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, 2000 [ ] 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) (Zip Code) (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 15, 2001 the aggregate market value of the 1,936,208 shares of common stock of Old Point Financial Corporation held by nonaffiliates was approximately $43 million based upon the closing price of the stock as of March 15, 2001. Number of shares outstanding on March 15, 2001 was 2,590,540. 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...............18 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............................................................45 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8....................................................45 -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 chartered 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, Norfolk 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, 2000, the Company had assets of $477.1 million, loans of $319.9 million, deposits of $374.8 million, and stockholders' equity of $46.5 million. At year end, the Company and its subsidiaries had a total of 238 employees, 29 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 2000 Hampton Roads Statistical Digest, there are more than 1.6 million people in the area with 30% of all jobs linked to the military. The service industry, which employed approximately 194,000 in 1999, is the biggest provider of jobs in Hampton Roads. The banking industry is highly competitive in the Hampton Roads area. There are approximately twenty 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"). As a bank holding company within the meaning of the Bank Holding -1-
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. The Company is currently reviewing the new law and at this time has not elected to be treated as a financial holding company under the 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> <CAPTION> TABLE I AVERAGE BALANCE SHEETS, NET INTEREST INCOME* AND RATES* - ----------------------------------------------------------------------------------------------------------------------------------- For the years ended December 31, 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------------------------------- 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 <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> Loans $303,826 $ 26,625 8.76% $259,320 $ 21,794 8.40% $226,908 $ 20,255 8.93% Investment securities: Taxable 71,148 4,383 6.16% 79,931 4,847 6.06% 87,112 5,285 6.07% Tax-exempt 54,726 4,090 7.47% 55,936 4,090 7.31% 34,317 2,665 7.77% -------- -------- -------- -------- -------- -------- Total investment securities 125,874 8,473 6.73% 135,867 8,937 6.58% 121,429 7,950 6.55% Federal funds sold 3,099 211 6.81% 4,131 219 5.30% 10,305 572 5.55% -------- -------- -------- -------- --------- -------- Total earning assets 432,799 35,309 8.16% 399,318 30,950 7.75% 358,642 28,777 8.02% Reserve for loan losses (3,394) (2,886) (2,628) -------- -------- -------- 429,405 396,432 356,014 Cash and due from banks 9,424 9,302 8,933 Bank premises and equipment 15,015 13,682 11,931 Other assets 5,759 4,265 3,878 -------- -------- -------- Total assets $459,603 $423,681 $380,756 ======== ======== ======== <CAPTION> LIABILITIES AND STOCKHOLDERS' EQUITY <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> Time and savings deposits: Interest-bearing transaction accounts $ 4,617 $ 109 2.36% $ 3,971 $ 94 2.37% $ 15,929 $ 346 2.17% Money market deposit accounts 93,458 3,013 3.22% 94,885 2,937 3.10% 71,199 2,326 3.27% Savings accounts 28,264 774 2.74% 27,923 765 2.74% 26,211 718 2.74% Certificates of deposit, $100,000 or more 35,241 2,051 5.82% 31,089 1,708 5.49% 26,084 1,462 5.60% Other certificates of deposit 136,792 7,863 5.75% 132,674 7,045 5.31% 121,676 6,740 5.54% -------- -------- -------- -------- -------- -------- Total time and savings deposits 298,372 13,810 4.63% 290,542 12,549 4.32% 261,099 11,592 4.44% Federal funds purchased, securities sold under agreement to repurchase & FHLB advances 48,922 2,769 5.66% 27,173 1,233 4.54% 21,713 1,013 4.67% Other short term borrowings 1,982 127 6.41% 1,691 83 4.91% 1,776 96 5.41% -------- -------- -------- -------- -------- -------- Total interest bearing liabilities 349,276 16,706 4.78% 319,406 13,865 4.34% 284,588 12,701 4.46% Demand deposits 65,169 61,503 56,001 Other liabilities 1,900 1,932 1,641 -------- -------- -------- Total liabilities 416,345 382,841 342,230 Stockholders' equity 43,258 40,840 38,526 -------- -------- -------- Total Liabilbities and Stockholders Equity $459,603 $423,681 $380,756 ======== ======== ======== Net interest income/yield $ 18,603 4.30% $ 17,085 4.28% $ 16,076 4.48% ======== ======== ======== Total deposits $363,541 $352,045 $317,100 ======== ======== ======== </TABLE> *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> <CAPTION> TABLE II ANALYSIS OF CHANGE IN NET INTEREST INCOME * - ----------------------------------------------------------------------------------------------------------------------------------- Year 2000 over 1999 Year 1999 over 1998 Year 1998 over 1997 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) - ------------------------------------------------------------------------------------------------------------------------------------ <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> INCOME FROM EARNING ASSETS Loans $ 3,740 $ 1,091 $ 4,831 $ 2,893 $(1,354) $ 1,539 $ 1,461 $ (494) $ 967 Investment Securities: Taxable (533) 69 (464) (436) (2) (438) 934 (122) 812 Tax-exempt (88) 88 - 1,679 (254) 1,425 825 (114) 711 -------- ------- --------- -------- -------- --------- ------- -------- ------- Total investment securities (621) 157 (464) 1,243 (256) 987 1,759 (236) 1,523 Federal funds sold (55) 47 (8) (343) (10) (353) 295 1 296 -------- ------- --------- -------- -------- --------- ------- -------- ------- 3,064 1,295 4,359 3,793 (1,620) 2,173 3,515 (729) 2,786 <CAPTION> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> INTEREST EXPENSE Interest bearing transaction accounts 15 (0) 15 (260) 8 (252) (186) (5) (191) Money market deposit accounts (44) 120 76 774 (163) 611 679 119 798 Savings accounts 9 (0) 9 47 0 47 11 (1) 10 Certificate of deposits, $100,000 or more 228 115 343 281 (35) 246 413 (86) 327 Other certificates of deposit 219 599 818 609 (304) 305 696 231 927 -------- -------- -------- -------- -------- --------- -------- -------- -------- Total time and savings deposits 427 834 1,261 1,451 (494) 957 1,613 258 1,871 Federal funds purchased, securities sold under agreement to repurchase and FHLB advances 987 549 1,536 255 (35) 220 191 (39) 152 Other short-term borrowings 14 30 44 (5) (8) (13) (4) 1 (3) -------- -------- -------- -------- -------- --------- -------- -------- -------- Total expense for interest bearing liabilities 1,428 1,413 2,841 1,701 (537) 1,164 1,800 220 2,020 Change in Net Interest Income $ 1,636 $ (118) $ 1,518 $ 2,092 $(1,083) $ 1,009 $ 1,715 $ (949) $ 766 * Computed on a fully taxable equvilent basis using a 34% rate. </TABLE> -4-
<TABLE> Interest Sensitivity - --------------------- The following table reflects the earlier of the maturity or repricing data for various assets and liabilities as of December 31, 2000. <CAPTION> TABLE III INTEREST SENSITIVITY ANALYSIS - ---------------------------------------------------------------------------------------------------------------- As of December 31, 2000 Within 4-12 1-5 Over 5 Dollars in thousands 3 Months Months Years Years Total - ---------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Uses of funds Federal funds sold..................... $ 5,397 $ - $ - $ - $ 5,397 Taxable investments.................... 7,064 250 55,719 6,890 69,923 Tax-exempt investments................. 0 1,393 6,928 45,093 53,414 _________ _________ _________ ________ _________ Total investments..................... 12,461 1,643 62,647 51,983 128,734 <CAPTION> Loans: <S> <C> <C> <C> <C> <C> Commercial............................ 25,758 3,060 28,296 1,520 58,634 Tax-exempt............................ 790 - - 2,524 3,314 Installment........................... 4,497 3,607 62,853 12,872 83,829 Real estate........................... 23,341 6,287 94,076 46,882 170,586 Other................................. 1,068 - 2,138 341 3,547 _________ _________ __________ ________ _________ Total loans............................ 55,455 12,954 187,363 64,139 319,910 _________ _________ __________ ________ _________ Total earning assets................... $ 67,915 $ 14,597 $ 250,010 $116,122 $ 448,644 <CAPTION> Sources of funds <S> <C> <C> <C> <C> <C> Interest checking deposits............. 9,143 - - - 9,143 Money market deposit accounts.......... 89,811 - - - 89,811 Regular savings accounts............... 28,706 - - - 28,706 Certificates of deposit $100,000 or more...................... 9,951 18,215 12,211 - 40,377 Other time deposits.................... 33,818 48,288 59,580 - 141,686 Federal funds purchased, securities sold under agreements to repurchase & FHLB advances....................... 37,038 5,000 10,000 - 52,038 Other borrowed money................... 2,089 - - - 2,089 _________ _________ __________ ________ _________ Total interest bearing liabilities..... $ 210,556 $ 71,503 $ 81,791 $ - $ 363,850 Rate sensitivity GAP................... $(142,641) $ (56,906) $ 168,219 $116,122 $ 84,794 Cumulative GAP......................... $(142,641) $(199,547) $ (31,328) $ 84,794 </TABLE> -5-
