SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period Ended June 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission File No. 0-12896 (1934 Act)
OLD POINT FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-1265373
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1 West Mellen Street, Hampton, Va. 23663
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (804) 722-7451
Not Applicable
Former name, former address and former fiscal year,
if changed since last report.
Check whether the registrant (1) has filed all reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
State the number of shares outstanding of each of the issuer's
classes of common stock as of July 31, 1997.
Class Outstanding at July 31, 1997
Common Stock, $5.00 par value 1,283,086 shares
OLD POINT FINANCIAL CORPORATION
FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION
Page
Item 1. Financial Statements . . . . . . . . . . . . . . .1
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996. . . . . . 1
Consolidated Statement of Earnings
Three months ended June 30, 1997 and 1996 . . 2
Six months ended June 30, 1997 and 1996. . . . .2
Consolidated Statement of Cash Flows
Six months ended June 30, 1997 and 1996 . . . 3
Consolidated Statements of Changes in Stockholders' Equity
Six months ended June 30, 1997 and 1996 . . . 4
Notes to Consolidated Financial Statements . . . . 5
Parent Only Balance Sheets
June 30, 1997 and December 31, 1996 . . . 6
Parent Only Statement of Earnings
Three months ended June 30, 1997 and 1996 6
Six months ended June 30, 1997 and 1996 . .6
Parent Only Statement of Cash Flows
Six months ended June 30, 1997 and 1996 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . 8
Analysis of Changes in Net Interest Income . . 9
Interest Sensitivity Analysis. . . . . . . . . 12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 13
(i)
<PAGE>
<TABLE>
<CAPTION>
PART 1. - FINANCIAL INFORMATION
OLD POINT FINANCIAL CORPORATION
Consolidated Balance Sheets June 30, December 31,
(Unaudited) 1997 1996
<S>
Assets <C> <C>
Cash and due from banks........................ $ 10,672,965 $ 10,938,067
Interest bearing balances due from banks....... 48,416 50,428
Securities available for sale, at market....... 68,510,342 70,088,789
Securities to be held to maturity.............. 29,967,806 24,967,429
Trading account securities..................... -- --
Federal funds sold............................. 3,910,726 560,915
Loans, total (excluding unearned income)....... 212,120,586 198,584,252
Less reserve for loan losses............... 2,404,726 2,330,029
----------- -----------
Net loans.............................. 209,715,860 196,254,223
Bank premises and equipment.................... 9,369,991 9,402,579
Other real estate owned........................ 473,864 353,864
Other assets................................... 3,923,342 3,728,410
----------- -----------
Total assets.............................. $ 336,593,312 $ 316,344,704
=========== ===========
Liabilities
Noninterest-bearing deposits................... $ 52,302,061 $ 47,533,417
Savings deposits............................... 98,120,250 96,196,174
Time deposits.................................. 128,141,766 119,789,184
----------- -----------
Total deposits.............................. 278,564,077 263,518,775
Federal funds purchased and securities sold und
agreement to repurchase.................... 18,748,044 17,135,126
Interest-bearing demand notes issued to the Uni
Treasury and other liabilities for borrowed 4,029,753 2,301,267
Other liabilities.............................. 1,245,261 989,636
----------- -----------
Total liabilities........................... 302,587,135 283,944,804
Stockholders' Equity
Common stock, $5.00 par value.................. 6,404,730 6,367,730
1997 1996
------- -------
Shares authorized..6,000,000 6,000,000
Shares outstanding.1,280,946 1,273,546
Surplus........................................ 9,615,191 9,345,091
Undivided profits.............................. 17,800,000 16,638,880
Unrealized gain/(loss) on securities .......... 186,256 48,199
----------- -----------
Total stockholders' equity................. 34,006,177 32,399,900
----------- -----------
Total liabilities and stockholders' equity. $ 336,593,312 $ 316,344,704
=========== ===========
See accompanying notes
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
OLD POINT FINANCIAL CORPORATION Three Months Ended Six Months Ended
