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| 8-K - FORM 8-K - OLD POINT FINANCIAL CORP | form8k.htm |
 Old Point Reports Profit for 2nd Quarter
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· Nonperforming assets decline by 39.66%
· Noninterest-bearing deposits grow $23.4 million
· Year to date net interest margin climbs to 3.81%
July 20, 2011 Hampton, VA Old Point Financial Corporation (Nasdaq "OPOF") posted a profit of $1.0 million for the second quarter of 2011, a 2.68% increase over the second quarter of 2010. The income for the six months ended June 30, 2011 was $1.4 million, or $0.28 per diluted share, as compared to net income of $62 thousand or $0.01 per diluted share in the first two quarters of 2010. This increase in income was primarily due to a reduced provision for loan losses. The provision was $3.7 million less in the six months ended June 30, 2011 than in the same period in 2010. Management was able to reduce the provision due to a decrease of nonperforming assets.
On June 30, 2011, nonperforming assets were 39.66% lower than nonperforming assets as of March 31, 2011, due to the 59.38% decline in nonaccrual loans since March 31, 2011. Nonaccrual loans totaling $12.3 million were sold without recourse in the second quarter. Of the $5.6 million of net loans charged off in 2011, $4.9 million was due to four loans. More than half of the net loans charged off in 2011 were previously provided for in the 2010 provision for loan losses.
The net interest margin for the second quarter 2011 was 3.87%, an 11 basis point improvement over the 3.76% net interest margin for the first quarter of 2011. The net interest margin for the six months ended June 30, 2011 was 3.81% or 33 basis points higher than the six months ended June 30, 2010. The net interest margin continues to improve as higher-cost time deposits reprice to current, lower market rates. In addition, management has focused on increasing lower-cost funds and improving relationship management in retail and corporate banking areas.
Noninterest income was down $176 thousand for the second quarter 2011 and down $669 thousand for the first six months of 2011, compared to the same periods in 2010. This reduction was due to lower overdraft fees as a result of changes in Regulation E requiring a customer to authorize in advance overdrafts caused by debit card and ATM transactions. The Company expects continued uncertainty regarding overdraft fee income and is compensating for this uncertainty by pursuing new product offerings, such as remote deposit capture and lockbox services, to help drive future noninterest income. These efforts are proving fruitful, as seen in the noninterest income category of other service charges, commission and fees, which improved $67 thousand for the second quarter of 2011 and $113 thousand for the six months ended June 30, 2011, when compared to the same periods in the prior year.
The Company’s noninterest expense increased by $525 thousand for the second quarter 2011 as compared to the second quarter 2010 and $957 thousand when comparing the first six months of 2011 to the first six months of 2010. For the six months ending June 30, 2011, salaries and employee benefits increased by $372 thousand over the same period in 2010 as the Company added 9 full-time equivalent employees. Many of these newly hired employees are in the Company’s private banking and corporate lending areas and were hired to increase small business lending, treasury services, and lending in areas other than commercial real estate as part of management’s focus on increasing loans and noninterest income.
Other areas of noninterest expense that increased were loan expenses and losses on write-downs and sales of foreclosed assets. Both expense categories have increased as the Company manages problem loans created by the economic down turn. As seen by the reduction in the Company’s nonperforming assets, these efforts are working. However, these expenses will likely continue to be elevated for the foreseeable future.
Assets as of June 30, 2011 were $832.4 million, a decrease of $54.4 million, or 6.14%, compared to assets as of December 31, 2010, largely due to the current loan environment. In response to the lack of quality loan demand in recent years, management has placed an increased emphasis on improving the Company’s net interest margin by reducing dependence on higher-cost sources of funding. As a result, the Company’s higher-cost time deposits decreased by $21.3 million. Term repurchase agreements also decreased, partially due to the exiting of certain high-cost, non-relationship accounts.
In addition to improving the Company’s net interest margin, Old Point has focused on relationship building. Noninterest-bearing deposits grew $23.4 million. A portion of this growth was due to the sale of high-quality treasury services. Customers pay for these services either with compensating balances or with fees which flow to noninterest income. As seen by both the balance sheet and the income statement, these efforts are working. The liability side of the balance sheet has shifted from higher cost non-relationship funds to lower cost, service providing accounts.
In the last quarter, Old Point’s management efforts have been recognized in a variety of ways. Hampton Roads Magazine and Virginian Pilot readers named Old Point one of the “Best of” winners in the Financial Institution category. Inside Business named Old Point a “Best Place to Work”, and Virginia Business named the new Headquarters Building the “Best Sustainable Project” of 2010. Additionally, Old Point continues to support numerous community initiatives and events. For information about upcoming efforts, please visit our website (www.oldpoint.com) or our Facebook page (www.facebook.com/oldpoint).
Other items of note:
Non-performing Assets (NPAs) as of June 30, 2011 were $20.3 million, down from $34.0 million on December 31, 2010.