The Company was liability sensitive as of December 31, 2000. There were $143 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, 2000. <TABLE> TABLE IV INVESTMENT SECURITY MATURITIES & YIELDS <CAPTION> - ---------------------------------------------------------------------------------------------------- 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 - ---------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> December 31, 2000 Maturities: Within 1 year $ 1,753 5.50% $ 1,391 6.97% $ 3,144 6.15% After 1 year, but within 5 years 55,693 6.04% 6,785 7.56% 62,478 6.21% After 5 years, but within 10 years 5,792 6.06% 29,959 6.86% 35,751 6.73% After 10 years 0 0.00% 16,300 6.46% 16,300 6.46% TOTAL $63,238 6.03% $54,435 6.83% $117,673 6.40% December 31, 1999 $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% </TABLE> Yields are calculated on a fully tax equivalent basis using a 34% rate. At December 31, 2000, the book value of other marketable equity securities with no stated maturity totaled $5.7 million with an weighted average yield of 6.37%. These securities consisted of an adjustable rate mortgage fund of $3.0 million yielding 5.72%, Federal Home Loan Bank stock of $1.7 million yielding 7.75%, Federal Reserve stock of $169 thousand yielding 6.00%, money market fund of $807 thousand yielding 6.36% and other securities of $50 thousand. The book value of other marketable securities with no stated maturity totaled $5.1 million, yielding 5.59%; and $5.58 million, yielding 5.45%; at December 31, 1999, and 1998 respectively. -6-
III. Loan Portfolio The following table shows a breakdown of total loans by type at December 31 for years 1996 through 2000: <TABLE> <CAPTION> TABLE V LOANS - --------------------------------------------------------------------------------------- As of December 31, 2000 1999 1998 1997 1996 Dollars in thousands - --------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Commercial and other $ 62,181 $ 62,257 $ 53,793 $ 45,059 $ 28,944 Real Estate Construction 15,219 11,461 5,418 3,836 5,213 Real Estate Mortgage 155,367 140,004 116,635 104,141 104,230 Tax Exempt 3,314 2,747 1,401 2,093 2,464 Installment Loans to Individuals 83,829 65,178 58,618 66,615 57,733 -------- --------- -------- -------- ---------- Total $319,910 $ 281,647 $235,865 $221,744 $ 198,584 ======== ========= ======== ======== ========== </TABLE> 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, 2000 is presented below: <TABLE> TABLE VI MATURITY SCHEDULE OF SELECTED LOANS <CAPTION> - ------------------------------------------------------------------------------------------------ December 31, 2000 One year One through Over five Dollars in thousands or less five years years Total - ------------------------------------------------------------------------------------------------ <S> <C> <C> <C> <C> Commercial and other $ 29,885 $ 30,435 $ 1,861 $62,181 Real estate construction 11,019 4,069 131 15,219 --------- -------- -------- ------- Total $ 40,904 $ 34,504 $ 1,992 $77,400 <CAPTION> <S> <C> <C> <C> <C> Loans maturing after one year with: Fixed interest rate $ 34,504 $ 1,992 $36,495 Variable interest rate $ - $ - $ - </TABLE> -7-
The following table presents information concerning the aggregate amount of nonaccrual, past due and restructured loans as of December 31 for the years 1996 through 2000. <TABLE> <CAPTION> TABLE VII NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS - -------------------------------------------------------------------------------------- As of December 31, 2000 1999 1998 1997 1996 Dollars in thousands - -------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Nonaccrual loans $ 37 $ 514 $ 253 $ 660 $1,550 Accruing loans past due 90 days or more 470 1,351 641 455 1,342 Restructured loans none none none none none Interest income which would have been recorded under original loan terms 25 49 52 205 163 Interest income recorded during the period 9 68 123 485 222 </TABLE> 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, 2000 such problem loans, not included in Table VII, amounted to approximately $2.4 million. There were no relationships in excess of $500 thousand. 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 1996 through 2000. <TABLE> TABLE VIII ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES <CAPTION> - ------------------------------------------------------------------------------------------------------------------------- For the year ended December 31, 2000 1999 1998 1997 1996 Dollars in thousands - ------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Balance at beginning of period $ 3,111 $ 2,855 $ 2,671 $ 2,330 $ 2,251 Charge Offs: Commercial, financial and agricultural 266 138 296 84 98 Real estate construction - - - - - Real estate mortgage - 74 87 67 2 Installment Loans to individuals 486 581 564 717 825 --------- --------- --------- --------- --------- Total charge offs 752 793 947 868 925 <CAPTION> <S> <C> <C> <C> <C> <C> Recoveries: Commercial, financial and agricultural 418 104 139 239 87 Real estate construction - - - - - Real estate mortgage 3 1 25 1 14 Installment Loans to individuals 244 294 317 369 303 --------- --------- --------- --------- --------- Total recoveries 665 399 481 609 404 Net charge offs 87 394 466 259 521 Additions charged to operations 625 650 650 600 600 --------- --------- --------- --------- --------- Balance at end of period $ 3,649 $ 3,111 $ 2,855 $ 2,671 $ 2,330 <CAPTION> <S> <C> <C> <C> <C> <C> Selected loan loss statistics Loans (net of unearned income): End of period $ 319,910 $ 281,647 $ 235,865 $ 221,744 $ 198,584 Daily average $ 303,826 $ 259,320 $ 226,908 $ 210,934 $ 192,940 Net charge offs to average total loans 0.03% 0.15% 0.21% 0.12% 0.27% Provision for loan losses to average total loans 0.21% 0.25% 0.29% 0.28% 0.31% Provision for loan losses to net charge offs 718.39% 164.97% 139.48% 231.66% 115.16% Allowance for loan losses to period end loans 1.14% 1.10% 1.21% 1.20% 1.17% Earnings to loan loss coverage* 80.06 16.97 14.64 23.67 10.28 * Income before taxes plus provision for loan losses, divided by net charge-offs. </TABLE> -9-
The following table shows the amount of the Allowance for Loan Losses allocated to each category at December 31 for the years 1996 through 2000. <TABLE> TABLE IX ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES <CAPTION> - ----------------------------------------------------------------------------------------------------------------------------------- As of December 31, 2000 1999 1998 1997 1996 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 to Category to Category to Category to Category to Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans - ----------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> Commercial and other $ 742 20.47% $ 828 23.08% $ 656 27.92% $ 575 21.26% $ 835 15.85% Real Estate Construction 49 4.76% 40 4.07% 17 2.30% 14 1.73% 23 2.62% Real Estate Mortgage 212 48.57% 195 49.71% 203 44.64% 240 46.97% 322 52.49% Consumer 519 26.20% 414 23.14% 370 25.14% 412 30.04% 391 29.04% Unallocated 2,127 - 1,634 - 1,609 - 1,430 - 759 - ------ ------- ------ ------- ------ ------- ------ ------- ------ ------- Total $3,649 100.00% $3,111 100.00% $2,855 100.00% $2,671 100.00% $2,330 100.00% </TABLE> V. Deposits The following table shows the average balances and average rates paid on deposits for the years ended December 31, 2000, 1999 and 1998. <TABLE> TABLE X DEPOSITS <CAPTION> - --------------------------------------------------------------------------------------------------- For the year ended December 31, 2000 1999 1998 Average Average Average Average Average Average Dollars in thousands Balance Rate Balance Rate Balance Rate - --------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> Interest bearing transaction accounts $ 4,617 2.36% $ 3,971 2.37% $ 15,929 2.17% Money market deposit accounts 93,458 3.22% 94,885 3.10% 71,199 3.27% Savings accounts 28,264 2.74% 27,923 2.74% 26,211 2.74% Certificate of deposit, $100,000 or more 35,241 5.82% 31,089 5.49% 26,084 5.60% Other certificate of deposit 136,792 5.75% 132,674 5.31% 121,676 5.54% --------- -------- -------- Total interest bearing deposits 298,372 4.63% 290,542 4.32% 261,099 4.44% Non-interest bearing demand deposits 65,169 61,503 56,001 --------- -------- -------- Total deposits $ 363,541 $352,045 $317,100 ========= ======== ======== </TABLE> -10-
