JUNIATA VALLEY FINANCIAL CORP
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-12.
0001558370-24-011834
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001558370-24-015219
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 110 previous paragraphs and 112 current paragraphs.
57 unchanged; 38 reworded; 13 added; 14 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 56 previous and 56 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
A provision for credit losses of $471,000 was recorded in the nine months ended September 30, 2024, compared to $411,000 for the nine months ended September 30, 2023.
Current report
Subsequent Event:
Current report
The net interest margin, on a fully tax equivalent basis, increased from 2.71% during the three months ended September 30, 2023, to 2.73% during the three months ended September 30, 2024.
Current report
Juniata recorded a provision for credit losses of $232,000 for the three months ended September 30, 2024 compared to a provision for credit losses of $121,000 for the three months ended September 30, 2023. For the 2024 period, this increase was due primarily to an updated loss driver analysis for the allowance for credit losses calculation and not a result of deteriorated asset quality, which remained strong.
Current report
As a percentage of average assets, annualized non-interest income was 0.67% for the three months ended September 30, 2024 compared to 0.62% for the three months ended September 30, 2023.
Current report
Non-interest expense was $5.1 million for the three months ended September 30, 2024, compared to $4.8 million for the three months ended September 30, 2023, an increase of 7.2%. Most significantly impacting non-interest expense in the comparative three month periods was an increase of $126,000 in employee benefits expense, due primarily to an increase in medical claims expenses, as well as an increase of $86,000 in both equipment expenses and professional fees. Also contributing to the increase in non-interest expense during the 2024 period was a $67,000 increase in taxes, other than income, due to recording a $62,000 Pennsylvania Shares Tax refund in the 2023 period. These increases were partially offset by a decrease of $47,000 in the provision for unfunded commitments recorded in other non-interest expense during the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Current report
As a percentage of average assets, annualized non-interest expense was 2.38% for the three months ended September 30, 2024 compared to 2.26% for the three months ended September 30, 2023.
Current report
Comparison of the Nine months Ended September 30, 2024 and 2023
Current report
Net income was $4.7 million for the nine months ended September 30, 2024, a decrease of $184,000, or 3.7%, compared to net income $4.9 million for the nine months ended September 30, 2023. Earnings per share, basic and diluted, was $0.95 for the nine months ended September 30, 2024, a decrease of 3.1%, compared to $0.98 for the nine months ended September 30, 2023.
Current report
Net interest income was $17.1 million during both the nine months ended September 30, 2024 and 2023.
Current report
Juniata recorded a provision for credit losses of $471,000 for the nine months ended September 30, 2024 compared to a provision for credit losses of $411,000 for the nine months ended September 30, 2023. This increase was due primarily to an updated loss driver analysis for the allowance for credit losses calculation in the third quarter of 2024 and not a result of deteriorated asset quality, which remained strong.
Current report
Non-interest income was $4.2 million during the nine months ended September 30, 2024 compared to $3.9 million during the nine months ended September 30, 2023, an increase of 8.4%.
Current report
Non-interest expense was $15.4 million during the nine months ended September 30, 2024 compared to $15.0 million during the nine months ended September 30, 2023, an increase of 2.6%.
Removed paragraphs (14)
Previous report
A provision for credit losses of $239,000 was recorded in the six months ended June 30, 2024, compared to $290,000 for the six months ended June 30, 2023.
Previous report
Subsequent to June 30, 2024, the following event took place:
Previous report
The personal loan portfolio contains loans with many different payment structures, payment streams and collateral. The Weighted Average Remaining Life (“WARM”) method was deemed most appropriate for these loans. WARM uses an annual charge-off rate over several vintages to estimate credit losses. The average annual charge-off rate is applied to the contractual term adjusted for prepayments.
Previous report
The yield on earning assets increased 44 basis points, to 4.36%, for the three months ended June 30, 2024 compared to same period last year, driven by an increase in loan yields of 55 basis points, while the cost to fund interest earning assets with interest bearing liabilities increased 63 basis points, to 2.29%, when comparing the two periods. The net interest margin, on a fully tax equivalent basis, decreased from 2.76% for the three months ended June 30, 2023 to 2.73% for the three months ended June 30, 2024. The Company anticipates continued margin compression as the Federal Reserve continues to work to control inflation by maintaining target ranges for the prime rate and federal funds rate.
