JUNIATA VALLEY FINANCIAL CORP

Previous wording

The information contained in this Quarterly Report on Form 10-Q contains forward looking statements (as such term is defined in the Securities Exchange Act of 1934 and the regulations thereunder). These forward-looking statements may include projections of, or guidance on, the Company’s future financial performance, expected levels of future expenses, including future credit losses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in the Company’s business or financial results. When words such as "may”, "should”, "will”, "could”, "estimates”, "predicts”, "potential”, “possible”, "continue”, "anticipates”, "believes”, "plans”, "expects”, "future”, "intends”, “projects”, the negative of these terms and other comparable terminology are used in this report, Juniata is making forward-looking statements. Any forward-looking statement made by the Company in this document is based only on Juniata’s current expectations, estimates and projections about future events and financial trends affecting the financial condition of its business based on information currently available to the Company and speaks only as of the date when made. Juniata undertakes no obligation to publicly update or revise forward-looking information, whether as a result of new or updated information, future events, or otherwise. Forward-looking statements are not historical facts or guarantees of future performance. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company’s control, and actual results may differ materially from this forward-looking information and therefore, should not be unduly relied upon. Many factors could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements, including, but not limited to: (i) the factors set forth in the sections of Juniata’s Annual Report on Form 10-K/A for the year ended December 31, 2023, titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and factors set forth in other current and periodic reports which Juniata has or will file with the Securities and Exchange Commission, and (ii) the following factors:

Current wording

The information contained in this Quarterly Report on Form 10-Q contains forward looking statements (as such term is defined in the Securities Exchange Act of 1934 and the regulations thereunder). These forward-looking statements may include projections of, or guidance on, the Company’s future financial performance, expected levels of future expenses, including future credit losses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in the Company’s business or financial results. When words such as "may”, "should”, "will”, "could”, "estimates”, "predicts”, "potential”, “possible”, "continue”, "anticipates”, "believes”, "plans”, "expects”, "future”, "intends”, “projects”, the negative of these terms and other comparable terminology are used in this report, Juniata is making forward-looking statements. Any forward-looking statement made by the Company in this document is based only on Juniata’s current expectations, estimates and projections about future events and financial trends affecting the financial condition of its business based on information currently available to the Company and speaks only as of the date when made. Juniata undertakes no obligation to publicly update or revise forward-looking information, whether as a result of new or updated information, future events, or otherwise. Forward-looking statements are not historical facts or guarantees of future performance. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company’s control, and actual results may differ materially from this forward-looking information and therefore, should not be unduly relied upon. Many factors could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements, including, but not limited to: (i) the factors set forth in the sections of Juniata’s Annual Report on Form 10-K for the year ended December 31, 2024, titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and factors set forth in other current and periodic reports which Juniata has or will file with the Securities and Exchange Commission, and (ii) the following factors:

Previous wording

Disclosure of the Company’s significant accounting policies is included in the Company’s critical accounting policies in its Annual Report on Form 10-K/A for the year ended December 31, 2023. Some of these policies require significant judgments, estimates and assumptions to be made by management, most particularly in connection with determining the provision for credit losses and the appropriate level of the allowance for credit losses.

Current wording

Disclosure of the Company’s significant accounting policies is included in the Company’s critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2024. Some of these policies require significant judgments, estimates and assumptions to be made by management, most particularly in connection with determining the provision for credit losses and the appropriate level of the allowance for credit losses.

Previous wording

The following discussion relates to the consolidated financial condition of the Company as of September 30, 2024, compared to December 31, 2023, and the consolidated results of operations for the three and nine months ended September 30, 2024, compared to the same periods in 2023. This discussion should be read in conjunction with the interim consolidated financial statements and related notes included herein.

