Juniata Valley Financial Corp. Announces Third Quarter Results

Mifflintown, PA, Oct. 29, 2018 (GLOBE NEWSWIRE) — Marcie A. Barber, President and Chief Executive Officer of Juniata Valley Financial Corp. (OTC Pink: JUVF) (“Juniata”), announced third quarter 2018 net income of $1,385,000, an increase of $179,000, or 14.8%, in comparison to net income for the third quarter of 2017. Earnings per share, basic and diluted, was $0.27 in the third quarter of 2018, representing an increase of 8.0% over the same period in 2017. For the nine months ended September 30, 2018, net income was $4,281,000, an increase of $322,000, or 8.1%, over earnings for the nine months ended September 30, 2017. Earnings per share, basic and diluted, during the nine months ended September 30, 2018 increased 3.6%, to $0.86, compared to the corresponding 2017 period. Juniata also reported increases of $34,171,000 in total loans, $28,744,000 in total assets, and $52,119,000 in total deposits over the balances at December 31, 2017.

The comparability of the results of operations for the three and nine months ended September 30, 2018 and the financial condition at September 30, 2018 were impacted by the acquisition of Liverpool Community Bank (“Liverpool”) on April 30, 2018. Juniata incurred $185,000 and $625,000 of merger-related expense in conjunction with the acquisition of Liverpool during the three and nine months ended September 30, 2018, respectively. Additionally, an adjustment to the carrying value of Juniata’s previous 39.16% ownership of Liverpool at April 30, 2018 resulted in a recorded net gain of $215,000 during the nine months ended September 30, 2018. Exclusive of these items and the corresponding tax impact, net income for the three months ended September 30, 2018 was $1,531,000, an increase of 26.9% over the corresponding 2017 period and net income for the nine months ended September 30, 2018 was $4,605,000, an increase of 16.3% over the nine months ended September 30, 2017. The recorded amounts of assets purchased and liabilities assumed in the Liverpool acquisition resulted in an increase in Juniata’s equity of $6,463,000. Loans and deposits added through the Liverpool acquisition totaled $31,331,000 and $36,052,000, respectively, at April 30, 2018. Prior to April 30, 2018, Juniata, as 39.16% owner of the former Liverpool Community Bank, recorded 39.16% of Liverpool’s earnings as “income from unconsolidated subsidiary”. Effective April 30, 2018, Liverpool merged with The Juniata Valley Bank.

Ms. Barber commented, “The integration of daily operations of Liverpool into Juniata impacts customers and associates, and successful integration is also important to ongoing financial performance. We successfully completed a full core processing conversion of the Liverpool office on October 12, 2018. Results of the joint operations have met our expectations for both smooth transition and enhanced earnings, and we anticipate this trend will continue.”.

Annualized return on average assets for the nine months ended September 30, 2018 was 0.93%, compared to 0.89% for the nine months ended September 30, 2017. Annualized return on average equity for the nine months period in 2018 was 9.28%, compared to 8.81% for the same period in 2017.

Net interest income, after the provision for loan losses, increased during the nine months ended September 30, 2018 by $1,138,000, or 8.4%, when compared to the nine months ended September 30, 2017. Average earning assets increased 3.5%, primarily due to a $21,036,000 increase in average loans. The yield on earning assets increased to 4.14% during the nine months ended September 30, 2018 from 3.91% in the same period in 2017. In addition, the rate paid on interest bearing liabilities increased from 0.66% for the nine months ended September 30, 2017, to 0.83% for the same period in 2018, as did the average balance of interest bearing liabilities, which increased by $5,965,000 in the 2018 period compared to the 2017 period. Rate increases reflect the effect of recent increases in both the prime rate and federal funds target rate.

Non-interest income during the nine months ended September 30, 2018 was $3,911,000, a decrease of $180,000 compared to the same period in 2017. Most significantly impacting the comparative nine month period was a net gain on the sales and calls of investment securities of $510,000 recorded in the nine months ended September 30, 2017, while a net loss of $15,000 was recorded in the comparable 2018 period. Excluding the impact of the securities gains (losses), non-interest income grew by $345,000, or 9.6%, primarily due to increases in debit card activity, fees derived from loan activity, the change in the value of equity securities. Income/gain from unconsolidated subsidiary increased $142,000 in the first nine months of 2018 compared to the same period in 2017, as a result of the $215,000 gain, offset by the discontinuance of income in this category after April 30, 2018.

