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Juniata Valley Financial Corp.

03/25/2026 | Press release | Distributed by Public on 03/25/2026 11:42

Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)

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)


		2025			2024			2023
BALANCE SHEET INFORMATION at December 31
Assets		$	895,263		$	848,874		$	870,555
Deposits			781,799			747,957			749,045
Loans, net of allowance for credit losses			594,295			527,686			519,717
Investments			247,329			265,903			282,729
Goodwill			9,812			9,812			9,812
Short-term borrowings and repurchase agreements			49,906			42,242			52,810
Long-term debt			-			5,000			20,000
Stockholders' equity			57,373			47,457			40,137
Number of shares outstanding			5,018,799			5,003,384			4,991,129

Average for the year
Assets			869,660			859,551			838,706
Stockholders' equity			52,181			43,895			36,241
Weighted average shares outstanding for the year - basic			5,016,012			5,000,833			5,009,787
Weighted average shares outstanding for the year - diluted			5,030,603			5,010,310			5,018,449

INCOME STATEMENT INFORMATION
Years Ended December 31
Total interest income		$	38,975		$	37,116		$	33,181
Total interest expense			13,617			14,187			10,489
Net interest income			25,358			22,929			22,692
Provision for credit losses			923			534			500
Non-interest income			5,769			5,825			5,321
Non-interest expense			20,831			21,012			19,947
Income before income taxes			9,373			7,208			7,566
Federal income tax expense			1,390			979			970
Net income		$	7,983		$	6,229		$	6,596

PER SHARE DATA
Earnings per share - basic		$	1.59		$	1.25		$	1.32
Earnings per share - diluted			1.59			1.24			1.31
Cash dividends			0.88			0.88			0.88
Book value			11.43			9.48			8.04

FINANCIAL RATIOS
Return on average assets			0.92	%		0.72	%		0.79	%
Return on average equity			15.30			14.19			18.20
Dividend payout			55.28			70.63			66.80
Average equity to average assets			6.00			5.11			4.32
Loans to deposits (year-end)			76.02			70.55			69.38
Yield on earning assets			4.53			4.35			3.96
Cost to fund earning assets			2.22			2.31			1.75
Non-interest income to average assets			0.66			0.68			0.63
Non-interest expense to average assets			2.40			2.44			2.38
Net non-interest expense to average assets			1.73			1.77			1.74

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 Company's future financial performance, expected levels of future expenses, including future credit losses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in the Company's business or financial results. When words such as "may", "should", "will", "could", "estimates", "predicts", "potential", "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;

●

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

●

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

●

the failure to maintain effective internal control over financial reporting;

●

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

●

the potential effects stablecoin could have on our deposits and related fee income.

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 or ATM, and anywhere internet or cell phone signals can be received via online and mobile banking, mobile wallet, or our newest offering, Greenlight, which is a financial literacy app for families, 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. Through disciplined loan and deposit pricing, we have improved our net interest margin. We also 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 support charitable programs that benefit the local communities, not only with monetary contributions, but also through the personal involvement of our caring employees.

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 significant estimates. If a loan no longer demonstrates similar risk characteristics to the loan pool to which it is assigned (for a collective risk assessment), it is removed from the pool and an individual assessment is 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

2025 AND 2024 FINANCIAL PERFORMANCE OVERVIEW

Net income for Juniata in 2025 was $8.0 million, an increase of 28.2%, compared to net income of $6.2 million for 2024. Earnings per share on a fully diluted basis increased 28.2%, to $1.59, in 2025, compared to $1.24 in 2024. Return on average assets ("ROA") for the years ended December 31, 2025 and December 31, 2024 was 0.92% and 0.72%, respectively, while the return on average equity ("ROE") for 2025 was 15.30% compared to 14.19% in 2024.

The net interest margin, on a fully tax-equivalent basis, increased from 2.71% in 2024 to 2.98% in 2025. The yield on earning assets increased 18 basis points, to 4.53%, while the cost of funds decreased nine basis points, to 2.22%, in 2025 compared to 2024.

Juniata strives to attain consistently satisfactory earnings levels each year by protecting the core 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 generally resulted in 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.

Summarized below are the components of net income and the contribution of each to ROA for 2025 and 2024.


(Dollars in thousands)	2025				2024
	Net Income		% of Average		Net Income		% of Average
	Components		Assets		Components		Assets
Net interest income	$	25,358	2.92	%	$	22,929	2.67	%
Provision for credit losses		(923)	(0.11)			(534)	(0.06)

Customer service fees		1,868	0.21			1,767	0.21
Debit card fee income		1,773	0.20			1,752	0.20
Earnings on bank-owned life insurance and annuities		263	0.03			236	0.03
Trust fees		444	0.05			469	0.05
Commissions from sales of non-deposit products		280	0.03			388	0.05
Fees derived from loan activity		681	0.08			682	0.08
Change in value of equity securities		131	0.02			115	0.01
Gain from life insurance proceeds		30	0.00			56	0.01
Other noninterest income		299	0.03			360	0.04
Total noninterest income		5,769	0.66			5,825	0.68

Employee compensation expense		(9,151)	(1.05)			(9,022)	(1.05)
Employee benefits		(2,141)	(0.25)			(2,448)	(0.28)
Occupancy and equipment		(2,201)	(0.25)			(2,275)	(0.26)
Data processing expense		(2,898)	(0.33)			(2,881)	(0.34)
Professional fees		(1,024)	(0.1)			(1,134)	(0.1)
Taxes, other than income		(162)	(0.02)			(191)	(0.02)
FDIC insurance premiums		(514)	(0.06)			(575)	(0.07)
Intangible amortization		(68)	(0.01)			(85)	(0.01)
Amortization of investment in low-income housing partnership		(322)	(0.04)			(322)	(0.04)
Other noninterest expense		(2,350)	(0.27)			(2,079)	(0.24)
Total noninterest expense		(20,831)	(2.40)			(21,012)	(2.44)

Income tax provision		(1,390)	(0.16)			(979)	(0.11)
Net income	$	7,983	0.92	%	$	6,229	0.72	%

Average assets	$	869,660			$	859,551

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 81% of total revenues (the total of net interest income and non-interest income, exclusive of gains on sales and calls of securities) for 2025. Interest spread measures the absolute difference between average rates earned and average rates paid. The net interest margin is expressed as the percentage of net interest income, on a fully taxable equivalent basis, to average interest earning assets. To compare the tax-exempt asset yields to taxable yields, amounts are adjusted to the pretax equivalent amounts based on the corporate federal income tax rate of 21%. The taxable equivalent adjustment to net interest income for 2025 was $278,000 compared to $235,000 in 2024.

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 1shows average asset and liability balances, average interest rates and interest income and expense for the years 2025, 2024 and 2023. Table 2further shows changes in net interest income attributable to the volume and rate components of net interest income.

