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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year ended December 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission File No. 0-13232

Juniata Valley Financial Corp.

(Exact name of registrant as specified in its charter)


Pennsylvania		23-2235254
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)


Bridge and Main Streets, PO Box 66
Mifflintown, PA		17059-0066
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (855) 582-5101


Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $1.00

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ◻ No ⌧

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ◻ No ⌧

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ⌧ No ◻

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ⌧

[Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.]


Large accelerated filer ◻	Accelerated filer ◻	Non-accelerated filer ⌧
Smaller reporting company ☒	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive‐based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D‐1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)

Yes ☐ No ⌧

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed second fiscal quarter was $55,956,664. ⁽¹⁾

There were 5,016,727 shares of the registrant’s common stock outstanding as of March 26, 2025.

(1)

The aggregate dollar amount of the voting stock set forth equals the number of shares of the Company’s Common Stock outstanding, reduced by the amount of Common Stock held by officers, directors, shareholders owning in excess of 10% of the Company’s Common Stock and the Company’s employee benefit plans multiplied by the last reported sale price for the Company’s Common Stock on June 30, 2024, the last business day of the registrants most recently completed second fiscal quarter. The information provided shall not be construed as an admission that any officer, director or 10% shareholder of the Company, or any employee benefit plan, may be deemed an affiliate of the Company or that such person or entity is the beneficial owner of the shares reported as being held by such person or entity, and any such inference is hereby disclaimed.

DOCUMENTS INCORPORATED BY REFERENCE

(Specific sections incorporated are identified under applicable items herein)

Certain portions of the Company’s Proxy Statement to be filed in connection with its 2025 Annual Meeting of Shareholders are incorporated by reference in Part III of this Report; provided; however, that any information in such Proxy Statement that is not required to be included in this Annual Report on Form 10-K shall not be deemed to be incorporated herein or filed for the purposes of the Securities Act of 1933 or the Securities Exchange Act of 1934.

Other documents incorporated by reference are listed in the Exhibit Index.

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TABLE OF CONTENTS


		PAGE

PART I		3
ITEM 1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	12
ITEM 1B.	UNRESOLVED STAFF COMMENTS	20
ITEM 1C.	CYBERSECURITY	20
ITEM 2.	PROPERTIES	22
ITEM 3.	LEGAL PROCEEDINGS	22
ITEM 4.	MINE SAFETY DISCLOSURES	22
PART II		23
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	23
ITEM 6.	RESERVED	23
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	50
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	51
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	107
ITEM 9A.	CONTROLS AND PROCEDURES	107
ITEM 9B.	OTHER INFORMATION	108
ITEM 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	108
PART III		109
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	109
ITEM 11.	EXECUTIVE COMPENSATION	109
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	109
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	109
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	109
PART IV		110
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	110
	SIGNATURES	112

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PART I

ITEM 1. BUSINESS

Overview

Juniata Valley Financial Corp. (the “Company” or “Juniata”) is a Pennsylvania corporation formed in 1983 as a result of a plan of merger and reorganization of The Juniata Valley Bank (the “Bank”). The plan received regulatory approval on June 7, 1983 and Juniata, a one-bank holding company, registered under the Bank Holding Company Act of 1956 as a bank holding company. The Bank is the oldest independent commercial bank in Juniata and Mifflin Counties and was organized as a state bank charter in 1867. The Company has one reportable segment, consisting of the Bank, as described in Note 2 of The Notes to Consolidated Financial Statements.

Nature of Operations

Juniata operates primarily in central and northern Pennsylvania with the purpose of delivering financial services within its local markets. The Company provides retail and commercial banking and other financial services through 14 branch locations located in Juniata, Mifflin, Perry, McKean, Potter and Franklin Counties. Additionally, in Mifflin, Juniata and Centre Counties, the Company maintains four offices for loan production, trust services and wealth management sales.

The Company offers a full range of consumer and commercial banking services. Consumer banking services include online account opening; online banking; mobile banking; telephone banking; automated teller machines; personal checking accounts; checking overdraft privileges; money market deposit accounts; savings accounts; debit cards; certificates of deposit; individual retirement accounts; secured lines of credit; construction and mortgage loans; and safe deposit boxes. Commercial banking services include low and high-volume business checking accounts; online account management services; remote deposit capability; ACH origination; payroll direct deposit; commercial lines of credit; commercial letters of credit; mobile deposit for business customers; and commercial term and demand loans.

The Bank also provides comprehensive trust, asset management and estate services, and the Company has a contractual arrangement with a broker-dealer to offer a full range of financial services to the Bank’s customers, including annuities, mutual funds, stock and bond brokerage services and long-term care insurance. Management believes the Bank has a relatively stable deposit base with no major seasonal depositor or group of depositors. Most of the Company’s commercial customers are small and mid-sized businesses in central and northern Pennsylvania.

Juniata’s loan underwriting policies are updated periodically and are presented for approval to the Board of Directors of the Bank. The purpose of the policies is to grant loans on a sound and collectible basis, to invest available funds in a safe, profitable manner, to serve the credit needs of the communities in Juniata’s primary market area and to ensure that all loan applicants receive fair and equal treatment in the lending process. It is the intent of the underwriting policies to seek to minimize credit losses by requiring careful investigation of the credit history of each applicant, verifying the source of repayment and the ability of the applicant to repay, securing those loans for which collateral is deemed to be required, exercising care in the documentation of the application, review, approval and origination process and administering a comprehensive loan collection program.

The major types of investments held by Juniata consist of obligations and securities issued by U.S. government agencies or corporations, obligations of state and local political subdivisions, government sponsored entity mortgage-backed securities, subordinated debt and common stock. Juniata’s investment policy directs that investments be managed in a way that provides necessary funding for the Company’s liquidity needs and adequate collateral to pledge for public funds held, and as directed by the Asset Liability Committee, manages interest rate risk. The investment policy specifies the types of investments permitted to be owned, addresses credit quality of investments and includes limitations by investment types and issuer.

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The Company’s primary source of funds is deposits, consisting of transaction type accounts, such as demand deposits and savings accounts, and time deposits, such as certificates of deposit. Most deposits are held by customers residing or located in Juniata’s market area. No material portion of the deposits has been obtained from a single or small group of customers, and the Company believes that the loss of any customer’s deposits or a small group of customers’ deposits would not have a material adverse effect on the Company.

Other sources of funds used by the Company may include brokered deposits, retail repurchase agreements, borrowings from the Federal Home Loan Bank of Pittsburgh and the Federal Reserve Bank of Philadelphia, and lines of credit established with correspondent banks for overnight funding.

Competition

The Bank’s service area is characterized by a high level of competition for banking and financial services among commercial banks, varying in size from local community banks to regional and national banks, credit unions, savings and loan associations and non-bank financial institutions, including fintech-based loan and deposit providers, insurance companies, investment counseling firms, and mutual funds and other business firms and individuals in corporate and trust investment management services located inside and outside the Bank’s market area. The Bank actively competes with such banks and institutions for local consumer and commercial deposit accounts, loans and other types of financial services. Many competitors have substantially greater financial resources and larger branch systems than those of the Bank.

In commercial transactions, the Company believes that the Bank’s legal lending limit to a single borrower (approximately $11.4 million as of December 31, 2024) enables it to compete effectively for the business of small and mid-sized businesses. However, the Bank’s legal lending limit is considerably lower than that of various competing institutions and thus, may act as a constraint on the Bank’s effectiveness in competing for larger financings.

In consumer transactions, the Bank believes it can compete on a substantially equal basis with larger financial institutions because it offers competitive interest rates on deposit products and on loans.

In competing with other banks and financial institutions, the Bank seeks to provide personalized services through management’s knowledge and awareness of its service areas, customers and borrowers. In management’s opinion, larger institutions often do not provide comparable attention to the retail depositors and the relatively small commercial borrowers that comprise the Bank’s primary customer base.

Supervision and Regulation

General

The Company operates in a highly regulated industry and, thus, may be affected by changes in state and federal regulations and legislation. As a registered bank holding company under the Bank Holding Company Act of 1956, as amended (the “Bank Holding Company Act”), the Company is subject to supervision and examination by the Board of Governors of the Federal Reserve System (“FRB”) and is required to file periodic reports and information regarding its business operations and those of the Bank with the FRB. In addition, under the Pennsylvania Banking Code of 1965, the Pennsylvania Department of Banking and Securities has the authority to examine the books, records and affairs of the Company and to require any documentation deemed necessary to ensure compliance with the Pennsylvania Banking Code.

The Bank Holding Company Act requires the Company to obtain FRB approval before: acquiring more than a five percent ownership interest in any class of the voting securities of any bank; acquiring all or substantially all the assets of a bank; or merging or consolidating with another bank holding company. In addition, the Bank Holding Company Act prohibits a bank holding company from acquiring the assets, or more than five percent of the voting securities, of a bank located in another state, unless such acquisition is specifically authorized by the statutes of the state in which the bank is located.

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The Company is generally prohibited under the Bank Holding Company Act from engaging in, or acquiring, direct or indirect ownership or control of more than five percent of the voting shares of any company engaged in, nonbanking activities unless the FRB, by order or regulation, has found such activities to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. In making such determination, the FRB considers whether the performance of these activities by a bank holding company can reasonably be expected to produce benefits to the public that outweigh the possible adverse effects.

A satisfactory safety and soundness rating, particularly regarding capital adequacy, and a satisfactory Community Reinvestment Act rating are generally prerequisites to obtaining federal regulatory approval to make acquisitions and open branch offices. As of December 31, 2024, the Bank was rated “satisfactory” under the Community Reinvestment Act and was a “well-capitalized” bank. An institution’s Community Reinvestment Act rating is considered in determining whether to grant approvals relating to charters, branches and other deposit facilities, relocations, mergers, consolidations and acquisitions. Less than satisfactory performance may be the basis for denying an application.

There are various legal restrictions on the extent to which the Company and its non-bank subsidiaries can borrow or otherwise obtain credit from the Bank. In general, these restrictions require that any such extensions of credit must be secured by designated amounts of specified collateral and are limited, as to any one of the Company or such non-bank subsidiaries, to ten percent of the lending bank’s capital stock and surplus and, as to the Company and all such non-bank subsidiaries in the aggregate, to 20 percent of the Bank’s capital stock and surplus. Further, the Company and the Bank are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit, lease or sale of property or furnishing of services.

As a bank chartered under the laws of Pennsylvania, the Bank is subject to the regulations and supervision of the Federal Deposit Insurance Corporation (“FDIC”) and the Pennsylvania Department of Banking and Securities. These government agencies conduct regular safety and soundness and compliance reviews that have resulted in satisfactory evaluations to date. Some of the aspects of the lending and deposit business of the Bank that are regulated by these agencies include personal lending, mortgage lending and reserve requirements.

The operations of the Bank are also subject to numerous federal, state and local laws and regulations which set forth specific restrictions and procedural requirements with respect to interest rates on loans, the extension of credit, credit practices, the disclosure of credit terms and discrimination in credit transactions. The Bank also is subject to certain limitations on the amount of cash dividends that it can pay to the Company. See Note 14 of The Notes to Consolidated Financial Statements for further information.

Under FRB policy, the Company is expected to act as a source of financial strength to the Bank, and to commit resources to support the Bank in circumstances where it might not be in a financial position to support itself. Consistent with the “source of strength” policy for subsidiary banks, the FRB has stated that, as a matter of prudent banking, a bank holding company generally should not maintain a rate of cash dividends unless its net income available to common stockholders has been sufficient to fully fund the dividends and the prospective rate of earnings retention appears to be consistent with the Company’s capital needs, asset quality and overall financial condition.

As a public company, the Company is subject to the Securities and Exchange Commission’s (“SEC”) rules and regulations relating to periodic reporting, proxy solicitation and insider trading.

