UNITED STATES
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 September 30, 2000
---------------------------------------------
[ ] 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 (757) 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 October 31, 2000.
Class Outstanding at October 31, 2000
Common Stock, $5.00 par value 2,590,540 shares
<PAGE>
OLD POINT FINANCIAL CORPORATION
FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION
Page
Item 1. Financial Statements....................................1
Consolidated Balance Sheets
September 30, 2000 and December 31, 1999..........1
Consolidated Statements of Earnings
Three months ended September 30, 2000 and 1999....2
Nine months ended September 30, 2000 and 1999.....2
Consolidated Statements of Cash Flows
Nine months ended September 30, 2000 and 1999.....3
Consolidated Statements of Changes in Stockholders' Equity
Nine months ended September 30, 2000 and 1999.....4
Notes to Consolidated Financial Statements.................5
Parent Only Balance Sheets
September 30, 2000 and December 31, 1999..........6
Parent Only Statement of Earnings
Three months ended September 30, 2000 and 1999....6
Nine months ended September 30, 2000 and 1999.....6
Parent Only Statement of Cash Flows
Nine months ended September 30, 2000 and 1999.....7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................8
Analysis of Changes in Net Interest Income............9
Item 3. Quantitative and Qualitative Disclosures about Market
Risk.................................................12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.......................13
(i)
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Unaudited September 30, December 31,
Consolidated Balance Sheets 2000 1999
-----------------------------------------------------------------------------
<S>
Assets
<C> <C>
Cash and due from banks........................... $ 9,445,700 $ 10,226,423
Interest bearing balances due from banks.......... 305,514 173,914
------------ ------------
Total cash due from banks 9,751,214 10,400,337
Investments:
Securities available for sale, at market........ 79,539,008 81,146,906
Securities to be held to maturity............... 45,836,258 45,838,726
Trading account securities........................ - -
Federal funds sold................................ 7,123,166 241,055
Loans, total ..................................... 313,369,705 281,646,439
Less reserve for loan losses.................. 3,494,544 3,110,804
------------ ------------
Net loans................................. 309,875,161 278,535,635
Bank premises and equipment....................... 14,687,542 14,323,764
Other real estate owned........................... 553,864 353,864
Other assets...................................... 5,737,121 5,453,316
------------ ------------
Total assets................................. $473,103,334 $436,293,603
============ ============
Liabilities
Noninterest-bearing deposits...................... $ 67,512,497 $ 63,005,586
Savings deposits.................................. 123,919,484 128,763,117
Time deposits..................................... 178,461,254 169,148,814
------------ ------------
Total deposits................................. 369,893,235 360,917,517
Federal funds purchased and securities sold under
agreement to repurchase.......................... 24,996,522 22,840,778
Interest-bearing demand notes issued to the United
States Treasury and other liabilities for
borrowed money................................... 4,577,417 3,317,437
Federal Home Loan Bank............................ 27,000,000 7,000,000
Other liabilities................................. 2,112,067 1,404,194
------------ ------------
Total liabilities.............................. 428,579,241 395,479,926
Stockholders' Equity
Common stock, $5.00 par value..................... $ 12,952,700 $ 12,916,310
2000 1999
Shares authorized.... 10,000,000 6,000,000
Shares outstanding... 2,590,540 2,581,822
Surplus........................................... 10,288,301 10,185,985
Undivided profits................................. 22,265,659 19,674,272
Unrealized gain/(loss) on securities.............. (982,567) (1,962,890)
------------ ------------
Total stockholders' equity.................... 44,524,093 40,813,677
------------ ------------
Total liabilities and stockholders' equity.... $473,103,334 $436,293,603
============ ============
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
Consolidated Statements of Earnings September 30, September 30,
---------------------------------------------------------------------------------------------------------------------
<S>
Interest Income
<C> <C> <C> <C>
Interest and fees on loans.....................$6,734,942 $5,545,428 $19,066,618 $15,953,718
Interest on federal funds sold................. 77,934 39,109 127,218 131,448
