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Juniata Valley Financial Corp. Announces Second Quarter 2022 Results

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Juniata Valley Financial Corp.
Juniata Valley Financial Corp.

Mifflintown, PA, July 21, 2022 (GLOBE NEWSWIRE) --

Juniata Valley Financial Corp. (OTCQX:JUVF) (“Juniata”), announced net income for the three months ended June 30, 2022 of $2.0 million, an increase of 14.0%, compared to net income of $1.7 million for the three months ended June 30, 2021. Earnings per share, basic and diluted, increased 14.3%, to $0.40, during the three months ended June 30, 2022, compared to $0.35 during the three months ended June 30, 2021. Net income for the six months ended June 30, 2022, increased 21.5%, to $4.1 million, compared to net income of $3.4 million for the six months ended June 30, 2021. Earnings per share, basic and diluted, increased 22.4% during the six months ended June 30, 2022, to $0.82, compared to basic and diluted earnings per share of $0.67 during the corresponding 2021 period.

President’s Message

President and Chief Executive Officer, Marcie A. Barber stated, “We are very pleased that we continued to build on the momentum generated during the first quarter as we posted record net income through the first half of the year. During the second quarter, we saw robust loan growth of nearly $30 million, while asset quality remained strong. We continue to focus on expanding our lending footprint through organic growth and strategic partnerships, with a vigilant eye on the uncertain economic outlook for our market area and the nation.”

Financial Results Year-to-Date

Annualized return on average assets for the six months ended June 30, 2022, was 1.00%, an increase of 19.0% compared to the annualized return on average assets of 0.84% for the six months ended June 30, 2021. Annualized return on average equity for the six months ended June 30, 2022 was 13.85%, an increase of 52.2% compared to the annualized return on average equity of 9.10% for the six months ended June 30, 2021.

Net interest income was $12.0 million during the six months ended June 30, 2022 compared to $10.1 million during the comparable 2021 period. Average earning assets increased $26.7 million, or 3.5%, to $780.6 million, during the six months ended June 30, 2022, compared to the same period in 2021, due to an increase of $43.7 million, or 14.2%, in average investment securities. The increase in average investment securities was partially offset by a decline of $9.8 million in average loans, primarily due to the forgiveness of PPP loans. While the average loan volume declined between the first six months of 2022 compared to the 2021 period, total loan yield increased by 39 basis points, mostly due to interest collected on a previously charged off nonaccrual loan, as well as from the increase in market interest rates as both the prime rate and federal funds target range increased by 150 basis points during the first half of 2022. The yield on earning assets increased 25 basis points, to 3.42%, in the first half of 2022 compared to same period in 2021, while the cost to fund interest earning assets with interest bearing liabilities decreased 16 basis points, to 0.46%. Average interest bearing liabilities increased by $9.7 million, or 1.8%, compared to the comparable 2021 period, due to growth in interest-bearing demand and savings deposits, which were partially offset by declines in time deposits, as well as short- and long-term borrowings due to reductions in FRB advances and FHLB borrowings. The net interest margin, on a fully tax equivalent basis, increased from 2.75% during the six months ended June 30, 2021, to 3.12% during the six months ended June 30, 2022.

A loan loss provision expense of $250,000 was recorded during the six months ended June 30, 2022, compared to a provision credit of $279,000 in the six months ended June 30, 2021. While Juniata continued to experience favorable asset quality trends and net recoveries during the first half of 2022, elevated qualitative risk factors were considered in its allowance for loan loss analysis for certain loan segments due to the uncertainty in the economy and the potential for a recession as inflation, labor shortages and supply chain disruptions remain prevalent. Additionally, loan growth of 5.4% as of June 30, 2022 compared to December 31, 2021 also factored into the increase in Juniata’s loan loss provision during the six months ended June 30, 2022.

Non-interest income was $2.7 million during the six months ended June 30, 2022 compared to $2.6 million during the six months ended June 30, 2021, an increase of 3.3%. Most significantly impacting the comparative six month periods was a $1.1 million loss on sales and calls of securities in 2022 due to the execution of a balance sheet and regulatory capital management strategy in which $1.1 million in security losses were offset by $1.2 million in gains from the termination of two derivatives contracts, recorded in other non-interest income. Additionally, the value of equity securities during the six months ended June 30, 2022 declined by $181,000 compared to the six months ended June 30, 2021 due to declines in bank stock market values, which were partially offset by increases of $74,000 in customer service fees and $51,000 in life insurance proceeds in the 2022 period.

