HAMPTON, Va., July 29, 2016 /PRNewswire/ -- Old Point
Financial Corporation (NASDAQ: OPOF) reported net income of
$1.6 million, or $0.32 per diluted share, for the six months ended
June 30, 2016, compared to net income
of $2.5 million, or $0.50 per diluted share, for the six months ended
June 30, 2015. Higher net interest
and noninterest income during this period were offset by higher
noninterest expense and a higher provision for loan losses.
Interest and dividend income decreased $254 thousand for the first six months of 2016 as
compared to the first six months of 2015, primarily as a result of
sales of securities in the first quarter of 2016. These securities
were sold to reduce the portfolio's susceptibility to interest rate
risk in future periods, as well as to provide liquidity for loan
growth. As loans typically bear higher yields than securities,
management expects this restructuring of the balance sheet to
provide higher interest income in future quarters.
The sale of these securities also resulted in a gain of
$509 thousand in the first quarter of
2016, which offset a $391 thousand
fee Old Point paid on the early payoff of an advance from the
Federal Home Loan Bank (FHLB). The payoff of this advance, which
would have matured in June, reduced interest expense by
$456 thousand when comparing the
first half of 2015 and 2016. This reduction in interest expense
increased net interest income before the provision by $256 thousand for the six months ended
June 30, 2016 when compared to the
six months ended June 30, 2015 and
was the primary reason Old Point's net interest margin increased
from 3.55% to 3.67% for the same periods.
While net interest income before the provision was higher in the
first half of 2016 than in the first half of 2015, net interest
income after the provision for loan losses was $844 thousand lower between the two periods due
to a $1.3 million provision for loan
losses in the first six months of 2016, which was $1.1 million higher than the provision in the
first six months of 2015. Approximately $400
thousand of this increase was due to growth in loans, which
required Old Point to set aside additional funds to maintain an
adequate allowance.
The remainder of the increase was due to a charge-off on a
single borrowing relationship whose condition deteriorated rapidly.
Old Point identified the potential impairment on this relationship
in the second quarter of 2016 and charged off uncollectible
balances of $836 thousand based on
management's analysis of the loans' collateral. Primarily as a
result of this charge-off, annualized net loans charged off as a
percent of total loans were 0.40% on for the six months ended
June 30, 2016, compared to a net
recovery for the six months ended June 30,
2015. Although this charge-off reduced earnings for the
second quarter of 2016 as compared to the second quarter of 2015,
nonperforming assets improved during the second quarter of 2016,
with nonaccrual loans decreasing $2.5
million and other real estate owned decreasing $356 thousand when comparing June 30, 2016 to March 31,
2016.
Old Point National Bank's President and CEO, Rob Shuford, Jr., reiterated, "Old Point has
diligently moved in a new direction. We are evaluating the types of
credits we're targeting and reviewing our credit, underwriting, and
monitoring processes. We're confident we've made significant
improvements in this area and are optimistic about our strategy for
the future."
Noninterest income and noninterest expense both increased when
comparing the first six months of 2016 to the first six months of
2015. When comparing these two periods, noninterest income
increased $315 thousand, primarily as
a result of net gains on sales of available-for-sale securities
during the first six months of 2016. For the same periods,
noninterest expense increased $795
thousand from the same period in 2015, with the single
largest component being the $391
thousand fee assessed on the prepayment of the FHLB advance
discussed previously.
Noninterest expense for the six months ended June 30, 2016 was also impacted by increases in
legal and audit expenses, occupancy and equipment, data processing,
and other outside service fees. Expenses incurred in the
preparation of the Company's proxy statement for its 2016 annual
stockholders' meeting increased legal and audit expenses. The 2016
proxy statement contained numerous proposals, including changes to
the Company's articles of incorporation, the addition of an
employee stock purchase plan, and the addition of a new stock
incentive plan, all of which required extensive review by outside
legal counsel. Occupancy and equipment increased due to additional
depreciation and service contract expenses related to the Company's
new, more sophisticated disaster recovery system that was
implemented in the third quarter of 2015. The new disaster recovery
system was also partially responsible for the increase in data
processing expense. Other outside service fees increased due to
servicing expenses on the Company's student loan portfolio and the
outsourcing of certain loan review functions. In contrast to these
increases when comparing the first half of 2016 to the first half
of 2015, ATM and check losses were down $109
thousand while salaries and employee benefits remained
essentially flat between the two periods.
On the balance sheet, assets as of June
30, 2016 were $897.7 million,
an increase of $886 thousand from
December 31, 2015. Although assets
remained almost flat in the first six months of 2016, there was a
significant shift in the composition of the balance sheet during
this period. Management continues to implement its balance
sheet strategy by growing the loan portfolio through the
reinvestment of funds previously held in securities, as well as
available liquidity from cash and due from banks. On a combined
basis, securities available-for-sale and cash and cash equivalents
decreased $52.8 million, while net
loans grew $29.5 million from
December 31, 2015 to June 30, 2016.