Current wording

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

Previous wording

Total assets as of September 30, 2024 were $858.0 million, a decrease of $12.6 million, or 1.5%, compared to total assets of $870.6 million at December 31, 2023. Cash and cash equivalents decreased by $17.0 million, or 58.8%, as of September 30, 2024 compared to December 31, 2023, as cash was used primarily to fund the growth in total loans, which increased by $12.9 million, or 2.4% as of September 30, 2024 compared to year-end 2023. Total deposits increased by $3.9 million, or 0.5%, as of September 30, 2024 compared to December 31, 2023 while short-term borrowings and repurchase agreements decreased by $7.1 million, or 13.4%, and long-term debt decreased by $15.0 million, or 75.0%, due to the maturity of a 5-year FHLB advance in May 2024.

Current wording

Total assets as of March 31, 2025 were $854.0 million, an increase of $5.1 million, or 0.6%, compared to total assets of $848.9 million at December 31, 2024. Cash and cash equivalents increased $2.5 million, or 22.8%, while total loans increased by $5.1 million, or 1.0%, as of March 31, 2025 compared to December 31, 2024. Total deposits increased by $728,000, or 0.1%, as of March 31, 2025 compared to December 31, 2024, while short-term borrowings and repurchase agreements increased by $1.8 million, or 4.4%, primarily due to increased balances in repurchase agreement accounts. At March 31, 2025, total stockholders’ equity increased $2.7 million, or 5.8%, compared to year-end 2024 due to an increase in retained earnings and a decline in other comprehensive losses.

Previous wording

A summary of the activity in the allowance for credit losses for the nine month periods ended September 30, 2024 and 2023, respectively, is presented below.

Current wording

A summary of the activity in the allowance for credit losses for the three month periods ended March 31, 2025 and 2024, respectively, is presented below.

Previous wording

As of September 30, 2024, there were $23.6 million of loans classified as special mention compared to $21.4 million at December 31, 2023, $1.8 million of loans classified as substandard at September 30, 2024 compared to $5.9 million at December 31, 2023, and $72,000 of loans classified as doubtful at September 30, 2024 compared to none at December 31, 2023. The increase in special mention loans between periods was primarily due to the downgrade of a commercial

Current wording

As of March 31, 2025, there were $13.3 million of loans classified as special mention compared to $23.0 million at December 31, 2024, $1.8 million of loans classified as substandard at both March 31, 2025 and December 31, 2024, and $140,000 of loans classified as doubtful at March 31, 2025 compared to $72,000 at December 31, 2024. The decrease in special mention loans between periods was primarily due to the upgrade of two commercial relationships, while the

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. 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 $2.9 million at September 30, 2024 and $2.5 million at December 31, 2023.

Current wording

The quantitative general allowance was $3.1 million at March 31, 2025 and $3.0 million at December 31, 2024.

Previous wording

The qualitative analysis resulted in a general reserve of $3.2 million at September 30, 2024, compared to $3.2 million at December 31, 2023.

Current wording

The qualitative analysis resulted in a general reserve of $3.1 million at March 31, 2025 and December 31, 2024.

Previous wording

Net income for the three months ended September 30, 2024 was $1.6 million, a decrease of $154,000, or 8.6%, compared to the three months ended September 30, 2023. Basic and diluted earnings per share was $0.33 for the three months ended September 30, 2024, a decrease of 8.3%, compared to basic and diluted earnings per share of $0.36 for the comparable 2023 period.

Current wording

Net income for the three months ended March 31, 2025 was $2.0 million, an increase of $653,000, or 48.2%, compared to the three months ended March 31, 2024. Basic and diluted earnings per share was $0.40 for the three months ended March 31, 2025, an increase of 48.1%, compared to basic and diluted earnings per share of $0.27 for the comparable 2024 period.

Previous wording

Annualized return on average assets for the three months ended September 30, 2024 was 0.76%, compared to the annualized return on average assets of 0.85% for the same period in 2023. For the three months ended September 30, annualized return on average equity was 14.72% in 2024 compared to 19.81% in the 2023 period.

Current wording

Annualized return on average assets for the three months ended March 31, 2025 was 0.94%, compared to the annualized return on average assets of 0.63% for the same period in 2024. For the three months ended March 31, annualized return on average equity was 16.55% in 2025 compared to 13.38% in the 2024 period.