Previous report
Juniata recorded a provision for credit losses of $119,000 for the three months ended June 30, 2024 compared to a provision for credit losses of $47,000 for the three months ended June 30, 2023. For the 2024 period, elevated qualitative risk factors were considered, including credit concentrations, asset quality trends, loan growth and net charge-offs resulting in a higher provision for credit losses in comparison to the 2023 period.
Previous report
As a percentage of average assets, annualized non-interest income was 0.69% for the three months ended June 30, 2024 compared to 0.66% for the three months ended June 30, 2023.
Previous report
Non-interest expense was $5.1 million for the three months ended June 30, 2024, compared to $5.5 million for the three months ended June 30, 2023, a decrease of 6.6%. Most significantly impacting non-interest expense in the comparative three month periods were decreases of $216,000 in employee benefits expense, due primarily to a decline in medical claims expenses, and the recording of $209,000 in merger and acquisition expense from the Path Valley branch acquisition in the second quarter of 2023. Also impacting the comparative three month periods was a $115,000 decrease in data processing expense due to the recording of a $238,000 breakage fee from our previous core provider in June 2023. These decreases were partially offset by increases of $101,000 in employee compensation and $60,000 in equipment expense.
Previous report
As a percentage of average assets, annualized non-interest expense was 2.36% for the three months ended June 30, 2024 compared to 2.62% for the three months ended June 30, 2023.
Previous report
Comparison of the Six Months Ended June 30, 2024 and 2023
Previous report
Net income was $3.1 million for both the six months ended June 30, 2024 and June 30, 2023 and earnings per share, basic and diluted, were $0.62 for both six month periods.
Previous report
Net interest income was $11.3 million during the six months ended June 30, 2023, a decrease of $122,000, or 1.1%, compared to $11.4 million recorded during the six months ended June 30, 2023.
Previous report
Juniata recorded a provision for credit losses of $239,000 in the six months ended June 30, 2024 compared to a provision for credit losses of $290,000 in the six months ended June 30, 2023.
Previous report
Non-interest income was $2.8 million during the six months ended June 30, 2024 compared to $2.6 million during the six months ended June 30, 2023, an increase of $183,000, or 7.1%.
Previous report
Non-interest expense was $10.3 million during the six months ended June 30, 2024 compared to $10.2 million during the six months ended June 30, 2023, an increase of $43,000, or 0.4%.
Reworded paragraphs (38)
Previous wording
The following discussion relates to the consolidated financial condition of the Company as of June 30, 2024, compared to December 31, 2023, and the consolidated results of operations for the three and six months ended June 30, 2024, compared to the same periods in 2023. This discussion should be read in conjunction with the interim consolidated financial statements and related notes included herein.
Current wording
The following discussion relates to the consolidated financial condition of the Company as of September 30, 2024, compared to December 31, 2023, and the consolidated results of operations for the three and nine months ended September 30, 2024, compared to the same periods in 2023. This discussion should be read in conjunction with the interim consolidated financial statements and related notes included herein.
Previous wording
Total assets as of June 30, 2024 were $862.7 million, a decrease of $7.9 million, or 0.9%, compared to December 31, 2023. Cash and cash equivalents decreased by $18.0 million, or 62.2%, as of June 30, 2024 compared to December 31, 2023, as cash was used primarily to fund loan growth, with total loans increasing by $16.0 million, or 3.0%, mainly due to an increase in real estate – commercial and commercial, financial and agricultural loans. Total deposits decreased by $3.9 million, or 0.5%, as of June 30, 2024 compared to December 31, 2023 primarily due to a decline in interest bearing demand and money market deposits. Short-term borrowings and repurchase agreements increased by $8.6 million, or 16.3%, as of June 30, 2024 compared to year end 2023 as overnight borrowings replaced a 5-year FHLB advance that matured in May 2024, leading to the $15.0 million, or 75.0%, decline in long-term debt.
Current wording
Total assets as of September 30, 2024 were $858.0 million, a decrease of $12.6 million, or 1.5%, compared to total assets of $870.6 million at December 31, 2023. Cash and cash equivalents decreased by $17.0 million, or 58.8%, as of September 30, 2024 compared to December 31, 2023, as cash was used primarily to fund the growth in total loans, which increased by $12.9 million, or 2.4% as of September 30, 2024 compared to year-end 2023. Total deposits increased by $3.9 million, or 0.5%, as of September 30, 2024 compared to December 31, 2023 while short-term borrowings and repurchase agreements decreased by $7.1 million, or 13.4%, and long-term debt decreased by $15.0 million, or 75.0%, due to the maturity of a 5-year FHLB advance in May 2024.