Consolidated Statements of Earnings June 30, June 30,
(Unaudited) 1997 1996 1997 1996
Interest Income
<S> <C> <C> <C> <C>
Interest and fees on loans..................... $ 4,644,469 $ 4,395,781 $ 9,050,342 $ 8,594,844
Interest on federal funds sold................. 62,469 81,918 102,895 122,794
Interest on securities:
Taxable..................................... 1,146,187 1,187,664 2,257,099 2,371,187
Exempt from federal income tax.............. 306,180 204,830 579,780 384,767
Interest on trading account securities......... 0 0 0 0
--------- --------- --------- ---------
Total interest on securities............. 1,452,367 1,392,494 2,836,879 2,755,954
--------- --------- --------- ---------
Total interest income...................... 6,159,305 5,870,193 11,990,116 11,473,592
Interest Expense
Interest on savings deposits................... 691,562 679,700 1,364,609 1,339,898
Interest on time deposits...................... 1,705,920 1,653,531 3,317,506 3,317,085
Interest on federal funds purchased and securit
sold under agreement to repurchase........... 191,778 166,963 377,129 349,033
Interest on demand notes (note balances) issued
United States Treasury and on other borrowed 29,530 17,861 51,697 39,485
--------- --------- --------- ---------
Total interest expense..................... 2,618,790 2,518,055 5,110,941 5,045,501
Net interest income............................ 3,540,515 3,352,138 6,879,175 6,428,091
Provision for loan losses...................... 100,000 250,000 200,000 300,000
--------- --------- --------- ---------
Net interest income after provision for
loan loss.................................. 3,440,515 3,102,138 6,679,175 6,128,091
Other Income
Income from fiduciary activities............... 434,850 389,838 869,700 779,676
Service charges on deposit accounts............ 430,532 484,347 853,523 971,683
Other service charges, commissions and fees.... 149,183 95,285 271,113 172,949
Other operating income......................... 42,146 34,441 157,826 164,815
Income from trading account.................... 0 0 0 0
Security gains (losses)........................ (3,361) (28) (4,068) (28)
--------- --------- --------- ---------
Total other income......................... 1,053,350 1,003,883 2,148,094 2,089,095
Other Expenses
Salaries and employee benefits................. 1,941,227 1,840,666 3,816,072 3,687,227
Occupancy expense of Bank premises............. 205,345 181,642 417,526 369,381
Furniture and equipment expense................ 263,044 250,156 536,648 497,472
Other operating expenses....................... 870,945 672,635 1,584,985 1,276,824
--------- --------- --------- ---------
Total other expenses....................... 3,280,561 2,945,099 6,355,231 5,830,904
Income before taxes............................ 1,213,304 1,160,922 2,472,038 2,386,282
Applicable income taxes ....................... 310,500 322,674 634,676 670,274
--------- --------- --------- ---------
Net income..................................... $ 902,804 $ 838,248 $ 1,837,362 $ 1,716,008
Per Share
Based on weighted average number of
common shares outstanding.................... 1,280,946 1,273,537 1,278,117 1,273,537
Net income..................................... $ 0.70 $ 0.66 $ 1.44 $ 1.35
See accompanying notes
-2-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OLD POINT FINANCIAL CORPORATION Six Months Ended
Consolidated Statements of Cash Flows June 30,
(Unaudited) 1997 1996
<S>
CASH FLOWS FROM OPERATING ACTIVITIES <C> <C>
Net income................................................ $ 1,837,362 $ 1,716,008
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................... 468,476 427,607
Provision for loan losses............................... 200,000 300,000
(Gains) loss on sale of investment securities, net...... 4,068 28
Net amortization & accretion of securities available for 236,188 389,657
Net (increase) decrease in trading account.............. 0 0
(Increase) in other real estate owned................... (265,000) 0
(Increase) decrease in other assets
(net of tax effect of FASB 115 adjustment)............ (266,052) (19,929)
Increase (decrease) in other liabilities................ 255,625 245,059
--------- ---------
Net cash provided by operating activities............. 2,470,667 3,058,430
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities ................................ (13,064,823) (22,601,603)
