JUNIATA VALLEY FINANCIAL CORP

Previous 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.

Current wording

The following discussion relates to the consolidated financial condition of the Company as of June 30, 2026, compared to December 31, 2025, and the consolidated results of operations for the three and six months ended June 30, 2026, compared to the same periods in 2025. This discussion should be read in conjunction with the interim consolidated financial statements and related notes included herein.

Previous wording

Total assets as of March 31, 2026 were $901.9 million, an increase of $6.6 million, or 0.7%, compared to total assets of $895.3 million at December 31, 2025. This increase was primarily due to an $8.7 million, or 1.5%, increase in total loans as of March 31, 2026 compared to December 31, 2025, with the increase funded by the $6.8 million, or 0.9%, increase in total deposits as well as cash flows from the reduction in the debt securities portfolio of $2.9 million, or 1.2%, as of March 31, 2026 compared to year-end 2025. Short-term borrowings and repurchase agreements decreased by $3.4 million, or 6.8%, as of March 31, 2026 compared to December 31, 2025, primarily due to a decrease in repurchase agreement account balances. At March 31, 2026, stockholders’ equity increased $2.7 million, or 4.7%, compared to year-end 2025 due to an increase in retained earnings and a decline in other comprehensive losses.

Current wording

Total assets as of June 30, 2026 were $918.9 million, an increase of $23.7 million, or 2.6%, compared to total assets of $895.3 million at December 31, 2025. Cash and cash equivalents increased by $2.6 million, or 22.3%, as of June 30, 2026 compared to December 31, 2025, while total debt securities decreased by $13.6 million, or 5.7%, over the same period as principal paydowns on the mortgage-backed securities portfolio, as well as proceeds from maturities and called securities, were used to fund loan growth rather than being reinvested into the securities portfolio. Total loans increased by $34.9 million, or 5.8%, as of June 30, 2026 compared to year-end 2025 primarily due to increases in real estate – commercial and construction loans. Total deposits increased by $23.9 million, or 3.1%, as of June 30, 2026 compared to December 31, 2025 mainly due primarily to an increase in interest bearing demand and time deposits. Short-term borrowings and repurchase agreements decreased by $6.1 million, or 12.2%, as of June 30, 2026 compared to year-end 2025 primarily due to a decrease in repurchase agreement balances resulting from fluctuations in customers’ accounts.

Previous 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.

Current wording

A summary of the activity in the allowance for credit losses for the six months ended June 30, 2026 and 2025, respectively, is presented below.

Previous 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.

Current wording

As of June 30, 2026, there were $17.7 million of loans classified as special mention compared to $17.5 million at December 31, 2025, $177,000 of loans classified as substandard at June 30, 2026 compared to $507,000 at December 31, 2025, and $124,000 of loans classified as doubtful at June 30, 2026 compared to $128,000 at December 31, 2025.

Previous 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.

Current wording

The ACL is a valuation account that is deducted from a 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. A loan is charged off against the allowance when management believes the uncollectability of a loan balance is confirmed and the expected recovery does not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

Previous wording

Loans that do not share risk characteristics are evaluated on an individual bases. Loans evaluated individually are excluded from 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.

Current wording

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are excluded from 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.

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

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 probability of default/loss given default (“PD/LGD”) and prepayment speed to establish the ACL. The prepayment and curtailment studies are updated quarterly by a third-party for each applicable portfolio segment.

Previous wording

In addition to the quantitative analysis, a qualitative analysis is performed each quarter to determine 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:

Current wording

In addition to the quantitative analysis, a qualitative analysis is performed each quarter to determine additional general reserves on loan portfolios that are not individually analyzed for several factors. The overall qualitative factors are based on the following risk factors:

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. The qualitative analysis resulted in a general reserve of $3.6 million at March 31, 2026 and $3.4 million at December 31, 2025.

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 $3.9 million at June 30, 2026 and $3.4 million at December 31, 2025.

Previous 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.

