SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarterly period Ended September 30, 1995 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from to Commission File No. 0-12896 (1934 Act) OLD POINT FINANCIAL CORPORATION (Exact name of registrant as specified 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) Registrant's telephone number, including area code (804) 728-1200 Not Applicable Former name, former address and former fiscal year, if changed since last report. Check whether the registrant (1) has filed all reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No State the number of shares outstanding of each of the issuer's classes of common stock as of October 15, 1995. Class Outstanding at October 15, 1995 Common Stock, $5.00 par value 1,273,537 shares OLD POINT FINANCIAL CORPORATION FORM 10-Q INDEX PART I - FINANCIAL INFORMATION Page Item 1. Financial Statements 1 Consolidated Balance Sheets September 30, 1995 and December 31, 1994 1 Consolidated Statement of Earnings Three months ended September 30, 1995 and 1994 2 Nine months ended September 30, 1995 and 1994 2 Consolidated Statement of Cash Flows Nine months ended September 30, 1995 and 1994 3 Consolidated Statements of Changes in Stockholders' Equity Nine months ended September 30, 1995 and 1994 4 Notes to Consolidated Financial Statements 5 Parent Only Balance Sheets September 30, 1995 and December 31, 1994 6 Parent Only Statement of Earnings Three months ended September 30, 1995 and 1994 6 Nine months ended September 30, 1995 and 1994 6 Parent Only Statement of Cash Flows Three months ended September 30, 1995 and 1994 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Analysis of Changes in Net Interest Income 9 Interest Sensitivity Analysis 12 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 14 (i) <TABLE> <CAPTION> PART 1. - FINANCIAL INFORMATION OLD POINT FINANCIAL CORPORATION Consolidated Balance Sheets September 30 December 31, (Unaudited) 1995 1994 Assets <S> <C> <C> Cash and due from banks........................ $ 9,114,984 $ 8,940,712 Securities available for sale, at market....... 73,307,861 82,598,958 Securities to be held to maturity.............. 18,118,263 919,141 Trading account securities..................... -- -- Federal funds sold............................. 7,664,286 246,900 Loans, total (excluding unearned income)....... 183,447,404 173,740,982 Less reserve for loan losses............... 2,656,269 2,646,692 Net loans.............................. 180,791,135 171,094,290 Bank premises and equipment.................... 7,517,964 7,432,994 Other real estate owned........................ 757,364 213,700 Other assets................................... 5,735,203 6,232,817 Total assets.............................. $303,007,060 $277,679,512 Liabilities Noninterest-bearing deposits................... $ 43,180,259 $ 37,086,440 Savings deposits............................... 96,052,047 96,985,612 Time deposits.................................. 116,574,385 101,527,085 Total deposits.............................. 255,806,691 235,599,137 Federal funds purchased and securities sold under agreement to repurchase.............. 12,043,542 13,694,007 Interest-bearing demand notes issued to the United States Treasury and other liabilities for borrowed money....... 4,056,927 1,162,240 Other liabilities.............................. 1,285,187 1,002,989 Total liabilities........................... 273,192,347 251,458,373 Stockholders' Equity Common stock, $5.00 par value.................. 6,367,685 6,319,515 1995 1994 Shares authorized......6,000,000 3,000,000 Shares outstanding.....1,273,537 1,261,283 Surplus........................................ 9,344,798 9,031,923 Undivided profits.............................. 14,072,341 12,793,050 Unrealized gain/(loss) on securities .......... 29,889 (1,923,349) Total stockholders' equity................. 29,814,713 26,221,139 Total liabilities and stockholders' equity. $303,007,060 $277,679,512 See accompanying notes </TABLE> <TABLE> <CAPTION> OLD POINT FINANCIAL CORPORATION Three Months Ended Nine Months Ended Consolidated Statements of Earnings September 30, September 30, (Unaudited) 1995 1994 1995 1994 Interest Income <S> <C> <C> <C> <C> Interest and fees on loans..................... $ 4,039,952 $ 3,583,181 $11,886,433 $10,045,543 Interest on federal funds sold................. 99,471 8,181 206,990 99,715 Interest on securities: Taxable..................................... 1,214,762 1,211,150 3,463,168 3,758,253 Exempt from federal income tax.............. 121,059 95,960 326,894 318,067 Interest on trading account securities......... 0 0 0 0 Total interest on securities............. 1,335,821 1,307,110 3,790,062 4,076,320 Total interest income...................... 