UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from____________ to___________

Commission File Number: 000-12896

OLD POINT FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)

Virginia
 
54-1265373
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

101 East Queen Street, Hampton, Virginia 23669
(Address of principal executive offices) (Zip Code)

(757) 728-1200
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $5.00 par value
OPOF
The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes      No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
Accelerated filer 
Non-accelerated filer
Smaller reporting company
 
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

5,222,385 shares of common stock ($5.00 par value) outstanding as of November 4, 2020
graphic



Index
OLD POINT FINANCIAL CORPORATION
FORM 10-Q

INDEX

PART I - FINANCIAL INFORMATION

 
 
Page
 
 
 
Item 1.
Financial Statements
1
 
 
 
 
Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019
1
 
 
 
 
Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2020 and 2019
2
 
 
 
 
Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2020 and 2019
3
 
 
 
 
Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the three and nine months ended September 30, 2020 and 2019
4
 
 
 
 
Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2020 and 2019
5
 
 
 
 
Notes to Consolidated Financial Statements (unaudited)
6
 
 
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
32
 
 
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
45
 
 
 
Item 4.
Controls and Procedures
45
 
 
 
 
PART II - OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
45
 
 
 
Item 1A.
Risk Factors
45
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
46
 
 
 
Item 3.
Defaults Upon Senior Securities
46
 
 
 
Item 4.
Mine Safety Disclosures
47
 
 
 
Item 5.
Other Information
47
 
 
 
Item 6.
Exhibits
48
 
 
 
 
Signatures
48

i

Index

GLOSSARY OF DEFINED TERMS

2019 Annual Report on Form 10-K
Annual Report on Form 10-K for the year ended December 31, 2019
ALLL
Allowance for Loan and Lease Losses
ASC
Accounting Standards Codification
ASU
Accounting Standards Update
Bank
The Old Point National Bank of Phoebus
CARES
Coronavirus Aid, Relief, and Economic Security Act
CET1
Common Equity Tier 1
Citizens
Citizens National Bank
Company
Old Point Financial Corporation and its subsidiaries
EPS
earnings per share
ESPP
Employee Stock Purchase Plan
Exchange Act
Securities Exchange Act of 1934, as amended
FASB
Financial Accounting Standards Board
FHLB
Federal Home Loan Bank
Federal Reserve
Board of Governors of the Federal Reserve System
FRB
Federal Reserve Bank
U.S. GAAP
Generally Accepted Accounting Principles
Incentive Stock Plan
Old Point Financial Corporation 2016 Incentive Stock Plan
OAEM
Other Assets Especially Mentioned
OREO
Other Real Estate Owned
PPP
Paycheck Protection Program
PPPLF
Paycheck Protection Program Liquidity Facility
SEC
Securities and Exchange Commission
SBA
Small Business Administration
TDR
Troubled Debt Restructuring
Trust
Old Point Trust & Financial Services N.A.


ii

Index

PART I – FINANCIAL INFORMATION

Item 1.
Financial Statements.

Old Point Financial Corporation and Subsidiaries
Consolidated Balance Sheets

(dollars in thousands, except share data)
 
September 30,
2020
   
December 31,
2019
 
 
 
(unaudited)
       
Assets
           
 
           
Cash and due from banks
 
$
18,644
   
$
37,280
 
Interest-bearing due from banks
   
113,227
     
48,610
 
Federal funds sold
   
5
     
3,975
 
Cash and cash equivalents
   
131,876
     
89,865
 
Securities available-for-sale, at fair value
   
168,547
     
145,715
 
Restricted securities, at cost
   
3,004
     
2,926
 
Loans held for sale
   
12,655
     
590
 
Loans, net
   
861,970
     
738,205
 
Premises and equipment, net
   
33,990
     
35,312
 
Premises and equipment, held for sale
   
-
     
907
 
Bank-owned life insurance
   
28,177
     
27,547
 
Other real estate owned, net
   
236
     
-
 
Goodwill
   
1,650
     
1,650
 
Core deposit intangible, net
   
330
     
363
 
Other assets
   
13,658
     
11,408
 
Total assets
 
$
1,256,093
   
$
1,054,488
 
 
               
Liabilities & Stockholders’ Equity
               
 
               
Deposits:
               
Noninterest-bearing deposits
 
$
363,526
   
$
262,558
 
Savings deposits
   
485,595
     
399,020
 
Time deposits
   
201,942
     
227,918
 
Total deposits
   
1,051,063
     
889,496
 
Overnight repurchase agreements
   
6,281
     
11,452
 
Federal Home Loan Bank advances
   
38,500
     
37,000
 
Federal Reserve Bank borrowings
   
37,340
     
-
 
Other borrowings
   
1,500
     
1,950
 
Accrued expenses and other liabilities
   
4,534
     
4,834
 
Total liabilities
   
1,139,218
     
944,732
 
 
               
Stockholders’ equity:
               
Common stock, $5 par value, 10,000,000 shares authorized; 5,222,385 and 5,200,038 shares outstanding (includes 29,576 and 19,933 of nonvested restricted stock, respectively)
   
25,964
     
25,901
 
Additional paid-in capital
   
21,165
     
20,959
 
Retained earnings
   
65,942
     
62,975
 
Accumulated other comprehensive income (loss), net
   
3,804
     
(79
)
Total stockholders’ equity
   
116,875
     
109,756
 
Total liabilities and stockholders’ equity
 
$
1,256,093
   
$
1,054,488
 

See Notes to Consolidated Financial Statements.