On March 12, 2020, the SEC adopted amendments to the “accelerated filer” and “large accelerated filer” definitions pursuant to Rule 12b-2 under the Securities Exchange Act of 1934 to resolve an overlap that existed between the definitions related to accelerated filers and “smaller reporting companies,” with the focus to reduce disclosure and reporting obligations for lower-revenue smaller reporting companies. The final amendments were effective on, and apply to an annual report filing due on or after, April 27, 2020. The most notable impact of these amendments was that a smaller reporting company with less than $100 million in revenue that previously met the definition of an accelerated filer or large accelerated filer is not required to obtain an attestation of their internal control over financial reporting as required under Section 404(b) of the Sarbanes-Oxley Act and is not required to comply with the shorter SEC filing deadlines that apply to accelerated filers. Juniata qualifies as a smaller reporting company and is not required to obtain such an attestation or comply with the shorter SEC filing deadlines that apply to accelerated filers.

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FDIC Insurance

The FDIC is an independent federal agency that insures the deposits, up to prescribed statutory limits, of federally insured banks and savings institutions and safeguards the safety and soundness of the banking and savings industries. The FDIC administers the Deposit Insurance Fund (“DIF”). The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) set the standard maximum deposit insurance coverage amount at $250,000. The FDIC deposit insurance coverage limit applies per depositor, per insured depository institution for each account ownership category.

The FDIC has been given greater latitude in setting the assessment rates for insured depository institutions which could be used to impose minimum assessments. The FDIC adopted a final rule, applicable to all insured depository institutions, to increase initial base deposit insurance assessment rate schedules uniformly by 2 basis points, beginning in the first quarterly assessment period of 2023. FDIC assessment rates currently range from 2.5 – 32 basis points for small institutions, such as Juniata, with assets under $10.0 billion. Initial base assessment rates range between 5 and 32 basis points (5 – 18 basis points for a CAMELS composite rating of 1 or 2). The initial base rates for a CAMELS composite rating of 3 is 8 – 32 basis points and 18 – 32 basis points for CAMELS composite ratings of 4 and 5. The unsecured debt adjustment for all CAMELS composite ratings for small institutions is from -5 – 0 basis points but cannot exceed the lesser of 5 basis points, or 50%, of an insured depository institutions’ initial base assessment rate.

Pursuant to the Dodd-Frank Act the FDIC: (1) defined the assessment base used to calculate deposit insurance assessments as “average consolidated total assets minus average tangible equity”; (2) set the DIF’s minimum reserve ratio to 1.35 percent with no upper limit on the reserve ratio; (3) established adjustments to the assessment rates; and (4) established a new deposit insurance assessment rate schedule. Though deposit insurance assessments maintain a risk-based approach, the FDIC imposes a more extensive risk-based assessment system on large insured depository institutions with at least $10 billion in total assets since they are more complex in nature and could pose greater risk.

Under the Dodd-Frank Act, the FDIC may terminate the insurance of an institution’s deposits upon finding that the institution has engaged in unsafe and unsound practices, is in an unsafe and unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. The Company does not know of any practice, condition or violation that might lead to termination of the Bank’s deposit insurance.

Community Reinvestment Act

Under the Community Reinvestment Act, the Bank has a continuing and affirmative obligation, consistent with its safe and sound operation, to help meet the credit needs of its entire community, including low and moderate-income neighborhoods. However, the Community Reinvestment Act does not establish specific lending requirements or programs for financial institutions, nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its community. The Community Reinvestment Act also requires:

●

the applicable regulatory agency to assess an institution’s record of meeting the credit needs of its community;

●

public disclosure of an institution’s CRA rating; and

●

that the applicable regulatory agency provides a written evaluation of an institution’s CRA performance utilizing a four-tiered descriptive rating system.

Capital Regulation

The Bank is subject to risk-based capital standards by which banks are evaluated in terms of capital adequacy. These regulatory capital requirements are administered by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital and classification are also subject to qualitative judgments by the regulators. Management believes that, as of December 31, 2024, the Bank meets all capital adequacy requirements to which it is subject.

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Prompt corrective action regulations provide five classifications of a financial institution’s capital adequacy: well-capitalized; adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year-end 2024 and 2023, the Bank was well-capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank’s capital category.

The United States is a member of the Basel Committee on Banking Supervision (the “Basel Committee”) that provides a forum for regular international cooperation on banking supervisory matters. The Basel Committee develops guidelines and supervisory standards and is best known for its international standards on capital adequacy. In December 2010, the Basel Committee released its final framework for strengthening international capital and liquidity regulation, officially identified by the Basel Committee as “Basel III”, which set capital standards with which the Bank is required to comply.

The Bank is subject to risk-based and leverage capital standards. The risk-based capital standards relate a banking organization’s capital to the risk profile of its assets and require the banking organization to maintain Tier 1 capital of at least 4% of total risk-adjusted assets, and total capital, including Tier 1 capital, equal to at least 8% of total risk-adjusted assets. Tier 1 capital includes common stockholders’ equity and qualifying perpetual preferred stock, together with related surpluses and retained earnings. The remaining category of regulatory capital, known as Tier 2 capital, may be comprised of limited life preferred stock, qualifying subordinated debt instruments and the reserves for possible credit losses.

Additionally, banking organizations must maintain a minimum leverage ratio of 3%, measured as the ratio of Tier 1 capital to adjusted average assets. This 3% leverage ratio is a minimum for the most highly rated banking organizations without any supervisory, financial or operational weaknesses or deficiencies. Other banking organizations are expected to maintain leverage capital ratios that are 100 to 200 basis points above such minimum, depending upon their financial condition.

Under the Federal Deposit Insurance Corporation Improvement Act of 1991 (the "1991 Act"), a bank holding company is required to guarantee that any "undercapitalized" (as such term is defined in the statute) insured depository institution subsidiary will comply with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal banking agency up to the lesser of (i) an amount equal to 5% of the institution’s total assets at the time the institution became undercapitalized, or (ii) the amount which is necessary (or would have been necessary) to bring the institution into compliance with all capital standards as of the time the institution failed to comply with such capital restoration plan.

Federal banking agencies have broad powers to take corrective action to resolve problems of insured depository institutions. The extent of these powers depends upon whether the institutions in question are “well-capitalized,” “adequately capitalized,” “undercapitalized”, “significantly undercapitalized” or “critically undercapitalized.” As of December 31, 2024, the Bank was a “well-capitalized” bank, as defined by the FDIC.

The FDIC has issued a rule that sets the capital level for each of the five capital categories by which banks are evaluated. A bank is deemed to be “well-capitalized” if the bank has a total risk-based capital ratio of 10% or greater, has a Tier 1 risk-based capital ratio of 6% or greater, has a leverage ratio of 5% or greater, and is not subject to any order or final capital directive by the FDIC to meet and maintain a specific capital level for any capital measure. A bank may be deemed to be in a capitalization category that is lower than is indicated by its actual capital position if it received an unsatisfactory safety and soundness examination rating.

All the bank regulatory agencies have rules requiring them to consider in their evaluation of a bank’s capital adequacy the exposure of a bank’s capital and economic value to changes in interest rates. These rules do not establish an explicit supervisory threshold. The agencies intend, at a subsequent date, to incorporate explicit minimum requirements for interest rate risk into their risk-based capital standards and have proposed a supervisory model to be used together with bank internal models to gather data and propose, at a later date, explicit minimum requirements.

The Basel III rules, among other things, narrow the definition of regulatory capital. Basel III requires bank holding companies and their bank subsidiaries to maintain substantially more capital, with a greater emphasis on common equity. Specifically, Basel III requires financial institutions to maintain: (a) a minimum ratio of common equity tier 1 capital

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(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 each of the foregoing capital requirements stated in (a) – (c) above. Basel III also provides for a “countercyclical capital buffer,” an additional capital requirement that generally is imposed when national regulators determine that excess aggregate credit growth has become associated with a buildup of systemic risk, to absorb losses during periods of economic stress. Banking institutions that maintain insufficient capital to comply with the capital conservation buffer face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall.

Additionally, the Basel III framework requires banks and bank holding companies to measure their liquidity against specific liquidity tests, including a liquidity coverage ratio (“LCR”) designed to ensure that the banking entity maintains a level of unencumbered high-quality liquid assets greater than or equal to the entity’s expected net cash outflow for a 30-day time horizon under an acute liquidity stress scenario, and a net stable funding ratio (“NSFR”) designed to promote more medium and long-term funding based on the liquidity characteristics of the assets and activities of banking entities over a one-year time horizon. In September 2014, the federal regulatory agencies finalized rules implementing the LCR for U.S. financial institutions that are “internationally active banking organizations” and those with more than $250 billion in total consolidated assets. The FRB separately adopted a less stringent, modified LCR requirement for bank holding companies that have more than $50 billion in total consolidated assets. Because of the Company’s size, neither the LCR Rule nor any additional proposed rules under the Basel III liquidity framework are applicable to it.

Gramm-Leach-Bliley Act

On November 12, 1999, the Gramm-Leach-Bliley Act (“GLB”) became law. GLB permits commercial banks to affiliate with investment banks. It also permits bank holding companies which elect financial holding company status to engage in any type of financial activity, including securities, insurance, merchant banking/equity investment and other activities that are financial in nature. The Company has not elected financial holding company status. The merchant banking provisions of GLB allow a bank holding company to make a controlling investment in any kind of company, financial or commercial. GLB allows a bank to engage in virtually every type of activity currently recognized as financial or incidental or complementary to a financial activity. A commercial bank that wishes to engage in these activities is required to be well-capitalized, well managed and to have a satisfactory or better Community Reinvestment Act rating. GLB also allows subsidiaries of banks to engage in a broad range of financial activities that are not permitted for banks themselves. Although the Company and the Bank have not commenced these types of activities to date, GLB enables them to evaluate new financial activities that would complement the products already offered to enhance non-interest income.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 implemented a broad range of corporate governance, accounting and reporting measures for companies, like Juniata, which have securities registered under the Securities Exchange Act of 1934. Specifically, the Sarbanes-Oxley Act and the various regulations promulgated under the Act, established, among other things: (i) requirements for audit committees, including independence, expertise, and responsibilities; (ii) additional responsibilities relating to financial statements for the Chief Executive Officer and Chief Financial Officer of reporting companies; (iii) standards for auditors and regulation of audits, including independence provisions that restrict non-audit services that accountants may provide to their audit clients; (iv) increased disclosure and reporting obligations for reporting companies and their directors and executive officers, including accelerated reporting of stock transactions and a prohibition on trading during pension blackout periods; and (v) a range of civil and criminal penalties for fraud and other violations of the securities laws. In addition, Sarbanes-Oxley required stock exchanges to institute additional requirements relating to corporate governance in their listing rules.

Section 404(b) of the Sarbanes-Oxley Act requires the Company to include in its Annual Report on Form 10-K a report by management on the adequacy of the Company’s internal control over financial reporting. Management’s internal control

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report must, among other things, set forth management’s assessment of the effectiveness of the Company’s internal control over financial reporting.

Due to the SEC’s recently adopted amendments to the “accelerated filer” and “large accelerated filer” definitions pursuant to Rule 12b-2 under the Securities Exchange Act of 1934, smaller reporting companies, such as Juniata, with less than $100 million in revenue that previously met the definition of an accelerated filer or large accelerated filer are not required to obtain an attestation of their internal control over financial reporting as required under Section 404(b) of the Sarbanes-Oxley Act; thus, no such attestation is included in this Annual Report on Form 10-K.

Financial Privacy

Federal banking regulators have adopted rules that limit the ability of banks and other financial institutions to disclose non-public information about consumers to nonaffiliated third parties. These limitations require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a nonaffiliated third party. The privacy provisions of the GLB Act affect the Company by limiting how consumer information is transmitted and conveyed to outside vendors.

