U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (no fee required)
For the transition period from to
Commission File No. 0-12896
OLD POINT FINANCIAL CORPORATION
(Name of issuer 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)
(757) 722-7451
(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock ($5.00 par value)
(Title of class)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form
10-K. [X]
As of March 14, 2000 the aggregate market value of the 2,149,074
shares of common stock of Old Point Financial Corporation held by
nonaffiliates was approximately $35 million based upon the closing
price of the stock as of March 14, 2000. Number of shares outstanding
on March 14, 2000 was 2,583,401.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
OLD POINT FINANCIAL CORPORATION
Form 10-K
INDEX
PART I...............................................................1
Item 1. Description of Business.....................................1
General.............................................................1
Statistical Information.............................................2
Item 2. Description of Property....................................13
Item 3. Legal Proceedings..........................................13
Item 4. Submission of Matters to a Vote of Security Holders........13
PART II.............................................................13
Item 5. Market for Common Equity And Related Stockholder Matters...13
Item 6. Selected Financial Data....................................13
Item 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................15
Item 8. Financial Statements and Supplementary Data.................19
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure........................37
PART III............................................................38
Item 10. Directors and Executive Officers of the Registrant.........38
Item 11. Executive Compensation.....................................41
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................43
Item 13. Certain Relationships and Related Transactions.............43
PART IV.............................................................44
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8..................................................44
-I-
PART I
Item 1. Description of Business
General
Old Point Financial Corporation (the "Company") was incorporated under
the laws of Virginia on February 16, 1984, for the purpose of
acquiring all the outstanding common stock of The Old Point National
Bank of Phoebus (the "Bank"), in connection with the reorganization of
the Bank into a one bank holding company structure. At the annual
meeting of the stockholders on March 27, 1984, the proposed
reorganization was approved by the requisite stockholder vote. At the
effective date of the reorganization on October 1, 1984, the Bank
merged into a newly formed national bank as a wholly owned subsidiary
of the Company, with each outstanding share of common stock of the
Bank being converted into five shares of common stock of the Company.
The Company completed a spin-off of its trust department as of April
1, 1999. The newly formed organization is charted as Old Point Trust
and Financial Services, N.A. ("Trust"). Trust is a wholly owned
subsidiary of the Company. The Company does not engage in any
activities other than acting as a holding company for the common stock
of the Bank and Trust. The principal business of the Company is
conducted through its subsidiaries which continue to conduct
business in substantially the same manner and from the same offices.
The Bank is a national banking association founded in 1922. The Bank
has fifteen offices in the cities of Hampton, Newport News and
Chesapeake, as well as James City and York County, Virginia, and
provides a full range of banking and related financial services,
including checking, savings, certificates of deposit, and other
depository services, commercial, industrial, residential real estate
and consumer loan services, safekeeping services.
As of December 31, 1999, the Company had assets of $436.3 million,
loans of $281.6 million, deposits of $360.9 million, and stockholders'
equity of $40.8 million. At year end, the Company and its
subsidiaries had a total of 233 employees, 30 of whom were part-time.
The Company's trade area is Hampton Roads, which includes
Williamsburg, Poquoson, Newport News, Hampton, Chesapeake,
Norfolk, Virginia Beach, Portsmouth and Suffolk. The area
also includes the Isle of Wight, James City, Gloucester and
Mathews counties. According to the 1999 Hampton Roads
Statistical Digest, there are more than 1.5 million people
in the area with 30% of all jobs linked to the military.
The single largest employer is Newport News Shipbuilding
with approximately 17,000 employees.
The banking industry is highly competitive in the Hampton
Roads area. There are approximately nineteen commercial and
savings banks conducting business in the area. Six of these
are major statewide banking organizations.
The Bank encounters competition for deposits and loans from
banks, saving and loan associations, and credit unions in
the area in which it operates. In addition, the Bank must
compete for deposits in some instances with nationally
marketed money market funds, brokerage firms and on-line or
internet banks.
The Company and its subsidiaries are subject to regulation
and examination by the Federal Reserve Board ("the Board"),
the Office of the Comptroller of the Currency and the
Federal Deposit Insurance Corporation ("the FDIC").
-1-
As a bank holding company within the meaning of the Bank
Holding Company Act of 1956, the Company is subject to the
ongoing regulation, supervision, and examination by the
Federal Reserve Board (the "Board"). The Company is
required to file with the Board periodic and annual reports
and other information concerning its own business operations
and those of its subsidiaries. In addition, prior Board
approval must be obtained before the Company can acquire (i)
ownership or control of any voting shares of another bank
if, after such acquisition, it would control more than 5% of
such shares, or (ii) all or substantially all of the assets
of another bank or merge or consolidate with another bank
holding company. A bank holding company is prohibited under
the Bank Holding Company Act, with limited exceptions, from
engaging in activities other than those of banking or of
managing or controlling banks or furnishing services to its
subsidiaries.
Recent Legislation
The Gramm-Leach-Bliley Act (the "Act") which was signed into
law by the President on November 12, 1999 became effective
March 11, 2000. The Act allows a bank holding company to
elect to become a "financial holding company" and permitted
to engage in financial activities. Among the items listed
in the Act as financial activities are lending, exchanging,
transferring, investing for others, or safeguarding money or
securities. Other permitted activities are providing
financial, investment or economic advisory services,
including advising an investment company; issuing or selling
instruments representing interests in pools of assets
permissible for a bank to hold; and underwriting, dealing in
or making a market in securities. As long as the Company
remains a bank holding company it remains subject to the
Bank Holding Company Act.
Statistical Information
The following statistical information is furnished pursuant to the
requirements of Guide 3 (Statistical Disclosure by Bank Holding
Companies) promulgated under the Securities Act of 1933.
I. Distribution of Assets, Liabilities and Shareholders' Equity;
Interest Rates and Interest Differential
The following table presents the distribution of assets, liabilities,
and shareholders' equity by major categories with related average
yields/rates. In these balance sheets, nonaccrual loans are included
in the daily average loans outstanding. The following table sets forth
a summary of changes in interest earned and paid attributable to
changes in volume and changes in yields/rates.
-2-
TABLE I
AVERAGE BALANCE SHEETS, NET INTEREST INCOME* AND RATES*
____________________________________________________________________________________________________________________________
For the years ended December 31, 1999 1998 1997
____________________________________________________________________________________________________________________________
Dollars in thousands Average Average Average
Interest Rates Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid Balance Expense Paid
____________________________________________________________________________________________________________________________
ASSETS
Loans $259,320 $21,794 8.40% $226,908 $20,255 8.93% $210,934 $19,288 9.14%
Investment securities:
Taxable 79,931 4,847 6.06% 87,112 5,285 6.07% 72,064 4,473 6.21%
Tax-exempt 55,936 4,090 7.31% 34,317 2,665 7.77% 24,129 1,954 8.10%
----------------- ----------------- ----------------
Total investment securities 135,867 8,937 6.58% 121,429 7,950 6.55% 96,193 6,427 6.68%
Federal funds sold 4,131 219 5.30% 10,305 572 5.55% 4,981 276 5.54%
----------------- ----------------- ----------------
Total earning assets 399,318 30,950 7.75% 358,642 28,777 8.02% 312,108 25,991 8.33%
Reserve for loan losses (2,886) (2,628) (2,366)
--------- --------- ---------
396,432 356,014 309,742
Cash and due from banks 9,302 8,933 8,753
Bank premises and equipment 13,682 11,931 10,036
Other assets 4,265 3,878 3,624
--------- -------- --------
Total assets $423,681 $380,756 $332,155
========= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Time and savings deposits:
Interest-bearing transaction
accounts $ 3,971 $ 94 2.37% $ 15,929 $ 346 2.17% $ 24,376 $ 537 2.20%
Money market deposit accounts 94,885 2,937 3.10% 71,199 2,326 3.27% 49,302 1,528 3.10%
Savings accounts 27,923 765 2.74% 26,211 718 2.74% 25,822 708 2.74%
Certificates of deposit, $100,000
or more 31,089 1,708 5.49% 26,084 1,462 5.60% 19,122 1,135 5.94%
Other certificates of deposit 132,674 7,045 5.31% 121,676 6,740 5.54% 108,665 5,813 5.35%
----------------- ----------------- ----------------
Total time and savings deposits 290,542 12,549 4.32% 261,099 11,592 4.44% 227,287 9,721 4.28%
Federal funds purchased and securities
sold under agreement to repurchase 27,173 1,233 4.54% 21,713 1,013 4.67% 17,767 861 4.85%
Other short term borrowings 1,691 83 4.91% 1,776 96 5.41% 1,857 99 5.33%
----------------- ----------------- ----------------
Total interest bearing liabilities 319,406 13,865 4.34% 284,588 12,701 4.46% 246,911 10,681 4.33%
Demand deposits 61,503 56,001 49,432
Other liabilities 1,932 1,641 1,394
----------------- ----------------- ----------------
Total liabilities 382,841 342,230 297,737
Stockholders' equity 40,840 38,526 34,418
---------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $423,681 $380,756 $332,155
======== ======== ========
Net interest income/yield $ 17,085 4.28% $16,076 4.48% $ 15,310 4.91%
======== ======= ========
Total deposits $352,045 $317,100 $276,719
======== ======== ========
* Computed on a fully taxable equivalent basis using a 34% rate
-3-
The following table sets forth a summary of changes in interest earned and paid attributable to changes in volume
and changes in yields/rates.
TABLE II
ANALYSIS OF CHANGE IN NET INTEREST INCOME *
_______________________________________________________________________________________________________________________________
Year 1999 over 1998 Year 1998 over 1997 Year 1997 over 1996
Due to change in: Due to change in: Due to change in:
Net Net Net
Average Average Increase Average Average Increase Average Average Increase
Dollars in Thousands Volume Rate (Decrease) Volume Rate (Decrease) Volume Rate (Decrease)
_______________________________________________________________________________________________________________________________
INCOME FROM EARNING ASSETS
Loans $2,893 $(1,354) $1,539 $1,461 $ (494) $ 967 $1,649 $ (42) $1,607
Investment Securities:
Taxable (436) (2) (438) 934 (122) 812 (401) 138 (263)
Tax-exempt 1,679 (254) 1,425 825 (114) 711 760 (98) 662
------- -------- ------- ------- ------- ------- ------- ------ -------
Total investment securities 1,243 (256) 987 1,759 (236) 1,523 359 40 399
Federal funds sold (343) (10) (353) 295 1 296 52 16 68
------- -------- ------- ------- ------- ------- ------- ------ -------
3,794 (1,621) 2,173 3,515 (729) 2,786 2,060 14 2,074
INTEREST EXPENSE
Interest bearing transaction accounts (260) 8 (252) (186) (5) (191) (621) (52) (673)
Money market deposit accounts 774 (163) 611 679 119 798 1,045 (306) 739
Savings accounts 47 0 47 11 (1) 10 (15) 1 (14)
Certificate of deposits, $100,000
or more 281 (35) 246 413 (86) 327 116 79 195
Other certificates of deposit 609 (304) 305 696 231 927 309 (138) 171
------- -------- ------- ------- ------- ------- ------- ------ -------
Total time and savings deposits 1,452 (495) 957 1,613 258 1,871 834 (416) 418
Federal funds purchased and securities
sold under agreement to repurchase 255 (35) 220 191 (39) 152 148 7 155
Other short-term borrowings (5) (8) (13) (4) 1 (3) 14 1 15
------- -------- ------- ------- ------- ------- ------- ------ -------
Total expense for interest bearing
liabilities 1,702 (538) 1,164 1,800 220 2,020 996 (408) 588
Change in Net Interest Income $2,092 $(1,083) $1,009 $1,714 $ (948) $ 766 $1,064 $ 422 $1,486
* Computed on a fully taxable equvilent basis using a 34% rate.
-4-
Interest Sensitivity
__________________________________________
The following table reflects the earlier of the maturity or repricing data for various assets
and liabilitities as of December 31, 1999.
