<PAGE>
2.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
---------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
March 31, December 31,
1996 1995
---------- ----------
(In thousands)
(Unaudited)
ASSETS:
Cash and due from banks $ 5,286 $ 6,578
Interest-bearing deposits with banks 59 15
Federal funds sold 7,050 5,080
--------- ----------
Total cash and cash equivalents 12,395 11,673
Securities available for sale 23,994 24,505
Securities held to maturity, fair value of
$45,175 and $43,070 respectively 45,154 42,671
Loans, receivable net of unearned discount of
$4,087 and $4,313, respectively 122,327 122,938
Less: Allowance for loan losses 1,658 1,616
--------- ----------
Net Loans receivable 120,669 121,322
Bank premises and equipment, net 1,700 1,729
Accrued interest receivable and other assets 4,320 3,978
--------- ----------
TOTAL ASSETS $ 208,232 $ 205,878
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Non-interest bearing deposits $ 20,589 $ 22,297
Interest bearing deposits 159,063 155,856
--------- ----------
Total deposits 179,652 178,153
Accrued interest and other liabilities 3,355 3,002
--------- ----------
Total liabilities 183,007 181,155
--------- ----------
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 2,000,000 shares; issued and
outstanding 1,113,001 shares 1,113 1,113
Capital surplus 14,734 14,734
Retained earnings 9,282 8,621
Net unrealized appreciation on securities
available for sale, net of taxes 96 255
--------- ----------
Total stockholders' equity 25,225 24,723
--------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $ 208,232 $ 205,878
========= ==========
<PAGE>
3.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Quarter Ended
----------------------
March 31, March 31,
1996 1995
---------- ----------
(In thousands, except
per share amounts)
INTEREST INCOME:
Loans receivable, including fees $ 2,870 $ 2,758
Taxable securities 694 437
Tax-exempt securities 278 327
Other 74 26
---------- ----------
Total interest income 3,916 3,548
INTEREST EXPENSE ON DEPOSITS 1,871 1,527
---------- ----------
Net interest income 2,045 2,021
PROVISION FOR LOAN LOSSES 45 45
---------- ----------
Net interest income, after
provision for loan losses 2,000 1,976
---------- ----------
OTHER INCOME:
Trust department 43 35
Customer service fee 57 57
Other 33 44
---------- ----------
Total other income 133 136
---------- ----------
OTHER EXPENSES:
Salaries and wages 545 532
Employee benefits 159 155
Occupancy 91 73
Equipment 79 74
Federal deposit insurance premiums 1 112
Director compensation 87 103
Taxes, other than income 57 51
Other 264 294
---------- ----------
Total other expenses 1,283 1,394
---------- ----------
INCOME BEFORE INCOME TAXES 850 718
FEDERAL INCOME TAXES 189 194
---------- ----------
Net income $ 661 $ 524
========== ==========
PER SHARE DATA:
Net income .59 .47
========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 1,113,001 1,113,001
========== ==========
<PAGE>
4.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
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
three months
ended March
31, 1996 - - 661 - 661
Net change in
unrealized
appreciation on
securities available
for sale, net of
taxes of $82 - - - (159) (159)
---------- ----------- ----------- ------------- -----------
Balance March
30, 1996 $ 1,113 $ 14,734 $ 9,282 $ 96 $ 25,225
========== =========== =========== ============= ===========
<PAGE>
5.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
For the Three Months Ended
-------------------------
March 31, March 31,
1996 1995
------------ -----------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 661 $ 524
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 45 45
Provision for depreciation and amortization 86 43
Deferred directors' fees and supplemental
retirement plan expense 55 79
Payment of deferred compensation (34) (31)
Deferred income taxes (36) (21)
(Increase) decrease in accrued interest
receivable and other assets (194) (258)
Increase (decrease) in interest payable
and other liabilities 318 247
------------ -----------
Net cash provided by operating activities 901 628
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale (1,563) (89)
Proceeds from maturities of and principal
repayments on securities available for sale 1,823 1,296
Purchases of securities held to maturity (5,303) (1,145)
Proceeds from maturities of and principal
repayments on securities held to maturity 2,791 939
Net (increase) decrease in loans receivable 593 (133)
Purchases of bank premises and equipment (18) (14)
------------ -----------
Net cash provided by (used in)
investing activities (1,677) 854
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 1,498 2,884
------------ -----------
Net cash provided by (used in)
financing activities 1,498 2,884
------------ -----------
Increase (decrease) in cash and
cash equivalents 722 4,366
CASH AND CASH EQUIVALENTS:
Beginning 11,673 5,985
------------ -----------
Ending $ 12,395 $ 10,351
============ ============
CASH PAYMENTS FOR:
Interest $ 1,855 $ 1,483
============ ============
<PAGE>
6.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
NOTES TO THE INTERIM FINANCIAL STATEMENTS
MARCH 31, 1996
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
three-month period ended March 31, 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.
