Old Point Financial (OPOF) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights The company reported a significant decline in Q2 2025 net income and EPS, announced a merger with TowneBank, and noted improvements in net interest margin and asset quality Overall Financial Performance Old Point reported a significant decrease in net income and diluted EPS for Q2 2025 compared to both the prior quarter and prior year, while adjusted operating earnings also declined Key Financial Performance Metrics: | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YTD June 30, 2025 | YTD June 30, 2024 | | :-------------------------------- | :------ | :------ | :------ | :----------------- | :----------------- | | Net Income | $1.2M | $2.2M | $2.5M | $3.4M | $4.2M | | Diluted EPS | $0.24 | $0.42 | $0.50 | $0.67 | $0.84 | | Adjusted Operating Earnings (non-GAAP) | $2.2M | - | $2.5M | $4.2M | $4.2M | | Adjusted Diluted EPS (non-GAAP) | $0.43 | - | $0.50 | $0.83 | $0.84 | Merger Announcement The Company announced an agreement to merge with TowneBank, which has been approved by shareholders and awaits regulatory approvals - Old Point Financial Corporation and The Old Point National Bank of Phoebus will merge with and into TowneBank, with TowneBank continuing as the surviving corporation[3] - The merger agreement has been approved by the Company's shareholders and remains subject to required regulatory approvals and other customary closing conditions[4] CEO Commentary & Key Q2 2025 Highlights CEO Robert F. Shuford, Jr. highlighted improvements in net interest margin and asset quality, emphasizing the strategic benefits of the TowneBank merger despite declines in total assets, deposits, ROE, and ROA - The Company continued to manage its deposit mix, leading to meaningful improvements in net interest margin[5] - Non-performing assets decreased nearly 20% compared to the prior quarter, demonstrating the strength and health of Old Point[5] - The partnership with TowneBank is expected to provide a stronger platform for growth and create enhanced value for shareholders, customers, and employees[5] Key Q2 2025 Financial Highlights: | Metric | June 30, 2025 | Change from Dec 31, 2024 | | :-------------------------------- | :-------------- | :----------------------- | | Total Assets | $1.4 billion | -$48.0 million (-3.3%) | | Net Loans Held for Investment | $994.3 million | -$4.4 million (-0.4%) | | Total Deposits | $1.2 billion | -$46.2 million (-3.7%) | | Return on Average Equity (ROE) | 4.25% | Down from 7.50% (Q1 2025) & 9.43% (Q2 2024) | | Return on Average Assets (ROA) | 0.35% | Down from 0.61% (Q1 2025) & 0.71% (Q2 2024) | Financial Condition This section details the company's balance sheet, asset quality, and capital management strategies Balance Sheet Overview Total assets and deposits decreased from December 31, 2024, primarily due to reductions in certain loan categories and time/noninterest-bearing deposits, partially offset by growth in savings deposits. Stockholders' equity increased due to net income and improved unrealized losses on securities - Total assets decreased by $48.0 million (3.31%) to $1.4 billion at June 30, 2025, from December 31, 2024[7] - Net loans held for investment decreased by $4.4 million (0.4%) to $994.3 million at June 30, 2025, primarily due to decreases in commercial – non-owner occupied loans and construction and land development loans, partially offset by increases in consumer automobile, multifamily, and equity lines of credit[7] Deposit Changes (June 30, 2025 vs. Dec 31, 2024): | Deposit Type | Change in Amount | Change in Percentage | | :------------------------ | :--------------- | :------------------- | | Total Deposits | -$46.2 million | -3.7% | | Noninterest-bearing deposits | -$12.5 million | -3.5% | | Savings deposits | +$17.5 million | +2.7% | | Time deposits | -$51.2 million | -21.3% | - Total stockholders' equity increased by $4.2 million (3.7%) to $118.1 million at June 30, 2025, driven by net income and a $1.6 million improvement in unrealized losses on securities available-for-sale, net of tax[10] Bank Capital Ratios (June 30, 2025 vs. Dec 31, 2024): | Ratio | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Tier 1 Capital ratio | 13.29% | 12.97% | | Leverage ratio | 10.57% | 10.06% | Asset Quality Non-performing assets decreased significantly quarter-over-quarter but increased year-over-year. The provision for credit losses decreased from the prior quarter but increased from the prior year, with the Allowance for Credit Losses (ACL) remaining stable year-over-year Non-performing Assets (NPAs): | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :-------------- | :-------------- | :-------------- | | Total NPAs | $3.3 million | $4.1 million | $2.0 million | | Change QoQ | -$818 thousand (-19.7%) | | | | Change YoY | +$1.4 million | | | | NPAs as % of Total Assets | 0.24% | 0.29% | 0.14% | - Non-accrual loans decreased to $43 thousand at June 30, 2025, from $80 thousand at March 31, 2025, and $44 thousand at June 30, 2024[11] - Loans past due 90 days or more and still accruing interest decreased by $952 thousand to $932 thousand at June 30, 2025, from $1.9 million at March 31, 2025[11] Provision for Credit Losses: | Period | Amount | | :-------------------------------- | :-------------- | | Q2 2025 | $468 thousand | | Q1 2025 | $717 thousand | | Q2 2024 | $261 thousand | - The Allowance for Credit Losses (ACL) on loans as a percentage of loans held for investment was 1.19% at June 30, 2025, compared to 1.17% at March 31, 2025, and 1.12% at June 30, 2024[12] Capital Management and Dividends The Company maintained a consistent quarterly dividend of $0.14 per share, representing a 58.3% payout ratio. Total consolidated equity increased, driven by net income and a reduction in unrealized losses on available-for-sale securities - The Company declared a dividend of $0.14 per share for the second quarter of 2025, consistent with the first quarter of 2025, representing a payout ratio of 58.3% of earnings per share[19] - Total consolidated equity increased by $4.2 million (3.7%) at June 30, 2025, compared to December 31, 2024, primarily due to net income and a $1.6 million reduction (net of tax) in unrealized losses on securities available-for-sale[20] Book Value per Share: | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :-------------- | :-------------- | :-------------- | | Book value per share | $23.15 | $22.96 | $21.66 | | Tangible book value per share (non-GAAP) | $22.80 | $22.61 | $21.31 | Results of Operations This section analyzes the company's net interest income, noninterest income, and noninterest expense Net Interest Income Net interest income and net interest margin (NIM) both increased quarter-over-quarter and year-over-year, primarily driven by higher average yields on loan balances, despite higher costs of deposits in the linked quarter Net Interest Income: | Period | Amount | Change QoQ | Change YoY | | :-------------------------------- | :-------------- | :-------------- | :-------------- | | Q2 2025 | $12.2 million | +$171 thousand (+1.4%) | +$63 thousand (+0.5%) | | Q1 2025 | $12.0 million | | | | Q2 2024 | $12.1 million | | | - The increase in net interest income from the linked quarter was primarily due to higher average yields on loan balances, partially offset by higher costs of deposits[13] Net Interest Margin (NIM): | Period | GAAP NIM | FTE NIM (non-GAAP) | | :-------------------------------- | :-------------- | :------------------- | | Q2 2025 | 3.70% | 3.71% | | Q1 2025 | 3.63% | 3.64% | | Q2 2024 | 3.62% | 3.63% | - Average yields on loans were 13 basis points higher in Q2 2025 compared to Q1 2025, and 5 basis points higher compared to Q2 2024, reflecting a higher interest rate environment[16] Noninterest Income Total noninterest income decreased quarter-over-quarter and year-over-year for Q2 2025, primarily due to the absence of a gain on subordinated notes recognized in Q1 and losses on repossessed