JUNIATA VALLEY FINANCIAL CORP
For the period ended Dec 31, 2024. Filed Mar 26, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 26, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-20.
0001558370-24-003611
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-26.
0001558370-25-003701
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 196 previous paragraphs and 194 current paragraphs.
115 unchanged; 63 reworded; 11 added; 17 removed; 1 previous and 5 current paragraphs rearranged.
Tables are not compared: 69 previous and 70 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Removed paragraphs (17)
Previous report
Juniata adopted ASU 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments as of January 1, 2023, resulting in a $1.1 million increase to the allowance for credit losses. The new current expected credit loss (CECL) model for determining the allowance for credit losses through credit loss expenses is based on forecasted economic scenarios as well as qualitative factors specific to Juniata augmented by industry-wide trends.
Previous report
Non-interest income was $5.3 million in 2023, which was an increase of $96,000 compared to 2022. Most significantly impacting the comparative year end periods was a $1.5 million decline in the loss on sales and calls of securities primarily due to the execution of a balance sheet and regulatory capital management strategy in 2022. The securities losses in 2022 were partially offset by $1.2 million in gains from the termination of two derivatives contracts, recorded in other non-interest income, resulting in the $1.1 million decline in other non-interest income in 2023 compared to 2022.
Previous report
Also impacting the comparative year end periods were decreases of $219,000, or 57.6%, in life insurance proceeds and $95,000, or 17.6%, in other non-interest-related fees derived from loan activity, primarily due to a decline in title insurance commissions. Additionally, fees generated by debit card activity increased by $67,000, or 3.9%, in 2023 compared to the prior year due to increased debit card usage, while the change in value of equity securities increased by $85,000, or 125.0%, resulting from an increase in bank stock market values.
Previous report
Management strives to control non-interest expense where possible to improve operating results. Non-interest expense was $19.9 million in both 2023 and 2022. Most significantly impacting non-interest expense in the comparative year end periods was a $355,000, or 13.7%, increase in data processing expense primarily due to recording a $238,000 breakage fee paid to Juniata’s current core service provider as Juniata will convert to a new core service provider in March 2024. Also impacting the comparative year end periods was a $227,000 increase in merger and acquisition expense as a result of the Path Valley branch acquisition in 2023 as no such expenses were incurred in 2022, as well as a $99,000, or 24.4%, increase in FDIC insurance premiums due to an increase in the assessment rate for all institutions in 2023.
Previous report
These increases were partially offset by a decline of $446,000, or 55.8%, in low-income housing partnership amortization expense in 2023 versus 2022 due to the completion of the 10-year amortization period in January 2023 for one of Juniata’s low-income housing partnership investments, as well as a $319,000, or 63.4%, decrease in taxes, other than income, between the comparative year end periods due to both a decline in Pennsylvania Shares Tax expense and recording a $62,000 Pennsylvania Shares Tax refund in 2023.
Previous report
Total average stockholders’ equity declined $12.7 million as of December 31, 2023 compared to December 31, 2022 primarily due to the recorded AOCI associated with the $26.2 million increase in unrealized losses on debt securities, which was partially offset by a $2.7 million, or 5.6%, increase in retained earnings. Juniata transferred $212.3 million in debt securities from the available for sale to the held to maturity classification in the fourth quarter of 2022, reflecting Juniata’s intent and ability to hold such debt securities for the foreseeable future or until maturity.
Previous report
Juniata adopted ASU 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments as of January 1, 2023, resulting in the recording of a $1.1 million increase to the allowance for credit losses. The new current expected credit loss (“CECL”) model is based primarily on forecasted economic scenarios as well as qualitative factors specific to Juniata. The ACL represents management’s assessment of the estimated credit losses the Company will receive over the life of the loan. ACL requires a projection of credit losses over the contract lifetime of the credit adjusted for prepayment tendencies.