TABLE 1

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS


	Year Ended						Year Ended						Year Ended
(Dollars in thousands)	December 31, 2025						December 31, 2024						December 31, 2023
	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)	$	537,373	$	32,499	6.05	%	$	513,249	$	30,342	5.91	%	$	474,060	$	25,876	5.46	%
Tax-exempt loans		25,013		926	3.70			23,608		767	3.25			28,169		852	3.02
Total loans		562,386		33,425	5.94			536,857		31,109	5.79			502,229		26,728	5.32
Investment securities:
Taxable investment securities		285,841		5,359	1.87			305,130		5,749	1.88			324,338		6,193	1.91
Tax-exempt investment securities		5,570		119	2.14			5,575		118	2.12			6,478		139	2.15
Total investment securities		291,411		5,478	1.88			310,705		5,867	1.89			330,816		6,332	1.91

Interest bearing deposits		5,682		72	1.27			6,355		140	2.20			5,158		121	2.35
Total interest earning assets		859,479		38,975	4.53			853,917		37,116	4.35			838,203		33,181	3.96

Non-interest earning assets:
Cash and due from banks		5,033						5,412						6,740
Allowance for credit losses		(6,483)						(5,874)						(5,677)
Premises and equipment		9,258						9,121						8,132
Other assets (7)		2,373						(3,025)						(8,692)
Total assets	$	869,660					$	859,551					$	838,706

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Interest bearing demand deposits (2)	$	210,347		3,589	1.71		$	207,438		3,684	1.78		$	214,785		2,789	1.30
Savings deposits		131,814		66	0.05			132,416		66	0.05			137,665		69	0.05
Time deposits		218,944		7,807	3.57			205,583		7,417	3.61			184,165		5,389	2.93
Short-term and long-term borrowings and other interest bearing liabilities		52,610		2,155	4.10			68,612		3,020	4.40			63,163		2,242	3.55
Total interest bearing liabilities		613,715		13,617	2.22			614,049		14,187	2.31			599,778		10,489	1.75

Non-interest bearing liabilities:
Demand deposits		197,780						194,727						196,447
Other		5,984						6,880						6,240
Stockholders' equity		52,181						43,895						36,241
Total liabilities and stockholders' equity	$	869,660					$	859,551					$	838,706
Net interest income and net interest rate spread			$	25,358	2.31	%			$	22,929	2.04	%			$	22,692	2.21	%
Net interest margin on interest earning assets (3)					2.95	%					2.69	%					2.71	%
Net interest income and net interest margin - Tax equivalent basis (4)			$	25,636	2.98	%			$	23,164	2.71	%			$	22,955	2.74	%

Notes:

On the following page.

TABLE 2

RATE/VOLUME ANALYSIS OF NET INTEREST INCOME


(Dollars in thousands)	2025 Compared to 2024						2024 Compared to 2023
	Increase (Decrease) Due To (6)						Increase (Decrease) Due To (6)
	Volume		Rate		Total		Volume		Rate		Total
ASSETS
Interest earning assets:
Loans:
Taxable (5)	$	1,426	$	731	$	2,157	$	2,139	$	2,327	$	4,466
Tax-exempt		46		113		159		(138)		53		(85)
Total loans (8)		1,472		844		2,316		2,001		2,380		4,381
Investment securities:
Taxable		(363)		(27)		(390)		(367)		(77)		(444)
Tax-exempt		-		1		1		(19)		(2)		(21)
Total investment securities		(363)		(26)		(389)		(386)		(79)		(465)
Interest bearing deposits		(15)		(53)		(68)		28		(9)		19
Total interest earning assets		1,094		765		1,859		1,643		2,292		3,935
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Demand deposits (2)	$	52	$	(147)	$	(95)	$	(95)	$	990	$	895
Savings deposits		-		-		-		(3)		-		(3)
Time deposits		482		(92)		390		627		1,401		2,028
Other, including short and long-term borrowings, and other interest bearing liabilities		(704)		(161)		(865)		193		585		778
Total interest bearing liabilities		(170)		(400)		(570)		722		2,976		3,698
Net interest income	$	1,264	$	1,165	$	2,429	$	921	$	(684)	$	237

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-accruingloans 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: $38.0 million, $45.4 million and $51.9 million in 2025, 2024 and 2023, respectively.

(8)	Interest income includes loan fees of $55,000, $130,000 and $117,000 in 2025, 2024 and 2023, respectively.

Net interest income was $25.4 million for the year ended December 31, 2025. An increase of $1.2 million in both volume and rate, respectively, resulted in an overall increase in net interest income of $2.4 million, or 10.6%, when compared to net interest income of $22.9 million for the comparable 2024 period, which increased by $237,000, or 1.0%, over the comparable 2023 period. Average interest earning assets increased $5.6 million, or 0.7%, to $859.5 million, during the year ended December 31, 2025, compared to the same period in 2024, which increased $15.7 million, or 1.9%, compared to the year ended December 31, 2023.

On average, total loans outstanding increased $25.5 million, or 4.8%, in 2025 compared to 2024. Average total loans outstanding increased $34.6 million, or 6.9%, in 2024 compared to 2023. Average yields on loans increased by 15 basis points in 2025 compared to 2024, which was 47 basis points more than 2023. As shown in Table 2, Rate - Volume Analysis of Net Interest Income, the increase in yield in 2025 increased interest income on loans by approximately $844,000, while the increase in volume raised interest income by $1.5 million compared to 2024, resulting in a net increase in interest recorded on loans of $2.3 million. During 2024, the increase in the yield on loans increased interest income 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.

Average investment securities decreased by $19.3 million, or 6.2%, during 2025. The decrease in volume on investment securities in 2025 accounted for a $363,000 decrease in interest income, while the decrease in yield on investment securities decreased interest income by $26,000, resulting in an aggregate decrease in interest recorded on investment securities of $389,000 in 2025 compared to 2024. Average investment securities decreased by $20.1 million, or 6.1%, during 2024. The decrease in volume of investment securities in 2024 accounted for a $386,000 decrease in interest income, while the decrease in yield on investment securities of $79,000 resulted in an aggregate decrease in interest recorded on investment securities of $465,000 in 2024 compared to 2023. Average yields on investment securities decreased by one basis point in 2025 compared to 2024, which was two basis points less than 2023.

In total, the yield on earning assets in 2025 was 4.53% compared to 4.35% in 2024 and 3.96% in 2023. On a fully tax equivalent basis, the yield on earning assets increased 19 basis points to 4.57% in 2025, from 4.38% in 2024, which increased 39 basis points from 3.99% in 2023.

