Old Point Releases Second Quarter 2014 Results

Net loans increase $18.8 million

Interest margin improves to 3.48%

Annualized net charge-offs decrease to 0.08% of total loans

Interest income increased $60 thousand when comparing the quarter ended June 30, 2014 to the same period in 2013.  At the same time, interest expense declined by $215 thousand, resulting in an increase to net interest income of $275 thousand.  Year-to-date, interest income declined $103 thousand while interest expense declined further at $439 thousand, resulting in an increase in net interest income of $336 thousand for the first half of 2014 when compared to the first half of 2013.   Higher-cost funds, such as time deposits, were allowed to mature without being renewed.  The loan growth seen in 2013 and the first half of 2014 also began to have an impact on net interest income in the second quarter of 2014, increasing interest income on loans while interest income on securities decreased.  As a result of the decrease in time deposits and the shift from securities to loans, the net interest margin increased from 3.19% during the first half of 2013 to 3.23% for all of 2013 and 3.48% for the first half of 2014.

Noninterest expense increased $455 thousand when comparing the six months ended June 30, 2014 to the same period in 2013.  The largest increases were in salaries and employee benefits and occupancy and equipment expenses.  Salaries and employee benefits increased $108 thousand or 1.11% for the first half of 2014, compared to the first half of 2013, partially due to increases in the cost of employer-provided medical insurance.  This expense was also increased by the addition of four employees when Old Point Trust, a subsidiary of Old Point Financial Corporation, acquired Penact in the fourth quarter of 2013.  Penact provides administrative and valuation services for retirement plans, and Old Point expects that future revenues will more than offset the increased salaries and benefits.  Occupancy and equipment expenses increased due to the completion of Old Point's new corporate headquarters.  While many categories of noninterest expense increased, loss (gain) on write-down/sale of other real estate owned decreased for both the three and six months ended June 30, 2014 when compared to the same periods in 2013, by $104 thousand and $147 thousand respectively.

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Assets as of June 30, 2014 were $860.9 million, a decrease of $3.4 million or 0.39% when compared to December 31, 2013.  Loan demand continued to improve in the first half of 2014, with net loans increasing $18.8 million between December 31, 2013 and June 30, 2014.  This loan growth was funded by reductions in the investment securities portfolio and cash and cash equivalents.  As loans generally bear higher rates of interest than securities, the shift in the mix of earning assets should provide additional increases to the net interest margin in subsequent quarters.

As a community bank, we believe that to succeed, the community around us must thrive. Old Point National Bank supports many organizations through sponsorships and charitable donations. Approximately 26% of our giving is earmarked for education, 31% for community development, 27% for arts & culture, and 16% for health & wellness.

Other items of note:

Non-Performing Assets (NPAs) as of June 30, 2014 were $18.1 million, down from $18.3 million on December 31, 2013. 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 $996 thousand as of June 30, 2014, of which $861 thousand were student loans that are 97-98% guaranteed by the U.S. Government. The Company expects to experience minimal losses on these government guaranteed loans.  None of the guaranteed loans were 90 days past due as of December 31, 2013, as Old Point purchased the portfolio in November of 2013.

Allowance for Loan and Lease Losses (ALLL) as of June 30, 2014 and December 31, 2013 was 1.34% and 1.36% of total loans, respectively.

Net loans charged off as a percent of total loans (annualized) were 0.08% for the first half of 2014, compared to 0.22% in the first half of 2013.

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Safe Harbor Statement Regarding Forward-Looking Statements. Statements in this press release which express "belief," "intention," "expectation," 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. 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; 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 investment portfolios; 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 real estate market; Old Point's expansion initiatives; 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, 2013. 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.

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