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Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Juniata Valley Financial Corp. Announces Results for the Quarter and Year Ended December 31, 2019

January 31, 2020 GMT

Mifflintown, PA, Jan. 31, 2020 (GLOBE NEWSWIRE) --

Juniata Valley Financial Corp. (OTC Pink: JUVF) (“Juniata”), announced net income for the year ended December 31, 2019 of $5,835,000, compared to net income of $5,904,000 for the year ended December 31, 2018. Earnings per share, basic and diluted, were $1.14 in 2019 compared to $1.18 in 2018. For the fourth quarter of 2019, net income was $1,484,000, an increase of $267,000, compared to net income of $1,217,000 for the fourth quarter of 2018. Earnings per share, basic and diluted, during the fourth quarter of 2019 were $0.29 compared to $0.24 during the corresponding 2018 period.

President and Chief Executive Officer, Marcie A. Barber stated, “We are very pleased with our financial performance in 2019. Fourth quarter earnings were very strong and, taking into consideration the items discussed below impacting comparability of year-to-year results, annual earnings remained robust. Credit quality is at its strongest level in ten years, with non-performing assets at just 0.3% of total assets on December 31, 2019 as compared to 0.45% of total assets on December 31, 2018. We are poised to focus on organic growth in 2020.”

Return on average assets and return on average equity for the year ended December 31, 2019 were 0.90% and 8.24%, respectively. Return on average assets and return on average equity for the comparable 2018 period were 0.96% and 9.42%, respectively.

The comparability of the results for the year ended December 31, 2019 and December 31, 2018 was impacted by the termination, and subsequent liquidation, of The Juniata Valley Bank Retirement Plan (“JVB Plan”) in the third quarter of 2019. Juniata satisfied all obligations of the JVB Plan in 2019, recording pre-tax pension settlement charges of $1,221,000 during the year, compared to a pre-tax pension settlement charge of $210,000 recorded in 2018. The comparability of the results for the three and twelve months ended December 31, 2019 and December 31, 2018 was also impacted by Juniata’s acquisition of Liverpool Community Bank (“Liverpool”) on April 30, 2018. During the three and twelve months ended December 31, 2018, Juniata incurred $259,000 and $844,000, respectively, in pre-tax merger-related expenses, while no merger-related expenses were incurred in 2019. In addition, a credit to the income tax provision of $406,000 was recorded in 2018 to remove a deferred tax liability related to Juniata’s previous 39.16% ownership in Liverpool upon Juniata’s acquisition of Liverpool, while no similar credit was recorded in 2019.

Net interest income increased $890,000, or 4.4%, during the year ended December 31, 2019 compared to 2018, as average earning assets increased by $29,504,000. The increase in average earning assets was partially funded by a $17,755,000 increase in interest-bearing deposits and term debt, with the remaining funding being provided by non-interest bearing funds.

The provision for loan losses decreased $910,000 in 2019 compared to 2018. A credit of $573,000 was recorded to the loan loss provision during the year ended December 31, 2019 primarily due to net recoveries of $500,000 on previously charged off loans. Also contributing to the decline in the provision for loan losses in 2019 was a general improvement in credit quality factors, such as delinquency trends and classified loan balances. As a percentage of total loans outstanding, delinquent loans exceeding 90 days were 0.26% as of December 31, 2019, compared to 0.35% on December 31, 2018. During the same timeframe, classified loan balances as a percentage of total outstanding loans decreased from 6.0% at December 31, 2018 to 5.4% at December 31, 2019.

Non-interest income was $4,749,000 in 2019 compared to $5,027,000 in 2018. Most significantly impacting the comparative year-end periods was a decline in income/gain from unconsolidated subsidiary of $296,000, which included a $215,000 gain from the adjustment to the carrying value of Juniata’s previous 39.16% ownership in Liverpool prior to its 100% acquisition. The equity method of accounting for the Liverpool investment was discontinued with the acquisition by Juniata of the remaining outstanding Liverpool shares in April 2018. Since then, all income and expense items from the newly acquired Liverpool office have been included as part of Juniata’s operations in the appropriate line items in the financial statements. Also contributing to the decline in noninterest income in 2019 compared to 2018 was an $83,000 decrease in fees derived from loan activity, primarily due to a recovery on a purchased loan in 2018. Partially offsetting these declines during the period was a decrease of $145,000 in the net loss on sales and calls of securities.

Non-interest expense was $20,407,000 in 2019 compared to $19,461,000 in 2018. The increase was driven by Juniata’s growth resulting from the Liverpool acquisition; specifically, increases in employee compensation and benefits, occupancy, equipment, and data processing. Professional fees also increased during 2019. Included in employee benefits expense was $1,221,000 in pre-tax pension settlement charges recorded in 2019 as a result of settling the remaining obligations associated with the final liquidation of the JVB Plan compared to $210,000 in pre-tax pension settlement charges recorded in 2018. Partially offsetting these increases was an increase in the gain on sales of other real estate owned of $148,000, a decline in FDIC insurance premiums of $166,000 due to the application of small bank assessment credits applied in 2019, and a decline in merger and acquisition expense of $884,000 as no similar expense was recorded in the 2019 period.