Previous wording
A summary of the activity in the allowance for credit losses for the six month periods ended June 30, 2024 and 2023, respectively, is presented below.
Current wording
A summary of the activity in the allowance for credit losses for the nine month periods ended September 30, 2024 and 2023, respectively, is presented below.
Previous wording
As of June 30, 2024, there were $21.9 million of loans classified as special mention compared to $21.4 million at December 31, 2023, $1.8 million of loans classified as substandard at June 30, 2024 compared to $5.9 million at December 31, 2023, and $72,000 of loans classified as doubtful at June 30, 2024 compared to none at December 31, 2023. The decline in
Current wording
As of September 30, 2024, there were $23.6 million of loans classified as special mention compared to $21.4 million at December 31, 2023, $1.8 million of loans classified as substandard at September 30, 2024 compared to $5.9 million at December 31, 2023, and $72,000 of loans classified as doubtful at September 30, 2024 compared to none at December 31, 2023. The increase in special mention loans between periods was primarily due to the downgrade of a commercial
Previous wording
substandard loans between periods was primarily due to the pay-off of a participated real estate-commercial loan during the first quarter of 2024.
Current wording
relationship, while the decline in substandard loans was primarily due to the pay-off of a participated real estate-commercial loan during the first quarter of 2024.
Previous wording
Management believes the allowance for credit losses carried were adequate to cover forecasted expected credit losses as of June 30, 2024. Management also believes the Company has sufficient liquidity and capital to absorb losses that may occur but continues to closely monitor the financial strength of borrowers and their ability to comply with repayment terms.
Current wording
Management believes the allowance for credit losses carried was adequate to cover forecasted expected credit losses as of September 30, 2024. Management also believes the Company has sufficient liquidity and capital to absorb losses that may occur but continues to closely monitor the financial strength of borrowers and their ability to comply with repayment terms.
Previous wording
Total non-performing loans as of June 30, 2024 decreased $4.5 million compared to December 31, 2023, due to a decline in non-accrual loans resulting from the pay-off of a participated non-accrual real estate-commercial loan during the first quarter of 2024.
Current wording
Total non-performing loans as of September 30, 2024 decreased $4.3 million compared to December 31, 2023, due to a decline in non-accrual loans resulting primarily from the pay-off of a participated non-accrual real estate-commercial loan during the first quarter of 2024.
Previous wording
Management analyzes the adequacy of the ACL regularly through reviews of the loan portfolio. Consideration is given to economic conditions, changes in interest rates and the effect of such changes on collateral values and borrowers’ ability to pay, changes in the composition of the loan portfolio and trends in past due and non-performing loan balances. The ACL is a material estimate that is susceptible to significant fluctuation and is established through a provision for credit losses based on management’s evaluation of the inherent risk in the loan portfolio. In addition to extensive in-house loan
Current wording
Management analyzes the adequacy of the ACL regularly through reviews of the loan portfolio. Consideration is given to economic conditions, changes in interest rates and the effect of such changes on collateral values and borrowers’ ability to pay, changes in the composition of the loan portfolio and trends in past due and non-performing loan balances. The ACL is a material estimate that is susceptible to significant fluctuation and is established through a provision for credit losses based on management’s evaluation of the inherent risk in the loan portfolio. In addition to extensive in-house loan monitoring procedures, the Company utilizes an outside party to conduct an independent loan review of commercial loan and commercial real estate loan relationships. Management utilizes the results of this outside loan review to assess the effectiveness of its internal loan grading system as well as to assist in the assessment of the overall adequacy of the ACL associated with these types of loans.
Previous wording
The ACL is made up of two basic components. The first component of the allowance for credit loss is the specific reserve in which the Company sets aside reserves based on the analysis of individual analyzed credits. In establishing specific reserves, the Company analyzes all substandard, doubtful and loss graded loans monthly and makes judgments about the risk of loss based on the cash flow of the borrower, the value of any collateral and the financial strength of any guarantors. If the loan is individually analyzed and cash flow dependent, then a specific reserve is established for the discount on the net present value of expected future cash flows. If the loan is individually analyzed and collateral dependent, then any shortfall is either charged off or a specific reserve is established. The Company also considers the impacts of any Small Business Administration guarantees. The specific reserve portion of the ACL was $62,000 at June 30, 2024 and $4,000 at December 31, 2023.
