Old Point Financial Reports $2.2 Million Net Income in Q1 2025, Announces Merger with TowneBank

Old Point Financial Corporation reported a net income of $2.2 million for the first quarter of 2025, translating to a diluted earnings per share of $0.42, compared to $1.7 million or $0.34 per share in the same period last year. This marks a 25.7% increase in net income year-over-year, although it represents a decline of 25.1% from the previous quarter's net income of $2.9 million. The company's total assets stood at $1.5 billion, reflecting a marginal increase of $418 thousand, or 0.03%, from the end of 2024. Net loans held for investment also saw a slight increase of $2.3 million, or 0.2%, reaching $1.0 billion.

In terms of operational metrics, total deposits increased by $2.6 million, or 0.2%, from December 31, 2024, with noninterest-bearing deposits rising by 4.4%. The return on average equity (ROE) for the quarter was 7.50%, down from 9.96% in the previous quarter but up from 6.44% a year earlier. The net interest margin (NIM) improved to 3.63%, compared to 3.52% in the prior quarter and 3.45% in the first quarter of 2024. However, the provision for credit losses increased significantly to $717 thousand from $80 thousand a year ago, driven by heightened reserves for specific commercial real estate loans.

The company also reported a notable increase in non-performing assets, which rose to $4.2 million, or 0.29% of total assets, up from $2.7 million, or 0.19%, at the end of 2024. This increase was primarily attributed to a $1.2 million real estate construction loan moving into the past-due category. The allowance for credit losses (ACLL) increased to $12.0 million, reflecting management's response to the evolving economic landscape and specific loan performance issues.

Strategically, Old Point Financial announced a proposed merger with TowneBank on April 2, 2025. The merger agreement stipulates that shareholders can choose between receiving $41.00 per share in cash or 1.14 shares of TowneBank common stock, subject to proration. The merger is contingent upon various regulatory approvals and customary closing conditions. The company aims to leverage this merger to enhance its market position and operational efficiencies, although it acknowledges potential challenges in integration and regulatory compliance.

Looking ahead, Old Point Financial remains focused on maintaining strong asset quality while pursuing growth opportunities. The company is closely monitoring economic conditions that could impact its credit quality and overall performance. Management believes that its current liquidity position, bolstered by a stable deposit base and access to additional funding sources, will support its operational needs and strategic initiatives in the coming quarters.