Allowance for Loan and Lease Losses (ALLL) on June 30, 2011 was 1.85% of total loans; as of December 31, 2010, that measure was 2.25%.
Net loans charged off/provision for loan losses: For the six months ended June 30, 2011, net loans charged off totaled $5.6 million, compared to $2.2 million for the same period in 2010.
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 the corporation's management, as well as estimates and assumptions made by, and information currently available to, the corporation's 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 the corporation 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 the corporation’s market area; technology; reliance on third parties for key services; the real estate market; the corporation’s expansion initiatives; accounting principles, policies and guidelines; and other factors detailed in the corporation's publicly filed documents, including its Annual Report on Form 10-K for the year ended December 31, 2010. 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 Old Point National Bank, a locally owned and managed community bank serving Hampton Roads with 21 branches and more than 60 ATMs throughout 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.
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Old Point Financial Corporation and Subsidiaries
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Consolidated Balance Sheet
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(dollars in thousands, except share data)
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June 30,
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December 31,
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2011
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2010
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(unaudited)
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Assets
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Cash and due from banks
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$ | 14,058 | $ | 15,603 | ||||
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Federal funds sold
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17,900 | 12,828 | ||||||
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Cash and cash equivalents
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31,958 | 28,431 | ||||||
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Securities available-for-sale, at fair value
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194,183 | 206,092 | ||||||
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Securities held-to-maturity (fair value approximates $2,270 and $1,957)
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2,252 | 1,952 | ||||||
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Restricted securities
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3,890 | 4,320 | ||||||
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Loans, net of allowance for loan losses of $9,974 and $13,228
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529,157 | 573,391 | ||||||
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Premises and equipment, net
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29,972 | 29,616 | ||||||
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Bank owned life insurance
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18,425 | 18,020 | ||||||
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Foreclosed assets, net of valuation allowance of $1,979 and $2,124
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10,797 | 11,448 | ||||||
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Other assets
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11,792 | 13,572 | ||||||
| $ | 832,426 | $ | 886,842 | |||||
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Liabilities & Stockholders' Equity
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Deposits:
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Noninterest-bearing deposits
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$ | 152,631 | $ | 129,208 | ||||
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Savings deposits
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224,358 | 225,210 | ||||||
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Time deposits
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303,454 | 324,796 | ||||||
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Total deposits
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680,443 | 679,214 | ||||||
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Federal funds purchased and other borrowings
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839 | 731 | ||||||
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Overnight repurchase agreements
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27,799 | 50,757 | ||||||
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Term repurchase agreements
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2,788 | 38,959 | ||||||
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Federal Home Loan Bank advances
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35,000 | 35,000 | ||||||
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Accrued expenses and other liabilities
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1,472 | 1,229 | ||||||
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Total liabilities
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748,341 | 805,890 | ||||||
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Commitments and contingencies
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Stockholders' equity:
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Common stock, $5 par value, 10,000,000 shares authorized; 4,955,259 and 4,936,989 shares issued and outstanding
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24,776 | 24,685 | ||||||
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Additional paid-in capital
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16,226 | 16,026 | ||||||
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Retained earnings
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43,695 | 42,810 | ||||||
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Accumulated other comprehensive loss
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(612 | ) | (2,569 | ) | ||||
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Total stockholders' equity
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84,085 | 80,952 | ||||||
| $ | 832,426 | $ | 886,842 | |||||
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Old Point Financial Corporation and Subsidiaries
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Consolidated Statements of Income
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(dollars in thousands, except per share data)
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Three Months Ended
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Six Months Ended
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June 30,
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June 30, |
June 30,
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June 30, | |||||||||||||
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2011
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2010
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2011
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2010
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(unaudited)
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(unaudited) |
(unaudited)
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(unaudited) | |||||||||||||
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Interest and Dividend Income:
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Interest and fees on loans
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$ | 8,191 | $ | 9,259 | $ | 16,593 | $ | 18,745 | ||||||||
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Interest on federal funds sold
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6 | 28 | 14 | 48 | ||||||||||||
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Interest on securities:
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Taxable
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896 | 849 | 1,799 | 1,653 | ||||||||||||
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Tax-exempt
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38 | 74 | 78 | 168 | ||||||||||||
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Dividends and interest on all other securities
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21 | 11 | 33 | 23 | ||||||||||||
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Total interest and dividend income
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9,152 | 10,221 | 18,517 | 20,637 | ||||||||||||
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Interest Expense:
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Interest on savings and interest-bearing demand deposits
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103 | 98 | 208 | 194 | ||||||||||||
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Interest on time deposits
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1,144 | 1,703 | 2,410 | 3,564 | ||||||||||||
