Mifflintown, PA, Oct. 29, 2020 (GLOBE NEWSWIRE) --
Juniata Valley Financial Corp. (OTC Pink: JUVF) (“Juniata”), announced net income for the quarter ended September 30, 2020 of $1.6 million, compared to net income of $1.1 million for the quarter ended September 30, 2019. Earnings per share, basic and diluted, were $0.32 during the three months ended September 30, 2020 compared to $0.21 during the three months ended September 30, 2019. For the nine months ended September 30, 2020, net income was $4.2 million compared to net income of $4.4 million for the nine months ended September 30, 2019. Earnings per share, basic and diluted, during the nine months ended September 30, 2020 were $0.83 compared to basic and diluted earnings per share of $0.85 during the corresponding 2019 period.
President’s Message
President and Chief Executive Officer, Marcie A. Barber stated, “We remain focused on weathering the potential economic storm for our customers and our shareholders. We are positioned to lend and are managing our balance sheet with appropriate flexibility to address changing needs of both constituents”.
Juniata’s COVID-19 Response
Juniata remained responsive to the needs of customers for short-term payment relief through the third quarter of 2020. During the nine month period ending on September 30, 2020, Juniata approved interest and/or principal payment deferrals on 237 loans totaling $90.2 million for individuals and businesses affected by the economic impacts of COVID-19. As of September 30, 2020, nine of these loans, totaling $11.8 million, remained in deferment.
Additionally, Juniata is actively consulting with customers who applied for and received Paycheck Protection Program (“PPP”) loans through the Small Business Administration (“SBA”). Through September 30, 2020, Juniata made 508 PPP loans totaling $31.5 million. These loans may be forgiven by the SBA if the borrower satisfies specified criteria. Juniata is working to implement the SBA’s recently announced streamlined forgiveness approval process on PPP loans of $50,000 or less, which comprises most of Juniata’s PPP loans in number, but a relatively small amount of the total PPP loan balance.
Year-to-Date Financial Results
Annualized return on average assets for the nine months ended September 30, 2020 was 0.78% compared to 0.90% during the nine months ended September 30, 2019. Annualized return on average equity for the nine months ended September 30, 2020 was 7.45% compared to 8.30% during the nine months ended September 30, 2019.
Net interest income was $15.3 million during the nine months ended September 30, 2020 compared to $15.8 million during the comparable 2019 period. The decrease in net interest income was mainly attributable to a $1.5 million decline in loan interest and fee income, which was partially offset by a $0.8 million increase in interest income on investment securities over the same period, as well as a $0.4 million decline in interest expense. Average earning assets increased by $79.7 million, or 13.5%, to $669.1 million during the nine months ended September 30, 2020 over the comparable 2019 period. The average balance of investment securities increased by $81.2 million during the nine months ended September 30, 2020 over the nine months ended September 30, 2019. Average loan balances declined by $2.2 million compared to the same period in 2019 due to paydowns that exceeded demand for non-PPP loans, with such decline offsetting the significant PPP loan origination activity in 2020. Average interest bearing deposits increased by $20.2 million, or 5.0%, while average non-interest bearing deposits increased by $27.0 million, or 21.5%, driven by deposits of government stimulus payments and decreased consumer spending. Further, due to Juniata’s participation in the Federal Reserve’s Paycheck Protection Plan Liquidity Facility (“PPPLF”), the average indebtedness during the nine month period ended September 30, 2020 increased by $31.7 million. The increased funding was invested in the securities portfolio. Over the nine months ended September 30, 2020, the yield on earning assets decreased 70 basis points, to 3.67%, over the comparable 2019 period, while the cost of interest bearing liabilities decreased 22 basis points, to 0.84%. The yields on earning assets and cost of funds were affected by the 175 basis point decline in the prime rate and the federal funds target range between the 2020 and 2019 periods. Net interest margin, on a fully tax equivalent basis, decreased from 3.64% during the nine months ended September 30, 2019 to 3.10% during the nine months ended September 30, 2020.
The provision for loan losses increased $1.1 million in the nine months ended September 30, 2020 in comparison to the nine months ended September 30, 2019. While both periods included the effect of net recoveries of $0.3 million and $0.5 million, respectively, due to the change in the economic environment resulting from the COVID-19 pandemic, Juniata increased the qualitative risk factors for all loan segments in the loan portfolio in its allowance for loan loss analysis during the nine month period ending on September 30, 2020.