Anti-Money Laundering Initiatives and the USA Patriot Act

A major focus of governmental policy on financial institutions in recent years has been aimed at combating money laundering and terrorist financing. U.S. federal laws and regulations, including the USA Patriot Act of 2001 (“USA Patriot Act”), impose significant compliance and due diligence obligations, create criminal and financial liability for non-compliance and expand the extra-territorial jurisdiction of the U.S. The United States Department of the Treasury has issued several regulations that apply various requirements of the USA Patriot Act to financial institutions. These regulations require financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all the relevant laws or regulations, could have serious legal and reputational consequences for the institution.

On January 1, 2021, the National Defense Authorization Act ("NDAA") was signed into law, which enacted significant changes to existing U.S. anti-money laundering (“AML”) laws. The NDAA includes: (i) significant changes to the collection of beneficial ownership and the establishment of a beneficial ownership registry, which requires certain corporate entities to report beneficial ownership information to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”); (ii) enhanced whistleblower provisions, which provide that one or more whistleblowers who voluntarily provide original information leading to the successful enforcement of violations of the Bank Secrecy Act or other AML-related laws under certain circumstances will receive a percentage of the monetary sanctions collected and will receive increased protections; (iii) increased penalties for violations of the BSA; (iv) improvements to existing information sharing provisions that permit financial institutions to share information relating to suspicious activity for the purpose of combating illicit finance risks; and (v) expanded duties and powers of FinCEN. Many of the new provisions, including those with respect to beneficial ownership, require the Department of Treasury and FinCEN to promulgate rules.

Office of Foreign Assets Control Regulation

The U.S. has instituted economic sanctions which restrict transactions with designated foreign countries, nationals and others. These are typically known as the “OFAC rules” because they are administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”). The OFAC-administered sanctions target countries in various ways. Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country, and prohibitions on “U.S. persons” engaging in financial transactions which relate to investments in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons). Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. Failure to

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comply with these sanctions could have serious legal and reputational consequences for the institution. As U.S. financial institutions, the Company and the Bank are required to comply with the OFAC rules.

Consumer Protection Statutes and Regulations

The Company is subject to many federal consumer protection statutes and regulations, including the Truth in Lending Act, the Truth in Savings Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Real Estate Settlement Procedures Act and the Home Mortgage Disclosure Act. Among other things, these acts:

●

require banks to disclose credit terms in meaningful and consistent ways;

●

prohibit discrimination against an applicant in any consumer or business credit transaction;

●

prohibit discrimination in housing-related lending activities;

●

require banks to collect and report applicant and borrower data regarding loans for home purchases or improvement projects;

●

require lenders to provide borrowers with information regarding the nature and cost of real estate settlements;

●

prohibit certain lending practices and limit escrow account amounts with respect to real estate transactions; and

●

prescribe possible penalties for violations of the requirements of consumer protection statutes and regulations.

The FRB’s Regulation E, which implements the Electronic Funds Transfer Act, limits the ability of a financial institution to assess an overdraft fee for paying automated teller machine transactions and one-time debit card transactions that overdraw a customer’s account, unless the customer affirmatively consents, or opts in, to the institution’s payment of overdrafts for these transactions.

Dodd-Frank Act

Among other things, the Dodd-Frank Act created the Financial Oversight Council, with oversight authority for monitoring and regulating systemic risk, and the Consumer Financial Protection Bureau (“CFPB”), which has broad regulatory and enforcement powers over consumer financial products and services. The CFPB is responsible for administering and enforcing numerous federal consumer financial laws enumerated in the Dodd-Frank Act. The Dodd Frank Act also provided that, for banks with total assets of more than $10 billion, the CFPB would have exclusive or primary authority to examine those banks for, and enforce compliance with, the federal consumer financial laws. Although not subject to examination by the CFPB, the Company remains subject to the review and supervision of other applicable regulatory authorities, and such authorities may enforce compliance with regulations issued by the CFPB.

The scope of the Dodd-Frank Act impacts many aspects of the financial services industry, and it requires the development and adoption of numerous regulations, some of which have not yet been issued. The effects of the Dodd-Frank Act on the financial services industry will depend, in large part, upon the extent to which regulators exercise the authority granted to them under the Dodd-Frank Act and the approaches taken in implementing those regulations. Additional uncertainty regarding the effects of the Dodd-Frank Act exists due to court decisions and the potential for additional legislative changes to the Dodd-Frank Act.

The Dodd-Frank Act’s provisions that have received the most public attention have generally been those which apply only to larger institutions with total consolidated assets of $50 billion or more. However, the Dodd-Frank Act contains numerous other provisions that affect all bank holding companies, including the Company.

The following is a list of significant provisions of the Dodd-Frank Act, and, if applicable, the resulting regulations adopted, that apply (or will apply) most directly to the Company and its subsidiary:

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Federal deposit insurance - The FDIC’s deposit insurance assessment base is now based on average total assets, minus average tangible equity;

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Debit card interchange fees - The FRB adopted regulations setting maximum permissible interchange fees issuers can receive or charge on electronic debit card transaction fees and network exclusivity arrangements;

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Interest on demand deposits - Depository institutions are permitted to pay interest on business transaction and other accounts;

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Stress testing - The FRB issued final rules regarding company-run stress testing. In accordance with these rules, a company whose assets exceed $10 billion is required to conduct an annual stress test. The Economic Growth Act raised the asset threshold for the stress testing requirement to apply to companies with assets above $100 billion. While the Company believes that both the quality and magnitude of its capital base are sufficient to support its current operations given its risk profile, this requirement is not applicable to the Company because its assets are under $100 billion;

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Ability-to-pay rules and qualified mortgages - As required by the Dodd-Frank Act, the CFPB amended Regulation Z, implementing the Truth in Lending Act, by requiring mortgage lenders to make a reasonable and good faith determination, based on verified and documented information, that a consumer applying for a residential mortgage loan has a reasonable ability to repay the loan according to its terms. These final rules prohibit creditors, such as the Company, from extending residential mortgage loans without regard for the consumer’s ability to repay and add restrictions and requirements to residential mortgage origination and servicing practices.

In addition, these rules restrict the imposition of prepayment penalties and compensation practices relating to residential mortgage loan origination. Mortgage lenders are required to determine consumers’ ability to repay in one of two ways. The first alternative requires the mortgage lender to consider eight underwriting factors when making the credit decision. Alternatively, the mortgage lender can originate "qualified mortgages," which are entitled to a presumption that the creditor making the loan satisfied the ability-to-repay requirements. In general, a "qualified mortgage" is a residential mortgage loan that does not have certain high-risk features, such as negative amortization, interest-only payments, balloon payments or a term exceeding 30 years. In addition, to be a qualified mortgage, the points and fees paid by a consumer cannot exceed 3% of the total loan amount, and the borrower’s total debt-to-income ratio must be no higher than 43% (subject to certain limited exceptions for loans eligible for purchase, guarantee or insurance by a government sponsored entity or a federal agency).

Compliance with these rules has increased Juniata’s overall regulatory compliance costs and required changes to the underwriting practices of the Company with respect to mortgage loans.

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Integrated disclosures under the Real Estate Settlement Procedures Act (“RESPA”) and the Truth in Lending Act (“TILA”) – CFB rules require lenders to provide a new Loan Estimate, combining content from the former “Good Faith Estimate” required under RESPA and the initial disclosures required under TILA, not later than the third business day after submission of a loan application, and a new “Closing Disclosure”, combining content of the former HUD-1 Settlement Statement required under RESPA and the final disclosures required under TILA, at least three days prior to the loan closing.

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Volcker Rule — As mandated by the Dodd-Frank Act, the OCC, FRB, FDIC, SEC and Commodity Futures Trading Commission issued rules (the "Volker Rule") implementing certain prohibitions and restrictions on the ability of a banking entity and non-bank financial company supervised by the FRB to engage in proprietary trading and have certain ownership interests in, or relationships with, a "covered fund". Generally, any entity that would be an investment company under the Investment Company Act of 1940 (the "1940 Act"), but for the application of the exemptions from SEC registration set forth in Section 3(c)(1) (fewer than l00 beneficial owners) or Section 3(c)(7) (qualified purchasers) of the 1940 Act, is treated as a covered fund. Also requires regulated entities to establish an internal compliance program consistent with the extent to which it engages in activities covered by the Volcker Rule, which must include making regular reports about those activities to regulators. Although there is some tiering of compliance and reporting obligations based on size, the fundamental prohibitions of the Volcker Rule apply to banking entities of any size, including the Company; and

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Incentive compensation — As required by the Dodd-Frank Act, a joint interagency proposed regulation was issued in April 2011. The proposed rule would require the reporting of incentive-based compensation arrangements by a covered financial institution and prohibit incentive-based compensation arrangements at a covered financial institution that provides excessive compensation or that could expose the institution to inappropriate risks that could lead to material financial loss. The proposed rule, if adopted as currently proposed, could limit the way the Company structures incentive compensation for its executives.

National Monetary Policy

In addition to being affected by general economic conditions, the earnings and growth of the Bank and, therefore, the earnings and growth of the Company, are affected by the policies of regulatory authorities, including the FRB and the FDIC. An important function of the FRB is to regulate the money supply and credit conditions. Among the instruments used to implement these objectives are open market operations in U.S. government securities, setting the discount rate and changes in financial institution reserve requirements. These instruments are used in varying combinations to influence overall growth and distribution of credit, bank loans, investments and deposits, and their use may also affect interest rates charged on loans or paid on deposits.

The monetary policies and regulations of the FRB have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. The effects of such policies upon the future businesses, earnings and growth of the Company cannot be predicted with certainty.

Employees

As of December 31, 2024, the Company had a total of 115 full-time and 39 part-time employees.

Additional Information

The Company files annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available on the SEC’s website (http://www.sec.gov).

The Company’s common stock is quoted under the symbol “JUVF” on the OTCQX Best Market, an electronic inter-dealer quotation and trading system operated by OTC Markets Group.

The Company’s website is www.JVBonline.com. At that address, we make available, free of charge, the Company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act (see “Investor Relations” section of website), as soon as reasonably practicable after we electronically file such material with the SEC.

In addition, we will provide, at no cost, paper or electronic copies of our reports and other filings made with the SEC (except for exhibits). Requests should be directed to Michael W. Wolf, Chief Financial Officer, Juniata Valley Financial Corp., P.O. Box 66, Mifflintown, PA 17059, (855) 582-5101.

The information on the websites listed above is not, and should not be deemed to be, part of this Annual Report on Form 10-K and is not incorporated by reference in this document.

ITEM 1A. RISK FACTORS

An investment in the Company's common stock involves certain risks, including, among others, the risks described below. In addition to the other information contained in this report, you should carefully consider the following risk factors in analyzing whether to make or to continue an investment in the Company.

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RISKS RELATED TO INTEREST RATES AND LIQUIDITY

Fluctuations in market interest rates and relative balances of rate-sensitive assets to rate-sensitive liabilities can negatively impact net interest margin and net interest income.

The operations of financial institutions such as the Company are dependent to a large degree on net interest income, which is the difference between interest income from loans and investments and interest expense on deposits and borrowings.

An institution's net interest income is significantly affected by market rates of interest that, in turn, are affected by prevailing economic conditions, by the fiscal and monetary policies of the federal government and the policies of various regulatory agencies. The FRB regulates the national money supply to manage recessionary and inflationary pressures. In doing so, the FRB may use techniques such as engaging in open market transactions of U.S. Government securities, changing the discount rate and changing reserve requirements against bank deposits. The use of these techniques may also affect interest rates charged on loans and paid on deposits. The interest rate environment, which includes both the level of interest rates and the shape of the U.S. Treasury yield curve, has a significant impact on net interest income.

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.

Like all financial institutions, the Company's consolidated statement of financial condition is affected by fluctuations in interest rates. Volatility in interest rates can also result in disintermediation, which is the flow of deposits away from financial institutions into direct investments, such as U.S. Government and corporate securities and other investment vehicles, including mutual funds, which, because of the absence of federal insurance premiums and reserve requirements, generally pay higher rates of return than bank deposit products. See "Item 7: Management's Discussion of Financial Condition and Results of Operations”.