The income tax benefit decreased by $645,000 in 2019 compared to 2018 due to higher taxable income in 2019 and the removal of a $406,000 deferred tax liability related to Juniata’s previous ownership in Liverpool, resulting in a credit to the 2018 tax provision for such amount.

Annualized return on average assets for the fourth quarter of 2019 increased 12.7%, to 0.89%, compared to 0.79% for the fourth quarter of 2018. Annualized return on average equity for the fourth quarter of 2019 increased 8.9%, to 8.10%, compared to 7.44% for the comparable 2018 period.

Net interest income was $5,091,000 for the fourth quarter of 2019 compared to $5,138,000 for the fourth quarter of 2018. Loan interest income decreased $201,000 and interest expense on long-term debt increased $226,000 during the fourth quarter of 2019 compared to the fourth quarter of 2018. Partially offsetting these items was an increase in interest income on securities of $387,000, or 45.7%, during the fourth quarter of 2019 compared to the same period in 2018.

The provision for loan losses decreased $189,000 in the fourth quarter of 2019 in comparison to the fourth quarter of 2018. A credit of $83,000 was recorded to the loan loss provision during the fourth quarter of 2019 due to a continued improvement in asset quality, while a charge of $106,000 was recorded during the comparable 2018 period.

Non-interest income during the quarter ended December 31, 2019 increased 11.6% to $1,245,000, compared to $1,116,000 during the quarter ended December 31, 2018. Most significantly impacting the comparative three month periods was a $186,000 increase in the gain/loss on sales of securities due to a $13,000 gain recorded during the fourth quarter of 2019 compared to a $173,000 loss recorded in the comparable 2018 period. In addition, the value of equity securities increased $30,000 during the fourth quarter of 2019 compared to a decline of $43,000 recorded in the comparable 2018 period. Partially offsetting these increases were declines of $58,000 in fees derived from loan activity due to the recovery of a purchased loan in the fourth quarter of 2018 and $31,000 in customer service fees due to collecting fewer overdraft fees during the three months ended December 31, 2019 compared to three months ended December 31, 2018.

Non-interest expense for the quarter ended December 31, 2019 declined 3.8% to $4,922,000, compared to $5,118,000 for the quarter ended December 31, 2018. Most significantly impacting the comparative three month period was a $259,000 decline in merger and acquisition expense as no similar expense was recorded during the fourth quarter of 2019, as well as a decline in FDIC insurance premiums of $65,000 due to the application of a small bank assessment credit in the fourth quarter of 2019, while no credit was received in the comparable 2018 period. Partially offsetting these declines were increases in the 2019 period in employee compensation expense, professional fees, and taxes, other than income.

The income tax provision increased by $200,000 during the fourth quarter of 2019 compared to the same period in 2018, primarily due to higher taxable income recorded in the 2019 period.

Total assets at December 31, 2019 were $670,632,000, an increase of $45,396,000 compared to total assets of $625,236,000 at December 31, 2018. This increase was in part due to borrowing $30,000,000 in long-term debt in 2019 to fund the purchases of investment securities. Total debt securities available for sale increased by $68,733,000 when comparing December 31, 2019 to December 31, 2018, while total loans declined by $17,041,000 over the period. In addition, total borrowings and deposits increased by $28,618,000 and $10,215,000, respectively, with total capital increasing by $6,329,000. The increase in total capital at December 31, 2019 was primarily the result of an increase of $4,815,000 in accumulated other comprehensive income due to $3,163,000 in unrealized gains on debt securities, as well as the liquidation of the JVB Plan.

On January 21, 2020, Juniata Valley Financial Corp.’s Board of Directors declared a cash dividend of $0.22 per share, payable on February 28, 2020 to shareholders of record on February 14, 2020.

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 when filed with the Securities and Exchange Commission. Accordingly, the financial information in this announcement is subject to change.

The Juniata Valley Bank, the principal subsidiary of Juniata Valley Financial Corp., is headquartered in Mifflintown, Pennsylvania, with nineteen community offices located in Juniata, Mifflin, Perry, Huntingdon, McKean 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 Pink Open 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 as a result 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 SubsidiaryConsolidated Statements of Financial Condition