Average interest bearing liabilities decreased by $334,000, or 0.1%, in 2025 compared to 2024, which increased $14.3 million, or 2.4%, compared to 2023. Average borrowings and other interest bearing liabilities decreased by $16.0 million, or 23.3%, in 2025 compared to 2024, which was partially offset by an increase in interest bearing deposits of $15.7 million, or 2.9%. Average interest bearing deposits increased by $8.8 million, or 1.6%, in 2025 compared to 2024, 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.

Changes in the volume and rate of total interest bearing liabilities, in the aggregate, decreased interest expense by $570,000 in 2025 compared to 2024, while the aggregate changes in volume and rate in 2024 increased interest expense by $3.7 million compared to 2023. The percentage of average interest earning assets funded by average non-interest bearing demand deposits was approximately 23.0% in 2025, compared to 22.8% in 2024, and 23.4% in 2023. The total cost to fund earning assets (computed by dividing the total interest expense by the total average earning assets) in 2025 was 1.58%, compared to 1.66% in 2024 and 1.25% in 2023.

PROVISION FOR CREDIT LOSSES

The Company determined that a provision for credit losses of $923,000 was appropriate for 2025, compared to a provision for credit losses of $534,000 recorded in 2024. 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 2025.

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 it 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, which provides 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 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 for both the years ended December 31, 2025 and December 31, 2024. The majority of the Company's non-interest income is derived from fee-generated income sources. 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 2025, revenues from these services totaled $4.4 million, with increases of $101,000, or 5.7%, in customer service fees and $21,000, or 1.2%, in debit card fee income compared to the year ended 2024. These increases were partially offset by decreases of $25,000, or 5.3%, in trust fees and $108,000, or 27.8%, in commissions from sales of non-deposit products with the latter primarily due to the transition to a new wealth management business model in 2025.

Trust fees decreased in 2025 compared to 2024 due to a decrease in estate settlement fees which were partially offset by an increase in non-estate trust 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 was a decrease of $61,000, or 16.9%, in other non-interest income in 2025 compared to 2024 due to recording a $50,000 net loss on the sale of fixed assets primarily attributed to the loss recorded on the sale of the Port Allegany branch office in 2025.

As a percentage of average assets, non-interest income was 0.66% and 0.68%, respectively, for the years ended 2025 and 2024.

NON-INTEREST EXPENSE

Management strives to control non-interest expense where possible to improve operating results. Non-interest expense was $20.8 million for the year ended December 31, 2025 compared to $21.0 million for the year ended December 31, 2024, a decrease of 0.9%. Most significantly impacting non-interest expense in the comparative year end periods was a decrease in employee benefits expenses of $307,000, or 12.5%, due to a decline in medical claims expenses for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Also impacting the comparative year end periods were decreases of $144,000, or 10.2%, in occupancy expenses and $110,000, or 9.7%, in professional fees. These decreases were partially offset by increases of $129,000, or 1.4%, in employee compensation expense and $205,000, or 192.5%, in the provision for unfunded loan commitments, which is included in other non-interest expense, for the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase in the provision for unfunded loan commitments was due to an increase in loan commitments between periods.

As a percentage of average assets, non-interest expense was 2.40% and 2.44%, respectively, for the years ended 2025 and 2024.

INCOME TAXES

Income tax expense for 2025 was $1.4 million compared to $979,000 in 2024. The increase was due to more taxable income in the 2025 period. Juniata qualifies for a federal tax credit for investments in low-income housing partnerships. The tax credit was $329,000 for both the year ended December 31, 2025 and the year ended December 31, 2024.

Exclusive of the tax credit, the Company recorded income tax expense of $1.7 million in 2025 and $1.3 million in 2024. Juniata's effective tax rate in 2025 was 14.8% versus 13.6% in 2024. See Note 13 of The Notes to Consolidated Financial Statements for further information on income taxes.

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)	2025						2024
	Average		Increase (Decrease)				Average
	Balance		Amount		%		Balance
Funding Uses:
Taxable loans	$	537,373	$	24,124	4.7	%	$	513,249
Tax-exempt loans		25,013		1,405	6.0			23,608
Taxable securities		285,841		(19,289)	(6.3)			305,130
Tax-exempt securities		5,570		(5)	(0.1)			5,575
Interest bearing deposits		5,682		(673)	(10.6)			6,355
Total interest earning assets		859,479		5,562	0.7			853,917
Investment in:
Low-income housing		683		(322)	(32.0)			1,005
BOLI and annuities		15,621		529	3.5			15,092
Goodwill and intangible assets		10,038		(78)	(0.8)			10,116
Unrealized gains (losses) on securities		(37,669)		7,717	(17.0)			(45,386)
Other non-interest earning assets		27,991		(2,690)	(8.8)			30,681
Less: Allowance for credit losses		(6,483)		(609)	10.4			(5,874)
Total uses	$	869,660	$	10,109	1.2	%	$	859,551

Funding Sources:
Interest bearing demand deposits	$	210,347	$	2,909	1.4	%	$	207,438
Savings deposits		131,814		(602)	(0.5)			132,416
Time deposits under $100		112,706		2,187	2.0			110,519
Time deposits over $100		106,238		11,174	11.8			95,064
Repurchase agreements		15,888		630	4.1			15,258
Short-term borrowings		33,902		(7,414)	(17.9)			41,316
Long-term debt		2,082		(9,107)	(81.4)			11,189
Other interest bearing liabilities		738		(111)	(13.1)			849
Total interest bearing liabilities		613,715		(334)	(0.1)			614,049
Demand deposits		197,780		3,053	1.6			194,727
Other liabilities		5,984		(896)	(13.0)			6,880
Stockholders' equity		52,181		8,286	18.9			43,895
Total sources	$	869,660	$	10,109	1.2	%	$	859,551

Overall, total average assets increased by $10.1 million, or 1.2%, for the year 2025 compared to 2024. The increase in 2025 was primarily due to an increase in taxable loans, which were funded by cash flows from taxable securities, as well as time deposits and interest bearing and noninterest bearing demand deposits. Average short- and long-term borrowings declined by $7.4 million and $9.1 million, respectively, in 2025 compared to 2024 as deposits, rather than borrowings, were used for funding needs. The ratio of average earning assets to total average assets decreased from 99.3% in 2024 to 98.8% in 2025. The ratio of average interest bearing liabilities to total average assets decreased from 71.4% in 2024 to 70.6% in 2025. 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 2025 and 2024. Total average stockholders' equity increased $8.3 million as of December 31, 2025 compared to December 31, 2024 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. 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,
	2025		2024		2023		2022		2021
Commercial, financial and agricultural	$	78,016	$	68,234	$	65,821	$	61,458	$	62,639
Real estate - commercial		273,135		247,582		223,077		199,206		159,806
Real estate - construction		58,064		37,827		52,589		50,748		43,281
Real estate - mortgage		173,889		162,771		162,385		150,290		131,754
Obligations of states and political subdivisions		15,258		13,850		17,232		18,770		16,323
Personal		3,016		3,605		4,290		4,040		4,500
Total loans	$	601,378	$	533,869	$	525,394	$	484,512	$	418,303

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


(Dollars in thousands)
	2025		2024
Beginning balance	$	533,869	$	525,394
Net new loans		66,974		7,834
Loans charged off		(34)		(40)
Loans transferred to repossessions		-		(10)
Other adjustments to carrying value		569		691
Net change		67,509		8,475
Ending balance	$	601,378	$	533,869

The following table presents the maturity distribution and amount of loans with fixed and variable interest rates as of December 31, 2025.