Current wording
The ACL is made up of two basic components. The first component of the allowance for credit loss is the specific reserve in which the Company sets aside reserves based on the analysis of individual analyzed credits. In establishing specific reserves, the Company analyzes all substandard, doubtful and loss graded loans monthly and makes judgments about the risk of loss based on the cash flow of the borrower, the value of any collateral and the financial strength of any guarantors. If the loan is individually analyzed and cash flow dependent, then a specific reserve is established for the discount on the net present value of expected future cash flows. If the loan is individually analyzed and collateral dependent, then any shortfall is either charged off or a specific reserve is established. The Company also considers the impacts of any Small Business Administration guarantees. The specific reserve portion of the ACL was $70,000 at September 30, 2024 and $4,000 at December 31, 2023.
Previous wording
Discounted cash flows (“DCF”) was selected as the appropriate method to analyze most of the Company’s loan segments, particularly loan segments with longer average lives and regular payment structures, because DCF allows for the effective incorporation of a reasonable and supportable forecast in a directionally consistent and objective manner. DCF generates cash flow projections at the instrument level where payment expectations are adjusted for prepayment and curtailment to produce an expected cash flow stream. This expected cash flow stream is compared to contractual cash flows to establish a valuation account for these loans.
Current wording
Discounted cash flows (“DCF”) was selected as the appropriate method to analyze the Company’s loan segments because DCF allows for the effective incorporation of a reasonable and supportable forecast in a directionally consistent and objective manner. DCF generates cash flow projections at the instrument level where payment expectations are adjusted for prepayment and curtailment to produce an expected cash flow stream. This expected cash flow stream is compared to contractual cash flows to establish a valuation account for these loans.
Previous wording
The quantitative general allowance was $2.7 million at June 30, 2024 and $2.5 million at December 31, 2023.
Current wording
The quantitative general allowance was $2.9 million at September 30, 2024 and $2.5 million at December 31, 2023.
Previous wording
Net income for the three months ended June 30, 2024 was $1.7 million, an increase of $348,000, or 24.9%, compared to the three months ended June 30, 2023. Basic and diluted earnings per share was $0.35 for the three months ended June 30, 2024, an increase of 25.0% compared to basic and diluted earnings per share of $0.28 for the comparable 2023 period.
Current wording
Net income for the three months ended September 30, 2024 was $1.6 million, a decrease of $154,000, or 8.6%, compared to the three months ended September 30, 2023. Basic and diluted earnings per share was $0.33 for the three months ended September 30, 2024, a decrease of 8.3%, compared to basic and diluted earnings per share of $0.36 for the comparable 2023 period.
Previous wording
Annualized return on average assets for the three months ended June 30, 2024 was 0.81%, compared to the annualized return on average assets of 0.67% for the same period in 2023. For the three months ended June 30, annualized return on average equity was 16.38% in 2024 compared to 15.49% in 2023.
Current wording
Annualized return on average assets for the three months ended September 30, 2024 was 0.76%, compared to the annualized return on average assets of 0.85% for the same period in 2023. For the three months ended September 30, annualized return on average equity was 14.72% in 2024 compared to 19.81% in the 2023 period.
Previous wording
Net interest income was $5.8 million for the three months ended June 30, 2024, an increase of $107,000, or 1.9%, compared to $5.7 million for the three months ended June 30, 2023.
Current wording
Net interest income was $5.8 million for the three months ended September 30, 2024, an increase of $115,000, or 2.0%, compared to $5.7 million for the three months ended September 30, 2023.
Previous wording
Average interest earning assets increased 2.9%, to $858.5 million, for the three months ended June 30, 2024 compared to the same period in 2023, primarily due to an increase of $43.0 million, or 8.7%, in average loans. The increase in average loans was partially offset by a decline of $20.7 million, or 6.2%, in average investment securities as principal paydowns on the mortgage-backed securities portfolio were used to fund loan growth rather than being reinvested into the securities portfolio. Average interest bearing liabilities increased by $19.9 million, or 3.3%, compared to the corresponding 2023 period. This increase was primarily due to increases of $19.7 million, or 10.7%, in average time deposits as customers moved to preferred higher-rate deposit products and $9.5 million, or 14.8%, in average borrowings and other interest bearing liabilities.
