ANNUAL
REPORT
20
24
The Tide is Turning
While it is true that the banking industry has been suffering an interest rate “perfect storm”,
it is also true that carefully managed community banks remain a relatively safe harbor and a
guiding light through turbulent times. Earnings have been undeniably impacted by increases
in short term deposit rates and an inverted yield curve – but we believe that the tide is turning.
That turning of the tide may be ever so slight, but we see it on the horizon.
The chart below illustrates the section of the yield curve that most immediately impacts our
net interest margin – it illustrates the disparity between our short term funding costs and our
yield on most loan assets. The negative slant between the overnight funding rate and the 5-
year Treasury rate at year end 2022 represented 26 basis points, a disparity which expanded
to 141 basis points by year end 2023.
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
Fed Funds Target
Rate
91 Day T-Bill (3
Mo. Rate)
2 Yr
5 Yr
10 Yr
Hundreds
Treasury Par Yield Curve Rates
12/30/2022
12/31/2023
12/31/2024
In simple terms, banks were forced to pay more for short term funding than long term
funding, and most depositors prefer short term commitments. In this environment, most
borrowers prefer long term fixed rates. The negative yield curve presented challenges in
pricing new loans at rates that provided a rational spread over funding costs, and this
problem was exacerbated by all fixed rate loans generated during the prior low-rate decade.
Despite the rough waters, we continued to deliver great service to our customers and healthy
earnings and dividends to our shareholders, and we laid the groundwork for expansion and
growth.
In March, we successfully completed a bank-wide core system conversion. The new system
introduced operating and workflow efficiencies and is designed to support growth and to
more seamlessly integrate the Fintech solutions our customers value and deserve. And, in
June, we relocated our Centre Region Loan Production office to provide easier access and to
accommodate expanded staffing and services.
Given that monetary and fiscal policies promise to be enigmatic in the coming years, we are
pleased that the critical metrics of our performance remain sound and strong. Credit quality
remained strong in 2024 as our delinquency, nonaccrual loan and charge-off rates were well
below the national averages. JVB remains well capitalized and well positioned for growth in
2025. Despite the funding rate pressures, we have maintained a solid deposit base which
supports our steady and measured growth.
We are positioned to benefit from the assistance a positive yield curve would provide. Note
the December 31, 2024 curve above, which shows the return of a “normal” rate scenario; as
a result, we anticipate modest, but real, improvement in our net interest margin throughout
the coming year.
With the core conversion behind us, 2025 will be a year of aggressive sales initiatives. We
anticipate branch expansion coupled with loan growth and deposit gathering to meet the
needs of customers within and beyond our branch footprint.
Yet, focused underwriting and credit oversight will remain intense, as we attempt to
understand the potential impact of swift and sweeping policy changes on the political front.
We are ready to face the challenges the coming year will bring, leveraging opportunities and
managing risk.
Marcie A. Barber, President and CEO
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended December 31, 2024
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission File No. 0-13232
Juniata Valley Financial Corp.
(Exact name of registrant as specified in its charter)
Pennsylvania
23-2235254
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
Bridge and Main Streets, PO Box 66
Mifflintown, PA
17059-0066
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (855) 582-5101
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
N/A
N/A
N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1.00
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes No
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 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.
Yes No
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definition
of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.]
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive‐based compensation received by any of the registrant’s executive officers
during the relevant recovery period pursuant to §240.10D‐1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)
Yes ☐ No
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and
asked price of such common equity, as of the last business day of the registrants most recently completed second fiscal quarter was $55,956,664. (1)
There were 5,016,727 shares of the registrant’s common stock outstanding as of March 26, 2025.
(1)
The aggregate dollar amount of the voting stock set forth equals the number of shares of the Company’s Common Stock outstanding, reduced by the amount of Common Stock held by
officers, directors, shareholders owning in excess of 10% of the Company’s Common Stock and the Company’s employee benefit plans multiplied by the last reported sale price for the
Company’s Common Stock on June 30, 2024, the last business day of the registrants most recently completed second fiscal quarter. The information provided shall not be construed as an
admission that any officer, director or 10% shareholder of the Company, or any employee benefit plan, may be deemed an affiliate of the Company or that such person or entity is the
beneficial owner of the shares reported as being held by such person or entity, and any such inference is hereby disclaimed.
DOCUMENTS INCORPORATED BY REFERENCE
(Specific sections incorporated are identified under applicable items herein)
Certain portions of the Company’s Proxy Statement to be filed in connection with its 2025 Annual Meeting of Shareholders are incorporated by reference in Part III of this Report; provided;
however, that any information in such Proxy Statement that is not required to be included in this Annual Report on Form 10-K shall not be deemed to be incorporated herein or filed for the purposes
of the Securities Act of 1933 or the Securities Exchange Act of 1934.
Other documents incorporated by reference are listed in the Exhibit Index.
2
TABLE OF CONTENTS
PAGE
PART I
3
ITEM 1.
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
ITEM 1A. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
ITEM 1B. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
ITEM 1C. CYBERSECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
ITEM 2.
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
ITEM 3.
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
ITEM 4.
MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
PART II
23
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . . .
23
ITEM 6.
RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . . . . .
50
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . . . . .
51
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
107
ITEM 9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
107
ITEM 9B. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108
PART III
109
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . . . . . . . . . .
109
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109
PART IV
110
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112
3
PART I
ITEM 1. BUSINESS
Overview
Juniata Valley Financial Corp. (the “Company” or “Juniata”) is a Pennsylvania corporation formed in 1983 as a result of
a plan of merger and reorganization of The Juniata Valley Bank (the “Bank”). The plan received regulatory approval on
June 7, 1983 and Juniata, a one-bank holding company, registered under the Bank Holding Company Act of 1956 as a
bank holding company. The Bank is the oldest independent commercial bank in Juniata and Mifflin Counties and was
organized as a state bank charter in 1867. The Company has one reportable segment, consisting of the Bank, as described
in Note 2 of The Notes to Consolidated Financial Statements.
Nature of Operations
Juniata operates primarily in central and northern Pennsylvania with the purpose of delivering financial services within its
local markets. The Company provides retail and commercial banking and other financial services through 14 branch
locations located in Juniata, Mifflin, Perry, McKean, Potter and Franklin Counties. Additionally, in Mifflin, Juniata and
Centre Counties, the Company maintains four offices for loan production, trust services and wealth management sales.
The Company offers a full range of consumer and commercial banking services. Consumer banking services include online
account opening; online banking; mobile banking; telephone banking; automated teller machines; personal checking
accounts; checking overdraft privileges; money market deposit accounts; savings accounts; debit cards; certificates of
deposit; individual retirement accounts; secured lines of credit; construction and mortgage loans; and safe deposit boxes.
Commercial banking services include low and high-volume business checking accounts; online account management
services; remote deposit capability; ACH origination; payroll direct deposit; commercial lines of credit; commercial letters
of credit; mobile deposit for business customers; and commercial term and demand loans.
The Bank also provides comprehensive trust, asset management and estate services, and the Company has a contractual
arrangement with a broker-dealer to offer a full range of financial services to the Bank’s customers, including annuities,
mutual funds, stock and bond brokerage services and long-term care insurance. Management believes the Bank has a
relatively stable deposit base with no major seasonal depositor or group of depositors. Most of the Company’s commercial
customers are small and mid-sized businesses in central and northern Pennsylvania.
Juniata’s loan underwriting policies are updated periodically and are presented for approval to the Board of Directors of
the Bank. The purpose of the policies is to grant loans on a sound and collectible basis, to invest available funds in a safe,
profitable manner, to serve the credit needs of the communities in Juniata’s primary market area and to ensure that all loan
applicants receive fair and equal treatment in the lending process. It is the intent of the underwriting policies to seek to
minimize credit losses by requiring careful investigation of the credit history of each applicant, verifying the source of
repayment and the ability of the applicant to repay, securing those loans for which collateral is deemed to be required,
exercising care in the documentation of the application, review, approval and origination process and administering a
comprehensive loan collection program.
The major types of investments held by Juniata consist of obligations and securities issued by U.S. government agencies
or corporations, obligations of state and local political subdivisions, government sponsored entity mortgage-backed
securities, subordinated debt and common stock. Juniata’s investment policy directs that investments be managed in a way
that provides necessary funding for the Company’s liquidity needs and adequate collateral to pledge for public funds held,
and as directed by the Asset Liability Committee, manages interest rate risk. The investment policy specifies the types of
investments permitted to be owned, addresses credit quality of investments and includes limitations by investment types
and issuer.
4
The Company’s primary source of funds is deposits, consisting of transaction type accounts, such as demand deposits and
savings accounts, and time deposits, such as certificates of deposit. Most deposits are held by customers residing or located
in Juniata’s market area. No material portion of the deposits has been obtained from a single or small group of customers,
and the Company believes that the loss of any customer’s deposits or a small group of customers’ deposits would not have
a material adverse effect on the Company.
Other sources of funds used by the Company may include brokered deposits, retail repurchase agreements, borrowings
from the Federal Home Loan Bank of Pittsburgh and the Federal Reserve Bank of Philadelphia, and lines of credit
established with correspondent banks for overnight funding.
Competition
The Bank’s service area is characterized by a high level of competition for banking and financial services among
commercial banks, varying in size from local community banks to regional and national banks, credit unions, savings and
loan associations and non-bank financial institutions, including fintech-based loan and deposit providers, insurance
companies, investment counseling firms, and mutual funds and other business firms and individuals in corporate and trust
investment management services located inside and outside the Bank’s market area. The Bank actively competes with
such banks and institutions for local consumer and commercial deposit accounts, loans and other types of financial
services. Many competitors have substantially greater financial resources and larger branch systems than those of the Bank.
In commercial transactions, the Company believes that the Bank’s legal lending limit to a single borrower (approximately
$11.4 million as of December 31, 2024) enables it to compete effectively for the business of small and mid-sized
businesses. However, the Bank’s legal lending limit is considerably lower than that of various competing institutions and
thus, may act as a constraint on the Bank’s effectiveness in competing for larger financings.
In consumer transactions, the Bank believes it can compete on a substantially equal basis with larger financial institutions
because it offers competitive interest rates on deposit products and on loans.
In competing with other banks and financial institutions, the Bank seeks to provide personalized services through
management’s knowledge and awareness of its service areas, customers and borrowers. In management’s opinion, larger
institutions often do not provide comparable attention to the retail depositors and the relatively small commercial
borrowers that comprise the Bank’s primary customer base.
Supervision and Regulation
General
The Company operates in a highly regulated industry and, thus, may be affected by changes in state and federal regulations
and legislation. As a registered bank holding company under the Bank Holding Company Act of 1956, as amended (the
“Bank Holding Company Act”), the Company is subject to supervision and examination by the Board of Governors of the
Federal Reserve System (“FRB”) and is required to file periodic reports and information regarding its business operations
and those of the Bank with the FRB. In addition, under the Pennsylvania Banking Code of 1965, the Pennsylvania
Department of Banking and Securities has the authority to examine the books, records and affairs of the Company and to
require any documentation deemed necessary to ensure compliance with the Pennsylvania Banking Code.
The Bank Holding Company Act requires the Company to obtain FRB approval before: acquiring more than a five percent
ownership interest in any class of the voting securities of any bank; acquiring all or substantially all the assets of a bank;
or merging or consolidating with another bank holding company. In addition, the Bank Holding Company Act prohibits a
bank holding company from acquiring the assets, or more than five percent of the voting securities, of a bank located in
another state, unless such acquisition is specifically authorized by the statutes of the state in which the bank is located.
5
The Company is generally prohibited under the Bank Holding Company Act from engaging in, or acquiring, direct or
indirect ownership or control of more than five percent of the voting shares of any company engaged in, nonbanking
activities unless the FRB, by order or regulation, has found such activities to be so closely related to banking or managing
or controlling banks as to be a proper incident thereto. In making such determination, the FRB considers whether the
performance of these activities by a bank holding company can reasonably be expected to produce benefits to the public
that outweigh the possible adverse effects.
A satisfactory safety and soundness rating, particularly regarding capital adequacy, and a satisfactory Community
Reinvestment Act rating are generally prerequisites to obtaining federal regulatory approval to make acquisitions and open
branch offices. As of December 31, 2024, the Bank was rated “satisfactory” under the Community Reinvestment Act and
was a “well-capitalized” bank. An institution’s Community Reinvestment Act rating is considered in determining whether
to grant approvals relating to charters, branches and other deposit facilities, relocations, mergers, consolidations and
acquisitions. Less than satisfactory performance may be the basis for denying an application.
There are various legal restrictions on the extent to which the Company and its non-bank subsidiaries can borrow or
otherwise obtain credit from the Bank. In general, these restrictions require that any such extensions of credit must be
secured by designated amounts of specified collateral and are limited, as to any one of the Company or such non-bank
subsidiaries, to ten percent of the lending bank’s capital stock and surplus and, as to the Company and all such non-bank
subsidiaries in the aggregate, to 20 percent of the Bank’s capital stock and surplus. Further, the Company and the Bank
are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit, lease or sale of
property or furnishing of services.
As a bank chartered under the laws of Pennsylvania, the Bank is subject to the regulations and supervision of the Federal
Deposit Insurance Corporation (“FDIC”) and the Pennsylvania Department of Banking and Securities. These government
agencies conduct regular safety and soundness and compliance reviews that have resulted in satisfactory evaluations to
date. Some of the aspects of the lending and deposit business of the Bank that are regulated by these agencies include
personal lending, mortgage lending and reserve requirements.
The operations of the Bank are also subject to numerous federal, state and local laws and regulations which set forth
specific restrictions and procedural requirements with respect to interest rates on loans, the extension of credit, credit
practices, the disclosure of credit terms and discrimination in credit transactions. The Bank also is subject to certain
limitations on the amount of cash dividends that it can pay to the Company. See Note 14 of The Notes to Consolidated
Financial Statements for further information.
Under FRB policy, the Company is expected to act as a source of financial strength to the Bank, and to commit resources
to support the Bank in circumstances where it might not be in a financial position to support itself. Consistent with the
“source of strength” policy for subsidiary banks, the FRB has stated that, as a matter of prudent banking, a bank holding
company generally should not maintain a rate of cash dividends unless its net income available to common stockholders
has been sufficient to fully fund the dividends and the prospective rate of earnings retention appears to be consistent with
the Company’s capital needs, asset quality and overall financial condition.
As a public company, the Company is subject to the Securities and Exchange Commission’s (“SEC”) rules and regulations
relating to periodic reporting, proxy solicitation and insider trading.
On March 12, 2020, the SEC adopted amendments to the “accelerated filer” and “large accelerated filer” definitions
pursuant to Rule 12b-2 under the Securities Exchange Act of 1934 to resolve an overlap that existed between the definitions
related to accelerated filers and “smaller reporting companies,” with the focus to reduce disclosure and reporting
obligations for lower-revenue smaller reporting companies. The final amendments were effective on, and apply to an
annual report filing due on or after, April 27, 2020. The most notable impact of these amendments was that a smaller
reporting company with less than $100 million in revenue that previously met the definition of an accelerated filer or large
accelerated filer is not required to obtain an attestation of their internal control over financial reporting as required under
Section 404(b) of the Sarbanes-Oxley Act and is not required to comply with the shorter SEC filing deadlines that apply
to accelerated filers. Juniata qualifies as a smaller reporting company and is not required to obtain such an attestation or
comply with the shorter SEC filing deadlines that apply to accelerated filers.
6
FDIC Insurance
The FDIC is an independent federal agency that insures the deposits, up to prescribed statutory limits, of federally insured
banks and savings institutions and safeguards the safety and soundness of the banking and savings industries. The FDIC
administers the Deposit Insurance Fund (“DIF”). The Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 (“Dodd-Frank Act”) set the standard maximum deposit insurance coverage amount at $250,000. The FDIC deposit
insurance coverage limit applies per depositor, per insured depository institution for each account ownership category.
The FDIC has been given greater latitude in setting the assessment rates for insured depository institutions which could be
used to impose minimum assessments. The FDIC adopted a final rule, applicable to all insured depository institutions, to
increase initial base deposit insurance assessment rate schedules uniformly by 2 basis points, beginning in the first
quarterly assessment period of 2023. FDIC assessment rates currently range from 2.5 – 32 basis points for small
institutions, such as Juniata, with assets under $10.0 billion. Initial base assessment rates range between 5 and 32 basis
points (5 – 18 basis points for a CAMELS composite rating of 1 or 2). The initial base rates for a CAMELS composite
rating of 3 is 8 – 32 basis points and 18 – 32 basis points for CAMELS composite ratings of 4 and 5. The unsecured debt
adjustment for all CAMELS composite ratings for small institutions is from -5 – 0 basis points but cannot exceed the lesser
of 5 basis points, or 50%, of an insured depository institutions’ initial base assessment rate.
Pursuant to the Dodd-Frank Act the FDIC: (1) defined the assessment base used to calculate deposit insurance assessments
as “average consolidated total assets minus average tangible equity”; (2) set the DIF’s minimum reserve ratio to
1.35 percent with no upper limit on the reserve ratio; (3) established adjustments to the assessment rates; and
(4) established a new deposit insurance assessment rate schedule. Though deposit insurance assessments maintain a risk-
based approach, the FDIC imposes a more extensive risk-based assessment system on large insured depository institutions
with at least $10 billion in total assets since they are more complex in nature and could pose greater risk.
Under the Dodd-Frank Act, the FDIC may terminate the insurance of an institution’s deposits upon finding that the
institution has engaged in unsafe and unsound practices, is in an unsafe and unsound condition to continue operations or
has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. The Company does not know
of any practice, condition or violation that might lead to termination of the Bank’s deposit insurance.
Community Reinvestment Act
Under the Community Reinvestment Act, the Bank has a continuing and affirmative obligation, consistent with its safe
and sound operation, to help meet the credit needs of its entire community, including low and moderate-income
neighborhoods. However, the Community Reinvestment Act does not establish specific lending requirements or programs
for financial institutions, nor does it limit an institution’s discretion to develop the types of products and services that it
believes are best suited to its community. The Community Reinvestment Act also requires:
•
the applicable regulatory agency to assess an institution’s record of meeting the credit needs of its community;
•
public disclosure of an institution’s CRA rating; and
•
that the applicable regulatory agency provides a written evaluation of an institution’s CRA performance
utilizing a four-tiered descriptive rating system.
Capital Regulation
The Bank is subject to risk-based capital standards by which banks are evaluated in terms of capital adequacy. These
regulatory capital requirements are administered by the federal banking agencies. Failure to meet minimum capital
requirements can result in certain mandatory and possibly additional discretionary actions by regulators that could have a
direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures
of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.
The Bank’s capital and classification are also subject to qualitative judgments by the regulators. Management believes
that, as of December 31, 2024, the Bank meets all capital adequacy requirements to which it is subject.
7
Prompt corrective action regulations provide five classifications of a financial institution’s capital adequacy: well-
capitalized; adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized,
although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is
required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion,
and capital restoration plans are required. At year-end 2024 and 2023, the Bank was well-capitalized under the regulatory
framework for prompt corrective action. There are no conditions or events since that notification that management believes
have changed the Bank’s capital category.
The United States is a member of the Basel Committee on Banking Supervision (the “Basel Committee”) that provides a
forum for regular international cooperation on banking supervisory matters. The Basel Committee develops guidelines
and supervisory standards and is best known for its international standards on capital adequacy. In December 2010, the
Basel Committee released its final framework for strengthening international capital and liquidity regulation, officially
identified by the Basel Committee as “Basel III”, which set capital standards with which the Bank is required to comply.
The Bank is subject to risk-based and leverage capital standards. The risk-based capital standards relate a banking
organization’s capital to the risk profile of its assets and require the banking organization to maintain Tier 1 capital of at
least 4% of total risk-adjusted assets, and total capital, including Tier 1 capital, equal to at least 8% of total risk-adjusted
assets. Tier 1 capital includes common stockholders’ equity and qualifying perpetual preferred stock, together with related
surpluses and retained earnings. The remaining category of regulatory capital, known as Tier 2 capital, may be comprised
of limited life preferred stock, qualifying subordinated debt instruments and the reserves for possible credit losses.
Additionally, banking organizations must maintain a minimum leverage ratio of 3%, measured as the ratio of Tier 1 capital
to adjusted average assets. This 3% leverage ratio is a minimum for the most highly rated banking organizations without
any supervisory, financial or operational weaknesses or deficiencies. Other banking organizations are expected to maintain
leverage capital ratios that are 100 to 200 basis points above such minimum, depending upon their financial condition.
Under the Federal Deposit Insurance Corporation Improvement Act of 1991 (the "1991 Act"), a bank holding company is
required to guarantee that any "undercapitalized" (as such term is defined in the statute) insured depository institution
subsidiary will comply with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal
banking agency up to the lesser of (i) an amount equal to 5% of the institution’s total assets at the time the institution
became undercapitalized, or (ii) the amount which is necessary (or would have been necessary) to bring the institution into
compliance with all capital standards as of the time the institution failed to comply with such capital restoration plan.
Federal banking agencies have broad powers to take corrective action to resolve problems of insured depository
institutions. The extent of these powers depends upon whether the institutions in question are “well-capitalized,”
“adequately capitalized,” “undercapitalized”, “significantly undercapitalized” or “critically undercapitalized.” As of
December 31, 2024, the Bank was a “well-capitalized” bank, as defined by the FDIC.
The FDIC has issued a rule that sets the capital level for each of the five capital categories by which banks are evaluated.
A bank is deemed to be “well-capitalized” if the bank has a total risk-based capital ratio of 10% or greater, has a Tier 1
risk-based capital ratio of 6% or greater, has a leverage ratio of 5% or greater, and is not subject to any order or final
capital directive by the FDIC to meet and maintain a specific capital level for any capital measure. A bank may be deemed
to be in a capitalization category that is lower than is indicated by its actual capital position if it received an unsatisfactory
safety and soundness examination rating.
All the bank regulatory agencies have rules requiring them to consider in their evaluation of a bank’s capital adequacy the
exposure of a bank’s capital and economic value to changes in interest rates. These rules do not establish an explicit
supervisory threshold. The agencies intend, at a subsequent date, to incorporate explicit minimum requirements for interest
rate risk into their risk-based capital standards and have proposed a supervisory model to be used together with bank
internal models to gather data and propose, at a later date, explicit minimum requirements.
The Basel III rules, among other things, narrow the definition of regulatory capital. Basel III requires bank holding
companies and their bank subsidiaries to maintain substantially more capital, with a greater emphasis on common equity.
Specifically, Basel III requires financial institutions to maintain: (a) a minimum ratio of common equity tier 1 capital
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(CET1) to risk-weighted assets of at least 4.5%; (b) a minimum ratio of tier 1 capital to risk-weighted assets of at least
6.0%; (c) a minimum ratio of total (that is, tier 1 plus tier 2) capital to risk-weighted assets of at least 8.0%; and (d) a
minimum leverage ratio of 3.0%, calculated as the ratio of tier 1 capital balance sheet exposures plus certain off-balance
sheet exposures (computed as the average for each quarter of the month-end ratios for the quarter). In addition, the
rules also limit a banking organization’s capital distributions and certain discretionary bonus payments if the banking
organization does not hold a “capital conservation buffer” of 2.5% above each of the foregoing capital requirements stated
in (a) – (c) above. Basel III also provides for a “countercyclical capital buffer,” an additional capital requirement that
generally is imposed when national regulators determine that excess aggregate credit growth has become associated with
a buildup of systemic risk, to absorb losses during periods of economic stress. Banking institutions that maintain
insufficient capital to comply with the capital conservation buffer face constraints on dividends, equity repurchases and
compensation based on the amount of the shortfall.
Additionally, the Basel III framework requires banks and bank holding companies to measure their liquidity against
specific liquidity tests, including a liquidity coverage ratio (“LCR”) designed to ensure that the banking entity maintains
a level of unencumbered high-quality liquid assets greater than or equal to the entity’s expected net cash outflow for a
30-day time horizon under an acute liquidity stress scenario, and a net stable funding ratio (“NSFR”) designed to promote
more medium and long-term funding based on the liquidity characteristics of the assets and activities of banking entities
over a one-year time horizon. In September 2014, the federal regulatory agencies finalized rules implementing the LCR
for U.S. financial institutions that are “internationally active banking organizations” and those with more than $250 billion
in total consolidated assets. The FRB separately adopted a less stringent, modified LCR requirement for bank holding
companies that have more than $50 billion in total consolidated assets. Because of the Company’s size, neither the LCR
Rule nor any additional proposed rules under the Basel III liquidity framework are applicable to it.
Gramm-Leach-Bliley Act
On November 12, 1999, the Gramm-Leach-Bliley Act (“GLB”) became law. GLB permits commercial banks to affiliate
with investment banks. It also permits bank holding companies which elect financial holding company status to engage in
any type of financial activity, including securities, insurance, merchant banking/equity investment and other activities that
are financial in nature. The Company has not elected financial holding company status. The merchant banking provisions
of GLB allow a bank holding company to make a controlling investment in any kind of company, financial or commercial.
GLB allows a bank to engage in virtually every type of activity currently recognized as financial or incidental or
complementary to a financial activity. A commercial bank that wishes to engage in these activities is required to be well-
capitalized, well managed and to have a satisfactory or better Community Reinvestment Act rating. GLB also allows
subsidiaries of banks to engage in a broad range of financial activities that are not permitted for banks themselves. Although
the Company and the Bank have not commenced these types of activities to date, GLB enables them to evaluate new
financial activities that would complement the products already offered to enhance non-interest income.
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 implemented a broad range of corporate governance, accounting and reporting measures
for companies, like Juniata, which have securities registered under the Securities Exchange Act of 1934. Specifically, the
Sarbanes-Oxley Act and the various regulations promulgated under the Act, established, among other things:
(i) requirements for audit committees, including independence, expertise, and responsibilities; (ii) additional
responsibilities relating to financial statements for the Chief Executive Officer and Chief Financial Officer of reporting
companies; (iii) standards for auditors and regulation of audits, including independence provisions that restrict non-audit
services that accountants may provide to their audit clients; (iv) increased disclosure and reporting obligations for reporting
companies and their directors and executive officers, including accelerated reporting of stock transactions and a prohibition
on trading during pension blackout periods; and (v) a range of civil and criminal penalties for fraud and other violations
of the securities laws. In addition, Sarbanes-Oxley required stock exchanges to institute additional requirements relating
to corporate governance in their listing rules.
Section 404(b) of the Sarbanes-Oxley Act requires the Company to include in its Annual Report on Form 10-K a report
by management on the adequacy of the Company’s internal control over financial reporting. Management’s internal control
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report must, among other things, set forth management’s assessment of the effectiveness of the Company’s internal control
over financial reporting.
Due to the SEC’s recently adopted amendments to the “accelerated filer” and “large accelerated filer” definitions pursuant
to Rule 12b-2 under the Securities Exchange Act of 1934, smaller reporting companies, such as Juniata, with less than
$100 million in revenue that previously met the definition of an accelerated filer or large accelerated filer are not required
to obtain an attestation of their internal control over financial reporting as required under Section 404(b) of the Sarbanes-
Oxley Act; thus, no such attestation is included in this Annual Report on Form 10-K.
Financial Privacy
Federal banking regulators have adopted rules that limit the ability of banks and other financial institutions to disclose
non-public information about consumers to nonaffiliated third parties. These limitations require disclosure of privacy
policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information
to a nonaffiliated third party. The privacy provisions of the GLB Act affect the Company by limiting how consumer
information is transmitted and conveyed to outside vendors.
Anti-Money Laundering Initiatives and the USA Patriot Act
A major focus of governmental policy on financial institutions in recent years has been aimed at combating money
laundering and terrorist financing. U.S. federal laws and regulations, including the USA Patriot Act of 2001 (“USA Patriot
Act”), impose significant compliance and due diligence obligations, create criminal and financial liability for non-
compliance and expand the extra-territorial jurisdiction of the U.S. The United States Department of the Treasury has
issued several regulations that apply various requirements of the USA Patriot Act to financial institutions. These
regulations require financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and
report money laundering and terrorist financing and to verify the identity of their customers. Failure of a financial
institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply
with all the relevant laws or regulations, could have serious legal and reputational consequences for the institution.
On January 1, 2021, the National Defense Authorization Act ("NDAA") was signed into law, which enacted significant
changes to existing U.S. anti-money laundering (“AML”) laws. The NDAA includes: (i) significant changes to the
collection of beneficial ownership and the establishment of a beneficial ownership registry, which requires certain
corporate entities to report beneficial ownership information to the U.S. Department of the Treasury’s Financial Crimes
Enforcement Network (“FinCEN”); (ii) enhanced whistleblower provisions, which provide that one or more
whistleblowers who voluntarily provide original information leading to the successful enforcement of violations of the
Bank Secrecy Act or other AML-related laws under certain circumstances will receive a percentage of the monetary
sanctions collected and will receive increased protections; (iii) increased penalties for violations of the BSA;
(iv) improvements to existing information sharing provisions that permit financial institutions to share information relating
to suspicious activity for the purpose of combating illicit finance risks; and (v) expanded duties and powers of FinCEN.
Many of the new provisions, including those with respect to beneficial ownership, require the Department of Treasury and
FinCEN to promulgate rules.
Office of Foreign Assets Control Regulation
The U.S. has instituted economic sanctions which restrict transactions with designated foreign countries, nationals and
others. These are typically known as the “OFAC rules” because they are administered by the Office of Foreign Assets
Control of the U.S. Department of the Treasury (“OFAC”). The OFAC-administered sanctions target countries in various
ways. Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment
in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country,
and prohibitions on “U.S. persons” engaging in financial transactions which relate to investments in, or providing
investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or
specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to
U.S. jurisdiction (including property in the possession or control of U.S. persons). Blocked assets (e.g., property and bank
deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. Failure to
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comply with these sanctions could have serious legal and reputational consequences for the institution. As U.S. financial
institutions, the Company and the Bank are required to comply with the OFAC rules.
Consumer Protection Statutes and Regulations
The Company is subject to many federal consumer protection statutes and regulations, including the Truth in Lending Act,
the Truth in Savings Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Real Estate Settlement Procedures
Act and the Home Mortgage Disclosure Act. Among other things, these acts:
•
require banks to disclose credit terms in meaningful and consistent ways;
•
prohibit discrimination against an applicant in any consumer or business credit transaction;
•
prohibit discrimination in housing-related lending activities;
•
require banks to collect and report applicant and borrower data regarding loans for home purchases or
improvement projects;
•
require lenders to provide borrowers with information regarding the nature and cost of real estate settlements;
•
prohibit certain lending practices and limit escrow account amounts with respect to real estate transactions; and
•
prescribe possible penalties for violations of the requirements of consumer protection statutes and regulations.
The FRB’s Regulation E, which implements the Electronic Funds Transfer Act, limits the ability of a financial institution
to assess an overdraft fee for paying automated teller machine transactions and one-time debit card transactions that
overdraw a customer’s account, unless the customer affirmatively consents, or opts in, to the institution’s payment of
overdrafts for these transactions.
Dodd-Frank Act
Among other things, the Dodd-Frank Act created the Financial Oversight Council, with oversight authority for monitoring
and regulating systemic risk, and the Consumer Financial Protection Bureau (“CFPB”), which has broad regulatory and
enforcement powers over consumer financial products and services. The CFPB is responsible for administering and
enforcing numerous federal consumer financial laws enumerated in the Dodd-Frank Act. The Dodd Frank Act also
provided that, for banks with total assets of more than $10 billion, the CFPB would have exclusive or primary authority to
examine those banks for, and enforce compliance with, the federal consumer financial laws. Although not subject to
examination by the CFPB, the Company remains subject to the review and supervision of other applicable regulatory
authorities, and such authorities may enforce compliance with regulations issued by the CFPB.
The scope of the Dodd-Frank Act impacts many aspects of the financial services industry, and it requires the development
and adoption of numerous regulations, some of which have not yet been issued. The effects of the Dodd-Frank Act on the
financial services industry will depend, in large part, upon the extent to which regulators exercise the authority granted to
them under the Dodd-Frank Act and the approaches taken in implementing those regulations. Additional uncertainty
regarding the effects of the Dodd-Frank Act exists due to court decisions and the potential for additional legislative changes
to the Dodd-Frank Act.
The Dodd-Frank Act’s provisions that have received the most public attention have generally been those which apply only
to larger institutions with total consolidated assets of $50 billion or more. However, the Dodd-Frank Act contains numerous
other provisions that affect all bank holding companies, including the Company.
The following is a list of significant provisions of the Dodd-Frank Act, and, if applicable, the resulting regulations adopted,
that apply (or will apply) most directly to the Company and its subsidiary:
•
Federal deposit insurance - The FDIC’s deposit insurance assessment base is now based on average total assets,
minus average tangible equity;
•
Debit card interchange fees - The FRB adopted regulations setting maximum permissible interchange fees issuers
can receive or charge on electronic debit card transaction fees and network exclusivity arrangements;
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•
Interest on demand deposits - Depository institutions are permitted to pay interest on business transaction and
other accounts;
•
Stress testing - The FRB issued final rules regarding company-run stress testing. In accordance with these rules,
a company whose assets exceed $10 billion is required to conduct an annual stress test. The Economic Growth
Act raised the asset threshold for the stress testing requirement to apply to companies with assets above $100
billion. While the Company believes that both the quality and magnitude of its capital base are sufficient to
support its current operations given its risk profile, this requirement is not applicable to the Company because its
assets are under $100 billion;
•
Ability-to-pay rules and qualified mortgages - As required by the Dodd-Frank Act, the CFPB amended
Regulation Z, implementing the Truth in Lending Act, by requiring mortgage lenders to make a reasonable and
good faith determination, based on verified and documented information, that a consumer applying for a
residential mortgage loan has a reasonable ability to repay the loan according to its terms. These final rules
prohibit creditors, such as the Company, from extending residential mortgage loans without regard for the
consumer’s ability to repay and add restrictions and requirements to residential mortgage origination and
servicing practices.
In addition, these rules restrict the imposition of prepayment penalties and compensation practices relating to
residential mortgage loan origination. Mortgage lenders are required to determine consumers’ ability to repay in
one of two ways. The first alternative requires the mortgage lender to consider eight underwriting factors when
making the credit decision. Alternatively, the mortgage lender can originate "qualified mortgages," which are
entitled to a presumption that the creditor making the loan satisfied the ability-to-repay requirements. In general,
a "qualified mortgage" is a residential mortgage loan that does not have certain high-risk features, such as negative
amortization, interest-only payments, balloon payments or a term exceeding 30 years. In addition, to be a
qualified mortgage, the points and fees paid by a consumer cannot exceed 3% of the total loan amount, and the
borrower’s total debt-to-income ratio must be no higher than 43% (subject to certain limited exceptions for loans
eligible for purchase, guarantee or insurance by a government sponsored entity or a federal agency).
Compliance with these rules has increased Juniata’s overall regulatory compliance costs and required changes to
the underwriting practices of the Company with respect to mortgage loans.
•
Integrated disclosures under the Real Estate Settlement Procedures Act (“RESPA”) and the Truth in Lending
Act (“TILA”) – CFB rules require lenders to provide a new Loan Estimate, combining content from the former
“Good Faith Estimate” required under RESPA and the initial disclosures required under TILA, not later than the
third business day after submission of a loan application, and a new “Closing Disclosure”, combining content of
the former HUD-1 Settlement Statement required under RESPA and the final disclosures required under TILA,
at least three days prior to the loan closing.
•
Volcker Rule — As mandated by the Dodd-Frank Act, the OCC, FRB, FDIC, SEC and Commodity Futures
Trading Commission issued rules (the "Volker Rule") implementing certain prohibitions and restrictions on the
ability of a banking entity and non-bank financial company supervised by the FRB to engage in proprietary
trading and have certain ownership interests in, or relationships with, a "covered fund". Generally, any entity that
would be an investment company under the Investment Company Act of 1940 (the "1940 Act"), but for the
application of the exemptions from SEC registration set forth in Section 3(c)(1) (fewer than l00 beneficial
owners) or Section 3(c)(7) (qualified purchasers) of the 1940 Act, is treated as a covered fund. Also requires
regulated entities to establish an internal compliance program consistent with the extent to which it engages in
activities covered by the Volcker Rule, which must include making regular reports about those activities to
regulators. Although there is some tiering of compliance and reporting obligations based on size, the fundamental
prohibitions of the Volcker Rule apply to banking entities of any size, including the Company; and
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•
Incentive compensation — As required by the Dodd-Frank Act, a joint interagency proposed regulation was
issued in April 2011. The proposed rule would require the reporting of incentive-based compensation
arrangements by a covered financial institution and prohibit incentive-based compensation arrangements at a
covered financial institution that provides excessive compensation or that could expose the institution to
inappropriate risks that could lead to material financial loss. The proposed rule, if adopted as currently proposed,
could limit the way the Company structures incentive compensation for its executives.
National Monetary Policy
In addition to being affected by general economic conditions, the earnings and growth of the Bank and, therefore, the
earnings and growth of the Company, are affected by the policies of regulatory authorities, including the FRB and the
FDIC. An important function of the FRB is to regulate the money supply and credit conditions. Among the instruments
used to implement these objectives are open market operations in U.S. government securities, setting the discount rate and
changes in financial institution reserve requirements. These instruments are used in varying combinations to influence
overall growth and distribution of credit, bank loans, investments and deposits, and their use may also affect interest rates
charged on loans or paid on deposits.