Non-interest expense was $9.9 million during the six months ended June 30, 2022 compared to $9.5 million during the six months ended June 30, 2021, an increase of 4.6%. Most significantly impacting non-interest expense in the comparative six month periods was a $359,000 increase in employee compensation and benefits expense due to temporary duplication of compensation and benefits expense as a result of employee transitions, as well as increased medical claims expenses. Also contributing to the increase in non-interest expense was a $42,000 decline in the gain on other real estate owned during the six months ended June 30, 2022 versus the comparable 2021 period.

The income tax provision increased by $226,000 during the six months ended June 30, 2022, resulting from higher taxable income compared to the same period in 2021.

Financial Results for the Quarter

Annualized return on average assets for the three months ended June 30, 2022 was 0.97%, an increase of 14.1%, compared to 0.85% for the three months ended June 30, 2021. Annualized return on average equity for the three months ended June 30, 2022 was 15.53%, an increase of 62.8%, compared to 9.54% for the three months ended June 30, 2021.

Net interest income was $6.0 million for the three months ended June 30, 2022 compared to $5.2 million for the three months ended June 30, 2021. Average earning assets increased $25.6 million, or 3.3%, to $792.5 million during the three months ended June 30, 2022, compared to the same period in 2021, predominantly due to an increase of $39.5 million, or 12.2%, in average investment securities, partially offset by a decline of $7.2 million, or 1.7%, in average loans. The yield on earning assets increased 25 basis points, to 3.40%, during the three months ended June 30, 2022 compared to same period in 2021 partly due to the increase in market interest rates as both the prime rate and federal funds target range increased by 125 basis points, as well as from interest collected on a previously charged off nonaccrual loan. Over the same three month periods, the cost to fund interest earning assets with interest bearing liabilities decreased 11 basis points, to 0.48%, primarily due to a greater amount of higher-cost long-term debt present in the 2021 period. During the three months ended June 30, 2022, average interest bearing liabilities increased by $10.4 million, or 1.9%, compared to the comparable 2021 period, mainly due to growth in interest-bearing demand and savings deposits, partially offset by declines in time deposits and short-and long-term debt. The net interest margin, on a fully tax equivalent basis, increased from 2.76% during the three months ended June 30, 2021 to 3.08%, during the three months ended June 30, 2022.

Juniata recorded a loan loss provision expense of $222,000 in the three months ended June 30, 2022 compared to a provision credit of $200,000 in the comparable 2021 period. Loan growth, coupled with the continued uncertainty in the economic outlook due to inflation, labor shortages and supply chain disruptions, resulted in an increased loan loss provision, despite favorable asset quality trends and net recoveries during the three months ended June 30, 2022.

Non-interest income in the three months ended June 30, 2022 was $1.4 million compared to $1.3 million in the three months ended June 30, 2021, an increase of 6.1%. Most significantly impacting non-interest income in the comparative three month periods was a $1.1 million loss on sales and calls of securities during the three months ended June 30, 2022 which was offset by $1.2 million in gains from the termination of two derivatives contracts recorded in other non-interest income. The securities were sold, and the derivative contracts terminated, as part of a balance sheet and regulatory capital management strategy. Also affecting the change in non-interest income between the three months ended June 30, 2022 and 2021 was a $65,000 decline in the value of equity securities, which was partially offset by $51,000 in life insurance proceeds recorded in the 2022 period.

Non-interest expense was $5.0 million for the three months ended June 30, 2022, compared to $4.9 million for the three months ended June 30, 2021, an increase of 3.3%. Most significantly impacting non-interest expense in the comparative three month periods was a $151,000 increase in employee compensation expense during the three months ended June 30, 2022 due to temporary duplication of compensation expense as a result of employee transitions, which was partially offset by a $23,000 decline in data processing expense over the same periods.

An income tax provision of $177,000 was recorded in the three months ended June 30, 2022, compared to an income tax provision of $89,000 recorded during the three months ended June 30, 2021 predominantly due to higher taxable income recorded during the 2022 period.

Financial Condition

Total assets as of June 30, 2022 were $817.7 million, an increase of $7.1 million, or 0.9%, compared to total assets of $810.5 million at December 31, 2021. Over this period, outstanding loans and deposits increased by $22.8 million, or 5.4%, and $11.4 million, or 1.6%, respectively, while investment securities decreased by $31.8 million, or 9.5%. Operating cash flows, as well as the proceeds from the sales of debt securities, were used to repay a $10.0 million brokered demand deposit, and to fund loan growth. As of June 30, 2022, short-term borrowings increased by $20.0 million compared to December 31, 2021 as Juniata reverted to using FHLB short-term borrowings to supplement core deposits to satisfy its funding needs in lieu of brokered demand deposits.

