<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT 1934
For the quarterly period ended June 30, 1997
-------------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------------- -----------------------
Commission File Number 2-81699
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Juniata Valley Financial Corp.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2235254
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Bridge and Main Streets, Mifflintown, Pennsylvania 17059
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(717) 436-8211
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 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. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of June 30, 1997
------------------------------ ------------------------------------------
Common Stock ($1.00 par value) 1,400,686 shares
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2.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
---------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
June 30, December 31,
1997 1996
------------------------
(In thousands)
(Unaudited)
ASSETS:
Cash and due from banks $ 6,894 $ 5,857
Interest-bearing deposits with banks 63 65
Federal funds sold 2,600 3,100
-------- --------
Total cash and cash equivalents 9,557 9,022
Securities available for sale 28,925 30,215
Securities held to maturity, fair value of
$42,003 and $40,309, respectively 42,026 40,284
Loans, receivable net of unearned discount of
$4,606 and $4,279, respectively 133,328 128,146
Less: Allowance for loan losses 1,786 1,707
-------- --------
Net loans receivable 131,542 126,439
Bank premises and equipment, net 1,724 1,766
Accrued interest receivable and other assets 4,934 4,538
-------- --------
TOTAL ASSETS $218,708 $212,264
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Non-interest bearing deposits $ 22,264 $ 21,873
Interest bearing deposits 165,251 160,582
-------- --------
Total deposits 187,515 182,455
Accrued interest and other liabilities 3,306 3,046
-------- --------
Total liabilities 190,821 185,501
-------- --------
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 1,400,686 and 1,117,088 shares,
respectively 1,401 1,117
Capital surplus 14,709 14,879
Retained earnings 11,569 10,549
Net unrealized appreciation on securities
available for sale, net of taxes 208 218
-------- --------
Total stockholders' equity 27,887 26,763
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $218,708 $212,264
======== ========
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3.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
---------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Unaudited)
<TABLE>
<CAPTION>
For the Quarter Ended For Six Months Ended
------------------------ -----------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
------------------------ -----------------------
(In thousands, except per share amount)
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans receivable $ 3,049 $ 2,841 $ 6,008 $ 5,711
Taxable securities 698 703 1,358 1,397
Tax-exempt securities 315 309 631 587
Other 27 48 81 122
--------- --------- --------- ---------
Total interest income 4,089 3,901 8,078 7,817
INTEREST EXPENSE ON DEPOSITS 1,931 1,869 3,830 3,739
--------- --------- --------- ---------
Net interest income 2,158 2,032 4,248 4,078
PROVISION FOR LOAN LOSSES 45 45 90 90
--------- --------- --------- ---------
Net interest income, after provision
for loan losses 2,113 1,987 4,158 3,988
--------- --------- --------- ---------
OTHER INCOME:
Trust department 40 60 85 103
Customer service fees 62 56 125 113
Net realized gains on sales of securities 65 - 65 -
Other 101 28 163 61
--------- --------- --------- ---------
Total other income 268 144 438 277
--------- --------- --------- ---------
OTHER EXPENSES:
Salaries and wages 569 553 1,133 1,098
Employee benefits 148 156 301 315
Occupancy 74 68 147 160
Equipment 76 91 156 170
Federal deposit insurance 6 1 11 2
Director compensation 65 90 130 177
Taxes, other than income 64 59 126 116
Other 378 267 690 531
--------- --------- --------- ---------
Total other expenses 1,380 1,285 2,694 2,569
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 1,001 846 1,902 1,696
FEDERAL INCOME TAXES 231 221 435 411
--------- --------- --------- ---------
Net income $ 770 $ 625 $ 1,467 $ 1,285
========= ========= ========= =========
PER SHARE DATA:
Net income $ .55 $ .45 $ 1.05 $ .92
========= ========= ========= =========
Weighted average number of shares
outstanding 1,397,110 1,392,309 1,396,735 1,391,780
========= ========= ========= =========
</TABLE>
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4.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
---------------------------------------------
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
----------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 1997
--------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Net unrealized
Appreciation
(Depreciation)
on Securities
Common Capital Retained Available
Stock Surplus Earnings For Sale Total
---------- --------- ---------- ----------------- -----------
(In Thousands)
<S> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1996 $ 1,117 $ 14,879 $ 10,549 $ 218 $ 26,763
Net income for the six months
ended June 30, 1997 - - 1,467 - 1,467
