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 March 31, 2000
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[ ] 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
---------------------------------------------
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 March 31, 2000
- ------------------------------ --------------------------------
Common Stock ($1.00 par value) 2,217,561 shares
<PAGE>
2.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ------------
(In thousands)
(Unaudited)
<S> <C> <C>
Cash and due from banks $ 9,730 $ 15,381
Interest-bearing deposits with banks 688 653
--------- ---------
Total cash and cash equivalents 10,418 16,034
Securities available for sale 41,735 45,100
Securities held to maturity, fair value
$57,648 and $58,171, respectively 59,276 59,550
Loans receivable net of allowance for loan
losses $2,509 and $2,486, respectively 208,344 204,336
Bank premises and equipment, net 3,695 3,428
Accrued interest receivable and other assets 8,317 7,671
--------- ---------
TOTAL ASSETS $ 331,785 $ 336,119
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing $ 35,730 $ 34,332
Interest bearing 249,069 249,018
--------- ---------
TOTAL DEPOSITS 284,799 283,350
Accrued interest payable
and other liabilities 4,471 4,214
Short-Term borrowings 0 5,300
--------- ---------
TOTAL LIABILITIES $ 289,270 $ 292,864
========= =========
Stockholders' Equity:
Preferred stock, no par value; 500,000 shares
authorized; no shares issued or outstanding -- --
Common stock, par value $1.00 per share;
authorized 20,000,000 shares;
issued 2,332,077 shares 2,332 2,332
Surplus 20,559 20,559
Retained earnings 23,578 23,665
Treasury stock, at cost 2000, 114,516 shares;
1999, 96,204 shares (3,919) (3,403)
Accumulated other comprehensive income (35) 102
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 42,515 43,255
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 331,785 $ 336,119
========= =========
</TABLE>
<PAGE>
3.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Quarter Ended
----------------------------
March 31, March 31,
2000 1999
---------- ----------
(In thousands, except
per share amounts)
Interest income:
Loans receivable, including fees $ 4,552 $ 4,192
Taxable securities 878 1,128
Tax-exempt securities 482 539
Other 34 118
---------- ----------
Total interest income 5,946 5,977
Interest Expense
Deposits 2,766 2,877
Short-term borrowings 19 --
---------- ----------
Total Interest Expense 2,785 2,877
---------- ----------
Net Interest Income 3,161 3,100
Provision for loan losses 45 30
---------- ----------
Net interest income after
provision for loan losses 3,116 3,070
---------- ----------
Other income:
Trust department 95 70
Customer service fees 128 116
Other 107 91
---------- ----------
Total other income 330 277
---------- ----------
Other expenses:
Salaries and wages 909 913
Employee benefits 270 262
Occupancy 113 118
Equipment 242 223
Federal deposit insurance premiums 15 11
Director compensation 73 71
Taxes, other than income 106 99
Other 330 340
---------- ----------
Total other expenses 2,058 2,037
---------- ----------
Income before income taxes 1,388 1,310
Federal income taxes 360 312
---------- ----------
Net Income $ 1,028 $ 998
========== ==========
Basic earnings per share $ .46 $ .43
========== ==========
Weighted average number of
shares outstanding 2,229,471 2,327,626
========== ==========
<PAGE>
4.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Other
Common Retained Treasury Comprehensive
Stock Surplus Earnings Stock Income Total
------- -------- -------- -------- ------------- --------
(In thousands)
BALANCE,
<S> <C> <C> <C> <C> <C> <C>
December 31, 1999 $ 2,332 $ 20,559 $ 23,665 $ (3,403) $ 102 $ 43,255
--------
Net income for
the three
months ended
March 31, 2000 -- -- 1,028 -- -- 1,028
Change in
unrealized
gains (losses)
on securities
available for
sale, net of
reclassification
adjustment and tax
effects -- -- -- -- (137) (137)
--------
Total Comprehensive Income 891
--------
Cash dividends,
$.50 per share (1,115) (1,115)
Treasury stock
acquired -- -- -- (516) -- (516)
Balance March
31, 2000 $ 2,332 $ 20,559 $ 23,578 $ (3,919) $ (35) $ 42.515
======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
5.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
For the Three Months Ended
----------------------------------
March 31, March 31,
2000 1999
--------- ---------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,028 $ 998
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 45 30
Provision for depreciation 76 70
Net amortization on securities premium 47 79
Deferred directors' fees and supplemental