The following table shows certificates of deposit in amounts of $100,000 or more as of December 31, 2000, 1999, and 1998 by time remaining until maturity. TABLE XI CERTIFICATE OF DEPOSIT $100,000 & MORE - --------------------------------------------------------------- Dollars in thousands 2000 1999 1998 Maturing in - --------------------------------------------------------------- 3 months or less $ 7,634 $ 6,457 $ 3,592 3 through 6 months 5,443 4,485 6,353 6 through 12 months 14,635 11,958 7,345 over 12 months 12,665 11,132 10,915 ---------- --------- -------- $ 40,377 $ 34,032 $ 28,205 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. 2000 1999 1998 Return on average assets 1.12% 1.14% 1.22% Return on average equity 11.87% 11.81% 12.03% Dividend payout ratio 29.23% 28.89% 26.62% Average equity to average assets 9.41% 9.64% 10.12% 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 2000, 1999, and 1998 are presented in the following table. -11-
<TABLE> <CAPTION> TABLE XII SHORT TERM BORROWINGS - ----------------------------------------------------------------------------------------------- 2000 1999 1998 Dollars in thousands Balance Rate Balance Rate Balance Rate - ----------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> Balance at December 31, Federal funds purchased $ - $ 2,400 5.00% $ - Securities sold under agreement to repurchase 27,038 4.38% 20,441 4.38% 19,128 4.25% U. S. treasury demand notes and other borrowed money 2,089 5.25% 3,317 5.25% 348 4.89% ---------- ---------- --------- Total $ 29,127 $ 26,158 $ 19,476 <CAPTION> Average daily balance outstanding: <S> <C> <C> <C> <C> <C> <C> Federal funds purchased $ 1,495 6.46% $ 792 5.07% $ 13 5.86% Securities sold under agreement to repurchase 24,511 5.10% 20,794 4.42% 21,700 4.66% U. S. treasury demand notes and other borrowed money 1,982 6.41% 1,691 4.79% 1,776 5.35% ---------- ---------- --------- Total $ 27,988 4.55% $ 23,277 4.55% $ 23,489 4.72% <CAPTION> The maximum amount outstanding at any month end: <S> <C> <C> <C> Federal funds purchased $ 10,000 $ 2,550 $ - Securities sold under agreement to repurchase $ 28,530 $ 22,013 $ 26,094 U. S. treasury demand notes and other borrowed money $ 6,397 $ 4,014 $ 4,024 </TABLE> -12-
Item 2. Description of Property The Bank owns the Main Office, five office buildings, and nine branches. 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 four branches are leased 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, 2000. Part II Item 5. Market for Common Equity And Related Stockholder Matters Beginning in 2000 the common stock of Old Point Financial Corporation was quoted on the Nasdaq SmallCap under the symbol "OPOF". The approximate number of shareholders of record as of December 31, 2000 was 1,423. The range of high and low prices and dividends per share of the Company's common stock for each quarter during 2000 and 1999 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> TABLE XIII SELECTED FINANCIAL HIGHLIGHTS <CAPTION> - ----------------------------------------------------------------------------------------------------------------------------------- Years Ended December 31, 2000 1999 1998 1997 1996 - ----------------------------------------------------------------------------------------------------------------------------------- (Dollars in Thousands except per share data) <S> <C> <C> <C> <C> <C> RESULTS OF OPERATIONS Interest income........................................... $ 33,644 $ 29,483 $ 27,805 $ 25,242 $ 23,377 Interest expense.......................................... 16,707 13,862 12,700 10,681 10,093 ---------- --------- -------- --------- ---------- Net interest income....................................... 16,937 15,621 15,105 14,561 13,284 Provision for loan loss................................... 625 650 650 600 600 ---------- --------- -------- --------- ---------- Net interest income after provision for loan loss........ 16,312 14,971 14,455 13,961 12,684 Gains (losses) on sales of investment securities.......... 44 (54) - (1) 2 Noninterest income........................................ 5,641 5,440 4,911 4,275 4,134 Noninterest expenses...................................... 15,657 14,320 13,193 12,704 12,066 ---------- --------- -------- --------- ---------- Income before taxes....................................... 6,340 6,037 6,173 5,531 4,754 Income taxes ............................................. 1,207 1,215 1,537 1,441 1,309 ---------- --------- -------- --------- ---------- Net income................................................ $ 5,133 $ 4,822 $ 4,636 $ 4,090 $ 3,445 <CAPTION> <S> <C> <C> <C> <C> <C> FINANCIAL CONDITION Total assets.............................................. $ 477,096 $ 436,294 $404,118 $ 348,671 $ 316,345 Total deposits............................................ 374,779 360,918 343,413 287,100 263,519 Total loans............................................... 319,910 281,647 235,865 221,744 198,584 Stockholders' equity...................................... 46,497 40,814 40,013 36,332 32,400 Average assets............................................ 459,603 423,681 380,756 332,155 313,012 Average equity............................................ 43,258 40,840 38,526 34,418 31,333 <CAPTION> <S> <C> <C> <C> <C> <C> PERTINENT RATIOS Return on average assets.................................. 1.12% 1.14% 1.22% 1.23% 1.10% Return on average equity.................................. 11.87% 11.81% 12.03% 11.88% 10.99% Dividends paid as a percent of net income................. 29.23% 28.89% 26.62% 25.68% 25.88% Average equity as a percent of average assets............. 9.41% 9.64% 10.12% 10.36% 10.01% <CAPTION> <S> <C> <C> <C> <C> <C> PER SHARE DATA Basic EPS................................................. $ 1.98 $ 1.87 $ 1.80 $ 1.60 $ 1.35 Cash dividends declared................................... 0.58 0.54 0.48 0.41 0.35 Book value................................................ 17.95 15.80 15.54 14.16 12.72 <CAPTION> <S> <C> <C> <C> <C> <C> GROWTH RATES Year end assets........................................... 9.35% 7.96% 15.90% 10.22% 3.97% Year end deposits......................................... 3.84% 5.10% 19.61% 8.95% 2.72% Year end loans............................................ 13.59% 19.41% 6.37% 11.66% 4.87% Year end equity........................................... 13.92% 2.00% 10.13% 12.14% 6.83% Average assets............................................ 8.48% 11.27% 14.63% 6.12% 7.50% Average equity............................................ 5.92% 6.01% 11.94% 9.85% 7.96% Net income................................................ 6.45% 4.01% 13.35% 18.72% 47.10% Cash dividends declared................................... 7.41% 12.50% 17.07% 17.14% 14.75% Book value................................................ 13.60% 1.69% 9.74% 11.30% 6.83% </TABLE> -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 $5.13 million, or $1.98 per share in 2000 compared to $4.82 million, or $1.87 per share in 1999 and $4.64 million, or $1.80 per share in 1998. Return on average assets was 1.12% in 2000, 1.14% in 1999 and 1.22% in 1998. Return on average equity was 11.87% in 2000, 11.81% in 1999 and 12.03% in 1998. For the past five years return on average assets has averaged 1.16% and return on average equity has averaged 11.72%. 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 $18.60 million in 2000, up $1.5 million, or 9% from $17.09 million in 1999 which was up $1.0 million, or 6% from $16.08 million in 1998. 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 increased to 4.30% in 2000 from 4.28% in 1999, which was down from 4.48% in 1998. Tax equivalent interest income increased $4.36 million, or 14%, in 2000. Average earning assets grew $33.48 million, or 8%. Total average loans increased $44.51 million, or 17%, while average investment securities decreased $9.99 million, or 7%. The yield on earning assets increased in 2000 by forty-one basis points primarily due to loan growth. Interest expense increased $2.84 million or 20%, in 2000. Interest bearing liabilities increased 9% in 2000. The cost of funding liabilities increased forty-four basis points. The increase in cost of funds was due to higher market interest rates in 2000. The rates on funding liabilities in 2000 rose faster than 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 decreased to $625 thousand in 2000 and was $650 thousand in 1999 and 1998. The decrease was due to a reduction in the net charge offs from the prior two years as detailed in the next paragraph. Loans charged off during 2000 totalled $752 thousand compared to $793 thousand in 1999 and $947 thousand in 1998. Recoveries amounted to $665 thousand in 2000, $399 thousand in 1999 and $481 thousand in 1998. -15-