Previous report
Management analyzes the adequacy of the ACL regularly through reviews of the loan portfolio. Consideration is given to economic conditions, changes in interest rates and the effect of such changes on collateral values and borrowers’ ability to pay, changes in the composition of the loan portfolio and trends in past due and non-performing loan balances. The ACL is a material estimate that is susceptible to significant fluctuation and is established through a provision for credit losses based on management’s evaluation of the inherent risk in the loan portfolio. In addition to extensive in-house loan monitoring procedures, the Company utilizes an outside party to conduct an independent loan review of commercial loan and commercial real estate loan relationships on a sample basis. Management utilizes the results of this outside loan review to assess the effectiveness of its internal loan grading system as well as to assist in the assessment of the overall adequacy of the ACL associated with these types of loans.
Previous report
The ACL is made up of two basic components. The first component of the allowance for credit loss is the specific reserve in which the Company sets aside reserves based on the analysis of individual analyzed credits. In establishing specific reserves, the Company analyzes all substandard, doubtful and loss graded loans monthly and makes judgments about the risk of loss based on the cash flow of the borrower, the value of any collateral and the financial strength of any guarantors. If the loan is individually analyzed and cash flow dependent, then a specific reserve is established for the discount on the net present value of expected future cash flows. If the loan is individually analyzed and collateral dependent, then any shortfall is either charged off or a specific reserve is established. The Company also considers the impacts of any Small Business Administration guarantees. The specific reserve portion of the ACL was $4,000 at December 31, 2023, while there was no specific reserve at December 31, 2022.
Previous report
The second component is a general reserve, which is used to record credit loss reserves for groups of homogenous loans for which the Company estimates the expected losses over the contractual lifetime of the loan, adjusted for prepayment tendencies. In addition, the future economic environment is incorporated into the projection with selected macro-economic variables to revert to the long-run historical mean after such time as management can no longer make or obtain a reasonable and supportable forecast.
Previous report
Discounted cash flows (“DCF”) was selected as the appropriate method to analyze most of the Company’s loan segments, particularly loan segments with longer average lives and regular payment structures, because DCF allows for the effective incorporation of a reasonable and supportable forecast in a directionally consistent and objective manner. DCF generates cash flow projections at the instrument level where payment expectations are adjusted for prepayment and curtailment to produce an expected cash flow stream. This expected cash flow stream is compared to contractual cash flows to establish a valuation account for these loans.
Previous report
The personal loan portfolio contains loans with many different payment structures, payment streams and collateral. The Weighted Average Remaining Life (“WARM”) method was deemed most appropriate for these loans. WARM uses an annual charge-off rate over several vintages to estimate credit losses. The average annual charge-off rate is applied to the contractual term adjusted for prepayments.
Previous report
Juniata reassessed classification of certain investments, and effective October 1, 2022, transferred $28.4 million of obligations of U.S. Government sponsored enterprises and $183.9 million in mortgage-backed securities from the available for sale to held to maturity security classification. The transfer occurred at fair value. The combined related unrealized loss of $46.8 million, included in other comprehensive income, remained in other comprehensive income to be 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. No gain or loss was recorded at the time of transfer.
Previous report
The Bank sold $24.7 million, par value, of subordinated debt of unconsolidated financial institutions, classified as corporate debt securities, at a loss of $1.5 million in 2022. Management’s intent with respect to these securities changed in 2022 due to the adverse regulatory impact of substantial (relative to capital) holdings of subordinated debt.
Previous report
The Company may use interest rate swap agreements as part of its asset liability management strategy to help manage interest rate risk. As of December 31, 2023, the Company had no interest rate swaps as the remaining cash flow hedge matured in April 2023. As of December 31, 2022, an interest rate swap with a notional amount of $20.0 million was designated as a cash flow hedge of a short-term FHLB advance. The notional amount of the interest rate swap did not represent amounts exchanged by the parties. The amount exchanged was determined by reference to the notional amount and the other terms of the individual interest rate swap agreement. The aggregate fair value of the swap was $268,000 as of December 31, 2022 and was recorded in other assets on the Consolidated Statements of Condition, with changes in fair value recorded in other comprehensive income. The Interest rate swap was determined to be fully effective during the periods presented and, as such, no amount of ineffectiveness was included in net income. See Note 22 of The Notes to Consolidated Financial Statements.