retirement plan expense 46 77
Payment of deferred compensation (43) (30)
Deferred income taxes (40) (38)
Increase (decrease) in accrued interest
receivable and other assets (476) 488
Increase in interest payable
and other liabilities 195 401
-------- --------
Net cash provided by operating activities 878 2,075
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of and principal
repayments on available for sale securities 3,140 4,023
Purchases of held to maturity securities (701) (11,973)
Proceeds from maturities of and principal
repayments on held to maturity securities 945 5,153
Net (increase)decrease in loans receivable (4,053) 642
Net purchases of bank premises and equipment (343) (32)
-------- --------
Net cash used in investing activities (1,012) (2,187)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits 1,449 (3,510)
Net decrease in short-term borrowings (5,300) --
Cash dividends (1,115) (1,160)
Purchase of Treasury Stock (516) (379)
-------- --------
Net cash used in financing activities (5,482) (5,049)
-------- --------
Decrease in cash and cash equivalents (5,616) (5,161)
CASH AND CASH EQUIVALENTS:
Beginning 16,034 20,728
-------- --------
Ending $ 10,418 $ 15,567
======== ========
CASH PAYMENTS FOR:
Interest $ 2,821 $ 2,873
======== ========
</TABLE>
<PAGE>
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
three-month period ended March 31, 2000, are not necessarily indicative of the
results that may be expected for the year ended December 31, 2000. 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, 1999.
NOTE B - Accounting Standards
The financial Accounting Standards Board issued statement No. 133, "Accounting
for Derivative Instruments and Hedging Activities", in June 1998. Statement No.
133 was amended by Statement No. 137 which deferred the effective date of
Statement No. 133. The Corporation adopted Statement No. 133 on November 30,
1999. As provided for under the Statement No. 133, the Corporation transferred
investment securities classified as "held to maturity" with a book value of
$10,980,000 to the "available for sale" classification.
<PAGE>
7.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Forward Looking Statements:
The Private Securities Litigation Reform Act of 1995 contains safe harbor
provisions regarding forward-looking statements. When used in this discussion,
the words "believes," "anticipates," "contemplates," "expects," and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties which could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest rates, risks associated with the effect of opening a new
branch, the ability to control costs and expenses, and general economic
conditions. The Corporation undertakes no obligation to publicly release the
results of any revisions to those forward-looking statements which may be made
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
Financial Condition:
Total assets of Juniata Valley Financial Corp. totaled $331,785,000 as of March
31, 2000, a decrease of $4,334,000 or 1.27% from December 31, 1999. This
decrease is a result of the cash and cash equivalents decline of $5,616,000 that
were maintained for potential year 2000 needs. These reserves were funded by
short-term borrowings of $5,300,000. The extra cash was not needed and the
excess was returned to the Federal Reserve Bank during the two weeks following
December 31, 1999. The cash provided by operating activities of $878,000 was
used to help fund loan growth of $4,053,000. Loan growth was also funded by
security proceeds which exceeded purchases by $3,384,000. The increase in
deposits of $1,449,000 was used in the $343,000 purchase of bank premise and
equipment. Along with the special $.50 dividend and the $516,000 to buy treasury
stock, the Bank used $5,482,000 in financing activities.
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.
<PAGE>
8.
Results of Operations:
Interest income decreased $31,000 or .52% for the quarter ended March 31, 2000.
The decline came from the decrease of interest income on securities. Interest
expense decreased by $92,000 or 3.20% for the quarter. Interest income and
expense for the first three months ended March 31, 2000, versus 1999, are
reflective of a decrease of both interest earning assets and interest bearing
liabilities and overall lower rates offered and paid in 2000 versus 1999. This
resulted in an increase in net interest income of $61,000 or 1.97% for the three
months ended March 31, 2000.
Because of the increase in loans, management has decided to increase loan loss
provision. The increase in the provision is not reflective of a decline in
underwriting standards or potential problem loans.