The Company's net loans charged off to year-end loans were 0.03 % in 2000, 0.15% in 1999, and 0.21% in 1998. The allowance for loan losses, as a percentage of year-end loans, was 1.14% in 2000, 1.10% in 1999, and 1.21% in 1998. As of December 31, 2000, nonperforming assets were $787 thousand, down from $868 thousand at year-end 1999. Nonperforming assets consist of loans in nonaccrual status and other real estate. The 2000 total consisted of other real estate of $750 thousand and $37 thousand in nonaccrual loans. The other real estate consists of $165 thousand in commercial property originally acquired as a potential branch site and now held for sale and $585 thousand in foreclosed properties. Nonaccrual loans consisted of $37 thousand in commercial loans. Loans still accruing interest but past due 90 days or more decreased to $470 thousand as of December 31, 2000 compared to $1.35 million as of December 31, 1999. 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 $299 thousand, or 6% in 2000 from 1999 compared to an increase of $475 thousand, or 10% in 1999 from 1998. Continuing the trend from 1999 the growth in other income is attributed to higher trust income and service charges on deposit accounts. In 2000 there were securities gains of $44 thousand as compared to losses totaling $54 thousand in 1999. OTHER EXPENSES Other expenses increased $1.3 million or 9% in 2000 over 1999 after increasing 9% in 1999 from 1998. Salary expense increased by 8% due to increased staffing for one new branch anticipated to open in early 2001 and normal salary increases. Occupancy expenses increased $87 thousand, or 9% in 2000 after increasing $27 thousand, or 3% in 1999. The Company opened a new commercial loan facility to better serve our customers. The increase of $198 thousand in equipment expenses is partially related to the acquisition of a new proof imaging system and ongoing upgrades to the computer systems. Other operating expenses increased $393 thousand or 12%. This increase was primarily caused by increased foreclosed property expense, the write-down of a branch site held for sale and a $34 thousand increase in FDIC insurance fees. ASSETS At December 31, 2000, the Company had total assets of $477.1 million, up 9% from $436.3 million at December 31, 1999. Average assets in 2000 were $459.6 million compared to $423.7 million in 1999. The growth in assets in 2000 was due to the increase in loans, which were up 14% in 2000. These loans were partially funded by the 3% decrease in investment securities. The Company also borrowed $18.0 million from the Federal Home Loan Bank. -16- The Old Point National Bank will open a new branch in early 2001. The branch will be located in Crown Center in downtown Norfolk. LOANS Total loans as of December 31, 2000 were $319.9 million, up 14% from $281.6 million at December 31, 1999. 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, 2000 total investment securities were $123.3 million, down 3% from $127.0 million on December 31, 1999. 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, 2000, total deposits amounted to $374.8 million, up 4% from $360.9 million on December 31, 1999. Non-interest bearing deposits increased $2.1 million, or 3%, at year-end 2000 over 1999. Savings deposits decreased $1.1 million, or 1%, in 2000 over 1999. Certificates of Deposit increased $12.9 million or 8% in 2000 over 1999. STOCKHOLDERS' EQUITY Total stockholders' equity as of December 31, 2000 was $46.5 million, up 14% from $40.8 million on December 31, 1999. 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 2000, 1999 and 1998. 2000 2000 1999 1998 Regulatory Requirements Tier 1 4.00% 13.77% 14.19% 14.89% Total Capital 8.00% 14.85% 15.23% 15.98% Tier 1 Leverage 13.00% 9.71% 10.08% 10.26% Year-end book value was $17.95 in 2000 and $15.80 in 1999. Cash dividends were $1.5 million, or $.58 per share in 2000 and $1.4 million, or $.54 per share in 1999. 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 2000 and 1999. The stock is quoted on the Nasdaq Small Cap under the symbol "OPOF" and the prices below are based on trade information. There were 1423 stockholders of the Company as of December 31, 2000. This -17-
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 2000 and 1999. 2000 1999 Market Value Market Value Dividend High Low Dividend High Low 1st Quarter $ 0.14 $20.50 $15.50 $ 0.13 $34.50 $28.75 2nd Quarter $ 0.14 $20.00 $18.81 $ 0.13 $30.00 $24.00 3rd Quarter $ 0.15 $20.50 $17.50 $ 0.14 $28.25 $24.00 4th Quarter $ 0.15 $19.00 $15.50 $ 0.14 $25.25 $19.50 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. Item 8. Financial Statements 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 Public 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 subsidiaries as of December 31, 2000 and 1999, 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, 2000. 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 a uditing 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 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 subsidiaries as of December 31, 2000 and 1999, and the consolidated results of their operations and cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with generally accepted accounting principles. /s/ Eggleston Smith P.C. - ------------------------ Eggleston Smith P.C. January 20, 2001 Newport News, Virginia -19-
<TABLE> <CAPTION> CONSOLIDATED BALANCE SHEETS - --------------------------------------------------------------------------------------------------- December 31, 2000 1999 - --------------------------------------------------------------------------------------------------- (Dollars in Thousands) <S> <C> <C> ASSETS Cash and due from banks................................... $ 11,044 $ 10,400 Investments: Securities available-for-sale, at market................ 77,096 81,147 Securities to be held-to-maturity (Market value $46,083 in 2000 and $44,271 in 1999)..... 46,241 45,839 Federal funds sold........................................ 5,397 241 Loans, total.............................................. 319,910 281,647 Less - allowance for loan losses.......................... 3,649 3,111 ---------- ---------- Net loans............................................... 316,261 278,536 Premises and equipment.................................... 15,059 14,324 Other real estate owned................................... 750 354 Other assets.............................................. 5,248 5,453 ---------- ---------- Total assets........................................... $ 477,096 $ 436,294 ========== ========== LIABILITIES Non interest-bearing deposits............................. $ 65,056 $ 63,006 Savings deposits.......................................... 127,660 128,763 Certificates of Deposit................................... 182,063 169,149 ---------- ---------- Total deposits......................................... 374,779 360,918 Federal funds purchased and securities sold under repurchase agreements................................... 27,038 22,841 Federal Home Loan Bank advances........................... 25,000 7,000 Interest bearing demand notes issued to the United States Treasury and other liabilities for borrowed money 2,089 3,317 Other liabilities......................................... 1,693 1,404 ---------- ---------- Total Liabilities...................................... 430,599 395,480 STOCKHOLDERS' EQUITY Common stock, $5 par value, 10,000,000 shares authorized Issued 2,590,540 in 2000 and 2,583,262 in 1999............ 12,953 12,916 Capital surplus........................................... 10,288 10,186 Retained earnings......................................... 23,297 19,675 Accumulated other comprehensive income (loss)............. (41) (1,963) ---------- ---------- Total stockholders' equity............................. 46,497 40,814 ---------- ---------- Total liabilities and stockholders' equity............. $ 477,096 $ 436,294 ========== ========== See Notes to Consolidated Financial Statements </TABLE> -20-
<TABLE> <CAPTION> CONSOLIDATED STATEMENTS OF INCOME - -------------------------------------------------------------------------------------------------------------------- Years Ended December 31, 2000 1999 1998 - -------------------------------------------------------------------------------------------------------------------- (Dollars in Thousands except per share amounts) <S> <C> <C> <C> INTEREST INCOME Interest and fees on loans.................................. $26,351 $ 21,718 $20,190 Interest on investment securities Taxable................................................... 4,383 4,846 5,284 Exempt from income tax.................................... 2,699 2,700 1,759 ------- -------- ------- 7,082 7,546 7,043 Interest on trading account securities...................... - - - Interest on federal funds sold.............................. 211 219 572 ------- -------- ------- Total interest income................................... 33,644 29,483 27,805 INTEREST EXPENSE Interest on savings deposits................................ 3,897 3,796 3,390 Interest on Certificates of Deposit......................... 9,914 8,752 8,201 Interest on federal funds purchased and securities sold under repurchase agreements........................... 1,344 960 1,013 Interest on Federal Home Loan Bank advances................. 1,425 273 - Interest on demand notes issued to the United States Treasury and other liabilities for borrowed money... 127 81 96 ------- -------- ------- Total interest expense................................... 16,707 13,862 12,700 ------- -------- ------- Net interest income......................................... 16,937 15,621 15,105 Provision for loan losses................................... 625 650 650 ------- -------- ------- Net interest income after provision for loan losses..... 16,312 14,971 14,455 OTHER INCOME Income from fiduciary activities............................ 2,460 2,306 1,930 Service charges on deposit accounts......................... 