Interest on securities:
Interest on United States Treasury
securities (taxable).......................... 16,006 22,648 47,862 124,061
Interest on obligations of other
United States Government agencies (taxable).. 972,194 1,089,264 2,926,523 3,331,358
Interest on obligations of states and
political subdivisions (tax exempt).......... 670,849 687,098 2,052,822 1,999,121
Interest on obligations of states and
political subdivisions (taxable)............. 19,906 19,907 59,719 28,975
Interest on trading account securities......... - - - -
Dividends and interest on all other securities. 101,479 81,482 269,437 251,611
---------- ---------- ----------- -----------
Total interest on securities............. 1,780,434 1,900,399 5,356,363 5,735,126
Trading account securities..................... - - - -
---------- ---------- ----------- -----------
Total interest income...................... 8,593,310 7,484,936 24,550,199 21,820,292
Interest Expense
Interest on savings deposits................... 987,865 960,832 2,915,281 2,789,471
Interest on time deposits...................... 2,560,744 2,184,869 7,145,091 6,453,596
Interest on federal funds purchased and
securities sold under agreement to repurchase. 342,494 242,744 1,001,922 716,710
Interest on Federal Home Loan Bank advances.... 510,211 127,471 1,023,752 179,340
Interest on demand notes (note balances)issued
to the United States Treasury and on other
borrowed money................................ 30,464 20,608 92,774 57,465
---------- ---------- ----------- -----------
Total interest expense..................... 4,431,778 3,536,524 12,178,820 10,196,582
Net interest income............................ 4,161,532 3,948,412 12,371,379 11,623,710
Provision for loan losses...................... 150,000 150,000 475,000 450,000
---------- ---------- ----------- -----------
Net interest income after provision for loan
losses........................................ 4,011,532 3,798,412 11,896,379 11,173,710
Other Income
Income from fiduciary activities............... 630,000 569,872 1,890,000 1,679,572
Service charges on deposit accounts............ 564,943 538,397 1,659,676 1,615,897
Other service charges, commissions and fees.... 156,900 151,924 526,724 515,057
Other operating income......................... 41,122 63,182 142,120 198,155
Security gains (losses)........................ 3,525 (53,932) 10,259 (53,932)
Trading account income......................... - - - -
---------- ---------- ----------- -----------
Total other income........................ 1,396,490 1,269,443 4,228,779 3,954,749
Other Expenses
Salaries and employee benefits................. 2,353,627 2,133,266 6,946,235 6,358,490
Occupancy expense of Bank premises............. 261,802 240,827 776,407 713,589
Furniture and equipment expense................ 353,493 321,879 1,120,472 927,664
Other operating expenses....................... 852,902 794,200 2,632,076 2,432,983
---------- ---------- ----------- -----------
Total other expenses...................... 3,821,824 3,490,172 11,475,190 10,432,726
---------- ---------- ----------- -----------
Income before taxes............................ 1,586,198 1,577,683 4,649,968 4,695,733
Applicable income taxes........................ 331,100 346,400 937,100 980,400
---------- ---------- ----------- -----------
Net income.....................................$1,255,098 $1,231,283 $ 3,712,868 $ 3,715,333
========== ========== =========== ===========
<CAPTION>
Per Share
<S> <C> <C> <C> <C>
Based on weighted average number of
common shares outstanding.................... 2,590,540 2,581,822 2,585,797 2,578,030
Basic Earnings per Share....................... 0.48 0.48 1.44 1.44
Diluted Earnings per Share..................... 0.47 0.48 1.41 1.44
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
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OLD POINT FINANCIAL CORPORATION Nine Months Ended
Consolidated Statements of Cash Flows September 30,
Unaudited 2000 1999
---------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income..........................................................$ 3,712,868 $ 3,715,333
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................................... 978,264 807,531
Provision for loan losses......................................... 475,000 450,000
(Gains) loss on sale of investment securities, net................ (10,259) 53,932
Net amortization & accretion of securities ....................... 52,148 63,821
Net (increase) decrease in trading account........................ 0 0
(Increase) in other real estate owned............................. (200,000) (275,056)
(Increase) decrease in other assets
(net of tax effect of FASB 115 adjustment)...................... (788,820) (27,191)
Increase (decrease) in other liabilities.......................... 707,873 771,747
