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Old Point Reports First Quarter 2019 Results

HAMPTON, Va., April 24, 2019 /PRNewswire/ -- Old Point Financial Corporation (the Company or Old Point) (NASDAQ "OPOF") reported net income of $2.0 million and earnings per diluted common share of $0.39 for the quarter ended March 31, 2019, as compared to net income of $942 thousand or $0.19 earnings per diluted common share for the first quarter of 2018. Net operating earnings (non-GAAP) for the first quarter of 2019 were also $2.0 million or $0.39 per diluted common share, which compares to $1.1 million, or $0.23 per diluted common share for the first quarter of 2018.

Robert Shuford, Jr., President and CEO of Old Point National Bank (the Bank) said, "We are pleased to report earnings of $2.0 million, or $0.39 per diluted common share, for the first quarter of 2019. Our Company experienced solid revenue growth and expense control during the quarter as compared to the same period in 2018, with continuing improvement in asset quality."

Highlights of the quarter are as follows:

  • Return on average assets (ROA) was 0.80% compared to 0.53% in the prior quarter and 0.39% in the first quarter of 2018. Net operating ROA (non-GAAP) was 0.80% compared to 0.54% and 0.47% in the fourth quarter of 2018 and the first quarter of 2018, respectively.
  • Return on average equity (ROE) was 7.94% compared to 5.45% in the prior quarter and 3.97% in the first quarter of 2018. Net operating ROE (non-GAAP) was 7.94% compared to 5.50% and 4.83 % in the fourth quarter of 2018 and the first quarter of 2018, respectively.
  • Net interest income declined slightly to $8.4 million compared to $8.6 million in the prior quarter but increased from $7.7 million in the first quarter of 2018.
  • Net interest margin (on a fully tax-equivalent basis) improved to 3.67% from 3.52% in the first quarter of 2018 and decreased from 3.69% in the prior quarter. 
  • Non-performing assets (NPAs) totaled $12.9 million as of March 31, 2019, down from $14.7 million at December 31, 2018 and down from $16.5 million at March 31, 2018. NPAs as a percentage of total assets improved to 1.26% at March 31, 2019 which compares to 1.42% at December 31, 2018 and 1.66% at March 31, 2018.
  • The efficiency ratio improved to 78.34% compared to 78.51% in the fourth quarter of 2018 and 85.65% in the first quarter of 2018.

Net Interest Income

Net interest income for the first quarter of 2019 was $8.4 million, a decrease of $243 thousand, or 2.8%, from the prior quarter and an increase of $614 thousand, or 7.9%, from the first quarter of 2018. The year-over-year growth was positively impacted by higher average earning asset balances and higher yields which was partially offset by higher funding costs.  The quarter-over-quarter decrease in net interest income was principally the result of lower average earning assets combined with increasing funding costs. The tax-equivalent net interest margin for the quarter was 3.67%, down from 3.69% in the prior quarter and up from 3.52% in the same period a year ago. The margin compression during the first quarter of 2019 was primarily due to higher rates on interest-bearing deposits and borrowings.

Asset Quality

Non-performing assets (NPAs) totaled $12.9 million as of March 31, 2019, down from $14.7 million at December 31, 2018 and $16.5 million at March 31, 2018. NPAs as a percentage of total assets were 1.26%, which compares to 1.42% at December 31, 2018 and 1.66% at March 31, 2018. Non-accrual loans decreased to $11.2 million from $12.1 million at December 31, 2018 and $14.1 million at March 31, 2018. Loans past due 90 days or more and still accruing interest decreased $819 thousand to $1.7 million from $2.5 million at December 31, 2018 and decreased by $488 thousand compared to $2.2 million at March 31, 2018. Of the loans past due 90 days or more at March 31, 2019, approximately $1.4 million were government-guaranteed student loans.