2,255 2,177 1,986 Other service charges, commissions and fees................. 726 691 642 Security gains (losses), net................................ 44 (54) - Income from trading account................................. - - - Other operating income...................................... 200 266 353 ------- -------- ------- Total other income....................................... 5,685 5,386 4,911 OTHER EXPENSE Salaries and employee benefits.............................. 9,336 8,677 7,797 Occupancy expense........................................... 1,054 967 940 Equipment expense........................................... 1,492 1,294 1,169 Other operating expense..................................... 3,775 3,382 3,287 ------- -------- ------- Total other expenses..................................... 15,657 14,320 13,193 ------- -------- ------- Income before income taxes.................................. 6,340 6,037 6,173 Income taxes................................................ 1,207 1,215 1,537 ------- -------- ------- Net income.................................................. $ 5,133 $ 4,822 $ 4,636 ======= ======== ======= Basic Earnings per Share Average shares outstanding (in thousands)................... 2,587 2,579 2,571 Net income per share of common stock........................ $ 1.98 $ 1.87 $ 1.80 Diluted Earnings per Share Average shares outstanding (in thousands)................... 2,588 2,588 2,595 Net income per share of common stock........................ $ 1.98 $ 1.86 $ 1.79 See Notes to Consolidated Financial Statements </TABLE> -21-
<TABLE> <CAPTION> Consolidated Statements of Cash Flows - ----------------------------------------------------------------------------------------------------------------- Years Ended December 31, 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------------- Dollars in Thousands <S> <C> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES Net income...................................................... $ 5,133 $ 4,822 $ 4,636 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization................................. 1,311 1,166 990 Provision for loan losses..................................... 625 650 650 (Gains) losses on sale of investment securities, net.......... (44) 54 - Net amortization and accretion of securities.................. 65 83 169 Net (increase) decrease in trading account.................... - - - Loss on disposal of equipment................................. 41 78 - (Increase) decrease in other real estate owned................. (396) (216) (297) (Increase) decrease in other assets (net of tax effect of FASB 115 adjustment).................. (785) 182 (887) Increase (decrease) in other liabilities...................... 289 188 167 Net cash provided by operating activities................... 6,239 7,007 5,428 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investment securities ........................... (3,041) (26,529) (77,059) Proceeds from maturities and calls of securities ............. 2,295 31,315 36,111 Proceeds from sales of available - for - sale securities ..... 7,285 1,346 - Proceeds from sales of held - to - maturity securities.. - - - Loans made to customers....................................... (109,388) (121,045) (147,183) Principal payments received on loans.......................... 71,038 74,869 132,596 Purchases of premises and equipment........................... (2,087) (3,516) (3,303) Proceeds from sales of premises and equipment................. - - 4 Proceeds from sales of other real estate owned................ - 346 587 (Increase) decrease in federal funds sold..................... (5,156) 6,337 399 Net cash provided by (used in) investing activities......... (39,054) (36,877) (57,848) CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in non-interest bearing deposits.......... 2,050 (2,330) 12,976 Increase (decrease) in savings deposits....................... (1,103) 7,081 21,691 Proceeds from the sale of Certificates of Deposit............. 72,263 56,054 57,762 Payments for maturing Certificates of Deposit................. (59,347) (43,300) (36,116) Increase (decrease) in federal funds purchased and repurchase agreements........................................ 4,197 3,712 (1,037) Increase (decrease) in Federal Home Loan Bank advances 18,000 7,000 - Increase (decrease) in interest bearing demand notes and other borrowed money........................ (1,229) 2,969 (3,677) Proceeds from issuance of common stock........................ 129 166 158 Dividends paid................................................ (1,501) (1,393) (1,234) Net cash provided by financing activities................... 33,459 29,959 50,523 Net increase (decrease) in cash and due from banks.......... 644 89 (1,897) Cash and due from banks at beginning of period............. 10,400 10,311 12,208 Cash and due from banks at end of period.................... $ 11,044 $ 10,400 $ 10,311 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash payments for: Interest.................................................... $ 16,382 $ 13,702 $ 12,533 Income taxes................................................ $ 1,475 1,150 1,600 SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING TRANSACTIONS Unrealized gain (loss) on investment securities, net of tax...................................... $ 1,922 $ (2,794) $ 121 See Notes to Consolidated Financial Statements. </TABLE> -22-
<TABLE> <CAPTION> CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - ----------------------------------------------------------------------------------------------------------------------------- Accumulated Common Other Total Stock Capital Retained Comprehensive Stockholders' (Par Value) Surplus Earnings Income (Loss) Equity - ----------------------------------------------------------------------------------------------------------------------------- (Dollars in Thousands) YEAR ENDED DECEMBER 31, 1998 <S> <C> <C> <C> <C> <C> Balance, beginning of year........... $ 12,831 $ 9,693 $13,098 $ 710 $ 36,332 Comprehensive income Net income......................... - - 4,636 - 4,636 (Decrease) increase in unrealized gain on investment securities..... - - - 121 121 -------- -------- ------- ---------- ---------- Total comprehensive income........... - - 4,636 121 4,757 Sale of stock........................ 46 327 (215) - 158 Cash dividends paid.................. - - (1,234) - (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......................... - - 4,822 - 4,822 (Decrease) increase in unrealized gain on investment securities..... - - - (2,794) (2,794) -------- -------- ------- ---------- ---------- Total comprehensive income........... - - 4,822 (2,794) 2,028 Sale of stock........................ 39 166 (39) - 166 Cash dividends paid.................. - - (1,393) - (1,393) -------- -------- ------- ---------- ---------- Balance, end of year................. $ 12,916 $ 10,186 $19,675 $ (1,963) $ 40,814 ======== ======== ======= ========== ========== YEAR ENDED DECEMBER 31, 2000 Balance, beginning of year........... $ 12,916 $ 10,186 $19,675 $ (1,963) $ 40,814 Comprehensive income Net income......................... - - 5,133 - 5,133 (Decrease) increase in unrealized gain on investment securities..... - - - 1,922 1,922 -------- -------- ------- ---------- ---------- Total comprehensive income........... - - 5,133 1,922 7,055 Sale of stock........................ 37 102 (10) - 129 -------- -------- ------- ---------- ---------- Cash dividends paid.................. - - (1,501) - (1,501) Balance, end of year................. $ 12,953 $ 10,288 $23,297 $ (41) $ 46,497 ======== ======== ======= ========== ========== See Notes to Consolidated Financial Statements </TABLE> -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 fifteen 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, 2000, 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. <TABLE> <CAPTION> The amortized cost and fair value of investment securities held-to-maturity at December 31, 2000 and 1999, were: - ---------------------------------------------------------------------------------------------------------------- Amortized Unrealized Unrealized Market Cost Gains Losses Value (Dollars in Thousands) <S> <C> <C> <C> <C> December 31, 2000: United States Treasury securities.... $ 499 $ 6 $ - $ 505 Obligations of other United States Government Agencies......... $ 44,437 $ - $ (246) $ 44,191 Obligations of state and political subdivisions....................... 1,305 82 - 1,387 -------- ------- ------- -------- $ 46,241 $ 88 $ (246) $ 46,083 ======== ======= ======= ======== December 31, 1999: Obligations of other United States Government Agencies......... $ 44,434 $ - $(1,541) $ 42,893 Obligations of state and political subdivisions....................... 1,405 - (27) 1,378 -------- ------- ------- -------- $ 45,839 $ - $(1,568) $ 44,271 ======== ======= ======= ======== The amortized cost and fair values of investment securities available-for-sale at December 31, 2000 were: - --------------------------------------------------------------------------------------------------------- <CAPTION> Amortized Unrealized Unrealized Market Cost Gains Losses Value (Dollars in Thousands) <S> <C> <C> <C> <C> United States Treasury securities.... $ 1,036 $ 32 $ - $ 1,068 Obligations of other United States Government agencies................. 