Increased Loan Loss Provision, Support for FDIC
Affect Old Point’s Second Quarter
• | Quarterly net loss of $622 thousand or $0.13 per diluted share |
• | Key factors: Increased loan loss provision, FDIC contribution |
• | Deposits rise 1.9% |
• | Net loans increase 0.6% |
• | Growth strategies continue |
July 23, 2009 Hampton, VAOld Point Financial Corporation(Nasdaq “OPOF”) reported growth in deposits and loans during the period from June 30, 2008 to June 30, 2009. The bank also continued with strategies for increasing market share. During the second quarter, the bank further raised its loan loss provision and its contribution to the Federal Deposit Insurance Corporation (FDIC). Those two factors led to a net loss for the quarter.Robert F. Shuford, Chairman and President of Old Point Financial Corporation, said, “As a well-capitalized bank that has weathered many economic cycles since it opened in 1923, Old Point is firmly positioned to stay the course through the current recession and take advantage of new opportunities that emerge from it.” The quarterly loss was Old Point’s first since the last banking crisis in the early 1990s.
Old Point experienced a net loss of $622.0 thousand, or $0.13 per diluted share, for the quarter that finished June 30, 2009. Assets as of June 30, 2009 were $853.1 million, up from June 30, 2008 assets of $836.2 million. Net loans rose to $625.1 million, an increase of 0.6% from $621.2 million in the second quarter of 2008. Deposits rose to $626.6 million, a 1.9% rise from $614.7 million in 2008’s second quarter. For the six months ending June 30, 2009, Old Point earned $147.8 thousand, or $0.03 per diluted share.
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“Due to turmoil in the nation’s banking industry, we’ve taken steps that are prudent and sound banking practices, but that naturally have an impact on our bottom line,” Shuford said. “Old Point’s provision for loan losses was higher for the second quarter of 2009 than it was for the same period in 2008. Our second quarter 2009 contribution to support the FDIC insurance program, which is necessary because of what has been happening with some other banks, was $751 thousand, making it more than forty-four times higher for the second quarter of 2009 than the $17 thousand for the like period in 2008.”
The rise in deposits and loans demonstrates Old Point’s strategy of investing in expanding market share, Shuford said. Old Point has increased its workforce since this time a year ago so it can pursue more corporate banking business, call upon a greater number of prospective retail customers, and begin staffing up for the upcoming opening of its branch in Norfolk’s Ghent section.
“Old Point continues to pursue the steady course that has taken us through dramatic economic cycles in the past,” said Shuford. “Still, we will constantly keep an eye on our loan portfolio and take appropriate steps.”
Non-performing Assets (NPAs) as a percentage of total assets are at 1.86% as of June 30, 2009 vs. 0.51% on June 30, 2008.
Allowance for Loan and Lease Losses (ALLL)on June 30, 2009 was at 1.15% of total loans; as of June 30, 2008, that measure was 0.82%. The Company continues to build the ALLL; the Bank made an addition of $4 million to the ALLL during the first six months of 2009.
Net loans charged off/provision for loan losses:Net loans charged off of $3.1 million during the six months ended June 30, 2009 was impacted by a $1.4 million write-down of a real estate project in the second quarter.
Net interest margin (NIM)for the second quarter of 2009 was 3.37% as compared to 3.55% for the second quarter of 2008. Year-to-date NIM for June 30, 2009 and 2008, respectively, was 3.36% and 3.50%.
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Also notable in the second quarter:
Credit for small business development:In the quarter that ended June 30, 2009, Old Point provided loans to dozens of small businesses throughout Hampton Roads, in segments that included retail, construction, and the service sector. In addition, as a participating lender with the Small Business Administration’s (SBA’s) America’s Recovery Capital (ARC) loan program, Old Point made Virginia’s first four ARC loans, which have been designed by the SBA to help small businesses during the current tough economy.
New financial services for households:In the second quarter, Old Point assisted more than 800 households in the region with new financial services, providing mortgages and other types of loans and establishing savings and checking accounts.
Community support:During the past year, Old Point continued to provide financial support and staff volunteer time to the nearly 500 community service organizations and programs it assists each year.
Old Point Financial Corporation(“OPOF” - Nasdaq) is the parent company ofOld Point National Bank, a locally owned and managed community bank serving Hampton Roads with 20 branches and more than 60 ATMs throughout Hampton Roads andOld Point Trust & Financial Services, N.A.,a Hampton Roads wealth management services provider. Web:www.oldpoint.com. For more information, contact Lani Chisman Davis at Old Point National Bank at 757- 728-1286.