The decline in securities outpaced the growth in loans due to
the sale of certain securities in the second quarter, which had
traded but not yet settled as of June 30,
2016 and were held in other assets. These securities were
sold in part to fund loan growth, but also to limit the securities
portfolio's susceptibility to interest rate risk. With the sharp
declines in market interest rates in June
2016, Old Point was able to sell for a gain certain
under-performing securities. A portion of this sale settled in June
of 2016, which resulted in a $6
thousand gain for the second quarter, but $24.5 million did not settle until July of
2016.
On the liabilities side of the balance sheet, declines in
deposits were offset by advances from the FHLB. As discussed above,
management made a strategic decision in the first quarter of 2016
to prepay a $25.0 million advance,
which would have matured in June of 2016. In second quarter 2016,
Old Point took out additional borrowings from the FHLB at
significantly lower rates than that carried by the advance that was
prepaid. These new advances were for shorter terms, allowing Old
Point to obtain additional liquidity when necessary without
maintaining excess liquidity on the balance sheet.
For information about our commitment to the community, pick up a
copy of Old Point's Community Engagement Report in any of our
branches or request a PDF via email (lwright@oldpoint.com). For
information about upcoming initiatives, please visit our website
(www.oldpoint.com), our Facebook page (www.facebook.com/oldpoint),
or join us on Twitter (www.twitter.com/opnb).
Other items of note:
Non-Performing Assets
(NPAs) decreased from $10.7
million as of December 31,
2015 to $9.0 million as of
June 30, 2016. NPAs do not include
restructured loans that are performing in accordance with their
modified terms. Loans past due 90 days or more but still accruing
interest, a component of NPAs, totaled $3.2
million as of June 30, 2016,
of which $2.6 million were student
loans with principal and interest amounts that are 97-98%
guaranteed by the U.S. Government. Old Point expects to experience
minimal losses on these government-guaranteed loans. Loans past due
90 days or more but still accruing interest totaled $3.4 million as of December 31, 2015, of which $3.1 million were student loans with principal
and interest amounts that are 97-98% guaranteed by the U.S.
government.
Allowance for Loan and Lease Losses (ALLL) was 1.33% of
total loans as of June 30, 2016,
compared to 1.36% at December 31,
2015.
Safe Harbor Statement Regarding Forward-Looking
Statements. Statements in this press release which use language
such as "believes," "expects," "plans," "may," "will," "should,"
"projects," "contemplates," "anticipates," "forecasts,"
"intends" and similar expressions, identify forward-looking
statements. These forward-looking statements are based on the
beliefs of Old Point's management, as well as estimates and
assumptions made by, and information currently available to,
management. These statements are inherently uncertain, and there
can be no assurance that the underlying estimates or assumptions
will prove to be accurate. Actual results could differ materially
from historical results or those anticipated by such statements.
Forward-looking statements in this release include, without
limitation, statements regarding future financial performance,
strategic business initiatives, management's efforts to reposition
the balance sheet, levels and sources of liquidity, use of proceeds
from the sale of securities, future levels of charge-offs or net
recoveries, and the performance of Old Point's purchased student
loan portfolio.
Factors that could have a material adverse effect on the
operations and future prospects of Old Point include, but are not
limited to, changes in: interest rates and yields; general economic
and business conditions, including unemployment levels; demand for
loan products; the legislative/regulatory climate; monetary and
fiscal policies of the U.S. Government, including policies of the
U.S. Treasury and the Federal Reserve Board; the quality or
composition of the loan or securities portfolios; changes in the
volume and mix of interest-earning assets and interest-bearing
liabilities; the effects of management's investment strategy and
strategy to manage the net interest margin; the U.S. Government's
guarantee of repayment of student loans purchased by Old Point; the
level of net charge-offs on loans; deposit flows; competition;
demand for financial services in Old Point's market area;
technology; reliance on third parties for key services; the use of
inaccurate assumptions in management's modeling systems; the real
estate market; accounting principles, policies and guidelines; and
other factors detailed in Old Point's publicly filed documents,
including its Annual Report on Form 10-K for the year ended
December 31, 2015. These risks and
uncertainties should be considered in evaluating the
forward-looking statements contained herein, and readers are
cautioned not to place undue reliance on such statements, which
speak only as of date of the release.
Old Point Financial Corporation ("OPOF" - Nasdaq) is
the parent company of The Old Point National Bank of
Phoebus, a locally owned and
managed community bank serving all of Hampton Roads and Old Point Trust &
Financial Services, N.A., a Hampton Roads wealth
management services provider. Web: www.oldpoint.com. For more
information, contact Erin Black,
Vice President/Marketing Director, Old Point National Bank at 757-
251-2792.
