Mifflintown, PA, July 25, 2019 (GLOBE NEWSWIRE) --
Juniata Valley Financial Corp. (OTC Pink: JUVF) (“Juniata”), announced net income for the second quarter ended June 30, 2019, was $1,845,000 compared to net income of $1,975,000 for the quarter ended June 30, 2018. Earnings per share, basic and diluted, was $0.36 in the second quarter of 2019 compared to basic and diluted earnings per share of $0.40 and $0.39, respectively, over the same period in 2018. For the six months ended June 30, 2019, net income was $3,258,000 compared to net income of $3,302,000 for the six months ended June 30, 2018. Earnings per share, basic and diluted, during the six months ended June 30, 2019 was $0.64 compared to basic and diluted earnings per share of $0.68 and $0.67, respectively, during the corresponding 2018 period.
Comparability of the results for the 2019 and 2018 periods was impacted by an adjustment related to an acquisition completed in the second quarter of 2018. The previously reported net income for the three and six months ended June 30, 2018 of $1,569,000 and $2,896,000, respectively, was subsequently increased by $406,000 in the first quarter of 2019 due to the removal of a deferred tax liability related to Juniata’s previous 39.16% ownership in Liverpool Community Bank (“Liverpool”) upon Juniata’s acquisition of its remaining shares on April 30, 2018.
President and Chief Executive Officer, Marcie A. Barber stated, “Second quarter results continue to highlight the strength of our Company, as levels of non-performing loans have declined to the lowest levels in over ten years through successful work-outs and recoveries of aged charge-offs. We believe our organic growth in core deposits indicates confidence in our Bank. Two successful and immediately accretive acquisitions within three years exhibit expertise in evaluating and integrating new partners. Further, ongoing efforts to reduce income statement volatility by satisfying liabilities inherent in legacy defined benefit plans signal our commitment to shareholders to deliver consistent performance.”
Annualized return on average assets and annualized return on average equity for the six months ended June 30, 2019 were 1.03% and 9.52%, respectively. Annualized return on average assets and annualized return on average equity for the six month period in 2018 was 1.09% and 10.98%, respectively.
Net interest income, after the provision for loan and lease losses, increased $1,655,000, or 17.4%, during the six months ended June 30, 2019 over the comparable 2018 period. The increase in net interest income was partially attributed to an increase of $1,274,000 in loan interest income, which was partially offset by a $497,000 increase in interest expense on deposits over the same period. Also contributing to the increase in net interest income during the 2019 period was a decrease of $643,000 in the provision for loan and lease losses in comparison to the same period in 2018. A credit of $444,000 was recorded to the loan loss provision during the six months ended June 30, 2019 primarily due to net recoveries of $424,000 during the period. Primarily due to the acquisition of Liverpool on April 30, 2018, average earning assets increased by $20,945,000, or 3.7%, during the six months ended June 30, 2019 over the comparable period in 2018, while average interest bearing deposits increased by $19,539,000, or 5.1%. Over the first six months of 2019, the yield on earning assets increased 39 basis points to 4.46% over the comparable 2018 period, while the yield on interest bearing liabilities increased 23 basis points to 1.03%.
Non-interest income was $2,308,000 during the six months ended June 30, 2019 in comparison to $2,670,000 during the six months ended June 30, 2018. Most significantly impacting the comparative six month periods was a decline in income/gain from unconsolidated subsidiary of $296,000, which included a $215,000 gain from the adjustment to the carrying value of Juniata’s previous 39.16% ownership in Liverpool prior to its 100% acquisition. The equity method of accounting for the Liverpool investment ended with the acquisition by Juniata of the remaining outstanding Liverpool shares in April 2018. Since then, all income and expense items from the newly acquired Liverpool office have been included as part of Juniata’s operations in the appropriate line items in the financial statements. Also contributing to the decline in non-interest income was a net loss on sales and calls of securities driven by the strategic repositioning of the investment portfolio in 2019, as well as declines in the value of equity securities and fees derived from loan activity. Partially offsetting these declines during the period were increases of $56,000, or 9.1%, in debit card fee income and $46,000, or 38.3%, in commissions from sales of non-deposit products.