TABLE III
INTEREST SENSITIVITY ANALYSIS
__________________________________________________________________________________________________________
As of December 31, 1998 Within 4-12 1-5 Over 5
Dollars in thousands 3 Months Months Years Years Total
__________________________________________________________________________________________________________
Uses of funds
Federal funds sold..................... 241 0 0 0 241
Taxable investments.................... 4,978 2,209 42,955 20,875 71,017
Tax-exempt investments................. 472 1,506 5,198 48,793 55,969
_______ ________ ________ ________ ________
Total investments.................... 5,691 3,715 48,153 69,668 127,227
Loans:
Commercial........................... 23,570 2,258 32,542 3,068 61,438
Tax-exempt........................... 1,013 32 16 1,686 2,747
Installment.......................... 3,986 2,384 52,065 6,743 65,178
Real estate.......................... 17,915 8,687 85,364 39,499 151,465
Other................................ 818 -- 0 0 818
________ ________ ________ ________ ________
Total loans............................ 47,302 13,361 169,987 50,996 281,646
________ ________ ________ ________ ________
Total earning assets................... 52,993 17,076 218,140 120,664 408,873
Sources of funds
Interest checking deposits............. 4,342 -- -- -- 4,342
Money market deposit accounts.......... 96,197 -- -- -- 96,197
Regular savings accounts............... 28,224 -- -- -- 28,224
Certificates of deposit
$100,000 or more..................... 9,164 15,902 8,966 -- 34,032
Other time deposits.................... 37,900 49,100 48,117 -- 135,117
Federal funds purchased and
securities sold under
agreements to repurchase............. 24,841 -- -- 5,000 29,841
Other borrowed money................... 3,317 -- 0 -- 3,317
________ ________ ________ ________ ________
Total interest bearing liabilities..... 203,985 65,002 57,083 5,000 331,070
Rate sensitivity GAP................... (150,992) (47,926) 161,057 115,664 77,803
Cumulative GAP......................... (150,992) (198,918) (37,861) 77,803
-5-
The Company was liability sensitive as of December 31, 1999. There
were $151 million more in liabilities than assets subject to repricing
within three months. This generally indicates that net interest
income should improve if interest rates fall since liabilities will
reprice faster than assets. It should be noted, however, that savings
deposits; which consist of interest bearing transactions accounts,
money market accounts, 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.
II. Investment Portfolio
Note 2 of the Notes to Financial Statements found in Item 8. Financial
Statements and Supplementary Data of this Report on Form 10K presents
the book and market value of investment securities on the dates
indicated.
The following table shows, by type and maturity, the book value and
weighted average yields of investment securities at December 31, 1999.
TABLE IV
INVESTMENT SECURITY MATURITIES & YIELDS
_____________________________________________________________________________________________
U.S.Govt/Agency State/Municipal Total
Book Weighted Book Weighted Book Weighted
Value Average Value Average Value Average
Dollars in Thousands Yield Yield Yield
_____________________________________________________________________________________________
December 31, 1999
Maturities:
Within 1 year $ 2,314 5.53% $ 1,963 8.70% $ 4,278 6.98%
After 1 year, but
within 5 years 43,361 6.01% 5,131 7.72% 48,491 6.19%
After 5 years, but
within 10 years 20,387 6.08% 29,773 6.96% 50,160 6.60%
After 10 years 0 0.00% 20,523 6.63% 20,523 6.63%
TOTAL $66,062 6.02% $57,391 6.97% $123,452 6.46%
December 31, 1998 $82,055 6.11% $48,596 8.10% $130,650 6.85%
December 31, 1997 $62,126 6.33% $27,843 8.18% $ 89,969 6.90%
Yields are calculated on a fully tax equivalent basis using a 34%
rate.
At December 31, 1999, the book value of other marketable equity
securities with no stated maturity totaled $5.1 million with an
weighted average yield of 5.59%. These securities consisted of an
adjustable rate mortgage fund of $3.0 million yielding 4.86%,
Federal Home Loan Bank stock of $1.2 million yielding 7.75%,
Federal Reserve stock of $169 thousand yielding 6.00%, money market
fund of $674 thousand yielding 5.25% and other securities of $50
thousand. The book value of other marketable securities with no
stated maturity totaled $5.58 million, yielding 5.45%; and $5.48
million, yielding 6.13%; at December 31, 1998, and 1997
respectively.
-6-
III. Loan Portfolio
The following table shows a breakdown of total loans by type at
December 31 for years 1995 through 1999:
TABLE V
LOANS
____________________________________________________________________________________
As of December 31, 1999 1998 1997 1996 1995
Dollars in thousands
____________________________________________________________________________________
Commercial and other $ 62,257 $ 53,793 $ 45,059 $ 28,944 $ 20,636
Real Estate Construction 11,461 5,418 3,836 5,213 4,093
Real Estate Mortgage 140,004 116,635 104,141 104,230 109,469
Tax Exempt 2,747 1,401 2,093 2,464 3,003
Installment Loans to
Individuals 65,178 58,618 66,615 57,733 52,154
--------------------------------------------------------
Total $281,647 $235,865 $221,744 $198,584 $189,355
========================================================
Based on Standard Industry Code, there are no categories of loans
which exceed 10% of total loans other than the categories disclosed
in the preceding table.
The maturity distribution and rate sensitivity of certain
categories of the Bank's loan portfolio at December 31, 1999 is
presented below:
TABLE VI
MATURITY SCHEDULE OF SELECTED LOANS
___________________________________________________________________________________________
December 31, 1999 One year One through Over five
Dollars in thousands or less five years years Total
___________________________________________________________________________________________
Commercial and other $19,850 $37,955 $4,452 $62,257
Real estate construction 10,584 877 0 11,461
------- ------- ------ -------
Total $30,434 $38,832 $4,452 $73,719
Loans maturing after one year with:
Fixed interest rate $32,167 $2,827 $34,994
Variable interest rate $ 6,665 $1,625 $ 8,290
-7-
The following table presents information concerning the aggregate
amount of nonaccrual, past due and restructured loans as of
December 31 for the years 1995 through 1999.
TABLE VII
NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS
__________________________________________________________________________________
As of December 31, 1999 1998 1997 1996 1995
Dollars in thousands
__________________________________________________________________________________
Nonaccrual loans $ 514 $ 253 $ 660 $1,550 $2,447
Accruing loans past due
90 days or more 1,351 641 455 1,342 248
Restructured loans none none none none none
Interest income which would have been
recorded under original loan terms 49 52 205 163 350
Interest income recorded
during the period 68 123 485 222 131
Loans are placed in nonaccrual status if principal or interest has
been in default for a period of 90 days or more unless the
obligation is both well secured and in the process of collection.
A debt is "well secured" if it is secured (i) by collateral in the
form of liens on or pledges of real or personal property, including
securities, that have a realizable value sufficient to discharge
the debt in full or (ii) by the guaranty of a financially
responsible party. A debt is "in the process of collection" if
collection of the debt is proceeding in due course either through
legal action, including judgment enforcement procedures, or, in
appropriate circumstances, through collection efforts not involving
legal action which are reasonably expected to result in repayment
of the debt or in its restoration to a current status.
Potential problem loans consist of loans that, because of potential
credit problems of the borrowers, have caused management to have
serious doubts as to the ability of such borrowers to comply with
the loan repayment terms. At December 31, 1999 such problem loans,
not included in Table VII, amounted to approximately $1.9 million.
There were no relationships in excess of $500 thousand. The
potential problem loans are generally secured by residential and
commercial real estate with appraised values exceeding the
principal balance of the loan.
IV. Summary of Loan Loss Experience
The determination of the balance of the Allowance for Loan Losses
is based upon a review and analysis of the loan portfolio and
reflects an amount which, in management's judgment, is adequate to
provide for possible future losses. Management's review includes
monthly analysis of past due and nonaccrual loans and detailed
periodic loan by loan analyses.
The principal factors considered by management in determining the
adequacy of the allowance are the growth and composition of the
loan portfolio, historical loss experience, the level of
nonperforming loans, economic conditions, the value and adequacy of
collateral, and the current level of the allowance.
-8-
The following table shows an analysis of the Allowance for Loan
Losses for the years 1995 through 1999.
TABLE VIII
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
______________________________________________________________________________________
For the year ended December 31, 1999 1998 1997 1996 1995
Dollars in thousands
______________________________________________________________________________________
Balance at beginning of period $2,855 $2,671 $2,330 $2,251 $2,647
Charge Offs:
Commercial, financial and agriculture 138 296 84 98 1,210
Real estate construction 0 0 0 0 0
Real estate mortgage 74 87 67 2 135
Installment Loans to individuals 581 564 717 825 375
----------------------------------------------
Total charge offs 793 947 868 925 1,720
Recoveries:
Commercial, financial and agriculture 104 139 239 87 296
Real estate construction 0 0 0 0 0
Real estate mortgage 1 25 1 14 44
Installment Loans to individuals 294 317 369 303 159
----------------------------------------------
Total recoveries 399 481 609 404 499
Net charge offs 394 466 259 521 1,221
Additions charged to operations 650 650 600 600 825
----------------------------------------------
Balance at end of period $3,111 $2,855 $2,671 $2,330 $2,251
Selected loan loss statistics
Loans (net of unearned income):
End of period $281,647 $235,865 $221,744 $198,584 $189,355
Daily average $259,320 $226,908 $210,934 $192,940 $180,638
Net charge offs to average
total loans.......................... 0.15% 0.21% 0.12% 0.27% 0.68%
Provision for loan losses
to average total loans............... 0.25% 0.29% 0.28% 0.31% 0.46%
Provision for loan losses
to net charge offs................... 164.97% 139.48% 231.66% 115.16% 67.57%
Allowance for loan losses
to period end loans.................. 1.10% 1.21% 1.20% 1.17% 1.18%
Earnings to loan loss coverage*....... 16.97 14.64 23.67 10.28 3.25
* Income before taxes plus provision for loan losses, divided by net charge-offs.
-9-
The following table shows the amount of the Allowance for Loan Losses
allocated to each category at December 31 for the years 1995 through
1999.
TABLE IX
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
__________________________________________________________________________________________________________________________
As of December 31, 1999 1998 1997 1996 1995
Percent Percent Percent Percent Percent
of loans of loans of loans of loans of loans
in Each in Each in Each in Each in Each
Category Category Category Category Category
Amount to Total Amount to Total Amount to Total Amount to Total Amount to Total
Loans Loans Loans Loans Loans
__________________________________________________________________________________________________________________________
Commercial and other $ 828 23.08% $ 656 27.92% $ 575 21.26% $ 835 15.85% $ 843 12.57%
Real Estate Construction 40 4.07% 17 2.30% 14 1.73% 23 2.62% 18 2.18%
Real Estate Mortgage 195 49.71% 203 44.64% 240 46.97% 322 52.49% 370 58.21%
Consumer 414 23.14% 370 25.14% 412 30.04% 391 29.04% 247 27.04%
Unallocated 1,634 0 1,609 0 1,430 0 759 0 773 0
--------------- --------------- --------------- --------------- ---------------
Total $3,111 100.00% $2,855 100.00% $2,671 100.00% $2,330 100.00% $2,251 100.00%
V. Deposits
The following table shows the average balances and average rates paid on
deposits for the years ended December 31, 1999, 1998, and 1997.
TABLE X
DEPOSITS
_________________________________________________________________________________________________________
For the year ended December 31, 1999 1998 1997
Average Average Average Average Average Average
Dollars in thousands Balance Rate Balance Rate Balance Rate
_________________________________________________________________________________________________________
Interest bearing transaction accounts $ 3,971 2.37% $ 15,929 2.17% $ 24,376 2.20%
Money market deposit accounts 94,885 3.10% 71,199 3.27% 49,302 3.10%
Savings accounts 27,923 2.74% 26,211 2.74% 25,822 2.74%
Certificate of deposit, $100,000 or more 31,089 5.49% 26,084 5.60% 19,122 5.94%
Other certificate of deposit 132,674 5.31% 121,676 5.54% 108,665 5.35%
-------- -------- --------
Total interest bearing deposits 290,542 4.32% 261,099 4.44% 227,287 4.28%
Non-interest bearing demand deposits 61,503 56,001 49,432
-------- -------- --------
Total deposits $352,045 $317,100 $276,719
======== ======== ========
-10-
The following table shows certificates of deposit in amounts of
$100,000 or more as of December 31, 1999, 1998, and 1997 by time
remaining until maturity.