The monetary policies and regulations of the FRB have had a significant effect on the operating results of commercial
banks in the past and are expected to continue to do so in the future. The effects of such policies upon the future businesses,
earnings and growth of the Company cannot be predicted with certainty.
Employees
As of December 31, 2024, the Company had a total of 115 full-time and 39 part-time employees.
Additional Information
The Company files annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC
filings are available on the SEC’s website (http://www.sec.gov).
The Company’s common stock is quoted under the symbol “JUVF” on the OTCQX Best Market, an electronic inter-dealer
quotation and trading system operated by OTC Markets Group.
The Company’s website is www.JVBonline.com. At that address, we make available, free of charge, the Company’s
Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and
amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act (see “Investor
Relations” section of website), as soon as reasonably practicable after we electronically file such material with the SEC.
In addition, we will provide, at no cost, paper or electronic copies of our reports and other filings made with the SEC
(except for exhibits). Requests should be directed to Michael W. Wolf, Chief Financial Officer, Juniata Valley Financial
Corp., P.O. Box 66, Mifflintown, PA 17059, (855) 582-5101.
The information on the websites listed above is not, and should not be deemed to be, part of this Annual Report on
Form 10-K and is not incorporated by reference in this document.
ITEM 1A. RISK FACTORS
An investment in the Company's common stock involves certain risks, including, among others, the risks described below.
In addition to the other information contained in this report, you should carefully consider the following risk factors in
analyzing whether to make or to continue an investment in the Company.
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RISKS RELATED TO INTEREST RATES AND LIQUIDITY
Fluctuations in market interest rates and relative balances of rate-sensitive assets to rate-sensitive liabilities can
negatively impact net interest margin and net interest income.
The operations of financial institutions such as the Company are dependent to a large degree on net interest income, which
is the difference between interest income from loans and investments and interest expense on deposits and borrowings.
An institution's net interest income is significantly affected by market rates of interest that, in turn, are affected by
prevailing economic conditions, by the fiscal and monetary policies of the federal government and the policies of various
regulatory agencies. The FRB regulates the national money supply to manage recessionary and inflationary pressures. In
doing so, the FRB may use techniques such as engaging in open market transactions of U.S. Government securities,
changing the discount rate and changing reserve requirements against bank deposits. The use of these techniques may also
affect interest rates charged on loans and paid on deposits. The interest rate environment, which includes both the level of
interest rates and the shape of the U.S. Treasury yield curve, has a significant impact on net interest income.
Net interest margin compression remained prevalent in 2024 despite the federal funds rate decreasing by 100 basis points
over the last four months of 2024. Many interest-earning assets, such as loans and investments, were originated, acquired
or repriced at higher rates, increasing the average rate earned on those assets, while the average rate paid on interest bearing
liabilities, such as deposits and borrowings, also increased, and at a faster pace, than the increase in rates on interest earning
assets, impacting the net interest margin in both 2023 and 2024.
Like all financial institutions, the Company's consolidated statement of financial condition is affected by fluctuations in
interest rates. Volatility in interest rates can also result in disintermediation, which is the flow of deposits away from
financial institutions into direct investments, such as U.S. Government and corporate securities and other investment
vehicles, including mutual funds, which, because of the absence of federal insurance premiums and reserve requirements,
generally pay higher rates of return than bank deposit products. See "Item 7: Management's Discussion of Financial
Condition and Results of Operations”.
See the section entitled “Interest Rate Risk” in Management’s Discussion and Analysis of Financial Condition, for more
information regarding the Company’s interest rate sensitivity.
Capital and liquidity strategies, including the impact of the capital and liquidity requirements implemented by the
Basel III standards, may require the Company to maintain higher levels of capital, which could restrict the amount
of capital that the Company has available to deploy for income generating and other activities.
In July 2013, the FRB approved the final rules implementing the Basel III capital standards (the “Basel III Rules”) which
substantially revised the risk-based capital requirements applicable to bank holding companies and depository
institutions. See previous Capital Regulation discussion.
As of December 31, 2024, the Company believes it meets all capital adequacy requirements to which it is
subject. However, the Basel III rules effectively require financial institutions to maintain higher capital levels than
previously required. As a result, Juniata may have to maintain capital in the form of assets that contribute less income to
Juniata and that are not available for deployment as loans or other interest-income generating assets, funding of capital
projects or other growth initiatives.
Competition, including competition on rates of deposit and for loan growth, may negatively impact the Company’s
net interest margin.
There is significant competition among banks in the market areas served by the Company. In addition, as a result of
deregulation of the financial industry, the Bank also competes with other providers of financial services, such as savings
and loan associations, credit unions, consumer finance companies, securities firms, insurance companies, the mutual funds
industry, fintech-based loan and deposit providers, full service brokerage firms and discount brokerage firms, some of
which are subject to less extensive regulations than the Company with respect to the products and services they provide.
14
Some of the Company’s competitors have greater resources than the Company and, as a result, may have higher lending
limits and may offer other products or services not offered by the Company.
Competition may adversely affect the rates the Company pays on deposits and charges on loans, thereby potentially
adversely affecting the Company’s profitability. Competition sometimes requires the Company to lower rates charged on
loans more than market rates would otherwise indicate. Competition may also require the Company to pay higher rates on
deposits than market rates would otherwise indicate. Thus, although loan demand has improved, intense competition
among lenders has continued to place downward pressure on loan yields, also narrowing the net interest margin.
Changes in interest rates or disruption in liquidity markets may adversely affect the Company’s sources of funding.
The Company must maintain enough sources of liquidity to meet the demands of its depositors and borrowers, support its
operations and meet regulatory expectations. The Company’s liquidity practices emphasize core deposits and repayments
and maturities of loans and investments as its primary sources of liquidity. These primary sources of liquidity can be
supplemented by Federal Home Loan Bank (“FHLB”) advances, borrowings from the Federal Reserve Bank, lines of
credit from correspondent banks and brokered deposits. Lower-cost, core deposits may be adversely affected by changes
in interest rates, and secondary sources of liquidity can be costlier to the Company than funding provided by deposit
account balances having similar maturities. In addition, adverse changes in the Company’s results of operations or financial
condition, regulatory actions involving the Company, or changes in regulatory, industry or market conditions could lead
to increases in the cost of these secondary sources of liquidity, the inability to refinance or replace these secondary funding
sources as they mature, or the withdrawal of unused borrowing capacity under these secondary funding sources.
While the Company attempts to manage its liquidity through various techniques, the assumptions and estimates used do
not always accurately forecast the impact of changes in customer behavior. For example, the Company may face limitations
on its ability to fund loan growth if customers move funds out of the Bank’s deposit accounts in response to increases in
interest rates. In the years following the 2008 financial crisis, even as the general level of market interest rates remained
low by historical standards, depositors frequently avoided higher-yielding and higher-risk alternative investments, in favor
of the safety and liquidity of non-maturing deposit accounts. These circumstances contributed to significant growth in non-
maturing deposit account balances at the Company, and at depository financial institutions generally. In a rising rate
environment, customers may become more sensitive to interest rates when making deposit decisions and considering
alternative opportunities. This increased sensitivity to interest rates could cause customers to move funds into higher-
yielding deposit accounts offered by the Company’s bank subsidiary, require the Company’s bank subsidiary to offer
higher interest rates on deposit accounts to retain customer deposits or cause customers to move funds into alternative
investments or deposits of other banks or non-bank providers. Technology and other factors have also made it more
convenient for customers to transfer low-cost deposits into higher-cost deposits or into alternative investments or deposits
of other banks or non-bank providers. Such movement of customer deposits could increase the Company’s funding costs,
reduce its net interest margin and/or create liquidity challenges.
Market conditions have been negatively impacted by disruptions in the liquidity markets in the past, and such disruptions
or an adverse change in the Company's results of operations or financial condition could, in the future, have a negative
impact on secondary sources of liquidity. If the Company is not able to continue to rely primarily on customer deposits to
meet its liquidity and funding needs, continue to access secondary, non-deposit funding sources on favorable terms or
otherwise fails to manage its liquidity effectively, the Company’s ability to continue to grow may be constrained, and the
Company’s liquidity, operating margins, results of operations and financial condition may be materially adversely affected.
Regulators emphasize liquidity planning at both the Bank and Company levels.
Due to regulatory limitations on the Corporation’s ability to rely on short-term borrowings, any significant movements of
deposits away from traditional depository accounts which negatively impacts the Corporation’s loan-to-deposit ratio could
restrict its ability to achieve growth in loans or require the Corporation to pay higher interest rates on deposit products to
retain deposits to fund loans.
Liquidity must also be managed at the holding company level. Banking regulators scrutinize liquidity at the holding
company level, in addition to consolidated and bank liquidity levels. For safety and soundness reasons, banking regulations
15
limit the amount of cash that can be transferred from subsidiary banks to the parent company in the form of loans and
dividends. Generally, these limitations are based on a subsidiary bank’s regulatory capital levels and net income. These
factors have affected some institutions' ability to pay dividends and have required some institutions to establish borrowing
facilities at the holding company level.
Unrealized losses in the Bank’s investment portfolio could affect liquidity.
If market interest rates increase, unrealized losses on the Bank’s available for sale debt securities portfolio can increase.
The increase in unrealized losses is reflected in Accumulated Other Comprehensive Income (“AOCI”) on the balance
sheet, which reduces GAAP total stockholders’ equity capital and, therefore, the tangible common equity ratio. Unrealized
losses do not affect regulatory capital ratios.
The Bank’s access to liquidity sources could be affected by unrealized losses if investments must be sold at a loss, tangible
capital ratios decline from an increase in unrealized losses or realized credit losses, the FHLB or other sources reduce
borrowing capacity or bank regulators impose restrictions on the Bank such as a limit on interest rates it may pay on
deposits or its ability to access brokered deposits.
COMPLIANCE AND REGULATORY RISKS
The increasing time and expense associated with regulatory compliance and risk management could negatively
impact our results of operations.
The time, expense and internal and external resources associated with regulatory compliance continue to increase. Thus,
balancing the need to address regulatory changes and effectively manage growth in non-interest expenses has become
more challenging than it had been in the past.
The Company and the Bank are extensively regulated under federal and state banking laws and regulations that are
primarily intended for the protection of depositors, federal deposit insurance funds and the banking system, but not
shareholders. In general, these laws and regulations establish: the eligible business activities for the Company; certain
acquisition and merger restrictions; limitations on intercompany transactions such as loans and dividends; capital adequacy
requirements; requirements for anti-money laundering programs; and consumer lending and other compliance
requirements. While these statutes and regulations are generally designed to minimize potential loss to depositors and the
FDIC insurance funds, they do not eliminate risk, and compliance with such statutes and regulations increases the
Company’s expense, requires management’s attention and can be a disadvantage from a competitive standpoint with
respect to non-regulated competitors and larger bank competitors.
Compliance with banking statutes and regulations is important to the Company's ability to engage in new activities and to
consummate additional acquisitions. Bank regulators are scrutinizing banks through longer and more extensive bank
examinations in both the safety and soundness and compliance areas. The results of such examinations could result in a
delay in receiving required regulatory approvals for potential new activities and transactional matters. If the Company's
compliance record would be determined to be unsatisfactory, such approvals may not be able to be obtained. Federal and
state banking regulators also possess broad powers to take supervisory actions, as they deem appropriate. These
supervisory actions may result in higher capital requirements, higher deposit insurance premiums and limitations on the
Company's operations that could have a material adverse effect on its business and profitability.
In addition, the Company is subject to changes in federal and state tax laws as well as changes in banking and credit
regulations, accounting principles, governmental economic and monetary policies and collection efforts by taxing
authorities.
16
RISKS RELATED TO OPERATIONS
Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information,
and adversely impact our reputation and results of operations.
The Company’s computer systems, software and networks are regularly subject to cyber-attacks, which may result in:
unauthorized access; mishandling or misuse of information; loss or destruction of data (including confidential customer
information); account takeovers; unavailability of service; computer viruses or other malicious code; disruption or
degradation of service; denial of service; and other events. Cyber threats may arise from human error, fraud or malice on
the part of employees or third parties, including third party vendors, or may result from accidental technological failure.
In addition, the parties intent on penetrating our systems may also attempt to fraudulently induce employees, customers,
third parties or other users of our systems to disclose sensitive information to gain access to the Company’s data or that of
the Company’s customers.
Cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction,
corruption or unavailability of critical data and confidential or proprietary information (the Company’s own or that of third
parties) and the disruption of business operations. The potential consequences of a material cybersecurity incident include
reputational damage, litigation with third parties and increased cybersecurity protection and remediation costs, which in
turn could adversely affect the Company’s competitiveness and results of operations. The Company carries insurance to
partially offset the risk of loss; however, there can be no assurance that the policy limits or policy exclusions would
adequately protect the Company from a related loss.
Potential disruption or failure of network and information processing systems and those of third-party vendors
may negatively impact our operations.
The Company's business activities are dependent on its ability to accurately and timely process, record and monitor many
transactions. If any of its financial, accounting, network or other information processing systems fail or have other
significant shortcomings, the Company could be materially adversely affected. The Company outsources some of it
processing and other activities to third party vendors. Third parties with which the Company does business could be sources
of operational risk to the Company, including the risk that the third parties' own network and information processing
systems could fail. Any of these occurrences could materially diminish the Company's ability to operate one or more of
the Company's businesses, or cause the Company to suffer financial loss, a disruption of its business, regulatory sanctions
or damage to its reputation, any of which could materially adversely affect the Company.
The Company may be subject to disruptions or failures of the Company's financial, accounting, network and information
processing systems arising from events that are wholly or partially beyond the Company's control, which may include, for
example, computer viruses or electrical or telecommunications outages, denial of service attacks or hacking targeting the
Company's or its vendors’ networks or information processing systems or websites, natural disasters, other damage to
property or physical assets or terrorist acts. The Company has developed an emergency recovery program, which includes
plans to maintain or resume operations in the event of an emergency and has contingency plans if operations or systems
cannot be resumed or restored. The emergency recovery program is periodically reviewed and updated, and components
of the emergency recovery program are periodically tested and validated. The Company also reviews and evaluates the
emergency recovery programs of vendors which provide certain third-party systems that the Company considers critical.
Nevertheless, there is no guarantee that these measures or any other measures can provide absolute security. In addition,
because the methods used to cause cyber-attacks change frequently or, in some cases, are not recognized until launched,
the Corporation may be unable to implement effective preventive measures or proactively address these attacks. Resulting
disruptions or failures affecting any of the Company’s systems may give rise to interruption in service to customers,
damage to the Company's reputation and loss or liability to the Company.
Failure by the Company to keep up with technological advancements in deployment of services and efficiency of
operations may make it more vulnerable to competition.
The financial services industry is continually undergoing rapid technological change, with frequent introductions of new
technology-driven products and services. The effective use of technology increases efficiency and enables financial
17
institutions to better serve customers and to reduce costs. The Company’s future success depends, in large part, upon its
ability to address the needs of its customers by using technology to provide products and services that will satisfy customer
demands, as well as to create additional efficiencies in the Company’s operations. Many of the Company’s financial
institution competitors have substantially greater resources to invest in technological improvements, and new payment
services developed and offered by non-financial institution competitors pose an increasing threat to the traditional payment
services offered by financial institutions. The Company may not be able to effectively implement new technology-driven
products and services, be successful in marketing these products and services to its customers or effectively deploy new
technologies to improve the efficiency of its operations. Failure to successfully keep pace with technological change
affecting the financial services industry could have a material adverse impact on the Company’s business, financial
condition and results of operations.
Further, the costs of new technology, including personnel, can be high in both absolute and relative terms. There can be
no assurance, given the fast pace of change and innovation, that the Company’s technology, either purchased or developed
internally, will meet or continue to meet the needs of the Company and the needs of its customers.
The Company may not be able to attract and retain skilled people.
The Company’s success depends, in large part, on its ability to attract and retain skilled people. The unexpected loss of
services of one or more of the Company’s key personnel could have a material adverse impact on the Company's business
because of their skills, knowledge of the Company's operations and markets, industry experience and the difficulty of
promptly finding qualified replacement personnel. Our ability to attract and retain skilled personnel cost effectively is
subject to a variety of external factors, including the limited availability of qualified personnel in the workforce in the local
markets in which we operate, unemployment levels within those markets, prevailing wage rates, which have increased
significantly, and health and other insurance costs. Furthermore, the complexities introduced into the labor market because
of the transition to increased work-from-home arrangements have impacted the competitive landscape in our labor market.
Based on current conditions in the labor market, we have experienced some difficulty in retaining and attracting personnel
and there is no assurance we will be able to continue to successfully do so.
ECONOMIC AND CREDIT RISKS
General economic conditions may harm our industry, business and results of operations.
Various aspects of our business could be impacted by general macroeconomic conditions including, among others,
inflation, interest rates, supply chain complications and economic uncertainty. Inflation rates in the United States have
increased to levels not experienced in several years. These economic uncertainties may be compounded by international
conflicts. Inflation, interest rates and related economic volatility could adversely affect our business, financial condition,
results of operations and liquidity. These unfavorable economic conditions could, among other things, impact the value of
our securities portfolio, impact our net interest margin, adversely impact our customers’ ability to make payments on
floating rate loans, if interest rates rise, and increase the risk of default by our customers experiencing financial difficulties
and business disruptions.
Difficult economic conditions and real estate markets, including protracted periods of low-growth and sluggish loan
demand, can negatively impact the Company’s income, and result in higher charge-offs as borrowers’ ability to
repay is negatively impacted by those conditions.
Lending money is an essential part of the banking business, and the revenues derived from lending activities are the most
significant segment of the Company’s income statement. Extended periods of sluggish loan demand can materially affect
the composition of the Company’s consolidated statement of financial condition, reducing the ratio of loans to deposits,
and the Company’s profitability. Adverse changes in the economy and real estate markets and the duration of economic
downturns can negatively affect the solvency of businesses and consumers. Borrowers’ inability to repay loans causes
increases in non-performing assets, which may result in elevated collection and carrying costs related to such non-
performing assets and increases in loan charge-offs, significantly impacting the credit loss provision charged to earnings
to fund the allowance for credit losses. The risk of non-payment is affected by credit risks of the borrower, changes in
economic and industry conditions, the duration of the loan and, in the case of a collateralized loan, uncertainties as to the
18
future value of the collateral supporting the loan. Historically, commercial loans have presented a greater risk of non-
payment than consumer loans. The application of various federal and state laws, including bankruptcy and insolvency
laws, may limit the amount that can be recovered on these loans.
The Company has established an allowance for credit losses that management believes to be adequate to offset expected
losses on the Company’s existing loans. However, there is no precise method of estimating credit losses. The Company
determines the appropriate level of the allowance for credit losses based on many quantitative and qualitative factors,
including, but not limited to, the size and composition of the loan portfolio; changes in risk ratings; changes in collateral
values; delinquency levels; historical losses; and economic conditions. In addition, as the Company’s loan portfolio grows,
it will generally be necessary to increase the allowance for credit losses through additional provisions, which will impact
the Company’s operating results. If the Company’s assumptions and judgments regarding such matters prove to be
inaccurate, its allowance for credit losses might not be sufficient, and additional provisions for credit losses might need to
be made. Depending on the amount of such provisions for credit losses, the adverse impact on the Company’s earnings
could be material. Also, there can be no assurance that any future declines in real estate market conditions, general
economic conditions or changes in regulatory policies will not require the Company to increase its allowance for credit
losses, through additional credit loss provisions, which could reduce earnings.
Investment securities losses could negatively impact our results of operations.
Price fluctuations in securities markets, as well as other market events, could have an impact on the Company’s results of
operations. As described below, the Company’s holding of certain securities and the revenues the Company earns from its
trust and investment management services business are particularly sensitive to those events:
•
Equity investments:
As of December 31, 2024, the Company’s equity investments were comprised primarily of publicly traded
financial institutions. The value of the securities in the Company’s equity portfolio may be affected by several
factors. General economic conditions and uncertainty surrounding the financial institution sector impacts the
value of these securities. Equity investments are stated at fair value with realized and unrealized gains and losses
reported in net income. General declines in bank stock values, as well as deterioration in the performance of
specific banks, are reflected on the Consolidated Statements of Income.
•
Municipal securities:
As of December 31, 2024, the Company had approximately $6.0 million of municipal securities issued by various
municipalities in its investment portfolio. Uncertainty with respect to the financial viability of municipal insurers
places greater emphasis on the underlying strength of issuers. Increasing pressure on local tax revenues of issuers
due to adverse economic conditions could also have a negative impact on the underlying credit quality of issuers.
•
Investment management and trust services revenue:
The Company’s investment management and trust services revenue is also impacted by fluctuations in the
securities markets. A portion of this revenue is based on the value of the underlying investment portfolios. If the
values of those investment portfolios decrease, whether due to factors influencing U.S. securities markets in
general or otherwise, the Company’s revenue could be negatively impacted. In addition, the Company’s ability
to sell its brokerage services is dependent, in part, upon consumers’ level of confidence in securities markets.
We may be negatively impacted by customer and regulatory reaction to unrelated bank failures.
In 2023, four highly publicized bank failures occurred. These banks had elevated levels of uninsured deposits, which may
be less likely to remain at the bank over time and less stable as a source of funding than insured deposits. These failures
led to volatility and declines in the market for bank stocks and questions about depositor confidence in depository
institutions. As a result of these failures, there was an increased customer and regulatory focus on funding and liquidity at
financial institutions, the composition of their deposits, including the amount of uninsured deposits, the amount of
accumulated other comprehensive loss, capital levels and interest rate risk management. If we are unable to meet the
liquidity expectations of our customers and regulatory agencies, it may have a material adverse effect on our financial
condition and results of operations.
19
RISKS RELATED TO INVESTMENT IN THE COMPANY’S STOCK
The Corporation is a holding company and relies on dividends from its subsidiaries for substantially all its revenue
and its ability to make dividends, distributions and other payments.
The Company is a separate and distinct legal entity from the Bank and depends on the payment of dividends from the
Bank for substantially all of its revenues. As a result, the Company's ability to make dividend payments on its common
stock depends primarily on certain federal and state regulatory considerations and the receipt of dividends and other
distributions from its subsidiaries. There are various regulatory and prudential supervisory restrictions, which may change
from time to time, that impact the ability of the Bank to pay dividends or make other payments to the Company. There can
be no assurance that the Bank will be able to pay dividends at past levels, or at all, in the future. If the Company does not
receive enough cash dividends or is unable to borrow from the Bank, then the Company may not have enough funds to
pay dividends to its shareholders, repurchase its common stock or service its debt obligations.
"Anti-takeover" provisions may keep shareholders from receiving a premium for their shares.
The Articles of Incorporation of the Company presently contain certain provisions, such as staggered Board of Directors
terms and super majority voting requirements for transactions not approved by the Company’s Board of Directors, which
may be deemed to be "anti-takeover" in nature. As such, these provisions may deter, discourage or make more difficult
the assumption of control of the Company by another company or person through a tender offer, merger, proxy contest or
similar transaction or series of transactions. In addition, provisions of Pennsylvania and applicable federal banking laws
could similarly make it more difficult for a third party to acquire control of the Company. The overall effects of the "anti-
takeover” provisions may be to discourage, make costlier or more difficult, or prevent a future takeover offer, even if
shareholders may desire the Company to pursue the takeover offer. These provisions may also increase the possibility that
a future bidder for control of the Company will be required to act through arms-length negotiation with the Company’s
Board of Directors.
If the Company fails to maintain an effective system of internal controls, it may not be able to accurately report its
financial results or prevent fraud. As a result, current and potential shareholders could lose confidence in the
Company’s financial reporting, which could harm its business and the trading price of its common stock.
The Company has established a process to document and evaluate its internal controls over financial reporting to satisfy
the requirements of Section 404(a) of the Sarbanes-Oxley Act of 2002 and related regulations, which require annual
management assessments of the effectiveness of the Company’s internal controls over financial reporting. In this regard,
management has dedicated internal resources, engaged outside consultants and adopted a detailed work plan to (i) assess
and document the adequacy of internal controls over financial reporting, (ii) take steps to improve control processes, where
appropriate, (iii) validate through testing that controls are functioning as documented and (iv) maintain a continuous
reporting and improvement process for internal control over financial reporting.
As described in Note 27 to the Consolidated Financial Statements included in the Company’s Annual Report on
Form 10-K/A for the year ended December 31, 2023, the Company reached a determination to restate its consolidated
financial statements and related disclosures as of and for the years ended December 31, 2023 and 2022 due to identifying
an error related to the Company’s capitalization of costs, which should have been expensed in the period incurred.
Management has concluded through testing, the controls implemented to remediate this issue are operating effectively.
The Company’s efforts to comply with Section 404(a) of the Sarbanes-Oxley Act of 2002 and the related regulations
regarding the Company’s assessment of its internal controls over financial reporting are likely to continue to result in
increased expenses. The Company’s management and audit committee have given the Company’s compliance with Section
404(a) a high priority. The Company cannot be certain that these measures will ensure that the Company implements and
maintains adequate controls over its financial processes and reporting in the future. Any failure to implement required new
or improved controls, or difficulties encountered in their implementation, could harm the Company’s operating results or
cause the Company to fail to meet its reporting obligations. If the Company fails to correct any issues in the design or
operating effectiveness of internal controls over financial reporting or fails to prevent fraud, current and potential
20
shareholders could lose confidence in the Company’s financial reporting, which could harm its business and the trading
price of its common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
Juniata’s risk management program is designed to identify, assess and mitigate risks across various aspects of the
Company, including credit, market, treasury, operational, compliance and reputational. Cybersecurity is a critical
component of this program, given the increasing reliance on technology and potential for a cybersecurity incident to occur,
which could disrupt business operations or compromise sensitive data. Juniata’s Information Security Officer (“ISO”) and
SVP/IT Manager are primarily responsible for the cybersecurity component of the risk management program and are key
members of the organization, both of which have a clear line of reporting directly to the Board of Directors and are involved
with management’s Information Technology (“IT”) Steering Committee. To date, the Company has not, to its knowledge,
experienced an incident materially affecting or reasonably likely to materially affect the Company.
Juniata’s policies, standards, processes and practices for assessing, identifying and managing material risks from
cybersecurity threats are based on the framework established by the Federal Financial Institutions Examination Council
(“FFIEC”) Guidelines and Cybersecurity Assessment Tool (“CAT”), which consists of controls designed to identify,
protect, detect, respond and recover from information and cyber security incidents. The FFIEC CAT tool will no longer
be updated after August 31, 2025, therefore, JVB will replace this tool with another tool such as the NIST 2.0 standard.
To prepare and respond to incidents, the Company has implemented a multi-layered cybersecurity program that is intended
to comply with Gramm-Leach-Bliley Act 12 CFR 364, Appendix B, integrating people, technology, and processes. The
program includes company-wide employee training, the use of innovative technologies, and the implementation of policies
and procedures in the areas of information security, data governance, business continuity and disaster recovery, privacy,
third-party risk management and incident response. Juniata’s objective for managing cybersecurity risk is to avoid or
minimize the impacts of external threat events or other efforts to penetrate, disrupt or misuse its systems or information.
The information security program is periodically reviewed by the Company’s SVP/IT Manager and ISO with the goal of
addressing changing threats and conditions.
The Company also employs a variety of preventative and detective tools designed to monitor, block, and provide alerts
regarding suspicious activity, as well as to report on suspected advanced persistent threats. The Company established
processes and systems designed to mitigate cyber risk, including regular and on-going education and training for
employees, preparedness simulations and tabletop exercises, and recovery and resilience tests. Juniata engages in regular
assessments of its infrastructure, software systems, and network architecture, using internal cybersecurity experts and
third-party specialists. The Company also actively monitors its email gateways for malicious phishing email campaigns
and remote connections as some of its workforce has the option to work remotely.
The Company relies on third-party vendor solutions to support its operations. Many of these vendors, particularly in the
financial services industry, have access to sensitive and proprietary information. To mitigate the operational, informational
and other risks associated with the use of vendors, the Company maintains a Vendor Management Policy, which includes
a detailed onboarding process and periodic reviews of vendors with access to sensitive Company data. The Vendor
Management Policy applies to any business arrangement between the Company and another individual or entity, by
contract or otherwise, in compliance with the FFIEC guidelines for third-party risk management. The Vendor Management
Policy is audited periodically in accordance with the Board of Directors approved Internal Audit plan.
Juniata leverages internal and external auditors and independent external partners to periodically review its processes,
systems and controls, including with respect to its information security program, to assess their design and operating
effectiveness and make recommendations to strengthen its information security and risk management programs. Regular
21
internal monitoring is integral to the Company’s risk assessment process, which includes regular testing of internal key
controls, systems and procedures. In addition, independent third-party penetration testing of the effectiveness of security
controls and preparedness measures is conducted at least annually or more often, if warranted, by the risk assessment or
other external factors. Management determines the scope and objectives of the penetration analysis.
The Company maintains a Business Continuity Plan (the “Plan”) that provides a documented framework for responding
to actual or potential cybersecurity incidents, including timely notification of and escalation to the appropriate Board of
Directors-approved management committees, as discussed further below, and to the IT Steering Committee. The Plan is
coordinated through the SVP/IT Manager and ISO, and key members of management are embedded into the Plan by their
design. The Plan facilitates coordination across multiple parts of the Company and is evaluated at least annually.
Integral elements of the Plan related to the Company’s response to cyber security vulnerabilities include the following:
•
Identifying the appropriate team and any appropriate sub-teams to address specific information and/or cyber
security incidents, or categories of information and/or cyber security incidents;
•
Coordinating incident response or crisis management activities, including developing, maintaining, and following
appropriate procedures to respond to and document identified information and/or cyber security incidents;
•
Conducting post-incident reviews to gather feedback on information and/or cyber security incident response
procedures and address any identified gaps in security measures;
•
Providing company-wide training and conducting periodic exercises to promote employee and stakeholder
preparedness and awareness of the Plan; and
•
Reviewing the Plan at least annually, or whenever there is a material change in the Company’s business practices
that may reasonably affect its cyber incident response procedures.
Governance
Management has overall responsibility for risk oversight. The Company’s SVP\IT Manager is accountable for managing
enterprise information security and delivering the information security program. These responsibilities include
cybersecurity risk assessment, defense operations, cyber incident response, vulnerability assessment, threat intelligence,
identity access governance, and the evaluation of third party risk management and business resilience as it relates to the
cybersecurity program.
The foregoing responsibilities are covered on a day-to-day basis by the SVP/IT Manager and ISO. The ISO has substantial
relevant expertise and formal training in the areas of information security and cybersecurity risk management, including
23 years of cybersecurity experience, 19 of which has been spent at a CPA firm specializing in banking industry financial
and information technology audits. The ISO provides guidance, oversight, monitoring and challenge of the first line’s
activities. The second line of defense function is separated from the first line of defense function through organizational
structure and ultimately reports directly to the Board of Directors.
The IT Steering Committee focuses on technology and business impact and is responsible for overseeing the Company’s
information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate
or prevent material cybersecurity issues and risks. The ISO and SVP/IT Manager provide quarterly reports to the IT
Steering Committee regarding the information security program and the technology program, key enterprise cybersecurity
initiatives and other matters relating to cybersecurity processes. The IT Steering Committee reviews and approves the
information security and technology budgets and strategies annually.
The IT Steering Committee focuses on the identification, monitoring, assessment, and management of risk associated with
the Company’s cyber and information security programs. The IT Steering Committee reviews key metrics summarizing
the Company’s cyber security risk profile on a quarterly basis.
Both the IT Steering Committee and the Board of Directors provide oversight and governance of the technology program
and the information security program. Both committees meet at least quarterly to provide oversight of the risk management
strategy, standards, policies, practices, controls, and mitigation and prevention efforts employed to manage security risks.
More frequent meetings occur from time to time in accordance with the Incident Response Plan (part of the Plan) to
22
facilitate timely informing and monitoring efforts. The ISO reports summaries of key issues, including significant
cybersecurity incidents discussed at committee meetings and the actions taken to the IT Steering Committee on at least a
quarterly basis, or more frequently as may be required by the Incident Response Plan, and to the Board of Directors on at
least an annual basis. Additionally, the ISO reports directly to the Board of Directors, at least annually, the overall status
of the Information Security Program and the Company’s compliance with the Interagency Guidelines for Safeguarding
Customer Information. Any material findings related to the risk assessment, risk management and control decisions,
service provider arrangements, results of testing security breaches or violations are discussed, as are management’s
responses and any recommendations for program changes.
ITEM 2. PROPERTIES
The physical properties of the Company are all owned or leased by the Bank.
The Bank owns and operates, for banking purposes, the buildings located at:
One South Main Street, Mifflintown, Pennsylvania (branch office)
218 Bridge Street, Mifflintown, Pennsylvania (corporate headquarters)
4068 William Penn Highway, Mifflintown, Pennsylvania (branch office)
1762 Butcher Shop Road, Mifflintown, Pennsylvania (operations center and Trust offices)
301 Market Street, Port Royal, Pennsylvania (branch office)
30580 Rt. 35, McAlisterville, Pennsylvania (branch office)
Four North Market Street, Millerstown, Pennsylvania (branch office)
16400 Path Valley Road, Spring Run, Pennsylvania (branch office)
One East Market Street, Lewistown, Pennsylvania (branch office)
20 Prince Street, Reedsville, Pennsylvania (branch office)
100 West Water Street, Lewistown, Pennsylvania (branch office)
320 South Logan Boulevard, Burnham, Pennsylvania (branch office)
571 Main Street, Richfield, Pennsylvania (branch office)
118 East Second Street, Coudersport, Pennsylvania (branch office)
104 N Front Street, Liverpool, Pennsylvania (branch office)
The Bank leases three offices:
Branch Offices
52 West Mill Street, Port Allegany, Pennsylvania (lease expires June 2028)
Financial Services Office
129 South Main Street, Suite 600, Lewistown, Pennsylvania (lease expires October 2029)
Loan Production Office
120 Regent Court, State College, Pennsylvania (lease expires May 2029)
ITEM 3. LEGAL PROCEEDINGS
At times, the nature of the Company’s and the Bank’s business generates litigation involving matters arising in the ordinary
course of business. However, in the opinion of management, there are no proceedings pending to which the Company or
the Bank is a party or to which its property is subject, which, if adversely determined, would be material in relation to their
financial condition. In addition, no material proceedings are pending or are known to be threatened or contemplated against
the Company by government authorities or others.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
23
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information:
The common stock of Juniata Valley Financial Corp. is quoted under the symbol “JUVF” on the OTCQX Best Market; an
electronic inter-dealer quotation and trading system operated by the OTC Market’s Group.
Transfer Agent:
Computershare Investor Services, P.O. Box 43006, Providence, RI 02940-3006. Phone: (800) 368-5948. Website:
www.computershare.com/investor.
Holders:
As of February 28, 2025, there were 1,575 registered holders of the Company’s outstanding common stock.
For information concerning the Company’s Equity Compensation Plans, see “Item 12: Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters”.
Dividends
Cash dividends of $0.88 per share were declared in each of 2024 and 2023. As stated in Note 14 – Stockholders’ Equity
and Regulatory Matters, in The Notes to Consolidated Financial Statements, the Company is subject to regulatory capital
requirements that limit the amount of capital available for dividends. While the Company expects to continue its policy of
regular dividend payments, no assurance of future dividend payments can be given. Future dividend payments will depend
upon the Company’s and the Bank’s financial condition, earnings, capital and regulatory requirements, prospects, business
conditions and other factors deemed relevant by the Board of Directors.
Annual Meeting:
The Annual Meeting of Shareholders of Juniata Valley Financial Corp. will be held at 10:30 a.m., on Tuesday, May 20,
2025, virtually via the internet at meetnow.global/MA99RZK.
Recent Sales of Unregistered Securities:
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers:
The Company periodically repurchases shares of its common stock under a share repurchase program approved by the
Board of Directors. In November of 2021, the Board of Directors authorized the repurchase of an additional 200,000 shares
of its common stock through the Company’s share repurchase program for a total of 209,307 shares authorized to be
repurchased at that time. The program will remain authorized until all approved shares are repurchased, unless terminated
by the Board of Directors. There were no shares purchased under the program during the fourth quarter of 2024. As of
December 31, 2024, 180,504 shares remained available to purchase under the program.
Total Number of
Total Number
Shares Purchased as
Maximum Number of
of Shares
Average
Part of Publicly Shares that May Yet Be
Purchased or Restricted
Price Paid
Announced Plans or
Purchased Under the
Period
Shares Forfeited
per Share
Programs
Plans or Programs (1)
October 1-31, 2024 . . . . . . . . . . . . . . . . . . . .
— $
—
—
180,504
November 1-30, 2024 . . . . . . . . . . . . . . . . . .
—
—
—
180,504
December 1-31, 2024 . . . . . . . . . . . . . . . . . .
—
—
—
180,504
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
180,504
ITEM 6. RESERVED
Not applicable.
24
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THREE-YEAR FINANCIAL SUMMARY
(Dollars in thousands, except share and per share data)
2024
2023
2022
BALANCE SHEET INFORMATION at December 31
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 848,874
$ 870,555
$ 829,619
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 747,957
749,045
711,512
Loans, net of allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . 527,686
519,717
480,485
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265,903
282,729
287,966
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,812
9,812
9,047
Short-term borrowings and repurchase agreements . . . . . . . . . . . . . . .