See the section entitled “Interest Rate Risk” in Management’s Discussion and Analysis of Financial Condition, for more information regarding the Company’s interest rate sensitivity.

Capital and liquidity strategies, including the impact of the capital and liquidity requirements implemented by the Basel III standards, may require the Company to maintain higher levels of capital, which could restrict the amount of capital that the Company has available to deploy for income generating and other activities.

In July 2013, the FRB approved the final rules implementing the Basel III capital standards (the “Basel III Rules”) which substantially revised the risk-based capital requirements applicable to bank holding companies and depository institutions. See previous Capital Regulation discussion.

As of December 31, 2024, the Company believes it meets all capital adequacy requirements to which it is subject. However, the Basel III rules effectively require financial institutions to maintain higher capital levels than previously required. As a result, Juniata may have to maintain capital in the form of assets that contribute less income to Juniata and that are not available for deployment as loans or other interest-income generating assets, funding of capital projects or other growth initiatives.

Competition, including competition on rates of deposit and for loan growth, may negatively impact the Company’s net interest margin.

There is significant competition among banks in the market areas served by the Company. In addition, as a result of deregulation of the financial industry, the Bank also competes with other providers of financial services, such as savings and loan associations, credit unions, consumer finance companies, securities firms, insurance companies, the mutual funds industry, fintech-based loan and deposit providers, full service brokerage firms and discount brokerage firms, some of which are subject to less extensive regulations than the Company with respect to the products and services they provide.

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Some of the Company’s competitors have greater resources than the Company and, as a result, may have higher lending limits and may offer other products or services not offered by the Company.

Competition may adversely affect the rates the Company pays on deposits and charges on loans, thereby potentially adversely affecting the Company’s profitability. Competition sometimes requires the Company to lower rates charged on loans more than market rates would otherwise indicate. Competition may also require the Company to pay higher rates on deposits than market rates would otherwise indicate. Thus, although loan demand has improved, intense competition among lenders has continued to place downward pressure on loan yields, also narrowing the net interest margin.

Changes in interest rates or disruption in liquidity markets may adversely affect the Company’s sources of funding.

The Company must maintain enough sources of liquidity to meet the demands of its depositors and borrowers, support its operations and meet regulatory expectations. The Company’s liquidity practices emphasize core deposits and repayments and maturities of loans and investments as its primary sources of liquidity. These primary sources of liquidity can be supplemented by Federal Home Loan Bank (“FHLB”) advances, borrowings from the Federal Reserve Bank, lines of credit from correspondent banks and brokered deposits. Lower-cost, core deposits may be adversely affected by changes in interest rates, and secondary sources of liquidity can be costlier to the Company than funding provided by deposit account balances having similar maturities. In addition, adverse changes in the Company’s results of operations or financial condition, regulatory actions involving the Company, or changes in regulatory, industry or market conditions could lead to increases in the cost of these secondary sources of liquidity, the inability to refinance or replace these secondary funding sources as they mature, or the withdrawal of unused borrowing capacity under these secondary funding sources.

While the Company attempts to manage its liquidity through various techniques, the assumptions and estimates used do not always accurately forecast the impact of changes in customer behavior. For example, the Company may face limitations on its ability to fund loan growth if customers move funds out of the Bank’s deposit accounts in response to increases in interest rates. In the years following the 2008 financial crisis, even as the general level of market interest rates remained low by historical standards, depositors frequently avoided higher-yielding and higher-risk alternative investments, in favor of the safety and liquidity of non-maturing deposit accounts. These circumstances contributed to significant growth in non-maturing deposit account balances at the Company, and at depository financial institutions generally. In a rising rate environment, customers may become more sensitive to interest rates when making deposit decisions and considering alternative opportunities. This increased sensitivity to interest rates could cause customers to move funds into higher-yielding deposit accounts offered by the Company’s bank subsidiary, require the Company’s bank subsidiary to offer higher interest rates on deposit accounts to retain customer deposits or cause customers to move funds into alternative investments or deposits of other banks or non-bank providers. Technology and other factors have also made it more convenient for customers to transfer low-cost deposits into higher-cost deposits or into alternative investments or deposits of other banks or non-bank providers. Such movement of customer deposits could increase the Company’s funding costs, reduce its net interest margin and/or create liquidity challenges.

Market conditions have been negatively impacted by disruptions in the liquidity markets in the past, and such disruptions or an adverse change in the Company's results of operations or financial condition could, in the future, have a negative impact on secondary sources of liquidity. If the Company is not able to continue to rely primarily on customer deposits to meet its liquidity and funding needs, continue to access secondary, non-deposit funding sources on favorable terms or otherwise fails to manage its liquidity effectively, the Company’s ability to continue to grow may be constrained, and the Company’s liquidity, operating margins, results of operations and financial condition may be materially adversely affected.

Regulators emphasize liquidity planning at both the Bank and Company levels.

Due to regulatory limitations on the Corporation’s ability to rely on short-term borrowings, any significant movements of deposits away from traditional depository accounts which negatively impacts the Corporation’s loan-to-deposit ratio could restrict its ability to achieve growth in loans or require the Corporation to pay higher interest rates on deposit products to retain deposits to fund loans.

Liquidity must also be managed at the holding company level. Banking regulators scrutinize liquidity at the holding company level, in addition to consolidated and bank liquidity levels. For safety and soundness reasons, banking regulations

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limit the amount of cash that can be transferred from subsidiary banks to the parent company in the form of loans and dividends. Generally, these limitations are based on a subsidiary bank’s regulatory capital levels and net income. These factors have affected some institutions' ability to pay dividends and have required some institutions to establish borrowing facilities at the holding company level.

Unrealized losses in the Bank’s investment portfolio could affect liquidity.

If market interest rates increase, unrealized losses on the Bank’s available for sale debt securities portfolio can increase. The increase in unrealized losses is reflected in Accumulated Other Comprehensive Income (“AOCI”) on the balance sheet, which reduces GAAP total stockholders’ equity capital and, therefore, the tangible common equity ratio. Unrealized losses do not affect regulatory capital ratios.

The Bank’s access to liquidity sources could be affected by unrealized losses if investments must be sold at a loss, tangible capital ratios decline from an increase in unrealized losses or realized credit losses, the FHLB or other sources reduce borrowing capacity or bank regulators impose restrictions on the Bank such as a limit on interest rates it may pay on deposits or its ability to access brokered deposits.

COMPLIANCE AND REGULATORY RISKS

The increasing time and expense associated with regulatory compliance and risk management could negatively impact our results of operations.

The time, expense and internal and external resources associated with regulatory compliance continue to increase. Thus, balancing the need to address regulatory changes and effectively manage growth in non-interest expenses has become more challenging than it had been in the past.

The Company and the Bank are extensively regulated under federal and state banking laws and regulations that are primarily intended for the protection of depositors, federal deposit insurance funds and the banking system, but not shareholders. In general, these laws and regulations establish: the eligible business activities for the Company; certain acquisition and merger restrictions; limitations on intercompany transactions such as loans and dividends; capital adequacy requirements; requirements for anti-money laundering programs; and consumer lending and other compliance requirements. While these statutes and regulations are generally designed to minimize potential loss to depositors and the FDIC insurance funds, they do not eliminate risk, and compliance with such statutes and regulations increases the Company’s expense, requires management’s attention and can be a disadvantage from a competitive standpoint with respect to non-regulated competitors and larger bank competitors.

Compliance with banking statutes and regulations is important to the Company's ability to engage in new activities and to consummate additional acquisitions. Bank regulators are scrutinizing banks through longer and more extensive bank examinations in both the safety and soundness and compliance areas. The results of such examinations could result in a delay in receiving required regulatory approvals for potential new activities and transactional matters. If the Company's compliance record would be determined to be unsatisfactory, such approvals may not be able to be obtained. Federal and state banking regulators also possess broad powers to take supervisory actions, as they deem appropriate. These supervisory actions may result in higher capital requirements, higher deposit insurance premiums and limitations on the Company's operations that could have a material adverse effect on its business and profitability.

In addition, the Company is subject to changes in federal and state tax laws as well as changes in banking and credit regulations, accounting principles, governmental economic and monetary policies and collection efforts by taxing authorities.

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RISKS RELATED TO OPERATIONS

Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations.

The Company’s computer systems, software and networks are regularly subject to cyber-attacks, which may result in: unauthorized access; mishandling or misuse of information; loss or destruction of data (including confidential customer information); account takeovers; unavailability of service; computer viruses or other malicious code; disruption or degradation of service; denial of service; and other events. Cyber threats may arise from human error, fraud or malice on the part of employees or third parties, including third party vendors, or may result from accidental technological failure. In addition, the parties intent on penetrating our systems may also attempt to fraudulently induce employees, customers, third parties or other users of our systems to disclose sensitive information to gain access to the Company’s data or that of the Company’s customers.

Cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (the Company’s own or that of third parties) and the disruption of business operations. The potential consequences of a material cybersecurity incident include reputational damage, litigation with third parties and increased cybersecurity protection and remediation costs, which in turn could adversely affect the Company’s competitiveness and results of operations. The Company carries insurance to partially offset the risk of loss; however, there can be no assurance that the policy limits or policy exclusions would adequately protect the Company from a related loss.

Potential disruption or failure of network and information processing systems and those of third-party vendors may negatively impact our operations.

The Company's business activities are dependent on its ability to accurately and timely process, record and monitor many transactions. If any of its financial, accounting, network or other information processing systems fail or have other significant shortcomings, the Company could be materially adversely affected. The Company outsources some of it processing and other activities to third party vendors. Third parties with which the Company does business could be sources of operational risk to the Company, including the risk that the third parties' own network and information processing systems could fail. Any of these occurrences could materially diminish the Company's ability to operate one or more of the Company's businesses, or cause the Company to suffer financial loss, a disruption of its business, regulatory sanctions or damage to its reputation, any of which could materially adversely affect the Company.

The Company may be subject to disruptions or failures of the Company's financial, accounting, network and information processing systems arising from events that are wholly or partially beyond the Company's control, which may include, for example, computer viruses or electrical or telecommunications outages, denial of service attacks or hacking targeting the Company's or its vendors’ networks or information processing systems or websites, natural disasters, other damage to property or physical assets or terrorist acts. The Company has developed an emergency recovery program, which includes plans to maintain or resume operations in the event of an emergency and has contingency plans if operations or systems cannot be resumed or restored. The emergency recovery program is periodically reviewed and updated, and components of the emergency recovery program are periodically tested and validated. The Company also reviews and evaluates the emergency recovery programs of vendors which provide certain third-party systems that the Company considers critical. Nevertheless, there is no guarantee that these measures or any other measures can provide absolute security. In addition, because the methods used to cause cyber-attacks change frequently or, in some cases, are not recognized until launched, the Corporation may be unable to implement effective preventive measures or proactively address these attacks. Resulting disruptions or failures affecting any of the Company’s systems may give rise to interruption in service to customers, damage to the Company's reputation and loss or liability to the Company.

Failure by the Company to keep up with technological advancements in deployment of services and efficiency of operations may make it more vulnerable to competition.

The financial services industry is continually undergoing rapid technological change, with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial

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institutions to better serve customers and to reduce costs. The Company’s future success depends, in large part, upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in the Company’s operations. Many of the Company’s financial institution competitors have substantially greater resources to invest in technological improvements, and new payment services developed and offered by non-financial institution competitors pose an increasing threat to the traditional payment services offered by financial institutions. The Company may not be able to effectively implement new technology-driven products and services, be successful in marketing these products and services to its customers or effectively deploy new technologies to improve the efficiency of its operations. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on the Company’s business, financial condition and results of operations.