------------- -------------
Net cash provided by operating activities....................... 4,927,074 5,560,117
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities .......................................... (1,096,576) (25,559,816)
Proceeds from maturities & calls of securities ................... 1,360,500 25,020,000
Proceeds from sales of available - for - sale securities.......... 2,789,891 1,346,068
Proceeds from sales of held - to - maturity securities............ 0 0
Loans made to customers........................................... (126,387,975) (130,798,723)
Principal payments received on loans.............................. 94,573,449 96,079,685
Proceeds from sales of other real estate owned.................... 0 345,056
Purchases of premises and equipment............................... (1,342,042) (2,514,244)
(Increase) decrease in federal funds sold......................... (6,882,111) (2,588,590)
------------- -------------
Net cash provided by (used in) investing activities............. (36,984,864) (38,670,564)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in non-interest bearing deposits.............. 4,506,911 2,700,803
Increase (decrease) in savings deposits........................... (4,843,633) 3,241,952
Proceeds from the sale of certificates of deposit................. 57,136,267 41,097,830
Payments for maturing certificates of deposit..................... (47,823,827) (29,148,099)
Increase (decrease) in federal funds purchased &
repurchase agreements............................................ 2,155,744 1,498,423
Increase (decrease) in Federal Home Loan Bank Advances............ 20,000,000 0
Increase (decrease) in other borrowed money....................... 1,259,980 12,659,170
Proceeds from issuance of common stock............................ 129,158 139,424
Dividends paid.................................................... (1,111,933) (1,031,279)
------------- -------------
Net cash provided by financing activities....................... 31,408,667 31,158,225
Net increase (decrease) in cash and due from banks.............. (649,123) (1,952,222)
Cash and due from banks at beginning of period.................. 10,400,337 10,310,839
------------- -------------
Cash and due from banks at end of period........................ $ 9,751,214 $ 8,358,617
============ =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest........................................................ $ 12,025,878 $ 10,145094
Income taxes.................................................... 1,050,000 900,000
</TABLE>
See accompanying notes
3
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
OLD POINT FINANCIAL CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Unaudited Accumulated
Other Total
Common Stock Par Capital Retained Comprehensive Stockholder's
Shares Value Surplus Earnings Income(Loss) Equity
-----------------------------------------------------------------------------------------------------------------------------------
<S>
FOR NINE MONTHS ENDED SEPTEMBER 30, 2000
<C> <C> <C> <C> <C> <C>
Balance at beginning of period............... 2,583,262 $ 12,916,310 $ 10,185,985 $ 19,674,272 $ (1,962,890) $ 40,813,677
Comprehensive Income
Net income................................. - - - 3,712,868 - 3,712,868
Increase (decrease) in unrealized
gain on investment securities.............. - - - - 980,323 980,323
--------- ------------ ------------ ------------ ------------ ------------
Total Comprehensive Income 3,712,868 980,323 4,693,191
Sale of common stock......................... 7,278 36,390 102,316 (9,548) - 129,158
Cash dividends............... ............... - - - (1,111,933) - (1,111,933)
--------- ------------ ------------ ------------ ------------ ------------
Balance at end of period..................... 2,590,540 $ 12,952,700 $ 10,288,301 $ 22,265,659 $ (982,567) $ 44,524,093
FOR NINE MONTHS ENDED SEPTEMBER 30, 1999
Balance at beginning of period............... 2,575,444 $ 12,877,220 $ 10,020,066 $ 16,284,552 $ 831,157 $ 40,012,995
Comprehensive Income
Net income................................. - - - 3,715,333 - 3,715,333
Increase (decrease) in unrealized
gain on investment securities.............. - - - - (2,179,040) (2,179,040)
--------- ------------ ------------ ------------ ------------ ------------
Total Comprehensive Income 3,715,333 (2,179,040) 1,536,293
Sale of common stock......................... 6,378 31,890 137,439 (29,905) - 139,424
Cash dividends............... ............... - - - (1,031,279) - (1,031,279)
--------- ------------ ------------ ------------ ------------ ------------
Balance at end of period..................... 2,581,822 $ 12,909,110 $ 10,157,505 $ 18,938,701 $ (1,347,883) $ 40,657,433
</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 1999
Annual Report to Shareholders and Form 10-K.