42,242
52,810
55,710
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,000
20,000
20,000
Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
47,457
40,137
35,693
Number of shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,003,384
4,991,129
5,003,059
Average for the year
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 859,551
838,706
819,153
Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43,895
36,241
50,151
Weighted average shares outstanding for the year - basic . . . . . . . . . . 5,000,833
5,009,787
4,999,980
Weighted average shares outstanding for the year - diluted . . . . . . . . 5,010,310
5,018,449
5,008,512
INCOME STATEMENT INFORMATION
Years Ended December 31
Total interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
37,116
$
33,181
$
27,555
Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,187
10,489
3,422
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,929
22,692
24,133
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
534
500
455
Non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,825
5,321
5,225
Non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21,012
19,947
21,531
Income before income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,208
7,566
7,372
Federal income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
979
970
308
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
6,229
$
6,596
$
7,064
PER SHARE DATA
Earnings per share - basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1.25
$
1.32
$
1.41
Earnings per share - diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.24
1.31
1.41
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.88
0.88
0.88
Book value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.48
8.04
7.13
FINANCIAL RATIOS
Return on average assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.72 %
0.79 %
0.86 %
Return on average equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14.19
18.20
14.09
Dividend payout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
70.63
66.80
62.30
Average equity to average assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.11
4.32
6.12
Loans to deposits (year-end) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
70.55
69.38
67.53
Yield on earning assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.35
3.96
3.50
Cost to fund earning assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.31
1.75
0.60
Non-interest income to average assets . . . . . . . . . . . . . . . . . . . . . . . . .
0.68
0.63
0.64
Non-interest expense to average assets . . . . . . . . . . . . . . . . . . . . . . . . .
2.44
2.38
2.63
Net non-interest expense to average assets . . . . . . . . . . . . . . . . . . . . . .
1.77
1.74
1.81
25
FORWARD-LOOKING STATEMENTS
The information contained in this Annual Report on Form 10-K contains forward looking statements (as such term is
defined in the Securities Exchange Act of 1934 and the regulations thereunder). These forward-looking statements may
include projections of, or guidance on, the Corporation’s future financial performance, expected levels of future expenses,
including future credit losses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends
in the Corporation’s business or financial results. When words such as "may”, "should”, "will”, "could”, "estimates”,
"predicts”, "potential”, "continue”, "anticipates”, "believes”, "plans”, "expects”, "future”, "intends”, “projects”, the
negative of these terms and other comparable terminology are used in this document, Juniata is making forward-looking
statements. Any forward-looking statement made by the Company in this document is based only on Juniata’s current
expectations, estimates and projections about future events and financial trends affecting the financial condition of its
business based on information currently available to the Company and speaks only as of the date when made. 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. Forward-looking statements are not historical facts or guarantees of future
performance. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of which are outside of the Company’s control, and actual
results may differ materially from this forward-looking information and therefore, should not be unduly relied upon. Many
factors could cause our actual results and financial condition to differ materially from those indicated in the forward-
looking statements, including, without limitation:
•
changes in general economic, business and political conditions, including inflation, a recession or intensified
international hostilities;
•
the impact of adverse changes in the economy and real estate markets, including protracted periods of low-growth and
sluggish loan demand;
•
the effect of market interest rates and uncertainties, and relative balances of rate-sensitive assets to rate-sensitive
liabilities, on net interest margin and net interest income;
•
the effect of competition on rates of deposit and loan growth and net interest margin;
•
increases in non-performing assets, which may result in increases in the allowance for credit losses, loan charge-offs
and elevated collection and carrying costs related to such non-performing assets;
•
other income growth, including the impact of regulatory changes which have reduced debit card interchange revenue;
•
investment securities gains and losses, including other than temporary declines in the value of securities which may
result in charges to earnings;
•
the effects of changes in the applicable federal income tax rate;
•
the level of other expenses, including salaries and employee benefit expenses;
•
the impact of increased regulatory scrutiny of the banking industry;
•
the impact of governmental monetary and fiscal policies, as well as legislative and regulatory changes;
•
the results of regulatory examination and supervision processes;
•
the failure of assumptions underlying the establishment of reserves for credit losses, and estimations of collateral values
and various financial assets and liabilities;
•
the increasing time and expense associated with regulatory compliance and risk management;
•
the ability to implement business strategies, including business acquisition activities and organic branch, product and
service expansion strategies;
•
capital and liquidity strategies;
•
the effects of changes in accounting policies, standards and interpretations on the presentation in the Company’s
consolidated balance sheets and consolidated statements of income;
•
the Company’s failure to identify and address cybersecurity risks;
•
the Company’s ability to keep pace with technological changes;
•
the Company’s ability to attract and retain talented personnel;
•
the Company’s reliance on its subsidiary for substantially all its revenues and its ability to pay dividends;
•
acts of war or terrorism;
•
disruptions due to flooding, climate change, severe weather or other natural disasters;
•
failure of third-party service providers to perform their contractual obligations;
26
•
the impact of unrealized losses on debt securities on accumulated other comprehensive income and stockholders’
equity;
•
the potential effects of regulatory responses and customer reaction to bank failures; and
•
the failure to maintain effective internal control over financial reporting.
OVERVIEW
This discussion relates to Juniata Valley Financial Corp. (the “Company” or “Juniata”) and its wholly owned subsidiary,
The Juniata Valley Bank (the “Bank”). Juniata is a bank holding company that delivers financial services through the Bank
within its market, primarily central and northern Pennsylvania. The Bank provides retail and commercial banking, trust,
estate, and wealth management services through offices located in Juniata, Mifflin, Perry, McKean, Potter, Franklin and
Centre Counties.
The overview is intended to provide a context for the following Management’s Discussion and Analysis of Financial
Condition and Results of Operations. Management’s Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with our consolidated financial statements, including the notes thereto, included
in this Annual Report on Form 10-K. We have attempted to identify the most important matters on which our management
focuses in evaluating our financial condition and operating performance and the short-term and long-term opportunities,
challenges and risks (including material trends and uncertainties) that we face. We also discuss the actions we are taking
to address these opportunities, challenges and risks. The Overview is not intended as a summary of, or a substitute for
review of, Management’s Discussion and Analysis of Financial Condition and Results of Operations.
ECONOMIC AND INDUSTRY-WIDE FACTORS RELEVANT TO JUNIATA
As a financial services organization, Juniata’s core business is most influenced by the level of, and movement of, interest
rates. Lending and investing are done daily, using funding from deposits and borrowings, resulting in net interest income,
the most significant portion of operating results. Using asset/liability management tools, the Company continually
evaluates the effects that possible changes in interest rates could have on operating results and balance sheet growth. Using
this information, along with analysis of competitive factors, management designs and prices its products and services.
General economic conditions are relevant to Juniata’s business. In addition, economic factors impact customers’ needs for
financing, thus affecting loan growth. Additionally, changes in the economy can directly impact the credit strength of
existing and potential borrowers.
FOCUS OF MANAGEMENT
The management of Juniata believes that it is important to know who and what we are to be successful. We must be aligned
in our efforts to achieve goals. We have identified the four characteristics that define the Company and the personnel that
support it. We are Committed, Capable, Caring and Connected. Management seeks to be the preeminent financial
institution in its market area and measures its success in achieving our goals by the five key elements described below.
SHAREHOLDER SATISFACTION
Above all else, management is committed to maximizing the value of our shareholders’ investment, through both stock
value appreciation and dividend returns. Remaining connected to our communities is intended to allow us to identify the
financial needs of our market and to deliver those products and services capably. In doing so, we will seek to profitably
grow the balance sheet and enhance earnings, while maintaining capital and liquidity levels that exceed all regulatory
guidelines.
CUSTOMER RELATIONSHIPS
We are committed to maximizing customer satisfaction. We are sensitive to the expanding array of financial services and
financial service providers available to our customers, both locally and globally. We are committed to fostering a complete
customer relationship by helping clients identify their current and future financial needs and offering practical and
affordable solutions to both. As our customers’ lifestyles change, the channels through which we deliver our services must
change as well. One element of the Company’s strategic plan is to provide connection through every means available,
wherever we are needed, whether through a stand-alone branch, in-store boutique, ATM or via online, mobile banking or
27
our newest offering, mobile wallet, anywhere internet or cell phone signals can be received because we are committed to
optimizing the customer experience.
BALANCE SHEET GROWTH
We are capable of profitable balance sheet growth. Rapid growth should not be a substitute for careful fiscal and strategic
management. It is our goal to continue quality growth despite intense competition by paying careful attention to the needs
of our customers. We will continue to maintain high credit standards, knowing that lending under the right circumstances
is the proper way to maintain soundness and profitability. We believe we consistently pay fair market rates on all deposits
and have invested wisely and conservatively in compliance with self-imposed standards, minimizing risk of asset
impairment. We aspire to increase our market share within the current communities that we serve, and to expand in
contiguous areas through acquisition and investment. As part of our strategic plan for growth, we continue to actively seek
opportunities for acquisitions of branches or stakes in other financial institutions.
OPERATING RESULTS
We are capable of producing solid results from operations. Recognizing that net interest margins have narrowed for banks
in general and that these margins may not return to the ranges experienced in the past, we focus on the importance of
providing fee-generating services in which customers find value. Offering a broad array of services prevents us from
becoming too reliant on one form of revenue. It has also been our philosophy to spend conservatively and to implement
operating efficiencies where possible to keep non-interest expense from escalating in areas that can be controlled.
CONNECTION TO THE COMMUNITY
We are active corporate citizens, connected to the communities we serve. Although the world of banking has transitioned
to global availability through electronics, we believe that our community banking philosophy is not only still valid, but
essential. Despite technological advances, banking is still a personal business, particularly in the rural areas we serve. We
believe that our customers shop for services and value a relationship with an institution involved in the same community,
with the same interests in its prosperity. We have a foundation and a history in each of the communities we serve.
Management takes an active role in local business and industry development organizations to help attract and retain
commerce in our market area. We provide businesses, large and small, with financial tools and financing needed to grow
and prosper. And though these tools are electronically driven, they are custom designed by relationship managers who
take time to understand the need. We have always been committed to responsible lending practices. We invest locally by
including local municipal bonds in our investment portfolio and participating in funding for such projects as low income
and elderly housing. We support charitable programs that benefit the local communities, not only with monetary
contributions, but also through the personal involvement of our caring employees.
JUNIATA’S OPPORTUNITIES
SOUNDNESS AND STABILITY
Our financial condition is strong. We enjoy strong liquidity ratios, as well as capital ratios that exceed regulatory
guidelines. Our business model includes a plan for growth without sacrificing profitability or integrity. We believe an
opportunity exists for banks such as ours to offer the trusted, personal service of a locally managed institution that has had
roots in the community for over 150 years.
EXPANSION OF CUSTOMER BASE
Our strategic focus is based on leveraging our collective knowledge of the Company’s primary and contiguous markets to
identify lending or fee-based opportunities consistent with our risk parameters and profitability targets. We continue to
develop our sales team through mentoring and by making employee education paramount. We continually seek and
implement back-room efficiencies. We recognize change is taking place in a world where convenience and mobility are
priorities for consumers and businesses when choosing a financial institution with whom to do business. We offer full-
featured secure mobile banking that includes remote check deposit for use on home computers and all mobile devices for
consumers. For businesses, we provide options for cash management and remote deposit. We offer identity protection to
the families of our customers, which we believe to be a true value-added service, with features that go far beyond traditional
banking services, and sets us apart from other financial institutions in our market area. With the acquisition of First
National Bank of Port Allegheny (“FNBPA”) in 2015, we expanded our market into the northern tier region of
Pennsylvania and integrated the JVB brand there. In 2018, we expanded our footprint in Perry County, Pennsylvania,
28
through the acquisition of remaining shares of LCB. In 2023, we expanded into Franklin County, Pennsylvania, through
the purchase of a branch office.
DELIVERY SYSTEM ENHANCEMENTS
We seek to continually enhance our customer delivery system, both through technology and physical facilities. We actively
seek opportunities to expand our branch network through acquisitions. We believe that it is imperative that our customers
have convenient and easy access to personal financial services that complement their lifestyle, whether it is through
electronic or personal delivery. We achieved an early entry into the mobile banking arena and have since expanded online
delivery, offering consumer remote deposit, mobile wallet and online consumer loan and deposit accounting opening.
Through the www.JVBonline.com website, we offer a suite of online services including the convenience of online loan
applications for residential mortgages, home equity, vehicle and other personal loans. Online and mobile banking features
include full bill-pay and monetary transfers between internal and external accounts. Our ATM network is equipped with
state-of-the art machines. Our Customer Care Center provides a dedicated service to address all customer inquiries,
including expanded service times and on-line chat, and provides outreach through our social media sites. Our updated
branch facilities feature a highly interactive and complete customer experience. In March 2024, we converted to a new
core operating system, allowing us to take advantage of new technologies and improve efficiencies.
JUNIATA’S CHALLENGES
NET INTEREST MARGIN COMPRESSION
Net interest margin compression remained prevalent in 2024 despite the federal funds rate decreasing by 100 basis points
over the last four months of 2024. Many interest-earning assets, such as loans and investments, were originated, acquired
or repriced at higher rates, increasing the average rate earned on those assets, while the average rate paid on interest bearing
liabilities, such as deposits and borrowings, also increased, and at a faster pace, than the increase in rates on interest earning
assets, impacting the net interest margin in both 2023 and 2024. We believe net interest margin compression will remain
a challenge, but lower market rates may help alleviate some of the compression, potentially positively impacting our net
interest margin in 2025.
COMPETITION
Each year, competition becomes more intense and global in nature. To meet this challenge, we attempt to stay in close
contact with our customers, monitoring their satisfaction with our services through surveys, personal visits and networking
in the communities we serve. We strive to meet or exceed our customers’ expectations and deliver consistent high-quality
service. We believe that our customers have become acutely aware of the value of local service, and we strive to maintain
their confidence.
RATE ENVIRONMENT
We intend to continue making what we believe to be rational pricing decisions for loans, deposits and non-deposit products.
This strategy can be difficult to maintain, as many of our peers appear to continue pricing for growth, rather than long-
term profitability and stability. We believe that a strategy of “growth for the sake of growth” results in lower profitability,
and such actions by large groups of banks have had an adverse impact on the entire financial services industry. We intend
to maintain our core pricing principles, which we believe protect and preserve our future as a sound community financial
services provider, proven by results.
REGULATION
The Company is subject to banking regulation, as well as regulation by the SEC and, as such, must comply with many
laws, including the USA Patriot Act, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the Dodd-Frank Wall Street
Reform and Consumer Protection Act. Management has established a Disclosure Committee for Financial Reporting, an
internal group at Juniata that seeks to ensure that current and potential investors in the Company receive full and complete
information concerning our financial condition and results of operations. Juniata has incurred direct and indirect costs
associated with compliance with the SEC’s filing and reporting requirements imposed on public companies by the
Sarbanes-Oxley Act, as well as adherence to new and existing banking regulations and stronger corporate governance
requirements.
29
APPLICATION OF CRITICAL ACCOUNTING POLICIES
The Company’s consolidated financial statements are prepared based upon the application of accounting principles
generally accepted in the United States of America (“GAAP”), the most significant of which are described in Note 2 of
The Notes to Consolidated Financial Statements – Summary of Significant Accounting Policies. Certain of these policies,
particularly with respect to allowance for credit losses and the investment portfolio, require numerous estimates and
economic assumptions, based upon information available as of the date of the consolidated financial statements. As such,
over time, these assumptions may prove to be inaccurate or vary and may significantly affect the Company’s reported
results and financial position in future periods.
The allowance for credit losses represents management’s assessment of the estimated credit losses the Company will
receive over the life of the loan and is based on forecasted economic scenarios as well as qualitative factors specific to
Juniata augmented by industry-wide trends. The methodology for determining the allowance for credit losses is considered
a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the
assumptions used and the potential for changes in the forecasted economic environment that could result in changes to
the amount of the recorded allowance for credit losses. Changes in underlying factors, assumptions or estimates in the
allowance for credit losses could have a material impact on the Company’s future financial condition and results of
operations. The allowance for credit losses is maintained at a level believed to be adequate by management to absorb
estimated lifetime losses in the loan portfolio. Management’s determination of the adequacy of the allowance for credit
losses is based upon an evaluation of relevant available information, from internal and external sources, relating to past
events, current conditions and reasonable and supportable forecasts. This determination is inherently subjective, as it
requires material estimates. If a loan no longer demonstrates similar risk characteristics to their loan pool, it is removed
from the pool and an individual assessment will be performed. The allowance calculation is also supplemented with
qualitative reserves that take into consideration the current portfolio and specific risk characteristics, such as changes in
policy and/or underwriting standards, portfolio mix, concentration and delinquency levels, as well as changes in
environmental conditions, among other factors, that have occurred but are not yet reflected in the quantitative model
component.
RESULTS OF OPERATIONS
2024 AND 2023 FINANCIAL PERFORMANCE OVERVIEW
Net income for Juniata in 2024 was $6.2 million, a decrease of 5.6%, compared to net income of $6.6 million for 2023.
Earnings per share on a fully diluted basis decreased 5.3%, to $1.24, in 2024, compared to $1.31 in 2023. Return on
average assets (“ROA”) for the years ended December 31, 2024 and 2023 was 0.72% and 0.79%, respectively, while the
return on average equity (“ROE”) for 2024 was 14.19% compared to 18.20% in 2023.
The net interest margin, on a fully tax-equivalent basis, decreased from 2.74% in 2023 to 2.71% in 2024. The yield on
earning assets increased 39 basis points, to 4.35%, while the cost of funds increased 56 basis points, to 2.31%, in 2024
compared to 2023. Net interest margin compression remained a factor in 2024 as interest-earning assets, such as loans and
investments, were originated or repriced at higher rates, increasing the average rate earned on those assets, while the
average rate paid on interest bearing liabilities, such as deposits and borrowings, increased at a faster pace.
Juniata strives to attain consistently satisfactory earnings levels each year by protecting the core (repeatable) earnings base
through conservative growth strategies that seek to minimize shareholder and balance-sheet risk, while serving its rural
Pennsylvania customer base. This approach has helped achieve solid performances year after year. The Company
considers the return on assets ratio to be a key indicator of its success and constantly scrutinizes the broad categories of
the income statement that impact this profitability indicator.
30
Summarized below are the components of net income and the contribution of each to ROA for 2024 and 2023.
(Dollars in thousands)
2024
2023
Net Income % of Average
Net Income % of Average
Components
Assets
Components
Assets
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,929
2.67 % $ 22,692
2.71 %
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(534)
(0.06)
(500)
(0.06)
Customer service fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,767
0.21
1,376
0.16
Debit card fee income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,752
0.20
1,770
0.21
Earnings on bank-owned life insurance and annuities . . . . . . . . . .
236
0.03
222
0.03
Trust fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
469
0.05
466
0.06
Commissions from sales of non-deposit products . . . . . . . . . . . . . .
388
0.05
337
0.04
Fees derived from loan activity . . . . . . . . . . . . . . . . . . . . . . . . . . . .
682
0.08
500
0.06
Change in value of equity securities . . . . . . . . . . . . . . . . . . . . . . . .
115
0.01
17
0.00
Gain from life insurance proceeds . . . . . . . . . . . . . . . . . . . . . . . . . .
56
0.01
161
0.02
Other noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
360
0.04
472
0.05
Total noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,825
0.68
5,321
0.63
Employee expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,470)
(1.33)
(10,809)
(1.29)
Occupancy and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,275)
(0.26)
(1,948)
(0.23)
Data processing expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,881)
(0.34)
(2,937)
(0.35)
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,134)
(0.1)
(848)
(0.1)
Taxes, other than income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(191)
(0.02)
(184)
(0.02)
FDIC insurance premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(575)
(0.07)
(504)
(0.06)
Gain on sales of other real estate owned . . . . . . . . . . . . . . . . . . . . .
—
—
16
0.00
Intangible amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(85)
(0.01)
(81)
(0.01)
Amortization of investment in low-income housing partnership . .
(322)
(0.04)
(353)
(0.04)
Merger and acquisition expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
(227)
(0.03)
Other noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,079)
(0.24)
(2,072)
(0.25)
Total noninterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,012)
(2.44)
(19,947)
(2.38)
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(979)
(0.11)
(970)
(0.12)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
6,229
0.72 % $ 6,596
0.79 %
Average assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 859,551
$ 838,706
NET INTEREST INCOME
Net interest income is the amount by which interest income on earning assets exceeds interest expense on interest bearing
liabilities. Net interest income is the most significant component of revenue, comprising approximately 80% of total
revenues (the total of net interest income and non-interest income, exclusive of gains on sales and calls of securities) for
2024. Interest spread measures the absolute difference between average rates earned and average rates paid. Because some
interest earning assets are tax-exempt, an adjustment is made for analytical purposes to present all assets on a fully tax-
equivalent basis. Net interest margin is the percentage of net return on average earning assets, on a fully tax-equivalent
basis, and provides a measure of comparability of a financial institution’s performance.
Both net interest income and net interest margin are impacted by interest rate changes, changes in the relationships between
various rates and changes in the composition of the average balance sheet. Additionally, product pricing, product mix and
customer preferences dictate the composition of the balance sheet and the resulting net interest income. Table 1 shows
average asset and liability balances, average interest rates and interest income and expense for the years 2024, 2023 and
2022. Table 2 further shows changes in net interest income attributable to the volume and rate components of net interest
income.
31
TABLE 1
AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS
Year Ended
Year Ended
Year Ended
(Dollars in thousands)
December 31, 2024
December 31, 2023
December 31, 2022
Average
Yield/
Average
Yield/
Average
Yield/
Balance(1) Interest Rate Balance(1) Interest Rate Balance(1) Interest Rate
ASSETS
Interest earning assets:
Loans:
Taxable loans (5) . . . . . . . . . . . . . . . . . . . $ 513,249 $ 30,342 5.91 % $ 474,060 $ 25,876 5.46 % $ 414,208 $ 20,429 4.93 %
Tax-exempt loans . . . . . . . . . . . . . . . . . .
23,608
767 3.25
28,169
852 3.02
27,762
798 2.88
Total loans . . . . . . . . . . . . . . . . . . . . . . 536,857 31,109 5.79
502,229 26,728 5.32
441,970 21,227 4.80
Investment securities:
Taxable investment securities . . . . . . . . . 305,130 5,749 1.88
324,338 6,193 1.91
332,777 6,077 1.83
Tax-exempt investment securities . . . . . .
5,575
118 2.12
6,478
139 2.15
7,214
155 2.15
Total investment securities . . . . . . . . . . 310,705 5,867 1.89
330,816 6,332 1.91
339,991 6,232 1.83
Interest bearing deposits . . . . . . . . . . . . . . .
6,355
140 2.20
5,158
121 2.34
5,423
96 1.78
Federal funds sold . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
— 0.00
Total interest earning assets . . . . . . . . . . . . . . 853,917 37,116 4.35
838,203 33,181 3.96
787,384 27,555 3.50
Non-interest earning assets:
Cash and due from banks . . . . . . . . . . . . . .
5,412
6,740
12,968
Allowance for credit losses . . . . . . . . . . . . .
(5,874)
(5,677)
(3,713)
Premises and equipment . . . . . . . . . . . . . . .
9,121
8,132
8,257
Other assets (7) . . . . . . . . . . . . . . . . . . . . .
(3,025)
(8,692)
14,257
Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 859,551
$ 838,706
$ 819,153
LIABILITIES AND STOCKHOLDERS’
EQUITY
Interest bearing liabilities:
Interest bearing demand deposits (2) . . . . . . $ 207,438 3,684 1.78
$ 214,785 2,789 1.30
$ 236,438 1,030 0.44
Savings deposits . . . . . . . . . . . . . . . . . . . . . 132,416
66 0.05
137,665
69 0.05
149,909
75 0.05
Time deposits . . . . . . . . . . . . . . . . . . . . . . . 205,583 7,417 3.61
184,165 5,389 2.93
136,472 1,472 1.08
Short-term and long-term borrowings
and other interest bearing liabilities . . . . .
68,612 3,020 4.40
63,163 2,242 3.55
45,326
845 1.86
Total interest bearing liabilities . . . . . . . . . . . 614,049 14,187 2.31
599,778 10,489 1.75
568,145 3,422 0.60
Non-interest bearing liabilities:
Demand deposits . . . . . . . . . . . . . . . . . . . . . . 194,727
196,447
195,301
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,880
6,240
5,556
Stockholders’ equity . . . . . . . . . . . . . . . . . . .
43,895
36,241
50,151
Total liabilities and stockholders’
equity . . . . . . . . . . . . . . . . . . . . . . . . . $ 859,551
$ 838,706
$ 819,153
Net interest income and net interest rate
spread . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 22,929 2.04 %
$ 22,692 2.21 %
$ 24,133 2.90 %
Net interest margin on interest earning
assets (3) . . . . . . . . . . . . . . . . . . . . . . . . . .
2.69 %
2.71 %
3.06 %
Net interest income and net interest
margin - Tax equivalent basis (4) . . . . . . . .
$ 23,164 2.71 %
$ 22,955 2.74 %
$ 24,386 3.10 %
Notes:
On the following page.
32
TABLE 2
RATE/VOLUME ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands)
2024 Compared to 2023
2023 Compared to 2022
Increase (Decrease) Due To (6)
Increase (Decrease) Due To (6)
Volume
Rate
Total
Volume
Rate
Total
ASSETS
Interest earning assets:
Loans:
Taxable (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,139 $ 2,327 $ 4,466 $ 2,952 $ 2,495 $ 5,447
Tax-exempt . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(138)
53
(85)
12
42
54
Total loans (8) . . . . . . . . . . . . . . . . . . . . . . . . . 2,001 2,380 4,381 2,964 2,537 5,501
Investment securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(367)
(77)
(444)
(154)
270
116
Tax-exempt . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(19)
(2)
(21)
(16)
—
(16)
Total investment securities . . . . . . . . . . . . . . .
(386)
(79)
(465)
(170)
270
100
Interest bearing deposits . . . . . . . . . . . . . . . . . . . .
28
(9)
19
(4)
29
25
Total interest earning assets . . . . . . . . . . . . . . . . . . 1,643 2,292 3,935 2,790 2,836 5,626
LIABILITIES AND STOCKHOLDERS’
EQUITY
Interest bearing liabilities:
Demand deposits (2) . . . . . . . . . . . . . . . . . . . . . $
(95) $
990 $
895 $
(95) $ 1,854 $ 1,759
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
—
(3)
(6)
—
(6)
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . .
627 1,401 2,028
515 3,402 3,917
Other, including short and long-term
borrowings, and other interest bearing
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
193
585
778
333 1,064 1,397
Total interest bearing liabilities . . . . . . . . . . . . . . .
722 2,976 3,698
747 6,320 7,067
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . $
921 $ (684) $
237 $ 2,043 $ (3,484) $ (1,441)
Notes:
(1)
Average balances were calculated using a daily average.
(2)
Includes interest bearing demand and money market accounts.
(3)
Net margin on interest earning assets is net interest income divided by average interest earning assets.
(4)
Interest on obligations of states and municipalities is not subject to federal income tax. To make the net yield comparable on a fully taxable basis,
a tax equivalent adjustment is applied against the tax-exempt income using a federal tax rate of 21%.
(5)
Non-accruing loans are included in the above table until they are charged off.
(6)
The change in interest due to rate and volume has been allocated to volume and rate changes in proportion to the relationship of the absolute
dollar amounts of the change in each.
(7)
Includes average net unrealized losses on debt securities: $45.4 million, $51.9 million and $25.7 million in 2024, 2023 and 2022, respectively.
(8)
Interest income includes loan fees of $130,000, $117,000 and $596,000 in 2024, 2023 and 2022, respectively.
Net interest income was $22.9 million for the year ended December 31, 2024. An increase in volume of $921,000 and a
decrease of $684,000 in rate resulted in an overall increase of $237,000, or 1.0%, when compared to net interest income
of $22.7 million for the comparable 2023 period, which decreased by $1.4 million, or 6.0%, over the 2022 period. Average
earning assets increased $15.7 million, or 1.9%, to $853.9 million, during the year ended December 31, 2024, compared
to the same period in 2023, which increased $50.8 million, or 6.5% compared to the year ended December 31, 2022.
On average, total loans outstanding increased $34.6 million, or 6.9%, in 2024 compared to 2023. Average total loans
outstanding increased $60.3 million, or 13.6%, in 2023 compared to 2022. Average yields on loans increased by 47 basis
points in 2024 compared to 2023, which was 52 basis points more than 2022. As shown in Table 2, Rate – Volume Analysis
of Net Interest Income, the increase in yield in 2024 increased interest income on loans by approximately $2.4 million,
while the increase in volume raised interest income by $2.0 million compared to 2023, resulting in a net increase in interest
recorded on loans of $4.4 million. During 2023, the increase in the yield on loans increased interest income by
approximately $2.5 million, while the increase in volume raised interest income by $3.0 million compared to 2022,
resulting in a net increase in interest recorded on loans of $5.5 million.
33
Average investment securities decreased by $20.1 million, or 6.1%, during 2024. The decrease in volume on investment
securities in 2024 accounted for a $386,000 decrease in interest income, while the decrease in yield on investment securities
increased interest income by $79,000, resulting in an aggregate decrease in interest recorded on investment securities of
$465,000 in 2024 compared to 2023. Average investment securities decreased by $9.2 million, or 2.7%, during 2023. The
decrease in volume on investment securities in 2023 accounted for a $170,000 decrease in interest income, while the
increase in yield on investment securities of $270,000 resulted in an aggregate increase in interest recorded on investment
securities of $100,000 in 2023 compared to 2022. Average yields on investment securities decreased by two basis points
in 2024 compared to 2023, which was eight basis points greater than 2022.
In total, the yield on earning assets in 2024 was 4.35% compared to 3.96% in 2023 and 3.50% in 2022. On a fully tax
equivalent basis, the yield on earning assets increased 39 basis points to 4.38% in 2024, from 3.99% in 2023, which
increased 46 basis points from 3.53% in 2022.
Average interest bearing liabilities increased by $14.3 million, or 2.4%, in 2024 compared to 2023, which increased $31.6
million compared to 2022. Average interest bearing deposits increased by $8.8 million, or 1.6%, in 2024 compared to
2023, due to an increase in time deposits of $21.4 million, which was partially offset by declines in interest bearing demand
and savings deposits as customers sought higher interest rate deposit products. Over the same period, average short-term
borrowings increased by $9.0 million, due to an increase in average FRB advances, and average repurchase agreements
increased by $5.4 million. These increases were partially offset by a decrease of $8.8 million in average long-term debt
due to the maturity of a $15.0 million advance in May 2024. During 2023, average interest bearing deposits increased by
$14.9 million compared to 2022, due to an increase in time deposits of $47.7 million, which was partially offset by declines
in interest bearing demand and savings deposits. Over the same period, average short-term borrowings increased by $13.7
million, primarily due to increases in overnight FHLB borrowings and FRB advances in 2023 compared to 2022, while
average repurchase agreements increased by $4.3 million due to the addition of three new relationships in 2023.
Changes in the volume and rate of total interest bearing liabilities, in the aggregate, increased interest expense by $3.7
million in 2024 compared to 2023, while the aggregate changes in volume and rate in 2023 increased interest expense by
$7.1 million compared to 2022. Both increases in market interest rates and competitive pricing pressure to both retain and
attract deposit customers resulted in the increase in interest expense in the 2024 and 2023 periods. The percentage of
average interest earning assets funded by average non-interest bearing demand deposits was approximately 22.8% in 2024,
compared to 23.4% in 2023, and 24.8% in 2022. The total cost to fund earning assets (computed by dividing the total
interest expense by the total average earning assets) in 2024 was 1.66%, compared to 1.25% in 2023 and 0.43% in 2022.
PROVISION FOR CREDIT LOSSES
The Company determined that a provision for credit losses of $534,000 was appropriate for 2024, compared to a loan loss
provision of $500,000 recorded in 2023. The discussion included in the Loans and Allowance for Credit Losses section
below titled “Financial Condition” explains the information and analysis used to derive the provision for credit losses for
2024.
NON-INTEREST INCOME
The Company remains committed to providing comprehensive services and products to meet the current and future
financial needs of its customers. Juniata believes its responsiveness to customers’ needs surpasses that of many of its
competitors and measures its success by the customer acceptance of fee-based services. The Company continually explores
avenues to enhance product offerings in areas beneficial to its customers, such as adding new features and services for its
electronic banking clientele. Fraud protection services are made available to all consumer depositors. Juniata offers a
variety of options for financing to home-buyers that includes a mortgage referral program, providing significant fee
income. Juniata also provides alternative investment opportunities through an arrangement with a broker-dealer that
integrates the delivery of non–traditional products with Juniata’s Trust and Wealth Management Division. This
arrangement enables Juniata to meet the investment needs of a varied customer base and to better identify its clients’ needs
for traditional trust services.
Non-interest income was $5.8 million in 2024, an increase of $504,000, or 9.5%, compared to 2023. Most significantly
impacting the comparative year end periods was a $391,000, or 28.4%, increase in customer service fees due to collecting
more overdraft and deposit service charges in 2024.
34
Fee-generated non-interest income consists of customer service fees derived from deposit accounts, debit card fee income,
trust relationships and sales of non-deposit products. In 2024, revenues from these services totaled $4.4 million,
representing an increase of $427,000, or 10.8%, from 2023 revenues with the increase in customer service fees being the
main catalyst for the increase followed by a $51,000, or 15.1%, increase in commissions from sales of non-deposit
products. Trust fees increased by $3,000 in 2024 versus 2023 due to an increase in non-estate trust fees which were partially
offset by a decline in estate settlement fees. Variances in trust fees from estate settlements can arise because estate
settlements occur sporadically and are not necessarily consistent year to year. Non-estate trust fees are repeatable revenues
that generally increase and decrease in relation to movements in interest rates as market values of trust assets under
management increase or decrease and as new relationships are established.
Also impacting the comparative year end periods were increases of $182,000, or 36.4%, in fees derived from loan activity
due to increases in title insurance commissions, and guidance line and swap fee income, as well as an increase of $98,000,
or 576.5%, in the change in value of equity securities resulting from an increase in the market value of bank stocks owned
by the Company. These increases were partially offset by a decline of $105,000, or 65.2%, in life insurance proceeds.
As a percentage of average assets, non-interest income was 0.68% and 0.63%, respectively in 2024 and 2023.
NON-INTEREST EXPENSE
Management strives to control non-interest expense where possible to improve operating results. Non-interest expense
was $21.0 million in 2024, an increase of $1.1 million, or 5.3% compared to 2023. Most significantly impacting non-
interest expense in the comparative year end periods was a $568,000, or 6.7%, increase in employee compensation expense
due to annual salary increases and overtime pay from the core conversion in the first quarter of 2024.
Also impacting the comparative year end periods were increases of $286,000, or 33.7%, in professional fees primarily due
to increases in audit and consulting fees, $204,000, or 31.0%, in equipment expense due to an increase in depreciation
expense related to the core conversion and $123,000, or 9.5%, in occupancy expense due to an increase in rental expense
from the early termination of a branch office lease in December 2024.
These increases were partially offset by a decline of $227,000, or 100.0%, in merger and acquisition expense from expenses
incurred in connection with the Path Valley branch acquisition in 2023.
As a percentage of average assets, non-interest expense was 2.44% in 2024 as compared to 2.38% in 2023.
INCOME TAXES
Income tax expense for 2024 was $979,000 compared to $970,000 in 2023. Juniata qualifies for a federal tax credit for
investments in low-income housing partnerships. The tax credit decreased from $366,000 in the year ended December 31,
2023 to $329,000 in the year ended December 31, 2024 due to the completion of the amortization period for one of
Juniata’s low-income housing partnership investments in January 2023.
Exclusive of the tax credit, the Company recorded income tax expense of $1.3 million in both 2024 and 2023. Juniata’s
effective tax rate in 2024 was 13.6% versus 12.8% in 2023. See Note 13 of The Notes to Consolidated Financial Statements
for further information on income taxes.
35
FINANCIAL CONDITION
BALANCE SHEET SUMMARY
Juniata functions as a financial intermediary and, as such, its financial condition can be best analyzed in terms of changes
in its uses and sources of funds and can also be analyzed in terms of changes in daily average balances. The table below
sets forth average daily balances for the last two years and the dollar change and percentage change for the past year.
TABLE 3
CHANGES IN USES AND SOURCES OF FUNDS
(Dollars in thousands)
2024
2023
Average
Increase (Decrease)
Average
Balance
Amount
%
Balance
Funding Uses:
Taxable loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 513,249
$
39,189
8.3 % $ 474,060
Tax-exempt loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,608
(4,561)
(16.2)
28,169
Taxable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
305,130
(19,208)
(5.9)
324,338
Tax-exempt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,575
(903)
(13.9)
6,478
Interest bearing deposits . . . . . . . . . . . . . . . . . . . . . . . . . .
6,355
1,197
23.2
5,158
Total interest earning assets . . . . . . . . . . . . . . . . . . . . . . .
853,917
15,714
1.9
838,203
Investment in:
Low income housing . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,005
(324)
(24.4)
1,329
BOLI and annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,092
132
0.9
14,960
Goodwill and intangible assets . . . . . . . . . . . . . . . . . . . . . .
10,116
431
4.5
9,685
Unrealized gains (losses) on securities . . . . . . . . . . . . . . .
(45,386)
6,562
(12.6)
(51,948)
Other non-interest earning assets . . . . . . . . . . . . . . . . . . . .
30,681
(1,473)
(4.6)
32,154
Less: Allowance for credit losses . . . . . . . . . . . . . . . . . . . .