Previous wording

Net interest income was $5.8 million for the three months ended September 30, 2024, an increase of $115,000, or 2.0%, compared to $5.7 million for the three months ended September 30, 2023.

Current wording

Net interest income was $5.8 million for the three months ended March 31, 2025, an increase of $283,000, or 5.1%, compared to $5.5 million for the three months ended March 31, 2024.

Previous wording

Average earning assets increased $21.1 million, or 2.5%, to $856.2 million, during the nine months ended September 30, 2024, compared to the same period in 2023, due primarily to an increase of $39.9 million, or 8.0%, in average loans. The increase in average loans was partially offset by a decline of $20.6 million, or 6.2%, in average investment securities as principal paydowns on the mortgage-backed securities portfolio were used to fund loan growth rather than being reinvested into the securities portfolio. Average interest bearing liabilities increased by $19.5 million, or 3.3%, during the nine months ended September 30, 2024 compared to the comparable 2023 period, due to growth in average time deposits, repurchase agreements and short-term borrowings, with this growth partially funding loan growth.

Current wording

Average interest earning assets decreased 1.7%, to $842.6 million, for the three months ended March 31, 2025 compared to the same period in 2024, due to a decrease of $18.2 million, or 5.7%, in average investment securities as principal paydowns on the mortgage-backed securities portfolio were used for funding needs rather than being reinvested into the securities portfolio. Average interest bearing liabilities decreased by $16.1 million, or 2.6%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This decrease was primarily due to a decline of $23.9 million, or 29.9%, in average borrowings and other interest bearing liabilities, which was partially offset by an increase in average time deposits of $17.3 million, or 8.7%, for the three months end March 31, 2025 compared to the three months ended March 31, 2024.

Previous wording

The yield on earning assets increased 39 basis points, to 4.41%, due to a 47 basis point increase in the yield on average loans in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, while the cost to fund interest earning assets with interest bearing liabilities increased 51 basis points, to 2.38%.

Current wording

The yield on earning assets increased 19 basis points, to 4.42%, for the three months ended March 31, 2025 compared to same period last year driven by an increase in loan yields of 24 basis points. The cost to fund interest earning assets with interest bearing liabilities increased two basis points, to 2.26%, due primarily to an 18 basis point increase in time deposit rates which was partially offset by a 100 basis point decline in the federal funds rate, which reduced borrowing costs between the three months ended March 31, 2025 and 2024.

Previous wording

The net interest margin, on a fully tax equivalent basis, increased from 2.71% during the three months ended September 30, 2023, to 2.73% during the three months ended September 30, 2024.

Current wording

The net interest margin, on a fully tax equivalent basis, increased from 2.63% for the three months ended March 31, 2024 to 2.83% for the three months ended March 31, 2025.

Previous wording

Juniata recorded a provision for credit losses of $232,000 for the three months ended September 30, 2024 compared to a provision for credit losses of $121,000 for the three months ended September 30, 2023. For the 2024 period, this increase was due primarily to an updated loss driver analysis for the allowance for credit losses calculation and not a result of deteriorated asset quality, which remained strong.

Current wording

Juniata recorded a provision for credit losses of $104,000 for the three months ended March 31, 2025 compared to a provision for credit losses of $120,000 for the three months ended March 31, 2024.

Previous wording

Management regularly reviews the adequacy of the allowance for credit losses and makes assessments as to specific loan impairment, charge-off expectations, general economic conditions in the Bank’s market area, specific loan quality and other factors. See the earlier discussion in the Financial Condition section explaining the information used to determine the provision.

Current wording

Management regularly reviews the adequacy of the allowance for credit losses and makes assessments as to specific loan impairment, charge-off expectations, general economic conditions in the Bank’s market area, specific loan quality and other factors. See the earlier discussion in the Financial Condition section explaining the information used to determine the provision for credit losses.