Non-interest income was $4.0 million during the nine months ended September 30, 2020 in comparison to $3.5 million during the nine months ended September 30, 2019. Most significantly impacting the comparative nine month periods was a $0.9 million increase in the gains on the sales and calls of securities in 2020 over the comparable 2019 period due in part to the execution of a balance sheet strategy in the second quarter of 2020 that produced net securities gains of $0.5 million, which were used to offset a $0.5 million prepayment penalty on the extinguishment of long-term debt. Additionally, a restructuring to reduce overall premium exposure in the debt securities portfolio during the third quarter of 2020, resulted in a net gain on the sales of securities of $0.3 million. Partially offsetting this increase in non-interest income was a $0.1 million greater decline in the fair value of equity securities during the nine months ended September 30, 2020 compared to the equivalent 2019 period. Further, customer service fees, primarily NSF fees, were $0.3 million less in the 2020 period compared to the same period in the prior year, mainly due to decreased spending and deposits of stimulus funding during the pandemic.
Non-interest expense was $14.5 million during the nine months ended September 30, 2020 compared to $15.5 million during the nine months ended September 30, 2019. Non-interest expense declined during the nine months ended September 30, 2020 compared to the same period in 2019 primarily due to Juniata’s $1.3 million decline in employee benefits resulting from the elimination of pension-related expenses in 2020 compared to the $1.2 million in pre-tax pension settlement charges recorded during the 2019 period. Also contributing to the decline were lower occupancy and professional fees. Partially offsetting these declines was a $0.5 million prepayment penalty on long-term debt extinguishment, while no similar expense was recorded during the comparable 2019 period. Additionally, a $0.2 million net gain on the sales of other real estate owned was realized during the nine months ended September 30, 2019, while no gains were recorded during the comparable 2020 period.
An income tax benefit of $44,000 was recorded during the nine months ended September 30, 2020 compared to a $27,000 benefit during the same period. In 2020, Juniata was able to take advantage of a provision in the CARES Act allowing the carryback of a net operating loss from a previous acquisition.
Quarter-to-Date Financial Results
Annualized return on average assets for the three months ended September 30, 2020 was 0.82%, compared to 0.66% for the three months ended September 30, 2019. Annualized return on average equity for the three months ended September 30, 2020 was 8.36%, compared to 6.00% for the three months ended September 30, 2019.
Net interest income was $5.2 million for the third quarter of 2020 compared to $5.1 million for the third quarter of 2019. Average earning assets increased 18.9%, to $723.6 million, with average investment securities increasing by $101.0 million, or 52.1%, in the third quarter of 2020 compared to the comparable 2019 period. The yield on earning assets declined 76 basis points, to 3.43%, during the three months ended September 30, 2020 compared to the same period in 2019, while the cost to fund interest bearing assets with interest bearing liabilities over the same period decreased by 39 basis points, to 0.73%. The yield on earning assets and cost of funds were affected by reductions in the prime rate and the federal funds target range between the third quarters of 2019 and 2020. Net interest margin, on a fully tax equivalent basis, decreased from 3.41% during the three months ended September 30, 2019 to 2.93% during the three months ended September 30, 2020.
The provision for loan losses increased $0.1 million in the third quarter of 2020 in comparison to the third quarter of 2019. Due to the continued uncertainty in the economic environment resulting from the COVID-19 pandemic, Juniata maintained increased qualitative risk factors for all loan segments in the loan portfolio in its allowance for loan loss analysis in the third quarter of 2020, including an additional qualitative factor for all loans that had been granted COVID-19 deferrals, regardless of present deferment status.
Non-interest income in the third quarter of 2020 was $1.5 million compared to $1.2 million in the third quarter of 2019, an increase of 21.2%. Most significantly impacting non-interest income in the comparative three month periods was a $0.3 million increase in gains on the sales and calls of securities in 2020 over the comparable 2019 period as mentioned previously. Partially offsetting this increase was a $0.1 million decrease in customer service fees, predominantly in overdraft fees, in the third quarter of 2020 compared to the third quarter of 2019.
Non-interest expense was $4.9 million for the three months ended September 30, 2020 compared to $5.4 million for the three months ended September 30, 2019, a decline of 8.0%. Most significantly impacting non-interest expense in the comparative three month periods was a $0.9 million decline in employee benefits expense due to the elimination of pension-related expenses in 2020 compared to 2019 when a $0.9 million pre-tax pension settlement charge was recorded. Partially offsetting this decline was a $0.1 million increase in employee compensation in the third quarter of 2020 compared to the third quarter of 2019, as well as a $0.2 million net gain on sales of other real estate owned recorded during the third quarter of 2019, while no similar amount was recorded during the 2020 period.
