10-Q 1 juvf-20190930x10q.htm 10-Q juvf_Current_Folio_10Q_Q3

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

(Mark One)

 

 

[ X ]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934

 

 

For the quarterly period ended September 30, 2019

 

 

OR

 

 

[    ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the transition period from                                                   to

Commission File Number                        000-13232                                                                            

Juniata Valley Financial Corp.

(Exact name of registrant as specified in its charter)

Pennsylvania

23‑2235254

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

Bridge and Main Streets, Mifflintown, Pennsylvania

17059

(Address of principal executive offices)

(Zip Code)

(855) 582-5101

(Registrant’s telephone number, including area code)

 

 

 

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

N/A

 

N/A

 

N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[ X ]  Yes        [   ]  No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

[ X ]  Yes        [   ]  No

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

 

 

 

Large accelerated filer  [    ]

Accelerated filer  [ X ]

Non-accelerated filer  [    ]

Smaller reporting company  [ X ]

 

Emerging growth company  [    ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [    ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act).

[    ]  Yes       [ X ]  No

 

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

 

 

 

Class

    

Outstanding as of November 8, 2019

Common Stock ($1.00 par value)

 

5,107,637 shares

 

 

 

 

 

TABLE OF CONTENTS

 

 

PART I - FINANCIAL INFORMATION 

 

 

 

Item 1. 

Financial Statements

 

 

 

 

 

Consolidated Statements of Financial Condition as of September 30, 2019 (Unaudited) and December 31, 2018

3

 

 

 

 

Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)

4

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)

5

 

 

 

 

Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)

6

 

 

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

8

 

 

 

 

Notes to Consolidated Financial Statements (Unaudited)

10

 

 

 

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

44

 

 

 

Item 3.

Not applicable.

 

 

 

 

Item 4. 

Controls and Procedures

58

 

PART II - OTHER INFORMATION 

 

 

 

Item 1. 

Legal Proceedings

59

 

 

 

Item 1A. 

Risk Factors

59

 

 

 

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

59

 

 

 

Item 3. 

Defaults upon Senior Securities

59

 

 

 

Item 4. 

Mine Safety Disclosures

59

 

 

 

Item 5. 

Other Information

60

 

 

 

Item 6. 

Exhibits

60

 

 

 

 

Signatures

61

 

 

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Financial Condition

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

(Dollars in thousands, except share data)

    

September 30, 2019

    

December 31, 2018

ASSETS

 

 

  

 

 

  

Cash and due from banks

 

$

13,239

 

$

15,617

Interest bearing deposits with banks

 

 

64

 

 

110

Federal funds sold

 

 

 —

 

 

729

Cash and cash equivalents

 

 

13,303

 

 

16,456

 

 

 

 

 

 

 

Interest bearing time deposits with banks

 

 

2,700

 

 

3,290

Equity securities

 

 

1,115

 

 

1,118

Debt securities available for sale

 

 

200,294

 

 

141,953

Restricted investment in bank stock

 

 

3,079

 

 

2,441

Total loans

 

 

405,321

 

 

417,631

Less: Allowance for loan losses

 

 

(3,057)

 

 

(3,034)

Total loans, net of allowance for loan losses

 

 

402,264

 

 

414,597

Premises and equipment, net

 

 

8,487

 

 

8,744

Other real estate owned

 

 

 —

 

 

744

Bank owned life insurance and annuities

 

 

16,195

 

 

15,938

Investment in low income housing partnerships

 

 

4,096

 

 

4,545

Core deposit and other intangible assets

 

 

340

 

 

405

Goodwill

 

 

9,047

 

 

9,139

Mortgage servicing rights

 

 

185

 

 

200

Accrued interest receivable and other assets

 

 

6,002

 

 

5,666

Total assets

 

$

667,107

 

$

625,236

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

  

 

 

  

Liabilities:

 

 

  

 

 

  

Deposits:

 

 

  

 

 

  

Non-interest bearing

 

$

135,024

 

$

126,057

Interest bearing

 

 

401,812

 

 

395,665

Total deposits

 

 

536,836

 

 

521,722

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

 

3,981

 

 

2,911

Short-term borrowings

 

 

 —

 

 

11,600

Long-term debt

 

 

45,000

 

 

15,000

Other interest bearing liabilities

 

 

1,576

 

 

1,596

Accrued interest payable and other liabilities

 

 

5,928

 

 

5,029

Total liabilities

 

 

593,321

 

 