17,266 60 (104) 17,222 Obligations of state and political subdivisions....................... 53,130 656 (543) 53,243 Adjustable Rate Mortgage Fund........ 3,807 (133) 3,674 Federal Home Loan Bank Stock......... 1,700 - - 1,700 Federal Reserve Bank stock........... 169 - - 169 Other marketable equity securities... 50 - (30) 20 -------- ------- ------- -------- Total................................ $ 77,158 $ 748 $ (810) $ 77,096 ======== ======= ======= ======== The amortized cost and fair values of investment securities available-for-sale at December 31, 1999 were: - --------------------------------------------------------------------------------------------------------- <CAPTION> Amortized Unrealized Unrealized Market Cost Gains Losses Value (Dollars in Thousands) <S> <C> <C> <C> <C> United States Treasury securities.... $ 1,045 $ - $ (11) $ 1,034 Obligations of other United States Government agencies................. 20,584 - (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 - - 1,208 Federal Reserve Bank stock........... 169 - - 169 Other marketable equity securities... 50 17 (2) 65 -------- ------- ------- -------- Total................................ $ 84,121 $ 322 $(3,296) $ 81,147 ======== ======= ======= ======== </TABLE> -27-
NOTE 2, Investment Securities (Continued) - ----------------------------------------- Investment securities carried at $57.3 million and $47.3 million at December 31, 2000 and 1999, 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, 2000 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. <TABLE> <CAPTION> December 31, 2000 Available-For-Sale Held-To-Maturity ------------------ ---------------- Amortized Market Amortized Market Cost Value Cost Value (Dollars in Thousands) <S> <C> <C> <C> <C> Due in one year or less.................... $ 2,894 $ 2,894 $ 250 $ 251 Due after one year through five years...... 18,792 18,961 43,686 43,458 Due after five years through ten years..... 34,751 35,037 1,000 987 Due after ten years........................ 14,995 14,641 1,305 1,387 -------- -------- --------- -------- Total debt securities.................... 71,432 71,533 46,241 46,083 Other securities without stated maturities. 5,726 5,563 - - -------- -------- --------- -------- Total investment securities $ 77,158 $ 77,096 $ 46,241 $ 46,083 ======== ======== ========= ======== </TABLE> The proceeds from the sale and maturities of investment securities, and the related realized gains and losses are shown below: 2000 1999 1998 (Dollars in Thousands) Proceeds from sales and maturities of investments............ $ 9,580 $ 32,661 $ 36,111 ======== ======== ========= Realized gains........................ $ 44 $ - $ - Realized losses....................... - 54 - -------- -------- --------- Net gains (losses).................. $ 44 $ (54) $ - ======== ======== ========= -28-
NOTE 3, Loans - ------------- At December 31, loans before allowance for loan losses consisted of: 2000 1999 (Dollars in Thousands) Commercial and other............... $ 62,181 $ 62,257 Real estate - construction......... 15,219 11,461 Real estate - mortgage............. 155,367 140,004 Installment loans to individuals... 83,829 65,178 Tax exempt loans................... 3,314 2,747 -------- -------- Total........................... $319,910 $281,647 ======== ======== Information concerning loans which are contractually past due or in non-accrual status is as follows: 2000 1999 (Dollars in Thousands) Contractually past due loans - past due 90 days or more and still accruing interest..... $ 470 $ 1,351 ======== ======== Loans which are in non-accrual status.......... $ 37 $ 514 ======== ======== 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 $3.0 million and $2.0 million at December 31, 2000 and 1999, 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, 2000. 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: 2000 1999 1998 (Dollars in Thousands) Balance, beginning of year... $ 3,111 $ 2,855 $ 2,671 Recoveries................... 665 399 481 Provision for loan losses.... 625 650 650 Loans charged off............ (752) (793) (947) -------- -------- ------- Balance, end of year...... $ 3,649 $ 3,111 $ 2,855 ======== ======== ======= -29-
NOTE 5, Premises and Equipment - ------------------------------ At December 31, premises and equipment consisted of: 2000 1999 (Dollars in Thousands) Land.............................. $ 3,453 $ 3,005 Buildings......................... 11,419 11,267 Leasehold improvements............ 805 882 Furniture, fixtures and equipment. 10,144 10,457 ------- --------- Total cost...................... 25,821 25,611 Less accumulated.................. depreciation and amortization.... 10,762 11,287 ------- --------- Net book value.................. $15,059 $ 14,324 ======= ========= NOTE 6, Other Real Estate Owned - ------------------------------- Other real estate consisted of the following at December 31: 2000 1999 (Dollars in Thousands) Foreclosed real estate............ $ 460 $ - Property held for sale............ 290 354 ------- --------- Total........................... $ 750 $ 354 ======= ========= NOTE 7. Deposits - ----------------- The aggregate amount of certificates of deposits in denominations of $100,000 or more at December 31, 2000 and 1999 was $40,377,000 and $34,032,000, respectively. At December 31, 2000, the scheduled maturities of certificates of deposits are as follows: Year (Dollars in Thousands) 2001 $27,712 2002 6,294 2003 5,039 2004 232 2005 1,100 Thereafter - ------- $40,377 ======= NOTE 8, Indebtedness - -------------------- The Bank's short-term borrowings include federal funds purchased, securities sold under repurchase agreements (including $1.6 million and $1.4 million to directors in 2000 and 1999, respectively) 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 9, Stock Option Plan - ------------------------- The Company has stock option plans which reserve 181,884 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: <TABLE> <CAPTION> Outstanding Granted Exercised Expired Outstanding Beginning During During During At End of Year the Year the Year the Year of Year <S> <C> <C> <C> <C> <C> 1998 ---- Shares............................ 84,534 64,500 (5,400) - 143,634 Weighted average exercisable price $ 19.09 $ 41.86 $ 18.54 $ - $ 29.33 1999 ---- Shares............................ 143,634 - (3,620) (2,040) 137,974 Weighted average exercisable price $ 29.33 $ - $ 18.48 $ 30.94 $ 29.60 2000 ---- Shares............................ 137,974 57,000 (2,220) (10,870) 181,884 Weighted average exercisable price $ 29.60 $ 18.40 $ 18.75 $ 36.29 $ 25.82 </TABLE> At December 31, 2000, 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 9, 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: 2000 1999 1998 Pro-forma net income (in thousands).. $ 5,112 $4,793 $4,565 ======= ====== ====== Pro-forma earnings per share......... $ 1.98 $ 1.85 $ 1.76 ======= ====== ====== 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 3.15% 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 1,000 in 2000, 16,000 in 1999, 24,000 in 1998. The Company also has an Employee Stock Purchase Plan which reserves 54,007 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 2000, 7,139 shares of common stock were purchased by employees. NOTE 10, Income Taxes - --------------------- The components of income tax expense are as follows: 2000 1999 1998 (Dollars in Thousands) Currently payable.................... $ 1,302 $1,213 $1,564 Deferred............................. (95) 2 (27) ------- ------ ------ Reported tax expense................. $ 1,207 $1,215 $1,537 ======= ====== ====== The items that caused timing differences affecting deferred income taxes are as follows: 2000 1999 1998 (Dollars in Thousands) Provision for loan losses............ $ (177) $ (108) $ (156) Pension plan expenses................ 37 34 46 Deferred loan fees, net.............. 7 27 (22) Security gains and losses............ 15 (6) - Interest on certain non-accrual loans 16 22 68 Depreciation......................... 70 38 31 Foreclosed assets.................... (64) - - Other................................ 1 (5) 6 ------- ------ ------ Total $ (95) $ 2 $ (27) ======= ====== ====== A reconciliation of the "expected" Federal income tax expense on income before income taxes with the reported income tax expense follows: 2000 1999 1998 (Dollars in Thousands) Expected tax expense (34%)........... $ 2,156 $2,053 $2,099 Interest expense on tax exempt assets 143 128 82 Tax exempt interest.................. (1,097) (967) (640) Disqualified incentive stock options. - (14) (10) Other, net........................... 5 15 6 ------- ------ ------ Reported tax expense................. $ 1,207 $1,215 $1,537 ======= ====== ====== -31-