Non-interest expense was $14,343,000 for the nine months ended September 30, 2018 versus $12,940,000 for the same period in 2017, an increase of 10.8%. The first nine months of 2018 included $625,000 in merger-related expenses, with no similar expense recorded in the comparable 2017 period. Employee compensation and benefits expense increased $524,000 during the nine months ended September 30, 2018 compared to the same period in 2017, primarily due to the addition of the Liverpool staff in 2018. Also impacting compensation and benefits expense was settlement expense of $210,000 related to a lump sum offering to terminated vested defined benefit participants. Occupancy and equipment expense increased $143,000 due to the completion and occupation of a relocated banking office at the end of 2017. In addition, the amortization expense for the investment in low-income housing partnerships increased $188,000 due to the additional investment in phase II of a tax credit investment, with no similar expense recorded in the first half of 2017. Partially offsetting these increases was a decline in Juniata’s income tax provision in the first nine months of 2018, which was $767,000 less than the tax provision in the comparable period in 2017 as a result of lower taxable income in the 2018 period, the reduction in the federal income tax rate to 21% in 2018 versus 34% in 2017, and an increase in low income housing tax credits of $187,000 from the addition of the phase II tax credit investment that commenced in the third quarter of 2017.

Annualized return on average assets for the three months ended September 30, 2018 was 0.89% compared to 0.81% for the three months ended September 30, 2017. Annualized return on average equity for the three months period in 2018 was 8.59% compared to 8.00% for the same period in 2017.

Net interest income, after the provision for loan losses, increased during the three months ended September 30, 2018 by $591,000, or 13.0%, when compared to the three months ended September 30, 2017. Average earning assets increased $25,571,000, primarily due to a 7.9% increase in average loans. The yield on earning assets increased to 4.27% during the three months ended September 30, 2018 from 3.98% in the same period in 2017. In addition, the rate paid on interest bearing liabilities increased 17 basis points to 0.88% during the third quarter of 2018 compared to the same period in 2017. The average balance of interest bearing liabilities also increased over the period by $8,948,000 compared to the same 2017 period.

Non-interest income during the three months ended September 30, 2018 was $1,241,000, an increase of $22,000 compared to the same period in 2017. Most significantly impacting the comparative three month periods were increases in debit card activity, customer service fees, and commissions from sales of non-deposit products. Partially offsetting these increases was a $66,000 decline in mortgage banking income due to a strategic shift in focus to a new mortgage product, which is increasing fees derived from loan activity, as well as a decline in the income from unconsolidated subsidiary. No income from unconsolidated subsidiary was recorded in the third quarter of 2018 due to the fact that Liverpool is no longer an unconsolidated subsidiary of Juniata following its acquisition by Juniata in the second quarter of 2018.

Non-interest expense increased $590,000 to $5,032,000 for the three months ended September 30, 2018 versus the same period in 2017. Included in the third quarter of 2018 was $185,000 in merger-related expenses, with no similar expense recorded in the comparable 2017 period. Noninterest expenses also increased in the third quarter of 2018 compared to the same period in 2017 due to increased employee compensation and benefits expense, amortization expense from the investment in low-income housing partnerships, and data processing expense. Included in the increase in employee compensation and benefits expense was the aforementioned defined benefit settlement expense of $210,000. Partially offsetting these increases was a net gain on the sales of other real estate owned and favorable variances in delinquent loan expense and electronic banking losses between the third quarter of 2018 and the third quarter of 2017. Juniata’s income tax provision for the three months ended September 30, 2018 was also $156,000 less than the tax provision in the comparable quarter in 2017, of which $27,000 was attributable to an increase in tax credits from the addition of phase II of the investment in low-income elderly housing partnerships, as well as the reduction of the statutory federal tax rate from 34% in 2017 to 21% in 2018.