Current wording
Average earning assets increased $11.2 million, or 1.3%, to $853.1 million during the three months ended September 30, 2024, compared to the same period in 2023, primarily due to an increase of $30.2 million, or 5.9%, in average loans, partially offset by a decline of $19.9 million, or 6.1%, in average investment securities driven by principal paydowns on the mortgage-backed securities portfolio. Average interest bearing liabilities increased by $7.6 million, or 1.3%, compared to the corresponding 2023 period, primarily due to increases in average time deposits, repurchase agreements and short-term borrowings.
Previous wording
Non-interest income was $1.5 million for the three months ended June 30, 2024, an increase of 7.3%, over the three months ended June 30, 2023. Most significantly impacting non-interest income in the comparative three month periods were increases of $117,000 in customer service fees and $86,000 in fees derived from loan activity, resulting primarily from an increase in title insurance commissions in the 2024 period. Partially offsetting these increases in the comparative three month periods was a decrease of $161,000 in life insurance proceeds as no item in this category was recorded in the three months ended June 30, 2024.
Current wording
Non-interest income was $1.4 million for the three months ended September 30, 2024, an increase of 11.1%, compared to $1.3 million for the three months ended September 30, 2023. Most significantly impacting non-interest income in the comparative three month periods were increases of $117,000 in customer service fees and $84,000 in the change in value of equity securities. Partially offsetting these increases in the comparative three month periods was a decrease of $35,000 in fees derived from loan activity primarily due to decreases in title insurance commissions and the derivative credit adjustment.
Previous wording
An income tax provision of $296,000 was recorded for the three months ended June 30, 2024 compared to $151,000 recorded for the three months ended June 30, 2023. The increase between three month periods was mainly due to more taxable income recorded in the 2024 period. Juniata qualifies for a federal tax credit for an investment in a low-income housing partnerships. The tax credit was $82,000 for both the three months ended June 30, 2024 and June 30, 2023.
Current wording
An income tax provision of $270,000 was recorded during the three months ended September 30, 2024 compared to an income tax provision of $310,000 recorded during the three months ended September 30, 2023. The decrease between three month periods was mainly due to more taxable income recorded in the 2023 period. Juniata qualifies for a federal tax credit for an investment in a low-income housing partnerships. The tax credit was $82,000 for both the three months ended September 30, 2024 and September 30, 2023.
Previous wording
For the three months ended June 30, 2024, the tax credit lowered the effective tax rate from 18.6% to 14.5% compared to the same period in 2023, when the tax credit lowered the effective tax rate from 15.1% to 9.7%.
Current wording
For the three months ended September 30, 2024, the tax credit lowered the effective tax rate from 18.5% to 14.2% compared to the same period in 2023, when the tax credit lowered the effective tax rate from 18.7% to 14.8%.
Previous wording
Annualized return on average assets for the six months ended June 30, 2024 was 0.72%, compared to 0.75% for the same period in 2023. For the six months ended June 30, annualized return on average equity was 15.14% in 2024 compared to 17.46% in 2023.
Current wording
Annualized return on average assets for the nine months ended September 30, 2024 was 0.73%, compared to 0.79% for the same period in 2023. For the nine months ended September 30, annualized return on average equity was 14.70% in 2024 compared to 18.25% in 2023.
Previous wording
The discussion that follows further explains changes in the components of net income when comparing the six months ended June 30, 2024 to the six months ended June 30, 2023.
Current wording
The discussion that follows further explains changes in the components of net income when comparing the nine months ended September 30, 2024 to the nine months ended September 30, 2023.
Previous wording
Average earning assets increased $26.1 million, or 3.1%, to $857.8 million, during the six months ended June 30, 2024, compared to the same period in 2023, due primarily to an increase of $44.9 million, or 9.2%, in average loans. The increase in average loans was partially offset by a decline of $20.9 million, or 6.2%, in average investment securities as principal paydowns on the mortgage-backed securities portfolio were used to fund loan growth rather than being reinvested into the securities portfolio. Average interest bearing liabilities increased by $25.4 million, or 4.3%, during the six months ended June 30, 2024 compared to the comparable 2023 period, due to growth in average time deposits, repurchase agreements and short-term borrowings, with this growth partially funding loan growth. The yield on earning assets increased 43 basis points, to 4.29%, due to a 53 basis point increase in the yield on average loans in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, while the cost to fund interest earning assets with interest bearing liabilities increased 76 basis points, to 2.27%.