Current wording

Net income for the three months ended June 30, 2026 was $2.5 million, an increase of $611,000, or 32.0%, compared to the three months ended June 30, 2025. Both basic and diluted earnings per share were $0.50 for the three months ended June 30, 2026 compared to both basic and diluted earnings per share of $0.38 for the comparable 2025 period.

Previous 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.

Current wording

Annualized return on average assets for the three months ended June 30, 2026 was 1.11 %, compared to the annualized return on average assets of 0.89% for the same period in 2025. For the three months ended June 30, annualized return on average equity was 16.51% in 2026 compared to 15.01% in the 2025 period.

Previous 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%.

Current wording

The yield on earning assets increased 30 basis points, to 4.80%, for the three months ended June 30, 2026 compared to same period last year, driven by an increase in loan yields of 13 basis points, while the cost to fund interest earning assets with interest bearing liabilities decreased 14 basis points, to 2.07%.

Previous 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.

Current wording

The net interest margin, on a fully tax equivalent basis, increased from 2.95% for the three months ended June 30, 2025 to 3.36% for the three months ended June 30, 2026.

Previous 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.

Current wording

Juniata recorded a provision for credit losses of $376,000 for the three months ended June 30, 2026 compared to a provision for credit losses of $349,000 for the three months ended June 30, 2025.

Previous 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.

Current wording

Non-interest expense was $5.4 million for the three months ended June 30, 2026, an increase of $361,000, or 7.1%, compared to the three months ended June 30, 2025. Most significantly impacting non-interest expense in the comparative three-month periods were increases in employee compensation and benefits expenses of $176,000 and $192,000, respectively. Also impacting the comparative three-month periods was an increase of $54,000 in occupancy expense due to increased maintenance expense, which was offset by a decrease of $82,000 in other non-interest expenses, primarily due to recording a $62,000 credit to the provision for unfunded commitments.

Previous 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%.

Current wording

An income tax provision of $478,000 was recorded during the three months ended June 30, 2026 compared to an income tax provision of $329,000 recorded during the three months ended June 30, 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 partnership. The tax credit was $83,000 for both the three months ended June 30, 2026 and June 30, 2025. For the three months ended June 30, 2026, the tax credit lowered the effective tax rate from 18.7% to 15.9% compared to the same period in 2025, when the tax credit lowered the effective tax rate from 18.4% to 14.7%.

Previous 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%.

Current wording

Average earning assets increased $42.1 million, or 5.0%, to $888.4 million for the six months ended June 30, 2026 compared to the same period in 2025. This increase was due to an increase of $69.3 million, or 12.8%, in average loans, which was partially offset by a decrease of $27.9 million, or 9.4%, in average investment securities as principal paydowns on the mortgage-backed securities portfolio, as well as proceeds from maturities and called securities, were used to fund loan growth rather than being reinvested into the securities portfolio. Average interest bearing liabilities increased by $25.8 million, or 4.3%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, with the largest increase being in average interest bearing demand deposits, which increased $14.3 million, or 6.9%.

Previous 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.

Current wording

Non-interest income was $2.8 million for both the six months ended June 30, 2026 and June 30, 2025. Most significantly impacting the comparative six-month periods was an increase of $266,000 in the change in value of equity securities in the 2026 period, which was partially offset by a $209,000 loss on the sales and calls of securities due to a portfolio yield restructuring plan undertaken in the second quarter of 2026. Also impacting the comparative six-month periods was an increase of $89,000 in fees derived from loan activity, which was offset by decreases of $58,000 in customer service fees and $70,000 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.

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 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.

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 six months ended June 30, 2026, overnight borrowings from the FHLB averaged $38.7 million. As of June 30, 2026, the Company had $33.1 million in short-term borrowings at the FHLB, with a remaining unused borrowing capacity of $232.0 million at the FHLB. Borrowings from the FHLB are secured by the Company’s qualifying loans at the FHLB.

Previous 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.

Current wording

As of June 30, 2026, the Company had no outstanding borrowings at the Federal Reserve Bank with an unused borrowing capacity of $41.9 million.