Proceeds from maturities & calls of securities ......... 3,594,000 16,250,000
Proceeds from sales of available-for-sale securities.... 6,017,813 0
Proceeds from sales of held-to-maturity securities..... 0 0
Loans made to customers................................. (56,384,292) (45,111,339)
Principal payments received on loans.................... 42,722,655 39,022,495
Proceeds from sales of other real estate owned.......... 145,000 246,477
Purchases of premises and equipment..................... (435,888) (1,312,906)
(Increase) decrease in federal funds sold............... (3,349,811) 240,316
---------- ----------
Net cash provided by (used in) investing activities... (20,755,346) (13,266,560)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in non-interest bearing deposits.... 4,768,644 4,981,154
Increase (decrease) in savings deposits................. 1,924,076 (914,823)
Proceeds from the sale of certificates of deposit....... 25,959,615 24,170,548
Payments for maturing certificates of deposit........... (17,607,033) (21,255,893)
Increase (decrease) in federal funds purchased &
repurchase agreements.................................. 1,612,918 96,343
Increase (decrease) in other borrowed money............. 1,728,486 3,484,167
Proceeds from issuance of common stock.................. 142,100 0
Dividends paid.......................................... (511,241) (407,533)
---------- ----------
Net cash provided by financing activities............. 18,017,565 10,153,963
Net increase (decrease) in cash and due from banks.... (267,114) (54,167)
Cash and due from banks at beginning of period........ 10,988,495 10,931,545
---------- ----------
Cash and due from banks at end of period.............. $ 10,721,381 $ 10,877,378
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest.............................................. 5,084,286 4,995,256
Income taxes.......................................... 700,000 700,000
See accompanying notes
- 3 -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OLD POINT FINANCIAL CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
Unrealized
Common Stock Undivided Gain/(Loss)
Shares Amount Surplus Profits On Securities Total
<S> <C> <C> <C> <C> <C> <C>
FOR SIX MONTHS ENDED JUNE 30, 1997
Balance at beginning of period.............. 1,273,546 $6,367,730 $9,345,091 16,638,880 48,199 32,399,900
Net income.................................. -- -- -- 1,837,362 -- 1,837,362
Sale of common stock........................ 7,400 37,000 270,100 (165,000) -- 142,100
Cash dividends............... .............. -- -- -- (511,242) -- (511,242)
Increase in unrealized gain on securities... -- -- -- -- 138,057 138,057
---------------------------------------------------------------------------
Balance at end of period.................... 1,280,946 $6,404,730 $9,615,191 $17,800,000 $186,256 $34,006,177
FOR SIX MONTHS ENDED JUNE 30, 1996
Balance at beginning of period............... 1,273,537 $6,367,685 $9,344,798 14,085,650 529,784 30,327,917
Net income................................... -- -- -- 1,716,008 -- 1,716,008
Sale of common stock......................... -- -- -- -- -- --
Cash dividends............... ............... -- -- -- (407,532) -- (407,532)
Increase in unrealized gain on securities... -- -- -- -- (780,579) (780,579)
-----------------------------------------------------------------------------
Balance at end of period..................... 1,273,537 $6,367,685 $9,344,798 $15,394,126 ($250,795) $30,855,814
</TABLE>
See accompanying notes
-4-
<PAGE>
OLD POINT FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accounting and reporting policies of the Registrant
conform to generally accepted accounting principles and to the
general practices within the banking industry. The interim
financial statements have not been audited; however, in the
opinion of management, all adjustments necessary for a fair
presentation of the consolidated financial statements have
been included. These adjustments include estimated provisions
for bonus, profit sharing and pension plans that are settled
at year-end. These financial statements should be read in
conjunction with the financial statements included in the
Registrant's 1996 Annual Report to Shareholders and Form 10-K.
2. Earnings per common share outstanding are computed by dividing
income by the weighted average number of outstanding common
shares for each period presented.
