2.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
---------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
June 30, December 31,
1996 1995
---------- ----------
(In thousands)
(Unaudited)
ASSETS:
Cash and due from banks $ 6,054 $ 6,578
Interest-bearing deposits with banks 14 15
Federal funds sold 1,100 5,080
--------- ----------
Total cash and cash equivalents 7,168 11,673
Securities available for sale 27,009 24,505
Securities held to maturity, fair value of
$46,072 and $43,070 respectively 46,269 42,671
Loans, receivable net of unearned discount of
$4,197 and $4,313, respectively 124,516 122,938
Less: Allowance for loan losses 1,681 1,616
--------- ----------
Net Loans receivable 122,835 121,322
Bank premises and equipment, net 1,691 1,729
Accrued interest receivable and other assets 4,286 3,978
--------- ----------
TOTAL ASSETS $ 209,258 $ 205,878
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Non-interest bearing deposits $ 20,611 $ 22,297
Interest bearing deposits 160,085 155,856
--------- ----------
Total deposits 180,696 178,153
Accrued interest and other liabilities 3,141 3,002
--------- ----------
Total liabilities 183,837 181,155
--------- ----------
Stockholders' Equity:
Preferred stock, no par value, authorized
500,000 shares, no shares issued or outstanding - -
Common stock, par value $1.00, per share;
authorized 5,000,000 shares; issued and
outstanding 1,115,539 and 1,113,001 shares,
respectively 1,116 1,113
Capital surplus 14,822 14,734
Retained earnings 9,494 8,621
Net unrealized appreciation (depreciation) on
securities available for sale, net of taxes (11) 255
--------- --------
Total stockholders' equity 25,421 24,723
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $ 209,258 $ 205,878
========= ==========
3.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Quarter Ended For Six Months Ended
---------------------- --------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
---------- --------- --------- ---------
(In thousands, except per share amount)
INTEREST INCOME:
Loans receivable $ 2,841 $ 2,850 $ 5,711 $ 5,608
Taxable securities 703 466 1,397 903
Tax-exempt securities 309 339 587 666
Other 48 76 122 102
---------- ---------- ---------- ---------
Total interest income 3,901 3,731 7,817 7,279
INTEREST EXPENSE ON DEPOSITS 1,869 1,724 3,739 3,251
---------- ---------- ---------- ---------
Net interest income 2,032 2,007 4,078 4,028
PROVISION FOR LOAN LOSSES 45 45 90 90
---------- ---------- ---------- ---------
Net interest income, after
provision for loan losses 1,987 1,962 3,988 3,938
---------- ---------- ---------- ---------
OTHER INCOME:
Trust department 60 45 103 80
Customer service fees 56 53 113 110
Other 28 41 61 85
---------- ---------- ---------- ---------
Total other income 144 139 277 275
---------- ---------- ---------- ---------
OTHER EXPENSES:
Salaries and wages 553 525 1,098 1,057
Employee benefits 156 155 315 310
Occupancy 68 68 160 141
Equipment 91 72 170 146
Federal deposit insurance 1 106 2 218
Director compensation 90 91 177 201
Taxes, other than income 59 55 116 105
Other 267 256 531 544
---------- ---------- ---------- --------
Total other expenses 1,285 1,328 2,569 2,722
---------- ---------- ---------- --------
INCOME BEFORE INCOME TAXES 846 773 1,696 1,491
FEDERAL INCOME TAXES 221 158 411 352
---------- ---------- ---------- ---------
Net income $ 625 $ 615 $ 1,285 $ 1,139
========== ========== ========== ==========
PER SHARE DATA:
Net income $ .56 $ .55 $ 1.15 $ 1.02
========== ========== ========== ==========
Weighted average number of
shares outstanding 1,113,847 1,113,001 1,113,424 1,113,001
========= ========= ========= =========
4.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(Unaudited)
Net unrealized
Appreciation
(Depreciation)
on Securities
Common Capital Retained Available
Stock Surplus Earnings For Sale Total
---------- ----------- ----------- ------------- -----------
(In thousands)
BALANCE,
DECEMBER 31,
1995 $ 1,113 $ 14,734 $ 8,621 255 $ 24,723
Net income for
the six
months ended
June 30, 1996 - - 1,285 - 1,285
Cash dividend,
$.37 per share - - (412) - (412)
Stock issued, dividend
reinvestment 3 88 - - 91
Net unrealized
depreciation on
securities available
for sale, net of
taxes of $6 - - - (266) (266)
---------- ----------- ----------- ------------- -----------
Balance June
30, 1996 $ 1,116 $ 14,822 $ 9,494 $ (11)$ 25,421
========== =========== =========== ============= ===========
5.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
For the Six Months Ended
-------------------------
June 30, June 30,
1996 1995
------------ -----------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,285 $ 1,139
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 90 90
Provision for depreciation and amortization 98 85