assets. However, year-to-date noninterest income increased Total Noninterest Income: | Period | Amount | Change QoQ | Change YoY | | :-------------------------------- | :-------------- | :-------------- | :-------------- | | Q2 2025 | $3.2 million | -$598 thousand | -$222 thousand | | Q1 2025 | $3.8 million | | | | Q2 2024 | $3.5 million | | | - The linked-quarter decrease was primarily driven by the gain on redemption and retirement of subordinated notes recognized in Q1 2025 and losses on sales of repossessed assets, partially offset by no losses on available-for-sale securities in Q2[17] - Noninterest income for the six months ended June 30, 2025, increased $403 thousand to $7.1 million compared to the same period in 2024, driven by the Q1 gain on subordinated notes and increased fiduciary and asset management fees[17] Noninterest Expense Noninterest expense increased quarter-over-quarter and year-over-year for Q2 2025, mainly driven by higher merger-related costs and salaries and employee benefits. Year-to-date noninterest expense also increased due to merger costs Total Noninterest Expense: | Period | Amount | Change QoQ | Change YoY | | :-------------------------------- | :-------------- | :-------------- | :-------------- | | Q2 2025 | $13.4 million | +$917 thousand | +$1.0 million | | Q1 2025 | $12.4 million | | | | Q2 2024 | $12.3 million | | | - Increases in noninterest expense from both the linked quarter and prior year quarter were primarily related to higher merger-related costs and salaries and employee benefits, partially offset by decreases in occupancy and equipment[18] - For the six months ended June 30, 2025, noninterest expense increased $784 thousand (3.1%) over the same period in 2024, primarily due to merger-related costs[18] Non-GAAP Financial Measures The Company provides supplemental non-GAAP financial measures (fully tax-equivalent, tangible, or adjusted basis) to offer additional understanding of ongoing operations and enhance comparability, emphasizing they should not be considered in isolation from GAAP - Non-GAAP financial measures are provided as a supplement to GAAP to offer additional understanding of ongoing operations and provide meaningful information about operating performance by enhancing comparability with other financial periods and institutions[23] - These measures enhance comparability by excluding the effects of items or events that may obscure trends in the Company's underlying performance[23] - Non-GAAP measures should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP, and may not be comparable to non-GAAP measures of other companies[23] Forward-Looking Statements & Additional Information This section outlines forward-looking statements, associated risks, and important additional information Safe Harbor Statement Regarding Forward-Looking Statements The report contains forward-looking statements regarding the proposed merger, future financial performance, economic conditions, and strategic focuses, which are based on management's current beliefs and estimates but are subject to significant risks and uncertainties that could cause actual results to differ materially - Statements using terms like 'believes,' 'expects,' 'plans,' 'may,' 'will,' 'should,' 'projects,' 'contemplates,' 'anticipates,' 'forecasts,' 'intends' are forward-looking statements[24] - These statements are inherently uncertain and actual results could differ materially from historical results or those expressed or implied due to various factors[24] - Significant risks and uncertainties include the merger not closing, adverse effects on business relationships due to the merger, changes in interest rates, adverse developments in the financial services industry, economic conditions, and cybersecurity risks[26] Additional Information and Where to Find It This section clarifies that the communication is not an offer to sell securities and directs investors to read the proxy statement/offering circular and other relevant documents