5
<PAGE>
<TABLE>
<CAPTION>
OLD POINT FINANCIAL CORPORATION
Parent only Balance Sheets June 30, December 31,
(Unaudited) 1997 1996
<S>
Assets <C> <C>
Cash in bank................................ $ 203,320 $ 142,683
Investment Securities....................... 1,877,175 1,675,761
Total Loans................................. 0 49,884
Investment in Subsidiary.................... 31,918,422 30,456,307
Equipment................................... 0 14,411
Other assets................................ 7,760 60,854
---------- ----------
Total Assets................................ $34,006,677 $32,399,900
========== ==========
Liabilities and Stockholders' Equity
Total Liabilities........................... $ 500 $ 0
Stockholders' Equity........................ 34,006,177 32,399,900
---------- ----------
Total Liabilities & Stockholders' Equity.... $34,006,677 $32,399,900
========== ==========
<CAPTION>
OLD POINT FINANCIAL CORPORATION Three Months Ended: Six Months Ended:
Parent only Income Statements June 30, June 30,
(Unaudited) 1997 1996 1997 1996
<S> <C> <C> <C> <C>
Income
Cash dividends from Subsidiary.............. $ 250,000 $ 250,000 $ 500,000 $ 500,000
Interest and fees on loans.................. 0 1,082 579 2,179
Interest income from investment securities.. 27,234 26,232 51,705 46,821
Gains (losses) from sale of investment secur 0 0 0 0
Other income................................ 0 0 0 0
-------- -------- -------- --------
Total Income................................ 277,234 277,314 552,284 549,000
Expenses
Salaries and employee benefits.............. 0 49,339 0 99,548
Other expenses.............................. 27,940 26,086 32,514 37,284
-------- -------- -------- --------
Total Expenses.............................. 27,940 75,425 32,514 136,832
-------- -------- -------- --------
Income before taxes & undistributed
net income of subsidiary................ 249,294 201,889 519,770 412,168
Income tax.................................. 500 (17,400) 7,400 (29,800)
-------- -------- -------- --------
Net income before undistributed
net income of subsidiary.................. 248,794 219,289 512,370 441,968
Undistributed net income of subisdiary...... 654,010 618,959 1,324,992 1,274,040
-------- -------- -------- --------
Net Income.................................. $ 902,804 $ 838,248 $ 1,837,362 $ 1,716,008
======== ======== ========= =========
</TABLE>
- 6 -
<PAGE>
<TABLE>
<CAPTION>
OLD POINT FINANCIAL CORPORATION Six Months Ended:
Parent only Statements of Cash Flows June 30,
(Unaudited) 1997 1996
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income.................................. $ 1,837,362 $ 1,716,008
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in undistributed income of subsidiary (1,324,992) (1,274,040)
Depreciation.............................. 0 1,776
Gains(losses) on sale of securities [net 0 0
(Increase) Decrease in other assets..... 52,614 29,285
Increase (decrease in other liabilities) 500 0
---------- ----------
Net cash provided by operating activities... 565,484 473,029
Cash flows from investing activities:
(Increase)decrease in investment securities. (200,000) 0
Sale of equipment........................... 14,411 0
Repayment of loans by customers............. 49,884 763
Net cash provided by investing activities... (135,705) 763
---------- ----------
Cash flows from financing activities:
Proceeds from issuance of common stock...... 142,100 0
Dividends paid.............................. (511,242) (407,532)
---------- ----------
Net cash provided by financing activities... (369,142) (407,532)
Net increase (decrease) in cash & due from banks 60,637 66,260
Cash & due from banks at beginning of period 142,683 122,263
---------- ----------
Cash & due from banks at end of period...... $ 203,320 $ 188,523
========== ==========
- 7 -
</TABLE>
<PAGE>
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Summary
Net income for the second quarter of 1997 increased 7.7% to
$902,804 from $838,248 for the comparable period in 1996. Earnings
per share were $0.70 in the second quarter of 1997 compared with
$0.66 in 1996.