Cash Dividend $.40 per share - - (447) - (447)
Stock issued, Employee stock
purchase plan 4 110 - - 114
5-for 4 stock split in the
form of a 25% stock dividend 280 (280) - - -
Net unrealized depreciation on
securities available for sale,
net of taxes - - - (10) (10)
------- --------- --------- --------- ---------
Balance June 30, 1997 $ 1,401 $ 14,709 $ 11,569 $ 208 $ 27,887
======= ========= ========= ========= =========
</TABLE>
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5.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
---------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
For the Six Months Ended
------------------------
June 30, June 30,
1997 1996
----------- -----------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,467 $ 1,285
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 90 90
Provision for depreciation 93 98
Net amortization on premiums of securities 94 120
Deferred directors' fees and supplemental
retirement plan expense 80 112
Payment of deferred compensation (71) (72)
Net realized gain on sale of securities (65) -
Deferred income taxes (34) (49)
Increase in accrued interest receivable
and other assets (237) (170)
Increase in interest payable and other
liabilities 190 69
---------- ----------
Net cash provided by operating activities 1,607 1,483
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available for sale securities (1,258) (5,750)
Proceeds from sales of available for sale securities 92 -
Proceeds from maturities of and principal
repayments on available for sale securities 2,477 2,823
Purchases of held to maturity securities (8,347) (7,532)
Proceeds from maturities of and principal
repayments on held to maturity securities 6,539 3,835
Net increase in loans receivable (5,253) (1,524)
Purchases of bank premises and equipment (50) (61)
---------- ----------
Net cash used in investing activities (5,800) (8,209)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 5,061 2,542
Cash dividends (447) (412)
Dividend reinvestment plan - 91
Employee stock purchase plan 114 -
---------- ----------
Net cash provided by financing activities 4,728 2,221
---------- ----------
Increase (decrease) in cash and cash
equivalents 535 (4,505)
CASH AND CASH EQUIVALENTS:
Beginning 9,022 11,673
---------- ----------
Ending $ 9,557 $ 7,168
========== ==========
CASH PAYMENTS FOR:
Interest $ 3,818 $ 3,691
========== ==========
Income Taxes $ 432 $ 442
========== ==========
</TABLE>
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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 completed
financial statements. In the opinion of mangement, all adjustments considered
necessary for fair presentation have been included. Operating results for the
six-month period ended June 30, 1997, are not necessarily indicative of the
results that may be expected for the year ended December 31, 1997. For further
information, refer to the consolidated financial statements and footnotes
thereto include in Juniata Valley Financial Corp. annual report on Form 10-K for
the year ended December 31, 1996.
NOTE B - Summary of Significant Account Policies
Per share data:
Net income and dividends per share are based on the weighted average number of
shares of common stock outstanding adjusted for stock dividends. The net income
per share data and weighted average number of shares outstanding as of June 30,
1997, have been adjusted to reflect a 5-for-4 stock split declared on July 15,
1997.
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7.
Management's Discussion and Analysis
- ------------------------------------
Financial Condition:
Total assets of Juniata Valley Financial Corp. reached $218,708,000 as of June
30, an increase of $6,444,000 or 3.04% from December 31, 1996. An increase of
$5,103,000 in loans receivable from December 31, 1996, to June 30, 1997,
contributed to this growth in assets as well as an increase in held to maturity
securities of $1,742,000. The cash provided by financing activities of
$4,728,000 and by operating activities of $1,672,000 for the period ended June
30, 1997, were used for loan growth of $5,253,000. The remaining cash was used
to purchase securities which exceeded repayments by $562,000.
On July 15, 1997, the Board of Directors of the Juniata Valley Bank declared a
5-for-4 stock split. Only whole shares will be issued and cash will be paid for
fractional shares. The effect of this stock split will be the issuance of
approximately 280,000 shares of stock; however the actual number of shares as
well as the dollar amount of fractional shares cannot be determined as of report
date.
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. In
1996, 4,087 shares were issued and 95,913 remain unissued. For the June 1, 1997
dividend pay date all shares to satisfy the dividend reinvestment plan were
purchased on the open market. No shares had to be issued.
An employee stock purchase plan was approved by stockholders on April 16, 1996.
The first plan year began on July 1, 1996, and ended May 15, 1997. There were
58 out of 87 eligible employees that participated in the first plan year. On
June 15, 1997, 3,600 shares were issued. The Corporation has reserved 100,000
shares of common stock for this plan. After the issuance on June 15, 1997,
there are 94,400 shares remaining to be issued.
