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Juniata Valley Financial Corp.

11/12/2025 | Press release | Distributed by Public on 11/12/2025 10:44

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements:

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. 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 filed or will file with the Securities and Exchange Commission, and (ii) the following factors:

●

changes in general economic, business and political conditions, including inflation, a recession or intensified international hostilities;

●

the impact of adverse changes in the economy and real estate markets, including protracted periods of low-growth and sluggish loan demand;

●

the effect of market interest rates and uncertainties, and relative balances of rate-sensitive assets to rate-sensitive liabilities, on net interest margin and net interest income;

●

the effect of competition on rates of deposit and loan growth, deposit and loan rates, and net interest margin;

●

increases in non-performing assets, which may result in increases in the allowance for credit losses, loan charge-offs and elevated collection and carrying costs related to such non-performing assets;

●

other income growth, including the impact of regulatory changes which have reduced debit card interchange revenue;

●

investment securities gains and losses, including other than temporary declines in the value of securities which may result in charges to earnings;

●

the effects of changes in the applicable federal income tax rate;

●

the level of other expenses, including salaries and employee benefit expenses;

●

the impact of increased regulatory scrutiny of the banking industry;

●

the impact of governmental monetary and fiscal policies, as well as legislative and regulatory changes;

●

the results of regulatory examination and supervision processes;

●

the failure of assumptions underlying the establishment of reserves for credit losses, and estimations of collateral values and various financial assets and liabilities;

●

the increasing time and expense associated with regulatory compliance and risk management;

●

the ability to implement business strategies, including business acquisition activities and organic branch, product and service expansion strategies;

●

capital and liquidity strategies, including the impact of the capital and liquidity requirements modified by the Basel III standards;

●

the effects of changes in accounting policies, standards and interpretations on the presentation in the Company's consolidated balance sheets and consolidated statements of income;

●

the Company's failure to identify and to address cyber-security risks;

●

the Company's ability to keep pace with technological changes;

●

the Company's ability to attract and retain talented personnel;

●

the Company's reliance on its subsidiary for substantially all its revenues and its ability to pay dividends;

●

acts of war or terrorism;

●

disruptions due to flooding, climate change, severe weather or other natural disasters;

●

failure of third-party service providers to perform their contractual obligations;

●

the impact of unrealized losses on debt securities on accumulated other comprehensive income and stockholders' equity;

●

the potential effects of regulatory responses and customer reaction to bank failures;

●

the failure to maintain effective internal control over financial reporting; and

●

the potential effects on our customers related to the current global trade restructuring policies.

Critical Accounting Policies:

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.

General:

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

Overview:

Juniata Valley Financial Corp. is a Pennsylvania corporation organized in 1983 to be the holding company of The Juniata Valley Bank. The Bank is a state-chartered bank headquartered in Mifflintown, Pennsylvania. Juniata Valley Financial Corp. and its subsidiary bank derive substantially all their income from banking and bank-related services, including interest earned on residential real estate, commercial mortgage, commercial and consumer loans, interest earned on investment securities and fee income from deposit services and other financial services provided to its customers.

Financial Condition:

Total assets as of September 30, 2025 were $880.5 million, an increase of $31.6 million, or 3.7%, compared to total assets of $848.9 million at December 31, 2024. Total loans increased by $43.9 million, or 8.2%, as of September 30, 2025 compared to year-end 2024 mainly due to increases in real estate - commercial and other construction loans. The increase was partially offset by a $10.2 million, or 4.0%, decrease in debt securities as of September 30, 2025 compared to December 31, 2024, as cash flows were used for funding needs rather than being reinvested into the investment portfolio. Total deposits increased by $27.6 million, or 3.7%, as of September 30, 2025 compared to December 31, 2024 due to increases in all deposit account types. Long-term debt decreased by $5.0 million, or 100.0%, as of September 30, 2025 compared to year-end 2024 due to the maturity of the remaining FHLB long-term advance in June 2025. Total capital increased $7.5 million, or 15.9%, as of September 30, 2025 due to an increase in undivided profits and a decline in other comprehensive losses compared to year-end 2024.

The table below illustrates the changes in deposit volumes by type of deposit as of September 30, 2025 compared to December 31, 2024.