(Dollars in thousands, except share data) (Unaudited) December December 31, 2019 31, 2018 ----------- ----------- ASSETS Cash and due from banks $ 12,658 $ 15,617 Interest bearing deposits with banks 82 110 Federal funds sold — 729 - ------- - - ------- - Cash and cash equivalents 12,740 16,456 Interest bearing time deposits with banks 2,210 3,290 Equity securities 1,144 1,118 Debt securities available for sale 210,686 141,953 Restricted investment in bank stock 3,442 2,441 Total loans 400,590 417,631 Less: Allowance for loan losses (2,961 ) (3,034 ) - ------- - - ------- - Total loans, net of allowance for loan losses 397,629 414,597 Premises and equipment, net 9,243 8,744 Other real estate owned — 744 Bank owned life insurance and annuities 16,266 15,938 Investment in low income housing partnerships 3,904 4,545 Core deposit and other intangible assets 318 405 Goodwill 9,047 9,139 Mortgage servicing rights 180 200 Accrued interest receivable and other assets 3,823 5,666 - ------- - - ------- - Total assets $ 670,632 $ 625,236 - ------- - - ------- - LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities: Deposits: Non-interest bearing $ 134,703 $ 126,057 Interest bearing 397,234 395,665 - ------- - - ------- - Total deposits 531,937 521,722 Securities sold under agreements to repurchase 3,429 2,911 Short-term borrowings 9,700 11,600 Long-term debt 45,000 15,000 Other interest bearing liabilities 1,603 1,596 Accrued interest payable and other liabilities 5,256 5,029 - ------- - - ------- - Total liabilities 596,925 557,858 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 December 31, 2019; 5,134,249 shares at December 31, 2018 5,142 5,134 Outstanding - 5,099,729 shares at December 31, 2019; 5,092,048 shares at December 31, 2018 Surplus 24,898 24,821 Retained earnings 43,954 42,525 Accumulated other comprehensive income (loss) 516 (4,299 ) Cost of common stock in Treasury: 42,020 shares at December 31, 2019; 42,201 shares (803 ) (803 ) at December 31, 2018 - ------- - - ------- - Total stockholders’ equity 73,707 67,378 - ------- - - ------- - Total liabilities and stockholders’ equity $ 670,632 $ 625,236 - ------- - - ------- -

Juniata Valley Financial Corp. and SubsidiaryConsolidated Statements of Income

Three Months Ended Year Ended (Dollars in thousands, except share and per share data) December 31, December 31, -------------------- ---------------------- 2019 2018 2019 2018 --------- --------- ---------- ---------- Interest income: (unaudited (unaudited) ) Loans, including fees $ 5,037 $ 5,238 $ 21,060 $ 20,060 Taxable securities 1,208 752 4,115 3,040 Tax-exempt securities 25 94 147 393 Other interest income 34 55 292 158 - ----- - - ----- - - ------ - - ------ - Total interest income 6,304 6,139 25,614 23,651 - ----- - - ----- - - ------ - - ------ - Interest expense: Deposits 900 890 3,706 3,068 Securities sold under agreements to repurchase 7 13 37 62 Short-term borrowings 10 26 24 190 Long-term debt 287 61 899 276 Other interest bearing liabilities 9 11 42 39 - ----- - - ----- - - ------ - - ------ - Total interest expense 1,213 1,001 4,708 3,635 - ----- - - ----- - - ------ - - ------ - Net interest income 5,091 5,138 20,906 20,016 Provision for loan losses (83 ) 106 (573 ) 337 - ----- - - ----- - - ------ - - ------ - Net interest income after provision for loan losses 5,174 5,032 21,479 19,679 - ----- - - ----- - - ------ - - ------ - Non-interest income: Customer service fees 437 468 1,717 1,779 Debit card fee income 349 341 1,349 1,280 Earnings on bank-owned life insurance and annuities 67 86 289 352 Trust fees 100 114 394 430 Commissions from sales of non-deposit products 54 57 272 259 Income/gain from unconsolidated subsidiary — — — 296 Fees derived from loan activity 95 153 333 416 Mortgage banking income 16 17 68 70 Gain (loss) on sales and calls of securities 13 (173 ) (43 ) (188 ) Change in value of equity securities 30 (43 ) 26 (1 ) Other non-interest income 84 96 344 334 - ----- - - ----- - - ------ - - ------ - Total non-interest income 1,245 1,116 4,749 5,027 - ----- - - ----- - - ------ - - ------ - Non-interest expense: Employee compensation expense 2,183 2,105 8,257 7,822 Employee benefits 504 523 3,594 2,458 Occupancy 317 299 1,296 1,217 Equipment 225 211 881 818 Data processing expense 569 522 2,114 1,924 Director compensation 50 58 206 215 Professional fees 189 146 961 640 Taxes, other than income 145 89 567 498 FDIC Insurance premiums 1 66 108 274 Loss (gain) on sales of other real estate owned — 2 (208 ) (60 ) Amortization of intangible assets 22 25 87 79 Amortization of investment in low-income housing partnerships 192 200 792 800 Merger and acquisition expense — 259 — 884 Other non-interest expense 525 613 1,752 1,892 - ----- - - ----- - - ------ - - ------ - Total non-interest expense 4,922 5,118 20,407 19,461 - ----- - - ----- - - ------ - - ------ - Income before income taxes 1,497 1,030 5,821 5,245 Income tax provision (benefit) 13 (187 ) (14 ) (659 ) - ----- - - ----- - - ------ - - ------ - Net income $ 1,484 $ 1,217 $ 5,835 $ 5,904 - ----- - - ----- - - ------ - - ------ - Earnings per share Basic $ 0.29 $ 0.24 $ 1.14 $ 1.18 Diluted $ 0.29 $ 0.24 $ 1.14 $ 1.18

JoAnn McMinn Email: joann.mcminn@jvbonline.com Phone: (717) 436-3206