(5,874)
(197)
3.5
(5,677)
Total uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 859,551
$
20,845
2.5 % $ 838,706
Funding Sources:
Interest bearing demand deposits . . . . . . . . . . . . . . . . . . . .
$ 207,438
$
(7,347)
(3.4)% $ 214,785
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
132,416
(5,249)
(3.8)
137,665
Time deposits under $100 . . . . . . . . . . . . . . . . . . . . . . . . . .
110,519
1,323
1.2
109,196
Time deposits over $100 . . . . . . . . . . . . . . . . . . . . . . . . . . .
95,064
20,095
26.8
74,969
Repurchase agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,258
5,390
54.6
9,868
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41,316
8,980
27.8
32,336
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,189
(8,811)
(44.1)
20,000
Other interest bearing liabilities . . . . . . . . . . . . . . . . . . . . .
849
(110)
(11.5)
959
Total interest bearing liabilities . . . . . . . . . . . . . . . . . . . .
614,049
14,271
2.4
599,778
Demand deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
194,727
(1,720)
(0.9)
196,447
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,880
640
10.3
6,240
Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43,895
7,654
21.1
36,241
Total sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 859,551
$
20,845
2.5 % $ 838,706
Overall, total average assets increased by $20.8 million, or 2.5%, for the year 2024 compared to 2023. The increase in
2024 was primarily due to an increase in taxable loans, which were funded by increases in time deposits, as well as short-
term borrowings and repurchase agreements. The ratio of average earning assets to total average assets decreased from
99.9% in 2023 to 99.3% in 2024. The ratio of average interest bearing liabilities to total average assets decreased from
71.5% in 2023 to 71.4% in 2024. Although Juniata’s investment in low income elderly housing projects and its bank
owned life insurance and annuities are not classified as interest-earning assets, income is derived directly from those assets.
These instruments represented 1.9% of total average assets in 2024 and 2023. Total average stockholders’ equity increased
$7.7 million as of December 31, 2024 compared to December 31, 2023 primarily due to a decrease in accumulated other
comprehensive loss due to the amortization of unrealized holding losses on previously transferred HTM securities and the
net change in unrealized AFS security losses, as well as an increase in retained earnings.
36
A more detailed discussion of the Company’s earning assets and interest bearing liabilities will follow in the Sections titled
“Loans”, “Investments” and “Deposits”.
LOANS
Loans outstanding at the end of each year consisted of the following:
(Dollars in thousands)
Years Ended December 31,
2024
2023
2022
2021
2020
Commercial, financial and agricultural . . . . . . . . . . . . . . $ 68,234 $ 65,821 $ 61,458 $ 62,639 $ 73,057
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . . . . . . 247,582 223,077 199,206 159,806 122,698
Real estate - construction . . . . . . . . . . . . . . . . . . . . . . . . . 37,827 52,589 50,748 43,281 61,051
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162,771 162,385 150,290 131,754 141,438
Obligations of states and political subdivisions . . . . . . . 13,850 17,232 18,770 16,323 18,550
Personal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,605
4,290
4,040
4,500
5,867
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 533,869 $ 525,394 $ 484,512 $ 418,303 $ 422,661
The following table summarizes how the ending balances changed in each of the last two years.
(Dollars in thousands)
2024
2023
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
525,394
$
484,512
Net new loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,834
40,176
Loans charged off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(40)
(47)
Loans transferred to other real estate owned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(39)
Loans transferred to repossessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10)
—
Other adjustments to carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
691
792
Net change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,475
40,882
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
533,869
$
525,394
The following table presents the maturity distribution and amount of loans with fixed and variable interest rates as of
December 31, 2024.
After 1 Year
After 5 Years
(Dollars in thousands)
Within
But Within
But Within
After
1 Year
5 Years
15 Years
15 Years
Total
Loans with Fixed Interest Rates
Commercial, financial, and agricultural . . . . . . .
$ 1,327
$ 11,496
$ 13,122
$
85
$ 26,030
Real estate - commercial . . . . . . . . . . . . . . . . . . .
2,366
15,742
20,290
6,319
44,717
Real estate - construction:
1-4 family residential construction . . . . . . . . . .
—
—
—
1,172
1,172
Other construction loans . . . . . . . . . . . . . . . . . .
39
4,494
2,925
1,303
8,761
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . .
1,007
6,343
43,545
51,537
102,432
Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
218
5,482
7,139
9
12,848
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4,957
$ 43,557
$ 87,021
$ 60,425
$ 195,960
Loans with Variable Interest Rates
Commercial, financial, and agricultural . . . . . . .
$ 7,268
$ 27,862
$
6,091
$
983
$ 42,204
Real estate - commercial . . . . . . . . . . . . . . . . . . .
1,076
28,624
84,174
88,991
202,865
Real estate - construction:
Other construction loans . . . . . . . . . . . . . . . . . .
8,327
5,532
1,334
12,701
27,894
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . .
465
3,886
29,224
26,764
60,339
Other loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
107
914
3,586
4,607
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 17,136
$ 66,011
$ 121,737
$ 133,025
$ 337,909
Total loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 22,093
$ 109,568
$ 208,758
$ 193,450
$ 533,869
37
The loan portfolio was comprised of approximately 31.1% consumer loans (real estate – mortgage and personal loans) and
68.9% commercial loans (commercial, financial and agricultural, real estate – commercial and construction, and
obligations of states and political subdivisions) on December 31, 2024 compared to 31.7% consumer loans and 68.3%
commercial loans on December 31, 2023. Management believes that diversification in the loan portfolio is important and
performs a loan concentration analysis on a quarterly basis. The highest loan concentration by activity type in 2024 was
real estate - commercial loans secured by income-producing property, with debt service on this category of loans being
reliant upon the cash flow generated by the property. In the aggregate, loans in this category had outstanding balances of
$180.5 million at December 31, 2024, or 153.59% of the Bank’s capital. Components of this concentration group with
balances considered for general reserve purposes are as follows:
(Dollars in thousands)
NAIC Definition
Outstanding Balance
% of Bank Capital
Lessors of residential buildings and dwellings . . . . . . . . . . . . . . . . . .
$
63,142
82.66 %
Lessors of non-residential buildings . . . . . . . . . . . . . . . . . . . . . . . . . .
48,842
63.94
Hotels and motels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,429
47.69
New housing for-sale builders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18,879
24.71
Continuing care retirement communities . . . . . . . . . . . . . . . . . . . . . . .
13,174
17.25
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
180,466
153.59 %
Given the reserves allocated to this sector over the years and the continued economic and market uncertainty, management
continues to assess a concentration risk factor to this group of loans when analyzing the adequacy of the allowance for
credit losses. See Note 6 of The Notes to Consolidated Financial Statements.
During 2024, the commercial, financial and agricultural, real estate – commercial and real estate – mortgage loan classes
increased, offset by declines in the real estate – construction, obligations of states and political subdivisions and personal
loan classes. During 2023, all loan classes, except for obligations of states and political subdivision loans, increased.
Continued emphasis is placed on responsiveness and personal attention given to customers, which management believes
differentiates the Bank from its competition. Nearly all commercial loans are either variable or adjustable rate loans, while
non-mortgage consumer loans generally have fixed rates for the duration of the loan.
Juniata strives to offer fair, competitive rates and to provide optimal service to attract loan growth and will continue to
place emphasis on attracting the entire customer relationship of our borrowers.
The loan portfolio carries the potential risk of past due, non-performing or, ultimately, charged-off loans. The Bank
attempts to manage this risk through credit approval standards and aggressive monitoring and collection efforts. Where
prudent, the Bank secures commercial loans with collateral consisting of real and/or tangible personal property. The
Company maintains a dedicated credit administration division, in response to the need for heightened credit review, both
in the loan origination process and in the ongoing risk assessment process. Juniata’s lending strategy and credit standards
stress quality growth, diversified by product. A standardized credit policy is in place throughout the Company, and the
credit committee of the Board of Directors reviews and approves all loan requests for amounts that exceed management’s
approval levels. The Company makes credit judgments based on a customer’s existing debt obligations, collateral, ability
to pay and general economic trends. See Note 2 of The Notes to Consolidated Financial Statements.
The current expected credit loss (“CECL”) model is based primarily on forecasted economic scenarios as well as
qualitative factors specific to Juniata. A quarterly provision or credit is charged or credited to earnings to maintain the
allowance for credit losses at an adequate level. Charge-offs and recoveries are recorded as adjustments to the allowance
for credit losses. The allowance for credit losses on December 31, 2024 was 1.16% of total loans, net of unearned interest,
compared to 1.08% of total loans, net of unearned interest at December 31, 2023.
The Company adopted ASC 326 using the prospective transition approach for financial assets purchased with credit
deterioration (“PCD”) that were previously classified as purchased credit impaired (“PCI”) and accounted for under ASC
310-30. In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets
as of the date of adoption.
38
Juniata recorded a provision for credit losses of $534,000 in 2024 compared to a loan loss provision of $500,000 in 2023.
Loan growth of 1.6% as of December 31, 2024 compared to December 31, 2023 was a factor in the increase in the
provision for credit losses for the year ended December 31, 2024. Net charge-offs were 0.01% of average loans outstanding
for the year ended 2024 and net recoveries were 0.01% of average loans outstanding for the year ended 2023.
At December 31, 2024, non-performing loans (as defined in Table 4 below), as a percentage of the allowance for credit
losses, were 9.9%, compared to 87.2% at December 31, 2023. Non-performing loans were 0.12% of loans outstanding as
of December 31, 2024 and 0.94% of loans outstanding as of December 31, 2023. Non-accrual loans decreased at
December 31, 2024 compared to December 31, 2023 due to the payoff of a $4.9 million non-accrual participated real-
estate construction loan in 2024. All non-performing loans were collateralized with real estate at December 31, 2024,
except three non-accrual loans totaling $105,000.
TABLE 4
NON-PERFORMING LOANS
(Dollars in thousands)
December 31, 2024
December 31, 2023
Non-performing loans
Non-accrual loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
496
$
4,952
Accruing loans past due 90 days or more . . . . . . . . . . . . . . . . . . . . . . . . .
119
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
615
$
4,952
Loans outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
533,869
$
525,394
Ratio of non-performing loans to loans outstanding . . . . . . . . . . . . . . . . . .
0.12 %
0.94 %
Ratio of non-accrual loans to loans outstanding . . . . . . . . . . . . . . . . . . . . .
0.09 %
0.94 %
Allowance for credit losses to non-accrual loans . . . . . . . . . . . . . . . . . . . .
1,246.57 %
114.64 %
Loans on which the accrual of interest has been discontinued are designated as non-accrual loans. Accrual of interest on
loans is generally discontinued when the contractual payment of principal or interest has become 90 days past due or
reasonable doubt exists as to the full, timely collection of principal or interest. However, it is the Company’s policy to
continue to accrue interest on loans over 90 days past due if (1) they are guaranteed or well secured and (2) there is an
effective means of timely collection in process.
When a loan is placed on non-accrual status, all unpaid interest credited to income is reversed against current period
income. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income,
according to management’s judgment as to the collectability of principal. Generally, accruals are resumed on loans only
when the obligation is brought fully current with respect to interest and principal, has performed in accordance with the
contractual terms for a reasonable period and the ultimate collectability of the total contractual principal and interest is no
longer in doubt. The Company’s nonaccrual and charge-off policies are the same, regardless of the loan type. During 2024,
gross interest income that would have been recorded if loans on non-accrual status had been current was $101,000, of which
$74,000 was collected and included in net income.
ALLOWANCE FOR CREDIT LOSSES (“ACL”)
The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected
to be collected on the loans. The ACL requires a projection of credit losses estimated over the contractual term of the
loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals
and modifications unless either of the following applies: management has a reasonable expectation at the reporting date
that a loan modification will be executed with an individual borrower, or the extension or renewal options are included in
the original or modified contract at the reporting date and not unconditionally cancellable by the Company. Loans are
charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected
recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.
Management estimates the allowance balance using relevant available information, from internal and external sources,
related to past events, current conditions and reasonable and supportable forecasts of certain macro-economic variables.
39
Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical
loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting
standards, portfolio mix, lending personnel, delinquency trends, credit concentrations, loan review results, changes in
collateral values, as well as the impact of changes in the regulatory and business environment or other relevant factors.
The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The
company has identified the following portfolio segments: commercial, financial and agricultural, real estate – commercial,
real estate - construction: 1-4 family residential construction, real estate - construction: other construction, real estate –
mortgage, obligations of states and political subdivisions and personal loans.
Loans that do not share risk characteristics are evaluated on a individual bases. Loans evaluated individually are not also
included in the collective evaluation. When management determines that foreclosure is probable expected credit losses are
based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.
The Company utilizes the Discounted Cash Flow (“DCF”) method to analyze all loan segments as it allows for the effective
incorporation of a reasonable and supportable forecast in a directionally consistent and objective manner. The DCF model
has two key components; a loss driver analysis combined with a cash flow analysis. The contractual cash flow is adjusted
for probability of default/loss given defaults (“PD/LGD”) and prepayment speed to establish a reserve level. The
prepayment and curtailment studies are updated quarterly by a third-party for each applicable pool of loans.
The Company estimates losses over a four quarter forecast period using Federal Open Market Committee (“FOMC”)
estimates for real GDP and unemployment rate. Based on the final values in the forecast and the uncertainty of a post-
pandemic economic recovery, management has elected to revert to historical loss experience over four quarters. The
economic factors considered as part of the ACL were selected after a rigorous regression analysis and model selection
process. Additionally, the Company uses reasonable credit risk assumptions based on an annual report produced by
Moody’s for the obligations of states and political subdivisions segment.
The quantitative general allowance was $3.0 million at December 31, 2024 and $2.5 million at December 31, 2023.
In addition to the quantitative analysis, a qualitative analysis is performed each quarter to provide additional general
reserves on loan portfolios that are not individually analyzed for various factors. The overall qualitative factors are based
on the following risk factors:
1) Lending Policy, Procedures, & Strategies - Changes in policy and/or underwriting standards as well as
anticipated changes are considered, and a qualitative factor is applied in accordance with the magnitude and
direction (loosening/tightening) of the change. In addition, any new loan programs are also taken into
consideration when evaluating this factor.
2) Changes in Nature and Volume of the Portfolio - The composition of the Bank’s loan portfolio is assessed to
evaluate possible risk changes arising from new or increasing types of loans, industries or collateral.
3) Credit & Lending Staff/Administration - The knowledge and experience of the lending and credit personnel is
assessed.
4) Problem Loan Trends - The level of delinquency, modifications, and extensions is used to measure the trends
of the risk changes within the portfolio.
5) Concentrations - As an extension of the portfolio composition review, lending concentrations are monitored
regularly. Concentrations may be measured by collateral, type, industry and geographical location.
40
6) Loan Review Results - Loan reviews conducted internally as well as by outside auditors or examiners are studied
for indications of possible risk changes.
7) Collateral Values - Changes in market values of the underlying collateral are monitored on select loan types and
pools. Examples could include housing, CRE or cattle prices. These variations may indicate the need for risk
adjustment as future loss levels could change if liquidation becomes necessary.
8) Regulatory and Business Environment - The impact of government fiscal and business policy as well as the
regulatory environment are monitored and may result in possible adjustments to the risk factors.
In determining how to apply the weightings for the various qualitative factors, management considered which factors were
not entirely considered within the base model and assessed which factors would have the highest impact on potential credit
losses. Weights and risks are consistent across various segments except for instances where the risk factor is not applicable,
or the segment is more or less exposed than other segments. Risk weighting is adjusted directionally based on relevancy
and the ability to quantify an impact. For example, the economy and external factors were determined to have the most
significant effect on the estimated losses largely because there is evidence that economic conditions are largely correlated
and can explain a significant portion of historical changes in loss. Likewise, risks that are well-controlled throughout the
organization, such as managerial changes and loan review controls, require less allocation.
The qualitative analysis resulted in a general reserve of $3.1 million at December 31, 2024, compared to $3.2 million at
December 31, 2023.
The determination of the ACL is complex, and the Company makes decisions on the effects of matters that are inherently
uncertain. Evaluations of the loan portfolio and individual credits require certain estimates, assumptions and judgements
as to the facts and circumstances related to particular situations or credits. There may be significant changes in the ACL
in future periods determined by factors prevailing at that point in time along with future forecasts.
The Company recorded net charge-offs of $28,000 in 2024 compared to net recoveries of $39,000 in 2023. The allowance
for credit losses at December 31, 2024 increased by 8.9% over the allowance for credit losses at December 31, 2023 due
to recording net charge-offs and loan growth of 1.6% in 2024, as well as updating the loss driver analysis in the third
quarter of 2024. Management’s analysis indicated that the allowance for credit losses of $6.2 million at December 31,
2024 was adequate.
41
A summary of activity in the allowance for credit losses for the last five years is shown below.
(Dollars in thousands)
Years Ended December 31,
2024
2023
2022
2021
2020
Balance of allowance - beginning of period . . . . $
5,677
$ 4,027
$ 3,508
$ 4,094
$ 2,961
Impact of adopting ASC 326 . . . . . . . . . . . . . . .
—
757
—
—
—
Initial allowance on loans purchased with
credit deterioration . . . . . . . . . . . . . . . . . . . . . .
—
354
—
—
—
Loans charged off:
Commercial, financial and agricultural . . . . . . .
—
—
—
—
(7)
Real estate - mortgage . . . . . . . . . . . . . . . . . . . .
—
(19)
(23)
—
(7)
Personal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(40)
(28)
(13)
(17)
(42)
Total charge-offs . . . . . . . . . . . . . . . . . . . . . . .
(40)
(47)
(36)
(17)
(56)
Recoveries of loans previously charged off:
Commercial, financial and agricultural . . . . . . .
—
—
2
7
1
Real estate - commercial . . . . . . . . . . . . . . . . . .
—
—
—
36
2
Real estate - construction . . . . . . . . . . . . . . . . . .
—
—
—
86
426
Real estate - mortgage . . . . . . . . . . . . . . . . . . . .
3
66
94
61
30
Personal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
20
4
10
9
Total recoveries . . . . . . . . . . . . . . . . . . . . . . . .
12
86
100
200
468
Net (charge-offs) recoveries . . . . . . . . . . . . . . . . .
(28)
39
64
183
412
Provision (benefit) for credit losses . . . . . . . . . . .
534
500
455
(769)
721
Balance of allowance - end of period . . . . . . . . . . $
6,183
$ 5,677
$ 4,027
$ 3,508
$ 4,094
Ratio of net (charge-offs) recoveries during
period to average loans outstanding . . . . . . . . .
(0.01)%
0.01 %
0.01 %
0.04 %
0.10 %
Because of the Company’s low rate of charge-offs, disaggregated ratios of net charge-offs to average loans outstanding
are not provided.
The following tables show how the allowance for credit losses is allocated among the various types of outstanding loans
and the percent of loans by type to total loans.
(Dollars in thousands)
Years Ended December 31,
2024
2023
2022
2021
2020
Commercial, financial and agricultural . . . . . . . . . . . . .
$
994
$
740
$
297
$
251
$
302
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . . . . .
3,010
2,799
1,110
1,020
908
Real estate - construction . . . . . . . . . . . . . . . . . . . . . . . .
853
882
1,146
884
1,586
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
39
1,385
1,269
1,200
Obligations of states and political subdivisions . . . . . .
1,258
1,157
54
45
28
Personal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44
60
35
39
70
$ 6,183
$ 5,677
$ 4,027
$ 3,508
$ 4,094
Years Ended December 31,
2024
2023
2022
2021
2020
Commercial, financial and agricultural . . . . . . . . . . . . . . .
12.8 %
12.5 %
12.7 %
15.0 %
17.3 %
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . . . . . . .
46.4 %
42.5 %
41.1 %
38.2 %
29.0 %
Real estate - construction . . . . . . . . . . . . . . . . . . . . . . . . . .
7.1 %
10.0 %
10.5 %
10.3 %
14.4 %
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30.4 %
30.9 %
31.0 %
31.5 %
33.5 %
Obligations of states and political subdivisions . . . . . . . .
2.6 %
3.3 %
3.9 %
3.9 %
4.4 %
Personal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.7 %
0.8 %
0.8 %
1.1 %
1.4 %
100 %
100 %
100 %
100 %
100 %
42
INVESTMENTS
Total investments, defined to include all interest earning assets except loans (i.e., debt securities available for sale at fair
value and held to maturity at amortized cost, equity securities, federal funds sold, interest bearing deposits, restricted
investment in bank stock and other interest-earning assets), totaled $265.9 million on December 31, 2024, a decrease of
$16.8 million, or 6.0%, compared to year-end 2023.
The following table summarizes how the ending balances changed annually in each of the last two years.
(Dollars in thousands)
2024
2023
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
282,729
$
287,966
Proceeds from sales, calls and maturities of debt securities available for sale . . . . . . .
(4,742)
(5,470)
Proceeds from calls and maturities of debt securities held to maturity . . . . . . . . . . . . .
(13,864)
(13,687)
Change in value of equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115
17
Adjustment in market value of securities available of sale . . . . . . . . . . . . . . . . . . . . . .
1,925
(370)
Amortization of unrealized holding losses on securities held to maturity . . . . . . . . . .
4,847
4,767
Amortization/accretion on securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . .
(123)
(133)
Restricted investment in bank stock, net change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
823
(1,959)
Interest bearing deposits with others, net change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5,807)
11,598
Net change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(16,826)
(5,237)
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
265,903
$
282,729
The investment area is managed according to internally established guidelines and quality standards. Juniata separates its
investment securities portfolio into two classifications: those held to maturity and those available for sale. Juniata holds
no securities in the trading classification.
At December 31, 2024, the market value of the investment securities portfolio was less than amortized cost by $15.1
million, compared to December 31, 2023, when the market value of the investment securities portfolio was less than
amortized cost by $10.7 million. The average maturity of the investment portfolio was 6.9 years on December 31, 2024
and 7.9 years on December 31, 2023.
The following table sets forth the maturities of securities and the weighted average yields of such securities by scheduled
maturity or call dates. Yields on obligations of states and public subdivisions are presented on a tax-equivalent basis.
(Dollars in thousands)
After One Year
After Five Years
Within One year
But Within Five Years
But Within Ten Years
After Ten Years
Total
December 31, 2024
Amount Yield
Amount
Yield Amount
Yield Amount Yield Amount Yield
Debt securities available for
sale, at fair value:
Obligations of U.S.
Government agencies and
corporations . . . . . . . . . . . $ 2,495
4.00 % $
12,081
0.74 % $
—
— % $
—
— % $ 14,576
1.27 %
Obligations of state and
political subdivisions . . . . .
—
— %
2,643
2.87 %
3,390
1.80 %
—
— %
6,033
2.21 %
Corporate Debt Securities . . .
—
— %
4,286
2.75 %
11,072
3.95 %
—
— % 15,358
3.64 %
Mortgage-backed
securities . . . . . . . . . . . . .
375
2.59 %
20,460
3.47 %
7,252
3.07 %
569
2.61 %
28,656
3.33 %
$ 2,870
3.82 % $
39,470
2.52 % $
21,714
3.32 % $
569
2.61 % $ 64,623
2.83 %
Debt securities held to
maturity, at amortized cost:
Obligations of U.S.
Government agencies and
corporations . . . . . . . . . . . $
—
— % $
25,389
4.30 % $
5,090
4.44 % $
—
— % $ 30,479
4.32 %
Mortgage-backed
securities . . . . . . . . . . . . .
—
— %
14,456
5.14 % 112,406
4.58 % 34,286
2.74 % 161,148
4.24 %
$
—
— % $
39,845
4.60 % $ 117,496
4.57 % $ 34,286
2.74 % $ 191,627
4.25 %
43
BANK OWNED LIFE INSURANCE AND ANNUITIES
The Company periodically insures the lives of certain bank officers to provide split-dollar life insurance benefits to some
key officers and to offset the cost of providing post-retirement benefits through non-qualified plans. Some annuities are
also owned to provide cash streams that match certain post-retirement liabilities. The $373,000 increase in cash surrender
value of the Company’s bank owned life insurance (“BOLI”) and annuities was due primarily to earnings and the purchase
of additional insurance related to 1035 Exchanges for two active participants to take advantage of increased interest rates.
See Note 7 of The Notes to Consolidated Financial Statements.
The following table summarizes how the cash surrender values of these instruments changed annually in each of the last
two years.
(Dollars in thousands)
2024
2023
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
14,841
$
15,197
BOLI earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
219
204
Annuity earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
18
BOLI purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
717
—
BOLI premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
19
Annuity premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
12
BOLI death benefit received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(663)
(621)
Annuity death benefits received. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(149)
Gain from BOLI proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
160
Gain from annuity proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
1
Net change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
373
(356)
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
15,214
$
14,841
GOODWILL AND INTANGIBLE ASSETS
Branch Acquisition
On September 8, 2006, the Company acquired a branch office in Richfield, PA. Goodwill recorded on the acquisition was
$2.0 million and is measured annually for impairment.
FNBPA Acquisition
On November 30, 2015, the Company completed its acquisition of FNBPA. Goodwill recorded on the acquisition was
$3.4 million as of December 31, 2024 and 2023. In addition, a core deposit intangible in the amount of $303,000 was
recorded and is being amortized over a ten-year period using a sum of the year’s digits basis. Core deposit intangible
amortization expense recorded in 2024 was $11,000 and is estimated to be $5,000 in 2025. The core deposit intangible
will be fully amortized in 2025. Core deposit and other intangible assets, net of amortization, was $5,000 as of
December 31, 2024 and $16,000 as of December 31, 2023.
LCB Acquisition
On April 30, 2018, Juniata completed the acquisition of LCB and, as a result, recorded goodwill of $3.6 million as of
December 31, 2024 and 2023. In addition, a core deposit intangible of $289,000 was recorded and will be amortized over
a ten-year period using a sum of the years’ digits basis. Core deposit intangible expense recorded in 2024 was $23,000,
and for the succeeding four years beginning 2025, is estimated to be $17,000, $12,000, $7,000 and $2,000 per year,
respectively. The core deposit intangible will be fully amortized in 2028. Core deposit intangible, net of amortization, was
$38,000 as of December 31, 2024 and $61,000 as of December 31, 2023.
Path Valley Acquisition
On May 12, 2023, Juniata acquired the Path Valley branch office and, as a result, recorded goodwill of $765,000 as of
December 31, 2024 and 2023. In addition, a core deposit intangible of $303,000 was recorded and is being amortized over
a ten-year period using a sum of the years’ digit basis. Core deposit intangible expense recorded in 2024 was $51,000, and
for the succeeding five years beginning 2025, is estimated to be $46,000, $40,000, $35,000 and $30,000 per year,
respectively, and $64,000 thereafter. Core deposit intangible, net of amortization, was $215,000 as of December 31, 2024
and $266,000 as of December 31, 2023.
44
Mortgage Servicing Rights
The Company did not originate and sell residential mortgage loans to the secondary market in 2024 or 2023; however, the
Company retained the servicing rights on loans originated and sold in prior years. The mortgage servicing rights are valued
based on the present value of estimated future cash flows on pools of mortgages stratified by rate and maturity date. The
computed value is carried as an intangible asset. As of December 31, 2024 and December 31, 2023, the fair value of
mortgage servicing rights was $69,000 and $83,000, respectively.
DERIVATIVES
The Company may enter into derivative financial instruments as part of its asset liability management strategy to help
manage its interest rate risk position and to meet the needs of customers. As of December 31, 2024 and 2023, the Company
had no derivatives designated as hedging instruments. The Company does, however, have derivatives not designated as
hedging instruments. At December 31, 2024, the Company had risk participation agreements with a fair value of $24,000
and back-to-back swaps with commercial borrowers with a fair value of $20,000. See Note 22 of The Notes to Consolidated
Financial Statements.
DEFERRED TAXES
The Company accounts for income taxes under the asset/liability method. Deferred tax assets and liabilities are recognized
for the future consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases, as well as operating loss and tax credit carryforwards, if applicable. A
valuation allowance is established against deferred tax assets when, in the judgment of management, it is more likely than
not that such deferred tax assets will not become realizable. The Company recorded net deferred tax assets of $9.8 million
and $11.3 million, at December 31, 2024 and December 31, 2023, respectively. The net deferred tax assets were carried
as a non-interest earning asset. See Note 13 of The Notes to Consolidated Financial Statements.
OTHER NON-INTEREST EARNING ASSETS
The following table summarizes the components of the non-interest earning asset category, and how the ending balances
changed over the last two years.
(Dollars in thousands)
2024
2023
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
43,030
$
36,711
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12,125)
6,333
Premises and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,202
(10)
Investment in low income housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(322)
(353)
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,477)
(649)
Other receivables and prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(376)
998
Net change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(13,098)
6,319
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
29,932
$
43,030
DEPOSITS
As of December 31, 2024, total deposits were $748.0 million, a decrease of $1.1 million, or 0.1%, compared to the
previous year end. Juniata had $105.2 million and $131.6 million in uninsured deposits as of December 31, 2024 and 2023,
respectively.
The following table summarizes how the ending balances changed over the last two years.
(Dollars in thousands)
2024
2023
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
749,045
$
711,512
Demand deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(226)
(2,104)
Interest bearing demand deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11,316)
(6,811)
Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5,511)
(8,668)
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,965
55,116
Net change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,088)
37,533
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
747,957
$
749,045
45
The following table shows the comparison of average transaction deposits and average time deposits as a percentage of
total deposits for the last two years.
Changes in Deposits
(Dollars in thousands)
2024
2023
Average
Increase (Decrease)
Average
Balance
Amount
%
Balance
Transaction deposits:
Money market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
47,948
$
(3,501)
(6.8) % $
51,449
Interest bearing demand . . . . . . . . . . . . . . . . . . . . . . . . . .
159,490
(3,846)
(2.4)
163,336
Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
132,416
(5,249)
(3.8)
137,665
Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
194,727
(1,720)
(0.9)
196,447
Total transaction deposits . . . . . . . . . . . . . . . . . . . . . . .
534,581
(14,316)
(2.6)
548,897
Time deposits:
$100 and greater . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
95,064
20,095
26.8
74,969
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110,519
1,323
1.2
109,196
Total time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
205,583
21,418
11.6
184,165
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 740,164
$
7,102
1.0 % $ 733,062
Average deposits increased 7.1 million, or 1.0%, to $740.2 million in 2024. Transaction accounts decreased by 2.6% in
2024, while time deposits increased by 11.6%. The largest dollar and percentage increase in 2024 compared to the previous
year was in time deposits of $100,000 and greater, which increased by $20.1 million, or 26.8%.
Maturities of time deposits of $250,000 or more outstanding at December 31, 2024 are summarized as follows:
(Dollars in thousands)
2024
Certificates of deposit of $250 or more
Maturing within 3 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
11,149
Maturing within 3 to 6 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,825
Maturing within 6 to 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,217
Maturing 1‑5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,495
$
41,686
Consumers have needs for transaction accounts, and the Bank is continuing to focus on that need in order to build deposit
relationships. Products are geared toward low-cost convenience and ease for the customer. The Company’s strategy is to
aggressively seek to grow customer relationships by staying in touch with customers’ changing needs and new methods
of connectivity, to increase deposit (and loan) market share. The Bank offers identity protection services as an option for
all consumer demand depositors. We believe this product to be a valuable and essential tool necessary to combat the
upsurge in fraud and identity theft. This product provides a unique benefit to our customers as there are no other banks in
our immediate market that offer a similar service.
In addition to deposit products, Juniata provides alternatives to customers through the sale of wealth management (non-
deposit) products. The Bank competes in the marketplace with many sources that offer products that directly compete with
traditional banking products. In keeping with our desire to provide our customers with a full array of financial services,
we supplement the services traditionally offered by our Trust Department by staffing our community offices with wealth
management consultants who are licensed and trained to sell variable and fixed rate annuities, mutual funds, stock
brokerage services and long-term care insurance. Although the sale of these products can reduce the Bank’s deposit levels,
these products offer solutions for our customers that traditional bank products cannot and allow us to service our customer
base more completely. Fee income from the sale of non-deposit products (primarily annuities and mutual funds) was $388,000
and $337,000 in 2024 and 2023, respectively, representing approximately 6.7% and 6.3%, respectively, of total non-interest
income.
46
OTHER INTEREST BEARING LIABILITIES
Juniata funds its needs primarily with local deposits and, when necessary, relies on external funding sources for additional
funding. External funding sources include credit facilities at correspondent banks, the FHLB of Pittsburgh and the Federal
Reserve Bank. Juniata’s average balances for all borrowings increased by $5.4 million in 2024 compared to 2023.
Changes in Borrowings
(Dollars in thousands)
2024
2023
Average
Increase (Decrease)
Average
Balance
Amount
%
Balance
Repurchase agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
15,258 $
5,390
54.6 % $
9,868
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41,316
20,394
97.5
20,922
FRB advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(11,414)
(100.0)
11,414
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,189
(8,811)
(44.1)
20,000
Other interest bearing liabilities . . . . . . . . . . . . . . . . . . . . .
849
(110)
(11.5)
959
Total borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
68,612
$
5,449
8.6 % $
63,163
STOCKHOLDERS’ EQUITY
Total stockholders’ equity increased by $7.3 million, or 18.2%, to $47.5 million in 2024 compared to 2023, primarily due
to a decrease in accumulated other comprehensive loss from recording the amortization of unrealized holding losses on
HTM securities and the net change in unrealized AFS security losses, as well as an increase in retained earnings. The
Company was well-capitalized and had the capacity to maintain its historical dividend level in 2024. The Company’s net
income exceeded dividends paid by $1.8 million.
The following table summarizes how the components of equity changed in the last two years.
(Dollars in thousands)
2024
2023
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
40,137
$
35,693
Cumulative effect of change in accounting principle . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(854)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,229
6,596
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,400)
(4,406)
Treasury stock issued for stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
62
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
142
143
Repurchase of stock, net of re-issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
(324)
Net change in unrealized AFS security losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,521
(293)
Amortization of unrealized holding losses on HTM securities . . . . . . . . . . . . . . . . . . .
3,799
3,731
Unrealized losses on cash flow hedge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(211)
Net change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,320
4,444
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
47,457
$
40,137
Average stockholders’ equity in 2024 was $43.9 million, an increase of 21.1% from $36.2 million in 2023. At
December 31, 2024, Juniata held 147,895 shares of stock in treasury versus 160,150 at December 31, 2023. Return on
average equity decreased to 14.19% in 2024 from 18.20% in 2023. See the discussion in the 2024 Financial Overview
section.
The Company periodically repurchases shares of its common stock under the share repurchase program approved by the
Board of Directors. The program will remain authorized until all approved shares are repurchased, unless terminated by
the Board of Directors. Repurchases have typically been accomplished through open market transactions and have
complied with all regulatory restrictions on the timing and amount of such repurchases. Shares repurchased have been
added to treasury stock and accounted for at cost. These shares may be reissued for stock option exercises, employee stock
purchase plan purchases, restricted stock awards, to fulfill dividend reinvestment program needs and to supply shares
needed as consideration in an acquisition. During 2024 and 2023, 239 and 27,569 shares, respectively, were repurchased
in conjunction with this program. Treasury shares of 12,494 and 15,639 were also redeemed for stock purchase plan
purchases in 2024 and 2023, respectively. The treasury shares remaining authorized for repurchase in the program were
180,504 as of December 31, 2024.
47
Juniata declared dividends of $0.88 per common share in each of 2024 and 2023 (See Note 14 of The Notes to Consolidated
Financial Statements regarding restrictions on dividends from the Bank to the Company). The dividend payout ratio was
70.63% and 66.80% in 2024 and 2023, respectively. The dividend payout ratio in 2024 was more than 2023 due primarily
to lower net income in 2024 compared to 2023. In January 2024, the Board of Directors declared a dividend of $0.22 per
share to stockholders of record on February 14, 2025, payable on February 28, 2025.
Juniata’s book value per share at December 31, 2024 was $9.48 as compared to $8.04 at December 31, 2023. Juniata’s
average equity to assets ratio for 2024 and 2023 was 5.11% and 4.32%, respectively. Refer also to the Capital Risk section
in the Asset / Liability management discussion that follows.
ASSET / LIABILITY MANAGEMENT OBJECTIVES
Management believes that optimal performance is achieved by maintaining overall risks at a low level. Therefore, the
objective of asset/liability management is to control risk and produce consistent, high quality earnings independent of
changing interest rates. The Company has identified five major risk areas discussed below:
•
Liquidity Risk;
•
Capital Risk;
•
Interest Rate Risk;
•
Investment Portfolio Risk; and
•
Economic Risk.
Liquidity Risk
Juniata seeks to have adequate liquid resources available to fulfill contractual obligations that require future cash payments.
Through liquidity risk management, the Company seeks to maintain its ability to readily meet commitments to fund loans,
purchase assets and other securities and repay deposits and other liabilities. Liquidity management also includes the ability
to manage unplanned changes in funding sources and recognize and address changes in market conditions that affect the
quality of liquid assets. Juniata has developed a methodology for assessing its liquidity risk through an analysis of its
primary and total liquidity sources and relies on three main types of liquidity sources: (1) asset liquidity, (2) liability
liquidity and (3) off-balance sheet liquidity.
Asset liquidity refers to assets that we are quickly able to convert into cash, consisting of cash, federal funds sold and
securities. Short-term liquid assets generally consist of federal funds sold and securities maturing over the next
twelve months. The quality of our short-term liquidity is good; as federal funds are unimpaired by market risk and as bonds
approach maturity, their value moves closer to par value. Liquid assets tend to reduce earnings when there is not an
immediate use for such funds, since normally these assets generate income at a lower rate than loans or other longer-term
investments.
