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Old Point Reports Second Quarter 2019 Results

OPOF

HAMPTON, Va., July 25, 2019 /PRNewswire/ -- Old Point Financial Corporation (the Company or Old Point) (NASDAQ "OPOF") reported net income of $1.6 million and earnings per diluted common share of $0.31 for the quarter ended June 30, 2019, as compared to net income of $992 thousand or $0.19 earnings per diluted common share for the second quarter of 2018. Net operating earnings (non-GAAP) for the second quarter of 2019 were also $1.6 million or $0.31 per diluted common share, which compares to $1.5 million, or $0.28 per diluted common share for the second quarter of 2018.  Net operating earnings (non-GAAP) for the second quarter of 2018 adjust for certain merger-related costs incurred in the acquisition of Citizens National Bank which closed on April 1, 2018.

Net income for the six months ended June 30, 2019 was $3.7 million or $0.70 earnings per diluted common share. For the comparative 2018 period, net income was $1.9 million or $0.38 earnings per diluted common share. Excluding the effect of $684 thousand in after tax merger costs, net operating earnings (non-GAAP) were $2.6 million, or $0.51 earnings per diluted common share, for the six month period ended June 30, 2018.

Robert Shuford, Jr., Chairman, President, and CEO of Old Point National Bank (the Bank) said, "We are pleased to report earnings of $3.7 million, or $0.70 earnings per diluted common share, for the first six months of 2019. Our Company experienced solid revenue growth and expense control during the first six months of 2019 compared to the same period in 2018 and continued improvement in overall asset quality."

Highlights of the quarter are as follows:

  • Net interest income increased slightly to $8.5 million for the second quarter of 2019 compared to $8.4 million in the first quarter of 2019 and the second quarter of 2018, respectively.
  • Net interest margin (on a fully tax-equivalent basis) improved to 3.68% from 3.67% in the prior quarter and 3.65% in the second quarter of 2018.
  • Non-performing assets (NPAs) totaled $12.4 million as of June 30, 2019, down from $12.9 million at March 31, 2019 and $16.4 million at June 30, 2018. NPAs as a percentage of total assets improved to 1.21% at June 30, 2019 which compared to 1.26% at March 31, 2019 and 1.59% at June 30, 2018.
  • Return on average assets (ROA) was 0.63% for the second quarter of 2019 compared to 0.80% in the prior quarter and 0.39% in the second quarter of 2018. Net operating ROA (non-GAAP) was 0.63% for the second quarter of 2019 compared to 0.80% and 0.58% in the first quarter of 2019 and the second quarter of 2018, respectively.
  • Return on average equity (ROE) was 6.12% for the second quarter of 2019 compared to 7.94% in the prior quarter and 4.06% in the second quarter of 2018. Net operating ROE (non-GAAP) was 6.12% for the second quarter of 2019 compared to 7.94% and 6.02% in the first quarter of 2019 and the second quarter of 2018, respectively.
  • The efficiency ratio improved to 78.06% for the second quarter of 2019 compared to 78.34% in the first quarter of 2019 and 85.54% in the second quarter of 2018.

Net Interest Income

Net interest income for the second quarter of 2019 was $8.5 million, an increase of $172 thousand, or 2.1%, from the prior quarter and $105 thousand, or 1.2%, from the second quarter of 2018. The year-over-year and quarter-over-quarter growth was positively impacted by higher average earning asset balances and higher yields which was partially offset by higher funding costs.  The tax-equivalent net interest margin for the quarter was 3.68%, up from 3.67% in the prior quarter and 3.65% in the same period a year ago.

Asset Quality

Non-performing assets (NPAs) totaled $12.4 million as of June 30, 2019, down from $12.9 million at March 31, 2019 and $16.4 million at June 30, 2018. NPAs as a percentage of total assets were 1.21%, which compares to 1.26% at March 31, 2019 and 1.59% at June 30, 2018. Non-accrual loans were $11.2 million at June 30, 2019 and March 31, 2019, down from $13.9 million at June 30, 2018. Loans past due 90 days or more and still accruing interest decreased $456 thousand to $1.2 million at June 30, 2019 from $1.7 million at March 31, 2019 and decreased by $1.1 million compared to $2.3 million at June 30, 2018. Of the loans past due 90 days or more at June 30, 2019, approximately $900 thousand were government-guaranteed student loans.