NOTE 10, Income Taxes (Continued) - --------------------------------- The components of the net deferred tax asset included in other assets are as follows at December 31: 2000 1999 (Dollars in Thousands) Components of Deferred Tax Liability: Depreciation.......................... $ (287) $ (217) Accretion of discounts on securities.. (16) (12) Net unrealized (gain) on available-for-sale securities........ - - Deferred loan fees and costs.......... (132) (125) Pension............................... (110) (73) ------- ------ Deferred tax liability............... (545) (427) Components of Deferred Tax Asset: Allowance for loan losses............ 993 817 Net unrealized loss on available-for-sale securities....... 21 1,011 Interest on non-accrual loans........ 110 125 Deferred compensation................ - 2 Foreclosed assets.................... 64 - Capital loss carry forward........... 7 18 ------- ------ Deferred tax asset, net............. $ 650 $1,546 ======= ====== NOTE 11, 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, 2000, under noncancellable leases is $1.3 million which is due as follows: Year (Dollars in Thousands) 2001 $ 289 2002 288 2003 202 2004 174 2005 118 Remaining term of leases 266 ------- Total $ 1,337 ======= The aggregate rental expense of premises and equipment was $220 thousand, $219 thousand and $220 thousand for 2000, 1999 and 1998 respectively. -32-
NOTE 12, 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: <TABLE> <CAPTION> Pension Benefits 2000 1999 ----------------------- (Dollars in Thousands) <S> <C> <C> Change in benefit obligation Benefit obligation at beginning of year......... $ 2,711 $ 2,721 Service cost.................................... 173 158 Interest cost................................... 215 216 Actuarial change................................ - 263 Benefits paid................................... (218) (647) -------- -------- Benefit obligation at end of year............... $ 2,881 $ 2,711 ======== ======== Change in plan assets Fair value of plan assets at beginning of year.. $ 2,729 $ 2,830 Actual return on plan assets.................... (228) 302 Employer contribution........................... 276 244 Benefits paid .................................. (218) (647) -------- -------- Fair value of plan assets at end of year........ $ 2,559 $ 2,729 ======== ======== Funded Status................................... $ (322) $ 18 Unrecognized prior service cost................. 22 29 Unrecognized transition obligation.............. (12) (25) Unrecognized actuarial gains (loss)............. 636 192 -------- -------- Prepaid (accrued) benefit cost.................. $ 324 $ 214 ======== ======== </TABLE> <TABLE> <CAPTION> Weighted-average assumptions as of December 31: 2000 1999 -------------------- <S> <C> <C> Discount rate................................... 8.00% 8.00% Expected return on plan assets.................. 8.00% 8.00% Rate of compensation increase................... 5.00% 5.00% </TABLE> <TABLE> <CAPTION> 2000 1999 1998 ----------------------------------- Components of net periodic benefit cost (Dollars in Thousands) <S> <C> <C> <C> Service Cost.................................... $ 173 $ 158 $ 148 Interest cost................................... 215 216 193 Expected return on plan assets.................. (216) (224) (185) Amortization of prior service cost.............. 7 7 7 Amortization of transition obligation........... (13) (12) (12) -------- -------- ------- Net periodic benefit cost....................... $ 166 $ 145 $ 151 ======== ======== ======= </TABLE> NOTE 13, 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 $232 thousand and $ 246 thousand in 2000 and 1999 respectively. -33-
NOTE 14, 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: 2000 1999 --------------------- (Dollars in Thousands) Commitments to extend credit: Home equity lines of credit....... $11,422 $11,027 Construction and development loans committed but not funded.. 7,625 7,797 Other lines of credit (principally commercial)......... 44,603 30,339 ------- ------- Total $63,650 $49,163 ======= ======= Irrevocable letters of credit...... $ 781 $ 693 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 2002. 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 15, Fair Value of Financial Instruments - -------------------------------------------- The estimated fair value of the Bank's financial instruments at December 31 are as follows: <TABLE> <CAPTION> 2000 1999 Carrying Fair Carrying Fair Amount Value Amount Value (Dollars in Thousands) (Dollars in Thousands) <S> <C> <C> <C> <C> Cash and due from banks................... $ 11,044 $ 11,044 $ 10,400 $ 10,400 Investment securities, held-to-maturity... 46,241 46,083 45,839 44,271 Investment securities, available-for-sale. 77,096 77,096 81,147 81,147 Federal funds sold........................ 5,397 5,397 241 241 Loans, net of allowances for loan losses.. 316,261 312,721 278,536 274,780 Deposits: Non-interest bearing deposits............ 65,056 65,056 63,006 63,006 Savings deposits......................... 127,660 127,660 128,763 128,763 Certificates of Deposit.................. 182,063 182,489 169,149 168,431 Securities sold under repurchase agreement and federal funds purchased.... 27,038 27,038 22,841 22,841 Federal Home Loan Bank Advances........... 25,000 24,897 7,000 6,645 Interest bearing U.S. Treasury demand notes and other liabilities for borrowed money....................... 2,089 2,089 3,317 3,317 Commitments to extend credit.............. 63,650 63,650 49,163 49,163 Irrevocable letters of credit............. 781 781 693 693 </TABLE> 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 16, 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, 2000, 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 13.77% and 14.85%. The Company's leverage ratio at December 31, 2000 was 9.71%. 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 2001, without approval of the Comptroller of the Currency, $5.9 million plus an additional amount equal to the Bank's retained net profits for 2001 up to the date of any dividend declaration. -35-
OLD POINT FINANCIAL CORPORATION PARENT ONLY BALANCE SHEETS - --------------------------------------------------- As of December 31, Dollars in thousands 2000 1999 - --------------------------------------------------- ASSETS Cash in bank $ 225 $ 60 Investment securities 1,305 1,405 Total Loans - - Investment in subsidiary 44,954 39,324 Other real estate owned - - Other assets 13 25 ------- ------- TOTAL ASSETS $46,497 $40,814 ======= ======= LIABILITIES AND STOCKHOLDERS EQUITY Notes payable - bank $ - $ - Other liabilities - - Total liabilities - - Stockholders' equity 46,497 40,814 ------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $46,497 $40,814 ======= ======= <TABLE> <CAPTION> OLD POINT FINANCIAL CORPORATION PARENT ONLY INCOME STATEMENTS - ------------------------------------------------------------------- For the year ended December 31, Dollars in thousands 2000 1999 1998 - ------------------------------------------------------------------- INCOME <S> <C> <C> <C> Cash dividends from subsidiary $1,650 $1,985 $1,300 Interest and Fees on Loans 0 0 0 Interest income from investment securities 123 27 106 Securities gains (losses) 0 (54) Other income 144 76 - ------ ------ ------ TOTAL INCOME 1,917 2,034 1,406 EXPENSES Interest on borrowed money - - - Other expenses 400 47 41 ------ ------ ------ TOTAL EXPENSES 400 47 41 Income before taxes and undistributed net income of subsidiary 1,517 1,987 1,365 Income tax (74) (7) 22 ------ ------ ------ Net income before undistributed net income of subsidiary 1,591 1,994 1,343 Undistributed net income of subsidia 3,542 2,755 3,293 ------ ------- ------ NET INCOME $5,133 $ 4,749 $4,636 </TABLE> -36-
<TABLE> <CAPTION> OLD POINT FINANCIAL CORPORATION PARENT ONLY STATEMENT OF CASH FLOWS - ------------------------------------------------------------------------------------------------------- For the year ending December 31, 2000 1999 1998 Dollars in thousands - ------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES <S> <C> <C> <C> Net income (Loss) $ 5,133 $ 4,749 $ 4,636 Adjustments to Reconcile Net Income to Net Cash Provided by operating activities: Equity in undistributed (earnings) losses of subsidiaries (3,543) (2,755) (3,293) (Gain) or Loss on sales of assets - 54 - Increase (decrease) in other assets 12 (25) - Increase (decrease) in other liabilities - - (12) -------- ------- ------- Net cash provided (used) by operating activities 1,602 2,023 1,331 CASH FLOWS FROM INVESTING ACTIVITIES Maturity/call of investment securities 100 (1,500) - Sales of available-for-sale securities - 1,441 (250) Payments for investments in and advances to subsidiaries (165) (1,020) - Sale or repayment of investments in and advances to subsidiaries - 50 - (Purchase)/Sale of Premises and Equipment - - - Loans to customers - - - -------- ------- ------- Net cash provided (used) by investing activities (65) (1,029) (250) CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in borrowed money - - - Proceeds from issuance of common stock 129 165 158 Dividends paid (1,501) (1,393) (1,234) Other, net - - - -------- ------- ------- Net cash provided (used) by financing activities (1,372) (1,228) (1,076) Net increase in cash and due from banks 165 (234) 5 Cash and due from banks at beginning of period 60 294 289 -------- ------- ------- Cash and due from banks