Total assets at September 30, 2018 were $620,689,000, an increase of 4.9% compared to December 31, 2017. Through the nine months ended September 30, 2018, loan balances averaged $406,659,000 compared to average loan balances during the nine months ended September 30, 2017 of $385,623,000, an increase of 5.5%. Average deposit balances increased by 1.4%, while average borrowings and other interest bearing liabilities declined 36.6% in the first nine months of 2018 compared to the same period in 2017.

On October 16, 2018, Juniata Valley Financial Corp.’s Board of Directors declared a cash dividend of $0.22 per share, payable on November 30, 2018 to shareholders of record on November 15, 2018.

Management considers subsequent events occurring after the statement of condition date for matters which may require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company’s consolidated financial statements when filed with the SEC. Accordingly, the financial information in this announcement is subject to change.

The Juniata Valley Bank, the principal subsidiary of Juniata Valley Financial Corp., is headquartered in Mifflintown, Pennsylvania, with sixteen community offices located in Juniata, Mifflin, Perry, Huntingdon, McKean and Potter Counties. More information regarding Juniata Valley Financial Corp. and The Juniata Valley Bank can be found online at www.JVBonline.com. Juniata Valley Financial Corp. trades through OTC Pink under the symbol JUVF.

Forward-Looking Information

*This press release may contain “forward looking” information as defined by the Private Securities Litigation Reform Act of 1995. Do not unduly rely on forward-looking statements.  Forward-looking statements can be identified by the use of words such as “believes”, “expects”, “anticipates”, “may”, “should”, “will”, “could”, “estimates”, “projects”, “predicts”, “potential”, “continue”, “plans”, “future” “intends”, “goal”, “strategy”, “likely”, “seek” and similar expressions. Any forward-looking statement made by us in this document is based only on information currently available to us and speaks only as of the date when made.  Juniata undertakes no obligation to publicly update or revise forward looking information, whether as a result of new or updated information, future events, or otherwise. Forward-looking statements are not historical facts or guarantees of future performance, events or results, and are subject to potential risks and uncertainties, many of which are outside of our control, that could cause actual results to differ materially from this forward-looking information.  Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include those discussed in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Statements” set forth in Juniata’s Annual Report on Form 10-K for the year ended December 31, 2017.

Financial Statements

           
Juniata Valley Financial Corp. and Subsidiary
Consolidated Statements of Financial Condition
  (Unaudited)      
(Dollars in thousands, except share data) September 30, 2018   December 31, 2017
ASSETS          
Cash and due from banks $  14,280      $  9,839   
Interest bearing deposits with banks    35         58   
Federal funds sold    1,013         –  
Cash and cash equivalents    15,328         9,897   
           
Interest bearing time deposits with banks    3,535         350   
Equity securities    1,162         –  
Securities available for sale    138,650         153,824   
Restricted investment in bank stock    2,170         3,104   
Investment in unconsolidated subsidiary    –        4,812   
Total loans    418,075         383,904   
Less: Allowance for loan losses    (3,038 )      (2,939 )
Total loans, net of allowance for loan losses    415,037         380,965   
Premises and equipment, net    8,659         8,887   
Other real estate owned    188         355   
Bank owned life insurance and annuities    15,862         14,972   
Investment in low income housing partnerships    4,745         5,245   
Core deposit and other intangible assets    429         195   
Goodwill    9,139         5,448   
Mortgage servicing rights    208         225   
Accrued interest receivable and other assets    5,577         3,666   
Total assets $  620,689      $  591,945   
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Liabilities:          
Deposits:          
Non-interest bearing $  123,709      $  115,911   
Interest bearing    406,078         361,757   
Total deposits    529,787         477,668   
           