For the six months ended June 30, 1997 net income increased
7.1% to $1,837,362 from $1,716,008 in 1996. Earnings per share
were $1.44 for the first six months of 1997 compared with $1.35 in
1996.
Return on average assets was 1.10% for the second quarter of
1997 and 1.07% for the comparable period in 1996. Return on
average equity was 10.72% for the second quarter of 1997 and 10.89%
for the second quarter of 1996.
For the six months ended June 30, 1997 and 1996 return on
average assets was 1.14% and 1.11% respectively. Return on average
equity was 11.02% in 1997 and 11.16% in 1996.
Net Interest Income
Net interest income, on a fully tax equivalent basis,
increased $193 thousand, or 5.5%, for the second quarter of 1997
over 1996. Average earning assets increased 3.3% and the net
interest yield, defined as the ratio of net interest income on a
fully tax equivalent basis to total earning assets, increased from
4.67% in 1996 to 4.78% in 1997.
For the six months ended June 30, 1997 net interest income
increased $540 thousand, or 8.1%, over the comparable period in
1996. Average earning assets increased 4.8% and the net interest
yield increased from 4.62% in 1996 to 4.77% in 1997. This increase
in earning assets is primarily due to loan growth. Based on a six
month average, Commercial loans grew by 15%, Real Estate by 3% and
Installment loans by 4% over 1996. During 1997 there has been a
shift in investment securities from taxable to tax exempt which
have higher tax equivalent yields. Interest rates on deposits
decreased during 1997 over the comparable period in 1996
contributing to the increase in the net interest yield.
Page 9 shows an analysis of average earning assets, interest bearing
liabilities and rates and yields.
-8-
<PAGE>
<TABLE>
<CAPTION>
OLD POINT FINANCIAL CORPORATION
NET INTEREST INCOME ANALYSIS For the quarter ended June 30,
(Fully taxable equivalent basis) * 1997 1996
Average Average
Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/
Dollars in thousands Balance Expense Paid Balance Expense Paid
<S> <C> <C> <C> <C> <C> <C>
Loans (net of unearned income)**......... $207,269 $4,624 8.92% $192,178 $4,421 9.20%
Investment securities:
Taxable................................ 73,297 1,146 6.25% 85,302 1,188 5.57%
Tax-exempt............................. 22,842 464 8.13% 14,648 310 8.47%
------- ----- ------- -----
Total investment securities.......... 96,139 1,610 6.70% 99,950 1,498 5.99%
Federal funds sold....................... 4,529 62 5.48% 5,896 82 5.56%
------- ----- ------- -----
Total earning assets................... $307,937 $6,296 8.18% $298,024 $6,001 8.05%
Time and savings deposits:
Interest-bearing transaction accounts.. $ 26,307 $ 145 2.20% $ 50,788 $ 305 2.40%
Money market deposit accounts.......... 47,378 369 3.12% 20,884 194 3.72%
Savings accounts....................... 25,863 177 2.74% 26,517 181 2.73%
Certificates of deposit, $100,000...... 17,721 250 5.64% 17,494 239 5.46%
Other certificates of deposit.......... 108,378 1,456 5.37% 103,408 1,414 5.47%
------- ----- ------- -----
Total time and savings deposits...... 225,647 2,397 4.25% 219,091 2,333 4.26%
Federal funds purchased and securities
under agreement to repurchase.......... 16,474 193 4.69% 14,888 167 4.49%
Other short term borrowings.............. 2,136 30 5.62% 1,579 18 4.56%
------- ----- ------- -----
Total interest bearing liabilities..... $244,257 2,620 4.29% $235,558 2,518 4.28%
Net interest income/yield................ $3,676 4.78% $3,483 4.67%
===== ==== ===== ====
<CAPTION>
For the six months ended June 30,
1997 1996
Average Average
Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/
Dollars in thousands Balance Expense Paid Balance Expense Paid
<S> <C> <C> <C> <C> <C> <C>
Loans (net of unearned income)**......... $203,927 $9,093 8.92% $190,767 $ 8,647 9.07%
Investment securities:
Taxable................................ 73,329 2,257 6.16% 79,782 2,371 5.94%
Tax-exempt............................. 21,607 878 8.13% 13,622 583 8.56%