Non-interest expense was $10,129,000 during the six months ended June 30, 2019 compared to $9,311,000 during the six months ended June 30, 2018. Non-interest expense increased in the first six months of 2019 compared to the same period in 2018 primarily driven by Juniata’s growth resulting from the Liverpool acquisition; specifically, employee compensation and benefits, occupancy, equipment, and data processing expenses all increased in the 2019 period, with professional fees also increasing. Included in employee benefits expense was a $278,000 pre-tax charge to earnings recorded during the six months ended June 30, 2019 as a result of a lump sum payment made to Juniata’s remaining defined benefit plan participants who opted for that election in the continuing process of terminating Juniata’s defined benefit plan. Partially offsetting these increases was a decline in merger and acquisition expense of $440,000 as no similar expense was recorded in the 2019 period.
The income tax provision increased by $519,000 during the six months ended June 30, 2019 compared to the same period in 2018 due to greater taxable income recorded in 2019, as well as the removal of the aforementioned $406,000 deferred tax liability related to Juniata’s previous ownership in Liverpool on April 30, 2018.
Annualized return on average assets for the three months ended June 30, 2019 was 1.16% compared to 1.28% for the three months ended June 30, 2018. Annualized return on average equity for the three months period in 2019 was 10.63% compared to 12.70% for the comparable 2018 period.
Net interest income increased during the three months ended June 30, 2019 by $498,000, or 9.9%, when compared to the three months ended June 30, 2018. The loan loss provision decreased $500,000 in the second quarter of 2019 in comparison to the same period in 2018 primarily due to net recoveries of $480,000 during the period.
Non-interest income during the three months ended June 30, 2019 was $1,214,000 compared to $1,496,000 during the three months ended June 30, 2018. Most significantly impacting the comparative three month period was the income/gain from unconsolidated subsidiary, which decreased by $227,000 in the second quarter of 2019 compared to the same period in 2018 due to the aforementioned $215,000 adjustment to the carrying value of Juniata’s previous partial ownership in Liverpool recorded in the second quarter of 2018.
Non-interest expense for the three months ended June 30, 2019 was $5,294,000 compared to $4,906,000 for the three months ended June 30, 2018. Non-interest expense increased during the second quarter of 2019 compared to the same period in 2018 due to the recording of the aforementioned $278,000 defined benefit lump sum settlement charge in employee benefits expense, as well increases related to the Liverpool acquisition in most expense line items. Partially offsetting these increases was a $376,000 decline in merger and acquisition expense as no such expense was recorded during the second quarter of 2019.
The income tax provision increased by $458,000 during the three months ended June 30, 2019 compared to the same period in 2018 due to greater taxable income recorded in 2019, as well as the removal of the aforementioned $406,000 deferred tax liability on April 30, 2018 that was related to Juniata’s previous ownership in Liverpool.
Total assets at June 30, 2019 were $662,064,000, an increase of $36,828,000 compared to total assets of $625,236,000 at December 31, 2018. Total securities available for sale and cash and cash equivalents increased by $38,066,000 and $9,092,000, respectively, when comparing June 30, 2019 to December 31, 2018, while total loans declined by $10,180,000 over the period. In addition, total borrowings and deposits increased by $18,346,000 and $12,653,000, respectively, as did total capital by $5,148,000. A balance sheet leverage strategy was undertaken in the second quarter of 2019, whereby Juniata borrowed $30,000,000 in long-term FHLB advances and subsequently invested the same amount into higher yielding investment securities.
On July 16, 2019, Juniata Valley Financial Corp.’s Board of Directors declared a cash dividend of $0.22 per share, payable on August 30, 2019 to shareholders of record on August 15, 2019.
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 Securities and Exchange Commission. 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 the Pink Open Market 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. When words such as “believes”, “expects”, “anticipates” or similar expressions are used in this release, Juniata is making forward-looking statements. Such information is based on Juniata’s current expectations, estimates and projections about future events and financial trends affecting the financial condition of its business. These statements are not historical facts or guarantees of future performance, events or results. Such statements involve potential risks and uncertainties and, accordingly, actual results may differ materially from this forward-looking information. Many factors could affect future financial results. 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. For a more complete discussion of certain risks and uncertainties affecting Juniata, please see the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Statements” set forth in the Juniata’s filings with the Securities and Exchange Commission.
