JUNIATA VALLEY FINANCIAL CORP

Previous wording

The following discussion relates to the consolidated financial condition of the Company as of September 30, 2025, compared to December 31, 2024, and the consolidated results of operations for the three and nine months ended September 30, 2025, compared to the same periods in 2024. This discussion should be read in conjunction with the interim consolidated financial statements and related notes included herein.

Current wording

The following discussion relates to the consolidated financial condition of the Company as of March 31, 2026, compared to December 31, 2025, and the consolidated results of operations for the three months ended March 31, 2026, compared to the same period in 2025. This discussion should be read in conjunction with the interim consolidated financial statements and related notes included herein.

Previous wording

A summary of the activity in the allowance for credit losses for the nine month periods ended September 30, 2025 and 2024, respectively, is presented below.

Current wording

A summary of the activity in the allowance for credit losses for the three month periods ended March 31, 2026 and 2025, respectively, is presented below.

Previous wording

As of September 30, 2025, there were $12.5 million of loans classified as special mention compared to $23.0 million at December 31, 2024, $1.3 million of loans classified as substandard at September 30, 2025 compared to $1.8 million at December 31, 2024, and $133,000 of loans classified as doubtful at September 30, 2025 compared to $72,000 at December 31, 2024. The decrease in special mention loans between periods was primarily due to the upgrade of two commercial relationships, while the increase in doubtful loans was due to the downgrade of a non-accrual loan guaranteed by the Small Business Administration.

Current wording

As of March 31, 2026, there were $16.9 million of loans classified as special mention compared to $17.5 million at December 31, 2025, $165,000 of loans classified as substandard at March 31, 2026 compared to $507,000 at December 31, 2025, and $124,000 of loans classified as doubtful at March 31, 2026 compared to $128,000 at December 31, 2025.

Previous wording

Juniata adopted ASU 2016-13 on January 1, 2023 to calculate the 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 uncollectability of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

Current wording

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 uncollectability of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

Previous wording

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 and 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.

Current wording

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 and a cash flow analysis. The contractual cash flow is adjusted for

Previous wording

The Company estimates losses over a four-quarter forecast period using Federal Open Market Committee (“FOMC”) estimates for real GDP and unemployment rate. 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.

Current wording

The Company estimates expected credit losses over a reasonable and supportable four-quarter forecast period using Federal Open Market Committee (“FOMC”) estimates for real GDP and unemployment rate. For periods beyond the forecast period, 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 $3.7 million at both March 31, 2026 and December 31, 2025.

Previous wording

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 loan 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 contingencies and loan review controls, require less allocation.

Current wording

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 loan 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 contingencies and loan review controls, require less allocation. The qualitative analysis resulted in a general reserve of $3.6 million at March 31, 2026 and $3.4 million at December 31, 2025.

Previous wording

Net income for the three months ended September 30, 2025 was $2.1 million, an increase of $419,000, or 25.6%, compared to the three months ended September 30, 2024. Basic and diluted earnings per share was $0.41 for the three months ended September 30, 2025, an increase of 24.2%, compared to basic and diluted earnings per share of $0.33 for the comparable 2024 period.

Current wording

Net income for the three months ended March 31, 2026 was $2.8 million, an increase of $789,000, or 39.3%, compared to the three months ended March 31, 2025. Basic and diluted earnings per share were $0.56 and $0.55, respectively, for the three months ended March 31, 2026 compared to both basic and diluted earnings per share of $0.40 for the comparable 2025 period.

Previous wording

Annualized return on average assets for the three months ended September 30, 2025 was 0.94%, compared to the annualized return on average assets of 0.76% for the same period in 2024. For the three months ended September 30, annualized return on average equity was 15.47% in 2025 compared to 14.72% in the 2024 period.

Current wording

Annualized return on average assets for the three months ended March 31, 2026 was 1.25 %, compared to the annualized return on average assets of 0.94% for the same period in 2025. For the three months ended March 31, annualized return on average equity was 19.04% in 2026 compared to 16.55% in the 2025 period.

Previous wording

The discussion that follows further explains changes in the components of net income when comparing the three months ended September 30, 2025 with the three months ended September 30, 2024.

Current wording

The discussion that follows further explains changes in the components of net income when comparing the three months ended March 31, 2026 to the three months ended March 31, 2025.

Previous wording

Net interest income was $6.6 million for the three months ended September 30, 2025, an increase of $761,000, or 13.1%, compared to $5.8 million for the three months ended September 30, 2024.

Current wording

Net interest income was $7.3 million for the three months ended March 31, 2026, an increase of $1.5 million, or 25.5%, compared to $5.8 million for the three months ended March 31, 2025.