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Old Point Financial Corporation
Consolidated Balance Sheets
in thousands, except per share data (unaudited)
Assets
30-Jun-09 | 30-Jun-08 | |||||||||||
Cash and due from banks | $ | 23,186 | $ | 61,550 | ||||||||
Federal funds sold | 1,822 | 2,684 | ||||||||||
Cash and cash equivalents | 25,008 | 64,234 | ||||||||||
Securities available-for-sale, at fair value | 136,666 | 92,355 | ||||||||||
Securities held-to-maturity | 1,967 | 3,104 | ||||||||||
Restricted Securities | 4,815 | 5,241 | ||||||||||
Loans, net of allowance for loan losses of $7,275 and $5,113 | 625,146 | 621,197 | ||||||||||
Premises and equipment, net | 28,892 | 27,594 | ||||||||||
Bank owned life insurance | 14,370 | 13,159 | ||||||||||
Other real estate owned, net | 8,032 | 2,246 | ||||||||||
Other assets | 8,168 | 7,090 | ||||||||||
Total Assets | $ | 853,064 | $ | 836,220 | ||||||||
Liabilities & Stockholders’ Equity | ||||||||||||
30-Jun-09 | 30-Jun-08 | |||||||||||
Deposits: | ||||||||||||
Noninterest-bearing deposits | $ | 109,544 | $ | 107,532 | ||||||||
Savings deposits | 185,751 | 183,676 | ||||||||||
Time deposits | 331,314 | 323,469 | ||||||||||
Total deposits | 626,609 | 614,677 | ||||||||||
Federal funds purchased, repurchase agreements and other borrowings | 77,628 | 56,864 | ||||||||||
Federal Home Loan Bank advances | 65,000 | 80,000 | ||||||||||
Accrued expenses and other liabilities | 2,127 | 3,143 | ||||||||||
Total Liabilities | 771,364 | 754,684 | ||||||||||
Stockholders’ Equity | ||||||||||||
Common stock, $5.00 par value | ||||||||||||
2009 | 2008 | |||||||||||
Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||
Shares Issued | 4,909,035 | 4,902,167 | 24,545 | 24,511 | ||||||||
Additional paid in capital | 15,638 | 15,414 | ||||||||||
Retained earnings | 42,005 | 41,880 | ||||||||||
Accumulated other comprehensive loss | (488 | ) | (269 | ) | ||||||||
Total stockholders’ equity | 81,700 | 81,536 | ||||||||||
Total liabilities and stockholders’ equity | $ | 853,064 | $ | 836,220 | ||||||||
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Old Point Financial Corporation
Consolidated Statements of Earnings
in thousands, except per share data
(unaudited)
3 Months Ended 30-Jun-09 | 3 Months Ended 30-Jun-08 | 6 Months Ended 30-Jun-09 | 6 Months Ended 30-Jun-08 | |||||||||
Interest Income | ||||||||||||
Interest and fees on loans | $ | 9,401 | $ | 10,094 | $ | 18,817 | $ | 20,346 | ||||
Interest on federal funds sold | 9 | 113 | 22 | 330 | ||||||||
Interest on securities: | ||||||||||||
Taxable | 710 | 865 | 1,370 | 1,858 | ||||||||
Exempt from Federal income tax | 154 | 245 | 314 | 520 | ||||||||
Dividends and interest on all other securities | 120 | 339 | 267 | 476 | ||||||||
Total interest and dividend income | 10,394 | 11,656 | 20,790 | 23,530 | ||||||||
Interest Expense | ||||||||||||
Interest on savings and interest-bearing demand deposits | 98 | 263 | 193 | 673 | ||||||||
Interest on time deposits | 2,607 | 3,349 | 5,435 | 6,962 | ||||||||
Interest on federal funds purchased , securities sold under agreement to repurchase and other borrowings | 144 | 213 | 241 | 550 | ||||||||
Interest on Federal Home Loan Bank advances | 854 | 1,025 | 1,749 | 2,049 | ||||||||
Total Interest expense | 3,703 | 4,850 | 7,618 | 10,234 | ||||||||
Net Interest Income | 6,691 | 6,806 | 13,172 | 13,296 | ||||||||
Provision for loan losses | 3,000 | 300 | 4,000 | 600 | ||||||||
Net interest income after provision for loan losses | 3,691 | 6,506 | 9,172 | 12,696 | ||||||||