An income tax provision of $0.1 million was recorded in the third quarter of 2020, compared to an income tax benefit of $0.1 million recorded in the third quarter of 2019, due to greater taxable income recorded during the 2020 period.
Financial Condition
Total assets at September 30, 2020 were $775.1 million, an increase of $104.5 million compared to total assets of $670.6 million at December 31, 2019. Comparing asset balances at September 30, 2020 and December 31, 2019, debt securities available for sale and loans increased by $86.2 million and $20.2 million, respectively. Over the same period, deposits increased by $68.6 million, with growth in both non-interest bearing and interest bearing deposits. Short-term debt increased by $11.4 million at September 30, 2020 compared to year-end 2019, while long-term debt declined by $10.0 million compared to the same period. Additionally, advances from the Federal Reserve Bank increased $31.3 million as of September 30, 2020 compared to December 31, 2019 due to Juniata’s participation in the PPPLF. Shareholders’ equity increased by $3.0 million primarily due to an increase in unrealized gains on debt securities at September 30, 2020 compared to December 31, 2019.
Subsequent Event
On October 20, 2020, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on November 16, 2020, payable on December 1, 2020.
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 release is subject to change.
The Juniata Valley Bank, the principal subsidiary of Juniata Valley Financial Corp., is headquartered in Mifflintown, Pennsylvania, with nineteen 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. In addition, the COVID-19 pandemic is having an adverse impact on Juniata, its customers and the communities it serves and may adversely affect Juniata’s business, results of operations and financial condition for an indefinite period of time. The Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 addressed risks and uncertainties associated with the COVID-19 pandemic and the Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 will update this disclosure.
Financial Statements
Juniata Valley Financial Corp. and Subsidiary
Consolidated Statements of Financial Condition
| (Dollars in thousands, except share data) | (Unaudited) | |||||||
| September 30, 2020 | December 31, 2019 | |||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 11,135 | $ | 12,658 | ||||
| Interest bearing deposits with banks | 1,144 | 82 | ||||||
| Cash and cash equivalents | 12,279 | 12,740 | ||||||
| Interest bearing time deposits with banks | 735 | 2,210 | ||||||
| Equity securities | 992 | 1,144 | ||||||
| Debt securities available for sale | 296,848 | 210,686 | ||||||
| Restricted investment in bank stock | 3,449 | 3,442 | ||||||
| Total loans | 420,754 | 400,590 | ||||||
| Less: Allowance for loan losses | (3,924 | ) | (2,961 | ) | ||||
| Total loans, net of allowance for loan losses | 416,830 | 397,629 | ||||||
| Premises and equipment, net | 8,881 | 9,243 | ||||||
| Bank owned life insurance and annuities | 16,503 | 16,266 | ||||||
| Investment in low income housing partnerships | 3,304 | 3,904 | ||||||
| Core deposit and other intangible assets | 261 | 318 | ||||||
| Goodwill | 9,047 | 9,047 | ||||||
| Mortgage servicing rights | 164 | 180 | ||||||
| Accrued interest receivable and other assets | 5,799 | 3,823 | ||||||
| Total assets | $ | 775,092 | $ | 670,632 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Non-interest bearing | $ | 159,512 | $ | 134,703 | ||||
| Interest bearing | 441,014 | 397,234 | ||||||
| Total deposits | 600,526 | 531,937 | ||||||
| Short-term borrowings and repurchase agreements | 24,575 | 13,129 | ||||||
| Federal Reserve Bank ("FRB") advances | 31,298 | — | ||||||
| Long-term debt | 35,000 | 45,000 | ||||||
| Other interest bearing liabilities | 1,563 | 1,603 | ||||||
| Accrued interest payable and other liabilities | 5,429 | 5,256 | ||||||
| Total liabilities | 698,391 | 596,925 | ||||||
| Commitments and contingent liabilities | ||||||||