------- ----- ------- -----
Total investment securities.......... 94,936 3,135 6.60% 93,404 2,954 6.33%
Federal funds sold....................... 3,826 103 5.38% 4,680 123 5.26%
------- ----- ------- -----
Total earning assets................... $302,689 $12,331 8.15% $288,851 $11,724 8.12%
Time and savings deposits:
Interest-bearing transaction accounts.. $ 26,113 $ 288 2.21% $ 50,123 $ 603 2.41%
Money market deposit accounts.......... 46,833 727 3.10% 20,206 373 3.69%
Savings accounts....................... 25,747 350 2.72% 26,818 364 2.71%
Certificates of deposit, $100,000...... 17,322 480 5.54% 16,763 458 5.46%
Other certificates of deposit.......... 106,330 2,838 5.34% 103,298 2,859 5.54%
------- ----- ------- -----
Total time and savings deposits...... 222,345 4,683 4.21% 217,208 4,657 4.29%
Federal funds purchased and securities
under agreement to repurchase.......... 16,298 377 4.63% 14,910 349 4.68%
Other short term borrowings.............. 1,927 52 5.40% 1,499 39 5.20%
------- ----- ------- -----
Total interest bearing liabilities..... $240,570 5,112 4.25% $233,617 5,045 4.32%
Net interest income/yield................ $7,219 4.77% $6,679 4.62%
===== ==== ===== ====
</TABLE>
* Tax equivalent yields based on 34% tax rate.
** Nonaccrual loans are included in the average loan balances
and income on such loans is recognized on a cash basis.
- 9 -
<PAGE>
Provision/Allowance for Loan Losses
The provision for loan losses was $200,000 for the first six
months of 1997, down significantly from $300,000 in the comparable
period in 1996. Loans charged off (net of recoveries) were
$125,303 compared with loans charged off (net of recoveries) of
$261,299 in the first six months of 1996. During 1994 and 1995
there was significant growth in the Installment loan portfolio
especially in indirect dealer loans. In the first six months of
1996, $264,058 of these dealer loans were charged off net of
recoveries. Since the beginning of 1996 the underwriting standards
for dealer loans has been raised thus reducing the loans charged
off. On an annualized basis net loan charge-offs were 0.12% of
total loans for the first half of 1997 compared with .27% for the
same period in 1996.
On June 30, 1997 nonperforming assets totalled $1.6 million
compared with $2.5 million on June 30, 1996. The June 1997 total
consisted of $120 thousand in foreclosed real estate, $354 thousand
in a former branch site, and $1.1 million in nonaccrual loans. The
June 1996 total consisted of $353 thousand in foreclosed real
estate, $354 thousand in a former branch site now listed for sale,
and $1.8 million in nonaccrual loans. Loans still accruing
interest but past due 90 days or more increased to $1 million as of
June 30, 1997 compared with $249 thousand as of June 30, 1996. The
$751 thousand increase in 1997 was due primarily to a $584 thousand
loan to a business which declared bankruptcy. A bankruptcy plan
has been approved by the courts and payments have been made
subsequent to June 30, 1997 to bring the loan current. The
remaining $166 thousand increase is attributable to various smaller
loans which are fully secured and in the process of collection.
The allowance for loan losses on June 30, 1997 was $2.4 million
compared with $2.3 million on June 30, 1996. It represented a
multiple of 1.5 times nonperforming assets and 2.18 times
nonperforming loans. The allowance for loan losses on June 30,
1997 was 1.13% of loans compared to 1.18% at June 30, 1996.
Other Income
Other income increased $49,467, or 4.9%, for the second
quarter of 1997 over the same period in 1996. Income from service
charges, commissions, and fees increased 56% over the same period
in 1996 due to increased ATM fee income. The company began
charging a $1.00 surcharge on non-customer ATM transactions in
1997.
For the six months ended June 30, 1997 other income increased
$58,999 or 2.8% from 1996. The higher income in 1997 was primarily
a result of the increase in ATM fee income.