557,858

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 - 5,141,749 shares at September 30, 2019; 5,134,249 shares at December 31, 2018 Outstanding - 5,107,637 shares at September 30, 2019; 5,092,048 shares at December 31, 2018

 

 

5,142

 

 

5,134

Surplus

 

 

24,880

 

 

24,821

Retained earnings

 

 

43,593

 

 

42,525

Accumulated other comprehensive income (loss)

 

 

808

 

 

(4,299)

Cost of common stock in Treasury: 34,112 shares at September 30, 2019; 42,201 shares at December 31, 2018

 

 

(637)

 

 

(803)

Total stockholders’ equity

 

 

73,786

 

 

67,378

Total liabilities and stockholders’ equity

 

$

667,107

 

$

625,236

 

See Notes to Consolidated Financial Statements

3

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Income (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

(Dollars in thousands, except share data)

 

September 30, 

 

September 30, 

 

 

    

2019

    

2018

    

2019

    

2018

 

Interest income:

 

 

  

 

 

 

 

  

 

(adjusted)

 

Loans, including fees

 

$

5,157

 

$

5,230

 

$

16,023

 

$

14,822

 

Taxable securities

 

 

1,118

 

 

748

 

 

2,907

 

 

2,288

 

Tax-exempt securities

 

 

29

 

 

97

 

 

122

 

 

299

 

Other interest income

 

 

76

 

 

54

 

 

258

 

 

103

 

Total interest income

 

 

6,380

 

 

6,129

 

 

19,310

 

 

17,512

 

Interest expense:

 

 

  

 

 

  

 

 

  

 

 

  

 

Deposits

 

 

970

 

 

839

 

 

2,806

 

 

2,178

 

Securities sold under agreements to repurchase

 

 

 9

 

 

17

 

 

30

 

 

49

 

Short-term borrowings

 

 

 —

 

 

21

 

 

14

 

 

164

 

Long-term debt

 

 

286

 

 

62

 

 

612

 

 

215

 

Other interest bearing liabilities

 

 

11

 

 

11

 

 

33

 

 

28

 

Total interest expense

 

 

1,276

 

 

950

 

 

3,495

 

 

2,634

 

Net interest income

 

 

5,104

 

 

5,179

 

 

15,815

 

 

14,878

 

Provision for loan losses

 

 

(46)

 

 

32

 

 

(490)

 

 

231

 

Net interest income after provision for loan losses

 

 

5,150

 

 

5,147

 

 

16,305

 

 

14,647

 

Non-interest income:

 

 

  

 

 

  

 

 

  

 

 

  

 

Customer service fees

 

 

429

 

 

462

 

 

1,280

 

 

1,311

 

Debit card fee income

 

 

328

 

 

323

 

 

1,000

 

 

939

 

Earnings on bank-owned life insurance and annuities

 

 

82

 

 

99

 

 

222

 

 

266

 

Trust fees

 

 

104

 

 

91

 

 

294

 

 

316

 

Commissions from sales of non-deposit products

 

 

52

 

 

82

 

 

218

 

 

202

 

Income/gain from unconsolidated subsidiary

 

 

 —

 

 

 —

 

 

 —

 

 

296

 

Fees derived from loan activity

 

 

104

 

 

91

 

 

238

 

 

263

 

Mortgage banking income

 

 

16

 

 

17

 

 

52

 

 

53

 

Loss on sales and calls of securities

 

 

 —

 

 

 —

 

 

(56)

 

 

(15)

 

Change in value of equity securities

 

 

(19)

 

 

(4)

 

 

(4)

 

 

42

 

Other non-interest income

 

 

100

 

 

80

 

 

260

 

 

238

 

Total non-interest income

 

 

1,196

 

 

1,241

 

 

3,504

 

 

3,911

 

Non-interest expense:

 

 

  

 

 

  

 

 

  

 

 

  

 

Employee compensation expense

 

 

2,038

 

 

1,992

 

 

6,074

 

 

5,717

 

Employee benefits

 

 

1,492

 

 

848

 

 

3,090

 

 

1,935

 

Occupancy

 

 

309

 

 

306

 

 

979

 

 

918

 

Equipment

 

 

224

 

 

203

 

 

656

 

 

607

 

Data processing expense

 

 

556

 

 

498

 

 

1,545

 

 

1,402

 

Director compensation

 

 

51

 

 

50

 

 

156

 

 

157

 

Professional fees

 

 

210

 

 

140

 

 

772

 

 

494

 

Taxes, other than income

 

 

144

 

 

157

 

 

422

 