Previous report
In 2019, the federal banking agencies jointly issued a final rule providing an optional, simplified measure of capital adequacy, the community bank leverage ratio framework (“CBLR framework”), for qualifying community banking organizations, consistent with Section 201 of the Economic Growth Act. The final rule became effective on January 1, 2020. The community bank leverage ratio removed the requirement for qualifying banking organizations to calculate and report risk-based capital, but rather only requires compliance with a Tier 1 to average assets (“leverage”) ratio. Qualifying banking organizations that elect to use the CBLR framework and maintain a leverage ratio of greater than required minimums will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the agencies’ capital rules (generally applicable rule) and, if applicable, will be considered to have met the well-capitalized ratio requirements for purposes of Section 38 of the Federal Deposit Insurance Act. Under the interim final rules, the community bank leverage ratio minimum requirement is 9.0% for calendar year 2022 and beyond. The interim rule allows for a two-quarter grace period to correct a ratio that falls below the required amount, provided the Bank maintains a leverage ratio of 8.0% for calendar year 2022 and beyond.
Previous report
Under the final rule, an eligible banking organization can opt out of the CBLR framework and revert to the risk-weighting framework without restriction. As of December 31, 2023, the Bank was a qualifying community banking organization as defined by the federal banking agencies but elected to remain subject to risk-weighting framework under the Basel III capital requirements at year-end 2023. See Note 14 of Notes to the Consolidated Financial Statements.
Reworded paragraphs (63)
Previous wording
Above all else, management iscommitted to maximizing the value of our shareholders’ investment, through both stock value appreciation and dividend returns. Remainingconnected to our communities will allow us to identify the financial needs of our market and to deliver those products and servicescapably. 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.
Current wording
Above all else, management iscommitted to maximizing the value of our shareholders’ investment, through both stock value appreciation and dividend returns. Remainingconnected to our communities is intended to allow us to identify the financial needs of our market and to deliver those products and servicescapably. 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.
Previous wording
We arecommitted 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 arecommittedto 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 provideconnectionthrough every means available, wherever we are needed, whether through a stand-alone branch, in-store boutique, ATM or via online and mobile banking anywhere internet or cell phone signals can be received. In 2023, we continued to make advances in technological resources, offering a mobile wallet to consumers because we arecommitted to optimizing the customer experience.
Current wording
We arecommitted 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 arecommittedto 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 provideconnectionthrough every means available, wherever we are needed, whether through a stand-alone branch, in-store boutique, ATM or via online, mobile banking or
Previous wording
We arecapableof 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 payingcareful 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, and in May 2023, we acquired the Path Valley branch in Franklin County, Pennsylvania.
Current wording
We arecapableof 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 payingcareful 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.
Previous wording
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, through the acquisition of remaining shares of LCB. In 2023, we expanded into Franklin County, Pennsylvania, through the purchase of a branch office.
Current wording
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,
Previous wording
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 will convert to a new core operating system, which should allow us to take advantage of new technologies and improve efficiencies.
Current wording
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.
Previous wording
Higher market interest rates decreased the net interest margin for many banks in 2023 in comparison to 2022. While interest-earning assets, such as loans and investments, have been originated or repriced at higher rates, increasing the average rate earned on those assets, the average rate paid on interest bearing liabilities, such as deposits and borrowings, has increased at a faster pace than the increase in interest earning assets, impacting the net interest margin in 2023. We believe the increased cost of funding will continue to impact the net interest margin and that increasing the net interest margin will continue to be a challenge as general market rates, particularly funding costs, remain high.
Current wording
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.