Previous wording

Non-interest income was $1.4 million for the three months ended September 30, 2024, an increase of 11.1%, compared to $1.3 million for the three months ended September 30, 2023. Most significantly impacting non-interest income in the comparative three month periods were increases of $117,000 in customer service fees and $84,000 in the change in value of equity securities. Partially offsetting these increases in the comparative three month periods was a decrease of $35,000 in fees derived from loan activity primarily due to decreases in title insurance commissions and the derivative credit adjustment.

Current wording

Non-interest income was $1.3 million for the three months ended March 31, 2025, an increase of $50,000, or 3.9%, compared to the three months ended March 31, 2024. Most significantly impacting non-interest income in the comparative three month periods were increases of $89,000 in customer service fees due to an increase in the collection of overdraft and checking account fees, as well as $24,000 in trust fees. Partially offsetting these increases between the comparative three month periods was a decline of $56,000 in fees derived from loan activity due to decreases in title insurance commissions, a derivative credit adjustment and loan referral fees in the 2025 period.

Previous wording

Non-interest expense was $5.1 million for the three months ended September 30, 2024, compared to $4.8 million for the three months ended September 30, 2023, an increase of 7.2%. Most significantly impacting non-interest expense in the comparative three month periods was an increase of $126,000 in employee benefits expense, due primarily to an increase in medical claims expenses, as well as an increase of $86,000 in both equipment expenses and professional fees. Also contributing to the increase in non-interest expense during the 2024 period was a $67,000 increase in taxes, other than income, due to recording a $62,000 Pennsylvania Shares Tax refund in the 2023 period. These increases were partially offset by a decrease of $47,000 in the provision for unfunded commitments recorded in other non-interest expense during the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Current wording

Non-interest expense was $4.7 million for the three months ended March 31, 2025 compared to $5.2 million for the three months ended March 31, 2024, a decrease of 9.2%. Most significantly impacting non-interest expense in the comparative three month periods were decreases in employee compensation and benefits expenses of $233,000 and $99,000, respectively. The primary drivers for these declines were higher overtime pay incurred in connection with the March 2024 core conversion, optimizing staffing levels and a decrease in medical claims expenses for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Also contributing to the decrease in non-interest expense between the comparative three month periods were decreases of $48,000 in professional fees and $34,000 in the provision for unfunded commitments recorded in other non-interest expense. Partially offsetting these decreases for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was an increase of $74,000 in equipment expense primarily due to an increase in office depreciation expense, as the 2025 period contained three full months of depreciation on new fixed assets purchased as a result of the core conversion in March 2024.

Previous wording

An income tax provision of $270,000 was recorded during the three months ended September 30, 2024 compared to an income tax provision of $310,000 recorded during the three months ended September 30, 2023. The decrease between three month periods was mainly due to more taxable income recorded in the 2023 period. Juniata qualifies for a federal tax credit for an investment in a low-income housing partnerships. The tax credit was $82,000 for both the three months ended September 30, 2024 and September 30, 2023.

Current wording

An income tax provision of $371,000 was recorded during the three months ended March 31, 2025 compared to an income tax provision of $201,000 recorded during the three months ended March 31, 2024. The increase between three month periods was mainly due to more taxable income recorded in the 2025 period. Juniata qualifies for a federal tax credit for an investment in a low-income housing partnerships. The tax credit was $82,000 for both the three months ended March 31, 2025 and March 31, 2024.

Previous wording

For the three months ended September 30, 2024, the tax credit lowered the effective tax rate from 18.5% to 14.2% compared to the same period in 2023, when the tax credit lowered the effective tax rate from 18.7% to 14.8%.

Current wording

For the three months ended March 31, 2025, the tax credit lowered the effective tax rate from 19.0% to 15.6% compared to the same period in 2024, when the tax credit lowered the effective tax rate from 18.2% to 12.9%.

Previous wording

The Company is a member of the Federal Home Loan Bank of Pittsburgh for the purpose of providing short-term liquidity to supplement other sources of liability liquidity. During the nine months ended September 30, 2024, overnight borrowings from the FHLB averaged $12.7 million. As of September 30, 2024, the Company had $6.1 million in short-term borrowings and $5.0 million in long-term debt with the Federal Home Loan Bank, with a remaining unused borrowing capacity of $242.5 million with the FHLB. These credit facilities are secured by qualifying loans and investment securities held in safekeeping at the FHLB.