2. Basic earnings per common share outstanding are computed by
dividing income by the weighted average number of
outstanding common shares for each period presented.
Diluted earnings per share are computed using the treasury
stock method.
5
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
OLD POINT FINANCIAL CORPORATION
Parent only Balance Sheets September 30, December 31,
(Unaudited) 2000 1999
-----------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash in bank................................ $ 36,890 $ 59,502
Investment Securities....................... 2,265,000 2,105,000
Total Loans................................. 0 0
Investment in Subsidiaries.................. 42,141,440 38,550,254
Equipment................................... 0 0
Other assets................................ 80,763 25,361
----------- -----------
Total Assets................................ $ 44,524,093 $ 40,740,117
=========== ===========
Liabilities and Stockholders' Equity
Total Liabilities........................... $ 0 $ 0
Stockholders' Equity........................ 44,524,093 40,740,117
----------- -----------
Total Liabilities & Stockholders' Equity.... $ 44,524,093 $ 40,740,117
=========== ===========
<CAPTION>
------------------------------------------------------------------------------------------------------------
OLD POINT FINANCIAL CORPORATION Three Months Ended: Nine Months Ended:
Parent only Income Statements September 30, September 30,
(Unaudited) 2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income
Cash dividends from Subsidiary.............. $ 425,000 $ 375,000 $ 1,225,000 $ 1,585,000
Interest and fees on loans.................. 0 0 0 0
Interest income from investment securities.. 32,224 24,873 90,791 74,738
Gains (losses) from sale of investment
securities................................. 0 (53,932) 0 (53,932)
Other income................................ 36,000 0 108,000 0
----------- ----------- ----------- -----------
Total Income................................ 493,224 345,941 1,423,791 1,605,806
Expenses
Salaries and employee benefits.............. 57,084 0 176,842 0
Other expenses.............................. 39,095 4,829 126,284 34,662
----------- ----------- ----------- -----------
Total Expenses.............................. 96,179 4,829 303,126 34,662
----------- ----------- ----------- -----------
Income before taxes & undistributed
net income of subsidiaries................ 397,045 341,112 1,120,665 1,571,144
Income tax.................................. (16,900) 4,500 (54,900) 11,300
----------- ----------- ----------- -----------
Net income before undistributed
net income of subsidiaries................ 413,945 336,612 1,175,565 1,559,844
Undistributed net income of subsidiaries.... 841,153 894,671 2,537,303 2,155,489
----------- ----------- ----------- -----------
Net Income.................................. $ 1,255,098 $ 1,231,283 $ 3,712,868 $ 3,715,333
=========== =========== =========== ===========
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
OLD POINT FINANCIAL CORPORATION Nine Months Ended:
Parent only Statements of Cash Flows September 30,
(Unaudited) 2000 1999
------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income.................................. $ 3,712,868 $ 3,715,333
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in undistributed income of
subsidiary............................. (2,537,303) (2,155,489)
Depreciation.............................. 0 0
Gains(losses) on sale of securities[net] 0 53,932
(Increase) Decrease in other assets..... (55,403) (7,750)
Increase (decrease in other liabilities) 0 0
----------- -----------
Net cash provided by operating activities... 1,120,162 1,606,026
Cash flows from investing activities:
Purchase of securities 0 (1,500,000)
Proceeds froms sales of available-for-sale
securities................................. 0 1,346,068
(Increase)decrease in investment securities. (160,000) 200,000
Investment in subsidiaries ................. 0 (1,020,000)
Sale of equipment........................... 0 0
Repayment of loans by customers............. 0 0
----------- -----------
Net cash provided by investing activities... (160,000) (973,932)
Cash flows from financing activities:
Proceeds from issuance of common stock...... 129,159 139,425
Dividends paid.............................. (1,111,933) (1,031,279)
----------- -----------
Net cash provided by financing activities... (982,774) (891,854)
Net increase (decrease) in cash & due from
banks...................................... (22,612) (259,760)
Cash & due from banks at beginning of period 59,502 293,695
----------- -----------
Cash & due from banks at end of period...... $ 36,890 $ 33,935
=========== ===========
</TABLE>
7
<PAGE>
Item 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Earnings Summary
Net income for the third quarter of 2000 increased 1.93% to
$1,255,098 from $1,231,283 for the comparable period in 1999.