| 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 - 5,151,279 shares at September 30, 2020; 5,141,749 shares at December 31, 2019 Outstanding - 5,029,841 shares at September 30, 2020; 5,099,729 shares at December 31, 2019 | 5,151 | 5,142 | ||||||
| Surplus | 24,977 | 24,898 | ||||||
| Retained earnings | 44,845 | 43,954 | ||||||
| Accumulated other comprehensive income | 3,827 | 516 | ||||||
| Cost of common stock in Treasury: 121,438 shares at September 30, 2020; 42,020 shares at December 31, 2019 | (2,099 | ) | (803 | ) | ||||
| Total stockholders' equity | 76,701 | 73,707 | ||||||
| Total liabilities and stockholders' equity | $ | 775,092 | $ | 670,632 | ||||
Juniata Valley Financial Corp. and Subsidiary
Consolidated Statements of Income (Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||
| (Dollars in thousands, except share and per share data) | September 30, | September 30, | |||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Interest income: | |||||||||||||||
| Loans, including fees | $ | 4,848 | $ | 5,157 | $ | 14,507 | $ | 16,023 | |||||||
| Taxable securities | 1,312 | 1,118 | 3,742 | 2,907 | |||||||||||
| Tax-exempt securities | 42 | 29 | 105 | 122 | |||||||||||
| Other interest income | 8 | 76 | 73 | 258 | |||||||||||
| Total interest income | 6,210 | 6,380 | 18,427 | 19,310 | |||||||||||
| Interest expense: | |||||||||||||||
| Deposits | 710 | 970 | 2,270 | 2,806 | |||||||||||
| Short-term borrowings and repurchase agreements | 26 | 9 | 34 | 44 | |||||||||||
| FRB advances | 28 | — | 35 | — | |||||||||||
| Long-term debt | 216 | 286 | 729 | 612 | |||||||||||
| Other interest bearing liabilities | 4 | 11 | 14 | 33 | |||||||||||
| Total interest expense | 984 | 1,276 | 3,082 | 3,495 | |||||||||||
| Net interest income | 5,226 | 5,104 | 15,345 | 15,815 | |||||||||||
| Provision for loan losses | 87 | (46 | ) | 639 | (490 | ) | |||||||||
| Net interest income after provision for loan losses | 5,139 | 5,150 | 14,706 | 16,305 | |||||||||||
| Non-interest income: | |||||||||||||||
| Customer service fees | 339 | 429 | 1,030 | 1,280 | |||||||||||
| Debit card fee income | 384 | 328 | 1,080 | 1,000 | |||||||||||
| Earnings on bank-owned life insurance and annuities | 74 | 82 | 201 | 222 | |||||||||||
| Trust fees | 98 | 104 | 302 | 294 | |||||||||||
| Commissions from sales of non-deposit products | 66 | 52 | 213 | 218 | |||||||||||
| Fees derived from loan activity | 94 | 104 | 184 | 238 | |||||||||||
| Mortgage banking income | 11 | 16 | 41 | 52 | |||||||||||
| Gain (loss) on sales and calls of securities | 283 | — | 845 | (56 | ) | ||||||||||
| Change in value of equity securities | 2 | (19 | ) | (152 | ) | (4 | ) | ||||||||
| Other non-interest income | 99 | 100 | 257 | 260 | |||||||||||
| Total non-interest income | 1,450 | 1,196 | 4,001 | 3,504 | |||||||||||
| Non-interest expense: | |||||||||||||||
| Employee compensation expense | 2,164 | 2,038 | 5,970 | 6,074 | |||||||||||
| Employee benefits | 625 | 1,492 | 1,747 | 3,090 | |||||||||||
| Occupancy | 284 | 309 | 869 | 979 | |||||||||||
| Equipment | 241 | 224 | 706 | 656 | |||||||||||
| Data processing expense | 600 | 556 | 1,664 | 1,545 | |||||||||||
| Professional fees | 198 | 210 | 562 | 772 | |||||||||||
| Taxes, other than income | 116 | 144 | 378 | 422 | |||||||||||
| FDIC Insurance premiums | 39 | — | 118 | 107 | |||||||||||
| Loss (gain) on sales of other real estate owned | — | (222 | ) | — | (208 | ) | |||||||||
| Amortization of intangible assets | 19 | 21 | 57 | 65 | |||||||||||
| Amortization of investment in low-income housing partnerships | 200 | 200 | 600 | 600 | |||||||||||
| Long-term debt prepayment penalty | — | — | 524 | — | |||||||||||
| Other non-interest expense | 439 | 384 | 1,307 | 1,383 | |||||||||||
| Total non-interest expense | 4,925 | 5,356 | 14,502 | 15,485 | |||||||||||
| Income before income taxes | 1,664 | 990 | 4,205 | 4,324 | |||||||||||
| Income tax provision (benefit) | 58 | (103 | ) | (44 | ) | (27 | ) | ||||||||
| Net income | $ | 1,606 | $ | 1,093 | $ | 4,249 | $ | 4,351 | |||||||
| Earnings per share | |||||||||||||||
| Basic | $ | 0.32 | $ | 0.21 | $ | 0.83 | $ | 0.85 | |||||||
| Diluted | $ | 0.32 | $ | 0.21 | $ | 0.83 | $ | 0.85 | |||||||