-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VUQMRQIsQvtsnKhGBqIsZqz53nRf/CFKXAzJhTeL2fVJv5ff8nrVeIa/3EcHrL9u YeDOlC+yLFqF9lNAH0pOdw== 0000950154-04-000034.txt : 20040512 0000950154-04-000034.hdr.sgml : 20040512 20040512130235 ACCESSION NUMBER: 0000950154-04-000034 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JUNIATA VALLEY FINANCIAL CORP CENTRAL INDEX KEY: 0000714712 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 232235254 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13232 FILM NUMBER: 04798539 BUSINESS ADDRESS: STREET 1: 2 SOUTH MAIN ST STREET 2: P O BOX 66 CITY: MIFFLINTOWN STATE: PA ZIP: 17059-0066 BUSINESS PHONE: 7174368211 MAIL ADDRESS: STREET 1: BRIDGE AND MAIN STREETS STREET 2: P O BOX 66 CITY: MIFFLINTOWN STATE: PA ZIP: 17059-0066 10-Q 1 jvb10q_56127-051204.txt JUNIATA VALLEY BANK 10Q 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 March 31, 2004 -------------- [ ] 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 2-81699 --------------------------------------------------------- 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) (717) 436-8211 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) 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 is an accelerated filer (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 April 30, 2004 - ----------------------------- -------------------------------- Common Stock ($1.00 par value) 2,278,354 shares 2. PART I - FINANCIAL INFORMATION Item 1 - FINANCIAL STATEMENTS JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY --------------------------------------------- CONSOLIDATED BALANCE SHEETS --------------------------- ASSETS ------ March 31, December 31, 2004 2003 -------- ------------ (In thousands, except share data) (Unaudited) Cash and due from banks $ 11,057 $ 13,502 Interest bearing deposits with banks 750 125 Federal funds sold 5,000 -- --------- --------- Cash and cash equivalents 16,807 13,627 Interest bearing time deposits with banks 4,090 4,090 Securities available for sale 74,341 83,584 Securities held to maturity, fair value $12,591 and $15,218, respectively 12,397 15,017 Restricted investment in bank stock 977 1,107 Loans receivable net of allowance for loan losses $2,889 and $2,820, respectively 257,646 249,960 Bank premises and equipment, net 6,649 6,755 Bank-owned life insurance 7,650 7,566 Accrued interest receivable and other assets 6,709 6,074 --------- --------- TOTAL ASSETS $ 387,266 $ 387,780 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Liabilities: Deposits: Non-interest bearing $ 43,731 $ 42,200 Interest bearing 289,223 290,784 --------- --------- Total deposits 332,954 332,984 Accrued interest payable and other liabilities 4,933 4,313 --------- --------- Total liabilities 337,887 337,297 --------- --------- Stockholders' Equity: Preferred stock, no par value; 500,000 shares authorized; no shares issued or outstanding -- -- Common stock, par value $1.00 per share; authorized 20,000,000 shares; issued 2,372,922 shares 2,373 2,373 Surplus 20,231 20,231 Retained earnings 28,087 29,016 Accumulated other comprehensive income 1,532 1,472 Treasury stock, at cost 2004 94,568 shares; 2003 88,219 shares (2,844) (2,609) --------- --------- Total stockholders' equity 49,379 50,483 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 387,266 $ 387,780 ========= ========= See Notes to Consolidated Financial Statements 3. JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY --------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME --------------------------------- (Unaudited) For the Quarter Ended --------------------- March 31, March 31, 2004 2003 ---- ---- (In thousands, except per share amount) INTEREST INCOME: Loans receivable $ 4,486 $ 4,574 Taxable securities 558 712 Tax-exempt securities 238 321 Other 35 66 ------- ------- Total interest income 5,317 5,673 INTEREST EXPENSE - Deposits 1,641 2,016 ------- ------- Net interest income 3,676 3,657 PROVISION FOR LOAN LOSSES 80 75 ------- ------- Net interest income after provision for loan losses 3,596 3,582 ------- ------- OTHER INCOME: Trust department 137 90 Customer service fees 282 164 Other 275 253 Gain on sale of securities 133 -- ------- ------- Total other income 827 507 ------- ------- OTHER EXPENSES: Salaries and wages 1,012 960 Employee benefits 382 331 Occupancy 210 195 Equipment 427 321 Director compensation 104 105 Taxes, other than income 129 133 Other 354 347 ------- ------- Total other expenses 2,618 2,392 -------- ------- INCOME BEFORE INCOME TAXES 1,805 1,697 FEDERAL INCOME TAXES 450 359 ------- ------- Net income $ 1,355 $ 1,338 ======= ======= Basic and diluted earnings per share $ .59 $ .58 ======= ======= See Notes to Consolidated Financial Statements 4.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY --------------------------------------------- CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY ---------------------------------------------- FOR THE THREE MONTHS ENDED MARCH 31, 2004 ----------------------------------------- (Unaudited) Accumulated Other Common Retained Comprehensive Treasury Stock Surplus Earnings Income Stock Total ------ ------- -------- ------------- --------- ----- (In thousands) BALANCE December 31, 2003 $ 2,373 $ 20,231 $ 29,016 $ 1,472 $ (2,609) $ 50,483 -------- Comprehensive Income: Net income for the three months ended March 31, 2004 -- -- 1,355 -- -- 1,355 Change in unrealized gains (losses) on securities available for sale, net of reclassification adjustment and tax effects -- -- -- 60 -- 60 -------- Total Comprehensive Income 1,415 -------- Cash dividends declared, $1.00 per share -- -- (2,284) -- -- (2,284) Treasury stock acquired -- -- -- -- (235) (235) ------- -------- ------- ------- -------- -------- Balance March 31, 2004 $ 2,373 $ 20,231 $ 28,087 $ 1,532 $ (2,844) $ 49,379 ======= ======== ======== ======= ======== ========
See Notes to Consolidated Financial Statements 5.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY --------------------------------------------- CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY ---------------------------------------------- FOR THE THREE MONTHS ENDED MARCH 31, 2003 ----------------------------------------- (Unaudited) Accumulated Other Common Retained Comprehensive Treasury Stock Surplus Earnings Income Stock Total ------ ------- -------- ------------- --------- ----- (In thousands) BALANCE December 31, 2002 $ 2,373 $ 20,212 $ 25,652 $ 1,795 $ (1,705) $ 48,327 -------- Comprehensive Income: Net income for the three months ended March 31, 2003 -- -- 1,338 -- -- 1,338 Change in unrealized gains (losses) on securities available for sale, net of reclassification adjustment and tax effects -- -- -- (46) -- (46) -------- Total Comprehensive Income 1,292 -------- Treasury stock acquired -- -- -- -- (567) (567) ------- -------- ------- ------- -------- -------- Balance March 31, 2003 $ 2,373 $ 20,212 $ 26,990 $ 1,749 $ (2,272) $ 49,052 ======= ======== ======== ======= ======== ========
See Notes to Consolidated Financial Statements 6.