Basic earnings per share were $0.48 in the third quarter of 2000
compared with $0.48 in 1999.
For the nine months ended September 30, 2000 net income decreased
.07% to $3,712,868 from $3,715,333 in 1999. Basic earnings per
share were $1.44 for the first nine months of 2000 compared with
$1.44 in 1999.
Return on average assets was 1.07% for the third quarter of 2000
and 1.15% for the comparable period in 1999. Return on average
equity was 11.34% for the third quarter of 2000 and 12.10% for
the third quarter of 1999.
For the nine months ended September 30, 2000 and 1999 return on
average assets was 1.09% and 1.18% respectively. Return on
average equity was 11.66% in 2000 and 12.12% in 1999.
Net Interest Income
Net interest income, on a fully tax equivalent basis, increased
$179 thousand, or 4.14%, for the third quarter of 2000 over 1999.
Average earning assets increased 10.04% and the net interest
yield, defined as the ratio of net interest income on a fully tax
equivalent basis to total earning assets, decreased from 4.27% in
1999 to 4.04% in 2000.
For the nine months ended September 30, 2000 net interest income
on a fully tax equivalent basis increased $759 thousand, or
5.97%, over the comparable period in 1999. Comparing the first
nine months of 2000 to 1999, average loans increased $46.3
million or 18.3% while investment securities decreased $7.8
million or 5.7%. Average earning assets increased 9.5% and the
net interest yield decreased from 4.30% in 1999 to 4.16% in 2000.
Interest expense increased $927 thousand or 26.2% in the third
quarter of 2000 from the third quarter of 1999, interest bearing
liabilities increased $36.1 million or 11.2 % in the third
quarter of 2000 over the same period in 1999.
For the nine months ended September 30, 2000 interest expense
increased $2.0 million, or 19.8% over the same period in 1999.
The cost of funding those liabilities increased 37 basis points
from 1999.
Page 9 shows an analysis of average earning assets, interest
bearing liabilities and rates and yields.
8
<PAGE>
<TABLE>
<CAPTION>
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OLD POINT FINANCIAL CORPORATION
NET INTEREST INCOME ANALYSIS For the quarter ended September 30,
(Fully taxable equivalent basis) * 2000 1999
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)** $312,201 $6,760 8.66% $264,172 $5,566 8.43%
Investment securities:
Taxable 72,886 1,110 6.09% 80,152 1,213 6.05%
Tax-exempt 55,795 1,017 7.29% 57,372 1,041 7.26%
-------- ------ -------- ------
Total investment securities 128,681 2,127 6.61% 137,524 2,254 6.56%
Federal funds sold 4,304 78 7.25% 2,885 39 5.41%
-------- ------ --------- ------
Total earning assets $445,186 $8,965 8.05% $404,581 $7,859 7.77%
======== ====== ======== ======
Time and savings deposits:
Interest-bearing transaction accounts $ 5,100 $ 30 2.35% $ 3,973 $ 24 2.42%
Money market deposit accounts 91,802 766 3.34% 94,555 741 3.13%
Savings accounts 27,906 192 2.75% 28,495 197 2.77%
Certificates of deposit, $100,000 or more 34,663 544 6.28% 30,839 423 5.49%
Other certificates of deposit 139,420 2,017 5.79% 132,216 1,762 5.33%
-------- ------ -------- ------
Total time and savings deposits 298,891 3,549 4.75% 290,078 3,147 4.34%
Federal funds purchased and securities sold
under agreement to repurchase 26,809 374 5.58% 21,971 243 4.42%
Federal Home Loan Bank advances 32,000 510 6.38% 9,548 127 5.32%
Other short term borrowings 1,677 31 7.39% 1,704 20 4.69%
-------- ------ -------- ------
Total interest bearing liabilities $359,377 4,464 4.97% $323,301 3,537 4.38%