5,475,244 4,898,472 15,883,485 14,221,578 Interest Expense Interest on savings deposits................... 702,686 700,257 2,078,268 2,066,624 Interest on time deposits...................... 1,622,824 1,087,037 4,384,826 3,129,275 Interest on federal funds purchased and securities sold under agreement to repurchase.. 143,520 130,814 401,950 373,381 Interest on demand notes (note balances) issued to the United States Treasury and on other borrowed money.................. 38,451 4,434 86,612 7,592 Total interest expense..................... 2,507,481 1,922,542 6,951,656 5,576,872 Net interest income............................ 2,967,763 2,975,930 8,931,829 8,644,706 Provision for loan losses...................... 0 0 25,000 25,000 Net interest income after provision for loan losses.............................. 2,967,763 2,975,930 8,906,829 8,619,706 Other Income Income from fiduciary activities............... 359,838 314,838 1,079,514 944,464 Service charges on deposit accounts............ 466,816 456,500 1,425,443 1,316,995 Other service charges, commissions and fees.... 80,869 55,964 177,610 250,034 Other operating income......................... 40,169 24,957 173,168 189,473 Income from trading account.................... 0 0 0 0 Security gains (losses)........................ 0 (3,044) 0 407,081 Total other income......................... 947,692 849,215 2,855,735 3,108,047 Other Expenses Salaries and employee benefits................. 1,800,476 1,773,968 5,345,882 5,277,459 Occupancy expense of Bank premises............. 178,581 181,606 526,842 528,213 Furniture and equipment expense................ 242,586 284,487 699,128 863,607 Other operating expenses....................... 668,398 759,344 2,233,471 2,321,207 Total other expenses....................... 2,890,041 2,999,405 8,805,323 8,990,486 Income before taxes............................ 1,025,414 825,740 2,957,241 2,737,267 Applicable income taxes ....................... 305,209 238,000 832,009 760,000 Net income..................................... $ 720,205 $ 587,740 $ 2,125,232 $ 1,977,267 Per Share Based on weighted average number of common shares outstanding.................... 1,273,537 1,261,283 1,271,813 1,259,488 Net income..................................... $ 0.57 $ 0.47 $ 1.67 $ 1.57 See accompanying notes </TABLE> <TABLE> <CAPTION> OLD POINT FINANCIAL CORPORATION Nine Months Ended Consolidated Statements of Cash Flows September 30, (Unaudited) 1995 1994 <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES Net income................................................ $ 2,125,233 $ 1,977,267 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization........................... 554,048 663,111 Provision for loan losses............................... 25,000 25,000 Gains on sale of investment securities, net............. 0 (407,081) Net amortization & accretion of securities.............. 847,725 1,021,298 Net (increase) decrease in trading account.............. 0 0 Increase in other real estate owned..................... (662,364) (245,700) (Increase) decrease in other assets..................... (477,807) (352,471) Increase (decrease) in other liabilities................ 282,198 260,935 Net cash provided by operating activities............. 2,694,033 2,942,359 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of securities ................................ (17,972,937) (7,981,925) Proceeds from maturities & calls of securities ......... 12,115,000 7,828,050 Proceeds from sales of securities ...................... 0 8,980,859 Loans made to customers................................. (64,952,268) (94,196,461) Principal payments received on loans.................... 55,261,268 75,159,508 Proceeds from sales of other real estate owned.......... 118,700 716,110 Purchases of premises and equipment..................... (639,018) (154,958) (Increase) decrease in federal funds sold............... (7,417,386) 1,901,854 Net cash provided by (used in) investing activities... (23,486,641) (7,746,963) CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in non-interest bearing deposits.... 6,093,819 624,629 Increase (decrease) in savings deposits................. (933,565) (4,599,085) Proceeds from the sale of certificates of deposit....... 56,103,912 44,919,472 Payments for maturing certificates of deposit........... (41,056,612) (38,008,247) Increase (decrease) in federal funds purchased & repurchase agreements.................................. (1,650,465) (727,720) Increase (decrease) in other borrowed money............. 2,894,687 3,246,430 Proceeds from issuance of common stock.................. 88,195 163,355 Dividends paid.......................................... (573,091) (504,243) Net cash provided by financing activities............. 20,966,880 5,114,591 Net increase (decrease) in cash and due from banks.... 