			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	$	692	$	13,536	$	20,767	$	92	$	35,087
Real estate - commercial		292		20,425		13,487		6,074		40,278
Real estate - construction:
Other construction loans		533		1,604		3,582		2,545		8,264
Real estate - mortgage		1,774		6,566		44,754		62,021		115,115
Other loans		249		4,326		9,258		7		13,840
Total fixed rate loans	$	3,540	$	46,457	$	91,848	$	70,739	$	212,584
Loans with Variable Interest Rates
Commercial, financial, and agricultural	$	14,339	$	16,511	$	11,184	$	895	$	42,929
Real estate - commercial		2,506		31,476		83,880		114,995		232,857
Real estate - construction:
1-4 family residential construction		266		-		-		-		266
Other construction loans		12,502		15,933		13,141		7,958		49,534
Real estate - mortgage		573		5,449		25,492		27,260		58,774
Other loans		1		107		804		3,522		4,434
Total variable rate loans	$	30,187	$	69,476	$	134,501	$	154,630	$	388,794
Total loans	$	33,727	$	115,933	$	226,349	$	225,369	$	601,378

The loan portfolio was comprised of approximately 29.4% consumer loans (real estate - mortgage and personal loans) and 70.6% commercial loans (commercial, financial and agricultural, real estate - commercial and construction, and obligations of states and political subdivisions) on December 31, 2025 compared to 31.1% consumer loans and 68.9% commercial loans on December 31, 2024. 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 2025 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 $264.2 million at December 31, 2025, or 213.38% 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	$	91,105	112.30	%
Lessors of non-residential buildings		66,856	82.41
New housing for-sale builders		43,042	53.06
Hotels and motels		42,931	52.92
Continuing care retirement communities		20,273	24.99
Total	$	264,207	213.38	%

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 2025, all loan classes increased except the personal loan class. 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. 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, 2025 was 1.18% of total loans, net of unearned interest, compared to 1.16% of total loans, net of unearned interest at December 31, 2024.

Juniata recorded a provision for credit losses of $923,000 in 2025 compared to a provision for credit losses of $534,000 in 2024. Loan growth of 12.6% as of December 31, 2025 compared to December 31, 2024 was the primary factor for the increase in the provision for credit losses. Net charge-offs as a percentage of average loans outstanding were 0.00% and 0.01% for the years ended 2025 and 2024, respectively.

At December 31, 2025, non-performing loans (as defined in Table 4 below), as a percentage of the allowance for credit losses, were 9.0%, compared to 9.9% at December 31, 2024. Non-performing loans as a percentage of loans outstanding were 0.11% and 0.12% as of December 31, 2025 and December 31, 2024, respectively. All non-performing loans were collateralized with real estate at December 31, 2025, except three non-accrual loans totaling $148,000.

TABLE 4

NON-PERFORMING LOANS


(Dollars in thousands)	December 31, 2025			December 31, 2024
Non-performing loans
Non-accrual loans	$	635		$	496
Accruing loans past due 90 days or more		-			119
Total	$	635		$	615

Loans outstanding	$	601,378		$	533,869

Ratio of non-performing loans to loans outstanding		0.11	%		0.12	%
Ratio of non-accrual loans to loans outstanding		0.11	%		0.09	%
Allowance for credit losses to non-accrual loans		1,115.43	%		1,246.57	%

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 non-accrual 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 non-accrual and charge-off policies are the same, regardless of the loan type. During the year ended December 31, 2025, gross interest income that would have been recorded if loans on non-accrual status had been current was $100,000. The Company recognized no interest income on non-accrual loans during the year ended December 31, 2025.

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. 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 for periods beyond 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 $3.7 million at December 31, 2025 and $3.0 million at December 31, 2024.

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.

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 $3.4 million at December 31, 2025, compared to $3.1 million at December 31, 2024.

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

The Company recorded net charge-offs of $23,000 in 2025 compared to net charge-offs of $28,000 in 2024. The allowance for credit losses at December 31, 2025 increased by 14.6% over the allowance for credit losses at December 31, 2024 due primarily to loan growth of 12.6% in 2025. Management's analysis indicated that the allowance for credit losses of $7.1 million at December 31, 2025 was adequate.

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,
	2025			2024			2023			2022			2021
Balance of allowance - beginning of period	$	6,183		$	5,677		$	4,027		$	3,508		$	4,094
Impact of adopting ASC 326		-			-			757			-			-
Initial allowance on loans purchased with credit deterioration		-			-			354			-			-
Loans charged off:
Real estate - mortgage		(4)			-			(19)			(23)			-
Personal		(30)			(40)			(28)			(13)			(17)
Total charge-offs		(34)			(40)			(47)			(36)			(17)
Recoveries of loans previously charged off:
Commercial, financial and agricultural		-			-			-			2			7
Real estate - commercial		-			-			-			-			36
Real estate - construction		-			-			-			-			86
Real estate - mortgage		4			3			66			94			61
Personal		7			9			20			4			10
Total recoveries		11			12			86			100			200

Net (charge-offs) recoveries		(23)			(28)			39			64			183
Provision (benefit) for credit losses		923			534			500			455			(769)
Balance of allowance - end of period	$	7,083		$	6,183		$	5,677		$	4,027		$	3,508

Ratio of net (charge-offs) recoveries during period to
average loans outstanding		(0.00)	%		(0.01)	%		0.01	%		0.01	%		0.04	%

Because of the Company's low rate of charge-offs, disaggregated ratios of net charge-offs to average loans outstanding are not provided.

The following tables show how the allowance for credit losses is allocated among the various types of outstanding loans and the percentage of loans by type to total loans.