Liability liquidity refers to funding obtained through deposits. The largest challenge associated with liability liquidity is
cost. Juniata’s ability to attract deposits depends primarily on several factors, including sales effort, competitive interest
rates and other conditions that help maintain consumer confidence in the stability of the financial institution. Large
certificates of deposit, public funds and brokered deposits are all acceptable means of generating and providing funding.
If the cost is favorable or fits the overall cost structure of the Bank, then these sources have many benefits. They are readily
available, come in large block size, have investor-defined maturities and are generally low maintenance.
Off-balance sheet liquidity is closely tied to liability liquidity. Sources of off-balance sheet liquidity include Federal Home
Loan Bank borrowings, repurchase agreements, brokered deposits and federal funds lines with correspondent banks. These
sources provide immediate liquidity to the Bank and are available to be deployed when a need arises. These instruments
also come in large block sizes, have investor-defined maturities and generally require low maintenance.
“Available liquidity” encompasses all three sources of liquidity when determining liquidity adequacy and measures the
Bank’s access to short-term funding sources for immediate needs and long-term funding sources when the need is
determined to be permanent. Management uses both on-balance sheet liquidity and off-balance sheet liquidity to manage
its liquidity position. The Company’s liquidity strategy seeks to maintain an adequate volume of high-quality liquid
instruments to facilitate customer liquidity demands. Management also maintains sufficient capital, which provides access
48
to the liability and off-balance sheet sides of the balance sheet for funding. An active knowledge of debt funding sources
is important to liquidity adequacy.
Contingency funding management involves maintaining contingent sources of immediate liquidity. Management believes
that it must consider an array of available sources in terms of volume, maturity, cash flows and pricing. To meet demands
in the normal course of business or for contingency, secondary sources of funding such as public funds deposits,
collateralized loans, sales of investment securities or sales of loan receivables are considered.
It is the Company’s policy to maintain a primary liquidity ratio greater than 7.5% and a total liquidity ratio greater than
10% of total assets. The primary liquidity ratio equals liquid assets divided by total assets, where liquid assets equal the
sum of cash and due from banks, federal funds sold, interest bearing deposits with other banks and available for sale
securities. Total liquidity is comprised of all components noted in primary liquidity plus securities classified as held-to-
maturity, if any. If either of these liquidity ratios falls below the minimum ratio, it is the Company’s policy to increase
liquidity in a timely manner to achieve the required ratio. As of December 31, 2024, the Company’s primary and total
liquidity ratios were 8.9% and 12.5%, respectively.
It is the Company’s policy to maintain available liquidity, when combined with on-balance sheet liquidity, greater than
15% of total assets and contingency liquidity, when combined with on-balance sheet liquidity and available liquidity,
greater than 22.5% of total assets. As of December 2024, the Company’s available and contingency liquidity ratios were
22.0% and 55.0%, respectively.
Juniata is a member of the FHLB of Pittsburgh, which provides short-term liquidity and a source for long-term borrowings.
The Bank uses this facility to satisfy temporary funding needs throughout the year. The Bank’s maximum borrowing
capacity with the FHLB was $249.3 million, with a balance of $32.9 million outstanding as of December 31, 2024. To
borrow additional amounts, the FHLB would require the Bank to purchase additional FHLB Stock. The Bank must
maintain sufficient qualifying collateral to secure all outstanding advances.
As of December 31, 2024, the Company had no borrowings outstanding with the Federal Reserve and an unused borrowing
capacity of $51.1 million with the Federal Reserve. The Company also has an unsecured line of credit with a correspondent
bank totaling $11.0 million, of which no funds were drawn at December 31, 2024. These funding sources are periodically
drawn upon to ensure the availability of funds.
The Company has an internal policy limit for brokered deposits of $175.0 million. As of December 31, 2024, the Company
had no brokered deposits.
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.
Capital Risk
The Company seeks to maintain sufficient core capital to protect depositors and shareholders and to take advantage of
business opportunities while ensuring that it has resources to absorb the risks inherent in the business. Federal banking
regulators have established capital adequacy requirements for banks and bank holding companies based on risk factors,
which require more capital backing for assets with higher potential credit risk than assets with lower credit risk.
The Bank is subject to risk-based capital standards by which banks are evaluated in terms of capital adequacy. These
regulatory capital requirements are administered by the federal banking agencies. Failure to meet minimum capital
requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material adverse effect on the consolidated financial statements. Under capital adequacy guidelines
and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve
quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices. The Bank’s capital and classification are also subject to qualitative judgments by the regulators.
Management believes that, as of December 31, 2024, the Bank met all capital adequacy requirements to which it is subject.
49
Prompt corrective action regulations provide five classifications: well-capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to
represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits.
If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are
required. At year-end 2024 and 2023, the most recent regulatory notifications categorized the Bank as well-capitalized
under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that
management believes have changed the Bank’s category.
The regulatory capital requirements established by the U.S. Basel III Capital Rules require financial institutions to
maintain: (a) Common Equity Tier 1 (CET1) to risk-weighted assets ratio of at least 4.5%; (b) a minimum ratio of tier 1
capital to risk-weighted assets of at least 6.0%; (c) a minimum ratio of total (that is, tier 1 plus tier 2) capital to risk-
weighted assets of at least 8.0%; and (d) a minimum leverage ratio of 3.0%, calculated as the ratio of tier 1 capital balance
sheet exposures plus certain off-balance sheet exposures (computed as the average for each quarter of the month-end ratios
for the quarter). However, unless the Bank maintains an additional 2.5% “capital conservation buffer” above
the percentages stated above in (a) – (c), the Company may be unable to obtain capital distributions from it, which could
negatively impact the Company’s ability to pay dividends, service debt obligations or repurchase common stock. In
addition, such a failure could result in a restriction on the Company’s ability to pay certain cash bonuses to executive
officers, negatively impacting the Company’s ability to retain key personnel. See Note 14 of Notes to the Consolidated
Financial Statements.
Interest Rate Risk
For most financial institutions, including Juniata, interest rate risk primarily reflects exposures to changes in interest rates.
Interest rate fluctuations affect earnings by changing net interest income and other interest-sensitive income and expense
levels. Interest rate changes also affect capital by impacting the net present value of a bank’s future cash flows, and the
cash flows themselves, as rates change. Interest rate risk is inherent in the banking industry. However, excessive interest
rate risk can threaten a bank’s earnings, capital, liquidity and solvency. The Company’s sensitivity to changes in interest
rate movements is continually monitored by the Asset Liability Management Committee (“ALCO”). At December 31,
2024, the Company’s cumulative repricing gap analysis indicated a liability-sensitive balance sheet through one year when
measured on a static basis.
Investment Portfolio Risk
Management considers its investment portfolio risk as the amount of appreciation or depreciation the investment portfolio
will sustain when interest rates change. The securities portfolio will decline in value when interest rates rise and increase
in value when interest rates decline. Securities with long maturities, excessive optionality (because of call features) and
unusual indexes tend to produce the most market risk during interest rate movements.
Economic Risk
Economic risk is the risk that the long-term or underlying value of the Company will change if interest rates change.
Economic value of equity (“EVE”) represents the change in the value of the balance sheet without regard to business
continuity. Rate shocks are applied to all financial assets and liabilities, using parallel and non-parallel rate shifts of 100
to 400 basis points to estimate the change in EVE under the various hypothetical scenarios. As of December 31, 2024, in
a rising rate environment, the modeling results for all basis point rate increases indicated the Company’s loss in value of
assets was greater than the present value gain in liabilities; however, the Company remained within EVE policy guidelines
for all rate shock scenarios.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has numerous off-balance sheet loan obligations that exist to meet the financing needs of its customers.
These financial instruments include commitments to extend credit, unused lines of credit and letters of credit. Because
many commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. These instruments involve, to varying degrees, elements of credit and interest rate risk
that are not recognized in the consolidated financial statements. The Company does not expect that these commitments
will have an adverse effect on its liquidity position.
50
Exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to
extend credit and financial guarantees written is represented by the contractual notional amount of those instruments. The
Company uses the same credit policies in making these commitments as it does for on-balance sheet instruments. The
Company had outstanding loan origination commitments aggregating $133.7 million and $125.7 million on December 31,
2024 and 2023, respectively. Additionally, on December 31, 2024 and 2023, respectively, the Company had $11.3 million
and $11.6 million outstanding in unfunded lines of credit commitments extended to its customers.
Letters of credit are instruments issued by the Company that guarantee payment by the Bank to the beneficiary in the event
of default by the Company’s customer in the non-performance of an obligation or service. Most letters of credit are
extended for a one-year period. The credit risk involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. The Company holds collateral supporting those commitments for which collateral
is deemed necessary. The amount of the liability as of December 31, 2024 and 2023 for guarantees under letters of credit
issued was not material. The maximum undiscounted exposure related to these guarantees on December 31, 2024 was $4.2
million, and the approximate value of underlying collateral upon liquidation that would be expected to cover this maximum
potential exposure was $50.2 million.
EFFECTS OF INFLATION
The performance of a bank is affected more by changes in interest rates than by inflation; therefore, the effect of inflation
is normally not as significant to the Company as it is to other businesses and industries. A bank’s operating expenses may
increase during inflationary times as the price of goods and services increase.
A bank’s performance is also affected during recessionary periods. In times of recession, a bank usually experiences a
tightening on its earning assets and on its profits. A recession is usually an indicator of higher unemployment rates, which
could mean an increase in the number of nonperforming loans because of layoffs and other deterioration of consumers’
financial condition.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
51
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following audited financial statements are set forth in this Annual Report on Form 10-K on the following pages:
REPORT ON MANAGEMENT’S ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL
REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 173) . . . . . . . . . . . .
53
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55
CONSOLIDATED STATEMENTS OF INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58
CONSOLIDATED STATEMENTS OF CASH FLOWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60
52
REPORT ON MANAGEMENT’S ASSESSMENT OF INTERNAL
CONTROL OVER FINANCIAL REPORTING
Management is responsible for the preparation, integrity and fair presentation of the consolidated financial statements
included in this Annual Report on Form 10-K. The consolidated financial statements and notes included in this annual
report have been prepared in conformity with accounting principles generally accepted in the United States of America,
and as such, include some amounts that are based on management’s best estimates and judgments.
The Company’s management is responsible for establishing and maintaining effective internal control over financial
reporting. The system of internal control over financial reporting, as it relates to the financial statements, is evaluated for
effectiveness by management and tested for reliability through a program of internal audits and management testing and
review. Actions are taken to correct potential deficiencies as they are identified. Any system of internal control, no matter
how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and
misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control
effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only a reasonable
assurance with respect to financial statement preparation.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31,
2024. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).
Based on our assessment, management concluded that as of December 31, 2024, the Company’s internal control over
financial reporting was effective and met the criteria of the Internal Control-Integrated Framework (2013).
Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules
of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual
report.
Marcie A. Barber
Michael W. Wolf
President and Chief Executive Officer
Chief Financial Officer
53
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders and the Board of Directors of Juniata Valley Financial Corp.
Mifflintown, Pennsylvania
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial condition of Juniata Valley Financial Corp. (the
"Company") as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income,
stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "financial
statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended
in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
54
Allowance for Credit Losses on Loans – Qualitative Factors
The allowance for credit losses (the “ACL”) as described in Notes 2 and 6 is a valuation account that is deducted from the
loans’ amortized cost basis to present the net amount expected to be collected on the loans. The ACL on loans was $6.2
million as of December 31, 2024 and the provision for credit losses on loans was $534,000 for the year ended December 31,
2024. The ACL requires a projection of credit losses estimated over the contractual term of the loans, adjusted for expected
prepayments when appropriate.
The Company measures expected credit losses based on a collective (pool) basis when similar risk characteristics exist in
the loan portfolio. The ACL for pooled loans is the sum of quantitative and qualitative loss estimates. Management
estimates the allowance balance using relevant available information, from internal and external sources, related to past
events, current conditions and reasonable and supportable forecasts of certain macro-economic variables. Historical credit
loss experience provides the basis for the estimation of expected credit losses. Adjustments to the historical loss
information are made for differences in current loan-specific risk characteristics such as differences in underwriting
standards, portfolio mix, lending personnel, delinquency trends, credit concentrations, loan review results, changes in
collateral values, as well as the impact of changes in regulatory and business environment or other relevant factors. Weights
and risks are assigned to the qualitative factors based on factors not considered in quantitative analysis. Evaluations of the
loan portfolio and individual credits require certain estimates, assumptions and judgements as to the facts and
circumstances related to particular situations or credits.
We consider the auditing of the Company’s qualitative factors within the ACL a critical audit matter, due to the subjective
and complex judgments used by management in the determination of the qualitative factors used in the calculation. This
resulted in a high degree of auditor judgment, a high degree of auditor subjectivity, and significant audit effort in
performing audit procedures over the qualitative factors.
The primary procedures we performed to address this critical audit matter included evaluating:
•
The appropriateness of significant judgments applied in the qualitative framework, including the qualitative
factors chosen, associated weightings, and allocation range within the framework.
•
The application of risk assignments for the individual qualitative factors, including the appropriateness of
management’s basis for risk level assignments.
•
The relevance and reliability of data used in determining the risk level assignments.
/s/ Crowe LLP
We have served as the Company's auditor since 2019.
Washington, D.C.
March 26, 2025
55
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share data)
December 31, 2024 December 31, 2023
ASSETS
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
5,064 $
17,189
Interest bearing deposits with banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,934
11,741
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,998
28,930
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,189
1,073
Debt securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64,623
67,564
Debt securities held to maturity (fair value $182,773 and $198,147, respectively) . . . . . . . . . . . . . . . . . .
191,627
200,644
Restricted investment in bank stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,530
1,707
Total loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
533,869
525,394
Less: Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,183)
(5,677)
Total loans, net of allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
527,686
519,717
Premises and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,382
8,180
Bank owned life insurance and annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,214
14,841
Investment in low income housing partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
832
1,154
Core deposit and other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
258
343
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,812
9,812
Mortgage servicing rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
83
Deferred tax asset, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,842
11,319
Accrued interest receivable and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,812
5,188
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
848,874 $
870,555
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
196,801 $
197,027
Interest bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
551,156
552,018
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
747,957
749,045
Short-term borrowings and repurchase agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42,242
52,810
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,000
20,000
Other interest bearing liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
830
951
Accrued interest payable and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,388
7,612
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
801,417
830,418
Commitments and contingent liabilities
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 - 5,151,279
shares at December 31, 2024 and December 31, 2023; Outstanding - 5,003,384 shares at
December 31, 2024 and 4,991,129 shares at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,151
5,151
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,896
24,924
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53,126
51,297
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(33,320)
(38,640)
Cost of common stock in Treasury: 147,895 shares at December 31, 2024; 160,150 shares at
December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,396)
(2,595)
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
47,457
40,137
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
848,874 $
870,555
See The Notes to Consolidated Financial Statements
56
JUNIATA FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Year Ended
(Dollars in thousands, except share data)
December 31,
2024
2023
Interest and dividend income:
Loans, including fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
31,109
$
26,728
Taxable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,749
6,193
Tax-exempt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118
139
Other interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
140
121
Total interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37,116
33,181
Interest expense:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,167
8,247
Short-term borrowings and repurchase agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,719
1,733
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
268
471
Other interest bearing liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33
38
Total interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,187
10,489
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,929
22,692
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
534
500
Net interest income after provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,395
22,192
Non-interest income:
Customer service fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,767
1,376
Debit card fee income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,752
1,770
Earnings on bank-owned life insurance and annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
236
222
Trust fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
469
466
Commissions from sales of non-deposit products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
388
337
Fees derived from loan activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
682
500
Change in value of equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115
17
Gain from life insurance proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
161
Other non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
360
472
Total non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,825
5,321
Non-interest expense:
Employee compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,022
8,454
Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,448
2,355
Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,412
1,289
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
863
659
Data processing expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,881
2,937
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,134
848
Taxes, other than income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
191
184
FDIC Insurance premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
575
504
Gain on other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(16)
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85
81
Amortization of investment in low-income housing partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
322
353
Merger and acquisition expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
227
Other non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,079
2,072
Total non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21,012
19,947
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,208
7,566
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
979
970
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6,229
$
6,596
Earnings per share
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1.25
$
1.32
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1.24
$
1.31
See The Notes to Consolidated Financial Statements
57
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year Ended December 31,
2024
2023
(Dollars in thousands)
Pre-Tax
Tax
Net-of-Tax
Pre-Tax
Tax
Net-of-Tax
Amount
Effect Amount Amount
Effect Amount
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,208 $ (979) $ 6,229 $ 7,566 $ (970) $ 6,596
Other comprehensive income:
Securities
Available for sale securities
Unrealized holding gain (loss) arising during
the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,925 (404) 1,521
(370)
77
(293)
Held to maturity securities
Amortization of unrealized holding losses on
held to maturity securities (2) (3) . . . . . . . . . . . . 4,847 (1,048) 3,799 4,767 (1,036) 3,731
Cash Flow Hedge
Unrealized gain on cash flow hedge . . . . . . . . . . .
—
—
—
2
(1)
1
Reclassification adjustment for gain included
in net income (1) (2) . . . . . . . . . . . . . . . . . . . . .
—
—
—
(269)
57
(212)
Other comprehensive income . . . . . . . . . . . . . . . . . . . 6,772 (1,452) 5,320 4,130 (903) 3,227
Total comprehensive income . . . . . . . . . . . . . . . . . . . $ 13,980 $ (2,431) $ 11,549 $ 11,696 $ (1,873) $ 9,823
(1)
Amounts are included in interest expense on short-term borrowings and repurchase agreements and in other non-interest income on the Consolidated
Statements of Income.
(2)
Income tax amounts are included in the income tax provision on the Consolidated Statements of Income.
(3)
Amounts are included in interest income on the Consolidated Statements of Income.
See The Notes to Consolidated Financial Statements
58
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Year ended December 31, 2024
Accumulated
(Dollars in thousands, except share
Number
Other
Total
data)
of Shares Common
Retained Comprehensive
Treasury Stockholders’
Outstanding
Stock Surplus Earnings Income (Loss)
Stock
Equity
Balance, January 1, 2024 . . . . . . . . 4,991,129 $ 5,151 $ 24,924 $ 51,297 $
(38,640) $ (2,595) $ 40,137
Net income . . . . . . . . . . . . . . . . . . . . .
6,229
6,229
Other comprehensive income . . . . . .
5,320
5,320
Cash dividends at $0.88 per share . .
(4,400)
(4,400)
Stock-based compensation . . . . . . . .
142
142
Purchase of treasury stock . . . . . . . .
(239)
(3)
(3)
Treasury stock issued for stock
plans . . . . . . . . . . . . . . . . . . . . . . . .
12,494
(170)
202
32
Balance, December 31, 2024 . . . . . 5,003,384 $ 5,151 $ 24,896 $ 53,126 $
(33,320) $ (2,396) $ 47,457
Year ended December 31, 2023
Accumulated
(Dollars in thousands, except share
Number
Other
Total
data)
of Shares Common
Retained Comprehensive
Treasury Stockholders’
Outstanding
Stock Surplus Earnings
Income (Loss)
Stock
Equity
Balance, January 1, 2023 . . . . . . . . 5,003,059 $ 5,151 $ 24,986 $ 49,961 $
(41,867) $ (2,538) $ 35,693
Cumulative change in accounting
principle (ASC 326) . . . . . . . . . . . .
(854)
(854)
Net income . . . . . . . . . . . . . . . . . . . . .
6,596
6,596
Other comprehensive income . . . . . .
3,227
3,227
Cash dividends at $0.88 per share . .
(4,406)
(4,406)
Stock-based compensation . . . . . . . .
143
143
Purchase of treasury stock . . . . . . . .
(27,569)
(324)
(324)
Treasury stock issued for stock
plans . . . . . . . . . . . . . . . . . . . . . . . .
15,639
(205)
267
62
Balance, December 31, 2023 . . . . . 4,991,129 $ 5,151 $ 24,924 $ 51,297 $
(38,640) $ (2,595) $ 40,137
See The Notes to Consolidated Financial Statements
59
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Year Ended December 31,
2024
2023
Operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6,229
$
6,596
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
534
500
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
733
563
Net amortization of securities premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
123
133
Net amortization of loan origination costs (fees) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80
(112)
Deferred net loan origination costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(572)
(575)
Amortization of intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85
81
Amortization of investment in low income housing partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . .
322
353
Net amortization of purchase fair value adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)
(4)
Change in value of equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(115)
(17)
Net gain on other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(16)
Earnings on bank owned life insurance and annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(236)
(222)
Deferred income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
(31)
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
142
143
Mortgage servicing right adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
9
Gain from life insurance proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(56)
(161)
Decrease (increase) in accrued interest receivable and other assets . . . . . . . . . . . . . . . . . . . . . . . . .
366
(1,228)
(Decrease) increase in accrued interest payable and other liabilities . . . . . . . . . . . . . . . . . . . . . . . .
(2,345)
1,853
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,335
7,865
Investing activities:
Purchases of:
Restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(823)
—
Premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,935)
(356)
Bank owned life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(717)
—
Bank owned life insurance premium and annuity payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(27)
(31)
Proceeds from:
Maturities of and principal repayments on securities available for sale . . . . . . . . . . . . . . . . . . . . . .
4,742
5,470
Maturities of and principal repayments on securities held to maturity . . . . . . . . . . . . . . . . . . . . . . .
13,864
13,687
Redemption of FHLB stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
1,959
Life insurance claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
663
770
Sale of other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
55
Sale of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
52
Sale of other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
—
Net increase in loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7,994)
(40,176)
Net cash received in acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
17,384
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,783
(1,186)
Financing activities:
Net (decrease) increase in deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,111)
18,820
Net decrease in short-term borrowings and securities sold under agreements to repurchase . . . . . . . . .
(10,568)
(2,900)
Repayment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(15,000)
—
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,400)
(4,406)
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
(324)
Treasury stock issued for employee stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
62
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(31,050)
11,252
Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(17,932)
17,931
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,930
10,999
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
10,998
$
28,930
Supplemental information:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
14,708
$
9,425
Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
915
1,035
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
—
$
39
Transfer of loans to repossessed vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
—
See The Notes to Consolidated Financial Statements
60
JUNIATA VALLEY FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2024 and 2023
1. NATURE OF OPERATIONS
Juniata Valley Financial Corp. (“Juniata” or the “Company”) is a bank holding company operating in central and northern
Pennsylvania for the purpose of delivering financial services within its local market. Through its wholly owned banking
subsidiary, The Juniata Valley Bank (the “Bank”), Juniata provides retail and commercial banking and other financial
services through 14 branch locations located in Juniata, Mifflin, Perry, McKean, Potter and Franklin Counties.
Additionally, in Mifflin, Juniata and Centre Counties, the Company maintains four offices for loan production, trust
services and wealth management sales. Each of the Company’s lines of business are part of the same reporting segment,
whose operating results are regularly reviewed and managed by a centralized executive management group. As a result,
the Company has only one reportable segment for financial reporting purposes. The Bank provides a full range of banking
services, including online and mobile banking, an automatic teller machine network, checking accounts, identity protection
products for consumers, savings accounts, money market accounts, fixed rate certificates of deposit, club accounts, secured
and unsecured commercial and consumer loans, construction and mortgage loans, online account opening, safe deposit
facilities and credit loans with overdraft checking protection. The Bank also provides a variety of trust services. The
Company has a contractual arrangement with a broker-dealer to allow the offering of annuities, mutual funds, stock and
bond brokerage services and long-term care insurance to its local market. The Bank operates under a state bank charter
and is subject to regulation by the Pennsylvania Department of Banking and the Federal Deposit Insurance Corporation.
Juniata is subject to regulation by the Board of Governors of the Federal Reserve Bank and the Pennsylvania Department
of Banking and Securities.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of Juniata Valley Financial Corp. and its wholly owned subsidiary conform to accounting
principles generally accepted in the United States of America (“GAAP”) and to general financial services industry
practices. A summary of the more significant accounting policies applied in the preparation of the accompanying
consolidated financial statements follows.
Principles of Consolidation
The consolidated financial statements include the accounts of Juniata Valley Financial Corp. and its wholly owned
subsidiary, The Juniata Valley Bank. All significant intercompany transactions and balances have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company generally acts in a principal capacity, on its own behalf, in most contracts with customers. In such
transactions, revenue and related costs to provide these services are recognized on a gross basis in the financial statements.
In some cases, the Company acts in an agent capacity, deriving revenue through assisting other entities in transactions
with its customers. In such transactions, revenue and the related costs to provide the services are recognized on a net basis
in the financial statements. These transactions primarily relate to non-deposit product commissions and fees derived from
customers’ use of various interchange and ATM/debit card networks.
All the Company’s revenue from contracts with customers in the scope of ASC Topic 606, Revenue from Contracts with
Customers, are recognized within non-interest income on the consolidated statements of income. Revenue streams not
within the scope of ASC 606 included in non-interest income on the consolidated statements of income include earnings
on bank-owned life insurance and annuities, income from unconsolidated subsidiary, fees derived from loan activity,
61
mortgage banking income, gain/loss on sales and calls of securities, and the change in value of equity securities. Refer to
Note 18 for a description of the Company’s sources of revenue accounted for under ASC 606.
Cash Flows
For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, interest
bearing demand deposits with banks and federal funds sold. Generally, federal funds are sold for one-day periods.
Debt Securities
Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent
and ability to hold them to maturity. Debt securities classified as available for sale are those securities that the Company
intends to hold for an indefinite period but not necessarily to maturity. Securities available for sale are carried at fair value,
with the unrealized gains and losses, net of tax, reported as a component of other comprehensive income. Interest income
includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-
yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated.
Premiums on callable debt securities are amortized to their earliest call date. Gains and losses on sales are recorded on the
trade date and determined using the specific identification method.
Allowance for Credit Losses – Held to Maturity Securities
Management measures expected credit losses on held to maturity debt securities on a collective basis by major security
type. Accrued interest receivable on held to maturity debt securities, recorded in accrued interest receivable and other
assets on the Consolidated Statements of Condition, totaled $364,000 and $384,000 at December 31, 2024 and 2023,
respectively, and is excluded from the estimate of credit losses. The estimate of expected credit losses considers historical
credit loss information adjusted for current conditions and reasonable and supportable forecasts.
Management classifies the held to maturity portfolio into two security types: obligations of U.S. government sponsored
enterprises and mortgage-backed securities. All the Company’s held to maturity debt securities are issued by U.S.
government agencies or U.S. government-sponsored enterprises. These securities are either explicitly or implicitly
guaranteed by the U.S. government, except for the Federal Farm Credit Bank securities, but all are highly rated by major
rating agencies and have a long history of no credit losses.
Allowance for Credit Losses – Available for Sale Securities
For available for sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell,
or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either
of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value
through income. For debt securities available for sale that do not meet that criteria, the Company evaluates whether the
decline in fair value resulted from credit losses or other factors. In making this assessment, management considers the
extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and
adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss
exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis
of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss
exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than
the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized
in other comprehensive income.
Changes in the allowance for credit losses are recorded as credit loss expense (or reversal). Losses are charged against the
allowance when management believes the uncollectibility of an available for sale security is confirmed or when either of
the criteria regarding intent or requirement to sell is met. Accrued interest receivable on available for sale debt securities,
recorded in accrued interest receivable and other assets on the Consolidated Statements of Condition, totaled $286,000 at
December 31, 2024 and is excluded from the estimate of credit losses.
Equity Securities
Equity securities are carried at fair value, with changes in fair value reported in net income. Equity securities without
readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from
observable price changes in orderly transactions for the identical or a similar investment.
62
Restricted Investment in Bank Stock
The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of
borrowings and other factors and may invest in additional amounts. The Bank also owns restricted stock investments in
the Atlantic Community Bankers Bank (“ACBB”) and Client-Owned Core Processing (“COCC”). All restricted stock is
carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of
par value. Both cash and stock dividends are reported as income. The Bank owned $2.3 million in restricted stock
investments with the FHLB at December 31, 2024 and $1.6 million at December 31, 2023. The Bank owned $80,000 in
restricted stock investments with ACBB at December 31, 2024 and 2023. The Bank owned $130,000 in restricted stock
investments with COCC at December 31, 2024 and none at December 31, 2023.
Loans
Loans that the Company originated and has the intent and ability to hold for the foreseeable future or until maturity or
payoff are stated at the outstanding unpaid principal balances, net of any deferred fees or costs and the allowance for credit
losses. Accrued interest receivable on loans, reported in accrued interest receivable and other assets on the Consolidated
Statements of Condition, totaled $1.6 million and $1.7 million at December 31, 2024 and December 31, 2023, respectively,
is excluded from the estimate of credit losses. Interest income on all loans, other than nonaccrual loans, is accrued over
the term of the loans based on the amount of principal outstanding. Unearned income is amortized to income over the life
of the loans, using the interest method.
The loan portfolio includes the following classes: (1) commercial, financial and agricultural, (2) real estate - commercial,
(3) real estate - construction, (4) real estate – mortgage, (5) obligations of states and political subdivisions, and (6) personal
loans.
Loans on which the accrual of interest has been discontinued are designated as non-accrual loans. Accrual of interest on
loans is generally discontinued when the contractual payment of principal or interest has become 90 days past due or
reasonable doubt exists as to the full, timely collection of principal or interest. However, it is the Company’s policy to
continue to accrue interest on loans over 90 days past due if (1) they are guaranteed or well secured and (2) there is an
effective means of timely collection in process.
When a loan is placed on non-accrual status, all unpaid interest credited to income is reversed against current period
income. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income,
according to management’s judgment as to the collectability of principal. Generally, accruals are resumed on loans only
when the obligation is brought fully current with respect to interest and principal, has performed in accordance with the
contractual terms for a reasonable period and the ultimate collectability of the total contractual principal and interest is no
longer in doubt. The Company’s nonaccrual and charge-off policies are the same, regardless of the loan class.
Loan Origination Fees and Costs
Loan origination fees and related direct origination costs for a given loan are deferred and amortized over the life of the
loan on a level-yield basis as an adjustment to interest income over the contractual life of the loan. The amount of net
unamortized origination fees carried as an adjustment to outstanding loan balances as of December 31, 2024 and 2023 was
$93,000 and $171,000, respectively.
Purchased Credit Deteriorated (“PCD”) Loans
The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since
origination. PCD loans are recorded at the amount paid. An allowance for credit losses is determined using the same
methodology as other loans held for investment. The initial allowance for credit losses determined on a collective basis is
allocated to individual loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial
amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit
discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance
for credit losses are recorded through credit loss expense.
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Allowance for Credit Losses – Loans
The allowance for credit losses (“ACL”) is a valuation account that is deducted from the loans’ amortized cost basis to
present the net amount expected to be collected on the loans. The ACL requires a projection of credit losses estimated over
the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes
expected extensions, renewals and modifications unless either of the following applies: management has a reasonable
expectation at the reporting date that a loan modification will be executed with an individual borrower, or the extension or
renewal options are included in the original or modified contract at the reporting date and not unconditionally cancellable
by the Company. Loans are charged off against the allowance when management believes the uncollectibility of a loan
balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected
to be charged-off. The ACL is adjusted through the provision for credit losses and reduced by net charge offs of loans.
Management estimates the allowance balance using relevant available information, from internal and external sources,
related to past events, current conditions and reasonable and supportable forecasts of certain macro-economic variables.
Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical
loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting
standards, portfolio mix, lending personnel, delinquency trends, credit concentrations, loan review results, changes in
collateral values, as well as the impact of changes in the regulatory and business environment or other relevant factors.
The Company adopted ASC 326 on January 1, 2023 using the modified retrospective method for all financial assets
measured at amortized cost and OBS credit exposures. The Company recorded a net decrease to retained earnings of
$854,000 as of January 1, 2023 for the cumulative effect of adopting ASC 326. At adoption of ASC 326, management did
not record an allowance for credit losses for the held to maturity or the available for sale debt securities portfolio.
The Company adopted ASC 326 using the prospective transition approach for financial assets purchased with credit
deterioration (“PCD”) that were previously classified as purchased credit impaired (“PCI”) and accounted for under ASC
310-30. In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets
as of the date of adoption. On January 1, 2023, the amortized cost basis of the PCD assets were adjusted to reflect the
addition of $354,000 to the allowance for credit losses.
The following table illustrates the impact of ASC 326.
January 1, 2023
As Reported
Impact of
(Dollars in thousands)
Under
Pre-ASC 326
ASC 326
ASC 326
Adoption
Adoption
Assets:
Loans
Commercial, financial and agricultural . . . . . . . . . . . . .
$
634
$
740
$
(106)
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . . . . .
2,421
2,799
(378)
Real estate - construction:
1-4 family residential construction . . . . . . . . . . . . . .
183
104
79
Other construction loans . . . . . . . . . . . . . . . . . . . . . .
670
778
(108)
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,136
1,157
(21)
Obligations of states and political subdivisions . . . . . .
45
39
6
Personal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49
60
(11)
Allowance for credit losses on loans . . . . . . . . . . . . . . . . . .
$
5,138
$
5,677
$
(539)
Liabilities:
Allowance for credit losses on OBS credit exposures . . . .
$
448
$
8
$
440
The Company currently utilizes the Discounted Cash Flow (“DCF”) method to analyze all loan segments as it allows for
the effective incorporation of a reasonable and supportable forecast in a directionally consistent and objective manner. In
the third quarter of 2024, the Company switched from the Weighted Average Remaining Life (“WARM”) method to
analyze the personal loan segment to DCF as it was determined to be a more predictive method for this segment. The DCF
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model has two key components; a loss driver analysis combined with a cash flow analysis. The contractual cash flow is
adjusted for probability of default/loss given defaults (“PD/LGD”) and prepayment speed to establish a reserve level. The
prepayment and curtailment studies are updated quarterly by a third-party for each applicable pool of loans. The Company
estimates losses over a four quarter forecast period using Federal Open Market Committee (“FOMC”) estimates for real
GDP and unemployment rate. Based on the final values in the forecast and the uncertainty of a post-pandemic economic
recovery, management has elected to revert to historical loss experience for periods beyond four quarters. The economic
factors considered as part of the ACL were selected after a rigorous regression analysis and model selection process.
Additionally, the Company uses reasonable credit risk assumptions based on an annual report produced by Moody’s for
the obligations of states and political subdivisions segment.
The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The
Company has identified the following portfolio segments and measures the allowance for credit losses using the following
methods:
Portfolio Segments
Methodology
Loss Drivers
Commercial, financial and agricultural . . . . . . . . . . .
DCF
National unemployment & national GDP
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . . .
DCF
National unemployment & national GDP
Real estate - construction:
1-4 family residential construction . . . . . . . . . . . .
DCF
National unemployment & national GDP
Other construction loans . . . . . . . . . . . . . . . . . . . .
DCF
National unemployment & national GDP
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . .
DCF
National unemployment & national GDP
Obligations of states and political subdivisions . . . .
DCF
Moody’s report
Personal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DCF
National unemployment & national GDP
According to ASC 326, an entity may make an accounting policy election not to measure an allowance for credit losses
for accrued interest receivable if the entity writes off the applicable accrued interest receivable balance in a timely manner.
The Company has made the accounting policy election not to measure an allowance for credit losses for accrued interest
receivable for all loan segments. Accrual of interest on loans is discontinued when the payment of principal or interest is
in doubt or when a loan becomes contractually past due by 90 days or more with respect to principal or interest, except for
loans that are well-secured and in the process of collection. When a loan is placed on nonaccrual status, any accrued but
uncollected interest is reversed from current income.
The determination of the ACL is complex, and the Company makes decisions on the effects of matters that are inherently
uncertain. Evaluations of the loan portfolio and individual credits require certain estimates, assumptions and judgements
as to the facts and circumstances related to particular situations or credits. There may be significant changes in the ACL
in future periods determined by factors prevailing at that point in time along with future forecasts.
Risks associated with each portfolio segment are as follows:
Commercial, Financial and Agricultural Lending:
The Company originates commercial, financial and agricultural loans primarily to businesses located in its primary market
area and surrounding areas. These loans are used for various business purposes, which include short-term loans and lines
of credit to finance machinery and equipment purchases, inventory and accounts receivable. Generally, the maximum term
for loans extended on machinery and equipment is shorter and does not exceed the projected useful life of such machinery
and equipment. Most business lines of credit are written with a five year maturity, subject to an annual credit review.
Commercial loans are generally secured with short-term assets; however, in many cases, additional collateral, such as real
estate, is provided as additional security for the loan. Loan-to-value maximum values have been established by the
Company and are specific to the type of collateral. Collateral values may be determined using invoices, inventory reports,
accounts receivable aging reports, collateral appraisals, and other methods.
In underwriting commercial loans, the Company performs an analysis of the borrower’s character, capacity to repay the
loan, the adequacy of the borrower’s capital and collateral, and conditions affecting the borrower. Evaluation of the
borrower’s past, present and future cash flows is also an important aspect of the Company’s analysis. Concentration
65
analysis assists in identifying industry specific risk inherent in commercial, financial and agricultural lending. Mitigants
include the identification of secondary and tertiary sources of repayment and appropriate increases in oversight.
Commercial, financial and agricultural loans generally present a higher level of risk than certain other types of loans,
particularly during slow economic conditions.
