Mifflintown, PA, Oct. 20, 2022 (GLOBE NEWSWIRE) --
Juniata Valley Financial Corp. (OTCQX:JUVF) (“Juniata”), announced net income for the three months ended September 30, 2022 of $2.1 million, an increase of 11.8%, compared to net income of $1.9 million for the three months ended September 30, 2021. Earnings per share, basic and diluted, increased 10.5%, to $0.42, for the three months ended September 30, 2022, compared to $0.38 for the three months ended September 30, 2021. Net income for the nine months ended September 30, 2022, increased 18.0%, to $6.2 million, compared to net income of $5.3 million for the nine months ended September 30, 2021. Earnings per share, basic and diluted, increased 18.1% for the nine months ended September 30, 2022, to $1.24, compared to basic and diluted earnings per share of $1.05 for the corresponding 2021 period.
President’s Message
Juniata’s 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 half of the year by posting record net income for the quarter. We also saw strong loan growth of more than $21 million during the quarter, while asset quality remained strong. Due to the changing interest rate environment, we expect the fourth quarter to be challenging as we balance maintaining our net interest margin with our customers’ expectations.”
Financial Results Year-to-Date
Annualized return on average assets for the nine months ended September 30, 2022, was 1.01%, an increase of 17.4% compared to the annualized return on average assets of 0.86% for the nine months ended September 30, 2021. Annualized return on average equity for the nine months ended September 30, 2022 was 15.02%, an increase of 58.6% compared to the annualized return on average equity of 9.47% for the nine months ended September 30, 2021.
Net interest income was $18.0 million for the nine months ended September 30, 2022 compared to $15.5 million for the comparable 2021 period. Average earning assets increased $26.6 million, or 3.5%, to $788.8 million, during the nine months ended September 30, 2022, compared to the same period in 2021, primarily due to an increase of $28.5 million, or 8.9%, in average investment securities, as well as a $5.1 million, or 1.2%, increase in average loans. The yield on earning assets during the nine months ended September 30, 2022 increased by 24 basis points to 3.41% compared to the nine months ended September 30, 2021 primarily due to the increase in market interest rates, which was driven by an increase of 300 basis points in the federal funds target range and prime rate during the current 2022 period compared to prior 2021 period. Average interest bearing liabilities increased by $7.1 million, or 1.3%, to $566.4 million for the nine months ended September 30, 2022 compared to the comparable 2021 period, due to growth in interest-bearing demand and savings deposits, which was partially offset by decreases in time deposits as well as by decreases in long-term borrowings and FRB advances. During the nine months ended September 30, 2022, the cost to fund interest earning assets with interest bearing liabilities decreased nine basis points, to 0.51%, primarily due to the decline in higher cost time deposits and long-term borrowings during the period. The net interest margin, on a fully tax equivalent basis, increased from 2.76% for the nine months ended September 30, 2021 to 3.08% for the nine months ended September 30, 2022.
A loan loss provision expense of $350,000 was recorded for the nine months ended September 30, 2022, compared to a provision credit of $536,000 in the nine months ended September 30, 2021. While we continued to experience favorable asset quality trends and net recoveries during the nine months ended September 30, 2022, elevated qualitative risk factors were considered in the 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 10.5% as of September 30, 2022 compared to December 31, 2021 was also a factor in the increase in the loan loss provision for the nine months ended September 30, 2022.
Non-interest income was $4.0 million for the nine months ended September 30, 2022 compared to $3.9 million for the nine months ended September 30, 2021, an increase of 2.3%. Most significantly impacting the comparative nine month periods was a $1.5 million loss on sales and calls of securities in the 2022 period due to the execution of a balance sheet and regulatory capital management strategy. Additionally, the value of equity securities during the nine months ended September 30, 2022 decreased by $249,000 compared to the nine months ended September 30, 2021 due to declines in bank stock market values. These decreases in net-interest income were offset by $1.2 million in gains from the termination of two derivatives contracts, recorded in other non-interest income, and by increases of $119,000 in fees derived from loan activity and $380,000 in life insurance proceeds in the 2022 period.