Noninterest Income | ||||||||||||
Income from fiduciary activities | 764 | 807 | 1,528 | 1,655 | ||||||||
Service charges on deposit accounts | 1,376 | 1,464 | 2,713 | 2,892 | ||||||||
Other service charges, commissions and fees | 656 | 669 | 1,268 | 1,379 | ||||||||
Income from bank owned life insurance | 176 | 180 | 352 | 357 | ||||||||
Other operating income | 129 | 54 | 204 | 114 | ||||||||
Total Noninterest income | 3,101 | 3,174 | 6,065 | 6,397 | ||||||||
Noninterest Expense | ||||||||||||
Salaries and employee benefits | 4,348 | 4,252 | 8,814 | 8,289 | ||||||||
Occupancy and equipment | 1,012 | 932 | 2,047 | 1,873 | ||||||||
FDIC insurance | 751 | 17 | 853 | 34 | ||||||||
Data processing | 274 | 252 | 523 | 489 | ||||||||
Customer development | 184 | 188 | 382 | 410 | ||||||||
Advertising | 180 | 225 | 352 | 410 | ||||||||
Loan expenses | 167 | 41 | 301 | 99 | ||||||||
Employee professional development | 130 | 179 | 272 | 331 | ||||||||
Postage and courier | 131 | 134 | 269 | 271 | ||||||||
Loss on write-down of other real estate owned | 74 | 0 | 141 | 0 | ||||||||
Other operating expenses | 640 | 737 | 1,341 | 1,412 | ||||||||
Total noninterest expenses | 7,891 | 6,957 | 15,295 | 13,618 | ||||||||
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3 Months Ended 30-Jun-09 | 3 Months Ended 30-Jun-08 | 6 Months Ended 30-Jun-09 | 6 Months Ended 30-Jun-08 | |||||||||||||
Income before income taxes | (1,099 | ) | 2,723 | (58 | ) | 5,475 | ||||||||||
Income tax expense | (477 | ) | 788 | (206 | ) | 1,570 | ||||||||||
Net Income | $ | (622 | ) | $ | 1,935 | $ | 148 | $ | 3,905 | |||||||
Basic Earnings Per Share | ||||||||||||||||
Average shares outstanding | 4,908,216 | 4,903,532 | 4,907,616 | 4,905,549 | ||||||||||||
Net income per share of common stock | $ | (0.13 | ) | $ | 0.40 | $ | 0.03 | $ | 0.80 | |||||||
Diluted Earnings per share | ||||||||||||||||
Average shares outstanding | 4,940,606 | 4,934,292 | 4,937,085 | 4,937,017 | ||||||||||||
Net income per share of common stock | $ | (0.13 | ) | $ | 0.39 | $ | 0.03 | $ | 0.79 | |||||||
Cash Dividends Declared | $ | 0.10 | $ | 0.16 | $ | 0.26 | $ | 0.32 | ||||||||
Selected Ratios | ||||||||||||||||
3 Months Ended 30-Jun-09 | 3 Months Ended 30-Jun-08 | 6 Months Ended 30-Jun-09 | 6 Months Ended 30-Jun-08 | |||||||||||||
Net Interest Margin | 3.37 | % | 3.55 | % | 3.36 | % | 3.50 | % | ||||||||
As of 30 Jun-09 | As of 31 Mar-09 | As of 31 Dec-08 | As of Jun 30-08 | |||||||||||||
NPAs/Total Assets | 1.86 | % | 1.94 | % | 1.79 | % | 0.51 | % | ||||||||
Allowance for Loan Losses/Total Loans | 1.15 | % | 1.11 | % | 1.00 | % | 0.82 | % | ||||||||
Non-Performing Assets (NPAs) (000) | $ | 15,863 | $ | 17,087 | $ | 14,919 | $ | 4,264 | ||||||||
Composition of NPAs: | ||||||||||||||||
Nonaccrual Loans | $ | 5,925 | $ | 9,529 | $ | 1,045 | $ | 889 | ||||||||
Loans > 90 days past due, but still accruing interest | $ | 1,217 | $ | 2,810 | $ | 3,529 | $ | 896 | ||||||||
Restructured Loans | $ | 689 | $ | 689 | $ | 6,594 | $ | 233 | ||||||||
Other Real Estate Owned | $ | 8,032 | $ | 4,059 | $ | 3,751 | $ | 2,246 | ||||||||
6 Months Ended 30-Jun-09 | 3 Months ended 31-Mar-09 | 12 Months ended 31-Dec-08 | 6 Months Ended 30-Jun-08 | |||||||||||||
Loans Charged off (net of recoveries) (000) | $ | 3,131 | $ | 392 | $ | 1,124 | $ | 617 | ||||||||
Net Annualized Charge Offs/Total Loans | 0.99 | % | 0.25 | % | 0.18 | % | 0.20 | % |
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