(Dollars in thousands)	September 30,		December 31,		Change
	2025		2024		$		%
Deposits:
Demand, non-interest bearing	$	207,419	$	196,801	$	10,618	5.4	%
Interest bearing demand and money market		212,577		208,901		3,676	1.8
Savings		134,577		128,903		5,674	4.4
Time deposits, $250,000 and more		42,430		41,686		744	1.8
Other time deposits		178,575		171,666		6,909	4.0
Total deposits	$	775,578	$	747,957	$	27,621	3.7	%

The following table shows the change in loan balances by loan class between December 31, 2024 and September 30, 2025.


(Dollars in thousands)	September 30,		December 31,		Change
	2025		2024		$		%
Loans:
Commercial, financial and agricultural	$	76,839	$	68,234	$	8,605	12.6	%
Real estate - commercial		266,095		247,582		18,513	7.5
Real estate - construction:
1-4 family residential construction		160		1,172		(1,012)	(86.3)
Other construction loans		47,534		36,655		10,879	29.7
Real estate - mortgage		168,045		162,771		5,274	3.2
Obligations of states and political subdivisions		15,873		13,850		2,023	14.6
Personal		3,176		3,605		(429)	(11.9)
Total loans	$	577,722	$	533,869	$	43,853	8.2	%

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


(Dollars in thousands)	Nine months ended September 30,
	2025			2024
January 1, beginning balance	$	6,183		$	5,677
Loans charged off		(28)			(33)
Recoveries of loans previously charged off		10			9
Net charge-offs		(18)			(24)
Provision for credit losses		669			471
Balance of allowance - end of period	$	6,834		$	6,124

Ratio of net charge-offs (recoveries) during period to average loans outstanding		0.00	%		0.00	%

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

Management believes the allowance for credit losses carried was adequate to cover forecasted expected credit losses as of September 30, 2025. Management also believes the Company has sufficient liquidity and capital to absorb losses that may occur but continues to closely monitor the financial strength of borrowers and their ability to comply with repayment terms.

Loans on which the accrual of interest has been discontinued are designated as non-accrual loans. Accrual of interest on loans is generally discontinued when the contractual payment of principal or interest has become 90 days past due or reasonable doubt exists as to the full, timely collection of principal or interest. However, it is the Company's policy to continue to accrue interest on loans over 90 days past due if (1) they are guaranteed or well secured and (2) there is an effective means of timely collection in process.

The following table summarizes the Bank's non-performing loans on September 30, 2025 compared to December 31, 2024.


(Dollars in thousands)	September 30, 2025			December 31, 2024
Non-performing loans
Non-accrual loans	$	560		$	496
Accruing loans past due 90 days or more		-			119
Total	$	560		$	615

Loans outstanding	$	577,722		$	533,869

Ratio of non-performing loans to loans outstanding		0.10	%		0.12	%
Ratio of non-accrual loans to loans outstanding		0.10	%		0.09	%
Allowance for credit losses to non-accrual loans		1,220.36	%		1,246.57	%

Allowance for Credit Losses ("ACL"):

Juniata adopted ASU 2016-13 on January 1, 2023 to calculate the ACL. The ACL is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. The ACL requires a projection of credit losses estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a loan modification will be executed with an individual borrower, or the extension or renewal options are included in the original or modified contract at the reporting date and not unconditionally cancellable by the Company. Loans are charged off against the allowance when management believes the uncollectability of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

Management estimates the allowance balance using relevant available information from internal and external sources related to past events, current conditions and reasonable and supportable forecasts of certain macro-economic variables. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, lending personnel, delinquency trends, credit concentrations, loan review results, changes in collateral values, as well as the impact of changes in the regulatory and business environment or other relevant factors.

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The company has identified the following portfolio segments: commercial, financial and agricultural, real estate - commercial, real estate - construction: 1-4 family residential construction, real estate - construction: other construction, real estate - mortgage, obligations of states and political subdivisions and personal loans.

Loans that do not share risk characteristics are evaluated on an individual bases. Loans evaluated individually are excluded from the collective evaluation. When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

The Company utilizes the Discounted Cash Flow ("DCF") method to analyze all loan segments as it allows for the effective incorporation of a reasonable and supportable forecast in a directionally consistent and objective manner. The DCF model has two key components: a loss driver analysis and a cash flow analysis. The contractual cash flow is adjusted for probability of default/loss given defaults ("PD/LGD") and prepayment speed to establish a reserve level. The prepayment and curtailment studies are updated quarterly by a third-party for each applicable pool of loans.

