2.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
---------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
June 30, December 31,
1995 1994
---------- ----------
(In thousands)
(Unaudited)
ASSETS:
Cash and due from banks $ 5,348 $ 5,978
Interest-bearing deposits with banks 41 7
Federal Funds Sold 3,525 -
--------- ----------
Total cash and cash equivalents 8,914 5,985
Securities available for sale 17,589 13,057
Securities held to maturity, fair value of
$44,527 and $42,728 respectively 44,572 44,157
Loans, receivable net of unearned discount of
$4,346 and $4,095 respectively 122,152 123,191
Less: Allowance for possible loan losses 1,571 1,523
--------- ----------
Net Loans receivable 120,581 121,668
Bank premises and equipment, net 1,644 1,681
Accrued interest receivable and other assets 3,895 3,681
--------- ----------
TOTAL ASSETS $ 197,195 $ 190,176
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Non-interest bearing deposits $ 18,845 $ 18,971
Interest bearing deposits 151,918 146,180
--------- ----------
Total deposits 170,763 165,151
Accrued interest and other liabilities 2,971 2,591
--------- ----------
Total liabilities 173,734 167,742
--------- ----------
Stockholders' Equity:
Preferred stock, no par value, authorized
500,000 shares, no shares issued or outstanding - -
Common stock, par value $1.00, per share;
authorized 2,000,000 shares; issued and
outstanding 890,692 shares 891 891
Capital surplus 14,956 14,956
Retained earnings 7,514 6,749
Net unrealized appreciation (depreciation)
available for sale, net of taxes of
$51 and ($84) 100 (162)
--------- ----------
Total stockholders' equity 23,461 22,434
--------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $ 197,195 $ 190,176
========= ==========
3.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Quarter Ended For Six Months Ended
---------------------- --------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
--------- --------- --------- ---------
(In thousands, except per share amount)
INTEREST INCOME:
Loans receivable $ 2,850 $ 2,570 $ 5,608 5,116
Taxable securities 446 462 903 910
Tax-exempt securities 339 395 666 753
Other 76 39 102 93
---------- ---------- ---------- ---------
Total interest income 3,731 3,466 7,279 6,872
INTEREST EXPENSE ON DEPOSITS 1,724 1,425 3,251 2,842
---------- ---------- ---------- ---------
Net interest income 2,007 2,041 4,028 4,030
PROVISION FOR LOAN LOSSES 45 45 90 90
---------- ---------- ---------- ---------
Net interest income, after
provision for loan losses 1,962 1,996 3,938 3,940
---------- ---------- ---------- ---------
OTHER INCOME:
Trust department income 45 35 80 65
Customer service fees 53 57 110 107
Other 41 43 85 74
---------- ---------- ---------- ---------
Total other income 139 135 275 246
---------- ---------- ---------- ---------
OTHER EXPENSES:
Salaries and wages 525 516 1,057 1,022
Employee benefits 155 145 310 289
Occupancy 68 73 141 162
Equipment 72 105 146 205
Federal deposit insurance 106 93 218 186
Director compensation 91 108 201 215
Taxes, other than income 55 49 105 97
Other 256 213 544 438
---------- ---------- ---------- ---------
Total other expenses 1,328 1,302 2,722 2,614
---------- ---------- ---------- ---------
INCOME BEFORE INCOME TAXES 773 829 1,491 1,572
FEDERAL INCOME TAXES 158 216 352 369
---------- ---------- ---------- ---------
Net Income $ 615 $ 613 $ 1,139 $ 1,203
========== ========== ========== =========
PER SHARE DATA:
Net Income $ .69 $ .69 $ 1.28 $ 1.35
========== ========== ========= =========
Weighted average number of
shares outstanding 890,692 890,692 890,692 890,692
========== ========= ========= ========
4.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(Unaudited)
Unrealized
Appreciation
(Depreciation)
on Securities
Common Capital Retained Available
Stock Surplus Earnings For Sale Total
----------- ---------- ----------- ------------- -----------
(In thousands)
BALANCE,
DECEMBER 31,
1994 $891 $ 14,956 $ 6,749 $ (162) $ 22,434
Net income for the
six months
ended June
30, 1995 - - 1,139 - 1,139
Cash dividend,
$.42 per share - - (374) - (374)
Net change in
unrealized
appreciation
on securities
available for
sale, net of
taxes of $9 - - - 262 262
---------- ----------- ----------- ------------- -----------
Balance June
30, 1995 $ 891 $ 14,956 $ 7,514 $ 100 $ 23,461
========== =========== =========== ============= ===========
5.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
For the Six Months Ended
-------------------------
June 30, June 30,
1995 1994
------------ -----------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,139 $ 1,203
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 90 90
Provision for depreciation and amortization 85 91
Deferred directors' fees and supplemental
retirement plan expense 158 147
Payment of deferred compensation (64) (63)
Deferred income taxes (48) (36)
(Increase) decrease in accrued interest
receivable and other assets (262) (201)
Increase (decrease) in interest payable
