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, 2000
-------------
[ ] 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 July 31, 2000
------------------------------ ------------------------------------------
Common Stock ($1.00 par value) 2,193,616 shares
<PAGE>
2.
ITEM 1 FINANCIAL STATEMENTS
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
--------- ------------
(In thousands)
(Unaudited)
<S> <C> <C>
Cash and due from banks $ 9,736 $ 15,381
Interest-bearing deposits with banks 671 653
Federal Funds sold 2,850 --
--------- ---------
Total cash and cash equivalents 13,257 16,034
Securities available for sale 40,895 45,100
Securities held to maturity, fair value
$53,143 and $58,171, respectively 54,550 59,550
Loans receivable net of allowance for loan
losses $2,522 and $2,486, respectively 213,732 204,336
Bank premises and equipment, net 4,318 3,428
Accrued interest receivable and other assets 8,250 7,671
--------- ---------
TOTAL ASSETS $ 335,002 $ 336,119
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing $ 34,785 $ 34,332
Interest bearing 253,547 249,018
--------- ---------
Total deposits 288,332 283,350
Short-Term borrowings -- 5,300
Accrued interest payable
and other liabilities 4,322 4,214
--------- ---------
Total liabilities 292,654 292,864
--------- ---------
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 20,482 20,559
Retained earnings 23,780 23,665
Treasury stock, at cost 2000 129,461 shares;
1999 96,204 shares (4,240) (3,403)
Accumulated other comprehensive income (loss) (6) 102
Total stockholders' equity 42,348 43,255
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 335,002 $ 336,119
========= =========
</TABLE>
<PAGE>
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,
2000 1999 2000 1999
---------- ---------- ---------- ----------
(In thousands, except per share amount)
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans receivable $ 4,725 $ 4,272 $ 9,277 $ 8,464
Taxable securities 839 1,085 1,718 2,214
Tax-exempt securities 469 563 950 1,102
Other 61 105 95 223
---------- ---------- ---------- ----------
Total interest income 6,094 6,025 12,040 12,003
---------- ---------- ---------- ----------
INTEREST EXPENSE
Deposits 2,877 2,849 5,643 5,727
Short-term borrowings 3 -- 21 --
---------- ---------- ---------- ----------
Total interest expense 2,880 2,849 5,664 5,727
---------- ---------- ---------- ----------
Net interest income 3,214 3,176 6,376 6,276
PROVISION FOR LOAN LOSSES 45 30 90 60
---------- ---------- ---------- ----------
Net interest income, after
provision for loan losses 3,169 3,146 6,286 6,216
---------- ---------- ---------- ----------
OTHER INCOME:
Trust department 105 100 200 170
Customer service fees 135 116 262 232
Other 99 91 206 182
---------- ---------- ---------- ----------
Total other income 339 307 668 584
---------- ---------- ---------- ----------
OTHER EXPENSES:
Salaries and wages 901 918 1,810 1,832
Employee benefits 285 277 555 539
Occupancy 123 139 237 256
Equipment 234 229 476 453
Director compensation 73 71 146 142
Taxes, other than income 120 112 225 211
Other 287 269 632 620
---------- ---------- ---------- ----------
Total other expenses 2,023 2,015 4,081 4,053
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 1,485 1,438 2,873 2,747
FEDERAL INCOME TAXES 376 357 736 669
---------- ---------- ---------- ----------
Net income $ 1,109 $ 1,081 $ 2,137 $ 2,078
========== ========== ========== ==========
PER SHARE DATA:
Basic earnings $ .50 $ .47 $ .96 $ .90
========== ========== ========== ==========
Weighted average number of
shares outstanding 2,209,623 2,300,928 2,219,547 2,314,203
========== ========== ========== ==========
</TABLE>
<PAGE>
4.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Other
Common Retained Treasury Comprehensive
Stock Surplus Earnings Stock Income (loss) Total
------ ------- -------- -------- ------------- -----
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
BALANCE,
December 31,
1999 $ 2,332 $ 20,559 $ 23,665 $(3,403) $102 $43,255
------- -------- -------- ------- ---- -------
Net income for
the six
months ended
June 30, 2000 - - 2,137 - - 2,137
Change in
unrealized
gains (losses)
on securities
available for
sale, net of
reclassification
adjustment and tax
effects - - - - (108) (108)
-------
Total Comprehensive Income 2,029
-------
Treasury stock
acquired - - - (1,111) - (1,111)
Treasury stock issued for
dividend reinvestment
plan (7,516 shares) - (77) - 272 - 195
Treasury stock issued
for employee stock
purchase plan (39 shares) - - - 2 - 2
Cash dividends,
$.91 per share - - (2,022) - - (2,022)
------- -------- -------- ------- ---- -------
Balance June 30, 2000 $ 2,332 $ 20,482 $ 23,780 $(4,240) $ (6) $42.348
======= ======== ======== ======= ==== =======
</TABLE>
<PAGE>
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,
2000 1999
-------- --------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,137 $ 2,078
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 90 60
Provision for depreciation 154 139
Net amortization on securities premium 98 73
Deferred directors' fees and supplemental
retirement plan expense 113 84
Payment of deferred compensation (85) (83)
Deferred income taxes (39) (48)
Increase in accrued interest
receivable and other assets (386) (490)
Increase (decrease) in accrued interest payable
and other liabilities 4 87