174,272 309,987 Cash and due from banks at beginning of period........ 8,940,712 8,166,076 Cash and due from banks at end of period.............. $ 9,114,984 $ 8,476,063 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash payments for: Interest.............................................. $ 6,683,301 5,502,269 Income taxes.......................................... $ 830,000 680,000 See accompanying notes </TABLE> <TABLE> <CAPTION> OLD POINT FINANCIAL CORPORATION STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) Unrealized Common Stock Undivided Gain/(Loss) Shares Amount Surplus Profits On Securities Total FOR NINE MONTHS ENDED SEPTEMBER 30, 1995 <S> <C> <C> <C> <C> <C> <C> Balance at beginning of period.. 1,263,903 $6,319,515 $9,031,923 $12,793,050 ($1,923,349) $26,221,139 Net income...................... -- -- -- 2,125,232 -- 2,125,232 Sale of common stock............ 9,634 48,170 312,875 (272,850) -- 88,195 Cash dividends.................. -- -- -- (573,091) -- (573,091) Decrease in unrealized loss on securities................. -- -- -- -- 1,953,238 1,953,238 Balance at end of period........ 1,273,537 $6,367,685 $9,344,798 $14,072,341 $29,889 $29,814,713 FOR NINE MONTHS ENDED SEPTEMBER 30, 1994 Balance at beginning of period.. 1,254,285 $6,271,425 $8,738,143 $10,856,057 ($29,565) $25,836,060 Net income...................... -- -- -- 1,977,267 -- 1,977,267 Sale of common stock............ 6,998 34,990 209,940 (81,575) -- 163,355 Cash dividends.................. -- -- -- (504,241) -- (504,241) Increase in unrealized loss on securities................. -- -- -- -- (1,097,475) (1,097,475) Balance at end of period........ 1,261,283 $6,306,415 $8,948,083 $12,247,508 ($1,127,040) $26,374,966 See accompanying notes </TABLE> OLD POINT FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The accounting and reporting policies of the Registrant conform to generally accepted accounting principles and to the general practices within the banking industry. The interim financial statements have not been audited; however, in the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial statements have been included. These adjustments include estimated provisions for bonus, profit sharing and pension plans that are settled at year-end. These financial statements should be read in conjunction with the financial statements included in the Registrant's 1994 Annual Report to Shareholders and Form 10-KSB. 2. Earnings per common share outstanding are computed by dividing income by the weighted average number of outstanding common shares for each period presented. <TABLE> <CAPTION> OLD POINT FINANCIAL CORPORATION Parent only Balance Sheets September 30, December 31, (Unaudited) 1995 1994 <S> <C> <C> Assets Cash in bank................................ $ 102,432 $ 154,143 Investment Securities....................... 1,665,599 1,437,584 Total Loans................................. 52,575 54,169 Investment in Subsidiary.................... 27,896,963 24,507,062 Equipment................................... 18,851 0 Other assets................................ 78,294 68,181 Total Assets................................ $ 29,814,714 $ 26,221,139 Liabilities and Stockholders' Equity Total Liabilities........................... $ 0 $ 0 Stockholders' Equity........................ 29,814,714 26,221,139 Total Liabilities & Stockholders' Equity.... $ 29,814,714 $ 26,221,139 </TABLE> <TABLE> <CAPTION> OLD POINT FINANCIAL CORPORATION Three Months Ended: Nine Months Ended: Parent only Income Statements September 30, September 30, (Unaudited) 1995 1994 1995 1994 <S> <C> <C> <C> <C> Income Cash dividends from Subsidiary.............. $ 250,000 $ 250,000 $ 750,000 $ 700,000 Interest and fees on loans.................. 1,121 1,166 3,397 3,528 Interest income from investment securities.. 24,841 18,000 71,273 42,439 Gains (losses) from sale of investment securities................... 0 0 0 0 Other income................................ 0 0 0 0 Total Income................................ 275,962 269,166 824,670 745,967 Expenses Salaries and employee benefits.............. 47,772 46,143 152,718 144,782 Other expenses.............................. 15,159 9,438 41,812 49,281 Total Expenses.............................. 62,931 55,581 194,530 194,063 Income before taxes & undistributed net income of subsidiary................ 213,031 213,585 630,140 551,904 Income tax.................................. (12,500) (12,000) (40,700) (50,000) Net income before undistributed net income of subsidiary.................. 225,531 225,585 670,840 601,904 Undistributed net income of subisdiary...... 