Other Expenses
Other expenses increased $335,462, or 11%, in the second
quarter of 1997 over 1996. Salaries and employees benefits
increased 5% due to normal increases in pay and increased health
insurance costs. Furniture and equipment expense increased
$12,887, or 5%, due to higher depreciation on computer equipment.
Other operating expenses increased by $198,310, or 29%, primarily
due to higher legal expenses associated with the company's defense
of a lawsuit. The company believes it will ultimately prevail in
this lawsuit.
For the six months ended June 30, 1997 other expenses
increased $524,327 or 9%, from 1996, primarily due to higher legal
expenses as mentioned above as well as increases in postage and
freight, stationery and supplies expense and higher FDIC insurance
premiums.
The Company has started construction of a 15,000 square-foot
building in Oyster Point of Newport News. This facility will house
the Old Point Commercial lending Department as well as the Real
Estate Lending Department. The new building will also be home to
the Trust and Financial Services Department. The building will be
ready for occupancy early 1998.<PAGE>
Financial Condition
At June 30, 1997 total assets were $336.6 million, up 6% from
$316.3 million at December 31, 1996. Total loans grew $13.5
million, or 7% and investment securities and federal funds sold
grew $6.8 million, or 7%, in 1997. Total deposits increased $15.0
million, or 6% in 1997 and demand note balances to the United
States Treasury increased $1.7 million to $4.0 million from $2.3
million at year end 1996.
-10-
Financial Condition
At June 30, 1997 total assets were $336.6 million, up 6% from
$316.3 million at December 31, 1996. Total loans grew $13.5
million, or 7% and investment securities and federal funds sold
grew $6.8 million, or 7%, in 1997. Total deposits increased $15.0
million, or 6% in 1997 and demand note balances to the United
States Treasury increased $1.7 million to $4.0 million from $2.3
million at year end 1996.
Capital Resources
The Company's capital position remains strong as evidenced by
the regulatory capital measurements. At June 30, 1997 the Tier I
capital ratio was 15.09%, the total capital ratio was 16.16% and
the leverage ratio was 10.29%. These ratios were all well above
the regulatory minimum levels of 4.00%, 8.00%, and 3.00%,
respectively.
Liquidity and Interest Sensitivity
Liquidity is the ability of the Company to meet present and
future obligations to depositors and borrowers. As loan demand
increases, liquidity will be provided by liquidation of short term
investment securities as well as other means of financing such as
purchase of federal funds and demand note to the US Treasury.
The Company was liability sensitive as of June 30, 1997.
There were $84.2 million more in liabilities than assets subject to
repricing within three months. Net interest income should improve
if interest rates fall since liabilities will reprice faster than
assets. Conversely, if interest rates rise, net interest income
should decline. It should be noted, however, that the savings
deposits; which consist of interest checking, money market, and
savings accounts; are less interest sensitive than other market
driven deposits. In a rising rate environment these deposit rates
have historically lagged behind the changes in earning asset rates,
thus mitigating somewhat the impact from the liability sensitivity
position. The table on page 12 reflects the earlier of the
maturity or repricing data for various assets and liabilities as of
June 30, 1997.
-11-
<PAGE>
<TABLE>
<CAPTION>
INTEREST SENSITIVITY ANALYSIS
As of June 30, 1997 MATURITY
(in thousands) Within 4-12 1-5 Over 5
3 Months Months Years Years Total
Uses of funds
<S> <C> <C> <C> <C> <C>
Federal funds sold................ 3,911 -- -- -- 3,911
Taxable investments............... 7,334 14,147 43,042 9,477 74,000
Tax-exempt investments............ 155 -- 827 23,496 24,478
------ ------ ------ ------ -------
Total investments............... 11,400 14,147 43,869 32,973 102,389
Loans:
Commercial...................... 30,241 9,396 25,870 1,303 66,810
Tax-exempt...................... 1,946 45 128 156 2,275
Installment..................... 4,264 12,207 35,018 2,809 54,298
Real estate..................... 16,886 18,578 39,668 12,993 88,125
Other........................... 222 -- 391 -- 613
------ ------ ------ ------ -------
Total loans....................... 53,559 40,226 101,075 17,261 212,121
------ ------ ------ ------ -------
Total earning assets.............. 64,959 54,373 144,944 50,234 314,510
Sources of funds
Interest checking deposits........ 25,927 -- -- -- 25,927
Money market deposit accounts..... 46,248 -- -- -- 46,248
Regular savings accounts.......... 25,945 -- -- -- 25,945
Certificates of deposit.........