TABLE XI
CERTIFICATE OF DEPOSIT $100,000 & MORE
_____________________________________________________________
Dollars in thousands 1999 1998 1997
Maturing in
_____________________________________________________________
3 months or less $ 6,456 $ 3,592 $ 5,449
3 through 6 months 4,485 6,353 3,087
6 through 12 months 11,958 7,345 5,843
over 12 months 11,132 10,915 9,467
------- ------- -------
$34,031 $28,205 $23,846
VI. Return on Equity and Assets
The return on average shareholders' equity and assets, the dividend
pay out ratio, and the average equity to average assets ratio for the
past three years are presented below.
1999 1998 1997
Return on average assets 1.14% 1.22% 1.23%
Return on average equity 11.81% 12.03% 11.88%
Dividend payout ratio 28.89% 26.62% 25.68%
Average equity to
average assets 9.64.% 10.15% 10.36%
VII. Short Term Borrowings
The Bank periodically borrowed funds through federal funds from its
correspondent banks, through the use of a demand note to the United
States Treasury (Treasury Tax and Loan Deposits), and through
securities sold under agreements to repurchase. The borrowings
matured daily and were based on daily cash flow requirements. The
borrowed amounts (in thousands) and their corresponding rates during
1999, 1998, and 1997 are presented in the following table.
-11-
TABLE XII
SHORT TERM BORROWINGS
_________________________________________________________________________________
1999 1998 1997
Dollars in thousands Balance Rate Balance Rate Balance Rate
_________________________________________________________________________________
Balance at December 31,
Federal funds purchased $ 2,400 5.00% $ - $ -
Securities sold under
agreement to repurchase 20,441 4.38% 19,128 4.25% 20,165 4.81%
U. S. treasury demand notes
and other borrowed money 3,317 5.25% 348 4.89% 4,025 5.27%
------- ------- -------
Total $26,158 $19,476 $24,190
Average daily
balance outstanding:
Federal funds purchased $ 792 5.07% $ 13 5.86% $ 271 5.54%
Securities sold under
agreement to repurchase 20,794 4.42% 21,700 4.66% 17,496 4.84%
U. S. treasury demand notes
and other borrowed money 1,691 4.79% 1,776 5.35% 1,857 5.33%
------- ------- -------
Total $23,277 4.55% $23,489 4.72% $19,624 4.89%
The maximum amount outstanding
at any month end:
Federal funds purchased $ 2,550 $ - $ -
Securities sold under
agreement to repurchase $22,013 $26,094 $23,121
U. S. treasury demand notes
and other borrowed money $ 4,014 $ 4,024 $ 4,033
-12-
Item 2. Description of Property
The Bank owns the Main Office, five office buildings4, and nine
branches5. All of the above properties are owned directly and free of
any encumbrances. The land at the Fort Monroe branch is leased by the
Bank under an agreement expiring in October 2011. The remaining three
branches are 6leased from unrelated parties under leases with renewal
options which expire anywhere from 10-15 years.
For more information concerning the commitments under current leasing
agreements, see Note 10. Lease Commitments of the Notes to Financial
Statements found in Item 8. Financial Statements and Supplementary
Data of this Report on Form 10K. Additional information on Other Real
Estate Owned can be found in Note 6. Other Real Estate Owned of the
Notes to Financial Statements found in Item 8. Financial Statements
and Supplementary Data of this Report on Form 10K.
Item 3. Legal Proceedings
The Company is not a party to any material pending legal proceedings
before any court, administrative agency, or other tribunal.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during
the quarter ended December 31, 1999.
Part II
Item 5. Market for Common Equity And Related Stockholder Matters
Beginning in 1998 the common stock of Old Point Financial Corporation
was quoted on the OTC Bulletin Board under the symbol "OPOF". The
Company has submitted an application to Nasdaq to list the Company's
stock on the Nasdaq SmallCap market. The approximate number of
shareholders of record as of December 31, 1999 was 1,419. The range
of high and low prices and dividends per share of the Company's common
stock for each quarter during 1999 and 1998 is presented in Part I.
Item 7. of this Annual Report on Form 10-K. Additional information
related to stockholder matters can be found in Note 15. Regulatory
Matters of the Notes to Financial Statements found in Item 8.
Financial Statements and Supplementary Data of this Report on Form
10K.
Item 6. Selected Financial Data
The following table summarizes the Company's performance for the past
five years.
-13-
TABLE XIII
SELECTED FINANCIAL HIGHLIGHTS
________________________________________________________________________________________
Years Ended December 31, 1999 1998 1997 1996 1995
________________________________________________________________________________________
(Dollars in Thousands except per share data)
RESULTS OF OPERATIONS
Interest income $29,483 $27,805 $25,242 $23,377 $21,534
Interest expense 13,862 12,700 10,681 10,093 9,531
-----------------------------------------------
Net interest income 15,621 15,105 14,561 13,284 12,003
Provision for loan loss 650 650 600 600 825
-----------------------------------------------
Net interest income after
provision for loan loss 14,971 14,455 13,961 12,684 11,178
Gains (losses) on sales of investment (54) 0 (1) 2 9
Noninterest income 5,440 4,911 4,275 4,134 3,836
Noninterest expenses 14,320 13,193 12,704 12,066 11,884
-----------------------------------------------
Income before taxes 6,037 6,173 5,531 4,754 3,139
Income taxes 1,215 1,537 1,441 1,309 797
-----------------------------------------------
Net income $4,822 $4,636 $4,090 $3,445 $2,342
FINANCIAL CONDITION
Total assets $436,294 $404,118 $348,671 $316,345 $304,266
Total deposits 360,918 343,413 287,100 263,519 256,535
Total loans 281,647 235,865 221,744 198,584 189,355
Stockholders' equity 40,814 40,013 36,332 32,400 30,328
Average assets 423,681 380,756 332,155 313,012 291,174
Average equity 40,840 38,526 34,418 31,333 29,022
PERTINENT RATIOS
Return on average assets 1.14% 1.22% 1.23% 1.10% 0.80%
Return on average equity 11.81% 12.03% 11.88% 10.99% 8.07%
Dividends paid as a percent
of net income 28.89% 26.62% 25.68% 25.88% 33.17%
Average equity as a percent
of average assets 9.64% 10.12% 10.36% 10.01% 9.97%
PER SHARE DATA
Basic EPS $1.87 $1.80 $1.60 $1.35 $0.92
Cash dividends declared 0.54 0.48 0.41 0.35 0.305
Book value 15.80 15.54 14.16 12.72 11.91
GROWTH RATES
Year end assets 7.96% 15.90% 10.22% 3.97% 9.57%
Year end deposits 5.10% 19.61% 8.95% 2.72% 8.89%
Year end loans 19.41% 6.37% 11.66% 4.87% 8.28%
Year end equity 2.00% 10.13% 12.14% 6.83% 15.66%
Average assets 11.27% 14.63% 6.12% 7.50% 4.59%
Average equity 6.01% 11.49% 9.85% 7.96% 8.72%
Net income 4.01% 13.35% 18.72% 47.10% -15.54%
Cash dividends declared 12.50% 17.07% 17.14% 14.75% 10.91%
Book value 1.69% 9.74% 11.30% 6.83% 14.78%
-14-
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion is intended to assist readers
in understanding and evaluating the consolidated results of
operations and financial condition of the Company. This
discussion should be read in conjunction with the financial
statements and other financial information contained
elsewhere in this report. The analysis attempts to identify
trends and material changes which occurred during the period
presented.
EARNINGS SUMMARY
Net income was $4.82 million, or $1.87 per share in 1999
compared to $4.64 million, or $1.80 per share in 1998 and
$4.09 million, or $1.60 per share in 1997. Return on
average assets was 1.14% in 1999, 1.22% in 1998 and 1.23% in
1997. Return on average equity was 11.81% in 1999, 12.03%
in 1998 and 11.88% in 1997. For the past five years return
on average assets has averaged 1.10% and return on average
equity has averaged 10.96%. Selected Financial Highlights
summarizes the Company's performance for the past five
years.
NET INTEREST INCOME
The principal source of earnings for the Company is net
interest income. Net interest income is the difference
between interest and fees generated by earning assets and
interest expense paid to fund them. Net interest income, on
a tax equivalent basis, was $17.09 million in 1999, up $1.0
million, or 6% from $16.08 million in 1998 which was up $766
thousand, or 5% from $15.30 million in 1997. Net interest
income is affected by variations in interest rates and the
volume and mix of earning assets and interest-bearing
liabilities. The net interest yield decreased to 4.28% in
1999 from 4.48% in 1998, which was down from 4.91% in 1997.
Tax equivalent interest income increased $2.17 million,
or 8%, in 1999. Average earning assets grew $40.66 million,
or 11%. Total average loans increased $32.41 million, or
14%, while average investment securities increased $14.44
million, or 12%. The yield on earning assets decreased in
1999 by twenty-seven basis points primarily due to lower
interest rates prevailing in the market.
Interest expense increased $1.16 million or 9%, in
1999. Interest bearing liabilities increased 11% in 1999.
The cost of funding liabilities decreased twelve basis
points. The reduction in cost of funds was due to lower
market interest rates in 1999; however, the rates paid on
funding liabilities in 1999 did not fall as fast as the
rates paid on earning assets due to the intense competition
for loans and deposits in the Company's market.
PROVISION/ALLOWANCE FOR LOAN LOSSES
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 loan
portfolio. The provision remained at $650 thousand in 1999
compared to 1998 which was up from $600 thousand in 1997.
Loans charged off during 1999 totalled $793 thousand
compared to $947 thousand in 1998 and $868 thousand in 1997.
Recoveries amounted to $399 thousand in 1999, $481 thousand
in 1998 and $609 thousand in 1997.
-15-
The Company's net loans charged off to year-end loans were
0.14% in 1999, 0.20% in 1998, and 0.12% in 1997. The
allowance for loan losses, as a percentage of year-end
loans, was 1.10% in 1999, 1.21% in 1998, and 1.20% in 1997.
As of December 31, 1999, nonperforming assets were $868
thousand, up from $737 thousand at year-end 1998.
Nonperforming assets consist of loans in nonaccrual status
and other real estate. The 1999 total consisted of other
real estate of $354 thousand and $514 thousand in nonaccrual
loans. The other real estate is a commercial property
originally acquired as a potential branch site and now held
for sale. Nonaccrual loans consisted of $241 thousand in
commercial loans and $273 thousand in mortgage loans. Loans
still accruing interest but past due 90 days or more
increased to $1.35 million as of December 31, 1999 compared
to $641 thousand as of December 31, 1998. The 1999 90 day
past due total included two loans amounting to $713 thousand
which were paid off the first week of January 2000.
The allowance for loan losses is analyzed for adequacy on
a quarterly basis to determine the required amount of
provision for loan losses. A loan-by-loan review is
conducted on all significant classified commercial and
mortgage loans. Inherent losses on these individual loans
are determined and an allocation of the allowance is
provided. Smaller nonclassified commercial and mortgage
loans and all consumer loans are grouped by homogeneous
pools with an allocation assigned to each pool based on an
analysis of historical loss and delinquency experience,
trends, economic conditions, underwriting standards, and
other factors.
OTHER INCOME
Other income increased $475 thousand, or 10% in 1999 from
1998 compared to an increase of $637 thousand, or 15% in
1998 from 1997. Continuing the trend from 1998 the growth
in other income is attributed to higher trust income and
service charges on deposit accounts.