Subsequent Event

On July 19, 2022, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on August 16, 2022, payable on September 1, 2022.

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, Centre 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 because 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, 2022

 

December 31, 2021

ASSETS

 

 

 

 

 

 

Cash and due from banks

 

$

14,435

 

 

$

12,928

 

Interest bearing deposits with banks

 

 

8,239

 

 

 

598

 

Federal funds sold

 

 

 

 

 

 

Cash and cash equivalents

 

 

22,674

 

 

 

13,526

 

 

 

 

 

 

 

 

Interest bearing time deposits with banks

 

 

245

 

 

 

735

 

Equity securities

 

 

1,044

 

 

 

1,124

 

Debt securities available for sale

 

 

303,627

 

 

 

335,424

 

Restricted investment in bank stock

 

 

2,587

 

 

 

2,116

 

Total loans

 

 

441,079

 

 

 

418,303

 

Less: Allowance for loan losses

 

 

(3,813

)

 

 

(3,508

)

Total loans, net of allowance for loan losses

 

 

437,266

 

 

 

414,795

 

Premises and equipment, net

 

 

8,246

 

 

 

8,371

 

Other real estate owned

 

 

 

 

 

87

 

Bank owned life insurance and annuities

 

 

16,881

 

 

 

16,852

 

Investment in low income housing partnerships

 

 

1,906

 

 

 

2,306

 

Core deposit and other intangible assets

 

 

148

 

 

 

175

 

Goodwill

 

 

9,047

 

 

 

9,047

 

Mortgage servicing rights

 

 

101

 

 

 

120

 

Accrued interest receivable and other assets

 

 

13,891

 

 

 

5,840

 

Total assets

 

$

817,663

 

 

$

810,518

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

  

 

 

  

Liabilities:

 

 

  

 

 

  

Deposits:

 

 

  

 

 

  

Non-interest bearing

 

$

196,322

 

 

$

182,022

 

Interest bearing

 

 

523,535

 

 

 

526,425

 

Total deposits

 

 

719,857

 

 

 

708,447

 

 

 

 

 

 

 

 

Short-term borrowings and repurchase agreements

 

 

25,029

 

 

 

4,227

 

Long-term debt

 

 

20,000

 

 

 

20,000

 

Other interest bearing liabilities

 

 

1,021

 

 

 

1,568

 

Accrued interest payable and other liabilities

 

 

5,331

 

 

 

4,986

 

Total liabilities

 

 

771,238

 

 

 

739,228

 

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 June 30, 2022 and December 31, 2021; Outstanding - 5,003,059 shares at June 30, 2022 and 4,988,542 shares at December 31, 2021

 

 

5,151

 

 

 

5,151

 

Surplus

 

 

24,926

 

 

 

25,008

 

Retained earnings

 

 

49,196

 

 

 

47,298

 

Accumulated other comprehensive loss

 

 

(30,310

)

 

 

(3,365

)

Cost of common stock in Treasury: 148,220 shares at June 30, 2022; 162,737 shares at December 31, 2021

 

 

(2,538

)

 

 

(2,802

)

Total stockholders' equity

 

 

46,425

 

 

 

71,290

 

Total liabilities and stockholders' equity

 

$

817,663

 

 

$

810,518

 


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, 

 

    

2022

    

2021

 

2022

    

2021

Interest income:

 

 

 

 

 

 

 

 

Loans, including fees

 

$

5,052

 

 

$

4,794

 

 

$

10,160

 

 

$

9,571

 

Taxable securities

 

 

1,609

 

 

 

1,187

 

 

 

2,986

 

 

 

2,193

 

Tax-exempt securities

 

 

40

 

 

 

38

 

 

 

80

 

 

 

76

 

Other interest income

 

 

18

 

 

 

6

 

 

 

25

 

 

 

11

 

Total interest income

 

 

6,719

 

 

 

6,025

 

 

 

13,251

 

 

 

11,851

 

Interest expense:

 

 

  

 

 

  

 

 

  

 

 

  

Deposits

 

 

550

 

 

 

597

 

 

 

1,012

 

 

 

1,216

 

Short-term borrowings and repurchase agreements

 

 

22

 