Further, the costs of new technology, including personnel, can be high in both absolute and relative terms. There can be no assurance, given the fast pace of change and innovation, that the Company’s technology, either purchased or developed internally, will meet or continue to meet the needs of the Company and the needs of its customers.

The Company may not be able to attract and retain skilled people.

The Company’s success depends, in large part, on its ability to attract and retain skilled people. The unexpected loss of services of one or more of the Company’s key personnel could have a material adverse impact on the Company's business because of their skills, knowledge of the Company's operations and markets, industry experience and the difficulty of promptly finding qualified replacement personnel. Our ability to attract and retain skilled personnel cost effectively is subject to a variety of external factors, including the limited availability of qualified personnel in the workforce in the local markets in which we operate, unemployment levels within those markets, prevailing wage rates, which have increased significantly, and health and other insurance costs. Furthermore, the complexities introduced into the labor market because of the transition to increased work-from-home arrangements have impacted the competitive landscape in our labor market. Based on current conditions in the labor market, we have experienced some difficulty in retaining and attracting personnel and there is no assurance we will be able to continue to successfully do so.

ECONOMIC AND CREDIT RISKS

General economic conditions may harm our industry, business and results of operations.

Various aspects of our business could be impacted by general macroeconomic conditions including, among others, inflation, interest rates, supply chain complications and economic uncertainty. Inflation rates in the United States have increased to levels not experienced in several years. These economic uncertainties may be compounded by international conflicts. Inflation, interest rates and related economic volatility could adversely affect our business, financial condition, results of operations and liquidity. These unfavorable economic conditions could, among other things, impact the value of our securities portfolio, impact our net interest margin, adversely impact our customers’ ability to make payments on floating rate loans, if interest rates rise, and increase the risk of default by our customers experiencing financial difficulties and business disruptions.

Difficult economic conditions and real estate markets, including protracted periods of low-growth and sluggish loan demand, can negatively impact the Company’s income, and result in higher charge-offs as borrowers’ ability to repay is negatively impacted by those conditions.

Lending money is an essential part of the banking business, and the revenues derived from lending activities are the most significant segment of the Company’s income statement. Extended periods of sluggish loan demand can materially affect the composition of the Company’s consolidated statement of financial condition, reducing the ratio of loans to deposits, and the Company’s profitability. Adverse changes in the economy and real estate markets and the duration of economic downturns can negatively affect the solvency of businesses and consumers. Borrowers’ inability to repay loans causes increases in non-performing assets, which may result in elevated collection and carrying costs related to such non-performing assets and increases in loan charge-offs, significantly impacting the credit loss provision charged to earnings to fund the allowance for credit losses. The risk of non-payment is affected by credit risks of the borrower, changes in economic and industry conditions, the duration of the loan and, in the case of a collateralized loan, uncertainties as to the

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future value of the collateral supporting the loan. Historically, commercial loans have presented a greater risk of non-payment than consumer loans. The application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount that can be recovered on these loans.

The Company has established an allowance for credit losses that management believes to be adequate to offset expected losses on the Company’s existing loans. However, there is no precise method of estimating credit losses. The Company determines the appropriate level of the allowance for credit losses based on many quantitative and qualitative factors, including, but not limited to, the size and composition of the loan portfolio; changes in risk ratings; changes in collateral values; delinquency levels; historical losses; and economic conditions. In addition, as the Company’s loan portfolio grows, it will generally be necessary to increase the allowance for credit losses through additional provisions, which will impact the Company’s operating results. If the Company’s assumptions and judgments regarding such matters prove to be inaccurate, its allowance for credit losses might not be sufficient, and additional provisions for credit losses might need to be made. Depending on the amount of such provisions for credit losses, the adverse impact on the Company’s earnings could be material. Also, there can be no assurance that any future declines in real estate market conditions, general economic conditions or changes in regulatory policies will not require the Company to increase its allowance for credit losses, through additional credit loss provisions, which could reduce earnings.

Investment securities losses could negatively impact our results of operations.

Price fluctuations in securities markets, as well as other market events, could have an impact on the Company’s results of operations. As described below, the Company’s holding of certain securities and the revenues the Company earns from its trust and investment management services business are particularly sensitive to those events:

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Equity investments:

As of December 31, 2024, the Company’s equity investments were comprised primarily of publicly traded financial institutions. The value of the securities in the Company’s equity portfolio may be affected by several factors. General economic conditions and uncertainty surrounding the financial institution sector impacts the value of these securities. Equity investments are stated at fair value with realized and unrealized gains and losses reported in net income. General declines in bank stock values, as well as deterioration in the performance of specific banks, are reflected on the Consolidated Statements of Income.

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Municipal securities:

As of December 31, 2024, the Company had approximately $6.0 million of municipal securities issued by various municipalities in its investment portfolio. Uncertainty with respect to the financial viability of municipal insurers places greater emphasis on the underlying strength of issuers. Increasing pressure on local tax revenues of issuers due to adverse economic conditions could also have a negative impact on the underlying credit quality of issuers.

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Investment management and trust services revenue:

The Company’s investment management and trust services revenue is also impacted by fluctuations in the securities markets. A portion of this revenue is based on the value of the underlying investment portfolios. If the values of those investment portfolios decrease, whether due to factors influencing U.S. securities markets in general or otherwise, the Company’s revenue could be negatively impacted. In addition, the Company’s ability to sell its brokerage services is dependent, in part, upon consumers’ level of confidence in securities markets.

We may be negatively impacted by customer and regulatory reaction to unrelated bank failures.

In 2023, four highly publicized bank failures occurred. These banks had elevated levels of uninsured deposits, which may be less likely to remain at the bank over time and less stable as a source of funding than insured deposits. These failures led to volatility and declines in the market for bank stocks and questions about depositor confidence in depository institutions. As a result of these failures, there was an increased customer and regulatory focus on funding and liquidity at financial institutions, the composition of their deposits, including the amount of uninsured deposits, the amount of accumulated other comprehensive loss, capital levels and interest rate risk management. If we are unable to meet the liquidity expectations of our customers and regulatory agencies, it may have a material adverse effect on our financial condition and results of operations.

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RISKS RELATED TO INVESTMENT IN THE COMPANY’S STOCK

The Corporation is a holding company and relies on dividends from its subsidiaries for substantially all its revenue and its ability to make dividends, distributions and other payments.

The Company is a separate and distinct legal entity from the Bank and depends on the payment of dividends from the Bank for substantially all of its revenues. As a result, the Company's ability to make dividend payments on its common stock depends primarily on certain federal and state regulatory considerations and the receipt of dividends and other distributions from its subsidiaries. There are various regulatory and prudential supervisory restrictions, which may change from time to time, that impact the ability of the Bank to pay dividends or make other payments to the Company. There can be no assurance that the Bank will be able to pay dividends at past levels, or at all, in the future. If the Company does not receive enough cash dividends or is unable to borrow from the Bank, then the Company may not have enough funds to pay dividends to its shareholders, repurchase its common stock or service its debt obligations.

"Anti-takeover" provisions may keep shareholders from receiving a premium for their shares.

The Articles of Incorporation of the Company presently contain certain provisions, such as staggered Board of Directors terms and super majority voting requirements for transactions not approved by the Company’s Board of Directors, which may be deemed to be "anti-takeover" in nature. As such, these provisions may deter, discourage or make more difficult the assumption of control of the Company by another company or person through a tender offer, merger, proxy contest or similar transaction or series of transactions. In addition, provisions of Pennsylvania and applicable federal banking laws could similarly make it more difficult for a third party to acquire control of the Company. The overall effects of the "anti-takeover” provisions may be to discourage, make costlier or more difficult, or prevent a future takeover offer, even if shareholders may desire the Company to pursue the takeover offer. These provisions may also increase the possibility that a future bidder for control of the Company will be required to act through arms-length negotiation with the Company’s Board of Directors.

If the Company fails to maintain an effective system of internal controls, it may not be able to accurately report its financial results or prevent fraud. As a result, current and potential shareholders could lose confidence in the Company’s financial reporting, which could harm its business and the trading price of its common stock.

The Company has established a process to document and evaluate its internal controls over financial reporting to satisfy the requirements of Section 404(a) of the Sarbanes-Oxley Act of 2002 and related regulations, which require annual management assessments of the effectiveness of the Company’s internal controls over financial reporting. In this regard, management has dedicated internal resources, engaged outside consultants and adopted a detailed work plan to (i) assess and document the adequacy of internal controls over financial reporting, (ii) take steps to improve control processes, where appropriate, (iii) validate through testing that controls are functioning as documented and (iv) maintain a continuous reporting and improvement process for internal control over financial reporting.

As described in Note 27 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2023, the Company reached a determination to restate its consolidated financial statements and related disclosures as of and for the years ended December 31, 2023 and 2022 due to identifying an error related to the Company’s capitalization of costs, which should have been expensed in the period incurred. Management has concluded through testing, the controls implemented to remediate this issue are operating effectively.

The Company’s efforts to comply with Section 404(a) of the Sarbanes-Oxley Act of 2002 and the related regulations regarding the Company’s assessment of its internal controls over financial reporting are likely to continue to result in increased expenses. The Company’s management and audit committee have given the Company’s compliance with Section 404(a) a high priority. The Company cannot be certain that these measures will ensure that the Company implements and maintains adequate controls over its financial processes and reporting in the future. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm the Company’s operating results or cause the Company to fail to meet its reporting obligations. If the Company fails to correct any issues in the design or operating effectiveness of internal controls over financial reporting or fails to prevent fraud, current and potential

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shareholders could lose confidence in the Company’s financial reporting, which could harm its business and the trading price of its common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

Risk Management and Strategy

Juniata’s risk management program is designed to identify, assess and mitigate risks across various aspects of the Company, including credit, market, treasury, operational, compliance and reputational. Cybersecurity is a critical component of this program, given the increasing reliance on technology and potential for a cybersecurity incident to occur, which could disrupt business operations or compromise sensitive data. Juniata’s Information Security Officer (“ISO”) and SVP/IT Manager are primarily responsible for the cybersecurity component of the risk management program and are key members of the organization, both of which have a clear line of reporting directly to the Board of Directors and are involved with management’s Information Technology (“IT”) Steering Committee. To date, the Company has not, to its knowledge, experienced an incident materially affecting or reasonably likely to materially affect the Company.

Juniata’s policies, standards, processes and practices for assessing, identifying and managing material risks from cybersecurity threats are based on the framework established by the Federal Financial Institutions Examination Council (“FFIEC”) Guidelines and Cybersecurity Assessment Tool (“CAT”), which consists of controls designed to identify, protect, detect, respond and recover from information and cyber security incidents. The FFIEC CAT tool will no longer be updated after August 31, 2025, therefore, JVB will replace this tool with another tool such as the NIST 2.0 standard.

To prepare and respond to incidents, the Company has implemented a multi-layered cybersecurity program that is intended to comply with Gramm-Leach-Bliley Act 12 CFR 364, Appendix B, integrating people, technology, and processes. The program includes company-wide employee training, the use of innovative technologies, and the implementation of policies and procedures in the areas of information security, data governance, business continuity and disaster recovery, privacy, third-party risk management and incident response. Juniata’s objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate, disrupt or misuse its systems or information. The information security program is periodically reviewed by the Company’s SVP/IT Manager and ISO with the goal of addressing changing threats and conditions.

The Company also employs a variety of preventative and detective tools designed to monitor, block, and provide alerts regarding suspicious activity, as well as to report on suspected advanced persistent threats. The Company established processes and systems designed to mitigate cyber risk, including regular and on-going education and training for employees, preparedness simulations and tabletop exercises, and recovery and resilience tests. Juniata engages in regular assessments of its infrastructure, software systems, and network architecture, using internal cybersecurity experts and third-party specialists. The Company also actively monitors its email gateways for malicious phishing email campaigns and remote connections as some of its workforce has the option to work remotely.