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY --------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Unaudited) For the Three Months Ended -------------------------- March 31, March 31, 2004 2003 -------- --------- (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,355 $ 1,338 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 80 75 Provision for depreciation 135 108 Net amortization of security premiums 70 57 Net realized gains on sales of securities (133) -- Deferred compensation expense 119 118 Payment of deferred compensation (121) (68) Deferred income taxes -- (52) Increase in accrued interest receivable and other assets (667) (905) Increase in accrued interest payable and other liabilities 622 404 Earnings on investment in life insurance (84) (87) -------- -------- Net cash provided by operating activities 1,376 988 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of available for sale securities (4,167) (7,186) Proceeds from sales of available for sale securities 168 -- Purchase of restricted bank stock (175) (256) Proceeds from sale of restricted bank stock 305 -- Proceeds from maturities of and principal repayments on available for sale securities 13,403 4,396 Purchases of held to maturity securities (1,295) (999) Proceeds from maturities of and principal repayments on held to maturity securities 3,909 5,016 Net (increase) decrease in loans receivable (7,766) 1,529 Net purchases of bank premises and equipment (29) (274) -------- -------- Net cash provided by investing activities 4,353 2,226 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Net (decrease) increase in deposits (30) 3,973 Cash dividends and cash paid for fractional shares (2,284) -- Purchase of treasury stock (235) (567) -------- -------- Net cash provided by (used in) financing activities (2,549) 3,406 -------- -------- Increase in cash and cash equivalents 3,180 6,620 Cash and cash equivalents: Beginning 13,627 14,901 -------- -------- Ending $ 16,807 $ 21,521 ======== ======== Supplementary cash flows information: Interest paid $ 1,675 $ 2,094 ======== ======== See Notes to Consolidated Financial Statements
7. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - Basis of Presentation The financial information includes the accounts of 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 three month period ended March 31, 2004, are not necessarily indicative of the results that may be expected for the year ended December 31, 2004. 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, 2003. NOTE B - Accumulated Other Comprehensive Income Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. The components of other comprehensive income and related tax effects are as follows: Three Months Ended March 31, ---------------------------- 2004 2003 ---- ---- (In thousands) Unrealized holding gains (losses) on available for sale securities $ 225 $ (69) Less classification adjustment for gains realized in income (133) -- ----- ----- Net unrealized gains (losses) 92 (69) Tax effect (32) 23 ----- ----- Net of tax amount $ 60 $ (46) ===== ====== 8. NOTE C - Stock Option Plan The Corporation accounts for the stock option plan under the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Corporation had applied the fair value recognition provisions of FASB Statement No. 123, "Accounting for Stock-Based Compensation," to stock-based compensation for quarters ended March 31, 2004 and 2003: 2004 2003 ---- ---- Net income, as reported $ 1,355 $ 1,338 Total stock-based employee compensation expense determined under fair value based method for all awards (9) (5) ------- ------- Pro forma net income $ 1,346 $ 1,333 ======= ======= Basic and diluted earnings per share: As reported $ .59 $ .58 Pro forma $ .59 $ .58 NOTE D - Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share: For the Quarter Ended --------------------- March 31, March 31, 2004 2003 -------- --------- Net income applicable to common stock 1,355,000 1,338,000 Weighted average common shares outstanding 2,283,107 2,309,423 Effect of dilutive securities, stock options 4,751 603 --------- --------- Weighted average common shares outstanding used to calculate diluted earnings per share 2,287,858 2,310,026 Basic earnings per share $ .59 $ .58 Diluted earnings per share $ .59 $ .58 9. NOTE E - Guarantees The Corporation does not issue any guarantees that would require liability recognition or disclosure, other than its letters of credit. Letters of credit written are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. Generally, all letters of credit, when issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to customers. The Corporation, generally, holds collateral and/or personal guarantees supporting these commitments. The Corporation had $867,000 of letters of credit as of March 31, 2004. Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payment required under the corresponding guarantees. The current amount of the liability as of March 31, 2004 for guarantees under standby letters of credit issued is not material. NOTE F - Defined Benefit Retirement Plan The Corporation has a defined benefit retirement plan covering substantially all of its employees. The benefits are based on years of service and the employees' compensation. The Corporation's funding policy is to contribute annually the maximum amount that can be deducted for federal income taxes purposes. Contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future. Pension expense included the following components for the quarter ended March 31, 2004. (In Thousands) Service cost, benefits earned during the year $ 90 Interest cost on projected benefit obligation 80 Expected return on plan assets (80) Net amortization -- Recognized gains or losses -- Prior service cost recognized -- Settlement gain or loss -- ---- Net periodic benefit cost $ 90 ==== This information relating to quarter ending March 31, 2003 cannot be obtained for comparative purposes. 10. Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward Looking Statements: The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements. When used in this discussion, the words "believes," "anticipates," "contemplates," "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected. Those risks and uncertainties include changes in interest rates, risks associated with the effect of opening a new branch, the ability to control costs and expenses and general economic conditions. The Corporation undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Critical Accounting Policies: Disclosure of the Corporation's significant accounting policies is included in the notes to the financial statements of the Bank's Annual Report on Form 10-K for the year ended December 31, 2003. Some of these policies are particularly sensitive, requiring significant judgments, estimates and assumptions to be made by management, most particularly in connection with determining the provision for loan losses and the appropriate level of the allowance for loan losses. Additional information is contained in this form 10-Q on pages 10 and 11. Financial Condition: Total assets of Juniata Valley Financial Corp. totaled $387,266,000 as of March 31, 2004, a decrease of $514,000 or .13% from December 31, 2003. Consumer sentiment is more positive about the economy because the bank has experienced an increase in loans of $7,766,000 in the first three months of 2004. Investment securities were used since loan demand did not keep pace with the inflow of deposits. Purchases exceeded called and matured investment securities by $12,148,000. The remaining portion of the inflows of investments were placed in federal funds until suitable investment securities could be found. A special $1.00 cash dividend was paid on February 27, 2004 of $2,284,000. All of these factors combined to increase cash and cash equivalents by $3,180,000. There are no material loans classified for regulatory purposes as loss, doubtful, substandard or special mention which management expects to significantly 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. 11. Results of Operations: Interest income decreased $356,000 or 6.28% for the first three months of 2004 over 2003. The decrease for interest income on loans for three months of $88,000 is because of a decline in rates of .78%. The decrease in interest income for taxable securities of $154,000 is due to declining rates and the decrease in tax exempt securities of $83,000 is due to declining rates and volume. The decline in rates for securities was .77%. The decrease in interest income other of $31,000 is due to a decrease in federal funds sold of $16,000 and interest bearing time deposits in banks of $14,000. Since November 2001, management has made an effort to keep federal funds to a minimum by purchasing time certificate of deposits in other banks. Interest expense decreased by $375,000 or 18.60% for the first three months of 2004 over 2003. Interest income and expense for the first three months ended March 31, 2004, versus 2003, reflect the declining interest rate environment for both interest earning assets and interest bearing liabilities. This resulted in an increase in net interest income of $19,000 or ..52% for the three months ended March 31, 2004. The increase in the allowance for loan loss is based upon quarterly loan portfolio reviews by management and a committee of the Board. The purpose of the review is to assess loan quality, identify impaired loans, analyze delinquencies, ascertain loan growth, evaluate potential charge-offs and recoveries and assess general economic conditions in the market served. Net charge-offs at March 31, 2004 were $11,000 compared to $57,000 at March 31, 2003. Past due and non-accrual loans at March 31, 2004 were $2,263,000. At March 31, 2003, this amount for past due and non-accrual loans was $2,204,000. Depending upon the state of the economy and the impact thereon to these borrowers, as well as future events, these loans and others not currently so identified could be classified as non-performing assets in the future. Other income has increased $320,000 or 63.12% for the first three months of 2004 over 2003. Trust department income increased $47,000, customer service fees increased $118,000, and gain on sale of securities increased $133,000. The increase in trust department income is a result of an increase in pension plan administration and investment management in 2004 over 2003. The increase in customer service