1

Index

Old Point Financial Corporation and Subsidiaries
Consolidated Statements of Income

 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
(unaudited, dollars in thousands, except per share data)
 
2020
   
2019
   
2020
   
2019
 
Interest and Dividend Income:
                       
Loans, including fees
 
$
8,788
   
$
8,972
   
$
26,539
   
$
26,909
 
Due from banks
   
41
     
257
     
224
     
425
 
Federal funds sold
   
-
     
10
     
12
     
23
 
Securities:
                               
Taxable
   
720
     
770
     
2,296
     
2,038
 
Tax-exempt
   
141
     
146
     
364
     
646
 
Dividends and interest on all other securities
   
47
     
53
     
136
     
176
 
Total interest and dividend income
   
9,737
     
10,208
     
29,571
     
30,217
 
                                 
Interest Expense:
                               
Checking and savings deposits
   
238
     
291
     
876
     
817
 
Time deposits
   
791
     
1,012
     
2,646
     
2,829
 
Federal funds purchased, securities sold under agreements to repurchase and other borrowings
   
69
     
32
     
106
     
105
 
Federal Home Loan Bank advances
   
171
     
321
     
584
     
1,024
 
Total interest expense
   
1,269
     
1,656
     
4,212
     
4,775
 
Net interest income
   
8,468
     
8,552
     
25,359
     
25,442
 
Provision for loan losses
   
300
     
-
     
900
     
1,013
 
Net interest income after provision for loan losses
   
8,168
     
8,552
     
24,459
     
24,429
 
                                 
Noninterest Income:
                               
Fiduciary and asset management fees
   
955
     
949
     
2,881
     
2,837
 
Service charges on deposit accounts
   
666
     
1,001
     
2,176
     
3,082
 
Other service charges, commissions and fees
   
1,121
     
1,047
     
3,044
     
2,998
 
Bank-owned life insurance income
   
207
     
201
     
630
     
591
 
Mortgage banking income
   
640
     
204
     
1,020
     
722
 
Gain on sale of available-for-sale securities, net
   
1
     
286
     
185
     
312
 
Gain on sale of fixed assets
   
-
     
-
     
818
     
-
 
Other operating income
   
67
     
49
     
139
     
184
 
Total noninterest income
   
3,657
     
3,737
     
10,893
     
10,726
 
                                 
Noninterest Expense:
                               
Salaries and employee benefits
   
6,660
     
5,991
     
18,118
     
17,617
 
Occupancy and equipment
   
1,233
     
1,484
     
3,687
     
4,282
 
Data processing
   
946
     
460
     
2,569
     
1,243
 
Customer development
   
82
     
137
     
267
     
450
 
Professional services
   
467
     
652
     
1,532
     
1,726
 
Employee professional development
   
200
     
181
     
513
     
597
 
Other taxes
   
162
     
146
     
470
     
445
 
ATM and other losses
   
75
     
57
     
233
     
172
 
(Gain) on other real estate owned
   
(22
)
   
-
     
(22
)
   
(2
)
Other operating expenses
   
861
     
588
     
2,531
     
1,965
 
Total noninterest expense
   
10,664
     
9,696
     
29,898
     
28,495
 
Income before income taxes
   
1,161
     
2,593
     
5,454
     
6,660
 
Income tax expense
   
61
     
361
     
610
     
775
 
Net income
 
$
1,100
   
$
2,232
   
$
4,844
   
$
5,885
 
                                 
Basic Earnings per Share:
                               
Weighted average shares outstanding
   
5,221,476
     
5,198,634
     
5,213,982
     
5,195,912
 
Net income per share of common stock
 
$
0.21
   
$
0.43
   
$
0.93
   
$
1.13
 
                                 
Diluted Earnings per Share:
                               
Weighted average shares outstanding
   
5,221,601
     
5,198,656
     
5,214,262
     
5,195,962
 
Net income per share of common stock
 
$
0.21
   
$
0.43
   
$
0.93
   
$
1.13
 

See Notes to Consolidated Financial Statements.