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.

The quantitative general allowance was $3.5 million at September 30, 2025 and $3.0 million at December 31, 2024.

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

Lending Policy, Procedures, & Strategies - Changes in policy and/or underwriting standards as well as anticipated changes are considered, and a qualitative factor is applied in accordance with the magnitude and direction (loosening/tightening) of the change. In addition, any new loan programs are also taken into consideration when evaluating this factor.

Changes in Nature and Volume of the Portfolio - The composition of the Bank's loan portfolio is assessed to evaluate possible risk changes arising from new or increasing types of loans, industries or collateral.

Credit & Lending Staff/Administration - The knowledge and experience of the lending and credit personnel is assessed.

Problem Loan Trends - The level of delinquency, modifications, and extensions is used to measure the trends of the risk changes within the portfolio.

Concentrations - As an extension of the portfolio composition review, lending concentrations are monitored regularly. Concentrations may be measured by collateral, type, industry and geographical location.

Loan Review Results- Loan reviews conducted internally as well as by outside auditors or examiners are studied for indications of possible risk changes.

Collateral Values - Changes in market values of the underlying collateral are monitored on select loan types and pools. Examples could include housing, CRE or cattle prices. These variations may indicate the need for risk adjustment as future loss levels could change if liquidation becomes necessary.

Regulatory and Business Environment - The impact of government fiscal and business policy as well as the regulatory environment are monitored and may result in possible adjustments to the risk factors.

In determining how to apply the weightings for the various qualitative factors, management considered which factors were not entirely considered within the base model and assessed which factors would have the highest impact on potential loan losses. Weights and risks are consistent across various segments except for instances where the risk factor is not applicable, or the segment is more or less exposed than other segments. Risk weighting is adjusted directionally based on relevancy and the ability to quantify an impact. For example, the economy and external factors were determined to have the most significant effect on the estimated losses largely because there is evidence that economic conditions are largely correlated and can explain a significant portion of historical changes in loss. Likewise, risks that are well-controlled throughout the organization, such as managerial contingencies and loan review controls, require less allocation.

The qualitative analysis resulted in a general reserve of $3.3 million at September 30, 2025 and $3.1 million at December 31, 2024.

The determination of the ACL is complex, and the Company makes decisions on the effects of matters that are inherently uncertain. Evaluations of the loan portfolio and individual credits require certain estimates, assumptions and judgements as to the facts and circumstances related to particular situations or credits. There may be significant changes in the ACL in future periods determined by factors prevailing at that point in time along with future forecasts.

Comparison of the Three Months Ended September 30, 2025 and 2024

Operations Overview:

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

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

Presented below are selected key ratios for the two periods:


	Three Months Ended
	September 30,
	2025		2024
Return on average assets (annualized)	0.94	%	0.76	%
Return on average equity (annualized)	15.47	%	14.72	%
Average equity to average assets	6.07	%	5.18	%
Non-interest income, as a percentage of average assets (annualized)	0.69	%	0.67	%
Non-interest expense, as a percentage of average assets (annualized)	2.49	%	2.38	%

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

Net Interest Income:

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

Average interest earning assets increased 1.4%, to $864.6 million, for the three months ended September 30, 2025 compared to the same period in 2024, due to an increase of $31.0 million, or 5.7%, in average loans, which was partially offset by a $19.1 million, or 6.2%, decrease in average investment securities. Average interest bearing liabilities increased by $4.4 million, or 0.7%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was primarily due to an increase of $19.7 million, or 3.6%, in average interest bearing deposits, which was partially offset by a decrease of $15.3 million, or 23.4%, in average borrowings and other interest bearing liabilities for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

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

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

The table below shows the net interest margin on a fully tax-equivalent basis for the three months ended September 30, 2025 and 2024.