Real Estate - Commercial Lending:
The Company engages in real estate - commercial lending in its primary market area and surrounding areas. The
Company’s real estate - commercial portfolio is secured primarily by residential housing, commercial buildings, raw land
and hotels. Generally, real estate - commercial loans have terms that do not exceed 20 years, have loan-to-value ratios of
up to 80% of the appraised value of the property and are typically secured by personal guarantees of the borrowers. As
economic conditions deteriorate, the Company reduces its exposure in real estate loans with higher risk characteristics. In
underwriting these loans, the Company performs a thorough analysis of the financial condition of the borrower, the
borrower’s credit history, and the reliability and predictability of the cash flow generated by the property securing the loan.
Appraisals on properties securing commercial real estate loans originated by the Company are performed by independent
appraisers. Real estate - commercial loans generally present a higher level of risk than certain other types of loans,
particularly during slow economic conditions.
Real Estate - Construction Lending:
The Company engages in real estate - construction lending in its primary market area and surrounding areas. The
Company’s real estate - construction lending consists of 1-4 family residential construction loans and other construction
loans, which are construction loans for purposes other than constructing 1-4 family residential properties such as land
development and commercial building construction loans. The Company’s 1-4 family residential construction loans are
loans for constructing 1-4 family residential properties, which will secure the loan. Other construction loans are generally
secured with the subject property, and advances are made in conformity with a pre-determined draw schedule supported
by independent inspections. Terms of construction loans depend on the specifics of the project, such as estimated
absorption rates, estimated time to complete, etc.
In underwriting real estate - construction loans, the Company performs a thorough analysis of the financial condition of
the borrower, the borrower’s credit history and, when applicable, the reliability and predictability of the cash flow
generated by the project using feasibility studies, market data, and other resources. Most appraisals on properties securing
real estate - construction loans originated by the Company are performed by independent appraisers. Real estate -
construction loans generally present a higher level of risk than certain other types of loans, particularly during slow
economic conditions. The difficulty of estimating total construction costs adds to the risk as well.
Real Estate - Mortgage Lending:
The Company’s real estate - mortgage portfolio is comprised of 1-4 family residential mortgages and business loans
secured by 1-4 family properties. One-to-four family residential mortgage loan originations, including home equity
installment and home equity lines of credit loans, are generated by the Company’s marketing efforts, its present customers,
walk-in customers and referrals. These loans originate primarily within the Company’s market area or with customers
primarily from the market area. The Company offers fixed-rate and adjustable rate real estate - mortgage loans with a term
up to a maximum of 25-years for both permanent structures and those under construction. The Company’s 1-4 family
residential mortgage originations are secured primarily by properties located in its primary market area and surrounding
areas. Most of the Company’s residential real estate - mortgage loans originate with a loan-to-value of 80% or less. Home
equity installment loans are secured by the borrower’s primary residence with a maximum loan-to-value of 80% and a
maximum term of 15 years. Home equity lines of credit are secured by the borrower’s primary residence with a maximum
loan-to-value of 90% and a maximum term of 20 years.
In underwriting 1-4 family residential real estate loans, the Company evaluates the borrower’s ability to make monthly
payments, the borrower’s repayment history and the value of the property securing the loan. The ability to repay is
determined by the borrower’s employment history, current financial conditions and credit background. The analysis is
based primarily on the customer’s ability to repay and secondarily on the collateral or security. Most properties securing
real estate loans made by the Company are appraised by independent fee appraisers. The Company generally requires
mortgage loan borrowers to obtain an attorney’s title opinion or title insurance and fire and property insurance (including
flood insurance, if necessary) in an amount not less than the amount of the loan. The Company does not engage in sub-
66
prime residential mortgage originations. Residential mortgage loans and home equity loans generally present a lower level
of risk than certain other types of consumer loans because they are secured by the borrower’s primary residence. Risk is
increased when the Company is in a subordinate position for the loan collateral.
Obligations of States and Political Subdivisions:
The Company lends to local municipalities and other tax-exempt organizations. These loans are primarily tax-anticipation
notes and, as such, carry minimal risk. Historically, the Company has never had a loss on any loan of this type.
Personal Lending:
The Company offers a variety of secured and unsecured personal loans, including vehicle loans, mobile home loans and
loans secured by savings deposits as well as other types of personal loans. Personal loan terms vary according to the type
and value of collateral and creditworthiness of the borrower. In underwriting personal loans, a thorough analysis of the
borrower’s willingness and financial ability to repay the loan as agreed is performed. The ability to repay is determined
by the borrower’s employment history, current financial conditions and credit background. Personal loans may entail
greater credit risk than do residential mortgage loans, particularly in the case of personal loans which are unsecured or are
secured by rapidly depreciable assets, such as automobiles or recreational equipment. In such cases, any repossessed
collateral for a defaulted personal loan may not provide an adequate source of repayment of the outstanding loan balance
because of the greater likelihood of damage, loss or depreciation. In addition, personal loan collections are dependent on
the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances.
Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the
amount which can be recovered on such loans.
Allowance for Credit Losses on Off-Balance Sheet Credit Exposures
The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk
via a contractual obligation to extend credit unless that obligation is unconditionally cancellable by the Company. The
allowance for credit losses on off-balance sheet credit exposures is recorded in other liabilities on the consolidated
statement of financial condition and adjusted through the provision for credit losses. The estimate includes consideration
of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded
over its estimated life. At December 31, 2024, the Company had $58.6 million in unfunded commitments and $312,000
in the provision for credit losses for unfunded lending commitments. At December 31, 2023, the Company had $56.0
million in unfunded commitments and $419,000 in the provision for credit losses for unfunded lending commitments.
Concentration of Credit Risk
Most of the Company’s activities are with customers located within Juniata’s footprint in central and northern
Pennsylvania. Note 5 discusses the types of securities in which the Company invests. Note 6 discusses the types of lending
in which the Company engages.
As a percentage of total risk based capital, credit exposure to residential buildings and dwellings represented 83%, credit
exposure to lessors of non-residential buildings and dwellings represented 64%, credit exposure to hotels and motels
represented 48%, credit exposure to builders of new housing for-sale represented 25% and credit exposure to continuing
care retirement communities represented 17% as of December 31, 2024. There were no other concentrations of credit to
any industry equaling more than 15% of total capital. The Bank’s business activities are geographically concentrated in
the counties of Juniata, Mifflin, Perry, Franklin, Centre, McKean, Potter and Snyder, Pennsylvania. The Bank has a
diversified loan portfolio; however, a substantial portion of its debtors’ ability to honor their obligations is dependent upon
the economy in central and northern Pennsylvania.
Loans Held for Sale and Mortgage Servicing Rights
The Company has originated residential mortgage loans with the intent to sell. These individual loans were normally sold
to the buyer immediately. The Company maintains servicing rights on these loans.
When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income
statement effect recorded in gains on sales of loans. Fair value is based on market prices for comparable mortgage servicing
contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated
future net servicing income. Under the fair value measurement method, the Company measures servicing rights at fair
67
value at each reporting date and reports changes in fair value of servicing assets in earnings in the period in which the
changes occur, which are included in other non-interest income on the Consolidated Statements of Income. The fair values
of servicing rights are subject to fluctuations because of changes in estimated and actual prepayment speeds and default
rates and losses. The carrying amount of mortgage servicing rights was $69,000 and $83,000 at December 31, 2024 and
2023, respectively.
Servicing fee income, which is included in fees derived from loan activity on the Consolidated Statements of Income, is
recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or
a fixed amount per loan and are recorded as income when earned. Servicing fees totaled $49,000 and $55,000 for the years
ended December 31, 2024 and 2023, respectively. Late fees and ancillary fees related to loan servicing are not material.
Other Real Estate Owned
Assets acquired in settlement of mortgage loan indebtedness are recorded as other real estate owned (“OREO”) at fair
value less estimated costs to sell, establishing a new cost basis. Physical possession of residential real estate property
collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the
borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or
through a similar legal agreement. These assets are subsequently accounted for at lower of cost or fair value less estimated
costs to sell. If fair value declines after foreclosure, a valuation allowance is recorded through expense. Operating costs
after acquisition are expensed.
Goodwill and Other Intangibles
Goodwill arises from business combinations and is generally determined as the excess of the fair value of the consideration
transferred, plus the fair value of any noncontrolling interest in the acquiree, over the fair value of the net assets acquired
and liabilities assumed as of the acquisition date. Intangible assets with definite useful lives are amortized over their
estimated useful lives to their estimated residual values. Other intangible assets consist of core deposit intangible assets
arising from whole bank acquisitions and are amortized on an accelerated method over their estimated useful lives.
Goodwill is the only intangible asset with an indefinite life on our balance sheet. Goodwill and intangible assets acquired
in a purchase business combination and determined to have an indefinite useful life are not amortized but tested for
impairment at least annually or more frequently if events and circumstances exists that indicate that a goodwill impairment
test should be performed. Juniata has selected December 31 as the date to perform the annual impairment test. There were
no impairment losses recognized based on periodic impairment testing in the years ended December 31, 2024 and 2023.
Derivatives
At the inception of a derivative contract, the Company designates the derivative as one of three types based on the
Company’s intentions and belief as to its likely effectiveness as a hedge. These three types are (1) a hedge of the fair value
of a recognized asset or liability or of an unrecognized firm commitment (“Fair value hedge”), (2) a hedge of a forecasted
transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow
hedge”), or (3) an instrument with no hedging designation (“Stand-alone derivative”). For a fair value hedge, the gain or
loss on the derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized
in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other
comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects
earnings. Change in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings,
as non-interest income.
Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense,
based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported
in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the
items being hedged.
The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management
objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This
documentation includes linking fair value of cash flow hedges to specific assets and liabilities on the balance sheet or to
specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception
and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair
68
values or cash flows of the hedged items. The Company will discontinue hedge accounting if it determines the derivative
is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or
terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment
of the derivative as a hedge is no longer appropriate or intended.
When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest
income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair
value, and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a
cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or
losses that were accumulated in other comprehensive income are amortized into earnings over the same periods in which
the hedged transactions will affect earnings.
The Company is exposed to losses if a counterparty fails to make its payments under a contract in which the Company is
in the net receiving position. The Company anticipates that the counterparties will be able to fully satisfy their obligations
under the agreements. All the contracts to which the Company is a party settle monthly or quarterly. In addition, the
Company obtains collateral above certain thresholds of the fair value of its hedges for each counterparty based upon their
credit standing, and the Company has netting agreements with the dealers with which it does business.
Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed principally using the
straight-line method over the estimated useful lives of the related assets, which range from 3 to 10 years for furniture and
equipment and 25 to 40 years for buildings. Expenditures for maintenance and repairs are charged against income as
incurred. Costs of major additions and improvements are capitalized. Amortization of leasehold improvements is computed
on a straight-line basis over the shorter of the assets’ useful life or the related lease term.
Trust Assets and Revenues
Assets held in a fiduciary capacity are not assets of the Bank or the Bank’s Trust Department and are, therefore, not
included in the consolidated financial statements. Trust revenues are recorded on the accrual basis as the related obligations
are satisfied.
Bank Owned Life Insurance, Annuities and Split-dollar Arrangements
The Company has purchased life insurance policies on certain key executives. Bank owned life insurance is recorded at
the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value
adjusted for other charges or other amounts due that are probable at settlement.
Juniata has committed to a continuation of life insurance coverage for certain persons post-retirement. The estimated
present value of future benefits to be paid was $1.1 million at both December 31, 2024 and December 31, 2023, and is
included in other liabilities. The related net expenses for the years ended 2024 and 2023 were $32,000 and $20,000,
respectively.
Investments in Low-income Housing Partnerships
Juniata has invested as a limited partner in two partnerships that provide low-income housing in Lewistown, Pennsylvania.
The amortization period for one of Juniata’s low-income housing partnership investments ended in January 2023. The
carrying value of the investment in the limited partnerships was $832,000 at December 31, 2024 and $1.2 million at
December 31, 2023. The decline in carrying value in 2024 was the result of amortization since the final remaining draw
occurred in 2019.
Income Taxes
The Company accounts for income taxes in accordance with income tax accounting guidance ASC Topic 740, Income
Taxes.
Current income tax accounting guidance results in two components of income tax expense: current and deferred. Current
income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted
tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes
69
using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax
effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and
laws are recognized in the period in which they occur.
Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets
are reduced by a valuation allowance if, based on the weight of the evidence available, it is more likely than not that some,
or all, of a deferred tax asset will not be realized.
The Company recognizes a benefit for uncertain tax positions if it is more likely than not, based on the technical merits,
that the tax position will be realized or sustained upon examination. The term “more likely than not” means a likelihood
of more than 50 percent; the terms “examined” and “upon examination” also include resolution of the related appeals or
litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and
subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized
upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether
a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information
available at the reporting date and is subject to management’s judgment. The Company recognizes interest and penalties
on income taxes, if any, as a component of income tax expense.
Advertising
The Company follows a policy of charging costs of advertising to expense as incurred. Advertising expenses were
$221,000 and $228,000 in 2024 and 2023, respectively, and included in other non-interest expense.
Off-balance Sheet Financial Instruments
In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of
commitments to extend credit and letters of credit. Such financial instruments are recorded on the consolidated statement
of financial condition when they are funded.
Transfer of Financial Assets
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over
transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee
obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the
transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an
agreement to repurchase them before their maturity.
Earnings Per Common Share
Basic earnings per common share is net income divided by weighted average number of common shares outstanding during
the period. All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are
considered participating securities for this calculation. Diluted earnings per common share includes the dilutive effect of
additional potential common shares issuable under stock options.
Comprehensive Income
Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes
changes in unrealized gains and losses on securities available for sale and unrealized gains and losses on cash flow hedges
arising during the period, as well as reclassification adjustments for realized gains and losses on securities available for
sale and cash flow hedges included in net income.
Loss Contingencies
Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities
when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. Management believes
that there are no such matters that will have a material effect on the financial statements.
Dividend Restrictions
Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to the
Company or by the Company to shareholders.
70
Fair Value of Financial Instruments
Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully
disclosed in a separate footnote. Fair value estimates involve uncertainties and matters of significant judgment regarding
interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items.
Changes in assumptions or in market conditions could significantly affect these estimates.
Stock-based Compensation
The Company sponsors a stock compensation plan for certain key officers which allows, among other stock-based
compensation methods, for the issuance of stock options and restricted stock awards. Prior to 2016, stock options were
used exclusively for long-term compensation. Beginning in 2016, restricted shares awards have been used. Compensation
expense for stock options granted and restricted stock awarded is measured using the fair value of the award on the grant
date and is recognized over the vesting period. The stock-based compensation expense amounts for stock options were
derived based on the fair value of options using the Black-Scholes option-pricing model.
Operating Segments
While the chief operating decision-maker monitors the revenue streams of the various products and services, operations
are managed and financial performance is evaluated, on a Company-wide basis. Operating segments are aggregated into
one segment as operating results for all segments are similar. Accordingly, all the financial service operations are
considered by management to be aggregated in one reportable operating segment. See Note 27.
Reclassifications
Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications
had no effect on prior year net income or stockholders’ equity.
3. RECENT ACCOUNTING STANDARDS UPDATE (“ASU”)
New Accounting Standards Adopted in 2024:
ASU 2023-07, Segment Reporting (Topic 280); Improvements to Reportable Segment Disclosures
The amendments in this ASU are intended to improve reportable segment disclosure requirements primarily through
enhanced disclosures about significant segment expenses. For public business entities, the amendments were effective for
fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.
The Company adopted this guidance effective December 31, 2024. See Note 27.
Pending Accounting Standards:
None.
4. RESTRICTIONS ON CASH AND DUE FROM BANKS
The Bank is required to maintain cash reserve balances with the Federal Reserve Bank if vault cash is insufficient to cover
the reserve requirement. As of December 31, 2024 and 2023, respectively, no reserves were required to be held at the
Federal Reserve Bank.
5. SECURITIES
Equity Securities
Equity securities owned by the Company consist of common stock of various financial services providers (“Bank Stocks”).
The Company had $1.2 million and $1.1 million in equity securities recorded at fair value on the consolidated statements
of financial condition as of December 31, 2024 and December 31, 2023, respectively.
71
During the years ended December 31, 2024 and 2023, the Company recorded a net gains of $115,000 and $17,000,
respectively, on the consolidated statements of income because of the change in fair value of the Company’s equity
securities portfolio.
Debt Securities
The Company’s investment portfolio includes primarily mortgage-backed securities issued by U.S. Government sponsored
agencies backed by residential mortgages (approximately 73%), bonds issued by U.S. Government sponsored agencies
(approximately 18%), corporate debt securities (approximately 6%) and municipalities (approximately 3%) as of
December 31, 2024. Most of the municipal bonds are general obligation bonds with maturities or pre-refunding dates
within 5 years.
At December 31, 2024 and December 31, 2023, in addition to securities of the U.S. Government and its agencies, the
Company had holdings of securities from two issuers in excess of 10% of stockholders’ equity; holdings in Federal Farm
Credit Bank and Pennsylvania Housing Finance securities had fair values of $11.6 million and $4.8 million, respectively,
as of December 31, 2024 and $11.3 million and $4.9 million, respectively, as of December 31, 2023.
On October 1, 2022, the Company reassessed classifications of certain investments transferring $212.3 million in securities
from the available for sale to the held to maturity security classification. The transfer occurred at fair value. The combined
related unrealized loss of $46.8 million was recorded to other comprehensive income and is being amortized out of other
comprehensive income with an offsetting entry to interest income as a yield adjustment through earnings over the
remaining term of the securities. The remaining unamortized balance of the transferred unrealized loss was $28.4 million
at December 31, 2024 and $32.2 million at December 31, 2023.
The amortized cost and fair value of debt securities as of December 31, 2024 and 2023, by contractual maturity, are shown
below. Expected maturities may differ from contractual maturities because the securities may be called or prepaid with or
without prepayment penalties. Securities not due at a single maturity date are shown separately.
(Dollars in thousands)
December 31, 2024
Gross
Gross
Amortized
Fair
Unrealized
Unrealized
Debt Securities Available for Sale
Cost
Value
Gains
Losses
Obligations of U.S. Government sponsored
enterprises
Within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2,500
$
2,495
$
—
$
(5)
After one year but within five years . . . . . . . . . . . .
13,000
12,081
—
(919)
15,500
14,576
—
(924)
Obligations of state and political subdivisions
After one year but within five years . . . . . . . . . . . .
2,780
2,643
—
(137)
After five years but within ten years . . . . . . . . . . .
4,107
3,390
—
(717)
6,887
6,033
—
(854)
Corporate debt securities
After one year but within five years . . . . . . . . . . . .
4,542
4,286
—
(256)
After five years but within ten years . . . . . . . . . . .
13,000
11,072
—
(1,928)
17,542
15,358
—
(2,184)
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . .
30,939
28,656
—
(2,283)
Total
$
70,868
$
64,623
$
—
$
(6,245)
72
(Dollars in thousands)
December 31, 2024
Gross
Gross
Amortized
Fair
Unrecognized
Unrecognized
Debt Securities Held to Maturity
Cost
Value
Gains
Losses
Obligations of U.S. Government sponsored
enterprises
After one year but within five years . . . . . . . . . . . .
$
25,389
$
25,263
$
—
$
(126)
After five years but within ten years . . . . . . . . . . .
5,090
5,059
—
(31)
30,479
30,322
—
(157)
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . .
161,148
152,451
—
(8,697)
Total
$ 191,627
$ 182,773
$
—
$
(8,854)
(Dollars in thousands)
December 31, 2023
Gross
Gross
Amortized
Fair
Unrealized
Unrealized
Debt Securities Available for Sale
Cost
Value
Gains
Losses
Obligations of U.S. Government sponsored
enterprises
After one year but within five years . . . . . . . . . . . .
$
15,500
$
14,173
$
—
$
(1,327)
15,500
14,173
—
(1,327)
Obligations of state and political subdivisions
Within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
500
496
—
(4)
After one year but within five years . . . . . . . . . . . .
2,514
2,387
—
(127)
After five years but within ten years . . . . . . . . . . .
4,355
3,625
—
(730)
7,369
6,508
—
(861)
Corporate debt securities
After one year but within five years . . . . . . . . . . . .
4,608
4,048
—
(560)
After five years but within ten years . . . . . . . . . . .
13,000
9,780
—
(3,220)
17,608
13,828
—
(3,780)
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . .
35,257
33,055
—
(2,202)
Total
$
75,734
$
67,564
$
—
$
(8,170)
(Dollars in thousands)
December 31, 2023
Gross
Gross
Amortized
Fair
Unrecognized
Unrecognized
Debt Securities Held to Maturity
Cost
Value
Gains
Losses
Obligations of U.S. Government sponsored
enterprises
After one year but within five years . . . . . . . . . . . .
$
15,886
$
15,984
$
104
$
(6)
After five years but within ten years . . . . . . . . . . .
13,634
13,702
85
(17)
29,520
29,686
189
(23)
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . .
171,124
168,461
1,917
(4,580)
Total
$ 200,644
$ 198,147
$
2,106
$
(4,603)
Certain obligations of the U.S. Government and state and political subdivisions are pledged to secure public deposits,
securities sold under agreements to repurchase and for other purposes as required or permitted by law. The carrying value
of the pledged assets was $171.5 million and $192.1 million at December 31, 2024 and 2023, respectively.
In addition to cash received from the scheduled maturities of securities, some investment securities available for sale are
sold at current market values through normal operations. There were no sales of securities during the years ended
December 31, 2024 and 2023.
73
The following table summarizes securities available for sale with unrealized and unrecognized losses at December 31,
2024 and December 31, 2023, aggregated by category and length of time in a continuous unrealized or unrecognized loss
position:
Unrealized Losses at December 31, 2024
Less Than 12 Months
12 Months or More
Total
(Dollars in thousands)
Number
Number
Number
of
Fair
Unrealized
of
Fair
Unrealized
of
Fair
Unrealized
Securities
Value
Losses
Securities
Value
Losses
Securities
Value
Losses
Securities available for sale
Obligations of U.S.
Government sponsored
enterprises . . . . . . . . . . . .
— $
— $
—
3 $
14,576 $
(924)
3 $
14,576 $
(924)
Obligations of state and
political subdivisions . . . . .
—
—
—
7
6,033
(854)
7
6,033
(854)
Corporate debt securities . . . .
—
—
—
9
15,358
(2,184)
9
15,358
(2,184)
Mortgage-backed securities . .
—
—
—
33
28,656
(2,283)
33
28,656
(2,283)
Total temporarily
impaired securities
available for sale . . . . .
— $
— $
—
52 $
64,623 $
(6,245)
52 $
64,623 $
(6,245)
Unrealized Losses at December 31, 2023
Less Than 12 Months
12 Months or More
Total
(Dollars in thousands)
Number
Number
Number
of
Fair
Unrealized
of
Fair
Unrealized
of
Fair
Unrealized
Securities
Value
Losses
Securities
Value
Losses
Securities
Value
Losses
Securities available for sale
Obligations of U.S.
Government sponsored
enterprises . . . . . . . . . . . .
— $
— $
—
3 $ 14,173 $
(1,327)
3 $ 14,173 $
(1,327)
Obligations of state and
political subdivisions . . . . .
1
1,456
(11)
7
5,052
(850)
8
6,508
(861)
Corporate debt securities . . . .
—
—
—
9
13,828
(3,780)
9
13,828
(3,780)
Mortgage-backed securities . .
—
—
—
34
33,055
(2,202)
34
33,055
(2,202)
Total temporarily
impaired securities
available for sale . . . . .
1 $
1,456 $
(11)
53 $ 66,108 $
(8,159)
54 $ 67,564 $
(8,170)
At December 31, 2024, three obligations of U.S. Government sponsored enterprises, seven obligations of state and political
subdivisions, nine corporate debt securities and thirty-three mortgage-backed securities available for sale had unrealized
losses. All of these securities were in a continuous loss position for 12 months or more, with the majority of the unrealized
losses related to the Company’s mortgage-backed securities portfolio. The mortgage-backed securities in the Company’s
portfolio are government sponsored enterprise (“GSE”) pass-through instruments issued by the Federal National Mortgage
Association (“FNMA”) or Federal Home Loan Mortgage Corporation (“FHLMC”), which guarantees the timely payment
of principal on these investments.
ASC 326 made targeted improvements to the accounting for credit losses on securities available for sale. The concept of
other-than-temporarily impaired securities has been replaced with the allowance for credit losses. Unlike held to maturity
debt securities, available for sale securities are evaluated on an individual level, and pooling of securities is not allowed.
For available for sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell,
or if it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If
either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to
fair value through income. For debt securities available for sale that do not meet the criteria, the Company evaluates
whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management
considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating
agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a
credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized
cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost
basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the
fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit
losses is recognized in other comprehensive income.
74
Changes in the allowance for credit losses are recorded as credit loss expense (or reversal). Losses are charged against the
allowance when management believes the uncollectibility of an available for sale security is confirmed or when either of
the criteria regarding intent or requirement to sell is met. As of December 31, 2024, management determined that an
immaterial credit loss existed because the decline in fair value of the available for sale debt securities was mostly
attributable to changes in interest rates and other market conditions, rather than erosion of issuer credit quality and, as a
result, timely payment of contractual cash flows, including principal and interest, has continued and is not considered at
risk. Therefore, the Company did not record an allowance for credit losses for these securities as of December 31, 2024
and December 31, 2023.
Credit Quality Indicators
All the Company’s held to maturity debt securities are issued by U.S. government agencies or U.S. government-sponsored
enterprises. These securities are either explicitly or implicitly guaranteed by the U.S. government, except for the Federal
Farm Credit Bank securities, but all are highly rated by major rating agencies and have a long history of no credit losses.
The Company monitors the credit quality of held to maturity debt securities using credit ratings. The credit ratings are
sourced from nationally recognized rating agencies. All held to maturity debt securities were current in their payment of
principal and interest as of December 31, 2024 and December 31, 2023.
The following tables summarize the amortized cost of held to maturity debt securities aggregated by credit quality indicator
based on the latest information available at December 31, 2024 and 2023.
(Dollars in thousands)
December 31, 2024
AAA
Total
Securities held to maturity
Obligations of U.S. Government sponsored enterprises . . . . . . . . . . . . . . . . .
$
30,479
$
30,479
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
161,148
161,148
$
191,627
$
191,627
(Dollars in thousands)
December 31, 2023
AAA
Total
Securities held to maturity
Obligations of U.S. Government sponsored enterprises . . . . . . . . . . . . . . . . .
$
29,520
$
29,520
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
171,124
171,124
$
200,644
$
200,644
6. LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES
Loan Portfolio Classification
The following table presents the loan portfolio by class at December 31, 2024 and 2023.
(Dollars in thousands)
December 31, 2024
December 31, 2023
Commercial, financial and agricultural . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
68,234
$
65,821
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
247,582
223,077
Real estate - construction:
1-4 family residential construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,172
5,085
Other construction loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,655
47,504
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
162,771
162,385
Obligations of states and political subdivisions . . . . . . . . . . . . . . . . . . . . . . . .
13,850
17,232
Personal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,605
4,290
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
533,869
$
525,394
75
The following tables present the activity in the allowance for credit losses by portfolio class for the years ended
December 31, 2024 and December 31, 2023:
Real estate-
Obligations
Commercial,
construction Real estate-
of states
(Dollars in thousands)
financial and
Real estate-
1-4 family construction and political Real estate-
agricultural
commercial residential
other
subdivisions
mortgage Personal
Total
Year Ended
December 31, 2024
Allowance for credit losses:
Beginning balance, . . . . . . . . . . $
740 $
2,799 $
104 $
778 $
39 $
1,157 $
60 $ 5,677
Provision for credit losses . . . . .
254
211
(72)
43
(15)
98
15
534
Loans charged off . . . . . . . . . . .
—
—
—
—
—
—
(40)
(40)
Recoveries collected . . . . . . . . .
—
—
—
—
—
3
9
12
Total ending allowance
balance . . . . . . . . . . . . . . . $
994 $
3,010 $
32 $
821 $
24 $
1,258 $
44 $ 6,183
Real estate-
Obligations
Commercial,
construction
Real estate-
of states
(Dollars in thousands)
financial and Real estate-
1-4 family construction and political Real estate-
agricultural commercial residential
other
subdivisions
mortgage Personal
Total
Year Ended
December 31, 2023
Allowance for loan losses:
Beginning balance, prior to
ASC 326 adoption . . . . . . . . . $
297 $
1,110 $
69 $
1,077 $
54 $
1,385 $
35 $
4,027
Impact of adopting ASC 326 . . .
337
1,204
114
(407)
(9)
(497)
15
757
Initial allowance on loans
purchased with credit
deterioration . . . . . . . . . . . . .
—
106
—
—
—
248
—
354
Provision for credit losses . . . . .
106
379
(79)
108
(6)
(26)
18
500
Loans charged off . . . . . . . . . . .
—
—
—
—
—
(19)
(28)
(47)
Recoveries collected . . . . . . . . .
—
—
—
—
—
66
20
86
Total ending allowance
balance . . . . . . . . . . . . . . . $
740 $
2,799 $
104 $
778 $
39 $
1,157 $
60 $
5,677
Under ASC 326, loans that do not share risk characteristics are not evaluated collectively and are instead individually
evaluated. When management determines foreclosure is probable, expected credit losses are based on the fair value of the
collateral, adjusted for selling costs as appropriate.
The following tables present the amortized cost basis of collateral-dependent loans by class of loans and collateral type as
of December 31, 2024 and 2023, respectively.
(Dollars in thousands)
As of December 31, 2024
Real Estate
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
135
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
256
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
391
(Dollars in thousands)
As of December 31, 2023
Real Estate
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,877
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,934
76
The following tables present the amortized cost basis of loans on nonaccrual status, including nonaccrual status loans with
no allowance, and loans past due over 89 days still accruing as of December 31, 2024 and December 31, 2023, respectively.
(Dollars in thousands)
Nonaccrual with
Nonaccrual with
Loans Past Due
No Allowance
an Allowance
Over 89 Days
As of December 31, 2024
for Credit Loss
for Credit Loss
Still Accruing(1)
Commercial, financial and agricultural . . . . . . . . . . . . . . . .
$
—
$
105
$
—
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
135
—
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
256
—
119
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
256
$
240
$
119
(Dollars in thousands)
Nonaccrual with
Nonaccrual with
Loans Past Due
No Allowance
an Allowance
Over 89 Days
As of December 31, 2023
for Credit Loss
for Credit Loss
Still Accruing(1)
Commercial, financial and agricultural . . . . . . . . . . . . . . . .
$
—
$
18
$
—
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,877
—
—
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
—
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
4,934
$
18
$
—
(1)
These loans are guaranteed, or well-secured, and there is an effective means of collection in process.
Interest income not recorded based on the original contractual terms of the loans for non-accrual loans was $74,000 in
2024 and $44,000 in 2023. Consumer mortgage loans secured by residential real estate properties for which formal
foreclosure proceedings were in process at December 31, 2024 totaled $33,000, while no consumer mortgage loans secured
by residential real estate properties were in the process of formal foreclosure proceedings at December 31, 2023.
The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as
determined by the length of time a recorded payment is past due. Past due status is determined by the contractual terms of
the loan.
The following tables present the classes of the loan portfolio summarized by the past due status as of December 31, 2024
and December 31, 2023:
(Dollars in thousands)
Greater
30‑59 Days
60‑89 Days
Than 89 Days
Total Past
As of December 31, 2024
Past Due(1)
Past Due
Past Due
Due
Commercial, financial and agricultural . . . . . . . . . . . . . . . . . . . . .
$
100
$
—
$
92
$
192
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
180
41
135
356
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
795
334
157
1,286
Personal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
6
—
8
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1,077
$
381
$
384
$
1,842
(Dollars in thousands)
Greater
30‑59 Days
60‑89 Days
Than 89 Days
Total Past
As of December 31, 2023
Past Due(1)
Past Due
Past Due
Due
Commercial, financial and agricultural . . . . . . . . . . . . . . . . . . . . .
$
73
$
—
$
—
$
73
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
117
—
—
117
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
332
90
4
426
Personal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
—
—
9
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
531
$
90
$
4
$
625
(1)
Loans are considered past due when the borrower is in arrears on two or more monthly payments.
77
Occasionally, the Company modifies loans to borrowers in financial difficulty by providing principal forgiveness, term
extension, an other-then-insignificant payment delay or interest rate reduction. When principal forgiveness is provided,
the amount of forgiveness is charged off against the allowance for credit losses. In some cases, the Company may provide
multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially.
If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be
granted.
There were no loans modified to borrowers experiencing financial difficulty during the years ended December 31, 2024
and 2023, and as such, there were no payment defaults on loans modified to borrowers experiencing financial difficulty
during the same year end periods.
If the Company determines a modified loan (or a portion of a loan) has subsequently been deemed uncollectible, the loan
(or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible
amount and the allowance for credit losses is adjusted by the same amount.
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service
their debt such as: current financial information, historical payment experience, credit documentation, public information,
and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as
to credit risk. This analysis includes loans to commercial customers with an aggregate loan exposure greater than $500,000
and for lines of credit in excess of $50,000. This analysis is performed on a continuing basis with all such loans reviewed
annually.
The Company uses the following definitions for risk ratings:
Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close
attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan
or of the institution’s credit position at some future date. Loans in this category are reviewed no less than quarterly.
Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of
the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that
jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain
some loss if the deficiencies are not corrected. Loans in this category are reviewed no less than monthly.
Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added
characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and
values, highly questionable and improbable. Loans in this category are reviewed no less than monthly.
Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered
pass-rated loans.
78
The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified
ratings of special mention, substandard and doubtful within the Company’s internal risk rating system as of December 31,
2024 and December 31, 2023. The decrease in substandard loans as of December 31, 2024 compared to December 31,
2023 was primarily due to the payoff of a participated real estate – commercial loan relationship in 2024.
(Dollars in thousands)
Special
As of December 31, 2024
Pass
Mention Substandard
Doubtful
Total
Commercial, financial and agricultural . . . . . . . . . . .
$
62,134
$
5,995
$
33
$
72
$
68,234
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . .
234,572
11,984
1,026
—
247,582
Real estate - construction:
1-4 family residential construction . . . . . . . . . . . .
1,172
—
—
—
1,172
Other construction loans . . . . . . . . . . . . . . . . . . . .
32,119
4,536
—
—
36,655
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . .
161,488
496
787
—
162,771
Obligations of states and political subdivisions . . . . .
13,850
—
—
—
13,850
Personal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,605
—
—
—
3,605
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 508,940
$
23,011
$
1,846
$
72
$
533,869
(Dollars in thousands)
Special
As of December 31, 2023
Pass
Mention Substandard
Doubtful
Total
Commercial, financial and agricultural . . . . . . . . . . .
$
62,952
$
2,851
$
18
$
—
$
65,821
Real estate - commercial . . . . . . . . . . . . . . . . . . . . . .
203,590
13,682
5,805
—
223,077
Real estate - construction:
1-4 family residential construction . . . . . . . . . . . .
5,085
—
—
—
5,085
Other construction loans . . . . . . . . . . . . . . . . . . . .
42,845
4,659
—
—
47,504
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . .
162,111
218
56
—
162,385
Obligations of states and political subdivisions . . . . .
17,232
—
—
—
17,232
Personal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,290
—
—
—
4,290
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 498,105
$
21,410
5,879
$
—
$
525,394
79
Based on the most recent analysis performed, the amortized cost basis by risk category of loans by class of loan and by
origination year as of December 31, 2024 is as follows:
Revolving Revolving
(Dollars in thousands)
Loans
Loans
Amortized Converted
As of December 31, 2024
2024
2023
2022
2021
2020
Prior
Cost Basis to Term
Total
Commercial, financial and
agricultural:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $
8,837 $
8,827 $
3,243 $
6,045 $
1,866 $
1,181 $ 31,662 $
473 $ 62,134
Special Mention . . . . . . . . . . . . .
45
697
847
3,005
—
—
1,401
—
5,995
Substandard . . . . . . . . . . . . . . . .
—
—
—
—
—
13
20
—
33
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
72
—
—
72
Total commercial, financial
and agricultural loans . . . . . $
8,882 $
9,524 $
4,090 $
9,050 $
1,866 $
1,266 $ 33,083 $
473 $ 68,234
Commercial, financial and
agricultural loans:
Current period gross write offs . . . . . $
— $
— $
— $
— $
— $
— $
— $
— $
—
Real estate - commercial:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $ 35,515 $ 42,566 $ 45,170 $ 30,571 $ 12,222 $ 59,135 $
8,589 $
804 $ 234,572
Special Mention . . . . . . . . . . . . .
—
—
—
—
8,165
3,620
199
—
11,984
Substandard . . . . . . . . . . . . . . . .
—
—
—
—
134
892
—
—
1,026
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Total real estate -
commercial loans . . . . . . . $ 35,515 $ 42,566 $ 45,170 $ 30,571 $ 20,521 $ 63,647 $
8,788 $
804 $ 247,582
Real estate - commercial:
Current period gross write offs . . . . . $
— $
— $
— $
— $
— $
— $
— $
— $
—
Real estate - construction - 1-4
family residential:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $
1,172 $
— $
— $
— $
— $
— $
— $
— $
1,172
Special Mention . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Substandard . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Total real estate -
construction - 1-4 family
residential loans . . . . . . . . $
1,172
$
—
$
—
$
—
$
—
$
—
$
—
$
— $
1,172
Real estate - construction - 1-4
family residential:
Current period gross write offs . . . . . $
— $
— $
— $
— $
— $
— $
— $
— $
—
Real estate - construction - other:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $ 10,405 $
9,241 $
103 $
3,392 $
187 $
3,036 $
4,963 $
792 $ 32,119
Special Mention . . . . . . . . . . . . .