OTHER EXPENSES
Other expenses increased $1.1 million or 9% in 1999 over
1998 after increasing 4% in 1998 from 1997. Salary expense
increased by 11% due to increased staffing for two new
branches opened in 1999 and normal salary increases.
Occupancy expenses increased only $27 thousand, or 3% in
1999 after increasing $94 thousand, or 11% in 1998. The
1998 increase was primarily due to costs associated with
opening the Old Point Trust and Financial Services Center in
the Oyster Point area of Newport News VA. The Company
continued to upgrade computer systems and outfit two new
branches. The increase of $125 thousand in equipment
expenses is principally related to depreciation expense on
the new computer systems acquired for Year 2000 upgrades.
Other operating expenses increased $95 thousand or 3%.
Marketing, telephone and organizational expenses were
primarily responsible for the increase in other expenses.
The marketing expenses help fuel the Company's exceptional
loan growth. A switch to high-speed communication lines
increased telephone expense and the Company's spin-off of
its Trust Department were responsible for the organization
expenses.
ASSETS
At December 31, 1999, the Company had total assets of
$436.3 million, up 8% from $404.1 million at December 31,
1998. Average assets in 1999 were $423.7 million compared
to $380.8 million in 1998. The growth in assets in 1999 was
due to the increase in loans, which were up 19% in 1999.
These loans were partially funded by the 8% decrease in
-16-
investment securities and reductions in Federal funds sold.
The Company also borrowed $7.0 million from the Federal Home
Loan Bank.
The Old Point National Bank opened two new branches in 1999.
The branch in Norge VA is new construction while the branch
in Chesapeake VA was an existing branch building purchased
by the Bank. The Woodland Road office was completely
renovated adding additional square footage and parking. Two
additional buildings were purchased in 1999. One building
will be used for General Operations and the other facility
will be used as a Commercial Services center.
LOANS
Total loans as of December 31, 1999 were $281.6 million,
up 19% from $235.9 million at December 31, 1998. The
Company realized significant growth in all categories of
loans. Footnote 3 of the financial statements details
the loan volume by category for the past two years.
INVESTMENT SECURITIES
At December 31, 1999 total investment securities were
$127.0 million, down 8% from $137.5 million on December 31,
1998. The goal of the Company is to provide maximum return
on the investment portfolio within the framework of its
asset/liability objectives. These objectives include
managing interest sensitivity, liquidity and pledging
requirements.
DEPOSITS
At December 31, 1999, total deposits amounted to $360.9
million, up 5% from $343.4 million on December 31, 1998.
Non-interest bearing deposits decreased $2.3 million, or 4%,
at year-end 1999 over 1998. Savings deposits increased $7.1
million, or 6%, in 1999 over 1998. Certificates of Deposit
increased $12.8 million or 8% in 1999 over 1998.
STOCKHOLDERS' EQUITY
Total stockholders' equity as of December 31, 1999 was
$40.8 million, up 2% from $40.0 million on December 31,
1998. The Company is required to maintain minimum amounts
of capital under banking regulations. Under the
regulations, Total Capital is composed of core capital (Tier
1) and supplemental capital (Tier 2). Tier 1 capital
consists of common stockholders' equity less goodwill. Tier
2 capital consists of certain qualifying debt and a
qualifying portion of the allowance for loan losses. The
following is a summary of the Company's capital ratios for
1999, 1998 and 1997.
1999 1999 1998 1997
Regulatory
Requirements
Tier 1 4.00% 14.19% 14.89% 15.06%
Total Capital 8.00% 15.23% 15.98% 16.19%
Tier 1 Leverage 3.00% 10.08% 10.26% 10.32%
-17-
Year-end book value was $15.80 in 1999 and $15.54 in
1998. Cash dividends were $1.4 million, or $.54 per share
in 1999 and $1.2 million, or $.48 per share in 1998. The
common stock of the Company has not been extensively traded.
The table below shows the high and low closing prices for
each quarter of 1999 and 1998. The stock was quoted on the
OTC Bulletin Board under the symbol "OPOF" and the prices
below are based on trades through the OTC Bulletin Board.
There were 1419 stockholders of the Company as of December
31, 1999. This stockholder count does not include
stockholders who hold their stock in a nominee registration.
The following is a summary of the dividends paid and market
price on Old Point Financial Corporation common stock for
1999 and 1998.
1999 1998
Market Value Market Value
Dividend High Low Dividend High Low
1st Quarter $ 0.13 $34.50 $28.75 $ 0.11 $39.00 $25.50
2nd Quarter $ 0.13 $30.00 $24.00 $ 0.11 $44.00 $37.00
3rd Quarter $ 0.14 $28.25 $24.00 $ 0.13 $43.00 $38.00
4th Quarter $ 0.14 $25.25 $19.50 $ 0.13 $40.50 $30.00
LIQUIDITY
Liquidity is the ability of the Company to meet present
and future obligations through the acquisition of additional
liabilities or sale of existing assets. Management
considers the liquidity of the Company to be adequate.
Sufficient assets are maintained on a short-term basis to
meet the liquidity demands anticipated by Management. In
addition, secondary sources are available through the use of
borrowed funds if the need should arise.
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.
Year 2000
The Company is pleased to report that there have been
no Year 2000 problems. Management attributes this to the
extensive testing and preparation prior to January 1, 2000.
Item 8. Financial Statement and Supplementary Data
The consolidated financial statements and related footnotes of
the company are presented below followed by the financial
statements of the parent.
The following are the summarized financial statements of the Company.
-18-
Eggleston Smith P.C.
Certified Pulic Accountants & Consultants
To the Board of Directors
Old Point Financial Corporation
Hampton, Virginia
We have audited the accompanying consolidated balance sheets of
Old Point Financial Corporation and subsidiary as of December 31,
1999 and 1998, and the related consolidated statements of income,
cash flows and changes in stockholders' equity for each of the
years in the three-year period ended December 31, 1999. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above, present fairly, in all material respects, the consolidated
financial position of Old Point Financial Corporation and
subsidiary as of December 31, 1999 and 1998, and the consolidated
results of their operations and cash flows for each of the years
in the three-year period ended December 31, 1999, in conformity
with generally accepted accounting principles.
/s/Eggleston Smith P.C.
- -----------------------
Eggleston Smith P.C.
January 20, 2000
Newport News, Virginia
-19-
CONSOLIDATED BALANCE SHEETS
_______________________________________________________________________________________
December 31, 1999 1998
_______________________________________________________________________________________
(Dollars in Thousands)
ASSETS
Cash and due from banks $ 10,400 $10,311
Investments:
Securities available-for-sale, at market 81,147 82,568
Securities to be held-to-maturity
(Market value $44,271 in 1999 and $55,424 in 1998) 45,839 54,919
Federal funds sold 241 6,578
Loans, total 281,647 235,865
Less - allowance for loan losses 3,111 2,855
-----------------------
Net loans 278,536 233,010
Premises and equipment 14,324 12,052
Other real estate owned 354 484
Other assets 5,453 4,196
-----------------------
Total assets $436,294 $404,118
=======================
LIABILITIES
Non interest-bearing deposits $63,006 $65,336
Savings deposits 128,763 121,682
Certificates of Deposit 169,149 156,395
-----------------------
Total deposits 360,918 343,413
Federal funds purchased and securities sold under
repurchase agreements 22,841 19,128
Federal Home Loan Bank advances 7,000 0
Interest bearing demand notes issued to the United
States Treasury and other liabilities for borrowed money 3,317 348
Other liabilities 1,404 1,216
-----------------------
Total Liabilities 395,480 364,105
STOCKHOLDERS' EQUITY
Common stock, $5 par value, 6,000,000 shares authorized
Issued 2,583,262 in 1999 and 2,575,444 in 1998 12,916 12,877
Capital surplus 10,186 10,020
Retained earnings 19,675 16,285
Accumulated other comprehensive income (1,963) 831
-----------------------
Total stockholders' equity 40,814 40,013
-----------------------
Total liabilities and stockholders' equity $436,294 $404,118
=======================
See Notes to Consolidated Financial Statements
-20-
CONSOLIDATED STATEMENTS OF INCOME
__________________________________________________________________________________________________________
Years Ended December 31, 1999 1998 1997
__________________________________________________________________________________________________________
(Dollars in Thousands except per share amounts)
INTEREST INCOME
Interest and fees on loans $21,718 $20,190 $19,203
Interest on investment securities
Taxable 4,846 5,284 4,473
Exempt from income tax 2,700 1,759 1,290
------- ------ ------
7,546 7,043 5,763
Interest on trading account securities 0 0 0
Interest on federal funds sold 219 572 276
------- ------ ------
Total interest income 29,483 27,805 25,242
INTEREST EXPENSE
Interest on savings deposits 3,796 3,390 2,773
Interest on Certificates of Deposit 8,752 8,201 6,948
Interest on federal funds purchased and securities
sold under repurchase agreements 960 1,013 861
Interest on Federal Home Loan Bank advances 273 0 0
Interest on demand notes issued to the United
States Treasury and other liabilities for borrowed money 81 96 99
------- ------ ------
Total interest expense 13,862 12,700 10,681
------- ------ ------
Net interest income 15,621 15,105 14,561
Provision for loan losses 650 650 600
------- ------ ------
Net interest income after provision for loan losses 14,971 14,455 13,961
OTHER INCOME
Income from fiduciary activities 2,306 1,930 1,750
Service charges on deposit accounts 2,177 1,986 1,723
Other service charges, commissions and fees 691 642 573
Security gains (losses), net (54) 0 (1)
Income from trading account 0 0 0
Other operating income 266 353 229
------- ------ ------
Total other income 5,386 4,911 4,274
OTHER EXPENSE
Salaries and employee benefits 8,677 7,797 7,670
Occupancy expense 967 940 846
Equipment expense 1,294 1,169 1,094
Other operating expense 3,382 3,287 3,094
------- ------ ------
Total other expenses 14,320 13,193 12,704
------- ------ ------
Income before income taxes 6,037 6,173 5,531
Income taxes 1,215 1,537 1,441
------- ------ ------
Net income $ 4,822 $ 4,636 $ 4,090
======= ======= =======
Basic Earnings per Share
Average shares outstanding (in thousands) 2,579 2,571 2,561
Net income per share of common stock $ 1.87 $ 1.80 $ 1.60
Diluted Earnings per Share
Average shares outstanding (in thousands) 2,588 2,595 2,575
Net income per share of common stock $ 1.86 $ 1.79 $ 1.59
See Notes to Consolidated Financial Statements
-21-
CONSOLIDATED STATEMENTS OF CASH FLOWS
________________________________________________________________________________________________________________
Years Ended December 31, 1999 1998 1997
________________________________________________________________________________________________________________
(Dollars in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,822 $ 4,636 $ 4,090
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1166 990 941
Provision for loan losses 650 650 600
(Gains) losses on sale of investment securities, net 54 0 1
Net amortization and accretion of securities 83 169 368
Net (increase) decrease in trading account 0 0 0
Loss on disposal of equipment 78 0 0
(Increase) decrease in other real estate owned.............. (216) (297) (613)
(Increase) decrease in other assets
(net of tax effect of FASB 115 adjustment)............... 182 (887) 16
Increase (decrease) in other liabilities................... 188 167 59
-------- ------- -------
Net cash provided by operating activities................ 7,007 5,428 5,462
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities ........................ (26,529) (77,059) (31,001)
Proceeds from maturities and calls of securities .......... 31,315 36,111 23,949
Proceeds from sales of available - for - sale securities .. 1346 0 6218
Proceeds from sales of held - to - maturity securities 0 0 0
Loans made to customers.................................... (121,045) (147,183) (123,513)
Principal payments received on loans....................... 74,869 132,596 100,094
Purchases of premises and equipment........................ (3,516) (3,303) (1,304)
Proceeds from sales of premises and equipment.............. 0 4 23
Proceeds from sales of other real estate owned............. 346 587 193
(Increase) decrease in federal funds sold.................. 6,337 399 (6,416)
-------- ------- -------
Net cash provided by (used in) investing activities...... (36,877) (57,848) (31,757)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in non-interest bearing deposits....... (2,330) 12,976 4,826
Increase (decrease) in savings deposits.................... 7,081 21,691 3,794
Proceeds from the sale of Certificates of Deposit.......... 56054 57762 59771
Payments for maturing Certificates of Deposit.............. (43,300) (36,116) (44,810)
Increase (decrease) in federal funds purchased and
repurchase agreements..................................... 3,712 (1,037) 3,030
Increase (decrease) in Federal Home Loan Bank advances 7,000 0 0
Increase (decrease) in interest bearing
demand notes and other borrowed money..................... 2,969 (3,677) 1,724
Proceeds from issuance of common stock..................... 166 158 230
Dividends paid............................................. (1,393) (1,234) (1,050)
-------- ------- -------
Net cash provided by financing activities................ 29,959 50,523 27,515
Net increase (decrease) in cash and due from banks....... 89 (1,897) 1,220
Cash and due from banks at beginning of period........... 10,311 12,208 10,988
-------- ------- -------
Cash and due from banks at end of period................. $ 10,400 $10,311 $12,208
======== ======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest................................................. $ 13,702 $12,533 $10,587
Income taxes............................................. 1,150 1,600 1,475
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING TRANSACTIONS
Unrealized gain (loss) on investment
securities, net of tax................................... $ (2,794) $ 121 $ 662
See Notes to Consolidated Financial Statements.