Average Balance Sheets and Net Interest Income Analysis


	Three Months Ended						Three Months Ended
(Dollars in thousands)	September 30, 2025						September 30, 2024						Increase (Decrease) Due To (6)
	Average				Yield/		Average				Yield/
	Balance(1)		Interest		Rate		Balance(1)		Interest		Rate		Volume		Rate		Total
ASSETS
Interest earning assets:
Loans:
Taxable loans (5)	$	543,657	$	8,377	6.11	%	$	515,785	$	7,790	6.01	%	$	418	$	169	$	587
Tax-exempt loans		25,928		247	3.78			22,832		189	3.30			26		32		58
Total loans		569,585		8,624	6.01			538,617		7,979	5.89			444		201		645
Investment securities:
Taxable investment securities		283,709		1,325	1.87			302,840		1,421	1.88			(90)		(6)		(96)
Tax-exempt investment securities		5,570		30	2.15			5,574		30	2.15			-		-		-
Total investment securities		289,279		1,355	1.87			308,414		1,451	1.88			(90)		(6)		(96)

Interest bearing deposits		5,764		17	1.17			6,039		24	1.55			(1)		(6)		(7)
Federal funds sold		-		-	-			-		-	-			-		-		-
Total interest earning assets		864,628		9,996	4.59			853,070		9,454	4.41			353		189		542

Other assets (7)		10,970						5,666
Total assets	$	875,598					$	858,736

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Interest bearing demand deposits (2)	$	211,789		915	1.71		$	206,157		949	1.83		$	26	$	(60)	$	(34)
Savings deposits		132,872		17	0.05			131,780		17	0.05			-		-		-
Time deposits		220,623		1,971	3.54			207,600		1,913	3.67			119		(61)		58
Short-term and long-term borrowings and other interest bearing liabilities		50,014		537	4.26			65,335		780	4.75			(182)		(61)		(243)
Total interest bearing liabilities		615,298		3,440	2.22			610,872		3,659	2.38			(37)		(182)		(219)

Non-interest bearing liabilities:
Demand deposits		201,001						196,508
Other		6,128						6,859
Stockholders' equity		53,171						44,497
Total liabilities and stockholders' equity	$	875,598					$	858,736
Net interest income and net interest rate spread			$	6,556	2.37	%			$	5,795	2.03	%	$	390	$	371	$	761
Net interest margin on interest earning assets (3)					3.01	%					2.70	%
Net interest income and net interest margin - Tax equivalent basis (4)			$	6,630	3.04	%			$	5,853	2.73	%

Notes:

1)	Average balances were calculated using a daily average.

2)	Includes interest-bearing demand and money market accounts.

3)	Net margin on interest earning assets is net interest income divided by average interest earning assets.

4)	Interest on obligations of states and municipalities is not subject to federal income tax. To make the net yield comparable on a fully taxable basis, a tax equivalent adjustment is applied against the tax-exempt income utilizing a federal tax rate of 21%.

5)	Non-accruing loans are included in the above table until they are charged off.

6)	The change in interest due to rate and volume has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

7)	Includes gross unrealized gains (losses) on securities available for sale and securities transferred to held to maturity.

Provision for Credit Losses:

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

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.

Non-interest Income:

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

As a percentage of average assets, annualized non-interest income was 0.69% for the three months ended September 30, 2025 compared to 0.67% for the three months ended September 30, 2024.

Non-interest Expense:

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

As a percentage of average assets, annualized non-interest expense was 2.49% for the three months ended September 30, 2025 compared to 2.38% for the three months ended September 30, 2024.

Provision for Income Taxes:

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

Comparison of the Nine months Ended September 30, 2025 and 2024

Operations Overview:

Net income was $6.0 million for the nine months ended September 30, 2025, an increase of $1.2 million, or 26.1%, compared to the nine months ended September 30, 2024. Basic and diluted earnings per share was $1.19 for the nine months ended September 30, 2025, an increase of 25.3%, compared to basic and diluted earnings per share of $0.95 for the comparable 2024 period.

Annualized return on average assets for the nine months ended September 30, 2025 was 0.92%, compared to 0.73% for the same period in 2024. For the nine months ended September 30, annualized return on average equity was 15.65% in 2025 compared to 14.70% in 2024.

Presented below are selected key ratios for the two periods:


	Nine Months Ended
	September 30,
	2025		2024
Return on average assets (annualized)	0.92	%	0.73	%
Return on average equity (annualized)	15.65	%	14.70	%
Average equity to average assets	5.91	%	4.99	%
Non-interest income, as a percentage of average assets (annualized)	0.67	%	0.65	%
Non-interest expense, as a percentage of average assets (annualized)	2.35	%	2.38	%

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

Net Interest Income:

Net interest income was $18.6 million during the nine months ended September 30, 2025, an increase of $1.4 million, or 8.4%, compared to $17.1 million recorded during the nine months ended September 30, 2024.