Non-interest expense was $14.9 million for the nine months ended September 30, 2022 compared to $14.4 million for the nine months ended September 30, 2021, an increase of 3.4%. Most significantly impacting non-interest expense in the comparative nine month periods was a $307,000 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 $76,000 increase in FDIC insurance premiums and a $42,000 decline in the gain on other real estate owned for the nine months ended September 30, 2022 versus the comparable 2021 period, which were partially offset by a $71,000 decline in data processing expense.
The income tax provision increased by $186,000 for the nine months ended September 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 September 30, 2022 was 1.03%, an increase of 13.2%, compared to 0.91% for the three months ended September 30, 2021. Annualized return on average equity for the three months ended September 30, 2022 was 17.90%, an increase of 75.7%, compared to 10.19 % for the three months ended September 30, 2021.
Net interest income was $6.0 million for the three months ended September 30, 2022 compared to $5.4 million for the three months ended September 30, 2021. Average earning assets increased $26.5 million, or 3.4%, to $805.1 million for the three months ended September 30, 2022, compared to the same period in 2021, due to an increase of $34.4 million, or 8.2%, in average loans, which was partially offset by a $1.3 million, or 0.4%, decrease in average investment securities and a $6.6 million, or 51.2%, decrease in average interest bearing deposits and federal funds sold. The yield on earning assets increased 23 basis points, to 3.39%, for the three months ended September 30, 2022 compared to same period in 2021, while the cost to fund interest earning assets with interest bearing liabilities increased 6 basis points, to 0.61%, over the same period, primarily due to the increase in market interest rates as both the prime rate and federal funds target range increased by 300 basis points in the 2022 period. During the three months ended September 30, 2022, average interest bearing liabilities increased by $1.7 million, or 0.3%, compared to the comparable 2021 period, mainly due to growth in average borrowings and other interest bearing liabilities, as well as savings deposits, which was partially offset by declines in interest bearing demand and time deposits. The net interest margin, on a fully tax equivalent basis, increased from 2.79% for the three months ended September 30, 2021 to 2.99% for the three months ended September 30, 2022.
A loan loss provision expense of $100,000 was recorded in the three months ended September 30, 2022 compared to a provision credit of $257,000 in the comparable 2021 period. Loan growth, coupled with the continued uncertainty in the economy and the potential for a recession as inflation, labor shortages and supply chain disruptions remained prevalent, resulted in an increased loan loss provision despite favorable asset quality trends during the three months ended September 30, 2022.
Non-interest income was $1.3 million in each of the three month periods ended September 30, 2022 and 2021. Most significantly impacting non-interest income in the comparative three month periods was a $378,000 loss on sales and calls of securities and a $68,000 decline in the value of equity securities during the three months ended September 30, 2022. These declines were partially offset by receipt of $329,000 in life insurance proceeds and an $83,000 increase in fees derived from loan activity during the three months ended September 30, 2022 compared to the three months ended September 30, 2021.
Non-interest expense was $5.0 million for the three months ended September 30, 2022, compared to $4.9 million for the three months ended September 30, 2021, an increase of 1.2%. Most significantly impacting non-interest expense in the comparative three month periods was a $63,000 increase in FDIC insurance premiums, which was partially offset by decline in data processing expense comparing the same periods.
An income tax provision of $102,000 was recorded in the three months ended September 30, 2022, compared to an income tax provision of $142,000 recorded for the three months ended September 30, 2021, as taxable income was lower for the 2022 period primarily due to the receipt of non-taxable life insurance proceeds during the 2022 period.