The provision for loan losses was $787 thousand for the second quarter of 2019, as compared to $226 thousand for the prior quarter and $575 thousand for the second quarter of 2018.  The allowance for loan and lease losses (ALLL) was $10.8 million at June 30, 2019 compared to $10.1 million at March 31, 2019 and $9.9 million at June 30, 2018. The ALLL as a percentage of loans held for investment was 1.41% at June 30, 2019, up from 1.32% at March 31, 2019 and 1.27% at June 30, 2018. Annualized net charge offs as a percentage of average loans outstanding was 0.06% for the second quarter of 2019, which compares to 0.13% in the preceding quarter and 0.22% in the second quarter of 2018.  Despite overall improving asset quality which positively impacted the level of provision for loan losses in the first quarter of 2019, the level of provision in the second quarter of 2019 was impacted by specific impairments of $707 thousand, or a 9 basis point increase in the ratio of the ALLL as a percentage of loans held for investment, associated with problem credit resolutions.   

Noninterest Income

Total noninterest income for the quarter was $3.6 million, an increase of $157 thousand from the previous quarter and an increase of $149 thousand, or 4.4% from the second quarter of 2018. Increases in other service charges, commissions and fees and mortgage banking income over the preceding quarter and the prior year quarter were partially offset by fluctuations in fiduciary and management fees and service charges on deposit accounts. 

Noninterest Expense

Noninterest expense totaled $9.5 million for the second quarter of 2019, an increase of $217 thousand from the first quarter of 2019 and a decrease of $710 thousand from the second quarter of 2018. Adjusting for the impact of merger expenses of $479 thousand in the second quarter of 2018, adjusted noninterest expense (non-GAAP) decreased $231 thousand comparing second quarter of 2019 to the same period in 2018. For the linked quarter, increases in salaries and employee benefits and data processing were partially offset by decreases in other operating expenses.

Balance Sheet Review

Total assets as of June 30, 2019 were $1.0 billion, essentially unchanged from December 31, 2018. Net loans held for investment decreased $13.5 million, or 1.8%, from December 31, 2018 to $750.4 million.  Securities available for sale, at fair value, decreased $2.8 million to $145.5 million at June 30, 2019.

Total deposits as of June 30, 2019 increased $4.6 million, or 0.6%, to $847.8 million from December 31, 2018. Noninterest-bearing deposits decreased $3.4 million, or 1.4%, savings deposits increased $1.6 million, or 0.4%, and time deposits increased $6.5 million, or 2.8%.

The Company's total stockholders' equity at June 30, 2019 increased $5.4 million or 5.3% from December 31, 2018 to $107.4 million.  The Bank remains well capitalized with a Tier 1 Capital ratio of 11.43% at June 30, 2019 as compared to 10.90% at December 31, 2018. The Bank's leverage ratio was 9.66% at June 30, 2019 as compared to 9.34% at December 31, 2018. 

Non-GAAP Financial Measures – In addition to the Company's results presented in accordance with GAAP, this release includes certain non-GAAP financial measures including net operating earnings, net operating earnings per share, net operating ROA, net operating ROE, operating efficiency ratio, and adjusted noninterest expense.  A schedule reconciling these non-GAAP financial measures is provided at the end of this press release.  The Company uses non-GAAP financial measures in its internal analysis of financial and operating performance and the Company's management believes that they provide greater transparency regarding management's view of the Company's performance.  These non-GAAP financial measures should be read in conjunction with, and not as a substitute for, the Company's GAAP results.  In addition, because not all companies use identical calculations, the Company's presentation of its non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.

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 may include, without limitation: statements regarding future financial performance; performance of the investment and loan portfolios, including performance of the consumer auto loan portfolio and the purchased student loan portfolio; the effects of diversifying the loan portfolio; strategic business initiatives; management's efforts to reposition the balance sheet; deposit growth; levels and sources of liquidity; use of proceeds from the sale of securities; future levels of charge-offs or net recoveries; the impact of changes in NPAs on future earnings; write-downs and expected sales of other real estate owned; and changes in interest rates.

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 and any changes associated with the current administration; 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; cyber threats, attacks and events; 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, 2018. 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 Elizabeth Beale, Interim Chief Financial Officer of Old Point Financial Corporation at 757-325-8123, or Laura Wright, Vice President/Marketing Director, Old Point National Bank at 757-728-1743.