Previous wording
The accounting policy for establishing the allowance for credit losses relies to a greater extent on the use of estimates than other areas and, as such, has a greater possibility of producing results that could be different from those currently reported. 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.
Current wording
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.
Previous wording
Net income for Juniata in 2023 was $6.6 million, a decrease of 20.7%, compared to net income of $8.3 million for 2022. Earnings per share on a fully diluted basis decreased 21.1%, to $1.31 in 2023, compared to $1.66 in 2022. Return on average assets (“ROA”) for the years ended December 31, 2023 and 2022 was 0.79% and 1.02%, respectively, while the return on average equity (“ROE”) for 2023 was 17.59% compared to 16.59% in 2022.
Current wording
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.
Previous wording
The net interest margin, on a fully tax-equivalent basis, decreased from 3.10% in 2022 to 2.74% in 2023. The yield on earning assets increased 46 basis points, to 3.96%, while the cost of funds increased 115 basis points, to 1.75%, in 2023 compared to 2022. Higher market interest rates decreased the net interest margin in 2023 in comparison to 2022. 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, impacting the net interest margin in 2023.
Current wording
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.
Previous wording
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 81% of total revenues (the total of net interest income and non-interest income, exclusive of gains on sales and calls of securities) for 2023. 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.
Current wording
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.
Previous wording
Net interest income was $22.7 million for the year ended December 31, 2023. An increase in volume of $2.0 million and a decrease of $3.4 million in rate resulted in an overall decrease of $1.4 million, or 6.0%, when compared to net interest income of $24.1 million for the comparable 2022 period, which increased by $2.8 million, or 13.1%, over the 2021 period. Average earning assets increased $50.8 million, or 6.5%, to $838.2 million, during the year ended December 31, 2023, compared to the same period in 2022, which increased $23.1 million, or 3.0% compared to the year ended December 31, 2021.
Current wording
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.
Previous wording
On average, total loans outstanding increased $60.3 million, or 13.6%, in 2023 compared to 2022. Average total loans outstanding increased $18.7 million, or 4.4%, in 2022 compared to 2021. Average loans in 2022 included average PPP loan balances of $2.7 million compared to $23.8 million in 2021. Average yields on loans increased by 52 basis points in 2023 compared to 2022, which was 20 basis points more than 2021. As shown in Table 2, Rate – Volume Analysis of Net Interest Income, the increase in yield in 2023 increased interest income on loans 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. Impacting the yield on loans in 2023 was an additional 100 basis point increase in the prime rate in 2023, which has increased by 525 basis points since the beginning of 2022. During 2022, the increase in the yield on loans increased interest income by approximately $851,000, while the increase in volume raised interest income by $914,000 compared to 2021, resulting in a net increase in interest recorded on loans of $1.8 million.
Current wording
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.
Previous wording
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 increased interest income by $270,000, resulting in an aggregate increase in interest recorded on investment securities of $100,000 in 2023 compared to 2022. Average investment securities increased by $10.5 million, or 3.2%, during 2022. The increase in volume on investment securities in 2022 accounted for a $165,000 increase in interest income, while the increase in yield on investment securities of $1.1 million resulted in an aggregate increase in interest recorded on investment securities of $1.2 million in 2022 compared to 2021. Average yields on investment securities increased by eight basis points in 2023 compared to 2022, which was 29 basis points greater than 2021. Investment yields in 2022 were impacted by the 425 basis point increase in the federal funds rate during the year, while investment yields in 2023 were further impact by an additional 100 basis point increase in the federal funds rate.
Current wording
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.
Previous wording
In total, the yield on earning assets in 2023 was 3.96% compared to 3.50% in 2022 and 3.21% in 2021. On a fully tax equivalent basis, the yield on earning assets increased 46 basis points to 3.99% in 2023, from 3.53% in 2022, which increased 28 basis points from 3.25% in 2021.
Current wording
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.