Financial Statements
Juniata Valley Financial Corp. and Subsidiary
Consolidated Statements of Financial Condition
| (Dollars in thousands, except share data) | (Unaudited) | |||||||
| June 30, 2019 | December 31, 2018 | |||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 14,431 | $ | 15,617 | ||||
| Interest bearing deposits with banks | 2,117 | 110 | ||||||
| Federal funds sold | 9,000 | 729 | ||||||
| Cash and cash equivalents | 25,548 | 16,456 | ||||||
| Interest bearing time deposits with banks | 2,700 | 3,290 | ||||||
| Equity securities | 1,133 | 1,118 | ||||||
| Securities available for sale | 180,019 | 141,953 | ||||||
| Restricted investment in bank stock | 3,098 | 2,441 | ||||||
| Total loans | 407,451 | 417,631 | ||||||
| Less: Allowance for loan losses | (3,015 | ) | (3,034 | ) | ||||
| Total loans, net of allowance for loan losses | 404,436 | 414,597 | ||||||
| Premises and equipment, net | 8,518 | 8,744 | ||||||
| Other real estate owned | 595 | 744 | ||||||
| Bank owned life insurance and annuities | 16,095 | 15,938 | ||||||
| Investment in low income housing partnerships | 4,235 | 4,545 | ||||||
| Core deposit and other intangible assets | 361 | 405 | ||||||
| Goodwill | 9,047 | 9,139 | ||||||
| Mortgage servicing rights | 190 | 200 | ||||||
| Accrued interest receivable and other assets | 6,089 | 5,666 | ||||||
| Total assets | $ | 662,064 | $ | 625,236 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Non-interest bearing | $ | 123,355 | $ | 126,057 | ||||
| Interest bearing | 411,020 | 395,665 | ||||||
| Total deposits | 534,375 | 521,722 | ||||||
| Securities sold under agreements to repurchase | 2,857 | 2,911 | ||||||
| Short-term borrowings | — | 11,600 | ||||||
| Long-term debt | 45,000 | 15,000 | ||||||
| Other interest bearing liabilities | 1,596 | 1,596 | ||||||
| Accrued interest payable and other liabilities | 5,710 | 5,029 | ||||||
| Total liabilities | 589,538 | 557,858 | ||||||
| Stockholders' Equity: | ||||||||
| Preferred stock, no par value: Authorized - 5000,000 shares, none issued | — | — | ||||||
| Common stock, par value $1.00 per share: Authorized 20,000,000 shares Issued - 5,141,749 shares at June 30, 2019; 5,134,249 shares at December 31, 2018 Outstanding - 5,103,628 shares at June 30, 2019; 5,092,048 shares at December 31, 2018 | 5,142 | 5,134 | ||||||
| Surplus | 24,858 | 24,821 | ||||||
| Retained earnings | 43,539 | 42,525 | ||||||
| Accumulated other comprehensive loss | (301 | ) | (4,299 | ) | ||||
| Cost of common stock in Treasury: 38,121 shares at June 30, 2019; 42,201 shares at December 31, 2018 | (712 | ) | (803 | ) | ||||
| Total stockholders' equity | 72,526 | 67,378 | ||||||
| Total liabilities and stockholders' equity | $ | 662,064 | $ | 625,236 | ||||
Juniata Valley Financial Corp. and Subsidiary
Consolidated Statements of Income (Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| (Dollars in thousands, except share and per share data) | June 30, | June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Interest income: | ||||||||||||||||
| Loans, including fees | $ | 5,611 | $ | 5,041 | $ | 10,866 | $ | 9,592 | ||||||||
| Taxable securities | 940 | 765 | 1,789 | 1,540 | ||||||||||||
| Tax-exempt securities | 32 | 99 | 93 | 202 | ||||||||||||
| Other interest income | 129 | 39 | 182 | 49 | ||||||||||||