The Company relies on third-party vendor solutions to support its operations. Many of these vendors, particularly in the financial services industry, have access to sensitive and proprietary information. To mitigate the operational, informational and other risks associated with the use of vendors, the Company maintains a Vendor Management Policy, which includes a detailed onboarding process and periodic reviews of vendors with access to sensitive Company data. The Vendor Management Policy applies to any business arrangement between the Company and another individual or entity, by contract or otherwise, in compliance with the FFIEC guidelines for third-party risk management. The Vendor Management Policy is audited periodically in accordance with the Board of Directors approved Internal Audit plan.

Juniata leverages internal and external auditors and independent external partners to periodically review its processes, systems and controls, including with respect to its information security program, to assess their design and operating effectiveness and make recommendations to strengthen its information security and risk management programs. Regular

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internal monitoring is integral to the Company’s risk assessment process, which includes regular testing of internal key controls, systems and procedures. In addition, independent third-party penetration testing of the effectiveness of security controls and preparedness measures is conducted at least annually or more often, if warranted, by the risk assessment or other external factors. Management determines the scope and objectives of the penetration analysis.

The Company maintains a Business Continuity Plan (the “Plan”) that provides a documented framework for responding to actual or potential cybersecurity incidents, including timely notification of and escalation to the appropriate Board of Directors-approved management committees, as discussed further below, and to the IT Steering Committee. The Plan is coordinated through the SVP/IT Manager and ISO, and key members of management are embedded into the Plan by their design. The Plan facilitates coordination across multiple parts of the Company and is evaluated at least annually.

Integral elements of the Plan related to the Company’s response to cyber security vulnerabilities include the following:

●

Identifying the appropriate team and any appropriate sub-teams to address specific information and/or cyber security incidents, or categories of information and/or cyber security incidents;

●

Coordinating incident response or crisis management activities, including developing, maintaining, and following appropriate procedures to respond to and document identified information and/or cyber security incidents;

●

Conducting post-incident reviews to gather feedback on information and/or cyber security incident response procedures and address any identified gaps in security measures;

●

Providing company-wide training and conducting periodic exercises to promote employee and stakeholder preparedness and awareness of the Plan; and

●

Reviewing the Plan at least annually, or whenever there is a material change in the Company’s business practices that may reasonably affect its cyber incident response procedures.

Governance

Management has overall responsibility for risk oversight. The Company’s SVP\IT Manager is accountable for managing enterprise information security and delivering the information security program. These responsibilities include cybersecurity risk assessment, defense operations, cyber incident response, vulnerability assessment, threat intelligence, identity access governance, and the evaluation of third party risk management and business resilience as it relates to the cybersecurity program.

The foregoing responsibilities are covered on a day-to-day basis by the SVP/IT Manager and ISO. The ISO has substantial relevant expertise and formal training in the areas of information security and cybersecurity risk management, including 23 years of cybersecurity experience, 19 of which has been spent at a CPA firm specializing in banking industry financial and information technology audits. The ISO provides guidance, oversight, monitoring and challenge of the first line’s activities. The second line of defense function is separated from the first line of defense function through organizational structure and ultimately reports directly to the Board of Directors.

The IT Steering Committee focuses on technology and business impact and is responsible for overseeing the Company’s information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks. The ISO and SVP/IT Manager provide quarterly reports to the IT Steering Committee regarding the information security program and the technology program, key enterprise cybersecurity initiatives and other matters relating to cybersecurity processes. The IT Steering Committee reviews and approves the information security and technology budgets and strategies annually.

The IT Steering Committee focuses on the identification, monitoring, assessment, and management of risk associated with the Company’s cyber and information security programs. The IT Steering Committee reviews key metrics summarizing the Company’s cyber security risk profile on a quarterly basis.

Both the IT Steering Committee and the Board of Directors provide oversight and governance of the technology program and the information security program. Both committees meet at least quarterly to provide oversight of the risk management strategy, standards, policies, practices, controls, and mitigation and prevention efforts employed to manage security risks. More frequent meetings occur from time to time in accordance with the Incident Response Plan (part of the Plan) to

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facilitate timely informing and monitoring efforts. The ISO reports summaries of key issues, including significant cybersecurity incidents discussed at committee meetings and the actions taken to the IT Steering Committee on at least a quarterly basis, or more frequently as may be required by the Incident Response Plan, and to the Board of Directors on at least an annual basis. Additionally, the ISO reports directly to the Board of Directors, at least annually, the overall status of the Information Security Program and the Company’s compliance with the Interagency Guidelines for Safeguarding Customer Information. Any material findings related to the risk assessment, risk management and control decisions, service provider arrangements, results of testing security breaches or violations are discussed, as are management’s responses and any recommendations for program changes.

ITEM 2. PROPERTIES

The physical properties of the Company are all owned or leased by the Bank.

The Bank owns and operates, for banking purposes, the buildings located at:

One South Main Street, Mifflintown, Pennsylvania (branch office)

218 Bridge Street, Mifflintown, Pennsylvania (corporate headquarters)

4068 William Penn Highway, Mifflintown, Pennsylvania (branch office)

1762 Butcher Shop Road, Mifflintown, Pennsylvania (operations center and Trust offices)

301 Market Street, Port Royal, Pennsylvania (branch office)

30580 Rt. 35, McAlisterville, Pennsylvania (branch office)

Four North Market Street, Millerstown, Pennsylvania (branch office)

16400 Path Valley Road, Spring Run, Pennsylvania (branch office)

One East Market Street, Lewistown, Pennsylvania (branch office)

20 Prince Street, Reedsville, Pennsylvania (branch office)

100 West Water Street, Lewistown, Pennsylvania (branch office)

320 South Logan Boulevard, Burnham, Pennsylvania (branch office)

571 Main Street, Richfield, Pennsylvania (branch office)

118 East Second Street, Coudersport, Pennsylvania (branch office)

104 N Front Street, Liverpool, Pennsylvania (branch office)

The Bank leases three offices:

Branch Offices

52 West Mill Street, Port Allegany, Pennsylvania (lease expires June 2028)

Financial Services Office

129 South Main Street, Suite 600, Lewistown, Pennsylvania (lease expires October 2029)

Loan Production Office

120 Regent Court, State College, Pennsylvania (lease expires May 2029)

ITEM 3. LEGAL PROCEEDINGS

At times, the nature of the Company’s and the Bank’s business generates litigation involving matters arising in the ordinary course of business. However, in the opinion of management, there are no proceedings pending to which the Company or the Bank is a party or to which its property is subject, which, if adversely determined, would be material in relation to their financial condition. In addition, no material proceedings are pending or are known to be threatened or contemplated against the Company by government authorities or others.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information:

The common stock of Juniata Valley Financial Corp. is quoted under the symbol “JUVF” on the OTCQX Best Market; an electronic inter-dealer quotation and trading system operated by the OTC Market’s Group.

Transfer Agent:

Computershare Investor Services, P.O. Box 43006, Providence, RI 02940-3006. Phone: (800) 368-5948. Website: www.computershare.com/investor.

Holders:

As of February 28, 2025, there were 1,575 registered holders of the Company’s outstanding common stock.

For information concerning the Company’s Equity Compensation Plans, see “Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”.

Dividends

Cash dividends of $0.88 per share were declared in each of 2024 and 2023. As stated in Note 14 – Stockholders’ Equity and Regulatory Matters, in The Notes to Consolidated Financial Statements, the Company is subject to regulatory capital requirements that limit the amount of capital available for dividends. While the Company expects to continue its policy of regular dividend payments, no assurance of future dividend payments can be given. Future dividend payments will depend upon the Company’s and the Bank’s financial condition, earnings, capital and regulatory requirements, prospects, business conditions and other factors deemed relevant by the Board of Directors.

Annual Meeting:

The Annual Meeting of Shareholders of Juniata Valley Financial Corp. will be held at 10:30 a.m., on Tuesday, May 20, 2025, virtually via the internet at meetnow.global/MA99RZK.

Recent Sales of Unregistered Securities:

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers:

The Company periodically repurchases shares of its common stock under a share repurchase program approved by the Board of Directors. In November of 2021, the Board of Directors authorized the repurchase of an additional 200,000 shares of its common stock through the Company’s share repurchase program for a total of 209,307 shares authorized to be repurchased at that time. The program will remain authorized until all approved shares are repurchased, unless terminated by the Board of Directors. There were no shares purchased under the program during the fourth quarter of 2024. As of December 31, 2024, 180,504 shares remained available to purchase under the program.


				Total Number of
	Total Number			Shares Purchased as	Maximum Number of
	of Shares	Average		Part of Publicly	Shares that May Yet Be
	Purchased or Restricted	Price Paid		Announced Plans or	Purchased Under the
Period	Shares Forfeited	per Share		Programs	Plans or Programs (1)
October 1-31, 2024	—	$	—	—	180,504
November 1-30, 2024	—		—	—	180,504
December 1-31, 2024	—		—	—	180,504

Totals	—			—	180,504

ITEM 6. RESERVED

Not applicable.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THREE-YEAR FINANCIAL SUMMARY

(Dollars in thousands, except share and per share data)


	2024			2023			2022
BALANCE SHEET INFORMATION at December 31
Assets	$	848,874		$	870,555		$	829,619
Deposits		747,957			749,045			711,512
Loans, net of allowance for credit losses		527,686			519,717			480,485
Investments		265,903			282,729			287,966
Goodwill		9,812			9,812			9,047
Short-term borrowings and repurchase agreements		42,242			52,810			55,710
Long-term debt		5,000			20,000			20,000
Stockholders’ equity		47,457			40,137			35,693
Number of shares outstanding		5,003,384			4,991,129			5,003,059

Average for the year
Assets		859,551			838,706			819,153
Stockholders’ equity		43,895			36,241			50,151
Weighted average shares outstanding for the year - basic		5,000,833			5,009,787			4,999,980
Weighted average shares outstanding for the year - diluted		5,010,310			5,018,449			5,008,512

INCOME STATEMENT INFORMATION
Years Ended December 31
Total interest income	$	37,116		$	33,181		$	27,555
Total interest expense		14,187			10,489			3,422
Net interest income		22,929			22,692			24,133
Provision for credit losses		534			500			455
Non-interest income		5,825			5,321			5,225
Non-interest expense		21,012			19,947			21,531
Income before income taxes		7,208			7,566			7,372
Federal income tax expense		979			970			308
Net income	$	6,229		$	6,596		$	7,064

PER SHARE DATA
Earnings per share - basic	$	1.25		$	1.32		$	1.41
Earnings per share - diluted		1.24			1.31			1.41
Cash dividends		0.88			0.88			0.88
Book value		9.48			8.04			7.13

FINANCIAL RATIOS
Return on average assets		0.72	%		0.79	%		0.86	%
Return on average equity		14.19			18.20			14.09
Dividend payout		70.63			66.80			62.30
Average equity to average assets		5.11			4.32			6.12
Loans to deposits (year-end)		70.55			69.38			67.53
Yield on earning assets		4.35			3.96			3.50
Cost to fund earning assets		2.31			1.75			0.60
Non-interest income to average assets		0.68			0.63			0.64
Non-interest expense to average assets		2.44			2.38			2.63
Net non-interest expense to average assets		1.77			1.74			1.81

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FORWARD-LOOKING STATEMENTS

The information contained in this Annual Report on Form 10-K 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 Corporation’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 Corporation’s business or financial results. When words such as "may”, "should”, "will”, "could”, "estimates”, "predicts”, "potential”, "continue”, "anticipates”, "believes”, "plans”, "expects”, "future”, "intends”, “projects”, the negative of these terms and other comparable terminology are used in this document, 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, without limitation:

●

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 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;

●

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 address cybersecurity 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;

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●

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; and

●

the failure to maintain effective internal control over financial reporting.