 

409

 

FDIC Insurance premiums

 

 

 —

 

 

59

 

 

107

 

 

208

 

Gain on sales of other real estate owned

 

 

(222)

 

 

(52)

 

 

(208)

 

 

(62)

 

Amortization of intangible assets

 

 

21

 

 

23

 

 

65

 

 

54

 

Amortization of investment in low-income housing partnerships

 

 

200

 

 

200

 

 

600

 

 

600

 

Merger and acquisition expense

 

 

 —

 

 

185

 

 

 —

 

 

625

 

Other non-interest expense

 

 

333

 

 

423

 

 

1,227

 

 

1,279

 

Total non-interest expense

 

 

5,356

 

 

5,032

 

 

15,485

 

 

14,343

 

Income before income taxes

 

 

990

 

 

1,356

 

 

4,324

 

 

4,215

 

Income tax benefit

 

 

(103)

 

 

(29)

 

 

(27)

 

 

(472)

 

Net income

 

$

1,093

 

$

1,385

 

$

4,351

 

$

4,687

 

Earnings per share

 

 

  

 

 

  

 

 

  

 

 

  

 

Basic

 

$

0.21

 

$

0.27

 

$

0.85

 

$

0.95

 

Diluted

 

$

0.21

 

$

0.27

 

$

0.85

 

$

0.94

 

 

See Notes to Consolidated Financial Statements

4

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Comprehensive Income (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Three Months Ended September 30, 

 

 

2019

 

2018

 

 

Before Tax

 

Tax

 

Net of Tax

 

Before Tax

 

Tax

 

Net of Tax

 

    

Amount

    

Effect

    

Amount

    

Amount

    

Effect

    

Amount

Net income

 

$

990

 

$

103

 

$

1,093

 

$

1,356

 

$

29

 

$

1,385

Other comprehensive income:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Available for sale securities:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Unrealized holding gains (losses) arising during the period

 

 

802

 

 

(168)

 

 

634

 

 

(645)

 

 

135

 

 

(510)

Pension net gain

 

 

(235)

 

 

49

 

 

(186)

 

 

(55)

 

 

12

 

 

(43)

Pension gain due to change in assumptions

 

 

 —

 

 

 —

 

 

 —

 

 

1,010

 

 

(212)

 

 

798

Amortization of pension net actuarial loss (2) (3)

 

 

942

 

 

(198)

 

 

744

 

 

242

 

 

(51)

 

 

191

Other comprehensive income

 

 

1,509

 

 

(317)

 

 

1,192

 

 

552

 

 

(116)

 

 

436

Total comprehensive income

 

$

2,499

 

$

(214)

 

$

2,285

 

$

1,908

 

$

(87)

 

$

1,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Nine Months Ended September 30, 

 

 

2019

 

2018 (adjusted)

 

 

Pre-Tax

 

Tax

 

Net-of-Tax

 

Pre-Tax

 

Tax

 

Net-of-Tax

 

    

Amount

    

Effect

    

Amount

    

Amount

    

Effect

    

Amount

Net income

 

$

4,324

 

$

27

 

$

4,351

 

$

4,215

 

$

472

 

$

4,687

Other comprehensive income (loss):

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Available for sale securities:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Unrealized holding gains (losses) arising during the period

 

 

4,317

 

 

(906)

 

 

3,411

 

 

(3,340)

 

 

701

 

 

(2,639)

Unrealized holding gain from unconsolidated subsidiary

 

 

 —

 

 

 —

 

 

 —

 

 

 5

 

 

 —

 

 

 5

Less reclassification adjustment for losses included in net income (1) (3)

 

 

56

 

 

(12)

 

 

44

 

 

15

 

 

(3)

 

 

12

Pension net loss (gain)

 

 

2,399

 

 

(504)

 

 

1,895

 

 

(55)

 

 

12

 

 

(43)

Pension (loss) gain due to change in assumptions

 

 

(1,478)

 

 

310

 

 

(1,168)

 

 

1,010

 

 

(212)

 

 

798

Amortization of pension net actuarial loss (2) (3)

 

 

1,276

 

 

(268)

 

 

1,008

 

 

323

 

 

(68)

 

 

255

Other comprehensive income (loss)

 

 

6,570

 

 

(1,380)

 

 

5,190

 

 

(2,042)

 

 

430

 

 

(1,612)

Total comprehensive income

 

$

10,894

 

$

(1,353)

 

$

9,541

 

$

2,173

 

$

902

 

$

3,075


(1)

Amounts are included in (loss) gain on sales and calls of securities on the consolidated statements of income as a separate element within total non-interest income.