Net amortization on premiums of securities 120 20
Deferred directors' fees and supplemental
retirement plan expense 112 158
Payment of deferred compensation (72) (64)
Deferred income taxes (49) (48)
(Increase) decrease in accrued interest
receivable and other assets (170) (262)
Increase (decrease) in interest payable
and other liabilities 69 195
------------ -----------
Net cash provided by operating activities 1,483 1,313
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of available for sale securities (5,750) (5,852)
Proceeds from maturities of and principal
repayments on available for sale securities 2,823 1,712
Purchases of held to maturity securities (7,532) (2,301)
Proceeds from maturities of and principal
repayments on held to maturity securities 3,835 1,871
Net (increase) decrease in loans receivable (1,524) 997
Purchases of bank premises and equipment (61) (49)
------------ -----------
Net cash provided by (used in)
investing activities (8,209) (3,622)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 2,542 5,612
Cash dividends (412) (374)
Dividend reinvestment plan 91 -
------------ -----------
Net cash provided by (used in)
financing activities 2,221 5,238
------------ -----------
Increase (decrease) in cash and
cash equivalents (4,505) 2,929
CASH AND CASH EQUIVALENTS:
Beginning 11,673 5,985
------------ -----------
Ending $ 7,168 $ 8,914
============ ============
CASH PAYMENTS FOR:
Interest $ 3,691 $ 3,133
============ ============
Income Taxes 442 311
============ ============
6.
NOTE A - Basis of Presentation
The financial information includes the accounts of the Juniata Valley Financial
Corp. and its wholly owned subsidiary, The Juniata Valley Bank. All
significant intercompany accounts and transactions have been eliminated.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for fair presentation have been included. Operating results for the
six-month period ended June 30, 1996, are not necessarily indicative of the
results that may be expected for the year ended December 31, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in Juniata Valley Financial Corp. annual report on Form 10-K
for the year ended December 31, 1995.
7.
Management's Discussion and Analysis
Financial Condition:
Total assets of Juniata Valley Financial Corp. reached $209,258,000 as of June
30, 1996, an increase of $3,380,000 or 1.64% from December 31, 1995. An
increase in held to maturity securities of $3,598,000 from December 31, 1995,
to June 30, 1996, and an increase of $2,504,000 in available for sale
securities contributed to this growth in assets. The cash provided by
financing activities of $2,221,000 and by operating activities of $1,483,000
combined with the decrease in cash and cash equivalents of $4,505,000 for the
period ended June 30, 1996, were used to purchase securities which exceeded
repayments and maturities by $6,624,000. The remaining cash was used for loan
growth of $1,524,000 since the beginning of the year. Additions to bank
premises and equipment were $61,000.
There are no material loans classified for regulatory purposes as loss,
doubtful, substandard or special mention which management expects to
significantly impact future operating results, liquidity or capital resources.
Additionally, management is not aware of any information which would give
serious doubt as to the ability of its borrowers to substantially comply with
their loan repayment terms. The Corporation's problem loans (i.e., 90 days
past due and restructured loans) were not material for all periods presented.
Management is not aware of any current recommendations of the regulatory
authorities which, if implemented, would have a material effect on the
Corporation's liquidity, capital resources or operations.
A dividend reinvestment plan for stockholders was instituted on January 1,
1996. The Corporation pays dividends semi-annually on June 1 and December 1 of
every year. Under the plan additional shares of Juniata Valley Financial Corp
may be purchased at market value with reinvested dividends and voluntary cash
payments. The Corporation has reserved 100,000 shares of common stock for this
plan. On June 1, 1996, 2,538 shares were issued and 97,462 remain unissued.
Results of operations:
Interest income increased $538,000 or 7.39% for the first six months and
$170,000 or 4.56% for the quarter comparing 1996 to 1995. Interest expense
increased $488,000 or 15.01% for the first six months and $145,000 or 8.41% for
the quarter ended June 30, 1996 over 1995. These increases in interest income
and expense for the first six months ended June 30, 1996, versus 1995, are
reflective of an increase of both interest earning assets and interest bearing
liabilities and overall higher rates offered and paid in 1996 versus 1995.