 

 

21

 

 

 

35

 

 

 

53

 

FRB advances

 

 

 

 

 

 

 

 

 

 

 

18

 

Long-term debt

 

 

118

 

 

 

213

 

 

 

234

 

 

 

425

 

Other interest bearing liabilities

 

 

1

 

 

 

1

 

 

 

2

 

 

 

3

 

Total interest expense

 

 

691

 

 

 

832

 

 

 

1,283

 

 

 

1,715

 

Net interest income

 

 

6,028

 

 

 

5,193

 

 

 

11,968

 

 

 

10,136

 

Provision for loan losses

 

 

222

 

 

 

(200

)

 

 

250

 

 

 

(279

)

Net interest income after provision for loan losses

 

 

5,806

 

 

 

5,393

 

 

 

11,718

 

 

 

10,415

 

Non-interest income:

 

 

  

 

 

  

 

 

  

 

 

  

Customer service fees

 

 

362

 

 

 

320

 

 

 

719

 

 

 

645

 

Debit card fee income

 

 

435

 

 

 

451

 

 

 

845

 

 

 

864

 

Earnings on bank-owned life insurance and annuities

 

 

59

 

 

 

68

 

 

 

111

 

 

 

122

 

Trust fees

 

 

95

 

 

 

115

 

 

 

250

 

 

 

227

 

Commissions from sales of non-deposit products

 

 

112

 

 

 

105

 

 

 

216

 

 

 

185

 

Fees derived from loan activity

 

 

102

 

 

 

92

 

 

 

232

 

 

 

196

 

Mortgage banking income

 

 

6

 

 

 

10

 

 

 

13

 

 

 

18

 

Gain (loss) on sales and calls of securities

 

 

(1,074

)

 

 

54

 

 

 

(1,074

)

 

 

58

 

Change in value of equity securities

 

 

(57

)

 

 

8

 

 

 

(80

)

 

 

101

 

Gain from life insurance proceeds

 

 

51

 

 

 

 

 

 

51

 

 

 

 

Other non-interest income

 

 

1,291

 

 

 

79

 

 

 

1,375

 

 

 

158

 

Total non-interest income

 

 

1,382

 

 

 

1,302

 

 

 

2,658

 

 

 

2,574

 

Non-interest expense:

 

 

  

 

 

  

 

 

  

 

 

  

Employee compensation expense

 

 

2,213

 

 

 

2,062

 

 

 

4,235

 

 

 

4,031

 

Employee benefits

 

 

613

 

 

 

614

 

 

 

1,314

 

 

 

1,159

 

Occupancy

 

 

319

 

 

 

312

 

 

 

650

 

 

 

642

 

Equipment

 

 

184

 

 

 

192

 

 

 

359

 

 

 

381

 

Data processing expense

 

 

650

 

 

 

673

 

 

 

1,229

 

 

 

1,256

 

Professional fees

 

 

188

 

 

 

195

 

 

 

364

 

 

 

383

 

Taxes, other than income

 

 

133

 

 

 

119

 

 

 

264

 

 

 

243

 

FDIC Insurance premiums

 

 

72

 

 

 

70

 

 

 

164

 

 

 

151

 

Gain on other real estate owned

 

 

 

 

 

 

 

 

(7

)

 

 

(49

)

Amortization of intangible assets

 

 

14

 

 

 

17

 

 

 

27

 

 

 

33

 

Amortization of investment in low-income housing partnerships

 

 

200

 

 

 

200

 

 

 

400

 

 

 

400

 

Other non-interest expense

 

 

442

 

 

 

413

 

 

 

893

 

 

 

825

 

Total non-interest expense

 

 

5,028

 

 

 

4,867

 

 

 

9,892

 

 

 

9,455

 

Income before income taxes

 

 

2,160

 

 

 

1,828

 

 

 

4,484

 

 

 

3,534

 

Income tax provision

 

 

177

 

 

 

89

 

 

 

386

 

 

 

160

 

Net income

 

$

1,983

 

 

$

1,739

 

 

$

4,098

 

 

$

3,374

 

Earnings per share

 

 

  

 

 

  

 

 

  

 

 

  

Basic

 

$

0.40

 

 

$

0.35

 

 

$

0.82

 

 

$

0.67

 

Diluted

 

$

0.40

 

 

$

0.35

 

 

$

0.82

 

 

$

0.67

 

CONTACT: Michael Wolf Email: michael.wolf@jvbonline.com Phone: (717) 436-7203