Current wording
Average earning assets increased $21.1 million, or 2.5%, to $856.2 million, during the nine months ended September 30, 2024, compared to the same period in 2023, due primarily to an increase of $39.9 million, or 8.0%, in average loans. The increase in average loans was partially offset by a decline of $20.6 million, or 6.2%, in average investment securities as principal paydowns on the mortgage-backed securities portfolio were used to fund loan growth rather than being reinvested into the securities portfolio. Average interest bearing liabilities increased by $19.5 million, or 3.3%, during the nine months ended September 30, 2024 compared to the comparable 2023 period, due to growth in average time deposits, repurchase agreements and short-term borrowings, with this growth partially funding loan growth.
Previous wording
The net interest margin, on a fully tax equivalent basis, decreased from 2.81% during the six months ended June 30, 2023, to 2.68% during the six months ended June 30, 2024.
Current wording
The net interest margin, on a fully tax equivalent basis, decreased from 2.77% during the nine months ended September 30, 2023, to 2.70% during the nine months ended September 30, 2024.
Previous wording
The table below shows the net interest margin on a fully tax-equivalent basis for the six months ended June 30, 2024 and 2023.
Current wording
The table below shows the net interest margin on a fully tax-equivalent basis for the nine months ended September 30, 2024 and 2023.
Previous wording
Most significantly impacting the comparative six month periods were increases of $165,000 in customer service fees and $152,000 in fees derived from loan activity primarily due to increases in title insurance commissions and guidance line and service fees. These increases were partially offset by a $161,000 decrease in life insurance proceeds as no proceeds were recorded in the 2024 period.
Current wording
Most significantly impacting the comparative nine month periods were increases of $282,000 in customer service fees due to collecting more overdraft fees and deposit service charges, $144,000 in the change in value of equity securities due to an increase in bank stock market values and $114,000 in fees derived from loan activity due primarily to increases in title insurance commissions and guidance line and service fees. These increases were partially offset by a $161,000 decrease in life insurance proceeds as no proceeds were recorded in the 2024 period.
Previous wording
As a percentage of average assets, annualized non-interest income was 0.64% in the first six months of 2024 compared to 0.62% in the comparable 2023 period.
Current wording
As a percentage of average assets, annualized non-interest income was 0.65% in the first nine months of 2024 compared to 0.62% in the comparable 2023 period.
Previous wording
Most significantly impacting non-interest expense in the comparative six month periods were increases of $274,000 in salary expense due to annual salary increases and overtime pay from the core conversion in the first quarter of 2024, as well as an increase of $170,000 in other non-interest expense, primarily due to a $107,000 increase in the provision for unfunded commitments in the 2024 period. Also contributing to the increase in other non-interest expense in the six months ended June 30, 2024 compared to June 30, 2023 were increases of $110,000 in professional fees and $99,000 in FDIC insurance premiums due to an increase in the annual assessment rate for all institutions. These increases were partially offset by decreases of $306,000 in employee benefits expense, due to a decline in medical claims expense, and $209,000 recorded in the 2023 period due to the merger and acquisition expense from the Path Valley branch acquisition with no item in this category recorded in the 2024 period.
Current wording
Most significantly impacting non-interest expense in the comparative nine month periods were increases of $356,000 in salary expense due to annual salary increases and overtime pay from the core conversion in the first quarter of 2024, as well as increases of $124,000 in equipment expense, primarily due to an increase in office depreciation, and $196,000 in professional fees, primarily due to an increase in audit and consulting expenses. These increases were partially offset by decreases of $180,000 in employee benefits expense, due to a decline in medical claims expense, and $227,000 in merger and acquisition expense due to the expense incurred in connection with the Path Valley branch acquisition in the 2023 period.
Previous wording
As a percentage of average assets, annualized non-interest expense was 2.38% during the six months ended June 30, 2024 compared to 2.46% during the six months ended June 30, 2023.
Current wording
As a percentage of average assets, annualized non-interest expense was 2.38% during the nine months ended September 30, 2024 compared to 2.39% during the nine months ended September 30, 2023.