—
—
—
—
4,536
—
—
—
4,536
Substandard . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Total real estate -
construction - other loans . . $ 10,405 $
9,241 $
103 $
3,392 $
4,723 $
3,036 $
4,963 $
792 $ 36,655
Real estate - construction - other:
Current period gross write offs . . . . . $
— $
— $
— $
— $
— $
— $
— $
— $
—
80
Revolving
Revolving
(Dollars in thousands)
Loans
Loans
Amortized Converted
As of December 31, 2024 (cont.)
2024
2023
2022
2021
2020
Prior Cost Basis to Term
Total
Real estate - mortgage:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $ 19,193 $ 23,800 $ 42,675 $ 16,802 $ 12,836 $ 38,894 $
6,767 $
521 $ 161,488
Special Mention . . . . . . . . . . . . .
—
—
100
—
—
196
200
—
496
Substandard . . . . . . . . . . . . . . . .
—
—
—
—
—
787
—
—
787
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
Total real estate - mortgage
loans . . . . . . . . . . . . . . . . $ 19,193 $ 23,800 $ 42,775 $ 16,802 $ 12,836 $ 39,877 $
6,967 $
521 $ 162,771
Real estate - mortgage:
Current period gross write offs . . . . . $
— $
— $
— $
— $
— $
— $
— $
— $
—
Obligations of states and political
subdivisions:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $
340 $
283 $ 3,613 $ 2,000 $ 4,587 $ 2,928 $
99 $
— $ 13,850
Special Mention . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Substandard . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Total Obligations of states
and political subdivisions . . $
340 $
283 $ 3,613 $ 2,000 $ 4,587 $ 2,928 $
99 $
— $ 13,850
Obligations of states and political
subdivisions:
Current period gross write offs . . . . . $
— $
— $
— $
— $
— $
— $
— $
— $
—
Personal:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $ 1,573 $ 1,227 $
492 $
149 $
7 $
79 $
56 $
22 $ 3,605
Special Mention . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Substandard . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Total personal loans . . . . . . . $ 1,573 $ 1,227 $
492 $
149 $
7 $
79 $
56 $
22 $ 3,605
Personal:
Current period gross write offs . . . . . $
— $
— $
(2) $
— $
— $
(35) $
(3) $
— $
(40)
81
The amortized cost basis by risk category of loans by class of loan and by origination year as of December 31, 2023 is as
follows:
Revolving Revolving
(Dollars in thousands)
Loans
Loans
Amortized Converted
As of December 31, 2023
2023
2022
2021
2020
2019
Prior
Cost Basis to Term
Total
Commercial, financial and
agricultural:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $ 10,750 $
5,123 $ 11,793 $
4,971 $
3,903 $
830 $ 25,582 $
— $ 62,952
Special Mention . . . . . . . . . . . . .
70
414
—
—
72
—
2,295
—
2,851
Substandard . . . . . . . . . . . . . . . .
—
—
—
—
—
18
—
—
18
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Total commercial, financial
and agricultural loans . . . . . $ 10,820 $
5,537 $ 11,793 $
4,971 $
3,975 $
848 $ 27,877 $
— $ 65,821
Commercial, financial and
agricultural loans:
Current period gross write offs . . . . . $
— $
— $
— $
— $
— $
— $
— $
— $
—
Real estate - commercial:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $ 36,375 $ 53,927 $ 23,561 $ 15,952 $ 17,606 $ 53,465 $
2,688 $
16 $ 203,590
Special Mention . . . . . . . . . . . . .
—
4,469
—
3,894
211
4,909
199
—
13,682
Substandard . . . . . . . . . . . . . . . .
—
—
—
4,877
—
928
—
—
5,805
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Total real estate -
commercial loans . . . . . . . $ 36,375 $ 58,396 $ 23,561 $ 24,723 $ 17,817 $ 59,302 $
2,887 $
16 $ 223,077
Real estate - commercial:
Current period gross write offs . . . . . $
— $
— $
— $
— $
— $
— $
— $
— $
—
Real estate - construction - 1-4
family residential:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $
1,674 $
3,411 $
— $
— $
— $
— $
— $
— $
5,085
Special Mention . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Substandard . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Total real estate -
construction - 1-4 family
residential loans . . . . . . . . $
1,674
$
3,411
$
—
$
—
$
—
$
—
$
—
$
— $
5,085
Real estate - construction - 1-4
family residential:
Current period gross write offs . . . . . $
— $
— $
— $
— $
— $
— $
— $
— $
—
Real estate - construction - other:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $
5,254 $
7,405 $ 17,928 $
2,354 $
276 $
3,088 $
6,390 $
150 $ 42,845
Special Mention . . . . . . . . . . . . .
—
—
2
4,657
—
—
—
—
4,659
Substandard . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Total real estate -
construction - other loans . . $
5,254 $
7,405 $ 17,930 $
7,011 $
276 $
3,088 $
6,390 $
150 $ 47,504
Real estate - construction - other:
Current period gross write offs . . . . . $
— $
— $
— $
— $
— $
— $
— $
— $
—
82
Revolving Revolving
(Dollars in thousands)
Loans
Loans
Amortized Converted
As of December 31, 2023 (cont.)
2023
2022
2021
2020
2019
Prior
Cost Basis to Term
Total
Real estate - mortgage:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $ 27,062 $ 43,005 $ 19,173 $ 14,577 $
5,524 $ 44,359 $
8,084 $
327 $ 162,111
Special Mention . . . . . . . . . . . . .
—
—
—
—
—
218
—
—
218
Substandard . . . . . . . . . . . . . . . .
—
—
—
—
—
56
—
—
56
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Total real estate - mortgage
loans . . . . . . . . . . . . . . . . $ 27,062 $ 43,005 $ 19,173 $ 14,577 $
5,524 $ 44,633 $
8,084 $
327 $ 162,385
Real estate - mortgage:
Current period gross write offs . . . . . $
— $
— $
— $
— $
— $
(19) $
— $
— $
(19)
Obligations of states and political
subdivisions:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $
350 $
3,876 $
2,413 $
5,094 $
12 $
5,486 $
1 $
— $ 17,232
Special Mention . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Substandard . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Total Obligations of states
and political subdivisions . . $
350 $
3,876 $
2,413 $
5,094 $
12 $
5,486 $
1 $
— $ 17,232
Obligations of states and political
subdivisions:
Current period gross write offs . . . . . $
— $
— $
— $
— $
— $
— $
— $
— $
—
Personal:
Risk Rating
Pass . . . . . . . . . . . . . . . . . . . . . . $
2,385 $
1,093 $
362 $
87 $
63 $
187 $
91 $
22 $
4,290
Special Mention . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Substandard . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Doubtful . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
Total personal loans . . . . . . . $
2,385 $
1,093 $
362 $
87 $
63 $
187 $
91 $
22 $
4,290
Personal:
Current period gross write offs . . . . . $
(4) $
(2) $
— $
(4) $
— $
(18) $
— $
— $
(28)
83
7. BANK OWNED LIFE INSURANCE AND ANNUITIES
The Company holds bank-owned life insurance (“BOLI”) and deferred annuities with a combined cash value of $15.2
million and $14.8 million at December 31, 2024 and 2023, respectively. The contracts are owned by the Bank in various
insurance companies. The crediting rate on the policies varies annually based on the insurance companies’ investment
portfolio returns in their general fund and market conditions. As annuitants retire, the deferred annuities may be converted
to payout annuities to create payment streams that match certain post-retirement liabilities. The cash surrender value on
the BOLI and annuities increased by $373,000 in 2024 with the net change resulting from proceeds from death benefits
received, premium payments, the purchase of additional insurance related to 1035 Exchanges for two active participants
to take advantage of increased interest rates and earnings recorded as non-interest income. The cash surrender value on
the BOLI and annuities decreased by $356,000 in 2023. Changes in cash value of BOLI and annuities in 2024 and 2023
are shown below:
(Dollars in thousands)
Life
Deferred
Insurance
Annuities
Total
Balance as of January 1, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 14,630 $
567
$ 15,197
Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
204
18
222
Premiums on existing policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
12
31
Death Benefits received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(621)
(149)
(770)
Gain from life insurance proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
160
1
161
Balance as of December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,392
449
14,841
Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
219
17
236
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
717
—
717
Premiums on existing policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
8
27
Death Benefits received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(663)
—
(663)
Gain from life insurance proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
—
56
Balance as of December 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 14,740
$
474
$ 15,214
8. PREMISES AND EQUIPMENT
Premises and equipment consist of the following:
(Dollars in thousands)
December 31,
2024
2023
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
302
$
294
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,916
13,862
Furniture, computer software and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,153
7,280
23,371
21,436
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(13,989)
(13,256)
$
9,382
$
8,180
Depreciation expense on premises and equipment charged to operations was $733,000 in 2024 and $563,000 in 2023.
The Company had no premises and equipment subject to lease agreements in which it acts as the lessor.
9. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
On September 8, 2006, the Company acquired a branch office in Richfield, PA. Goodwill associated with this transaction
is carried at $2.0 million. On November 30, 2015, the Company acquired FNBPA and carries goodwill of $3.4 million
relating to the acquisition. On April 30, 2018, Juniata completed the acquisition of the remaining stock of LCB and, as a
result, recorded goodwill of $3.6 million. On May 12, 2023, the Company acquired a branch office (“Path Valley”) in
84
Spring Run, Pennsylvania. Goodwill associated with this transaction is carried at $765,000. Total goodwill was $9.8
million at December 31, 2024 and 2023.
Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful
life are not amortized but tested for impairment at least annually, or more frequently if events and circumstances exists
that indicate that a goodwill impairment test should be performed. Impairment exists when a reporting unit’s carrying
value of goodwill exceeds its fair value. At December 31, 2024 and 2023, the Company elected to perform a qualitative
assessment to determine if it was more likely than not that fair value of the reporting unit exceeded its carrying value,
including goodwill. The qualitative assessment indicated that it is more likely than not that fair value of goodwill is more
than the carrying value, resulting in no impairment.
Intangible Assets
On November 30, 2015, a core deposit intangible in the amount of $303,000 associated with the FNBPA acquisition was
recorded. On April 30, 2018, a core deposit intangible of $289,000 associated with the LCB acquisition was recorded. On
May 12, 2023, a core deposit intangible in the amount of $303,000 associated with the Path Valley branch acquisition was
recorded. All core deposit intangibles are being amortized over a ten-year period using a sum of the years’ digits basis.
The following table shows the amortization schedule for each of the core deposit intangible assets recorded.
(Dollars in thousands)
Path Valley
FNBPA
LCB
Acquisition
Acquisition
Acquisition
Core
Core
Core
Deposit
Deposit
Deposit
Intangible
Intangible
Intangible
Beginning Balance at Acquisition Date . . . . . . . . . . . . . . . . . . . . . . . $
303 $
303 $
289
Amortization expense recorded prior to December 31, 2022 . . . .
—
271
200
Amortization expense recorded in Years ended:
December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37
16
28
December 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
51
11
23
Unamortized balance as of December 31, 2024 . . . . . . . . . . . . . . . $
215 $
5 $
38
Scheduled Amortization expense for years ended:
December 31, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
46 $
5 $
17
December 31, 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40
—
12
December 31, 2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
—
7
December 31, 2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
—
2
December 31, 2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
—
—
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40
—
—
10. DEPOSITS
The aggregate amount of demand deposit overdrafts that were reclassified as loans was $40,000 at December 31, 2024,
compared to $171,000 at December 31, 2023. Deposits consist of the following:
(Dollars in thousands)
December 31,
2024
2023
Demand, non-interest bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 196,801
$ 197,027
Interest-bearing demand and money market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
208,901
220,217
Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128,903
134,414
Time deposits, $250 or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41,686
33,412
Other time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
171,666
163,975
$ 747,957
$ 749,045
85
There were no brokered deposits as of December 31, 2024 and December 31, 2023.
The aggregate amount of scheduled maturities of time deposits as of December 31, 2024 include the following:
(Dollars in thousands)
Time Deposits
Maturing in:
$250 or more
Other
Total Time Deposits
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
35,191
$
105,205
$
140,396
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,002
53,110
58,112
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
801
7,818
8,619
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
422
2,818
3,240
2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
270
2,422
2,692
Later . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
293
293
$
41,686
$
171,666
$
213,352
11. BORROWINGS
Short-term borrowings, and the related maximum amounts outstanding at the end of any month in the years ended
December 31, 2024 and 2023, are presented below.
Maximum Outstanding at
(Dollars in thousands)
Years Ended December 31,
Any Month End
2024
2023
2024
2023
Repurchase agreements . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
14,342
$
12,810
$
17,214
$
15,266
Short-term borrowings:
Overnight FHLB advances . . . . . . . . . . . . . . . . . . . . . . .
27,900
—
27,900
38,000
3-month FHLB advances . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
20,000
FRB advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
40,000
40,000
40,000
$
42,242
$
52,810
$
85,114
$ 113,266
The Company participated in the Federal Reserve’s Bank Term Funding Program (“BTFP”) to take advantage of the
program’s advantageous borrowing rate. These borrowings are listed as FRB advances on the Consolidated Statements of
Financial Condition. All FRB advances matured in 2024; therefore, no outstanding balance remained as of December 31,
2024. FRB advances totaled $40.0 million as of December 31, 2023.
The following table presents supplemental information related to short-term borrowings.
Securities sold under
(Dollars in thousands)
agreements to repurchase
Short-term borrowings
2024
2023
2024
2023
Amount outstanding as of December 31 . . . . . . . . . . $ 14,342
$ 12,810
$ 27,900
$ 40,000
Weighted average interest rate as of
December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.51 %
4.37 %
4.81 %
4.89 %
Average amount outstanding during the year . . . . . . $ 15,258
$
9,868
$ 41,316
$ 32,336
Weighted average interest rate during the year . . .
4.01 %
3.89 %
5.10 %
5.01 %
The Bank has repurchase agreements with some of its depositors, under which customers’ funds are invested daily into an
interest bearing account. These funds are carried by the Company as short-term debt. It is the Company’s policy to
completely collateralize repurchase agreements with U.S. Government securities. As of December 31, 2024, the securities
that serve as collateral for securities sold under agreements to repurchase had a fair value of $21.1 million. The interest
rate paid on these funds is variable and subject to change daily.
Long-term debt is comprised only of FHLB advances with an original maturity of one year or more. Outstanding balances
were $5.0 million as of December 31, 2024 and $20.0 million December 31, 2023.
86
The following table summarizes the scheduled maturities of long-term debt as of December 31, 2024.
(Dollars in thousands)
Scheduled
Weighted Average
Year
Maturities
Interest Rate
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
5,000
2.41 %
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
$
5,000
2.41 %
The Bank must maintain sufficient qualifying collateral with the FHLB to secure borrowings. Therefore, a Master
Collateral Agreement has been entered into which pledges all mortgage related assets as collateral for future borrowings.
Mortgage related assets could include loans or investment securities. As of December 31, 2024, the amount of loans
included in qualifying collateral was $360.7 million. As of December 31, 2023, the amount of loans included in qualifying
collateral was $333.5 million. No investment securities were included in qualifying collateral as of December 31, 2024 or
2023.
The Bank’s maximum borrowing capacity with the FHLB was $249.3 million, with a balance of $32.9 million outstanding
as of December 31, 2024. The Bank’s maximum borrowing capacity with the FHLB was $230.2 million, with a balance
of $20.0 million outstanding as of December 31, 2023. To borrow additional amounts, the FHLB would require the Bank
to purchase additional FHLB Stock. The FHLB is a source of both short-term and long-term funding. The Bank must
maintain sufficient qualifying collateral to secure all outstanding advances. Qualifying collateral is defined by the FHLB
and includes outstanding balances of the Company’s real estate loans, excluding loans with certain risk mitigants, including
delinquencies and loans made to insiders, borrowers with low credit scores or loans with high loan-to-value ratios.
12. OPERATING LEASE OBLIGATIONS
As of December 31, 2024, the Company has three operating leases. The leases are comprised of real estate property for
branch and office space with terms extending through 2029. As of December 31, 2024, the Company had operating lease
right of use (“ROU”) assets totaling $255,000 included in other assets and operating lease liabilities totaling $263,000
included in other liabilities.
The calculated amount of the ROU assets and lease liabilities are impacted by the length of the lease term and the discount
rate used to calculate the present value of the minimum lease payments. The Company’s lease agreements often include
one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of
a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset
and lease liability.
Topic 842 requires the use of the rate implicit in the lease as the discount rate if that rate is readily determinable. As this
rate is rarely determinable, the Company utilized its incremental borrowing rate at lease inception, which is the rate the
Company would have incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease
payments in a similar economic environment.
As of December 31, 2024, the weighted-average remaining operating lease term was 4.4 years, and the weighted-average
discount rate was 6.29%. As of December 31, 2023, the weighted-average remaining operating lease term was 4.3 years,
and the weighted-average discount rate was 5.02%.
The Company’s total operating lease cost for the years ended December 31, 2024 and 2023 was $199,000 and $109,000,
respectively. The increased expense in 2024 was primarily due to the early termination of a branch office lease totaling
$77,000. There were no operating lease payments made to a related party for the year ended December 31, 2024. Total
operating lease payments made to a related party totaled $25,000 for the year ended December 31, 2023.
87
The future minimum payments for operating leases with initial or remaining terms of one year or more as of December 31,
2024 were as follows:
(Dollars in thousands)
Years ending December 31,
Lease Obligation
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
68
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
70
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61
2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34
2030 and beyond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Total Future Minimum Lease Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
302
Amounts Representing Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(39)
Present Value of Net Future Minimum Lease Payments (Lease Liability) . . . . . . . . . . . . . . . . . . . . .
$
263
13. INCOME TAXES
The components of income tax expense for the two years ended December 31 were:
(Dollars in thousands)
Years Ended December 31,
2024
2023
Current tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
944
$
1,001
Deferred tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
(31)
Total tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
979
$
970
Federal credits are available for ten years for Juniata’s investment in two low income housing projects. Tax credits
associated with phase I of the projects ended in January 2023, while phase II project credits will run through 2027. The
tax credits are included in the tax expense line item on the Consolidated Statements of Income. Amortization of the
investments using the cost method is scheduled to occur over the same period as tax credits are earned. Juniata’s maximum
exposure to loss is limited to the carrying value of the investment at year-end.
The total tax provision during the year ended December 31, 2024 was $979,000 compared to $970,000 during the year
ended December 31, 2023. A reconciliation of the statutory income tax expense computed at 21% to the income tax
expense included in the consolidated statements of income follows:
(Dollars in thousands)
Years Ended December 31,
2024
2023
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 7,208
$ 7,566
Statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21 %
21 %
Federal tax at statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,514
1,589
Tax-exempt interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(151)
(176)
Net earnings on BOLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(39)
(39)
Gain from life insurance proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12)
(34)
Federal tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(329)
(366)
Other permanent differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)
(4)
Total tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
979
$
970
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.6 %
12.8 %
88
Deductible temporary differences and taxable temporary differences gave rise to a net deferred tax asset for the Company
as of December 31, 2024 and December 31, 2023. The components are detailed below:
(Dollars in thousands)
Years Ended December 31,
2024
2023
Deferred Tax Assets:
Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1,364
$
1,280
Deferred directors’ compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
174
200
Employee and director benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
209
229
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61
53
Investment in low income housing project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
588
585
Fair value adjustments to acquired assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
48
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
—
Lease liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55
101
Unrealized loss on debt securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,311
1,716
Unrealized loss on debt securities held to maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,453
8,501
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,279
12,713
Deferred Tax Liabilities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(104)
(101)
Right of use asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(53)
(99)
Loan origination fees and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(653)
(592)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12)
(11)
Unrealized gain from securities impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(72)
(18)
Annuity earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(80)
(77)
Fair value of mortgage servicing rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(15)
(17)
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(448)
(437)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(42)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,437)
(1,394)
Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
9,842
$ 11,319
The Company has concluded that the deferred tax assets are realizable (on a more likely than not basis) through the
combination of future reversals of existing taxable temporary differences, certain tax planning strategies and expected
future taxable income.
It is the Company’s policy to recognize interest and penalties on unrecognized tax benefits in income tax expense in the
Consolidated Statements of Income. No significant income tax uncertainties were identified because of the Company’s
evaluation of its income tax position. Therefore, the Company recognized no adjustment for unrecognized income tax
benefits for the years ended December 31, 2024 and 2023. The Company is no longer subject to examination by taxing
authorities for years before 2021. Tax years 2021 through the present, with limited exception, remain open to examination.
14. STOCKHOLDERS’ EQUITY AND REGULATORY MATTERS
The Company is authorized to issue shares of preferred stock with no par value. The Board has the ability to fix the voting,
dividend, redemption and other rights of the preferred stock, which can be issued in one or more series. No shares of
preferred stock have been issued.
The Company has a dividend reinvestment and stock purchase plan. Under this plan, additional shares of Juniata Valley
Financial Corp. stock may be purchased by shareholders at the prevailing market prices through reinvested dividends and
voluntary cash payments, within limits. To the extent that shares are not available in the open market, the Company has
reserved common stock to be issued under the plan. Any adjustment in capitalization of the Company will result in a
proportionate adjustment to the reserved shares for this plan. At December 31, 2024, 141,887 shares were available for
issuance under the Dividend Reinvestment Plan. No shares were issued under this plan in 2024 or 2023.
89
The Company periodically repurchases shares of its common stock under a share repurchase program approved by the
Board of Directors. The program will remain authorized until all approved shares are repurchased, unless terminated by
the Board of Directors. Repurchases have typically been through open market transactions and have complied with all
regulatory restrictions on the timing and amount of such repurchases. Shares repurchased have been added to treasury
stock and accounted for at cost. These shares may be reissued for stock option exercises, stock awards, employee stock
purchase plan purchases, to fulfill dividend reinvestment program needs and to supply shares needed for exchange in an
acquisition. During 2024 and 2023, 239 and 27,569 shares, respectively, were repurchased in conjunction with this
program. Remaining shares authorized to be repurchased in the program were 180,504 as of December 31, 2024.
Regulatory Capital
The Bank is subject to risk-based capital standards by which banks are evaluated in terms of capital adequacy. These
regulatory capital requirements are administered by the federal banking agencies. Failure to meet minimum capital
requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative
measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting
practices. The Bank’s capital and classification are also subject to qualitative judgments by the regulators. Management
believes that, as of December 31, 2024, the Bank met all capital adequacy requirements to which it is subject.
Prompt corrective action regulations provide five classifications: well-capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to
represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits.
If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are
required. At year-end 2024 and 2023, the most recent regulatory notifications categorized the Bank as well-capitalized
under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that
management believes have changed the Bank’s category.
A capital conservation buffer of 2.50% is applicable to all capital ratios except for the Tier 1 Leverage ratio. The capital
conservation buffer is equal to the lowest value of the three applicable capital ratios less the regulatory minimum
(“adequately capitalized”) for each respective capital measurement. The Bank’s capital conservation buffer at
December 31, 2024 was 4.78%. Compliance with the capital conservation buffer is required to avoid limitations on certain
capital distributions, especially dividends.
90
Actual and required capital amounts and ratios as of December 31, 2024 and December 31, 2023, are presented below.
Minimum
Regulatory
Requirements
to be Well
Capitalized
Minimum Requirement
under Prompt
(Dollars in thousands)
for Capital
Corrective Action
Actual
Adequacy Purposes
Provisions
The Juniata Valley Bank
Amount
Ratio
Amount
Ratio
Amount
Ratio
As of December 31, 2024:
Total Capital (to Risk Weighted Assets) . . . . . . . . . . . .
$
76,389
12.78 % $
47,822
8.00 % $
59,778
10.00 %
Tier 1 Capital (to Risk Weighted Assets) . . . . . . . . . .
70,206
11.74 %
35,867
6.00 %
47,822
8.00 %
Common Equity Tier 1 Capital (to Risk Weighted
Assets) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
70,206
11.74 %
26,900
4.50 %
38,856
6.50 %
Tier 1 Capital (to Average Assets) Leverage . . . . . . . .
70,206
8.26 %
33,987
4.00 %
42,483
5.00 %
As of December 31, 2023:
Total Capital (to Risk Weighted Assets) . . . . . . . . . . . .
$
73,726
12.50 % $
47,196
8.00 % $
58,995
10.00 %
Tier 1 Capital (to Risk Weighted Assets) . . . . . . . . . . .
68,049
11.53 %
35,397
6.00 %
47,196
8.00 %
Common Equity Tier 1 Capital (to Risk Weighted
Assets) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68,049
11.53 %
26,548
4.50 %
38,347
6.50 %
Tier 1 Capital (to Average Assets) Leverage . . . . . . . .
68,049
8.04 %
33,876
4.00 %
42,345
5.00 %
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. As of December 31, 2024, $3.8 million of undistributed earnings of the Bank, included in
consolidated stockholders’ equity, was available for distribution to the Company as dividends without prior regulatory
approval, subject to the regulatory capital requirements above.
The Bank did not elect to phase in the regulatory capital impact of adopting CECL over a 3-year or 5-year transition period.
15. EARNINGS PER SHARE
Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then
shared in the earnings of the Company. Potential common shares that may be issued by the Company relate solely to
outstanding stock options and are determined using the treasury stock method. Restricted stock is participating, and
therefore, is included in the basic EPS calculation. The following table sets forth the computation of basic and diluted
earnings per share:
(Amounts in thousands, except earnings per share data)
Year ended December 31,
2024
2023
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6,229 $
6,596
Weighted-average common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,001
5,010
Basic earnings per share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.25
1.32
Weighted-average common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
5,001 $
5,010
Common stock equivalents due to effect of stock options . . . . . . . . . . . . . . . . . . . . .
9
8
Total weighted-average common shares and equivalents . . . . . . . . . . . . . . . . . . . . . .
$
5,010 $
5,018
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1.24 $
1.31
Anti-dilutive stock options outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
1
91
16. ACCUMULATED OTHER COMPREHENSIVE INCOME
The following tables show changes in accumulated other comprehensive income by component, net of tax, for the years
ending December 31, 2024 and 2023:
Unrealized
Unrealized
Gains
Gains
Gains
(Dollars in thousands)
(Losses) on
(Losses) on
(Losses) on
Cash Flow
AFS
HTM
December 31, 2024
Hedges
Securities
Securities
Total
Beginning balance, December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . .
$
—
$
(6,454)
$
(32,186)
$
(38,640)
Current period other comprehensive income:
Other comprehensive income before reclassification . . . . . . . . . . .
—
1,521
—
1,521
Amounts reclassified from accumulated other comprehensive
income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
3,799
3,799
Net current period other comprehensive income . . . . . . . . . . . . .
—
1,521
3,799
5,320
Ending balance, December 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . .
$
—
$
(4,933)
$
(28,387)
$
(33,320)
Unrealized
Unrealized
Gains
Gains
Gains
(Dollars in thousands)
(Losses) on
(Losses) on
(Losses) on
Cash Flow
AFS
HTM
December 31, 2023
Hedges
Securities
Securities
Total
Beginning balance, December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . .
$
211
$
(6,161)
$
(35,917)
$
(41,867)
Current period other comprehensive income (loss):
Other comprehensive income before reclassification . . . . . . . . . . .
1
(293)
—
(292)
Amounts reclassified from accumulated other comprehensive
income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(212)
—
3,731
3,519
Net current period other comprehensive income (loss) . . . . . . . .
(211)
(293)
3,731
3,227
Ending balance, December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . .
$
—
$
(6,454)
$
(32,186)
$
(38,640)
The following table shows significant amounts reclassified out of each component of accumulated other comprehensive
income for the year ending December 31, 2024:
(Dollars in thousands)
Details About Accumulated Other Comprehensive Loss Components
Amount
Reclassified From
Accumulated Other
Comprehensive
Loss
Affected Line Item in the Consolidated
Statements of Income
Unrealized gains and losses on securities
Amortization of unrealized losses on held to maturity securities . . . .
$
4,847
Total before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,847
Tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,048) Income tax provision (benefit)
Total reclassifications for the period, net of tax . . . . . . . . . . . . . . . . . . . .
$
3,799
92
The following table shows significant amounts reclassified out of each component of accumulated other comprehensive
income for the year ending December 31, 2023:
(Dollars in thousands)
Details About Accumulated Other Comprehensive Loss Components
Amount
Reclassified From
Accumulated Other
Comprehensive
Loss
Affected Line Item in the Consolidated
Statements of Income
Unrealized gains and losses on securities
Amortization of unrealized losses on held to maturity securities . . . .
$
4,767
Total before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,767
Tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,036) Income tax provision (benefit)
Net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,731
Unrealized gains and losses on cash flow hedges
Realized gains on cash flow hedges . . . . . . . . . . . . . . . . . . . . . . . . . .
(269)
Short-term borrowings and
repurchase agreements
Total before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(269)
Tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57 Income tax provision (benefit)
Net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(212)
Total reclassifications for the period, net of tax . . . . . . . . . . . . . . . . . . . .
$
3,519
17. FAIR VALUE MEASUREMENT
Fair value measurement and disclosure guidance defines fair value as the price that would be received to sell an asset or
transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants
at the measurement date under current market conditions. A fair value measurement assumes that the transaction to sell
the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal
market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market
used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a
transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities
that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market
participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact
and (iv) willing to transact. Additional guidance is provided on determining when the volume and level of activity for the
asset or liability has significantly decreased. The guidance also includes guidance on identifying circumstances when a
transaction may not be considered orderly.
Fair value measurement and disclosure guidance provides a list of factors that a reporting entity should evaluate to
determine whether there has been a significant decrease in the volume and level of activity for the asset or liability in
relation to normal market activity for the asset or liability. When the reporting entity concludes there has been a significant
decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market
is needed, and significant adjustments to the related prices may be necessary to estimate fair value in accordance with fair
value measurement and disclosure guidance.
This guidance clarifies that, when there has been a significant decrease in the volume and level of activity for the asset or
liability, some transactions may not be orderly. In those situations, the entity must evaluate the weight of the evidence to
determine whether the transaction is orderly. The guidance provides a list of circumstances that may indicate that a
transaction is not orderly. A transaction price that is not associated with an orderly transaction is given little, if any, weight
when estimating fair value.
The market approach uses prices and other relevant information generated by market transactions involving identical or
comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash
flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently
would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be
consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing
the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use
93
in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable,
meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in
pricing the asset or liability developed based on the best information available in the circumstances. In that regard, the
guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active
markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as
follows:
Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can
access at the measurement date.
Level 2 Inputs – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by
observable market data.
Level 3 Inputs – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that
market participants would use in pricing an asset or liability.
An asset’s or liability’s placement in the fair value hierarchy is based on the lowest level of input that is significant to the
fair value measurement.
A description of the valuation methodologies used for instruments measured at fair value, as well as the general
classification of such instruments pursuant to the valuation hierarchy, is set forth below.
In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available,
fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.
Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may
include amounts to reflect counterparty credit quality, the Company’s creditworthiness, among other things, as well as
unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company’s valuation
methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future
fair values. While management believes the Company’s valuation methodologies are appropriate and consistent with other
market participants, the use of different methodologies or assumptions to determine the fair value of certain financial
instruments could result in a different estimate of fair value at the reporting date.
Equities Securities
The fair value of equity securities is based upon quoted prices in active markets and is reported using Level 1 inputs.
Debt Securities
For debt securities where quoted prices are not available, fair values are calculated based on market prices of similar
securities and are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value
measurement from an independent pricing service. The fair value measurements consider observable data that may include
dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market
consensus prepayment speeds, credit information and the debt securities’ terms and conditions, among other things. For
debt securities where quoted prices or market prices of similar securities are not available, fair values are calculated using
other market indicators and are reported at fair value utilizing Level 3 inputs.
Collateral Dependent Loans
Certain collateral dependent loans are reported on a non-recurring basis at the fair value of the underlying collateral since
repayment is expected solely from the collateral. Fair value is generally determined based upon independent third-party
appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included in the
Level 3 fair value classification, based upon the lowest level of input that is significant to the fair value measurements.
Other Real Estate Owned
Certain assets included in other real estate owned are carried at fair value because of impairment and accordingly are
measured on a non-recurring basis as they are carried at the lower of cost or fair value. These assets are subsequently
94
accounted for at the lower of cost or fair value less estimated costs to sell. Values are estimated using Level 3 inputs, based
on appraisals that consider the sales prices of property in the proximate vicinity less estimated costs to sell.
Mortgage Servicing Rights
The fair value of servicing assets is based on the present value of estimated future cash flows on pools of mortgages
stratified by rate and maturity date and are considered Level 3 inputs.
The following tables summarize financial assets and financial liabilities measured at fair value as of December 31, 2024
and December 31, 2023, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure
fair value.
(Level 1)
(Level 2)
(Level 3)
Quoted Prices in
Significant
Significant
(Dollars in thousands)
Active Markets
Other
Other
for Identical
Observable
Unobservable
December 31, 2024
Assets
Inputs
Inputs
Total
Assets measured at fair value on a recurring basis:
Debt securities available for sale:
Obligations of U.S. Government agencies and
corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
—
$ 14,576
$
—
$ 14,576
Obligations of state and political subdivisions . . . . . . . . .
—
6,033
—
6,033
Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . .
—
8,403
6,955
15,358
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . .
—
28,656
—
28,656
Total debt securities available for sale . . . . . . . . . . . . . .
$
—
$ 57,668
$
6,955
$ 64,623
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1,189
$
—
$
—
$
1,189
Mortgage servicing rights . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
—
$
—
$
69
$
69
(Level 1)
(Level 2)
(Level 3)
Quoted Prices in
Significant
Significant
(Dollars in thousands)
Active Markets
Other
Other
for Identical
Observable
Unobservable
December 31, 2023
Assets
Inputs
Inputs
Total
Assets measured at fair value on a recurring basis:
Debt securities available for sale:
Obligations of U.S. Government agencies and
corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
—
$ 14,173
$
—
$ 14,173
Obligations of state and political subdivisions . . . . . . . . .
—
6,508
—
6,508
Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . .
—
7,675
6,153
13,828
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . .
—
33,055
—
33,055
Total debt securities available for sale . . . . . . . . . . . . . .
$
—
$ 61,411
$
6,153
$ 67,564
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1,073
$
—
$
—
$
1,073
Mortgage servicing rights . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
—
$
—
$
83
$
83
95
The table below presents a reconciliation of the beginning and ending balances of investment securities measured at fair
value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2024 and
2023.
Year Ended
(Dollars in thousands)
December 31,
2024
2023
Investment Securities:
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6,153
$
7,145
Total gain (loss) included in OCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
802
(992)
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Principal payments and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Balance, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6,955
$
6,153
Mortgage servicing rights and assets measured at fair value on a nonrecurring basis for which Level 3 inputs have been
used to determine fair value are immaterial to the Company’s consolidated financial statements.
Fair Value of Financial Instruments
Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there
are inherent weaknesses in any estimation technique. Therefore, the fair value estimates herein are not necessarily
indicative of the amounts the Company could have realized in sales transactions on the dates indicated. The estimated fair
value amounts have been measured as of their respective year ends and have not been re-evaluated or updated for purposes
of these consolidated financial statements after those respective dates. As such, the estimated fair values of these financial
instruments after the respective reporting dates may be different from the amounts reported at each year end.
The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair
value calculation is provided only for a limited portion of the Company’s assets and liabilities. Due to a wide range of
valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s
disclosures and those of other companies may not be meaningful.
96
The carrying amounts and estimated fair values of the Company’s financial instruments are as follows:
Financial Instruments
(Dollars in thousands)
December 31, 2024
December 31, 2023
Carrying
Fair
Carrying
Fair
Value
Value
Value
Value
Financial assets:
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
5,064 $
5,064 $ 17,189 $ 17,189
Interest bearing deposits with banks . . . . . . . . . . . . . . . . . . . . . . .
5,934
5,934 11,741 11,741
Debt securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . 64,623 64,623 67,564 67,564
Debt securities held to maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . 191,627 182,773 200,644 198,147
Loans, net of allowance for credit losses . . . . . . . . . . . . . . . . . . . 527,686 511,826 519,717 500,439
Accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,251
2,251
2,438
2,438
Financial liabilities:
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 213,352 $ 212,152 $ 197,387 $ 194,219
Securities sold under agreements to repurchase . . . . . . . . . . . . . . 14,342
N/A 12,810
N/A
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,900 27,900 40,000 39,868
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,000
5,000 20,000 19,638
Other interest bearing liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
830
829
951
947
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
876
876
1,397
1,397
Off-balance sheet financial instruments:
Commitments to extend credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
— $
— $
—
Letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
The following tables present the carrying amount, fair value and placement in the fair value hierarchy of the Company’s
financial instruments not previously disclosed as of December 31, 2024 and December 31, 2023. These tables exclude
financial instruments for which the carrying amount approximates fair value.
(Level 1)
(Level 2)
(Level 3)
Quoted Prices in
Significant
Significant
(Dollars in thousands)
Active Markets
Other
Other
Carrying
for Identical
Observable
Unobservable
Amount
Fair Value
Assets or Liabilities
Inputs
Inputs
December 31, 2024
Financial instruments – Assets
Debt securities held to maturity . . . . . . . . . . . $ 191,627 $ 182,773 $
— $ 182,773 $
—
Loans, net of allowance for credit losses . . . 527,686 511,826
—
— 511,826
Financial instruments – Liabilities
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . $ 213,352 $ 212,152 $
— $ 212,152 $
—
Short-term borrowings . . . . . . . . . . . . . . . . . .