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

The yield on earning assets increased 17 basis points, to 4.50%, for the nine months ended September 30, 2025 compared to same period in 2024 driven by an increase in loan yields of 16 basis points, while the cost to fund interest earning assets with interest bearing liabilities decreased eight basis points, to 2.23%.

The net interest margin, on a fully tax equivalent basis, increased from 2.70% during the nine months ended September 30, 2024, to 2.94% during the nine months ended September 30, 2025.

The table below shows the net interest margin on a fully tax-equivalent basis for the nine months ended September 30, 2025 and 2024.


	Nine Months Ended						Nine Months Ended
(Dollars in thousands)	September 30, 2025						September 30, 2024						Increase (Decrease) Due To (6)
	Average				Yield/		Average				Yield/
	Balance(1)		Interest		Rate		Balance(1)		Interest		Rate		Volume		Rate		Total
ASSETS
Interest earning assets:
Loans:
Taxable loans (5)	$	527,894	$	23,854	6.04	%	$	512,638	$	22,648	5.90	%	$	675	$	531	$	1,206
Tax-exempt loans		24,368		663	3.64			23,937		576	3.22			11		76		87
Total loans		552,262		24,517	5.94			536,575		23,224	5.78			686		607		1,293
Investment securities:
Taxable investment securities		289,045		4,062	1.87			307,591		4,341	1.88			(262)		(17)		(279)
Tax-exempt investment securities		5,571		90	2.15			5,576		89	2.13			-		1		1
Total investment securities		294,616		4,152	1.88			313,167		4,430	1.89			(262)		(16)		(278)

Interest bearing deposits		5,568		54	1.30			6,477		116	2.38			(17)		(45)		(62)
Federal funds sold		-		-	-			-		-	-			-		-		-
Total interest earning assets		852,446		28,723	4.50			856,219		27,770	4.33			407		546		953

Other assets (7)		9,355						4,855
Total assets	$	861,801					$	861,074

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Interest bearing demand deposits (2)	$	209,320		2,675	1.71		$	207,368		2,749	1.77		$	26	$	(100)	$	(74)
Savings deposits		131,289		49	0.05			133,486		50	0.05			(1)		-		(1)
Time deposits		218,493		5,871	3.59			203,442		5,444	3.57			403		24		427
Short-term and long-term borrowings and other interest bearing liabilities		50,565		1,573	4.16			72,996		2,413	4.42			(743)		(97)		(840)
Total interest bearing liabilities		609,667		10,168	2.23			617,292		10,656	2.31			(315)		(173)		(488)

Non-interest bearing liabilities:
Demand deposits		195,494						194,061
Other		5,742						6,744
Stockholders' equity		50,898						42,977
Total liabilities and stockholders' equity	$	861,801					$	861,074
Net interest income and net interest rate spread			$	18,555	2.27	%			$	17,114	2.02	%	$	722	$	719	$	1,441
Net interest margin on interest earning assets (3)					2.91	%					2.67	%
Net interest income and net interest margin - Tax equivalent basis (4)			$	18,755	2.94	%			$	17,291	2.70	%

Notes:

1)	Average balances were calculated using a daily average.

2)	Includes interest-bearing demand and money market accounts.

3)	Net margin on interest earning assets is net interest income divided by average interest earning assets.

4)	Interest on obligations of states and municipalities is not subject to federal income tax. To make the net yield comparable on a fully taxable basis, a tax equivalent adjustment is applied against the tax-exempt income utilizing a federal tax rate of 21%.

5)	Non-accruing loans are included in the above table until they are charged off.

6)	The change in interest due to rate and volume has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

7)	Includes gross unrealized gains (losses) on securities available for sale.

Provision for Loan Losses:

Juniata recorded a provision for credit losses of $669,000 in the nine months ended September 30, 2025 compared to a provision for credit losses of $471,000 in the nine months ended September 30, 2024. The increase in the provision for credit losses between nine month periods was primarily the result of 8.2% loan growth as of September 30, 2025 compared to December 31, 2024, in comparison to 2.4% loan growth during the same period in 2024.

Management regularly reviews the adequacy of the allowance for loan 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.

