Oxford Bank Corp. (OXBC)

[norweger1979]

2014 annual letter to shareholders

Dear Shareholder:

Oxford Bank Corporation’s financial condition has continued to improve during 2014 bolstered by a variety of sources
including elimination of many problem assets, improved earnings, a one-time increase in net tax assets, and investor
capital contributions. The Corporation’s bank subsidiary (“the Bank”) once again took aggressive steps to clear out
bank-owned properties during 2014, writing down carrying values by approximately $420,000 at year-end, compared
to $1.0 million during 2013, in an attempt to expedite property sales. These efforts proved to be successful as the Bank
managed to sell approximately 35 properties during 2014 with net book values totaling over $3.4 million.

The Company’s pretax earnings totaled $911,000 during 2014 compared to $563,000 during 2013, or $0.77 and $0.49
per weighted average share outstanding, respectively. During 2014, the Company was able to recover the majority of
its deferred tax asset totaling approximately $6 million, as an adjustment to net earnings. The resulting net earnings
after deferred tax asset and other tax recoveries totaled $7.3 million, or $6.11 per weighted average share during 2014
compared to $1.1 million, or $1.23 per weighted average share during 2013.

The Company has begun to achieve results from its ongoing capital raising efforts. Through the end of 2014, the
Company had raised $1,658,000 in new capital from the investment community and has raised a total of $1,828,000
through March 2015. As of this writing, the Bank requires less than $1 million to reach its Tier 1 Capital-to-Asset Ratio
goal of 8%. In addition to the capital already raised, the Company has entered into a contractual relationship with a lead
investor who is expected to contribute an additional $5 million in new capital. This new capital is expected to increase
the Bank’s total Tier 1 Capital to over $25 million, and the Tier 1 Capital-to-Asset Ratio to over 9.5% during the early part
of 2015. These numbers are substantially improved from the Bank’s low of $7.1 million, or 2.4% as of the end of the third
quarter of 2010.

Non-Performing Assets (NPAs) have been reduced from a high of $27.6 million in 2009 to $9.0 million in 2013, and now
stands at $5.8 million at the end of 2014. Other Real Estate Owned (OREO), a part of the NPL total, has been reduced
from a high of $13.9 million at year-end 2010 to $7.6 million at year-end 2013 to $3.8 million at year-end 2014. Also
during 2014, the Bank was successful in extinguishing the IRS audit as well as settling amounts in connection with
residential mortgages sold during 1998 through 2006. Total settlements amounted to less than what had previously
been recorded to cover potential losses from these disputes.

As the Company begins to look beyond the challenges of the past, the Bank continues to upgrade its products and
its operations. Plans are underway for the Bank to improve its electronic delivery capabilities in order to provide a
higher level of service for its customers. In addition, the Bank is making plans to refurbish and upgrade various banking
centers within its branch network and hopes to have the majority of its physical improvements accomplished by the
end of 2015. All of these activities are, of course, expected to be achieved while continuing to maintain steady or
improving profitability in 2015.

http://www.oxfordbank.com/2014annualreport/2014_AnnualReport.pdf