Previous wording
An income tax provision of $497,000 was recorded during the six months ended June 30, 2024 compared to an income tax provision of $398,000 recorded during the six months ended June 30, 2023. Juniata qualifies for a federal tax credit for investments in low-income housing partnerships. The tax credit decreased from $202,000 in the six months ended June 30, 2023 to $165,000 in the six months ended June 30, 2024 due to the completion of the amortization period for one of Juniata’s low-income housing partnership investments in January 2023.
Current wording
An income tax provision of $767,000 was recorded during the nine months ended September 30, 2024 compared to an income tax provision of $708,000 recorded during the nine months ended September 30, 2023. Juniata qualifies for a federal tax credit for investments in low-income housing partnerships. The tax credit decreased from $284,000 in the nine months ended September 30, 2023 to $247,000 in the nine months ended September 30, 2024 due to the completion of the amortization period for one of Juniata’s low-income housing partnership investments in January 2023.
Previous wording
The tax credit lowered the effective tax rate from 18.4% to 13.8% during the six months ended June 30, 2024 compared to the same period in 2023, when the tax credit lowered the effective tax rate from 17.0% to 11.3%.
Current wording
The tax credit lowered the effective tax rate from 18.4% to 13.9% during the nine months ended September 30, 2024 compared to the same period in 2023, when the tax credit lowered the effective tax rate from 17.6% to 12.6%.
Previous wording
The Company is a member of the Federal Home Loan Bank of Pittsburgh for the purpose of providing short-term liquidity to supplement other sources of liability liquidity. During the six months ended June 30, 2024, overnight borrowings from the FHLB averaged $9.3 million. As of June 30, 2024, the Company had $23.0 million in short-term borrowings and $5.0 million in long-term debt with the Federal Home Loan Bank, with a remaining unused borrowing capacity of $219.0 million with the FHLB. These credit facilities are secured by qualifying loans and investment securities held in safekeeping at the FHLB.
Current wording
The Company is a member of the Federal Home Loan Bank of Pittsburgh for the purpose of providing short-term liquidity to supplement other sources of liability liquidity. During the nine months ended September 30, 2024, overnight borrowings from the FHLB averaged $12.7 million. As of September 30, 2024, the Company had $6.1 million in short-term borrowings and $5.0 million in long-term debt with the Federal Home Loan Bank, with a remaining unused borrowing capacity of $242.5 million with the FHLB. These credit facilities are secured by qualifying loans and investment securities held in safekeeping at the FHLB.
Previous wording
As of June 30, 2024, the Company had $24.0 million in short-term borrowings with the Federal Reserve’s Bank Term Funding Program (“BTFP”) that matures in December 2024 with remaining unused borrowing capacity at the Federal Reserve of $16.7 million. The Company opted to utilize this additional contingent liquidity source in order to take advantage of the program’s advantageous borrowing rate.
Current wording
As of September 30, 2024, the Company had $24.0 million in short-term borrowings with the Federal Reserve’s Bank Term Funding Program (“BTFP”) that matures in December 2024 with remaining unused borrowing capacity at the Federal Reserve of $17.3 million. The Company opted to utilize this additional contingent liquidity source in order to take advantage of the program’s advantageous borrowing rate.
Previous wording
Funding derived from securities sold under agreements to repurchase (accounted for as collateralized financing transactions) is available through corporate cash management accounts for business customers. This product provides the Company with the ability to pay interest on corporate checking accounts.
Current wording
At September 30, 2024, the Company had $15.6 million in funding derived from securities sold under agreements to repurchase (accounted for as collateralized financing transactions). This product is available through corporate cash management accounts for business customers and provides the Company with the ability to pay interest on corporate checking accounts.
Previous wording
At June 30, 2024, uninsured deposits represented 20.3% of the Company’s total deposits. This amount excludes deposits of state and political subdivisions because the Company pledges debt securities for deposits in excess of the $250,000 FDIC insurance limit in the case of those deposits.
Current wording
At September 30, 2024, uninsured deposits represented 20.5% of the Company’s total deposits. This amount excludes deposits of state and political subdivisions because the Company pledges debt securities for deposits in excess of the $250,000 FDIC insurance limit in the case of those deposits.
Previous wording
In view of the sources previously mentioned and the steps taken by the Company through the six months ended June 30, 2024, management believes the Company’s liquidity can provide the funds needed to meet operational cash needs.