-22-
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
_____________________________________________________________________________________________________________________
Accumulated
Common Other Total
Stock Capital Retained Comprehensive Stockholder
(Par Value) Surplus Earnings Income (Loss) Equity
_____________________________________________________________________________________________________________________
YEAR ENDED DECEMBER 31, 1997 (Dollars in Thousands)
Balance, beginning of year $ 6,368 $ 9,345 $16,639 $ 48 $32,400
Comprehensive income
Net income 0 0 4,090 0 4,090
(Decrease) increase in unrealized gain
on investment securities 0 0 0 662 662
------- ------- ------- ------- -------
Total comprehensive income 0 0 4,090 662 4,752
Sale of stock 48 348 (166) 0 230
Stock dividend declared on common stock 6,415 0 (6,415) 0 0
Cash dividends paid 0 0 (1,050) 0 (1,050)
------- ------- ------- ------- -------
Balance, end of year $12,831 $ 9,693 $13,098 $ 710 $36,332
======= ======= ======= ======= =======
YEAR ENDED DECEMBER 31, 1998
Balance, beginning of year $12,831 $ 9,693 $13,098 $ 710 $36,332
Comprehensive income
Net income 0 0 4,636 0 4,636
(Decrease) increase in unrealized gain
on investment securities 0 0 0 121 121
------- ------- ------- ------- -------
Total comprehensive income 0 0 4,636 121 4,757
Sale of stock 46 327 (215) 0 158
Cash dividends paid 0 0 (1,234) 0 (1,234)
------- ------- ------- ------- -------
Balance, end of year $12,877 $10,020 $16,285 $ 831 $40,013
======= ======= ======= ======= =======
YEAR ENDED DECEMBER 31, 1999
Balance, beginning of year $12,877 $10,020 $16,285 $ 831 $40,013
Comprehensive income
Net income 0 0 4,822 0 4,822
(Decrease) increase in unrealized gain
on investment securities 0 0 0 (2,794) (2,794)
------- ------- ------- ------- -------
Total comprehensive income 0 0 4,822 (2,794) 2,028
Sale of stock 39 166 (39) 0 166
Cash dividends paid 0 0 (1,393) 0 (1,393)
------- ------- ------- ------- -------
Balance, end of year $12,916 $10,186 $19,675 $(1,963) $40,814
======= ======= ======= ======= =======
See Notes to Consolidated Financial Statements
-23-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1.SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Old Point Financial
Corporation and its subsidiaries conform to generally
accepted accounting principles and to general practice
within the banking industry. The following is a summary of
significant accounting and reporting policies:
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts
of Old Point Financial Corporation ("the Company") and its
subsidiaries The Old Point National Bank of Phoebus ("the
Bank") and Old Point Trust & Financial Services N.A.
("Trust"). All significant intercompany balances and
transactions have been eliminated in consolidation.
NATURE OF BUSINESS:
Old Point Financial Corporation is a two-bank holding
company that conducts substantially all of its operations
through its subsidiaries, The Old Point National Bank of
Phoebus and Old Point Trust and Financial Services, N.A.
The Bank services individual and commercial customers, the
majority of which are in Hampton Roads. The Bank has
fourteen branch offices. The Bank offers a full range of
deposit and loan products to its retail and commercial
customers. Substantially all of the Bank's deposits are
interest bearing. The majority of the Bank's loan portfolio
is secured by real estate. Trust offers a full range of
services for individuals and businesses. Products and
services include retirement planning, estate planning,
financial planning, trust accounts, tax services, and
investment management services.
USE OF ESTIMATES:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions. The amounts recorded in
the financial statements may be affected by those estimates
and assumptions. Actual results may vary from those
estimates.
The Company uses estimates primarily in developing its
allowance for loan losses, in computing deferred tax assets,
in determining the estimated useful lives of premises and
equipment, and in the valuation of other real estate
owned.
INVESTMENT SECURITIES:
Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities" (SFAS 115), addresses the accounting and
reporting for investments in equity securities that have
readily determinable fair values and for all investments in
debt securities. Those investments are to be classified in
three categories and accounted for as follows:
Held-to-maturity - Debt securities for which the
Corporation has the positive intent and ability to hold to
maturity are classified as held-to-maturity securities and
reported at cost, adjusted for premiums and discounts that
are recognized in interest income using the interest method
over the period to maturity.
Trading - Debt and equity securities that are bought
and held principally for the purpose of selling them in the
near term are classified as trading account securities and
recorded at their fair values. Unrealized gains and losses
on trading account securities are included immediately in
income.
Available-for-sale - Debt and equity securities not
classified as either held-to-maturity securities or trading
account securities are classified as available-for-sale
securities and recorded at fair value, with unrealized gains
and losses reported as a component of comprehensive income.
Gains and losses on the sale of available-for-sale
-24-
securities are determined using the specific identification
method. Premiums and discounts are recognized in interest
income using the interest method over the period to
maturity.
INTEREST ON LOANS:
Interest is accrued daily on the outstanding loan balances.
Accrual of interest is discontinued on a loan when
management believes, after considering collection efforts
and other factors, that the borrower's financial condition
is such that collection of interest is doubtful.
LOAN ORIGINATION FEES AND COSTS:
Loan origination fees and certain direct origination costs
are capitalized and recognized as an adjustment of the yield
on the related loan.
ALLOWANCE FOR LOAN LOSSES:
The allowance for loan losses is generated by direct charges
against income and is available to absorb loan losses. The
allowance is based upon management's periodic evaluation of
changes in the overall credit worthiness of the loan
portfolio, economic conditions in general, and the effect of
these conditions upon the financial status of specific
borrowers and other factors.
The Bank is subject to regulation by the Office of the
Comptroller of the Currency. They may require that the Bank
adjust its allowance for loan losses upon request.
OTHER REAL ESTATE OWNED:
Other real estate owned is carried at the lower of cost or
estimated fair value and consists of foreclosed real
property and other property held for sale. The estimated
fair value is reviewed periodically by management and any
write-downs are charged against current earnings.
PREMISES AND EQUIPMENT:
Premises and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and
amortization are calculated on both straight-line and
accelerated methods and are charged to expense over the
estimated useful lives of the related assets. Costs of
maintenance and repairs are charged to expense as incurred.
INCOME TAXES:
Income taxes are provided based upon income reported in the
statements of income (after exclusion of non-taxable income
such as interest on state and municipal securities). The
income tax effect resulting from timing differences between
financial statement pre-tax income and taxable income is
deferred to future periods.
PENSION PLAN:
The Company has a non-contributory defined benefit pension
plan covering substantially all of its employees. Benefits
are based on years of service and average earnings during
the highest average sixty-month period during the final one
hundred and twenty months of employment.
The Company's policy is to fund the maximum amount of
contributions allowed for tax purposes. The Bank accrues an
amount equal to its actuarially computed obligation under
the plan.
The net periodic pension expense includes a service cost
component, interest on the projected benefit obligation,
return on plan assets and the effect of deferring and
amortizing certain actuarial gains and losses and the
unrecognized net transition asset over fifteen years.
-25-
TRUST ASSETS AND INCOME:
Assets held by Trust are not included in the financial
statements, because such items are not assets of the
Company. In accordance with industry practice, trust
service income is recognized primarily on the cash basis.
Reporting such income on the accrual basis would not
materially effect net income.
Advertising Expense
Advertising expenses are expensed as incurred.
RECLASSIFICATIONS:
Certain amounts in the financial statements have been
reclassified to conform with classifications adopted in the
current year.
-26-
NOTE 2, Investment Securities
At December 31, 1999, the investment securities portfolio is composed of
securities classified as held-to-maturity and available-for-sale, in
conjunction with SFAS 115. Investment securities held-to-maturity are
carried at cost, adjusted for amortization of premiums and accretions of
discounts, and investment securities available-for-sale are carried
at market value.
The amortized cost and fair value of investment securities
held-to-maturity at December 31, 1999 and 1998, were:
____________________________________________________________________________________________
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(Dollars in Thousands)
December 31, 1999:
Obligations of United
States Government Agencies $44,434 $ 0 $(1,541) $42,893
Obligations of state and political
subdivisions 1,405 0 (27) 1,378
------- ---- ------- -------
$45,839 $ 0 $(1,568) $44,271
======= ==== ======= =======
December 31, 1998:
Obligations of United
States Government Agencies $54,919 $505 $ 0 $55,424
======= ==== ======= =======
The amortized cost and fair values of investment securities
available-for-sale at December 31, 1999 were:
____________________________________________________________________________________________
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(Dollars in Thousands)
United States Treasury securities $ 1,045 $ 0 ($11) $ 1,034
Obligations of other United States
Government agencies 20,584 0 (889) 19,695
Obligations of state and political
subdivisions 57,391 305 (2,255) 55,441
Adjustable Rate Mortgage Fund 3,674 (139) 3,535
Federal Home Loan Bank Stock 1,208 0 0 1,208
Federal Reserve Bank stock 169 0 0 169
Other marketable equity securities 50 17 (2) 65
------- ---- ------- -------
Total $84,121 $322 $(3,296) $81,147
======= ==== ======= =======
The amortized cost and fair values of investment securities
available-for-sale at December 31, 1998 were:
____________________________________________________________________________________________
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
(Dollars in Thousands)
United States Treasury securities $ 7,526 $ 30 $ 0 $ 7,556
Obligations of other United States
Government agencies 19,611 261 (24) 19,848
Obligations of state and political
subdivisions 48,596 1,395 (235) 49,756
Adjustable Rate Mortgage Fund 4,400 (161) 4,239
Federal Home Loan Bank Stock 1,042 0 0 1,042
Federal Reserve Bank stock 85 0 0 85
Other marketable equity securities 50 0 (8) 42
------- ------ ----- -------
Total $81,310 $1,686 $(428) $82,568
======= ====== ===== =======
-27-
NOTE 2, Investment Securities (Continued)
________________________________________________________________
Investment securities carried at $47.3 million and $37.8 million at
December 31, 1999 and 1998, respectively, were pledged to secure
public deposits and securities sold under agreements to repurchase
and for other purposes required or permitted by law.