Old Point
Financial Corporation and Subsidiaries
|
Consolidated Balance
Sheets
|
June 30,
|
December
31,
|
(dollars in
thousands, except per share data)
|
2016
|
2015
|
|
(unaudited)
|
|
Assets
|
|
|
|
|
|
Cash and due from
banks
|
$
28,974
|
$
33,514
|
Interest-bearing due
from banks
|
1,722
|
1,064
|
Federal funds
sold
|
1,520
|
2,412
|
Cash and cash
equivalents
|
32,216
|
36,990
|
Securities
available-for-sale, at fair value
|
166,216
|
214,192
|
Restricted
securities
|
2,882
|
2,016
|
Loans, net of
allowance for loan losses of $7,934 and $7,738
|
590,227
|
560,737
|
Premises and
equipment, net
|
40,285
|
41,282
|
Bank-owned life
insurance
|
24,843
|
24,411
|
Other real estate
owned, net of valuation allowance of $2,046 and $2,549
|
1,887
|
2,741
|
Other
assets
|
39,117
|
14,418
|
Total
assets
|
$
897,673
|
$
896,787
|
|
|
|
Liabilities &
Stockholders' Equity
|
|
|
|
|
|
Deposits:
|
|
|
Noninterest-bearing
deposits
|
$
206,815
|
$
215,090
|
Savings
deposits
|
311,932
|
321,370
|
Time
deposits
|
208,254
|
210,011
|
Total
deposits
|
727,001
|
746,471
|
Overnight repurchase
agreements
|
23,865
|
25,950
|
Federal Home Loan
Bank advances
|
45,000
|
25,000
|
Accrued expenses and
other liabilities
|
5,874
|
6,190
|
Total
liabilities
|
801,740
|
803,611
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
Common stock, $5 par
value, 10,000,000 shares authorized;
|
|
|
4,959,009 shares
issued and outstanding
|
24,795
|
24,795
|
Additional paid-in
capital
|
16,392
|
16,392
|
Retained
earnings
|
55,732
|
55,151
|
Accumulated other
comprehensive loss, net
|
(986)
|
(3,162)
|
Total stockholders'
equity
|
95,933
|
93,176
|
Total liabilities and
stockholders' equity
|
$
897,673
|
$
896,787
|
Old Point
Financial Corporation and Subsidiaries
|
|
|
Consolidated
Statements of Income
|
|
|
(dollars in
thousands, except per share data)
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
|
June 30,
|
|
2016
|
2015
|
2016
|
2015
|
|
(unaudited)
|
(unaudited)
|
Interest and
Dividend Income:
|
|
|
|
|
Interest and fees on
loans
|
$
6,560
|
$
6,485
|
$
12,973
|
$
12,840
|
Interest on due from
banks
|
1
|
3
|
5
|
10
|
Interest on federal
funds sold
|
1
|
1
|
2
|
1
|
Interest on
securities:
|
|
|
|
|
Taxable
|
471
|
615
|
1,019
|
1,301
|
Tax-exempt
|
376
|
415
|
760
|
838
|
Dividends and
interest on all other securities
|
26
|
31
|
41
|
64
|
Total interest and
dividend income
|
7,435
|
7,550
|
14,800
|
15,054
|
|
|
|
|
|
Interest
Expense:
|
|
|
|
|
Interest on savings
deposits
|
54
|
57
|
109
|
109
|
Interest on time
deposits
|
517
|
544
|
1,034
|
1,072
|
Interest on federal
funds purchased, securities sold under
|
|
|
|
|
agreements to
repurchase and other borrowings
|
8
|
8
|
14
|
16
|
Interest on Federal
Home Loan Bank advances
|
3
|
309
|
144
|
614
|
Total interest
expense
|
582
|
918
|
1,301
|
1,811
|
Net interest
income
|
6,853
|
6,632
|
13,499
|
13,243
|
Provision for loan
losses
|
1,250
|
25
|
1,400
|
300
|
Net interest income
after provision for loan losses
|
5,603
|
6,607
|
12,099
|
12,943
|
|
|
|
|
|
Noninterest
Income:
|
|
|
|
|
Income from fiduciary
activities
|
877
|
914
|
1,778
|
1,894
|
Service charges on
deposit accounts
|
1,021
|
994
|
1,996
|
1,976
|
Other service
charges, commissions and fees