Previous wording
Average interest bearing liabilities increased by $31.6 million, or 5.6%, in 2023 compared to 2022, which increased $9.2 million compared to 2021. Average interest bearing deposits increased by $14.9 million, or 2.1%, in 2023 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 as customers sought higher interest rate deposit products. Over the same period, average short-term borrowings increased by $13.7 million, primarily due to increases in overnight FHLB borrowings and FRB advances, while average repurchase agreements increased by $4.3 million due to the addition of three new relationships in 2023. During 2022, average interest bearing demand and savings deposits increased by $28.4 million compared to 2021, while average overnight borrowings and short-term debt increased by $11.9 million. These increases were partially offset by decreases in average time deposits of $12.9 million, as well as FHLB long-term debt and FRB advances, which decreased in total by $19.1 million.
Current wording
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.
Previous wording
Changes in the volume and rate of total interest bearing liabilities, in the aggregate, increased interest expense by $7.1 million in 2023 compared to 2022, while the aggregate changes in volume and rate in 2022 increased interest expense by $204,000 compared to 2021. Both the increase in market interest rates and competitive pricing pressure to both retain and attract deposit customers resulted in the steep increase in interest expense in 2023 compared to the prior periods. The percentage of average interest earning assets funded by average non-interest bearing demand deposits was approximately 23.4% in 2023, compared to 24.8% in 2022, and 23.4% in 2021. The total cost to fund earning assets (computed by dividing the total interest expense by the total average earning assets) in 2023 was 1.25%, compared to 0.43% in 2022 and 0.42% in 2021.
Current wording
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.
Previous wording
Juniata adopted ASC 326 on January 1, 2023, which replaced the incurred loss methodology with an expected loss methodology. The new CECL model determines the allowance for credit losses through credit loss expenses based on forecasted economic scenarios as well as qualitative factors specific to Juniata augmented by industry-wide trends. While Juniata continued to experience favorable asset quality trends, elevated qualitative risk factors, including political uncertainty, national delinquency trends, the continuing effects of the current interest rate environment, as well as loan growth, were considered in determining the level of the allowance for credit losses. The Company determined that a provision for credit losses of $500,000 was appropriate for 2023, compared to a loan loss provision of $455,000 recorded in 2022. 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 2023.
Current wording
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.
Previous wording
Fee-generated non-interest income consists of customer service fees derived from deposit accounts, trust relationships and sales of non-deposit products. In 2023, revenues from these services totaled $2.2 million, representing a decrease of $149,000, or 6.4%, from 2022 revenues. Customer service fees decreased by $96,000, or 6.5%, due to a decrease in overdraft fee income, while commissions from sales of non-deposit products decreased in 2023, in comparison to 2022, by $47,000, or 12.2%. Trust fees decreased by $6,000 in 2023 versus 2022, due to a decrease in non-estate trust fees. Variances in fees from estate settlements can arise because estate settlements occur sporadically and are not necessarily consistent year to year. Non-estate 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.
Current wording
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.
Previous wording
As a percentage of average assets, non-interest income (excluding securities gains/losses on sales or calls of securities, change in value of equity securities, gain from life insurance proceeds and swap termination proceeds) was 0.61% and 0.63%, respectively in 2023 and 2022.
Current wording
As a percentage of average assets, non-interest income was 0.68% and 0.63%, respectively in 2024 and 2023.
Previous wording
As a percentage of average assets, non-interest expense was 2.37% in 2023 as compared to 2.43% in 2022. Excluding merger and acquisition expense and the FIS breakage fee, non-interest expense as a percentage of average assets was 2.32% in 2023.
Current wording
As a percentage of average assets, non-interest expense was 2.44% in 2024 as compared to 2.38% in 2023.
Previous wording
Income tax expense for 2023 was $970,000 versus $642,000 in 2022. Juniata qualifies for a federal tax credit for investments in low-income housing partnerships. The tax credit decreased from $902,000 in the year ended December 31, 2022 to $366,000 in the year ended December 31, 2023 due to the completion of the amortization period for one of Juniata’s low-income housing partnership investments.