Financial Condition
Total assets as of September 30, 2022 were $815.2 million, an increase of $4.7 million, or 0.6%, compared to total assets of $810.5 million at December 31, 2021. Over this period, outstanding loans and deposits increased by $44.1 million, or 10.5%, and $9.4 million, or 1.3%, respectively, while debt securities available for sale decreased by $48.2 million, or 14.4%. The increase in deposits, as well as the proceeds from the sales of debt securities, were used to repay a $10.0 million brokered interest bearing demand deposit and fund loan growth. As of September 30, 2022, short-term borrowings and repurchase agreements increased by $31.6 million, or 748.6%, compared to December 31, 2021, primarily because we returned to using $20.0 million in FHLB short-term borrowings to supplement core deposits to satisfy funding needs in lieu of brokered interest bearing demand deposits. Additionally, overnight borrowings increased between periods to meet funding needs, as did the balance of repurchase agreements due to the addition of a new customer relationship using this funding product in 2022. Total stockholders’ equity declined $36.4 million as of September 30, 2022 compared to December 31, 2021 primarily due to a $39.4 million increase in unrealized losses on available for sale securities, which was partially offset by a $2.9 million, or 6.2%, increase in retained earnings.
Subsequent Event
On October 18, 2022, the Board of Directors declared a cash dividend of $0.22 per share to shareholders of record on November 15, 2022, payable on December 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 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 eighteen 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 OTCQX Best 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) | |||||||
| September 30, 2022 | December 31, 2021 | |||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 13,325 | $ | 12,928 | ||||
| Interest bearing deposits with banks | 102 | 598 | ||||||
| Cash and cash equivalents | 13,427 | 13,526 | ||||||
| Interest bearing time deposits with banks | — | 735 | ||||||
| Equity securities | 1,014 | 1,124 | ||||||
| Debt securities available for sale | 287,251 | 335,424 | ||||||
| Restricted investment in bank stock | 3,104 | 2,116 | ||||||
| Total loans | 462,430 | 418,303 | ||||||
| Less: Allowance for loan losses | (3,905 | ) | (3,508 | ) | ||||
| Total loans, net of allowance for loan losses | 458,525 | 414,795 | ||||||
| Premises and equipment, net | 8,254 | 8,371 | ||||||
| Other real estate owned | 30 | 87 | ||||||
| Bank owned life insurance and annuities | 15,139 | 16,852 | ||||||
| Investment in low income housing partnerships | 1,706 | 2,306 | ||||||
| Core deposit and other intangible assets | 134 | 175 | ||||||
| Goodwill | 9,047 | 9,047 | ||||||
| Mortgage servicing rights | 96 | 120 | ||||||
| Accrued interest receivable and other assets | 17,522 | 5,840 | ||||||
| Total assets | $ | 815,249 | $ | 810,518 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Non-interest bearing | $ | 202,493 | $ | 182,022 | ||||
| Interest bearing | 515,341 | 526,425 | ||||||
| Total deposits | 717,834 | 708,447 | ||||||
| Short-term borrowings and repurchase agreements | 35,869 | 4,227 | ||||||
| Long-term debt | 20,000 | 20,000 | ||||||
| Other interest bearing liabilities | 995 | 1,568 | ||||||
| Accrued interest payable and other liabilities | 5,646 | 4,986 | ||||||
| Total liabilities | 780,344 | 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 September 30, 2022 and December 31, 2021; Outstanding - 5,003,059 shares at September 30, 2022 and 4,988,542 shares at December 31, 2021 | 5,151 | 5,151 | ||||||
| Surplus | 24,956 | 25,008 | ||||||
| Retained earnings | 50,216 | 47,298 | ||||||