Securities sold under agreements to repurchase    3,759         9,769   
Short-term borrowings    593         12,000   
Long-term debt    15,000         25,000   
Other interest bearing liabilities    1,568         1,593   
Accrued interest payable and other liabilities    4,600         6,528   
Total liabilities    555,307         532,558   
Stockholders’ Equity:          
Preferred stock, no par value:  Authorized – 500,000 shares, none issued    –        –  
Common stock, par value $1.00 per share:  Authorized 20,000,000 shares          
Issued –          
5,134,249 shares at September 30, 2018;          
4,811,611 shares at December 31, 2017          
Outstanding –          
5,093,536 shares at September 30, 2018;          
4,767,656 shares at December 31, 2017    5,134         4,811   
Surplus    24,800         18,565   
Retained earnings    42,023         40,876   
Accumulated other comprehensive loss    (5,802 )      (4,034 )
Cost of common stock in Treasury:          
40,713 shares at September 30, 2018;          
43,955 shares at December 31, 2017    (773 )      (831 )
Total stockholders’ equity    65,382         59,387   
Total liabilities and stockholders’ equity $  620,689      $  591,945   

                       
Juniata Valley Financial Corp. and Subsidiary
Consolidated Statements of Income (Unaudited)
           
  Three Months Ended   Nine Months Ended
(Dollars in thousands, except share data) September 30,   September 30,
  2018     2017   2018     2017  
Interest income:                      
Loans, including fees $  5,230      $  4,607    $  14,822      $  13,491   
Taxable securities    748         729       2,288         2,128   
Tax-exempt securities    97         112       299         340   
Other interest income    54         9       103         20   
Total interest income    6,129         5,457       17,512         15,979   
Interest expense:                      
Deposits    839         561       2,178         1,555   
Securities sold under agreements to repurchase    17         8       49         17   
Short-term borrowings    21         80       164         212   
Long-term debt    62         95       215         274   
Other interest bearing liabilities    11         8       28         23   
Total interest expense    950         752       2,634         2,081   
Net interest income    5,179         4,705       14,878         13,898   
Provision for loan losses    32         149       231         389   
Net interest income after provision for loan losses    5,147         4,556       14,647         13,509   
Non-interest income:                      
Customer service fees    462         428       1,311         1,302   
Debit card fee income    323         274       939         824   
Earnings on bank-owned life insurance and annuities    99         93       266         269   
Trust fees    91         97       316         324   
Commissions from sales of non-deposit products    82         43       202         140   
Income/gain from unconsolidated subsidiary    –        49       296         154   
Fees derived from loan activity    91         77       263         181   
Mortgage banking income    17         83       53         170   
Gain (loss) on sales and calls of securities    –        2       (15 )      510   
Change in value of equity securities    (4 )      –      42         –  
Other non-interest income    80         73       238         217   
Total non-interest income    1,241         1,219       3,911         4,091   
Non-interest expense:                      
Employee compensation expense    1,992         1,829       5,717         5,326   
Employee benefits    848         567       1,935         1,802   
Occupancy    306         291       918         878   
Equipment    203         175       607         504   
Data processing expense    498         440       1,402         1,318   
Director compensation    50         60       157         183   
Professional fees    140         148       494         431   
Taxes, other than income    157         111       409         353   
FDIC Insurance premiums    59         83       208         250   
(Gain) loss on sales of other real estate owned    (52 )      19       (62 )      (26 )
Amortization of intangible assets    23         17       54         52   
Amortization of investment in low-income housing partnerships    200         173       600         412   
Merger and acquisition expense    185         –      625         –  
Other non-interest expense    423         529       1,279         1,457   
Total non-interest expense    5,032         4,442       14,343         12,940   
Income before income taxes    1,356         1,333       4,215         4,660   
Income tax (benefit) provision    (29 )      127       (66 )      701   
Net income $  1,385      $  1,206    $  4,281      $  3,959   
Earnings per share                      
Basic $  0.27      $  0.25    $  0.86      $  0.83   
Diluted $  0.27      $  0.25    $  0.86      $  0.83   
Cash dividends declared per share $  0.22      $  0.22    $  0.66      $  0.66   
Weighted average basic shares outstanding   5,093,536       4,767,656     4,951,537       4,764,325  
Weighted average diluted shares outstanding   5,120,466       4,778,950     4,973,179       4,772,935  

 

CONTACT: JoAnn McMinn
Email: joann.mcminn@jvbonline.com
Phone: (717) 436-3206

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