at end of period $ 225 $ 60 $ 294 </TABLE> Accounting Rule Changes - ----------------------- None. Regulatory Requirements and Restrictions - ---------------------------------------- For the reserve maintenance period in effect at December 31, 2000, 1999 and 1998 the bank was required to maintain with the Federal Reserve Bank of Richmond an average daily balance totaling approximately $581 thousand, $350 thousand and $350 thousand 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 2002 Annual Meeting, or until their successors have been duly elected and have qualified. <TABLE> <CAPTION> Amount and Nature of Principal Beneficial Ownership Director Occupation For as of March 15, 2001 Name (Age) Since (1) Past Five Years (Percent of Class)(2)(3) - --------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> Dr. Richard F. Clark (68) 1981 Pathologist (retired) 63,871 (4) Sentara Hampton General Hospital (2.5%) Russell Smith Evans Jr. (58) 1993 Assistant Treasurer and 3,550 (4) Corporate Fleet Manager * Ferguson Enterprises G. Royden Goodson, III (45) 1994 President 7,707 (4) Warwick Plumbing & Heating Corp. * Dr. Arthur D. Greene (56) 1994 Surgeon - Partner 4,286 (4) Tidewater Orthopaedic Associates * Gerald E. Hansen (59) 2000 President 1,001 Chesapeake Insurance Services, Inc. * Stephen D. Harris (59) 1988 Attorney-at-Law - Partner 10,453 (4) Geddy, Harris, Franck & Hickman, L.L.P. * John Cabot Ishon (54) 1989 President 17,783 (4) Hampton Stationery * Eugene M. Jordan (77) 1964 Attorney-at-Law 21,000 (4) John B. Morgan, II (54) 1994 President 4,334 (4) Morgan Marrow Insurance * Louis G. Morris (46) 2000 President & CEO 24,511 (4) Old Point National Bank * Dr. H. Robert Schappert (62) 1996 Veterinarian - Owner 90,740 (4) Beechmont Veterinary Hospital (3.5%) Robert F. Shuford (63) 1965 Chairman of the Board, President & CEO 160,086 (4)(5) Old Point Financial Corporation (6.1%) Chairman of the Board Old Point National Bank *Represents less than 1.0% of the total outstanding shares. </TABLE> -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, 1,5500 shares; Dr. Greene, 1,968 shares; Mr. Hansen, 361 shares; Mr. Harris, 407 shares, Mr. Ishon, 7,483 shares; Mr. Jordan, 6,000 shares; Mr. Morgan, 2,934 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 9,386, Dr. Schappert 1,000, and Mr. Shuford 26,570. (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 193,584 shares of stock as of March 15, 2001. 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 2000. -39-
In addition to the executive officers included in the preceding list of directors, the persons listed below are executive officers of the Company. Name and (Age) Principal Occupation with the Registrant Cary B. Epes (52) Senior Vice President/Credit Mr. Epes also serves as Executive Vice President and Chief Credit Officer for Old Point National Bank. Margaret P. Causby (50) Senior Vice President/Administration Ms. Causby also serves as Executive Vice President and Chief Administrative Officer for Old Point National Bank. Frank E. Continetti (41) Executive Vice President/Trust Mr. Continetti also serves as President and Chief Executive Officer for Old Point Trust & Financial Services, N.A. Laurie D. Grabow (43) Senior Vice President/Finance Ms. Grabow also serves as Senior Vice President and 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 2000 exceeded $100,000. The table also presents the number and percentages of shares of the Company's common stock held by these executive officers, who are all executive officers of the Company. <TABLE> <CAPTION> SUMMARY COMPENSATION TABLE Annual Compensation Amount of Nature of Beneficial Ownership as of March 15, 2001 Name and Principal All Other (Percent of Position Year Salary(1) Bonus(2) Compensation(3) Class)(4)(5)(6) - ----------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Robert F. Shuford, 2000 $156,800 $27,000 $15,519 160,086 Chairman, President 1999 $153,500 $27,000 $17,556 (6.1%) & CEO ( Company) 1998 $151,200 $34,560 $17,765 Louis G. Morris 2000 $129,800 $22,500 $10,241 24,511 President & CEO 1999 $100,267 $18,048 $ 9,220 * (Bank) 1998 $ 90,247 $21,600 $ 9,051 Cary B. Epes 2000 $107,000 $19,260 $ 8,948 12,679 EVP/CCO (Bank) 1999 $ 99,267 $17,868 $ 9,340 * 1998 $ 89,167 $21,600 $ 9,440 Margaret P. Causby 2000 $106,000 $19,080 $ 8,863 12,941 EVP/CAO (Bank) 1999 $ 97,947 $17,630 $ 9,004 * 1998 $ 88,167 $21,600 $ 9,035 Frank E.Continetti 2000 $102,000 $15,000 $ 8,511 3,586 President & CEO 1999 $ 83,409 $10,759 $ 7,724 * OPT&FS, NA 1998 $ 67,336 $ 4,665 $ 6,885 </TABLE> -41-
(1) Salary includes directors' fees as follows: Mr. Shuford - 2000, $6,800, 1999, $3,900 and 1998 $4,200. Mr. Morris - 2000, $4,800. Mr. Continetti - 2000, $2,000. (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, Mrs. Causby and Mr. Continetti is paid in the year in which it is earned. (3) Mr. Shuford has received other compensation as follows: <TABLE> <CAPTION> 2000 1999 1998 ------ ------ ------ <S> <C> <C> <C> Deferred Profit Sharing $3,896 $4,532 $5,090 Cash Profit Sharing 3,559 4,210 4,811 401(k) Matching Plan 4,500 4,488 4,410 Group Term Insurance 3,564 4,326 3,454 ------- ------- ------- Total $15,519 $17,556 $17,765 Mr. Morris has received other compensation as follows: 2000 1999 1998 ------- ------- ------- Deferred Profit Sharing $ 3,247 $ 3,037 $ 3,122 Cash Profit Sharing 2,966 2,821 2,951 401(k) Matching Plan 3,750 3,008 2,705 Group Term Insurance 278 354 273 ------- ------- ------- Total $10,241 $ 9,220 $ 9,051 Mr. Epes has received other compensation as follows: 2000 1999 1998 ------- ------- ------- Deferred Profit Sharing $ 2,779 $ 3,007 $ 3,087 Cash Profit Sharing 2,539 2,793 2,918 401(k) Matching Plan 3,210 2,978 2,675 Group Term Insurance 420 562 760 ------- ------- ------- Total $ 8,948 $ 9,340 $ 9,440 Mrs. Causby has received other compensation as follows: 2000 1999 1998 ------- ------- ------- Deferred Profit Sharing $ 2,753 $ 2,967 $ 3,053 Cash Profit Sharing 2,516 2,756 2,885 401(k) Matching Plan 3,180 2,938 2,645 </TABLE> -42-
<TABLE> <S> <C> <C> <C> Group Term Insurance 414 343 452 ------- ------- ------- Total $ 8,863 $ 9,004 $ 9,035 Mr. Continetti has received other compensation as follows: 2000 1999 1998 Deferred Profit Sharing $ 2,598 $ 2,527 $ 2,325 Cash Profit Sharing 2,373 2,347 2,204 401(k) Matching Plan 3,000 2,502 2,020 Group Term Insurance 540 348 336 ------- ------- ------- Total $ 8,511 $ 7,724 $ 6,885 </TABLE> (4) 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 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 26,570 shares, Mr. Morris 9,386 shares, Mr. Epes 11,006 shares, Mrs. Causby 11,106 shares and Mr. Continetti, 3,200 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, 2000 borrowing by all policy making officers and directors amounted to $3.0 million. This represented 6.5% of the total equity capital accounts of the Company as of December 31, 2000. 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 -43-
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 Troutman Sanders Mays & Valentine L.L.P. serves as legal counsel to the Company. Jordan, Ishon & Jordan serve as legal counsel to the Bank and Trust Company. Mr. Eugene M. Jordan is a member of the firm. During 2000, the firm received a retainer and fees totaling $51,835. Morgan Marrow Insurance of which John B. Morgan, II is President, provided insurance for which the Company paid $59,649 during 2000. Hampton Stationery, of whom John Cabot Ishon is President, provided office furniture and supplies for which the Company paid $36,735. 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. -44-
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, 2000 and 1999 Consolidated Statements of Income Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Changes in Stockholders' Equity Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows Years Ended December 31, 2000, 1999 and 1998 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 -45-
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 January 24, 2000 regarding the Company's announcement of approval by the Board of Directors to repurchase up to 5% of the corporation's common stock. A Current Report, Form 8-K, was filed on February 18, 2000 announcing the death of Gertrude Dixon, a Company board member. -46-
INDEX OF EXHIBITS Exhibit No. 3 Articles of Incorporation and Bylaws (incorporated by reference from our Annual Report on Form 10-K 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 23 Not Applicable 24 Consent of Independent Certified Public Accountants 25 Powers of Attorney 27 Not Applicable 28 Not Applicable 29 Not Applicable -47-
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, 2001. 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, 2001. /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 Royden G. Goodson, III /s/Dr. Arthur D. Greene - ----------------------- Director Arthur D. Green /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/Louis G. Morris - ------------------ Director Louis G. Morris /s/John B. Morgan - ----------------- Director John B. Morgan /s/Dr. H. Robert Schappert - -------------------------- Director Dr. H. Robert Schappert -48-