The provision for loan losses was $226 thousand for the first quarter of 2019, as compared to $1.0 million for the prior quarter and $525 thousand for the first quarter of 2018.  The allowance for loan and lease losses (ALLL) was $10.1 million at March 31, 2019 and December 31, 2018 compared to $9.7 million at March 31, 2018. The ALLL as a percentage of loans held for investment was 1.32% at March 31, 2019, up slightly from 1.31% at December 31, 2018 and down slightly from 1.33% at March 31, 2018. Annualized net charge offs as a percentage of average loans outstanding was 0.13% for the first quarter of 2019, which compares to 0.58% in the preceding quarter and 0.13% in the first quarter of 2018.  Improving asset quality positively impacted the level of provision for loan losses in the first quarter of 2019, while the fourth quarter 2018 provision for loan losses was impacted by a $573 thousand charge-off.

Noninterest Income

Total noninterest income for the quarter was $3.4 million, an increase of $84 thousand from the previous quarter and an increase of $274 thousand, or 8.7% from the first 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 $9.3 million for the first quarter of 2019, a decrease of $149 thousand from the fourth quarter of 2018 and a decrease of $125 thousand from the first quarter of 2018. Adjusting for the impact of merger expenses of $205 thousand in the first quarter of 2018, adjusted noninterest expense (non-GAAP) increased $80 thousand or 0.9% comparing first quarter of 2019 to the same period in 2018. For the linked quarter, decreases in occupancy and equipment and professional services offset increases in salaries and employee benefits.

Balance Sheet Review

Total assets as of March 31, 2019 were $1.0 billion, essentially unchanged from December 31, 2018. Net loans held for investment decreased $11.1 million, or 1.5%, from December 31, 2018 to $752.8 million.  Securities available for sale, at fair value, increased $9.6 million to $157.8 million at March 31, 2019.

Total deposits as of March 31, 2019 decreased $7.0 million, or 0.8%, to $836.2 million from December 31, 2018. Noninterest-bearing deposits decreased $13.3 million, or 5.4%, savings deposits increased $4.3 million, or 1.2%, and time deposits increased $2.1 million, or 0.9%.

The Company's total stockholders' equity at March 31, 2019 increased $3.0 million or 3.0% from December 31, 2018 to $105.0 million.  The Bank remains well capitalized with a Tier 1 Capital ratio of 11.24% at March 31, 2019 as compared to 10.90% at December 31, 2018. The Bank's leverage ratio was 9.60% at March 31, 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, and operating efficiency ratio.  A schedule reconciling these non-GAAP financial measures is provided at the end of this press release.  The Company uses these 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 Jeff Farrar, Chief Financial Officer & Senior Vice President/Finance of Old Point Financial Corporation at 757-728-1248, or Laura Wright, Vice President/Marketing Director, Old Point National Bank at 757-728-1743.

 

Old Point Financial Corporation and Subsidiaries

Consolidated Balance Sheets

March 31,


December 31,

(dollars in thousands, except share data)

2019


2018


(unaudited)



Assets








Cash and due from banks

$            16,993


$            19,915

Interest-bearing due from banks

15,128


20,000

Federal funds sold

678


2,302

Cash and cash equivalents

32,799


42,217

Securities available-for-sale, at fair value

157,819


148,247

Restricted securities, at cost

3,691


3,853

Loans held for sale

649


479

Loans, net

752,799


763,898

Premises and equipment, net

36,677


36,738

Bank-owned life insurance

26,955


26,763

Goodwill

1,650


1,650

Other real estate owned, net

-


83

Core deposit intangible, net

396


407

Other assets

13,445


13,848

Total assets

$      1,026,880


$      1,038,183





Liabilities & Stockholders' Equity








Deposits:




Noninterest-bearing deposits

$         232,954


$         246,265

Savings deposits

372,189


367,915

Time deposits

231,034


228,964

Total deposits

836,177


843,144

Federal funds purchased and other short-term borrowings

-


-

Overnight repurchase agreements

24,643


25,775

Federal Home Loan Bank advances

55,000


60,000

Other borrowings

2,400


2,550

Accrued expenses and other liabilities

3,641


4,708

Total liabilities

921,861


936,177





Stockholders' equity:




Common stock, $5 par value, 10,000,000 shares authorized; 
5,185,151 and 5,184,289 shares outstanding (includes 13,689
nonvested restricted stock, respectively)

