MIFFLINTOWN - Marcie Barber, president and CEO of Juniata Valley Financial Corp., announced that net income and earnings per share for the quarter ending March 31 were $1,006,000 and 24 cents, respectively.
First quarter net income in 2013 represented increases of $588,000 and $123,000, respectively, compared to the same quarter in 2012 and to the immediate preceding quarter ending Dec. 31, 2012.
The favorable results achieved in the first quarter of 2013 versus the two prior periods, are due to improvements in levels of non-interest expense net of non-interest income and a lower provision for loan losses, particularly in comparison to the first quarter of 2012, partially offset by a lower net interest margin.
The net interest margin on a fully tax-equivalent basis was 3.50 percent in the first quarter of 2013, 12 basis points lower than the immediate preceding quarter and 34 basis points lower than in the first quarter of 2012.
The decrease in net interest income was driven by lower outstanding loan balances and lower yields on both loans and investment securities, as the sustained period of low market interest rates continued. Compared to the level in Dec. 31, 2012, loan balances at March 31 declined by 1.9 percent.
Several factors contributed to the decrease in loan balances. First, loan balances declined as a result of targeted and continuing efforts by bank personnel to address loans which were nonperforming or which had the potential to become nonperforming. Secondly, loan demand remains low as a result of the continuing soft economic conditions. Additionally, in order to minimize long-term interest rate risk, most fixed-rate residential mortgage loans originated by Juniata in 2013 were sold into the secondary market, with Juniata retaining the associated servicing rights. While this activity allows the generation of fee income, it also results in a reduction in loan balances.
The bank has been diligent in its efforts to address non-performing and potential non-performing loans, and charged off $1 million against the balance of an impaired loan during the first quarter of 2013. The potential charge off had been previously identified and a specific reserve had been established.
The level of non-performing loans as of March 31 reflected an improvement of 4.3 percent compared to Dec. 31, 2012, and 5 percent as compared to March 31, 2012.
The continued improvement in credit quality, along with lower loan balances outstanding, allowed the bank to record a lower provision for loan losses in the first quarter of 2013 as compared to both the immediate preceding quarter and the same quarter one year earlier.
"We look forward to increased loan demand as economic conditions improve," Barber said. "JVB is well positioned to meet the credit needs of all its markets."
Non-interest income in the first quarter of 2013 decreased by 2.3 percent and increased by 3.4 percent, respectively, when compared to the immediate preceding quarter and the same quarter one year ago.
Sales of non-deposit products, on which the bank receives commissions, have rebounded in the first quarter of 2013 as compared to both the immediate preceding quarter and the same quarter one year ago.
Income from the sales of those products has increased by 33.3 percent in the first quarter of 2013 over the first quarter of 2012, and by 78.5 percent over the fourth quarter of 2012.
With Juniata's initiation of secondary market loan origination activities in 2012, a significant increase in gains on the sale of loans and other fees derived from loan activities was realized in the first quarter of 2013 as compared to the first quarter of 2012. However, gains from this activity in the first quarter of 2013 were less than in the fourth quarter of 2012.
Non-interest expense decreased in the first quarter of 2013 by 9.1 percent and 6.5 percent, respectively, when compared to the immediate preceding quarter and to the same quarter one year ago. Each instance was due primarily to lower staffing levels, benefit cost containment and lower net costs relating to foreclosed real estate properties.
Total assets on March 31, 2012 were $448.8 million as compared to $448.9 million in Dec. 31, 2012.
On April 16, Juniata Valley Financial Corp.'s Board of Directors declared a cash dividend of 22 cents per share for the second quarter of 2013, payable on June 3 to shareholders of record on May 15.
The Juniata Valley Bank, the principal subsidiary of Juniata Valley Financial Corp., is headquartered in Mifflintown with 12 community offices located in Juniata, Mifflin, Perry and Huntingdon counties. Juniata Valley owns 39.16 percent of Liverpool Community Bank, which it carries under the equity method of accounting.
More information regarding Juniata Valley Financial Corp. and The Juniata Valley Bank can be found online at www.JVBonline.com.