and other liabilities 195 90
------------ -----------
Net cash provided by operating activities 1,293 1,321
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of available for sale securities (5,852) (999)
Proceeds from maturities of and principal
repayments on available for sale securities 1,716 1,001
Purchases of held to maturity securities (2,301) (14,024)
Proceeds from maturities of and principal
repayments on held to maturity securities 1,887 8,499
Net (increase) decrease in loans receivable 997 (1,655)
Purchases of bank premises and equipment (49) (63)
------------ -----------
Net cash provided by (used in)
investing activities (3,602) (7,241)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 5,612 4,185
Cash Dividends (374) (371)
------------ -----------
Net cash provided by (used in)
financing activities 5,238 3,814
------------ -----------
Increase (decrease) in cash and cash
equivalents 2,929 (2,106)
CASH AND CASH EQUIVALENTS:
Beginning 5,985 10,429
------------ -----------
Ending $ 8,914 $ 8,323
============ ===========
CASH PAYMENTS FOR:
Interest $ 3,133 $ 2,834
============ ============
Income taxes $ 311 $ 363
============ ============
6.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
NOTES TO THE INTERIM FINANCIAL STATEMENTS
JUNE 30, 1995
NOTE A - Basis of Presentation
The financial information includes the accounts of the Juniata Valley Financial
Corp. and its wholly owned subsidiary, The Juniata Valley Bank. All
significant intercompany accounts and transactions have been eliminated.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for fair presentation have been included. Operating results for the
six-month period ended June 30,1995, are not necessarily indicative of the
results that may be expected for the year ended December 31, 1995. For further
information, refer to the consolidated financial statements and footnotes
thereto included in Juniata Valley Financial Corp. annual report on Form 10-K
for the year ended December 31, 1994.
NOTE B - Significant Accounting Policies
Recently issued FASB statements:
The financial accounting Standards Board has issued Statement No. 122,
"Accounting for Mortgage Servicing Rights and Excess Servicing Receivables and
for Securitization of Mortgage Loans," which amends Statement No. 65,
"Accounting for Certain Mortgage Banking Activities". Mortgage servicing
rights are contractual obligations undertaken by an institution to provide
servicing for mortgage loans owned by others, typically for a fee. Prior to
Statement No. 122, a distinction was made in accounting for mortgage servicing
rights depending on whether the servicing rights were purchased from other
parties or were generated though loans originated by the servicer and sold to
other parties with the servicing rights retained. Statement No. 122 require
servicers to recognize mortgage servicing rights as assets, no matter how the
rights were acquired. In addition, Statement No. 122 requires all capitalized
mortgage servicing rights to be evaluated periodically for impairment.
Recognition of impairment will be through a valuation allowance in an amount
when the capitalized mortgage servicing rights exceeds their fair values.
Statement No. 122 is effective for financial statements for fiscal years
beginning after December 15, 1995, although earlier application is encouraged,
retroactive capitalization of originated mortgage servicing rights is
prohibited. The effect of adopting the provisions of this Statement is not
expected to have a material impact on the Corporation's financial position or
results of operations.
7.
Management's Discussion and Analysis
Financial Condition:
Total assets of Juniata Valley Financial Corp. reached $197,195,000 as of June
30, 1995, an increase of $7,018,000 or 3.69% from December 31, 1994. An
increase in available for sale securities of $4,532,000 and in cash and cash
equivalents of $2,929,000 from December 31, 1994, to June 30, 1995 were the
primary reasons for the growth in assets. The cash provided by financing
activities of $5,238,000 and by operating activities of $1,293,000 for the
period ended June 30, 1995, was used to cover the purchase of securities which
exceeded repayments and maturities by $4,550,000. The remaining cash increase
was attributed to the increase in cash and cash equivalents. Net loan demand
declined by $997,000 since the beginning of the year. Additions to bank
premise and equipment was $49,000.
There are no material loans classified for regulatory purposes as loss,
doubtful, substandard or special mention which management expects to impact
future operating results, liquidity or capital resources. Additionally,
management is not aware of any information which would give serious doubt as to
the ability of its borrowers to substantially comply with their loan repayment
terms. The Corporation's problem loans (i.e., 90 days past due and
restructured loans) were not material for all periods presented.