494,674 362,155 1,454,393 1,375,363 Net Income.................................. $ 720,205 $ 587,740 $ 2,125,233 $ 1,977,267 </TABLE> <TABLE> <CAPTION> OLD POINT FINANCIAL CORPORATION Nine Months Ended: Parent only Statements of Cash Flows September 30, (Unaudited) 1995 1994 <S> <C> <C> Cash Flows from Operating Activities: Net Income.................................. $ 2,125,233 $ 1,977,267 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed income of subsidiary....................... (1,454,393) (1,375,363) Accretion on securities................ (7,636) 0 Depreciation........................... 2,072 0 Gains(losses) on sale of securities..... 0 0 (Increase) Decrease in other assets..... (19,248) 128,613 Increase (decrease in other liabilities) 0 0 Net cash provided by operating activities... 646,028 730,517 Cash flows from investing activities: (Increase)decrease in investment securities. (193,514) (850,000) Purchase of equipment....................... (20,923) 0 (Increase)/decrease in other real estate owned....................... 0 435,000 Repayment of loans by customers............. 1,594 1,465 Net cash provided by investing activities... (212,843) (413,535) Cash flows from financing activities: Proceeds from issuance of common stock...... 88,195 163,355 Dividends paid.............................. (573,091) (504,243) Net cash provided by financing activities... (484,896) (340,888) Net increase (decrease) in cash & due from banks................... (51,711) (23,906) Cash & due from banks at beginning of period 154,143 132,382 Cash & due from banks at end of period...... $ 102,432 $ 108,476 </TABLE> Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Summary Net income for the third quarter of 1995 increased 23% to $720,205 from $587,740 for the comparable period in 1994. Earnings per share were $0.57 in the third quarter of 1995 compared with $0.47 in 1994. For the nine months ended September 30, 1995 net income increased 7% to $2,125,232 from $1,977,267 in 1994. Earnings per share were $1.67 for the first nine months of 1995 compared with $1.57 in 1994. Return on average assets was 0.97% for the third quarter of 1995 and 0.85% for the comparable period in 1994. Return on average equity was 9.71% for the third quarter of 1995 and 8.81% for the third quarter of 1994. For the nine months ended September 30, 1995 and 1994 return on average assets was 0.99% and 0.95% respectively. Return on average equity was 9.91% in 1995 and 9.83% in 1994. Net Interest Income Net interest income, on a fully tax equivalent basis, decreased $4,000, or 0.13%, for the third quarter of 1995 from 1994. Average earning assets increased 7.22% and the net interest yield, defined as the ratio of net interest income on a fully tax equivalent basis to total earning assets, declined from 4.72% in 1994 to 4.40% in 1995. For the nine months ended September 30, 1995 net interest income increased $297,000 or 3.33% over the comparable period in 1994. Average earning assets increased 3.88% and the net interest yield decreased from 4.60% in 1994 to 4.58% in 1995. The composition of average earning assets continued to change during the first nine months of 1995. Average loans increased 12%, average investment securities decreased 10%, and average Federal Funds Sold increased 27%. Certificates of deposit increased 18% while interest checking and savings accounts declined 6%. Net interest income has also been negatively impacted by nonperforming loans and loans charged off. The higher level of nonperforming loans is expected to continue to depress the net interest yield through the remainder of 1995. Page 9 shows an analysis of average earning assets, interest bearing liabilities and rates and yields. <TABLE> <CAPTION> _________________________________________ __________________________________________________________________ OLD POINT FINANCIAL CORPORATION NET INTEREST INCOME ANALYSIS For the quarter ended September 30, (Fully taxable equivalent basis) * 1995 1994 _________________________________________ ____________________________________ __________________________________ Dollars in thousands Average Average Interest Rates Interest Rates Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid _________________________________________ ____________________________________ ____________________________________ <S> <C> <C> <C> <C> <C> <C> Loans (net of unearned income)**......... $182,264 $ 4,067 8.93% $168,022 $ 3,622 8.62% Investment securities:*** Taxable................................ 80,255 1,215 6.06% 84,384 1,211 5.74% Tax-exempt............................. 7,861 183 9.31% 5,962 145 9.73% ________ ________ ________ ________ Total investment securities.......... 88,116 1,398 6.35% 90,346 1,356 6.00% Federal funds sold....................... 7,482 99 5.29% 794 8 4.03% ________ ________ ________ ________ Total earning assets................... $277,862 $5,564 8.01% $259,162 $4,986 7.70% Time and savings deposits: Interest-bearing transaction accounts.. $49,058 $325 2.65% $50,567 $335 2.65% Money market deposit accounts.......... 