Current wording
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.
Previous wording
Exclusive of the tax credit, the Company recorded income tax expense of $1.3 million in 2023, compared to $1.5 million in 2022. Juniata’s effective tax rate in 2023 was 12.8% versus 7.2% in 2022. See Note 13 of The Notes to Consolidated Financial Statements for further information on income taxes.
Current wording
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.
Previous wording
Overall, total average assets increased by $20.8 million, or 2.5%, for the year 2023 compared to 2022. The increase in 2023 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 increased from 96.1% in 2022 to 99.8% in 2023. The ratio of average interest bearing liabilities to total average assets increased from 69.4% in 2022 to 71.4% in 2023. 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% and 2.2% of total average assets in 2023 and 2022, respectively. A more detailed discussion of the Company’s earning assets and interest bearing liabilities will follow in the Sections titled “Loans”, “Investments” and “Deposits”.
Current wording
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.
Previous wording
From year-end 2022 to year-end 2023, total loans outstanding increased by $40.9 million. The following table summarizes how the ending balances changed in each of the last two years.
Current wording
The following table summarizes how the ending balances changed in each of the last two years.
Previous wording
The loan portfolio was comprised of approximately 31.7% consumer loans (real estate – mortgage and personal loans) and 68.3% commercial loans (commercial, financial and agricultural, real estate – commercial and construction, and obligations of states and political subdivisions) on December 31, 2023 compared to 31.9% consumer loans and 68.1% commercial loans on December 31, 2022. 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 2023 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 $163.7 million at December 31, 2023, or 142.10% of the Bank’s capital. Components of this concentration group with balances considered for general reserve purposes are as follows:
Current wording
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:
Previous wording
During 2023, all loan categories, except for obligations of states and political subdivision loans, increased. During 2022, all real estate loan categories, as well as obligations of states and political subdivision loans increased, offset by declines in commercial, financial and agricultural, as well as personal loans. The decrease in commercial, financial and agricultural loans in 2022 was due to SBA loan forgiveness and repayments of PPP loans, which accounted for $10.1 million of the decline between periods. Juniata’s business model closely aligns lenders and community office managers’ efforts to effectively develop referrals and existing customer relationships. 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.
Current wording
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.
Previous wording
On January 1, 2023, Juniata adopted ASC 326. The 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 at adequate levels. Charge-offs and recoveries are recorded as adjustments to the allowance. The allowance for credit losses on December 31, 2023 was 1.08% of total loans, net of unearned interest, compared to 0.83% of total loans, net of unearned interest at December 31, 2022.
Current wording
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.
Previous wording
Juniata recorded a provision for credit losses of $500,000 in 2023 compared to a loan loss provision of $455,000 in 2022. Loan growth of 8.4% as of December 31, 2023 compared to December 31, 2022 was a factor in the increase in the credit loss provision for the year ended December 31, 2023. Additionally, while Juniata continued to experience favorable asset quality trends and net recoveries during the year ended December 31, 2023, elevated qualitative risk factors were considered in the allowance for credit loss analysis due to continued political uncertainty, national delinquency trends and the continuing effects of the current interest rate environment. Net recoveries for both year ended 2023 and 2022 were 0.01% of average loans outstanding.
Current wording
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.
Previous wording
At December 31, 2023, non-performing loans (as defined in Table 4 below), as a percentage of the allowance for credit losses, were 87.2%, compared to 4.4% at December 31, 2022. Non-performing loans were 0.94% of loans outstanding as of December 31, 2023 and 0.04% of loans outstanding as of December 31, 2022. Non-accrual loans increased at December 31, 2023 compared to December 31, 2022 due to the downgrade of a $4.9 million participated real-estate construction loan. All but one $18,000 non-performing loan was collateralized with real estate at December 31, 2023.
Current wording
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.