| Accumulated other comprehensive loss | (42,880 | ) | (3,365 | ) | ||||
| Cost of common stock in Treasury: 148,220 shares at September 30, 2022; 162,737 shares at December 31, 2021 | (2,538 | ) | (2,802 | ) | ||||
| Total stockholders' equity | 34,905 | 71,290 | ||||||
| Total liabilities and stockholders' equity | $ | 815,249 | $ | 810,518 | ||||
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, | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Interest income: | ||||||||||||||||
| Loans, including fees | $ | 5,286 | $ | 4,800 | $ | 15,446 | $ | 14,371 | ||||||||
| Taxable securities | 1,493 | 1,350 | 4,479 | 3,543 | ||||||||||||
| Tax-exempt securities | 37 | 36 | 117 | 112 | ||||||||||||
| Other interest income | 55 | 8 | 80 | 19 | ||||||||||||
| Total interest income | 6,871 | 6,194 | 20,122 | 18,045 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Deposits | 680 | 555 | 1,692 | 1,771 | ||||||||||||
| Short-term borrowings and repurchase agreements | 70 | 17 | 105 | 70 | ||||||||||||
| FRB advances | — | — | — | 18 | ||||||||||||
| Long-term debt | 118 | 216 | 352 | 641 | ||||||||||||
| Other interest bearing liabilities | 4 | 2 | 6 | 5 | ||||||||||||
| Total interest expense | 872 | 790 | 2,155 | 2,505 | ||||||||||||
| Net interest income | 5,999 | 5,404 | 17,967 | 15,540 | ||||||||||||
| Provision for loan losses | 100 | (257 | ) | 350 | (536 | ) | ||||||||||
| Net interest income after provision for loan losses | 5,899 | 5,661 | 17,617 | 16,076 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Customer service fees | 394 | 348 | 1,113 | 993 | ||||||||||||
| Debit card fee income | 422 | 423 | 1,267 | 1,287 | ||||||||||||
| Earnings on bank-owned life insurance and annuities | 53 | 64 | 164 | 186 | ||||||||||||
| Trust fees | 128 | 111 | 378 | 338 | ||||||||||||
| Commissions from sales of non-deposit products | 86 | 86 | 302 | 271 | ||||||||||||
| Fees derived from loan activity | 220 | 137 | 452 | 333 | ||||||||||||
| Mortgage banking income | 11 | 8 | 24 | 26 | ||||||||||||
| Gain (loss) on sales and calls of securities | (378 | ) | — | (1,452 | ) | 58 | ||||||||||
| Change in value of equity securities | (30 | ) | 38 | (110 | ) | 139 | ||||||||||
| Gain from life insurance proceeds | 329 | — | 380 | — | ||||||||||||
| Other non-interest income | 75 | 91 | 1,450 | 249 | ||||||||||||
| Total non-interest income | 1,310 | 1,306 | 3,968 | 3,880 | ||||||||||||
| Non-interest expense: | ||||||||||||||||
| Employee compensation expense | 2,112 | 2,145 | 6,347 | 6,176 | ||||||||||||
| Employee benefits | 544 | 563 | 1,858 | 1,722 | ||||||||||||
| Occupancy | 298 | 293 | 948 | 935 | ||||||||||||
| Equipment | 187 | 184 | 546 | 565 | ||||||||||||
| Data processing expense | 665 | 709 | 1,894 | 1,965 | ||||||||||||
| Professional fees | 223 | 226 | 587 | 609 | ||||||||||||
| Taxes, other than income | 106 | 71 | 370 | 314 | ||||||||||||
| FDIC Insurance premiums | 143 | 80 | 307 | 231 | ||||||||||||
| Gain on other real estate owned | — | — | (7 | ) | (49 | ) | ||||||||||
| Amortization of intangible assets | 14 | 16 | 41 | 49 | ||||||||||||
| Amortization of investment in low-income housing partnerships | 200 | 200 | 600 | 600 | ||||||||||||
| Other non-interest expense | 495 | 441 | 1,388 | 1,266 | ||||||||||||
| Total non-interest expense | 4,987 | 4,928 | 14,879 | 14,383 | ||||||||||||
| Income before income taxes | 2,222 | 2,039 | 6,706 | 5,573 | ||||||||||||
| Income tax provision | 102 | 142 | 488 | 302 | ||||||||||||
| Net income | $ | 2,120 | $ | 1,897 | $ | 6,218 | $ | 5,271 | ||||||||
| Earnings per share | ||||||||||||||||
| Basic | $ | 0.42 | $ | 0.38 | $ | 1.24 | $ | 1.05 | ||||||||
| Diluted | $ | 0.42 | $ | 0.38 | $ | 1.24 | $ | 1.05 | ||||||||