The amortized cost and approximate market values of investment securities
at December 31, 1999 by contractual maturity are shown below. Expected
maturities will differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
December 31, 1999
Available-For-Sale Held-To-Maturity
------------------ ----------------
Amortized Market Amortized Market
Cost Value Cost Value
(Dollars in Thousands)
Due in one year or less $ 4,278 $ 4,187 $ 0 $ 0
Due after one year through five years 17,656 17,317 30,836 29,884
Due after five years through ten years 36,563 35,735 13,598 13,008
Due after ten years 20,523 18,930 1,405 1,379
------- ------- ------- -------
Total debt securities 79,020 76,169 45,839 44,271
Other securities without stated maturities 5,101 4,978 0 0
------- ------- ------- -------
Total investment securities $84,121 $81,147 $45,839 $44,271
======= ======= ======= =======
The proceeds from the sale and maturities of investment securities,
and the related realized gains and losses are shown below:
1999 1998 1997
(Dollars in Thousands)
Proceeds from sales and
maturities of investments $32,566 $36,111 $30,167
======= ======= =======
Realized gains $ 0 $ 0 $ 3
Realized losses 54 0 4
------- ------- -------
Net gains (losses) $ (54) $ 0 $ (1)
======= ======= =======
-28-
NOTE 3, Loans
At December 31, loans before allowance for loan losses consisted of:
1999 1998
(Dollars in Thousands)
Commercial and other $62,257 $53,793
Real estate - construction 11,461 5,418
Real estate - mortgage 140,004 116,635
Installment loans to individuals 65,178 58,618
Tax exempt loans 2,747 1,401
-------- --------
Total $281,647 $235,865
======== ========
Information concerning loans which are contractually past due or in
non-accrual status is as follows:
1999 1998
(Dollars in Thousands)
Contractually past due loans -
past due 90 days or more and
still accruing interest $1,351 $641
====== ====
Loans which are in
non-accrual status $514 $253
==== ====
The Bank has had, and may be expected to have in the future, banking
transactions in the ordinary course of business with directors, executive
officers, their immediate families, and companies in which they are
principal owners (commonly referred to as related parties), on the same
terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with others. The aggregate direct
and indirect loans of these persons totaled $2.0 million and $1.8 million
at December 31, 1999 and 1998, respectively. These totals do not include
loans made in the ordinary course of business to other companies where a
director or executive officer of the Bank was also a director or officer
of such company but not a principal owner. None of the directors or
executive officers had direct or indirect loans exceeding 10% of
stockholders' equity at December 31, 1999.
The bank does not account for any of its loans under the provisions
of Statement of Financial Accounting Standards No. 114 or 118 related
to impaired loans.
NOTE 4, Allowance for Loan Losses
Changes in the allowance for loan losses are as follows:
1999 1998 1997
(Dollars in Thousands)
Balance, beginning of year $2,855 $2,671 $2,330
Recoveries 399 481 609
Provision for loan losses 650 650 600
Loans charged off (793) (947) (868)
------ ------ ------
Balance, end of year $3,111 $2,855 $2,671
-29-
NOTE 5, Premises and Equipment
___________________________________________
At December 31, premises and equipment consisted of:
1999 1998
(Dollars in Thousands)
Land $ 3,005 $2,458
Buildings 11,267 9,879
Leasehold improvements 882 882
Furniture, fixtures and equipment 10,457 9,925
-----------------
Total cost 25,611 23,144
Less accumulated
depreciation and amortization 11,287 11,092
-----------------
Net book value $14,324 $12,052
=================
NOTE 6, Other Real Estate Owned
___________________________________________
Other real estate consisted of the following at December 31:
1998 1998
(Dollars in Thousands)
Foreclosed real estate $ 0 $130
Property held for sale 354 354
--------------
Total $354 $484
==============
NOTE 7, Indebtedness
___________________________________________
The Bank's short-term borrowings include federal funds purchased,
securities sold under repurchase agreements (including $1.4 million
to directors in 1999 and 1998) and United States Treasury Demand Notes.
The federal funds purchased and securities sold under repurchase
agreements are held under various maturities and interest rates.
The United States Treasury Demand Notes are subject to call by the
United States Treasury with interest paid monthly at the rate of 25
basis points (1/4%) below the federal funds rate.
NOTE 8, Stock Option Plan
___________________________________________
The Company has stock option plans which reserve 137,974 shares of common
stock for grants to key employees. The exercise price of each option
equals the market price of the Company's common stock on the date of the
grant and an option's maximum term is ten years. A summary of the
exercisable incentive stock options is presented below:
Outstanding Granted Exercised Expired Outstanding
Beginning During During During At End
of Year the Year the Year the Year of Year
1997
----
Shares 92,346 25,754 (22,280) (11,286) 84,534
Weighted average exercisable price $17.13 $20.75 $13.12 $18.60 $19.09
1998
----
Shares 84,534 64,500 (5,400) 0 143,634
Weighted average exercisable price $19.09 $41.86 $18.54 $0 $29.33
1999
----
Shares 143,634 0 (3,620) (2,040) 137,974
Weighted average exercisable price $29.33 $0.00 $18.48 $30.94 $29.60
At December 31, 1999, exercise prices on outstanding options ranged from
$18.13 to $41.86 per share and the weighted average remaining contractual
life was 7 years.
-30-
NOTE 8, Stock Option Plan (Continued)
The Company accounts for its stock option plans in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees, which does
not allocate costs to stock options granted at current market values.
The Company could, as an alternative, allocate costs to stock options
using option pricing models, as provided in Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation.
Because of the limited number of options granted and the limited amount
of trading activity in the Company's stock, management believes that stock
options are best accounted for in accordance with APB Opinion No. 25.
However, had the stock options been accounted for in accordance with
SFAS No. 123, pro-forma amounts for net earnings and earnings per
share would have been as follows for each of the years ending December 31:
__________________________________________________________________________
1999 1998 1997
Pro-forma net income (in thousands) $4,793 $4,565 $4,041
====== ====== ======
Pro-forma earnings per share $ 1.85 $ 1.76 $ 1.57
====== ====== ======
Pro-forma amounts were computed using a 6% risk free interest rate over
a 10 year term using an annual dividend rate of between 1.29% and 2.02
and a .01% volatility rate.
The pro-forma effect of the potential exercise of stock options on basic
earnings per share would be to increase the number of weighted average
number of outstanding shares by approximately 16,000 in 1999, 24,000
in 1998, 14,000 in 1997.
The Company also has an Employee Stock Purchase Plan which reserves 61,146
shares of common stock for eligible employees. The purchase price is 95%
of the lesser of (1) the common stock's fair market value at July 1 or
(2)the common stock's fair market value at the following June 30.
During 1999, 5,114 shares of common stock were purchased by employees.
NOTE 9, Income Taxes
The components of income tax expense are as follows:
____________________________________________________
1999 1998 1997
(Dollars in Thousands)
Currently payable $1,213 $1,564 $1,458
Deferred 2 (27) (17)
------ ------ ------
Reported tax expense $1,215 $1,537 $1,441
====== ====== ======
The items that caused timing differences affecting deferred income taxes
are as follows:
_______________________________________________________________________
1999 1998 1997
(Dollars in Thousands)
Provision for loan losses $(108) $(156) $(186)
Pension plan expenses 34 46 17
Deferred loan fees, net 27 (22) 24
Security gains and losses (6) 0 (4)
Interest on certain non-accrual loans 22 68 95
Depreciation 38 31 37
Other (5) 6 0
----- ----- -----
Total $ 2 $ (27) $ (17)
===== ===== =====
A reconciliation of the "expected" Federal income tax expense on income
before income taxes with the reported income tax expense follows:
_______________________________________________________________________
1999 1998 1997
(Dollars in Thousands)
Expected tax expense (34%) $2,053 $2,099 $1,880
Interest expense on tax exempt assets 128 82 57
Tax exempt interest (967) (640) (494)
Disqualified incentive stock options (14) (10) (2)
Other, net 15 6 0
------ ------ ------
Reported tax expense $1,215 $1,537 $1,441
====== ====== ======
-31-
NOTE 9, Income Taxes (Continued)
_____________________________________________________________________
The components of the net deferred tax asset included in other
assets are as follows at December 31:
1999 1998
(Dollars in Thousands)
Components of Deferred Tax Liability:
Depreciation $ (217) $(179)
Accretion of discounts on securities (12) (9)
Net unrealized (gain) on
available-for-sale securities 0 (428)
Deferred loan fees and costs (125) (70)
Pension (73) (38)
---------------
Deferred tax liability (427) (724)
Components of Deferred Tax Asset:
Allowance for loan losses 817 709
Net unrealized loss on
available-for-sale securities 1,011 0
Interest on non-accrual loans 125 147
Deferred compensation 2 5
Capital loss carry forward 18 0
---------------
Deferred tax asset, net $1,546 $ 137
===============
NOTE 10, Lease Commitments
___________________________________________________
The Bank has noncancellable leases on premises and equipment expiring
at various dates, including extensions to the year 2011. Certain leases
provide for increased annual payments based on increases in real estate
taxes and the Consumer Price Index.
The total approximate minimum rental commitment at December 31, 1999,
under noncancellable leases is $1.2 million which is due as follows:
Year (Dollars in Thousands)
2000 $ 219
2001 216
2002 216
2003 129
2004 101
Remaining term of leases 314
------
Total $1,195
======
The aggregate rental expense of premises and equipment was $219 thousand,
$220 thousand and $208 thousand for 1999, 1998 and 1997 respectively.
-32-
NOTE 11, Pension Plan
______________________________________________________________________
The following tables set forth the Pension Plan's changes in benefit
obligation, plan assets, funded status, assumptions and the components
of net periodic benefit cost recognized in the Bank's financial
statements at December 31:
Pension Benefits
1999 1998
----------------
(Dollars in Thousands)
Change in benefit obligation
Benefit obligation at beginning of year $2,721 $2,445
Service cost 158 148
Interest cost 216 193
Actuarial change 0 86
Benefits paid (647) (151)
------ ------
Benefit obligation at end of year $2,448 $2,721
====== ======
Change in plan assets
Fair value of plan assets at beginning of year $2,830 $2,341
Actual return on plan assets 326 352
Employer contribution 244 288
Benefits paid (647) (151)
------ ------
Fair value of plan assets at end of year $2,753 $2,830
====== ======
Funded Status $ (305) $ (109)
Unrecognized prior service cost (29) (36)
Unrecognized transition obligation 25 38
Unrecognized actuarial gains (loss) 95 (8)
------- ------
Prepaid (accrued) benefit cost $ (214) $ (115)
======= ======
Weighted-average assumptions as of December 31:
1999 1998
----------------
Discount rate 8.00% 8.00%
Expected return on plan assets 8.00% 8.00%
Rate of compensation increase 5.00% 5.00%
1999 1998 1997
--------------------------
(Dollars in Thousands)
Components of net periodic benefit cost
Service Cost $158 $148 $141
Interest cost 216 193 179
Expected return on plan assets (224) (185) (158)
Amortization of prior service cost 7 7 6
Amortization of transition obligation (12) (12) (12)
---- ---- ----
Net periodic benefit cost $145 $151 $156
==== ==== ====
NOTE 12, Profit Sharing
The Bank has a defined contribution profit sharing and thrift plan covering
substantially all of its employees. The Bank may make profit sharing
contributions to the plan as determined by the Board of Directors. In
addition, the Bank matches thrift contributions by employees fifty cents
for each dollar contributed. Expenses related to the plan totaled $246
thousand and $283 thousand in 1999 and 1998 respectively.
-33-
NOTE 13, Commitments and Contingencies
___________________________________________________________________________
In the normal course of business, the Bank makes various commitments and
incurs certain contingent liabilities. These commitments and contingencies
represent off-balance sheet risk for the Bank. To meet the financing needs
of its customers, the Bank makes lending commitments under commercial lines
of credit, home equity loans and construction and development loans.
The Bank also incurs contingent liabilities related to irrevocable
letters of credit.