Net interest income/yield $4,501 4.04% $4,322 4.27%
====== ===== ====== =====
<CAPTION>
--------------------------------------------------------------------------------------------------------
For the nine months ended September 30,
2000 1999
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)** $299,503 $19,138 8.52% $253,236 $16,010 8.43%
Investment securities:
Taxable 72,964 3,304 6.04% 82,120 3,736 6.07%
Tax-exempt 56,676 3,111 7.32% 55,331 3,029 7.30%
-------- ------- -------- -------
Total investment securities 129,640 6,415 6.60% 137,451 6,765 6.56%
Federal funds sold 2,454 127 6.90% 3,442 131 5.07%
-------- -------- -------- -------
Total earning assets $431,597 $25,680 7.93% $394,129 $22,906 7.75%
======== ======= ======== =======
Time and savings deposits:
Interest-bearing transaction accounts $ 4,345 $ 77 2.36% $ 3,948 $ 70 2.36%
Money market deposit accounts 94,098 2,258 3.20% 93,470 2,152 3.07%
Savings accounts 28,325 580 2.73% 27,710 568 2.73%
Certificates of deposit, $100,000 or more 32,601 1,434 5.86% 29,834 1,233 5.51%
Other certificates of deposit 136,565 5,711 5.58% 131,610 5,221 5.29%
-------- ------- -------- -------
Total time and savings deposits 295,934 10,060 4.53% 286,572 9,244 4.30%
Federal funds purchased and securities sold
under agreement to repurchase 27,151 1,034 5.08% 22,209 717 4.30%
Federal Home Loan Bank advance 21,956 1,024 6.22% 4,479 179 5.33%
Other short term borrowings 2,087 93 5.94% 1,657 57 4.59%
-------- ------- -------- -------
Total interest bearing liabilities $347,128 12,211 4.69% $314,917 10,197 4.32%
Net interest income/yield $13,469 4.16% $12,709 4.30%
======= ===== ======= =====
</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 is a charge against earnings
necessary to maintain the allowance for loan losses at a level
consistent with management's evaluation of the portfolio.
The provision for loan losses was $475 thousand for the first
nine months of 2000, up from $450 thousand in the comparable
period in 1999. Loans charged off (net of recoveries) were
$91,260 compared with loans charged off (net of recoveries) of
$335,523 in the first nine months of 1999. On an annualized
basis net loan charge-offs were 0.04% of total loans for the
first three quarters of 2000 compared with 0.16% for the same
period in 1999.
On September 30, 2000 nonperforming assets totaled $1.02 million
compared with $555 thousand on September 30, 1999. The September
2000 total consisted of $200 thousand in foreclosed real estate,
$354 thousand in a former branch site now listed for sale, and
$465 thousand in nonaccrual loans. The September 1999 total
consisted of $60 thousand in foreclosed real estate, $354
thousand in a former branch site, and $141 thousand in nonaccrual
loans. Loans still accruing interest but past due 90 days or
more increased to $977 thousand as of September 30, 2000 compared
with $557 thousand as of September 30, 1999. The allowance for
loan losses on September 30, 2000 was $3.5 million compared with
$2.97 million on September 30, 1999. It represented a multiple
of 3.43 times nonperforming assets and 7.53 times nonperforming
loans. The allowance for loan losses was 1.12% of loans on
September 30, 2000 compared to 1.10% at September 30, 1999.
Other Income
For the third quarter of 2000 other income increased $127
thousand, or 10.0%, and for the nine months ended September 30,
2000 other income increased $274 thousand or 6.9%. In both
periods, the increase in income is attributed to an increase in
fiduciary income.