$100,000 or more................ 5,154 7,141 7,139 -- 19,434
Other time deposits............... 22,727 37,611 48,370 -- 108,708
Federal funds purchased and
securities sold under
agreements to repurchase........ 19,132 -- -- -- 19,132
Other borrowed money.............. 4,000 -- 30 -- 4,030
------ ------ ------ ------ -------
Total interest bearing liabilities.. 149,133 44,752 55,539 -- 249,424
Rate sensitivity GAP.............. (84,174) 9,621 89,405 50,234 65,086
Cumulative GAP.................... (84,174) (74,553) 14,852 65,086
</TABLE>
-12-
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) First Amendment to Old Point Financial Corporation
1996 Employee Stock purchase Plan
(b) No reports on Form 8-K were filed during the second
quarter of 1997.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OLD POINT FINANCIAL CORPORATION
August 13, 1997
By: /s/Robert F. Shuford
President and Director
Principal Executive Officer
By: /s/Louis G. Morris
Senior Vice President and Treasurer
Principal Financial and Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 10721
<INT-BEARING-DEPOSITS> 48
<FED-FUNDS-SOLD> 3911
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 68510
<INVESTMENTS-CARRYING> 29968
<INVESTMENTS-MARKET> 29865
<LOANS> 212121
<ALLOWANCE> 2405
<TOTAL-ASSETS> 336593
<DEPOSITS> 278564
<SHORT-TERM> 4000
<LIABILITIES-OTHER> 1245
<LONG-TERM> 30
0
0
<COMMON> 6405
<OTHER-SE> 27415
<TOTAL-LIABILITIES-AND-EQUITY> 336593
<INTEREST-LOAN> 9050
<INTEREST-INVEST> 2837
<INTEREST-OTHER> 103
<INTEREST-TOTAL> 11990
<INTEREST-DEPOSIT> 4682
<INTEREST-EXPENSE> 5111
<INTEREST-INCOME-NET> 6879
<LOAN-LOSSES> 200
<SECURITIES-GAINS> (4)
<EXPENSE-OTHER> 6355
<INCOME-PRETAX> 2472
<INCOME-PRE-EXTRAORDINARY> 2472
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1837
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 1.44
<YIELD-ACTUAL> 4.77
<LOANS-NON> 1094
<LOANS-PAST> 1025
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 3455
<ALLOWANCE-OPEN> 2330
<CHARGE-OFFS> 418
<RECOVERIES> 293
<ALLOWANCE-CLOSE> 2405
<ALLOWANCE-DOMESTIC> 2405
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 928
</TABLE>
EXHIBIT 99 ADDITIONAL EXHIBIT
FIRST AMENDMENT TO
OLD POINT FINANCIAL CORPORATION
1996 EMPLOYEE STOCK PURCHASE PLAN
Pursuant to the authority granted to the officers of Old Point
Financial Corporation 1996 Employee Stock Purchase Plan (the
"Plan") is hereby amended, effective July 1, 1996 as follows:
1. Subparagraph 2.1(a) of the plan is amended to read:
2.1(a) Each Eligible Employee who has completed a 6 month
Period of Service as the Offering Commencement Date shall be
eligible to participate in the offering.
The undersigned officer of the Old Point Financial Corporation
has signed this amendment, thereby evidencing the approval and
adoption of this amendment on the 27th day of June, 1997.
Old Point Financial Corporation
By: /s/Robert Shuford
Its President