Off- balance sheet items at December 31 are as follows:
1999 1998
(Dollars in Thousands)
__________________________________________________________________
Commitments to extend credit:
Home equity lines of credit $11,027 $10,463
Construction and development
loans committed but not funded 7,797 9,168
Other lines of credit
(principally commercial) 30,339 32,514
------- -------
Total $49,163 $52,145
======= =======
Irrevocable letters of credit $ 693 $ 646
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments
are expected to expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements. The Bank
evaluates each customer's credit worthiness on a case-by-case basis. The
amount of collateral obtained, if deemed necessary by the Bank, upon
extensions of credit is based on management's credit evaluation of the
customer. Collateral held varies but may include accounts receivable,
inventory, property, plant and equipment, and income-producing commercial
properties.
Standby letters of credit and financial guarantees written are conditional
commitments issued by the bank to guarantee the performance of a customer
to a third party. Those guarantees are primarily issued to support private
borrowing agreements. Most guarantees extend for less than two years and
expire in decreasing amounts through 2001. The credit risk involved in
issuing letters of credit is essentially the same as that involved in
extending loans to customers. The Bank holds various collateral supporting
those commitments for which collateral is deemed necessary.
-34-
NOTE 14, Fair Value of Financial Instruments
_____________________________________________________________________________________________________
The estimated fair value of the Bank's financial instruments at December 31 are as follows:
1999 1998
Carrying Fair Carrying Fair
Amount Value Amount Value
(Dollars in Thousands) (Dollars in Thousands)
Cash and due from banks $10,400 $10,400 $10,311 $10,311
Investment securities, held-to-maturity 45,839 44,271 54,919 55,424
Investment securities, available-for-sale 81,147 81,147 82,568 82,568
Federal funds sold 241 241 6,578 6,578
Loans, net of allowances for loan losses 278,536 274,780 233,010 234,072
Deposits:
Non-interest bearing deposits 63,006 63,006 65,336 65,336
Savings deposits 128,763 128,763 121,682 121,682
Certificates of Deposit 169,149 168,431 156,395 157,322
Securities sold under repurchase
agreement and federal funds purchased 22,841 22,841 19,128 19,128
Federal Home Loan Bank Advances 7,000 6,645 0 0
Interest bearing U.S. Treasury demand
notes and other liabilities
for borrowed money 3,317 3,317 348 348
Commitments to extend credit 49,163 49,163 52,145 52,145
Irrevocable letters of credit 693 693 646 646
The above presentation of fair values is required by the Statement
of Financial Accounting Standards No. 107 "Disclosures about Market
Values of Financial Instruments". The fair values shown do not
necessarily represent the amounts which would be received on sale
or other disposition of the instrument.
The carrying amounts of cash and due from banks, federal funds sold,
demand and savings deposits and securities sold under repurchase
agreements represent items which do not present significant market
risks, are payable on demand or are of such short duration that the
market value approximates carrying value.
Investment securities are valued at the quoted market price for
individual securities held.
The fair value of loans is estimated by discounting future cash
flows using current rates at which similar loans would be made
to borrowers.
Certificates of deposit are presented at estimated fair value
using rates currently offered for deposits of similar remaining
maturities.
NOTE 15, Regulatory Matters
___________________________
The Company is required to maintain minimum amounts of capital
to "risk weighted" assets, as defined by the banking regulators.
At December 31, 1999, the Company is required to have minimum
Tier 1 and Total capital ratios of 4.00% and 8.00% respectively.
The Company's actual ratios at that date were 14.19% and 15.23%.
The Company's leverage ratio at December 31, 1999 was 10.08%.
The approval of the Comptroller of the Currency is required if the
total of all dividends declared by a national bank in any calendar
year exceeds the bank's net profits for that year combined with its
retained net profits for the preceding two calendar years. Under
this formula, the banking subsidiary can distribute as dividends to
the Company in 2000, without approval of the Comptroller of the Currency,
$6.1 million plus an additional amount equal to the Bank's retained net
profits for 2000 up to the date of any dividend declaration.
-35-
OLD POINT FINANCIAL CORPORATION
PARENT ONLY
BALANCE SHEETS
____________________________________________________
As of December 31,
Dollars in thousands 1999 1998
____________________________________________________
ASSETS
Cash in bank $ 60 $ 294
Investment securities 1,405 2,107
Total Loans 0 0
Investment in subsidiaries 39,250 37,598
Other real estate owned 0 0
Other assets 25 14
-----------------
TOTAL ASSETS $40,740 $40,013
=================
LIABILITIES AND
STOCKHOLDERS EQUITY
Notes payable - bank $ 0 $ 0
Other liabilities 0 0
Total liabilities 0 0
Stockholders' equity 40,740 40,013
-----------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $40,740 $40,013
=================
OLD POINT FINANCIAL CORPORATION
PARENT ONLY
INCOME STATEMENTS
_______________________________________________________________
For the year ended December 31,
Dollars in thousands 1999 1998 1997
_______________________________________________________________
INCOME
Cash dividends from subsidiaries $1,985 $1,300 $1,000
Interest and Fees on Loans 0 0 1
Interest income from
investment securities 27 106 105
Securities gains (losses) (54)
Other income 76 0 0
---------------------------
TOTAL INCOME 2,034 1,406 1,106
EXPENSES
Interest on borrowed money 0 0 0
Other expenses 47 41 50
---------------------------
TOTAL EXPENSES 47 41 50
Income before taxes and
undistributed net income
of subsidiaries 1,987 1365 1056
Income tax (7) 22 19
---------------------------
Net income before undistributed
net income of subsidiaries 1,994 1,343 1,037
Undistributed net income of
subsidiaries 2,755 3,293 3,053
---------------------------
NET INCOME $4,749 $4,636 $4,090
-36-
OLD POINT FINANCIAL CORPORATION
PARENT ONLY
STATEMENT OF CASH FLOWS
______________________________________________________________________________________________
For the year ending December 31, 1999 1998 1997
Dollars in thousands
______________________________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (Loss) $4,749 $4,636 $4,090
Adjustments to Reconcile Net Income to Net Cash Provided by
operating activities:
Equity in undistributed (earnings) losses of subsidiaries (2,755) (3,293) (3,053)
(Gain) or Loss on sales of assets 54 0 0
Increase (decrease) in other assets (25) 0 53
Increase (decrease) in other liabilities 0 (12) 11
-------------------------
Net cash provided (used) by operating activities 2,023 1,331 1,101
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities (1,500) 0 0
Sales of available-for-sale securities 1,441 (250) (200)
Payments for investments in and advances to subsidiaries (1,020) 0 0
Sale or repayment of investments in and advances to subsidiaries 50 0 0
(Purchase)/Sale of Premises and Equipment 0 0 16
Loans to customers 0 0 48
-------------------------
Net cash provided (used) by investing activities (1,029) (250) (136)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in borrowed money 0 0 0
Proceeds from issuance of common stock 165 158 231
Dividends paid (1,393) (1,234) (1,050)
Other, net 0 0 0
-------------------------
Net cash provided (used) by financing activities (1,228) (1,076) (819)
Net increase in cash and due from banks (234) 5 146
Cash and due from banks at beginning of period 294 289 143
-------------------------
Cash and due from banks at end of period $ 60 $ 294 $ 289
=========================
Accounting Rule Changes
None.
Regulatory Requirements and Restrictions
For the reserve maintenance period in effect at December 31, 1999,
1998 and 1997 the bank was required to maintain with the Federal
Reserve Bank of Richmond an average daily balance totaling
approximately $350 thousand, $350 thousand and $400 million
respectively.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
-37-
PART III
Item 10. Directors and Executive Officers of the Registrant
The eleven persons named below, all of whom currently serve
as directors of the Company, will be nominated to serve as
directors until the 2001 Annual Meeting, or until their
successors have been duly elected and have qualified.
Amount and Nature of
Principal Beneficial Ownership
Director Occupation For As of March 14, 2000
Name and (Age) Since (1) Past Five Years (Percent of Class)(2)(3)
Dr. Richard F. Clark (67) 1981 Pathologist(retired) 63,533 (4)
Sentara Hampton General Hospital (2.5%)
Russell Smith Evans Jr. (57) 1993 Assistant Treasurer and 2,650 (4)
Corporate Fleet Manager *
Ferguson Enterprises
G. Royden Goodson, III (44) 1994 President 4,862 (4)
Warwick Plumbing & Heating Corp. *
Dr. Arthur D. Greene (55) 1994 Surgeon - Partner 3,914 (4)
Tidewater Orthopaedic Associates *
Stephen D. Harris (58) 1988 Attorney-at-Law - Partner 9,000 (4)
Geddy, Harris, Franck *
& Hickman, L.L.P. & Geddy
John Cabot Ishon (53) 1989 President 12,780 (4)
Hampton Stationery *
Eugene M. Jordan (76) 1964 Attorney-at-Law 28,000 (4)
(1.1%)
John B. Morgan, II (53) 1994 President 2,600 (4)
Morgan-Marrow Insurance *
Louis G. Morris (45) 2000 President & CEO 20,729 (4)
Old Point National Bank *
Dr. H. Robert Schappert (61) 1996 Veterinarian - Owner 89,740 (4)
Beechmont Veterinary Hospital (3.5%)
Robert F. Shuford (62) 1965 Chairman of the Board, 156,898 (4)(5)
President & CEO, (6.0%)
Old Point Financial Corporation
Chairman of the Board, President & CEO
Old Point National Bank
- ------------------------
*Represents less than 1.0% of the total outstanding shares.
-38-
(1) Refers to the year in which the individual first became a
director of the Bank. Dr. Richard F. Clark, Eugene M.
Jordan, and Robert F. Shuford became directors of the
Company upon consummation of the Bank's reorganization on
October 1, 1984. All present directors of the Company are
directors of the Bank. Dr. Richard F. Clark, Dr. Arthur D.
Greene, Mr. John C. Ishon and Mr. Robert F. Shuford are
directors of the Trust Company.
(2) For purposes of this table, beneficial ownership has been
determined in accordance with the provisions of Rule 13d-3 of the
Securities Exchange Act of 1934 under which, in general, a person
is deemed to be the beneficial owner of a security if he or she
has or shares the power to vote or direct the voting of the
security or the power to dispose of or direct the disposition of
the security, or if he or she has the right to acquire beneficial
ownership of the security within sixty days.
(3) Includes shares held (i) by their close relatives or held
jointly with their spouses, (ii) as custodian or trustee for the
benefit of their children or others, or (iii) as attorney-in-fact
subject to a general power of attorney - Dr. Clark, 200 shares;
Mr. Evans, 650 shares; Dr. Greene, 1,968 shares; Mr. Harris, 400
shares, Mr. Ishon, 3,480 shares; Mr. Jordan, 14,000 shares; Mr.
Morgan, 2,400 shares; Dr. Schappert, 81,370 shares; and Mr.
Shuford, 75,590 shares.
(4) Includes shares that may be acquired within 60 days pursuant
to the exercise of stock options granted under the 1989 and 1998
Old Point Stock Option Plans - Dr. Clark 1,000, Mr. Evans 1,000,
Mr. Goodson 1,000, Dr. Greene 1,000, Mr. Harris 1,000, Mr. Ishon
1,000, Mr. Jordan 1,000, Mr. Morgan 1,000, Mr. Morris 6,998, Dr.
Schappert 1,000, and Mr. Shuford 24,182.
(5) Mr. Shuford is one of three directors of the VuBay
Foundation, a charitable foundation organized under 501(c)(3) of
the Internal Revenue Code of 1986, as amended. A majority of the
Directors have the power to vote shares of Company common stock
owned by the foundation. The foundation owned 2,300 shares of
stock as of March 14, 2000. Mr. Shuford disclaims any beneficial
ownership of these shares.
There are two family relationships among the directors and
executive officers. Mr. Jordan is the father-in-law of Mr.
Ishon. Mr. Shuford and Dr. Schappert are married to sisters.
None of the directors serve as a director of any other company
with a class of securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934.
There were no delinquent Securities and Exchange Commission Form 4
filings during 1999.