Other Expenses
For the third quarter of 2000 other expenses increased $332
thousand or 9.5% over the third quarter of 1999. For the nine
months ending September 2000 other expenses increased $1.0
million or 10.0% over the same period in 1999. These increases
are due to higher cost associated with opening two new branch
facilities. The costs include higher salary expense to staff the
new facilities and higher depreciation costs for buildings and
furniture.
Assets
At September 30, 2000 total assets were $473.1 million, up 8.4%
from $436.3 million at December 31, 1999. Total loans grew $31.7
million or 11.3%. The majority of this growth was in the
installment and real estate portfolios. Federal Home Loan Bank
advances increased $20 million in 2000 from year-end 1999 to fund
the to the loan growth.
Investment securities decreased by $1.6 million, or 1.3%, in
2000. Total deposits increased $9.0 million, or 2.5% in 2000 and
demand note balances to the United States Treasury increased $1.3
million from year-end 1999.
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Capital Ratios
The Company's capital position remains strong as evidenced by the
regulatory capital measurements. At September 30, 2000 the Tier
I capital ratio was 12.21%, the total capital ratio was 13.16%
and the leverage ratio was 10.0%. These ratios were all well
above the regulatory minimum levels of 4.00%, 8.00%, and 3.00%,
respectively.
Capital Resources
The Company purchased land for a new branch site in Williamsburg,
Virginia. An office building will be constructed on this site in
2001. The Company has committed to purchase an item processing
system and an imaging system. Testing and implementation for
these systems are expected to be completed by the end of 2000.
The Company believes that it has adequate internal and external
resources available to fund its capital expenditure requirements.
Liquidity
Liquidity is the ability of the Company to meet present and
future obligations to depositors and borrowers. As stated above
total loans increased $31.7 million since year-end 1999. Funding
of these loans has been provided by Federal Home Loan Bank
advances. Management does not expect this strong loan demand to
continue. However, if this trend does continue liquidity can be
provided internally by liquidation of short term investment
securities as well as other means of financing such as purchase
of federal funds, demand note to the US Treasury and Federal Home
Loan Bank advances.
Effects of Inflation
Management believes that the key to achieving satisfactory
performance in an inflationary environment is its ability to
maintain or improve its net interest margin and to generate
additional fee income. The Company's policy of investing in and
funding with interest sensitive assets and liabilities is
intended to reduce the risks inherent in a volatile inflationary
economy.
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Item 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Sensitivity
Old Point Financial Corporation does not have any risk sensitive
instruments entered into for trading purposes.
Trading market risk is the risk to net income from changes in the
fair values of assets and liabilities that are marked-to-market
through the income statement. The Company does not carry a
trading portfolio and is currently not exposed to trading risk.
Old Point Financial Corporation does have risk sensitive
instruments entered into for other than trading purposes. Based
on scheduled maturities, the Company was liability sensitive as
of September 30, 2000. There were $123 million more in
liabilities than assets subject to repricing within three months.
This is a slight improvement from the December 31, 1999.
When the company is liability sensitive, 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 deposits totaling $123.9 million; 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.
Market risk is the risk of loss due to changes in instrument
values or earnings variations caused by changes in interest
rates, commodity prices and market variables such as equity price
risk. Old Point Financial Corporation's equity price risk is
immaterial and the company's primary exposure is to interest rate
risk.
Non-trading market risk is the risk to net income from changes in
interest rates on asset and liabilities, other than trading. The
risk arises through the potential mismatch resulting from timing
differences in repricing of loans and deposits. Old Point
Financial Corporation monitors this risk by reviewing the timing
differences and using a portfolio rate shock model that projects
various changes in interest income under a changing rate
environment of up to plus or minus 300 basis points. The rate
shock model reveals that a 200 basis point rise in rates would
cause approximately a 0.37% decrease in net income. The model
indicates a 300 basis point rise in rates would cause
approximately a 0.98% decrease in net income at September 30,
2000.
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PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b)No reports on Form 8-K were filed during the
third quarter of 2000.
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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
November 9, 2000
By: /s/Louis G Morris
Louis G. Morris
Executive Vice President and CFO
By: /s/Laurie D Grabow
Laurie D. Grabow
Senior Vice President
Principal Financial and Accounting Officer
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