Old Point Financial (US:OPOF)2025-03-31 14:00Capital Adequacy and Regulatory Compliance - As of December 31, 2024, the Bank met all capital adequacy requirements under the Basel III Final Rules, including the capital conservation buffer[51]. - The Basel III Capital Rules require a minimum CET1 ratio of at least 4.5%, plus a 2.5% capital conservation buffer, resulting in a minimum CET1 ratio of at least 7%[50]. - The Bank has not elected to opt into the Community Bank Leverage Ratio Framework (CBLRF) as of December 31, 2024[53]. - The FDIC's basic limit on deposit insurance coverage is $250,000 per depositor[58]. - Total base assessment rates for institutions with less than $10 billion in assets range from 2.5 to 32 basis points as of December 31, 2024[59]. - The FDIC adopted a final rule to increase initial base deposit insurance assessment rate schedules uniformly by 2 basis points, effective from the first quarterly assessment period of 2023[60]. - The Bank received an "Outstanding" CRA rating during its last evaluation in 2022[67]. - The proposed rules from July 2023 will significantly alter how banks with $100 billion or more in total assets calculate risk-based assets, but do not apply to the Company[52]. - The Company does not expect any impact on its ability to receive dividends from the Bank based on its current financial condition[48]. - The Dodd-Frank Act allows the FDIC to manage the required amount of reserves for the DIF, with a target designated reserve ratio of 2%[59]. - The Company does not anticipate any material impact on its business, operations, or financial condition due to the modified CRA regulations, which will be applicable starting January 1, 2026, with certain data reporting requirements effective from January 1, 2027[68]. Regulatory and Compliance Obligations - The Company is subject to various laws and regulations aimed at combating money laundering and terrorist financing, which impose significant compliance costs and obligations[71]. - The Corporate Transparency Act requires reporting companies to disclose beneficial ownership interests, with initial filing obligations for newly-formed companies and subsequent reports for updates[73]. - The Company is monitoring regulatory developments related to the Corporate Transparency Act, including future FinCEN rulemakings, to assess its impact[74]. - The federal banking agencies have adopted guidelines for cybersecurity programs, expecting financial institutions to maintain sufficient business continuity planning processes[75]. - The Company is subject to consumer protection laws and regulations, including the Truth in Lending Act and the Equal Credit Opportunity Act, which mandate certain disclosure requirements[78]. Economic and Interest Rate Risk - The Company’s earnings are influenced by the monetary policies of the Federal Reserve Board, which can affect the source and cost of funds and rates of return on loans and investments[86]. - Future legislative and regulatory initiatives may change the operating environment of the Company in substantial and unpredictable ways, potentially affecting costs and permissible activities[87]. - Interest rate risk is the primary market risk exposure for the Company, managed through policies approved by the ALCO and Board of Directors[292]. - As of December 31, 2024, the company's net interest income is projected to decrease marginally under various interest rate scenarios, with a decrease of $3,570,000 (6.90%) under a -300 basis points scenario[296]. - The company's balance sheet is slightly asset sensitive for a 300 basis points upward scenario, indicating a potential increase in net interest income when interest rates rise[294]. - The estimated change in net economic value of equity at December 31, 2024 shows an increase of $24,600,000 (9.97%) under a +300 basis points scenario[300]. - Under a -200 basis points scenario, the net economic value of equity is projected to decrease by $38,400,000 (15.56%)[300]. - The company uses computer simulation analysis to project net interest income under multiple interest rate scenarios, incorporating various assumptions such as growth and changes in asset and liability mix[293]. - Management cannot predict future interest rates or their exact effect on net interest income, emphasizing the inherent limitations in such computations[296]. - Economic value simulation indicates the longer-term earnings capability of the balance sheet, calculated based on discounted cash flow analysis[299]. - The company anticipates that changes in interest rates may significantly affect prepayments of loans and mortgage-backed securities, potentially impacting interest rate sensitivity[297]. - The economic value simulation for December 31, 2023 shows a change in economic value of equity of $3,200,000 (1.34%) under a +300 basis points scenario[300]. - The company aims to maintain a relatively neutral interest rate risk profile to minimize exposure to fluctuations in market rates[294].