However, repricing of the assets is lagging behind the repricing of the
liabilities, resulting in a smaller increase in net interest income of $50,000
or 1.24% year to date and $25,000 or 1.25% for the quarter ended June 30, 1996,
versus 1995.
Other income has increased $2,000 or .73% for the first six months and $5,000
or 3.60% for the quarter comparing 1996 to 1995. The increase for the first
six months was due to an increase of $23,000 in trust department income due to
the settlement of three estates in 1996 over 1995. This increase was offset by
a decrease in the other income category of $24,000 from 1995 to 1996. This
decrease is mainly due to a decrease in insurance fees earned on consumer
loans.
8.
Results of operations (continued):
Other expenses for the first six months decreased $153,000 or 5.62% and $43,000
or 3.24% for the quarter from 1996 over 1995. This can be attributed to the
decrease in the federal deposit insurance premiums of $216,000 year to date and
$105,000 for the quarter. This decrease was due to an industry wide decrease
in assessment rates on insured deposits. The effect of the decrease in the
deposit insurance premium assessment rate will continue to have a favorable
impact to the bank in the future. The $41,000 for the first six months and
$28,000 for the quarter increase in salaries and wages can be attributed to
annual merit increases and promotions of employees. The $19,000 increase year
to date in 1996 over 1995 in occupancy is due to snow removal. The $24,000
decrease in director compensation is due to declines in deferred compensation
and the director's retirement plan. The $13,000 decrease in the other category
is due to a $15,000 consulting fee incurred in 1995 not incurred in 1996.
All of these factors combined have contributed to an increase in net income of
$146,000 or 12.82% for the six months ended June 30, 1996.
Liquidity:
The objective of liquidity management is to ensure that sufficient funding is
available at a reasonable cost to meet the ongoing operational cash needs of
the Corporation and to take advantage of income producing opportunities as they
arise. While the desired level of liquidity will vary depending upon a variety
of factors, it is the primary goal of the Corporation to maintain a high level
of liquidity in all economic environments.
Principal sources of asset liquidity are provided by securities maturing in one
year or less, other short-term investments such as Federal Funds sold and cash
and due from banks. Liability liquidity, which is more difficult to measure,
can be met by attracting deposits and maintaining the core deposit base. The
Corporation joined the Federal Home Loan Bank of Pittsburgh in August of 1993
for the purpose of providing short term liquidity when other sources are unable
to fill these needs.
In view of the primary and secondary sources previously mentioned, Management
believes that the Corporation's liquidity is capable of providing the funds
needed to meet loan demand.
Interest rate sensitivity:
Interest rate sensitivity management is the responsibility of the
Asset/Liability Management Committee. This process involves the development
and implementation of strategies to maximize net interest margin, while
minimizing the earnings risk associated with changing interest rates. The
traditional gap analysis identifies the maturity and repricing terms of all
assets and liabilities.
As of June 30, 1996, the Corporation had a six-month negative gap of
$9,339,000. Generally a liability sensitive position indicates that more
liabilities than assets are expected to reprice within the time period and that
falling interest rates could positively affect net interest income while rising
interest rates could negatively affect net interest income. However, the
traditional analysis does not accurately reflect the Bank's interest rate
sensitivity since the rates on core deposits generally do not change as quickly
as market rates. Historically net interest income has, in fact, not been
subject to the degree of sensitivity indicated by the traditional analysis at
The Juniata Valley Bank.
9.
Capital Adequacy:
The Bank's regulatory capital ratios for the periods presented are as
follows:
Risk Weighted Assets Ratio:
Actual Required
------ --------
June 30, December 31, June 30, December 31,
1996 1995 1996 1995
------------- ------------ ------------- ------------
TIER I 18.16% 18.24% 4.0% 4.0%
TIER I & II 19.36% 19.45% 8.0% 8.0%
Total Assets Leveraged Ratio:
TIER I 12.28% 12.41% 4.0% 4.0%
At June 30, 1996, the Corporation exceeds the regulatory requirements
to be considered a "well capitalized" financial institution.
10.
Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K
None
(b) Exhibits
(27) Financial Data Schedules
Pursuant to the requirements 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.
Juniata Valley Financial Corp.
(Registrant)
Date_______________________________ By_______________________________
A. Jerome Cook, President
Date_______________________________ By_______________________________
Linda L. Engle, Treasurer
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<ARTICLE> 9
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<COMMON> 1,116
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