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Juniata Valley Financial Corp. Announces Third Quarter 2022 Results

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 


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

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