filed with the SEC and FDIC for comprehensive information on the proposed merger - This communication does not constitute an offer to sell or the solicitation of an offer to buy securities of Old Point or TowneBank[29] - Old Point filed a definitive proxy statement/offering circular with the SEC on May 27, 2025, which was delivered to shareholders seeking approval of the merger[29] - Investors are urged to read the proxy statement/offering circular and other relevant documents filed with the FDIC and SEC, available for free on their respective websites (www.sec.gov and www.fdic.gov)[30](index=30&type=chunk) Information about Old Point Financial Corporation Old Point Financial Corporation is the parent company of Old Point National Bank and Old Point Wealth Management, serving the Hampton Roads and Richmond regions of Virginia with a range of financial services - Old Point Financial Corporation (Nasdaq: OPOF) is the parent company of Old Point National Bank and Old Point Wealth Management[31] - Old Point National Bank offers a wide range of financial services, while Old Point Wealth Management is the largest wealth management services provider headquartered in Hampton Roads, Virginia[31] - The company serves the Hampton Roads and Richmond regions of Virginia[31] Financial Statements This section presents the company's consolidated financial statements and key financial ratios Consolidated Balance Sheets Presents the consolidated balance sheets of Old Point Financial Corporation and Subsidiaries as of June 30, 2025 (unaudited) and December 31, 2024 (derived from audited statements), detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheets (dollars in thousands): | (dollars in thousands) | June 30, 2025 (unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :---------------- | | Assets | | | | Cash and cash equivalents | $100,678 | $140,044 | | Securities available-for-sale, at fair value | $214,377 | $218,083 | | Loans, net | $994,334 | $998,713 | | Total assets | $1,402,527 | $1,450,570 | | Liabilities & Stockholders' Equity | | | | Total deposits | $1,208,701 | $1,254,914 | | Subordinated notes, net | $26,114 | $29,799 | | Total liabilities | $1,284,391 | $1,336,600 | | Total stockholders' equity | $118,136 | $113,970 | | Total liabilities and stockholders' equity | $1,402,527 | $1,450,570 | Consolidated Statements of Income Provides the unaudited consolidated statements of income for the three and six months ended June 30, 2025, and comparative periods, detailing interest income, interest expense, net interest income, provision for credit losses, noninterest income, noninterest expense, and net income Consolidated Statements of Income (dollars in thousands, except per share amounts): | (dollars in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------- | :------ | :------ | :------ | :------- | :------- | | Total interest and dividend income | $17,574 | $17,303 | $18,118 | $34,877 | $35,501 | | Total interest expense | $5,395 | $5,295 | $6,002 | $10,690 | $11,845 | | Net interest income | $12,179 | $12,008 | $12,116 | $24,187 | $23,656 | | Provision for credit losses | $468 | $717 | $261 | $1,185 | $341 | | Total noninterest income | $3,249 | $3,847 | $3,471 | $7,096 | $6,693 | | Total noninterest expense | $13,364 | $12,447 | $12,324 | $25,811 | $25,027 | | Net income | $1,242 | $2,158 | $2,529 | $3,400 | $4,246 | | Diluted EPS | $0.24 | $0.42 | $0.50 | $0.67 | $0.84 | | Cash Dividends Declared per Share | $0.14 | $0.14 | $0.14 | $0.28 | $0.28 | Average Balance Sheets, Net Interest Income And Rates (Quarterly) Presents average balance sheets, net interest income, and rates for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, on a fully tax-equivalent basis Average Balance Sheets, Net Interest Income And Rates (Quarterly, dollars in thousands): | (dollars in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------- | :------------ | | Average Earning Assets | | | | | Loans* | $1,002,979 | $1,012,941 | $1,061,884 | | Total