OVERVIEW

This discussion relates to Juniata Valley Financial Corp. (the “Company” or “Juniata”) and its wholly owned subsidiary, The Juniata Valley Bank (the “Bank”). Juniata is a bank holding company that delivers financial services through the Bank within its market, primarily central and northern Pennsylvania. The Bank provides retail and commercial banking, trust, estate, and wealth management services through offices located in Juniata, Mifflin, Perry, McKean, Potter, Franklin and Centre Counties.

The overview is intended to provide a context for the following Management’s Discussion and Analysis of Financial Condition and Results of Operations. Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements, including the notes thereto, included in this Annual Report on Form 10-K. We have attempted to identify the most important matters on which our management focuses in evaluating our financial condition and operating performance and the short-term and long-term opportunities, challenges and risks (including material trends and uncertainties) that we face. We also discuss the actions we are taking to address these opportunities, challenges and risks. The Overview is not intended as a summary of, or a substitute for review of, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

ECONOMIC AND INDUSTRY-WIDE FACTORS RELEVANT TO JUNIATA

As a financial services organization, Juniata’s core business is most influenced by the level of, and movement of, interest rates. Lending and investing are done daily, using funding from deposits and borrowings, resulting in net interest income, the most significant portion of operating results. Using asset/liability management tools, the Company continually evaluates the effects that possible changes in interest rates could have on operating results and balance sheet growth. Using this information, along with analysis of competitive factors, management designs and prices its products and services.

General economic conditions are relevant to Juniata’s business. In addition, economic factors impact customers’ needs for financing, thus affecting loan growth. Additionally, changes in the economy can directly impact the credit strength of existing and potential borrowers.

FOCUS OF MANAGEMENT

The management of Juniata believes that it is important to know who and what we are to be successful. We must be aligned in our efforts to achieve goals. We have identified the four characteristics that define the Company and the personnel that support it. We are Committed, Capable, Caring and Connected. Management seeks to be the preeminent financial institution in its market area and measures its success in achieving our goals by the five key elements described below.

SHAREHOLDER SATISFACTION

Above all else, management is committed to maximizing the value of our shareholders’ investment, through both stock value appreciation and dividend returns. Remaining connected to our communities is intended to allow us to identify the financial needs of our market and to deliver those products and services capably. 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.

CUSTOMER RELATIONSHIPS

We are committed 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 are committed to 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 provide connection through every means available, wherever we are needed, whether through a stand-alone branch, in-store boutique, ATM or via online, mobile banking or

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our newest offering, mobile wallet, anywhere internet or cell phone signals can be received because we are committed to optimizing the customer experience.

BALANCE SHEET GROWTH

We are capable of 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 paying careful 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.

OPERATING RESULTS

We are capable of producing solid results from operations. Recognizing that net interest margins have narrowed for banks in general and that these margins may not return to the ranges experienced in the past, we focus on the importance of providing fee-generating services in which customers find value. Offering a broad array of services prevents us from becoming too reliant on one form of revenue. It has also been our philosophy to spend conservatively and to implement operating efficiencies where possible to keep non-interest expense from escalating in areas that can be controlled.

CONNECTION TO THE COMMUNITY

We are active corporate citizens, connected to the communities we serve. Although the world of banking has transitioned to global availability through electronics, we believe that our community banking philosophy is not only still valid, but essential. Despite technological advances, banking is still a personal business, particularly in the rural areas we serve. We believe that our customers shop for services and value a relationship with an institution involved in the same community, with the same interests in its prosperity. We have a foundation and a history in each of the communities we serve. Management takes an active role in local business and industry development organizations to help attract and retain commerce in our market area. We provide businesses, large and small, with financial tools and financing needed to grow and prosper. And though these tools are electronically driven, they are custom designed by relationship managers who take time to understand the need. We have always been committed to responsible lending practices. We invest locally by including local municipal bonds in our investment portfolio and participating in funding for such projects as low income and elderly housing. We support charitable programs that benefit the local communities, not only with monetary contributions, but also through the personal involvement of our caring employees.

JUNIATA’S OPPORTUNITIES

SOUNDNESS AND STABILITY

Our financial condition is strong. We enjoy strong liquidity ratios, as well as capital ratios that exceed regulatory guidelines. Our business model includes a plan for growth without sacrificing profitability or integrity. We believe an opportunity exists for banks such as ours to offer the trusted, personal service of a locally managed institution that has had roots in the community for over 150 years.

EXPANSION OF CUSTOMER BASE

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,

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through the acquisition of remaining shares of LCB. In 2023, we expanded into Franklin County, Pennsylvania, through the purchase of a branch office.

DELIVERY SYSTEM ENHANCEMENTS

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.

JUNIATA’S CHALLENGES

NET INTEREST MARGIN COMPRESSION

COMPETITION

Each year, competition becomes more intense and global in nature. To meet this challenge, we attempt to stay in close contact with our customers, monitoring their satisfaction with our services through surveys, personal visits and networking in the communities we serve. We strive to meet or exceed our customers’ expectations and deliver consistent high-quality service. We believe that our customers have become acutely aware of the value of local service, and we strive to maintain their confidence.

RATE ENVIRONMENT

We intend to continue making what we believe to be rational pricing decisions for loans, deposits and non-deposit products. This strategy can be difficult to maintain, as many of our peers appear to continue pricing for growth, rather than long-term profitability and stability. We believe that a strategy of “growth for the sake of growth” results in lower profitability, and such actions by large groups of banks have had an adverse impact on the entire financial services industry. We intend to maintain our core pricing principles, which we believe protect and preserve our future as a sound community financial services provider, proven by results.

REGULATION

The Company is subject to banking regulation, as well as regulation by the SEC and, as such, must comply with many laws, including the USA Patriot Act, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Management has established a Disclosure Committee for Financial Reporting, an internal group at Juniata that seeks to ensure that current and potential investors in the Company receive full and complete information concerning our financial condition and results of operations. Juniata has incurred direct and indirect costs associated with compliance with the SEC’s filing and reporting requirements imposed on public companies by the Sarbanes-Oxley Act, as well as adherence to new and existing banking regulations and stronger corporate governance requirements.

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APPLICATION OF CRITICAL ACCOUNTING POLICIES

The Company’s consolidated financial statements are prepared based upon the application of accounting principles generally accepted in the United States of America (“GAAP”), the most significant of which are described in Note 2 of The Notes to Consolidated Financial Statements – Summary of Significant Accounting Policies. Certain of these policies, particularly with respect to allowance for credit losses and the investment portfolio, require numerous estimates and economic assumptions, based upon information available as of the date of the consolidated financial statements. As such, over time, these assumptions may prove to be inaccurate or vary and may significantly affect the Company’s reported results and financial position in future periods.

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.

RESULTS OF OPERATIONS

2024 AND 2023 FINANCIAL PERFORMANCE OVERVIEW

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.

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.

Juniata strives to attain consistently satisfactory earnings levels each year by protecting the core (repeatable) earnings base through conservative growth strategies that seek to minimize shareholder and balance-sheet risk, while serving its rural Pennsylvania customer base. This approach has helped achieve solid performances year after year. The Company considers the return on assets ratio to be a key indicator of its success and constantly scrutinizes the broad categories of the income statement that impact this profitability indicator.

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Summarized below are the components of net income and the contribution of each to ROA for 2024 and 2023.


(Dollars in thousands)	2024				2023
	Net Income		% of Average		Net Income		% of Average
	Components		Assets		Components		Assets
Net interest income	$	22,929	2.67	%	$	22,692	2.71	%
Provision for credit losses		(534)	(0.06)			(500)	(0.06)

Customer service fees		1,767	0.21			1,376	0.16
Debit card fee income		1,752	0.20			1,770	0.21
Earnings on bank-owned life insurance and annuities		236	0.03			222	0.03
Trust fees		469	0.05			466	0.06
Commissions from sales of non-deposit products		388	0.05			337	0.04
Fees derived from loan activity		682	0.08			500	0.06
Change in value of equity securities		115	0.01			17	0.00
Gain from life insurance proceeds		56	0.01			161	0.02
Other noninterest income		360	0.04			472	0.05
Total noninterest income		5,825	0.68			5,321	0.63

Employee expense		(11,470)	(1.33)			(10,809)	(1.29)
Occupancy and equipment		(2,275)	(0.26)			(1,948)	(0.23)
Data processing expense		(2,881)	(0.34)			(2,937)	(0.35)
Professional fees		(1,134)	(0.1)			(848)	(0.1)
Taxes, other than income		(191)	(0.02)			(184)	(0.02)
FDIC insurance premiums		(575)	(0.07)			(504)	(0.06)
Gain on sales of other real estate owned		—	—			16	0.00
Intangible amortization		(85)	(0.01)			(81)	(0.01)
Amortization of investment in low-income housing partnership		(322)	(0.04)			(353)	(0.04)
Merger and acquisition expense		—	—			(227)	(0.03)
Other noninterest expense		(2,079)	(0.24)			(2,072)	(0.25)
Total noninterest expense		(21,012)	(2.44)			(19,947)	(2.38)

Income tax provision		(979)	(0.11)			(970)	(0.12)
Net income	$	6,229	0.72	%	$	6,596	0.79	%

Average assets	$	859,551			$	838,706

NET INTEREST INCOME

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.

Both net interest income and net interest margin are impacted by interest rate changes, changes in the relationships between various rates and changes in the composition of the average balance sheet. Additionally, product pricing, product mix and customer preferences dictate the composition of the balance sheet and the resulting net interest income. Table 1 shows average asset and liability balances, average interest rates and interest income and expense for the years 2024, 2023 and 2022. Table 2 further shows changes in net interest income attributable to the volume and rate components of net interest income.

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TABLE 1

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS


	Year Ended						Year Ended						Year Ended
(Dollars in thousands)	December 31, 2024						December 31, 2023						December 31, 2022
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance(1)		Interest		Rate		Balance(1)		Interest		Rate		Balance(1)		Interest		Rate
ASSETS
Interest earning assets:
Loans:
Taxable loans (5)	$	513,249	$	30,342	5.91	%	$	474,060	$	25,876	5.46	%	$	414,208	$	20,429	4.93	%
Tax-exempt loans		23,608		767	3.25			28,169		852	3.02			27,762		798	2.88
Total loans		536,857		31,109	5.79			502,229		26,728	5.32			441,970		21,227	4.80
Investment securities:
Taxable investment securities		305,130		5,749	1.88			324,338		6,193	1.91			332,777		6,077	1.83
Tax-exempt investment securities		5,575		118	2.12			6,478		139	2.15			7,214		155	2.15
Total investment securities		310,705		5,867	1.89			330,816		6,332	1.91			339,991		6,232	1.83

Interest bearing deposits		6,355		140	2.20			5,158		121	2.34			5,423		96	1.78
Federal funds sold		—		—	—			—		—	—			—		—	0.00
Total interest earning assets		853,917		37,116	4.35			838,203		33,181	3.96			787,384		27,555	3.50

Non-interest earning assets:
Cash and due from banks		5,412						6,740						12,968
Allowance for credit losses		(5,874)						(5,677)						(3,713)
Premises and equipment		9,121						8,132						8,257
Other assets (7)		(3,025)						(8,692)						14,257
Total assets	$	859,551					$	838,706					$	819,153

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest bearing liabilities:
Interest bearing demand deposits (2)	$	207,438		3,684	1.78		$	214,785		2,789	1.30		$	236,438		1,030	0.44
Savings deposits		132,416		66	0.05			137,665		69	0.05			149,909		75	0.05
Time deposits		205,583		7,417	3.61			184,165		5,389	2.93			136,472		1,472	1.08
Short-term and long-term borrowings and other interest bearing liabilities		68,612		3,020	4.40			63,163		2,242	3.55			45,326		845	1.86
Total interest bearing liabilities		614,049		14,187	2.31			599,778		10,489	1.75			568,145		3,422	0.60

Non-interest bearing liabilities:
Demand deposits		194,727						196,447						195,301
Other		6,880						6,240						5,556
Stockholders’ equity		43,895						36,241						50,151
Total liabilities and stockholders’ equity	$	859,551					$	838,706					$	819,153
Net interest income and net interest rate spread			$	22,929	2.04	%			$	22,692	2.21	%			$	24,133	2.90	%
Net interest margin on interest earning assets (3)					2.69	%					2.71	%					3.06	%
Net interest income and net interest margin - Tax equivalent basis (4)			$	23,164	2.71	%			$	22,955	2.74	%			$	24,386	3.10	%

Notes:

On the following page.