2

Index

Old Point Financial Corporation
Consolidated Statements of Comprehensive Income

 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
(unaudited, dollars in thousands)
 
2020
   
2019
   
2020
   
2019
 
                         
Net income
 
$
1,100
   
$
2,232
   
$
4,844
   
$
5,885
 
Other comprehensive income (loss), net of tax
                               
Net unrealized gain on available-for-sale securities
   
453
     
212
     
4,029
     
3,068
 
Reclassification for gain included in net income
   
(1
)
   
(225
)
   
(146
)
   
(246
)
Other comprehensive income (loss), net of tax
   
452
     
(13
)
   
3,883
     
2,822
 
Comprehensive income
 
$
1,552
   
$
2,219
   
$
8,727
   
$
8,707
 

See Notes to Consolidated Financial Statements.

3

Index

Old Point Financial Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity

(unaudited, dollars in thousands, except share and per share data)
 
Shares of
Common
Stock
   
Common
Stock
   
Additional
Paid-in
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Total
 
THREE MONTHS ENDED SEPTEMBER 30, 2020
                             
                                     
Balance at June 30, 2020
   
5,191,217
   
$
25,956
   
$
21,093
   
$
65,468
   
$
3,352
   
$
115,869
 
Net income
   
-
     
-
     
-
     
1,100
     
-
     
1,100
 
Other comprehensive income, net of tax
   
-
     
-
     
-
     
-
     
452
     
452
 
Employee Stock Purchase Plan share issuance
   
1,592
     
8
     
16
     
-
     
-
     
24
 
Restricted stock vested
   
-
     
-
     
-
     
-
     
-
     
-
 
Stock-based compensation expense
   
-
     
-
     
56
     
-
     
-
     
56
 
Cash dividends ($0.12 per share)
   
-
     
-
     
-
     
(626
)
   
-
     
(626
)
                                                 
Balance at end of period
   
5,192,809
   
$
25,964
   
$
21,165
   
$
65,942
   
$
3,804
   
$
116,875
 
                                                 
THREE MONTHS ENDED SEPTEMBER 30, 2019
                                               
                                                 
Balance at June 30, 2019
   
5,178,339
   
$
25,892
   
$
20,838
   
$
60,016
   
$
679
   
$
107,425
 
Net income
   
-
     
-
     
-
     
2,232
     
-
     
2,232
 
Other comprehensive loss, net of tax
   
-
     
-
     
-
     
-
     
(13
)
   
(13
)
Employee Stock Purchase Plan share issuance
   
897
     
4
     
16
     
-
     
-
     
20
 
Restricted stock vested
   
-
     
-
     
-
     
-
     
-
     
-
 
Stock-based compensation expense
   
-
     
-
     
22
     
-
     
-
     
22
 
Cash dividends ($0.12 per share)
   
-
     
-
     
-
     
(623
)
   
-
     
(623
)
                                                 
Balance at end of period
   
5,179,236
   
$
25,896
   
$
20,876
   
$
61,625
   
$
666
   
$
109,063
 

(dollars in thousands, except share and per share data)
 
Shares of
Common
Stock
   
Common
Stock
   
Additional
Paid-in
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Total
 
NINE MONTHS ENDED SEPTEMBER 30, 2020
                                   
                                     
Balance at December 31, 2019
   
5,180,105
   
$
25,901
   
$
20,959
   
$
62,975
   
$
(79
)
 
$
109,756
 
Net income
   
-
     
-
     
-
     
4,844
     
-
     
4,844
 
Other comprehensive income, net of tax
   
-
     
-
     
-
     
-
     
3,883
     
3,883
 
Employee Stock Purchase Plan share issuance
   
4,185
     
21
     
49
     
-
     
-
     
70
 
Restricted stock vested
   
8,519
     
42
     
(42
)
   
-
     
-
     
-
 
Stock-based compensation expense
   
-
     
-
     
199
     
-
     
-
     
199
 
Cash dividends ($0.36 per share)
   
-
     
-
     
-
     
(1,877
)
   
-
     
(1,877
)
                                                 
Balance at end of period
   
5,192,809
   
$
25,964
   
$
21,165
   
$
65,942
   
$
3,804
   
$
116,875
 
                                                 
NINE MONTHS ENDED SEPTEMBER 30, 2019
                                               
                                                 
Balance at December 31, 2018
   
5,170,600
   
$
25,853
   
$
20,698
   
$
57,611
   
$
(2,156
)
 
$
102,006
 
Net income
   
-
     
-
     
-
     
5,885
     
-
     
5,885
 
Other comprehensive income, net of tax
   
-
     
-
     
-
     
-
     
2,822
     
2,822
 
Employee Stock Purchase Plan share issuance
   
2,797
     
14
     
46
     
-
     
-
     
60
 
Restricted stock vested
   
5,839
     
29
     
(29
)
   
-
     
-
     
-
 
Stock-based compensation expense
   
-
     
-
     
161
     
-
     
-
     
161
 
Cash dividends ($0.36 per share)
   
-
     
-
     
-
     
(1,871
)
   
-
     
(1,871
)
                                                 
Balance at end of period
   
5,179,236
   
$
25,896
   
$
20,876