(2)

Amounts are included in the computation of net periodic benefit cost and are included in employee benefits expense on the consolidated statements of income as a separate element within total non-interest expense.

(3)

Income tax amounts are included in the provision for income taxes on the consolidated statements of income.

See Notes to Consolidated Financial Statements

5

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Stockholders’ Equity (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

(Dollars in thousands, except share data)

 

Number 

 

 

 

 

 

 

 

 

Other

 

 

 

Total

 

 

of Shares

    

Common

    

 

    

Retained

    

Comprehensive

    

Treasury

    

Stockholders’

 

    

Outstanding

    

Stock

    

Surplus

    

Earnings

 

Income (Loss)

    

Stock

    

Equity

Balance, July 1, 2019

 

5,103,628

 

$

5,142

 

$

24,858

 

$

43,539

 

$

(301)

 

$

(712)

 

$

72,526

Net income

 

 

 

 

 

 

 

 

 

 

1,093

 

 

 

 

 

 

 

 

1,093

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

1,192

 

 

 

 

 

1,192

Reclassification for ASU 2018-02

 

  

 

 

  

 

 

  

 

 

83

 

 

(83)

 

 

  

 

 

 —

Cash dividends at $0.22 per share

 

 

 

 

 

 

 

 

 

 

(1,122)

 

 

 

 

 

 

 

 

(1,122)

Stock-based compensation

 

 

 

 

 

 

 

28

 

 

 

 

 

 

 

 

 

 

 

28

Treasury stock issued for stock plans

 

4,009

 

 

 

 

 

(6)

 

 

 

 

 

 

 

 

75

 

 

69

Balance, September 30, 2019

 

5,107,637

 

$

5,142

 

$

24,880

 

$

43,593

 

$

808

 

$

(637)

 

$

73,786

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

(Dollars in thousands, except share data)

 

Number 

 

 

 

 

 

 

 

 

Other

 

 

 

Total

 

 

of Shares

    

Common

    

 

    

Retained

    

Comprehensive

    

Treasury

    

Stockholders’

 

    

Outstanding

    

Stock

    

Surplus

    

Earnings

 

Income (Loss)

    

Stock

    

Equity

Balance, January 1, 2019

 

5,092,048

 

$

5,134

 

$

24,821

 

$

42,525

 

$

(4,299)

 

$

(803)

 

$

67,378

Net income

 

  

 

 

  

 

 

  

 

 

4,351

 

 

  

 

 

  

 

 

4,351

Other comprehensive income

 

  

 

 

  

 

 

  

 

 

 

 

 

5,190

 

 

  

 

 

5,190

Reclassification for ASU 2018-02

 

  

 

 

  

 

 

  

 

 

83

 

 

(83)

 

 

  

 

 

 —

Cash dividends at $0.66 per share

 

  

 

 

  

 

 

  

 

 

(3,366)

 

 

  

 

 

  

 

 

(3,366)

Stock-based compensation

 

  

 

 

  

 

 

75

 

 

  

 

 

  

 

 

  

 

 

75

Forfeiture of restricted stock

 

(800)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 —

Treasury stock issued for stock plans

 

8,889

 

 

 

 

 

(8)

 

 

 

 

 

 

 

 

166

 

 

158

Common stock issued for stock plans

 

7,500

 

 

 8

 

 

(8)

 

 

  

 

 

  

 

 

  

 

 

 —

Balance, September 30, 2019

 

5,107,637

 

$

5,142

 

$

24,880

 

$

43,593

 

$

808

 

$

(637)

 

$

73,786

 

6

Juniata Valley Financial Corp. and Subsidiary

Consolidated Statements of Stockholders’ Equity (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

(Dollars in thousands, except share data)

 

Number 

 

 

 

 

 

 

Retained

 

Other

 

 

 

Total

 

 

of Shares

    

Common

    

 

    

Earnings

    

Comprehensive

    

Treasury

    

Stockholders’

 

 

Outstanding

    

Stock

    

Surplus

    

(adjusted)

    

Income (Loss)

    

Stock

    

Equity

Balance at July 1, 2018

 

5,093,536

 

$

5,134

 

$

24,779

 

$

42,164

 

$

(6,238)

 

$

(773)

 

$

65,066

Net income

 

 

 

 

 

 

 

 

 

 

1,385

 

 

 

 

 

 

 

 

1,385

Other comprehensive income