Previous wording

Average earning assets decreased $3.8 million, or 0.4%, to $852.4 million during the nine months ended September 30, 2025 compared to the same period in 2024, due primarily to a decrease of $18.6 million, or 5.9%, in average investment securities as principal paydowns on the mortgage-backed securities portfolio were used for funding needs rather than being reinvested into the securities portfolio. This decline was partially offset by a $15.7 million, or 2.9%, increase in average loans comparing the nine month periods. Average interest bearing liabilities decreased by $7.6 million, or 1.2%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This decrease was primarily due to a decline of $22.4 million, or 30.7%, in average borrowings and other interest bearing liabilities, which was partially offset by an increase in average time deposits of $15.1 million, or 7.4%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Current wording

Average interest earning assets increased 4.7%, to $882.6 million, for the three months ended March 31, 2026, compared to the same period in 2025, due to an increase of $65.9 million, or 12.2%, in average loans, which was partially offset by a decrease of $26.4 million, or 8.8%, in average investment securities as cash flows from the securities portfolio were used to fund loan growth rather than being reinvested into the securities portfolio. Average interest bearing liabilities increased by $24.2 million, or 4.0%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to an increase in total average interest bearing deposits of $23.8 million, or 4.3%.

Previous wording

The yield on earning assets increased 18 basis points, to 4.59%, for the three months ended September 30, 2025 compared to same period in 2024, driven by an increase in loan yields of 12 basis points, while the cost to fund interest earning assets with interest bearing liabilities decreased 16 basis points, to 2.22%.

Current wording

The yield on earning assets increased 44 basis points, to 4.86%, for the three months ended March 31, 2026 compared to same period last year, driven by an increase in loan yields of 39 basis points, while the cost to fund interest earning assets with interest bearing liabilities decreased 15 basis points, to 2.11%.

Previous wording

The net interest margin, on a fully tax equivalent basis, increased from 2.73% for the three months ended September 30, 2024 to 3.04% for the three months ended September 30, 2025.

Current wording

The net interest margin, on a fully tax equivalent basis, increased from 2.83% for the three months ended March 31, 2025 to 3.39% for the three months ended March 31, 2026.

Previous wording

Juniata recorded a provision for credit losses of $216,000 for the three months ended September 30, 2025 compared to a provision for credit losses of $232,000 for the three months ended September 30, 2024.

Current wording

Juniata recorded a provision for credit losses of $180,000 for the three months ended March 31, 2026 compared to a provision for credit losses of $104,000 for the three months ended March 31, 2025. This increase is due primarily to an increase in total loans outstanding between the comparable periods.

Previous wording

Non-interest income was $1.5 million for the three months ended September 30, 2025, an increase of $72,000, or 5.0%, compared to the three months ended September 30, 2024. Most significantly impacting the comparative three month periods was an increase of $99,000 in fees derived from loan activity primarily due to increases in title insurance commissions, as well as increases in letter of credit and guidance line fees. These increases were partially offset by a decrease of $38,000 in commissions from sales of non-deposit products in the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Current wording

Non-interest income was $1.4 million for the three months ended March 31, 2026, an increase of $96,000, or 7.1%, compared to the three months ended March 31, 2025. Most significantly impacting non-interest income in the comparative three month periods were increases of $86,000 in the change in value of equity securities and $80,000 in fees derived from loan activity due to increases in title insurance commissions as well as guidance line and service fees. Partially offsetting these increases between the comparative three month periods was a decline of $51,000 in commissions from sales of non-deposit products due to the transition to a new wealth management business model in the second quarter of 2025, as well as a $25,000 decrease in customer service fees.

Previous wording

Non-interest expense was $5.4 million for the three months ended September 30, 2025, an increase of $343,000, or 6.7%, compared to the three months ended September 30, 2024. Most significantly impacting non-interest expense in the comparative three month periods was an increase of $328,000 in employee compensation expense. Also contributing to the increase in non-interest expense between the comparative three month periods was an increase of $161,000 in other non-interest expense primarily due to an increase of $80,000 in expenses associated with the changes to the wealth management department, as well as an increase in $39,000 to the provision for unfunded commitments. Partially offsetting these increases was a decrease of $79,000 in employee benefits expense due to a decline in medical claims expense in the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Current wording

Non-interest expense was $5.2 million for the three months ended March 31, 2026, an increase of $526,000, or 11.2%, compared to the three months ended March 31, 2025. Most significantly impacting non-interest expense in the comparative three month periods were increases in employee compensation and benefits expenses of $269,000 and $195,000, respectively. The primary drivers for the increase in employee compensation expense were regular merit increases and additional lending staff, while increased medical claims expenses was the primary driver for the increase in employee benefits expense for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Partially offsetting these increases between the comparative three month periods was a decline of $40,000 in occupancy expense.

Previous wording

An income tax provision of $357,000 was recorded during the three months ended September 30, 2025 compared to an income tax provision of $270,000 recorded during the three months ended September 30, 2024. The increase between three month periods was mainly due to more taxable income being recorded in the 2025 period. Juniata qualifies for a federal tax credit for an investment in a low-income housing partnerships. The tax credit was $82,000 for both the three months ended September 30, 2025 and September 30, 2024. For the three months ended September 30, 2025, the tax credit lowered the effective tax rate from 18.2% to 14.8% compared to the same period in 2024, when the tax credit lowered the effective tax rate from 18.5% to 14.2%.

