Old Point Financial (OPOF) - 2024 Q2 - Quarterly Report

Financial Performance - Consolidated net income for the second quarter of 2024 was $2.5 million, an increase of $727 thousand or 40.3% compared to $1.8 million in the second quarter of 2023[94]. - Return on average equity (ROE) was 9.4% for the second quarter of 2024, up from 7.0% for the same period in 2023[97]. - Net interest income for the second quarter of 2024 was $12.1 million, an increase of $17 thousand or 0.1% from the second quarter of 2023[98]. - Total noninterest income for Q2 2024 was $3.5 million, a slight decrease of $6 thousand compared to Q2 2023, primarily due to lower mortgage banking income[129]. - Noninterest expense decreased to $12.3 million in Q2 2024 from $13.1 million in Q2 2023, primarily due to a 12% reduction in employee headcount[130]. - The efficiency ratio improved to 79.07% for the three months ended June 30, 2024, compared to 84.41% for the same period in 2023[177]. Asset and Loan Management - Total assets decreased by $23.0 million or 1.6% from December 31, 2023, totaling $1.4 billion as of June 30, 2024[95]. - Net loans held for investment were $1.0 billion at June 30, 2024, a decrease of $25.3 million or 2.4% from December 31, 2023[95]. - Average loans decreased by $26.8 million, or 2.5%, in Q2 2024 compared to Q2 2023, and by $3.0 million, or 0.3%, for the first six months of 2024 compared to the same period in 2023[114]. - The company's loan portfolio totaled $1.054 billion as of June 30, 2024, with a notable decrease in commercial and industrial loans by $7.5 million[141]. - As of June 30, 2024, total loans decreased to $1,054.6 million from $1,080.3 million as of December 31, 2023, representing a decline of 2.4%[146]. Deposits and Funding - Total deposits increased by $6.2 million or 0.5% from December 31, 2023[97]. - Total deposits increased to $1.2 billion, up $6.2 million or 0.5% from December 31, 2023[155]. - Average interest-bearing deposits in other banks increased by $72.2 million in Q2 2024 and $61.8 million for the first six months of 2024 compared to the respective periods in 2023[116]. - FHLB advances decreased from $69.5 million at December 31, 2023, to $39.6 million as of June 30, 2024, indicating a reduction in reliance on borrowed funds[133]. Credit Quality and Losses - Provision for credit losses for Q2 2024 was $261 thousand, a decrease from $361 thousand in Q2 2023, indicating improved credit quality[126]. - Charged-off loans totaled $977 thousand for the first six months of 2024, compared to $754 thousand in the same period of 2023, indicating an increase in loan defaults[126]. - The allowance for credit losses (ACL) decreased to $12.1 million from $12.4 million, a decline of 2.4%[148]. - Nonperforming assets increased by $516 thousand to $2.0 million or 0.14% of total assets at June 30, 2024, compared to 0.10% at June 30, 2023[98]. - Total nonperforming assets decreased to $1.96 million from $2.18 million, a reduction of 10.3%[146]. Capital and Liquidity - Total stockholders' equity as of June 30, 2024, was $110.0 million, reflecting a 3.0% increase from $106.8 million on December 31, 2023[159]. - The Common Equity Tier 1 Capital to Risk-Weighted Assets ratio was 12.07%, significantly above the regulatory minimum of 4.5%[165]. - The Company reported a Total Capital to Risk-Weighted Assets ratio of 13.09% as of June 30, 2024, exceeding the minimum requirement of 8.0%[165]. - The liquidity coverage ratio was 771.4%, indicating strong liquidity management relative to outstanding commitments[171]. Market Risks and Economic Conditions - The Company is exposed to significant risks including changes in interest rates, inflation, and economic conditions, which could adversely affect operations and future prospects[180]. - The Company anticipates a marginal decrease in net interest income under various interest rate scenarios, with a projected decrease of 5.27% for a +300 basis points change[189]. - The estimated change in net economic value of equity is projected to increase by 5.68% for a +300 basis points change in the yield curve[191]. - The Company maintains a rates neutral interest sensitivity position as of June 30, 2024, with no predictions on the direction or magnitude of future rates[187]. Regulatory and Compliance - The Company did not opt into the Community Bank Leverage Ratio framework, which could have simplified capital adequacy requirements[163]. - The Company has not experienced any changes in internal control over financial reporting that materially affect its financial reporting as of June 30, 2024[196]. - The Company is involved in various legal proceedings, but management believes these will not have a material adverse effect on its consolidated financial position[197].