Results of operations:
Interest income increased $261,000 or 3.34% for the first six months of 1997
compared to 1996 and $188,000 or 4.82% for the quarter. Interest expense
increased $91,000 or 2.43% for the first six months of 1997 and $62,000 or 3,32%
for the quarter comparing 1997 to 1996. These increases in interest income and
expense for the first six month ended June 30, 1997, versus 1996, are reflective
of an increase of both interest earning assets and interest bearing liabilities
and overall higher rates offered and paid in 1997 versus 1996. This resulted in
an increase in net interest income of $170,000 or 4.17%
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8.
for the six months ended June 30, 1997 and $126,000 or 6.20% for the quarter
ended.
Other income has increased $161,000 or 58.12% for the first six months of 1997
and $124,000 or 86.11% for the quarter. This was due to gains on sales of
securities for $65,000. There was also an increase of $102,000 in the other
category for the first six months. $51,000 was received in life insurance
proceeds due to the death of a former director; a fixed asset owned by the Bank
was sold which resulted in a $14,000 gain and a $32,000 increase in insurance
fees earned on consumer loans compared to the same period last year. There was
an increase of $12,000 in customer service fees. This was a result of an
increase in the volume in accounts as opposed to an increase in fees. The
decrease of $18,000 in trust department fees was due to the settlement of three
estates in 1996 over 1997.
Other expenses for the first six months increased $125,000 or 4.87% and $95,000
or 7.9% for the quarter comparing 1997 to 1996. The $35,000 increase in salary
and wages for the six months ended June 30, 1997, compared to 1996, can be
attributed to annual merit increases and promotions of employees. The $14,000
decrease in employee benefits is a result of lower benefit costs as opposed to
less benefits being provided. The $13,000 decrease in occupancy can be
attributed to snow removal in 1996 that did not occur in 1997. The $13,000
decrease in equipment expense is due to less costly leases in 1997 over 1996.
The $47,000 decrease in directors compensation is due to fully funded retirement
plans. The $159,000 increase in the other category is due to $25,000 increase
in the marketing budget and $128,000 increase in repossessions and loan
collection expenses.
All of these factors combined have contributed to an increase in net income of
$182,000 or 14.16% for the six months and $145,000 or 23.20% for the quarter
ended June 30, 1997.
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
<PAGE>
9.
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, 1997, the Corporation had a six-month negative gap of $6,834,000.
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.
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,
1997 1996 1997 1996
------------ ------------ ------------ ------------
TIER I 18.88% 18.73% 4.0% 4.0%
TIER I & II 20.10% 19.94% 8.0% 8.0%
Total Assets Leverage Ratio:
TIER I 12.87% 12.66% 4.0% 4.0%
At June 30, 1997, the Corporation exceeds the regulatory requirements to be
considered a "well capitalized" financial institution.
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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
(27) Financial Data Schedule
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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<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,357
<INT-BEARING-DEPOSITS> 63
<FED-FUNDS-SOLD> 2,600
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 28,925
<INVESTMENTS-CARRYING> 42,026
<INVESTMENTS-MARKET> 42,003
<LOANS> 133,328
<ALLOWANCE> 1,786
<TOTAL-ASSETS> 218,708
<DEPOSITS> 187,515
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,306
<LONG-TERM> 0
0
0
<COMMON> 1,401
<OTHER-SE> 26,486
<TOTAL-LIABILITIES-AND-EQUITY> 218,708
<INTEREST-LOAN> 6,008
<INTEREST-INVEST> 1,986
<INTEREST-OTHER> 81
<INTEREST-TOTAL> 8,078
<INTEREST-DEPOSIT> 3,830
<INTEREST-EXPENSE> 3,830
<INTEREST-INCOME-NET> 4,248
<LOAN-LOSSES> 90
<SECURITIES-GAINS> 65
<EXPENSE-OTHER> 2,694
<INCOME-PRETAX> 1,902
<INCOME-PRE-EXTRAORDINARY> 1,902
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,467
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.05
<YIELD-ACTUAL> 7.90
<LOANS-NON> 225
<LOANS-PAST> 228
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 496
<ALLOWANCE-OPEN> 1,707
<CHARGE-OFFS> 41
<RECOVERIES> 30
<ALLOWANCE-CLOSE> 1,786
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