 

Old Point Financial Corporation and Subsidiaries

Consolidated Balance Sheets

June 30,


December 31,

(dollars in thousands, except share data)

2019


2018


(unaudited)



Assets








Cash and due from banks

$            15,903


$            19,915

Interest-bearing due from banks

33,868


20,000

Federal funds sold

831


2,302

Cash and cash equivalents

50,602


42,217

Securities available-for-sale, at fair value

145,453


148,247

Restricted securities, at cost

3,479


3,853

Loans held for sale

754


479

Loans, net

750,421


763,898

Premises and equipment, net

36,293


36,738

Bank-owned life insurance

27,153


26,763

Goodwill

1,650


1,650

Other real estate owned, net

-


83

Core deposit intangible, net

385


407

Other assets

13,214


13,848

Total assets

$      1,029,404


$      1,038,183





Liabilities & Stockholders' Equity








Deposits:




Noninterest-bearing deposits

$         242,882


$         246,265

Savings deposits

369,477


367,915

Time deposits

235,425


228,964

Total deposits

847,784


843,144

Federal funds purchased and other short-term borrowings

-


-

Overnight repurchase agreements

18,011


25,775

Federal Home Loan Bank advances

50,000


60,000

Other borrowings

2,250


2,550

Accrued expenses and other liabilities

3,934


4,708

Total liabilities

921,979


936,177





Commitments and contingencies








Stockholders' equity:




Common stock, $5 par value, 10,000,000 shares authorized; 5,202,850 and 5,184,289 shares outstanding (includes 24,511 and 13,689 of nonvested restricted stock, respectively)

25,892


25,853

Additional paid-in capital

20,838


20,698

Retained earnings

60,016


57,611

Accumulated other comprehensive income(loss), net

679


(2,156)

Total stockholders' equity

107,425


102,006

Total liabilities and stockholders' equity

$      1,029,404


$      1,038,183

 

Old Point Financial Corporation and Subsidiaries










Consolidated Statements of Income (unaudited)

                  Three Months Ended


Six Months Ended

(dollars in thousands, except per share data)

Jun. 30, 2019


Mar. 31, 2019


Jun. 30, 2018


Jun. 30, 2019


Jun. 30, 2018











Interest and Dividend Income:










Loans, including fees

$             9,075


$             8,862


$             8,688


$           17,937


$           16,583

Due from banks

111


57


22


168


26

Federal funds sold

6


7


8


13


10

Securities:










Taxable

648


620


499


1,268


993

Tax-exempt

234


266


302


500


646

Dividends and interest on all other securities

59


64


75


123


135

Total interest and dividend income

10,133


9,876


9,594


20,009


18,393











Interest Expense:










Checking deposits

0


0


0





Checking and savings deposits

275


251


141


526


245

Time deposits

947


870


698


1,817


1,314

Federal funds purchased, securities sold under










agreements to repurchase and other borrowings

36


37


42


73


52

Federal Home Loan Bank advances

344


359


287


703


611

Total interest expense

1,602


1,517


1,168


3,119


2,222

Net interest income

8,531


8,359


8,426


16,890


16,171

Provision for loan losses

787


226


575


1,013


1,100

Net interest income after provision for loan losses

7,744


8,133


7,851


15,877


15,071











Noninterest Income:










Fiduciary and asset management fees

929


959


916


1,888


1,899

Service charges on deposit accounts

1,028


1,053


1,078


2,081


1,948

Other service charges, commissions and fees

1,026


925


941


1,951


1,795

Bank-owned life insurance income

198


192


173


390


382

Mortgage banking income

302


216


236


518


377

Gain on sale of available-for-sale securities, net

-


26


40


26


120

Gain on acquisition of Old Point Mortgage

-


-


-


-


-

Other operating income

90


45


40


135


45

Total noninterest income

3,573


3,416


3,424


6,989


6,566











Noninterest Expense:










Salaries and employee benefits

5,927


5,699


5,935


11,626


11,412

Pension termination settlement

-


-


-


-


-

Occupancy and equipment

1,405


1,393


1,487


2,798


2,964

Data processing

420


363


373


783


676

FDIC insurance

131


127


186


258


377

Customer development

151


162


135


313


317

Professional services

560


514


537


1,074


1,025

Employee professional development

230


186


208


416


400

Other taxes

149


150


142


299


312

ATM and other losses

53


62


157


115


254

Loss (gain) on other real estate owned

-


(2)


86


(2)


86

Merger expenses

-


-


391


-


596

Other operating expenses

482


637


581


1,119


1,215

Total noninterest expense

9,508


9,291


10,218


18,799


19,634

Income before income taxes

1,809


2,258


1,057


4,067


2,003

Income tax expense

183


231


65


414


69

Net income

$             1,626


$             2,027


$                 992


$             3,653


$             1,934











Basic Earnings per Share:










Weighted average shares outstanding 

5,202,166


5,186,807


5,177,233


5,194,529


5,099,008

Net income per share of common stock

$                0.31


$                0.39


$                0.19


$                0.70


$                0.38











Diluted Earnings per Share:










Weighted average shares outstanding 

5,202,196


5,186,907


5,177,233


5,194,594


5,099,124

Net income per share of common stock

$                0.31


$                0.39


$                0.19


$                0.70


$                0.38











Cash Dividends Declared per Share:

$                0.12


$                0.12


$                0.11


$                0.24


$                0.22

 

 

Old Point Financial Corporation and Subsidiaries

Average Balance Sheets, Net Interest Income And Rates













For the quarter ended June 30,

(unaudited)

2019


2018




Interest






Interest




Average


Income/


Yield/


Average


Income/


Yield/

(dollars in thousands)

Balance


Expense


Rate**


Balance


Expense


Rate**

ASSETS












Loans*

$    767,393


$   9,088


4.75%


$    778,033


$   8,702


4.47%

Investment securities:












Taxable

108,060


648


2.40%


95,657


499


2.09%

Tax-exempt*

38,500


296


3.08%


49,879


382


3.06%

Total investment securities

146,560


944


2.58%


145,536


881


2.42%

Interest-bearing due from banks

18,656


111


2.40%


4,656


22


1.89%

Federal funds sold

1,143


6


2.38%


2,079


8


1.54%

Other investments

3,595


59


6.54%


4,314


75


6.95%

Total earning assets

937,347


$ 10,208


4.37%


934,618


$   9,688


4.15%

Allowance for loan losses

(10,331)






(10,125)





Other non-earning assets

104,691






100,098





Total assets

$ 1,031,707






$ 1,024,591

















LIABILITIES AND STOCKHOLDERS' EQUITY












Time and savings deposits:












Interest-bearing transaction accounts

$      31,050


$          3


0.03%


$      28,875


$          3


0.04%

Money market deposit accounts

254,908


250


0.39%


240,832


117


0.19%

Savings accounts

87,816


22


0.10%


88,904


21


0.09%

Time deposits

232,566


947


1.63%


236,396


698


1.18%

Total time and savings deposits

606,340


1,222


0.81%


595,007


839


0.56%

Federal funds purchased, repurchase












agreements and other borrowings

23,070


36


0.62%


30,125


42


0.56%

Federal Home Loan Bank advances

52,747


344


2.62%


64,560


287


1.78%

Total interest-bearing liabilities

682,157


1,602


0.94%


689,692


1,168


0.68%

Demand deposits

239,589






233,931





Other liabilities

3,481






2,897





Stockholders' equity

106,480






98,071





Total liabilities and stockholders' equity

$ 1,031,707






$ 1,024,591





Net interest margin



$   8,606


3.68%




$   8,520


3.65%













*Computed on a fully tax-equivalent basis using a 21% rate, adjusting interest income by $75 thousand and







 $94 thousand, respectively.












**Annualized










Old Point Financial Corporation and Subsidiaries

Average Balance Sheets, Net Interest Income And Rates














For the six months ended June 30,

(unaudited)

2019


2018




Interest






Interest




Average


Income/


Yield/


Average


Income/


Yield/

(dollars in thousands)

Balance


Expense


Rate


Balance


Expense


Rate

ASSETS












Loans*

$    769,258


$ 17,964


4.71%


$    761,795


$ 16,612


4.36%

Investment securities:












Taxable

105,676


1,268


2.42%


95,025


993


2.09%

Tax-exempt*

41,059


633


3.11%


53,881


818


3.04%

Total investment securities

146,735


1,901


2.61%


148,906


1,811


2.43%

Interest-bearing due from banks

14,319


168


2.37%


2,913


26


1.79%

Federal funds sold

1,133


13


2.38%


1,271


10


1.57%

Other investments

3,689


123


6.73%


4,365


135


6.19%

Total earning assets

935,134


$ 20,169


4.35%


919,250


$ 18,594


4.05%

Allowance for loan losses

(10,396)






(9,985)





Other nonearning assets

103,374






96,763





Total assets

$ 1,028,112






$ 1,006,028

















LIABILITIES AND STOCKHOLDERS' EQUITY












Time and savings deposits:












Interest-bearing transaction accounts

$      29,606


$          5


0.04%


$      28,239


$          5


0.04%

Money market deposit accounts

253,007


477


0.38%


235,961


208


0.18%

Savings accounts

87,882


44


0.10%


87,214


32


0.07%

Time deposits

231,335


1,817


1.58%


224,088


1,314


1.17%

Total time and savings deposits

601,830


2,343


0.79%


575,502


1,559


0.54%

Federal funds purchased, repurchase












agreements and other borrowings

24,139


73


0.61%


29,243


52


0.36%

Federal Home Loan Bank advances

55,470


703


2.55%


72,403


611


1.69%

Total interest-bearing liabilities

681,439


3,119


0.92%


677,148


2,222


0.66%

Demand deposits

237,496






228,524





Other liabilities

4,186






3,172





Stockholders' equity

104,991






97,184





Total liabilities and stockholders' equity

$ 1,028,112






$ 1,006,028





Net interest margin



$ 17,050


3.68%




$ 16,372


3.56%













*Computed on a fully tax-equivalent basis using a 21% rate, adjusting interest income by $160 thousand and






 $201 thousand, respectively.












**Annualized










 

Old Point Financial Corporation and Subsidiaries

As of or for the quarter ended,

Selected Ratios (unaudited)

June 30,


March 31,


June 30,

(dollars in thousands, except per share data)

2019


2019


2018







Earnings per common share, diluted

$                0.31


$                  0.39


$                0.19

Return on average assets (ROA)

0.63%


0.80%


0.39%

Return on average equity (ROE)

6.12%


7.94%


4.06%

Net Interest Margin (FTE)

3.68%


3.67%


3.65%

Non-performing assets (NPAs) / total assets

1.21%


1.26%


1.59%

Annualized Net Charge Offs / average total loans

0.06%


0.13%


0.22%

Allowance for loan losses / total loans

1.41%


1.32%


1.27%

Efficiency ratio (FTE)

78.06%


78.34%


85.54%







Non-Performing Assets (NPAs)






Nonaccrual loans

$            11,203


$             11,245


$            13,891

Loans > 90 days past due, but still accruing interest

1,222


1,678


2,295

Other real estate owned

-


-


251

Total non-performing assets

$            12,425


$             12,923


$            16,437







Other Selected Numbers






Loans, net

$         750,421


$           752,799


$         766,344

Deposits

847,784


836,177


840,335

Stockholders equity

107,425


105,019


99,293

Total assets

1,029,404


1,026,880


1,032,130

Loans charged off during the quarter, net of recoveries

118


249


426

Quarterly average loans

767,393


771,143


778,033

Quarterly average assets

1,031,707


1,024,476


1,024,591

Quarterly average earning assets

937,347


932,895


934,618

Quarterly average deposits

845,929


832,652


828,938

Quarterly average equity

106,480


103,486


98,071

 

Reconciliations of GAAP Measures to Non-GAAP Measures(unaudited)











Three Months Ended


Six Months Ended


Jun. 30, 2019


Mar. 31, 2019


Jun. 30, 2018


Jun. 30, 2019


Jun. 30, 2018











Net income

$         1,626


$         2,027


$            992


$         3,653


$         1,934

Plus: Merger-related costs (after tax)

-


-


391


-


596

         Merger-related severance costs (after tax)

-


-


88


-


88

         Compensation expense for benefit plan termination (after tax)

-


-


-


-


-

         Tax expenses for tax asset revaluation

-


-


-


-


-

Less: Gain on acquisition of Old Point Mortgage (after tax)

-


-


-


-


-

Net operating earnings

$         1,626


$         2,027


$         1,471


$         3,653


$         2,618











Weighted average shares outstanding (assuming dilution)

5,202,196


5,186,907


5,177,233


5,194,594


5,099,124

Earnings per share (GAAP)

$           0.31


$           0.39


$           0.19


$           0.70


$           0.38

Net operating earnings per share (non-GAAP)

0.31


0.39


0.28


0.70


0.51











Average assets

$   1,031,707


$   1,024,476


$   1,024,591


$   1,028,112


$   1,006,028

ROA (GAAP)

0.63%


0.80%


0.39%


0.72%


0.39%

Net operating ROA (non-GAAP)

0.63%


0.80%


0.58%


0.72%


0.52%











Average stockholders equity

$     106,480


$     103,486


$       98,071


$     104,991


$       97,184

ROE (GAAP)

6.12%


7.94%


4.06%


7.02%


4.01%

Net operating ROE (non-GAAP)

6.12%


7.94%


6.02%


7.02%


5.43%











Efficiency ratio (FTE)

78.06%


78.34%


85.54%


78.20%


85.59%

Operating efficiency ratio (FTE)

78.06%


78.34%


81.53%


78.20%


82.61%

 

 

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. www.oldpoint.com

 

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SOURCE Old Point Financial Corporation