Current wording

An income tax provision of $563,000 was recorded during the three months ended March 31, 2026 compared to an income tax provision of $371,000 recorded during the three months ended March 31, 2025. The increase between three month periods was mainly due to more taxable income being recorded in the 2026 period. Juniata qualifies for a federal tax credit for an investment in a low-income housing partnerships. The tax credit was $82,000 for both the three months ended March 31, 2026 and March 31, 2025. For the three months ended March 31, 2026, the tax credit lowered the effective tax rate from 19.2% to 16.8% compared to the same period in 2025, when the tax credit lowered the effective tax rate from 19.0% to 15.6%.

Previous wording

The Company is a member of the Federal Home Loan Bank of Pittsburgh for the purpose of providing short-term liquidity to supplement other sources of liability liquidity. During the nine months ended September 30, 2025, overnight borrowings from the FHLB averaged $31.0 million. As of September 30, 2025, the Company had $29.1 million in short-term borrowings at the FHLB, with a remaining unused borrowing capacity of $244.1 million at the FHLB. Borrowings from the FHLB are secured by the Company’s qualifying loans at the FHLB.

Current wording

The Company is a member of the Federal Home Loan Bank of Pittsburgh for the purpose of providing short-term liquidity to supplement other sources of liability liquidity. During the three months ended March 31, 2026, overnight borrowings from the FHLB averaged $41.7 million. As of March 31, 2026, the Company had $36.4 million in short-term borrowings at the FHLB, with a remaining unused borrowing capacity of $260.2 million at the FHLB. Borrowings from the FHLB are secured by the Company’s qualifying loans at the FHLB.

Previous wording

As of September 30, 2025, the Company had no outstanding borrowings at the Federal Reserve Bank with an unused borrowing capacity of $50.6 million.

Current wording

As of March 31, 2026, the Company had no outstanding borrowings at the Federal Reserve Bank with an unused borrowing capacity of $49.2 million.

Previous wording

The Company has internal authorization for brokered deposits of up to $175.0 million. As of September 30, 2025, the Company had no brokered deposits.

Current wording

The Company has internal authorization for brokered deposits of up to $118.3 million. As of March 31, 2026, the Company had no brokered deposits.

Previous wording

In addition, the Company also has an unsecured line of credit with a correspondent bank totaling $11.0 million, of which no funds were drawn at September 30, 2025.

Current wording

In addition, the Company also has an unsecured line of credit with a correspondent bank totaling $10.0 million, of which no funds were drawn at March 31, 2026.

Previous wording

At September 30, 2025, the Company had $13.6 million in funding derived from securities sold under agreements to repurchase (accounted for as collateralized financing transactions). This product is available through corporate cash management accounts for business customers and provides the Company with the ability to pay interest on corporate checking accounts.

Current wording

At March 31, 2026, the Company had $10.1 million in funding derived from securities sold under agreements to repurchase (accounted for as collateralized financing transactions). This product is available through corporate cash management accounts for business customers and provides the Company with the ability to pay interest on corporate checking accounts.

Previous wording

At September 30, 2025, uninsured deposits represented 15.1% of the Company’s total deposits. This amount excludes deposits of state and political subdivisions because the Company pledges debt securities for deposits in excess of the $250,000 FDIC insurance limit in the case of those deposits.

Current wording

At March 31, 2026, uninsured deposits represented 15.8% of the Company’s total deposits. This amount excludes deposits of state and political subdivisions because the Company pledges debt securities for deposits in excess of the $250,000 FDIC insurance limit in the case of those deposits.

Previous wording

In view of the sources previously mentioned and the steps taken by the Company through the nine months ended September 30, 2025, management believes the Company’s liquidity can provide the funds needed to meet operational cash needs.

Current wording

In view of the sources previously mentioned and the steps taken by the Company through the three months ended March 31, 2026, management believes the Company’s liquidity can provide the funds needed to meet operational cash needs.

Previous wording

As of September 30, 2025, the Company had $145.4 million outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $145.0 million at December 31, 2024. As of September 30, 2025 and December 31, 2024, the Company had $3.9 million and $4.2 million, respectively, of financial and performance letters of credit commitments outstanding. Commercial letters of credit as of September 30, 2025 and December 31, 2024 totaled $9.7 million and $10.9 million, respectively.

Current wording

As of March 31, 2026, the Company had $129.0 million outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $132.3 million at December 31, 2025. As of both March 31, 2026 and December 31, 2025, the Company had $5.2 million of financial and performance letters of credit commitments outstanding. Commercial letters of credit as of March 31, 2026 and December 31, 2025 totaled $10.0 million and $9.7 million, respectively.

Previous wording

The Company’s principal source of funds for dividend payments is dividends received from the Bank. Certain regulatory restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends, loans or advances. At September 30, 2025, $4.8 million in undistributed earnings of the Bank, included in the consolidated stockholders’ equity, was available for distribution to the Company as dividends without prior regulatory approval, subject to regulatory capital requirements.

Current wording

The Company’s principal source of funds for dividend payments is dividends received from the Bank. Certain regulatory restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends, loans or advances. At March 31, 2026, $6.9 million in undistributed earnings of the Bank, included in the consolidated stockholders’ equity, was available for distribution to the Company as dividends without prior regulatory approval, subject to regulatory capital requirements.