25,857


25,853

Additional paid-in capital

20,763


20,698

Retained earnings

59,015


57,611

Accumulated other comprehensive loss, net

(616)


(2,156)

Total stockholders' equity

105,019


102,006

Total liabilities and stockholders' equity

$      1,026,880


$      1,038,183

 

 


Old Point Financial Corporation and Subsidiaries


Consolidated Statements of Income (unaudited)

Three Months Ended

(dollars in thousands, except per share data)

Mar. 31, 2019


Dec. 31, 2018


Mar. 31, 2018







Interest and Dividend Income:






Loans, including fees

$            8,862


$            8,998


$            7,895

Due from banks

57


104


4

Federal funds sold

7


6


2

Securities:






Taxable

620


576


494

Tax-exempt

266


285


344

Dividends and interest on all other securities

64


81


60

Total interest and dividend income

9,876


10,050


8,799







Interest Expense:






Checking and savings deposits

251


219


104

Time deposits

870


828


616

Federal funds purchased, securities sold under






agreements to repurchase and other borrowings

37


37


10

Federal Home Loan Bank advances

359


364


324

Total interest expense

1,517


1,448


1,054

Net interest income

8,359


8,602


7,745

Provision for loan losses

226


1,012


525

Net interest income after provision for loan losses

8,133


7,590


7,220







Noninterest Income:






Fiduciary and asset management fees

959


922


983

Service charges on deposit accounts

1,053


1,115


870

Other service charges, commissions and fees

925


880


854

Bank-owned life insurance income

192


197


209

Mortgage banking income

216


171


141

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

26


-


80

Gain on acquisition of Old Point Mortgage

-


-


-

Other operating income

45


47


5

Total noninterest income

3,416


3,332


3,142







Noninterest Expense:






Salaries and employee benefits

5,699


5,561


5,477

Pension termination settlement

-


-


-

Occupancy and equipment

1,393


1,499


1,477

Data processing

363


334


302

FDIC insurance

127


164


191

Customer development

162


151


182

Professional services

514


788


488

Employee professional development

186


154


192

Other taxes

150


134


170

ATM and other losses

62


50


97

Loss (gain) on other real estate owned

(2)


-


-

Merger expenses

-


12


205

Other operating expenses

637


593


635

Total noninterest expense

9,291


9,440


9,416

Income before income taxes

2,258


1,482


946

Income tax expense

231


94


4

Net income

$            2,027


$            1,388


$               942







Basic Earnings per Share:






Weighted average shares outstanding 

5,184,586


5,183,720


5,020,075

Net income per share of common stock

$              0.39


$              0.27


$              0.19







Diluted Earnings per Share:






Weighted average shares outstanding 

5,184,599


5,183,909


5,020,146

Net income per share of common stock

$              0.39


$              0.27


$              0.19







Cash Dividends Declared per Share:

$              0.12


$              0.11


$              0.11

 

 



Old Point Financial Corporation and Subsidiaries

Average Balance Sheets, Net Interest Income And Rates




For the quarter ended March 31,

(unaudited)

2019


2018




Interest






Interest




Average


Income/


Yield/


Average


Income/


Yield/

(dollars in thousands)

Balance


Expense


Rate**


Balance


Expense


Rate**

ASSETS












Loans*

$    771,143


$   8,876


4.67%


$    745,376


$   7,910


4.30%

Investment securities:












Taxable

103,264


620


2.43%


94,387


494


2.12%

Tax-exempt*

43,648


337


3.13%


57,929


436


3.05%

Total investment securities

146,912


957


2.64%


152,316


930


2.48%

Interest-bearing due from banks

9,933


57


2.33%


1,150


4


1.41%

Federal funds sold

1,124


7


2.53%


455


2


1.78%

Other investments

3,783


64


6.86%


4,415


60


5.51%

Total earning assets

932,895


$   9,961


4.33%


903,712


$   8,906


4.00%

Allowance for loan losses

(10,462)






(9,842)