Previous 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.

Current wording

The Company has internal authorization for brokered deposits of up to $120.9 million. As of June 30, 2026, the Company had no brokered deposits.

Previous 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.

Current wording

At June 30, 2026, the Company had $10.7 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 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.

Current wording

At June 30, 2026, uninsured deposits represented 14.6% 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 three months ended March 31, 2026, 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 six months ended June 30, 2026, management believes the Company’s liquidity can provide the funds needed to meet operational cash needs.

Previous wording

The Company’s consolidated financial statements do not reflect various off-balance sheet arrangements that are made in the normal course of business, which may involve some liquidity risk, credit risk and interest rate risk. These commitments consist mainly of loans approved but not yet funded, unused lines of credit and outstanding letters of credit. Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third-party. Generally, financial and performance letters of credit have expiration dates within one year of issuance, while commercial letters of credit have longer term commitments. The credit risk involved in issuing letters of credit is essentially the same as the risks that are involved in extending loan facilities to customers. The Company generally holds collateral and/or personal guarantees supporting these commitments.

Current wording

The Company’s consolidated financial statements do not reflect various off-balance sheet arrangements that are made in the normal course of business, which may involve some liquidity risk, credit risk and interest rate risk. These commitments consist mainly of loans approved but not yet funded, unused lines of credit and outstanding letters of credit. Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third-party. Generally, financial and performance letters of credit have expiration dates within one year of issuance, while commercial letters of credit have longer term commitments. The credit risk involved in issuing letters of credit is essentially the same as the risks involved in extending loan facilities to customers. The Company generally holds collateral and/or personal guarantees supporting these commitments.

Previous 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.

Current wording

As of June 30, 2026, the Company had $112.8 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 June 30, 2026 and December 31, 2025, the Company had $5.7 million and $5.2 million, respectively, of financial and performance letters of credit commitments outstanding. Commercial letters of credit as of June 30, 2026 and December 31, 2025 totaled $17.0 million and $9.7 million, respectively.

Previous wording

Management believes the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding letters of credit. The current amount of the liability as of March 31, 2026 for payments under letters of credit issued was not material. Because these instruments have fixed maturity dates, and because many of them will expire without being drawn upon, they do not generally present any significant liquidity risk.

Current wording

Management believes the proceeds obtained through collateral liquidation and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding letters of credit. The current amount of the liability as of June 30, 2026 for payments under letters of credit issued was not material. Because these instruments have fixed maturity dates, and because many of them will expire without being drawn upon, they do not generally present any significant liquidity risk.

Previous wording

Additionally, the Company has sold qualifying residential mortgage loans to the FHLB as part of its Mortgage Partnership Finance Program (“Program”). Under the terms of the Program, there was limited recourse back to the Company for loans that do not perform in accordance with the terms of the loan agreement. Each loan sold under the Program is “credit enhanced” such that the individual loan’s rating was raised to “BBB”, as determined by the FHLB. The Program can be terminated by either the FHLB or the Company, without cause. The FHLB has no obligation to commit to purchase any mortgage through, or from, the Company.

Current wording

Additionally, the Company has sold qualifying residential mortgage loans to the FHLB as part of its Mortgage Partnership Finance Program (“Program”). Under the terms of the Program, there was limited recourse back to the Company for loans that do not perform in accordance with the terms of the loan agreement. Each loan sold under the Program is “credit enhanced” such that the individual loan’s rating was raised to “BBB”, as determined by the FHLB. The Program can be terminated by either the FHLB or the Company, without cause. The FHLB has no obligation to purchase any mortgage through, or from, the Company.

Previous wording

The Company’s principal source of funds for dividend payments is dividends received from the Bank. Certain regulatory restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends, loans or advances. At 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.

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 June 30, 2026, $7.4 million in undistributed earnings of the Bank, included in the consolidated stockholders’ equity, was available for distribution to the Company as dividends without prior regulatory approval, subject to regulatory capital requirements.