| Total interest income | 6,712 | 5,944 | 12,930 | 11,383 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Deposits | 973 | 745 | 1,836 | 1,339 | ||||||||||||
| Securities sold under agreements to repurchase | 10 | 17 | 21 | 32 | ||||||||||||
| Short-term borrowings | 1 | 59 | 14 | 143 | ||||||||||||
| Long-term debt | 165 | 60 | 326 | 153 | ||||||||||||
| Other interest bearing liabilities | 11 | 9 | 22 | 17 | ||||||||||||
| Total interest expense | 1,160 | 890 | 2,219 | 1,684 | ||||||||||||
| Net interest income | 5,552 | 5,054 | 10,711 | 9,699 | ||||||||||||
| Provision for loan losses | (459 | ) | 41 | (444 | ) | 199 | ||||||||||
| Net interest income after provision for loan losses | 6,011 | 5,013 | 11,155 | 9,500 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Customer service fees | 429 | 437 | 851 | 849 | ||||||||||||
| Debit card fee income | 364 | 324 | 672 | 616 | ||||||||||||
| Earnings on bank-owned life insurance and annuities | 71 | 86 | 140 | 167 | ||||||||||||
| Trust fees | 91 | 123 | 190 | 225 | ||||||||||||
| Commissions from sales of non-deposit products | 95 | 70 | 166 | 120 | ||||||||||||
| Income from unconsolidated subsidiary | — | 227 | — | 296 | ||||||||||||
| Fees derived from loan activity | 64 | 77 | 134 | 172 | ||||||||||||
| Mortgage banking income | 19 | 17 | 36 | 36 | ||||||||||||
| Loss on sales and calls of securities | — | — | (56 | ) | (15 | ) | ||||||||||
| Change in value of equity securities | 6 | 52 | 15 | 46 | ||||||||||||
| Other non-interest income | 75 | 83 | 160 | 158 | ||||||||||||
| Total non-interest income | 1,214 | 1,496 | 2,308 | 2,670 | ||||||||||||
| Non-interest expense: | ||||||||||||||||
| Employee compensation expense | 2,068 | 1,933 | 4,036 | 3,725 | ||||||||||||
| Employee benefits | 857 | 523 | 1,598 | 1,087 | ||||||||||||
| Occupancy | 321 | 294 | 670 | 612 | ||||||||||||
| Equipment | 218 | 197 | 432 | 404 | ||||||||||||
| Data processing expense | 528 | 488 | 989 | 904 | ||||||||||||
| Director compensation | 54 | 53 | 105 | 107 | ||||||||||||
| Professional fees | 365 | 177 | 562 | 354 | ||||||||||||
| Taxes, other than income | 144 | 139 | 278 | 252 | ||||||||||||
| FDIC Insurance premiums | 51 | 79 | 107 | 149 | ||||||||||||
| Loss (gain) on sales of other real estate owned | 14 | (10 | ) | 14 | (10 | ) | ||||||||||
| Amortization of intangible assets | 22 | 20 | 44 | 31 | ||||||||||||
| Amortization of investment in low-income housing partnerships | 200 | 200 | 400 | 400 | ||||||||||||
| Merger and acquisition expense | — | 376 | — | 440 | ||||||||||||
| Other non-interest expense | 452 | 437 | 894 | 856 | ||||||||||||
| Total non-interest expense | 5,294 | 4,906 | 10,129 | 9,311 | ||||||||||||
| Income before income taxes | 1,931 | 1,603 | 3,334 | 2,859 | ||||||||||||
| Income tax provision (benefit) | 86 | (372 | ) | 76 | (443 | ) | ||||||||||
| Net income | $ | 1,845 | $ | 1,975 | $ | 3,258 | $ | 3,302 | ||||||||
| Earnings per share | ||||||||||||||||
| Basic | $ | 0.36 | $ | 0.40 | $ | 0.64 | $ | 0.68 | ||||||||
| Diluted | $ | 0.36 | $ | 0.39 | $ | 0.64 | $ | 0.67 | ||||||||
| Cash dividends declared per share | $ | 0.22 | $ | 0.22 | $ | 0.44 | $ | 0.44 | ||||||||
| Weighted average basic shares outstanding | 5,101,751 | 4,987,137 | 5,098,460 | 4,879,361 | ||||||||||||
| Weighted average diluted shares outstanding | 5,121,273 | 5,008,218 | 5,119,030 | 4,898,248 | ||||||||||||