(Dollars in thousands)	Years Ended December 31,
	2025		2024		2023		2022		2021
Commercial, financial and agricultural	$	1,201	$	994	$	740	$	297	$	251
Real estate - commercial		3,087		3,010		2,799		1,110		1,020
Real estate - construction		1,421		853		882		1,146		884
Real estate - mortgage		30		24		39		1,385		1,269
Obligations of states and political subdivisions		1,320		1,258		1,157		54		45
Personal		24		44		60		35		39
Total	$	7,083	$	6,183	$	5,677	$	4,027	$	3,508


	Years Ended December 31,
	2025		2024		2023		2022		2021
Commercial, financial and agricultural	13.0	%	12.8	%	12.5	%	12.7	%	15.0	%
Real estate - commercial	45.4	%	46.4	%	42.5	%	41.1	%	38.2	%
Real estate - construction	9.7	%	7.1	%	10.0	%	10.5	%	10.3	%
Real estate - mortgage	28.9	%	30.4	%	30.9	%	31.0	%	31.5	%
Obligations of states and political subdivisions	2.5	%	2.6	%	3.3	%	3.9	%	3.9	%
Personal	0.5	%	0.7	%	0.8	%	0.8	%	1.1	%
Total	100	%	100	%	100	%	100	%	100	%

INVESTMENTS

Total investments, defined to include all interest earning assets except loans (i.e., debt securities available for sale at fair value and held to maturity at amortized cost, equity securities, federal funds sold, interest bearing deposits, restricted investment in bank stock and other interest-earning assets), totaled $247.3 million on December 31, 2025, a decrease of $18.6 million, or 7.0%, compared to year-end 2024.

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


(Dollars in thousands)
	2025		2024
Beginning balance	$	265,903	$	282,729
Redemption of equity securities		(46)		-
Proceeds from sales, calls and maturities of debt securities available for sale		(12,151)		(4,742)
Proceeds from calls and maturities of debt securities held to maturity		(14,042)		(13,864)
Change in value of equity securities		131		115
Adjustment in market value of securities available of sale		3,220		1,925
Amortization of unrealized holding losses on securities held to maturity		4,619		4,847
Amortization/accretion on securities available for sale		(92)		(123)
Restricted investment in bank stock, net change		(8)		823
Interest bearing deposits with others, net change		(205)		(5,807)
Net change		(18,574)		(16,826)
Ending balance	$	247,329	$	265,903

The investment area is managed according to internally established guidelines and quality standards. Juniata separates its investment securities portfolio into two classifications: those held to maturity and those available for sale. Juniata holds no securities in the trading classification.

At December 31, 2025, the market value of the investment securities portfolio was less than amortized cost by $5.2 million, compared to December 31, 2024 when the market value of the investment securities portfolio was less than amortized cost by $15.1 million. The average maturity of the investment portfolio was 6.4 years on December 31, 2025 and 6.9 years on December 31, 2024.

The following table sets forth the maturities of securities and the weighted average yields of such securities by scheduled maturity or call dates. Yields on obligations of states and public subdivisions are presented on a tax-equivalent basis.


(Dollars in thousands)					After One Year				After Five Years
	Within One year				But Within Five Years				But Within Ten Years				After Ten Years				Total
December 31, 2025	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
Debt securities available for sale, at fair value:
Obligations of U.S. Government agencies and corporations	$	5,865	0.70	%	$	6,754	0.78	%	$	-	-	%	$	-	-	%	$	12,619	0.74	%
Obligations of state and political subdivisions		1,465	3.87	%		1,266	1.79	%		3,614	1.80	%		-	-	%		6,345	2.28	%
Corporate Debt Securities		1,967	2.75	%		-	-	%		9,031	3.96	%		-	-	%		10,998	3.74	%
Mortgage-backed securities, residential		337	2.53	%		21,969	3.45	%		2,719	2.80	%		613	2.64	%		25,638	3.35	%
Total	$	9,634	1.66	%	$	29,989	2.78	%	$	15,364	3.25	%	$	613	2.64	%	$	55,600	2.71	%
Debt securities held to maturity, at amortized cost:
Obligations of U.S. Government agencies and corporations	$	-	-	%	$	31,481	4.32	%	$	-		%	$	-	-	%	$	31,481	4.32	%
Mortgage-backed securities, residential		-	-	%		16,733	5.44	%		100,760	4.62	%		33,231	2.62	%		150,724	4.27	%
Total	$	-	-	%	$	48,214	4.71	%	$	100,760	4.62	%	$	33,231	2.62	%	$	182,205	4.28	%

BANK OWNED LIFE INSURANCE AND ANNUITIES

The Company periodically insures the lives of certain bank officers to provide split-dollar life insurance benefits to some key officers and to offset the cost of providing post-retirement benefits through non-qualified plans. Some annuities are also owned to provide cash streams that match certain post-retirement liabilities. The $733,000 increase in cash surrender value of the Company's bank owned life insurance ("BOLI") and annuities was due primarily to earnings and the purchase of additional insurance related to a 1035 Exchange for an active participant to take advantage of increased interest rates. See Note 7 of The Notes to Consolidated Financial Statements.

The following table summarizes how the cash surrender values of these instruments changed annually in each of the last two years.


(Dollars in thousands)
	2025		2024
Beginning balance	$	15,214	$	14,841
BOLI earnings		247		219
Annuity earnings		16		17
BOLI purchases		890		717
BOLI premiums		19		19
Annuity premiums		7		8
BOLI death benefit received		(372)		(663)
Annuity death benefits received		(104)		-
Gain from BOLI proceeds		30		56
Net change		733		373
Ending balance	$	15,947	$	15,214

GOODWILL AND INTANGIBLE ASSETS

Branch Acquisition

On September 8, 2006, the Company acquired a branch office in Richfield, PA. Goodwill recorded on the acquisition was $2.0 million and is measured annually for impairment.

FNBPA Acquisition

On November 30, 2015, the Company completed its acquisition of FNBPA. Goodwill recorded on the acquisition was $3.4 million as of December 31, 2025 and 2024. In addition, a core deposit intangible in the amount of $303,000 was recorded and is being amortized over a ten-year period using a sum of the year's digits basis. Core deposit intangible amortization expense recorded in 2025 was $5,000 and was fully amortized in 2025. Core deposit and other intangible assets, net of amortization, was fully amortized as of December 31, 2025 and $5,000 as of December 31, 2024.

LCB Acquisition

On April 30, 2018, Juniata completed the acquisition of LCB and, as a result, recorded goodwill of $3.6 million as of December 31, 2025 and 2024. In addition, a core deposit intangible of $289,000 was recorded and will be amortized over a ten-year period using a sum of the years' digits basis. Core deposit intangible expense recorded in 2025 was $17,000, and for the succeeding three years beginning 2026, is estimated to be $12,000, $7,000 and $2,000 per year, respectively. The core deposit intangible will be fully amortized in 2028. Core deposit intangible, net of amortization, was $21,000 as of December 31, 2025 and $38,000 as of December 31, 2024.