Other non-earning assets

102,043






93,388





Total assets

$ 1,024,476






$    987,258

















LIABILITIES AND STOCKHOLDERS' EQUITY












Time and savings deposits:












Interest-bearing transaction accounts

$      28,145


$          3


0.04%


$      27,597


$          3


0.04%

Money market deposit accounts

251,086


226


0.37%


231,035


91


0.16%

Savings accounts

87,949


22


0.10%


85,505


10


0.05%

Time deposits

230,091


870


1.53%


211,641


616


1.18%

Total time and savings deposits

597,271


1,121


0.76%


555,778


720


0.53%

Federal funds purchased, repurchase












agreements and other borrowings

25,220


37


0.59%


28,353


10


0.14%

Federal Home Loan Bank advances

58,222


359


2.50%


80,333


324


1.64%

Total interest-bearing liabilities

680,713


1,517


0.90%


664,464


1,054


0.64%

Demand deposits

235,381






223,056





Other liabilities

4,896






3,452





Stockholders' equity

103,486






96,286





Total liabilities and stockholders' equity

$ 1,024,476






$    987,258





Net interest margin



$   8,444


3.67%




$   7,852


3.52%













*Computed on a fully tax-equivalent basis using a 21% rate, adjusting interest income by $85 and $107, respectively.






**Annualized











 

 

Old Point Financial Corporation and Subsidiaries

As of or for the quarter ended,

Selected Ratios (unaudited)

March 31,


December 31,


March 31,

(dollars in thousands, except per share data)

2019


2018


2018







Earnings per common share, diluted

$                0.39


$                  0.27


$                0.19

Return on average assets (ROA)

0.80%


0.53%


0.39%

Return on average equity (ROE)

7.94%


5.45%


3.97%

Net Interest Margin (FTE)

3.67%


3.69%


3.52%

Non-performing assets (NPAs) / total assets

1.26%


1.42%


1.66%

Annualized Net Charge Offs / average total loans

0.13%


0.58%


0.13%

Allowance for loan losses / total loans

1.32%


1.31%


1.33%

Efficiency ratio (FTE)

78.34%


78.51%


85.65%







Non-Performing Assets (NPAs)






Nonaccrual loans

$            11,245


$             12,141


$            14,131

Loans > 90 days past due, but still accruing interest

1,678


2,497


2,166

Other real estate owned

-


83


203

Total non-performing assets

$            12,923


$             14,721


$            16,500







Other Selected Numbers






Loans, net

$         752,799


$           763,898


$         723,144

Deposits

836,177


843,144


789,027

Stockholders equity

105,019


102,006


94,998

Total assets

1,026,880


1,038,183


993,773

Loans charged off during the quarter, net of recoveries

249


1,132


242

Quarterly average loans

771,143


774,476


745,376

Quarterly average assets

1,024,476


1,035,996


987,258

Quarterly average earning assets

932,895


942,191


903,712

Quarterly average deposits

832,652


848,816


778,834

Quarterly average equity

103,486


100,956


96,286




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


Three Months Ended


Mar. 31, 2019


Dec. 31, 2018


Mar. 31, 2018







Net income

$         2,027


$         1,388


$            942

Plus: Merger-related costs (after tax)

-


12


205

Net operating earnings

$         2,027


$         1,400


$         1,147







Weighted average shares outstanding (assuming dilution)

5,184,599


5,183,909


5,020,146

Earnings per share (GAAP)

$           0.39


$           0.27


$           0.19

Net operating earnings per share (non-GAAP)

0.39


0.27


0.23







Average assets

$   1,024,476


$   1,035,996


$     987,258

ROA (GAAP)

0.80%


0.53%


0.39%

Net operating ROA (non-GAAP)

0.80%


0.54%


0.47%







Average stockholders equity

$     103,486


$     100,956


$       96,286

ROE (GAAP)

7.94%


5.45%


3.97%

Net operating ROE (non-GAAP)

7.94%


5.50%


4.83%







Efficiency ratio (FTE)

78.34%


78.51%


85.65%

Operating efficiency ratio (FTE)

78.34%


78.41%


83.78%


 

Old Point Financial Corporation (

 

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