19,836 197 3.97% 19,480 160 3.29% Savings accounts....................... 26,188 181 2.76% 29,572 206 2.79% Certificates of deposit, $100,000 or more................... 14,633 208 5.69% 11,382 121 4.25% Other certificates of deposit.......... 100,595 1,414 5.62% 84,506 969 4.59% ________ ________ ________ ________ Total time and savings deposits...... 210,310 2,325 4.42% 195,507 1,791 3.66% Federal funds purchased and securities sold under agreement to repurchase..... 11,499 144 5.01% 13,724 131 3.82% Other short term borrowings.............. 2,368 39 6.59% 664 4 2.41% ________ ________ ________ ________ Total interest bearing liabilities..... $224,177 2,508 4.48% $209,895 1,926 3.67% Net interest income/yield................ $3,056 4.40% $3,060 4.72% ===== ===== ===== ===== ________________________________________________________________________________ For the nine months ended September 30, 1995 1994 ____________________________________ ____________________________________ Average Average Interest Rates Interest Rates Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid _________________________________________ ____________________________________ ____________________________________ Loans (net of unearned income)**......... $178,835 $11,999 8.95% $159,952 $10,162 8.47% Investment securities:*** Taxable................................ 77,732 3,463 5.94% 88,185 3,758 5.68% Tax-exempt............................. 6,933 495 9.52% 6,404 482 10.04% ________ ________ ________ ________ Total investment securities.......... 84,665 3,958 6.23% 94,589 4,240 5.98% Federal funds sold....................... 4,971 207 5.55% 3,905 100 3.41% ________ ________ ________ ________ Total earning assets................... $268,471 $16,164 8.03% $258,446 $14,502 7.48% Time and savings deposits: Interest-bearing transaction accounts.. $48,929 $964 2.63% $50,958 $993 2.60% Money market deposit accounts.......... 19,197 565 3.92% 19,659 444 3.01% Savings accounts....................... 26,763 549 2.74% 30,654 630 2.74% Certificates of deposit, $100,000 or more................... 13,350 542 5.41% 10,283 330 4.28% Other certificates of deposit.......... 96,015 3,843 5.34% 82,179 2,808 4.56% ________ ________ ________ ________ Total time and savings deposits...... 204,254 6,463 4.22% 193,733 5,205 3.58% Federal funds purchased and securities sold under agreement to repurchase... 10,956 402 4.89% 15,390 373 3.23% Other short term borrowings.............. 2,110 87 5.50% 278 9 4.32% ________ ________ ________ ________ Total interest bearing liabilities..... $217,320 6,952 4.27% $209,401 5,587 3.56% Net interest income/yield................ $9,212 4.58% $8,915 4.60% ===== ===== ===== ===== * Tax equivalent yields based on 34% tax rate. ** Nonaccrual loans are included in the average loan balances and income on such loans is recognized on a cash basis *** All investment securities are reported at amortized cost for this schedule. </TABLE> Provision/Allowance for Loan Losses The provision for loan losses remained constant at $25,000 for the first nine months of 1995 compared with the same period in 1994. Loans charged off (net of recoveries) were $15,422 in the first nine months of 1995, compared to $149,314 for the same period in 1994. On an annualized basis net loan charge-offs for the first nine months of 1995 were 0.01% of total loans at period end compared with 0.12% for the same period in 1994 and 0.85% for the full year of 1994. On September 30, 1995 nonperforming assets totalled $4.75 million compared with $3.57 million on September 30, 1994. The September 1995 total consisted of $403 thousand in foreclosed real estate, $354 thousand in a former branch site now offered for sale, and $3.99 million in nonaccrual loans. The September 1994 total consisted of $395 thousand in foreclosed real estate and $3.17 million in nonaccrual loans. Loans still accruing interest but past due 90 days or more increased to $1.0 million as of September 30, 1995 compared with $128 thousand on September 30, 1994. The allowance for loan losses on September 30, 1995 was $2.7 million. It represented a multiple of 0.56 times nonperforming assets and 0.67 times nonperforming loans. The allowance for loan losses on September 30, 1995 was 1.45% of loans (net of unearned income) compared to 1.52% at September 30, 1994. Other Income Other income increased $98,477, or 12%, for the third quarter of 1995 over the same period in 1994. The increase in 1995 resulted primarily from increased deposit and trust department fees as well as mortgage brokerage income. For the nine months ended September 30, 1995 other income decreased $252,312, or 8%, from 1994, primarily as a result of security gains in the first quarter of 1994. Other Expenses Other expenses