fees is a result of higher transaction volume as opposed to an increase in fees. The increased volume is due to the introduction of an overdraft privilege program introduced in November 2003. The sales of securities were taken because of attractive gains available. Other expenses increased $226,000 or 9.45% for the three months ended March 31, 2004 over 2003. The $52,000 increase in salary and wages for the three months ended March 31, 2004, compared to 2003, can be attributed to an increase of 5 full-time equivalents and normal merit increases. The $51,000 increase in employee benefits is reflective of increases in the costs as opposed to additional benefits. The $15,000 increase in occupancy is a result of depreciation expense from the Water Street community office remodeling. The increase of $106,000 in equipment cost is from increased usage of the internet banking and telephone banking products and installation of the teller and platform automation systems. Director compensation and taxes other than income had no significant changes. The other expenses increased $7,000 which can be attributed to insurance costs. The increase in federal income taxes is due to an increase of the effective tax rate due to a decline in tax free securities. All of these factors combined have contributed to an increase in net income of $17,000 or 1.27% for the first three months ended March 31, 2004 over 2003. 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. 12. Off-Balance Sheet Arrangements: The Corporation's financial statements do not reflect various off-balance sheet arrangements that are made in the normal course of business, which may involve some liquidity risk, credit risk and interest rate risk. These commitments consist mainly of loan approved but not yet funded, unused lines of credit and letters of credit made under the same standards as on-balance sheet instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Letters of credit are conditional commitments issued to guarantee the financial performance obligation of a customer to a third party. Unused commitments at March 31, 2004, were $34,276,000. Because these instruments have fixed maturity dates, and because may of them will expire without being drawn upon, they do not generally present any significant liquidity risk to the Corporation. Management believes that any amounts actually drawn upon can be funded in the normal course of operations. The Corporation has no investment in or financial relationship with any unconsolidated entities that are reasonably likely to have a material effect on liquidity or the availability of capital resources. 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 March 31, 2004, the Corporation had a six-month negative gap of $12,733,000. Generally a liability sensitive position indicates that more liabilities than assets are expected to re-price 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 ------ -------- March 31, December 31, March 31, December 31, 2004 2003 2004 2003 --------- ------------ --------- ------------ TIER I 18.02% 18.89% 4.0% 4.0% TIER I & II 19.19% 20.05% 8.0% 8.0% Total Assets Leveraged Ratio: TIER I 11.60% 11.93% 4.0% 4.0% At March 31, 2004, the Corporation and the Bank exceed the regulatory requirements to be considered a "well capitalized" financial institution. 13. Quantitative and Qualitative Disclosures About Market Risk: From January 1, 2001 to March 31, 2004, the Federal Reserve has lowered the federal funds rate thirteen times by 500 basis points. We are currently in the lowest interest rate environment in 50 years. Net interest margin for the Corporation was 4.17% at December 31, 2002 and increased to 4.23% at December 31, 2003. Because of the extent to which rates have declined, the Bank has become more sensitive to future rate declines and expects added compression of the net interest margin. Currently, the Bank has approximately 33.00% of its deposits in NOW, money market and savings accounts, which it considers core deposits. These types of interest bearing deposit accounts carry lower rates relative to other types of deposits. Because of this, these accounts have contributed significantly to the net interest margin. However, there is an ultimate floor to which the rates on these accounts can fall. Under current conditions, the inability to further decrease these deposits rates while loan and other earning assets continue to drop and re-price at lower rates will result in further compression of the net interest margin. The added risk in this interest rate environment is that as the rates on the core deposits bottom-out, investors could migrate to other types of accounts paying higher rates. The last financial simulation performed by the Bank as of December 31, 2003, showed a possible decline in net interest income of $195,000 in a -100 basis point rate shock over a one year period. This reflected a change in the assumptions that the rates on NOW and savings accounts would remain constant in a -100 or +200 basis point rate shock. The net interest income at risk position remains within the guidelines established by the Bank's asset/liability policy. The Bank continues to monitor and manage its rate sensitivity during these unusual times. No material change has been noted in the Bank's equity value at risk. Please refer to the Annual Report on Form 10-K as of December 31, 2003 for further discussion of this matter. 14. Item 4 - CONTROLS AND PROCEDURES Disclosure Controls and Procedures The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act. Internal Control Over Financial Reporting There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 15. Part II. Other Information Item 1. Legal Proceedings None Item 2. Changes in Securities (E) Issuer Purchases of Equity Securities