27,900
27,900
—
27,900
—
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . .
5,000
5,000
—
5,000
—
Other interest bearing liabilities . . . . . . . . . . .
830
829
—
829
—
97
(Level 1)
(Level 2)
(Level 3)
Quoted Prices in
Significant
Significant
(Dollars in thousands)
Active Markets
Other
Other
Carrying
for Identical
Observable
Unobservable
Amount Fair Value Assets or Liabilities
Inputs
Inputs
December 31, 2023
Financial instruments – Assets
Debt securities held to maturity . . . . . . . . . . . $ 200,644 $ 198,147 $
— $ 198,147 $
—
Loans, net of allowance for credit losses . . . 519,717 500,439
—
— 500,439
Financial instruments – Liabilities
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . $ 197,387 $ 194,219 $
— $ 194,219 $
—
Short-term borrowings . . . . . . . . . . . . . . . . . .
40,000
39,868
—
39,868
—
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 20,000 19,638
— 19,638
—
Other interest bearing liabilities . . . . . . . . . . .
951
947
—
947
—
18. REVENUE RECOGNITION
The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), as well as subsequent ASU’s
that modified ASC 606, on January 1, 2018. The Company elected to apply the ASU and all related ASU’s using the
modified retrospective approach applied to all contracts initiated on or after the effective date, and for contracts which
have remaining obligations as of the effective date, while prior period results continue to be reported under legacy U.S.
GAAP. Based on this assessment, the Company concluded that ASC 606 did not materially change the method by which
the Company currently recognizes revenue for these revenue streams, which is by recognizing revenues as they are earned
based upon contractual terms, as transactions occur, or as services are provided and collectability is reasonably assured.
The Company generally acts in a principal capacity, on its own behalf, in most contracts with customers. In such
transactions, revenue and related costs to provide these services are recognized on a gross basis in the financial statements.
In some cases, the Company acts in an agent capacity, deriving revenue through assisting other entities in transactions
with its customers. In such transactions, revenue and the related costs to provide the services are recognized on a net basis
in the financial statements. These transactions primarily relate to non-deposit product commissions and fees derived from
customer’s use of various interchange and ATM/debit card networks.
All the Company’s revenue from contracts with customers in the scope of ASC 606 are recognized within non-interest
income on the consolidated statements of income. Revenue streams not within the scope of ASC 606 included in non-
interest income on the consolidated statements of income include earnings on bank-owned life insurance and annuities,
fees derived from loan activity, mortgage banking income, gain/loss on sales and calls of securities, and the change in
value of equity securities.
A description of the Company’s sources of revenue accounted for under ASC 606 are as follows:
Customer Service Fees – fees mainly represent fees from deposit customers for transaction based, account maintenance,
and overdraft services. Transaction based fees include, but are not limited to, stop payment and overdraft fees. These fees
are recognized at the time of the transaction when the performance obligation has been fulfilled. Account maintenance
fees and account analysis fees are earned over the course of a month, representing the period of the performance obligation,
and are recognized monthly.
Debit Card Fee Income – consists of interchange fees from cardholder transactions conducted through the card payment
network. Cardholders use debit cards to conduct point-of-sale transactions that produce interchange fees. The Company
acts in an agent capacity to offer processing services for debit cards to its customers. Fees are recognized with the
processing of the transactions and netted against the related fees from such transactions.
98
Trust Fees – include asset management and estate fees. Asset management fees are generally based on a fee schedule,
based upon the market value of the assets under management, and recognized monthly when the service obligation is
completed. Trust fees recognized in 2024 and 2023 were $380,000 and $361,000, respectively. Fees for estate management
services are based on a specified fee schedule and generally recognized as the following performance obligations are
fulfilled: (i) 25% of total estate fee recognized when all estate assets are collected and debts paid, (ii) 50% of the total fee
is recognized when the inheritance tax return is filed, and (iii) remaining 25% is recognized when the first and final account
is confirmed, settling the estate. Estate fees recognized during 2024 and 2023 were $88,000 and $105,000, respectively.
Commissions From Sales Of Non-Deposit Products – include, but are not limited to, brokerage services, employer-based
retirement solutions, individual retirement planning, insurance solutions, and fee-based investment advisory services. The
Company acts in an agent capacity to offer these services to customers. Revenue is recognized, net of related fees, in
the month in which the contract is fulfilled.
Other Non-Interest Income – includes certain revenue streams within the scope of ASC 606 comprised primarily of ATM
surcharges, commissions on check orders, and wire transfer fees. ATM surcharges are the result of customers conducting
ATM transactions that generate fee income. All these fees, as well as wire transfer fees, are transaction based and are
recognized at the time of the transaction. In addition, the Company acts in an agent capacity to offer checks to its customers
and recognizes commissions, net of related fees, when the contract is fulfilled.
Gains/Losses On Sales Of Other Real Estate Owned – are recognized when control of the property transfers to the buyer,
which generally occurs when the deed is executed.
19. EMPLOYEE BENEFIT PLANS
Long-Term Incentive Plan
The Company maintains the 2016 Long-Term Incentive Plan (the “Plan”), which amended and restated the former 2011
Stock Option Plan (the “2011 Plan”). The Plan continues in effect for any outstanding awards under the 2011 Plan in
accordance with the terms and conditions governing such awards immediately prior to the effective date of the Plan but
expanded the types of awards authorized to include, among others, restricted stock. Under the provisions of the Plan, while
active, awards may consist of grants of incentive stock options, nonqualified stock options, stock appreciation rights,
restricted stock and performance shares to officers and key employees of the Company, as well as directors.
Compensation expense for stock options granted and restricted stock awarded is measured using the fair value of the award
on the grant date and is recognized over the vesting period. The Company recognized $142,000 and $143,000 of expense
for the years ended December 31, 2024 and 2023, respectively, for stock-based compensation.
The Plan is administered by a committee of the Board of Directors. The Committee determines, among other things, the
recipients of stock compensation, the number of shares to be subject to each award, the option price, the duration of the
option and the restricted period, as appropriate. A recipient of the restricted shares will forfeit those shares in their entirety
if employment is terminated prior to the vesting date for reasons other than retirement, death or disability. Forfeited awards
are returned to the pool of shares available for grant for future awards. The maximum number of shares of common stock
that may be issued under the Plan is 300,000 shares, and 180,600 shares were available for grant as of December 31, 2024.
Shares of common stock issued under the Plan may be treasury shares or authorized but unissued shares.
During 2024, a total of 9,628 restricted shares were awarded to certain officers and all directors. In 2023, a total of 11,409
shares of restricted stock were awarded to certain officers and all directors. Each award vests after three-years, with interim
vesting in the case of death, disability or retirement as approved by the Board of Directors.
99
The following table presents compensation expense and related tax benefits for restricted stock awards recognized on the
consolidated statement of income.
(Dollars in thousands)
2024
2023
Compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
142
$
143
Tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(30)
(30)
Net income effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
112
$
113
At December 31, 2024, there was $159,000 of unrecognized compensation cost related to all non-vested restricted stock
awards. This cost is expected to be recognized through February 2027.
The following table presents a summary of non-vested restricted shares activity for 2024.
Weighted
Average
Grant Date
Shares
Fair Value
Non-vested at January 1, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,322
$
16.21
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,141)
16.55
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,628
12.35
Non-vested at December 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,809
$
14.85
No stock options were awarded in 2024. Outstanding options granted prior to 2024 have all vested and are exercisable at
the grant price, which is at least the fair market value of the stock on the grant date. The Plan provides that the option price
per share is not to be less than the fair market value of the stock on the day the option was granted, and in no event less
than the par value of such stock. Options granted under the Plan are exercisable no earlier than one year after the date of
grant and expire ten years after the date of the grant. Total options outstanding as of December 31, 2024 have an exercise
price of $17.80 and are scheduled to expire on February 17, 2025. As of December 31, 2024, there was no unrecognized
compensation cost related to options granted under the Plan. No options were exercised under the Plans for the years ended
December 31, 2024 and 2023.
A summary of the status of the outstanding stock options as of December 31, 2024 and 2023, and changes during the years
ending of those dates is presented below.
2024
2023
Weighted
Weighted
Average
Average
Exercise
Exercise
Shares
Price
Shares
Price
Outstanding at beginning of year . . . . . . . . . . . . . . . . . . . . . . .
50,425 $
17.76
60,347 $
17.78
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
Cancelled/Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,500)
17.80
—
—
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(24,225)
17.72
(9,922)
17.65
Outstanding at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,700 $
17.80
50,425 $
17.76
Options exercisable at year-end . . . . . . . . . . . . . . . . . . . . . . . .
22,700
50,425
Weighted-average fair value of options granted during
the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
—
$
—
Intrinsic value of options exercised during the year . . . . . . . .
$
—
$
—
Intrinsic value of options cancelled during the year . . . . . . . .
$
—
Intrinsic value of options outstanding and exercisable at
December 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
—
100
Defined Contribution Plan (“401(k) Plan”)
The Company has a 401(k) Plan under which employees, through payroll deductions, can defer portions of their
compensation. The Company makes an annual non-elective fully vested contribution equal to 3% of compensation to each
eligible participant. For the year ended December 31, 2024, the contribution amount totaled $268,000, which was credited
to employee’s accounts by January 31, 2025. This liability at December 31, 2023 totaled $265,000 and was credited to
employee accounts by January 31, 2024. Expense incurred under this plan was $268,000 and $262,000 in 2024 and 2023,
respectively. The 401(k) Plan also includes an employer matching contribution for employees that elect to defer
compensation into this program. The matching contribution in 2024 and 2023 was $250,000 and $231,000, respectively.
Employee Stock Purchase Plan
The Company has an Employee Stock Purchase Plan under which employees, through payroll deductions, can purchase
shares of Company stock annually. The option price of the stock purchases is between 95% and 100% of the fair market
value of the stock on the offering termination date as determined annually by the Board of Directors. The maximum
number of shares which employees may purchase under the Plan is 250,000; however, the annual issuance of shares may
not exceed 5,000 shares plus any unissued shares from prior offerings. There were 2,866 shares issued in 2024 and 4,230
shares issued in 2023 under this plan. As of December 31, 2024, there were 149,554 shares reserved for issuance under
the Employee Stock Purchase Plan.
Supplemental Retirement Plans
The Company has non-qualified supplemental retirement plans for directors and key employees. At December 31, 2024
and 2023, the present value of the future liability associated with these plans was $73,000 and $84,000, respectively. For
the years ended December 31, 2024 and 2023, $6,000 and $7,000, respectively, was recorded as expense in connection
with these plans. The Company offsets the cost of these plans through the purchase of bank-owned life insurance and
annuities. See Note 7.
Deferred Compensation Plans
The Company has entered into deferred compensation agreements with certain directors to provide each director with an
additional retirement benefit, or to provide their beneficiary with a benefit, in the event of pre-retirement death. At
December 31, 2024 and 2023, the present value of the future liability was $830,000 and $1.0 million, respectively. For
the years ended December 31, 2024 and 2023, $32,000 and $38,000, respectively, was recorded as expense in connection
with these plans. Separate accounts are maintained for each participating director with interest credited on a quarterly basis
at the then current rate offered on long-term certificates of deposit. The Company offsets the cost of these plans through
the purchase of bank-owned life insurance. See Note 7.
Salary Continuation Plans
The Company has non-qualified salary continuation plans for key employees. At December 31, 2024 and December 31,
2023, the present value of the future liability was $922,000 and $1.0 million, respectively. For the years ended
December 31, 2024 and 2023, $61,000 and $70,000, respectively, was recorded as expense in connection with these plans.
The Company offsets the cost of these plans through the purchase of bank-owned life insurance. See Note 7.
20. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the
financing needs of its customers. These financial instruments may include commitments to extend credit and letters of
credit. Because many commitments are expected to expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash requirements. These instruments involve, to varying degrees, elements of credit risk
that are not recognized in the consolidated financial statements.
Exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to
extend credit and letters of credit is represented by the contractual amount of those instruments. The Bank uses the same
credit policies in making these commitments and conditional obligations as it does for on-balance sheet instruments. The
Company controls the credit risk of its financial instruments through credit approvals, limits and monitoring procedures;
however, it does not generally require collateral for such financial instruments since there is no principal credit risk.
101
A summary of the Company’s financial instrument commitments is as follows:
(Dollars in thousands)
December 31,
2024
2023
Commitments to grant loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 133,693
$ 125,727
Unfunded commitments under lines of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,324
11,646
Outstanding letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,176
3,629
Commitments to extend credit are agreements to lend to a customer if there is no violation of any condition established in
the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of
a fee. Since portions of the commitments are expected to expire without being drawn upon, the total commitment amounts
do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-
case basis. The amount of collateral obtained by the Bank upon extension of credit is based on management’s credit
evaluation of the counterparty. Collateral held varies but may include personal or commercial real estate, accounts
receivable, inventory and equipment.
Outstanding letters of credit are instruments issued by the Bank that guarantee payment to the beneficiary by the Bank in
the event of default by the Bank’s customer in the non-performance of an obligation or service. Most letters of credit are
extended for one year periods. The credit risk involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. The Bank holds collateral supporting those commitments for which collateral is
deemed necessary. The amount of the liability as of December 31, 2024 and 2023 for guarantees under letters of credit
issued is not material.
The maximum undiscounted exposure related to these guarantees on December 31, 2024 was $4.2 million, and the
approximate value of underlying collateral upon liquidation that would be expected to cover this maximum potential
exposure was $50.2 million.
21. RELATED-PARTY TRANSACTIONS
The Bank has granted loans to certain senior and executive officers, directors and their related interests. The aggregate
dollar amount of these loans was $11.1 million and $5.4 million at December 31, 2024 and 2023, respectively. During
2024, $2.3 million in new loans and advances were added as was $4.6 million in existing loans due to a change in the
composition of a related party, while repayments totaled $1.2 million. None of these loans were past due or in non-accrual
status on December 31, 2024 or 2023.
Deposits and other funds from related parties held by Juniata amounted to $800,000 and $722,000 at December 31, 2024
and 2023, respectively.
22. DERIVATIVES
The Company may enter into derivative financial instruments as part of its asset liability management strategy to help
manage its interest rate risk position and to meet the needs of customers.
Derivatives Designated as Hedging Instruments
The Company had no derivatives designated as cash flow hedges as of December 31, 2024 and December, 31, 2023. In
April 2023, the Company’s remaining interest rate swap with a notional amount of $20.0 million designated as a cash flow
hedge on a short-term FHLB advance matured. Changes in fair value of the swap were recorded in other comprehensive
income. The interest rate swap was determined to be fully effective during the 2023 period and, as such, no amount of
ineffectiveness was included in net income.
102
The effect of cash flow hedge accounting, before income taxes, on accumulated other comprehensive income for the
period ended December 31, 2023 was as follows:
(Dollars in thousands)
December 31, 2023
Amount of Gain
Location of Gain
Amount of Gain
Recognized in
Reclassified
Reclassified from
OCI on Derivatives
from OCI into Income
OCI into Income
Interest rate contract . . . . . . . . . . .
$
2
Interest expense on short-term
borrowings and repurchase agreements
$
(269)
Total
$
2
$
(269)
The gain recognized into income for the cash flow hedging relationship on the Consolidated Statements of Income for
the year ended December 31, 2023 was $269,000.
Derivatives Not Designated as Hedging Instruments
The Company entered into risk participation agreements with financial institution counterparties for interest rate swaps
related to loans in which the Company is a participant. The risk participation agreements provide credit protection to the
financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution.
These risk participation agreements are recorded within other liabilities on the Consolidated Statement of Financial
Condition at their estimated fair value. At December 31, 2024 and 2023, the estimated fair value of the risk participation
agreements was $24,000 and $25,000, respectively. Changes to the fair value of the risk participation agreements are
included in fees derived from loan activity in the Consolidated Statement of Income. The company recorded income of
$32,000 and $57,000, respectively, for the years ended December 31, 2024 and 2023.
The Company acts as an interest rate swap counterparty for commercial borrowers, which are accounted for at fair value.
The Company manages its exposure to such interest rate swaps by entering corresponding and offsetting interest rate swaps
with a third party that mirrors the terms of the swap with the commercial borrower. This position, referred to as a “back-
to-back swap”, directly offsets itself, and Juniata’s exposure is the fair value of the derivative due to changes in credit risk
of the commercial borrower and third party. The back-to-back swaps are recorded within other assets and other liabilities
on the Consolidated Statement of Financial Condition at their estimated fair value which was $20,000 at December 31,
2024. The Company recognized $79,000 in fee income for the year ended December 31, 2024 upon the execution of the
back-to-back swap contracts which is included in fees derived from loan activity in the Consolidated Statement of Income.
The Company had no back-to-back swaps in 2023.
23. COMMITMENTS AND CONTINGENT LIABILITIES
The Company, from time to time, may be a defendant in legal proceedings relating to the conduct of its banking business.
Most of such legal proceedings are a normal part of the banking business and, in management’s opinion, the consolidated
financial condition and results of operations of the Company would not be materially affected by the outcome of such
legal proceedings.
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, by giving notice to the other party. The FHLB has no
obligation to commit to purchase any mortgage through, or from, the Company.
103
24. BRANCH ACQUISITION
On May 12, 2023, the Company completed the acquisition of a branch office in Spring Run, Pennsylvania. The acquisition
included real estate and deposits. The liabilities were recorded on the balance sheet at their estimated fair values as of
May 12, 2023, and their results of operations of the branch have been included in the Consolidated Statement of Income
since such date.
Included in the purchase price of the branch was goodwill and core deposit intangible of $765,000 and $303,000,
respectively. The core deposit intangible is being amortized over a ten-year period using a sum of the years’ digit basis.
The goodwill will not be amortized but will be measured annually for impairment.
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed:
(Dollars in thousands)
Assets:
Cash received at settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
17,384
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
248
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
765
Core deposit intangible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
303
Other assets purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
$
18,703
Liabilities:
Deposits purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
18,697
Other liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
$
18,703
25. SUBSEQUENT EVENT
In January 2025, the Board of Directors declared a dividend of $0.22 per share to shareholders of record on February 14,
2025, payable on February 28, 2025.
104
26. JUNIATA VALLEY FINANCIAL CORP. (PARENT COMPANY ONLY) FINANCIAL INFORMATION
CONDENSED BALANCE SHEETS
(Dollars in thousands)
December 31,
2024
2023
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
80
$
150
Investment in bank subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46,458
39,112
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
929
879
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46
39
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 47,513
$ 40,180
LIABILITIES
Accounts payable and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
56
$
43
STOCKHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
47,457
40,137
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . .
$ 47,513
$ 40,180
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars in thousands)
Years Ended December 31,
2024
2023
INCOME
Interest and dividends on investment securities available for sale . . . . . . . . . . . . . . . . . . . .
$
47
$
45
Dividends from bank subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,400
4,772
Change in value of equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
7
Other non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
6
TOTAL INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,497
4,830
EXPENSE
Other non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
172
149
TOTAL EXPENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
172
149
INCOME BEFORE INCOME TAXES AND EQUITY
IN UNDISTRIBUTED NET INCOME OF SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . .
4,325
4,681
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(20)
(24)
4,345
4,705
Undistributed net income of subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,884
1,891
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,229
6,596
OTHER COMPREHENSIVE INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,320
3,227
TOTAL COMPREHENSIVE INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 11,549
$
9,823
105
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Years Ended December 31,
2024
2023
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6,229
$
6,596
Adjustments to reconcile net income to net cash provided by operating activities:
Undistributed net income of subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,884)
(1,891)
Change in value of equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(50)
(7)
(Increase) decrease in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7)
46
Increase in other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
15
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,301
4,759
Cash flows from investing activities:
Proceeds from the maturity of available for sale investment securities . . . . . . . . . . . . . . .
—
—
Net cash provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Cash flows from financing activities:
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,400)
(4,406)
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
(324)
Treasury stock issued for stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
62
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,371)
(4,668)
Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(70)
91
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
150
59
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
80
$
150
27. Segment Information
The Company’s reportable segment is determined by the Chief Financial Officer, who is the designated chief operation
decision maker (“CODM”), based upon information provided about the Company’s products and services offered,
primarily banking operations. The segment is also distinguished by the level of information provided to the CODM, who
uses such information to review performance of various components of the business (such as branches), which are then
aggregated if operating performance, products/services and customers are similar. The CODM evaluates the financial
performance of the Company’s business components such as revenue streams, significant expenses and budget to actual
results in assessing the Company’s segment and in the determination of allocating resources. The CODM uses revenue
streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets. The
CODM uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis
coupled with monitoring of budget to actual results are used in assessment performance and in establishing compensation.
Loans, investments and deposits provide revenues in the banking operations. Interest expense, provisions for credit losses
and employee benefits and compensation provide the significant expenses in the banking operations. All operations are
domestic.
106
Accounting policies for segments are the same as those described in Note 2. Segment performance is evaluated using
consolidated net income. Information reported internally for performance assessment by the CODM follows, inclusive of
reconciliations of significant segment totals to the financial statements:
(Dollars in thousands)
Year Ended
December 31,
Banking Segment
2024
2023
Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
37,116
$
33,181
Reconciliation of revenue
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,825
5,321
Total Consolidated revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
42,941
$
38,502
Less:
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,187
10,489
Segment net interest income and noninterest income . . . . . . . . . . . . . . . . . . . . . . .
$
28,754
$
28,013
Less:
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
534
500
Employee compensation and benefits expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,470
10,809
Other segment items* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,542
9,138
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
979
970
Segment net income/consolidated net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6,229
$
6,596
Reconciliation of assets
Total assets for reportable segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
848,874
870,555
Total consolidated assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
848,874
$
870,555
* Other segment items include expenses for professional services, technology, occupancy and overhead.
107
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Attached as exhibits to this Form 10-K are certifications of the Company’s Chief Executive Officer (CEO) and Chief
Financial Officer (CFO), which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934, as
amended (the Exchange Act). This “Controls and Procedures” section includes information concerning the controls and
controls evaluation referred to in the certifications.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
The Company’s management, with the participation of its CEO and CFO, conducted an evaluation, as of December 31,
2024, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act
Rule 13a-15(e)). Based on this evaluation, the Company’s CEO and CFO concluded that, as of the end of the period
covered by this annual report, the Company’s disclosure controls and procedures were effective in reaching a reasonable
level of assurance that management is timely alerted to material events relating to the company during the period when
the Company’s periodic reports are being prepared.
Conclusion Regarding Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Rule 13a – 15(f) promulgated under the Exchange Act. The Company’s management,
with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the
evaluation under the framework in Internal Control-Integrated Framework (2013), the Company’s management
concluded that internal control over financial reporting was effective as of December 31, 2024.
108
Management’s Report on Internal Control over Financial Reporting
Management is responsible for the preparation, integrity and fair presentation of the consolidated financial statements
included in this Annual Report on Form 10-K. The consolidated financial statements and notes included in this annual
report have been prepared in conformity with accounting principles generally accepted in the United States of America,
and as such, include some amounts that are based on management’s best estimates and judgments.
The Company’s management is responsible for establishing and maintaining effective internal control over financial
reporting. The system of internal control over financial reporting, as it relates to the financial statements, is evaluated for
effectiveness by management and tested for reliability through a program of internal audits and management testing and
review. Actions are taken to correct potential deficiencies as they are identified. Any system of internal control, no matter
how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and
misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control
effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only a reasonable
assurance with respect to financial statement preparation.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31,
2024. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).
Based on our assessment, management concluded that as of December 31, 2024, the Company’s internal control over
financial reporting was effective and met the criteria of the Internal Control-Integrated Framework (2013).
The independent registered public accounting firm that audited the consolidated financial statements included in the annual
report has not issued an attestation report on the Company’s internal control over financial reporting.
/s/ Marcie A. Barber
Marcie A. Barber, President and Chief Executive Officer
/s/ Michael W. Wolf
Michael W. Wolf, Chief Financial Officer
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31,
2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
During the fiscal quarter ended December 31, 2024, none of the Company’s directors or “officers” (as defined in Rule
16a-1(f) (17 C.F.R. 240.16a-1(f))) adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1
trading arrangement” (as those terms are defined in Item 408 of Regulation S-K (17 C.F.R. 229.408)).
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
109
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Incorporated by reference herein is information appearing in the Proxy Statement for the Annual Meeting of Shareholders
to be held on May 20, 2025 (the “Proxy Statement”) under the captions “Management – Proposal 1 Election of Directors”,
“Management – Executive Officers of the Company”, “Corporate Governance and Board Matters – Audit Committee –
Members, Number of Meetings, Function, Charter and Audit Committee Financial Expert” and “Delinquent
Section 16(a) Reports”. The Company has adopted a Code of Ethics that is applicable to the Company’s Chief Executive
Officer, Chief Financial Officer and Principal Accounting Officer and other designated senior officers, which can be found
in the Investor Information – Governance Documents section of the Company’s website at www.JVBonline.com.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference herein is the information contained in the Proxy Statement under the captions “Director’s
Compensation”, “Corporate Governance And Board Matters – Personnel and Compensation Committee” and “Corporate
Governance And Board Matters – Personnel and Compensation Committee Interlocks and Insider Participation”.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Incorporated by reference herein is the information contained in the Proxy Statement under the caption “Stock Ownership
by Management and Beneficial Owners”. Additionally, the following table contains information regarding equity
compensation plans approved by shareholders, which include a stock option plan for the Company’s employees and an
employee stock purchase plan. The Company has no equity compensation plans that were not approved by shareholders.
Equity Compensation Plan Information
Number of securities to be
Number of securities remaining
issued upon exercise of
available for future issuance
outstanding options, warrants
Weighted average exercise
under equity compensation
and rights
price of outstanding options,
plans (excluding securities
Plan Category
(a)
warrants and rights
reflected in column a)
Equity compensation plans
approved by security holders . . . . . .
22,700
$
17.80
180,600
Equity compensation plans not
approved by security holders . . . . . .
—
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,700
$
17.80
180,600
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
Incorporated by reference herein is the information contained in the Proxy Statement under the caption “Corporate
Governance And Board Matters – Related Party Transactions” and “Management – Directors of the Company – Director
Qualifications”.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Incorporated by reference herein is information contained in the Proxy Statement under the caption “Other Matters –
Independent Registered Public Accounting Firm”.
110
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) The following consolidated financial statements of the Company are filed as part of this Form 10-K:
(i)
Reports of Independent Registered Public Accounting Firm
(ii)
Consolidated Statements of Financial Condition as of December 31, 2024 and December 31, 2023
(iii)
Consolidated Statements of Income for the fiscal years ended December 31, 2024 and December 31,
2023
(iv)
Consolidated Statements of Comprehensive Income for the fiscal years ended December 31, 2024 and
December 31, 2023
(v)
Consolidated Statements of Stockholders’ Equity for the fiscal years ended December 31, 2024 and
December 31, 2023
(vi)
Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2024 and
December 31, 2023
(vii)
Notes to Consolidated Financial Statements
(a)(2) Financial Statements Schedules. All financial statement schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are
inapplicable and have therefore been omitted.
(a)(3) Exhibits.
3.1
Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3(i) to the Company’s
Form 8-K Current Report filed with the SEC on November 12, 2015)
3.2
Amended and Restated Bylaws (incorporated by reference to Exhibit 3(ii) to the Company’s Current Report
on Form 8-K filed with the SEC on February 17, 2022)
4.1
Description of Registrant’s Securities (incorporated by reference to the Company’s Form 8-A filed with the
SEC on September 13, 2011)
10.1
Form of 1999 Directors Deferred Compensation Agreement (incorporated by reference to Exhibit 10.7 to the
Company’s Annual Report on Form 10-K filed with the SEC on March 13, 2009)*
10.2
Form of Amendments to the 1999 Directors Deferred Compensation Agreement (incorporated by reference
to Exhibit 10.7 to the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2011)*
10.3
Form of Director Supplemental Life Insurance/ Split Dollar Plan (incorporated by reference to Exhibit 10.8
to the Company’s Annual Report on Form 10-K filed with the SEC on March 13, 2009)*
10.4
Employee Annual Incentive Plan, (filed herewith)*■
10.5
Change of Control Severance Agreement with Michael W. Wolf (incorporated by reference to Exhibit 10.1 to
the Company’s Current Report on Form 8-K filed with the SEC on April 26, 2022).*
111
10.6
Salary Continuation Agreement with Marcie A. Barber (incorporated by reference to Exhibit 10.20 to the
Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2008)*
10.7
Change of Control Severance Agreement with Marcie A. Barber (incorporated by reference to Exhibit 10.19
to the Company’s Current Report on Form 8-K filed with the SEC on May 27, 2008)*
10.8
Long Term Incentive Plan of Juniata Valley Financial Corp. (incorporated by reference to Exhibit 10.1 to the
Company’s 2016 proxy statement filed with the SEC on April 8, 2016)*
19
Insider Trading Policy, (filed herewith)
21.1
Subsidiaries of Juniata Valley Financial Corp.
23.1
Consent of Crowe LLP
31.1
Rule 13(a)-14 Certification of Marcie A. Barber
31.2
Rule 13(a)-14 Certification of Michael W. Wolf
32.1
Section 1350 Certification of Marcie A. Barber
32.2
Section 1350 Certification of Michael W. Wolf
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
*
Denotes a compensatory plan.
■
Denotes that portions of such Plan have been omitted pursuant to a request for confidential treatment and such
confidential information has been filed separately with the Securities Exchange Commission.
(b) Exhibits. The exhibits required to be filed as part of this report are submitted as a separate section of this report.
(c) Financial Statements Schedules. None Required.
112
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and 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: March 26, 2025
/s/ Marcie A. Barber
By: Marcie A. Barber
Director, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Martin L. Dreibelbis
March 26, 2025
Martin L. Dreibelbis
Chairman
/s/ Gary E. Kelsey
March 26, 2025
Gary E. Kelsey
Vice Chairman
/s/ Marcie A. Barber
March 26, 2025
Marcie A. Barber
Director and Chief Executive Officer (Principal Executive Officer)
/s/ Michael A. Buffington
March 26, 2025
Michael A. Buffington
Director
/s/ Christina Calkins-Mazur
March 26, 2025
Christina Calkins-Mazur
Director
/s/ Joseph B. Scarnati, III
March 26, 2025
Joseph B. Scarnati, III
Director
/s/ Steven C. Sliver
March 26, 2025
Steven C. Sliver
Director
/s/ Bradley J. Wagner
March 26, 2025
Bradley J. Wagner
Director
/s/ Michael W. Wolf
March 26, 2025
Michael W. Wolf
Chief Financial Officer (Principal Accounting and Financial Officer)
113
JUNIATA VALLEY FINANCIAL CORP.
CORPORATE OFFICERS
Martin L. Dreibelbis
Chairman
Gary E. Kelsey
Vice Chairman
Marcie A. Barber
President and Chief Executive Officer
Michael W. Wolf
Executive Vice President, Secretary, Treasurer and Chief Financial Officer
JUNIATA VALLEY FINANCIAL CORP. AND THE JUNIATA VALLEY BANK
BOARD OF DIRECTORS
Marcie A. Barber
Gary E. Kelsey, Vice Chairman
President and Chief Executive Officer
Retired, Potter County, PA, Register of Wills
and Recorder of Deeds
Michael A. Buffington
Founder and President, Buffington Property
Joseph B. Scarnati, III
Management, LLC and One-Stop
Consultant, Allegheny Strategy Partners
Communications
Owner, The Dan Smith Candy Company
Christina Calkins-Mazur
Steven C. Sliver
Retired, Dealer Principle, Calkins Buick
Retired, President & CEO Mutual Benefit Group
GMC Subaru
Bradley J. Wagner
Martin L. Dreibelbis, Chairman
President, The Wenger Group, Inc.
Retired, Petroleum Consultant
THE JUNIATA VALLEY BANK
BUSINESS DEVELOPMENT BOARD MEMBERS
Keith A. Altiery
Mark S. Elsesser
Jeffrey C. Moyer
Richard A. Smeltz
Corey P. Wray
DIRECTORY OF OFFICERS OF JVB
EXECUTIVE
INFORMATION TECHNOLOGY, COMPUTER OPERATIONS & SECURITY
Marcie A. Barber . . . . . . . . . .
President, Chief Executive Officer Curtis M. Crouse . . . . . . . .
Senior Vice President, IT Manager & Security Officer
Michael W. Wolf . . . . . . . . . .
Executive Vice President, Chief Financial Officer S. Marlene Hubler . . . . . . .
Assistant Vice President, Facilities Manager & Branch
Danyelle M. Pannebaker . . . . .
Executive Assistant
Operations Support
Brent J. Harpster . . . . . . . .
Systems Administrator
COMPLIANCE
Beverly M. McClellan . . . .
Data Analyst
Camie L. Harr . . . . . . . . . . . .
Compliance & BSA Officer
OPERATIONS
CUSTOMER EXPERIENCE
Kimberly A. Hart . . . . . . . .
Deposit Operations Supervisor & Fraud Officer
Kaitlyn M. Rhine . . . . . . . . . .
Customer Care & Electronic Banking Manager Taren L. Varner . . . . . . . . .
Business Solutions Officer
FINANCE
BRANCH ADMINISTRATION
Cortney E. Wilbert . . . . . . . . .
Vice President, Controller Amy J. Pitts . . . . . . . . . . . .
Vice President, Branch Administrator
Kristi J. Burdge . . . . . . . . . . .
Assistant Vice President, Accounting Manager Catherine E. DeWyer . . . . .
Branch Operations Administrator
Renee D. Williamson . . . . . . .
Financial Information Manager
Emma J. Kerstetter . . . . . . . . .
Financial Information Analyst BURNHAM OFFICE
Holly M. Laub . . . . . . . . . .
Community Office Manager
HUMAN RESOURCES
Tina J. Smith . . . . . . . . . . . . .
Senior Vice President, Director of Human Resources COUDERSPORT OFFICE
Kelly L. Bruno . . . . . . . . . .
Community Office Manager & Northern Tier Electronic
MARKETING
Banking Coordinator
Kelsea N. Oravic . . . . . . . . . .
Marketing Officer
GARDENVIEW OFFICE
BUSINESS LENDING
Kelly L. Mayes . . . . . . . . .
Assistant Vice President, Community Office Manager &
Jeremiah J. Trout . . . . . . . . . .
Senior Vice President, Lending Division Manager
Relationship Manager
William T. Campbell, Jr. . . . . .
Vice President & Regional Lending Executive, Centre Jessica M. Zimmerman . . . .
Assistant Office Manager
Region
Joseph W. Lashway . . . . . . . .
Vice President, Northern Tier Senior Lender LILLIBRIDGE OFFICE
Thomas P. O'Connell . . . . . . .
Vice President, Relationship Manager Denise R. Russell . . . . . . . .
Community Office Manager
Kelly A. Sherman . . . . . . . . . .
Vice President, Relationship Manager
Trevor P. Stark . . . . . . . . . . . .
Vice President, Relationship Manager LIVERPOOL OFFICE
H. Fred Wallace . . . . . . . . . . .
Vice President & Regional Lending Executive, Capital Diana S. Orwan . . . . . . . . .
Community Office Manager
Region
McALISTERVILLE & RICHFIELD OFFICES
CONSUMER LENDING
Leslie A. Miller . . . . . . . . .
Vice President, Community Office Manager
Larry B. Cottrill, Jr. . . . . . . . .
Vice President, Mortgage & Consumer Lending Manager Amber N. Portzline . . . . . .
Assistant Office Manager, Richfield Office
CREDIT ADMINISTRATION & LOAN OPERATIONS
MIFFLINTOWN & MOUNTAIN VIEW OFFICES
Lisa M. Snyder . . . . . . . . . . . .
Senior Vice President, Credit Administration Manager Austin L. Ferry . . . . . . . . .
Assistant Office Manager
Mathew J. Waddell . . . . . . . . .
Vice President, Portfolio Manager & Credit Officer
Cathleen L. Miller . . . . . . . . .
Loan Operations Supervisor MILLERSTOWN OFFICE
Pamela K. Parson . . . . . . . . . .
Vice President, Collections Manager Lisa M. Richardson . . . . . .
Community Office Manager
Jeremy S. Schwartz . . . . . . . . .
Senior Credit Analyst
MONUMENT SQUARE OFFICE
TRUST & INVESTMENT SERVICES
Christine L. Searer . . . . . . .
Vice President, Market Manager
Thomas D. Weldon . . . . . . . . .
Senior Vice President, Trust & Investment Services
Division Manager PATH VALLEY OFFICE
Cynthia L. Williams . . . . . . . .
Vice President, Trust Officer Lori A. Yocum . . . . . . . . .
Community Office Manager
Adam E. Truitt . . . . . . . . . . . .
Vice President, Financial Services Officer
Jonathan F. King . . . . . . . . . .
Financial Services Representative PORT ROYAL OFFICE
Renee M. Graybill . . . . . . . . .
Trust Operations Supervisor Barbara I. Seaman . . . . . . .
Vice President, Community Office Manager &
Relationship Manager
WATER STREET OFFICE
Samantha M. Treaster . . . . .
Community Office Manager
114
JUNIATA VALLEY FINANCIAL
CORP.
218 Bridge Street
Mifflintown, PA 17059
www.jvbonline.com
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