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Interest on federal funds purchased, securities sold under agreements to repurchase and other borrowings
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18 | 183 | 71 | 361 | ||||||||||||
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Interest on Federal Home Loan Bank advances
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425 | 711 | 845 | 1,540 | ||||||||||||
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Total interest expense
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1,690 | 2,695 | 3,534 | 5,659 | ||||||||||||
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Net interest income
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7,462 | 7,526 | 14,983 | 14,978 | ||||||||||||
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Provision for loan losses
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500 | 1,300 | 2,300 | 6,000 | ||||||||||||
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Net interest income, after provision for loan losses
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6,962 | 6,226 | 12,683 | 8,978 | ||||||||||||
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Noninterest Income:
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Income from fiduciary activities
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760 | 781 | 1,531 | 1,602 | ||||||||||||
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Service charges on deposit accounts
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1,055 | 1,280 | 2,067 | 2,595 | ||||||||||||
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Other service charges, commissions and fees
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821 | 754 | 1,558 | 1,445 | ||||||||||||
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Income from bank owned life insurance
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203 | 210 | 405 | 599 | ||||||||||||
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Gain on sale of available-for-sale securities, net
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51 | 0 | 51 | 0 | ||||||||||||
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Other operating income
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62 | 103 | 145 | 185 | ||||||||||||
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Total noninterest income
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2,952 | 3,128 | 5,757 | 6,426 | ||||||||||||
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Noninterest Expense:
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Salaries and employee benefits
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4,896 | 4,622 | 9,525 | 9,153 | ||||||||||||
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Occupancy and equipment
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1,050 | 1,051 | 2,136 | 2,150 | ||||||||||||
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FDIC insurance
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266 | 317 | 672 | 646 | ||||||||||||
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Data processing
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339 | 305 | 666 | 602 | ||||||||||||
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Customer development
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218 | 218 | 439 | 440 | ||||||||||||
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Advertising
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142 | 174 | 287 | 350 | ||||||||||||
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Loan expenses
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230 | 242 | 418 | 364 | ||||||||||||
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Other outside service fees
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157 | 108 | 301 | 200 | ||||||||||||
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Employee professional development
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179 | 117 | 312 | 260 | ||||||||||||
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Postage and courier expense
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120 | 135 | 243 | 270 | ||||||||||||
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Legal and audit expenses
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220 | 215 | 363 | 320 | ||||||||||||
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Loss (gain) on write-down/sale of foreclosed assets
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269 | (5 | ) | 458 | (51 | ) | ||||||||||
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Other operating expenses
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415 | 477 | 848 | 1,007 | ||||||||||||
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Total noninterest expenses
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8,501 | 7,976 | 16,668 | 15,711 | ||||||||||||
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Income (loss) before income taxes
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1,413 | 1,378 | 1,772 | (307 | ) | |||||||||||
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Income tax expense (benefit)
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378 | 370 | 392 | (369 | ) | |||||||||||
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Net income
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$ | 1,035 | $ | 1,008 | $ | 1,380 | $ | 62 | ||||||||
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Basic Earnings per Share:
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Average shares outstanding
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4,954,970 | 4,925,910 | 4,946,210 | 4,923,025 | ||||||||||||
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Net income per share of common stock
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$ | 0.21 | $ | 0.21 | $ | 0.28 | $ | 0.01 | ||||||||
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Diluted Earnings per Share:
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Average shares outstanding
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4,954,970 | 4,932,233 | 4,946,210 | 4,933,023 | ||||||||||||
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Net income per share of common stock
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$ | 0.21 | $ | 0.20 | $ | 0.28 | $ | 0.01 | ||||||||
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Cash Dividends Declared
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$ | 0.05 | $ | 0.05 | $ | 0.10 | $ | 0.15 | ||||||||
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Old Point Financial Corporation and Subsidiaries
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Selected Ratios
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June 30,
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March 31,
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December 31,
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June 30,
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2011
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2011
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2010
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2010
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Net Interest Margin Year-to-Date
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3.81 | % | 3.76 | % | 3.63 | % | 3.48 | % | ||||||||
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NPAs/Total Assets
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2.44 | % | 3.90 | % | 3.84 | % | 3.47 | % | ||||||||
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Annualized Net Charge Offs/Total Loans
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2.06 | % | 3.36 | % | 0.59 | % | 0.69 | % | ||||||||
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Allowance for Loan Losses/Total Loans
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1.85 | % | 1.82 | % | 2.25 | % | 1.87 | % | ||||||||
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Non-Performing Assets (NPAs) (in thousands)
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Nonaccrual Loans
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$ | 8,959 | $ | 22,058 | $ | 20,881 | $ | 18,677 | ||||||||
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Loans> 90 days past due, but still accruing interest
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266 | 129 | 73 | 659 | ||||||||||||
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Restructured Loans
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258 | 259 | 1,639 | 2,480 | ||||||||||||
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Foreclosed Assets
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10,797 | 11,164 | 11,448 | 9,884 | ||||||||||||
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Total Non-Performing Assets
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$ | 20,280 | $ | 33,610 | $ | 34,041 | $ | 31,700 | ||||||||
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Loans Charged Off (net of recoveries) (in thousands)
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$ | 5,554 | $ | 4,744 | $ | 3,437 | $ | 2,157 | ||||||||