- ------------------------------------------------------------------------------------------------------------------------- (d) (c) Maximum number (or (a) (b) Total number of shares (or approximate dollar value) Period Total number of shares Average price paid units) purchased as part of of shares (or units) that (or units) purchased per share (or unit) publicly announced plans may yet be purchased or programs under the plans or programs - ------------------------------------------------------------------------------------------------------------------------- Month #1 January 1 to 0 0 0 89,645 January 31, 2004 - ------------------------------------------------------------------------------------------------------------------------- Month #2 February 1 to February 29, 2004 2,149 34.98 2,149 87,496 - ------------------------------------------------------------------------------------------------------------------------- Month #3 March 1 to 4,200 38.00 4,200 83,296 March 31, 2004 - ------------------------------------------------------------------------------------------------------------------------- Total 6,349 36.98 6,349 83,296 - -------------------------------------------------------------------------------------------------------------------------
On March 23, 2001, Juniata Valley Financial Corp. announced plans to buyback 100,000 shares of their stock. There is no expiration date to this buyback. Item 3. Defaults Upon Senior Securities Not applicable Item 4. Submission of Matters to a Vote of Security Holder None Item 5. Other information None 16. Item 6. Exhibits Exhibits 31.1 Rule 13a - 14(a)/15d - 14(a) Certification Exhibits 31.2 Rule 13a - 14(a)/15d - 14(a) Certification Exhibits 32.1 Section 1350 Certification Exhibits 32.2 Section 1350 Certification Form 8-K Form 8-K was filed on January 22, 2004 announcing the special $1.00 dividend to be paid to shareholders of record on February 1, 2004 and payable on February 27, 2004. Form 8-K was filed on February 18, 2004 announcing the year end financial results. Pursuant to the requirements of the Security 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 --------------------------- ------------------------------------- Francis J. Evanitsky, President & CEO Date By --------------------------- ------------------------------------- Linda L. Engle, Executive VP & CFO EX-31 2 jvbex311_56127-051204.txt CERT FRANCIS EVANITSKY 17. EXHIBIT 31.1 RULE 13A - 14(A)/15D - 14(A) CERTIFICATION I, Francis J. Evanitsky, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Juniata Valley Financial Corp.; 2. Based on my knowledge, this report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) [OMITTED PURSUANT TO THE GUIDANCE OF RELEASE NO. 8238, SECTION III (E)]; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date ------------------------ ------------------------------------- Francis J. Evanitsky, President & CEO EX-31 3 jvbex312_56127-051204.txt CERT LINDA ENGLE 18. EXHIBIT 31.2 RULE 13A - 14(A)/15D - 14(A) CERTIFICATION I, Linda L. Engle, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Juniata Valley Financial Corp.; 2. Based on my knowledge, this report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: c) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) [OMITTED PURSUANT TO THE GUIDANCE OF RELEASE NO. 8238, SECTION III (E)]; d) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and d) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date -------------------------------- ---------------------------------- Linda L. Engle, Executive VP & CFO EX-32 4 jvbex321_56127-051204.txt CERT FRANCIS EVANITSKY EXHIBIT 32.1 SECTION 1350 CERTIFICATION The undersigned herby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with this Quarterly Report on form 10-Q, that: o the report fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, and o the information contained in the report fairly presents, in all material respects, the company's financial condition and results of operation. - ------------------------------------- Francis J. Evanitsky, President & CEO Dated: ------------------------------- EX-32 5 jvbex322_56127-051204.txt CERT LINDA ENGLE EXHIBIT 32.2 SECTION 1350 CERTIFICATION The undersigned herby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with this Quarterly Report on form 10-Q, that: o the report fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, and o the information contained in the report fairly presents, in all material respects, the company's financial condition and results of operation. - ------------------------------------ Linda L. Engle, Executive VP & CFO Dated: ------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----