-39-
In addition to the executive officers included in the preceding
list of directors, the persons listed below were executive
officers of the Company.
Name and (Age) Principal Occupation
with the Registrant
Cary B. Epes (51) Senior Vice President/Credit
Mr. Epes also serves as Executive
Vice President and Chief Credit
Officer for Old Point National Bank.
Margaret P. Causby (49) Senior Vice President/Administration
Ms. Causby also serves as Executive
Vice President and Chief Administration
Officer for Old Point National Bank.
Frank E. Continetti (40) Executive Vice President/Trust
Mr. Continetti also serves as President
and Chief Executive Officer for Old
Point Trust and Financial Services, N.A.
Laurie D. Grabow (42) Senior Vice President/Finance
Ms. Grabow also serves as Senior Vice President
Chief Financial Officer for Old Point National Bank
Each of these executive officers owns less than 1% of the stock
of the Company.
-40-
Item 11 Executive Compensation
Cash Compensation
The following table presents a three-year summary of all
compensation paid or accrued by the Company and the Bank to the
Company's Chief Executive Officer and each executive officer
whose salary and bonus for 1999 exceeded $100,000. The table
also presents the number and percentage of shares of the
Company's Common Stock held by these executive officers, who are
all executive officers of the Company.
SUMMARY COMPENSATION TABLE
Annual Compensation
Amount and
Nature of
Beneficial
Ownership
as of March
14, 2000
Name and Principal All Othere (Percent of
Position Year Salary(1) Bonus(2) Compensation(3) Class)(4)(5)(6)
- ------------------ ---- --------- -------- --------------- ---------------
Robert F. Shuford 1999 $153,500 $27,000 $17,556 156,898
Chairman, President 1998 $151,200 $34,560 $17,765 (6.0%)
& CEO(Company) 1997 $148,500 $26,000 $16,092
Louis G. Morris 1999 $100,267 $18,048 $ 9,220 20,729
President & CEO (Bank) 1998 $ 90,247 $21,600 $ 9,051 *
1997 $ 83,000 $14,400 $ 7,636
Cary B. Epes 1999 $ 99,267 $17,868 $ 9,340 10,039
EVP/CCO (Bank) 1998 $ 89,167 $21,600 $ 9,440 *
1997 $ 82,000 $14,400 $ 7,708
Margaret P. Causby 1999 $ 97,947 $17,630 $ 9,004 10,440
EVP/CAO (Bank) 1998 $ 88,167 $21,600 $ 9,035 *
EVP 1997 $ 78,483 $14,400 $ 7,372
-41-
(1) Salary includes directors' fees as follows: Mr. Shuford -
1999, $3,900, 1998, $4,200, and 1997 $4,500.
(2) Bonus consideration for Mr. Shuford is paid in the year
following the year in which the bonus is earned so that the
Compensation Committee can evaluate year-end results. Bonus
consideration for Mr. Morris, Mr. Epes and Mrs. Causby is paid in
the year in which it is earned.
(3) Mr. Shuford has received other compensation as follows:
1999 1998 1997
------- ------- -------
Deferred Profit Sharing $ 4,532 $ 5,090 $ 4,342
Cash Profit Sharing 4,210 4,811 4,088
401(k) Matching Plan 4,488 4,410 4,320
Group Term Insurance 4,326 3,454 3,342
------- ------- -------
Total $17,556 $17,765 $16,092
Mr. Morris has received other compensation as follows:
1999 1998 1997
------- ------- -------
Deferred Profit Sharing $ 3,037 $ 3,122 $ 2,551
Cash Profit Sharing 2,821 2,951 2,356
401(k) Matching Plan 3,008 2,705 2,490
Group Term Insurance 354 273 239
------- ------- -------
Total $ 9,220 $ 9,051 $ 7,636
Mr. Epes has received other compensation as follows:
1999 1998 1997
------- ------- -------
Deferred Profit Sharing $ 3,007 $ 3,087 $ 2,520
Cash Profit Sharing 2,793 2,918 2,328
401(k) Matching Plan 2,978 2,675 2,460
Group Term Insurance 562 760 400
------- ------- -------
Total $ 9,340 $ 9,440 $ 7,708
Mrs. Causby has received other compensation as follows:
1999 1998 1997
------- ------- -------
Deferred Profit Sharing $ 2,967 $ 3,053 $ 2,408
Cash Profit Sharing 2,756 2,885 2,224
401(k) Matching Plan 2,938 2,645 2,350
Group Term Insurance 343 452 390
------- ------- -------
Total $ 9,004 $ 9,035 $ 7,372
(4) For purposes of this table, benefical ownership has been
determined in accordance with the provisions of Rule 13d-3
-42-
of the Securities Exchange Act of 1934 under which, in
general, a person is deemed to be the beneficial owner of a
security if he or she has or shares the power to vote or
direct the voting of the security or the power to dispose of
or direct the disposition of the security, or if he or she
has the right to acquire beneficial ownership of the
security within 60 days.
(5) Include shares held (1) by their joint relative or held
jointly with their spouses, (2) as custodian or trustee for
the benefit of their children or others, (3) as attorney-in-
fact subject to a general power of attorney-Mr. Shuford,
75,590 shares.
(6) Include shares that may be acquired within 60 days pursuant
to the exercise of stock options granted under the 1989 and
1998 Old Point Stock Option Plans-Mr. Shuford 24,182 shares,
Mr. Morris 6,998 shares, Mr. Epes 8,618 shares, Mrs. Causby
8,718 shares.
Item 12 Security Ownership of certain Beneficial Owners and
Management
Security ownership of certain beneficial owners and management is
detailed in Part III, Item 10 of this Annual Report on Form 10-K.
Item 13. Certain Relationships and Related Transactions
Some of the Company's directors, executive officers, and
members of their immediate families, and corporations,
partnerships and other entities of which such persons are
officers, directors, partners, trustees, executors or
beneficiaries, are customers of the Bank. As of December 31,
1999 borrowing by all policy making officers and directors
amounted to $2.0 million. This represented 4.9% of the total
equity capital accounts of the Company as of December 31, 1999.
All loans and commitments to lend included in such transactions
were made in the ordinary course of business, upon substantially
the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other
persons and did not involve more than normal risk of
collectibility or present other unfavorable features. It is the
policy of the Bank to provide loans to officers who are not
executive officers and to employees at more favorable rates than
those prevailing at the time for comparable transactions with
other persons. These loans do not involve more than the normal
risk of collectibility or present other unfavorable features.
The law firm of Mays & Valentine L.L.P. serves as legal
counsel to the Company. Cumming, Hatchett and Jordan, P.C. serves
as legal counsel to the Bank and Trust Company. Mr. Eugene M.
Jordan was a member of the firm in 1999. During 1999, the firm
received a retainer and fees totaling $55,358. Morgan Marrow
Insurance of which John B. Morgan, II is President, provided
insurance for which the Company paid $47,749 during 1999. Hampton
Stationery, of whom John Cabot Ishon is President, provided
office furniture and supplies for which the Company paid
$101,023. Geddy, Harris, Franck & Hickman L.L.P. of which
Stephen D. Harris is a partner, and Warwick Plumbing & Heating
Corp. of which G. Royden Goodson, III is President provide
products and services to the Company.
-43-
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8
A.1 Financial Statements:
The following audited financial statements are
included in Part II, Item 8, of this Annual Report
on Form 10-K.
Consolidated Balance Sheets - December 31, 1999 and 1998
Consolidated Statements of Income
Years Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Changes in Stockholders' Equity
Years Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows
Years Ended December 31, 1999, 1998 and 1997
Notes to Financial Statements
Auditor's Report
A.2 Financial Statement Schedules:
Schedule Location
Average Balance Sheets, Net Interest
Income and Rates Part I, Item 1
Analysis of Change in Net Interest Income Part I, Item 1
Interest Sensitivity Analysis Part I, Item 1
Investment Securities Part I, Item 1
Investment Security Maturities & Yields Part I, Item 1
Loans Part I, Item 1
Maturity Schedule of Selected Loans Part I, Item 1
Nonaccrual, Past Due and Restructured Loans Part I, Item 1
Analysis of the Allowance for Loan Losses Part I, Item 1
Allocation of the Allowance for Loan Losses Part I, Item 1
Deposits Part I, Item 1
Certificates of Deposit of $100,000 and more Part I, Item 1
Return on Average Equity Part I, Item 1
Short Term Borrowings Part I, Item 1
Lease Commitments Part I, Item 1
Other Real Estate Owned Part I, Item 1
Selected Financial Data Part II, Item 6
Capital Ratios Part II, Item 7
Dividends Paid and Market Price
of Common Stock Part II, Item 7
Proceeds from sales and maturities
of securities Part II, Item 8
Premises and Equipment Part II, Item 8
Stock Option Plan Part II, Item 8
Components of Income Tax Expense Part II, Item 8
Reconciliation of Expected and
Reported Income Tax Expense Part II, Item 8
Pension Plan Part II, Item 8
Commitments and Contingencies Part II, Item 8
Fair Value of Financial Instruments Part II, Item 8
Directors and Executive Officer Part III, Item 10
Executive Compensation Part III, Item 11
-44-
A.3 Exhibits:
3 Articles of Incorporation and Bylaws
4 Not Applicable
9 Not Applicable
10 Not Applicable
11 Not Applicable
12 Not Applicable
13 Not Applicable
18 Not Applicable
19 Not Applicable
22 Subsidiaries of the Registrant
23 Not Applicable
24 Consent of Independent Certified Public
Accountants
25 Powers of Attorney
27 Financial Data Schedule
28 Not Applicable
29 Not Applicable
B. Reports on Form 8-K:
A Current Report, Form 8-K , was filed on November 18, 1999. The Company
reported under Item 5 that Frank E. Continetti succeeded W. Rodney Rosser
as President & CEO of Old Point Trust & Financial Services, NA. Also reported
that Louis G. Morris was promoted to President and CEO of Old Point National
Bank effective January 1, 2000.
-45-
INDEX OF EXHIBITS
Exhibit No.
3 Articles of Incorporation and Bylaws
(incorporated by reference from our Annual
Report on Form 10K for the year ended 1998
(File No. 000-12896))
4 Not Applicable
9 Not Applicable
10 Not Applicable
11 Not Applicable
12 Not Applicable
13 Not Applicable
18 Not Applicable
19 Not Applicable
22 Subsidiaries of the Registrant 48
23 Not Applicable
24 Consent of Independent Certified
Public Accountants 49
25 Powers of Attorney 50
27 Financial Data Schedule 61
28 Not Applicable
29 Not Applicable
-46-
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized on the 28th day of March, 2000.
OLD POINT FINANCIAL CORPORATION
/s/Robert F. Shuford
--------------------
Robert F. Shuford, President
Pursuant to the requirements of the Securities and Exchange Act
of 1934, this report has been signed by the following persons on
behalf of the registrant and in their capacities on the 28th day of
March, 2000.
/s/Robert F. Shuford
- -------------------- President and Director
Robert F. Shuford Principal Executive Officer
/s/Laurie D. Grabow
- ------------------- Senior Vice President
Laurie D. Grabow Principal Financial &
Accounting Officer
/s/Richard F. Clark Director
- -------------------
Richard F. Clark
/s/Russell S. Evans, Jr. Director
- ------------------------
Russell S. Evans, Jr.
/s/G. Royden Goodson, III Director
- -------------------------
G. Royden Goodson, III
/s/Dr. Arthur D. Greene Director
- -----------------------
Dr. Arthur D. Greene
/s/Stephen D. Harris Director
- --------------------
Stephen D. Harris
/s/John Cabot Ishon Director
- --------------------
John Cabot Ishon
/s/Eugene M. Jordan Director
- ---------------------
Eugene M. Jordan
/s/John B. Morgan Director
- ------------------
John B. Morgan
/s/Dr. H. Robert Schappert Director
- ----------------------------
Dr. H. Robert Schappert
-47-