Current wording
In view of the sources previously mentioned and the steps taken by the Company through the nine months ended September 30, 2024, management believes the Company’s liquidity can provide the funds needed to meet operational cash needs.
Previous wording
The Company’s consolidated 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 loans approved but not yet funded, unused lines of credit and outstanding letters of credit. Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third-party. Generally, financial and performance letters of credit have expiration dates within one year of issuance, while commercial letters of credit have longer term commitments. The credit risk involved in issuing letters of credit is essentially the same as the risks that are involved in extending loan facilities to customers. The Company generally holds collateral and/or personal guarantees supporting these commitments.
Current wording
The Company’s consolidated 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 loans approved but not yet funded, unused lines of credit and outstanding letters of credit. Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third-party. Generally, financial and performance letters of credit have expiration dates within one year of issuance, while commercial letters of credit have longer term commitments. The credit risk involved in issuing letters of credit is essentially the same
Previous wording
As of June 30, 2024, the Company had $133.0 million outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $137.4 million at December 31, 2023. As of June 30, 2024 and December 31, 2023, the Company had $3.8 million and $3.6 million, respectively, of financial and performance letters of credit commitments outstanding. Commercial letters of credit as of June 30, 2024 and December 31, 2023 totaled $9.5 million and $9.3 million, respectively.
Current wording
As of September 30, 2024, the Company had $140.4 million outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $137.4 million at December 31, 2023. As of September 30, 2024 and December 31, 2023, the Company had $4.0 million and $3.6 million, respectively, of financial and performance letters of credit commitments outstanding. Commercial letters of credit as of September 30, 2024 and December 31, 2023 totaled $12.9 million and $9.3 million, respectively.
Previous wording
Additionally, the Company has sold qualifying residential mortgage loans to the FHLB as part of its Mortgage Partnership Finance Program (“Program”). Under the terms of the Program, there is limited recourse back to the Company for loans that do not perform in accordance with the terms of the loan agreement. Each loan sold under the Program is “credit enhanced” such that the individual loan’s rating is raised to “BBB”, as determined by the FHLB. The Program can be terminated by either the FHLB or the Company, without cause. The FHLB has no obligation to commit to purchase any mortgage through, or from, the Company.
Current wording
Additionally, the Company has sold qualifying residential mortgage loans to the FHLB as part of its Mortgage Partnership Finance Program (“Program”). Under the terms of the Program, there was limited recourse back to the Company for loans that do not perform in accordance with the terms of the loan agreement. Each loan sold under the Program is “credit enhanced” such that the individual loan’s rating was raised to “BBB”, as determined by the FHLB. The Program can be terminated by either the FHLB or the Company, without cause. The FHLB has no obligation to commit to purchase any mortgage through, or from, the Company.
Previous wording
The Company’s principal source of funds for dividend payments is dividends received from the Bank. Certain regulatory restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends, loans or advances. At June 30, 2024, $42.4 million in undistributed earnings of the Bank, included in the consolidated stockholders’ equity, was available for distribution to the Company as dividends without prior regulatory approval, subject to regulatory capital requirements.
Current wording
The Company’s principal source of funds for dividend payments is dividends received from the Bank. Certain regulatory restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends, loans or advances. At September 30, 2024, $45.6 million in undistributed earnings of the Bank, included in the consolidated
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
The yield on earning assets increased 39 basis points, to 4.41%, due to a 47 basis point increase in the yield on average loans in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, while the cost to fund interest earning assets with interest bearing liabilities increased 51 basis points, to 2.38%.
Current report — wording carried from elsewhere
The yield on earning assets increased 42 basis points, to 4.33%, due to a 51 basis point increase in the yield on average loans in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, while the cost to fund interest earning assets with interest bearing liabilities increased 68 basis points, to 2.31%.
Current report — wording carried from elsewhere
as the risks that are involved in extending loan facilities to customers. The Company generally holds collateral and/or personal guarantees supporting these commitments.
Current report — wording carried from elsewhere
stockholders’ equity, was available for distribution to the Company as dividends without prior regulatory approval, subject to regulatory capital requirements.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
monitoring procedures, the Company utilizes an outside party to conduct an independent loan review of commercial loan and commercial real estate loan relationships. Management utilizes the results of this outside loan review to assess the effectiveness of its internal loan grading system as well as to assist in the assessment of the overall adequacy of the ACL associated with these types of loans.