Non-interest Income:

Non-interest income was $4.3 million for the nine months ended September 30, 2025, an increase of $120,000, or 2.8%, compared to the nine months ended September 30, 2024. Most significantly impacting the comparative nine month periods was an increase of $100,000 in customer service fees in the 2025 period, which was partially offset by a decrease of $79,000 in commissions from sales of non-deposit products in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to the transition to a new wealth management business model in 2025.

As a percentage of average assets, annualized non-interest income was 0.67% in the first nine months of 2025 compared to 0.65% in the comparable 2024 period.

Non-interest Expense:

Non-interest expense was $15.2 million for the nine months ended September 30, 2025, a decrease of $164,000, or 1.1%, compared to the nine months ended September 30, 2024. Most significantly impacting non-interest expense in the comparative nine month periods was a decrease in employee benefits expenses of $209,000 due to a decline in medical claims expenses for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Also contributing to the decrease in non-interest expense between the comparative nine month periods were decreases of $121,000 in professional fees and $55,000 in FDIC insurance premiums. These decreases were partially offset by increases of $94,000 in equipment expense and $164,000 in the provision for unfunded loan commitments, which is included in other non-interest expense, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

As a percentage of average assets, annualized non-interest expense was 2.35% in the nine months ended September 30, 2025 compared to 2.38% in the nine months ended September 30, 2024.

Provision for income taxes:

An income tax provision of $1.1 million was recorded during the nine months ended September 30, 2025 compared to an income tax provision of $767,000 recorded during the nine months ended September 30, 2024. The increase between nine month periods was mainly due to more taxable income being recorded in the 2025 period. Juniata qualifies for a federal tax credit for investments in low-income housing partnerships. The tax credit was $247,000 in both the nine months ended September 30, 2025 and September 30, 2024. The tax credit lowered the effective tax rate from 18.5% to 15.0% during the nine months ended September 30, 2025 compared to the same period in 2024, when the tax credit lowered the effective tax rate from 18.4% to 13.9%.

Liquidity:

The objective of liquidity management is to ensure that sufficient funding is available, at a reasonable cost, to meet the ongoing operational cash needs of the Company and to take advantage of income producing opportunities as they arise. While the desired level of liquidity will vary depending upon a variety of factors, it is a primary goal of the Company to maintain an adequate level of liquidity in all economic environments. Principal sources of asset liquidity are provided by loans and securities maturing in one year or less, and other short-term investments, such as federal funds sold and cash and due from banks. Liability liquidity, which is more difficult to measure, can be met by attracting deposits and maintaining the core deposit base.

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

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

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

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

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

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

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

Off-Balance Sheet Arrangements:

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.

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

Management believes the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding letters of credit. The current amount of the liability as of September 30, 2025 for payments under letters of credit issued was not material. Because these instruments have fixed maturity dates, and because many of them will expire without being drawn upon, they do not generally present any significant liquidity risk.

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

Interest Rate Sensitivity:

Interest rate sensitivity management is overseen by the Asset/Liability Management Committee. This process involves the development and implementation of strategies to maximize net interest margin, while minimizing the earnings risk associated with changing interest rates. Traditional gap analysis identifies the maturity and re-pricing terms of all assets and liabilities. A simulation analysis is used to assess earnings and capital at risk from movements in interest rates.

Capital Adequacy:

Bank regulatory authorities in the United States issue risk-based capital standards. These capital standards relate a banking company's capital to the risk profile of its assets and provide the basis by which all banking companies and banks are evaluated in terms of capital adequacy.

The Basel III risk-based capital standards require financial institutions to maintain: (a) a minimum ratio of common equity tier 1 ("CET1") to risk-weighted assets of at least 4.5%, (b) a minimum ratio of tier 1 capital to risk-weighted assets of at least 6.0%; (c) a minimum ratio of total (that is, tier 1 plus tier 2) capital to risk-weighted assets of at least 8.0%; and (d) a minimum leverage ratio of 3.0%, calculated as the ratio of tier 1 capital balance sheet exposures plus certain off-balance sheet exposures (computed as the average for each quarter of the month-end ratios for the quarter). In addition, the rules also limit a banking organization's capital distributions and certain discretionary bonus payments if the banking organization does not hold a "capital conservation buffer" of 2.5% above the minimum risk-based standards stated in (a) - (c).

At September 30, 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.

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

Juniata Valley Financial Corp. published this content on November 12, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 12, 2025 at 16:45 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]

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