-------- --------
Net cash provided by operating activities 2,086 1,900
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available for sale securities (511) (415)
Proceeds from maturities of and principal
repayments on available for sale securities 4,518 8,294
Purchases of held to maturity securities (702) (13,973)
Proceeds from maturities of and principal
repayments on held to maturity securities 5,509 6,932
Net increase in loans receivable (9,379) (4,840)
Net purchases of bank premises and equipment (1,044) (81)
-------- --------
Net cash used in investing activities (1,609) (4,083)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits 4,982 (2,429)
Net decrease in short-term borrowings (5,300) --
Cash dividends (2,022) (2,033)
Purchase of Treasury Stock (1,111) (1,500)
Treasury Stock issued 197 258
-------- --------
Net cash used in financing activities (3,254) (5,704)
-------- --------
Decrease in cash and cash equivalents (2,777) (7,887)
CASH AND CASH EQUIVALENTS:
Beginning 16,034 20,728
Ending $ 13,257 $ 12,841
======== =========
CASH PAYMENTS FOR:
Interest $ 5,707 $ 5,708
======== =========
Income Taxes $ 765 $ 724
======== =========
<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
six-month period ended June 30, 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. Statement No. 133 was
further amended by Statement No. 138 in the year 2000. The amendments had no
effect on the Corporation.
<PAGE>
7.
ITEM 2 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 $335,002,000 as of June
30, 2000, a decrease of $1,117,000 or .33% from December 31, 1999. This decrease
is a result of the cash and cash equivalents decline of $2,777,000 that were
maintained for potential year 2000 needs. These additional cash 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
$2,086,000 and deposit growth of $4,982,000 were used to help fund loan growth
of $9,379,000. Installment loans grew by $3,595,000 and mortgage loans grew by
$3,191,000 since December 31, 1999. The remaining $2,593,000 can be attributed
to small business and demand loans. Loan growth was also funded by security
proceeds which exceeded purchases by $8,814,000. Security proceeds not needed
for loan growth were used in the $1,044,000 purchase of bank premise and
equipment. Of this increase, $759,000 can be attributed to an operations center
in the construction phase. Dividends paid year to date of $.91 and the
$1,111,000 to buy treasury stock resulted in the Bank using $3,254,000 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 increased $37,000 or .31% for the six months ended June 30,
2000. For the quarter the increase was $69,000 or 1.15%. The increase came from
the increase of interest income on loans which was $813,000 or 9.61% for the six
months. Interest income on securities declined by $496,000 for taxable
securities and $152,000 for tax-exempt securities. Interest expense decreased by
$63,000 or 1.10% for the six month period and increased $31,000 or 1.09% for the
quarter ended June 30, 2000. This resulted in an increase in net interest income
of $100,000 or 1.59% for the six months ended June 30, 2000 and $38,000 or 1.20%
for the quarter.
Because of the increase in loans, management has decided to increase the 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 $84,000 or 14.38% for the six month period and
$32,000 or 10.42% for the quarter in 2000 over 1999. Trust department income has
increased $30,000, customer service fees have increased $30,000 and other income
has increased $24,000. The increase in trust department income is a result of
the settlement of four 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 $14,000 and $11,000 in debit card fees.
Other expenses increased $28,000 or .69% for the six month period and $8,000 or
.40% for the quarter ended June 30, 2000. The $22,000 decrease in salary and
wages for the six months ended June 30, 2000, compared to 1999, can be
attributed to a decrease of two full time equivalents. The $16,000 increase in
employee benefits is reflective of increases in costs as opposed to additional
benefits. The $22,000 increase in equipment can be attributed to higher
maintenance costs. The $14,000 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
$59,000 or 2.84% for the six month period and $28,000 or 2.59% for the quarter
ended June 30, 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
<PAGE>
9.
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, 2000, the Corporation had a six-month negative gap of
$18,942,000. 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
---------------------------- ---------------------------
June 30, December 31, June 30, December 31,
2000 1999 2000 1999
------ ------------ -------- ------------
<S> <C> <C> <C> <C>
TIER I 19.42% 19.59% 4.0% 4.0%
TIER I & II 20.56% 20.76% 8.0% 8.0%
Total Assets Leveraged Ratio:
TIER I 12.85% 12.33% 4.0% 4.0%
</TABLE>
At June 30, 2000, the Corporation exceeds the regulatory requirements to be
considered a "well capitalized" financial institution.
ITEM 3 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
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
------------------------------- ----------------------------------
Francis J. Evanitsky, President
Date By
------------------------------- ----------------------------------
Linda L. Engle, Treasurer