decreased $109,364, or 4%, in the third quarter of 1995 from 1994. While salary expense increased slightly all categories of other expenses decreased. The Bank received a $146,187 FDIC insurance refund in September 1995, covering the period June through September 1995. For the nine months ended September 30, 1995 other expenses decreased $185,163, or 2%, from 1994. The 1995 expenses reflect lower loan administration and FDIC insurance expenses. Regulatory approval has been obtained for the relocation of our Sherwood branch office approximately one half mile from its present location during the fourth quarter 1995. Also, regulatory approval has been granted to open a new full service branch office in the Kiln Creek area of York County. It is anticipated that this branch will open in the first half of 1996. The Company also plans to construct a 15,000 square foot building in the Oyster Point area of Newport News to house Trust, Commercial and Real Estate Loans, and a branch office. This building is scheduled to be occupied in late 1996. Financial Condition At September 30, 1995 total assets were $303.0 million, up 9% from $277.7 million at December 31, 1994. Total loans grew $9.7 million, or 6%, while investment securities and federal funds sold increased $15.3 million, or 18%, in 1995. Total deposits grew $20.2 million, or 9% in 1995; while repurchase agreements, used as a cash management vehicle by commercial customers, declined $1.6 million, or 12%. Capital Resources The Company's capital position remains strong as evidenced by the regulatory capital measurements. At September 30, 1995 the Tier I capital ratio was 15.8%, the total capital ratio was 17.1%, and the leverage ratio was 9.9%. These ratios were all well above the regulatory minimum levels of 4.00%, 8.00%, and 3.00%, respectively. Liquidity and Interest Sensitivity Liquidity is the ability of the Company to meet present and future obligations to depositors and borrowers. As loan demand increases, liquidity will be provided by liquidation of short term investment securities as well as other means of financing such as purchase of federal funds and demand note to the US Treasury. The Company was liability sensitive as of September 30, 1995. There were $77.5 million more in liabilities than assets subject to repricing within three months. If interest rates rise, net interest income should decline. It should be noted, however, that the savings deposits; which consist of interest checking, money market, 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. Conversely, net interest income should improve if interest rates fall since liabilities will reprice faster than assets. The table on page 12 reflects the earlier of the maturity or repricing data for various assets and liabilities as of September 30, 1995. <TABLE> <CAPTION> INTEREST SENSITIVITY ANALYSIS As of September 30, 1995 MATURITY (in thousands) Within 4-12 1-5 Over 5 3 Months Months Years Years Total Uses of funds <S> <C> <C> <C> <C> <C> Federal funds sold.............. 7,664 -- -- -- 7,664 Taxable investments............. 9,322 14,195 48,265 9,990 81,772 Tax-exempt investments.......... 100 446 1,939 7,124 9,609 Total investments............. 17,086 14,641 50,204 17,114 99,045 Loans: Commercial.................... 28,310 1,881 18,598 960 49,749 Tax-exempt.................... 3,156 21 368 688 4,233 Installment................... 95 1,326 45,212 1,199 47,832 Real estate................... 10,141 3,763 56,650 10,471 81,025 Other......................... 608 -- -- -- 608 Total loans..................... 42,310 6,991 120,828 13,318 183,447 Total earning assets............ 59,396 21,632 171,032 30,432 282,492 Sources of funds Interest checking deposits...... 50,637 -- -- -- 50,637 Money market deposit accounts... 19,878 -- -- -- 19,878 Regular savings accounts........ 25,537 -- -- -- 25,537 Certificates of deposit......... $100,000 or more.............. 3,750 7,635 3,553 -- 14,938 Other time deposits............. 22,110 48,301 31,184 42 101,637 Federal funds purchased and securities sold under agreements to repurchase...... 11,032 1,012 -- -- 12,044 Other borrowed money............ 4,000 -- 57 -- 4,057 Total interest bearing liabiliti 136,944 56,948 34,794 42 228,728 Rate sensitivity GAP............ (77,548) (35,316) 136,238 30,390 53,764 Cumulative GAP.................. (77,548) (112,864) 23,374 53,764 </TABLE> PART II - OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) not applicable (b) No reports on Form 8-K were filed during the third quarter of 1995. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. OLD POINT FINANCIAL CORPORATION October 20, 1995 By: /s/Robert F. Shuford President and Director Principal Executive Officer By: /s/Louis G. Morris Senior Vice President and Treasurer Principal Financial and Accounting Officer