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TABLE 2

RATE/VOLUME ANALYSIS OF NET INTEREST INCOME


(Dollars in thousands)	2024 Compared to 2023						2023 Compared to 2022
	Increase (Decrease) Due To (6)						Increase (Decrease) Due To (6)
	Volume		Rate		Total		Volume		Rate		Total
ASSETS
Interest earning assets:
Loans:
Taxable (5)	$	2,139	$	2,327	$	4,466	$	2,952	$	2,495	$	5,447
Tax-exempt		(138)		53		(85)		12		42		54
Total loans (8)		2,001		2,380		4,381		2,964		2,537		5,501
Investment securities:
Taxable		(367)		(77)		(444)		(154)		270		116
Tax-exempt		(19)		(2)		(21)		(16)		—		(16)
Total investment securities		(386)		(79)		(465)		(170)		270		100
Interest bearing deposits		28		(9)		19		(4)		29		25
Total interest earning assets		1,643		2,292		3,935		2,790		2,836		5,626
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest bearing liabilities:
Demand deposits (2)	$	(95)	$	990	$	895	$	(95)	$	1,854	$	1,759
Savings deposits		(3)		—		(3)		(6)		—		(6)
Time deposits		627		1,401		2,028		515		3,402		3,917
Other, including short and long-term borrowings, and other interest bearing liabilities		193		585		778		333		1,064		1,397
Total interest bearing liabilities		722		2,976		3,698		747		6,320		7,067
Net interest income	$	921	$	(684)	$	237	$	2,043	$	(3,484)	$	(1,441)

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 using 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 average net unrealized losses on debt securities: $45.4 million, $51.9 million and $25.7 million in 2024, 2023 and 2022, respectively.

(8)	Interest income includes loan fees of $130,000, $117,000 and $596,000 in 2024, 2023 and 2022, respectively.

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.

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.

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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.

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.

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.

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.

PROVISION FOR CREDIT LOSSES

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.

NON-INTEREST INCOME

The Company remains committed to providing comprehensive services and products to meet the current and future financial needs of its customers. Juniata believes its responsiveness to customers’ needs surpasses that of many of its competitors and measures its success by the customer acceptance of fee-based services. The Company continually explores avenues to enhance product offerings in areas beneficial to its customers, such as adding new features and services for its electronic banking clientele. Fraud protection services are made available to all consumer depositors. Juniata offers a variety of options for financing to home-buyers that includes a mortgage referral program, providing significant fee income. Juniata also provides alternative investment opportunities through an arrangement with a broker-dealer that integrates the delivery of non–traditional products with Juniata’s Trust and Wealth Management Division. This arrangement enables Juniata to meet the investment needs of a varied customer base and to better identify its clients’ needs for traditional trust services.

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.

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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.

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.

As a percentage of average assets, non-interest income was 0.68% and 0.63%, respectively in 2024 and 2023.

NON-INTEREST EXPENSE

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.

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.

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.

As a percentage of average assets, non-interest expense was 2.44% in 2024 as compared to 2.38% in 2023.

INCOME TAXES

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.

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.

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FINANCIAL CONDITION

BALANCE SHEET SUMMARY

Juniata functions as a financial intermediary and, as such, its financial condition can be best analyzed in terms of changes in its uses and sources of funds and can also be analyzed in terms of changes in daily average balances. The table below sets forth average daily balances for the last two years and the dollar change and percentage change for the past year.

TABLE 3

CHANGES IN USES AND SOURCES OF FUNDS


(Dollars in thousands)	2024						2023
	Average		Increase (Decrease)				Average
	Balance		Amount		%		Balance
Funding Uses:
Taxable loans	$	513,249	$	39,189	8.3	%	$	474,060
Tax-exempt loans		23,608		(4,561)	(16.2)			28,169
Taxable securities		305,130		(19,208)	(5.9)			324,338
Tax-exempt securities		5,575		(903)	(13.9)			6,478
Interest bearing deposits		6,355		1,197	23.2			5,158
Total interest earning assets		853,917		15,714	1.9			838,203
Investment in:
Low income housing		1,005		(324)	(24.4)			1,329
BOLI and annuities		15,092		132	0.9			14,960
Goodwill and intangible assets		10,116		431	4.5			9,685
Unrealized gains (losses) on securities		(45,386)		6,562	(12.6)			(51,948)
Other non-interest earning assets		30,681		(1,473)	(4.6)			32,154
Less: Allowance for credit losses		(5,874)		(197)	3.5			(5,677)
Total uses	$	859,551	$	20,845	2.5	%	$	838,706

Funding Sources:
Interest bearing demand deposits	$	207,438	$	(7,347)	(3.4)	%	$	214,785
Savings deposits		132,416		(5,249)	(3.8)			137,665
Time deposits under $100		110,519		1,323	1.2			109,196
Time deposits over $100		95,064		20,095	26.8			74,969
Repurchase agreements		15,258		5,390	54.6			9,868
Short-term borrowings		41,316		8,980	27.8			32,336
Long-term debt		11,189		(8,811)	(44.1)			20,000
Other interest bearing liabilities		849		(110)	(11.5)			959
Total interest bearing liabilities		614,049		14,271	2.4			599,778
Demand deposits		194,727		(1,720)	(0.9)			196,447
Other liabilities		6,880		640	10.3			6,240
Stockholders’ equity		43,895		7,654	21.1			36,241
Total sources	$	859,551	$	20,845	2.5	%	$	838,706

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.

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A more detailed discussion of the Company’s earning assets and interest bearing liabilities will follow in the Sections titled “Loans”, “Investments” and “Deposits”.

LOANS

Loans outstanding at the end of each year consisted of the following:


(Dollars in thousands)
	Years Ended December 31,
	2024		2023		2022		2021		2020
Commercial, financial and agricultural	$	68,234	$	65,821	$	61,458	$	62,639	$	73,057
Real estate - commercial		247,582		223,077		199,206		159,806		122,698
Real estate - construction		37,827		52,589		50,748		43,281		61,051
Real estate - mortgage		162,771		162,385		150,290		131,754		141,438
Obligations of states and political subdivisions		13,850		17,232		18,770		16,323		18,550
Personal		3,605		4,290		4,040		4,500		5,867
Total	$	533,869	$	525,394	$	484,512	$	418,303	$	422,661

The following table summarizes how the ending balances changed in each of the last two years.


(Dollars in thousands)
	2024		2023
Beginning balance	$	525,394	$	484,512
Net new loans		7,834		40,176
Loans charged off		(40)		(47)
Loans transferred to other real estate owned		—		(39)
Loans transferred to repossessions		(10)		—
Other adjustments to carrying value		691		792
Net change		8,475		40,882
Ending balance	$	533,869	$	525,394

The following table presents the maturity distribution and amount of loans with fixed and variable interest rates as of December 31, 2024.



			After 1 Year		After 5 Years
(Dollars in thousands)	Within		But Within		But Within		After
	1 Year		5 Years		15 Years		15 Years		Total
Loans with Fixed Interest Rates
Commercial, financial, and agricultural	$	1,327	$	11,496	$	13,122	$	85	$	26,030
Real estate - commercial		2,366		15,742		20,290		6,319		44,717
Real estate - construction:
1-4 family residential construction		—		—		—		1,172		1,172
Other construction loans		39		4,494		2,925		1,303		8,761
Real estate - mortgage		1,007		6,343		43,545		51,537		102,432
Other loans		218		5,482		7,139		9		12,848
Total	$	4,957	$	43,557	$	87,021	$	60,425	$	195,960
Loans with Variable Interest Rates
Commercial, financial, and agricultural	$	7,268	$	27,862	$	6,091	$	983	$	42,204
Real estate - commercial		1,076		28,624		84,174		88,991		202,865
Real estate - construction:
Other construction loans		8,327		5,532		1,334		12,701		27,894
Real estate - mortgage		465		3,886		29,224		26,764		60,339
Other loans		—		107		914		3,586		4,607
Total	$	17,136	$	66,011	$	121,737	$	133,025	$	337,909
Total loans	$	22,093	$	109,568	$	208,758	$	193,450	$	533,869

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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:


(Dollars in thousands)
NAIC Definition	Outstanding Balance		% of Bank Capital
Lessors of residential buildings and dwellings	$	63,142	82.66	%
Lessors of non-residential buildings		48,842	63.94
Hotels and motels		36,429	47.69
New housing for-sale builders		18,879	24.71
Continuing care retirement communities		13,174	17.25
Total	$	180,466	153.59	%

Given the reserves allocated to this sector over the years and the continued economic and market uncertainty, management continues to assess a concentration risk factor to this group of loans when analyzing the adequacy of the allowance for credit losses. See Note 6 of The Notes to Consolidated Financial Statements.

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.

Juniata strives to offer fair, competitive rates and to provide optimal service to attract loan growth and will continue to place emphasis on attracting the entire customer relationship of our borrowers.

The loan portfolio carries the potential risk of past due, non-performing or, ultimately, charged-off loans. The Bank attempts to manage this risk through credit approval standards and aggressive monitoring and collection efforts. Where prudent, the Bank secures commercial loans with collateral consisting of real and/or tangible personal property. The Company maintains a dedicated credit administration division, in response to the need for heightened credit review, both in the loan origination process and in the ongoing risk assessment process. Juniata’s lending strategy and credit standards stress quality growth, diversified by product. A standardized credit policy is in place throughout the Company, and the credit committee of the Board of Directors reviews and approves all loan requests for amounts that exceed management’s approval levels. The Company makes credit judgments based on a customer’s existing debt obligations, collateral, ability to pay and general economic trends. See Note 2 of The Notes to Consolidated Financial Statements.

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.

The Company adopted ASC 326 using the prospective transition approach for financial assets purchased with credit deterioration (“PCD”) that were previously classified as purchased credit impaired (“PCI”) and accounted for under ASC 310-30. In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption.

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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.

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.

TABLE 4

NON-PERFORMING LOANS


(Dollars in thousands)	December 31, 2024			December 31, 2023
Non-performing loans
Non-accrual loans	$	496		$	4,952
Accruing loans past due 90 days or more		119			—
Total	$	615		$	4,952

Loans outstanding	$	533,869		$	525,394

Ratio of non-performing loans to loans outstanding		0.12	%		0.94	%
Ratio of non-accrual loans to loans outstanding		0.09	%		0.94	%
Allowance for credit losses to non-accrual loans		1,246.57	%		114.64	%

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.

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.

ALLOWANCE FOR CREDIT LOSSES (“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 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.

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.

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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 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.

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.

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.

The quantitative general allowance was $3.0 million at December 31, 2024 and $2.5 million at December 31, 2023.

In addition to the quantitative analysis, a qualitative analysis is performed each quarter to provide 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.

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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 credit 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 changes and loan review controls, require less allocation.

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.

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.

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.

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A summary of activity in the allowance for credit losses for the last five years is shown below.


(Dollars in thousands)	Years Ended December 31,
	2024		2023		2022		2021		2020
Balance of allowance - beginning of period	$	5,677	$	4,027	$	3,508	$	4,094	$	2,961
Impact of adopting ASC 326		—		757		—		—		—
Initial allowance on loans purchased with credit deterioration		—		354		—		—		—
Loans charged off:
Commercial, financial and agricultural		—		—		—		—		(7)
Real estate - mortgage		—		(19)

JUNIATA VALLEY FINANCIAL CORP 10-K