|
1,033
|
1,058
|
2,051
|
2,063
|
Income from
bank-owned life insurance
|
217
|
222
|
432
|
443
|
Income from Old Point
Mortgage
|
80
|
125
|
89
|
158
|
Gain on sale of
available-for-sale securities, net
|
6
|
0
|
515
|
0
|
Other operating
income
|
52
|
46
|
90
|
102
|
Total noninterest
income
|
3,286
|
3,359
|
6,951
|
6,636
|
|
|
|
|
|
Noninterest
Expense:
|
|
|
|
|
Salaries and employee
benefits
|
4,890
|
5,057
|
10,044
|
10,106
|
Occupancy and
equipment
|
1,390
|
1,304
|
2,748
|
2,631
|
Data
processing
|
435
|
407
|
857
|
765
|
FDIC
insurance
|
156
|
153
|
321
|
300
|
Customer
development
|
154
|
161
|
304
|
315
|
Legal and audit
expenses
|
295
|
160
|
497
|
274
|
Other outside service
fees
|
178
|
195
|
361
|
309
|
Employee professional
development
|
179
|
162
|
327
|
293
|
Capital stock
tax
|
127
|
111
|
262
|
225
|
ATM and check
losses
|
83
|
142
|
170
|
279
|
Prepayment fee on
Federal Home Loan Bank advance
|
0
|
0
|
391
|
0
|
Loss on
write-down/sale of other real estate owned
|
9
|
3
|
108
|
72
|
Other operating
expenses
|
589
|
639
|
1,186
|
1,212
|
Total noninterest
expense
|
8,485
|
8,494
|
17,576
|
16,781
|
Income before income
taxes
|
404
|
1,472
|
1,474
|
2,798
|
Income tax expense
(benefit)
|
(148)
|
193
|
(99)
|
314
|
Net income
|
$
552
|
$
1,279
|
$
1,573
|
$
2,484
|
|
|
|
|
|
Basic Earnings per
Share:
|
|
|
|
|
Average shares
outstanding
|
4,959,009
|
4,959,009
|
4,959,009
|
4,959,009
|
Net income per share
of common stock
|
$
0.11
|
$
0.26
|
$
0.32
|
$
0.50
|
|
|
|
|
|
Diluted Earnings
per Share:
|
|
|
|
|
Average shares
outstanding
|
4,959,009
|
4,959,009
|
4,959,009
|
4,959,009
|
Net income per share
of common stock
|
$
0.11
|
$
0.26
|
$
0.32
|
$
0.50
|
|
|
|
|
|
Cash Dividends
Declared per Share:
|
$
0.10
|
$
0.08
|
$
0.20
|
$
0.16
|
Old Point
Financial Corporation and Subsidiaries
|
|
|
|
|
Selected
Ratios
|
June 30,
|
March 31,
|
December
31,
|
June 30,
|
|
2016
|
2016
|
2015
|
2015
|
Net Interest
Margin Year-to-Date
|
3.67%
|
3.62%
|
3.56%
|
3.55%
|
NPAs/Total
Assets
|
1.00%
|
1.38%
|
1.19%
|
1.30%
|
Annualized Net
Charge Offs/Total Loans
|
0.40%
|
0.06%
|
0.06%
|
-0.01%
|
Allowance for Loan
Losses/Total Loans
|
1.33%
|
1.36%
|
1.36%
|
1.29%
|
|
|
|
|
|
|
|
|
|
|
Non-Performing
Assets (NPAs) (in thousands)
|
|
|
|
|
Nonaccrual
Loans
|
$
3,910
|
$
6,457
|
$
4,582
|
$
3,576
|
Loans > 90 days
past due, but still accruing interest
|
3,222
|
3,092
|
3,356
|
3,116
|
Non-Performing
Restructured Loans
|
0
|
0
|
0
|
0
|
Other real estate
owned
|
1,887
|
2,243
|
2,741
|
4,961
|
Total
Non-Performing Assets
|
$
9,019
|
$
11,792
|
$
10,679
|
$
11,653
|
|
|
|
|
|
|
|
|
|
|
Other Selected
Numbers (in thousands)
|
|
|
|
|
Loans Charged Off
Year-to-Date, net of recoveries
|
$
1,204
|
$
86
|
$
362
|
$
(22)
|
Year-to-Date
Average Loans
|
$
575,812
|
$
570,344
|
$
563,534
|
$
555,032
|
Year-to-Date
Average Assets
|
$
861,243
|
$
863,515
|
$
884,386
|
$
883,227
|
Year-to-Date
Average Earning Assets
|
$
759,537
|
$
759,463
|
$
775,987
|
$
775,276
|
Year-to-Date
Average Deposits
|
$
726,831
|
$
725,517
|
$
730,046
|
$
725,318
|
Year-to-Date
Average Equity
|
$
94,682
|
$
94,470
|
$
90,433
|
$
89,755
|
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SOURCE Old Point Financial Corporation