falling short-term rates.  "As we move
 toward profitability, the pace of lowering our net loss will be slowed until
 our current liquidity ($22 million in Federal Funds) can be re-deployed in the
 loan portfolio at higher returns," Potter explained.  He emphasized that "we
 fully intend to maintain our credit standards even if it means extending our
 breakeven point for a few more months."
     The bank's capital ratio remained strong at 13% of assets and book value
 was $6.89 per share at quarter end.
 
     Red Oak Bank opened for business on April 19, 1999 and is located at
 190 Park Avenue near the intersection with Columbia Turnpike.  This location
 is within close proximity to Morristown, Convent Station, Madison, Chatham,
 Florham Park, Livingston, Morris Plains and the Hanovers.
 
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SOURCE Red Oak Bank
    MORRISTOWN, N.J., April 26 /PRNewswire/ -- Red Oak Bank
 (OTC Bulletin Board:   ROBK) reported its financial performance for the first
 quarter ended March 31, 2001 today at its Annual Meeting.
     The bank closed the quarter with assets of $50.1 million, more than double
 its size from the first quarter 2000.  "In our planning documents, our most
 optimistic growth scenario was to reach the $50 million goal by May of 2002,
 but in the fall of 2000, customers started to flock into our little bank in
 droves," said Dale G. Potter, Chairman and CEO.  Deposit growth, which started
 to accelerate in the second half of 2000, continued strong during the first
 quarter of 2001.  Deposits for the quarter grew 34% vs. 30% for the fourth
 quarter 2000 and ended the quarter at $43.3 million.
     The loan portfolio ended the quarter at $24.9 million, up $10.2 million
 from the end of the first quarter 2000, but down $1.3 million from year-end.
 "Loan growth is also accelerating," noted Potter, "however we had several loan
 participations totaling $4.4 million, that we put back to a correspondent bank
 near the end of the first quarter, causing a net decline in our loan portfolio
 compared to year-end outstandings."  The loss of the revenue will slow our
 earnings growth somewhat until new loans can be booked to replace those
 loans," Potter explained.  The core loan portfolio, excluding the paid off
 participation, grew $3.1 million for the quarter.  The portfolio remains sound
 with no delinquencies.
     The net loss for the quarter was $293,045 down from $299,069 for the
 fourth quarter 2000 and $305,592 for the same quarter last year.  "Our biggest
 challenge in attempting to reach breakeven was our need to grow deposits.  We
 have been successful in cranking up that engine," Potter said.  "Now we need
 to put our significant liquidity to work in higher yielding assets to improve
 our spreads."  First quarter earnings were negatively impacted by the sale of
 a significant portion of the investment portfolio, which resulted in a
 one-time charge of $49,000.  This had the temporary short-term effect of
 increasing liquidity at a time of falling short-term rates.  "As we move
 toward profitability, the pace of lowering our net loss will be slowed until
 our current liquidity ($22 million in Federal Funds) can be re-deployed in the
 loan portfolio at higher returns," Potter explained.  He emphasized that "we
 fully intend to maintain our credit standards even if it means extending our
 breakeven point for a few more months."
     The bank's capital ratio remained strong at 13% of assets and book value
 was $6.89 per share at quarter end.
 
     Red Oak Bank opened for business on April 19, 1999 and is located at
 190 Park Avenue near the intersection with Columbia Turnpike.  This location
 is within close proximity to Morristown, Convent Station, Madison, Chatham,
 Florham Park, Livingston, Morris Plains and the Hanovers.
 
                     MAKE YOUR OPINION COUNT -- Click Here
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 SOURCE  Red Oak Bank