Path Valley Acquisition

On May 12, 2023, Juniata acquired the Path Valley branch office and, as a result, recorded goodwill of $765,000 as of December 31, 2025 and 2024. In addition, a core deposit intangible of $303,000 was recorded and is being amortized over a ten-year period using a sum of the years' digit basis. Core deposit intangible expense recorded in 2025 was $46,000, and for the succeeding five years beginning 2026, is estimated to be $40,000, $35,000, $30,000, $24,000 and $18,000 per year, respectively, and $22,000 thereafter. Core deposit intangible, net of amortization, was $169,000 as of December 31, 2025 and $215,000 as of December 31, 2024.

Mortgage Servicing Rights

The Company did not originate and sell residential mortgage loans to the secondary market in 2025 or 2024; however, the Company retained the servicing rights on loans originated and sold in prior years. The mortgage servicing rights are valued based on the present value of estimated future cash flows on pools of mortgages stratified by rate and maturity date. The computed value is carried as an intangible asset. As of December 31, 2025 and December 31, 2024, the fair value of mortgage servicing rights was $60,000 and $69,000, respectively.

DERIVATIVES

The Company may enter into derivative financial instruments as part of its asset liability management strategy to help manage its interest rate risk position and to meet the needs of customers. As of December 31, 2025 and 2024, the Company had no derivativesdesignated as hedging instruments. The Company does, however, have derivatives not designated as hedging instruments. At December 31, 2025, the Company had risk participation agreements with a fair value of $20,000 and back-to-back swaps with commercial borrowers with a fair value of $161,000. See Note 22 of The Notes to Consolidated Financial Statements.

DEFERRED TAXES

The Company accounts for income taxes under the asset/liability method. Deferred tax assets and liabilities are recognized for the future consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as operating loss and tax credit carryforwards, if applicable. A valuation allowance is established against deferred tax assets when, in the judgment of management, it is more likely than not that such deferred tax assets will not become realizable. The Company recorded net deferred tax assets of $8.2 million and $9.8 million, at December 31, 2025 and December 31, 2024, respectively. The net deferred tax assets were carried as a non-interest earning asset. See Note 13 of The Notes to Consolidated Financial Statements.

OTHER NON-INTEREST EARNING ASSETS

The following table summarizes the components of the non-interest earning asset category, and how the ending balances changed over the last two years.


(Dollars in thousands)
	2025		2024
Beginning balance	$	29,932	$	43,030
Cash and cash equivalents		655		(12,125)
Premises and equipment, net		(126)		1,202
Investment in low-income housing		(322)		(322)
Deferred tax assets		(1,644)		(1,477)
Other receivables and prepaid expenses		(865)		(376)
Net change		(2,302)		(13,098)
Ending balance	$	27,630	$	29,932

DEPOSITS

As of December 31, 2025, total deposits were $781.8 million, an increase of $33.8 million, or 4.5%, compared to the previous year end. Juniata had $126.9 million and $105.2 million in uninsured deposits as of December 31, 2025 and 2024, respectively.

The following table summarizes how the ending balances changed over the last two years.


(Dollars in thousands)
	2025		2024
Beginning balance	$	747,957	$	749,045
Demand deposits		13,064		(226)
Interest bearing demand deposits		10,496		(11,316)
Savings deposits		3,741		(5,511)
Time deposits		6,541		15,965
Net change		33,842		(1,088)
Ending balance	$	781,799	$	747,957

The following table shows the comparison of average transaction deposits and average time deposits as a percentage of total deposits for the last two years.


	Changes in Deposits
(Dollars in thousands)	2025						2024
	Average		Increase (Decrease)				Average
	Balance		Amount		%		Balance
Transaction deposits:
Money market	$	46,396	$	(1,552)	(3.2)	%	$	47,948
Interest bearing demand		163,951		4,461	2.8			159,490
Savings		131,814		(602)	(0.5)			132,416
Demand		197,780		3,053	1.6			194,727
Total transaction deposits		539,941		5,360	1.0			534,581

Time deposits:
$100 and greater		106,238		11,174	11.8			95,064
Other		112,706		2,187	2.0			110,519
Total time deposits		218,944		13,361	6.5			205,583
Total deposits	$	758,885	$	18,721	2.5	%	$	740,164

Average deposits increased 18.7 million, or 2.5%, to $758.9 million in 2025. Overall, transaction accounts increased by $5.3 million, or 1.0%, in 2025, while total time deposits increased by $13.4 million, or 6.5%. The largest dollar and percentage increase in 2025 compared to the previous year was in time deposits of $100,000 and greater, which increased by $11.2 million, or 11.8%.

Maturities of uninsured time deposits (i.e. those in the amount of $250,000 or more) outstanding at December 31, 2025 are summarized as follows:


(Dollars in thousands)
	2025
Certificates of deposit of $250 or more
Maturing within 3 months	$	11,231
Maturing within 3 to 6 months		16,313
Maturing within 6 to 12 months		9,438
Maturing 1-5 years		5,453
Total	$	42,435

Consumers have needs for transaction accounts, and the Bank is continuing to focus on that need in order to build deposit relationships. Products are geared toward low-cost convenience and ease for the customer. The Company's strategy is to aggressively seek to grow customer relationships by staying in touch with customers' changing needs and new methods of connectivity, to increase deposit (and loan) market share. The Bank offers identity protection services as an option for all consumer demand depositors. We believe this product to be a valuable and essential tool necessary to combat the upsurge in fraud and identity theft. This product provides a unique benefit to our customers.

In addition to deposit products, Juniata provides alternatives to customers through the sale of wealth management (non-deposit) products. The Bank competes in the marketplace with many sources that offer products that directly compete with traditional banking products. In keeping with our desire to provide our customers with a full array of financial services, we supplement the services traditionally offered by our Trust Department with wealth management consultants who are licensed and trained to sell variable and fixed rate annuities, mutual funds, stock brokerage services and long-term care insurance. Although the sale of these products can reduce the Bank's deposit levels, these products offer solutions for our customers that traditional bank products cannot and allow us to service our customer base more completely. Fee income from the sale of non-deposit products (primarily annuities and mutual funds) was $280,000 in 2025 and $388,000 in 2024, representing approximately 4.9% and 6.7%, respectively, of total non-interest income.

OTHER INTEREST BEARING LIABILITIES

Juniata funds its needs primarily with local deposits and, when necessary, relies on external funding sources for additional funding. External funding sources include credit facilities at correspondent banks, the FHLB of Pittsburgh and the Federal Reserve Bank. Juniata's average balances for all borrowings decreased by $16.0 million in 2025 compared to 2024.