NOTE B - Significant Accounting Policies
FAS No. 121 - "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of"
On January 1, 1996, the Financial Accounting Standards Board (FASB) issued
Statement No. 121, "Accounting for the impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" which establishes accounting and
measurement standards for the impairment of long-lived assets such as property
and equipment, certain identifiable intangibles and goodwill related to those
assets. There was no effect on the financial statement upon the adoption of
Statement 121.
<PAGE>
7.
Management's Discussion and Analysis
Financial Condition:
Total assets of Juniata Valley Financial Corp. reached $208,232,000 as of March
31, 1996, an increase of $2,354,000 or 1.14% from December 31, 1995. An
increase in securities held to maturity of $2,483,000 from December 31, 1995,
to March 31, 1996, was the primary reason for the growth in assets. The cash
provided by financing activities of $1,498,000 and by operating activities of
$901,000 for the period ended March 31, 1996, were used to purchase securities
which exceeded repayments and maturities by $2,252,000. The remaining cash
increase was attributed to the increase in cash and cash equivalents. Net
loans outstanding declined by $611,000 since the beginning of the year.
Additions to bank premises and equipment were $18,000.
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.
Results of operations:
Interest income increased $368,000 or 10.37% for the first three months of 1996
compared to 1995. Interest expense increased $344,000 or 22.53% for the first
three months. These increases in interest income and expense for the first
three months ended March 31, 1996, 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 $24,000 or 1.19% for the first three months
ended March 31, 1996, versus 1995.
Other income has decreased $3,000 or 2.21% for the first three months of 1996
over 1995. The decrease for the first three months was due to a decrease of
$11,000 in the other category. This was due to a tax refund received in 1995.
An increase of $8,000 in trust department income helped to offset the decrease,
as a result of the settlement of two estates.
Other expenses for the first three months decreased $111,000 or 7.96% from 1996
over 1995. This can be attributed to the decrease in the federal deposit
insurance premiums of $111,000. 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 $13,000 increase in salaries
and wages can be attributed to annual merit increases and promotions of
employees. The $18,000 decrease in 1996 over 1995 in occupancy is due to snow
removal. The $16,000 decrease in director compensation is due to declines in
deferred compensation and the director's retirement plan. The $30,000 decrease
in the other category is due to a $15,000 consulting fee incurred in 1995 not
incurred in 1996; and a $15,000 decrease in repossession and loan collection
expense.
<PAGE>
8.
Results of operations (continued):
All of these factors combined have contributed to an increase in net income of
$137,000 or 26.15% for the three months ended March 31, 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
interest earning assets and interest bearing liabilities.
As of March 31, 1996, the Corporation had a six-month negative gap of
$1,812,000. Generally a liability sensitive position indicates that more
liabilities than assets are expected to re-price 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.
<PAGE>
9.
Capital Adequacy:
The Bank's regulatory capital ratios for the periods presented are as
follows:
Risk Weighted Assets Ratio:
Actual Required
------ --------
March 31, December 31, March 31, December 31,
1996 1995 1996 1995
------------- ------------ ------------- ------------
TIER I 18.34% 18.24% 8.0% 8.0%
TIER I & II 19.55% 19.45% 8.0% 8.0%
Total Assets Leveraged Ratio:
TIER I 12.19% 12.41% 4.0% 4.0%
At March 31, 1996, the Corporation exceeds the regulatory requirements
to be considered a "well capitalized" financial institution.
<PAGE>
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
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 5,286
<INT-BEARING-DEPOSITS> 59
<FED-FUNDS-SOLD> 7,050
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 23,994
<INVESTMENTS-CARRYING> 45,154
<INVESTMENTS-MARKET> 45,175
<LOANS> 122,327
<ALLOWANCE> 1,658
<TOTAL-ASSETS> 208,232
<DEPOSITS> 179,652
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,355
<LONG-TERM> 0
0
0
<COMMON> 1,113
<OTHER-SE> 24,112
<TOTAL-LIABILITIES-AND-EQUITY> 208,232
<INTEREST-LOAN> 2,870
<INTEREST-INVEST> 972
<INTEREST-OTHER> 74
<INTEREST-TOTAL> 3,916
<INTEREST-DEPOSIT> 1,871
<INTEREST-EXPENSE> 1,871
<INTEREST-INCOME-NET> 2,045
<LOAN-LOSSES> 45
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,283
<INCOME-PRETAX> 850
<INCOME-PRE-EXTRAORDINARY> 661
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 661
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
<YIELD-ACTUAL> 8.01
<LOANS-NON> 453
<LOANS-PAST> 372
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 570
<ALLOWANCE-OPEN> 1,616
<CHARGE-OFFS> 8
<RECOVERIES> 5
<ALLOWANCE-CLOSE> 1,658
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