Management is not aware of any current recommendations of the regulatory
authorities which, if implemented, would have a material effect on the
Corporation's liquidity, capital resources or operations.
Results of operations:
Interest income increased $407,000 or 5.92% for the first six months of 1995
compared to 1994, while the increase for the quarter was $265,000 or 7.65%.
Interest expense increased $409,000 or 14.39% for the first six months while
the increase for the quarter was $299,000 or 20.98%. These increases in
interest income and expense for the first six months of 1995 versus 1994 are
reflective of the overall higher rates offered and paid in 1995 versus 1994;
however repricing of the assets is lagging behind the repricing of the
liabilities. Net interest income decreased $2,000 or 0.05% for the first six
months of 1995 compared to 1994. This was due to an increase in both volume
and rates.
Other income has increased $29,000 or 11.79% for the first six months of 1995
over 1994. The increase for the quarter was $4,000. The increase for first
six months was due to an increase in all categories, especially trust
department income, as a result of the settlement of two large estates. The
increase in the other category for the first six months can all be attributed
to an increase in fees charged to customers as a result of increased volume.
Expenses for the first six months increased $108,000 or 4.13% from 1994 to
1995; for the quarter the increase in expenses was $26,000 or 2.00%. The
increase in salaries can be attributed to the annual merit increases and
promotions of employees. The increase in the other category is due to a
$15,000 consulting fee incurred in 1995; $9,000 increase in examination fees by
the Pennsylvania Department of Banking; a $14,000 increase in errors and
omissions; and an $11,000 increase in repossession and delinquent loans. The
decrease in occupancy expense is a direct result of a decrease in repairs and
maintenance. The decrease in equipment costs can be primarily attributed to
the expiration of a lease and a less costly replacement lease. All of these
factors combined have contributed to a decline in net income of $64,000 or
5.32% for the six months ended, while the net income for the quarter increased
$2,000.
8.
Liquidity:
The objective of liquidity management is to ensure that sufficient funding is
available at a reasonable cost to meet the ongoing operational cash needs of
the Corporation and to take advantage of income producing opportunities as they
arise. While the desired level of liquidity will vary depending upon a variety
of factors, it is the primary goal of the Corporation to maintain a high level
of liquidity in all economic environments.
Principal sources of asset liquidity are provided by securities maturing in one
year or less, other short-term investments such as Federal Funds sold and cash
and due from banks. Liability liquidity, which is more difficult to measure,
can be met by attracting deposits and maintaining the core deposit base. The
Corporation joined the Federal Home Loan Bank of Pittsburgh in August of 1993
for the purpose of providing short term liquidity when other sources are unable
to fill these needs.
In view of the primary and secondary sources previously mentioned, Management
believes that the Corporation's liquidity is capable of providing the funds
needed to meet loan demand.
9.
Interest rate sensitivity:
Interest rate sensitivity management is the responsibility of the
Asset/Liability Management Committee. This process involves the development
and implementation of strategies to maximize net interest margin, while
minimizing the earnings risk associated with changing interest rates. The
traditional gap analysis identifies the maturity and repricing terms of all
assets and liabilities.
As of June 30, 1995, the Corporation had a six-month negative gap of
$3,603,000. Generally a liability sensitive position indicates that more
liabilities than assets are expected to reprice within the time period and that
falling interest rates could positively affect net interest income while rising
interest rates could negatively affect net interest income. However, the
traditional analysis does not accurately reflect the Bank's interest rate
sensitivity since the rates on core deposits generally do not change as quickly
as market rates. Historically net interest income has, in fact, not been
subject to the degree of sensitivity indicated by the traditional analysis at
The Juniata Valley Bank.
Capital Adequacy:
The Bank's regulatory capital ratios for the periods presented are as
follows:
Risk Weighted Assets Ratio:
Actual Required
------ --------
June 30, December 31, June 30, December 31,
1995 1994 1995 1994
------------- ------------ ------------- ------------
TIER I 18.21% 17.16% 8.0% 8.0%
TIER I & II 19.44% 18.34% 8.0% 8.0%
Total Assets Leveraged Ratio:
TIER I 12.11% 11.47% 3.0% 3.0%
At June 30, 1995, the Corporation exceeds the regulatory requirements
to be considered a "well capitalized" financial institution.
10.
Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K
None
(b) Exhibits
(27) Financial Data Schedules
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Juniata Valley Financial Corp.
(Registrant)
Date_______________________________ By_______________________________
A. Jerome Cook, President
Date_______________________________ By_______________________________
Linda L. Engle, Treasurer