Previous wording
When a loan is placed on non-accrual status, all unpaid interest credited to income in the current year is reversed against current period income, and unpaid interest accrued in prior years is charged against the allowance for credit losses. 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 2023, gross interest income that would have been recorded if loans on non-accrual status had been current was$119,000, of which $12,000 was collected and included in net income.
Current wording
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.
Previous wording
CECL requires a reasonable and supportable economic forecast when establishing the ACL. The Company estimates losses over a four quarter forecast period and has elected to revert 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.
Current wording
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.
Previous wording
The quantitative general allowance was $2.5 million at both December 31, 2023 and January 1, 2023.
Current wording
The quantitative general allowance was $3.0 million at December 31, 2024 and $2.5 million at December 31, 2023.
Previous wording
The qualitative analysis resulted in a general reserve of $3.2 million at December 31, 2023, compared to $2.6 million at January 1, 2023.
Current wording
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.
Previous wording
The Company recorded net recoveries of $39,000 in 2023. With the $1.1 million impact of adopting ASC 326, an increase to the provision expense greater than net recoveries and loan growth of 8.4%, the allowance for credit losses at December 31, 2023 increased by 41.0% over the allowance at December 31, 2022. Management’s analysis indicated that the allowance for credit losses of $5.7 million at December 31, 2023 was adequate.
Current wording
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.
Previous wording
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 $282.7 million on December 31, 2023, a decrease of $5.2 million, or 1.8%, compared to year-end 2022.
Current wording
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.
Previous wording
At December 31, 2023, the market value of the investment securities portfolio was less than amortized cost by $10.7 million, compared to December 31, 2022, when the market value of the investment securities portfolio was less than amortized cost by $7.5 million. The weighted average life of the investment portfolio was 7.9 years on December 31, 2023 and 8.1 years on December 31, 2022.
Current wording
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.
Previous wording
The Company periodically ensures 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 $356,000 decline in cash surrender value of the Company’s bank owned life insurance (“BOLI”) and annuities was due primarily to the death of two former directors in 2023. See Note 7 of The Notes to Consolidated Financial Statements.
Current wording
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.
Previous wording
On November 30, 2015, the Company completed its acquisition of FNBPA. Goodwill recorded on the acquisition was $3.4 million as of December 31, 2022 and 2021. 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 2023 was $16,000 and, for the succeeding two years beginning 2024, is estimated to be $11,000 and $5,000 per year, respectively. The core deposit intangible will be fully amortized in 2025. Core deposit and other intangible assets, net of amortization, was $16,000 as of December 31, 2023 and $32,000 as of December 31, 2022.
Current wording
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.
Previous wording
On April 30, 2018, Juniata completed the acquisition of LCB and, as a result, recorded goodwill of $3.6 million as of December 31, 2022 and 2021. 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 2023 was $28,000, and for the succeeding five years beginning 2024, is estimated to be $23,000, $17,000, $12,000, $7,000 and $2,000 per year, respectively. Core deposit intangible, net of amortization, was $61,000 as of December 31, 2023 and $89,000 as of December 31, 2022.
Current wording
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.
Previous wording
On May 12, 2023, a core deposit intangible in the amount of $303,000 associated with the Path Valley branch acquisition 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 2023 was $37,000, and for the succeeding five years beginning 2024, is estimated to be $51,000, $46,000, $40,000, and $35,000 per year, respectively, and $94,000 thereafter. Core deposit intangible, net of amortization, was $266,000 as of December 31, 2023.
Current wording
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.
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Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
our newest offering, mobile wallet, anywhere internet or cell phone signals can be received because we arecommitted to optimizing the customer experience.
Current report — wording carried from elsewhere
through the acquisition of remaining shares of LCB. In 2023, we expanded into Franklin County, Pennsylvania, through the purchase of a branch office.
Current report — wording carried from elsewhere
A more detailed discussion of the Company’s earning assets and interest bearing liabilities will follow in the Sections titled “Loans”, “Investments” and “Deposits”.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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.
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Previous report — wording carried elsewhere
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.