	Changes in Borrowings
(Dollars in thousands)	2025						2024
	Average		Increase (Decrease)				Average
	Balance		Amount		%		Balance
Repurchase agreements	$	15,888	$	630	4.1	%	$	15,258
Short-term borrowings		33,902		(7,414)	(17.9)			41,316
Long-term debt		2,082		(9,107)	(81.4)			11,189
Other interest bearing liabilities		738		(111)	(13.1)			849
Total	$	52,610	$	(16,002)	(23.3)	%	$	68,612

STOCKHOLDERS' EQUITY

Total stockholders' equity increased by $9.9 million, or 20.9%, to $57.4 million in 2025 compared to 2024, primarily due to a decrease in accumulated other comprehensive loss from recording the amortization of unrealized holding losses on HTM securities and the net change in unrealized AFS security losses, as well as an increase in retained earnings. The Company was well-capitalized and had the capacity to maintain its historical dividend level in 2025. The Company's net income exceeded dividends paid by $3.6 million.

The following table summarizes how the components of equity changed in the last two years.


(Dollars in thousands)
	2025		2024
Beginning balance	$	47,457	$	40,137
Net income		7,983		6,229
Dividends		(4,413)		(4,400)
Treasury stock issued for stock plans		30		32
Stock-based compensation		154		142
Repurchase of stock, net of re-issuance		(4)		(3)
Net change in unrealized AFS security losses		2,544		1,521
Amortization of unrealized holding losses on HTM securities		3,622		3,799
Net change		9,916		7,320
Ending balance	$	57,373	$	47,457

Average stockholders' equity in 2025 was $52.2 million, an increase of 18.9% from $43.9 million in 2024. At December 31, 2025, Juniata held 132,480 shares of stock in treasury versus 147,895 at December 31, 2024. Return on average equity increased to 15.30% in 2025 from 14.19% in 2024. See the discussion in the 2025 Financial Overview section.

The Company periodically repurchases shares of its common stock under the share repurchase program approved by the Board of Directors. The program will remain authorized until all approved shares are repurchased, unless terminated by the Board of Directors. Repurchases have typically been accomplished through open market transactions and have complied with all regulatory restrictions on the timing and amount of such repurchases. Shares repurchased have been added to treasury stock and accounted for at cost. These shares may be reissued for stock option exercises, employee stock purchase plan purchases, restricted stock awards, to fulfill dividend reinvestment program needs and to supply shares needed as consideration in an acquisition. During 2025 and 2024, 282 and 239 shares, respectively, were repurchased in conjunction with this program. Additionally, 330 restricted shares were forfeited by a departing director in 2025. Treasury shares of 16,027 and 12,494 were also redeemed for equity grants and stock purchase plan purchases in 2025 and 2024, respectively. The treasury shares remaining authorized for repurchase in the program were 179,892 as of December 31, 2025.

Juniata declared dividends of $0.88 per common share in each of 2025 and 2024 (See Note 14 of The Notes to Consolidated Financial Statements regarding restrictions on dividends from the Bank to the Company). The dividend payout ratio was 55.28% and 70.63% in 2025 and 2024, respectively. The dividend payout ratio in 2025 was lower than 2024 due primarily to higher net income in 2025 compared to 2024. In January 2026, the Board of Directors declared a dividend of $0.22 per share to stockholders of record on February 13, 2026, payable on February 27, 2026.

Juniata's book value per share at December 31, 2025 was $11.43 as compared to $9.48 at December 31, 2024. Juniata's average equity to assets ratio for 2025 and 2024 was 6.00% and 5.11%, respectively. Refer also to the Capital Risk section in the asset / liability management discussion that follows.

ASSET / LIABILITY MANAGEMENT OBJECTIVES

Management believes that optimal performance is achieved by maintaining overall risks at a low level. Therefore, the objective of asset/liability management is to control risk and produce consistent, high quality earnings independent of changing interest rates. The Company has identified five major risk areas discussed below:

●

Liquidity Risk;

●

Capital Risk;

●

Interest Rate Risk;

●

Investment Portfolio Risk; and

●

Economic Risk.

Liquidity Risk

Juniata seeks to have adequate liquid resources available to fulfill contractual obligations that require future cash payments. Through liquidity risk management, the Company seeks to maintain its ability to readily meet commitments to fund loans, purchase assets and other securities and repay deposits and other liabilities. Liquidity management also includes the ability to manage unplanned changes in funding sources and recognize and address changes in market conditions that affect the quality of liquid assets. Juniata has developed a methodology for assessing its liquidity risk through an analysis of its primary and total liquidity sources and relies on three main types of liquidity sources: (1) asset liquidity, (2) liability liquidity and (3) off-balance sheet liquidity.

Asset liquidity refers to assets that we are quickly able to convert into cash, consisting of cash, federal funds sold and securities. Short-term liquid assets generally consist of federal funds sold and securities maturing over the next twelve months. The quality of our short-term liquidity is good; as federal funds are unimpaired by market risk and as bonds approach maturity, their value moves closer to par value. Liquid assets tend to reduce earnings when there is not an immediate use for such funds, since normally these assets generate income at a lower rate than loans or other longer-term investments.

Liability liquidity refers to funding obtained through deposits. The largest challenge associated with liability liquidity is cost. Juniata's ability to attract deposits depends primarily on several factors, including sales effort, competitive interest rates and other conditions that help maintain consumer confidence in the stability of the financial institution. Large certificates of deposit, public funds and brokered deposits are all acceptable means of generating and providing funding. If the cost is favorable or fits the overall cost structure of the Bank, then these sources have many benefits. They are readily available, come in large block size, have investor-defined maturities and are generally low maintenance.

Off-balance sheet liquidity is closely tied to liability liquidity. Sources of off-balance sheet liquidity include Federal Home Loan Bank borrowings, repurchase agreements, brokered deposits and federal funds lines with correspondent banks. These sources provide immediate liquidity to the Bank and are available to be deployed when a need arises. These instruments also come in large block sizes, have investor-defined maturities and generally require low maintenance.

Available liquidity encompasses all three sources of liquidity when determining liquidity adequacy and measures the Bank's access to short-term funding sources for immediate needs and long-term funding sources when the need is determined to be permanent. Management uses both on-balance sheet liquidity and off-balance sheet liquidity to manage its liquidity position. The Company's liquidity strategy seeks to maintain an adequate volume of high-quality liquid instruments to facilitate customer liquidity demands. Management also maintains sufficient capital, which provides access

to the liability and off-balance sheet sides of the balance sheet for funding. An active knowledge of debt funding sources is important to liquidity adequacy.

Contingency funding management involves maintaining contingent sources of immediate liquidity. Management believes that it must consider an array of available sources in terms of volume, maturity, cash flows and pricing. To meet demands in the normal course of business or for contingency, secondary sources of funding such as public funds deposits, collateralized loans, sales of investment securities or sales of loan receivables are considered.