Current wording

The Company is a member of the Federal Home Loan Bank of Pittsburgh for the purpose of providing short-term liquidity to supplement other sources of liability liquidity. During the three months ended March 31, 2025, overnight borrowings from the FHLB averaged $33.7 million. As of March 31, 2025, the Company had $27.8 million in short-term borrowings and $5.0 million in long-term debt with the Federal Home Loan Bank, with a remaining unused borrowing capacity of $207.3 million with the FHLB. These credit facilities are secured by qualifying loans and investment securities held in safekeeping at the FHLB.

Previous wording

In addition, the Company also has an unsecured line of credit with a correspondent bank totaling $11.0 million, of which no funds were drawn at September 30, 2024. This line of credit is tested at least annually to ensure the availability of funds.

Current wording

In addition, the Company also has an unsecured line of credit with a correspondent bank totaling $11.0 million, of which no funds were drawn at March 31, 2025. Availability under this line of credit is tested at least annually to ensure the availability of funds.

Previous wording

At September 30, 2024, the Company had $15.6 million in funding derived from securities sold under agreements to repurchase (accounted for as collateralized financing transactions). This product is available through corporate cash management accounts for business customers and provides the Company with the ability to pay interest on corporate checking accounts.

Current wording

At March 31, 2025, the Company had $16.3 million in funding derived from securities sold under agreements to repurchase (accounted for as collateralized financing transactions). This product is available through corporate cash management accounts for business customers, and provides the Company with the ability to pay interest on corporate checking accounts.

Previous wording

At September 30, 2024, uninsured deposits represented 20.5% of the Company’s total deposits. This amount excludes deposits of state and political subdivisions because the Company pledges debt securities for deposits in excess of the $250,000 FDIC insurance limit in the case of those deposits.

Current wording

At March 31, 2025, uninsured deposits represented 14.1% of the Company’s total deposits. This amount excludes deposits of state and political subdivisions because the Company pledges debt securities for deposits in excess of the $250,000 FDIC insurance limit in the case of those deposits.

Previous wording

In view of the sources previously mentioned and the steps taken by the Company through the nine months ended September 30, 2024, management believes the Company’s liquidity can provide the funds needed to meet operational cash needs.

Current wording

In view of the sources previously mentioned and the steps taken by the Company through the three months ended March 31, 2025, 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

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 that are involved in extending loan facilities to customers. The Company generally holds collateral and/or personal guarantees supporting these commitments.

Previous wording

As of September 30, 2024, the Company had $140.4 million outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $137.4 million at December 31, 2023. As of September 30, 2024 and December 31, 2023, the Company had $4.0 million and $3.6 million, respectively, of financial and performance letters of credit commitments outstanding. Commercial letters of credit as of September 30, 2024 and December 31, 2023 totaled $12.9 million and $9.3 million, respectively.

Current wording

As of March 31, 2025, the Company had $163.8 million outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $145.0 million at December 31, 2024. As of March 31, 2025 and December 31,

Previous wording

At September 30, 2024, the Bank exceeded the regulatory requirements to be considered a "well capitalized" financial institution under Basel III, as well as exceeded the capital conservation buffer of 2.5% for the risk-based capital standards stated in (a) – (c) in the paragraph above.

Current wording

At March 31, 2025, the Bank exceeded the regulatory requirements to be considered a "well capitalized" financial institution under Basel III, and also exceeded the capital conservation buffer of 2.5% for the risk-based capital standards stated in (a) – (c) in the paragraph above.

Previous wording

The Company’s principal source of funds for dividend payments is dividends received from the Bank. Certain regulatory restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends, loans or advances. At September 30, 2024, $45.6 million in undistributed earnings of the Bank, included in the consolidated

Current wording

The Company’s principal source of funds for dividend payments is dividends received from the Bank. Certain regulatory restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends, loans or advances. At March 31, 2025, $4.1 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.