Other income has increased $53,000 or 19.13% for the quarter in 2000 over 1999.
Trust department income has increased $25,000, customer service fees have
increased $12,000 and other income has increased $16,000. The increase in trust
department income is a result of the settlement of two estates in 2000. The
increase in customer service fees is a result of higher transaction volume as
opposed to an increase in fees. The other category increase can be attributed to
an increase in mutual fund commissions of $17,000.
Other expenses increased $21,000 or 1.03% for the three months ended March 31,
2000. The $4,000 decrease in salary and wages for the three months ended March
31, 2000, compared to 1999, can be attributed to a decrease of two full time
equivalents. The $8,000 increase in employee benefits is reflective of increases
in the costs as opposed to additional benefits. The $7,000 increase in taxes,
other than income is an increase in Pennsylvania Bank Shares Tax.
All of these factors combined have contributed to an increase in net income of
$30,000 or 3.01% for the three months ended March 31, 2000.
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. Although
the Bank has experienced an outflow of deposits with a decline of over eight
million dollars, Management does not believe this will continue and it will not
be a
<PAGE>
9.
factor in meeting liquidity needs. 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 March 31, 2000, the corporation had a six-month negative gap of
$20,381,000. 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.
<PAGE>
10.
Capital Adequacy:
The Bank's regulatory capital ratios for the periods presented are as follows:
Risk Weighted Assets Ratio:
<TABLE>
<CAPTION>
Actual Required
---------------------------- ---------------------------
March 31, December 31, March 31, December 31,
2000 1999 2000 1999
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
TIER I 19.82% 19.59% 4.0% 4.0%
TIER I & II 20.98% 20.76% 8.0% 8.0%
Total Assets Leveraged Ratio:
TIER I 12.97% 12.33% 4.0% 4.0%
</TABLE>
At March 31, 2000, the Corporation exceeds the regulatory requirements to be
considered a "well capitalized" financial institution.
Quantitative and Qualitative Disclosures About Market Risk:
There have been no material changes in the Corporation's exposure to market
risk. Please refer to the Annual Report on form 10-k as of December 31, 1999.
<PAGE>
11.
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 Holder
The annual meeting of shareholders was held on April
18, 2000.
The shareholders approved the 2000 Incentive Stock
Option Plan Shares voted for approval of the plan
1,577,099
Shares voted against the plan 73,453
Shares not voted 567,009
Item 5. Other information
None
Item 6. Exhibits and Reports on Form 8-k
Form 8-k was filed on January 18, 2000, concerning
the $.50 cash dividend and repurchase of 5% of
Juniata Valley Financial Corp. outstanding shares of
common stock.
(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
------------------------ --------------------------------
Francis J. Evanitsky, President
Date By
------------------------ --------------------------------
Linda L. Engle, Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000714712
<NAME> Juniata Valley Financial Corp.
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1,000
<CASH> 9,730
<INT-BEARING-DEPOSITS> 688
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 41,735
<INVESTMENTS-CARRYING> 59,276
<INVESTMENTS-MARKET> 57,648
<LOANS> 210,853
<ALLOWANCE> 2,509
<TOTAL-ASSETS> 331,785
<DEPOSITS> 284,799
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,471
<LONG-TERM> 0
0
0
<COMMON> 2,332
<OTHER-SE> 40,183
<TOTAL-LIABILITIES-AND-EQUITY> 331,785
<INTEREST-LOAN> 4,552
<INTEREST-INVEST> 1,360
<INTEREST-OTHER> 34
<INTEREST-TOTAL> 5,946
<INTEREST-DEPOSIT> 2,766
<INTEREST-EXPENSE> 2,785
<INTEREST-INCOME-NET> 3,161
<LOAN-LOSSES> 45
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,058
<INCOME-PRETAX> 1,388
<INCOME-PRE-EXTRAORDINARY> 1,388
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,028
<EPS-BASIC> .46
<EPS-DILUTED> .46
<YIELD-ACTUAL> 7.61
<LOANS-NON> 88
<LOANS-PAST> 636
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 782
<ALLOWANCE-OPEN> 2,486
<CHARGE-OFFS> 23
<RECOVERIES> 1
<ALLOWANCE-CLOSE> 2,509
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