It is the Company's policy to maintain a primary liquidity ratio greater than 7.5% and a total liquidity ratio greater than 10% of total assets. The primary liquidity ratio equals liquid assets divided by total assets, where liquid assets equal the sum of cash and due from banks, federal funds sold, interest bearing deposits with other banks and available for sale securities. Total liquidity is comprised of all components noted in primary liquidity plus securities classified as held-to-maturity, if any. If either of these liquidity ratios falls below the minimum ratio, it is the Company's policy to increase liquidity in a timely manner to achieve the required ratio. As of December 31, 2025, the Company's primary and total liquidity ratios were 7.5% and 11.1%, respectively.

It is the Company's policy to maintain available liquidity that, when combined with on-balance sheet liquidity, is greater than 15% of total assets and contingency liquidity that, when combined with on-balance sheet liquidity and available liquidity, is greater than 22.5% of total assets. As of December 2025, the Company's available and contingency liquidity ratios were 20.4% and 51.7%, respectively.

Juniata is a member of the FHLB of Pittsburgh, which provides short-term liquidity and a source for long-term borrowings. The Bank uses this facility to satisfy temporary funding needs throughout the year. The Bank's maximum borrowing capacity with the FHLB was $254.7 million, with a balance of $34.7 million outstanding as of December 31, 2025. To borrow additional amounts, the FHLB would require the Bank to purchase additional FHLB Stock. The Bank must maintain sufficient qualifying collateral to secure all outstanding advances.

As of December 31, 2025, the Company had no borrowings outstanding with the Federal Reserve and an unused borrowing capacity of $49.9 million with the Federal Reserve. The Company also has an unsecured line of credit with a correspondent bank totaling $11.0 million, of which no funds were drawn at December 31, 2025. These funding sources are periodically drawn upon to ensure the availability of funds.

The Company has an internal policy limit for brokered deposits of $175.0 million. As of December 31, 2025, the Company had no brokered deposits.

Funding derived from securities sold under agreements to repurchase (accounted for as collateralized financing transactions) is available through corporate cash management accounts for business customers. This product provides the Company with the ability to pay interest on corporate checking accounts.

Capital Risk

The Company seeks to maintain sufficient core capital to protect depositors and shareholders and to take advantage of business opportunities while ensuring that it has resources to absorb the risks inherent in the business. Federal banking regulators have established capital adequacy requirements for banks and bank holding companies based on risk factors, which require more capital backing for assets with higher potential credit risk than assets with lower credit risk.

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, if undertaken, could have a direct material adverse 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, 2025, the Bank met all capital adequacy requirements to which it was subject.

Prompt corrective action regulations provide five classifications: 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 2025 and 2024, the most recent regulatory notifications categorized the Bank as 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 category.

The regulatory capital requirements established by the U.S. Basel III Capital Rules require financial institutions to maintain: (a) Common Equity Tier 1 (CET1) to risk-weighted assets ratio 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). However, unless the Bank maintains an additional 2.5% "capital conservation buffer" above the percentages stated above in (a) - (c), the Company may be unable to obtain capital distributions from it, which could negatively impact the Company's ability to pay dividends, service debt obligations or repurchase common stock. In addition, such a failure could result in a restriction on the Company's ability to pay certain cash bonuses to executive officers, negatively impacting the Company's ability to retain key personnel. See Note 14 of Notes to the Consolidated Financial Statements.

Interest Rate Risk

For most financial institutions, including Juniata, interest rate risk primarily reflects exposures to changes in interest rates. Interest rate fluctuations affect earnings by changing net interest income and other interest-sensitive income and expense levels. Interest rate changes also affect capital by impacting the net present value of a bank's future cash flows, and the cash flows themselves, as rates change. Interest rate risk is inherent in the banking industry. However, excessive interest rate risk can threaten a bank's earnings, capital, liquidity and solvency. The Company's sensitivity to changes in interest rate movements is continually monitored by the Asset Liability Management Committee ("ALCO"). At December 31, 2025, the Company's cumulative repricing gap analysis indicated a liability-sensitive balance sheet through one year when measured on a static basis.

Investment Portfolio Risk

Management considers its investment portfolio risk as the amount of appreciation or depreciation the investment portfolio will sustain when interest rates change. The securities portfolio will decline in value when interest rates rise and increase in value when interest rates decline. Securities with long maturities, excessive optionality (because of call features) and unusual indexes tend to produce the most market risk during interest rate movements.

Economic Risk

Economic risk is the risk that the long-term or underlying value of the Company will change if interest rates change. Economic value of equity ("EVE") represents the change in the value of the balance sheet without regard to business continuity. Rate shocks are applied to all financial assets and liabilities, using parallel and non-parallel rate shifts of 100 to 400 basis points to estimate the change in EVE under the various hypothetical scenarios. As of December 31, 2025, in a rising rate environment, the modeling results for all basis point rate increases indicated the Company's loss in value of assets was greater than the present value gain in liabilities; however, the Company remained within EVE policy guidelines for all rate shock scenarios.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has numerous off-balance sheet loan obligations that exist to meet the financing needs of its customers. These financial instruments include commitments to extend credit, unused lines of credit and letters of credit. Because many commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. These instruments involve, to varying degrees, elements of credit and interest rate risk that are not recognized in the consolidated financial statements. The Company does not expect that these commitments will have an adverse effect on its liquidity position.

Exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and financial guarantees written is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making these commitments as it does for on-balance sheet instruments. The Company had outstanding loan origination commitments aggregating $122.5 million and $133.7 million on December 31, 2025 and 2024, respectively. Additionally, on December 31, 2025 and 2024, respectively, the Company had $9.8 million and $11.3 million outstanding in unfunded lines of credit commitments extended to its customers.

Letters of credit are instruments issued by the Company that guarantee payment by the Bank to the beneficiary in the event of default by the Company's customer in the non-performance of an obligation or service. Most letters of credit are extended for a one-year period. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds collateral supporting those commitments for which collateral is deemed necessary. The amount of the liability as of December 31, 2025 and 2024 for guarantees under letters of credit issued was not material. The maximum undiscounted exposure related to these guarantees on December 31, 2025 was $5.2 million, and the approximate value of underlying collateral upon liquidation that would be expected to cover this maximum potential exposure was $67.0 million.

EFFECTS OF INFLATION

The performance of a bank is affected more by changes in interest rates than by inflation; therefore, the effect of inflation is normally not as significant to the Company as it is to other businesses and industries. A bank's operating expenses may increase during inflationary times as the price of goods and services increase.

A bank's performance is also affected during recessionary periods. In times of recession, a bank usually experiences a tightening on its earning assets and on its profits. A recession is usually an indicator of higher unemployment rates, which could mean an increase in the number of nonperforming loans because of layoffs and other deterioration of consumers' financial condition.

Juniata Valley Financial Corp. published this content on March 25, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 25, 2026 at 17:43 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]

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Juniata Valley Financial Corp.

Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)