earning assets | $1,321,949 | $1,340,652 | $1,342,747 | | Average Interest-Bearing Liabilities | | | | | Total time and savings deposits | $888,208 | $882,781 | $873,797 | | Total interest-bearing liabilities | $958,043 | $953,315 | $959,521 | | Net Interest Margin (FTE) | 3.71% | 3.64% | 3.63% | Average Balance Sheets, Net Interest Income And Rates (Six Months) Presents average balance sheets, net interest income, and rates for the six months ended June 30, 2025, and June 30, 2024, on a fully tax-equivalent basis Average Balance Sheets, Net Interest Income And Rates (Six Months, dollars in thousands): | (dollars in thousands) | YTD June 30, 2025 | YTD June 30, 2024 | | :-------------------------------- | :---------------- | :---------------- | | Average Earning Assets | | | | Loans* | $1,001,069 | $1,069,389 | | Total earning assets | $1,324,385 | $1,342,413 | | Average Interest-Bearing Liabilities | | | | Total time and savings deposits | $885,509 | $873,770 | | Total interest-bearing liabilities | $955,691 | $967,572 | | Net Interest Margin (FTE) | 3.69% | 3.55% | Selected Ratios Provides a table of key financial ratios and selected balance sheet items for various quarterly and six-month periods, including earnings per share, return on assets/equity, net interest margin, efficiency ratio, and asset quality metrics Selected Ratios (dollars in thousands, except per share data): | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------- | :------ | :------ | :------ | :------- | :------- | | Earnings per common share, diluted | $0.24 | $0.42 | $0.50 | $0.67 | $0.84 | | Return on average assets (ROA) | 0.35% | 0.61% | 0.71% | 0.48% | 0.59% | | Return on average equity (ROE) | 4.25% | 7.50% | 9.43% | 5.86% | 7.94% | | Net Interest Margin (FTE) (non-GAAP) | 3.71% | 3.64% | 3.63% | 3.69% | 3.55% | | Efficiency ratio | 86.62% | 78.51% | 79.07% | 82.51% | 82.46% | | Book value per share | $23.15 | $22.96 | $21.66 | | | | Tangible Book Value per share (non-GAAP) | $22.80 | $22.61 | $21.31 | | | | Non-performing assets (NPAs) / total assets | 0.24% | 0.29% | 0.14% | | | | Allowance for credit losses on loans / total loans | 1.19% | 1.17% | 1.12% | | | | Total non-performing assets | $3,329 | $4,147 | $1,959 | | | | Loans, net | $994,334 | $1,001,009 | $1,042,774 | | | | Deposits | $1,208,701 | $1,257,478 | $1,236,575 | | | | Total assets | $1,402,527 | $1,450,988 | $1,423,354 | | | Reconciliation of Certain Non-GAAP Financial Measures Provides detailed reconciliations of non-GAAP financial measures, including fully tax-equivalent net interest income, tangible book value per share, and adjusted operating earnings, to their most directly comparable GAAP measures Reconciliation of Certain Non-GAAP Financial Measures (dollars in thousands, except per share data): | (dollars in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------- | :------ | :------ | :------ | :------- | :------- | | Net interest income (GAAP) | $12,179 | $12,008 | $12,116 | $24,187 | $23,656 | | Net interest income (FTE) (non-GAAP) | $12,216 | $12,044 | $12,153 | $24,260 | $23,730 | | Total Stockholders' Equity (GAAP) | $118,136 | $117,217 | $109,996 | | | | Tangible Stockholders' Equity (non-GAAP) | $116,365 | $115,435 | $108,181 | | | | Book value per share | $23.15 | $22.96 | $21.66 | | | | Tangible book value per share (non-GAAP) | $22.80 | $22.61 | $21.31 | | | | Net income (GAAP) | $1,242 | $2,158 | $2,529 | $3,400 | $4,246 | | Adjusted Operating Earnings (non-GAAP) | $2,178 | $1,985 | $2,529 | $4,207 | $4,246 | | Diluted EPS (GAAP) | $0.24 | $0.42 | $0.50 | $0.67 | $0.84 | | Diluted EPS (non-GAAP) | $0.43 | $0.39 | $0.50 | $0.83 | $0.84 | | Return on average assets (GAAP) | 0.35% | 0.61% | 0.71% | 0.48% | 0.59% | | Adjusted return on average assets (non-GAAP) | 0.61% | 0.56% | 0.71% | 0.59% | 0.59% | | Return on average equity (GAAP) | 4.25% | 7.50% | 9.43% | 5.86% | 7.94% | | Adjusted return on average equity (non-GAAP) | 7.46% | 6.90% | 9.43% | 7.26% | 7.94% |