Old Point Releases Second Quarter 2015 Results
| · | Net income increases 19.54% |
| · | Net loans increase $35.2 million |
| · | Year-to-date charge-offs remain low |
July 21, 2015 Hampton, VA Old Point Financial Corporation (NASDAQ "OPOF") reported net income of $2.5 million, or $0.50 per diluted share, for the first half of 2015, compared to net income of $2.1 million, or $0.42 per diluted share, in the first half of 2014. This 19.54% increase is primarily attributed to lower interest expense and higher noninterest income. Net income for the quarter ended June 30, 2015 was also higher than in the same quarter of 2014, increasing 16.17% to $1.3 million. The increase in quarterly net income was due to lower interest expense, a reduced provision for loan losses, and higher noninterest income.
Assets as of June 30, 2015 were $893.5 million, an increase of $17.2 million or 1.97% when compared to December 31, 2014. During the first half of 2015, Old Point continued to grow loans. This growth was funded through a variety of methods: cash flows received from the securities portfolio; excess liquidity previously held in cash and due from banks; and targeted increases in certain deposit categories. Net loans grew $35.2 million, or 6.66%, during the first half of 2015, while noninterest-bearing and savings deposits grew $8.7 million, securities declined $11.6 million, and cash and cash equivalents declined $12.2 million. As loans typically bear higher yields than securities and significantly higher yields than cash and due from banks, total interest and dividend income increased $52 thousand when comparing the first six months of 2014 and 2015. This shift in the composition of the asset base also increased Old Point's net interest margin for the first half of 2015 to 3.55%, from 3.48% for the first half of 2014.
In prior years, Old Point has worked to lower the cost of its time deposits, with these efforts being the primary contributor to a $182 thousand reduction in interest expense in the first half of 2015, as compared to the first half of 2014. As a result of both the shift in assets from securities to loans and the reduction in interest expense, net interest income before the provision increased $234 thousand when comparing the first six months of 2014 and 2015.
Annualized net charge-offs as a percent of total loans were a negative 0.01% for the first half of 2015, or a net recovery of $22 thousand as loan recoveries exceeded charge-offs during the six months ended June 30, 2015. This net recovery is compared to 0.08% in annualized net charge-offs in the first half of 2014. Due to this net recovery, Old Point set aside $50 thousand less provision for loan losses in the first six months of 2015 than in the same period in 2014. As a result, net interest income after the provision was $284 thousand higher in the first half of 2015 than the first half of 2014.
Both noninterest income and noninterest expense increased when comparing the first half of 2014 and 2015, with noninterest income growing more than noninterest expense. Almost every major category of noninterest income increased between these two periods, with the largest dollar increases in income from fiduciary activities and income from Old Point Mortgage. Noninterest expense increased only $51 thousand, or 0.30%, when comparing the first half of 2015 to the same period in 2014.
As a community bank, we believe that to succeed, the community around us must thrive. Old Point National Bank supports many organizations through sponsorships and charitable donations. Approximately 29% of our giving is earmarked for education, 30% for community development, 13% for arts & culture, and 28% for health & wellness.
For more information about our commitment to the community, pick up a copy of Old Point's Community Engagement Report in any of our branches or request a PDF via email (lwright@oldpoint.com). For information about upcoming initiatives, please visit our website (www.oldpoint.com), our Facebook page (www.facebook.com/oldpoint), or join us on Twitter (www.twitter.com/opnb).
Other items of note:
Non-Performing Assets (NPAs) decreased from $11.8 million as of December 31, 2014 to $11.7 million as of June 30, 2015. NPAs do not include restructured loans that are performing in accordance with their modified terms. Loans past due 90 days or more but still accruing interest, a component of NPAs, totaled $3.1 million as of June 30, 2015, of which $2.9 million were student loans that are 97-98% guaranteed by the U.S. Government. Old Point expects to experience minimal losses on these government-guaranteed loans. At December 31, 2014, government-guaranteed student loans 90 days or more past due but still accruing interest totaled $1.0 million.
Allowance for Loan and Lease Losses (ALLL) as of June 30, 2015 and December 31, 2014 was 1.29% and 1.32% of total loans, respectively.
Safe Harbor Statement Regarding Forward-Looking Statements. Statements in this press release which express "belief," "intention," "expectation," and similar expressions, identify forward-looking statements. These forward-looking statements are based on the beliefs of 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. 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; general economic and business conditions, including unemployment levels; demand for loan products; the legislative/regulatory climate; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of the loan or investment portfolios; the level of net charge-offs on loans; deposit flows; competition; demand for financial services in Old Point's market area; technology; reliance on third parties for key services; the real estate market; Old Point's expansion initiatives; 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, 2014. 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 Erin Black, Vice President/Marketing Director, Old Point National Bank at 757- 251-2792.
